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Exhibit 10.9
NATIONAL RECORD MART, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The purposes of the 1997 Non-employee Directors Stock Option Plan (the
"Plan") are to encourage non-employee directors of National Record Mart, Inc.
(the "Corporation"), a Delaware corporation, to increase their efforts to make
the Corporation more successful, to provide an additional inducement for persons
to remain as directors of the Corporation, to reward such persons by providing
an opportunity to acquire shares of Common Stock, par value $.01 per share, of
the Corporation (the "Common Stock") on favorable terms and to provide a means
through which the Corporation may attract able persons to become directors of
the Corporation.
SECTION 1
ADMINISTRATION
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The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). The Board shall interpret the Plan and prescribe such
rules, regulations and procedures in connection with the operations of the Plan
as it shall deem to be necessary and advisable for the administration of the
Plan consistent with the purposes of the Plan. All questions of interpretation
and application of the Plan, or as to grants under the Plan, shall be subject to
the determination of the Board, which shall be final and binding.
The Board shall keep records of action taken. A majority of the Board
shall constitute a quorum at any meeting, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved
in writing by all the members of the Board, shall be the acts of the Board.
SECTION 2
ELIGIBILITY
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Those directors of the Corporation who are not employees of the
Corporation shall be eligible to be granted stock options as described herein.
Subject to the provisions of the Plan, the Board shall have full and
final authority, in its discretion, to grant stock options as described herein
and to determine the non-employee directors to whom any such grant shall be made
and the number of shares to be covered thereby. In determining the eligibility
of any person, as well as in determining the number of shares covered by each
grant, the Board shall consider the nature and value to the Corporation of his
or her services, his or her present and/or potential contribution to the success
of the Corporation and such other factors as the Board may deem relevant.
SECTION 3
SHARES AVAILABLE UNDER THE PLAN
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The aggregate number of shares of the Common Stock that may be issued
and as to which grants may be made under the Plan is 25,000. If any stock option
granted under the Plan is canceled by mutual consent or terminates or expires
for any reason without having been exercised in full, the number of shares
subject thereto shall again be available for purposes of the Plan.
The shares which may be issued under the Plan may be either authorized
but unissued shares or treasury shares or partly each.
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SECTION 4
GRANT OF STOCK OPTIONS
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The Board shall have authority, in its discretion, to grant
"nonstatutory stock options" (i.e., stock options which do not qualify under
Sections 422 or 423 of the Internal Revenue Code of 1986 (the "Code")).
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS
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Stock options granted under the Plan shall be subject to the following
terms and conditions of Sections 5(A) through 5(I):
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be not less than one hundred percent (100%) of the
fair market value per share of the Common Stock covered by the stock option on
the date of grant. For purposes of this Section 5(A), the fair market value of
the Common Stock shall be determined as provided in Section 5(H).
(B) The option price for each stock option shall be payable in cash in
United States dollars (including check, bank draft or money order). The
exercise of the stock option shall not be deemed to occur and no shares of
Common Stock will be issued by the Corporation upon exercise of the stock
option until the Corporation has received payment of the option price in full.
The date of exercise of a stock option shall be determined under procedures
established by the Board, and as of the date of exercise the person exercising
the stock option shall be considered for all purposes to be the owner of the
shares with respect to which the stock option has been exercised.
(C) Each stock option shall be exercisable at such time or times as
the Board, in its discretion, shall determine at grant. No stock option shall
be exercisable after the expiration of ten years from the date of grant. A
stock option to the extent exercisable at any time may be exercised in whole or
in part.
(D) Subject to the last two sentences of this Section 5(D), (i) no
stock option shall be transferable by the optionee otherwise than by Will, or
if the optionee dies intestate, by the laws of descent and distribution of the
state of domicile of the optionee at the time of death and (ii) all stock
options shall be exercisable during the lifetime of the optionee only by the
optionee. However, the Board may, in its discretion, determine that an optionee
may transfer an option by gift to the optionee's spouse or to any of the
optionee's lineal descendants or the trustee(s) of a trust for the benefit of
such persons to the extent approved in advance by the Board in writing. Any
options gifted to such persons or trusts shall be subject to the restrictions,
terms and conditions of this Plan, and any such transferee shall be deemed to
be an optionee and shall upon receipt of such stock options, as a condition of
effectiveness of the transfer, sign a written agreement with the Corporation
in the form prescribed by the Board agreeing to such restrictions, terms and
conditions.
(E) Unless the Board, in its discretion, shall otherwise determine, if
the optionee ceases to be a director of the Corporation for any reason,
including death all outstanding stock options held by the optionee or the
optionee's transferee at the time of such cessation shall automatically
terminate six months after the date of such cessation.
(F) If an optionee (i) engages in the operation or management of a
business (whether as owner, partner, officer, director, employee or otherwise
and whether during or after the optionee's tenure as a director of the
Corporation) which is in competition with the Corporation, (ii) induces or
attempts to induce any customer, supplier, licensee or other individual,
corporation or other business organization having a business relationship with
the Corporation to cease doing business with the Corporation or in any way
interferes with the relationship between any such customer, supplier, licensee
or other person and the Corporation, or (iii) solicits any employee of the
Corporation to leave the employment thereof or in any way interferes with the
relationship of such employee with the Corporation, the Board, in its
discretion, may immediately terminate all outstanding stock options held by the
optionee without paying any consideration therefor. Whether an optionee has
engaged in any of the activities
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referred to in the preceding sentence which would cause the outstanding stock
options to be terminated shall be determined, in its discretion, by the Board,
and any such determination by the Board shall be final and binding.
(G) All stock options shall be confirmed by an agreement which shall
be executed on behalf of the Corporation by the Chief Executive Officer (if
other than the President), the President or any Vice President and by the
optionee. The provisions of such agreements need not be identical.
