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 Xxxxxx X.
Xxxxxx, 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.
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 Xxxxxx X. Xxxxxx ("Xxxxxx") 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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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 Xxxxxx 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: 0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
If to Pacific: 0000 Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxx 00000
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 Xxxxxx 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/ Xxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
---------------- ---------------------
Xxxx Xxxxxxx Xxxxxx X. Xxxxxx
Chief Executive Officer Chairman
/s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
individually as to Sections 3.3 and 14
only
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