EXHIBIT 4.6
SUBSCRIPTION AGREEMENT
AMERICAN TECHNOLOGIES GROUP, INC.
American Technologies Group, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned Xxxxxx X. Xxxxxxxx, Xx. (the "Holder") understands that
American Technologies Group, Inc., a Nevada corporation (the "Company"), is
offering to sell to the Holder, and the Holder wishes to purchase $1,000,000
principal amount of the Secured Convertible Debentures due June 30, 2003 in
the form attached hereto as Exhibit A (the "Initial Debenture") and $500,000
principal amount of the Secured Redeemable Convertible Debentures due four
years after issuance (the "Second Debenture" and together with the Initial
Debenture the "Debentures"). The Holder further understands that the
offering and sale is being made without registration of the Debentures and
shares of Common Stock issuable upon conversion thereof (the Debentures and
shares of Common Stock issuable upon exercise thereof are hereinafter
sometimes referred to as the "Securities") under the Securities Act of 1933,
as amended (the "Securities Act"), and is being made only to "accredited
investors" (as defined in Rule 501 of Regulation D under the Securities Act).
1. SALE OF THE DEBENTURES. Upon the basis of the representations and
warranties, and subject to the terms and conditions set forth in this
Agreement, the Issuer covenants and agrees to sell and the Holder agrees to
purchase the Initial Debenture upon execution of this Agreement and the
Second Debenture upon the effective date (the "Effective Date") of the
Company's Registration Statement on Form S-3 (Registration No. 333-68327),
provided such Effective Date occurs on or before October 1, 1999.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Holder as follows on the date hereof and as of
the Effective Date.
(a) The Common Stock issuable upon the conversion of the
Debentures has been duly authorized and, when issued and delivered to the
Holder in accordance with the terms of said Debentures, will be validly
issued, fully paid and nonassessable.
(b) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Nevada with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or
qualification, except where the failure so to register or qualify does not
have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company.
(c) The Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act. The Company has filed all material required
to be filed pursuant to all reporting obligations under either Section 13(a)
or 15(d) of the Exchange Act for a period of at least twelve (12) calendar
months immediately preceding the date hereof.
(d) Neither the issuance of the Securities, the execution,
delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transaction contemplated hereby (i)
requires any consent, approval, authorization or other order of or
registration or filing with, any court, regulatory body administrative agency
or other governmental body, agency or official or conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under, the
certificate of incorporation or by-laws, or other organizational documents,
of the Company or any of its subsidiaries or (ii) conflicts or will conflict
with, or constitutes or will constitute a material breach of, or default
under, (or if any of the foregoing occurs it will not have a material adverse
affect on the Company) any material agreement, indenture, lease or other
instrument to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, or any of its subsidiaries or any
of their respective properties, or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be
bound or to which any of the property or assets of any of them is subject.
(e) The execution and delivery of, and the performance by the
Company of its obligations under this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, and the Company has full corporate and legal power to enter into
this Agreement and perform all of its obligations hereunder.
(f) Exhibit B and Exhibit C attached hereto and incorporated
herein as though set forth in full set forth all patents, patent
applications, trademarks, trademark applications and other intangible
properties related to the Company's IE-TM- technology as described in the
referenced patents and patent applications and any technology related thereto
(all of the foregoing being herein called "Intangibles") that the Company
owns or has pending free and clear of all liens.
(g) Management of the Company will use its best efforts to have
the Company's Board of Directors appoint Xxxxx Xxxxxx to fill a vacancy on
the Board at its next meeting which is anticipated to be held within the next
30 days.
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3. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. The Holder hereby
represents and warrants to the Company as follows:
(a) The Holder is aware that no federal of state agency has passed
upon the Common Stock or made any finding or determination concerning the
fairness of this investment.
(b) The Holder has had an opportunity to ask questions of and
receive answers from representatives of the Company, concerning the terms and
conditions of this investment.
(c) The Securities for which the Holder hereby subscribes will be
acquired for the Holder's own account, for investment only and not with a
view toward resale or distribution in a manner which would require
registration under the Securities Act.
