1996 Stock Option Plan - Topps Co. Inc.
THE TOPPS COMPANY, INC.
1996 STOCK OPTION PLAN
(Amended and Restated as of June 30, 2005)
1. PURPOSES.
The Topps Company, Inc. 1996 Stock Option Plan (the "Plan") is intended to
attract and retain the best available personnel, to encourage participants to
make substantial contributions to the future success of The Topps Company, Inc.,
a Delaware corporation (the "Company") or to certain entities directly or
indirectly controlled by or affiliated with the Company, and to ensure that the
Company can provide competitive compensation opportunities to its personnel. The
above objectives will be effectuated through the granting of certain options
("Options") to purchase shares of the Company's common stock, par value $0.01
per share (the "Common Stock") and stock appreciation rights ("SARs"). By
meeting these objectives, the Plan is intended to benefit the shareholders of
the Company.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee (the "Committee") consisting
of at least two persons, appointed by the Board of Directors of the Company (the
"Board of Directors"), each of whom shall be a "disinterested person" within the
meaning of and to the extent required by Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and an "outside director" for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). Within the limits of the express provisions of the Plan, the Committee
shall have the authority, in its discretion, to take the following actions under
the Plan:
(a) to make grants of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Code, Options which are not intended to be ISOs
("Non-Qualified Options") and SARs and to determine the individuals to whom, and
the time or times at which, Options or SARs shall be granted, the number of
shares of Common Stock to be subject to each Option and whether such Options
shall be ISOs or Non-Qualified Options;
(b) to interpret the Plan;
(c) to prescribe, amend and rescind rules and regulations relating to the
Plan;
(d) to determine the terms and provisions of the respective Option or SAR
agreements;
(e) to accelerate the vesting of any outstanding Options or SARs;
(f) to make grants to individuals who are foreign nationals or who are
employed outside the United States or both, on such terms and conditions (which
may be different than specified by the Plan) which the Committee deems necessary
or appropriate to assure the viability of such grants to meet the purposes of
the Plan and to comply with the laws or customs of the jurisdiction in which
such individual is a citizen or resident;
(g) to make all other determinations and take all other actions necessary
or advisable for the administration of the Plan.
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In making such determinations, the Committee may take into account the
nature of the services rendered by such individuals, and such other factors as
the Committee, in its discretion, shall deem relevant. An individual to whom an
Option or SAR has been granted under the Plan is referred to herein as an
"Optionee". The Committee's determinations on the matters referred to in this
Section 2 shall be final, binding and conclusive for all purposes, upon all
persons, including without limitation, the Company, the stockholders, the
Committee and each member thereof, the directors, officers and employees of the
Company, and the Optionees and their respective successors in interest. The
Committee may designate persons other than members of the Committee or the Board
of Directors to carry out its responsibilities, subject to such limitations,
restrictions and conditions as it may prescribe, except that the Committee may
not delegate its authority with regard to the awarding of grants to persons
subject to Section 16 of the 1934 Act, unless otherwise permitted by Rule 16b-3
under the 1934 Act, or whose compensation may be subject to limitations on
deductibility under Section 162(m) of the Code. Further, the Committee may not
delegate its authority if such delegation would cause the Plan not to comply
with the requirements of Rule 16b-3 or any successor rule under the 1934 Act.
3. SHARES SUBJECT TO THE PLAN.
The Company shall at all times while the Plan is in force reserve such
number of shares of Common Stock as will be sufficient to satisfy the
requirements of outstanding Options and SARs which provide for settlement in
shares of Common Stock. Subject to adjustment as contemplated by Section 9
hereof, the total number of shares of Common Stock which may be issued under the
Plan shall not exceed that number of shares of Common Stock which remain
available for grant of options under The Topps Company, Inc. 1987 Stock Option
Plan, as amended (the "Prior Plan") on June 25, 1996, as increased (i) annually
on the last day of the Company's fiscal year, by an amount equal to 0.70% of the
aggregate of the total number of shares of Common Stock outstanding on the last
day of each fiscal year of the Company, commencing with the fiscal year ending
March 1, 1997 and ending with the fiscal year ending February 25, 2001, and (ii)
from time to time, by (A) that number of shares of Common Stock which were or
are reserved for issuance upon the exercise of Options granted under the Plan,
or under the Prior Plan, which shall have expired, been canceled, or terminated
for any reason without having been exercised in full, and (B) that number of
shares which are exchanged by an Optionee, either actually or by attestation, as
full or partial payment to the Company of the purchase price of shares being
acquired through the exercise of a stock option granted under the Plan or the
Prior Plan. The preceding sentence notwithstanding, the aggregate number of
shares for which ISOs may be granted under the Plan shall not exceed 1,500,000.
