<PAGE> 1
OMB APPROVAL
OMB Number: 3235-0145
Expires: October 31, 1997
Estimated average burden
hours per response 14.90
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 11)*
AMERICAN FILM TECHNOLOGIES, INC.
- ------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.002 PAR VALUE
- ------------------------------------------------------------------------------
(Title of Class of Securities)
026 038-30-7
- ------------------------------------------------------------------------------
(CUSIP Number)
Robert E. Braun, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
(310) 203-8080
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
June 17, 1996
- ------------------------------------------------------------------------------
(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
SCHEDULE 13D
CUSIP No. 026 038-30-7 Page 2 of 5 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gerald M. Wetzler
###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Personal Funds
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
31,623,000(1) Common Stock
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 31,623,000(1) Common Stock
WITH
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,623,000(1) Common Stock
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.99%(1)
14 TYPE OF REPORTING PERSON*
IN (current?)
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) See the information contained in Item 5(a) of this Amendment No. 11.
<PAGE> 3
CUSIP No. 026 038-30-7 Page 3 of 5 Pages
This Amendment No. 11 (this "Amendment No. 11"), filed on
behalf of Gerald M. Wetzler, a citizen of the United States, amends and
supplements the statement on Schedule 13D, as originally filed with the
Securities and Exchange Commission (the "Commission") on October 25, 1993 with
respect to Mr. Wetzler's ownership of common stock, par value $.002 per share,
of American Film Technologies, Inc. (the "Issuer"), as previously amended by
ten (10) separate amendments thereto, each filed with the Commission (as so
previously amended, the "Schedule 13D"). Unless otherwise indicated, all
information contained in the Schedule 13D shall not be invalidated by the
filing of this Amendment No. 11 and shall remain as true and correct as of the
date hereof with reference to the facts in existence as of the date the
Schedule 13D or amendment containing such information was filed with the
Commission.
Item 1. Security and Issuer.
Securities:
Common Stock, $.002 par value ("Common Stock")
Options to Acquire Common Stock ("Options")
Please see Item 4
Issuer: American Film Technologies, Inc.
300 Park Avenue, 17th Floor
New York, New York 10022
Item 2. Identity and Background.
(a) Gerald M. Wetzler
(b) 300 Park Avenue, 17th Floor, New York,
New York 10022
(c) Investor
300 Park Avenue, 17th Floor
New York, New York 10022
(d) Mr. Wetzler has not, during the last five years, been
convicted in a criminal proceeding.
(e) Mr. Wetzler has not, during the last five years, been
a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a
result of which he was or is subject to a judgment,
decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to,
federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizen of the United States of America.
<PAGE> 4
CUSIP No. 026 038-30-7 Page 4 of 5 Pages
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Wetzler used $200,000 of personal funds to acquire the
Options in Item 4 below.
Item 4. Purpose of Transaction.
On June 17, 1996, the Company entered into an agreement with
Gerald Wetzler, the President of the Company, pursuant to
which Mr. Wetzler purchased, for $200,000, an option to
acquire common stock of the Company or, in the alternative,
preferred stock convertible into common stock of the Company.
The options give Mr. Wetzler the right to purchase up to
20,000,000 shares of common stock of the Company at an
exercise price of $0.12 per share. If the Company does not,
at the time of exercise, have sufficient shares of common
stock authorized for exercise of the option, Mr. Wetzler shall
have the right to purchase 10,000,000 shares of the Company's
authorized but unissued preferred stock at an exercise price
of $0.24 per share. The shares of preferred stock issued to
Mr. Wetzler will vote with the Company's common stock on all
matters, and each share shall entitle the holder to four votes
on any matter brought before the stockholders of the Company.
In addition, the preferred stock shall have a liquidation
preference of $0.24 per share. The shares of preferred stock,
if any, issued to Mr. Wetzler pursuant to the option will
automatically be converted to shares of common stock at an
exchange ratio of two shares of common stock for each share of
preferred stock at such time as sufficient shares of common
stock exist for such conversion, whether by amendment of the
Company's certificate of incorporation, by redemption or
repurchase of outstanding shares, or otherwise.
The Option Agreement is attached as an exhibit to this
Amendment No. 11.
On June 18, 1996, Mr. Wetzler agreed to sell a total of One
Million Five Hundred Thousand (1,500,000) shares of Common
Stock in two transactions, in each case at a purchase price of
$0.05 per share.
Item 5. Interest in Securities of Issuer.
(a) 31,623,000 shares of Common Stock representing 34.99%
of the Common Stock outstanding as of March 1, 1996.
