Exhibit 10.23
STOCK OPTION AGREEMENT
BETWEEN
XXXXXX XXXXXXXX
AND @ ENTERTAINMENT, INC.
This Stock Option Agreement ("Option Agreement") is made
effective as of January 1, 1998 (the "Effective Date"), by and between Xxxxxx
Xxxxxxxx ("Xxxxxxxx") of London, England, and @ Entertainment, Inc., a Delaware
corporation (the "Company").
1. Grant of Option and Option Period.
a. The Company hereby grants Xxxxxxxx an option (the "Option")
to purchase five hundred thousand shares (500,000) (the "Shares") of the
Company's common stock (the "Common Stock"), with a par value of $0.01 per
share, pursuant to the terms and conditions set forth in this Option Agreement.
The exercise price for the Option (the "Exercise Price") shall be twelve dollars
(U.S. $12.00) per share.
b. The option to purchase two hundred and fifty thousand
(250,000) of these Shares will vest each year for two years on the anniversary
date of the Effective Date beginning with the first anniversary of the Effective
Date, provided, however, that no portion of such option shall vest after the
date (the "Cut-Off Date") that the Consultancy Agreement (as described in
Section 15 of this Agreement) is terminated.
c. If Xxxxxxxx'x consultancy with the Company is terminated
for cause Xxxxxxxx shall have no right to exercise any portion of the Option
that has not then vested.
d. Each exercise of the Option shall reduce, by an equal
number, the total number of shares of Company Common stock that may thereafter
be purchased by Xxxxxxxx under the Option.
2. Manner of Exercise.
Subject to the conditions and restrictions contained in Section 3 below, the
Option shall be exercised by delivering written notice of exercise to the
Secretary of the Company. Such notice shall be irrevocable and must be
accompanied by payment in cash, banker's draft or such other form of
consideration as the Company may approve, and a signed Subscription Agreement,
reasonably acceptable to both parties.
3. Non-transferability.
Neither this Option nor any interest therein may be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner (other than by will or by
the laws of descent and distribution during the option period described in
Section 1, or in a manner as may be established from time to time by the
Company's Stock Option Committee pursuant to the Company's 1997
Stock Option Plan). This Option is not assignable by operation of law or subject
to execution, attachment or similar process. During Xxxxxxxx'x lifetime, the
Option can only be exercised by Xxxxxxxx. Any attempted sale, pledge,
assignment, hypothecation or other transfer of the Option or any interest
therein contrary to the provisions hereof, or the levy of any execution,
attachment or similar process upon the Option or any interest therein shall be
null and void and without force or effect. No transfer of the Option by gift in
trust to a family member, by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished written notice thereof executed by the trustee(s) of a trust
established for a family member or the personal representative of the estate of
Xxxxxxxx which shall be accompanied by an authenticated copy of the documents
appointing such trustee(s) or of the letters testamentary appointing such
personal representative, or such other evidence as the Company may deem
reasonably necessary to establish the validity of the transfer, and also
evidence as the Company may deem reasonably necessary to establish the
acceptance by the transferee or transferees of the terms and conditions of the
Option. The terms of the Option transferred by will or by the laws of descent
and distribution shall be binding upon the executors, administrators, heirs and
successors of Xxxxxxxx. The terms of the Option transferred in trust shall be
binding upon the trustee(s) of such trust.
4. Adjustment in the Event of Change in Stock.
In the event of any change in the outstanding Common Stock of the Company due to
stock dividends, recapitalizations, reorganizations, mergers, consolidations,
split-ups, rights offering, warrants, or exchange of shares, the number and kind
of the Shares and/or the purchase price per Share will be appropriately
adjusted, upwards or downwards, consistent with such change. The reasonable
determination of the Company regarding any adjustment will be final and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of the Shares.
5. No Stock Rights.
Xxxxxxxx shall not be entitled to vote, be deemed the holder of any Shares, have
the right to receive dividends with respect to any Shares, or otherwise have any
of the rights of a stockholder of the Company with respect to any Shares, unless
and until Xxxxxxxx has exercised the Option with respect to such Shares in
accordance with the terms and conditions of this Option Agreement.
