<PAGE> 1
As filed with the Securities and Exchange Commission on ___________, 1995
Registration No.33-__________________________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
PLAYBOY ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2258830
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
680 NORTH LAKE SHORE DRIVE
CHICAGO, ILLINOIS 60611
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
PLAYBOY ENTERPRISES, INC. 1995 STOCK INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
--------------------
IRMA VILLARREAL
SECRETARY
PLAYBOY ENTERPRISES, INC.
680 NORTH LAKE SHORE DRIVE
CHICAGO, ILLINOIS 60611
(312) 751-8000
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Proposed maximum
maximum aggregate
Title of each class of Amount to be offering price offering Amount of
securities to be registered registered per share price registration fee
<S> <C> <C> <C> <C>
Class B Common Stock, $.01 par value.... 1,176,750(1) $9.03(2) $10,626,052(3) $3,320.64
Shares
</TABLE>
(1) 1,058,750 Class B shares are being offered pursuant to stock options
and restricted stock previously granted or issued by the Stock Option
Committee of the Board of Directors and 118,000 Class B shares are
being offered pursuant to stock options or other awards which may be
granted or issued in the future.
(2) Reflects the weighted average exercise price of all options and
restricted stock previously granted or issued ($9.13 Class B) and all
shares offered under options or other awards which may be granted or
issued in the future (based on the average of the high and low prices
reported in the consolidated reporting system for November 2, 1990
(the "Rule 457 Prices")) ($8.13 Class B).
(3) Reflects the sum of the actual aggregate exercise price of options
previously granted and the aggregate exercise price of possible future
grants based on Rule 457 Prices.
================================================================================
<PAGE> 2
PART II
ITEM 3. INCORPORATION OF DOCUMENT BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994, and its Quarterly Reports on Form 10-Q for the quarterly
periods ending September 30, 1994 and December 31, 1994, and the description
of the Company's Class A and Class B Common Stock contained in the registration
statement on Form 8-A dated May 17, 1990, as amended by Form 8, dated June 7,
1990, are incorporated by reference into this registration statement. Any
documents filed by the Company subsequent to the filing of this registration
statement pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be a part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation. Section 145 of the
General Corporation Law of the State of Delaware ("GCL") provides that a
Delaware corporation has the power to indemnify its officers and directors in
certain circumstances.
Subsection (a) of Section 145 of the GCL empowers a corporation
to indemnify any director or officer, or former director or officer, who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding provided that such director or officer acted in good faith in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such director or officer had no cause to believe his or her
conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of
the capacities set forth above, against expenses actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any
claim, issue or matter as to which such director or officer shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the corporation unless and only to the extent that the Court of
Chancery shall determine that despite the adjudication of liability such
director or officer is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action suit
or proceeding referred to in subsections (a) and (b) or
<PAGE> 3
in the defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him or her in connection therewith; that expenses may be
advanced subject to an undertaking to reimburse such expenses if the person
receiving the advance is ultimately determined not to be entitled to
indemnification; that indemnification provided for by Section 145 shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and empowers the corporation to purchase and maintain insurance on
behalf of a director or officer of the corporation against any liability
asserted against him or her or incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liabilities under Section
145.
Article TWELFTH of the Company's Restated Certificate of
Incorporation provides that directors will be exempt from monetary liabilities
in certain circumstances, as follows:
"Directors shall not be personally liable to the corporation
or its stockholders for monetary damages for breaches of
fiduciary duty as a director, except for liability (i) for
breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law; (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit."
Article VII, Section 6 of the Company's bylaws provides for
indemnification of officers and directors of the Company, to the fullest extent
permitted by applicable law for all expenses, liability and loss in connection
with any action, suit or proceeding while serving as a director or officer of
the Company or as an officer, director or employee of any other entity at the
request of the Company. Such indemnification continues as to a person who has
ceased to be a director or officer, and inures to the benefit of his or her
heirs, executors and administrators. The Company is required to indemnify any
officer or director in connection with a proceeding initiated by such officer
or director only if such proceeding was authorized by the Board. The right to
indemnification includes the right to be paid by the Company the expenses
incurred in defending any such proceeding in advance of its final disposition
subject to receipt by the Company of any required undertaking to repay all
amounts so advanced if it shall ultimately be determined that the director or
officer is not entitled to be indemnified under the Company's bylaws or
otherwise. If an indemnification claim is not paid in full by the Company
within ninety days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant is also entitled to be paid the expense of prosecuting that claim.
The right to indemnification and payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in the bylaws is not
exclusive of any other rights. This section of the bylaws provides further
that the Company may maintain insurance to protect any director or officer
against any expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such expense, liability or loss.
The Company maintains such insurance for its directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Form of certificate for shares of the Company's Class B Common Stock
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
(incorporated by reference to Exhibit 1.2 of the Registration Statement on Form 8-A,
dated May 17, 1990, as amended by Form 8, dated May 17, 1990) [SEC File No. 1-6813]
4.2 Playboy Enterprises, Inc. 1995 Stock Incentive Plan
4.3 Form of Non-Qualified Stock Option Agreement for Non-Qualified Stock Options which
may be granted under the Plan
4.4 Form of Incentive Stock Option Agreement for Incentive Stock Options granted under the Plan
4.5 Form of Restricted Stock Agreement for Restricted Stock issued under the Plan
5.1 Opinion of Counsel
23.1 Consent of Coopers & Lybrand
</TABLE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is on
Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
4
<PAGE> 5
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
5
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, there unto duly
authorized, in the City of Chicago, State of Illinois, on March 15, 1995.
PLAYBOY ENTERPRISES, INC.
(Registrant)
By /s/Howard Shapiro
-------------------------------
Howard Shapiro, Executive Vice
President, Law and Administration,
and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C> <C>
/s/ Christie Hefner Chairman and Chief )
- --------------------------------- Executive Officer )
Christie Hefner (Principal Executive Officer) )
)
/s/ David I. Chemerow Executive Vice President, )
- ------------------------------ Finance and Operations )
David I. Chemerow (Principal Financial )
and Accounting Officer) )
)
/s/ Dennis S. Bookshester Director )
- ----------------------------- )
Dennis S. Bookshester )
) March 15, 1995
) ------------------
/s/ Robert Kamerschen Director )
- ----------------------------- )
Robert Kamerschen )
)
/s/ John R. Purcell Director )
- --------------------------------- )
John R. Purcell )
)
/s/ Sol Rosenthal Director )
- --------------------------------- )
Sol Rosenthal )
)
/s/ Richard S. Rosenzweig Director and Executive )
- ---------------------------- Vice President )
Richard S. Rosenzweig
</TABLE>
6
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ------------
<S> <C> <C>
4.1 Form of certificate for shares of the Company's Class B
Common Stock (incorporated by reference to Exhibit 1.2 of
the Registration Statement on Form 8-A, dated May 17, 1990,
as amended by Form 8, dated May 17, 1990) [SEC File No. 1-6813]
4.2 Playboy Enterprises, Inc. 1995 Stock Incentive Plan
4.3 Form of Non-Qualified Stock Option Agreement for Non-Qualified
Stock Options which may be granted under the Plan
4.4 Form of Incentive Stock Option Agreement for Incentive Stock
Option granted under the Plan
4.5 Form of Restricted Stock Agreement for Restricted Stock issued
under the Plan
5.1 Opinion of Counsel
23.1 Consent of Coopers & Lybrand
</TABLE>
7
<PAGE> 1
EXHIBIT 4.2
PLAYBOY ENTERPRISES, INC.
STOCK INCENTIVE PLAN
Playboy Enterprises, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), hereby adopts this Playboy
Enterprises, Inc. 1995 Stock Incentive Plan. The purposes of this Plan are as
follows:
(1) To further the growth, development and financial success
of the Company by providing additional incentives to certain of its key
employees through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.
(2) To enable the Company to obtain and retain the services
of key employees considered essential to the long-range success of the Company
by providing and offering them an opportunity to own stock in the Company
and/or rights which will reflect the growth, development and financial success
of the Company.
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Plan they shall
have the meaning specified below, unless the context clearly indicates
otherwise.
Section 1.1 - Board. "Board" shall mean the Board of Directors of the Company.
Section 1.2 - Change of Control. "Change of Control" shall mean the occurrence
of any of the following events: (i) except in a transaction described in clause
(iii) below, Hugh M. Hefner, Christie Hefner, the Hugh M. Hefner 1991 Trust
(for so long as Hugh M. Hefner and Christie Hefner are joint trustees or one of
them is sole trustee), and the Hugh M. Hefner Foundation (for so long as Hugh
M. Hefner and Christie Hefner are joint trustees or one of them is sole
trustee) cease collectively to own a majority of the total number of votes that
may be cast for the election of directors of the Company; or (ii) a sale of
Playboy magazine by the Company; or (iii) the liquidation or dissolution of the
Company, or any merger, consolidation or other reorganization involving the
Company unless (x) the merger, consolidation or other reorganization is
initiated by the Company, and (y) is one in which the stockholders of the
Company immediately prior to such reorganization become the majority
stockholders of a successor or ultimate parent corporation of the Company
resulting from such reorganization and (z) in connection with such event,
provision is made for an assumption of outstanding Options and rights or a
substitution thereof of a new Option or right in such successor or ultimate
parent of substantially equivalent value.
Section 1.3 - Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
<PAGE> 2
Section 1.4 - Committee. "Committee" shall mean the Stock Option Committee of
the Board of Directors comprised of those members of the Compensation Committee
of the Board who are disinterested persons ("Disinterested Persons") within the
meaning of Rule 16b-3 which has been adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, as such rule
or its equivalent is then in effect ("Rule 16b-3").
Section 1.5 - Common Stock. "Common Stock" shall mean the Class B Common
Stock, par value $.01 per share, of the Company.
Section 1.6 - Company. "Company" shall mean Playboy Enterprises, Inc., a
Delaware Corporation.
Section 1.7 - Deferred Stock. "Deferred Stock" shall mean Common Stock awarded
under Article VII of the Plan.
Section 1.8 - Director. "Director" shall mean a member of the Board.
Section 1.9 - Employee. "Employee" shall mean any officer or other employee
(as defined in accordance with the Regulations and Revenue Rulings then
applicable under Section 3401(c) of the Code) of the Company or any Subsidiary.
Section 1.10 - ERISA. "ERISA" shall mean the Employment Retirement Income
Security Act of 1974, as amended.
Section 1.11 - Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
Section 1.12 - Grantee. "Grantee" shall mean an Employee granted a
Performance Award, Dividend Equivalent, Stock Payment or Stock Appreciation
Right, or an award of Deferred Stock, under this Plan.
Section 1.13 - Incentive Stock Option. "Incentive Stock Option" shall mean an
Option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
Section 1.14 - Non-Qualified Option. "Non-Qualified Option" shall mean an
Option which is not designated as an Incentive Stock Option by the Committee.
Section 1.15 - Officer. "Officer" shall mean an officer of the Company.
2
<PAGE> 3
Section 1.16 - Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as
determined by the Committee, be either a Non-Qualified Stock Option or an
Incentive Stock Option.
Section 1.17 - Optionee. "Optionee" shall mean an Employee to whom an Option
is granted under the Plan.
Section 1.18 - Performance Award. "Performance Award" shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.
