Document:

Exhibit 10.34

 

August 10, 2004

 

Special Devices,
Incorporated

14370 White Sage Road

Moorpark, CA  93021

Attn:  James Reeder

 

Re:                               Credit
Facility Provided by Wells Fargo Foothill, Inc. to Special Devices Incorporated

 

Ladies and Gentlemen:

 

This waiver letter agreement (this “Letter
Agreement”) is entered into by and between Special Devices, Incorporated, a
Delaware corporation (“Borrower”), and Wells Fargo Foothill, Inc. (fka
Foothill Capital Corporation, the “Lender”).  Reference is made to that certain Loan and
Security Agreement dated as of June 27, 2001, between Borrower and Lender,
as amended by those certain letter agreements dated as of July 17, 2002,
October 22, 2002, March 28, 2003, June 13, 2003, and
July 29, 2003, and that certain Consent and Amendment No. 1 dated as of
April 16, 2003 (as amended, the “Loan Agreement”).  Capitalized terms used but not otherwise
defined in this Letter Agreement shall have the meanings ascribed to them in
the Loan Agreement.  The term “Loan
Documents” as defined in the Loan Agreement is hereby amended and
supplemented to include this Letter Agreement.

 

Borrower currently has outstanding Term Loans in the
aggregate principal amount of $1,950,850 and has requested that Lender waive
the provisions of Section 2.13(b)(iii) of the Loan Agreement that require
Borrower to exercise the LIBOR Option for LIBOR Rate Loans in integral
multiples of $250,000, and allow Borrower to convert or continue all of its
outstanding Term Loans as LIBOR Rate Loans. 
Lender hereby agrees to waive the provisions of
Section 2.13(b)(iii) of the Loan Agreement with respect to Borrower’s
conversion of the outstanding balance of the Term Loan into a LIBOR Rate Loan,
or continuing any LIBOR Rate Loans currently outstanding; provided, that
Borrower agrees to convert or continue, as applicable, the entire remaining
balance of its outstanding Term Loans into or as LIBOR Rate Loans.

 

Except as specifically set forth above, the respective
rights and obligations of the parties under the Loan Agreement shall remain
unchanged and the Loan Agreement and the Loan Documents shall remain in full
force and effect.  Except as expressly
set forth herein, this Letter Agreement shall not be deemed to be a waiver,
amendment or modification of, or consent to or departure from, any provisions
of the Loan Agreement or the Loan Documents, or to be a waiver of any Default
or Event of Default under the Loan Agreement or the Loan Documents, whether
arising before or after the date hereof or as a result of the transactions
contemplated hereby (except for the specific waiver referenced above), and the
execution or delivery of this Letter Agreement shall not preclude the future
exercise of any right, remedy, power or privilege available to the Lender under
the Loan Agreement or the Loan Documents, nor shall any such action be
construed or deemed to be a satisfaction, novation, cure, modification,
amendment or release of the Loan Agreement or the Loan Documents.

 

 

This Letter Agreement, together with the agreements,
documents and instruments contemplated hereby, constitutes the entire
understanding of the parties with respect to the subject matter hereof and
thereof, and any other prior or contemporaneous agreements, whether written or
oral, with respect hereto or thereto are expressly superseded hereby and
thereby, shall be governed by and construed in accordance with the laws of the
State of California and shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.

 

BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND
FOREVER DISCHARGES THE LENDER AND ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”) FROM ALL
KNOWN CLAIMS, DEMANDS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND
LIABILITIES WHATSOEVER, WHETHER FIXED, CONTINGENT OR CONDITIONAL, OR AT LAW OR
IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS LETTER
AGREEMENT IS EXECUTED THAT BORROWER MAY NOW HAVE AGAINST THE RELEASED PARTIES,
IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND THAT ARISE FROM ANY LOANS,
THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT, THE LOAN
DOCUMENTS OR NEGOTIATION FOR AND EXECUTION OF THIS LETTER AGREEMENT.

 

This Letter Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same instrument. 
The terms and conditions of the Loan Agreement are hereby incorporated
by reference into this Letter Agreement.

 

 

This Letter Agreement shall become effective upon
Borrower returning a executed copy of this Letter Agreement to Lender.

 

Please indicate your agreement by signing in the space
provided below.

 

Very truly yours,

 

	
  WELLS FARGO FOOTHILL, INC.

