<PAGE>
As filed with the Securities and Exchange Commission on April 18, 1997
Registration No. 33- _________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20559
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Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AMERICAN TECHNOLOGIES GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada 95-4307525
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1017 South Mountain Avenue
Monrovia, California 91016
(Address of Principal Executive Offices)
EMPLOYMENT/CONSULTANT AGREEMENT
(Full Title of the Plan)
John R. Collins
Chief Executive Officer
American Technologies Group, Inc.
1017 South Mountain Avenue
Monrovia, California 91016
(818) 357-5000
(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
JOHN M. DAB, ESQ.
General Counsel
American Technologies Group, Inc.
1017 South Mountain Avenue
Monrovia, California 91016
(818) 357-5000
Telecopy: (818) 357-4464
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities to Amount to Price Offering Registration
be Registered be per Price(1) Fee
Registered Share(1)
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Common Stock, $.001 par 65,000 $5.00 $325,000 $100
value shares
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(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c).
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<PAGE>
PROSPECTUS
65,000 Shares
Common Stock
AMERICAN TECHNOLOGIES GROUP, INC.
EMPLOYMENT AND CONSULTANT AGREEMENTS
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus relates to 65,000 shares of Common Stock of American
Technologies Group, Inc., a Nevada corporation (the "Company"), subject to
agreements (the "Agreements") entered into by and between the Company and (i) a
management and financial consulting firm, (ii) an individual and (iii) a
financial public relations firm (individually, an "Employee/Consultant" and
collectively, "Employees/Consultants").
Employees/Consultants who are affiliates ("Affiliates") of the Company, as
such term is defined in Rule 405 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), may not resell under this Prospectus shares
of the Company's Common Stock received pursuant to the Agreements. Any other
Employees/Consultants, however, may from time to time sell, without
restrictions, shares of Common Stock received pursuant to such Agreements.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT.
The date of this Prospectus is April 18, 1997.
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The Company hereby undertakes to provide to each person to whom this
Prospectus is delivered, without charge, upon written or oral request of such
person, a copy of any and all documents required to be delivered pursuant to
Rule 428(b) under the Securities Act and a copy of any or all of the other
documents that have been incorporated by reference in the Registration Statement
on Form S-8, covering the shares of Common Stock under the Consulting
Agreements, filed with the Securities and Exchange Commission concurrently
herewith. Those documents are herein incorporated by reference and may be
obtained by contacting James Nicastro, Vice President, Administration, American
Technologies Group, Inc., 1017 South Mountain Avenue, Monrovia, California
91016, telephone number (818) 357-5000.
TABLE OF CONTENTS
Page
----
Introduction. . . . . . . . . . . . . . . . . . . . . . . . 3
Description of the Agreements . . . . . . . . . . . . . . . 3
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No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, in connection
with the Agreements described in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.
2
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INTRODUCTION
This Prospectus relates to 65,000 shares of Common Stock of the Company
issuable under the Agreements. A Registration Statement on Form S-8 with
respect to such shares of Common Stock has been filed with the Securities and
Exchange Commission concurrently herewith. This Prospectus, which forms a part
of such Registration Statement, sets forth information concerning the Agreements
and the Company and is being distributed to participating Employees/Consultants
pursuant to the Securities Act.
The Company's principal executive offices are located at 1017 South
Mountain Avenue, Monrovia, California 91016; its telephone number is (818) 357-
5000.
DESCRIPTION OF THE AGREEMENTS
DESCRIPTION OF THE AGREEMENTS
Three separate contracts constitute the Agreements under which the
Company's Common Stock is to be issued pursuant to this Prospectus: (i) a
Consulting Agreement dated as of March 14, 1997, by and between the Company and
Pacific Trade & Development Corp. ("Pacific"), (the "Pacific Agreement"); (ii)
an Employment Agreement dated March 1, 1997, by and between the Company and
Lawrence J. Brady ("Brady"), (the "Brady Agreement") and (iii) a Stock Option
Agreement dated as of August 1, 1995, by and between the Company and High Growth
Capital Group ("High Growth"), (the "High Growth Agreement").
PACIFIC AGREEMENT. The Pacific Agreement provides for the issuance of an
aggregate of 200,000 shares of the Company's Common Stock to Pacific for
marketing and financial consulting including general corporate guidance to be
provided to the Company; only 20,000 of these shares are covered by this
Prospectus.
BRADY AGREEMENT. The Brady Agreement provides for the issuance of 20,000
shares of Common Stock to Brady as further consideration for the commitments and
obligations of Brady under the Brady Agreement.
HIGH GROWTH AGREEMENT. The High Growth Agreement was entered into in
connection with a concurrently executed consulting agreement and provides for
the issuance to High Growth of an option to purchase up to 25,000 shares of the
Company's Common Stock at an exercise price of $1.33 per share (the "Option").
TERMINATION OF AGREEMENTS. The Pacific Agreement terminates on March 15,
1998. The Brady Agreement has no definite term and may be terminated by the
Company or Brady at any time. The Option granted under the High Growth
Agreement expires July 31, 1997.
ADMINISTRATION OF THE AGREEMENT. The Pacific Agreement and the High Growth
Agreement are administered by the Chief Executive Officer and President of the
Company. The Brady Agreement
3
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is administered by the Chief Executive Officer and Vice-Chairman of the
Company's Board of Directors. The officers are elected by the Company's Board
of Directors (the same persons, one of whom is also a principal stockholder of
the Company, constitute two of the five Board members), and serve at the
discretion of the Board, until their respective successors are elected and
qualify. Such officers have the authority to construe and interpret any of the
provisions of the Agreements.
Other than as disclosed herein, such officers and Directors of the Company
have no material relationships with the Company, its employees, or its
affiliates.
ERISA
The Agreements and the Common Stock issuable thereunder are not subject to
the Employee Retirement Income Security Act of 1974 ("ERISA").
