Exhibit 4.4
PLAYBOY ENTERPRISES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS AGREEMENT, dated as of November 13, 1996 is made by and between
Playboy Enterprises, Inc., a Delaware corporation hereinafter referred to as
"Company," and Sol Rosenthal, a non-employee Director of the Company hereinafter
referred to as "Optionee":
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its Class B Common Stock, par value $.01 per share
(hereinafter referred to as the "Class B Stock"); and
WHEREAS, the execution of a stock option agreement in the form hereof
has been duly authorized by a resolution of the Board of Directors of the
Company duly adopted on November 13, 1996 and incorporated herein by reference;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
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Whenever the following terms are used in this Agreement, they shall
have the meaning specified below.
Section 1. - "Board" shall mean the Board of Directors of the Company.
Section 1.2 - "Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - "Committee" shall mean the Compensation Committee of the Board.
Section 1.4 - "Company" shall mean Playboy Enterprises, Inc.
Section 1.5 - "Director" shall mean a member of the Board.
Section 1.6 - "Option" shall mean the non-qualified option to purchase 10,000
shares of Class B Stock of the Company granted under this Agreement.
Section 1.7 - "Rule 16b-3" shall mean 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 1.8 - "Secretary" shall mean the Secretary of the Company.
Section 1.9 - "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.10 - "Termination of Service" shall mean the time at which the
Optionee ceases to serve as a Director for any reason, with or without cause,
which includes termination by resignation, death or retirement.
ARTICLE II
GRANT OF OPTION
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Section 2.1 - Grant of Option
In consideration of the Optionee's agreement to continue to serve as a
Director and for other good and valuable consideration, on the date hereof the
Company irrevocably grants to the Optionee a non-qualified option to purchase
any part or all of an aggregate of 10,000 shares of its Class B Stock upon the
terms and conditions set forth in this Agreement.
Section 2.2 - Purchase Price
The purchase price of the shares of Class B Stock covered by the Option
shall be $12.00 per share, which was 100% of the fair market value per share of
such shares at the end of the business day immediately preceding the day the
Option was granted, as determined according to the closing price of the Class B
Stock on such business day.
Section 2.3 - No Additional Rights
Nothing in this Agreement or in the Plan shall confer upon the Optionee any
right to continue to serve as a Director of the Company or shall interfere with
or restrict in any way the right which is hereby expressly reserved, to remove
the Optionee as a Director in accordance with the By-laws and Restated
Certificate of Incorporation of the Company and applicable law.
Section 2.4 - Adjustments in Option
In the event that the outstanding shares of Class B Stock 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 merger, consolidation, recapitalization,
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reclassification, stock split, stock dividend or combination of shares, 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, so that the Optionee'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. 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
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Section 3.1 - Commencement of Exercisability
a. Subject to Section 3.1(b), the Option shall become exercisable
in four (4) cumulative installments as follows:
(i) The first installment shall consist of twenty-five
percent (25%) of the shares covered by the Option and shall become
exercisable twelve (12) months after November 13, 1996.
(ii) The second installment shall consist of twenty-five
percent (25%) of the shares covered by the Option and shall become
exercisable twenty-four (24) months after November 13, 1996.
(iii) The third installment shall consist of twenty-five
percent (25%) of the shares covered by the Option and shall become
exercisable thirty-six (36) months after November 13, 1996.
(iv) The fourth installment shall consist of twenty-five
percent (25%) of the shares covered by the Option and shall become
exercisable forty-eight (48) months after November 13, 1996.
b. No portion of the Option which is unexercisable at
Termination of Service shall thereafter become exercisable.
Section 3.2 - Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. As
each such installment becomes exercisable it shall remain exercisable until it
becomes unexercisable under the terms of Section 3.3.
