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EXHIBIT 10.16
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into, effective
as of April 22, 1997 (the "Effective Date"), by and between American Film
Technologies, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx
(the "Holder").
R E C I T A L S
WHEREAS, the Company has elected Holder and the Holder has concurrently
herewith agreed to serve as Executive Vice President, Chief Financial Officer
and Chief Accounting Officer of the Company; and
WHEREAS, Consultant has agreed to render consulting services to the
Company pursuant to the terms of that certain Consulting Agreement dated April
22, 1997 (the "Agreement").
WHEREAS, as the sole and exclusive consideration to be paid to the Holder
for agreeing to be so served as Executive Vice President, Chief Financial
Officer and Chief Accounting Officer of the Company and to render consulting
services pursuant to the Agreement, the Company has agreed to grant the stock
option provided for herein to the Holder.
NOW, THEREFORE, the Company and the Holder covenant and agree as follows:
1. Grant of the Option. For good and valuable consideration, the receipt
of which is hereby acknowledged, the Company hereby grants to the Holder a stock
option (the "Option") to acquire from the Company, from time to time on the
terms and conditions set forth herein, all or any portion of an aggregate of Two
Hundred Thousand (200,000) shares of the Company's $.002 par value common stock
(the "Common Stock"), at the price equal to the $.05 per share (the "Exercise
Price"). Each of the number of shares of Common Stock into which the Common
Stock is exercisable and the Exercise Price is subject to adjustment as provided
in Section 4 hereof.
2. Term of the Option. Subject to the provisions of Section 8 hereof, the
Option will commence on the date hereof and will terminate on April 17, 2002
(the "Expiration Date").
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3. Vesting; Exercise. The Holder's right to exercise all or any portion of
the Option and receive the shares of Common Stock represented thereby shall
become exercisable immediately as of the date hereof.
4. Adjustments Upon Changes in Capitalization or Other Significant Events.
In the event of any increase or decrease in the number of the issued shares of
Common Stock by reason of a stock dividend, stock split, reverse stock split or
consolidation or combination of shares and the like at any time or from time to
time throughout the term of the Option such that the holders of outstanding
Common Stock shall have had an adjustment made, without payment therefor, in
the number of shares of Common Stock owned by them or shall have become entitled
or required to have had an adjustment made in the number of shares of Common
Stock owned by them, without payment therefor, there shall be a corresponding
adjustment as to the number of shares of Common Stock into which the Option is
exercisable and to the Exercise Price, with the result that the Holder's
proportionate share of Common Stock shall be maintained as before the occurrence
of such event without change in the aggregate exercise price applicable in the
event the Holder elected to exercise the Option in full (except for any change
in the aggregate exercise price resulting from rounding-off of share quantities
or prices).
5. Exercise of the Option. To exercise all or any portion of the Option,
the Holder must do the following:
5.1 deliver to the Company a written notice, in the form of Exhibit
"A" attached hereto and made a part hereof, specifying the number of shares of
Common Stock for which the Option is being exercised;
5.2 surrender the Agreement to the Company upon complete exercise of
the Option;
5.3 tender payment, either in cash or by cashiers or certified check
of the aggregate exercise price for the shares of Common Stock for which the
Option is being exercised;
5.4 pay, or make arrangements satisfactory to the Board for payment
to the Company of, all federal, state and local taxes, if any, required to be
withheld by the Company in connection with the exercise of the Option or the
relevant portion thereof; and
5.5 execute and deliver to the Company any other documents required
from time to time by the Company in order to promote compliance with the
Securities Act of 1933, as amended (the "1933 Act"), applicable state securities
laws, or any other applicable law, rule or regulation.
6. Delivery of Share Certificate. As soon as practicable after the Option
or any portion thereof has been duly exercised, the Company will deliver to the
Holder a certificate
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for the shares of Common Stock for which the Option was exercised. Unless the
Option has expired or been exercised in full, the Company and the Holder agree
that the Company may affix to this Agreement an appropriate notation indicating
the number of shares for which the Option was exercised and return this
Agreement to the Holder. If any law or regulation of the Securities and Exchange
Commission (the "SEC") or of any other federal or state governmental body having
jurisdiction shall require the Company or the Holder to take any action prior to
issuance to the Holder of the shares of Common Stock specified in the written
notice of exercise, or if any listing agreement between the Company and any
national securities exchange requires such shares to be listed prior to
issuance, the date for the delivery of such shares shall be adjourned until the
completion of such action and/or such listing.