Shares available for issuance under the Plan which are not issued in a given
year shall be carried forward and continue to be available in the succeeding
year. Where an SAR is settled in cash or any form other than shares of Common
Stock, the shares in respect of which the SARs are settled shall not be deemed
issued and shall remain available for issuance under the Plan. The shares of
Common Stock to be issued under the Plan may be authorized but unissued shares
or shares of Common Stock that shall have been or may be reacquired by the
Company.
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4. ELIGIBILITY.
(a) Incentive Stock Options ("ISOs") meeting the requirements of Section
422 of the Code may be granted under the Plan only to employees of the Company
or a "subsidiary corporation" within the meaning of Section 424 of the Code
("Subsidiary"). Non-Qualified Options and SARs may be granted under the Plan
only to employees and non-employee directors of, and persons or entities which
provide significant services to, (i) the Company, (ii) a Subsidiary, or (iii)
entities directly or indirectly controlled by or affiliated with the Company and
designated by the Committee ("Designated Entities"). The term "Company," when
used in the Plan, shall be deemed to include the Company, Subsidiaries and
Designated Entities.
(b) Nothing contained in the Plan shall be construed to limit the right of
the Company to adopt such other incentive arrangements as it may deem advisable,
including, without limitation, the right to grant stock options otherwise than
under the Plan for proper corporate purposes.
5. TERMS OF GRANTS.
Each Option or SAR granted under the Plan shall be evidenced by a written
agreement in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall in its discretion adopt.
Option and SAR agreements need not contain identical terms and conditions and
may include, without limitation, expiration contingencies, forfeitability
contingencies based on continued employment with the Company, the meeting of
performance criteria, or any or all of the above.
(a) The Committee shall fix the purchase price of the shares of Common
Stock subject to each Option and the exercise price of each SAR, at the time
such Option or SAR is granted; provided, that in no event shall the per share
purchase price of an Option or the exercise price of an SAR be less than the
Fair Market Value of a share of Common Stock on the date of grant, except that
in the case of an Option or SAR granted retroactively in tandem with or as a
substitution for another grant, the purchase price or exercise price may be the
same as the purchase price or exercise price of such other grant.
(b) The Committee shall fix the date or dates on which each Option (or
portion thereof) or SAR shall be exercisable at the time such Option or SAR is
granted.
(c) The Committee shall fix the expiration date of each Option or SAR at
the time such Option or SAR is granted. No Option or SAR shall be exercisable
after the expiration of ten (10) years from the date of its grant and each
Option and SAR shall be subject to earlier termination as determined by the
Committee.
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(d) SARs and Options shall be exercised by the delivery to the Company at
its principal office or at such other address as may be established by the
Committee (Attention: Assistant Treasurer) of written notice of the number of
SARs or number of shares of Common Stock with respect to which the SAR or Option
is being exercised accompanied, in the case of an exercise of an Option, by
payment in full of the purchase price of such shares. Unless otherwise
determined by the Committee at the time of grant, payment may be made (i) in
cash, (ii) by certified check or bank cashier's check payable to the order of
the Company in the amount of such purchase price, (iii) by delivery to the
Company of shares of Common Stock having a Fair Market Value equal to such
purchase price, (iv) by irrevocable instructions to a broker to deliver promptly
to the Company the amount of sale or loan proceeds necessary to pay such
purchase price, to sell the shares of Common Stock to be issued upon exercise of
the Option and deliver the cash proceeds less commissions and brokerage fees to
the Optionee or to deliver the remaining shares of Common Stock to the Optionee,
or (v) by any combination of the methods of payment described in (i) through
(iv) above.
(e) An Optionee shall not have any of the rights of a holder of the Common
Stock with respect to the shares of Common Stock subject to an Option until such
shares are issued to such Optionee upon the exercise of such Option.
(f) Any grant under the Plan shall be non-transferable and, accordingly,
shall not be assignable, alienable, salable or otherwise transferable by the
Optionee except by will or the laws of descent and distribution, and may be
exercised, during the lifetime of an Optionee, only by the Optionee. No Option
or SAR granted under the Plan shall be subject to execution, attachment or other
process.
