EXHIBIT
10.1


 


PROMISSORY
NOTE


 


	
  $150,000.00

  	
   

  	
  Dallas,
  Texas

  
	
   

  	
   

  	
  April 22, 2004

  



 


FOR VALUE RECEIVED, ADVANCED MATERIALS GROUP, INC., a Nevada
corporation (“Debtor”), hereby promises to pay to [ROBERT E. DELK] [TIMOTHY R.
BUSCH] or his assigns (“Holder”), the sum of One Hundred Fifty Thousand Dollars
($150,000.00) in immediately available funds and in lawful money of the United
States of America as provided below. 
The principal amount of this Promissory Note (this “Note”), together
with interest accrued on such principal amount as provided in Section 1
hereof, is due and payable in full on July 21, 2004 (the “Maturity Date”).


 


1.                                       Interest.  Commencing on the date hereof, Debtor shall
pay simple interest on the unpaid principal balance of this Note from the date
hereof until fully paid computed on the basis of the actual number of days
elapsed from the date of this Note to and including the Maturity Date at a rate
per annum equal to ten percent (10%). Interest accrued on the outstanding
principal amount of this Note is due and payable together with the principal
amount of this Note on the Maturity Date, in accordance with the immediately
preceding paragraph of this Note. In the event any Event of Default (as defined
below) has occurred and is continuing, then, in any such event, the outstanding
principal amount and accrued interest on this Note shall bear interest at a
rate per annum equal to the lesser of twelve percent (12%) or the maximum
interest rate permitted by applicable law (the “Default Rate”) until such Event
of Default has been cured to the reasonable satisfaction of Holder. An Event of
Default shall no longer be continuing and shall be deemed to be cured for
purposes of this Note upon the cessation or correction of the circumstances which
caused the Event of Default; provided, however, that (x) Holder has not already
initiated or exercised its rights or remedies under this Note in such a manner
as to render the foregoing cessation and correction inapplicable in the
circumstances; (y) all interest, fees, costs, expenses and other obligations
due to Holder resulting from or caused by such Event of Default have been paid
to Holder; and (z) no other Event of Default has occurred and is continuing.


 


2.                                       Optional
Payments of Principal and Interest. 
At any time prior to the Maturity Date, Debtor may prepay the
outstanding balance of principal and accrued interest, in whole or in part,
without premium or penalty. All payments hereunder received from Debtor by the
Holder shall be applied first to interest and then to principal.


 


3.                                       Issuance
of Warrants. On or prior to May 14, 2004, Debtor shall execute and issue to
the Holder a Warrant in the form attached hereto as Exhibit A pursuant
to which Holder shall have the right to acquire up to 50,000 shares of Common
Stock of Debtor, subject to and in accordance with the terms and conditions set
forth therein. In addition to and cumulative with such other rights and
remedies as Holder may have hereunder and under applicable law, upon the
occurrence of an Event of Default under clause (i) of Section 4
hereof, Debtor shall execute and issue to the Holder another Warrant in the
form attached hereto as Exhibit A pursuant to which Holder shall have
the right to acquire up to an additional 50,000 shares of Common Stock of
Debtor, subject to and in accordance with the terms and conditions set forth
therein.


 

















 


4.                                       Events
of Default. Upon the occurrence of any of the following events of default
(each, an “Event of Default”), unless Debtor shall have cured such default to
the reasonable satisfaction of the Holder within ten (10) business days after
the occurrence of such event of default, then, at the option of the Holder, the
entire balance of principal and interest shall be automatically accelerated and
immediately become due and payable without notice, presentment for payment,
demand, protest, notice of protest or notice of dishonor or other act of any
kind by or on behalf of the Holder, all of which are hereby expressly waived,
and Holder shall be entitled to exercise any and all of its rights and remedies
available to it pursuant to this Note or at law:


 


(i)                                     Debtor
fails to make any payment of principal and interest when due in accordance with
the provisions of this Note;


 


(ii)                                  the
making of an assignment for the benefit of creditors by Debtor or any other
party liable for the payment of this Note, or the voluntary appointment (at the
request of any such party or with the consent of any such party) of a receiver,
custodian, liquidator or trustee in bankruptcy of any such party’s property or
the filing by and such party of a petition in bankruptcy or other similar
proceeding under any law for relief of debtors; or


 


(iii)                               the
filing against any party liable for the payment of this Note of a petition in
bankruptcy or other similar proceeding under any law for relief of debtors, or
the involuntary appointment of a receiver, custodian, liquidator or trustee in
bankruptcy of any such party’s property, where such petition or appointment is
not vacated or discharged within sixty (60) days after the filing or making
thereof.


 


5.                                       Manner
of Payment.  Payments of principal
and interest shall be made in lawful money of the United States of America (by
wire transfer in funds immediately available at the place of payment) to such
account as Holder may designate in writing to Debtor. Any payments due
hereunder which are due on a day which is not a business day shall be payable
on the first succeeding business day and such extension of time shall be
included in the computation of interest due hereunder.


 


6.                                       Debtor
Liable.  Debtor shall remain
primarily liable on this Note until full payment hereof in accordance with the
terms hereof, unaffected by any forbearance or extension of time, any guaranty
or assumption by others, or by any other matter, as to all of which notice is
hereby waived by Debtor. Without limiting the generality of the foregoing, the
granting or allowance of any extension or extension of time for the payment of
any sum or sums due hereunder, or for the performance of any covenant,
condition or agreement thereof or hereof, or any other action or failure to act
by Holder shall in no way release or discharge the liability of Debtor, except
upon full payment of this Note in accordance with the terms of this Note or as
expressly agreed to in writing by Holder. 
The failure of Holder to exercise any right or remedy under this Note
shall not constitute a waiver thereof, unless expressly waived in writing by
Holder.


 


7.                                       Severability.  The terms and provisions of this Note are
severable. In the event of the unenforceabilty or invalidity of any one or more
of the terms, covenants, conditions or provisions of this Note under any
applicable law, such terms, covenant, condition or provision shall be deemed
stricken from this Note and such unenforceability or invalidity shall not
render any other term, covenant, condition or provision hereof unenforceable or
invalid. In the event any waiver by Debtor hereunder is prohibited by
applicable law, such waiver shall be deemed to be deleted herefrom.


 


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8.                                       Extension
of Time.  Holder, at its option, may
extend the time for payment of this Note, postpone the enforcement hereof, or
grant any other indulgences without affecting or diminishing Holder’s right to
recourse against Debtor, which right is expressly reserved.


 


9.                                       Attorneys’
Fees.  If this Note is collected by or
through an attorney at law on behalf of Holder, then Debtor shall be obligated
to pay, in addition to the principal balance and accrued interest hereof,
reasonable attorneys’ fees incurred by Holder and court costs.


 


10.                                 Time
is of the Essence. Time is of the essence with respect to this Note.


 


11.                                 Governing
Law.  The terms and provision of
this Note are governed by and shall be construed in accordance with the laws of
the State of Nevada, without reference to the choice of law principles thereof.


 


 


IN WITNESS WHEREOF, Debtor has executed this Note on the date first
above written.


 


	
   

  	
  ADVANCED MATERIALS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Robert E. Delk, President and CEO

  



 


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EXHIBIT A


 


FORM OF WARRANT


 


Attached.


 


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