-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AfInlpVIy8zKZFnlhrzA0IzJ3+WcSWc6sl4VugDlxX/31cd3c0EYY6mFaGe9kQGX YCZcT9pflfboSK4IHYrvPg== 0001096906-01-500494.txt : 20020411 0001096906-01-500494.hdr.sgml : 20020411 ACCESSION NUMBER: 0001096906-01-500494 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20011008 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATG INC CENTRAL INDEX KEY: 0001054000 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 942657762 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23781 FILM NUMBER: 1796445 BUSINESS ADDRESS: STREET 1: 47375 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 BUSINESS PHONE: 5104903008 MAIL ADDRESS: STREET 1: 47375 FREMONT BLVD CITY: FREMONT STATE: CA ZIP: 94538 8-K 1 atg8k_oct82001.txt CURRENT REPORT - OCTOBER 8, 2001 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 8, 2001 --------------- ATG INC. (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation) 0-23781 94-2657762 (Commission File Number) (IRS Employer Identification No.) 3400 Arden Road, Fremont, CA 94545 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (510) 783-8200 47375 Fremont Boulevard, Fremont, California 94538 (Former address) Item 5. Other Events ATG Inc. ("ATG" or the "Company") has not completed the preparation of its financial statements for the nine months ended September 30, 2001, and has not filed its Quarterly Report on Form 10-Q for the period ended September 30, 2001. The Company is currently in discussions with its accountants and other advisors in regard to certain significant issues associated with the preparation of such statements. It cannot be presently predicted when such statements will be finalized. Previously Reported: Credit Facility ------------------------------------ In November 1999, the Company completed an agreement with a consortium of banks for a credit facility in the amount of $45 million. The credit facility includes a letter of credit in support of tax-exempt industrial revenue bonds (the IRB) in the aggregate face amount of $26.5 million. The IRB were issued during November 1999, and bear interest at a floating rate (3.65% at March 31, 2001), based upon prevailing market conditions, which is re-set every seven days. The IRB are due October 31, 2014 and may be prepaid at any time without penalty. The proceeds are to be applied exclusively for the construction of low-level mixed waste facility in Richland, Washington. The credit facility also includes a five year revolving working capital line of credit (the Bank Loan), due October 2004, in the amount of $18 million, including a letter of credit facility of $5 million. Borrowings, when made, bear a variable interest rate based on financial ratio criteria. The credit facility is collateralized by accounts receivable, inventory, and equipment. The credit facility agreement requires the Company to comply with a number of covenants, including capital asset acquisition limits, limits on additional debt, minimum levels of tangible net worth, dividend payment restrictions and maintenance of financial ratios. At December 31, 1999, ATG was in violation of some of these financial ratio covenants. ATG obtained a permanent waiver, subsequent to year-end, in respect of these violations as of December 31, 1999. In connection with the waiver, the banks agreed to revise and lower some of the financial ratio covenants that ATG failed to meet as of December 31, 1999, and substitute new covenants, for which ATG was in compliance for the original violated covenants and revise and lower some of the financial covenants for each of the quarterly periods in the year ended December 31, 2000, and increase the borrowings available to ATG by $6 million, for a total of $24 million, through June 30, 2000. The borrowing limit subsequent to June 30, 2000 is $18 million. In addition, the interest rate applied to the working capital facility was revised. At March 31, 2000, the Company was in violation of the revised financial ratios under the credit facility. Pursuant to a forbearance and consent agreement dated as of June 1, 2000, the lenders agreed to forbear in the exercise of any of their rights or remedies with respect to March 31, 2000 covenant defaults through June 30, 2000. At June 30, 2000, the Company continued to be in violation of the revised financial ratios under the credit facility. Furthermore, at June 30, 2000, ATG failed to make a required payment of principal in the approximate amount of $5,750,000 under the Bank Loan, so as to bring total borrowings the $18 million limit. ATG currently has borrowings of $23.8 million and is being charged interest at a default rate, which is currently 9.75%. The Company requested that the banks grant a forbearance in respect of the violations described above beyond June 30, 2000. As one of the conditions to granting a forbearance, the banks required that the Company deposit into a segregated account the amount of $1,500,000 to finance the completion and demonstration testing of the company's new low-level mixed waste facility in Richland, Washington. To fund this amount, on August 11, 2000, the Company obtained a short-term loan in the amount of $1,500,000 bearing a maturity date of October 5, 2000 from an individual lender. The loan bears interest at a rate of 9.75% per annum. The proceeds were used to fund certain facility expenditures through December 31, 2000. The Company was unable to repay the loan on its stated maturity date but subsequently obtained an extension until December 31, 2001. The Company anticipates that it will need to obtain additional financing or obtain another extension on the due date in order to repay the loan. The Company failed to make payments for certain interest, bank fees, and letter of credit fees on the Bank Loan that were due in 2000 and the first six months of 2001. In June 2001, the Company received a refund of federal income taxes for 1998 in the amount of $2.1 million. Of this, $1.5 million was paid to the banks to be applied to accrued interest, fees, and letter of credit fees. In July 2001, the Company met with the banks and presented a business plan and financial forecast for the balance of the year 2001. In that plan, the Company proposed to initiate the sale of as much as $10 million in additional IRB, which it has the authority, or could obtain the authority, to do. The Company would then apply an agreed upon amount of the net proceeds from these new IRB to the Bank Loan. Without obtaining concessions from the banks or new financing, the Company is not able to make the mandatory principal payment on the Bank Loan or to comply with the current financial covenants set forth in the credit facility. The Company would further be unable to pay any substantial amounts owing (after application of the $1.5 million paid to the banks in