As filed with the Securities and Exchange Commission on August 28, 1997
Registration No. 333_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GALOOB TOYS, INC.
-----------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 94-1716574
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
500 FORBES BOULEVARD
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 952-1678
--------------
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
GALOOB TOYS, INC.
AMENDED AND RESTATED
1996 SHARE INCENTIVE PLAN
-------------------------
(Full Title of Plan)
WILLIAM G. CATRON, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
GALOOB TOYS, INC.
500 FORBES BOULEVARD
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 952-1678
--------------
(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
JEFFREY J. WEINBERG, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Maximim Propsed Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Offering Amount of
to be be Registered Registered(1) per Share(2) Price(2) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 1,850,000 shares $20.5938 $38,098,530 $11,546
================================================================================================================================
</TABLE>
(1) Plus such indeterminate number of shares of Common Stock of the Registrant
as may be issued to prevent dilution resulting from stock dividends, stock
splits or similar transactions in accordance with Rule 416 under the Securities
Act of 1933.
(2) Estimated pursuant to Rule 457(h) and Rule 457(c) under the Securities Act
of 1933, based upon the average of the high and low prices of the Registrant's
Common Stock as reported on the New York Stock Exchange on August 22, 1997.
================================================================================
NYFS03...:\15\47315\0006\2475\FRMD186S.27E
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Item 1.
The documents containing the information specified in Part I of this
Registration Statement will be sent or given to employees as specified by Rule
428(b)(1). Such documents are not required to be and are not filed with the
Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424. These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended (the "Securities Act").
Item 2.
Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus), other documents
required to be delivered to eligible employees pursuant to Rule 428(b) or
additional information about the Galoob Toys, Inc. 1996 Share Incentive Plan and
its administrators are available without charge by contacting:
William G. Catron
Galoob Toys, Inc.
500 Forbes Boulevard
South San Francisco, California 94080
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission by Galoob Toys,
Inc., (the "Company") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(b) The Company's Annual Report on Form 10-K/A (File No. 001-09599)
for the fiscal year ended December 31, 1996, as filed with the Commission on
April 30, 1997.
(c) The Company's Quarterly Report on Form 10-Q for the fiscal
quarters ended March 31, 1997 and June 30, 1997.
(d) The description of the Company's Common Stock, par value $.01
per share (the "Common Stock"), contained in a Registration Statement on Form
8-B filed with the Commission pursuant to Section 12 of the Exchange Act on
August 25, 1987, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification of officers and directors of the Company is
governed by Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") and the Certificate of Incorporation and By-Laws of the Company.
Among other things, the DGCL permits indemnification of a director, officer,
employee or agent in civil, criminal, administrative or investigative actions,
suits or proceedings (other than an action by or in the right of the
corporation) to which such person was or is a party or is threatened to be made
a party by reason of the fact of such relationship with the corporation or the
fact that such person is or was serving in a similar capacity with another
entity at the request of the corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful.
II-1
<PAGE>
Indemnification in a suit by or in the right of the corporation is
permitted if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, but
no indemnification may be made in such suit to any person adjudged to be liable
to the corporation unless and only to the extent that the Delaware Court of
Chancery or the court in which the action was brought determines that, despite
the adjudication of liability, such person is under all circumstances, fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
Under the DGCL, to the extent that a director, officer, employee or
agent is successful, on the merits or otherwise, in the defense of any action,
suit or proceeding or any claim, issue or matter therein (whether or not the
suit is brought by or in the right of the corporation), he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him. In all cases in which indemnification is permitted (unless ordered by a
court), it may be made by the corporation only as authorized in the specific
case upon a determination that the applicable standard of conduct has been met
by the party to be indemnified. The determination must be made by a majority
vote of a quorum consisting of the directors who were not parties to the action,
or if such a quorum is not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or by the stockholders. The statute authorizes the corporation to pay
expenses incurred by an officer or director in advance of a final disposition of
a proceeding upon receipt of an undertaking, by or on behalf of the person to
whom the advance will be made, to repay the advance if it shall ultimately be
determined that he was not entitled to indemnification.
The DGCL provides that indemnification and advances of expenses
permitted thereunder are not to be exclusive of any rights to which those
seeking indemnification or advancement of expenses may be entitled under any
By-Law, agreement, vote of stockholders or disinterested directors, or
otherwise. The DGCL also authorizes a corporation to purchase and maintain
liability insurance on behalf of its directors, officers, employees and agents
regardless of whether the corporation would have the statutory power to
indemnify such person against the liabilities insured.