Section 1.19 - Plan. "Plan" shall mean the 1995 Stock Incentive Plan of the
Company.
Section 1.20 - Restricted Stock. "Restricted Stock" shall mean Common Stock
awarded under Article VI of this Plan.
Section 1.21 - Restricted Stockholder. "Restricted Stockholder" shall mean an
Employee granted an award of Restricted Stock under Article VII of this Plan.
Section 1.22 - Secretary. "Secretary" shall mean the Secretary of the Company.
Section 1.23 - Securities Act. "Securities Act" shall mean the Securities Act
of 1933, as amended.
Section 1.24 - Stock Payment. "Stock Payment" shall mean (i) a payment in the
form of shares of Common Stock, or (ii) an option or other right to purchase
shares of Common Stock, as part of a deferred compensation arrangement, made in
lieu of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to a key
Employee in cash, awarded under Article VII of this Plan.
Section 1.25 - Subsidiary. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Section 1.26 - Termination of Employment. "Termination of Employment" shall
mean the time when the employee-employer relationship between the Optionee,
Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated, voluntarily or involuntarily, for any reason, with or without Cause
(as defined below), including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement, but excluding any
termination where there is a simultaneous reemployment
3
<PAGE> 4
by the Company or a Subsidiary. The Committee, subject to the definition of
Cause below, shall determine the effect of all other matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence shall constitute a Termination of Employment if, and to the
extent that, such leave of absence interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. For purposes of the Plan, "Cause" shall mean an
Employee's (a) gross negligence in the performance of the responsibilities of
such Employee's office or position; (b) any act of dishonesty or moral
turpitude materially adversely affecting the Company or the Company's
reputation; (c) commission of any other willful or intentional act that could
reasonably be expected to injure materially the reputation, business or
business relationships of the Company or any Subsidiary; or (d) conviction of a
felony or of any crime involving moral turpitude, fraud or misrepresentation.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 - Shares Subject to Plan
The shares of stock subject to Options, awards of Restricted
Stock, Performance Awards, awards of Deferred Stock, or Stock Payments shall be
Common Stock. The aggregate number of shares which may be issued upon exercise
of such Options or rights or upon any such awards under the Plan shall not
exceed the sum of 1,100,000 shares of Common Stock plus that number of shares
of Common Stock pursuant to which options could otherwise be granted under the
Company's 1989 Stock Option Plan which, by resolution of the Board, are
transferred to this Plan and are no longer eligible for grant under the
Company's 1989 Stock Option Plan. Furthermore, the maximum number of shares of
Common Stock which may be subject to Options, rights or other awards granted
under the Plan to any individual in any calendar year shall not exceed 150,000,
and the method of counting such shares shall conform to any requirements
applicable to performance-based compensation under Section 162(m) of the Code.
The shares of Common Stock issuable upon exercise of such Options or rights or
upon any such awards may be either previously authorized but unissued shares or
treasury shares.
4
<PAGE> 5
Section 2.2 - Unexercised Options and Awards
If any Option, or other right to acquire shares of Common
Stock under any other award under this Plan, expires or is cancelled without
having been fully exercised (including Restricted Stock or any other award that
is forfeited before applicable vesting requirements are met or transfer
restrictions have lapsed), the number of shares subject to such Option or other
right but as to which such Option or other right was not exercised (or vested
or delivered without restriction, as the case may be) prior to its expiration
or cancellation may again be optioned, granted or awarded hereunder, subject to
the limitations of Section 2.1.
Section 2.3 - Adjustments in Outstanding Options or Rights
Subject to Section 4.2(c), in the event that the outstanding
shares of the Common Stock subject to Options or other rights are changed into
or exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a recapitalization, reclassification,
stock split, stock dividend or combination of shares or similar transaction,
the Committee shall make an appropriate and equitable adjustment in the number
and kind of shares as to which all outstanding Options or rights, or portions
thereof then unexercised, shall be exercisable, so that the Optionee's,
Grantee's or Restricted Stockholder's proportionate interest shall be
maintained. Such adjustment shall be made without change in the total price
applicable to the unexercised portion of the Option or right (except for any
change in the aggregate price resulting from rounding-off of share quantities
or prices) and with any necessary corresponding adjustment in price per share;
provided, however, that, in the case of Incentive Stock Options, each such
adjustment shall be made in such manner as not to constitute a "modification"
within the meaning of Section 424(h)(3) of the Code. Any such adjustment made
by the Committee shall be final and binding upon all Optionees, Grantees,
Restricted Stockholders, the Company or any Subsidiary, their representatives
and all other interested persons. Such adjustments will also be made in
determining Section 2.1 limitations on maximum number and kind of shares which
may be issued on exercise of Options, Restricted Stock or other awards. The
shares of Class B Common Stock reserved under this Plan will be reduced as
Options, Restricted Stock or other awards are granted or issued so that the
aggregate number of any single Class of Stock will never exceed the total
amount of shares authorized under the Plan.
5
<PAGE> 6
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 - Eligibility
Any key Employee of the Company or a Subsidiary except Hugh M.
Hefner shall be eligible to be granted Options.
Section 3.2 - Qualification of Incentive Stock Options.
No Incentive Stock Option shall be granted unless such Option,
when granted, qualifies as an "incentive stock option" under Section 422 of the
Code. Without limitation of the foregoing, no person shall be granted an
Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
unless such Incentive Stock Option conforms to the applicable provisions of
Section 422 of the Code.
Section 3.3 - Granting of Options
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are "key Employees"
and select from among the key Employees (including
those to whom Options and/or rights have been previously
granted under the Plan or any other stock option or other plan
of the Company) such of them as in its opinion should be
granted Options; and
(ii) Determine for each Employee the number of shares
to be subject to such Options; and
(iii) Determine whether such Options are to be
Incentive Stock Options or Non-Qualified Options; and
(iv) Determine the terms and conditions of such
Options, consistent with the Plan.
(b) Upon the selection of a key Employee to be granted an
Option, the Committee shall instruct the Secretary or other authorized officer
to execute and deliver a Stock Option Agreement, and may impose such conditions
on the grant of such Option as it deems appropriate, not inconsistent with this
Plan. Without limiting the generality of the preceding sentence, the Committee
may, in its discretion and on
6
<PAGE> 7
such terms as it deems appropriate, require as a condition on the grant of an
Option to an Employee that the Employee surrender for cancellation some or all
of the unexercised Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, or Stock Payments or other rights which have been
previously granted to him. An Option, the grant of which is conditioned upon
such surrender may have an Option price lower (or higher) than the Option price
of the surrendered Option, may cover the same (or a lesser or greater) number
of shares as the surrendered Option, may contain such other terms as the
Committee deems appropriate and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, Option period or any
other term or condition of such surrendered Option or award.
(c) Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code. Any Incentive Stock Option
granted under this Plan may be modified by the Committee to disqualify such
option from treatment as an "incentive stock option" under Section 422 of the
Code.
ARTICLE IV
TERMS OF OPTIONS
Section 4.1 - Option Price
(a) The price of the shares subject to each Non-Qualified
Option shall not be less than 100% of the fair market value of such shares at
the end of the business day immediately preceding the day such Option is
granted.
(b) For purposes of the Plan, the fair market value ("Fair
Market Value") of a share of the Company's Common Stock as of a given date
shall be: (i) the closing price of a share of such class of the Company's
Common Stock on the principal exchange on which shares of the Company's Common
Stock are then trading, if any, on the day previous to such date, or, if shares
were not traded on the day previous to such date, then on the next preceding
trading day during which a sale occurred; or (ii) if such Common Stock is not
traded on an exchange but is quoted on NASDAQ or a successor quotation system,
(1) the last sales price (if the Company's Common Stock is then listed as a
National Market Issue under the NASD National Market System) or (2) the mean
between the closing representative bid and asked prices (in all other cases)
for the Company's Common Stock on the day previous to such date as reported by
NASDAQ or such successor quotation system; or (iii) if such Common Stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the mean between the closing bid and asked prices for
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the Company's Common Stock, on the day previous to such date, as determined in
good faith by the Committee; or (iv) if the Company's Common Stock is not
publicly traded, the fair market value established by the Committee acting in
good faith.
(c) The price of the shares subject to Incentive Stock
Options shall not be less than the greater of (i) 100% of the Fair Market Value
of a share of Common Stock on the date the Incentive Stock Option is granted,
or (ii) 110% of the fair market value of a share of Common Stock on the date
such Incentive Stock Option is granted in the case of an individual then owning
(within the meaning of section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary.
Section 4.2 - Commencement of Exercisability; Change of Control
(a) Subject to the provisions of Sections 4.2(b) and 9.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.2(b) and 9.3 and except
in connection with a Change of Control, accelerate the time at which such
Option or any portion thereof may be exercised; provided further, that, to the
extent necessary for this Plan to meet the requirements of Rule 16b-3, no
Option granted hereunder shall be exercisable for at least six months (or such
other period as may be specified in said Rule) after such Option is granted.
(b) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable, except as may be
otherwise provided by the Committee either in the Stock Option Agreement or in
a resolution adopted following the grant of the Option. Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment of the
Optionee, or amend any other term or condition of such Option relating to such
a termination.
(c) If an Optionee is terminated without Cause less than one
(1) year after a Change of Control specified in clause (i) or (ii) of the
definition thereof, unless the terms of any Option specifically exclude such
right, the Optionee shall have the right to exercise such Optionee's Option
until expiration thereof pursuant to Section 4.3(a)(ii) with respect to all
vested installments of such Option, and with respect to the next installment
(if any) of such Option that was unvested on the date of such Termination of
Employment.
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Not less than ninety (90) days prior to the effective date of
any Change of Control specified in clause (iii) of the definition of such term,
the Committee shall give the Employee notice of such event if the Option has
then neither been fully exercised nor become unexercisable under Section 4.3,
and shall specify in such notice a date prior to the effective date of such
event when this Option shall be exercisable with respect to all vested
installments thereof, and with respect to the next installment (if any) of such
Option that is unvested on the date of such Change of Control.
(d) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth
in the preceding sentence shall be applied by taking Options into account in
the order in which they were granted. For purposes of this Section 4.2(d), the
Fair Market Value of stock shall be determined as of the time the Option with
respect to such stock is granted.
Section 4.3 - Expiration of Options
(a) Unless an Option expires earlier pursuant to the terms of
a Stock Option Agreement, each Option may be exercised any time until the first
of the following events, after which such Option will become unexercisable:
(i) The expiration of ten (10) years from the date the
Option was granted if the Employee is still employed by the Company or
any Subsidiary; or
(ii) The expiration of three (3) months from the
Employee's Termination of Employment if such Termination of Employment
results from such Employee's retirement, or such Employee's being
discharged not for Cause, unless the Employee dies within said three-
month period; or
(iii) The effective date of (i) a Termination of
Employment for Cause, (ii) the Employee's resignation, or (iii) a
Change of Control specified in clause (iii) of the definition of such
term; or
(iv) In the case of an Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of one
(1) year from the date of the Optionee's Termination of Employment;
provided, however, that this subsection (iv) shall not apply if the
Optionee dies within said one-year period; or
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(v) One (1) year from the date of the Optionee's
death.
