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 XXXXXXXX X. XXXXX ("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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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.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
EMPLOYEE: XXXXXXXX X. XXXXX
XX 0 Xxx 00X
Xxxxxxxxx, Xxx Xxxxxxxxx 00000
(000) 000-0000 (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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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/ Xxxxxxxx X. Xxxxx
---------------------------
Xxxxxxxx X. Xxxxx
EMPLOYER: American Technologies Group, Inc.,
a Nevada corporation
By: /s/ Xxxx Xxxxxxx
------------------------
Xxxx Xxxxxxx
Title: Chief Employee Officer
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