SOURCE FOR SECURITIES COVERED BY THE AGREEMENTS
The shares subject to the Agreements will be newly issued shares of Common
Stock issued by the Company and are not expected to be purchased in the open
market.
RESTRICTIONS ON TRANSFER OF STOCK
Common Stock issued pursuant to the Agreements may be sold, assigned,
gifted, pledged, hypothecated, encumbered or otherwise transferred or alienated
in any manner by the holder(s) thereof, subject however to such other
restrictions as may be contained in the Agreements and also subject to
compliance with any applicable federal, state or other local law, regulation or
rule governing the sale or transfer of stock or securities.
Affiliates of the Company may not sell shares of Common Stock acquired
pursuant to this Prospectus unless such shares have been registered under the
Securities Act by the Company for resale by Affiliates or an exemption for
such registration is available. Rule 144, promulgated under the Securities
Act, which contains limitations on the manner of sale and the amount of
shares that may be sold, provides an exemption from registration under the
Securities Act.
TAX EFFECT OF AGREEMENTS
The Company has not investigated the tax implications of the Agreements
to the persons who acquire Common Stock thereunder. Employees/Consultants
who receive Common Stock should consult their own tax advisors as to the tax
consequences to them. No representations regarding any such tax consequences
is made by the Company.
4
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing information specified in this Part I are being
separately provided to the Registrant's consultants as specified by Rule
428(b)(1).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed in paragraphs (a) through (c) below are hereby
incorporated by reference in this Registration Statement. All documents
subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates that all securities offered
herein have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereto from the date of filing of such documents.
(a) The Registrant's Annual Report on Form 10-KSB for the year ended
July 31, 1996.
(b) All other reports filed by Registrant pursuant to Sections 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by the above-
referenced Annual Report.
(c) The section of the Registrant's Registration Statement on Form 10,
filed with the Commission on January 24, 1994, entitled "Description of
Securities", as amended by Amendment Nos. 1, 2, 3 and 4 filed with the
Commission on February 22, 1994, June 17, 1994, July 5, 1994 and July 15, 1994,
respectively.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
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Item 6. Indemnification of Directors and Officers.
1. Section 78.751 of the Nevada Revised Statutes permits the
indemnification of officers, directors, employees and agents of the Registrant
and requires indemnification in certain instances. Such provision reads as
follows:
78.751. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
ADVANCEMENT OF EXPENSES.
1. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he acted in good faith and
in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that,
with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation,
or is or was
II-2
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serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections 1 and 2, or in defense of any claim, issue or matter
therein, he must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by
a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
II-3
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(c) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses
of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the certificate or articles of incorporation or any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise, for either an action in his official capacity or an
action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection
2 or for the advancement of expenses made pursuant to subsection
5, may not be made to or on behalf of any director or officer if
a final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation of
the law and was material to the cause of action.
II-4
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(c) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
2. Article VI INDEMNIFICATION of the Registrant's Amended and Restated
Bylaws provides in material part as follows:
"Section 1. DEFINITIONS. For the purposes of this Article,
"agent" means any person who is or was a director, officer, employee,
or other agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee, or agent of
another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, or was a director, officer, employee, or
agent of a foreign or domestic corporation or other enterprise which
was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
"Section 2. INDEMNIFICATION OF CORPORATE AGENTS. The
corporation shall indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise to the fullest
extent permitted by Nevada law and permitted by, or not inconsistent
with, the Articles of Incorporation. The rights conferred on any
person above shall be not be exclusive of any other right such person
may have or hereafter acquire under any statute, provision of the
Articles of Incorporation, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise..
"Section 3 ADVANCEMENT OF EXPENSES. The expenses of officers
and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and
in advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court
of competent jurisdiction that he is not entitled to be indemnified by
the corporation. The provisions of this subsection
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do not affect any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled under any
contract or otherwise by law.
"Section 4. INDEMNIFICATION CONTRACTS. The Board of Directors
is authorized to enter into a contract with any director, officer,
employee or agent of the corporation, or any person serving at the
request of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing for
indemnification rights equivalent to, or if the Board of Directors so
determines, greater than, those provided in Section 2 of this Article
VI.
"Section 5. INSURANCE. The corporation shall have [the] power
to purchase and maintain insurance or make other financial
arrangements on behalf of any agent of the corporation for any
liability asserted against or incurred by the agent in such capacity
or arising out of the agent's status as such whether or not the
corporation would have the power to indemnify the agent against such
liability under the provisions of this Article. The other financial
arrangements made by the corporation may include, but shall not be
limited to, any of the arrangements set forth in the Nevada General
Corporation Law, as the same may be amended from time to time."
Item 7. Exemption From Registration Claimed.
Not applicable.
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Item 8. Exhibits.
Exhibit
Numbers
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5.1 Opinion of John M. Dab.
10.1 Employment Agreement between the Company
and Lawrence J. Brady dated March 1, 1997.
10.2 Consulting Agreement between the Company
and Pacific Trade & Development Corp. dated March 14, 1997.
10.3 Stock Option Agreement dated as of August 1, 1995,
by and between the Company and High Growth Capital Group.
24.1 Consent of John M. Dab (included in Exhibit 5.1).
24.2 Consent of Arthur Andersen LLP.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d)
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of the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Monrovia, State of California, on
this 17th day of April, 1997.
AMERICAN TECHNOLOGIES GROUP, INC.
By:/s/ John Collins
-----------------------------
JOHN R. COLLINS
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John Collins Chairman of the Board, April 17, 1997
- ---------------- Chief Executive Officer
JOHN R. COLLINS and Treasurer (Principal)
Financial and Accounting
Officer)
/s/ Shui-Yin Lo Director of Research and April 17, 1997
- --------------- Development and a Director
SHUI YIN LO
/s/ David Gann Director of Marketing April 17, 1997
- -------------- and a Director
DAVID GANN
/s/ Hugo Pomrehn Vice Chairman of the Board April 17, 1997
- ----------------
HUGO POMREHN
/s/ Lawrence J. Brady President and a Director April 17, 1997
- ---------------------
LAWRENCE J. BRADY
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EXHIBIT INDEX
Page
Exhibit ----
Number
- ------
5.1 Opinion of John M. Dab.
10.1 Employment Agreement between the Company and
Lawrence J. Brady dated March 1, 1997.