The Certificate of Incorporation of the Registrant (the
"Certificate") provides that no director shall be personally liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for breach of the director's duty of
loyalty to the Registrant or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director derived an improper personal benefit.
The Certificate also provides that directors, officers and others
shall be indemnified to the full extent authorized by the DGCL, as in effect
(or, to the extent indemnification is broadened, as it may be amended), against
any expense, liability or loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
from threatened, pending or completed actions to the extent permitted by the
DGCL, suits or proceedings, whether civil criminal, administrative or
investigative. The Certificate further provides that the expenses incurred by
any such person in defending an action, suit or proceeding shall, at his
request, be paid by the Company in advance of the final disposition of such
action, suit or proceeding.
The Certificate provides that the right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition shall not be exclusive of any other right which any person may have
or acquire under any statute, provision of the Company's Certificate or By-laws,
agreement, vote of stockholders or otherwise.
The Company maintains directors' and officers' liability and company
reimbursement insurance policies which, among other things (i) provides for
payment on behalf of its officers and directors
II-2
<PAGE>
against loss as defined in the policy stemming from acts committed by directors
and officers in their capacities as such and (ii) provides for payment on behalf
of the Company against such loss, but only when the Company shall be required or
permitted to indemnify the directors or officers for such loss. The policy does
not cover loss from claims made against insured directors or officers arising
within certain specified circumstances, including losses arising from specified
categories of misconduct.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1(a) Certificate of Incorporation. (Incorporated by reference
to Exhibit 3.1 (a) to the Company's Amendment No. 1 to the
Registration Statement on Form S-1, Registration No.
333-12953, filed with the Commission on November 8, 1996
(the "Amendment No. 1 to the Form S-1").)
4.1(b) Amendment to Certificate of Incorporation (Incorporated
by reference to Exhibit 3.1(b) to Amendment No.1 to the Form
S-1).
4.2 Bylaws. (Incorporated by reference to Amendment No. 1 to the
Registration Statement on the Form 8-B, filed with the
Commission on January 11, 1988.)
4.3 Form of Certificate for Shares of Common Stock of the
Registrant. (Incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3,
Registration No. 33-33640, filed with the Commission on
February 26, 1990 (the "Form S-3").)
4.5 Galoob Toys, Inc. Amended and Restated 1996 Share Incentive
Plan
5 Opinion of William G. Catron
23.1 Consent of William G. Catron (included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP.
24 Power of Attorney (included as part of the signature page to
this Registration Statement and incorporated herein be
reference).
II-3
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20 percent change in maximum aggregate
offering set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed
in the Registration Statement or any material change
to such information in the Registration Statement;
provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by the foregoing paragraphs is contained in periodic
reports filed by the Company pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that
is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of
II-4
<PAGE>
such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors,
officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant has duly
caused this Amendment to the Registration Statement on Form S-8 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of South
San Francisco, State of California, on the 28th day of August, 1997.
GALOOB TOYS, INC.
By: /s/ Roger Kowalsky
--------------------------------
Roger Kowalsky
Executive Vice President
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Roger Kowalsky acting individually, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Mark D. Goldman President, Chief Executive Officer August 28, 1997
- ------------------------------ and Director
Mark D. Goldman
/s/ Roger Kowalsky Executive Vice President and August 28, 1997
- ------------------------------ Chief Financial Officer and
Roger Kowalsky Director
/s/ Andrew Cavanaugh Director August 28, 1997
- ------------------------------
Andrew Cavanaugh
/s/ Paul A. Gliebe, Jr. Director August 28, 1997
- ------------------------------
Paul A. Gliebe, Jr.
/s/ Scott R. Heldfond Director August 28, 1997
- ------------------------------
Scott R. Heldfond
/s/ S. Lee Kling Director August 28, 1997
- ------------------------------
S. Lee Kling
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1(a) Certificate of Incorporation. (Incorporated by reference to
Exhibit 3.1 (a) to the Company's Amendment No. 1 to the
Registration Statement on Form S-1, Registration No.
333-12953, filed with the Commission on November 8, 1996 (the
"Amendment No. 1 to the Form S-1").)
4.1(b) Amendment to Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1(b) to Amendment No.1 to the form
S-1).
4.2 Bylaws. (Incorporated by reference to Amendment No. 1 to the
Registration Statement on the Form 8-B, filed with the
Commission on January 11, 1988.)
4.3 Form of Certificate for Shares of Common Stock of the
Registrant. (Incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3, Registration
No. 33-33640, filed with the Commission on February 26, 1990
(the "Form S-3").)