June 2001) for accrued interest, fees, or letter of credit fees from 2000 and the first six months of 2001 on the Bank Loan. Finally, the Company would have difficulty paying interest, fees, and letter of credit fees on the Bank Loan going forward. Update: Credit Facility ----------------------- At the present time, the banks have not agreed to the debt swap proposed by the Company. In addition, the banks have not granted a forbearance in respect of the violations of the credit agreement beyond June 30, 2000. On October 3, 2001, the Company received a demand letter from First Bank of California, declaring a default under the credit facility and acceleration of all indebtedness. Then, on October 11, 2001, the Company received a letter from First Bank of California, rescinding the notice of default declared in the letter of October 3, 2001. In November, the banks elected to enforce their rights and remedies under the credit agreement by perfecting their security interest in all bank deposits of the Company, including deposits maintained with United Commercial Bank, which includes the Company's payroll and general operating account. As a result, checks previously written on these accounts to pay the ordinary business expenses of the Company, including license fees due to the United States Nuclear Regulatory Commission, and payroll checks for the employees of the Company, were returned to the Company unpaid. This action raised substantial doubt as to whether the Company could continue in business. On November 16, 2001, the Company entered into agreements with United California Bank, as Agent for the banks under the credit facility, and with United Commercial Bank, as depositary of funds of the Company, for release of $1,000,000 to the Company to pay its returned checks and to pay other expenses as determined by the Company. Copies of such agreements are filed as exhibits to this report and are incorporated herein by this reference. Of the funds being made available to the Company under these agreements, it is estimated that substantially all of the funds will be required to pay for employee payroll checks. Thus, the Company must seek further accommodations under the credit facility or immediately identify other sources of financing in order to stay in business and to make the required payments to the banks. The Board of Directors and management of the Company are currently reviewing alternatives with ATG financial advisors, including bankruptcy counsel, in order to ascertain the actions necessary to generate the needed operating capital or to obtain other relief. The Company's operations will not generate sufficient cash flow to allow the Company to meet its past due obligations under the bank loan. If it cannot immediately modify or refinance this debt, it may be required to seek bankruptcy relief or to otherwise reorganize or sell substantially all of its assets. In the meantime, the Company has shut-down all operations. The Company's news release dated November 19, 2001, announcing the shut-down, is filed as an exhibit to this report and is incorporated herein by this reference. Board and Management Changes ---------------------------- Phillip L. Jordan, the Company's Vice President of Finance and Chief Financial Officer since July 17, 2001, was terminated by the Board of Directors on October 8, 2001. On October 24, 2001, Frank Y. Chiu, Executive Vice President and a Director of the Company, was appointed interim Chief Financial Officer. George Doubleday II resigned from the Board of Directors of the Company, effective October 11, 2001. David F. Chan also resigned from the Board, effective October 22, 2001. The replacements appointed to the Board of Directors are Edward Vinecour (a founder of the Company) and Rio Chao (a certified public accountant). The Board of Directors currently has six members. In addition to Messrs. Vinecour and Chao, the Directors are: Doreen M. Chiu, Frank Y. Chiu, David R. Sebastian and James E. Thomas. Vik Mani, Chief Operations Manager of the Company (previously the Chief Operating Officer), has resigned as an employee with the Company, effective November 12, 2001, and assumed an advisory role to the President and Chief Executive Officer of the Company, effective November 13, 2001. The Employment Agreement of Mr. Mani, as previously amended and restated on February 18, 2001, is filed as an exhibit to this report. Item 7. Exhibits 10.53 Employment Agreement dated October 27, 2000, as amended and restated on February 8, 2001, and February 18, 2001, between Vik Mani and ATG Inc. 10.54 Letter agreement dated November 16, 2001, between United California Bank, as Agent, and ATG Inc. 10.55 Letter agreement dated November 16, 2001, between United Commercial Bank, ATG Inc. and legal counsel for United California Bank, as Agent 99.1 News release dated November 19, 2001, announcing the shut-down of operations of ATG Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ATG Inc. (Registrant) Dated: November 20, 2001 By: /s/ Doreen M. Chiu ------------------------------------- Doreen M. Chiu President and Chief Executive Officer EX-10.53 3 atg8kex10-53.txt EMPLOYMENT AGREEMENT EXHIBIT 10.53 ------------- EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement"), entered into as of the 27th day of October, 2000, between ATG Inc ("the Company") and Vik Mani ("Prospective Employee") and collectively as "the Parties," amended and agreed to by both parties as of February 8 2001 is further amended and agreed to by both parties as of the 18th day of February, 2001. This amended Agreement supersedes the previous version of the Agreement; and the terms and conditions contained herein shall govern the employment relationship between the Parties. In consideration of the foregoing and the mutual promises and covenants contained herein and other good and valuable consideration, the Company hereby employs Prospective Employee in a new position as its Chief Operations Manager, a non-officer position, as of the date of February 18, 2001,and Prospective Employee hereby accepts such employment. 1. The term of the employment is for thirty-six (36) months effective the date of joining of the Company by Prospective Employee which is November 20, 2000. ATG will announce Prospective Employee as its new Chief Operations Manager of the Company on a date mutually agreed upon. Prospective Employee is not employed "at-will", but is employed under the terms and conditions set forth in this Agreement. 