10.2 Consulting Agreement between the Company and Pacific
Trade & Development Corp. dated March 14, 1997.
10.3 Stock Option Agreement dated as of August 1, 1995, by
and between the Company and High Growth Capital Group
24.1 Consent of John M. Dab (included in Exhibit 5.1).
24.2 Consent of Arthur Andersen LLP.
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Exhibit 5.1
[LETTERHEAD]
April 18, 1997
Board of Directors
American Technologies Group, Inc.
1017 S. Mountain Ave.
Monrovia, California 91016
Gentlemen:
As General Counsel for American Technologies Group, Inc. (the "Company"),
in connection with the Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission on or
about April 18, 1997 relating to the issuance and sale of up to 65,000 shares
of the Company's Common Stock (the "Shares"), as more fully described in the
Registration Statement, I have examined such corporate records and other
documents and such questions of law as I have considered necessary or
appropriate for the purposes of this opinion and, on the basis of such
examination, advise you that in my opinion the Shares will be, when issued
and sold as specified in the Registration Statement, validly issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. This consent is not to be construed as an admission
that I am a person whose consent is required to be filed with the
Registration Statement under the provisions of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ John M. Dab
John M. Dab
General Counsel
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
March 1, 1997 by and between AMERICAN TECHNOLOGIES GROUP, INC., a Nevada
corporation ("Employer"), and LAWRENCE J. BRADY ("Employee"), and is made with
respect to the following facts:
RECITALS
A. WHEREAS, Employer desires to obtain the services of Employee as
President; and
B. WHEREAS, Employee is willing to provide such services to Employer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration the receipt of which
is hereby acknowledged, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. EMPLOYMENT.
1.1 TITLE, BOARD MEMBERSHIPS. Employer hereby engages Employee and
Employee hereby accepts employment with Employer, to perform Employee's services
as President of Employer and such other services as may be required of Employee
under this Agreement, on the terms and conditions hereinafter set forth.
Employee further agrees to accept election and to serve during all or any part
of the Term (as that term is defined in Section 2 hereof) of this Agreement as
an officer and/or director of Employer and of any subsidiary or affiliate of
Employer, without compensation therefor, except as set forth in this Agreement,
if elected to any such position by the shareholders of Employer or by the Board
of Directors of Employer (the "Board") or of any subsidiary or affiliate, as the
case may be.
1.2 DUTIES, PLACE OF EMPLOYMENT. Employee shall perform all duties
customarily performed by Employees employed in the capacity of President of
companies engaged in the business of Employer and shall use and devote his full
time and efforts in the discharge of his duties. Employee shall perform his
duties at Employer's principal Employee offices in Los Angeles County, but shall
travel to and from such county as may be reasonably required in the performance
of such duties. Subject to the terms of this Agreement, Employee shall comply
promptly and faithfully with Employer's reasonable instructions, directions,
requests, rules and regulations. Employer shall not be deemed to have waived
the right to require Employee to perform any duties hereunder by assigning
Employee to any other duties or services.
2. TERM. The term ("Term") of this Agreement and Employee's employment
hereunder is for no definite period and may be terminated at any time by either
party, with or without cause or advance notice (called "at will" status). Any
change to this "at will" employment status may only be changed by a written
agreement between Employee and the Board.
3. COMPENSATION. During the Term as full compensation for all services
to be performed by Employee pursuant to this Agreement, Employer agrees to pay
Employee the base salary
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and bonuses set forth in this Section 3, in addition to such other benefits and
compensation as are provided elsewhere in this Agreement.
3.1 BASE SALARY.
(a) Employee shall be entitled to an annual base salary of One
Hundred Thirty Thousand Dollars ($130,000) during the first year of employment
under this Agreement. The base salary shall be paid to Employee bi-weekly
during the Term.
(b) On or before August 1, 1997, the Board of Directors of
Employer shall consider an increase in the base compensation payable to Employee
under Section 3.1 (a) provided however, nothing herein contained shall preclude
the Board of Directors from authorizing an increase in the base salary over and
above the base salary at any time payable to him under this Agreement.
3.2 COMMITMENT PAYMENTS. As further consideration for the commitment
and obligations of Employee hereunder, upon execution hereof:
(a) Employer agrees to issue to Employee 20,000 shares of the
common stock (the "Common Stock") of Employer (the "Shares") valued at $1.65 per
share. The Shares to be delivered to Employee hereunder shall be delivered upon
registration of the Shares under the Securities Act of 1933 on Form S-8.
(b) Employer shall issue to Employee an option (the "Option") to
purchase five hundred thousand (500,000) shares of Common Stock at an exercise
price of $3.00 per share. The Option shall expire on September 1, 2005 and vest
at the rate of 25% on September 1, 1997, and each of the following three
anniversaries thereof, provided the Agreement is in effect on such vesting date.
The option agreement shall be in the form of Exhibit A, attached hereto.
Employee understands that the Option and the shares of Common Stock underlying
the Option have not been registered under federal or state securities laws and
may not be transferred without registration thereunder or pursuant to an
exemption therefrom.
3.3 BONUS. Nothing herein contained shall preclude the Board of
Directors of Employer from authorizing the payment to Employee of a bonus,
whether in cash or capital stock, based upon Employee's performance or other
reasonable criteria. The payment of such additional compensation shall not
operate as an amendment obligating Employer to make any similar payment or to
pay additional compensation at any future time or for any future period or be
deemed to affect the base salary in any manner.
3.4 ADDITIONAL BENEFITS.
(a) MEDICAL INSURANCE. Employer shall provide Employee during
the Term with group accident, medical, dental and hospital insurance coverage,
provided however, that such insurance shall only be provided when determined by
the Board of Directors to be within the financial resources of the Company.