(b) Subject to the provisions of Section 4.3(a), the
Committee shall provide, in the terms of each individual Option, when such
Option expires and becomes unexercisable; and (without limiting the generality
of the foregoing) the Committee may provide in the terms of individual Options
that said Options expire immediately upon a Termination of Employment for any
reason.
(c) The term of any Incentive Stock Option shall not be more
than five (5) years from such date if the Incentive Stock Option is granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of capital
stock of the Company or any Subsidiary.
Section 4.4 - No Right to Continued Employment
Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or any Subsidiary or as a director of the Company, or shall
interfere with or restrict in any way the rights of the Company and any of its
Subsidiaries, which are hereby expressly reserved, to discharge any Optionee at
any time for any reason whatsoever, with or without Cause.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 - Person Eligible to Exercise
(a) Subject to 5.1(b), during the lifetime of the Optionee,
only such Optionee (or the spouse or former spouse of such Optionee following
transfer of the Option pursuant to a qualified domestic relations order as
defined by the Code or Title I of ERISA, or the rules thereunder) may exercise
an Option (or any portion thereof) granted to such Optionee. After the death
of the Optionee, any exercisable portion of an Option may, within the time
frame allowed, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution. To the extent Rule 16b-3 as then
in effect permits transfers of Options other than as provided in this Section
5.1(a), the Committee may by resolution amend this Section 5.1(a) or the terms
of outstanding options to reflect such other transfer limitation requirements,
in the Committee's discretion.
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(b) Should the Optionee be determined under applicable law to
have become a disabled person or the equivalent thereof, the Option may, prior
to the time when the Option becomes unexercisable under the Plan or the
applicable Stock Option Agreement, be exercised by the Optionee's guardian or
by any other person empowered to do so under applicable laws of guardianship.
For purposes of this section 5.1(b), "disabled person" shall mean a person who
(i) because of mental deterioration or physical incapacity is not fully able to
manage such person's person or estate or (ii) is mentally ill and who because
of such person's mental illness is not fully able to manage such person's
person or estate.
Section 5.2 - Partial Exercise
An exercisable Option may be exercised in whole or in part.
However, an Option shall not be exercisable with respect to fractional shares
and the Committee may require that, by terms of the Option, a partial exercise
be with respect to a minimum number of shares.
Section 5.3 - Manner of Exercise
All or a portion of an exercisable Option shall be deemed
exercised upon delivery of all of the following to the Secretary of the Company
or the Secretary's office:
(a) A written notice signed by the Optionee (or other person
then entitled to exercise such Option or portion), stating that such Option or
portion thereof is being exercised and such notice complies with all applicable
rules established by the Committee; and
(b) Payment in full for the exercised shares:
(i) In cash or by certified or cashier's check; or
(ii) In shares of the same class of the Company's
Common Stock owned by the Optionee. These shares must be duly
endorsed for transfer to the Company and will be credited at the Fair
Market Value on the date of delivery; or
(iii) With the consent of the Committee and at the sole
discretion of the Company, by a full recourse promissory note bearing
interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and
payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to
be given for such note. No Option may, however, be exercised
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by delivery of a promissory note or by a loan from the Company when or
where such loan or other extension of credit is prohibited by law; or
(iv) Any combination of the consideration provided
in the foregoing subsections (i), (ii), and (iii); or
(v) To the extent permitted by law (including then
existing interpretations of Rule 16b-3) a "cashless exercise
procedure" satisfactory to the Committee which permits the Optionee to
deliver an exercise notice to a broker-dealer, who then sells the
Option shares, delivers the exercise price and withholding taxes to
the Company and delivers the excess funds less commission and
withholding taxes to the Optionee; and
(c) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(d) Appropriate proof of the right of such person or persons
to exercise the option or portion thereof in the event that the Option or
portion thereof shall be exercised pursuant to Section 5.1 by any person or
persons other than the Optionee; and
(e) Full payment of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option. With the
consent of the Committee, (i) shares of the Company's Common Stock owned by the
Employee duly endorsed for transfer or (ii) subject to the timing requirements
of Section 5.4, shares of the Company's Common Stock issuable to the Employee
upon exercise of the Option, valued in accordance with Section 4.1(b) of the
Plan at the date of Option exercise, may be used to make all or part of such
payment.
Section 5.4 - Certain Timing Requirements
At the discretion of the Committee shares of Common Stock
issuable to the Optionee upon exercise of the Option may be used to satisfy the
Option exercise price or the tax withholding consequences of such exercise, in
the case of persons subject to Section 16 of the Exchange Act and to the extent
such limitation is required by Rule 16b-3, as then in effect, only (i) during
the period beginning on the third business day following the date of release of
the quarterly or annual summary statement of sales and earnings of the Company
and ending on the twelfth business
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day following such date or (ii) pursuant to an irrevocable written election by
the Optionee to use shares of Common Stock issuable to the Optionee upon
exercise of the Option to pay all or part of the Option price or the
withholding taxes made at least six months prior to the payment of such Option
price or withholding taxes.
Section 5.5 - Additional Conditions to Issuance of Stock Certificates
The shares of Common Stock issuable and deliverable upon the
exercise of an Option shall be fully paid and non-assessable. In addition to
satisfaction of the conditions specified in Sections 5.3 and 5.4, the Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The completion of any registration or other qualification
of such shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
(b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee or Board may establish from time to
time for reasons of administrative convenience.
Section 5.6 - Rights as Stockholders
The holders of Options shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
holders or the Company's stock record books reflect the Optionee as a
stockholder pursuant to any book entry procedure approved by the Secretary.
The Committee, in its absolute discretion, may impose such
other restrictions on the transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such other restriction
shall be set forth in the respective Stock Option Agreement and may be referred
to on the certificates evidencing such shares. The Committee may require the
Employee to give the Company prompt notice of any disposition of shares of
Common Stock, acquired by
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exercise of an Incentive Stock Option, within (i) two years from the date of
granting such Option or (ii) one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
Section 6.1 - Award of Restricted Stock
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees
(including Employees who have previously received other awards under
this Plan or any other stock option plan of the Company) such of them
as in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and
other terms and conditions applicable to such Restricted Stock,
consistent with this Plan.
(b) In all cases, legal consideration meeting the
requirements of Delaware law shall be required for each issuance of Restricted
Stock.
(c) Upon the selection of a key Employee to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate.
Section 6.2 - Restricted Stock Agreement
Restricted Stock shall be issued only pursuant to a written
Restricted Stock Agreement, which shall be executed by the selected key
Employee and an authorized officer of the Company and which shall contain such
terms and conditions as the Committee shall determine, consistent with this
Plan.
Section 6.3 - No Right to Continued Employment
Nothing in this Plan or in any Restricted Stock Agreement
hereunder shall confer on any Restricted Stockholder any right to continue in
the employ of the Company or any Subsidiary or shall interfere with or restrict
in any way the rights of the Company and any Subsidiary, which are hereby
expressly reserved, to discharge
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any Restricted Stockholder at any time for any reason whatsoever, with or
without good cause.
Section 6.4 - Rights as Stockholders
Upon delivery of any shares of Restricted Stock that are
certificated to the escrow holder pursuant to Section 6.7, and upon issuance
thereof, if uncertificated, the Restricted Stockholder shall have, unless
otherwise provided by the Committee, all the rights of a stockholder with
respect to said shares, subject to the restrictions in the Restricted Stock
Agreement, including the right to receive all dividends and other distributions
paid or made with respect to the shares; provided, however, that in the
discretion of the Committee, any extraordinary distribution with respect to the
Common Stock shall be subject to the restrictions set forth in Section 6.5.
Section 6.5 - Restrictions
All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide,
which restrictions may include, without limitation, restrictions concerning
voting rights and transferability and restrictions based on duration of
employment with the Company or a Subsidiary, Company performance, individual
performance, or a change of control; provided, however, that by a resolution
adopted after the Restricted Stock is issued, the Committee may, on such terms
and conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. Unless provided otherwise by the Committee, if no
consideration (other than services) was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse upon Termination of Employment for any reason at any time or prior to any
date the Committee may establish.
Section 6.6 - Repurchase of Restricted Stock
If consideration (other than services) was paid for Restricted
Stock, the Committee shall provide in the terms of each individual Restricted
Stock Agreement that the Company shall have the right to repurchase from the
Restricted Stockholder the Restricted Stock then subject to restrictions under
the Restricted Stock Agreement immediately upon a Termination of Employment at
a cash price per share equal to the price paid by the Restricted Stockholder
for such Restricted Stock or such other price as may be specified in the
Restricted Stock Agreement; provided, however, that
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provision may be made in the Restricted Stock Agreement in the Committee's
discretion that no such right of repurchase shall exist in the event of a
Termination of Employment without Cause, or following a Change in Control of
the Company or because of the Restricted Stockholder's retirement, death or
disability, or otherwise.
Section 6.7 - Escrow
The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed (or the Secretary shall establish
book entry procedures sufficient to prevent unauthorized transfers of the
Restricted Stock).
Section 6.8 - Legend
In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all certificated shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, or
stop transfer instructions with respect to book entry procedures, which legend,
legends or instructions shall make appropriate reference to the conditions
imposed hereby.
ARTICLE VII
PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS
Section 7.1 - Performance Awards
Any key Employee selected by the Committee may be granted one
or more Performance Awards. The value of such Performance Awards may be linked
to the market value, book value, net profits or other measure of the value of
Common Stock or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee, or may be based upon the
appreciation in the market value, book value, net profits or other measure of
the value of a specified number of shares of Common Stock over a fixed period
or periods determined by the Committee. In making such determinations, the
Committee shall consider (among such other factors as it deems relevant in
light of the specific type of award) the contributions, responsibilities and
other compensation of the particular key Employee.
Section 7.2 - Stock Payments
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Any key Employee selected by the Committee may receive Stock
Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Fair Market Value, book value, net profits or other measure of the value of
Common Stock or other specific performance criteria determined appropriate by
the Committee, determined on the date such Stock Payment is made or on any date
thereafter.
Section 7.3 - Deferred Stock
Any key Employee selected by the Committee may be granted an
award of Deferred Stock in the manner determined from time to time by the
Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Grantee of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the award has vested and the Common Stock underlying the award has been
issued.
Section 7.4 - Performance Award Agreement, Deferred Stock Agreement, Stock
Payment
Agreement
Each Performance Award, Deferred Stock Award and/or Stock
Payment shall be evidenced by a written agreement, which shall be executed by
the Grantee and an authorized Officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with
this Plan.
Section 7.5 - Term
The term of a Performance Award Agreement, Deferred Stock
Award and/or Stock Payment shall be set by the Committee in its discretion.
Section 7.6 - Exercise Upon Termination of Employment
A Performance Award, Deferred Stock Award and/or Stock Payment
is exercisable or payable only while the Grantee is an Employee; provided that
the Committee may determine that the Performance Award, Deferred Stock Award
and/or Stock Payment may be exercised or paid subsequent to Termination of
Employment without Cause, or following a Change in Control of the Company
specified in clause (i)
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or (ii) of the definition of such term, or because of the Grantee's retirement,
death or disability, or otherwise.
Section 7.7 - Payment
Payment of the amount determined under Section 7.1 above shall
be in cash, in Common Stock or a combination of both, as determined by the
Committee. To the extent any payment under this Article VII is effected in
Common Stock, it shall be made subject to satisfaction of all provisions of
Sections 5.3 and 5.5.