  	
   

  
	
   

  	
   

  
	
  /s/ JEFFREY ROYSTON

  	
   

  	
   

  
	
   

  	
   

  
	
  AGREED AND ACKNOWLEDGED:

  	
   

  
	
   

  	
   

  
	
  SPECIAL DEVICES, INCORPORATED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ JAMES E. REEDER

  	
   

  	
   

  
	
   

  	
   

  
	
  Name: 

  	
  James E. Reeder

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  VP Finance

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  August 10, 2004<PAGE>

                                                                     EXHIBIT 4.3

                      AA NORTHVALE MEDICAL ASSOCIATES, INC.
                    REDEEMABLE COMMON STOCK PURCHASE WARRANT

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL
BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

   VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON THE LAST DAY OF THE EXERCISE
                            PERIOD, AS DEFINED BELOW

                REDEEMABLE CLASS A COMMON STOCK PURCHASE WARRANT
                                       OF
                      AA NORTHVALE MEDICAL ASSOCIATES, INC.

         This is to certify that, FOR VALUE RECEIVED, ____________ ("Holder"),
is entitled to purchase, subject to the provisions of this Redeemable Class A
Common Stock Purchase Warrant (this "Warrant"), from AA Northvale Medical
Associates, Inc., a New Jersey corporation (the "Company"), at an initial
exercise price per share of $5.70 (the "Initial Exercise Price"), subject to
adjustment as provided in this Warrant, _______________ thousand (_____________)
shares of common stock, no par value ("Common Stock"). The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Stock," and the exercise price for
the purchase of a share of Common Stock pursuant to this Warrant in effect at
any time and as adjusted from time to time is hereinafter sometimes referred to
as the "Exercise Price."

         1. ISSUANCE OF WARRANT. This Warrant is being issued pursuant to that
certain Subscription Agreement dated as of the date hereof between the Company
and the Holder (the "Subscription Agreement"). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed thereto in the
Subscription Agreement. In addition the following terms have the meanings set
forth below:

                  "AAN Warrant" means this Warrant for the purchase of the
number of shares of Common Stock of the Company noted above.

                  "ADMT Warrant" shall mean the Warrant for the purchase of
______ shares of common stock of ADM Tronics Unlimited, Inc., a Delaware
corporation, which was issued to the Holder concurrently with the issuance of
the AAN Warrant. The ADMT Warrant is sometimes referred to herein as the
"Corresponding ADMT Warrant."

                                       1
<PAGE>

                  "Approved Market" shall mean any public market in the United
States on which the AAN Common Stock is trading (it being understood that the
Pink Sheets Quotation Service shall not qualify as an Approved Market for these
purposes).

                  "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities, which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.

                  "Exercise Period" shall mean the period commencing on August
__, 2004 and ending at 5 p.m., eastern time on August __, 2009.

                  "Offering" shall mean the joint offering of units by the
Company and ADMT pursuant to a confidential private placement memorandum dated
May 20, 2004, as amended and supplemented ("PPM").

                  "Permitted Issuances" shall mean: (i) Common Stock issued
pursuant to a stock split or subdivision, (ii) Common Stock issuable or issued
to employees, consultants or directors of the Company directly or pursuant to a
stock plan or other compensation arrangement approved by the Board of Directors
of the Company, provided: however, that such issuances, in the aggregate, shall
be less than 271,000 shares of AAN until such time as the shares of Common Stock
underlying the Warrant are registered for resale with the SEC and listed for
trading on an Approved Market, (iii) Common Stock issued or issuable upon
conversion of the Warrants or any other securities exercisable or exchangeable
for, or convertible into shares of Common Stock outstanding as of May 20, 2004,
and (iv) shares of Common Stock issued or issuable in a transaction approved in
advance by the holders of more than 50% of the then outstanding Warrants.

