EXHIBIT 10.34
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement"), dated as of December 29, 1995,
is by and between NORTH AMERICAN TECHNOLOGIES GROUP, INC., a Delaware
corporation (the "Company"), and XXXXX X. XXXXXXXX ("Employee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Employee hereby agree as follows:
1. Grant of Option; Vesting Schedule.
(a) Grant of Option. The Company hereby grants to Employee an option the
("Option") to purchase, subject to the terms and conditions hereof, from the
Company twenty-two thousand two hundred and twenty-two (22,222) shares (the
"Option Shares") of Common Stock, par value $0.001 per share, of the Company
(the "Common Stock") beginning on the Commencement Date (as defined below) and
ending at 5:00 p.m. Eastern Standard Time, on June 30, 2006 (the "Termination
Date"), at an exercise price equal to $4.50 per share of Common Stock. As used
herein, the term "Commencement Date" shall mean the date first set out above.
The number of Option Shares and the exercise price per share shall be subject to
adjustment from time to time upon the occurrence of certain events as set forth
below. The shares of Common Stock or any other shares or other units of stock
or other securities or property, or any combination thereof then receivable upon
exercise of the Option, as adjusted from time to time, are sometimes referred to
hereinafter as "Exercise Shares." The exercise price per share as from time to
time in effect is referred to hereinafter as the "Exercise Price." The Option
is not an "incentive stock option" as described in Section 422A of the Internal
Revenue Code of 1986, as amended.
(b) Vesting Schedule. Following the Commencement Date, the Option shall
vest and be exerciseable (unless earlier terminated as provided herein) on
December 29 in the years set forth below and in the amounts set forth below:
Number of
December 29 Shares
1996 5,556
1997 5,556
1998 5,555
1999 5,555
------
Total 22,222
1
; provided, however, that (i) the Option to acquire such shares shall vest on
the date set forth above only in the event that Employee is in the employ of the
Company or any of its subsidiaries in any capacity on such date and (ii) the
Option to acquire any Exercise Shares, if not earlier terminated by the terms of
this Agreement, shall terminate on June 30, 2006 regardless of the date on which
the Option to acquire such Exercise Shares vested as provided in this clause
(b). The period beginning on the Commencement Date and ending on the
Termination Date is sometimes referred to herein as the Option Period. Except
as provided otherwise in the next succeeding paragraph, if Employee is not in
the employ of the Company or any of its subsidiaries in any capacity on any of
the various vesting dates set forth above, regardless of the reason therefore,
then the Option with respect to such year shall not vest.
Notwithstanding anything herein to the contrary, in the event Employee is
no longer employed by the Company or any of its subsidiaries as a result of the
termination of such employment relationship:
(x) by the Company or any of its subsidiaries for any reason other than
"Cause" (as such term is then defined in any written employment agreement
between Employee, on the one hand, and the Company or any such subsidiary, on
the other hand (the "Employment Agreement"), or the death or disability (as such
term may be defined in such Employment Agreement) of Employee, or
(y) by Employee for "Good Reason" (as such term may be defined in such
Employment Agreement),
then 50% of all Option Shares that have not vested on or before the date of such
termination shall immediately vest as of such termination date, and the Option
Period with respect to such newly vested Option Shares shall begin on such
termination date and shall continue for a period of five years thereafter and
expire on the fifth anniversary date of such termination date.
2. Exercise of Option. The Option may be exercised, so long as it is then
valid and outstanding, from time to time in whole (as to Option Shares then
exercisable) or in part, and if in part, on as many occasions during the Option
Period as Employee shall desire, subject to the terms and provisions of this
Agreement. The Option may be exercised upon delivery on any business day to the
Company at its address set forth below (or such other office of the Company, if
any, as shall theretofore have been designated by the Company by written notice
to the Employee) of the following:
(a) a completed and executed Notice of Option Exercise in the form set
forth in Appendix A hereto and made a part hereof; and
(b) payment of the full Exercise Price for the number of Exercise Shares
set forth in the Notice of Option Exercise, in lawful money of the United States
of America, by certified
2
check or cashier's check made payable to the order of the Company (or with the
consent of the Company, the purchase price therefor may be paid in whole or in
part by the delivery to the Company of certificates representing shares of
Common Stock held by Employee, duly endorsed for transfer or accompanied by
blank stock, each of which shares shall be valued at a price equal to its then
Current Market Value, as defined below).
