<PAGE> 1
--------------------------
OMB APPROVAL
--------------------------
OMB Number: 3235-0145
Expires: October 31, 1994
Estimated average burden
hours per form.......14.90
--------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _________)*
ADVANCED MATERIALS GROUP, INC.
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
COMMON STOCK
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
COMMISSION FILE NO. 0-16401
- --------------------------------------------------------------------------------
(CUSIP NUMBER)
RICHARD H. PICKUP, C/O WEDBUSH MORGAN SECURITIES, INC.
610 NEWPORT CENTER DR., SUITE 1300
NEWPORT BEACH, CALIFORNIA, 92660 -- (714) 759-1311
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
AUGUST 17, 1997
- --------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1: and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP No. Com. File No. 0-16401 SCHEDULE 13D Page 2 of 7 Pages
---------------------- ----- -----
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Dito-Caree, LP, a Nevada limited partnership --
Tax I.D. No. 88-0302506
Richard H. Pickup, an individual -- Social Security No. ###-##-####
---------------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ x ]
(b) [ ]
---------------------------------------------------------------------
(3) SEC USE ONLY
---------------------------------------------------------------------
(4) SOURCE OF FUNDS*
PF and WC
---------------------------------------------------------------------
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
---------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION -- Dito-Caree, LP is a
limited partnership organized under and pursuant to the laws of the
State of Nevada. Richard H. Pickup is an individual maintaining his
residence in the State of California and is a citizen of the U.S.
---------------------------------------------------------------------
(7) SOLE VOTING POWER
Dito-Caree, LP -- 900,000 (plus rights to
NUMBER OF exercise warrants to acquire
SHARES an additional 430,096 shares
BENEFICIALLY Richard H. Pickup -- 0
OWNED BY --------------------------------------------------------
EACH (8) SHARED VOTING POWER
REPORTING NONE
PERSON --------------------------------------------------------
WITH (9) SOLE DISPOSITIVE POWER
Dito-Caree, LP -- 900,000
Richard H. Pickup -- 0
--------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
NONE
--------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Dito-Caree, LP -- 900,000
Richard H. Pickup -- 0
---------------------------------------------------------------------
(12) CHECK BOX IF AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
---------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Dito-Caree, LP -- 10.64%
Richard H. Pickup -- 0%
---------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
Dito-Caree, LP -- PN
Richard H. Pickup -- IN
---------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to shares of Common Stock ("Shares") of
Advanced Materials Group, Inc., a Nevada corporation ("AMG") whose executive
offices are located at 20211 South Susana Road, Rancho Dominguez, California
90221. Shares of AMG are traded on the NASDAQ over the counter National Market
System under the trading symbol of ADMG.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is an original filing and is filed by Dito-Caree, LP,
a Nevada limited partnership ("Caree"), and Richard H. Pickup, an individual
("Mr. Pickup"). It is acknowledged that Mr. Pickup controls Caree and, by
reason of his control of Caree, it is acknowledged that Mr. Pickup is an
affiliate of Caree, and, therefore, Caree and Mr. Pickup are acknowledged to be
a "group" concerning the acquisition and holding of Shares, although no formal
arrangement, agreement or understanding has been entered into between Mr.
Pickup and Caree (nor any of the other individuals or entities identified
herein) concerning the Shares.
The filing of this Schedule 13D is to disclose the execution of an
acquisition agreement dated the 13th day of August, 1997 (the "Acquisition
Agreement") by and between Trilon Dominion Partners, LLC ("Trilon"), as Seller,
and Timothy R. Busch, as Trustee of the Timothy R. Busch Living Trust, under
Declaration of Trust dated September 7, 1983 ("Trust"), and the Trust's
assignees and designees under the Acquisition Agreement including Caree. Said
Acquisition Agreement (a copy of which is attached hereto as an exhibit) is
subject to a number of contingencies and conditions, therefore, the 1,600,807
Shares to be transferred under the terms of the Acquisition Agreement (together
with warrants as referenced within the Acquisition Agreement) shall not be
transferred until the close of the acquisition transaction, which is
anticipated to occur on or before September 15, 1997. Caree does anticipate the
transaction will close and, upon the close of the transaction, Caree will
acquire and own, as a designee of the Buyer under the Acquisition Agreement,
900,000 Shares, together with rights to warrants convertible into Shares, which
warrants, if exercised, potentially would give to Caree the right to acquire an
additional 430,096 Shares.