7. Fractional Shares. In no event shall the Company be required to issue
fractional shares upon the exercise of any portion of the Option.
8. Adjustments to Term and Exercisability of the Option by the Company.
The Holder may not exercise all or any portion of the Option and the term of the
Option shall expire upon occurrence of the following events:
8.1 The expiration of thirty (30) days from the date of terminating
the Agreement solely as the result of Holder's material breach thereof; or
8.2 In the event the Agreement terminates as a result of Holder's
death, the expiration of one (1) year from the date of Holder's death.
9. Nontransferability. The Option is not transferable other than (a) by
operation of law, (b) to one or more trusts of which the Holder is a trustor, or
(c) by will or the laws of descent and distribution. The Option may be exercised
during the lifetime of the Holder only by the Holder or his or her
court-appointed legal representative.
10. Warranties and Representations of the Holder. By executing this
Agreement, the Holder accepts the Option and represents and warrants to the
Company and covenants and agrees with the Company as follows:
10.1 THE SECURITIES OFFERED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND ANY SALE OF SUCH SECURITIES IS SUBJECT TO
COMPLIANCE WITH, OR THE AVAILABILITY OF EXEMPTIONS FROM COMPLIANCE WITH, THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THIS INSTRUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY
BE MADE. TRANSFER OF THIS INSTRUMENT AND THE SECURITIES OFFERED HEREBY IS
RESTRICTED AS PROVIDED IN SECTIONS 9 AND 12 HEREOF.
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10.2 The Holder acknowledges that no registration statement under the
1933 Act or under any state securities law has been filed and that the Company
has no obligation to file such a registration statement in the future with
respect to the Option or, any shares of Common Stock that may be acquired upon
exercise of the Option or any portion thereof.
10.3 The Holder warrants and represents that the Option and any
shares of Common Stock acquired upon exercise of the Option or any portion
thereof will be acquired and held by the Holder for the Holder's own account,
for investment purposes only, and not with a view towards the distribution or
public offering thereof or with any present intention of reselling or
distributing the same at any particular future time.
10.4 The Holder agrees not to sell, transfer or otherwise voluntarily
dispose of any shares of Common Stock that may be acquired upon exercise of the
Option or any portion thereof unless (i) there is an effective registration
statement under the 1933 Act covering the proposed disposition and compliance
with governing state securities laws, (ii) the Holder delivers to the Company,
at the Holder's expense, a "no-action" letter or similar interpretative opinion,
satisfactory in form and substance to the Company, from the staff of each
appropriate securities agency, to the effect that such shares may be disposed of
by the Holder in the manner proposed, or (iii) the Holder delivers to the
Company, an opinion of counsel reasonably satisfactory to the Company, to the
effect that the proposed disposition is exempt from registration under the 1933
Act and governing state securities laws.
10.5 The Holder acknowledges and consents to the appearance of a
restrictive legend, in substantially the following form:
NOTICE: RESTRICTIONS ON TRANSFER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED, OR
OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF CERTAIN CONDITIONS.
INFORMATION CONCERNING THESE RESTRICTIONS MAY BE OBTAINED FROM THE
CORPORATION. ANY OFFER OR DISPOSITION OF THESE SECURITIES WITHOUT
SATISFACTION OF SAID CONDITIONS WILL BE WRONGFUL AND WILL NOT ENTITLE
THE TRANSFEREE TO REGISTER OWNERSHIP OF THE SECURITIES WITH THE
CORPORATION.
10.6 The Holder agrees not to sell, transfer or otherwise dispose of
the Option, except as specifically permitted by this Agreement and any
applicable securities laws.
11. Warranties and Representations of the Company.
11.1 The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
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11.2 The grant of the Option to the Holder has been duly authorized
by all requisite corporation action on the part of the Company and the shares of
Common Stock represented by the Option have been properly reserved for issuance.
11.3 The number of shares of Common Stock represented by the Option
(when coupled with all shares currently outstanding and all shares to be issued
upon the exercise of all other currently outstanding options granted by the
Company which may be exercised absent an increase in the number of authorized
shares of common stock) does not exceed the number of shares of Common Stock
currently authorized for issuance by the Company's Certificate of Incorporation,
as amended (the "Certificate").
11.4 No consents, approvals or permits are required to be obtained
from any third person, including, without limitation, any securities commission,
before the grant of the Option, nor do any conditions precedent exist (other
than those specifically identified herein) that would impair the Company's
ability to grant the Option hereunder.
11.5 No consents, approvals, nor permits are required to be obtained
from any third person, other those which may be required under applicable
securities laws, before the issuance of Common Stock upon the exercise of all or
any portion of the Option.