Section 13(d) of the Securities Exchange Act of 1934,
as amended ("Section 13(d)") only obligates Mr.
Wetzler to report beneficial ownership as to those
shares of Common Stock that
<PAGE> 5
CUSIP No. 026 038-30-7 Page 5 of 5 Pages
he has the right to acquire within sixty (60) days.
(b) Mr. Wetzler has sole voting and investment power over
31,623,000 shares of Common Stock. Mr. Wetzler's
voting control over an additional 300,000 shares of
Common Stock owned by Richardson & Associates (as
previously disclosed) expired on March 15, 1996.
(c) As of June 17, 1996, Mr. Wetzler has been granted the
Option to purchase 20,000,000 shares of Common Stock
by the Issuer. Upon certain conditions, the Option
may be used to purchase 10,000,000 shares of
preferred stock, convertible into 20,000,000 shares
of common stock.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Pursuant to the terms of the Option Agreement, Mr. Wetzler was
granted the Option.
Item 7. Material to be Filed as Exhibits.
1. Stock Option Agreement, effective as of June 17,
1996, by and between Gerald M. Wetzler and American
Film Technologies, Inc.
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
<TABLE>
<S> <C>
_________________________ _______________________________
Date Gerald M. Wetzler
</TABLE>
<PAGE> 1
THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT TO COMPLIANCE
WITH, OR THE AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR
SOLICITATION MAY NOT LAWFULLY BE MADE. TRANSFER OF THIS INSTRUMENT AND THE
SECURITIES OFFERED HEREBY IS RESTRICTED AS PROVIDED IN SECTIONS 11, 12 AND 14
BELOW.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is entered into,
effective as of June 17, 1996 (the "Effective Date"), by and between American
Film Technologies, Inc., a Delaware corporation (the "Company"), and Gerald M.
Wetzler (the "Holder").
R E C I T A L S
WHEREAS, the Company wishes to obtain additional financing to fund its
operations through the sale of equity securities and the Holder desires to
invest in the Company; and
WHEREAS, the Company has agreed to sell to the Holder for Two Hundred
Thousand Dollars ($200,000) an Option to purchase either (i) 10,000,000 shares
of the Company's Class A Convertible Preferred Stock (the "Preferred Stock") at
an exercise price of Twenty Four Cents ($.24) per share or (ii) after the
occurrence of the Conversion Events, hereinafter defined, Twenty Million
(20,000,000) shares of the Company's, $.002 par value per share common stock
(the "Common Stock") at an exercise price of Twelve Cents ($.12) per share;
WHEREAS, the Company and the Holder have agreed that the Preferred
Stock shall carry a liquidation preference of Twenty Four Cents ($.24) per
share and will have four votes per share on all matters which come before the
shareholders;
WHEREAS, all issued and outstanding shares of Preferred Stock will
automatically convert into Common Stock upon shareholder approval of an
increase in the authorized Common Stock to no less than 125,000,000 shares
(prior to the effect of any reverse stock split) and the filing of an Amendment
to the Company's Certificate of Incorporation with respect to the
aforementioned increase in number of authorized shares of Common Stock (the
"Conversion Events");
<PAGE> 2
NOW, THEREFORE, the Company and the Holder covenant and agree as
follows:
1. Grant of the Option. For the sum of Two Hundred Thousand
Dollars ($200,000)(the "Option Price"), the receipt of which is hereby
acknowledged, the Company hereby grants to the Holder the Option to acquire
from the Company, from time to time on the terms and conditions set forth
herein, all or any portion of an aggregate of either (a) Ten Million
(10,000,000) shares of Preferred Stock or (b) after the occurrence of the
Conversion Events into Twenty Million (20,000,000) shares of Common Stock (the
Preferred Stock or the Common Stock, as the case may be, hereinafter referred
to as the "Option Shares").
2. Exercise Price. The exercise price of the Option Shares shall
be Twenty Four Cents ($.24) per share for the Preferred Stock and after the
occurrence of the Conversion Events Twelve Cents ($.12) per share for the
Common Stock (the "Exercise Price"). Each of the number of Option Shares into
which the Option Shares is exercisable and the Exercise Price of the Option
Shares is subject to adjustment as provided in Section 5 hereof.
3. Term of the Option. Subject to the provisions of Section 11
hereof, the Option will have a two year term (the "Option Term") commencing on
the date hereof and terminating as of 5:00 p.m. (New York time) on June 17,
1998 (the "Expiration Date").