Section 7.8 - No Right to Continued Employment
Nothing in this Plan or in any agreement hereunder shall
confer on any Grantee any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Grantee at any time for any reason whatsoever, with or without good cause.
ARTICLE VIII
ADMINISTRATION
Section 8.1 - Duties and Powers of Committee
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the agreements pursuant to which
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, or
Stock Payments are granted and awarded and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
herewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock
options" within the meaning of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and
all rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.
Section 8.2 - Majority Rule
The Committee shall act by a majority of its members in
attendance at a meeting at which a quorum is present or by a memorandum or
other written instrument signed by all members of the Committee.
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Section 8.3 - Compensation; Professional Assistance; Good Faith Actions
Members of the Committee shall receive such compensation for
their services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Options or other awards, and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 - Options and Other Rights Are Not Transferable
No Options, Restricted Stock Awards, Deferred Stock Awards,
Performance Awards, or Stock Payments or interest under this Plan or part
thereof shall be liable for the debts, contracts or engagements of any
Optionee, Grantee, Restricted Stockholder or their respective successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that nothing in this Section 9.1
shall prevent transfers by will or by the applicable laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of ERISA, or the rules thereunder.
Section 9.2 - Amendment, Suspension or Termination of the Plan; Modification of
Options
The Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the
Board; provided, however, that no such amendment or modification may become
effective if it would cause the Plan to fail to meet the applicable
requirements of Rule 16b-3, and any
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amendment or modification requiring stockholder approval under applicable
provisions of Rule 16b-3 (including applicable provisions, if any, with respect
to any increase in the number of shares that may be subject to Options under
Section 2.1) shall become effective only after stockholder approval is
obtained. Neither the amendment, suspension nor termination of the Plan shall,
without the consent of the holder of an Option, Restricted Stock or award,
alter or impair any rights or obligations under any such Option, Restricted
Stock or award. No Option, Restricted Stock or award may be granted during any
period of suspension nor after termination of the Plan, and in no event may any
Option be granted under this Plan after the expiration of ten years from the
date the Plan is approved by the Company's stockholders under Section 9.3. An
Option, Restricted Stock or award shall be subject in all events to the
condition that, if at any time the Board shall determine, in its discretion,
that the listing, registration or qualification of any of the Company's
securities upon any securities exchange or under any law, regulation or other
requirement of any governmental authority is necessary or desirable, or that
any consent or approval from any governmental authority is necessary or
desirable, then the Board may modify the terms of any Option, Restricted Stock
or other award granted under the Plan, without the consent of the Optionee,
Grantee or Restricted Stockholder in any manner which the Board deems necessary
or desirable in order to improve the Company's ability to obtain such listing,
registration, qualification, consent or approval.
Section 9.3 - Approval of Plan by Stockholders
This Plan will be submitted for the approval of the Company's
stockholders within 12 months after the date of the Board's initial adoption of
the Plan. Options, Performance Awards, or Stock Payments may be granted and
Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, or Stock Payments
shall not be exercisable and such Restricted Stock or Deferred Stock shall not
vest prior to the time when this plan is approved by the stockholders, and
provided further, that if such approval has not been obtained at the end of
said 12-month period, all Options, Performance Awards, or Stock Payments
previously granted and all Restricted Stock or Deferred Stock previously
awarded under this Plan shall thereupon be cancelled and become null and void.
Section 9.4 - Effect of Plan Upon Other Option and Compensation Plans
The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Company or any Subsidiary
except, as provided in Section 2.1, shares reserved under the Company's 1989
Stock Option Plan, by resolution of the Board, are transferred to this Plan and
are no longer eligible for grant under the Company's 1989 Stock Option Plan.
Nothing in this Plan shall be construed to limit the right of the Company or
any Subsidiary (a) to establish any other forms of
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incentives or compensation for employees of the Company or any Subsidiary or
(b) to grant or assume options otherwise than under this Plan in connection
with any proper corporate purpose, including, but not by way of limitation, the
grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, firm or association.
Section 9.5 - No Obligation to Register
The Company shall not be deemed, by reason of the granting of
any Option or any other award hereunder, to have any obligation to register the
shares of Common Stock subject to such Option or award under the Securities Act
or to maintain in effect any registration of such shares which may be made at
any time under the Securities Act.
Section 9.6 - Tax Withholding
The Company shall be entitled to require payment in cash or
deduction from other compensation payable to each Optionee, Grantee or
Restricted Stockholder of any sums required by federal, state or local tax law
to be withheld with respect to the issuance, vesting or exercise of any Option,
Restricted Stock, Deferred Stock, Performance Award, or Stock Payment.
Section 9.7 - Loans
The Committee may permit, in its discretion, and subject to
the Company's approval, the extension by the Company of one or more loans to
key Employees in connection with the exercise or receipt of an Option,
Performance Award, or Stock Payment granted under this Plan, or the issuance of
Restricted Stock or Deferred Stock awarded under this Plan. The terms and
conditions of any such loan shall be set by the Committee, subject to the
Company's approval.
Section 9.8 - Limitations Applicable to Section 16 Persons and
Performance-Based Compensation
Notwithstanding any other provision of this Plan, any Option,
Performance Award, or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to a key Employee who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule, and this Plan shall be deemed amended to
the extent necessary to conform to such limitations. Furthermore,
notwithstanding any other provision of this Plan, any Option, right or award
intended to qualify as performance-based compensation as described
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in Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder
that are requirements for qualification as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed
amended to the extent necessary to conform to such requirements.
Section 9.9 - Compliance with Laws
This Plan, the granting and vesting of Options, Restricted
Stock awards, Deferred Stock awards, Performance Awards, or Stock Payments
under this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options, Performance Awards, or Stock
Payments granted or Restricted Stock or Deferred Stock awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities laws and
federal margin requirements) and to such approvals by any listing, regulatory
or governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable
to assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan, Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, or Stock Payments granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.
Section 9.10 - Transfer Restrictions
To the extent required for compliance of the Plan with any
applicable provisions of Rule 16b-3, shares acquired upon exercise of any
Option, award or right under this Plan may not be sold or otherwise transferred
for at least six months (or such other period as provided in such Rule) after
such acquisition.
Section 9.11 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.
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Section 9.12 - Governing Law
The laws of the State of Delaware shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Playboy Enterprises, Inc. on __________, 199_.
Executed on this ____ day of ____________, 199_.
_____________________________
Assistant Secretary
* * * *
I hereby certify that the foregoing Plan was duly approved by
the shareholders of Playboy Enterprises, Inc. on __________, 199_.
Executed on this ____ day of ____________, 199_.
_____________________________
Secretary
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EXHIBIT 4.3
PLAYBOY ENTERPRISES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), dated
___________ __, 199__, is made by and between PLAYBOY ENTERPRISES, INC., a
Delaware corporation (the "Company"), and _____________________, an employee of
the Company or a Subsidiary (the "Optionee"):
WHEREAS, the Company has established the 1995 Playboy Enterprises, Inc.
Stock Incentive Plan (the "Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement, and which
shall control in the event of any inconsistency between this Agreement and the
Plan on any interpretation of this Agreement); and
WHEREAS, the Company wishes to afford the Employee the opportunity to
purchase shares of its $.01 par value Class __ Common Stock; and
WHEREAS, the Stock Option Committee of the Company's Board of Directors (the
"Committee"), appointed to administer the Plan, has determined that it would be
in the best interest of the Company to grant the Non-Qualified Option provided
for herein to the Optionee as an inducement to enter into or remain in the
service of the Company or its Subsidiaries and as an incentive for increased
efforts during such service, and has advised the Company thereof and instructed
the undersigned officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereby agree as follows:
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ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the
meaning specified below unless the context clearly indicates to the contrary.
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Plan.
Section 1.1 - Change of Control
"Change of Control" shall mean the occurrence of any of the following
events: (i) except in a transaction described in clause (iii) below, Hugh M.
Hefner, Christie Hefner, the Hugh M. Hefner 1991 Trust (for so long as Hugh M.
Hefner and Christie Hefner are joint trustees or one of them is sole trustee
thereof), and the Hugh M. Hefner Foundation (for so long as Hugh M. Hefner and
Christie Hefner are joint trustees or one of them is sole trustee thereof)
cease collectively to own a majority of the total number of votes that may be
cast for the election of directors of the Company; or (ii) a sale of Playboy
magazine by the Company; or (iii) the liquidation or dissolution of the
Company, or any merger, consolidation or other reorganization involving the
Company unless (x) the merger, consolidation or other reorganization is
initiated by the Company, and (y) is one in which the stockholders of the
Company immediately prior to such reorganization become the majority
stockholders of a successor or ultimate parent corporation of the Company
resulting from such reorganization and (z) in connection with such event,
provision is made for an assumption of outstanding Options and rights or a
substitution thereof of a new Option or right in such successor or ultimate
parent of substantially equivalent value.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Common Stock
"Common Stock" shall mean the Class B Common Stock, par value $.01 per
share, of the Company.
Section 1.4 - ERISA
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"ERISA" shall mean the Employment Retirement Income Security Act of 1974, as
amended.
Section 1.5 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.6 - Option
"Option" shall mean the non-qualified option to purchase Common Stock of the
Company granted under this Agreement.
Section 1.7 - Plan
"Plan" shall mean the 1995 Playboy Enterprises, Inc. Stock Incentive Plan.
Section 1.11 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1.12 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.13 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.15 - Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Optionee and the Company or a Subsidiary is terminated
for any reason, voluntarily or involuntarily, with or without Cause (as defined
below), including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement, but excluding any termination where
there is a simultaneous reemployment by the Company or a Subsidiary. The
Committee, subject to the definition of Cause below, shall determine the effect
of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether particular
leaves of absence constitute Terminations of Employment. For purposes of the
Plan, "Cause" shall mean an Employee's (a) gross negligence in the performance
of the responsibilities of such
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Employee's office or position; (b) any act of dishonesty or moral turpitude
materially adversely affecting the Company or the Company's reputation; (c)
commission of any other willful or intentional act that could reasonably be
expected to injure materially the reputation, business or business
relationships of the Company or any Subsidiary; or (d) conviction of a felony
or of any crime involving moral turpitude, fraud or misrepresentation.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
For good and valuable consideration and subject to the vesting provisions
hereof, on the date hereof the Company irrevocably grants to the Optionee the
option to purchase any part or all of an aggregate of ________ shares of its
$.01 par value Class B Common Stock upon the terms and conditions set forth in
this Agreement.
Section 2.2 - Purchase Price
The purchase price of the shares of stock covered by the Option shall be
$_____ per share without commission or other charge, which was not less than
100% of the fair market value of such shares at the end of the business day
immediately preceding the day such Option was granted, as determined pursuant
to the Plan.
Section 2.3 - No Right to Continued Employment
Nothing in this Agreement or in the Plan shall confer upon the Optionee any
right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at
any time for any reason whatsoever, with or without cause.
Section 2.4 - Adjustments in Option
In the event that the outstanding shares of the Common Stock subject to the
Option are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of a
recapitalization, reclassification, stock split, stock dividend or combination
of shares or similar transaction, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which the Option,
or portions thereof then unexercised, shall be exercisable, to the end that
after such event the Optionee's proportionate interest shall be maintained.
