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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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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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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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(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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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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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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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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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:___________________
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