EXHIBIT 99.3
COMPENSATION COMMITTEE APPROVED FORM
APRIL 27, 2005
AMERICAN TECHNOLOGY CORPORATION
2005 EQUITY INCENTIVE PLAN
STOCK AWARD AGREEMENT
Unless otherwise defined herein, the terms defined in the
American Technology Corporation 2005 Equity Incentive Plan (the "Plan") shall
have the same defined meanings in this Stock Award Agreement.
I. NOTICE OF RESTRICTED STOCK GRANT
You have been granted restricted shares of Common Stock, subject to the
terms and conditions of the Plan and this Stock Award Agreement, as follows:
Name of Awardee:
---------------------------
Total Number of Shares Granted:
---------------------------
Purchase Price per Share: $
---------------------------
Fair Market Value per Share: $
---------------------------
Grant Date:
---------------------------
Vesting Commencement Date:
---------------------------
Vesting Schedule: [Subject to Section II.H below, the first [
]% of the Shares subject to this Stock Award
Agreement shall vest on the Vesting
Commencement Date, and [ ]% of the Shares
subject to this Stock Award Agreement shall
vest each [month/quarter/year] of the
Vesting Commencement Date, subject to the
Awardee continuing to be a Service Provider
on such dates. Vesting shall accelerate as
provided in Section II.C below.]
II. AGREEMENT
X. XXXXX OF RESTRICTED STOCK. Pursuant to the terms and conditions set forth in
this Stock Award Agreement (including Section I above) and the Plan, American
Technology Corporation, a Delaware corporation (the "Company"), grants to the
Awardee named in Section I above, on the Grant Date set forth in Section I
above, the number of Shares set forth in Section I above. The granted Shares may
be subject to a purchase price, as set forth in Section I above.
B. PURCHASE OF RESTRICTED STOCK. If the granted Shares are subject to a purchase
price, as set forth in Section I above, the Awardee shall have the right to
purchase such Shares at the specified purchase price in accordance with such
procedures as may be established by the Administrator from time to time.
C. VESTING. The Awardee shall vest in the granted Shares in accordance with the
vesting schedule provided for in Section I above; provided, however, that the
Awardee shall cease vesting in the granted Shares upon the Awardee's Termination
of Service. Notwithstanding the foregoing, the Awardee shall vest in all granted
Shares if the Company is subject to a Change in Control before the Awardee's
Termination of Service, and the Awardee is subject to an Involuntary Termination
(defined below) in anticipation of or within 24 months after the Change in
Control. For purposes of this Award, the term "Change in Control" shall not
include any underwritten public offering of Shares registered under the
Securities Act of 1933, as amended (the "Securities Act").
The term "Involuntary Termination" shall mean the Awardee's Termination
of Service by reason of the involuntary discharge of the Awardee by the Company
(or the Affiliate employing him or her) for reasons other than Cause (defined
below), death or Total and Permanent Disability. The term "Cause" shall mean (1)
the Awardee's theft, dishonesty, or falsification of any documents or records of
the Company or any Affiliate; (2) the Awardee's improper use or disclosure of
confidential or proprietary information of the Company or any Affiliate; (3) any
action by the Awardee which has a detrimental effect on the reputation or
business of the Company or any Affiliate; (4) the Awardee's failure or inability
to perform any reasonable assigned duties after written notice from the Company
or an Affiliate, and a reasonable opportunity to cure, such failure or
inability; (5) any material breach by the Awardee of any employment or service
agreement between the Awardee and the Company or an Affiliate, which breach is
not cured pursuant to the terms of such agreement; (6) the Awardee's conviction
(including any plea of guilty or nolo contendere) of any criminal act which
impairs the Awardee's ability to perform his or her duties with the Company or
an Affiliate; or (7) violation of a material Company policy.