In the event that Employee is no longer in the employ of the Company or any of
its subsidiaries in any capacity, Employee shall be entitled to exercise this
Option, according to the terms and conditions set forth herein, to purchase only
that number of Option Shares in which Employee has become vested prior to the
termination of such employment or, pursuant to the provisions of the last
paragraph of Section 1(b) hereof, immediately as of such termination.
3. Issuance of Exercise Shares; Delivery of Stock Certificate. The Company
shall, within ten (10) business days (or as soon thereafter as is practicable)
of the exercise of this Option, issue in the name of and cause to be delivered
to the Employee (or such other person or persons, if any, as the Employee shall
have designated in the Notice of Option Exercise) one or more certificates
representing the Exercise Shares to which the Employee (or such other person or
persons) shall be entitled upon such exercise under the terms hereof. Such
certificate or certificates shall be deemed to have been issued and the Employee
(or such other person or persons so designated) shall be deemed to have become
the record holder of the Exercise Shares as of the date of the due exercise of
this Option.
4. Exercise Shares Fully Paid and Non-assessable. The Company agrees and
covenants that all Exercise Shares issuable upon the due exercise of the Option
will, upon issuance of a certificate therefor in accordance with the terms
hereof, be duly authorized, validly issued, fully paid and non-assessable and
free and clear of all taxes (other than taxes which, pursuant to this Agreement,
the Company shall not be obligated to pay) or liens, charges, and security
interests created by the Company with respect to the issuance thereof.
5. Reservation of Exercise Shares. At the time of or before taking any
action which would cause an adjustment pursuant to this Agreement increasing the
number of shares of capital stock constituting the Exercise Shares, the Company
will take any corporate action which may be necessary in order that the Company
have remaining, after such adjustment, a number of shares of such capital stock
unissued and unreserved for other purposes sufficient to permit the exercise of
all the then vested Options under this Agreement of like tenor immediately after
such adjustment. The Company will also from time to time take action to
increase the authorized amount of its capital stock constituting the Exercise
Shares if at any time the number of shares of capital stock authorized but
remaining unissued and unreserved for other purposes shall be insufficient to
permit the exercise of the Options under this Agreement then vested. The
Company may but shall not be limited to reserve and keep available, out of the
aggregate of its authorized but unissued shares of capital stock, for the
purpose of enabling it to satisfy any obligation to issue Exercise Shares upon
exercise of Options, through the Termination Date, the number of Exercise Shares
deliverable upon the
3
full exercise of this Option. At the time of or before taking any action which
would cause (pursuant to the provisions of this Section 5) an adjustment
resulting in a reduction of the Exercise Price below the then par value (if any)
of the Exercise Shares issuable upon exercise of the Options, the Company will
take any corporate action which may be necessary in order to assure that the par
value per share of the Exercise Shares is at all times equal to or less than the
Exercise Price per share and so that the Company may validly and legally issue
fully paid and non-assessable Exercise Shares at the Exercise Price, as so
adjusted. The Company will also from time to time take similar action if at any
time the Exercise Price is below the then par value of the Exercise Shares.
6. Fractional Shares. The Company shall not be required to issue
fractional shares of capital stock upon the exercise of this Option or to
deliver stock certificates which evidence fractional shares of capital stock.
