STOCK OPTION AGREEMENT
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AGREEMENT, dated as of February 5, 1997 by and between AMERICAN
ELECTROMEDICS CORP., a Delaware corporation (the "Company"), and XXXXXX X.
XXXXXXXX (the "Optionee").
W I T N E S S E T H
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WHEREAS, pursuant to an Employment Agreement, dated as of the
date hereof (the "Employment Agreement), between the Optionee and the
Company, the Company agreed to grant a stock option (the "Option") to the
Optionee for the purchase of Three Hundred Thousand (300,000) shares of the
Company's Common Stock, par value $.10 per share (the "Common Stock"); and
WHEREAS, the Board of Directors of the Company and its
Compensation Committee have authorized the grant of the Option to the
Optionee;
NOW, THEREFORE, in consideration of the premises, mutual
covenants herein set forth and other good and valuable consideration,
subject to the terms and conditions herein, the Company and the Optionee
hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions
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herein, the Company hereby grants to the Optionee an option (the "Option")
to purchase Three Hundred Thousand (300,000) shares (the "Option Shares")
of its Common Stock at an exercise price (the "Exercise Price") of $3.00
per share, as may be adjusted from time to time as provided in this
Agreement.
2. Exercise of the Option.
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2.01 Subject to adjustments as provided in Section 5
herein, the Option shall be cumulatively exercisable:
(a) immediately as to 30,000 of the Option Shares; and
(b) as to the balance of the Option Shares, 7,500 of the
Option Shares shall vest on the first day of each month after the date
hereof, commencing on March 1, 1997, so that all of the Option Shares shall
be exercisable on February 1, 2000.
2.02 Should the Employment Agreement be terminated either (i)
prior to February 28, 2000 by its terms, (ii) by the Company other than for
cause, as defined therein, or (iii) by the Optionee, all Option Shares
which have vested prior to such termination shall be exercisable for a
period of ninety (90) days from the date of such termination of the
Employment Agreement, but not beyond the Expiration Date in Section 2.03
hereof. Should the Employment Agreement be terminated by the Company for
cause, as defined therein, all Option Shares which have vested shall
immediately expire as of such termination date, and no longer be
exercisable after the date of such termination of the Employment
Agreement. All unvested Option Shares shall terminate upon such
termination of the Employment Agreement regardless of the reason for
such termination.
2.03 The Option shall expire on January 31, 2002 (the
"Expiration Date") subject to earlier termination as provided herein.
3. Rights of Holder. The Optionee shall not have any rights to
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dividends or any other rights of a stockholder with respect to any Option
Shares until such Shares shall have been issued to him (as evidenced by the
appropriate entry on the transfer books of the Company) upon purchase of
such Shares upon exercise of the Option. Furthermore, nothing contained in
this Agreement shall confer upon the Optionee any right to be continued in
the employ of the Company or its subsidiaries beyond what is called for in
the Employment Agreement or shall prevent the Company from terminating his
employment in accordance with the Employment Agreement.
4. Non-Transferability of Option. This Option shall not be
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transferable other than by will or by the laws of descent and distribution,
and may be exercised during the Optionee's lifetime only by him.
5. Adjustments.
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5.01 Adjustments by the Company. In the event of a stock
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dividend, stock split-up, share combination, exchange of shares,
recapitalization, merger, consolidation, acquisition or disposition of
property or shares, reorganization, liquidation or other similar changes or
transactions, by the Company during the term of the Option, the Board of
Directors of the Company shall make such adjustment of the number and class
of shares then covered by the Option, or of the Exercise Price, or both,
whose determination shall be conclusive. To the extent practicable, the
Company shall give the Optionee prior notice of any such event, provided
that the failure by the Company to give such notice shall not subject the
Company to any liability herein.
5.02 Adjustments Due to Merger, Consolidation, Reorganization,
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Asset Sale, Liquidation, etc. (a) If the Company shall be the surviving
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corporation in any reorganization, merger, consolidation, etc. of the
Company with one or more other corporations, any then outstanding Option
shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to such Option would have been
entitled immediately following such reorganization, merger, consolidation,
etc. with a corresponding proportionate adjustment of the Exercise Price as
to which such Option may be exercised so that the aggregate Exercise Price
as to which such Option may be exercised shall be the same as the aggregate
Exercise Price as to which such Option may be exercised for the shares
remaining subject to the Option immediately prior to such reorganization,
merger, consolidation, etc.