(g) For purposes of the Plan, as of any date when the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotation
System National Market System ("NASDAQ-NMS") or listed on one or more national
securities exchanges, the "Fair Market Value" of the Common Stock as of such
date shall be deemed to be the closing price, on the day prior to the date of
grant, (or, in the case of an exercise by delivery of shares of Common Stock, on
the day prior to the delivery of shares to the Company) on the stock exchange
(including NASDAQ-NMS) with the largest volume of sales of Common Stock on such
day if sold on any exchange, or if not sold on any such exchange, the average of
the closing bid and asked prices of the Common Stock on the day prior to the
date of grant of the Option (or, in the case of an exercise by delivery of
shares of Common Stock, on the day prior to the delivery of shares to the
Company); or, if there are no such sales on that date, then on the last
preceding date on which such sales were reported. If the Common Stock is not
quoted on the NASDAQ-NMS or listed on an exchange, or representative quotes are
not otherwise available, the "Fair Market Value" of the Common Stock shall mean
the amount determined by the Committee to be the fair market value based upon a
good faith attempt to value the Common Stock accurately.
(h) In no event shall any single Optionee be granted Options or SARs under
the Plan covering more than 500,000 shares of Common Stock during any partial or
full fiscal year of the Company during which the Plan is in existence, subject
to adjustment as provided in Section 9 hereof.
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6. SPECIAL PROVISIONS APPLICABLE TO ISOS.
The following special provisions shall be applicable to ISOs granted under
the Plan.
(a) No ISOs shall be granted under the Plan after ten (10) years from the
earlier of (i) the date the Plan is adopted, or (ii) the date the Plan is
approved by the Company's shareholders.
(b) ISOs may not be granted to a person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
any Subsidiary, or any "parent corporation" (a "Parent") of the Company within
the meaning of Section 424(e) of the Code.
(c) If the aggregate Fair Market Value of the Common Stock with respect to
which ISOs are exercisable for the first time by any Optionee during a calendar
year (under all plans of the Company and its Parents and Subsidiaries) exceeds
$100,000, such ISOs shall be treated, to the extent of such excess, as
Non-Qualified Options. For purposes of the preceding sentence, the Fair Market
Value of the Common Stock shall be determined at the time the ISOs covering such
shares were granted.
7. STOCK APPRECIATION RIGHTS.
A SAR grant shall confer on an Optionee the right to receive in shares of
Common Stock, cash or a combination of both, up to the positive difference, if
any, between the Fair Market Value of a designated number of shares of Common
Stock on the date the SARs are exercised and the designated exercise price of
the SARs contained in the terms and conditions of the grant. Shares issued in
settlement of the exercise of an SAR shall be valued at their Fair Market Value
on the date of the exercise of the SAR.
8. LIMITED RIGHTS.
Each Option or SAR granted under the Plan shall include a limited right
("Limited Right") which will allow the Optionee to receive the value of the
Option or SAR, as described below, upon a Change in Control as defined below.
Limited Rights shall provide for automatic exercise upon the occurrence of a
Change in Control, whether or not the related Option or SAR is then exercisable
in accordance with its terms, provided there is then a positive difference
between the Change in Control Price and the exercise price of the Option or SAR.
Each Limited Right shall expire no later than the expiration of the
underlying Option or SAR and shall be transferable only when and to the extent
the underlying Option or SAR is transferable.
Except to the extent payment is due as a result of an automatic exercise
upon the occurrence of a Change in Control as provided in the preceding
paragraph, Limited Rights or the applicable portion thereof granted with respect
to a given Option or SAR shall terminate and cease to exist upon the expiration,
termination or forfeiture of the related Option or SAR. Upon the exercise of an
Option or SAR, the related Limited Right shall cease to exist to the extent of
the shares of Common Stock with respect to which such Option is exercised. Upon
the exercise of a Limited Right, the related Option or SAR shall expire. Limited
Rights shall be transferable only at such time or times and to the extent that
the underlying Option or SAR would be transferable.
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Upon exercise of a Limited Right, the Optionee shall be entitled to receive
in cash, in lieu of exercising his Option or SAR, an amount in cash equal in
value to the excess of (i) the Change in Control Price, as defined below, of a
share of Common Stock over (ii) the purchase price or exercise price specified
in the related Option or SAR agreement, such excess to be multiplied by the
number of shares of Common Stock or SARs to which the Limited Right relates.