D. RISK OF FORFEITURE.
1. GENERAL RULE. The granted Shares shall initially be subject to a
risk of forfeiture. The Shares subject to a risk of forfeiture shall be referred
to herein as "Restricted Shares." The Awardee may not transfer, assign,
encumber, or otherwise dispose of any Restricted Shares other than in accordance
with this Stock Award Agreement and the Plan. If the Awardee transfers any
Restricted Shares in accordance with this Stock Award Agreement and the Plan,
then this Section shall apply to the transferee to the same extent as to the
transferor.
2. LAPSE OF RISK OF FORFEITURE. The risk of forfeiture shall lapse as
the Awardee vests in the granted Shares in accordance with the vesting schedule
set forth in Section I above.
3. FORFEITURE OF GRANTED SHARES. The Restricted Shares shall
automatically be forfeited and immediately returned to the Company upon the
Awardee's Termination of Service; provided that if any Restricted Shares were
purchased by the Awardee, then upon the Awardee's Termination of Service, the
Company shall have the right to repurchase such Restricted Shares at the
original price paid by the Awardee at any time during the 90-day period
following the date of the Awardee's Termination of Service. The certificates
evidencing the Restricted Shares shall have stamped on them a special legend
referring to the Company's right of repurchase.
4. ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of a stock
split, reverse stock split, stock dividend, recapitalization, combination or
reclassification of the Common Stock or any other increase or decrease in the
number of issued and outstanding Shares effected without receipt of
consideration by the Company, any new, substituted or additional securities or
other property (including money paid other than as an ordinary cash dividend)
which are by reason of such transaction distributed with respect to any
Restricted Shares or into which such Restricted Shares thereby become
convertible shall immediately be subject to a risk of forfeiture as provided
herein.
5. ESCROW. Upon issuance, the certificates representing the granted
Shares may, at the discretion of the Administrator, be deposited in escrow with
the Company to be held in accordance with the provisions of this Stock Award
Agreement. If the granted Shares are held in escrow, as provided in this
subsection (5), any new, substituted or additional securities or other property
described in subsection (4) above shall immediately be delivered to the Company
to be held in escrow, but only to the extent the granted Shares are at the time
Restricted Shares. All regular cash dividends on Restricted Shares (or other
securities) at the time held in escrow shall be paid directly to the Awardee and
shall not be held in escrow. Restricted Shares, together with any other assets
or securities held in escrow hereunder, shall be (i) surrendered to the Company
for cancellation upon forfeiture thereof, or (ii) released to the Awardee upon
request, but only to the extent that the granted Shares are no longer Restricted
Shares.
E. LEAVE OF ABSENCE. The Awardee shall not incur a Termination of
Service when the Awardee goes on a military leave, a sick leave or another bona
fide leave of absence, if the leave was approved by the Company (or Affiliate
employing him or her) in writing and if continued crediting of service is
required by the terms of the leave or by applicable law. However, the Awardee
incurs a Termination of Service when the approved leave ends, unless the Awardee
immediately returns to active work.
F. RIGHTS AS A STOCKHOLDER. The Awardee shall have the rights of a
stockholder of the Company, including the right to vote the granted Xxxxxx.
G. REGULATORY COMPLIANCE. The issuance of Common Stock pursuant to this
Stock Award Agreement shall be subject to full compliance with all applicable
requirements of law and the requirements of any stock exchange or interdealer
quotation system upon which the Common Stock may be listed or traded.
-3-
H. VESTING IF SALE PROHIBITED BY XXXXXXX XXXXXXX POLICY. The Company
has established an Xxxxxxx Xxxxxxx Policy (as such policy shall be amended from
time to time, the "Policy") relative to trading while in possession of material,
undisclosed information. Under the Policy, officers, directors, employees and
consultants of the Company and its subsidiaries are prohibited from trading in
securities of the Company during certain "Blackout Periods" as described in the
Policy. If a scheduled vesting date for Shares falls on a day during such a
Blackout Period, then the Shares that would otherwise have vested on such date
shall not vest on such date, but shall instead vest, provided the Awardee
remains a Service Provider, on the date that is two (2) business days after the
last day of the Blackout Period applicable to the Shares.