(b) BENEFITS GENERALLY OFFERED. In addition to any other
compensation or benefits to be received by Employee pursuant to the terms of
this Agreement, Employee shall be
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entitled to participate, to the extent allowable in accordance with his status,
in all employee benefits offered from time to time by Employer to its senior
officers; including, but not limited to, stock option plans, group life,
disability and any other insurance and profit sharing plans.
(c) EMPLOYER'S APARTMENT. Employee may occupy Employer's
apartment for a limited period of time to enable Employee to locate Employee's
own residence in Los Angeles County.
4. VACATION. Employee shall be entitled to two (2) weeks paid vacation
for each year worked during the Term.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. Employee's employment under the terms of
this Agreement may be terminated immediately, at the option of Employer, for
"Cause" as that term is defined in Section 6.2(a).
5.2 TERMINATION FOR DISABILITY. Employee's employment under the
terms of this Agreement may be terminated immediately, at the option of
Employer, for "Disability" as that term is defined in Section 6.2(b).
5.3 TERMINATION BY DEATH. Employee's employment under the terms of
this Agreement shall be terminated upon the death of Employee.
6. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
6.1 PAYMENTS. In the event of the termination of Employee's
employment under this Agreement by Employer, other than termination for death or
"Cause," Employee shall have no duty to mitigate and Employer shall pay to
Employee one (1) months base salary if the termination occurs prior to
expiration of two (2) years from the commencement of the Term, two (2) months
base salary if the termination occurs during the one (1) year period commencing
on the second anniversary of the Term or three (3) months base salary if the
termination occurs after the third anniversary of the Term.
6.2 DEFINITIONS.
(a) CAUSE. Termination by the Board of Employee's employment
for "Cause" shall mean a termination upon (i) the good faith determination of
the Board that Employee has failed to perform fully or faithfully Employee's
obligation under of this Agreement, (ii) the final conviction of Employee for a
felony involving willful conduct materially injurious, harmful or detrimental to
Employer; (iii) Employee commits an act or omits to take action in bad faith or
to the detriment of Employer, (iv) Employee fails or refuses to comply with the
policies, standards or regulations of Employer or (v) Employee violates any of
the warranties contained in Section 9 hereof. For the purposes of this Section
6.2(a), "final conviction" and shall be and mean a conviction or an
adjudication, as the case may be, that is no longer appealable due to the
passage of time or otherwise, and with respect to which a final judgment has
been entered on the judgment roles of the court in which the action was
commenced. Further, for the purposes of this Section 6.2(a), no act or omission
to act on Employee's part shall be considered "Willful" unless done, or omitted
to be done, by Employee in
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bad faith and without reasonable belief that Employee's act or omission was in
the best interest of Employer.
(b) DISABILITY. Termination of Employee's employment for
"Disability" shall mean a termination following absence from Employee's full-
time duties with Employer for one hundred eighty (180) consecutive days as a
result of Employee's incapacity due to physical or mental illness and Employee's
failure to return to the full-time performance of Employee's duties within
thirty (30) days after written notice of termination is given to Employee.
7. TRADE SECRETS. The parties acknowledge and agree that during the Term
and in the course of the discharge of his duties hereunder, Employee shall have
access to and become acquainted with information concerning the operations of
Employer, including, without limitation, financial, sales, customer, supplier,
operations, personnel and other information that is owned by Employer and
regularly used in the operation of Employer's business and that this information
constitutes Employer's trade secrets. Employee agrees that he shall not
disclose any such trade secrets, directly or indirectly, to any other person or
use any of them in any way either during the Term or at any time thereafter,
except as required in the course of his employment hereunder.
8. NON-COMPETITION. During the term hereof, and for three years
thereafter, Employee shall not, directly or indirectly, whether as an employee,
employer, consultant, agent, officer, principal, partner, stockholder, director
or any other individual or representative capacity, engage or participate in any
business that is in competition in any manner with the business of Employer.
9. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES. Employee hereby warrants
and represents to ATG as follows, each of which representation and warranty is
material and is being relied upon by ATG and each of which is true at and as of
the date hereof and as of the issuance of the Shares and each such issuance:
9.1 INVESTMENT INTENT. Employee is acquiring the Shares for his own
account and not with a view to their resale or distribution and that he is
prepared to hold the Shares for an indefinite period and has no present
intention to sell, distribute or grant any participating interests in the
Shares. Employee hereby acknowledges the fact that the Shares will not be
registered under the Securities Act of 1933, as amended (the "1933 Act") or
applicable state securities laws.
9.2 RESTRICTED SECURITIES. that Employee has been informed that the
Shares may not be resold or transferred unless first registered under applicable
Federal and State securities laws or unless an exemption from such registration
is available. Accordingly, Employee hereby acknowledges that he is prepared to
hold the Shares for an indefinite period of time.
9.3 EMPLOYEE'S KNOWLEDGE. that Employee has a preexisting business
or personal relationship with ATG, that he is aware of the business affairs and
financial condition of ATG and that he has such knowledge and experience in
business and financial matters with respect to companies in business similar to
ATG to enable Employee to evaluate the risks of the prospective investment and
to make an informed investment decision with respect thereto. Employee further
acknowledges that ATG has made available to Employee the opportunity to ask
questions and receive answers from ATG concerning the terms and conditions of
the issuance of the Shares and that Employee could be
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<PAGE>
reasonably assumed to have the capacity to protect his own interests in
connection with such investment.
9.4 SPECULATIVE INVESTMENT. that Employee realizes that his purchase
of the Shares will be a speculative investment and that Employee is able,
without impairing his financial condition, to hold the Shares for an indefinite
period of time and to suffer a complete loss of his investment.
9.5 NO INCONSISTENT OBLIGATIONS. Employee is under no contractual or
other restriction or obligation, compliance with which is inconsistent with the
execution of this Agreement, the performance of Employee's obligations hereunder
or the other rights of Employer hereunder; and
9.6 NO INFIRMITY. Employee is under no physical or mental disability
that would hinder the performance of Employee's obligations under this
Agreement.