4.5 Galoob Toys, Inc. Amended and Restated 1996 Share Incentive
Plan
5 Opinion of William G. Catron
23.1 Consent of William G. Catron (included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP.
24 Power of Attorney (included as part of the signature page to
this Registration Statement and incorporated herein be
reference).
EXHIBIT 4.5
GALOOB TOYS, INC.
AMENDED AND RESTATED
1996 SHARE INCENTIVE PLAN
1. Purpose. Galoob Toys, Inc. 1996 Share Incentive Plan (the "Plan") is
intended to provide incentives which will attract, retain and motivate highly
competent persons as key employees of Galoob Toys, Inc. (the "Company") and of
any subsidiary corporation now existing or hereafter formed or acquired, by
providing them opportunities to acquire shares of the common stock, par value
$.01 per share, of the Company ("Common Stock") or to receive monetary payments
based on the value of such shares pursuant to the Benefits (as defined below)
described herein. Furthermore, the Plan is intended to assist in aligning the
interests of the Company's key employees to those of its stockholders.
2. Administration.
(a) The Plan will be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company from among its members
(which may be the Compensation Committee), and shall be comprised solely
of not less than two members who shall be (i) "Non- Employee Directors"
within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and (ii) unless otherwise determined by the Board of Directors,
"outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Committee is
authorized, subject to the provisions of the Plan, to establish such rules
and regulations as it deems necessary for the proper administration of the
Plan and to make such determinations and interpretations and to take such
action in connection with the Plan and any Benefits (as defined below)
granted hereunder as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be binding and conclusive
on all participants and their legal representatives. No member of the
Board of the Directors, no member of the Committee and no employee of the
Company shall be liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith, gross negligence or willful
misconduct, or for any act or failure to act hereunder by any other member
or employee or by any agent to whom
<PAGE>
duties in connection with the administration of this Plan have been
delegated. The Company shall indemnify members of the Committee and any
agent of the Committee who is an employee of the Company, against any and
all liabilities or expenses to which they may be subjected by reason of
any act or failure to act with respect to their duties on behalf of the
Plan, except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
(b) The Committee may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem advisable,
and the Committee, or any person to whom it has delegated duties as
aforesaid, may employ one or more persons to render advice with respect to
any responsibility the Committee or such person may have under the Plan.
The Committee may employ such legal or other counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion or computation received from any such counsel,
consultant or agent. Expenses incurred by the Committee in the engagement
of such counsel, consultant or agent shall be paid by the Company, or the
subsidiary or affiliate whose employees have benefitted from the Plan, as
determined by the Committee.
3. Participants. Participants will consist of such key employees of the
Company and any subsidiary corporation of the Company as the Committee in its
sole discretion determines to be significantly responsible for the success and
future growth and profitability of the Company and whom the Committee may
designate from time to time to receive Benefits under the Plan. Designation of a
participant in any year shall not require the Committee to designate such person
to receive a Benefit in any other year or, once designated, to receive the same
type or amount of Benefit as granted to the participant in any other year. The
Committee shall consider such factors as it deems pertinent in selecting
participants and in determining the type and amount of their respective
Benefits.
4. Type of Benefits. Benefits under the Plan may be granted in any one or
a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
Awards, (d) Performance Awards and (e) Stock Units (each as described below, and
collectively, the "Benefits"). Stock Awards, Performance Awards and Stock Units
may, as determined by the
2
<PAGE>
Committee in its discretion, constitute Performance-Based Awards, as described
in Section 11 below. Benefits shall be evidenced by agreements (which need not
be identical) in such forms as the Committee may from time to time approve;
provided, however, that in the event of any conflict between the provisions of
the Plan and any such agreements, the provisions of the Plan shall prevail.