4. Vesting; Exercise. Subject to the provisions of Section 11
hereof, during the Option Term the Holder shall have the right to exercise all
or any portion of the Option and receive the Option Shares represented thereby.
5. Adjustments Upon Changes in Capitalization or Other
Significant Events.
(a) In the event of any increase or decrease in the
number of the issued shares of Common Stock by reason of a stock dividend,
stock split, reverse stock split or consolidation or combination of shares and
the like at any time or from time to time throughout the term of the Option
such that the holders of outstanding Common Stock shall have had an adjustment
made, without payment therefor, in the number of shares of Common Stock owned
by them or shall have become entitled or required to have had an adjustment
made in the number of shares of Common Stock owned by them, without payment
therefor, there shall be a corresponding adjustment as to the number of shares
of Common Stock into which the Preferred Stock is convertible or upon the
occurrence of the Conversion Events, the Option is exercisable and to the
Exercise Price, with the result that the Holder's proportionate share of Common
Stock which the Option may convert into shall be maintained as before the
occurrence of such event without change in the aggregate exercise price
applicable in the event the Holder elected to exercise the Option in full
(except
-2-
<PAGE> 3
for any change in the aggregate exercise price resulting from rounding-off of
share quantities or prices).
(b) In the event the Company (or any other corporation,
the securities of which are receivable at the time upon exercise of the Option)
shall effect a plan of reorganization, recapitalization, reclassification or
other like capital transaction or shall merge or consolidate with or into
another corporation or shall convey all or substantially all of its assets to
another corporation (collectively, any such event being referred to as a
"Material Alteration Event") at any time or from time to time throughout the
term of the Option, then in each such case the Holder, upon any exercise of the
Option at any time after the consummation of such a Material Alteration Event
shall be entitled to receive (in lieu of the securities or other property to
which the Holder would have been entitled to receive upon exercise prior to
such consummation) the securities or other property to which the Holder would
have been entitled to have received upon consummation of the Material
Alteration Event without adjustment to the aggregate exercise price applicable
in the event the Holder elected to exercise the Option in full (except for any
change in the aggregate exercise price resulting from rounding-off of share
quantities or prices), and all subject to further adjustment as provided in
Section 5(a) hereof; provided that prior to consummating any Material
Alteration Event, the Company shall have complied with its obligations in
Section 6 hereof.
6. Obligation to Redeem Option.
(a) In the event that the Company intends to consummate a
Material Alteration Event at any time during the term of the Option, in
addition to any rights granted to the holder by Section 5(b) hereof, it shall
provide the Holder with written notice thereof no less than thirty (30) days
prior to the consummation thereof. The Holder shall thereafter have the right,
exercisable at any time prior to the third (3rd) business day immediately
preceding the consummation of the Material Alteration Event, to obligate the
Company to redeem the Option in its entirety (but not only a portion thereof)
at a price equivalent to (a) the average of the daily closing prices per share
of Common Stock for the five (5) consecutive business days immediately
preceding the Material Alteration Event on the principal national securities
exchange on which the Common Stock is listed or admitted to trading or, if not
so listed or admitted, on the National Market System, as reported by NASDAQ, or
if not admitted to trading thereon, the average of the closing bid and listed
prices in the over-the-counter market as reported by NASDAQ less (b) the
Exercise Price at such time (as adjusted in accordance with Section 5 hereof),
such resulting amount multiplied by the aggregate number of shares of Common
Stock into which the Option is exercisable (or would be exercisable upon the
occurrence of the Conversion Events) at the time of such redemption.
-3-
<PAGE> 4
(b) In the event that the Holder elects to have the
Option redeemed, it shall surrender the Option along with its notice of the
election to redeem the Option pursuant to 6(a) above. The Company shall pay to
Holder the payment calculated in Section 6(a) hereof, which payment shall be
made within five (5) days after the consummation of the Material Alteration
Event.
(c) If the Company fails to notify the Holder of the
intended consummation of a Material Alteration Event, the Holder's right to
obligate the Company to redeem the Option shall remain in full force and effect
until the earlier of (i) the tenth (10th) business day following the giving of
proper notice by the Company to the Holder as to the Material Alteration Event
or (ii) the expiration of the Option, in either case at the same price as would
have been applicable to such redemption if such notice had been duly delivered.
(d) If the Holder elects to have the Option redeemed and
if the Material Alteration Event is not consummated the Holder's redemption of
the Option shall be nullified, the Option shall be promptly returned to the
Holder and the Holder will continue to have all rights with respect to the
Option as set forth in this Agreement.