Such adjustment in the Option shall be
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<PAGE> 5
made without change in the total price applicable to the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary
corresponding adjustment in the Option price per share. Any such adjustment
made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) Subject to Sections 3.3, 3.4 and 5.6, the Option shall become
exercisable in four (4) cumulative installments as follows:
(i) The first installment shall consist of one-fourth (1/4th) of the
shares covered by the Option and shall become exercisable on the first
anniversary of the date the Option is granted.
(ii) The second installment shall consist of one-fourth (1/4th) of the
shares covered by the Option and shall become exercisable on the second
anniversary of the date the Option is granted.
(iii) The third installment shall consist of one-fourth (1/4th) of the
shares covered by the Option and shall become exercisable on the third
anniversary of the date the Option is granted.
(iv) The fourth installment shall consist of one-fourth (1/4th) of the
shares covered by the Option and shall become exercisable on the fourth
anniversary of the date the Option is granted.
(b) Except as provided in Section 3.4, no portion of the Option which is
unexercisable at Termination of Employment shall thereafter become exercisable.
Section 3.2 - Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
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Section 3.3 - Expiration of Option
Each Option may be exercised any time until the first of the following
events, after which such Option will become unexercisable:
(a) The expiration of ten (10) years from the date the Option was granted
if the Employee is still employed by the Company or any Subsidiary; or
(b) The expiration of three (3) months from the Employee's Termination of
Employment if such Termination of Employment results from such Employee's
retirement, or such Employee's being discharged not for Cause, unless the
Employee dies within said three-month period; or
(c) The effective date of (i) a Termination of Employment for Cause, (ii)
the Employee's resignation, or (iii) a Change of Control specified in clause
(iii) of the definition of such term; or
(d) In the case of an Optionee who is disabled (within the meaning of
Section 22(e)(3) of the Code), the expiration of one (1) year from the date of
the Optionee's Termination of Employment; provided, however, that this
subsection (d) shall not apply if the Optionee dies within said one-year
period; or
(e) One (1) year from the date of the Optionee's death.
Section 3.4 - Acceleration of Exercisability
If an Optionee is terminated without Cause less than one (1) year after a
Change of Control specified in clause (i) or (ii) of the definition thereof,
unless the terms of any Option specifically exclude such right, the Optionee
shall have the right to exercise such Optionee's Option until expiration
thereof pursuant to Section 4.3(a)(ii) with respect to all vested installments
of such Option, and with respect to the next installment (if any) of such
Option that was unvested on the date of such Termination of Employment.
Not less than ninety (90) days prior to the effective date of any Change of
Control specified in clause (iii) of the definition of such term, the Committee
shall give the Employee notice of such event if the Option has then neither
been fully exercised nor become unexercisable under Section 4.3, and shall
specify in such notice a date prior to the effective date of such event when
this Option shall be exercisable with respect to all vested installments
thereof, and with respect to the next installment (if any) of such Option that
is unvested on the date of such Change of Control.
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ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
(a) Subject to Section 4.1(b), during the lifetime of the Optionee, only
such Optionee (or the spouse or former spouse of such Optionee following
transfer of the Option pursuant to a qualified domestic relations order as
defined by the Code or Title I of ERISA, or the rules thereunder) may exercise
the Option (or any portion thereof) granted to such Optionee. After the death
of the Optionee, any exercisable portion of the Option may, within the time
frame allowed, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution. To the extent Rule 16b-3 as then
in effect permits transfers of Options other than as provided in this Section
4.1(a), the Committee may by resolution amend this Section 4.1(a) to reflect
such other transfer limitation requirements, in the Committee's discretion.
(b) Should the Optionee be determined under applicable law to have become a
disabled person or the equivalent thereof, the Option may, prior to the time
when the Option becomes unexercisable under the Plan or this Agreement, be
exercised by the Optionee's guardian or by any other person empowered to do so
under applicable laws of guardianship. For purposes of this Section 4.1(b),
"disabled persons" shall mean a person who (i) because of mental deterioration
or physical incapacity is not fully able to manage such person's person or
estate or (ii) is mentally ill and who because of such person's mental illness
is not fully able to manage such person's person or estate.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than one
hundred (100) shares (or such lesser number of shares as shall then be the
subject of unexercised, vested installments) and shall be for whole shares
only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, must be exercised by
delivery of all of the following to the Secretary of the Company or the
Secretary's office prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:
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(a) A written notice signed by the Optionee (or the other person then
entitled to exercise the Option or portion), stating that such Option or
portion thereof is being exercised and such notice complies with all applicable
rules established by the Committee; and
(b) Payment in full for the exercised shares:
(i) In cash or by certified or cashier's check for the shares
with respect to which such Option or portion is exercised; or
(ii) (A) Shares of the same class of the Company's Common Stock
owned by the Optionee duly endorsed for transfer to the Company or (B)
subject to the timing requirements of Section 4.4, shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option, with a
fair market value on the date of Option exercise equal to the aggregate
purchase price of the shares with respect to which such Option or portion is
exercised; or
(iii) With the consent of the Committee and at the
sole discretion of the Company, by a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable
upon such terms as may be prescribed by the Committee. The Committee may
also prescribe the form of such note and the security to be given for such
note. No Option may, however, be exercised by delivery of a promissory note
or by a loan from the Company when or where such loan or other extension of
credit is prohibited by law; or
(iv) Any combination of the consideration provided in the
foregoing subparagraphs (i), (ii) and (iii); or
(v) To the extent permitted by law (including then existing
interpretations of Rule 16b-3) a "cashless exercise procedure" satisfactory
to the Committee which permits the Optionee to deliver an exercise notice to
a broker-dealer, who then sells the Option shares, delivers the exercise
price to the Company and delivers the excess funds less commission to the
Optionee; and
(c) Such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
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(d) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and
(e) Full payment to the Company of all amounts which, under federal, state
or local tax law, it is required to withhold upon exercise of the Option. With
the consent of the Committee, (i) shares of the Company's Common Stock owned by
the Optionee duly endorsed for transfer or (ii) subject to the timing
requirements of Section 4.4, shares of the Company's Common Stock issuable to
the Optionee upon exercise of the Option, valued in accordance with Section
4.1(b) of the Plan at the date of Option exercise, may be used to make all or
part of such payment.
Section 4.4 - Certain Timing Requirements
At the discretion of the Committee shares of Common Stock issuable to the
Optionee upon exercise of the Option may be used to satisfy the Option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Exchange Act and to the extent such
limitation is required by Rule 16b-3, as then in effect, only (i) during the
period beginning on the third business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth business day following such date or (ii) pursuant to an
irrevocable written election by the Optionee to use shares of Common Stock
issuable to the Optionee upon exercise of the Option to pay all or part of the
Option price or the withholding taxes made at least six months prior to the
payment of such Option price or withholding taxes.
Section 4.5 - Conditions to Issuance of Stock Certificates
The shares of Common Stock issuable and deliverable upon the exercise of the
Option, or any portion thereof, shall be fully paid and non-assessable. In
addition to the requirements of Sections 4.3 and 4.4, the Company shall not be
required to issue or deliver any certificate or certificates for shares of
stock purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(b) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
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<PAGE> 10
(c) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.6 - Rights as Stockholder
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares shall have been issued by the Company to
such holder or the Company's stock record books reflect the Optionee as a
stockholder pursuant to any book entry procedure approved by the Secretary.
ARTICLE V
OTHER PROVISIONS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent herewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon the Optionee, the
Company and all other interested persons. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under this Plan except with respect to matters which
under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules
issued thereunder, are required to be determined in the sole discretion of the
Committee. No member of the Committee shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan or the Option.
Section 5.2 - Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Optionee or such
Optionee's respective successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect; provided, however, that
nothing in this Section 5.2 shall prevent transfers by will or by the
applicable laws of descent and distribution or pursuant to a qualified
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domestic relations order as defined by the Code or Title I of ERISA, or the
rules thereunder, or as permitted by Section 4.1.
Section 5.3 - Amendment, Suspension or Termination of Plan; Modification of
Options
An Option shall be subject in all events to the condition that, if at any
time, the Board shall determine, in its discretion, that the listing,
registration, or qualification of any of the Company's securities upon any
securities exchange or under any law, regulation or other requirement of any
governmental authority is necessary or desirable, or that any consent or
approval from any governmental authority is necessary or desirable, then the
Board may modify the terms of the Option granted under this Agreement, without
the consent of the Employee, in any manner which the Board deems necessary or
desirable in order to improve the Company's ability to obtain such listing,
registration, qualification, consent or approval.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement will be by
registered mail, return receipt requested and if to the Company shall be
addressed in care of its Secretary at 680 N. Lake Shore Drive, Chicago,
Illinois 60611, and if to the Optionee, shall be addressed to the Optionee at
the address given beneath the Optionee's signature hereto. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to such Optionee. Any notice which is required
to be given to the Optionee shall, if the Optionee is then deceased, be given
to the Optionee's personal representative if such representative has previously
informed the Company of the Optionee's status and address by written notice
under this Section 5.4. Any notice shall be deemed duly given when delivered
or, except in connection with notice of exercise under Section 4.3, at such
time as delivery is attempted.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6 - Stockholder Approval
The Plan will be submitted for approval by the Company's stockholders within
twelve (12) months after the date the Plan was initially adopted by the Board.
This Option may not be exercised to any extent by anyone prior to the time when
the Plan is approved by the stockholders, and if such approval has not been
obtained by the end of said twelve-month period, this Option shall thereupon be
cancelled and become null and void.
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Section 5.7 - Construction
The laws of the State of Delaware shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
PLAYBOY ENTERPRISES, INC.
By _________________________________
Authorized Representative
680 N. Lake Shore Drive
Chicago, Illinois 60611
____________________________
Optionee
____________________________
____________________________
Address
Optionee's Taxpayer
Identification Number:
____________________________
Date of Grant:____________________
Amount of Shares Available Under Option: __________________
Exercise Price:___________________
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EXHIBIT 4.4
PLAYBOY ENTERPRISES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), dated
___________ __, 199__, is made by and between PLAYBOY ENTERPRISES, INC., a
Delaware corporation (the "Company"), and _____________________, an employee of
the Company or a Subsidiary (the "Employee"):
WHEREAS, the Company has established the 1995 Playboy
Enterprises, Inc. Stock Incentive Plan (the "Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms
of which are hereby incorporated by reference and made a part of this
Agreement, and which shall control in the event of any inconsistency between
this Agreement and the Plan on any interpretation of this Agreement); and
WHEREAS, the Company wishes to afford the Employee the
opportunity to purchase shares of its $.01 par value Class __ Common Stock; and
WHEREAS, the Stock Option Committee of the Company's Board of
Directors (the "Committee"), appointed to administer the Plan, has determined
that it would be in the best interest of the Company to grant the Incentive
Stock Option provided for herein to the Employee as an inducement to remain in
the service of the Company or its Subsidiaries and as an incentive for
increased efforts during such service, and has advised the Company thereof and
instructed the undersigned officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereby agree as follows:
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ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan.