5. Common Stock Available Under the Plan. The aggregate number of shares
of Common Stock that may be subject to Benefits, including Stock Options,
granted under this Plan shall be 1,850,000 shares of Common Stock, which may be
authorized and unissued or treasury shares, subject to any adjustments made in
accordance with Section 12 hereof. The maximum number of shares of Common Stock
with respect to which Benefits may be granted or measured to any individual
participant under the Plan during the term of the Plan shall not exceed 500,000,
provided, however, that the maximum number of shares of Common Stock with
respect to which Stock Options and Stock Appreciation Rights may be granted to
an individual participant under the Plan during the term of the Plan shall not
exceed 500,000 (in each case, subject to adjustments made in accordance with
Section 12 hereof). Other than those shares of Common Stock subject to Benefits
that are cancelled or terminated as a result of the Committee's exercise of its
discretion with respect to Performance-Based Awards as provided for in Section
11, any shares of Common Stock subject to a Stock Option or Stock Appreciation
Right which for any reason is cancelled or terminated without having been
exercised, any shares subject to Stock Awards, Performance Awards or Stock Units
which are forfeited, any shares subject to Performance Awards settled in cash or
any shares delivered to the Company as part of full payment for the exercise of
a Stock Option or Stock Appreciation Right shall again be available for Benefits
under the Plan. The preceding sentence shall apply only for purposes of
determining the aggregate number of shares of Common Stock subject to Benefits
and shall not apply for purposes of determining the maximum number of shares of
Common Stock subject to Benefits (including the maximum number of shares of
Common Stock subject to Stock Options and Stock Appreciation Rights) that any
individual participant may receive.
6. Stock Options. Stock Options will consist of awards from the Company
that will enable the holder to purchase a specific number of shares of Common
Stock, at set terms and at a fixed purchase price. Stock Options may be
"incentive
3
<PAGE>
stock options" ("Incentive Stock Options"), within the meaning of Section 422 of
the Code, or Stock Options which do not constitute Incentive Stock Options
("Nonqualified Stock Options"). The Committee will have the authority to grant
to any participant one or more Incentive Stock Options, Nonqualified Stock
Options, or both types of Stock Options (in each case with or without Stock
Appreciation Rights). Each Stock Option shall be subject to such terms and
conditions consistent with the Plan as the Committee may impose from time to
time, subject to the following limitations:
(a) Exercise Price. Each Stock Option granted hereunder shall have
such per-share exercise price as the Committee may determine at the date
of grant; provided, however, subject to subsection (d) below, that the
per-share exercise price shall not be less than 100% of the Fair Market
Value (as defined below) of the Common Stock on the date the option is
granted.
(b) Payment of Exercise Price. The option exercise price may be paid
in cash or, in the discretion of the Committee determined at the date of
grant, by the delivery of shares of Common Stock of the Company then owned
by the participant, by the withholding of shares of Common Stock for which
a Stock Option is exercisable, or by a combination of these methods. In
the discretion of the Committee determined at the date of grant, payment
may also be made by delivering a properly executed exercise notice to the
Company together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay
the exercise price. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage
firms. The Committee may prescribe any other method of paying the exercise
price that it determines to be consistent with applicable law and the
purpose of the Plan, including, without limitation, in lieu of the
exercise of a Stock Option by delivery of shares of Common Stock of the
Company then owned by a participant, providing the Company with a
notarized statement attesting to the number of shares owned, where, upon
verification by the Company, the Company would issue to the participant
only the number of incremental shares to which the participant is entitled
upon exercise of the Stock Option. In determining which methods a
participant may utilize to pay the exercise
4
<PAGE>
price, the Committee may consider such factors as it determines are
appropriate.
(c) Exercise Period. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee; provided, however, that no Stock
Option shall be exercisable later than ten years after the date it is
granted. All Stock Options shall terminate at such earlier times and upon
such conditions or circumstances as the Committee shall in its discretion
set forth in such option agreement at the date of grant.
(d) Limitations on Incentive Stock Options. Incentive Stock Options
may be granted only to participants who are key employees of the Company
or subsidiary corporation of the Company at the date of grant. The
aggregate market value (determined as of the time the option is granted)
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a participant during any calendar year
(under all option plans of the Company) shall not exceed $100,000. For
purposes of the preceding sentence, (i) Incentive Stock Options will be
taken into account in the order in which they are granted and (ii)
Incentive Stock Options granted before 1987 shall not be taken into
account. Incentive Stock Options may not be granted to any participant
who, at the time of grant, owns stock possessing (after the application of
the attribution rules of Section 424(d) of the Code) more than 10% of the
total combined voting power of all outstanding classes of stock of the
Company or any subsidiary corporation of the Company, unless the option
price is fixed at not less than 110% of the Fair Market Value of the
Common Stock on the date of grant and the exercise of such option is
prohibited by its terms after the expiration of five years from the date
of grant of such option. Notwithstanding anything to the contrary
contained herein, no Incentive Stock Option may be exercised later than
ten years after the date it is granted.
7. Stock Appreciation Rights. The Committee may, in its discretion, grant
Stock Appreciation Rights to the holders of any Stock Options granted hereunder.