10. PERSONAL NATURE. This Agreement is personal, being entered into upon
the singular skill, qualifications and experience of Employee. Employee shall
not assign this Agreement or any rights, benefits, duties or obligations
hereunder without the express written consent of Employer. Employee hereby
grants to Employer the right to use Employee's name, likeness and/or biography
in connection with the services performed by Employee hereunder and in
connection with the advertising or exploitation of any project with respect to
which Employee performs services hereunder.
11. NOTICES. Any and all notices or other communications required or
permitted by this Agreement or by law shall be deemed duly served and given when
actually received by personal delivery or by certified mail, return receipt
requested, with first class postage prepaid thereon, to the party to whom such
notice or communication is directed, addressed as follows:
EMPLOYER: AMERICAN TECHNOLOGIES GROUP, INC.
1017 S. Mountain Avenue
Monrovia, CA 91016
EMPLOYEE: LAWRENCE J. BRADY
RR 1 Box 83A
Jefferson, New Hampshire 03583
(603) 586-7111 (telephone)
Each of the parties hereto may change its address for purposes of this
Section 11 by giving written notice of such change in the manner provided for in
this Section 11.
12. GOOD FAITH. All approvals and consents required to be given by any
party to this Agreement shall be given or withheld in good faith and may not be
unreasonably withheld. Each party hereto shall use due diligence in its attempt
to accomplish any act required to be accomplished by that party.
13. ATTORNEY'S FEES AND EXPENSES. In the event that it should become
necessary for any party to this Agreement to bring an action, including
arbitration, either at law or in equity, to enforce or interpret the terms of
this Agreement, the prevailing party in such action shall be entitled to
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<PAGE>
recover its reasonable attorneys' fees and expenses as a part of any judgment
therein, in addition to any other award which may be granted.
14. APPLICABLE LAW/VENUE. This Agreement is executed and intended to be
performed in the State of California and the laws of such state shall govern its
interpretation and effect. If suit is instituted by any party hereto by any
other party hereto for any cause or matter arising from or in connection with
the respective rights or obligations of the parties hereunder, the sole
jurisdiction and venue for such action shall be the Superior Court of the State
of California in and for the County of Los Angeles.
15. INTEGRATED AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior employment agreements between the parties and all such
prior employment agreements shall be deemed voluntarily terminated by the mutual
consent of the parties hereto and shall be of no further force or effect.
16. SEVERABILITY. Any provision in this Agreement which is, by competent
judicial authority, declared illegal, invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such illegality, invalidity or unenforceability without invalidating the
remaining provisions hereof or affecting the legality, validity or
enforceability of such provision in any other jurisdiction. The parties hereto
agree to negotiate in good faith to replace any illegal, invalid or
unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or otherwise to amend this Agreement, including the provision
relating to choice of law, to achieve such result.
16. WAIVER No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYEE: /s/ Lawrence J. Brady
---------------------------
Lawrence J. Brady
EMPLOYER: American Technologies Group, Inc.,
a Nevada corporation
By: /s/ John Collins
------------------------
John Collins
Title: Chief Employee Officer
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CONSULTING AGREEMENT
THIS AGREEMENT is made as of the 14th day of March, 1997 by and between
Pacific Trade and Development Corp., a Nevada corporation (hereinafter called
Pacific), and American Technologies Group Inc., a Nevada corporation
(hereinafter called ATG).
R E C I T A L S:
WHEREAS, ATG desires management, marketing and financial consulting
including general corporate guidance (the "Services");
WHEREAS, Pacific is capable of providing such consulting services.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, ATG and Pacific hereby agree as follows:
1. ENGAGEMENT. Upon the terms, and subject to the terms and conditions,
contained herein, ATG hereby engages Pacific, through the services of Donald W.
Wright, among others, to provide the Services and Pacific agrees to serve as a
special consultant to the Chairman of the Board and to provide the Services.
Pacific shall devote such time and attention as Pacific reasonably determines is
necessary to successfully provide the Services. As part of Pacific's
obligations hereunder, Pacific shall:
a) Familiarize itself as required with the business, operations,
properties, conditions (financial and otherwise) and prospects of ATG and its
subsidiaries;
b) Consult and assist the Company in developing a general strategy
regarding corporate structure, mergers and acquisitions;
c) Render such other consulting services as ATG may from time to time
request.
2. FEES. As compensation for the Services rendered by Pacific hereunder,
ATG shall pay Pacific at the rate of $8,000 per month, in arrears, prior to the
last day of the month during which such payment was earned, with the first
payment due on or before April 30, 1997.
<PAGE>
3. STOCK OPTION.
3.1 As additional compensation to Pacific hereunder, ATG hereby
grants to Pacific the right and option to purchase (the "Option"), on the terms
and conditions hereinafter set forth, an aggregate of 200,000 shares of the
common stock (the "Common Stock") of ATG (the "Option Shares") at an exercise
price of $2.50 per share, payable in cash. The Option shall vest in twenty-five
percent (25%) increments on March 15, June 15, September 15 and December 15,
1997 provided the Agreement is in effect on such date.
3.2 Once exercisable, the Option shall remain so exercisable until
February 28, 2001 and thereafter, if not exercised, shall be null and void.
3.3 Pacific and Donald W. Wright ("Wright") hereby warrant and
represent to ATG as follows, each of which representation and warranty is
material and is being relied upon by ATG and each of which is true at and as of
the date hereof and will be true at the time of exercise of the Option:
3.3.1 that Pacific is acquiring the Option, and if Pacific
exercises the Option will acquire the Option Shares, for Pacific's own account
and not with a view to their resale or distribution and that Pacific is prepared
to hold the Option and the Option Shares, if acquired, for an indefinite period
and has no present intention to sell, distribute or grant any participating
interests in the Option or the Option Shares, if acquired. Pacific hereby
acknowledges the fact that the Option Shares will not be registered under the
Securities Act of 1933, as amended (the "1933 Act") or any applicable state
securities laws.
