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Exhibit 10.15.1.1
AMERICAN TECHNOLOGY CORPORATION
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STOCK OPTION AGREEMENT
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GRANTED UNDER THE APPROVAL OF THE BOARD OF DIRECTORS OF
AMERICAN TECHNOLOGY CORPORATION
THIS STOCK OPTION AGREEMENT, dated as of September 1, 1997 (the "Date of
Grant"), is granted by AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation
("Company"), to Xxxx Xxxxxxxx (the "Optionee"), whose status with the Company is
described on the signature page hereof below his signature.
WHEREAS, the Optionee is now an officer of the Company and the Company
desires to have the Optionee remain in its service and desires to encourage
stock ownership by the Optionee and to increase the Optionee's proprietary
interest in the Company's success; and as an inducement thereto has determined
to grant to the Optionee the option herein provided for, to the end that the
Optionee may thereby be assisted in obtaining an interest, or an increased
interest, as the case may be, in the stock ownership of the Company;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. GRANT AND VESTING.
(a) Pursuant to the Unanimous Consent of Directors of the Company dated August
26, 1997, the Company hereby grants to the Optionee an option (the "Option") to
purchase up to 862,000 shares of the Company's common stock, $.00001 par value
per share (the "Option Shares") at the price of $5.81 per share (the "Purchase
Price" or "Exercise Price") representing the closing bid price on August 29,
1997.
(b) This option shall vest and become exercisable with respect to 250,000 option
shares on this grant date and the balance of 612,000 option shares vesting and
becoming exercisable at the rate of 17,000 option shares on each full month
anniversary of employment thereafter with all shares vesting and become
exercisable on August 31, 2000.
(c) Additionally 306,000 option shares (deducted from the farthest out months
vesting) shall vest and become exercisable upon the achievement of a significant
licensing agreement during Optionee's employment, as determined by the Board of
Directors in its sole discretion.
(d) Subject to the provisions hereof, immediately prior to the closing of a
transaction as described in Section 5(b)(2) of the Optionee's Employment
Agreement dated September 1, 1997 ("Corporate Transaction"), the exerciseability
of each option granted to purchase shares of Common Stock that is outstanding
immediately prior to the closing of such Corporate Transaction, will be
automatically accelerated so that each such option will, immediately prior to
the closing date for the Corporate Transaction, become fully exerciseable with
respect to the total number of shares issuable upon exercise thereof and may be
exercised prior to the closing of such Corporate Transaction for all or any
portion of such shares.
(e) This Option is granted separately at the discretion of the Board of
Directors and is not an option pursuant to the 1992 option plans. Both the
Purchase Price and the number of Option Shares purchasable may be adjusted
pursuant to Paragraph 9 hereof.
2. TERM. This Option is exercisable during the period beginning with the
Date of Grant and ending August 31, 2002, at 5:00 p.m. (Pacific Time), except as
provided in Paragraph 7 hereof.
3. EXERCISE OF OPTION. During the Optionee's life, this Option may only
be exercised by him or her in whole or in part. This Option may only be
exercised by presentation at the principal offices of the Company in San Diego,
California of written notice to the Company's Secretary advising the Company of
the Optionee's election to purchase Option Shares, specifying the number of
Option Shares being purchased, accompanied by payment. No Option Shares shall be
issued until full payment is made therefor. Payment shall be made either (i) in
cash, represented by bank or cashier's check, certified check or money order; or
(ii) by advising the Company, at the time the Option is exercised, to withhold
from exercise under the Option the appropriate number of Option Shares, the
aggregate market value (closing bid price) of which on the date of exercise of
the Option is equal to the aggregate cash purchase price of the
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Option Shares being exercised and purchased under the Option, and such
withholding shall constitute full payment for the non-withheld Option Shares
issued upon exercise, or (iii) at the discretion of the Board of Directors, by
delivery of the Optionee's personal recourse note with interest and terms
acceptable to the Board of Directors.
4. ISSUANCE OF OPTION SHARES; RESTRICTIVE LEGEND. (a) Upon proper
exercise of this Option, the Company shall mail or deliver to the Optionee, as
promptly as practicable, a stock certificate or certificates representing the
Option Shares purchased, subject to clause (b) below. The Company shall not be
required to sell or issue any shares under the Option if the issuance of such
shares shall constitute a violation of any applicable law or regulation or of
any requirements of any national securities exchange upon which the Company's
common stock may be listed.
(b) Upon any exercise of this Option, if a registration statement under
the Securities Act of 1933 (the "Act") is not in effect with respect to the
Option Shares, then the Company shall not be required to issue any Option Shares
unless the Company has received evidence reasonably satisfactory to it to the
effect that the Optionee is acquiring such shares for investment and not with a
view to the distribution thereof. Any reasonable determination in this
connection by the Company shall be final, binding and conclusive.
