PLAY BY PLAY TOYS & NOVELTIES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
Date of Grant: August 29, 1997
This Non-Qualified Stock Option Agreement (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 ,
an individual,
hereinafter referred to as
"GRANTEE"
WHEREAS, Grantee is an employee or officer of the Company; and
WHEREAS, the Board of Directors of Company considers Grantee to be a
person who is eligible for a grant of non-qualified stock options under the
Plan, and has determined that it would be in the best interest of Company to
grant the non-qualified stock options documented herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Company and Grantee hereby agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions hereinafter set
forth, Company hereby grants to Grantee, as of the Date of Grant, an option to
purchase up to XX shares of common stock of the Company (the "Stock") at a
purchase price per share of XX.XX Dollars ($XX.XX) 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."
-1-
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 expiration of six months from the Date of Grant,
up to one-quarter (ignoring fractional shares) of the total
number of Option Shares;
(b) On and after the first anniversary of the Date of Grant, up to an
additional one-quarter (ignoring fractional shares) of the total
number of Option Shares;
(c) On and after the second anniversary of the Date of Grant, up to
an additional one-quarter (ignoring fractional shares) of the
total number of Option Shares; and
(d) On and after the third anniversary of the Date of Grant, the
remaining Option Shares.
3. TERMINATION OF OPTION.
(a) The Option 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 Grant (the "Option Term").
(b) Upon the occurrence of Grantee's ceasing for any reason to
be employed by the Employer, the Option, to the extent not
previously exercised, shall terminate and become null and void
immediately upon such termination of Grantee's employment, except
in a case where the termination of Grantee's employment is by
reason of retirement, disability or death. Upon a termination of
Grantee's employment by reason of retirement, disability or
death, the Option may be exercised during the following period,
but only to the extent that the Option was outstanding and
exercisable on any such date of death: the six-month period
following the date of issuance of letters testamentary or letters
of administration to the executor or administrator of Grantee's
estate, but not later than one year after Grantee's death. In no
event, however, shall any such period extend beyond the Option
Term.
(c) In the event of the death of Grantee, the Option may be exercised
by Grantee's legal representative, but only to the extent that
the Option would otherwise have been exercisable by Grantee.
(d) A transfer of Grantee'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.
-2-
(e) Notwithstanding anything to the contrary set forth herein or in
the Plan, in the event Grantee shall (i) commit any act of
malfeasance or wrongdoing affecting Company or any subsidiary of
Company, (ii) breach any covenant not to compete, or employment
contract, with Company or any subsidiary of Company, or (iii)
engage in conduct that would warrant Grantee's discharge for
cause (excluding general dissatisfaction with the performance of
Grantee's duties, but including any act of disloyalty or any
conduct clearly tending to bring discredit upon Company or any
subsidiary of Company), any unexercised portion of the Option
shall immediately terminate and be void.
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 Grantee'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 Company, 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 Grantee'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 Company 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
in 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 Company.
(c) If Grantee fails to pay for any of the Option Shares specified in
the notice or fails to accept delivery thereof, Grantee's right
to purchase the Option Shares may be terminated by Company.
-3-
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 Company, Grantee shall
deliver to Company, 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 Company, delivery of such
representation prior to the delivery of any certificate 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 Grantee'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 transferable otherwise by
will or the laws of descent and distribution (but shall be exercisable by
Grantee'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 may otherwise be limited by
a written agreement 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. 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.
-4-
11. AMENDMENT OF OPTION. The Option may be amended by the Board of
Directors of the Company or by a committee appointed by the Board of Directors
(the "Committee") at any time (a) if the Board of Directors 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 Company; provided, however, that (a) if the
shares of Stock are admitted to trading on a national securities exchange, Fair
Market Value on any date shall be the last sale price reported for the shares of
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.
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 _________________________________
"GRANTEE"
-5-