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Section 3.3 - Expiration of Option
The Option may be exercised any time until the first of the
following events:
a. Ten (10) years from the date the Option was granted if the
Optionee is still a Director of the Company.
b. Three (3) months after the Optionee's Termination of Service
if such Termination of Service results from (i) Optionee's
retirement, or (ii) Optionee's removal from the Board other than
for cause.
c. The effective date of (i) removal of Optionee from the Board
for cause, (ii) the Optionee's resignation from the Board, or
(iii) a "Change of Control" described in clauses (iv) and (v) of
the definition of such term set forth in Section 3.4 hereof.
d. One (1) year after the date on which the Optionee ceases to be
a Director of the Company by reason of having become disabled
(within the meaning of Section 22(e)(3) of the Code); provided,
however, that this subsection (d) shall not apply if the Optionee
dies prior to the expiration of such one (1) year period.
e. One (1) year from the date of the Optionee's death.
Section 3.4 - Acceleration of Exercisability
In the event there is a "Change of Control" (as hereinafter
defined), the Optionee shall have the right to exercise the Option with respect
to all shares covered by the Option held by Optionee.
In the event of any Change of Control described in clauses (iv) or
(v) below, if the Option has then neither been fully exercised nor become
unexercisable under Section 3.1, this Option shall be exercisable as to all
shares covered hereby during the period commencing ninety (90) days prior to the
scheduled effective date of any such Change in Control and ending on the day
immediately preceding the effective date of such Change in Control; provided
that any exercise of any Option so accelerated shall be conditioned upon the
consummation of the contemplated corporate transaction.
For purposes of this Agreement, the term "Change of Control" means
the occurrence of any of the following events:
(i) except pursuant to a transaction described in the proviso
to Section 3.4(iv) or (v), Hugh M. Hefner and Christie Hefner
cease collectively to hold over 50% of the combined voting power
of the then-
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outstanding securities entitled to vote generally in the election
of Directors of the Company ("Voting Stock");
(ii) except pursuant to a transaction described in the
proviso to Section 3.4(iv) or (v), a sale, exchange or other
disposition of PLAYBOY Magazine;
(iii) except pursuant to a transaction described in the
proviso to Section 3.4(iv) or (v), the liquidation or dissolution
of the Company;
(iv) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person; provided,
however, that no such merger, consolidation or reorganization will
constitute a Change of Control if (x) the merger, consolidation or
reorganization is initiated by the Company, (y) as a result of such
merger, consolidation or reorganization not less than a majority of
the combined voting power of the then-outstanding securities of the
surviving, resulting or ultimate parent corporation, as the case
may be, immediately after such transaction is held in the aggregate
by persons who held not less than a majority of the combined voting
power of the outstanding Voting Stock of the Company immediately
prior to such transaction, and (z) in connection with such a
transaction, provision is made for an assumption of this Option or
a substitution hereof with a new option in the surviving, resulting
or ultimate parent corporation, as the case may be, of
substantially equivalent value; or
(v) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal person; provided, however, that no such sale or transfer will
constitute a Change of Control if (w) the sale or transfer is
initiated by the Company, (x) as a result of such sale or transfer
not less than a majority of the combined voting power of the then-
outstanding securities of such corporation or other legal person,
as the case may be, immediately after such sale or transfer is held
in the aggregate by persons who held not less than a majority of
the combined voting power of the outstanding Voting Stock of the
Company immediately prior to such sale or transfer, and (z) in
connection with such a transaction, provision is made for an
assumption of this Option or a substitution hereof with a new
option in such corporation or other legal person, as the case may
be, of substantially equivalent value.
For purposes of this Section 3.4, any Voting Stock beneficially
owned (as such term is defined under Rule 13d-3 or any successor rule or
regulation under the Securities Exchange Act of 1934, as amended) by the Hugh M.
Hefner Foundation shall be deemed to be held by Christie Hefner if and so long
as she has sole voting power with respect to such Voting Stock.