2. Prospective Employee will report at all times to the CEO of the Company. The following officers and department heads shall report to Prospective Employee: All operations personnel and business development personnel, except Fred Feizollahi. As Chief Operations Manager of ATG, Prospective Employee's duties and responsibilities will be to manage the Company's marketing, sales and operations. Provided, however, that the Engineering Department (headed by Fred Feizollahi) is outside of the scope of the Chief Operations Manager's responsibilities. The Chief Operations Manager reports directly to the CEO. The Chief Operations Manager will have no responsibility for the financial management of the Company and is not authorized to sign Company checks or decide to whom such checks will or will not be written. The Finance, Accounting and Comptroller organizations report directly to the Chief Financial Officer (CFO), who reports directly to the CEO; and neither of these organizations nor the CFO report to or are within the control of the Chief Operations Manager or the Operations organization. The Chief Operations Manager is not required or permitted to be involved in the collection, accounting or payment of taxes or other indebtedness on behalf of the Company. 3. The Company shall pay a signing bonus ("Signing Bonus") of $560,000.00, to the Prospective Employee hereby receipted for by the Prospective Employee, and received by the Prospective Employee in two payments on October 5, 2000 ($307,500) and October 20, 2000 ($252,500) prior to Prospective Employee giving notice to his present employer of the intent to resign his employment. The Signing Bonus is paid to the Prospective Employee in consideration of the fact that the Prospective Employee is agreeing to resign his current employment as Senior Vice President with his current employer, CH2M Hill, a premier company of world standing in the industry and in robust financial condition. By giving up his employment with CH2M Hill, the Prospective Employee is sacrificing in excess of one million dollars ($1,000,000.00) in annual bonuses, long-term incentive compensation, stock options, retirement plans, ESOP contributions and company stock appreciation. The Company acknowledges that it has received full and adequate consideration from the Prospective Employee for the Signing Bonus paid by the Company, by the action of the Prospective Employee resigning from his current position and agreeing to join the Company. ATG considers the services of the Prospective Employee critical to its credibility in the industry because of the proven credentials, skills and experience of the Prospective Employee and is, therefore, willing to make this up-front investment as a Signing Bonus for the Prospective Employee as inducement for Prospective Employee to resign his current employment and join ATG, a much smaller company with potential for growth but facing much greater challenges and uncertainties. The Signing Bonus shall be irrevocable and non-refundable to the Company and is for the inducement to the Prospective Employee to execute this Agreement and leave his current, senior level employment with a more assured financial future and guaranteed employee benefits. Upon the execution of this Agreement and giving notice to his current employer, the said Signing Bonus shall be deemed fully earned. Prospective Employee shall be responsible for all taxes associated with the signing bonus, i.e. federal and state withholding for income taxes, social security, and Medicare. 4. In addition to the Signing Bonus described in Section 3., the Company shall pay Prospective Employee a salary of $325,000, in the first twelve (12) months of employment payable in accordance with Company current payroll practices as other employees are scheduled for their payment of employment compensation. Total first twelve (12) months' compensation, excluding the Signing Bonus and stock options as hereinafter set forth, is $325,000 gross. 5. The Company shall pay to Prospective Employee in the second twelve (12) month period of employment, a salary of $300,000. Further, Company shall pay Prospective Employee a performance cash bonus of $50,000.00 based on predetermined performance goal as set forth below. The total compensation is $350,000 in the second twelve (12) month time period if performance goal is met, excluding stock options as hereinafter set forth. The performance goal is defined as the Company obtaining a minimum of $15 million ("New Business Goal") of new DOE business (contracted capacity) from INEEL, Hanford, Rocky Flats or any other DOE contracts within twenty-four (24) months from commencement of the employment. Once the $15 million minimum New Business Goal requirement is met, the performance cash bonus will be earned based on $10,000 per million dollars of new business up to a maximum of $50,000. Such performance bonus earned by the Prospective Employee shall be paid to the Prospective Employee at six month intervals commencing the date of achievement of the new business goal, but no later than 30 days after earning the maximum second twelve (12) month employment period performance bonus as stated above. In the event Prospective Employee is terminated by the Company, resigns for Good Reason, as hereinafter defined, or due to Change of Control, as hereinafter defined, or dies or becomes disabled during the second twelve (12) month period, such performance bonus will be computed and paid on the same basis as if he were still employed with the Company for such period. 6. The Company shall pay to Prospective Employee in the third twelve (12) month period of employment a salary of $300,000 , plus a cash bonus up to the amount of $50,000 based on the performance goal to be determined by both Parties. Such goal will not be less than $20 million of DOE New Business ($20 million of DOE new business contracted capacity) from Hanford, Rocky Flats, INEEL or any other DOE contracts, however, alternate sources of "New Business" may be agreed upon between the Company and the Prospective Employee as the basis for setting the performance goal (New Business) stated above. Such bonus shall be paid to Prospective Employee pro-rated at 6 month intervals commencing the date of achievement of the performance goal, but no later than thirty (30) days after earning the bonus set forth above. In the event Prospective Employee is terminated by the Company, resigns for Good Reason, as hereinafter defined, or due to Change of Control, as hereinafter defined, or dies or becomes disabled during the third twelve (12) month period, such bonus will be computed and paid on the same basis as if he were still employed with the Company for such period. During the third twelve (12) month period of employment only, the Prospective Employee will be paid salary at the annual salary rate of $300,000 only after the performance goal as agreed upon between the Company and the Prospective Employee as stated above is achieved and the actual business delivered during the first 24 months of employment is at least $10 million. During the third twelve (12) month period of employment only, until such a time when the performance goal is achieved, the Prospective Employee will be paid salary at the reduced annual rate of $200,000. In the event the performance goal for the third twelve (12) month period is not mutually agreed to, then it shall be as set forth above, which is defined as the Company obtaining a minimum of $20 million ("New Business Goal") of new DOE business (contracted capacity) from INEEL, Hanford, Rocky Flats or any other DOE contracts within 24 months from commencement of the employment. 