In addition, Stock Appreciation Rights may be granted independently of, and
without relation to, options. A Stock Appreciation Right
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means a right to receive a payment, in cash, Common Stock or a combination
thereof, in an amount equal to the excess of (x) the Fair Market Value, or other
specified valuation, of a specified number of shares of Common Stock on the date
the right is exercised over (y) the Fair Market Value, or other specified
valuation (which shall be no less than the Fair Market Value), of such shares of
Common Stock on the date the right is granted, all as determined by the
Committee; provided, however, that if a Stock Appreciation Right is granted
retroactively in tandem with or in substitution for a Stock Option, the
designated Fair Market Value in the award agreement may be the Fair Market Value
on the date such Stock Option was granted. Each Stock Appreciation Right shall
be subject to such terms and conditions as the Committee shall impose from time
to time.
8. Stock Awards. The Committee may, in its discretion, grant Stock Awards
(which may include mandatory payment of bonus incentive compensation in stock)
consisting of Common Stock issued or transferred to participants with or without
other payments therefor as additional compensation for services to the Company.
Stock Awards may be subject to such terms and conditions as the Committee
determines appropriate, including, without limitation, restrictions on the sale
or other disposition of such shares, the right of the Company to reacquire such
shares for no consideration upon termination of the participant's employment
within specified periods, and may constitute Performance-Based Awards, as
described below. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Stock covered by
such an Award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed. The Stock Award shall specify whether
the participant shall have, with respect to the shares of Common Stock subject
to a Stock Award, all of the rights of a holder of shares of Common Stock of the
Company, including the right to receive dividends and to vote the shares. Except
as provided in Section 12 hereof, the Committee may not grant a Stock Award that
does not constitute a Performance-Based Award unless the vesting date of such
Stock Award is three (3) years or more from the date such Stock Award is
granted.
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9. Performance Awards.
(a) Performance Awards may be granted to participants at any time
and from time to time, as shall be determined by the Committee.
Performance Awards may, as determined by the Committee in its sole
discretion, constitute Performance-Based Awards. The Committee shall have
complete discretion in determining the number, amount and timing of awards
granted to each participant. Such Performance Awards may be in the form of
shares of Common Stock or Stock Units. Performance Awards may be awarded
as short-term or long-term incentives. With respect to those Performance
Awards that are intended to constitute Performance-Based Awards, the
Committee shall set performance targets at its discretion which, depending
on the extent to which they are met, will determine the number and/or
value of Performance Awards that will be paid out to the participants, and
may attach to such Performance Awards one or more restrictions.
Performance targets may be based upon, without limitation, Company-wide,
divisional and/or individual performance.
(b) With respect to those Performance Awards that are not intended
to constitute Performance-Based Awards, the Committee shall have the
authority at any time to make adjustments to performance targets for any
outstanding Performance Awards which the Committee deems necessary or
desirable unless at the time of establishment of goals the Committee shall
have precluded its authority to make such adjustments.
(c) Payment of earned Performance Awards shall be made in accordance
with terms and conditions prescribed or authorized by the Committee. The
participant may elect to defer, or the Committee may require or permit the
deferral of, the receipt of Performance Awards upon such terms as the
Committee deems appropriate.
10. Stock Units.
(a) The Committee may, in its discretion, grant Stock Units to
participants hereunder. Stock Units may, as determined by the Committee in
its sole discretion, constitute Performance-Based Awards. The Committee
shall determine the criteria for the vesting of Stock Units. A Stock Unit
granted by the Committee shall provide payment in shares of Common Stock
at such time as the award agreement shall specify. Shares of Common Stock
issued pursuant to this Section 10 may be issued
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with or without other payments therefor as may be required by applicable
law or such other consideration as may be determined by the Committee. The
Committee shall determine whether a participant granted a Stock Unit shall
be entitled to a Dividend Equivalent Right (as defined below).
(b) Upon vesting of a Stock Unit, unless the Committee has
determined to defer payment with respect to such unit or a Participant has
elected to defer payment under subsection (c) below, shares of Common
Stock representing the Stock Units shall be distributed to the participant
unless the Committee, with the consent of the participant, provides for
the payment of the Stock Units in cash or partly in cash and partly in
shares of Common Stock equal to the value of the shares of Common Stock
which would otherwise be distributed to the participant.
(c) Prior to the year with respect to which a Stock Unit may vest,
the participant may elect not to receive Common Stock upon the vesting of
such Stock Unit and for the Company to continue to maintain the Stock Unit
on its books of account. In such event, the value of a Stock Unit shall be
payable in shares of Common Stock pursuant to the agreement of deferral.