For purposes of this Section 8, the following definitions shall apply:
Unless more limited definition is provided in the Option or SAR agreement,
a "Change in Control" shall be deemed to have occurred upon the first to occur
of the following:
(a) The acquisition by any person (including a group, within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act), other than the Company, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 50% or more of the combined voting power of the Company's then
outstanding voting securities;
(b) During any period of 24 months or less, the persons who were Continuing
Directors immediately before the beginning of such period shall cease, for any
reason other than death, to constitute at least a majority of the Board of
Directors, provided that any director who was not a director at the beginning of
such period shall be deemed to be a Continuing Director if clause (ii) of the
definition of "Continuing Director" applies; or
(c) The Company sells or otherwise disposes of or transfers (A) all or
substantially all of its assets or (B) assets constituting one or more of the
Company's main lines of business (such as the confectionary line of business or
the entertainment line of business), in either case (whether through a direct
sale of assets or through a reorganization of such assets into a wholly-owned
subsidiary of the Company followed by a sale of such subsidiary) to any other
company or legal entity, and as a result of such sale or other disposition or
transfer of assets, less than a majority of the combined voting power of the
then-outstanding securities of such other company or other legal entity, to
which such assets are being sold, disposed or transferred to, immediately after
such sale, disposition or transfer is held directly or indirectly in the
aggregate by the holders of voting securities of the Company immediately prior
to such sale or other disposition or transfer (including voting securities
issuable upon exercise or conversion of options, warrants or other securities or
rights); provided, however that a sale or other disposition or transfer of
assets pursuant to clause (B) above shall only constitute a "Change in Control"
with respect to those employees whose employment relates to the assets being
sold or otherwise disposed of or transferred and whose employment with the
Company and all its affiliates terminates as a direct result of such sale or
other disposition or transfer.
"Change in Control Price" shall mean the highest price per share of Common
Stock paid in any transaction in connection with a Change in Control of the
Company.
"Continuing Director" shall mean any member of the Board of Directors of
the Company who either (i) is a member of the Board of Directors on the date
this Plan is adopted, or (ii) was nominated for election to the Board of
Directors by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Continuing Directors.
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9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event that the outstanding shares of Common Stock are changed by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination, exchange of shares, spin-off or
other distribution (other than normal cash dividends) of Company assets to
shareholders, a proportionate adjustment, if any, shall be made by the
Committee, as it deems appropriate to reflect such change, in the aggregate
number of shares of Common Stock available under the Plan, the maximum number of
shares covered by Options or SARs granted to any Optionee during any partial or
full calendar year, in the number of shares of Common Stock and price per share
of Common Stock subject to outstanding Options, and in the number and exercise
price of outstanding SAR grants. If the Company shall be sold, reorganized,
consolidated, or merged with another corporation (a "Corporate Event"), an
Optionee shall be entitled to receive upon the exercise of his Option or SAR the
same number and kind of shares of stock or the same amount of property, cash or
securities as he would have been entitled to receive upon the occurrence of any
such Corporate Event as if he had been, immediately prior to such event, the
holder of the number of shares of Common Stock covered by his Option; provided,
however, that the Committee may, in its discretion, unless it is intended that
pooling of interests accounting treatment apply, accelerate the exercisability
of outstanding Options and SARs to any date within 30 days prior to or
concurrent with the occurrence of such Corporate Event and, in connection
therewith, may shorten the term of outstanding Options and SARs to the date of
the occurrence of such Corporate Event.
(b) If fractions of a share would result from any such adjustment, the
adjustment shall be revised to the next lower whole number of shares.
10. FURTHER CONDITIONS OF EXERCISE.
(a) Unless prior to the exercise of an Option the shares of Common Stock
issuable upon such exercise are the subject of a registration statement filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Securities Act"), and there is then in effect a
prospectus filed as part of such registration statement meeting the requirements
of Section 10(a)(3) of the Securities Act, the notice of exercise with respect
to such Option shall be accompanied by a representation or agreement of the
Optionee to the Company to the effect that such shares are being acquired for
investment only and not with a view to the resale or distribution thereof, or
such other documentation as may be required by the Company, unless, in the
opinion of counsel to the Company, such representation, agreement or
documentation is not necessary to comply with the Securities Act.
(b) Anything in subparagraph (a) of this Section 10 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell any shares
of Common Stock until they have been listed on each securities exchange on which
the shares of Common Stock may then be listed and until and unless, in the
opinion of counsel to the Company, the Company may issue such shares pursuant to
a qualification or an effective registration statement, or an exemption from
registration, under such state and federal laws, rules or regulations as such
counsel may deem applicable. The Company shall use reasonable efforts to effect
such listing, qualification and registration, as the case may be.
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11. TERMINATION OF SERVICE.