         2. EXERCISE OF WARRANT/REGISTRATION RIGHTS.

         (a) This AAN Warrant may be exercised in whole or in part at any time
or from time to time from the date that the Common Stock of the Company is
listed on an Approved Market, and that the shares of Common Stock issuable upon
exercise of this AAN Warrant have been registered for resale with the SEC until
the end of the Exercise Period by presentation and surrender of this AAN Warrant
and the ADMT Warrants to the Company at its principal office, or at the office
of its stock transfer agent, if any, with the Purchase Form annexed to this AAN
Warrant duly executed and accompanied by payment of the Exercise Price for the
number of shares of Common Stock specified in the Purchase Form in cash (the
Holder will receive no consideration for the surrender of the ADMT Warrant). If
this AAN Warrant should be exercised in part only, the Company shall, upon
surrender of this AAN Warrant (and the ADMT Warrants) for cancellation, execute
and deliver a new AAN Warrant (and the ADMT Warrants) evidencing the rights of
the Holder hereof to purchase the balance of the shares of Common Stock
purchasable hereunder. Upon receipt by the Company of this AAN Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. As soon as practicable after each exercise of this Warrant, in whole
or in part, and in any event within three (3) business days thereafter, the
Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder hereof
or, subject to Section 6 hereof, as the Holder (upon payment by the Holder of
any applicable transfer taxes) may direct a certificate or certificates for the
number of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock to which the Holder shall be entitled upon exercise plus, in
lieu of any fractional share to which the Holder would otherwise be entitled,
all issuances of Common Stock shall be rounded up to the nearest whole share.

                                       2
<PAGE>

         (b) The Company shall use its best efforts to file a registration
statement (the "Registration Statement") registering the Warrant Stock with the
SEC under the Securities Act of 1933, as amended (the "Act") within 60 days
following the closing of the Offering.

         (c) The Company has also granted "piggyback" registration rights to the
Holder, as more fully described in the Subscription Agreement executed as of the
date hereof.

         3. RESERVATION OF SHARES; FRACTIONAL SHARES. The Company hereby agrees
that at all times there shall be reserved for issuance and/or delivery upon
exercise of this Warrant such number of shares of Common Stock as shall be
required for issuance and delivery upon exercise of this Warrant. No fractional
shares or script representing fractional shares shall be issued upon the
exercise of this Warrant. Instead, the Company will round up to the nearest
whole share.

         4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This AAN Warrant
is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof (along with the Corresponding ADMT Warrant) to the Company
or at the office of its stock transfer agent, if any, for other AAN Warrants
(and Corresponding ADMT Warrants) of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this AAN Warrant (and
Corresponding ADMT Warrant) to the Company or at the office of its stock
transfer agent, if any, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new AAN Warrant (and Corresponding ADMT Warrant) in the
name of the assignee named in such instrument of assignment and this AAN Warrant
(and Corresponding ADMT Warrant) shall promptly be canceled. This AAN Warrant
(and Corresponding ADMT Warrant) may be divided or combined with other AAN
Warrants (and Corresponding ADMT Warrants) which carry the same rights upon
presentation hereof at the office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new AAN Warrants (and Corresponding ADMT Warrants) are to
be issued and signed by the Holder hereof. The term "Warrant" and "AAN Warrant"
as used herein includes any AAN Warrants into which this Warrant may be divided
or exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor. Any such new Warrant executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not this Warrant so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.

                                       3
<PAGE>

         5. RIGHTS AND OBLIGATIONS OF THE HOLDER. The Holder shall not, by
virtue of this Warrant, be entitled to any rights of a stockholder in the
Company, either at law or equity, and the rights of the Holder are limited to
those expressed in the Warrant and are not enforceable against the Company
except to the extent set forth herein. In addition, no provision hereof, in the
absence of affirmative action by Holder to purchase shares of Common Stock, and
no enumeration herein of the rights or privileges of Holder hereof, shall give
rise to any liability of such Holder for the purchase price of any Common Stock
or as a stockholder of Company, whether such liability is asserted by Company or
by creditors of Company.

         6. ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon exercise of each Warrant
shall be subject to adjustment as follows and the Company shall give each Holder
notice of any event described below which requires an adjustment pursuant to
this Section 6 at the time of such event:

         (a) Stock Dividends, Subdivisions and Combinations. If at any time
Company shall:

                  (i) take a record of the holders of its Common Stock for the
         purpose of entitling them to receive a dividend payable in, or other
         distribution of, shares of Common Stock,

                  (ii) subdivide or reclassify its outstanding shares of Common
         Stock into a larger number of shares of Common Stock, or

                  (iii) combine or reclassify its outstanding shares of Common
         Stock into a smaller number of shares of Common Stock or otherwise
         effect a reverse stock split,

then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event, or the record date therefor,
whichever is earlier, would own or be entitled to receive after the happening of
such event, and (ii) the Exercise Price(s) shall be adjusted to equal (A) the
Exercise Price immediately prior to such event multiplied by the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment.

         (b) Certain Other Distributions and Adjustments.