3.3.2 that Pacific has been informed that the Option and the
Option Shares may not be resold or transferred unless first registered under
Federal and state securities laws or unless an exemption from such registration
is available. Accordingly, Pacific hereby acknowledges that Pacific is prepared
to hold the Option and the Option Shares for an indefinite period of time.
3.3.3 that Pacific has a preexisting business or personal
relationship with ATG, that it is aware of the business affairs and financial
condition of ATG and that Pacific has such knowledge and experience in business
and financial matters with respect to companies in business similar to ATG to
enable Pacific to evaluate the risks of the prospective investment and to make
an informed investment decision with respect thereto. Pacific further
acknowledges that ATG has made available to Pacific the
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<PAGE>
opportunity to ask questions and receive answers from ATG concerning the terms
and conditions of the issuance of the Option and the Option Shares and that
Pacific could be reasonably assumed to have the capacity to protect its own
interests in connection with such investment.
3.3.4 that Pacific realizes that its purchase of the Option and
the Option Shares is a speculative investment and that Pacific is able, without
impairing its financial condition, to hold the Option and the Option Shares for
an indefinite period of time and to suffer a complete loss of its investment.
3.3.5 that Wright is the principal shareholder of Pacific and
that at least 50% of the outstanding capital stock of Pacific is owned by
Accredited Investors as defined by the California Corporations Code.
4. NO TRANSFER: Pacific shall not transfer, encumber, alienate or
dispose, by gift or otherwise, all or any part of the Option Shares, except to
officers or directors of Pacific or as may be permitted by law.
5. RESTRICTIVE LEGEND: In order to reflect the restrictions on
disposition of the Option Shares, the stock certificates for such shares will be
endorsed with the a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE LAW, AND MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREUNDER OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
6. TERM.
6.1 This Agreement shall commence on the date hereof and shall
continue until March 15, 1998, unless terminated by the mutual agreement of the
parties or by ATG for Cause.
6.2 Termination by ATG of this Agreement for "Cause" shall mean a
termination upon the good faith determination of ATG that Pacific has failed to
perform fully or faithfully its obligation under this Agreement.
6.3 Notwithstanding termination of this Agreement, Sections 3, 4, 7,
8 and 9 hereof shall survive, provided however, Section 8 shall only survive
termination for a period of three years.
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7. CONFIDENTIAL INFORMATION.
7.1 DEFINITION. Pacific recognizes that the relationship created by
this Agreement may involve access by Pacific to information of substantial value
to ATG, including, but not limited to, designs, drawings, plans, software,
programs, material and manufacturing specifications, devices, trade secrets,
applications, formulae, know-how, methods, techniques, and processes (whether
related to ATG's patents, or otherwise), as well as financial, business,
marketing and product development information, and customer lists relating to
the ATG's products and operations (collectively, "Confidential Information"),
provided that Confidential Information shall not include information:
a) In the public domain or which subsequently falls into the public
domain;
b) Which Pacific can prove was known through a source independent of
ATG prior to any communication by ATG; or
c) Disclosed to Pacific in good faith by a third party having a legal
right to do so.
7.2 NON-DISCLOSURE. Pacific acknowledges and agrees that ATG
represents that it owns or has the legal right to all right, title and interest
in and to the Confidential Information. Pacific further agrees that it shall
(i) maintain the secrecy and confidentiality of all Confidential Information
which comes to its attention, (ii) take all necessary precautions to prevent any
disclosure of Confidential Information by any of its employees or agents, and
(iii) during the term of this Agreement and for so long as Confidential
Information does not enter into the public domain through no act or omission of
Pacific, neither publish, disclose nor disseminate any part of such Confidential
Information in any manner, or use the same, without the prior written consent of
ATG.
7.3 INJUNCTIVE RELIEF. Pacific understands and agrees that the
Confidential Information has special value, the loss of which cannot be
reasonably or adequately compensated in damages or in an action at law, and
therefore, in the event of any breach or violation of the provisions of this
Section 7 by Pacific, ATG shall be entitled to equitable relief by way of
injunction without bond and without the necessity of proving actual damages, in
addition to, and not in limitation of, any other relief or rights to which ATG
may be entitled. The terms and provisions of this Section 7 shall survive any
termination or expiration of this Agreement.
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7.4 AFTER FINAL TERMINATION. Pacific shall cease to use any
Confidential Information and shall promptly return to ATG any and all physical,
written and descriptive matter (including all reproductions and copies thereof)
containing Confidential Information upon Final Termination, as defined below, or
expiration of this Agreement.
8. NON-COMPETITION. During the term hereof, Pacific and its officers and
directors shall not, directly or indirectly, whether as an employee, employer,
consultant, agent, officer, principal, partner, stockholder, director or any
other individual or representative capacity, engage or participate in any
business that is in competition in any manner with any business of ATG. If
Pacific believes that such a conflict may arise from services provided to past
or future clients, then Pacific shall immediately so advise ATG in writing of
such fact and the parties shall mutually determine the appropriate course of
action with respect to the potential conflict.
9. REGISTRATION RIGHTS. If at any time Pacific desires to exercise the
Option and resale of the Option Shares is not available under Rule 144 or such
other comparable Rule, Pacific shall so notify ATG in writing and as soon as
practicable ATG shall file a registration statement on Form S-8 or other
applicable form with the Securities and Exchange Commission covering the Option
Shares.
10. ADJUSTMENT IN OPTION SHARES. In the event any change is made to the
Common Stock by reason of any stock split, stock dividend, combination of
shares, or other change affecting the outstanding Common Stock as a class
without receipt of fair consideration, then appropriate adjustments will be made
to (i) the total number of Option Shares subject to the Options and (ii) the
exercise prices payable per share in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder. If ATG is the
surviving entity in any merger or other business combination, then the Options,
if outstanding immediately after such merger or other business combination shall
be appropriately adjusted to apply and pertain to the number and class of
securities to which Pacific immediately prior to such merger of other business
combination would have been entitled to receive in the consummation of such
merger or other business combination.
