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EXHIBIT 10.44
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") dated as of February 27,
1998 entered into between THE XXXXXX ENTERTAINMENT COMPANY, a California
corporation ("Company"), and DON GOLD ("Optionee"). This Option is granted
under, and is governed by, The Xxxxxx Entertainment Company 1997 Stock Option
Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee the option
("Option") to purchase upon, and subject to, the terms and conditions set forth
herein, all or any part of 20,000 shares of Company's common stock ("Common
Stock") at a price of $10.25 per share. The Option granted hereunder is not
intended to qualify as an "Incentive Stock Option" within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended.
2. TERM AND EXERCISABILITY.
(a) The term of the Option granted hereunder shall commence as of
the date hereof and shall terminate on the tenth anniversary hereof (the
"Expiration Date"), unless sooner terminated in accordance with the provisions
set forth herein or in the Plan;
(b) The Option shall vest over a two-year period in accordance
with the following schedule: (i) on the first anniversary hereof with respect to
one-half of the number of shares of Stock subject to the Option, (ii) on the
second anniversary hereof with respect to an additional one-half of the number
of shares of Stock subject to the Option, and (iii) as otherwise provided
pursuant to Sections 2(c) hereof;
(c) The Option shall vest in its entirety and be immediately
exercisable upon the consummation of a merger, consolidation or other
reorganization of the Company, completion of a tender offer for more than 50% of
the Company's outstanding capital stock or sale of all or substantially all of
the assets of the Company to any person other than AKAUSA Limited and its
affiliates (a "Change of Control"). On a Change of Control, the following
provisions shall apply:
(i) In the event of a Change of Control in which the
consideration received by the Company's shareholders in exchange
for their shares of the Company's Common Stock consists solely
of cash, the Option shall be deemed to have been exercised in
full immediately prior to the consummation of such Change of
Control and, in connection with such exercise, Optionee shall
receive a cash amount equal to the difference between the
exercise price of the Option and the price per share of Common
Stock received by the holders of the Company's Common Stock
pursuant to such Change of Control.
(ii) In the event of a Change of Control in which the
consideration received by the Company's shareholders in exchange
for their shares of the Company's Common Stock does not consist
solely of cash, the Option shall thereafter be exercisable for
the number of shares of stock or other securities and
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the amount of cash or other property, if any, that Optionee
would have received pursuant to such Change of Control in
respect of the shares of Common Stock underlying the Option had
the Option been exercised immediately prior thereto.
(d) If the Optionee's employment by the Company terminates for
any reason other than good cause, death or disability, the Option shall be
exercisable only to the extent it is exercisable on the effective date of the
Optionee's termination of employment and may thereafter be exercised by the
Optionee until and including the earliest to occur of (i) the date which is
three (3) months after the effective date of the Optionee's termination of
employment and (ii) the Expiration Date of the Options.
(e) If the Optionee's employment by the Company terminates by
reason of death or disability, the Option shall be exercisable only to the
extent it is exercisable on the date of death or disability and may thereafter
be exercised by the Optionee until and including the earliest to occur of (i)
the date which is one (1) year after the date of death or disability and (ii)
the Expiration Date.
(f) If the Optionee's employment by the Company terminates for
good cause, the Option shall terminate automatically on the effective date of
the Optionee's termination of employment.
(g) If the Optionee dies during the period set forth in Section
2(e) following termination of employment by reason of disability, or if the
Optionee dies during the period set forth in Section 2(d) following termination
of employment for other than good cause, the Option shall be exercisable only to
the extent it is exercisable on the date of death and may thereafter be
exercised by the Optionee's Legal Representative or Permitted Transferees, as
the case may be, until and including the earliest to occur of (i) the date which
is one (1) year after the date of death and (ii) the Expiration Date. After
death, such Option may, to the extent that it remains unexercised (but
exercisable by the Optionee according to such Option's terms) upon the date of
such death, be exercised by the person or persons to whom the Optionee rights
under the Option shall pass by the Optionee's will or by the laws of descent and
distribution.
3. EXERCISE OF OPTION.
3.1 NOTICE. The Option shall be exercised by written notice
delivered to the Company stating the number of shares with respect to which the
Option is being exercised, together with the form of payment allowed in the
Plan. If the Option is being exercised by any person(s) other than Optionee,
notice shall be accompanied by proof, satisfactory to counsel for the Company,
of the right of the applicable person(s) to exercise the Option. Not less than
one hundred (100) shares may be purchased at any one time unless the number
purchased is the total number which may be purchased under the Option and in no
event may the Option be exercised with respect to fractional shares.