Under the terms of the Acquisition Agreement with Trilon, a total of
1,600,807 total Shares are to be acquired, together with 900,065 warrants, upon
payment of a total cash consideration of $2,921,162.25 (allocable $2,801,412.25
for the Shares and $119,750 for the warrants). In connection with such
transaction, Caree shall acquire 900,000 Shares and 430,096 warrants, for a
total consideration of $1,690,114. The balance of said Shares and warrants
(consisting of 700,807 Shares and 469,969 warrants) shall be acquired by the
Lenawee Trust ("Lenawee") (as identified in Item 3 hereinbelow), as assignee
and designee of the Trust, and entities and individuals associated with (but
not controlled by) Lenawee.
None of the reporting entities currently own any Shares of AMG, however,
upon acquisition of the Shares, it is anticipated the total holdings of Shares
by Caree shall exceed 10% of the issued and outstanding Shares of AMG. This
Schedule 13D is being filed by the following individuals and entities:
(a) Richard H. Pickup, an individual ("Mr. Pickup"). His
business address is 610 Newport Center Drive, Suite 1300, Newport Beach,
California 92660. Mr. Pickup beneficially owns no AMG Shares and it is not
anticipated that he shall acquire any Shares as a result of the transaction
with Trilon described herein. Although Mr. Pickup does not own, and it is not
anticipated he shall, of record, beneficially own, any AMG Shares, he is deemed
to control Caree.
<PAGE> 4
(b) Dito-Caree, LP ("Caree") is a Nevada limited partnership
which currently owns no Shares, however, it is anticipated it will acquire the
Shares and warrants specified hereinabove, including acquiring 900,000 Shares,
upon the close of the anticipated transaction with Trilon. Caree was organized
to transact business as a limited partnership within the State of Nevada and
Caree's mailing address is 3753 Howard Hughes Parkway, Suite 200, Las Vegas,
Nevada 89109. The current General Partner of Caree is Gamebusters, Inc., a
Nevada corporation, whose business address is 3753 Howard Hughes Parkway, Suite
200, Las Vegas, Nevada 89109, with the officers being David B. Hehn, as
President and Secretary/Treasurer, and the directors being David B. Hehn and
Richard H. Pickup. All stock of Gamebusters, Inc. is controlled by Richard H.
Pickup.
Over the past five years, none of the filing persons, or any of the
entities identified hereinabove, including any officer or director of any
corporation identified herein, have (1) been convicted in a criminal proceeding,
or (2) been a party to a civil proceeding of a judicial or administrative body
which resulted in a judgment, decree or final order enjoining future violations
of or prohibitions or mandating activity subject to federal or state securities
laws or finding any violations with respect to such laws.
Although Richard H. Pickup is the controlling person of Caree, and it
is acknowledged that he exercises sufficient control in order to consider Caree
to be treated with Mr. Pickup as a "group," there exists no agreements or
understandings, either in writing or orally, between Mr. Pickup and Caree
concerning their Shares, nor the holding voting or acquisition or disposition
of any Shares of AMG. Further, each of the reporting persons or entities herein
disavows any instance as a group with any other party acquiring Shares as
identified under Item 3 hereinbelow.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The transaction giving rise to this Schedule 13D filing involves the
execution of an Acquisition Agreement with Trilon to purchase and acquire a
total of 1,600,807 Shares of AMG upon the close of a purchase transaction
memorialized in an agreement dated the 13th day of August, 1997 (a copy of which
is attached hereto). It is anticipated that upon the close of that transaction,
a total of 900,000 Shares shall be delivered to Caree and 700,807 Shares shall
be delivered to Lenawee and related individuals (which trust it is acknowledged
is an affiliate of and is controlled by Timothy R. Busch together with various
individuals who are members of, employees of, or affiliated with The Busch Firm,
Mr. Busch's law firm). Each share of Common Stock was acquired in connection
with a transaction with Trilon at a purchase price (attributable both to the
Shares and the additional warrants described in the Acquisition Agreement)
approximately $1.75 per share, with total additional consideration of $119,750
being attributable to the acquisition of warrants described in the Acquisition
Agreement (it is also anticipated that transactional expenses, including legal
fees and other expenses incurred to document and complete the transaction and
transfer the Shares from Trilon under the terms of the Acquisition Agreement,
will approximate $85,000, which additional transactional expenses are to be
shared on a pro rata basis among the purchasers of the Shares).