(d) A "Stock Unit" means a notational account representing one share
of Common Stock. A "Dividend Equivalent Right" means the right to receive
the amount of any dividend paid on the share of Common Stock underlying a
Stock Unit, which shall be payable in cash or in the form of additional
Stock Units.
11. Performance-Based Awards. Certain Benefits granted under the Plan may
be granted in a manner such that the Benefits qualify for the performance-based
compensation exemption of Section 162(m) of the Code ("Performance-Based
Awards"). As determined by the Committee in its sole discretion, either the
granting or vesting of such Performance-Based Awards are to be based upon one or
more of the following factors: net sales, pretax income before allocation of
corporate overhead and bonus, budget, earnings per share, net income, division,
group or corporate financial goals, return on stockholders' equity, return on
assets, attainment of strategic and operational initiatives, appreciation in
and/or maintenance of the price of the Common Stock or any other publicly-traded
securities of the
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<PAGE>
Company, market share, gross profits, earnings before interest and taxes,
earnings before interest, taxes, dividends and amortization, economic
value-added models and comparisons with various stock market indices, reductions
in costs or any combination of the foregoing. With respect to Performance-Based
Awards, (i) the Committee shall establish in writing (x) the objective
performance-based goals applicable to a given period and (y) the individual
employees or class of employees to which such performance-based goals apply no
later than 90 days after the commencement of such period (but in no event after
25% of such period has elapsed) and (ii) no Performance-Based Awards shall be
payable to or vest with respect to, as the case may be, any participant for a
given period until the Committee certifies in writing that the objective
performance goals (and any other material terms) applicable to such period have
been satisfied. With respect to any Benefits intended to qualify as
Performance-Based Awards, after establishment of a performance goal, the
Committee shall not revise such performance goal or increase the amount of
compensation payable thereunder (as determined in accordance with Section 162(m)
of the Code) upon the attainment of such performance goal. Notwithstanding the
preceding sentence, the Committee may reduce or eliminate the number of shares
of Common Stock or cash granted or the number of shares of Common Stock vested
upon the attainment of such performance goal.
12. Adjustment Provisions; Change in Control.
(a) If there shall be any change in the Common Stock of the Company,
through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spinoff, combination
of shares, exchange of shares, dividend in kind or other like change in
capital structure or distribution (other than normal cash dividends) to
stockholders of the Company, an adjustment shall be made to each
outstanding Stock Option and Stock Appreciation Right such that each such
Stock Option and Stock Appreciation Right shall thereafter be exercisable
for such securities, cash and/or other property as would have been
received in respect of the Common Stock subject to such Stock Option or
Stock Appreciation Right had such Stock Option or Stock Appreciation Right
been exercised in full immediately prior to such change or distribution,
and such an adjustment shall be made successively each time any
9
<PAGE>
such change shall occur. In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of participants'
rights under the Plan, the Committee will have authority to adjust, in an
equitable manner, the number and kind of shares that may be issued under
the Plan, the exercisability and vesting provisions of such Benefits, the
number and kind of shares subject to outstanding Benefits, the exercise
price applicable to outstanding Benefits, and the Fair Market Value of the
Common Stock and other value determinations applicable to outstanding
Benefits. Appropriate adjustments may also be made by the Committee in the
terms of any Benefits under the Plan to reflect such changes or
distributions and to modify any other terms of outstanding Benefits on an
equitable basis, including modifications of performance targets and
changes in the length of performance periods. In addition, other than with
respect to Stock Options, Stock Appreciation Rights and other awards
intended to constitute Performance-Based Awards, the Committee is
authorized to make adjustments to the terms and conditions of, and the
criteria included in, Benefits in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company,
or in response to changes in applicable laws, regulations, or accounting
principles. Notwithstanding the foregoing, (i) any adjustment with respect
to an Incentive Stock Option shall comply with the rules of Section 424(a)
of the Code, and (ii) in no event shall any adjustment be made which would
render any Incentive Stock Option granted hereunder other than an
incentive stock option for purposes of Section 422 of the Code.
(b) In the event of a Change in Control (as defined below), the
Committee, in its discretion, may take such actions as it deems
appropriate with respect to outstanding Benefits, including, without
limitation, accelerating the exercisability or vesting of such Benefits.