7. In addition to the Company's New Business Goals, as the Chief Operations Manager, Prospective Employee understands that other overall measures of Company's performance, such as profitability, cost cutting measures, health and safety, effective and efficient operation, new market and product development, will also be within Prospective Employee's executive responsibility. However, the standard for Performance Bonus eligibility shall be the New Business Goals. Because of such responsibilities of Prospective Employee, the Company agrees to provide Prospective Employee with a sufficient operations budget assistance and support to allow the accomplishment of the New Business Goals, such as reasonable travel and entertainment expenses, cell phone, computer, etc and other customary Business Development expenses, as well as to assist Prospective Employee in his overall responsibilities. Prospective Employee is authorized to incur expenses in the performance of his duties. The Company shall reimburse Prospective Employee for all such expenses ten days after submitting the expenses or at the next pay period, whichever is sooner. The Company recognizes that Prospective Employee's ability to assist the Company in achieving its performance goals, including New Business Goals, may be affected by matters beyond Prospective Employee's control and/or prior knowledge, such as Company's financial condition, prior regulatory violations or other prior conflicts with clients. Therefore, Prospective Employee's failure to meet the New Business Goals or otherwise meet Company's anticipated levels of performance shall not constitute a basis to deny Prospective Employee payment of performance bonuses or terminate Prospective Employee's employment for Cause (as defined below) to the extent caused by matters beyond Prospective Employee's control and/or prior knowledge. 8. In the event the Prospective Employee resigns from the company due to no breach by the Company of this agreement before expiration of the (36) months term of this agreement, Prospective Employee's Employment will end, without further obligation or liability to the Company, provided, however, the Prospective Employee will make himself available to ATG upon request on an exclusive consulting basis at the rate of $2000/day for a minimum period of up to 180 days following his resignation in order to assure an orderly transition. The foregoing shall constitute Company's exclusive remedy in the event that Prospective Employee terminates his employment prior to the expiration of the (36) months terms of this agreement due to no breach of this Agreement by the Company. Company expressly waives the right to seek other remedies, including but not limited to specific performance, or to claim damages, whether arising in contract, tort, or otherwise (including negligence and strict liability) in connection with Prospective Employee's resignation of his employment. In the event the Prospective Employee resigns during the term of this Agreement due to breach of this Agreement by the Company, the Company filing for Bankruptcy in any form, or for Good Reason (hereinafter defined), then the Company shall pay the Prospective Employee an amount equal to one twelve (12) month period salary for the twelve (12) month period of such resignation, earned but not paid performance bonuses, and the relocation costs set forth in Section 18 hereof. All payments will be effected in a single lump sum payment within two weeks of the effective date of Prospective Employee's resignation. Further, all the stock options granted shall be deemed fully earned and vested with the time period to exercise all stock options extended by one year, and the Company shall be responsible for the continuation of medical benefits at Company's expense for a period of twelve (12) months. It is the intent of the Prospective Employee to remain on the Company's Payroll and help the Company through any restructuring activities, provided however, there would be no change in compensation and there will be no change of the CEO and/or the Executive Vice President. A. In the event Prospective Employee is terminated by the Company for any reason whatsoever, including disability, and other than for Cause ("Cause" as defined below) prior to the end of the thirty-six (36) month term, the Company shall pay the Prospective Employee a severance salary equal to one twelve (12) month period salary for the twelve (12) month period such termination occurs, all the performance cash bonuses earned but not paid to Prospective Employee until then, and the relocation costs as set forth in Section 18 hereof. All payments will be effected in a single lump sum payment within two weeks of the effective date of Prospective Employee's resignation. Further, all stock options granted will be deemed fully earned and vested with the time period to exercise the stock options extended by one year . Additionally, the Company shall be responsible for continuation of medical benefits for a period of twelve (12) months at Company's expense. In consideration of the foregoing, the Parties expressly waive their rights to bring any claim for other compensation or other legal action against the other in connection with the Prospective Employee's termination by the Company. Nothing herein shall restrict the right of the Company to terminate the Prospective Employee's employment for Cause. "For Cause" or "Cause" as used in this Agreement shall mean that at the option of the Company, Prospective Employee's employment hereunder shall be terminated immediately, upon any of the following actions or occurrences if Company in good faith and not in an arbitrary manner believes that such action or occurrence impairs Company's willingness to place trust in Prospective Employee as an employee or impairs Prospective Employee's ability to perform the services required of Prospective Employee hereunder: (i) Prospective Employee's personal dishonesty, commission and conviction of any felony affecting his reputation and the business of the Company; (ii) Prospective Employee's gross negligence or gross negligent misconduct which materially affects the business of the Company; (iii) Prospective Employee's willful misconduct; B. Death or disability shall not be deemed a resignation and Prospective Employee or his successors