In the event that any fraction of an Exercise Share would, except for the
provisions of this Section 6, be issuable upon the exercise of this Option, the
Company shall pay to the Employee an amount in cash equal to such fraction
multiplied by the Current Market Value (as defined herein) of the Exercise
Share. For purposes of this subparagraph, the "Current Market Value" shall
mean, and be determined, as follows:
(a) if the type of securities representing the Exercise Shares are traded
in the over-the-counter market and not on any national securities exchange and
not in the NASDAQ Reporting System, the average of the mean between the last bid
and asked prices per share, as reported by the National Quotation Bureau, Inc.,
or another generally accepted reporting service, for the last business day prior
to the date on which this Option is exercised, or if not so reported, the
average of the closing bid and asked prices for an Exercise Share as furnished
to the Company by any member of the National Association of Securities Dealers,
Inc., selected by the Company for that purpose;
(b) if the type of securities representing the Exercise Shares are listed
or traded on a national securities exchange or in the NASDAQ National Market
System, the closing price on the principal national securities exchange on which
they are so listed or traded or in the NASDAQ National Market System, as the
case may be, on the last business day prior to the date of the exercise of this
Option. The closing price referred to in this clause (b) shall be the last
reported sales price or, in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices, in either case, on the
national securities exchange on which the Exercise Shares are then listed or in
the NASDAQ Reporting System; or
(c) if no such closing price or closing bid and asked prices are
available, as determined in any reasonable manner as may be prescribed by the
Board of Directors of the Company.
7. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Exercise Shares upon the exercise of this
Option; provided,
4
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any
certificates representing the Exercise Shares in a name other than that of the
Employee, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
8. Rights of Employee. The Employee shall not, by virtue of anything
contained in this Agreement or otherwise, be entitled to any right whatsoever,
either in law or equity, of a stockholder of the Company, including without
limitation, the right to receive dividends or to vote or to consent or to
receive notice as a shareholder in respect of the meetings of shareholders or
the election of directors of the Company or any other matter, with respect to
any Exercise Shares prior to the acquisition of such Exercise Shares on the
exercise of this Option as provided in this Agreement.
9. Adjustment of Exercise Shares and Exercise Price. The Exercise Price
and the number and kind of Exercise Shares purchasable upon the exercise of this
Option shall be subject to adjustment from time to time upon the happening of
certain events as provided in this Section 9. The Exercise Price in effect at
any time and the number and kind of securities purchasable upon exercise of this
Option also shall be subject to adjustment as hereinafter provided.
(a) In the case the Company shall (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock, (ii)
subdivide or classify its outstanding Common Stock into a greater number of
shares or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, classification, combination or reclassification shall be
proportionally adjusted so that the Employee, upon any exercise of this Option
immediately thereafter shall be entitled to receive the aggregate number and
kind of shares which, if this Option had been exercised by such Employee
immediately prior to such date, he would have owned upon such exercise and been
entitled to receive upon such dividend, subdivision, classification, combination
or reclassification. For example, if the Company declares a 2 for 1 stock
dividend or stock split and the Exercise Price immediately prior to such event
was $5.00 per share, the adjusted Exercise Price immediately after such event
would be $2.50 per share, and as a result, the number of Option Shares would
double. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) In case the Company shall hereafter issue rights or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of Common Stock (or securities convertible into Common Stock) at a price (or
having a conversion price per share) less than the current market price of the
Common Stock (as defined in the subsection (d) below) on the record date
mentioned below, the Exercise Price shall be adjusted so that the same shall
equal the price determined by multiplying the Exercise Price in effect
5
immediately prior to the date of such issuance by a fraction, the numerator of
which shall be the sum of the number of shares of Common Stock outstanding on
the record date mentioned below and the number of additional shares of Common
Stock which the aggregate offering price of the total number of shares of Common
Stock so offered (or the aggregate conversion price of the convertible
securities so offered) would purchase at such current market price per share of
the Common Stock, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on such record date and the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are convertible). Such adjustment
shall be made successively whenever such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or securities convertible into Common Stock) actually delivered.