(c) Unless and until removed as provided below, each certificate
evidencing unregistered Option Shares shall bear a legend in substantially the
following form:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws
of any state and may not be sold or transferred except upon such
registration or upon receipt by this Corporation of an opinion or
counsel satisfactory to this Corporation, in form and substance
satisfactory to this Corporation, that registration is not required for
such sale or transfer. "
The Company shall issue a new certificate which does not contain such
legend if (i) the shares represented by such certificate are sold pursuant to a
registration statement (including a current prospectus) which has become
effective under the Act, or (ii) the staff of the Securities and Exchange
Commission shall have issued a "no action" letter, reasonably satisfactory to
the Company's counsel, to the effect that such shares may be freely sold and
thereafter traded publicly without registration under the Act, or (iii) the
Company's counsel, or other counsel acceptable to the Company, shall have
rendered an opinion satisfactory to the Company to the effect that such shares
may be freely sold and thereafter publicly traded without registration under the
Act. The Company agrees that if it should cause the registration of any stock
options of any senior officers that it will include the option shares of the
Optionee with any registration statement, as long as the shares qualify to be so
registered, at no cost to Optionee. The Company shall not be obligated to take
any other affirmative action in order to cause the exercise of the Option or the
issuance of any Option Shares to comply with any law or regulation of any
governmental authority.
5. TRANSFER OF OPTION SHARES. Option Shares issued upon exercise of this
Option which have not been registered under the Act shall be transferable by a
holder thereof only upon compliance with the conditions in this Paragraph.
Before making any transfer of Option Shares, the holder of the shares shall give
written notice to the Company of the holder's intention to make the transfer,
describing the manner and circumstances of the transfer. If in the opinion of
the Company's counsel, or of other counsel acceptable to the Company, the
proposed transfer may be effected without registration under the Act, the
Company shall so notify the holder and the holder shall be entitled to transfer
such shares as described in the holder's notice to the Company. If such counsel
opines that the transfer may not be made without registration under the Act,
then the Company shall so notify the holder, in which event the holder shall not
be entitled to transfer the shares until (i) the Company notifies the holder
that it is permissible to proceed with the transfer, or (ii) registration of the
shares under the Act has become effective. The Company may issue "stop transfer"
instructions to its transfer agent with respect to any or all of the Option
Shares as it deems necessary to prevent any violation of the Act.
6. TRANSFER OR ENCUMBRANCE OF THIS OPTION PROHIBITED. This Option may
not be transferred or assigned in any manner by the Optionee, except by will or
trust upon the Optionee's death or by operation of law under the laws of descent
and distribution. The same restriction on transfer or assignment shall apply to
any heirs, devisees, beneficiaries or other persons acquiring this Option or an
interest herein under such an instrument or by operation of law. Further, this
Option may not be pledged, hypothecated or otherwise encumbered, by operation of
law or otherwise, nor shall it be subject to execution, attachment or similar
process.
7. TERMINATION OF SERVICE, DEATH, OR DISABILITY.
(a) Except as may be otherwise expressly provided in this Agreement,
this Option shall terminate and any vested options at such termination shall no
longer be exercisable as follows:
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(i) Upon termination of the Optionee's employment with the
Company for cause;
(ii) At the expiration of twelve (12) months from the date of
the Optionee's resignation;
(iii) At the expiration of twelve (12) months from the date of
Optionee's termination of the Optionee's employment with
the Company without cause, for any reason other than death;
provided, that if the Optionee dies within such
twelve-month period, subclause (iv) below shall also apply;
or
(iv) At the expiration of twelve (12) months after the date of
death of the Optionee.
(b) "Employment with the Company" shall include employment with any
parent or subsidiary of the Company, and this Option shall not be affected by
the Optionee's transfer of employment among the Company and any parent or
subsidiary thereof. An Optionee's employment with the Company shall not be
deemed interrupted or terminated by a bona fide leave of absence (such as
sabbatical leave or employment by the Government) duly approved, military leave
or sick leave. This Option shall not be affected in the event the Optionee
suffers a significant diminution in his duties or any significant reduction in
his overall compensation. After the death of the Optionee, his executors,
administrators or personal representatives, or any person or persons to whom the
Option may be transferred by will, trust or by the laws of descent and
distribution, shall have the right, at any time prior to termination hereof, to
exercise this Option pursuant to its terms.
(c) This Option confers no right upon the Optionee with respect to the
continuation of his employment (or his position as an officer, director or other
provider of services) with the Company or any parent or subsidiary of the
Company, and shall not interfere with the right of the Company, or any parent or
subsidiary Company, to terminate such relationship(s) at any time in accordance
with law and any agreements then in force.