(e) If, as a result of any Material Alteration Event, the
Company ceases to exist, the Company shall have caused any successor
corporation thereto to assume the Option and the obligations under this
Agreement, and such successor corporation shall be bound by the provisions
hereunder, including, without limitation, this Section 6.
7. Exercise of the Option. To exercise all or any portion of the
Option, the Holder must do the following:
(a) deliver to the Company a written notice, in the form
of the attached Exhibit A, specifying the number of shares of Preferred Stock
or Common Stock for which the Option is being exercised;
(b) surrender the Agreement to the Company upon complete
exercise of the Option;
(c) tender payment, either in cash or in such other manner as
the Board of Directors of the Company (the "Board"), in its sole discretion,
shall approve, of the aggregate Exercise Price for the Option Shares for which
the Option is being exercised;
(d) pay, or make arrangements satisfactory to the Board
for payment to the Company of, all federal, state and local taxes, if any,
required to be withheld by the Company in connection with the exercise of the
Option or the relevant portion thereof; and
-4-
<PAGE> 5
(e) execute and deliver to the Company any other
documents required from time to time by the Company in order to promote
compliance with the Securities Act of 1933, as amended (the "1933 Act"),
applicable state securities laws, or any other applicable law, rule or
regulation.
8. Delivery of Share Certificate. As soon as practicable after
the Option or any portion thereof has been duly exercised, the Company will
deliver to the Holder a certificate representing the Option Share for which the
Option was exercised. Unless the Option has expired or been exercised in full,
the Company and the Holder agree that the Company may affix to this Agreement
an appropriate notation indicating the number and kind of Option Shares for
which the Option was exercised and return this Agreement to the Holder. If any
law or regulation of the Securities and Exchange Commission (the "SEC") or of
any other federal or state governmental body having jurisdiction shall require
the Company or the Holder to take any action prior to issuance to the Holder of
the Option Shares specified in the written notice of exercise, or if any
listing agreement between the Company and any national securities exchange
requires such shares to be listed prior to issuance, the date for the delivery
of such shares shall be adjourned until the completion of such action and/or
such listing.
9. Fractional Shares. In no event shall the Company be required
to issue fractional shares upon the exercise of any portion of the Option.
10. Shareholders Approval. The Company agrees to recommend to its
shareholders an increase in the amount of its authorized share of Common Stock
to no less than 125,000,000 shares (before any reverse stock split) at its 1995
Annual Meeting of Shareholders (the "Annual Meeting"). The Company further
agrees to take such steps as may be necessary, including but not limited to the
filing of applicable proxy materials with the SEC and the mailing of such proxy
materials to its shareholders, in order to hold the Annual Meeting on or before
August 31, 1996. In the event the Company obtains the approval of the
shareholders for the increase in its authorized shares of Common Stock at the
Annual Meeting, it agrees to take such steps as may be necessary to consummate
all additional Conversion Events as soon thereafter as possible.
11. Piggy-back Registration Rights; Indemnification.
(a) After the occurrence of the Conversion Events,
subject to Section 11(i) below, and so long as Holder holds or has the right to
acquire any Option Share, in the event the Company decides to file a
registration statement ("Registration Statement") under the 1933 Act on SEC
Forms S-1 or S-3 or any other applicable form that covers the offer and sale by
the Company or any holders of Common Stock any of the Company's securities for
money (a "Company Registration"), the
-5-
<PAGE> 6
Company shall give written notice (a "Registration Notice") thereof to the
Holder. If the Company receives a written request to include in the Company
Registration all or a portion of the Holder's shares within thirty (30) days
after a Registration Notice is given, the Company shall include such shares in
the Company Registration. If the Company Registration is to cover an
underwritten offering, such shares shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters.
(b) If in the good faith judgment of the managing
underwriter of an offering related to a Company Registration, to include any or
all of the shares requested to be registered by the Holder would interfere with
the successful marketing of the Company's securities or any other holder's
securities, if such Company Registration of such holder's securities is
pursuant to a demand registration right, then the amount of shares to be
included in such public offering shall be reduced to the amount allowed by the
managing underwriter in its good faith judgment. If such reduction occurs it
shall be on a pro rata basis with all other selling stockholders in such
Company registration.
(c) The Company may decline to file a Registration
Statement after giving a Registration Notice, or withdraw a Registration
Statement after filing and after a Registration Notice, but prior to the
effectiveness thereof; provided (i) that the Company shall promptly notify the
Holder, in writing, of any such action; and (ii) that the Company shall bear
all expenses incurred by the Holder in connection with such withdrawn
Registration Statement.