(c) Whenever the Exercise Price payable upon exercise of this Option is
adjusted pursuant to the provisions of (a) or (b) above, the number of Exercise
Shares purchasable upon exercise of this Option shall simultaneously be adjusted
by multiplying the number of Exercise Shares initially issuable upon exercise of
this Option by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(d) For the purpose of any computation under the subsection above, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 30 consecutive business days before
such date. The closing price for each day shall be the last sale price (regular
way) or, in case no such reported sale takes place on such day, the average of
the last reported bid and lowest reported asked prices as reported by NASDAQ, or
other similar organization if NASDAQ is no longer reporting such information, or
if not so available, the fair market price as determined by the Board of
Directors.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($0.01) in
such price; provided, however, that any adjustments which by reason of the
provisions of this sentence are not required to be made shall be carried forward
and taken into account in any subsequent adjustment required to be made
hereunder. All calculations under this Section 9 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be. Anything
in this section to the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the Exercise Price, in
addition to those required by this Section 9 as it, in its sole discretion,
shall determine to be advisable in order that any dividend or distribution in
shares of Common Stock, subdivision, classification, reclassification or
combination of Common Stock, issuance of warrants or options or other
6
rights to acquire Common Stock or distribution of evidences of indebtedness or
other assets (excluding cash dividends) referred to hereinabove in this Section
9 hereafter made by the Company to the holders of its Common Stock shall not
result in any tax to the holders of its Common Stock or securities convertible
into Common Stock.
(f) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Exercise Price
and adjusted number of Shares issuable upon exercise of this Option to be mailed
to the Employee, at the address set forth in this Agreement for notice, and
shall cause a certified copy thereof to be mailed to its transfer agent, if any.
The Company may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular accountants employed
by the Company) to make any computation required by this Section 9, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.
(g) In the event that at any time, as a result of an adjustment made
pursuant to this Section 9, the Employee thereafter shall become entitled to
receive any Exercise Shares of the Company other than Common Stock, thereafter
the number of such other shares so receivable upon exercise of this Option shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section 9.
10. Restrictions on Exercise and Transferability. This Option, and the
rights of Employee under this Agreement, shall be exerciseable only by the
Employee or, upon his death or disability, by his estate or any duly appointed
guardian, executor, administrator, trustee or other legal representative(s), and
shall not be transferred or assigned to any other party other than Employee's
estate upon his death.
(a) LIMITATION ON SALES OF EXERCISE SHARES. Notwithstanding any of the
other provisions of this Agreement, and regardless of whether the Exercise
Shares are subject to an effective registration statement under the Securities
Act of 1933, as amended, sales of Exercise Shares by the Employee shall be
limited during the time period commencing on July 10, 1997 and ending on June
30, 2001. From July 10, 1997 until June 30, 1998, there shall be no sales
allowed of the Exercise Shares. Effective June 30, 1998 the Employee shall be
allowed to sell twenty-five percent (25%) of the total number of Exercise Shares
issuable upon the exercise of this Option. Thereafter, the Employee may sell an
additional 25% of the total number of Exercise Shares issuable upon exercise of
this Option after each of the one year periods ended June 30, 1999, 2000 and
2001. Any Exercise Shares that are not sold by Employee during the year in
which such Exercise Shares are eligible to be sold may be sold in any subsequent
year.
11. Restrictive Legends. So long as an exemption therefrom is then
available, the Company shall not be required by the terms of this Agreement to
register, under the Securities Act of 1933, as amended (the "Act"), or under
applicable state securities laws
7
(together with the Act, the "Securities Laws"), any of the Exercise Shares
issued or to be issued upon the exercise of the Option. In addition, in the
event that any such Exercise Shares are not so registered, Employee consents to
the placement on the certificate or certificates representing such Exercise
Shares a legend or legends to the effect that, among other things, neither such
certificate or certificates nor the Exercise Shares evidenced thereby have been
registered under any Securities Laws and that no sale, transfer or other
disposition thereof or any interest therein may be made or shall be recognized
unless in the satisfactory written opinion of counsel for, or satisfactory to,
the Company, such transaction would not violate or required registration under
such Securities Laws. The Company may also place on such certificate or
certificates any other legend it deems necessary or desirable in order to
conform to any of the Securities Laws.