                  (i) If at any time Company shall take a record of the holders
         of its Common Stock for the purpose of entitling them to receive any
         dividend or other distribution of:

                                       4
<PAGE>

                           (A) cash,

                           (B) any evidences of its indebtedness, any shares of
                  its stock or any other securities or property of any nature
                  whatsoever (other than Convertible Securities or shares of
                  Common Stock), or

                           (C) any warrants or other rights to subscribe for or
                  purchase any evidences of its indebtedness, any shares of its
                  stock or any other securities or property of any nature
                  whatsoever (other than Convertible Securities or shares of
                  Common Stock),

then Holder, upon exercise of this Warrant, shall be entitled to receive such
dividend or distribution as if Holder had exercised this Warrant.

                  (ii) A reclassification of the Common Stock (other than a
         change in par value, or from par value to no par value or from no par
         value to par value) into shares of Common Stock and shares of any other
         class of stock shall be deemed a distribution by Company to the holders
         of its Common Stock of such shares of such other class of stock and in
         such event Holder shall be entitled to receive such distribution as if
         Holder had exercised this Warrant and, if the outstanding shares of
         Common Stock shall be changed into a larger or smaller number of shares
         of Common Stock as a part of such reclassification, such change shall
         be deemed a subdivision or combination, as the case may be, of the
         outstanding shares of Common Stock within the meaning of Section 6(a).

         (c) Issuance of Additional Shares of Common Stock.

                  (i) If at any time the Company shall issue or sell any shares
         of Common Stock in exchange for consideration in an amount per share of
         Common Stock less than the then current Exercise Price, other than
         Permitted Issuances, then (A) the Exercise Price shall be adjusted so
         that it shall equal the price determined by multiplying the Exercise
         Price in effect immediately prior to such event by a fraction, of which
         the numerator shall be the number of shares of Common Stock outstanding
         on the date of issuance plus the number of additional shares of Common
         Stock which the aggregate offering price would purchase based upon the
         Exercise Price, and of which the denominator shall be the number of
         shares of Common Stock outstanding on the date of issuance plus the
         number of additional shares of Common Stock issued or issuable in such
         offering, and (B) the number of shares of Common Stock for which this
         Warrant is exercisable shall be adjusted to equal the product obtained
         by multiplying the Exercise Price in effect immediately prior to such
         issue or sale by the number of shares of Common Stock for which this
         Warrant is exercisable immediately prior to such issue or sale and
         dividing the product thereof by the Exercise Price resulting from the
         adjustment made pursuant to clause (A) above.

                  (ii) The provisions of paragraph (i) of this Section 6(c)
         shall not apply to any issuance of shares of Common Stock for which an
         adjustment is provided under Section 6(a) or 6(b). No adjustment of the
         number of shares of Common Stock for which this Warrant shall be
         exercisable shall be made under paragraph (i) of this Section 6(c) upon
         the issuance of any shares of Common Stock which are issued pursuant to
         the exercise of any warrants or other subscription or purchase rights
         or pursuant to the exercise of any conversion or exchange rights in any
         Convertible Securities, if any such adjustment shall previously have
         been made upon the issuance of such warrants or other rights or upon
         the issuance of such Convertible Securities (or upon the issuance of
         any warrant or other rights therefor) pursuant to Section 6(d) or
         Section 6(e).

                                       5
<PAGE>

         (d) Issuance of Warrants or Other Rights. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or purchase any shares of
Common Stock or any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such warrants or
other rights or upon conversion or exchange of such Convertible Securities shall
be less than the Trigger Price, then the number of shares for which this Warrant
is exercisable and the Exercise Price shall be adjusted as provided in Section
6(c) on the basis that the maximum number of shares of Common Stock issuable
pursuant to all such warrants or other rights or necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and the Company shall be deemed to have
received all the consideration payable therefor, if any, as of the date of
issuance of such warrants or other rights. No further adjustment of the Exercise
Price(s) shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon exercise of such warrants or other rights or upon
the actual issuance of such Common Stock upon such conversion or exchange of
such Convertible Securities.

         (e) Issuance of Convertible Securities. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the then current Exercise Price, then the number of shares of Common Stock
for which this Warrant is exercisable and the Exercise Price shall be adjusted
as provided in Section 6(c) on the basis that the maximum number of shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding and
Company shall have received all of the consideration payable therefor, if any,
as of the date of issuance of such Convertible Securities. If any issue or sale
of Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Exercise Price have been or are to be made pursuant to
Section 6(d), no further adjustment of the number of shares of Common Stock for
which this Warrant is exercisable and the Exercise Price shall be made by reason
of such record, issue or sale.