The Committee, in its discretion, may determine that, upon the occurrence
of a Change in Control of the Company, each Stock Option and Stock Appreciation
Right outstanding hereunder shall terminate within a specified number of days
after notice to the holder, and such holder shall receive, with respect to each
share of Common Stock subject to such Stock Option or Stock Appreciation Right,
an amount equal to
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<PAGE>
the excess of the Fair Market Value of such shares of Common Stock immediately
prior to the occurrence of such Change in Control over the exercise price per
share of such Stock Option or Stock Appreciation Right; such amount to be
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or in a combination thereof, as the Committee,
in its discretion, shall determine.
For purposes of this Section 12(b), a "Change in Control" of the Company
shall be deemed to have occurred upon any of the following events:
(A) A person or entity or group of persons or entities, acting in
concert, shall become the direct or indirect beneficial owner (within the
meaning of Rule 13d-3 of the Exchange Act) of securities of the Company
representing twenty-five percent (25%) or more of the combined voting
power of the issued and outstanding common stock of the Company (a
"Significant Owner"), unless such shares are originally issued to such
Significant Owner by the Company; or
(B) The majority of the Company's Board of Directors is no longer
comprised of the incumbent directors who constitute the Board of Directors
on the Effective Date (as hereinafter defined) and any other individual(s)
who becomes a director subsequent to the date of this Agreement whose
initial election or nomination for election as a director, as the case may
be, was approved by at least a majority of the directors who comprised the
incumbent directors as of the date of such election or nomination; or
(C) The Company's Common Stock shall cease to be publicly traded; or
(D) A sale of all or substantially all of the assets of the Company;
or
(E) The Board of Directors shall approve any merger, consolidation,
or like business combination or reorganization of the Company, the
consummation of which would result in the occurrence of any event
described in clause (B) or (C) above, and such transaction shall have been
consummated.
11
<PAGE>
13. Transferability. Each Benefit granted under the Plan to a participant
shall not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable, during the participant's lifetime, only
by the participant. In the event of the death of a participant, each Stock
Option or Stock Appreciation Right theretofore granted to him or her shall be
exercisable during such period after his or her death as the Committee shall in
its discretion set forth in such option or right at the date of grant and then
only by the executor or administrator of the estate of the deceased participant
or the person or persons to whom the deceased participant's rights under the
Stock Option or Stock Appreciation Right shall pass by will or the laws of
descent and distribution. Notwithstanding the foregoing, at the discretion of
the Committee, an award of a Benefit other than an Incentive Stock Option may
permit the transferability of a Benefit by a participant solely to the
participant's spouse, siblings, parents, children and grandchildren or trusts
for the benefit of such persons or partnerships, corporations, limited liability
companies or other entities owned solely by such persons, including trusts for
such persons, subject to any restriction included in the award of the Benefit.
14. Other Provisions. The award of any Benefit under the Plan may also be
subject to such other provisions (whether or not applicable to the Benefit
awarded to any other participant) as the Committee determines, at the date of
grant, appropriate, including, without limitation, for the installment purchase
of Common Stock under Stock Options, for the installment exercise of Stock
Appreciation Rights, to assist the participant in financing the acquisition of
Common Stock, for the forfeiture of, or restrictions on resale or other
disposition of, Common Stock acquired under any form of Benefit, for the
acceleration of exercisability or vesting of Benefits in the event of a change
in control of the Company, for the payment of the value of Benefits to
participants in the event of a change in control of the Company, or to comply
with federal and state securities laws, or understandings or conditions as to
the participant's employment in addition to those specifically provided for
under the Plan.
15. Fair Market Value. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value shall be the closing price of the Company's Common
Stock on the date of calculation (or on the last preceding trading date if
Common Stock was not traded on such date) if the Company's
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Common Stock is readily tradeable on a national securities exchange or other
market system, and if the Company's Common Stock is not readily tradeable, Fair
Market Value shall mean the amount determined in good faith by the Committee as
the fair market value of the Common Stock of the Company.
16. Withholding. All payments or distributions of Benefits made pursuant
to the Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements. If the Company
proposes or is required to distribute Common Stock pursuant to the Plan, it may
require the recipient to remit to it or to the corporation that employs such
recipient an amount sufficient to satisfy such tax withholding requirements
prior to the delivery of any certificates for such Common Stock. In lieu
thereof, the Company or the employing corporation shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit an optionee or award or right holder to pay all
or a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Common Stock by electing to
have the Company withhold shares of Common Stock having a Fair Market Value
equal to the amount of tax to be withheld, such tax calculated at rates required
by statute or regulation.
17. Tenure. A participant's right, if any, to continue to serve the
Company as a director, officer, employee, or otherwise, shall not be enlarged or
otherwise affected by his or her designation as a participant under the Plan.
18. Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder
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shall be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.