6. Reservation and Issuance of Shares.
a. The Company will at all times have authorized, and reserve
and keep available, free from preemptive rights, for the purpose of enabling it
to satisfy any obligation to issue the number of shares of Common Stock
deliverable upon exercise of the Option.
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b. The Company covenants that all Shares will, upon issuance
in accordance with the terms of this Agreement, be duly authorized, fully paid
and non-assessable.
7. Lock-up Agreement
a. Agreement. During the term of this Option Agreement,
Xxxxxxxx if requested by the Company and the lead underwriter of any public
offering of the Common Stock or other securities of the Company (the "Lead
Underwriter"), hereby irrevocably agrees not to sell, contract to sell, grant
any option to purchase, transfer the economic risk of ownership in, make any
short sale of, pledge or otherwise transfer or dispose of any interest in any
Common Stock or any securities convertible into or exchangeable or exercisable
for or any other rights to purchase or acquire Common Stock (except Common Stock
included in such public offering or acquired on the public market after such
offering) during the 180-day period following the effective date of a
registration statement of the Company filed under the Securities Act of 1933, as
amended, or such shorter period of time as the Lead Underwriter shall specify.
Xxxxxxxx further agrees to sign such documents as may be requested by the Lead
Underwriter to effect the foregoing and agrees that the Company may impose
stop-transfer instructions with respect to such Common Stock or such other
securities subject until the end of such period. The Company and Xxxxxxxx
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 7.
8. Registration Rights.
a. Registration Procedures. The Company will, as
expeditiously as possible:
(i) prepare and file with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form S-8 (the
"Registration Statement") with respect to the Shares and use its best efforts to
cause such Registration Statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective;
(iii) furnish to Xxxxxxxx such number of copies of a
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as Xxxxxxxx may reasonably request; and
(iv) use its best efforts to register or
qualify the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United States and
Puerto Rico as Xxxxxxxx shall reasonably request (provided,
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however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is not
then qualified or to file any general consent to service of process).
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 8 in respect of the
securities which are to be registered at the request of Xxxxxxxx that Xxxxxxxx
shall furnish to the Company such information regarding the securities held by
Xxxxxxxx and the intended method of disposition thereof as the Company shall
reasonably request and as shall be required in connection with the action taken
by the Company.
b. Expenses. All expenses incurred in complying with Section
8, including, without limitation, all registration and filing fees (including
all expenses incident to filing with the NASD), printing expenses, fees and
disbursements of counsel for the Company, expenses of any special audits
incident to or required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdictions pursuant to this Section 8,
shall be paid by the Company, except that (i) the Company shall not be liable
for any fees, discounts or commissions to any underwriter in respect of the
securities sold by Xxxxxxxx; and (ii) the Company shall not be liable for any
fees or expenses of counsel for Xxxxxxxx in connection with any registration.
c. Indemnification and Contribution.
(i) In the event of any registration of any of
the Shares under the Securities Act pursuant to this Section 8, the Company
shall indemnify and hold harmless Xxxxxxxx, against any losses, claims, damages
or liabilities, joint or several, to which Xxxxxxxx may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (1) any alleged untrue statement of any material fact contained,
on the effective date thereof, in any Registration Statement under which such
securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereto,
or (2) any alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse Xxxxxxxx for any legal or any other expenses reasonably incurred
by Xxxxxxxx in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue statement or alleged
omission made in such Registration Statement, preliminary prospectus, prospectus
or amendment or supplement in reliance upon and in conformity with written
information regarding Xxxxxxxx or his stock furnished to the Company by Xxxxxxxx
specifically for use therein or so furnished for such purposes by any
underwriter. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Xxxxxxxx, and shall survive the
transfer of such securities by Xxxxxxxx.
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(ii) Xxxxxxxx by acceptance hereof, agrees to
indemnify and hold harmless the Company, its directors and officers and each
other person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon information regarding Xxxxxxxx
or his stock in writing provided to the Company by Xxxxxxxx specifically for use
in the following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of Xxxxxxxx, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto.