         (f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments which by reason of this
Section 6(f) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 6(f)
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.

                                       6
<PAGE>

         (g) The Company may retain a firm of independent public accountants of
recognized standing selected by the Board (who may be the regular accountants
employed by the Company) to make any computation required by this Section 6.

         (h) In the event that at any time, as a result of an adjustment made
pursuant to Section 6(a), (b) or (c) of this Warrant, the Holder of any Warrant
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Sections 6(a) through (g), inclusive,
of this Warrant.

         (i) Notwithstanding the foregoing, no adjustment shall be effected due
to, or as a result of, any Permitted Issuances.

         (j) Other Action Affecting Common Stock. In case at any time or from
time to time Company shall take any action in respect of its Common Stock, other
than any action described in this Section 6, then, unless such action will not
have a materially adverse effect upon the rights of the Holders, the number of
shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.

         7. REDEMPTION. Provided the shares of Common Stock issuable upon
exercise of this Warrant are registered with the SEC for resale to the public,
or an exemption to the registration requirements is available to the Holder of
this Warrant under Rule 144, the Company may, at its option, call for the
redemption of the then outstanding AAN Warrants in the event that: (i) the
market price of the Common Stock is at or above $31.26 per share for twenty (20)
consecutive trading days ending on the day prior to the date on which the
Company gives notice that it is requiring exercise of the AAN Warrants; and (ii)
the shares of Common Stock issuable upon exercise of the AAN Warrants are
registered with the SEC for resale to the public, or an exemption to the
registration requirements is available to the holder of the AAN Warrants under
Rule 144, provided, however, that the aggregate number of AAN Warrants to be
redeemed shall not exceed the cumulative trading volume for the ten (10)
consecutive trading days prior to such redemption within any thirty (30) day
period. The number of AAN Warrants to be redeemed shall be pro rata among each
holder of the then outstanding AAN Warrants. The redemption price to be paid by
AAN shall be equal to $1.00 per AAN Warrant. If the AAN Warrants are redeemed,
the Corresponding ADMT Warrant shall thereafter be void.

         The Redemption Notice shall be given not later than the thirtieth day
before the date fixed for redemption. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to this
Warrant except to receive the redemption price of $1.00 per Warrant upon
surrender. If the AAN Warrants are redeemed, a proportionate number of the
Corresponding ADMT Warrants shall thereafter be void.

                                       7
<PAGE>

         8. OFFICER'S CERTIFICATE. Whenever the Exercise Price(s) shall be
adjusted as required by the provisions of Section 6 of this Warrant, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price(s) and the adjusted number of
shares of Common Stock issuable upon exercise of each Warrant, determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. A copy of each such officer's
certificate shall be forwarded to Holder.

         9. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (1) if the Company shall pay any dividend or make any distribution
upon Common Stock, or (2) if the Company shall offer to the holders of Common
Stock for subscription or purchase by them any share of any class or any other
rights, or (3) if any capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation or merger of the Company with or
into another entity, tender offer transaction for the Company's Common Stock,
sale, lease or transfer of all or substantially all of the property and assets
of the Company, or voluntary or involuntary dissolution, liquidation or winding
up of the Company shall be effected, or (4) if the Company shall file a
registration statement under the Securities Act, on any form other than on Form
S-4 or S-8 or any successor form, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least ten days prior to the
date specified in clauses (1), (2), (3) or (4), as the case may be, of this
Section 9 a notice containing a brief description of the proposed action and
stating the date on which (i) a record is to be taken for the purpose of such
dividend, distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, tender offer transaction, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, or
(iii) such registration statement is to be filed with the Securities and
Exchange Commission.

         10. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing or surviving corporation and which
does not result in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in case of any sale, lease or conveyance of all or
substantially all of the assets of the Company, the Company shall, as a
condition precedent to such transaction, cause effective provisions to be made
so that (i) the Holder shall have the right thereafter by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization and
other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock which could have been purchased upon exercise
of this Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and (ii) the successor or acquiring
entity shall expressly assume the due and punctual observance and performance of
each covenant and condition of this Warrant to be performed and observed by
Company and all obligations and liabilities hereunder (including but not limited
to the provisions of Section 3 regarding the increase in the number of shares of
Warrant Stock potentially issuable hereunder). Any such provision shall include
provision for adjustments which shall be as nearly equivalent as possible to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in connection
with any such capital reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole in part, for a security
of the Company other than Common Stock, any such issue shall be treated as an
issuance of Common Stock covered by the provisions of Section 6 of this Warrant.