or assignees shall have no obligation of any payments to the Company due to Prospective Employee's death or disability. Prospective Employee is deemed to be under a disability if he is unable to perform his duties on account of illness or other incapacity and such illness or other incapacity continues for a period of more than three (3) consecutive months during any twelve (12) month period. After such three (3) month period, the Company shall have the right to terminate Prospective Employee. The termination becomes effective after providing thirty (30) days written notice. If Prospective Employee is deemed disabled, by a physician of his choosing, then the time deadline to exercise any stock option shall be extended twelve (12)months and waived entirely if Prospective Employee is deceased. Prospective Employee's estate, legal representatives, or heirs, as appropriate, shall succeed to and acquire all rights and benefits of Prospective Employee herein. D. "Good Reason" for Prospective Employee's resignation from the Company shall mean any one of the following: (i) the Company breaches this Agreement; (i) the Company files for Bankruptcy in any form; (ii) the Company fails to meet its obligations to pay wages or state or federal taxes; (iii) the Company fails to renew its Officers and Directors Liability Insurance Policies with the same policy limits and comparable coverage as the current policies; (v) the Company's by-laws do not clearly define the duties of the Chief Operations Manager in a manner consistent with the description set forth in Section 2, above, or are not amended to be consistent within 7days of the effective date of this Agreement; (vi) the Board of Directors does not approve this amended Agreement and Prospective Employee does not receive written confirmation of such approval within 7 days of the effective date of this Agreement; (vii) the Company has not recorded or the Board of Directors has not confirmed the Company's payment of the Signing Bonus within one week of the effective date of this Agreement;(viii) a mutually acceptable arrangement is not reached between the Prospective Employee and the Company within two weeks of signing of this Agreement by the Prospective Employee and the Company to Protect the Prospective Employee against Payroll and Payroll Taxes Liability and to defend against potential claims in the event the Company files for Bankruptcy in any form. E. Company's termination of Prospective Employee will be effective immediately upon the Company providing written notice to the Prospective Employee in the manner described in Section 22 unless the Company's notification specifies otherwise. Prospective Employee's resignation shall be effective immediately upon Prospective Employee's written notice to the Company in the manner described in Section 22, unless Prospective Employee's notification specifies otherwise. 9. Prospective Employee shall be granted an option to purchase 90,000 shares of the Company's common stock at the market price on January 2, 2001, deemed vested in accordance with the Company's policies i.e. vested proratedly over thirty-six (36) month s. However, in the event of Prospective Employee's death, disability, termination by the Company, or resignation by Prospective Employee during the term for Good Reason or Change of Control, all such stock options granted shall be deemed earned and vested, and the time period to exercise the options shall be extended by twelve months. 10. In the event the New Business Goal ($20 million of contracted capacity) is met by the Company on or before December 31, 2001, a stock option for 60,000 shares of the Company's common stock, at the stock price as of December 31, 2001 shall be granted to the Prospective Employee. In the event the New Business Goal is exceeded by $10 million ($30 million total of contracted capacity), a stock option of an additional 60,000 shares (for a total of 120,000 shares) of Company's common stock, at the same price as set forth above, shall be granted to Prospective Employee. Such options shall vest in accordance with the Company policy as set forth above in Section 9, subject to the same exceptions as set forth in Section 9 for death, disability, termination by the Company, or resignation by the Prospective Employee for Good Reason or Change of Control. 11. In the event during the term of this Agreement, the Company's common stock sells publicly at a price of $20 or more per share for a period of three (3) consecutive months, (in the event of stock splits, adjustments shall be made accordingly for such effective computation), the Company shall grant Prospective Employee an additional 100,000 shares of the Company's common stock, deemed vested equally over the three twelve (12) month periods of the term. The option price shall be as set forth above. Such options shall vest in accordance with the Company policy as set forth above in Section 9, subject to the same exceptions as set forth in Section 9 for death, disability, termination by the Company, or resignation by the Prospective Employee for Good Reason or Change of Control. 12. All stock options vested to Prospective Employee must be exercised in accordance with the Company's standard policies for officer stock options. 13. "Change of Control" means any one of the following: (i) change of ownership including acquisition of the Company; acquisition of equal to or greater than 50%of the issued and outstanding common stock by a single individual or entity other than the current principal stock holders; (ii) a significant merger or consolidation; (iii)change in executive direction of the Company including the appointment of a new CEO; (iv) a change in the majority of the Board of Directors caused by the merger or consolidation; (v) Liquidation or Dissolution of the Company including direct or indirect sale or other disposition of all or substantially all of the assets of the Company; (vi) a significant change in the business lines of the Company. In the event of a Change of Control, the Prospective Employee may resign without further obligation to the Company or the successor organization and Company shall pay to Prospective Employee all the salaries and performance bonuses payable to the Prospective Employee during the first twenty-four (24) month period of this Employment Agreement, as well as the relocation costs provided for in Section 18 hereof. All payments will be effected in a single lump sum payment within two weeks of the effective date of Prospective Employee's resignation. Further, Stock Options already granted are deemed fully earned and vested. . Additionally, the Company shall provide for the continuation of medical benefits at Company's expense for a period of eighteen (18) months after Prospective Employee's separation from the Company. The time period to exercise all stock options shall be extended by one year . 