I. WITHHOLDING TAX. The Company's obligation to deliver the granted
Shares or to remove any restrictive legends upon vesting of such Shares under
the Plan shall be subject to the satisfaction of all applicable federal, state,
local and foreign income, and employment tax withholding requirements. The
Awardee shall pay to the Company an amount equal to the withholding amount (or
the Company may withhold such amount from the Awardee's salary) in cash. At the
Administrator's election, the Awardee may pay the withholding amount with Shares
(including previously vested granted Shares); provided, however, that payment in
Shares shall be limited to the withholding amount calculated using the minimum
statutory withholding rates.
J. CERTAIN FEDERAL INCOME TAX ISSUES.
1. Subject to provisions discussed in subsection (2) below,
under Section 83 of the Code, the Awardee will recognize ordinary income upon
transfer of the Shares to the Awardee, measured as the difference between the
fair market value of the granted Shares on the date of transfer and the amount
paid for the granted Shares, if any. The capital gain holding period will begin
on the date of transfer.
2. To the extent that the granted Shares are subject to a
"substantial risk of forfeiture" (within the meaning of Section 83 of the Code)
on the Grant Date, the Awardee will not recognize ordinary income on the Grant
Date. Instead, the Awardee will recognize ordinary income when the granted
Shares are no longer subject to a substantial risk of forfeiture (i.e., as the
Shares vest). The Awardee's ordinary income is measured as the difference
between the amount paid for the granted Shares, if any, and the fair market
value of the granted Shares when such Shares are no longer subject to a
substantial risk of forfeiture. The capital gain holding period for Shares
subject to a substantial risk of forfeiture begins on the date when such Shares
are no longer subject to a substantial risk of forfeiture.
3. If the Shares are subject to a substantial risk of
forfeiture, the Awardee may nonetheless accelerate his or her recognition of
ordinary income, if any, and begin his or her capital gains holding period by
timely filing an election pursuant to Section 83(b) of the Code (the "83(b)
Election"). If the Awardee makes an 83(b) Election, the excess of (i) the fair
market value of the granted Shares on the Grant Date over (ii) the purchase
price, if any, paid for the granted Shares will be included in the Awardee's
ordinary income. However, if the granted Shares are later forfeited, the Awardee
will not be entitled to a tax deduction or a refund of the tax already paid. If
the Awardee makes the 83(b) Election, the Awardee will not recognize any
additional income when the granted Shares vest and any appreciation in the value
of the granted Shares after the election is not taxed as compensation but
instead is taxed as capital gain when the granted Shares are sold.
-4-
4. The 83(b) Election must be filed with the Internal Revenue Service
within 30 days after the Shares are transferred. Any ordinary income resulting
from the election will be subject to applicable tax withholding requirements, if
the Awardee is an employee or former employee. The election is generally
irrevocable and cannot be made after the 30-day period has expired. In the event
that the Awardee makes an 83(b) Election, the Awardee agrees that (i) the
Awardee will promptly provide the Company with a copy of the 83(b) Election, as
filed with the Internal Revenue Service, and (ii) the Company may withhold from
any payments due to the Awardee any applicable federal, state or local taxes and
such other deductions as are prescribed by law and/or the Awardee will pay to
the Company all such tax withholding amounts promptly upon request.
5. THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME
TAXATION UPON THE AWARDEE WITH RESPECT TO THE GRANT OF RESTRICTED SHARES UNDER
THE PLAN. IT DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF THE U.S. FEDERAL
INCOME TAX CONSEQUENCES. IT DOES NOT DISCUSS THE INCOME TAX LAWS OF ANY STATE,
MUNICIPALITY OR FOREIGN COUNTRY IN WHICH THE AWARDEE'S INCOME OR GAIN MAY BE
TAXABLE. IN ANY EVENT, THE AWARDEE IS XXXXXX ADVISED TO CONSULT ITS OWN TAX
ADVISOR AS TO THE CONSEQUENCES OF MAKING AN 83(b) ELECTION. IF THE AWARDEE
DESIRES TO MAKE AN 83(b) ELECTION, THEN IT IS THE AWARDEE'S RESPONSIBILITY TO
TIMELY MAKE A VALID ELECTION.
