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Exhibit
10.47
AMERICAN TECHNOLOGY
CORPORATION
October 17,
2005
Mr. John
Zavoli
Dear
John,
American
Technology Corporation ("Company") is very pleased to confirm our
offer of employment. This offer is contingent upon the
recommendation of the Company's Compensation Committee, and
approval by the Company's Board of Directors (both to be obtained
no later than October 18, 2005), and satisfactory results of all
reference, education, and background checks. Our offer is based on
the following terms and conditions:
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Title:
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President and
Chief Operating Officer commencing on the start date.
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Start
Date:
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We have
anticipated your start date as Tuesday, November 1,
2005.
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Salary:
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Your base
salary will be $250,000.00 per year, payable in accordance with the
normal payroll practices of the Company. Your base salary will be
reviewed by the Compensation Committee at the end of fiscal 2006,
and any increase recommended by the Compensation Committee will be
subject to approval by the Board of Directors.
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Bonus:
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You will be
eligible for an annual bonus with respect to fiscal years beginning
fiscal 2006 as recommended by the Compensation Committee and
approved by the Board of Directors. The bonus will be based in part
on your achievement of detailed quarterly and annual goals that
will be established by the Compensation Committee with input from
you and the chairman of the Board during the first 90 days of your
employment. Any bonus so determined will be payable at the same
time as annual bonuses are paid to other executive officers of the
Company.
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AMERICAN TECHNOLOGY
CORPORATION
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Stock
Options:
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Management will
recommend to the Compensation Committee that you be granted
a stock option under the Company's 2005 Equity Incentive Plan
(the "Plan") to purchase 100,000 shares of common stock at the
first meeting of the Compensation Committee held after your start
date, or earlier by unanimous written consent. This option will be
in addition to the stock option granted to you on June 14, 2005.
The recommended option will have an exercise price equal to the
fair market value of our common stock on the date the
Compensation Committee approves the grant, determined in
accordance with the Plan. The recommended option will be
exercisable for five (5) years after grant, subject to earlier
termination upon termination of your continuous service. The
recommended option will vest over four (4) years, with one fourth
(1/4) of the shares vesting twelve (12) months after the grant
date, and the balance vesting in equal quarterly installments
through and including the fourth anniversary of the grant date. The
recommended option will be a non-qualified stock option and will
not qualify for incentive stock option (ISO) treatment under the
Internal Revenue Code.
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In the event
your employment is terminated for any reason other than Cause
(as defined on Exhibit A), or if you resign for Good Reason (as
defined on Exhibit A), you will be entitled to severance in the
form of post-termination salary continuation and payment by the
Company of the premiums for extension of benefits on COBRA
(collectively, "Compensation Continuation") for the number of
months set forth below, conditioned on your e
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