(d) The Holder acknowledges that, until a registration statement
is declared effective by the SEC, there are substantial restrictions on the
transferability of shares of Common Stock as required pursuant to federal and
state securities laws. The Holder further agrees to be responsible for
compliance with all conditions on transfer imposed by any state blue sky or
securities law. The Holder acknowledges that each certificate representing
the shares of Common Stock issued upon conversion of the Debentures prior to
the effective date of a registration statement covering such shares shall be
stamped with a restrictive legend substantially similar to the following:
"The securities evidences by this certificate have not been
registered under the United States Securities Act of 1933, as amended
(the "Act), or any state securities laws, and may not be offered or
sold, transferred, pledged, hypothecated or otherwise disposed of
except (i) pursuant to an effective registration statement under the
Act, (ii) to the extent applicable, Rule 144 under the Act (or any
similar rule under the Act relating to the disposition of securities)
or (iii) if an exemption from registration under such Act is
available.
Notwithstanding the foregoing, the securities evidenced by this
certificate are also subject to the registration rights set forth in
that certain Subscription Agreement by and between the Holder hereof
and the Company, a copy of which is on file at the Company's principal
executive office."
(e) The Holder is an "accredited investor" as defined in Rule
501(a) under the Securities Act. The Holder has a net worth in excess of
$1,000,000. The Holder agrees to furnish any additional information requested
to assure compliance with applicable federal and state securities laws in
connection with the purchase and sale of the subscription.
4. RESTRICTIONS ON TRANSFER.
The Debenture shall not be sold or transferred unless (i) it first
shall have been registered under the Securities Act, (ii) the Company first
shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or
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transfer is exempt from the registration requirements of the Securities Act,
(iii) written notice of such transfer and the name and address of such
transferee has been received by the Company and (iv) the transferee shall
first agree in writing to be bound by all provisions of this Agreement.
5. INDEMNIFICATION.
(a) In the event that the Company registers under the Securities
Act any of the Securities held by the Holder, the Company shall indemnify and
hold harmless the Holder and each underwriter of such shares (including any
broker or dealer through whom such of the shares may be sold) and each
person, if any, who controls the Holder or any such underwriter within the
meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") from and
against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them become subject under the Securities
Act or the Exchange Act or otherwise, and except as hereinafter provided,
shall reimburse the Holder and each of the underwriters and each such
controlling person, if any, for any legal or other expenses reasonable
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, or in the prospectus (or the
registration statement or prospectus as from time to time amended or
supplemented by the Company) or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
unless such untrue statement or omission was made in such registration
statement or prospectus in reliance upon and in conformity with information
furnished in writing to the Company in connection therewith by the Holder
(insofar as indemnification of the Holder is concerned) or any underwriter
(insofar as indemnification of any such underwriter is concerned) relating
thereto expressly for use therein. Promptly after receipt by the Holder or
any underwriter or any person controlling any of them, as the case may be, of
notice of a claim to which the foregoing indemnification applies, the Holder
or such other person shall notify the Company in writing of the commencement
thereof, and, subject to the provisions hereinafter stated, the Company shall
assume the defense of such action (including the employment of counsel, who
shall be counsel satisfactory to the Holder or such underwriter or
controlling person, as the case may be, and the payment of expenses) insofar
as such action shal relate to any alleged liability in respect of which
indemnity may be sought against the Company. The Holder or any underwriter
or any such controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of the Company
unless: (i) the employment of such counsel has been specifically authorized
by the Company, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties of any such action, suit or proceeding
(including any impleaded parties) include both the person or persons seeking
indemnification (the "indemnified person") and the Company and such
indemnified person shall have been advised by its counsel that representation
of the indemnified person and the Company by the same counsel would be
inappropriate under the applicable standards of professional conduct (whether
or not such representation by the same counsel has been proposed) due to
actual or potential differing interests between them (in which case the
Company shall not have
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the right to assume the defense of such action, suit or proceeding on behalf
of such indemnified person). The Company shall not be liable to indemnify
any person for any settlement by such person of any such action effected
without the Company's consent.