(b) In the event of a merger or consolidation in which the
Company is not the surviving corporation, or sale of all or substantially
all of the assets of the Company in which outstanding shares of Common
Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the
Company (collectively, a "Corporate Transaction"), the Board of Directors
of the Company, or the board of directors of any corporation assuming the
obligations of the Company, may, in its discretion, take any one or more of
the following actions, as to outstanding Options: (i) provide that such
Options shall be assumed or equivalent Options shall be substituted, by the
acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the Optionee, provide that all unexercised Options will
terminate immediately prior to the consummation of such transaction unless
exercised by the Optionee within a specified period following the date of
such notice, or (iii) in the event of a Corporate Transaction under the
terms of which holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in the
Corporate Transaction (the "Transaction Price"), make or provide for a cash
payment to the Optionee equal to the difference between (A) the Transaction
Price times the number of shares of Common Stock subject to such
outstanding Options (to the extent then exercisable at prices not in excess
of the Transaction Price) and (B) the aggregate Exercise Price of all such
outstanding Options in exchange for the termination of such Options.
6. Reservation of Shares. The Company shall at all times
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during the term of the Option reserve and keep available such number of
shares of Common Stock or such other class of stock then subject to the
Option as shall be sufficient to satisfy the requirements of this
Agreement. The Company shall list such shares of Common Stock on the
national securities exchange or automated quotation system on which the
Company's Common Stock is then listed.
7. Exercise Procedure.
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7.01 Procedure. (a) The Optionee may exercise the Option, at any
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time or from time to time as provided herein, by delivering to the Company
a written notice duly signed by the Optionee stating the number of Option
Shares that the Optionee has elected to purchase and accompanied by payment
in an amount equal to the full purchase price for the Option Shares to be
purchased (the "Purchased Shares"). The notice may be in form of the
"Exercise of Option to Purchase Shares" attached hereto. The payment may
either be in cash or by check.
(b) Following receipt by the Company of such notice of exercise and
full payment, the Company shall issue, as soon as practicable, a stock
certificate for the Purchased Shares in the name as designated by the
Optionee and deliver the certificate to the Optionee.
7.02 Compliance. The Company, however, shall not be required to
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issue or deliver the stock certificate pursuant to Section 7.01(b) hereof
until it has complied with all requirements of the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended, any securities exchange or automated quotation system on which the
Company's Common Stock may then be listed, and all applicable state laws in
connection with the issuance of the Option Shares or their listing on said
securities exchange or system, including receiving representations by the
Optionee as reasonably required to ensure compliance with the foregoing
laws.
7.03 Legend. If the Purchased Shares are not then covered by a
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registration statement in accordance with Section 8 hereof, each
certificate for the Purchased Shares shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE
BEEN COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED."
8. Registration Statement. Upon the written request of the
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Optionee, the Company shall use its best efforts to prepare and file with
the Securities and Exchange Commission (the "Commission") a Registration
Statement (the "Registration Statement") on Form S-8 or any successor form
under the Securities Act, assuming continued eligibility by the Company to
use such Form, for the purpose of registering for purchase and sale of the
Option Shares. The Company shall bear the costs of preparing and filing
the Registration Statement (other than any selling costs of the Optionee)
and may include in such Registration Statement other shares of its Common
Stock underlying options or awards granted to other persons.
Notwithstanding the provisions of this Section 8, the Company shall not be
obligated to file a registration statement hereunder if (i) the Purchased
Shares may then be sold pursuant to Rule 144 under the Securities Act or
(ii) the Company is not able to use a Form S-8.
9. Notices. Each notice relating to this Agreement shall be in
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writing and delivered in person or by facsimile or certified mail to the
following addresses:
If to the Company
American Electromedics Corp.
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attn: Xxxx Xxxx, President
Fax: (000) 000-0000
If the Optionee:
Xxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
or to such other address as either party hereto may hereinafter duly give
to the other.
10. Binding. This Agreement shall be binding upon and inure to
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the benefit of the parties hereto, and their successors, assigns, heirs and
administrators.
11. Entire Agreement. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the matters herein,
and cannot be amended, modified or terminated except by an agreement in
writing executed by the parties hereto.
12. Governing Law. This Agreement shall be construed in
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accordance with and governed by the laws of the State of Delaware without
regard to the conflicts of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
AMERICAN ELECTROMEDICS CORP.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx,
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Exercise of Option
To Purchase Shares
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To: AMERICAN ELECTROMEDICS CORP.
The undersigned hereby exercises the within Option for the
purchase of shares (the "Shares") of American Electromedics Corp.
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Common Stock granted under a Stock Option Agreement, dated as of
, 1997, and herewith makes payment of the purchase price by
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the delivery of $ . In the event the Shares are not registered under
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the Securities Act of 1933, as amended, the undersigned shall provide such
representations as may be required by the Company to fulfill any exemptions
that may be sought under said Act. Kindly issue the certificate for the
Shares in accordance with the instructions given below:
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Signature
Instructions for issuance
of stock:
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Name
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Address
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Social Security Number