(d) All expenses incident to the Company's performance of
or compliance with this Agreement including, without limitation (i) all
registration and filing fees, all fees and expenses associated with filings
required to be made with the NASD, as may be required by rules and regulations
of the NASD (other than fees required in excess of fees which would otherwise
pertain in the event that the Holder is a member of the NASD), fees and
expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications for the
Holder's shares), rating agency fees, printing expenses (including expenses of
printing certificates for the Holder's shares in a form eligible for deposit
with the Depository Trust Company and of printing prospectuses if the printing
of prospectuses is reasonably requested by the holders of a Majority Amount),
messenger and delivery expenses, (ii) internal expenses (including, without
limitation, all salaries and expenses of their officers and employees
performing legal or accounting duties), securities acts liability insurance (if
the Company elects to obtain such insurance), (iii) fees and expenses of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), (iv) fees and expenses of
-6-
<PAGE> 7
any special experts retained by the Company in connection with such
registration, and (v) fees and expenses of other persons retained by the
Company, (all such expenses being herein called "Registration Expenses"), will
be borne by the Company, provided that in no event shall Registration Expenses
include (A) any underwriting discounts or commissions attributable to the sale
of the Holder's shares, (B) any fees and expenses of counsel for the Holder if
such counsel is different than counsel for the Company or any accountant or
other professional engaged by the Holder, or (C) any direct out-of-pocket
expenses of the Holder.
In the event that following effectiveness of a Company
Registration, pursuant to which the Holder is a selling stockholder, it becomes
necessary for the Company to prepare and file a supplemental prospectus or
amended prospectus in order to maintain the effectiveness of such registration
statement during the period referred to in Section 9(e)(ii) hereof, the Company
shall pay all printing costs associated with the printing of such supplemental
or amended prospectus to be distributed in connection with sales of securities
pursuant thereto.
(e) If and whenever the Company elects to file a
Registration Statement and is hereby required in connection therewith to
register the Holder's shares, the Company will:
(i) Use its best efforts to effect such
registration to permit the sale of such shares in accordance with the intended
plan of distribution thereof, and pursuant thereto the Company will take the
actions set forth below as expeditiously as possible; provided, however, that
in all cases the Holder shall use its best efforts to cooperate with and assist
the Company in such registration.
(ii) Prepare and file with the SEC as soon as
practicable a Registration Statement with respect to such shares and use its
best efforts to cause such Registration Statement to become effective and
remain effective until the shares covered by such Registration Statement have
been sold;
(iii) Prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement, and such
supplements to the prospectus, as may be requested by the Holder or any
underwriter or as may be required by the rules, regulations or instructions
applicable to the registration form used by the Company or by the 1933 Act or
rules and regulations thereunder to keep the Registration Statement effective
until all shares covered by such Registration Statement are sold in accordance
with the intended plan of distribution set forth in such Registration Statement
or supplement to the prospectus.
(iv) With respect to the following, promptly
notify the Holder and the managing underwriter, if any, and (if requested by
any such person) confirm such notice in writing:
-7-
<PAGE> 8
A. when any prospectus or any
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective;
B. of any request by the SEC for
amendments or supplements to the Registration Statement or the prospectus or
for additional information;
C. of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
D. of the receipt by the Company of any
notification with respect to the suspension of the qualification of the shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
E. of the existence of any fact which
results in the Registration Statement, any prospectus or any document
incorporated therein by reference containing a misstatement.
(v) Make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible time.
(vi) If requested by the managing underwriter, if
any, immediately incorporate in a supplement or post-effective amendment such
information as the managing underwriter agrees should be included therein
relating to the sale of the shares including, without limitation, information
with respect to the number of shares being sold to any underwriters, the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the underwritten offering of the shares to be sold in such
offering; and make all required filings of such supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
supplement or post-effective amendment.
(vii) Furnish to the Holder and the managing
underwriter, if any, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference).
(viii) Deliver to the Holder and any underwriters,
without charge, as many copies of each prospectus (and each preliminary
prospectus) as such persons may reasonably request (the Company hereby
consenting to the use of each such prospectus (or preliminary prospectus) by
the Holder and any underwriters in connection with the offering and sale of the
shares covered by such prospectus (or preliminary prospectus)).
-8-
<PAGE> 9
(ix) Prior to any public offering of shares,
register or qualify or cooperate with any underwriters and their respective
counsel in connection with the registration or qualification of such shares for
offer and sale under the securities or blue sky laws of such jurisdictions and
do anything else necessary or advisable to enable the disposition of the shares
covered by the Registration Statement in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where
it is not then so subject.