The negotiation of the Acquisition Agreement and the transfer of Shares
to be acquired by Caree shall be purchased in a private placement transaction
as negotiated with Trilon. All funds used to acquire Shares shall be working
capital of Caree or personal funds of Mr. Pickup.
In addition to Caree, other individuals or entities which shall
participate in the private purchase transaction under the Acquisition Agreement
with Trilon, consist of Lenawee, with its Trustees being Gregory A. Busch and
David Keligian, both of whom maintain offices at 2532 Dupont Drive, Irvine,
California 92612, and the ultimate beneficiary of that Trust is acknowledged
-4-
<PAGE> 5
to be Timothy R. Busch, principal in The Busch Firm, a law firm maintaining
offices at 2532 Dupont Drive, Irvine, California 92612. Lenawee, and certain
other individuals or entities who are affiliated with or consultants to or
associated with The Busch Firm, or members thereof, shall also acquire Shares
under the Acquisition Agreement. Lenawee and those individuals associated with
The Busch Firm shall acquire 700,807 Shares together with 469,969 warrants,
Lenawee shall acquire the substantial portion of those Shares and warrants, with
the balance of those Shares and warrants being acquired by members of The Busch
Firm or related individuals designated as David B. Hehn, David Keligian, Gregory
A. Busch, George Mulcaire, Jim Scheinkman, Karen Busch, Four JM LLC (which
entity has, as its ultimate member beneficiaries, John F. Moody, Joseph W.
Moody; Jeffrey Moody and Jane Fowler), Clay Stevens, Steve Howard, Doug Stevens,
Rudy Fuchs, John Savage, Sherrie Schaeffer, Dennis W. Harwood and Rick Weiner.
Each of the filing persons specifically disaffirm the existence of any
group, relationship, contracts, or agreements by and between Lenawee or any of
the individuals named in the preceding paragraph who shall be acquiring Shares.
Further, each of those individuals and entities identified shall acquire Shares
directly from Trilon and no loans or contributions of funds as between any of
the individuals identified as participating in the transaction and the filing
persons shall exist, and no agreements or understandings are executed or
entered into by and between Caree or Mr. Pickup and any of the individuals
identified above. It is to be noted that Mr. Busch of The Busch Firm does act,
from time to time, as legal counsel to Mr. Pickup and to Caree, however, and no
agreements, understandings exist in relation to any holding or voting of the
Shares to be acquired. Each of the filing persons herein specifically
disaffirms the existence of any "group" for filing purpose under Section 13(d)
of the Act existing as of the date of acquiring the Shares from Trilon and any
other entity or individual identified herein is not acknowledged to be a member
of any group with Mr. Pickup or Caree.
ITEM 4. PURPOSE OF TRANSACTION
Each of the filing persons has purchased the Shares in AMG for
investment purposes only and no agreement, formal or informal, written or oral,
has been entered into by and between any of the filing persons concerning the
formation of any group nor taking any form of group action. Certain
representatives of Caree and Mr. Pickup have made inquiries of certain
management personnel of AMG concerning business operations of AMG, however, no
form of proposal, understanding or any other form of arrangements have been
made, proposed or discussed during those conversations.
None of the filing persons have entered into any commitment,
understanding or binding obligation with one or more of the filing persons or
any third persons concerning the acquisition and disposition of Shares. Rights
of the filing persons shall include the making of further acquisitions of
Shares from one or more sellers, either through open market purchases or in
privately negotiated transactions, and in disposing of all or any portion of
the Shares of AMG common stock held by all or any of the filing persons to one
or more purchasers, either through open market or in privately negotiated
transactions. None of the filing persons, including Mr. Richard H. Pickup, has
any present plans in connection with any of the foregoing actions, nor any of
those actions specified hereinbelow, however none of the foregoing or following
actions by any of the filing persons can be ruled out in the future for either
the short or long term.
Further, none of the filing persons has any present plans or proposals
which may relate to our result in:
A. The acquisition or disposition by any person of any additional
securities of the issue or the disposition of securities of the issuer.
-5-
<PAGE> 6
B. An extraordinary corporate transaction, such a merger,
reorganization or liquidation involving the issuer or any of its subsidiaries.
C. The sale or transfer of a material amount of assets of the
issuer or any of its subsidiaries.
