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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 15)*
AMERICAN FILM TECHNOLOGIES, INC..
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(Name of Issuer)
COMMON STOCK, $.002 PAR VALUE
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(Title of Class of Securities)
026 038-30-7
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(CUSIP Number)
Barry L. Burten, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
(310) 203-8080
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 18, 1997
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(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).
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SCHEDULE 13D
CUSIP No. 026 038-30-7 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gerald M. Wetzler ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
13,143,667(1) Common Stock
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 13,143,667(1) Common Stock
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,143,667(1) Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17%(1)
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
(1) See the information contained in Item 5(a) of this Amendment No. 15.
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CUSIP No. 026 038-30-7 Page 3 of 7 Pages
This Amendment No. 15 ("Am. No. 15"), 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 fourteen (14) 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 Am. No. 15 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 5
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) Chairman of the Board and Chief Executive Officer of the
Issuer 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.
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CUSIP No. 026 038-30-7 Page 4 of 7 Pages
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Wetzler exercised the options described in Item 4(B) for an
aggregate consideration of $72,000. Mr. Wetzler obtained the $72,000
from his personal funds.
Item 4. Purpose of Transaction.
(A) Since Am. No. 14, Mr. Wetzler disposed of 584,000 shares
via sale (detailed in the Form 4 filings).
(B) This Am. No. 15 includes among shares beneficially owned
by Mr. Wetzler 250,000 shares acquired upon exercise of
his option to purchase common stock at an exercise price
of Twelve Cents ($0.12) per share and an additional
668,790 shares acquired upon exercise of his option to
purchase common stock at an exercise price of Six and
Twenty-Eight Hundredth Cents ($0.0628) per share.
(C) This Am. No. 15 also includes among shares beneficially
owned by Mr. Wetzler an additional 2,997,877 shares
issuable upon exercise of options to purchase common stock
at an exercise price of Six and Twenty-Eight Hundredths
Cents($0.0628) per share. These are part of an option to
purchase 10,000,000 shares, which vests at 1 2/3% per
month, commencing January 31, 1996 and includes shares
exercisable on this option within 60 days of this filing.
This excludes 668,790 shares which have already been
acquired as part of this option and have been identified
in Item 4(B) above.
(D) This Am. No. 15 does not account for the following
unexercised portion of options to purchase shares of
common stock, since they were terminated as of the dates
set forth below as reported in recent Form 4 filings.
(1) 19,750,000 shares of common stock issuable upon
exercise of certain remaining unexercised options to
purchase common stock at an exercise price of Twelve Cents
($0.12) per share. These options were terminated as of
September 12, 1997.
(2) 10,000,000 shares of common stock issuable upon
exercise of options to purchase common stock at an
exercise price of Seven Cents ($0.07) per share. These
options were terminated as of September 12, 1997.
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CUSIP No. 026 038-30-7 Page 5 of 7 Pages
(3) 4,000,000 shares of common stock issuable upon
exercise of options to purchase common stock at an
exercise price of Nine Cents ($0.09) per share. These
options were terminated as of September 18, 1997.
(4) 1,500,000 shares issuable upon exercise of options to
purchase common stock at an exercise price of Nine Cents
($0.09) per share. These options were terminated on
September 18, 1997.
Item 5. Interest in Securities of Issuer.
(A) 13,143,667 shares of Common Stock representing
approximately 17% of the Common Stock outstanding as of
September 15, 1997. 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 he has the right to
acquire within sixty (60) days.
(B) Mr. Wetzler has sole voting and investment power over
13,143,667 shares of Common Stock.
(C) The above figure (13,143,667) for shares beneficially held
by Mr. Wetzler does not include:
(1) 30,000,000 shares issuable upon exercise of option to
purchase common stock at an exercise price of One Cent
($0.01) per share. This option was purchased by Mr.
Wetzler from Issuer on September 12, 1997 for an aggregate
price of $130,000, and will not vest until April 12, 1998.
Accordingly, Mr. Wetzler may not exercise this option to
acquire shares within 60 days. This option terminates on
September 12, 1999.