(iii) If the indemnification provided for in this
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(iv) The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 8(c) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
9. Representations and Warranties of Xxxxxxxx. In order to induce the
Company to accept this Option Agreement, Xxxxxxxx hereby represents and warrants
to the Company as follows:
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a. If in the future Xxxxxxxx desires to offer or dispose of
the Option or any the Shares or any interst therein, he will do so only in
compliance with applicable securies laws and this Option Agreement.
x. Xxxxxxxx acknowledges that there may be restrictions under
the securities laws of the jurisdiction(s) in which he resides on the sale of
the Shares he obtains on exercise of the Option, and that he should seek legal
assistance before proceeding with the purchase or sale of said Shares.
x. Xxxxxxxx agrees that the representations and warranties of
Xxxxxxxx set forth in this Section 9 shall survive the exercise of the Option
and the termination or expiration of this Option Agreement for a period of six
months.
10. Governing Law.
This Option Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware without regard to the principles of conflicts of
laws or choice of law.
11. Benefit.
This Option Agreement shall be binding upon the Company, Xxxxxxxx, their heirs,
executors, administrators, legal representatives, successors, and permitted
assigns, and Xxxxxxxx in furtherance thereof may execute a will directing
Xxxxxxxx'x executor to perform this Option Agreement and to execute all
documents necessary to effectuate the purposes of this Option Agreement, but the
failure to execute such a will shall not affect the rights of the Company or the
obligations of Xxxxxxxx'x estate as provided in this Option Agreement. Nothing
in this Option Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto, any rights or remedies under or by reason
of this Option Agreement.
12. Specific Performance.
The parties to this Option Agreement hereby agree that an award of damages alone
is inadequate to remedy a breach of terms of this Option Agreement and that
specific performance, injunctive relief or other equitable remedy is the only
way by which the intent of this Option Agreement may be adequately realized upon
breach by one or more of the parties. Such remedy shall, however, be cumulative
and not exclusive, and shall be in addition to any other remedy which the
parties may have.
13. Waiver.
Failure to insist upon strict compliance with any of the terms, covenants or
conditions of this Option Agreement shall not be deemed a waiver of such terms,
covenants or conditions, nor shall
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any waiver or relinquishment of any right or power hereunder at any one time or
more times be deemed a waiver or relinquishment of such right or power at any
other time or times.
14. Notice.
a. All notices required to be given under the terms of this
Agreement or which any of the Parties may desire to give hereunder shall be in
writing and delivered personally or sent by express delivery, by facsimile, or
by registered or certified mail with proof of receipt, postage and expenses
prepaid and with return receipt requested addressed as follows:
If to the Company:
@ Entertainment, Inc.
c/o Chase Enterprises
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
X.X.X.
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxx Xxxxx
With a copy to:
Xxxx X. Xxxx
Xxxxx & XxXxxxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
U. S. A.
Facsimile: (000) 000-0000
If to Xxxxxxxx:
Xxxxxx Xxxxxxxx
00 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0
Facsimile:
b. Notice given in accordance with this Section 15 shall be
deemed to have been given when delivered personally, or when received if sent
via express delivery, facsimile, or registered or certified mail, postage
prepaid and return receipt requested.
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c. Any party may change its address for notices by
communicating its new address in writing to the other party.
15. Entire Agreement.
This Option Agreement is subject to that certain Consultancy Agreement between
Xxxxxxxx and @ Entertainment, Inc., dated November 17, 1997, and in the event of
a conflict between them, the provisions of the Consultancy Agreement shall
prevail. Except as provided in the foregoing sentence, this Option Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and may be amended only by writing executed by all of the
parties.
16. Severability.
The invalidity or unenforceability of any provisions of this Option Agreement
shall in no way affect the validity or enforceability of any other provision
hereof.
17. Headings.
The headings to the sections of this Option Agreement are used for reference
only and are not to be construed as limiting or extending the provisions hereof.
18. Counterparts.
This Option Agreement may be executed in any number of counterparts, each of
which shall be considered an original but all of which shall constitute the
Option Agreement by and among the parties.
IN WITNESS THEREOF, the undersigned have executed this Option
Agreement effective as of the date first above written.
@ Entertainment, Inc.,
a Delaware corporation
By: ____________________________
Xxxxxx X. Xxxxxx, III
Its: Chief Executive Officer
_________________________________
Xxxxxx Xxxxxxxx
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