D. A change in the present board of directors or management of the
issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies upon the board (except to vote for
directors as specified above).
E. Any material change in the present capitalization or dividend
policy of the issuer.
F. Any material change in the issuer's business or corporate
structure.
G. Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the issuer by any person.
H. Causing a class of securities of the issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association.
I. Causing a class of equity securities of the issuer becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended; or
J. Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
As of the date of this filing, none of the filing persons owns any
Shares or securities of AMG. Upon satisfaction of the conditions under the
Acquisition Agreement and the close of the transaction contemplated under the
terms of the Acquisition Agreement, it is anticipated that each of the filing
persons shall own the following Shares:
(a) Richard H. Pickup, an individual, shall own none of the Shares
or securities of AMG.
(b) Dito-Caree, LP, a Nevada limited partnership, currently owns no
Shares of AMG, however, upon the close of the transaction, it is contemplated
that Caree shall own 900,000 Shares, plus rights to warrants representing a
right to acquire an additional 430,096 Shares. It is anticipated that the Shares
will be acquired upon the close of the transaction anticipated to occur on or
before September 15, 1997, and a total consideration shall be paid by Caree to
acquire said Shares (and warrants) in the sum of $1,690,114. Upon completion of
the transaction, Caree's holdings of 900,000 Shares would represent
approximately 10.64% of all outstanding Shares. The percentage of Caree's Shares
are based upon a total of 8,460,000 Shares of Common Stock as reflected on AMG's
most recent filings with the Securities and Exchange Commission.
-6-
<PAGE> 7
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
A copy of the contract dated the 13th day of August, 1997 by and between
Trilon and Trust, under which Caree is entitled to receive Shares, is attached
hereto as an exhibit. No other contract, arrangement, understanding or
relationship exists with respect to the securities of AMG between any of the
entities or persons disclosed herein or Richard H. Pickup.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Attached hereto as Exhibit 7.1 is a copy of the contract dated the 13th
day of August 1997 by and between Trilon and the Trust.
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and current.
Dated: September 5, 1997 DITO-CAREE, LP, a Nevada
limited partnership
By: GAMEBUSTERS, INC.
a Nevada corporation
Its General Partner
By: [SIG]
--------------------------------
David B. Hehn
President
RICHARD H. PICKUP
/s/ RICHARD H. PICKUP
----------------------------------
Richard H. Pickup
An individual
-7-
<PAGE> 1
TIMOTHY R. BUSCH LIVING TRUST U/T/D/9/7/83
2532 Dupont Drive
Irvine, California 92612-1254
August 13, 1997
VIA FACSIMILE (212) 867-2955
AND AIRBORNE DELIVERY
Trilon Dominion Partners, LLC
245 Park Avenue, 28th Floor
New York, N.Y. 10167
Attn: Scott Flamm
Re: Our File No. 2240-O-4.3
-----------------------
Binding Letter Agreement to Purchase Securities
Dear Mr. Flamm:
This letter agreement ("Letter Agreement") shall document the parties'
binding obligation to purchase and sell the Securities (defined below).
1.0 Background.
Trilon Dominion Partners, LLC ("Seller") and representatives of
Buyer (as defined below) have been negotiating various terms and conditions
pertaining to the sale of the Securities of Advanced Materials Group, Inc., a
Nevada corporation ("Company"). The Seller has offered to sell the Securities
("Transaction") for the purchase consideration set forth below, and is willing
to make the representations, warranties and covenants provided below to induce
Buyer to consummate the Transaction. The Buyer has offered to buy the
Securities for the purchase consideration set forth below, and is willing to
make the representations, warranties and covenants provided below to induce
Seller to consummate the Transaction. The Buyer is willing to purchase the
Securities subject to the terms and conditions set forth below.
The parties anticipate that they may subsequently enter into a
more detailed purchase and sale agreement ("Purchase Agreement") to consummate
the
EXHIBIT 7.1
<PAGE> 2
Scott Flamm
August 13, 1997
Page 2
Transaction. However, the parties wish to enter into this binding Letter
Agreement, and Seller and Buyer are relying on same, as consideration for both
parties' incurrence of certain costs necessary to consummate the Transaction.
The binding nature of this Letter Agreement is not dependent upon the entering
into of a subsequent Purchase Agreement, if any.