11. NOTICES. All notices, requests, demands and other communications
called for or contemplated hereunder shall be in writing, and shall be addressed
to the Parties, their successors in interests or their assignees at the
following addresses or such other addresses as the Parties may designate:
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If to ATG: 1017 South Mountain Avenue
Monrovia, California 91016
If to Pacific: 1680 Greenfield Drive
Reno, Nevada 89509
Any such notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fees prepaid, in a post office
or branch post office regularly maintained by the United States Postal Service.
Each of the parties hereto may change its address for purposes of this Section
11 by giving written notice of such change in the manner provided for in this
Section 11.
12. ARBITRATION. Any dispute between the parties hereto arising out of or
related to this Agreement shall be submitted for binding arbitration to the
American Arbitration Association ("AAA"), or such other arbitration organization
mutually acceptable, in accordance with its then current rules in Los Angeles
County, California, and the parties hereto shall be bound by the results of such
arbitration as confirmed in accordance with Section 1285 of the California Code
of Civil procedure. The prevailing party shall be entitled to recover its costs
and fees, including reasonable attorneys' fees, from the other party hereto,
including costs and fees on appeal, if any. The trier-of-fact shall determine
the identity of the prevailing party whether or not the arbitration proceeds to
final judgment. Each party hereto consents to the personal jurisdiction of the
AAA and Federal and State courts in Los Angeles County, California.
13. APPLICABLE LAW. This Agreement is executed and intended to be
performed in the State of California and the laws of such state shall govern its
interpretation and effect
14. INTEGRATED AGREEMENT. As to the subject matter of this Agreement,
this Agreement constitutes the entire agreement of the parties and supersedes
all prior agreements between the parties and all such prior agreements shall be
deemed voluntarily terminated by the mutual consent of the parties hereto and
shall be of no further force or effect, including, but not limited to, the Stock
Option Agreement between ATG and Wright dated October 16, 1995.
15. ASSIGNMENT. This Agreement is not assignable but shall be binding
upon and shall inure to the benefit of the successors of each party hereto,
provided however that the Option may be assigned to an officer or director of
Pacific.
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16. SEVERABILITY. Any provision in this Agreement which is, by competent
judicial authority, declared illegal, invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such illegality, invalidity or unenforceability without invalidating the
remaining provisions hereof or affecting the legality, validity or
enforceability of such provision in any other jurisdiction. The parties hereto
agree to negotiate in good faith to replace any illegal, invalid or
unenforceable provision of this Agreement with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement, or otherwise to amend this Agreement, including the provision
relating to choice of law, to achieve such result.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
American Technologies Group, Inc., Pacific Trade and
a Nevada corporation Development Corp.,
a Nevada corporation
By:/s/ John Collins By: /s/ Donald W. Wright
---------------- ---------------------
John Collins Donald W. Wright
Chief Executive Officer Chairman
/s/ Donald W. Wright
--------------------
Donald W. Wright
individually as to Sections 3.3 and 14
only
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made as of the 1st day of August, 1995, by
and between AMERICAN TECHNOLOGIES GROUP, INC., a Nevada corporation (hereinafter
called the "Company"), and HIGH GROWTH CAPITAL GROUP, a California corporation
(hereinafter called "HIGH GROWTH").
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement, the Company hereby grants to HIGH GROWTH, as of the
date hereof (the "Grant Date"), a stock option to purchase up to 25,000 shares
of the Company's Common Stock (the "Optioned Shares") from time to time during
the option term at an exercise price of $1.33 per share.
2. OPTION TERM. This Option shall be exercisable during the one year
period commencing on the first anniversary of the Grant Date.
3. TRANSFERABILITY. This Option shall be neither transferable nor
assignable by HIGH GROWTH, either voluntarily or involuntarily, except to (i)
the current shareholder of HIGH GROWTH or (ii) otherwise with the written
consent of the Company; such transferees or assigns being subject to the
provisions hereof. The Optioned Shares, if acquired, shall not be transferred,
encumbered, alienated or disposed, by gift or otherwise, except as may be
permitted by law. In order to reflect any restrictions on disposition of the
Optioned Shares, the stock certificates for such shares will be endorsed with
the a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW, AND
MAY NOT BE SOLD, ASSIGNED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION THEREUNDER OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
4. ADJUSTMENT IN OPTION SHARES.
(a) In the event any change is made to the Common Stock issuable
hereunder by reason of any stock split, stock dividend, combination of shares,
or other change affecting the outstanding Common Stock as a class without
receipt of consideration, then appropriate adjustments will be made to (i) the
total number of Optioned Shares subject to this option and (ii) the option price
payable per share in order to reflect such
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change and thereby preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger or other
business combination, then this option, if outstanding immediately after such
merger or other business combination shall be appropriately adjusted to apply
and pertain to the number and class of securities to which HIGH GROWTH
immediately prior to such merger or other business combination would have been
entitled to receive in the consummation of such merger or other business
combination.
5. SPECIAL TERMINATION OF OPTION.
(a) In the event of one or more of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) any other corporate reorganization or business combination
in which fifty percent (50%) or more of the Company's outstanding voting stock
is transferred, or exchanged through merger, to different holders in a single
transaction or a series of related transactions;
then this Option shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless it is expressly assumed by the
successor corporation or parent thereof. The Company shall provide HIGH GROWTH
with at least thirty (30) days prior written notice of the specified date for
the Corporate Transaction. The Company can give no assurance that the options
shall be assumed by the successor corporation or its parent company.
(b) This Agreement shall not in any way affect the right of the
Company to make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
6. PRIVILEGE OF STOCK OWNERSHIP. The holder of this Option shall not
have any of the rights of a shareholder with respect to the Optioned Shares
until such individual shall have exercised the option and paid the option price
in accordance with this Agreement.