19. No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Benefit. The Committee shall
determine whether cash, or Benefits, or other property shall be issued or paid
in lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
20. Duration, Amendment and Termination. No Benefit shall be granted more
than ten years after the Effective Date; provided, however, that the terms and
conditions applicable to any Benefit granted prior to such date may thereafter
be amended or modified by mutual agreement between the Company and the
participant or such other persons as may then have an interest therein;
provided, however, that the foregoing shall not permit such parties to agree to
amend or modify the exercise price of a Stock Option previously granted
hereunder, except as provided in Section 12. Also, by mutual agreement between
the Company and a participant hereunder, under this Plan or under any other
present or future plan of the Company, Benefits may be granted to such
participant in substitution and exchange for, and in cancellation of, any
Benefits previously granted such participant under this Plan, or any other
present or future plan of the Company. The Committee may amend the Plan from
time to time or suspend or terminate the Plan at any time. However, no action
authorized by this Section 20 shall reduce the amount of any existing Benefit or
change the terms and conditions thereof without the participant's consent. No
amendment of the Plan shall, without approval of the stockholders of the
Company, (i) increase the total number of shares which may be issued under the
Plan or the maximum number of shares with respect to Stock Options, Stock
Appreciation Rights and other Benefits that may be granted to any individual
under the Plan or (ii) modify the requirements as to eligibility for Benefits
under the Plan; provided, however, that no amendment may be made without
approval of the stockholders of the Company if the amendment will disqualify any
Incentive Stock Options granted hereunder.
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21. Governing Law. This Plan, Benefits granted hereunder and actions taken
in connection herewith shall be governed and construed in accordance with the
laws of the State of Delaware (regardless of the law that might otherwise govern
under applicable Delaware principles of conflict of laws).
22. Effective Date.
(a) The Plan shall be effective as of July 29, 1996, the date on
which the Plan was adopted by the Committee (the "Effective Date"),
provided that the Plan is approved by the stockholders of the Company at
an annual meeting or any special meeting of stockholders of the Company
within 12 months of the Effective Date, and such approval of stockholders
shall be a condition to the right of each participant to receive any
Benefits hereunder. Any Benefits granted under the Plan prior to such
approval of stockholders shall be effective as of the date of grant
(unless, with respect to any Benefit, the Committee specifies otherwise at
the time of grant), but no such Benefit may be exercised or settled and no
restrictions relating to any Benefit may lapse prior to such stockholder
approval, and if stockholders fail to approve the Plan as specified
hereunder, any such Benefit shall be cancelled.
(b) This Plan shall terminate on July 28, 2006 (unless sooner
terminated by the Committee).
15
EXHIBIT 5
August 28, 1997
Galoob Toys, Inc.
500 Forbes Boulevard
South San Francisco, California 94080
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
As General Counsel for Galoob Toys, Inc., (the "Company") I have
been requested to render this opinion in connection with the preparation and
filing with the Securities and Exchange Commission of the Company's Registration
Statement on Form S-8 (the "Registration Statement") under the Securities Act of
1933, as amended, relating to the issuance of 1,850,000 Shares of the Company's
common shares, par value $.01 per share (the "Common Shares"), pursuant to
certain stock options, stock awards, and performance awards to be issued under
the Company's Amended and Restated 1996 Share Incentive Plan (the "Plan").
In so acting, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Registration Statement and the
Plan pursuant to which the Common Shares will be issued, and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives of
the Company, and have made such inquiries of such officers and representatives
as I have deemed relevant and necessary as a basis for the opinions hereinafter
set forth.
In such examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently esta-
<PAGE>
Galoob Toys, Inc.
August 28, 1997
Page 2
blished, I have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications stated
herein, I am of the opinion that the Common Shares to be issued pursuant to the
Plan have been duly authorized and, when issued upon exercise of options issued
pursuant to the Plan will be validly issued, fully paid and non-assessable.
I am a member of the Bar of the States of California and Illinois
and do not hold myself out as being an expert on laws other than the laws of the
United States of America, the State of California and, solely for the purpose of
providing the opinions set forth herein, the General Corporation Law of the
State of Delaware.
The opinions expressed herein are rendered solely for your benefit
in connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent. I hereby
consent to the use of this opinion as an exhibit to the Registration Statement.
Galoob Toys, Inc.
/s/ William G. Catron
------------------------
William G. Catron, Esq.
General Counsel
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 31, 1997 appearing on page F-1
of Galoob Toys, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1996.
Price Waterhouse LLP
San Francisco, California
August 28, 1997