2.0 Buyer.
The Buyer shall be the Timothy R. Busch Living Trust (an
affiliate of Timothy R. Busch) or its assignees or designees, including Dito
Caree Limited Partnership ("Dito") or its affiliates.
3.0 Securities.
The securities to be purchased ("Securities") are:
3.1 1,600,807 common voting shares in the Company (the
"Stock").
3.2 Warrants ("Warrants") evidencing the holder's rights to
purchase shares of additional Company common stock on
the following terms:
No. of Shares Exercise Price Expiration Date
- ------------- -------------- ---------------
35,000 $0.90 per share 9/30/99
840,000 $2.98 per share 3/24/99
60,000 $0.75 per share 12/22/2000
30,000 $0.75 per share 12/22/2000
4.0 Payment of Purchase Price.
The Purchase Price shall be Two Million Nine Hundred Twenty-One
Thousand One Hundred Sixty-Two Dollars and Twenty-Five Cents
<PAGE> 3
Scott Flamm
August 13, 1997
Page 3
($2,921,162.25). The Purchase Price is allocable One Dollar and Seventy-Five
Cents ($1.75) per share of Stock (a total of Two Million Eight Hundred One
Thousand Four Hundred Twelve Dollars and Twenty-Five Cents ($2,801,412.25)) and
a total of One Hundred Nineteen Thousand Seven Hundred Fifty Dollars
($119,750.000) to the Warrants.
The Buyer shall deliver a deposit ("Deposit") of One Hundred
Thousand Dollars ($100,000.00) within seventy-two (72) hours of the full
execution of this Letter Agreement. The Deposit shall be nonrefundable, except
in the event of Seller's breach of this Letter Agreement or Seller's failure to
satisfy the conditions set forth in Paragraph 7.0 herein. The balance of the
Purchase Price shall be payable in cash at the Closing.
5.0 Seller's Warranties, Representations and Covenants.
The Seller warrants, represents and covenants as follows:
(a) The Securities are validly issued, fully paid and
non-assessable. The Warrants have not previously been exercised, are fully
assignable to Buyer and immediately exercisable without condition and are
evidenced by written instruments containing only customary terms for this type
of security.
(b) The Seller has authority to enter into this Letter
Agreement and this Letter Agreement is Seller's valid and binding obligation,
enforceable in accordance with its terms.
(c) Neither the Seller nor the Securities are subject to any
judgments, orders, decrees, claims, litigation, agreements, or instruments
which may interfere with (i) the Seller's ability to perform its obligations or
(ii) the value of the Securities.
(d) Seller has good marketable title to the Securities, free
and clear from any and all liens, encumbrances, pledges, claims or rights of
any other parties.
<PAGE> 4
Scott Flamm
August 13, 1997
Page 4
(e) Seller has no liability to pay any broker, agency, or
finder fees or commissions with respect to the Transaction.
(f) Seller shall reasonably cooperate with Buyer to cause,
the Company to enter into the agreement described in Section 7.0(a) hereof.
Seller's representations and warranties shall survive the
Closing.
6.0 Buyer's Warranties, Representations and Covenants.
The Buyer warrants, represents and covenants as follows:
(a) The Buyer has authority to enter into this Letter
Agreement and this Letter Agreement is Buyer's valid and binding obligation,
enforceable in accordance with its terms.
(b) The Buyer is not subject to any judgments, orders,
decrees, claims, litigation, agreements, or instruments which may interfere
with the Buyer's ability to perform its obligations under this Letter Agreement.
(c) The Buyer represents that the Buyer and all of its
assignees or designees are either accredited investors or are, together with
their purchaser representatives, if any, sophisticated investors within the
meaning of applicable securities laws.
(d) The Buyer represents that, except as provided herein,
the Securities are being purchased for Buyer's own account, for investment
purposes only, and not for the account of any other person, and not with a view
to distribution, assignment, or resale to others or to fractionalize in whole
or in part and that the offering and sale of the Securities is intended to be
exempt from registration under the Securities Act of 1933 and that the Buyer is
not acting as an underwriter for the purposes of said Act. In furtherance
thereof, Buyer represents, warrants, and agrees that no other person has or
will transfer such Securities or rights thereto unless such transaction is
registered or qualified under the Securities
<PAGE> 5
Scott Flamm
August 13, 1997
Page 5
Act of 1933 and applicable state securities laws or unless an exemption from the
registration requirements of the Securities Act of 1933 and such laws is
available.