(2) 6,333,333 shares issuable upon exercise of option to
purchase common stock of the Issuer at an exercise price
of Six and twenty-eight hundredths Cents ($0.0628)per
share. This option is part of an option to purchase an
aggregate of 10,000,000 shares. It was purchased by
Mr. Wetzler on January 1, 1996 and vests at 1 2/3% per
month until its expiration. At this time, 3,666,667 of
the 10,000,000 shares issuable upon exercise of Wetzler's
option to purchase have or will vest within 60 days of
this Am. No. 15. 668,790 of such shares pursuant to such
option were exercised on August 25, 1997 and identified,
together with the 2,997,877 unexercised portion, in
Item 4(C) above as beneficially owned. The remaining
6,333,333 will not vest
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CUSIP No. 026 038-30-7 Page 6 of 7 Pages
within 60 days of this filing, and accordingly are
not yet deemed to be beneficially owned.
(D) Not applicable.
(E) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
(A) January 1, 1996 Option Agreement. Mr. Wetzler was granted
10,000,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of Six and
twenty-eight hundredths Cents ($0.0628) per share. The
option vests at 1 2/3% each month; thus, 166,667 shares
vest each month. The option terminates on January 1, 2001.
(B) June 17, 1996 Option Agreement. Mr. Wetzler purchased
20,000,000 shares issuable upon his option to purchase
common stock at an exercise price of Twelve Cents ($0.12)
per share. This option was terminated as of September 12,
1997. However, prior to such termination, Mr. Wetzler had
acquired 250,000 shares pursuant to such option, as
identified in Item 4(B) above.
(C) January 3, 1997 Option Agreement. Mr. Wetzler purchased
10,000,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of Seven Cents
($0.07) per share. The option was terminated on September
12, 1997 prior to any exercise.
(D) May 12, 1997 Option Agreement. Mr. Wetzler purchased
4,000,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of Nine Cents
($0.09) per share. The option was terminated as of
September 12, 1997 prior to any exercise.
(E) June 6, 1997 Option Agreement. Mr. Wetzler purchased
1,500,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of Nine Cents
($0.09) per share. The option was terminated as of
September 12, 1997 prior to any exercise.
(F) September 12, 1997 Option Agreement. Mr. Wetzler purchased
30,000,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of One Cent
($0.01) per share. The
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CUSIP No. 026 038-30-7 Page 7 of 7 Pages
option vests as of April 12, 1998 and terminates
as of September 12, 1999.
Item 7. Material to be Filed as Exhibits.
(A) The January 1, 1996 Option Agreement is incorporated by
reference to Exhibit 10.9 of the Issuer's Form 10-K annual
report for the fiscal year ended June 30, 1996.
(B) The June 17, 1996 Option Agreement is incorporated by
reference to Exhibit 10.16 of the Issuer's Form 10-K
annual report for the fiscal year ended June 30, 1996.
(C) September 12, 1997 Option Agreement. Mr. Wetzler purchased
30,000,000 shares issuable upon exercise of his option to
purchase common stock at an exercise price of One Cent
($0.01) per share. The option vests as of April 12, 1998
and terminates as of September 12, 1999.
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.
October 2, 1997 /S/ Gerald M. Wetzler
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Date Gerald M. Wetzler
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EXHIBIT 99.(D)
THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN REGIS TERED 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 12, 13 AND 15 BELOW.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") dated September 12, 1997
(the "Effective Date") is entered into 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 and the Holder have entered into the Stock Option
Agreements dated June 17, 1996 (the "June 1996 Option") and January 3, 1997 (the
"January 1997 Option");
WHEREAS, in recognition of Holder's ongoing services on behalf of the
Company, the Company's deteriorating financial condition and Holder's desire to
further invest in the Company, the Holder and the Company wish to terminate the
June 1996 Option and the January 1997 Option and to enter into the Agreement;
WHEREAS, pursuant to the Agreement the Holder agrees to terminate the June
1996 Option and the January 1997 Option and Company has agreed to sell to the
Holder for One Hundred and Thirty Thousand Dollars ($130,000) an Option to
purchase Thirty Million (30,000,000) shares of the Company's, $.002 par value
per share common stock (the "Common Stock") at an exercise price of One Cent
($.01) per share;
NOW, THEREFORE, the Company and the Holder covenant and agree as follows:
1. Termination of Options. As of the Effective Date, the June 1996
Option and the January 1997 Option shall terminate and all unexercised options
issuable pursuant to
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the June 1996 Option and the January 1997 Option shall also terminate and no
longer be exercisable (the "Option Terminations").