Except as otherwise specifically provided by the Committee in the Option or
SAR agreement, Options and SARs may be exercised only within the period set
forth below. An Option or SAR held by a director shall be exercisable only if
the Optionee has maintained continuous status as a member of the Board of
Directors and an Option or SAR held by an employee shall be exercisable only if
the Optionee has maintained continuous status as an employee since the date of
grant. No Option or SAR shall be exercisable after termination of an Optionee's
membership on the Board of Directors or employment with the Company unless such
termination occurs by reason of retirement with the consent of the Board of
Directors, death or disability (as defined in Section 22(e)(3) of the Code). In
the event of termination of service by retirement with the consent of the Board
of Directors, or disability, the Options or SARs held by such individual which
were otherwise exercisable on the date of his termination shall expire unless
exercised by such individual within a period of three months after the date of
termination by retirement or one year after the date of termination by
disability. In the case of the death of an Optionee while employed by the
Company or within three months of termination of service by retirement with the
consent of the Board of Directors, his Options or SARs may be exercised by his
heirs, legatees or personal representatives, within a period of one year after
the date of death. In the event of the death of an Optionee within one year
after the termination of employment due to disability, his Options or SARs may
be exercised by his heirs, legatees or personal representatives within a period
of one year after the Optionee's date of death. Options or SARs granted under
the Plan shall not be affected by any change of employment so long as the
Optionee continues to be an employee of the Company, a Subsidiary or a
Designated Entity. Notwithstanding the foregoing, the Committee may provide in
an Option or SAR agreement for the continued exercisability of Options after
termination of employment for such other period or periods and on such other
terms and conditions as the Committee determines to be appropriate. In no event,
however, shall any Option or SAR be exercisable after 10 years from the date it
was granted.
12. TERMINATION, MODIFICATION AND AMENDMENT.
(a) The Plan (but not Options or SARs previously granted under the Plan)
shall terminate five (5) years from the date the Plan is approved by the
Company's stockholders and no Option or SAR shall be granted after termination
of the Plan.
(b) The Plan may at any time be terminated or, from time to time, be
suspended, modified or amended by the Board of Directors; provided, however,
that the Board of Directors shall not, without approval by the affirmative vote
of the holders of a majority of the voting securities of the Company present in
person or represented by proxy and entitled to vote at a meeting duly held in
accordance with Delaware law, (i) increase (except as provided by Section 7) the
maximum number of shares of Common Stock as to which Options or SARs may be
granted under the Plan, or (ii) reduce the minimum purchase price or exercise
price at which Options or SARs may be granted under the Plan.
(c) No termination, modification or amendment of the Plan may materially
and adversely affect the rights conferred under the Plan or any related grant
agreement with respect to outstanding Options or SAR grants without the written
consent of the affected Optionee.
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13. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective upon adoption by the Board of Directors,
subject to approval by a proper vote of the stockholders of the Company. Options
may be granted under the Plan prior to receipt of such approval, provided that,
in the event such approval is not obtained, the Plan and all Options and SARs
granted under the Plan shall be null and void and of no force or effect.
14. NOT A CONTRACT.
Nothing contained in the Plan or in any Option or SAR agreement executed
pursuant hereto shall be deemed to confer upon any Optionee any right to
continue as a member of the Board of Directors, or to remain in the employ or
service of the Company, any Subsidiary or any Designated Entity.
15. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware without
reference to principles of conflict of laws.
16. WITHHOLDING.
As a condition to the exercise of any Option or SAR, the Committee may
require that an Optionee satisfy, through deduction or withholding from any
payment of any kind otherwise due to the Optionee, or through such other
arrangements as are satisfactory to the Committee, the full amount of all
federal, state and local income and other taxes of any kind required or
permitted to be withheld in connection with such exercise. The Committee may
permit shares of Common Stock to be used to satisfy tax withholding requirements
and such shares shall be valued at their Fair Market Value as of the settlement
date of the Option or SAR being exercised.
17. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS.
Unless otherwise determined by the Committee, compensation recognized upon
exercise of Options or SARs or upon settlement of rights under the Plan shall
not be deemed a part of the recipient's compensation for purposes of calculating
payments or benefits from any Company benefit or severance program (or severance
pay law of any country). The above notwithstanding, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
18. UNFUNDED PLAN.
Unless otherwise determined by the Committee, the Plan shall be unfunded
and shall not create (or be construed to create) a trust or a separate fund or
funds. The Plan shall not establish any fiduciary relationship between the
Company and any person. To the extent any person holds any rights by virtue of a
grant awarded under the Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company.
19. SUCCESSORS AND ASSIGNS.
The Plan shall be binding on all successors and assigns of a participant,
including, without limitation, the estate of such participant and the executor
or administrator of such estate, or any receiver or trustee in bankruptcy or
representative of the participant's creditors.