(x) Cooperate with the managing underwriter, if
any, to facilitate the timely preparation and delivery of certificates that do
not bear any restrictive legends and that represent the shares to be sold and
cause such shares to be in such denominations and registered in such names as
the managing underwriter may request at least three business days prior to any
sale of shares to the underwriters.
(xi) Use its best efforts to cause the shares
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such shares.
(xii) If the Registration Statement or any
prospectus contains a misstatement, prepare a supplement or post-effective
amendment to the Registration Statement or the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the shares, the
prospectus will not contain a misstatement.
(xiii) Enter into such agreements (including an
underwriting agreement) and do anything else necessary or advisable in order to
expedite or facilitate the disposition of such shares and:
A. make such representations and
warranties to the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary underwritten offerings;
B. obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriter, if
any) addressed to the underwriter, if any, covering the matters customarily
covered in opinions delivered to underwriters in primary underwritten offerings
and such other matters as may be reasonably requested by such underwriters;
-9-
<PAGE> 10
C. obtain "cold comfort" letters and
updates thereof from the Company's independent certified public accountants
addressed to the underwriters, if any; such letters shall be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
by underwriters in connection with primary underwritten offerings; and
D. deliver such documents and
certificates as may be requested by the managing underwriter, if any, to
evidence compliance with clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company.
(f) The Company agrees to indemnify and hold harmless the
Holder from and against all claims arising out of or based upon any
misstatement or alleged misstatement, except insofar as such misstatement or
alleged misstatement was based upon information furnished in writing to the
Company by the Holder for use in the document containing such misstatement or
alleged misstatement.
(g) If any action or proceeding (including any
governmental investigation or inquiry) shall be brought or asserted against the
Holder in respect of which indemnity may be sought from the Company, the Holder
shall promptly notify the Company in writing, and the Company shall assume the
defense thereof, including the employment of counsel satisfactory to the Holder
and the payment of all expenses.
The Holder shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be the expense of the Holder unless (i)
the Company has agreed to pay such fees and expenses, (ii) the Company has
failed to assume the defense of such action or proceeding or has failed to
employ counsel satisfactory to the Holder in any such action or proceeding or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Holder and the Company, and the Holder
shall have been advised by counsel that there may be one or more legal defenses
available to the Holder that are different from or additional to those
available to the Company.
If the Holder notifies the Company in writing that it elects
to employ separate counsel at the Company's expense as permitted by the
provisions of the preceding paragraph, the Company shall not have the right to
assume the defense of such action or proceeding on behalf of the Holder. The
foregoing notwithstanding, the Company shall not be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
the Holder in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances.
-10-
<PAGE> 11
(h) The Holder agrees to indemnify and hold harmless the
Company, its directors, officers, employees, agents and attorneys and each
person, if any, who controls the Company within the meaning of either Section
15 of the 1933 Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "1934 Act") to the same extent as the foregoing indemnity from the
Company to the Holder, with respect to information relating to the Holder
furnished in writing by the Holder for use in any Registration Statement,
prospectus or preliminary prospectus.
In case any action or proceeding shall be brought against the
Company or its directors or officers or any such controlling person, in respect
of which indemnity may be sought against the Holder, the Company or its
directors or officers or such controlling person shall have the rights and
duties given to the Holder by Sections 10(f) and 10(g) above.
(i) Holder's rights hereunder shall terminate at such
time as Holder may within any three-month period sell in the public marketplace
all of the Option Shares owned by Holder pursuant to Rule 144 promulgated under
the 1933 Act or any successor rule or regulation.
12. Nontransferability. The Option is not transferable other than
(a) by operation of law, (b) to one or more trusts of which the Holder is a
trustor, or (c) by will or the laws of descent and distribution. The Option
may be exercised during the lifetime of the Holder only by the Holder or his
court-appointed legal representative.
13. Warranties and Representations of the Holder. By executing
this Agreement, the Holder accepts the Option and represents and warrants to
the Company and covenants and agrees with the Company as follows:
(i) The Holder acknowledges that no registration
statement under the 1933 Act or under any state securities law has been filed
and that the Company has no obligation to file such a registration statement in
the future with respect to the Option or any Option Shares that may be acquired
upon exercise of the Option or any portion thereof, except as otherwise
provided by Section 10 hereof.
(j) The Holder warrants and represents that the Option
and any Option Shares acquired upon exercise of the Option or any portion
thereof will be acquired and held by the Holder for the Holder's own account,
for investment purposes only, and not with a view towards the distribution or
public offering thereof or with any present intention of reselling or
distributing the same at any particular future time.