14. The Company's corporate house in Richland, WA, fully furnished, shall be provided, as primary residence, exclusively to Prospective Employee and his family, and paid for and maintained by the Company. All utilities and maintenance expenses will be Company's responsibility. The Prospective Employee will be responsible for all personal long distance telephone charges. Prospective Employee's principal place of work is deemed to be Richland, WA. 15. DELETED. 16. The Company shall provide Prospective Employee with the Company's standard benefits to all employees, including but not limited to medical, dental, vision and life insurance benefits, as well as participation in the Company's 401K or other retirement plan(s), sick days and personal days. Prospective Employee shall be provided the option to add, at his expense such participation of family members in such plans. 17. Prospective Employee shall be entitled to receive 4 weeks paid vacation during each twelve (12) month period of the agreement. Prospective Employee agrees to reasonably work with the Company as to timing and length of time increments when such vacation is used. 18. The Company will pay relocation costs for the Prospective Employee and spouse to move to Richland, Washington including coach air fare or over the road expenses. The Prospective Employee will maintain his current household in Denver at his own expense and will not move furniture to Richland, Washington. The Company will pay for movement of personal effects and shipment of one automobile. In the event of termination of the Prospective Employee by the Company, voluntary termination by the Prospective Employee due to Good Reason or Change of Control conditions stated in Section 13, all relocation costs, on the same basis as above, shall be paid to the Employee for relocation back to Denver, Colorado or another city within the continental USA within the same distance. 19. Prospective Employee agrees to give notice to his current employer on or before November 17, 2000. Prospective Employee can use his best judgement how to transition from his existing employment provided ATG can announce his employment as provided for in Section 1. If the Prospective Employee does not resign from the current employer, the Prospective Employee will promptly refund, at the request of the CEO of the Company, the Signing Bonus paid in consideration and as inducement to the Prospective Employee for resigning from his current employment, received IN CASH OR CERTIFIED FUNDS. It is agreed that such repayment of the Signing Bonus shall be LIQUIDATED DAMAGES and are Company's SOLE AND ONLY REMEDY for Prospective Employee's failure to resign from his current employment for the purpose of joining the Company. Company expressly waives the remedies of specific performance and additional damages. 20. The Company will reimburse Prospective Employee's family (either the Prospective Employee or the spouse) for round-trip coach class airfare and expenses to Denver, Colorado not to exceed ten trips during each twelve (12) month period of employment. In additional to the ten trips, the Company will reimburse Prospective Employee and the spouse for additional two trips the cost of round-trip coach class airfare and expenses to Denver, Colorado during the Holiday seasons i.e. November 22 through December 31. 21. All information disclosed and discussed in writing or verbally by any party (or its representative) in connection with the transaction contemplated by this Agreement to any other party (or its representative) shall be kept confidential by such other party and its representative. 22. Any notice or other communication hereunder must be given in writing and (a) delivered in person, (b) transmitted by telex, telefax or other telecommunications mechanism or (c) mailed by certified or registered mail, postage prepaid, receipt requested, as follows: If to Company addressed to: ATG Inc. 47375 Fremont Boulevard Fremont, CA 94538 Attention: Doreen Chiu, President and CEO If to Prospective Employee, addressed to: Vik Mani 7902 Glenridge Drive Castle Rock, Colorado 80104 or to such other address or to such other person as either party shall have last designated by such notice to the other party. Each such notice or other communication shall be effective (i) if given by telecommunication, immediately when transmitted to the applicable number so specified in (or pursuant to) this Section 22 and an electronic acknowledgement is recorded (ii) if given by mail, three days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid (iii) if given by Express or Priority Mail, the date of mailing or (iv) if given by any other means, when actually received at such address. 23. This Agreement supersedes any and all prior written or oral agreements between the Company and Perspective Employee and constitutes the entire agreement between the parties with respect to the subject matter herein and no modification, amendment, or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by both parties. 24. Prospective Employee and the Company agree that any dispute or controversy relating or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination shall be settled by binding arbitration. The decision of the Arbitrator may enter as a judgment in any court with competent jurisdiction. . 25. This Agreement is binding upon and benefits the heirs, executors, and legal representatives of Prospective Employee and any successors of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. Successor shall mean any firm, corporation, or other business entity which at any time whether by purchase, merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. 26. The Prospective Employee is not required to Mitigate the amount of any payment or benefit received pursuant to this Agreement due to cessation of employment . Further, the Company cannot reduce any benefits or payments because of any earnings or benefits that Prospective Employee may receive from any other source known to the Company. Notwithstanding the foregoing, the Prospective Employee is not required to inform the Company of any retirement benefits received from present or previous employers, and such retirement benefits shall not reduce the liability of the Company hereunder. 27. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. Facsimile signatures are deemed to be originals for the purposes of this Agreement. 28. All agreements and covenants contained herein are severable, and, in the event any one of them, with the exception of those contained in reference to the duties to be performed by the Prospective Employee and his compensation, shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein. 29. Any ambiguity in this Agreement will be not be construed in favor of either party. 