7.0 Conditions to the Closing
The Buyer's obligation to close this transaction is subject to
satisfaction of the following conditions:
(a) The Company shall have entered into a binding written
agreement providing as follows:
(i) The Company shall as promptly as practicable
file an S-3 Registration Statement causing the
registration of the resale of the Stock and the shares
subject to the Warrants (collectively, the "Registered
Securities") with the Securities Exchange Commission and
applicable state securities agencies;
(ii) The Company shall file an amendment to such
Registration Statement to reflect the Transaction as
soon as practicable following the Closing; and
(iii) The Company shall use its best efforts to cause
such Registration Statement and prospectus to become and
remain current and effective for a period of two (2)
years following the Closing (or, in the case of the
shares subject to the Warrants, two (2) years following
the exercise thereof) and take such actions to permit
the Registered Securities to be freely tradeable in
Buyer's hands as expeditiously as possible. The costs
relating to registration will be at Company or Seller's
expense, except that Buyer will pay all reasonable
incremental costs of the Company attributable to the
need to amend the Registration Statement to reflect the
Transaction. Such agreement shall contain other
customary provisions contained in registration rights
agreements that are not inconsistent with the foregoing,
in form and substance reasonably satisfactory to Buyer.
<PAGE> 6
Scott Flamm
August 13, 1997
Page 6
(b) All of the Seller's representations and warranties set
forth above being true and correct as of the Closing.
8.0 Closing.
Closing shall occur at the offices of The Busch Firm on the
fifth (5th) business day following the satisfaction of all of the conditions
set forth in Section 7.0, provided that in no event shall the Closing occur
after September 15, 1997 ("Closing").
9.0 Compliance.
The parties intend that the purchase and sale of the Securities
in the Transaction shall be pursuant to a so-called "Section 4(1-1/2)
Transaction" and that the parties shall provide such instruments to each other
and to the Company to ensure that the purchase and sale of the Securities
hereunder comprises an exempt transaction under the Securities Act of 1933 and
applicable state securities laws. The foregoing shall not limit the Buyer's
rights to cause the registration of the Securities for resale as provided
herein.
10.0 Liquidated Damages.
In event of Buyer's breach of any term of this Letter
Agreement, Seller's exclusive remedy shall be to retain the Deposit as
liquidated damages and Seller shall have no other recourse against Buyer.
11.0 Miscellaneous.
If either party institutes any legal proceeding against the
other in connection with this Letter Agreement or any matter arising out of or
in connection with this Letter Agreement, the prevailing party in such
proceeding shall be entitled to recover court costs and such reasonable
attorneys' fees as the court may deem proper, including all costs and expenses
of any appellate court proceedings or bankruptcy court proceedings. Time is of
the essence of this Letter Agreement. This Letter Agreement embodies the
entire agreement and understanding between the parties relating to the subject
matter of this Letter
<PAGE> 7
Scott Flamm
August 13, 1997
Page 7
Agreement and neither this Letter Agreement nor any provision of this Letter
Agreement may be amended, waived, or discharged, except by a written instrument
executed by the party against whom enforcement of such amendment, waiver, or
discharge is sought. This Letter Agreement shall be interpreted and enforced in
accordance with California law, and the sole and proper venue shall be Orange
County, California. This Letter Agreement may be executed in counterparts each
of which, taken together, shall constitute a complete agreement. This Letter
Agreement may be executed by signing and forwarding the signature to the other
party via facsimile, provided that the original signature of this Letter
Agreement is sent immediately thereafter via overnight mail.
If the foregoing correctly sets forth your agreement, please execute a
counterpart to this Letter Agreement below and return it by facsimile (with a
hard copy by overnight mail) to Rick S. Weiner of The Busch Firm at the address
listed above.
Very truly yours,
TIMOTHY R. BUSCH LIVING TRUST
U/T/D/ 9/7/83
By: /s/ TIMOTHY R. BUSCH
--------------------------------------
Timothy R. Busch
Its: Trustee
--------------------------------------
[ACCEPTANCE ON THE FOLLOWING PAGE]
<PAGE> 8
Scott Flamm
August 13, 1997
Page 8
Agreed to and accepted on this 14th of August, 1997.
TRILON DOMINION PARTNERS, LLC
By: /s/ SCOTT FLAMM
-----------------------------
SCOTT FLAMM
Its: Executive Vice President