(k) The Holder agrees not to sell, transfer or otherwise
voluntarily dispose of any Option Shares that may be
-11-
<PAGE> 12
acquired upon exercise of the Option or any portion thereof unless (i) there is
an effective registration statement under the 1933 Act covering the proposed
disposition and compliance with governing state securities laws, (ii) the
Holder delivers to the Company, at the Holder's expense, a "no-action" letter
or similar interpretative opinion, satisfactory in form and substance to the
Company, from the staff of each appropriate securities agency, to the effect
that such shares may be disposed of by the Holder in the manner proposed, or
(iii) the Holder delivers to the Company, or legal counsel designated by the
Holder and reasonably satisfactory to the Company, to the effect that the
proposed disposition is exempt from registration under the 1933 Act and
governing state securities laws.
(l) The Holder acknowledges and consents to the
appearance of a restrictive legend, in substantially the following form:
NOTICE: RESTRICTIONS ON TRANSFER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT UPON
SATISFACTION OF CERTAIN CONDITIONS. INFORMATION CONCERNING
THESE RESTRICTIONS MAY BE OBTAINED FROM THE CORPORATION. ANY
OFFER OR DISPOSITION OF THESE SECURITIES WITHOUT SATISFACTION
OF SAID CONDITIONS WILL BE WRONGFUL AND WILL NOT ENTITLE THE
TRANSFEREE TO REGISTER OWNERSHIP OF THE SECURITIES WITH THE
CORPORATION.
(m) The Holder agrees not to sell, transfer or otherwise
dispose of the Option, except as specifically permitted by this Agreement and
any applicable securities laws.
14. Warranties and Representations of the Company.
(n) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(o) The grant of the Option to the Holder has been duly
authorized by all requisite corporation action on the part of the Company and
the Preferred Stock and upon the occurrence of the Conversion Events the shares
of Common Stock represented by the Option will have been properly reserved for
issuance.
(p) The number of shares of Preferred Stock and upon the
occurrence of the Conversion Events the shares of Common Stock represented by
the Option (when coupled with all shares of Preferred Stock or Common Stock
currently outstanding and all
-12-
<PAGE> 13
Option Shares to be issued upon the exercise of all other currently outstanding
options granted by the Company) does not exceed the number of shares of
Preferred Stock or Common Stock, as the case may be, currently authorized for
issuance by the Company's Certificate of Incorporation, as amended (the
"Certificate").
(q) No consents, approvals or permits are required to be
obtained from any third person, including, without limitation, any securities
commission, before the grant of the Option, nor do any conditions precedent
exist (other than those specifically identified herein) that would impair the
Company's ability to grant the Option hereunder or issue the Option Shares upon
the exercise of all or any portion of the Option.
(r) No Registration Statement involving the Preferred
Stock or Common Stock is currently on file with the SEC.
15. Procedures Upon Permitted Transfer. Before any sale, transfer
or other disposition of any of Option Shares acquired upon exercise of the
Option, the Holder agrees to give written notice to the Company of his or her
intention to effect such disposition. The notice must describe the
circumstances of the proposed transfer in reasonable detail and must specify
the manner in which the requirements of Section 12(c) above will be satisfied
in connection with the proposed disposition. After (a) legal counsel to the
Company has determined in good faith that the requirements of Section 12(c)
above will be satisfied and (b) the Holder has executed such documentation as
may be necessary to effect the proposed disposition, the Company will, as soon
as practicable, transfer such shares in accordance with the terms of the
notice. Any stock certificate issued upon such transfer will bear a
restrictive legend, in the form set forth in Section 12(d) of this Agreement,
unless in the opinion of the Company's legal counsel such legend is not
required. Compliance with the foregoing procedures is in addition to
compliance with any separate requirements applicable to the Holder under the
Certificate or otherwise.
16. Rights as Stockholder. The Option, in and of itself, does not
create rights in the Holder as a stockholder of the Company; provided that upon
any such exercise of the Option or any portion thereof that complies with the
requirements of this Agreement, the Holder shall immediately be vested with all
the rights afforded to other stockholders of the Company, regardless of when
the Company actually delivers certificates representing Option Shares to the
Holder.
17. Further Assurances. The Holder and the Company agree, from
time to time, to execute such additional documents as the other party hereto
may reasonably require to effectuate the purposes of this Agreement.
-13-
<PAGE> 14
18. Binding Effect. This Agreement shall be binding upon the
Holder, the Company, the Holder's heirs, successors and assigns, and any
corporation or other entity that succeeds to the rights and liabilities of the
Company.