8. NO RIGHTS AS STOCKHOLDER. The Optionee shall have no rights as a
stockholder with respect to Option Shares until the date of issuance of a stock
certificate for such shares. No adjustment for dividends, or otherwise, except
as provided in Xxxxxxxxx 0, xxxxx xx made if the record date therefor is prior
to the date of exercise of such Option.
9. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of this
Option shall not limit or affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Option
Shares or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
However,
(a) If, prior to the Company's delivery of all the Option Shares subject
to this Option, the Company shall effect a subdivision (split) or combination
(reverse split) of shares or other capital readjustment, the payment of a common
stock dividend, or other increase or reduction of the number of shares of common
stock outstanding, without receiving compensation therefor in money, services or
property, then (i) in the event of an increase in the number of such shares
outstanding, the Purchase Price shall be proportionately reduced and the number
of Option Shares then still purchasable shall be proportionately increased; and
(ii) in the event of a reduction in the number of such shares outstanding, the
Purchase Price payable per share shall be proportionately increased and the
number of Option Shares then still purchasable shall be proportionately reduced.
(b) If while this Option remains outstanding the Company is reorganized,
merged, consolidated or party to a plan of share exchange with another
corporation, or if the Company sells or otherwise disposes of all or
substantially all its property or assets to another corporation, then subject to
the provisions of clause (ii) below, (i) after the effective date of such
reorganization, merger, consolidation, exchange or sale, as the case may be, the
Optionee shall be entitled, upon exercise of this Option, to receive, in lieu of
the Option Shares, the number and class of shares of such stock, other
securities, cash and other property or rights as the holders of shares of the
Company's common stock received pursuant to the terms of the reorganization,
merger, consolidation, exchange or sale and to which he would have been entitled
if, immediately prior to such reorganization, merger, consolidation, exchange or
sale, he had been the holder of record of a number of shares of common stock
equal to the number of Option Shares as to which this Option shall be so
exercised; and (ii) this Option may be canceled by the Board of Directors of the
Company as of the effective date of any such reorganization, merger,
consolidation, exchange or sale; provided that (x) such reorganization, merger,
consolidation, exchange or sale results in a change in control of the Company
rather than a mere change of form or domicile of the Company, (y) written notice
of such cancellation is given to the Optionee or other holder of this Option
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not less than 45 days prior to such effective date, and (z) the holder shall
have the right to exercise the Option in full during such 45-day period
preceding the effective date of such reorganization, merger, consolidation,
exchange or sale.
(c) In case the Company shall determine to offer to the holders of its
common stock rights to subscribe pro rata for any new or additional shares of
common stock, or any securities convertible into common stock, then the Optionee
shall be entitled to participate in such pro rata offering in the same manner
and to the same extent as if this Option had been exercised at the Purchase
Price then in effect and the number of Option Shares then purchasable upon
exercise hereof had been issued to the Optionee pursuant to the terms hereof.
(d) Except as herein before expressly provided, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the Purchase Price or the number of Option Shares then
subject to this Option.
10. NOTIFICATION TO COMPANY OF CERTAIN SALES. The Optionee or other
holder of Option Shares who sells any of such shares shall notify the Company of
such fact in writing within 30 days after the date of sale, if:
(a) At the time the Option Shares were sold, less than ONE year had
elapsed since the date the Option Shares were purchased by the Optionee, and
less than TWO years had elapsed since the Date of Grant of this Option; or
(b) the Optionee was not an employee of the Company (or of a parent or
subsidiary thereof) at all times during the period beginning on the Date of
Grant of this Option and ending on the date three (3) months prior to the date
this Option was exercised to purchase the Option Shares sold.
11. PAYMENT OF WITHHOLDING TAXES. The exercise of any Option is subject
to the condition that if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in such event, the exercise of the Option shall not be effective
unless such withholding shall have been effected or obtained in a manner
acceptable to the Company.
12. NOTICES, ETC. Any notice hereunder by the Optionee shall be given to
the Company in writing, and such notice and any payment by the Optionee
hereunder shall be deemed duly given or made only upon receipt thereof at the
Company's office at 00000 Xxxxxxx Xxxxx Xx. Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
or at such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in writing
and shall be deemed duly given or made if mailed or delivered to the Optionee at
the last address as the Optionee may have on file with the Company's Secretary.
This Option shall be governed under and construed in accordance with the laws of
the State of California. This address shall be binding on the Company and the
Optionee and all successors, assigns, heirs, devisees and personal
representatives thereof.
NOTE: This option must match the Control copy maintained by the Company, in all
particulars.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Option Agreement
as of the day and year first above written.
AMERICAN TECHNOLOGY CORPORATION
By /s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX, PRESIDENT
ATTEST:
By /s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX, SECRETARY
OPTIONEE NAME AND STATUS;
XXXX XXXXXXXX, EMPLOYEE
ORIGINAL to Optionee / COPY to Company
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