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EXHIBIT 10.2
AMERICAN TECHNOLOGY CORPORATION
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Special Stock Option
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Granted Under the Approval of the Board of Directors of American
Technology Corporation
THIS SPECIAL STOCK OPTION, dated as of October 2, 1997 (the "Date of
Grant"), is granted by AMERICAN TECHNOLOGY CORPORATION, a Delaware corporation
("Company"), to Xxxxxxxxx X. Xxxxxxx (the "Optionee"), whose status with the
Company is described on the signature page hereof below his signature.
WHEREAS, the Optionee is now a Director 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. Pursuant to the Unanimous Consent of Directors of the Company
dated October 2, 1997, the Company hereby grants to the Optionee an option (the
"Option") to purchase 50,000 shares of the Company's common stock, $.00001 par
value per share (the "Option Shares") at the price of $16.00 per share (the
"Purchase Price" or "Exercise Price") and vesting 25,000 option shares on
October 2, 1998 and 25,000 option shares on October 2, 1999. 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 10 hereof.
2. TERM. This Option is exercisable during the period beginning with the
Date of Grant and ending October 2, 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. 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 in cash, represented by bank or cashier's
check, certified check or money order.
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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 may, but shall in no event by obligated to, register any
securities covered hereby pursuant to the Act. 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
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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 as follows:
(i) Upon termination of the Optionee's directorship with
the Company for cause;
(ii) At the expiration of six (6) months from the date of
the Optionee's resignation or termination of the Optionee's directorship with
the Company without cause, for any reason other than death; provided, that if
the Optionee dies within such six-month period, subclause
(iii) below shall apply; or (iii) At the expiration of
fifteen (15) months after the date of death of the Optionee.
(b) This Option confers no right upon the Optionee with respect
to the continuation of his directorship (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
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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 not
less than 45 days prior to such effective date, and (z) the Options or other
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
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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.
The failure of the Optionee or other holder of Option Shares to promptly
give such notice to the Company shall entitle the Company to cancel this Option
forthwith, without prior notice to the holder hereof.
11. 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 Xxxxx 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Special Stock
Option as of the day and year first above written.
AMERICAN TECHNOLOGY CORPORATION
By ________________________________________
Xxxx X. Xxxxxxxx, President
ATTEST:
By ______________________________
Xxxxxxx Xxxxxx, Secretary
OPTIONEE NAME and STATUS;
Xxxxxxxxx X. Xxxxxxx, Director
ORIGINAL to Optionee / COPY to Company
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