Section 1.1 - Change of Control
"Change of Control" shall mean the occurrence of any of the
following events: (i) except in a transaction described in clause (iii) below,
Hugh M. Hefner, Christie Hefner, the Hugh M. Hefner 1991 Trust (for so long as
Hugh M. Hefner and Christie Hefner are joint trustees or one of them is sole
trustee thereof), and the Hugh M. Hefner Foundation (for so long as Hugh M.
Hefner and Christie Hefner are joint trustees or one of them is sole trustee
thereof) cease collectively to own a majority of the total number of votes that
may be cast for the election of directors of the Company; or (ii) a sale of
Playboy magazine by the Company; or (iii) the liquidation or dissolution of the
Company, or any merger, consolidation or other reorganization involving the
Company unless (x) the merger, consolidation or other reorganization is
initiated by the Company, and (y) is one in which the stockholders of the
Company immediately prior to such reorganization become the majority
stockholders of a successor or ultimate parent corporation of the Company
resulting from such reorganization and (z) in connection with such event,
provision is made for an assumption of outstanding Options and rights or a
substitution thereof of a new Option or right in such successor or ultimate
parent of substantially equivalent value.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.3 - Common Stock
"Common Stock" shall mean the Class B Common Stock, par value
$.01 per share, of the Company.
Section 1.4 - ERISA
"ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended.
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Section 1.5 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
Section 1.6 - Option
"Option" shall mean the incentive stock option to purchase
Common Stock of the Company granted under this Agreement.
Section 1.7 - Plan
"Plan" shall mean the 1995 Playboy Enterprises, Inc. Stock
Incentive Plan.
Section 1.8 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended in the future.
Section 1.9 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.10 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.11 - Termination of Employment
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Employee and the Company or a
Subsidiary is terminated, voluntarily or involuntarily, for any reason, with or
without Cause (as defined below), including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement, but
excluding any termination where there is a simultaneous reemployment by the
Company or a Subsidiary. The Committee, subject to the definition of Cause
below, shall determine the effect of all other matters and questions relating
to Termination of Employment, including, but not by way of limitation, the
question of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that a leave of absence shall constitute a
Termination of Employment if, and to the extent that, such leave of absence
interrupts employment for purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section. For
purposes of
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<PAGE> 4
the Plan, "Cause" shall mean an Employee's (a) gross negligence in the
performance of the responsibilities of such Employee's office or position; (b)
any act of dishonesty or moral turpitude materially adversely affecting the
Company or the Company's reputation; (c) commission of any other willful or
intentional act that could reasonably be expected to injure materially the
reputation, business or business relationships of the Company or any
Subsidiary; or (d) conviction of a felony or of any crime involving moral
turpitude, fraud or misrepresentation.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
For good and valuable consideration and subject to the vesting
provisions hereof, on the date hereof the Company irrevocably grants to the
Employee the option to purchase any part or all of an aggregate of ________
shares of its $.01 par value Class B Common Stock upon the terms and conditions
set forth in this Agreement.
Section 2.2 - Purchase Price
The purchase price of the shares of stock covered by the
Option shall be $_____ per share without commission or other charge, which is
not less than the greater of (i) 100% of the fair market value of a share of
Common Stock on the date the Incentive Stock Option was granted, or (ii) 110%
of the fair market value of a share of Common Stock on the date the Incentive
Stock Option was granted in the case of an individual then owning more than 10%
of the total combined voting power of all classes of stock of the Company or
any Subsidiary (within the meaning of section 424(d) of the Code), as
determined pursuant to the Plan.
Section 2.3 - No Right to Continued Employment
Nothing in this Agreement or in the Plan shall confer upon the
Employee any right to continue in the employ of the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and
its Subsidiaries, which are hereby expressly reserved, to discharge the
Employee at any time for any reason whatsoever, with or without cause.
Section 2.4 - Adjustments in Option
In the event that the outstanding shares of the stock subject
to the Option are changed into or exchanged for a different number or kind of
shares of the Company or other securities of the Company by reason of a
recapitalization,
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reclassification stock split, stock dividend or combination of shares or
similar transaction, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such
event the Employee's proportionate interest shall be maintained. Such
adjustment in the Option shall be made without change in the total price
applicable to the unexercised portion of the Option (except for any change in
the aggregate price resulting from rounding-off of share quantities or prices)
and with any necessary corresponding adjustment in the Option price per share;
provided, however, that each such adjustment shall be made in such manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code. Any such adjustment made by the Committee shall be final and binding
upon the Employee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) Subject to Sections 3.3, 3.4 and 5.6, the Option shall
become exercisable in four (4) cumulative installments as follows:
(i) The first installment shall consist of
one-fourth (1/4th) of the shares covered by the Option and shall
become exercisable on the first anniversary of the date the Option is
granted.
(ii) The second installment shall consist of one-fourth
(1/4th) of the shares covered by the Option and shall become
exercisable on the second anniversary of the date the Option is
granted.
(iii) The third installment shall consist of one-fourth
(1/4th) of the shares covered by the Option and shall become
exercisable on the third anniversary of the date the Option is
granted.
(iv) The fourth installment shall consist of one-fourth
(1/4th) of the shares covered by the Option and shall become
exercisable on the fourth anniversary of the date the Option is
granted.
(b) Except as provided in Section 3.4, no portion of the
Option which is unexercisable at Termination of Employment shall thereafter
become exercisable.
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Section 3.2 - Duration of Exercisability
The installments provided for in Section 3.1 are cumulative.
Each such installment which becomes exercisable pursuant to Section 3.1 shall
remain exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 - Expiration of Option
The Option may be exercised any time until the first of the
following events, after which such Option will become unexercisable:
(a) The expiration of ten (10) years from the date the Option
was granted if the Employee is still employed by the Company or any Subsidiary;
or
(b) If the Employee owned (within the meaning of Section
424(d) of the Code), at the time the Option was granted, more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any Parent Corporation, the expiration of five (5)
years from the date the Option was granted; or
(c) The expiration of three (3) months from the Employee's
Termination of Employment if such Termination of Employment results from such
Employee's Retirement, or such Employee's being discharged not for Cause,
unless the Employee dies within said three-month period; or
(d) The effective date of (i) a Termination of Employment for
Cause, (ii) the Employee's resignation, or (iii) a Change of Control specified
in clause (iii) of the definition of such term; or
(e) In the case of an Employee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of one (1) year from
the date of the Employee's Termination of Employment; provided, however, that
this subsection (e) shall not apply if the Employee dies within said one-year
period; or
(f) One (1) year from the date of the Employee's death.
Section 3.4 - Acceleration of Exercisability
If an Optionee is terminated without Cause less than one (1)
year after a Change of Control specified in clause (i) or (ii) of the
definition thereof, unless the terms of any Option specifically exclude such
right, the Optionee shall have the right to exercise such Optionee's Option
until expiration thereof pursuant to Section 4.3(a)(ii) with respect to all
vested installments of such Option, and with respect to the next
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<PAGE> 7
installment (if any) of such Option that was unvested on the date of such
Termination of Employment.
Not less than ninety (90) days prior to the effective date of
any Change of Control specified in clause (iii) of the definition of such term,
the Committee shall give the Employee notice of such event if the Option has
then neither been fully exercised nor become unexercisable under Section 4.3,
and shall specify in such notice a date prior to the effective date of such
event when this Option shall be exercisable with respect to all vested
installments thereof, and with respect to the next installment (if any) of such
Option that is unvested on the date of such Change of Control.
Section 3.5 - Special Tax Consequences
The Employee acknowledges that, to the extent that the
aggregate fair market value of stock with respect to which "incentive stock
options" (within the meaning of Section 422 of the Code, but without regard to
Section 422(d) of the Code), including the Option, are exercisable for the
first time by the Employee during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any Subsidiary) exceeds
$100,000, such Options shall be treated as Non-Qualified Options to the extent
required by Section 422 of the Code. The Employee further acknowledges that
the rule set forth in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted. For purposes of these
rules, the fair market value of stock shall be determined as of the time the
Option with respect to such stock is granted.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
(a) Subject to Section 4.1(b), during the lifetime of the
Employee, only such Employee (or the spouse or former spouse of such Optionee
following transfer of the Option pursuant to a qualified domestic relations
order as defined by the Code or Title I of ERISA, or the rules thereunder) may
exercise an Option (or any portion thereof) granted to such Employee. After
the death of the Employee, any exercisable portion of an Option may, within the
time frame allowed, be exercised by his personal representative or by any
person empowered to do so under the deceased Employee's will or under the then
applicable laws of descent and distribution. To the extent Rule 16b-3 as then
in effect permits transfers of Options other than as provided in this Section
4.1(a), the Committee may by resolution amend this Section 4.1(a) to reflect
such other transfer limitation requirements, in the Committee's discretion.
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<PAGE> 8
(b) Should the Employee be determined under applicable law to
have become a disabled person or the equivalent thereof, the Option may, prior
to the time when the Option becomes unexercisable under the Plan or this
Agreement, be exercised by the Employee's guardian or by any other person
empowered to do so under applicable laws of guardianship. For purposes of this
Section 4.1(b), "disabled persons" shall mean a person who (i) because of
mental deterioration or physical incapacity is not fully able to manage such
person's person or estate or (ii) is mentally ill and who because of such
person's mental illness is not fully able to manage such person's person or
estate.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior
to the time when the Option or portion thereof becomes unexercisable under
Section 3.3; provided, however, that each partial exercise shall be for not
less than one hundred (100) shares (or such lesser number of shares as shall
then be the subject of unexercised, vested installments) and shall be for whole
shares only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, must be
exercised by delivery of all of the following to the Secretary of the Company
or the Secretary's office prior to the time when the Option or such portion
becomes unexercisable under Section 3.3:
(a) A written notice signed by the Employee (or the other
person then entitled to exercise the Option or portion), stating that such
Option or portion thereof is being exercised and such notice complies with all
applicable rules established by the Committee; and
(b) Payment in full for the exercised shares:
(i) In cash or by certified or cashier's check for
the shares with respect to which such Option or portion is exercised;
or
(ii) (A) Shares of the same class of the Company's
Common Stock owned by the Employee duly endorsed for transfer to the
Company or (B) subject to the timing requirements of Section 4.4,
shares of the Company's Common Stock issuable to the Employee upon
exercise of the Option, with a fair market value on the date of Option
exercise equal to the aggregate purchase price of the shares with
respect to which such Option or portion is exercised. The Employee
acknowledges that the withholding of shares otherwise issuable upon
exercise to pay the exercise price of an ISO or to
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<PAGE> 9
satisfy tax withholding consequences will constitute a "disqualifying
disposition" of the ISO under Sections 422(a)(1) and 424(c) of the
Code; or
(iii) With the consent of the Committee and at the
sole discretion of the Company, by a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and
payable upon such terms as may be prescribed by the Committee. The
Committee may also prescribe the form of such note and the security to
be given for such note. No Option may, however, be exercised by
delivery of a promissory note or by a loan from the Company when or
where such loan or other extension of credit is prohibited by law; or
(iv) Any combination of the consideration provided
in the foregoing subparagraphs (i), (ii) and (iii); or
(v) To the extent permitted by law (including then
existing interpretations of Rule 16b-3) a "cashless exercise
procedure" satisfactory to the Committee which permits the Employee to
deliver an exercise notice to a broker-dealer, who then sells the
Option shares, delivers the exercise price to the Company and delivers
the excess funds less commission to the Employee; and
(c) Such representations and documents as the Committee, in
its absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Committee may, in its absolute discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and
(d) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the Employee,
appropriate proof of the right of such person or persons to exercise the
Option; and
(e) Full payment of all amounts which, under federal, state
or local tax law, it is required to withhold upon exercise of the Option. With
the consent of the Committee, (i) shares of the Company's Common Stock owned by
the Employee duly endorsed for transfer or (ii) subject to the timing
requirements of Section 4.4, shares of the Company's Common Stock issuable to
the Employee upon exercise of the Option, valued in accordance with Section
4.1(b) of the Plan at the date of Option exercise, may be used to make all or
part of such payment.