(b) The Holder shall indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, against all losses, claims, damages, expenses or liabilities or actions
to which they or any of them become subject under the Securities Act or the
Exchange Act or otherwise, and shall reimburse the Company, its officers and
directors and each such controlling person, if any, for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims damages, expenses, liabilities or
actions arise out of or are based upon any information relating to the Holder
furnished by or on behalf of the Holder in writing specifically for inclusion
in such registration statement.
(c) Any losses, claims, damages, liabilities and reasonable
expenses for which an indemnified party is entitled to indemnification under
Sections 6(a) and 6(b) of this Agreement shall be paid by the indemnifying
party to the indemnified party as such losses, claims, damages, liabilities
and expenses are incurred.
6. BROKERS. Each of the Company and Holder hereby indemnifies and
holds the other harmless from any liability for any brokers' or finders' fee
with respect to this Agreement or the transactions contemplated hereby for
which the Company or the Holder, as the case may be, is responsible.
7. WAIVER AMENDMENT. Neither this Agreement nor any provisions hereof
shall be modified, changed, discharged or terminated except by an instrument
in writing, signed by the party against whom any waiver, change, discharge or
termination is sought.
8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, their respective successors and
assigns, and no other person shall have any right or obligation hereunder.
Neither this Agreement nor any right, remedy, obligation or liability without
the prior written consent or other party and any assignment in violation
hereof shall be void, provided that the Holder may assign its rights and
obligations hereunder to any person acquiring some or all of the Securities,
provided that such transfer (i) is made in accordance with Section 3 hereof
and is not pursuant to an effective registration statement and (ii) such
person agrees in writing to be bound by the terms hereof.
9. CHOICE OF LAW: CONFLICT OF LAW: JURISDICTION AND VENUE. In the
case of any dispute, question, controversy or claim arising among the parties
hereto which shall arise out of or in connection with this Agreement, the
same shall be submitted to arbitration before a panel of three arbitrators in
Chattanooga, Tennessee in accordance with the rules of the American
Arbitration Association. One arbitrator shall be appointed by the party or
parties bringing the claims ("Claimant") and one arbitrator shall be
appointed by the party or parties defending the
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claim ("Respondent"). The arbitrators selected by such parties shall be
selected within thirty (30) days after notification by the Claimant to the
Respondent that it has determined to submit such dispute, question,
controversy or claim to arbitration. The two arbitrators so selected shall
select a third arbitrator within thirty (30) days after the selection of the
arbitrator selected by such parties. Should a party fail to select an
arbitrator within the specified time period, or should the arbitrators
selected by the parties fail to select a third arbitrator, the missing
arbitrator or arbitrators shall be appointed by the Chattanooga, Tennessee
office of the American Arbitration Association. The decision of the panel
shall be final and binding on the parties and enforceable in any court of
competent jurisdiction. The costs of the arbitration will be imposed upon the
Claimant and Respondent as determined by the arbitration panel or, failing
such determination, will be borne equally by the Claimant and the Respondent.
The successful or prevailing party or parties shall be entitled to recover
reasonable attorneys fees in addition to any other relief to which it may be
entitled.
10. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
11. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original but all of
which will constitute one and the same instrument. However, in enforcing any
party's rights under this Agreement it will be necessary to produce only one
copy of this Agreement signed by the party to be charged.
12. NOTICE. Any notice to be given or to be served upon any party in
connection with this Agreement must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two
(2) days after it has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the following addresses
with a confirmation of delivery:
If to the Company, to:
American Technologies Group, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder, to:
Xxxxxx X. Xxxxxxxx, Xx.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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With a copy to:
Xxxxxx X. Xxxxxxxx
Baker, Donelson, Bearman & Xxxxxxxx
1800 Republic Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The undersigned acknowledges that this Agreement shall not be effective unless
and until accepted by the Company as indicated below.
Dated this 13th day of July, 1999.
By: Xxxxxx X. Xxxxxxxx, Xx.
-------------------------
Xxxxxx X. Xxxxxxxx, Xx.
THIS SUBSCRIPTION IS AGREED TO AND ACCEPTED BY THE COMPANY ON THE 13TH DAY
OF JULY, 1999.
AMERICAN TECHNOLOGIES GROUP, INC.
By: Xxxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
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