2. Grant of the Option. In recognition of the Option Termination and
for the sum of One Hundred and Thirty Thousand Dollars ($130,000)(collectively
the "Option Price"), the receipt of which is hereby acknowledged, the Company
hereby grants to the Holder the Option to acquire from the Company, from time to
time on the terms and conditions set forth herein, all or any portion of an
aggregate of Thirty Million (30,000,000) shares of Common Stock (the "Option
Shares").
3. Exercise Price. The exercise price of the Option Shares shall be One
Cent ($.01) per share (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.
4. Term of the Option. 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 September 12, 1999 (the "Expiration Date").
5. Vesting; Exercise. Commencing as of 5:00 p.m. (New York time) on
April 12, 1998 (the "Vesting Date"), during remainder of 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. Prior to the Vesting Date no
portion of the Option Shares may be exercised.
6. 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 for any change in the aggregate
exercise price resulting from rounding-off of share quantities or prices).
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(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 6(a)
hereof; provided that prior to consummating any Material Alteration Event, the
Company shall have complied with its obligations in Section 7 hereof.
7. Obligation to Redeem Option.
(a) In the event that the Company intends to consummate a Material
Alteration Event at any time during the Option Term, in addition to any rights
granted to the holder by Section 6(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 6 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.
(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 7(a) above. The Company shall pay to Holder the
payment calculated in Section 7(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
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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 7.
8. 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
(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.
9. 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.
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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.
10. Fractional Shares. In no event shall the Company be required to
issue fractional shares upon the exercise of any portion of the Option.
11. Piggy-back Registration Rights; Indemnification.
(a) 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 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
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<PAGE> 6
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
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;
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<PAGE> 7
(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:
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.
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<PAGE> 8
(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)).
(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:
F. 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;
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<PAGE> 9
G. 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;
H. 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
I. 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
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<PAGE> 10
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.
(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 11(f) and 11(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:
(a) 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 11 hereof.
(b) 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.
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<PAGE> 11
(c) The Holder agrees not to sell, transfer or otherwise
voluntarily dispose of any Option Shares that may be 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, an opinion of such counsel to the effect that the proposed
disposition is exempt from registration under the 1933 Act and governing state
securities laws.
(d) 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.
(e) 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.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) 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.
(c) 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 Option Shares to be issued upon the exercise of
all other currently outstanding options granted
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<PAGE> 12
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").
(d) 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.
(e) 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 13(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 13(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 13(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.
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.
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<PAGE> 13
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.
21. 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 21. 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
With copy to:
Lee Mermelstein, Esq.
Jacobson & Mermelstein
52 Vanderbuilt Avenue
New York, New York 10017
To the Company:
4105 Sorrento Valley Boulevard
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<PAGE> 14
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
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<PAGE> 15
22. 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.
23. Counterparts. This Agreement may be executed by the parties in one
or more counterparts, all of which taken together shall constitute one
instrument.
24. 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:__________________________
Harvey Finkel
Its: Chief Financial Officer
"Holder" _____________________________
Gerald M. Wetzler
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EXHIBIT A
Form of Exercise of Option
To: American Film Technologies, Inc.
4105 Sorrento Valley Boulevard
The undersigned holds an option (the "Option") represented by a Stock
Option Agreement (the "Agreement") effective as of September 12, 1997. The
undersigned hereby exercises [the Option] [a portion of the Option] and elects
to purchase ____________ shares of Common 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 8 of the Agreement computed as follows:
__________ shares of Common Stock x $.01 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 11 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 13(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: ______________ __, ____.
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