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7. MANNER OF EXERCISING OPTION.
(a) In order to exercise this Option with respect to all or any part
of the Optioned Shares, the holder hereof must take the following actions:
(i) Deliver to the Secretary of the Company an Exercise Notice
(the "Notice"); and
(ii) Pay the aggregate option price for the purchased shares in
cash.
(b) This Option shall be deemed to have been exercised with respect
to the number of Optioned Shares specified in the Purchase Agreement at such
time as the Notice for such shares shall have been delivered to the Company and
all other conditions of this Paragraph have been fulfilled. Payment of the
option price shall immediately become due and shall accompany the Notice. As
soon thereafter as practical, the Company shall mail or deliver to HIGH GROWTH
or to the other person or persons exercising this option a certificate or
certificates representing the shares so purchased and paid for.
8. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of Optioned Shares
upon such exercise shall be subject to compliance by the Company and HIGH GROWTH
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Company's Common Stock
may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this Option, HIGH GROWTH shall
execute and deliver to the Company such representations in writing as may be
requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
9. HIGH GROWTH'S AND SHAREHOLDER'S REPRESENTATIONS:
HIGH GROWTH and Everett Gust ("Gust"), hereby represent and warrant to
the Company as follows, each of which representation and warranty is material
and is being relied upon by the Company and each of which is true at and as of
the date hereof and will be true upon exercise of the Option:
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9.1 INVESTMENT INTENT. HIGH GROWTH is acquiring the Option and will
acquire the Optioned Shares, if at all, for its own account and not with a view
to their resale or distribution and that HIGH GROWTH is prepared to hold the
Option and the Optioned Shares for an indefinite period and has no present
intention to sell, distribute or grant any participating interests in the Option
or the Optioned Shares. HIGH GROWTH hereby acknowledges the fact that the
Option and the Optioned Shares will not be registered under the Securities Act
of 1933, as amended (the "1933 Act") or applicable state securities laws.
9.2 RESTRICTED SECURITIES. that HIGH GROWTH has been informed that
the Option and the Optioned Shares may not be resold or transferred unless first
registered under applicable Federal and State securities laws unless an
exemption from such registration is available and the Company has consented to
such transfer. Accordingly, HIGH GROWTH hereby acknowledges that it is prepared
to hold the Option and the Optioned Shares for an indefinite period of time.
9.3 HIGH GROWTH'S AND SHAREHOLDER'S KNOWLEDGE. that HIGH GROWTH and
Gust have a preexisting business or personal relationship with the Company, that
they are aware of the business affairs and financial condition of the Company
and that they have such knowledge and experience in business and financial
matters with respect to companies in business similar to the Company to enable
them to evaluate the risks of the prospective investment and to make an informed
investment decision with respect thereto. HIGH GROWTH and Gust further
acknowledges that the Company has made available to them the opportunity to ask
questions and receive answers from the Company concerning the terms and
conditions of the issuance of the Option and the Optioned Shares and that they
could be reasonably assumed to have the capacity to protect their own interests
in connection with such investment.
9.4 SPECULATIVE INVESTMENT. that HIGH GROWTH realizes that its
purchase of the Option and the Optioned Shares will be a speculative investment
and that HIGH GROWTH and Gust are able, without impairing their financial
condition, to hold the Option and the Optioned Shares for an indefinite period
of time and to suffer a complete loss of their investment.
9.5 SHAREHOLDERS. that Gust is the only shareholder of HIGH GROWTH.
10. PIGGYBACK REGISTRATION RIGHTS: If at any time the Company shall file
a registration statement (the "Registration Statement") with the Securities and
Exchange Commission covering shares of the Company's capital stock, the Company
shall promptly
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give written notice to HIGH GROWTH and shall use its best efforts to include in
the Registration Statement all of the Option Shares specified in a written
request by HIGH GROWTH, made within 30 days after receipt of such written
notice. If the registration for which the Company gives notice is for an
underwritten public offering, then the Company shall so notify HIGH GROWTH. In
such event, the right of HIGH GROWTH to registration pursuant hereto shall be
subject to the determination of the underwriter as to the maximum number of
shares of Common Stock to include in the registration. If the underwriter
places a limitation on the number of shares to be included in the registration,
the number of shares to be included in the registration for the benefit for all
shareholders requesting registration shall be reduced pro rata.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, administrators, heirs, legal representatives
and assigns of HIGH GROWTH and the successors and assigns of the Company.
12. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
option without the imposition of requirements unacceptable to the Company in its
reasonable discretion shall relieve the Company of any liability with respect to
the non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained. The Company, however, shall use its best efforts to obtain
all such approvals.
13. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of its Corporate Secretary at its corporate office. Any notice
required to be given or delivered to HIGH GROWTH shall be in writing and
addressed to HIGH GROWTH at the address indicated below HIGH GROWTH's signature
line on this Agreement. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
14. WITHHOLDING. HIGH GROWTH acknowledges that, upon any exercise of this
Option, the Company shall have the right to require HIGH GROWTH to pay to the
Company an amount equal to the amount the Company is required to withhold as a
result of such exercise for federal and state income tax purposes.
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15. GOVERNING LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by a duly authorized officer and HIGH GROWTH has caused this
Agreement to be executed by a duly authorized officer and Gust has executed this
Agreement individually, all as of the day and year indicated above.
American Technologies Group, Inc.,
a Nevada corporation
By:/S/ John Collins
----------------
John Collins
Chief Executive Officer
1017 South Mountain Ave.
Monrovia, California 91016
HIGH GROWTH CAPITAL GROUP,
a California corporation
By:/s/ Everett Gust
----------------
Everett Gust
President
485 E, 17th., #600
Costa Mesa, California 92627
/s/ Everett Gust
- ----------------
Everett Gust,
individually, as to Section 9
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EXHIBIT 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Technologies Group, Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 registration statement of our report dated
November 13, 1996 included in the Company's Form 10-K for the year ended July
31, 1996 and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Los Angeles, California
April 16, 1997