12. Procedures Upon Permitted Transfer. Before any sale, transfer or other
disposition of any of the shares of Common Stock acquired upon exercise of the
Option, the Holder agrees to give written notice to the Company of his or her
intention to effect such disposition. The notice must describe the circumstances
of the proposed transfer in reasonable detail and must specify the manner in
which the requirements of Section 10(d) above will be satisfied in connection
with the proposed disposition. After (a) legal counsel to the Company has
determined in good faith that the requirements of Section 10(d) above will be
satisfied and (b) the Holder has executed such documentation as may be necessary
to effect the proposed disposition, the Company will, as soon as practicable,
transfer such shares in accordance with the terms of the notice. Any stock
certificate issued upon such transfer will bear a restrictive legend, in the
form set forth in Section 10(e) of this Agreement, unless in the opinion of the
Company's legal counsel such legend is not required. Compliance with the
foregoing procedures is in addition to compliance with any separate requirements
applicable to the Holder under the Certificate or otherwise.
13. Rights as Stockholder. The Option, in and of itself, does not create
rights in the Holder as a stockholder of the Company; provided that upon any
such exercise of the Option or any portion thereof that complies with the
requirements of this Agreement, the Holder shall immediately be vested with all
the rights afforded to other stockholders of the Company, regardless of when the
Company actually delivers certificates representing Common Stock to the Holder.
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14. Further Assurances. The Holder and the Company agree, from time to
time, to execute such additional documents as the other party hereto may
reasonably require to effectuate the purposes of this Agreement.
15. Binding Effect. This Agreement shall be binding upon the Holder, the
Company, the Holder's heirs, successors and assigns, and any corporation or
other entity that succeeds to the rights and liabilities of the Company.
16. Cost of Litigation. In any action at law or in equity or any
arbitration to enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court or arbitrator
in a final judgment or decree, shall pay the successful party or parties all
costs, expenses and reasonable attorneys' fees incurred by the successful party
or parties (including without limitation costs, expenses and fees on any
appeals), and if the successful party recovers judgment in any such action or
proceeding, such costs, expenses and attorneys' fees shall be included as part
of the judgment.
17. Entire Agreement; Modifications. This Agreement constitutes the entire
agreement and understanding between the Company and the Holder regarding the
subject matter hereof. No modification of the Option or this Agreement, or
waiver of any provision of this Agreement, shall be valid unless in writing and
duly executed by the Company and the Holder. The failure of any party to enforce
any of that party's rights against the other party for breach of any of the
terms of this Agreement shall not be construed as a waiver of such rights as to
any continued or subsequent breach.
18. Governing Law. This Agreement shall be governed by and interpreted
under the law of the State of California applicable to agreements wholly
negotiated, executed and to be performed in that state.
19. Notices. Any notices that either party to this Agreement is required
or may desire to give to the other shall be given by sending the same to the
other at the address below, or at such other address as may be designated in
writing by any party in a notice to the other given in the manner prescribed in
this Section 19. All such notices shall be in writing and delivered by telex,
facsimile, personal delivery or if sent by mail, certified or registered mail,
return receipt requested deposited so addressed, postage prepaid. If sent by
mail notices shall be deemed delivered five (5) business days after deposit in
the mail. The addresses to which any such notices shall be given are the
following:
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To Holder:
Xx. Xxxxxx Xxxxxx
0000 Xxxx Xxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
To the Company:
Xxxxxx X. Xxxxxxx
c/o American Film Technologies, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No. (000) 000-0000
With copy to:
Xxxxx X. Xxxxxx, Esq.
Jeffery, Mangels, Xxxxxx & Xxxxxxx LLP
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
20. Severability. Whenever possible, each provision of this Agreement
shall be interpreted so as to be effective and valid under applicable law. If
any provision of this Agreement is prohibited or deemed invalid under any
applicable law, however, such provision shall be ineffective only to the extent
of such prohibition or invalidity, and neither the remainder of such provision
nor this Agreement shall be invalidated as a result.
21. Counterparts. This Agreement may be executed by the parties in one or
more counterparts, all of which taken together shall constitute one instrument.
22. Jurisdiction. The parties hereto agree to submit to the exclusive
jurisdiction of the Superior Court of the State of California, County of Los
Angeles, any controversy, claim or dispute arising out of or relating to this
Agreement or the method and manner of performance thereof or the breach thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
"Company" American Film Technologies, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chief Executive Officer
"Holder" /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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