(H) The fair market value per share of Common Stock for the purposes
of this Plan shall, so long as the Common Stock is listed on a United States
securities exchange registered under the Securities Exchange Act of 1934 (the
"1934 Act") or on the National Association of Securities Dealers Automated
Quotations System or any successor system then in use ("NASDAQ"), be the mean
between the highest and lowest sales prices per share of the Common Stock on
such exchange or system for the date as of which fair market value is to be
determined. At any time when the Common Stock is not so listed, the fair market
value per share of Common Stock for the purposes of this Plan shall be the
value determined in good faith by the Board.
(I) In the discretion of the Board, no shares of the Common Stock
shall be issued or delivered upon the exercise of a stock option granted under
the Plan unless the Corporation has received an opinion from counsel for the
Corporation that the issuance or delivery of the shares to which the person
exercising the stock option is entitled will not cause the Corporation to
violate the Securities Act of 1933, as amended (the "1933 Act"), any applicable
state or foreign securities law or any applicable rules or regulations under
the 1933 Act or under any such state or foreign securities law. The Corporation
is under no obligation to register shares issuable upon the exercise of stock
options granted under the Plan under the 1933 Act or to register such shares,
or take any other action, under any state or foreign securities law in
connection with the offer or sale of such shares under the Plan or to prepare
any disclosure document for distribution to optionees under the 1933 Act or any
state or foreign securities law in connection with such offer or sale. As a
condition precedent to the issuance or delivery of shares upon the exercise of
a stock option, the person exercising the stock option may be required to
represent, warrant and agree (i) that the shares to be acquired upon exercise
of the stock option are being acquired for the account of such person for
investment and not with a view to the resale or other distribution thereof and
(ii) that such person will not, directly or indirectly, transfer, sell, assign,
pledge, hypothecate or otherwise dispose of any such shares unless the
transfer, sale, assignment, pledge, hypothecation or other disposition of the
shares is pursuant to effective registrations under the 1933 Act and any
applicable state or foreign securities laws or pursuant to appropriate
exemptions from any such registrations. The certificate or certificates
representing the shares to be issued or delivered upon exercise of a stock
option may bear a legend to this effect and other legends required by any
applicable securities laws, and appropriate stop-transfer instructions may be
issued to the Corporation's stock transfer agent with respect to such shares.
In addition, also as a condition precedent to the issuance or delivery of
shares upon the exercise of a stock option, the person exercising the stock
option may be required to make certain other representations and warranties and
to provide certain other information to enable counsel for the Corporation to
render the opinion under the first sentence of this Section 5(I).
Subject to the foregoing provisions of this section and the other
provisions of the Plan, stock options granted under the Plan shall be subject
to such restrictions and other terms and conditions, if any, as shall be
determined, in its discretion, by the Board and set forth in the agreement
referred to in Section 5(G), or an amendment thereto.
SECTION 6
ADJUSTMENT AND SUBSTITUTION OF SHARES
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If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock subject to any outstanding stock options, and the number of shares of
the Common Stock which may be issued under the Plan but are not subject to
outstanding stock options on the date fixed for determining the stockholders
entitled to receive such stock dividend or distribution shall be adjusted on
the payment date of such dividend or distribution by adding thereto the number
of shares of the Common Stock which would have been distributable thereon if
such shares had been outstanding on such record date.
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If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Corporation or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock subject to any then outstanding stock option, and for
each share of the Common Stock which may be issued under the Plan but which is
not then subject to any outstanding stock option, the number and kind of shares
of stock or other securities into which each outstanding share of the Common
Stock shall be so changed or for which each such share shall be exchangeable.
In case of any adjustment or substitution as provided for in the first
two paragraphs of this Section 6, the aggregate option price for all shares
subject to each then outstanding stock option prior to such adjustment or
substitution shall be the aggregate option price for all shares of stock or
other securities (including any fraction) to which such shares shall have been
adjusted or which shall have been substituted for such shares. Any new option
price per share shall be carried to three decimal places with the last decimal
place rounded upwards to the nearest whole number.
If the outstanding shares of the Common Stock shall be changed in
value by reason of any spin-off, split-off, or split-up, or dividend in partial
liquidation, dividend in property other than cash or extraordinary distribution
to holders of the Common Stock, the Board shall make any adjustments to any
then outstanding stock option which it determines are equitably required to
prevent dilution or enlargement of the rights of optionees which would
otherwise result from any such transaction.
No adjustment or substitution provided for in this Section 6 shall
require the Corporation to issue or sell a fraction of a share or other
security. Accordingly, all fractional shares or other securities which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
Except as provided in this Section 6, an optionee shall have no rights
by reason of any issue by the Corporation of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.
SECTION 7
NO RIGHTS CONFERRED BY THE PLAN
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Neither the adoption of the Plan nor any action of the Board pursuant
to the Plan shall be deemed to give any person any right to be granted a stock
option under the Plan. Nothing in the Plan, in any stock option, or in any
agreement providing for any stock option shall confer any right on any person
to tenure as a director of the Corporation.
SECTION 8
AMENDMENT
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The right to alter and amend the Plan at any time and from time to
time and the right to revoke or terminate the Plan are hereby specifically
reserved to the Board; provided that no such revocation or termination shall
terminate any outstanding stock options granted under the Plan. No alteration,
amendment, revocation or termination of the Plan may, without the consent of
the holder of an outstanding grant under the Plan, adversely affect the rights
of such holder with respect to such outstanding grant.
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SECTION 9
EFFECTIVE DATE OF PLAN
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The effective date and date of adoption of the Plan shall be June 30,
1997, the date of adoption of the Plan by the Board.
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