PLAY BY PLAY TOYS & NOVELTIES, INC.
GRANT OF INCENTIVE STOCK OPTION
Date of Xxxxx: May 16, 1996.
This Grant of Incentive Stock Option (the "Agreement"), dated as of the
date of grant first stated above (the "Date of Grant"), is delivered
BY PLAY-BY-PLAY TOYS & NOVELTIES, INC.,
a Texas corporation,
hereinafter referred to as
"COMPANY"
TO XXXX XXXXXXX,
an individual,
hereinafter referred to as
"GRANTEE"
WHEREAS, the Board of Directors of Company (the "Board") on August 25,
1994, adopted, with subsequent shareholder approval, the TMI, Inc. 1994
Incentive Plan (the "Plan");
WHEREAS, Grantee is an employee or officer of Company or one of its
subsidiaries (Grantee's employer is sometimes referred to herein as the
"Employer");
WHEREAS, the Plan provides for the granting of incentive stock options by
a committee to be appointed by the Board (the "Committee") to employees and
officers of Company or any subsidiary of Company to purchase, or to exercise
certain rights with respect to, shares of the common stock, no par value, of the
Company (the "Stock"), in accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers Grantee to be a person who is eligible
for a grant of incentive stock options under the Plan, and has determined that
it would be in the best interest of Company to grant the incentive stock options
documented herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, Company and Grantee hereby agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions hereinafter set
forth, Company, with the approval and at the direction of the Committee, hereby
grants to Grantee, as of the Date of Grant, an option to purchase up to one
hundred thousand (100,000) shares of Stock at a purchase price per share of
Thirteen and 75/100 Dollars ($13.75). Such option is hereinafter referred to as
the "Option" and the shares of stock purchasable upon exercise of the Option are
hereinafter sometimes referred to as the "Option Shares." The Option is intended
by the parties hereto to be, and shall be treated as, an incentive stock option
(as such term is defined under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")).
2. VESTING OF EXERCISE RIGHTS. Subject to the other terms of this
Agreement, the Option shall become exercisable in four (4) installments, Grantee
having the right hereunder to purchase from Company the following number of
Option Shares upon exercise of the Option, on and after the following dates, in
cumulative fashion:
(a) On and after the Date of Xxxxx, up to Twenty Thousand (20,000)
shares of the total number of Option Shares;
(b) On and after the first anniversary of the Date of Xxxxx, up to an
additional twenty-six thousand six hundred sixty-seven (26,667)
shares of the total number of Option Shares;
(c) On and after the second anniversary of the Date of Xxxxx, up to an
additional twenty-six thousand six hundred sixty-seven (26,667)
shares of the total number of Option Shares;
(d) On and after the third anniversary of the Date of Xxxxx, the
remaining twenty-six thousand six hundred sixty-six (26,666) shares
of the Option Shares.
3. TERMINATION OF OPTION.
(a) Each installment of the Option under Paragraph 2 and all rights
hereunder with respect thereto, to the extent such rights shall not
have been exercised, shall terminate and become null and void after
the expiration of five (5) years from the date of vesting of each
such installment of the Option (the "Option Term").
(b) Upon the occurrence of Xxxxxxx's employment with Company being
terminated by Company for any reason, the Option shall become
immediately fully vested and shall be exercisable during the six (6)
month period following the date of such termination of Xxxxxxx's
employment. Upon a termination of Xxxxxxx's employment by reason of
Xxxxxxx's termination of employment or by retirement, disability or
death, all vested installments of the Option shall be exercisable
during the following periods: (i) the six (6) month period following
the date of such termination of Xxxxxxx's employment
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in the case of a disability (within the meaning of Section 22(e)(3)
of the Code) or in the case of employment termination by Xxxxxxx,
(ii) the six-month period following the date of issuance of letters
testamentary or letters of administration to the executor or
administrator of Xxxxxxx's estate, in the case of Xxxxxxx's death
during his or her employment by the Employer, but not later than one
year after Xxxxxxx's death, and (iii) the six-month period following
the date of such termination in the case of retirement on or after
attainment of age 65, or in the case of disability other than as
described in (i) above. In no event, however, shall any such period
extend beyond the Option Term.
(c) In the event of the death of Xxxxxxx, the Option may be exercised by
Xxxxxxx's legal representative, but only to the extent that the
Option would otherwise have been exercisable by Xxxxxxx.
(d) A transfer of Xxxxxxx's employment between Company and any
subsidiary of Company, or between any subsidiaries of Company, shall
not be deemed to be a termination of Grantee's employment.
4. EXERCISE OF OPTIONS.
(a) Grantee may exercise the Option with respect to all or any part of
the number of Option Shares then exercisable hereunder by giving the
Secretary of the Company at the Company's principal executive office
written notice delivered in person or by mail of Xxxxxxx's intent to
exercise. The notice of the exercise shall specify the number of
Option Shares as to which the Option is to be exercised and the date
of exercise thereof, which date shall be at least five (5) days
after the giving of the notice unless an earlier time shall have
been mutually agreed upon.
(b) Full payment (in U.S. dollars) by Grantee of the option price for
the Option Shares purchased shall be made on or before the exercise
date specified in the notice of exercise in cash, or, with the prior
written consent of the Committee, in whole or in part through the
surrender of previously acquired shares of Stock at their Fair
Market Value (as defined in Paragraph 12) on the exercise date. On
the exercise date specified in Xxxxxxx's notice or as soon
thereafter as is practicable, a certificate or certificates for the
Option Shares then being purchased shall be issued to Grantee upon
full payment of the exercise price for such Option Shares. The
obligation of Company to deliver Stock shall, however, be subject to
the condition that if at any time the Committee shall determine in
its sole discretion that the listing, registration or qualification
of the Option or the Option Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or a connection with, the Option or the issuance or
purchase of Stock thereunder, the Option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Committee.