Section 4.4 - Certain Timing Requirements
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<PAGE> 10
At the discretion of the Committee shares of Common Stock
issuable to the Employee upon exercise of the Option may be used to satisfy the
Option exercise price or the tax withholding consequences of such exercise, in
the case of persons subject to Section 16 of the Exchange Act and to the extent
such limitation is required by Rule 16b-3, as then in effect, only (i) during
the period beginning on the third business day following the date of release of
the quarterly or annual summary statement of sales and earnings of the Company
and ending on the twelfth business day following such date or (ii) pursuant to
an irrevocable written election by the Employee to use shares of Common Stock
issuable to the Employee upon exercise of the Option to pay all or part of the
Option price or the withholding taxes made at least six months prior to the
payment of such Option price or withholding taxes.
Section 4.5 - Conditions to Issuance of Stock Certificates
The shares of Common Stock issuable and deliverable upon the
exercise of the Option, or any portion thereof, shall be fully paid and
non-assessable. In addition to the requirements of Sections 4.3 and 4.4, the
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or regulations
of the Securities and Exchange Commission or of any other governmental
regulatory body, which the Committee shall, in its absolute discretion, deem
necessary or advisable; and
(b) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.
Section 4.6 - Rights as Stockholder
The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares have been issued by the Company to such
holder or the Company's stock record books reflect the Employee as a
stockholder pursuant to any book entry procedure approved by the Secretary.
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<PAGE> 11
ARTICLE V
OTHER PROVISIONS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent herewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons. Any such
interpretations and rules in regard to this Option shall be consistent with the
basic purpose of the Plan to grant "incentive stock options" within the meaning
of Section 422 of the Code. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any regulations or rules issued thereunder,
are required to be determined in the sole discretion of the Committee. No
member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan or
the Option.
Section 5.2 - Option Not Transferable
Neither the Option nor any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of the Employee
or such Employee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect; provided, however, that
nothing in this Section 5.2 shall prevent transfers by will or by the
applicable laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of ERISA, or the rules
thereunder, or as permitted by Section 4.1.
Section 5.3 - Amendment, Suspension or Termination of Plan; Modification of
Options
An Option shall be subject in all events to the condition
that, if at any time, the Board shall determine, in its discretion, that the
listing, registration, or qualification of any of the Company's securities upon
any securities exchange or under any law, regulation or other requirement of
any governmental authority is necessary or desirable, or that any consent or
approval from any governmental authority is necessary or desirable, then the
Board may modify the terms of the Option granted under this Agreement, without
the consent of the Employee, in any manner
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<PAGE> 12
which the Board deems necessary or desirable in order to improve the Company's
ability to obtain such listing, registration, qualification, consent or
approval.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to
the Company shall be by registered mail, return receipt requested and if to the
Company shall be addressed in care of its Secretary at 680 N. Lake Shore Drive,
Chicago, Illinois 60611, and if to the Employee, shall be addressed to such
Employee at the address given beneath such Employee's signature hereto. By a
notice given pursuant to this Section 5.4, either party may hereafter designate
a different address for notices to be given to such Employee. Any notice which
is required to be given to the Employee shall, if the Employee is then
deceased, be given to the Employee's personal representative if such
representative has previously informed the Company of such Employee's status
and address by written notice under this Section 5.4. Any notice shall be
deemed duly given when delivered or, except in connection with notice of
exercise under Section 4.3, at such time as delivery is attempted.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
Section 5.6 - Stockholder Approval
The Plan will be submitted for approval by the Company's
stockholders within twelve (12) months after the date the Plan was initially
adopted by the Board. This Option may not be exercised to any extent by anyone
prior to the time when the Plan is approved by the stockholders, and if such
approval has not been obtained by the end of said twelve-month period, this
Option shall thereupon be cancelled and become null and void.
Section 5.7 - Construction
The laws of the State of Delaware shall govern the
interpretation, validity, administration, enforcement and performance of the
terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
PLAYBOY ENTERPRISES, INC.
By _______________________________
Authorized Representative
680 N. Lake Shore Drive
Chicago, Illinois 60611
____________________________
Employee
____________________________
____________________________
Address
Employee's Taxpayer
Identification Number:
____________________________
Date of Grant:____________________
Amount of Shares Available Under Option: __________________
Exercise Price:___________________
13
<PAGE> 1
EXHIBIT 4.5
PLAYBOY ENTERPRISES, INC.
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement"), dated ___________ __,
199__ (the "Award Date"), is made by and between PLAYBOY ENTERPRISES, INC., a
Delaware corporation (the "Company"), and _____________________, an employee of
the Company or a Subsidiary (the "Employee"):
WHEREAS, the Company has established the 1995 Playboy Enterprises, Inc.
Stock Incentive Plan (the "Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement, and which
shall control in the event of any inconsistency between this Agreement and the
Plan or any interpretation of this Agreement); and
WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock (as defined hereunder), subject to certain restrictions thereon
(hereinafter referred to as "Restricted Stock"); and
WHEREAS, the Stock Option Committee of the Company's Board of Directors (the
"Committee"), appointed to administer the Plan, has determined that it would be
in the best interest of the Company to issue the shares of Restricted Stock
provided for herein to the Employee in partial consideration of past services
to the Company and/or its Subsidiaries and to provide further incentives for
performance and continued service during the vesting periods provided herein,
and has advised the Company thereof and instructed the undersigned Officers (as
defined hereunder) to issue said Restricted Stock;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereby agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Whenever the following terms are used below in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan.
Section 1.1 - Change of Control
"Change of Control" shall mean the occurrence of any of the following
events: (i) except in a transaction described in clause (iii) below, Hugh M.
Hefner, Christie Hefner, the Hugh M. Hefner 1991 Trust (for so long as Hugh M.
Hefner and Christie Hefner are joint trustees or one of them is sole trustee),
and the Hugh M. Hefner Foundation (for so long as Hugh M. Hefner and Christie
Hefner are joint trustees or one of them is sole trustee) cease collectively to
own a majority of the total number of votes that may be cast for the election
of directors of the Company; or (ii) a sale of Playboy magazine by the Company;
or (iii) the liquidation or dissolution of the Company, or any merger,
consolidation or other reorganization involving the Company unless (x) the
merger, consolidation or other reorganization is initiated by the Company, and
(y) is one in which the stockholders of the Company immediately prior to such
reorganization become the majority stockholders of a successor or ultimate
parent corporation of the Company resulting from such reorganization and (z) in
connection with such event, provision is made for an assumption of outstanding
Options and rights or a substitution thereof of a new Option or right in such
successor or ultimate parent of substantially equivalent value.
Section 1.2 - Common Stock
"Common Stock" shall mean the Class B Common Stock, par value $.01 per
share, of the Company.
Section 1.3 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.4 - Plan
"Plan" shall mean the 1995 Playboy Enterprises, Inc. Stock Incentive Plan.
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<PAGE> 3
Section 1.5 - Restrictions
"Restrictions" shall mean the transferability restrictions imposed upon
Restricted Stock under this Agreement.
Section 1.6 - Restricted Stock
"Restricted Stock" shall mean Common Stock of the Company issued under this
Agreement and subject to the Restrictions imposed hereunder.
Section 1.7 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1.8 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.9 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.10 - Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Restricted Stockholder and the Company or any
Subsidiary is terminated, voluntarily or involuntarily, for any reason, with or
without Cause (as defined below), including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement, but
excluding any termination where there is simultaneous reemployment by the
Company or a Subsidiary. The Committee, subject to the definition of Cause
below, shall determine the effect of all other matters and questions relating
to Termination of Employment, including, but not by way of limitation, the
question of whether particular leaves of absence constitute Terminations of
Employment. For purposes of the Plan, "Cause" shall mean an Employee's (a)
gross negligence in the performance of the responsibilities of such Employee's
office or position; (b) any act of dishonesty or moral turpitude materially
adversely affecting the Company or the Company's reputation; (c) commission of
any other willful or intentional act that could reasonably be expected to
injure materially the reputation, business or business relationships of the
Company or any Subsidiary; or (d) conviction of a felony or of any crime
involving moral turpitude, fraud or misrepresentation.
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Section 1.11 - Vested Stock
"Vested Stock" shall mean Restricted Stock with respect to which the
Employee has satisfied the time or performance vesting standards of the
Agreement as specified in Article III.
ARTICLE II
ISSUANCE OF RESTRICTED STOCK
Section 2.1 - Issuance of Restricted Stock
In consideration of the Employee's agreement to remain in the employ of the
Company until some or all of the Restrictions hereunder shall have lapsed, for
past services rendered to the Company and for other good and valuable
consideration which the Committee has determined to be equal to not less than
the par value of the Restricted Stock issued hereunder, on the date hereof the
Company issues to the Employee ____________ shares of its Class B Common Stock,
par value $.01 per share, upon the terms, conditions and restrictions set forth
in this Agreement.
Section 2.2 - No Right to Continued Employment
Nothing in this Agreement or in the Plan shall confer upon the Employee any
right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company or any
Subsidiary, which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without Cause.
ARTICLE III
RESTRICTIONS
Section 3.1 - Vesting Period
All Restrictions will lapse automatically and Vested Stock will be issued on
June 30, 2005, if and only if (i) there has been no Termination of Employment
of the Employee for any reason prior to such date, and (ii) there has been no
forfeiture of shares due to a Change of Control as specified in Section 3.8
prior to such date.
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Section 3.2 - Accelerated Vesting; Performance Goals
Performance goals have been established as a condition to accelerated
vesting of the Restricted Stock. The performance goals are based on the
Company's "Operating Income" as such term is used and determined by the Company
for purposes of the Company's financial reports filed with the Securities and
Exchange Commission under the Exchange Act. Operating Income will be measured
before any unusual or "one-time" economic or accounting instances which would
distort the actual Operating Income of the Company as determined by the
Committee, which may rely in its discretion on the Company's publicly reported
Operating Income Before One-Time Items. The Restrictions will lapse with
respect to specified percentages of the shares of Restricted Stock subject to
this award, without duplication, at the end of any fiscal year of the Company,
beginning with the fiscal year ended June 30, 1995, during which Operating
Income first equals or exceeds each of the following thresholds:
<TABLE>
<CAPTION>
Annual Operating Percentage of Total
---------------- -------------------
Income Goal Restricted Stock Award
----------- ----------------------
($ million)
-----------
<S> <C>
7.5 25%
10.0 25%
15.0 25%
20.0 25%
</TABLE>
For example, if no Restrictions have yet lapsed, and the Company's Operating
Income equals $8.0 million in a given year, the restrictions would lapse with
respect to 25% of the Restricted Stock, whereas if 25% of the Restricted Stock
had previously vested no additional Restricted Stock would vest; if in a
subsequent fiscal year, Operating Income equals $16.0 million, the restrictions
would lapse with respect to an additional 50% of the Restricted Stock, and so
on.