3.2 WITHHOLDING TAX. Optionee may not exercise all or any portion
of the Option granted hereunder unless and until Optionee shall have made all
arrangements which the Company and its counsel shall deem necessary to satisfy
the Company's federal and state income
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tax withholding obligations, including paying to the Company the amount of any
taxes which the Company may be required to withhold with respect thereto, as
provided in the Plan.
4. NONTRANSFERABILITY; DISABILITY OR DEATH OF OPTIONEE. The Option shall
not be transferable except by will or by the laws of descent and distribution
and shall be exercisable only by Optionee or the Optionee's guardian or legal
representative during his lifetime. After death, the persons to whom Optionee's
rights under the Option shall have passed by order of a court of competent
jurisdiction, by will or by the applicable laws of descent and distribution or
the executor or administrator of Optionee's estate, shall have the right to
exercise the Option, pursuant to the terms of this Agreement and the Plan.
Except as permitted by the preceding sentence, no option granted hereunder may
be transferred. assigned, pledged, hypothecated or otherwise disposed of
(whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so transfer, assign, pledge,
hypothecate or otherwise dispose of any option granted hereunder. such option
and all rights thereunder shall immediately become null and void.
5. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall have no rights as a
stockholder with respect to the Common Stock until the date of issuance of stock
certificates to Optionee. No adjustment will be made for dividends or other
rights for which the record date is prior to the date the stock certificates are
issued.
6. NOTIFICATION OF SALE. Subject to Section 7 hereof, Optionee agrees
that Optionee, or any person acquiring shares upon exercise of the Option, will
notify the Company not more than five (5) days after any sale or other
disposition of such shares.
7. HOLDING OF STOCK AFTER EXERCISE OF OPTION. Optionee hereby represents
and covenants that (a) any share of Stock purchased upon exercise of the Option
will be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act or
applicable state securities law; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, Optionee shall submit a written
statement, in form satisfactory to counsel for the Company, to the effect that
such representation (x) is true and correct as of the date of purchase of any
shares hereunder, or (y) is true and correct as of the date of any sale of any
such shares, as applicable. A legend to the foregoing effect shall be placed
upon any shares received upon exercise of this Option. As a further condition
precedent to any exercise of the Option, Optionee shall comply with all
regulations and requirements of any regulatory authority having control of or
supervision over the issuance of the shares and, in connection therewith, shall
execute any documents which the Board or any committee authorized by the Board
shall in its sole discretion deem necessary or advisable.
8. DELIVERY OF CERTIFICATES.
Upon the exercise of the Option in whole or in part, the Company
shall deliver
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one or more certificates representing the number of shares purchased against
full payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as otherwise
provided in Section 3.2.
9. ADJUSTMENTS.
In the event of any change in the outstanding Common Stock by
reason of any stock split, stock dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off or
other similar change in capitalization, or any distribution to holders of Common
Stock other than a cash dividend, the number and class of shares available under
this Plan, the number and class of shares under each outstanding option and the
purchase price per share, shall be appropriately adjusted by the Committee, such
adjustments to be made in the case of outstanding options without a change in
the aggregate purchase price.
10. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of Optionee, acquire any rights hereunder.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Chief Financial Officer as its main
office, and any notice to Optionee shall be addressed to Optionee's address on
file with the Company or a subsidiary corporation, or to such other address as
either may designate to the other in writing. Any notice shall be deemed to be
duly given if and when enclosed in a properly sealed enveloped and addressed as
stated above, and deposited. postage prepaid, in a post office or branch post
office regularly maintained by the United States government. In lieu of giving
notice by mail as aforesaid, any written notice under this Agreement may be
given to Optionee in person, and to the Company by personal delivery to its
Chief Financial Officer.
12. GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the internal laws of the State of California.
13. COUNTERPARTS. This Agreement may be executed in counterparts each of
which shall be deemed an original and which together shall constitute one and
the same instrument.
Please confirm your agreement to the foregoing by signing below where
indicated.
THE XXXXXX ENTERTAINMENT COMPANY,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
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AGREED AND ACCEPTED:
/s/ Don Gold
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DON GOLD