30. ATG represents that no claims have been paid and there are no claims currently pending on the existing Directors and Officers Liability Insurance Policies with Executive Risk Indemnity Inc. and Genesis Insurance Company. ATG further represents that these policies will be renewed or policies with comparable coverage and limits of liability purchased and in effect prior to the expiration of the current insurance policies on May 6, 2001. ATG will provide Prospective Employee with written confirmation of the foregoing from its insurance agent within 14 days of execution of this Agreement. 31. The Company hereby represents that this Agreement has been approved by its Board of Directors and agrees to hold harmless Prospective Employee if the Board of Directors has not approved this Agreement. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its duly authorized officer or individually as of the day and year first above written. Company Prospective Employee ATG, Inc. By /s/ Doreen M. Chiu /s/ Vik Mani ATG, Inc. President & CEO Vik Mani EX-10.54 4 atg8kex10-54.txt LETTER AGREEMENT EXHIBIT 10.54 ------------- November 16, 2001 VIA FACSIMILE - ------------- Mr. Frank Chiu ATG, Inc. 3400 Arden Road Hayward, CA 94545 Re: ATG, Inc. - Deposit accounts Dear Frank: ATG, Inc. has requested that the United California Bank (fka Sanwa Bank California) in its capacity as agent (the "Agent") for certain banks issuing letters of credit for the account of ATG Inc. and for lenders pursuant to that certain Credit and Reimbursement Agreement dated as of November 1, 1999 (the "Credit and Reimbursement Agreement") with ATG Inc., as amended, extended and modified from time to time, (collectively with the Agent, the "Secured Parties"), allow ATG to utilize certain funds in deposit accounts ATG maintains at United Commercial Bank ("Commercial Bank"). Such accounts are referred to as the "Commercial Bank Deposit Accounts." The Secured Parties have a security interest in the Commercial Bank Deposit Accounts. As a result of numerous defaults by ATG pursuant to the Credit and Reimbursement Agreement, including without limitation, defaults in payments of amounts owed to the Secured Parties, the Agent had instructed Commercial Bank to deliver the funds on deposit in the Commercial Bank Deposit Accounts to the Agent in accordance with the Secured Parties' rights as secured creditors. November 16, 2001 Mr. Frank Chiu Page 2 ATG advised the Agent that ATG had no access to funds to pay its outstanding payroll and certain other critical expenses including, without limitation, a retainer for bankruptcy counsel for ATG. ATG further reported that its failure to cover the outstanding payroll checks, that had been delivered to ATG's employees, could lead to the immediate loss of employees, the loss security for ATG's assets and the potential for damage to ATG's assets that also serve as the collateral of the Secured Parties. In addition to its payroll, ATG advised that it had certain other critical expenses that it needed to pay in order to maintain ATG for purposes of a sale or orderly liquidation in order to maximize the value of ATG's operations. Included in those expenses is the retainer required for ATG to engage bankruptcy counsel. Even with the engagement of bankruptcy counsel, ATG advised that it could not immediately file a bankruptcy case and seek court approval for the use of cash collateral to pay payroll for several days. Accordingly, ATG requested that the Secured Parties allow ATG the immediate use of One Million Dollars ($1,000,000) (the "Requested Funds") from the Commercial Bank Deposit Accounts to preserve and protect its operations and assets pending the filing of a bankruptcy case. The Secured Parties are willing to permit ATG to utilize the Requested Funds on the following conditions: 1. ATG's access to the Requested Funds shall occur after ATG instructs Commercial Bank to transfer to the Agent all amounts in the Commercial Bank Deposit Accounts in excess of Requested Funds and Agent has confirmed that such wire has been sent to it. A form of the letter instruction to Commercial Bank is attached. Please sign the letter on the line reserved for ATG's signature and telecopy it to Dave Minnick (fax number 415-983-1200) and me (fax number 213-896-7387) so that the letter can be forwarded to Commercial Bank.Concurrently with ATG's access to the Requested Funds, ATG executes a control agreement regarding the Commercial Bank Deposit Accounts. A form of control agreement is attached to this letter. Please sign the control agreement on the line reserved for ATG's signature and telecopy it to Dave Minnick and me so that the control agreement can be forwarded to Commercial Bank. 2. Concurrently with ATG's access to the Requested Funds, ATG instructs all other financial institutions at which ATG maintains any deposit accounts or other cash equivalents, to wire transfer the funds in such accounts to the Agent for deposit into ATG's deposit accounts maintained with the Agent (the "Agent Deposit Accounts") and ATG closes all such other accounts. In November 16, 2001 Mr. Frank Chiu Page 3 addition ATG agrees not to open any other deposit accounts or to deposit any other funds in any form of account or investment with any financial institution other than the Agent. 3. ATG shall direct all future deposits of any collections or other funds owed to or received by ATG to be made directly to the Agent's Deposit Accounts. Any amounts that are deposited in the Commercial Bank Deposit Accounts or any other account located at any institution other than the Agent, shall be immediately transferred to the Agent for deposit to the Agent's Deposit Accounts. By allowing the use of the Requested Funds, the Secured Parties are not waiving any defaults of ATG. The Secured Parties reserve all of their rights and remedies against ATG, which may be exercised at any time without further notice to ATG. Without limiting the foregoing, any failure of ATG to comply with the terms and conditions of this letter may result in the Secured Parties exercising any or all of their rights against ATG. To avoid any misunderstanding, the Secured Parties have not agreed to any further use of their cash collateral whether for payroll or any other purpose. The Agent remains ready to negotiate with ATG regarding the use of cash collateral in a bankruptcy filing by ATG. In light of the concerns that ATG employees may cease working for ATG and leave ATG without sufficient protection for its assets or otherwise impair ATG's assets, the Secured Parties believe that a receiver should be appointed to take control of ATG's assets to protect against such situations. ATG needs to be under court supervision whether in a bankruptcy or pursuant to a court appointed receiver. While the Secured