STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement") is made and entered
into as of the 11th day of August, 1997, by and between Fotoball USA, Inc.,
a Delaware corporation (the "Company"), and ADR Management Group Ltd., a New
Jersey corporation (the "Optionee").
The Board of Directors (the "Board") of the Company adopted a resolution
granting the Optionee, subject to the terms contained in that certain
agreement (the "Agreement") dated as of August 11, 1997, by and between the
Company and Optionee, a stock option (the "Option") to purchase 15,000 shares
(the "Shares"), of the Company's common stock, par value $.01 per share
(the "Common Stock"), on the terms and subject to the conditions set forth in
the Agreement. The Option was not granted under the Company's 1994 Stock
Option Plan.
The Option is not intended to satisfy the requirements for an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company makes no representations or warranties as
to the income, estate or other tax consequences to the Optionee of the grant
or exercise of the Option or the sale or other disposition of the Shares
acquired pursuant to the exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase
the Shares under this Option Agreement shall be $2.6875, of the Fair Market
Value (as defined in Paragraph 4 hereof) of the Shares on the date of such
grant, subject to adjustment as provided in Paragraph 3 below.
(b) Unless the Option is previously terminated or accelerated pursuant
to this Option Agreement, 1,250 shares of the Option shall vest on the 11th
day of each month commencing September 11, 1997 until and including
August 11, 1998. in no event shall any Shares be purchasable under this
Agreement after August 11, 2000 (the "Expiration Date"). The Option shall
cease to be exercisable thirty (30) days after the date of termination of the
Agreement for reasons other than termination for Good Reason (as defined in
the Agreement), or termination due to the death, Disability (as defined in
the Agreement) or retirement of Xxxx X. Xxxxxxxxxx ("Xxxxxxxxxx").
Immediately upon the termination of the Agreement for Good Reason, all rights
of ADR hereunder shall thereupon terminate.
(c) If (i) Germinario ceases to be an employee of ADR or any
affiliate of ADR and this cessation is due to retirement (as defined by the
Board or a committee thereof in its sole discretion), (ii) Germinario becomes
unable to render services or perform his duties to ADR by reason of Disability
or (iii) Germinario dies, ADR shall have the right to exercise the unexercised
portion of the Option which ADR could have exercised on the day on which
Germinario ceased to be an employee of ADR due to retirement, Disability or
death; provided, however, that such exercise must be in accordance with the
terms of this Agreement and within (i) three (3) months after the date on
which Germinario's employment is terminated by reason of Germinario's
retirement or Disability or (ii)(A) twelve (12) months after the date on
which Germinario's employment is terminated by reason of Germinario's death
or (B) three (3) months after the date on which Germinario's employment is
terminated by reason of Germinario's death if such death occurs during the
three (3) month period following the termination of Germinario's employment
by reason of retirement or Disability, as the case may be. In no event,
however, shall ADR exercise the Option after the Expiration Date.
2. (a) Subject to Section 422 of the Code, neither the Option nor any
right under the Option shall be assignable, alienable, saleable or
transferable by the Optionee without the written consent of the Company, or
by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder.
(b) The Option shall not be pledged, alienated, attached, or otherwise
encumbered or transferred in any manner without the written consent of the
Company, and any purported pledge, alienation, attachment, encumbrance, or
transfer thereof without the written consent of the Company shall be void and
unenforceable against the Company.
3. In the event that the Board or a committee thereof shall determine
that the outstanding shares of Common Stock are affected by any (i) subdivision
or consolidation of shares, (ii) dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
(iii) recapitalization or other capital adjustment of the Company or
(iv) merger, consolidation or other reorganization of the Company or other
rights to purchase Shares or other securities of the Company, or other
similar corporate transaction or event, such that an adjustment is determined
by the Board or a committee thereof to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available hereunder, then the Board or a committee thereof shall, in
such manner as it may deem necessary to prevent dilution or enlargement of the
benefits or potential benefits intended to be made hereunder, adjust any or
all of (x) the number and type of Shares which may be subject to the Option,
(y) the number and type of Shares subject to the unexercised portion of the
Option, and (z) the grant, purchase, or exercise price with respect to the
Option or, if deemed appropriate, make provision for a cash payment to the
Optionee. In computing any adjustment under this paragraph, any fractional
share shall be eliminated; provided, however, in each case, that (i) each
such adjustment shall be made in such manner as not to constitute a
cancellation and reissuance of a Non-Qualified Stock Option for purposes of
Section 162(m) of the Code, or the regulations promulgated thereunder, to the
extent that such reissuance would result in the grant of such Options in
excess of the maximum permitted to be granted to the Optionee in any fiscal
year; and (ii) the number of Shares subject to any Option denominated in
Shares shall always be a whole number.