12. Certain Registration Rights. If at any time prior to the Termination
Date the Company registers under the Act any shares of Common Stock to be issued
to an executive officer of the Company or any of its subsidiaries upon exercise
of an option (a "Management Option") to acquire such shares of Common Stock
granted in connection with such person's employment with the Company or any of
its subsidiaries as an executive officer, then the Company shall offer in
writing to Employee a corresponding right to receive shares of Common Stock that
are registered under the Act upon the exercise of any of Employee's then vested
and unexercised shares of Common Stock under this Agreement upon similar terms
and provisions as those offered to such other executive officer. In addition,
if at any time prior to the Termination Date the Company offers to register any
of such other executive officer's outstanding shares of Common Stock that were
issued to him upon exercise of a Management Option, then the Company shall offer
in writing to Employee at the same time a corresponding right to cause the
Company to register any of the Employee's then outstanding shares of Common
Stock that were issued to him upon exercise of the Option granted under this
Agreement. The rights granted in favor of Employee under this Section 12: (a)
shall be as equal in nature to the rights granted in favor of such other
executive officer as is reasonably practicable, (b) shall relate to a
proportionate number of Employee's shares of Common Stock as the Board of
Directors of the Company deems reasonable and (c) shall be subject to such other
reasonable terms and conditions as the Board of Directors of the Company may
then impose.
13. Notices. All notices or other communications under or relating to
this Agreement shall be in writing and shall be deemed to have been given if
delivered by hand or mailed by certified mail, postage prepaid, return receipt
request, addressed as follows:
If to the Company: North American Technologies Group, Inc.
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attention: Corporate Secretary
If to the Employee: Xxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxx 00000
8
Either of the Company or the Employee may from time to time change the
address to which notices to it are to be mailed hereunder by notice in
accordance with the provisions of this Section.
14. Amendments. This Amended and Restated Stock Option Agreement includes
a) the amendment entered into as of July 10, 1997; b) the effect of the
Company's 9 to 1 reverse stock split which was effective May 13, 1998; and c)
the amendment to the stock option agreement approved by the Board of Directors
on February 22, 1999 in which the exercise price was reduced to $4.50. This
Agreement may be further amended or supplemented only by a writing signed by
both parties hereto.
15. Successors and Assigns. Subject to the provisions of Section 10 hereof,
this Agreement shall inure to the benefit of and be binding on the respective
successors, assigns and legal representatives of the Employee and the Company.
16. Severability. If for any reason any provision, paragraph or terms of
this Agreement is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and Sections of this Agreement shall be deemed to be severable.
17. Governing Law. To the full extent controllable by stipulation of the
Company and Employee, this Agreement shall be interpreted and enforced under
Texas law.
18. Headings. Headings used herein are included herein for convenience of
reference only and shall not affect the construction of this Agreement or
constitute a part of this Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first set out above.
"Company" NORTH AMERICAN TECHNOLOGIES
GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
Chairman of the Board
"Employee" XXXXX X. XXXXXXXX
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
9
APPENDIX A
NOTICE OF STOCK OPTION EXERCISE
Pursuant to that certain Stock Option Agreement, dated as of ____________,
1995, as amended to date (the "Agreement"), by and between North American
Technologies Group, Inc., a Delaware corporation (the "Company"), and the
undersigned, and subject to the vesting periods set forth therein, the
undersigned hereby irrevocably elects to exercise an option to acquire
________________ shares of _____________________________, at an exercise price
of $____ per share, or an aggregate purchase price of $__________. Enclosed
herewith is a certified check or cashier's check made payable to the order of
the Company in the amount of the aggregate purchase price set forth in the
preceding sentence [or, if, applicable: "; provided, however, that $________ of
such purchase price therefor is hereby paid by the delivery to the Company of
______ shares of Common Stock represented by certificate no(s) ___________, duly
endorsed for transfer or accompanied by a blank stock power, all in accordance
with the terms and provisions of the Agreement"]. Each capitalized terms used
herein, unless otherwise defined, has the meaning given such term in the
Agreement.
The undersigned hereby represents and agrees that the Exercise Shares
purchased pursuant hereto are being purchased for investment and not with a view
to the distribution or resale thereof, and that the undersigned understands that
said Exercise Shares have not been registered under the Securities Laws.
The undersigned requests that a certificate for the Exercise Shares be
issued in the name of: ______________________________________
______________________________________
______________________________________
[Please print name, address]
Address of Employee (if different from above):
_________________________________
_________________________________
_________________________________
Dated:__________________
Name of Employee: _________________________________
Employee's Signature: _________________________________
10