Parties are willing to allow ATG a short time to prepare for a bankruptcy filing, such as by negotiating a cash collateral arrangement with the Secured Parties, ATG's need for paying its next payroll puts a limit on how long ATG can delay its filing of a bankruptcy. The Secure Parties are not willing to allow further usage of their cash collateral without a court order governing that usage. From the Secured Parties' view, and in the view of most, if not all, courts, cash collateral usage will require a budget from ATG for the use of funds going forward. Such a budget is critical to any negotiations with the Secured Parties for the use of cash collateral. The sooner the Agent can review ATG's proposed budget the faster we can move on cash collateral negotiations. November 16, 2001 Mr. Frank Chiu Page 4 Please confirm ATG's agreement to the terms under which the Secured Parties are permitting use of the Requested Funds by signing a copy of this letter and telecopying it to the Agent at (213) 896-7387 Very truly yours, /s/ E. Leign Irwin E. Leign Irwin cc: Lender Group Thomsen Young M. David Minnick ATG agrees to the terms and conditions for access to the Requested Funds as set forth above. Dated: November 16, 2001 ATG, Inc. By /s/ Frank Y. Chiu ------------------------------ Frank Y. Chiu Executive Vice President and Chief Financial Officer EX-10.55 5 atg8kex10-55.txt LETTER AGREEMENT EXHIBIT 10.55 ------------- 50 FREMONT STREET SAN FRANCISCO, CA 94105-2228 415.983.1000 F: 415.983.1200 MAILING ADDRESS: P. O. BOX 7880 SAN FRANCISCO, CA 94120-7880 M. David Minnick 415.983.1351 dminnick@pillsburywinthrop.com November 16, 2001 VIA FACSIMILE & FIRST-CLASS MAIL - -------------------------------- Mr. Dennis Lee United Commercial Bank 711 Van Ness Avenue San Francisco, CA 94102 Re: ATG, Inc. - Security interest in deposit accounts Dear Mr. Lee: We are counsel to United California Bank (fka Sanwa Bank California) in its capacity as agent (the "Agent") for certain banks issuing letters of credit for the account of ATG Inc. and for lenders pursuant to that certain Credit and Reimbursement Agreement dated as of November 1, 1999 (the "Credit and Reimbursement Agreement") with ATG Inc., as amended, extended and modified from time to time, (collectively with the Agent, the "Secured Parties"). United Commercial Bank ("Commercial Bank") was notified by letter dated June 18, 2001 that ATG Inc. has granted a security interest in, among other things, all of the deposit accounts of ATG Inc. at Commercial Bank (the "Deposit Accounts"), to the Secured Parties pursuant to that certain Security Agreement (the "Security Agreement") dated as of November 1, 1999. The Secured Parties understand that there are at least two deposit accounts in the name of ATG INC., which are identified as account numbers 63717544 and 63517403 and are expressly included in the definition of Deposit Accounts. By our letter dated November 8, 2001 we notified Commercial Bank that certain Events of Default (as defined in the Credit and Reimbursement Agreement) had occurred November 16, 2001 Mr. Dennis Lee Page 2 and were continuing under the Credit and Reimbursement Agreement. In connection with such Events of Default and pursuant to the rights and remedies of the Secured Parties under the Credit and Reimbursement Agreement, the Security Agreement, the documents executed in connection therewith and at law and/or in equity, the Agent instructed Commercial Bank to immediately pay the balance of any and all funds in the Deposit Accounts directly to the benefit of the Agent, on behalf of the Secured Parties. We have had discussions with counsel for ATG. As a result, the Agent is willing to authorize $1,000,000 to be utilized from the Deposit Accounts to pay such entities as ATG selects provided that all amounts that ATG has on deposit with Commercial Bank in excess of $1,000,000 have been wire transferred to the Agent pursuant to the following wire instructions and confirmation of the wire transfer has been provided to the Agent: United California Bank Routing # 1220-03516 1977 Saturn Street Monterey Park, CA 91754 Attn: Frances Medina Reference: ATG, Inc. Account #0492-17477 In addition, if any new funds should be deposited for the account of ATG with Commercial Bank, such funds shall be deposited in a separate account that is blocked from any withdrawals without the instructions of ATG and the Agent or the Agent acting alone. All of the Deposit Accounts with Commercial Bank, including without limitation, any new account established to receive deposits, shall be and remain subject to the security interest of the Agent. To the extent, if any, that there is any creditor with a superior lien to the Secured Parties, the Secured Parties will take the funds received subject to such superior lien. November 16, 2001 Mr. Dennis Lee Page 3 Very truly yours, /s/ M. David Minnick - ---------------------- M. David Minnick cc: Ms. E. Leigh Irwin Mr. Thomsen Young ATG, Inc agrees to the above and expressly authorizes Commercial Bank to wire transfer the funds in excess of $1,000,000 to the Agent pursuant to the instructions set forth above. ATG, INC. By /s/ Frank Y. Chiu ------------------------------- Frank Y. Chiu Executive Vice President and Chief Financial Officer EX-99.1 6 atg8kex99-1.txt NEW RELEASE DATED NOV 19, 2001 EXHIBIT 99.1 ------------ ATG INC. News Release NEWS Release Monday, November 19, 2001 Bank Freezes ATG's Operating Funds of $3.5 Million HAYWARD, Calif.--(BUSINESS WIRE)--November 19, 2001--ATG Inc. (Nasdaq:ATGC - ---- news), a leading provider of low-level radioactive and low-level mixed waste - ---- treatment services, today announced that it has been forced to shut down all of its operations due to the fact that its funds of approximately $3.5 million have been frozen by its Bank. Because of lack of access to its funds, ATG, Inc is no longer able to continue operations at its facilities and has initiated orderly and safe shut-down of all of its operations effective immediately while conducting negotiations with the Bank. About ATG Inc. ATG Inc. is a radioactive and hazardous waste management company that offers comprehensive thermal and non-thermal treatment solutions for low-level radioactive and low-level mixed waste generated by commercial, institutional and government clients such as nuclear power plants, medical facilities, research institutions and the U.S. Departments of Defense and Energy. This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of various factors set forth under "Factors Affecting Future Operating Results" in the Company's annual report on Form 10-K and such other risks detailed from time to time in the Company's other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Contact: ATG Inc. Doreen Chiu, 510/490-3008 -----END PRIVACY-ENHANCED MESSAGE-----