The lapse of the Restrictions in any year shall be effective only when the
Company's independent auditors shall have issued their audit report with
respect to such year.
Section 3.3 - Right to Payment of Restricted Stock
Upon issuance of an independent auditor's report with respect to each fiscal
year, a determination will be made as to the amount of Restricted Stock earned,
if any, on the basis of the vesting guidelines in Section 3.1 and 3.2 and what
Restricted Stock has thereby become Vested Stock. Participants must be
employed by the Company or by a Subsidiary as of the last day of each fiscal
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<PAGE> 6
year in order to receive any Vested Stock which may have vested during that
year. Unlegended stock certificates will be issued to participants only when
the independent audit report confirms that vesting requirements have been
satisfied; pending such issuance, Restricted Stock will be held in book entry
form by the Company as custodian for the Employee. Unless the Secretary
determines that certificates must be issued pursuant to applicable law or
contractual obligations, Restricted Stock shall not be issued to the Employee
in certificated form. The Secretary of the Company shall establish book entry
procedures sufficient to prevent unauthorized transfers of the Restricted
Stock.
Section 3.4 - Legend
The Secretary shall, or shall instruct the Company's transfer agent to,
provide stop transfer instructions in the Company's stock records to prevent
any transfer of the Restricted Stock for any purpose until the stock is vested.
Any certificate that the Secretary or the transfer agent deems necessary to
issue to represent shares of Restricted Stock shall, until all restrictions
lapse and new certificates are issued pursuant to Section 3.5, bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING
REQUIREMENTS AND MAY BE SUBJECT TO REACQUISITION BY THE COMPANY UNDER THE
TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND BETWEEN PLAYBOY
ENTERPRISES, INC. (THE "COMPANY") AND THE HOLDER OF THE SECURITIES. PRIOR TO
VESTING OF OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE, DIRECTLY OR
INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES. COPIES OF THE ABOVE
REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF THE COMPANY AT 680 NORTH
LAKE SHORE DRIVE, CHICAGO, IL 60611.
Section 3.5 - Lapse of Restrictions
Upon the vesting of the shares of Restricted Stock as provided in Sections
3.1 through 3.3 and subject to Sections 4.2 and 4.3, the Company shall cause
new certificates to be issued with respect to such Vested Stock and delivered
to the Employee or his legal representative, free from the legend provided for
in Section 3.4 and any of the other Restrictions. Such Vested Stock shall
thereupon cease to be considered Restricted Stock subject to the terms and
conditions of this Agreement.
Section 3.6 - Restricted Stock Not Transferable
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Prior to the issuance of Vested Stock, no Restricted Stock or any interest
or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Employee or his successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect.
Section 3.7 - Termination of Employment
If there is a Termination of Employment for any reason, whether voluntarily
or involuntarily, with or without Cause, by retirement or by reason of death or
disability or otherwise, at any time prior to June 30, 2005, the Employee shall
forfeit all unvested Restricted Stock, and all Restricted Stock shall, on the
effective date of such Termination of Employment, be immediately cancelled and
returned to the status of authorized and unissued Common Stock.
Notwithstanding the foregoing, if an Employee was employed on the last day of a
fiscal year and there is a Termination of Employment of such Employee prior to
the issuance of an independent audit report that shows that Restrictions have
lapsed with respect to any unvested Restricted Stock during such fiscal year,
such Employee shall receive Vested Stock with respect to such Restricted Stock
notwithstanding such Termination of Employment.
Section 3.8 - Change of Control
Upon a Change of Control specified in clause (iii) of the definition
thereof, any Restricted Stock that has not vested shall be forfeited on the
effective date of such Change of Control, and all Restricted Stock shall, on
the effective date of such Change of Control, be immediately cancelled and
returned to the status of authorized and unissued Common Stock; provided,
however, that a Change of Control specified in clause (i) or (ii) of the
definition thereof occurs, such Restricted Stock shall remain outstanding,
subject to any remaining Restrictions.
Section 3.9 - Changes in Common Stock
In the event that the outstanding shares of the Company's Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company pursuant to a recapitalization, reclassification,
stock split-up, stock dividend, or other combination of shares or similar
transaction, any new, additional or different shares or securities which are
issued in the name of the Employee as a holder of Restricted Stock shall be
considered to be Restricted Stock and shall be subject to all of the
Restrictions.
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ARTICLE IV
MISCELLANEOUS
Section 4.1 - Administration
The Committee shall have the power to interpret the Plan, this Agreement and
all other documents relating to Restricted Stock and to adopt such rules for
the administration, interpretation and application of the Plan as are
consistent herewith and to interpret, amend or revoke any such rules. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Employee, the Company and all
other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Restricted Stock and all members of the Committee shall
be fully protected by the Company in respect to any such action, determination
or interpretation. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
this Plan except with respect to matters which under Rule 16b-3 or Section
162(m) of the Internal Revenue Code of 1986, as amended, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion
of the Committee.
Section 4.2 - Approval of Plan by Stockholders
The Restricted Stock will not vest prior to the approval of the Plan by the
stockholders, and, if such approval has not been obtained 12 months after the
date of the Board's initial adoption of the Plan, such Restricted Stock shall
thereupon be cancelled and become null and void.
Section 4.3 - Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate or
certificates for Vested Stock pursuant to this Agreement prior to fulfillment
of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification
of such shares under any state or Federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and
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(c) The obtaining of any approval or other clearance from any state
or Federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) Subject to the provisions of Section 4.8 the payment by the
Employee of all amounts required to be withheld, under federal, state and
local tax laws, with respect to the issuance of Restricted Stock and/or
the lapse or removal of any of the Restrictions; and
(e) The lapse of such reasonable period of time as the Committee may
establish from time to time for reasons of administrative convenience.
Section 4.4 - Notices
Any notice to be given under the terms of this Agreement will be by
registered mail, return receipt requested and if to the Company shall be
addressed in care of its Secretary at 680 N. Lake Shore Drive, Chicago,
Illinois 60611, and any notice to be given to the Employee shall be addressed
to the Employee at the address given beneath the Employee's signature hereto.
By a notice given pursuant to this Section 4.4, either party may hereafter
designate a different address for notices to be given to the Company or such
Employee. Any notice which is required to be given to the Employee shall, if
the Employee is then deceased, be given to the Employee's personal
representative if such representative has previously informed the Company of
such Employee's status and address by written notice under this Section 4.4.
Any notice shall have been deemed duly given when received.
Section 4.5 - Rights as Stockholder
Upon issuance of the Restricted Stock in the name of the Employee, the
Employee shall have all the rights of a stockholder with respect to said shares
including the right to receive all dividends and other distributions paid or
made with respect to the shares.
Section 4.6 - Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 4.7 - Amendment
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This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
Section 4.8 - Tax Withholding
The Company's obligation (i) to issue or deliver to the Employee any
certificate or certificates for Vested Stock or (ii) to pay to the Employee any
dividends or make any distributions with respect to the Restricted Stock, is
expressly conditioned upon receipt from the Employee, on or prior to the date
the same is required to be withheld, of:
(a) Full payment (in cash or by check) of any amount that must be
withheld by the Company for federal, state and/or local tax purposes; or
(b) Subject to the Committee's consent and Section 4.8(c), full
payment by delivery to the Company of unrestricted shares of the Company's
Common Stock previously owned by the Employee duly endorsed for transfer to
the Company by the Employee with an aggregate fair market value equal to the
amount that must be withheld by the Company for federal, state and/or local
tax purposes; or
(c) With respect to the withholding obligation for shares of
Restricted Stock that become unrestricted shares of stock as of a certain
date (the "Vesting Date"), subject to the Committee's consent and to the
timing requirements set forth in this Section 4.8(c), full payment by
retention by the Company of a portion of such shares of Restricted Stock
which become Vested Stock with an aggregate fair market value (determined
as of the Vesting Date) equal to the amount that must be withheld by the
Company for federal, state and/or local tax purposes. To the extent such
limitation is required by Rule 16b-3, as then in effect, such shares of
Restricted Stock which become Vested Stock as of the Vesting Date may be
used to satisfy the tax withholding consequences of such lapse of
restrictions or vesting only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual
summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to an irrevocable
written election by the Employee to use shares of Restricted Stock which
become Vested Stock as of the Vesting Date to pay all or part of the
withholding taxes (subject to the approval of the Committee) made at least
six months prior to the payment of such withholding taxes; or
(d) Subject to the Committee's consent, any combination of payments
provided for in the foregoing subsections (a), (b) or (c).
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Section 4.9 - Governing Law
The laws of the State of Delaware shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
IN WITNESS HEREOF, this Agreement has been executed and delivered by the
parties hereto.
PLAYBOY ENTERPRISES, INC.
By ___________________________
Its __________________________
___________________________
Employee
____________________________
____________________________
Address
____________________________
Employee Tax I.D. Number
Restricted Stock Issued: _______________ shares
Par Value of Stock: $.01 per share
Date Issued:
_________________
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Exhibit 5.1
March 15, 1995
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I am the Executive Vice President, Law and Administration, and General
Counsel to Playboy Enterprises, Inc., a Delaware corporation (the "Company"),
and have acted as counsel to the company in connection with the issuance of up
to 1,176,750 shares (the "Shares") of the Company's Class B Common Stock, $.01
par value, issuable under the Company's 1995 Stock Incentive Plan (the "Plan")
pursuant to a Registration Statement on Form S-8, filed by the Company with the
Securities and Exchange Commission on March 20, 1995 (the "Registration
Statement").
I am familiar with the proceedings taken and to be taken by the Company
in connection with the authorization, issuance and sale of the Common
Stock, and for the purposes of this opinion, have assumed such proceedings will
be timely completed in the manner presently proposed. In addition, I have
examined such documents and such questions of law and fact, including an
examination of originals or copies certified or otherwise identified to my
satisfaction of such documents, corporate records and instruments as I have
deemed necessary or appropriate for purposes of this opinion.
Based on the foregoing, it is my opinion that the Common Stock has been
duly authorized, and that the Common Stock to be issued or sold pursuant to the
Plan has been duly authorized, and that such stock, when issued or sold in
accordance with the terms thereof, will be validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and I further consent to the use of my name under the
heading "Legal Matters" in the Prospectus which is part of the Registration
Statement.
Respectfully submitted,
/s/Howard Shapiro
-----------------------
Howard Shapiro, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Playboy Enterprises, Inc. on Form S-8 relating to the Playboy Enterprises, Inc.
1995 Stock Incentive Plan of our report dated July 26, 1994, on our audits of
the consolidated financial statements and financial statement schedules of
Playboy Enterprises, Inc. as of June 30, 1994 and 1993 and for each of the
three years in the period ended June 30, 1994, which report is included in the
Annual Report on Form 10-K.
We also consent to the use of our name and the statements with respect to us
appearing under the heading "Experts" in the prospectus that is part of the
above-referenced registration statement.
/s/Coopers & Lybrand L.L.P.
- --------------------------------
Coopers & Lybrand L.L.P.
Chicago, Illinois
March 16, 1995