19. Cost of Litigation. In any action at law or in equity or any
arbitration to enforce any of the provisions or rights under this Agreement,
the unsuccessful party to such litigation, as determined by the court or
arbitrator in a final judgment or decree, shall pay the successful party or
parties all costs, expenses and reasonable attorneys' fees incurred by the
successful party or parties (including without limitation costs, expenses and
fees on any appeals), and if the successful party recovers judgment in any such
action or proceeding, such costs, expenses and attorneys' fees shall be
included as part of the judgment.
20. Entire Agreement; Modifications. This Agreement constitutes
the entire agreement and understanding between the Company and the Holder
regarding the subject matter hereof. No modification of the Option or this
Agreement, or waiver of any provision of this Agreement, shall be valid unless
in writing and duly executed by the Company and the Holder. The failure of any
party to enforce any of that party's rights against the other party for breach
of any of the terms of this Agreement shall not be construed as a waiver of
such rights as to any continued or subsequent breach.
21. Governing Law. This Agreement shall be governed by and
interpreted under the law of the State of California applicable to agreements
wholly negotiated, executed and to be performed in that state.
22. Notices. Any notices that either party to this Agreement is
required or may desire to give to the other shall be given by sending the same
to the other at the address below, or at such other address as may be
designated in writing by any party in a notice to the other given in the manner
prescribed in this Section 22. All such notices shall be sufficiently given
when deposited so addressed, postage prepaid, in the United States mail. The
addresses to which any such notices shall be given are the following:
To Holder:
Gerald M. Wetzler
c/o American Film Technologies, Inc.
300 Park Avenue, 17th Floor
New York, New York 10022
-14-
<PAGE> 15
With copy to:
Lee Mermelstein, Esq.
Jacobson & Mermelstein
52 Vanderbuilt Avenue
New York, New York 10017
To the Company:
4105 Sorrento Valley Boulevard
San Diego, California 92121
Attention: Chief Financial Officer
With copy to:
Barry L. Burten, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
23. Severability. Whenever possible, each provision of this
Agreement shall be interpreted so as to be effective and valid under applicable
law. If any provision of this Agreement is prohibited or deemed invalid under
any applicable law, however, such provision shall be ineffective only to the
extent of such prohibition or invalidity, and neither the remainder of such
provision nor this Agreement shall be invalidated as a result.
24. Counterparts. This Agreement may be executed by the parties
in one or more counterparts, all of which taken together shall constitute one
instrument.
25. Jurisdiction. The parties hereto agree to submit to the
exclusive jurisdiction of the Superior Court of the State of California, County
of Los Angeles, any controversy, claim or dispute arising out of or relating to
this Agreement or the method and manner of performance thereof or the breach
thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"Company" American Film Technologies, Inc.
By:
--------------------------
John Karl
Its: Chief Financial Officer
"Holder" -----------------------------
Gerald M. Wetzler
-15-
<PAGE> 16
EXHIBIT A
Form of Exercise of Option
To: American Film Technologies, Inc.
4105 Sorrento Valley Boulevard
San Diego, California 92121
The undersigned holds an option (the "Option") represented by
a Stock Option Agreement (the "Agreement") effective as of June 17, 1996. The
undersigned hereby exercises [the Option] [a portion of the Option] and elects
to purchase ____________ shares of {Common Stock}{Preferred Stock} (as defined
in the Agreement) of American Film Technologies, Inc. pursuant to the Option.
This notice is accompanied by full payment of the Exercise Price for the shares
pursuant to Section 4 of the Agreement computed as follows:
__________ shares of Preferred Stock x $.24 per share = $________
__________ shares of Common Stock x $.12 per share = $________
The undersigned acknowledges that no registration statement
under the Securities Act of 1933, as amended, or under any state securities law
has been filed and that the Company has no obligation to file such a
registration statement in the future with respect to the Shares, except as
provided in Section 9 of the Agreement. The undersigned warrants and
represents that the undersigned is acquiring and will hold the shares for the
undersigned's own account, for investment purposes only, and not with a view
towards the distribution or public offering of the shares or with any present
intention of reselling or distributing the shares at any particular future
time. The undersigned consents to the appearance of a restrictive legend, in
the form required by Section 12(d) of the Agreement, on the certificate for the
shares. The undersigned agrees not to sell, transfer or otherwise dispose of
the shares except as specifically permitted by the Agreement or any applicable
securities law expressly permitting such a disposition.
Date: ______________ __, ____.
____________________________________
