EXHIBIT P
[LETTERHEAD OF GALOOB TOYS, INC.]
October 20, 1998
Dear Galoob Option Holder:
In connection with the Agreement and Plan of Merger, dated as of
September 17, 1998, by and among Galoob Toys, Inc. ("Galoob"), Hasbro, Inc.
("Hasbro") and New HIAC II Corp. (the "Merger Agreement"), and Hasbro's related
offer to purchase all outstanding shares of common stock, par value $0.01 per
share, of Galoob (the "Common Stock"), Galoob has agreed to terminate its
existing 1996 Share Incentive Plan, 1995 Non-Employee Director Stock Option
Plan, 1994 Senior Management Stock Option Plan and Amended and Restated 1984
Employee Stock Option Plan (collectively, the "Option Plans"). The Option Plans
shall be terminated effective as of the effective date of the merger
contemplated by the Merger Agreement (the "Merger").
In connection with the termination of the Option Plans, each
outstanding option to purchase Common Stock (each, an "Option") held by you,
whether or not then vested or exercisable, shall, immediately prior to the
Merger, automatically become vested and exercisable and shall thereafter be
cancelled. In exchange for the cancellation of Options held by you pursuant to
which you hold the option to purchase shares of Common Stock for an amount which
is less than $12.00 per share, the Company shall pay to you, in cash, an amount
which shall be determined pursuant to the formula set forth below (such amount,
the "Cancellation Consideration"). In the event you hold an Option to purchase
shares of Common Stock for an amount equal to or greater than $12.00 per share
of Common Stock, there shall be no payment made to you in exchange for the
cancellation of such Option.
The Cancellation Consideration shall be for an amount equal to the
product of (A) the excess, if any, of (i) $12.00, over (ii) the exercise price
per share of Common Stock subject to each cancelled Option and (B) the number of
shares of Common Stock subject to each such cancelled Option. Any consideration
you may be entitled to pursuant to this formula will be paid without interest
and net of any withholding taxes.
Please return a signed copy of this letter to Xxxxxxxx X. XxXxxxx to
the address set forth above. No payment will be made unless a signed copy of
this letter is received by Xx. XxXxxxx by November 2, 1998. By signing this
letter, you hereby acknowledge and agree to accept cash payment in accordance
with the formula set forth above in consideration for the cancellation of your
Options.
The cancellation of the Options and the payments, if any, pursuant
to the description contained herein are contingent on the consummation of the
transactions contemplated by the Merger Agreement. If the transactions
contemplated by the Merger Agreement are not consummated, this notice shall be
deemed null and void.
NYFS03...:\15\47315\0003\1981\RID0228V.190
If you have any questions regarding the foregoing, please contact
Xxxxxxxx X. XxXxxxx at (000) 000-0000 (ext. 2210).
Very truly yours,
GALOOB TOYS, INC.
Xxxxxxx X. Xxxxxx
Executive Vice President
General Counsel and
Chief Administrative Officer
Acknowledged as of this ______ day of _________, 1998.
(sign here)
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(print name here)
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