K. PLAN. This Stock Award Agreement is subject to all of the terms and
provisions of the Plan, receipt of a copy of which is hereby acknowledged by the
Awardee. The Awardee hereby agrees to accept as binding, conclusive, and final
all decisions and interpretations of the Administrator upon any questions
arising under the Plan and this Stock Award Agreement.
L. SUCCESSORS. This Stock Award Agreement shall inure to the benefit of
and be binding upon the parties hereto and their legal representatives, heirs,
and permitted successors and assigns.
M. RESTRICTIONS ON RESALE. The Awardee agrees not to sell any Shares at
a time when Applicable Laws, Company policies or an agreement between the
Company and its underwriters prohibit a sale. This restriction shall apply as
long as the Awardee is a Service Provider and for such period of time after the
Awardee's Termination of Service as the Administrator may specify.
N. LOCK-UP AGREEMENT. The Awardee hereby agrees that in connection with
any underwritten public offering of Shares made by the Company pursuant to a
registration statement filed under the Securities Act, the Awardee shall not
offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase
or make any short sale of, or otherwise dispose of any Shares (including but not
limited to Shares subject to this Award) or any rights to acquire Shares of the
Company for such period of time beginning on the date of filing of such
registration statement with the Securities and Exchange Commission and ending at
the time as may be established by the underwriters for such public offering;
provided, however, that such period of time shall end not later than 180 days
from the effective date of such registration statement. The foregoing limitation
shall not apply to shares registered for sale in such public offering.
-5-
O. ENTIRE AGREEMENT; GOVERNING LAW. This Stock Award Agreement and the
Plan constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Awardee with respect to the subject matter
hereof, and may not be modified adversely to the Awardee's interest except by
means of a writing signed by the Company and the Awardee. This Stock Award
Agreement is governed by the internal substantive laws, but not the choice of
law rules, of California.
P. NO GUARANTEE OF CONTINUED SERVICE. THE AWARDEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF THE SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED SHARES OR PURCHASING SHARES
HEREUNDER). THE AWARDEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS STOCK AWARD
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH AWARDEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE AWARDEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By the Awardee's signature and the signature of the Company's
representative below, the Awardee and the Company agree that this Award is
granted under and governed by the terms and conditions of this Stock Award
Agreement and the Plan. The Awardee has reviewed this Stock Award Agreement and
the Plan in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Stock Award Agreement and fully understands all
provisions of this Stock Award Agreement and the Plan. The Awardee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Administrator upon any questions relating to this Stock Award Agreement and
the Plan.
The Awardee further agrees that the Company may deliver by email all
documents relating to the Plan or this Award (including, without limitation,
prospectuses required by the Securities and Exchange Commission) and all other
documents that the Company is required to deliver to its security holders
(including, without limitation, annual reports and proxy statements). The
Awardee also agrees that the Company may deliver these documents by posting them
on a web site maintained by the Company or by a third party under contract with
the Company.
-6-
By executing this Stock Award Agreement, the Awardee hereby warrants
and represents that it is acquiring the Shares for its own account and that it
has no intention of distributing, transferring or selling all or any part of the
Shares except in accordance with the terms of this Stock Award Agreement and
Section 25102(f) of the California Corporations Code. The Awardee also hereby
warrants and represents that it has either (i) preexisting personal or business
relationships with the Company or any of its officers, directors or controlling
persons, or (ii) the capacity to protect its own interests in connection with
the grant of this Award by virtue of its business or financial expertise, or
that of any of its professional advisors who are unaffiliated with and who are
not compensated by the Company or any of its Affiliates, directly or indirectly.
AWARDEE: AMERICAN TECHNOLOGY CORPORATION
By:
------------------------------ ------------------------------------
Signature
Title:
------------------------------ -------------------------------
Printed Name
Residence
-----------------------------
-7-