                                       8
<PAGE>

         11. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. This Warrant or
the Warrant Stock or any other security issued or issuable upon exercise of this
Warrant may not be sold or otherwise disposed of except as follows:

                  (i) to a person who, in the opinion of counsel for the
         Company, is a person to whom this Warrant or Warrant Stock may legally
         be transferred without registration and without the delivery of a
         current prospectus under the Act with respect thereto and then only
         against receipt of an agreement of such person to comply with the
         provisions of this Section 11 with respect to any resale or other
         disposition of such securities which agreement shall be satisfactory in
         form and substance to the Company and its counsel; or

                  (ii) to any person upon delivery of a prospectus then meeting
         the requirements of the Act relating to such securities and the
         offering thereof for such sale or disposition.

         12. GOVERNING LAW; JURISDICTION. The corporate laws of the State of New
Jersey shall govern all issues concerning the relative rights of the Company and
its stockholders. All issues concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to the principles of conflicts of law thereof. The parties hereto agree that
venue in any and all actions and proceedings related to the subject matter of
this Warrant shall be in the state and federal courts in and for New York, New
York, which courts shall have exclusive jurisdiction for such purpose, and the
parties hereto irrevocably submit to the exclusive jurisdiction of such courts
and irrevocably waive the defense of an inconvenient forum to the maintenance of
any such action or proceeding. Service of process may be made in any manner
recognized by such courts. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought.

         13. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:

                                       9
<PAGE>

                                     AA Northvale Medical Associates, Inc.
                                     224-S Pegasus Avenue
                                     Northvale, New Jersey 07647
                                     Attn: President
                                     Tel: (201) 767-6040  Fax: (201) 784-0620

                  or such other address as it shall have specified to the
Subscriber in writing, with a copy (which shall not constitute notice) to:

                                     Frank J. Hariton, Esq.
                                     1065 Dobbs Ferry Road
                                     White Plains, New York 10607
                                     Attn: Frank J. Hariton
                                     Tel: 914.674.4373; Fax: 914.693.2963

                  If to the Holder:  ProMed Management, Inc.
                                     237 Park Avenue, 9th Floor
                                     New York, New York 10017
                                     Attention: Barry Kurokawa

                  With copies to:    Greenberg Traurig, LLP
                                     200 Park Avenue, 14th Floor
                                     New York, NY 10166
                                     Facsimile No.: (212) 801-6400
                                     Attn: Jonathan Ain, Esq.

         14. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock underlying this Warrant
upon exercise of this Warrant; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the registration of any certificate for shares of Common Stock underlying
this Warrant in a name other that of the Holder. The Holder is responsible for
all other tax liability that may arise as a result of holding or transferring
this Warrant or receiving shares of Common Stock underlying this Warrant upon
exercise hereof.

                            [Signature page follows]

                                       10
<PAGE>

IN WITNESS WHEREOF, this Warrant has been duly executed as of ____ ___, 2004.

                                           AA NORTHVALE MEDICAL ASSOCIATES, INC.

                                           By: _________________________________
                                           Name:
                                           Title:

                                       11
<PAGE>

                                  PURCHASE FORM

                         Dated: _______________, 20_____

         The undersigned hereby irrevocably elects to exercise the within AAN
Warrant to the extent of purchasing _____ shares of Common Stock and hereby
makes payment of (i) $___________ in payment of the actual exercise price
thereof and (ii) the surrender to the Company of a proportionate amount of the
Corresponding ADMT Warrant for no consideration.

                                                     ---------------------------

<PAGE>

                     INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:_________________________________________________
          (Please typewrite or print in block letters)

Signature:____________________________________________

Social Security or Employer Identification No.:_________________________

<PAGE>

                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfer unto:

Name:____________________________________________________
             (Please typewrite or print in block letters)

Address:_________________________________________________

Social Security or Employer Identification No.:__________________________

The right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint attorney to transfer the same (along with the
Corresponding ADMT Warrant) on the books of the Company with full power of
substitution.

         Dated: _________________, 200_.

                                              Signature:________________________

Signature Guaranteed:

-----------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00078-of-00352.parquet"}]]