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ARTICLE IV
EXERCISE OF OPTION
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Section 4.1 - Person Eligible to Exercise
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a. Except as may be otherwise determined by the Committee, during
the lifetime of the Optionee, only he or she may exercise the Option or any
portion thereof. If the Optionee dies, any exercisable portion of the Option
may, within the time frame allowed, be exercised by his or her personal
representative or by any person empowered to do so under the Optionee's will or
under the then applicable laws of descent and distribution.
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 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, "disabled person" shall mean a
person who (i) because of mental deterioration or physical incapacity is not
fully able to manage his person or estate or (ii) is mentally ill and who
because of his mental illness is not fully able to manage his person or estate.
Section 4.2 - Partial Exercise
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Any exercisable portion of the Option may be exercised in whole or in
part at any time during the time frame allowed; provided, however, that each
partial exercise shall be for whole shares only.
Section 4.3 - Manner of Exercise
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The Option, or any exercisable portion thereof, must be exercised by
delivery to the Secretary or his office of:
a. Notice in writing signed by the Optionee (or other person then
entitled to exercise the Option) that the Option or portion thereof is
being exercised; and
b. Payment in full for the exercised shares:
(i) In cash or by certified or cashier's check; or
(ii) In shares of Class B Stock owned by the Optionee, duly
endorsed for transfer to the Company. Such shares will be
credited at the fair market value on the date of delivery; or
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(iii) Any combination of the consideration provided in the
foregoing subparagraphs (i) and (ii); and
c. Such representations and documents as are necessary or advisable
to effect compliance with all applicable provisions of the Securities
Act and other federal or state securities laws or regulations; and
d. Appropriate proof of the right of such person or persons to
exercise the Option in the event the Option or portion shall be
exercised pursuant to Section 4.1 by any person or persons other than
the Optionee; and
e. Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the
Option.
Section 4.4 - Share Certificates
The shares of stock deliverable upon the exercise of the Option shall
be fully paid and non-assessable.
The Company shall not be required to issue or deliver any certificate
or certificates for shares for 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 may be necessary or advisable; and
b. The obtaining of any approval or other clearance from any state
or federal governmental agency which may be necessary or advisable; and
c. The payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Option.
Section 4.5 - Rights as Stockholder
The holder of the Option shall not be, nor have any of the rights or
privileges of, a holder of the Company's Class B Stock 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.
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ARTICLE V
OTHER PROVISIONS
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Section 5.1 - Administration
The Committee shall have the power to interpret this Agreement and to adopt
rules for its administration. 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. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Option.
Section 5.2 - Option Not Transferable
Except as may be determined by the Committee, 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 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; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3 - Modification of Option
The Option is 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 or compliance of the Option with any law or regulation of any such
authority is necessary or desirable, then the Board may modify the terms of the
Option, without the consent of the Optionee, 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, approval or compliance. Without
limitation of the foregoing, to the extent required for compliance with the
provisions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended, the Board may provide for restrictions on the sale or transfer of
any shares acquired upon exercise of this Option.
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
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Optionee shall be addressed to him at the address given beneath his signature
hereto. By a notice given pursuant to the Section 5.4, either party may
hereafter designate a different address for notices to be given him. 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 his 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 - Construction
This Agreement shall be administered, interpreted and enforced under
the laws of the State of Delaware.
Section 5.6 - No Additional Rights
Nothing in this Option shall confer upon the Optionee any right to
continue to serve as a Director or shall interfere with or restrict in any way
the right, which right is hereby expressly reserved, to remove the Optionee as a
Director in accordance with the By-laws and Certificate of Incorporation of the
Company and applicable law.
Section 5.7 - No Obligation to Register
The Company shall not be deemed, by reason of the granting of this
Option, to have any obligation to register the shares of Class B Stock subject
to this Option 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.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
PLAYBOY ENTERPRISES, INC.
By: /s/ Howard Shapiro
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Authorized Representative
680 N. Lake Shore Drive
Chicago, Illinois 60611
/s/ Sol Rosenthal
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Sol Rosenthal
441 North Barrington Ave.
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Los Angeles, CA 90049
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Address
Optionee's Taxpayer
Identification Number:
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