4. Subject to the term of the Agreement, the Option shall be exercised
when written notice of such exercise, signed by a duly authorized officer of
the entity entitled to exercise the Option, has been delivered or transmitted
by registered or certified mail, to the Secretary of the Company at its
principal office. Said written notice shall specify the number of Shares
purchasable under the Option which such entity then wishes to purchase
and shall be accompanied by such documentation, if any, as may be required by
the Company as provided in Paragraph 6 below and be accompanied by payment of
the aggregate Option price. Such payment of the aggregate Option price shall
be, without limitation, in the form of cash, Shares, outstanding Options or
other consideration, or any combination thereof, having a Fair Market Value
on the exercise date equal to the exercise price of the Option or portion
thereof being exercised. Delivery of said notice and such documentation shall
constitute an irrevocable election to purchase the Shares specified in said
notice and the date on which the Company receives said notice and
documentation shall, subject to the provisions of Paragraphs 5 and 6 hereof,
be the date as of which the Shares so purchased shall be deemed to have been
issued. The person entitled to exercise the Option shall not have the right
or status as a holder of the Shares to which such exercise relates prior to
receipt by the Company of such payment, notice and documentation. For
purposes of this Agreement, "Fair Market Value" shall mean, with respect to
Shares or other securities, (i) the closing price per Share of the Shares on
the principal exchange on which the Shares are then trading, if any, on such
date, or, if the Shares were not traded on such date, then on the next
preceding tmding day during which a sale occurred; or (ii) if the Shares are
not traded on an exchange but are quoted on the Nasdaq National Market
("Nasdaq") or a successor quotation system, (1) the last sales price (if the
Shares are then listed on Nasdaq) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the Shares on
such date as reported by Nasdaq or a successor quotation system; or (iii) if
the Shares are 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 the Shares on such date as determined in good faith by the Board
or a committee thereof; or (iv) if the Shares are not publicly traded, the
fair market value established by the Board or a committee thereof acting in
good faith.
5. Anything in this Agreement to the contrary notwithstanding, in no
event may the Option be exercisable if the Company shall, at any time and in
its sole discretion, determine that (i) the listing, registration or
qualification of any Shares otherwise deliverable upon such exercise, upon
any securities exchange or under any state or federal law, or (ii) the
consent or approval of any regulatory body or the satisfaction of withholding
tax or other withholding liabilities is necessary or desirable in connection
with such exercise. In such event, such exercise shall be held in abeyance
and shall not be effective unless and until such withholding, listing,
registration, qualification, consent, or approval shall have been affected or
obtained free of any conditions not acceptable to the Company.
6. The Board or a committee thereof may require as a condition to the
right to exercise the Option hereunderthat the Company receive from the
person exercising the Option, representations, warranties and agreements, at
the time of any such exercise, to the effect that the Shares are being
purchased for investment only and without any present intention to sell or
otherwise distribute such Shares and that the Shares will not be disposed of
in transactions which, in the opinion of counsel to the Company, would
violate the registration provisions of the Securities Act of 1933, as then
amended, and the rules and regulations thereunder. The certificate issued to
evidence such Shares shall bear appropriate legends summarizing such
restrictions on the disposition thereof.
7. All certificates for Shares delivered pursuant to the Option or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Board or a committee thereof may deem advisable under the
rules, regulations, and other restrictions of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable federal or state securities laws, and the
Board or a committee thereof may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
8. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware and applicable federal law. Subject to
subparagraph 2(a) hereof, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors or assigns, as the case may be.
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be duly
executed and delivered as of the date first above written.
FOTOBALL USA, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
President and Chief Executive Officer
ADR MANAGEMENT GROUP LTD.
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx,
Chief Executive Officer