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(c) If Grantee fails to pay for any of the Option Shares specified in
the notice or fails to accept delivery thereof, Xxxxxxx's right to
purchase the Option Shares may be terminated by Company.
5. ADJUSTMENT OF OPTION SHARES AND OPTION PRICE. In the event of any stock
dividend or subdivision of the shares of common stock of Company into a greater
number of shares, the purchase price hereunder shall be proportionately reduced
and the number of shares subject to the Option shall be proportionately
increased; conversely, in the event of any combination of the outstanding shares
of common stock of Company, the purchase price hereunder shall be
proportionately increased and the number of shares of Stock subject to the
Option shall be proportionately reduced.
6. INVESTMENT REPRESENTATION. Upon demand by the Committee, Xxxxxxx shall
deliver to the Committee, at the time of any exercise of the Option or portion
thereof, a written representation that the Stock to be acquired upon such
exercise are to be acquired for investment and not for resale or with a view to
the distribution thereof. Upon such demand by the Committee, delivery of such
representation prior to the delivery of any certificates representing the Stock
issuable upon exercise of the Option and prior to the expiration of the Option
Term shall be a condition precedent to the right of Grantee to purchase any
shares of Stock.
7. RIGHTS AS A SHAREHOLDER. Neither Grantee nor any personal
representative shall be, or shall have any of the rights and privileges of, a
shareholder of Company with respect to any shares of Stock purchasable or
issuable upon the exercise of the Option, in whole or in part, prior to the date
of exercise of the Option.
8. NON-TRANSFERABILITY OF OPTION. During Xxxxxxx's lifetime, the Option
hereunder shall be exercisable only by Grantee or any guardian or legal
representative of Grantee, and the Option shall not be transferrable otherwise
by will or the laws of descent and distribution (but shall be exercisable by
Xxxxxxx's executor or administrator pursuant to Paragraph 3(b) hereof) or
pursuant to a qualified domestic relations order, nor shall the Option be
subject to attachment, execution or other similar process. In the event of (a)
any attempt by Grantee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interests hereby
conferred, then Company may terminate the Option by notice to Grantee and the
Option shall thereupon become null and void.
9. NO RIGHT TO CONTINUED EMPLOYMENT. The granting of the Option nor its
exercise shall not be construed as granting to Grantee any right with respect to
continuance of employment by the Employer. Except as set forth in the Employment
Agreement dated May 2, 1996 between the Employer and Grantee, the right of the
Employer to terminate at will Grantee's employment with the Employer at any time
(whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by Company, as the Employer or on behalf of the Employer (whichever the
case may be), and acknowledged by Grantee.
10. DISPOSITION OF SHARES. No share of Stock acquired by the exercise of
an option granted hereunder shall be transferable, other than by will or by the
laws of descent and distribution,
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within two (2) years of the Date of Grant or within one (1) year after the
transfer of shares pursuant to exercise of the Option. Each certificate
representing shares of Stock acquired by the exercise of the Option shall bear a
legend to that effect. Grantee hereby further acknowledges that the transfer of
the shares of Stock acquired by the exercise of the Option may be limited by
Rule 144 of the General Rules and Regulations promulgated under the Securities
Act of 1933, as amended.
11. AMENDMENT OF OPTION. The Option may be amended by the Board or the
Committee at any time (a) if the Board or the Committee determines, in its sole
discretion, that amendment is necessary or advisable in the light of any
addition to or change in the Code, or in the regulations issued thereunder, or
any federal or state securities law or other law or regulation, which change
occurs after the Date of Grant and by its terms applies to the Option; or (b)
other than in the circumstances described in clause (a), with the consent of
Grantee.
12. FAIR MARKET VALUE. For purposes of this Agreement, the term "Fair
Market Value" of a share of Stock shall mean the Fair Market Value of the Stock
as determined in good faith by the Committee; provided, however, that (a) if the
Stock is admitted to trading on a national securities exchange, Fair Market
Value on any date shall be the last sale price reported for the Stock on such
exchange on such date or, if no sale was reported on such date, on the last date
preceding such date on which a sale was reported (b) if the shares of stock are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") and have been designated as a National
Market System ("NMS") security, Fair Market Value on any date shall be the last
sale price reported for the shares of Stock on such system on such date or on
the last day preceding such date on which a sale was reported, or (c) if the
shares of Stock are admitted to quotation on NASDAQ and have not been designated
a NMS security or are listed on another comparable quotation system, Fair Market
Value on any date shall be the average of the highest bid and lowest asked
prices of the shares of Stock on such system on such date.
13. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant to
the terms of the Plan, the terms of which are incorporated herein by reference,
and the Option shall in all respects be interpreted in accordance with the Plan.
The Committee shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder.
14. CONFLICT IN AGREEMENTS. In the event any provision of this Agreement
conflicts with any provision of that certain Employment Agreement by and between
Company and Grantee dated May 2, 1996 (the "Employment Agreement"), then the
provisions of the Employment Agreement shall be controlling and this Agreement
shall be modified to the extent to make the Employment Agreement and this
Agreement consistent.
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IN WITNESS WHEREOF, Company and Grantee have executed this Agreement in a
manner appropriate to each as of the day and year first above written.
PLAY-BY-PLAY TOYS & NOVELTIES, INC.
By _________________________________
Title ______________________________
"COMPANY"
ACCEPTED AND AGREED TO:
By _________________________________
Xxxx Xxxxxxx
"GRANTEE"
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