EXHIBIT 4.1
SPEC'S MUSIC, INC.
1993 INCENTIVE STOCK PLAN
SPEC'S MUSIC, INC.
1993 INCENTIVE STOCK PLAN
1. OBJECTIVES. The objectives of the Incentive Stock Plan (the "Plan")
are to enable Spec's Music, Inc. (the "Company") to compete successfully in
retaining and attracting key employees of outstanding ability, to stimulate the
efforts of such employees toward the Company's objectives and to encourage the
identification of their interest with those of the Company's shareholders. To
create the appropriate incentive, the Plan provides for granting Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock
Awards and Performance Share Awards, or any combination of the foregoing.
2. DEFINITIONS. For purposes of the Plan, the following terms shall
have the meanings assigned to them, unless another g is clearly indicated by a
particular usage and context:
(a) "Award" means, individually or collectively, any Option,
Stock Appreciation Right, Restricted Stock Award or Performance Share
Award.
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the Committee of the Board, referred to
in Section
(d) "Company" means Spec's Music, Inc.
(e) "Director" means a member of the Board.
(f) "Disinterested Person" means a member of the Board who is
not, during the one year prior to his or her service as an
administrator of this Plan, or during such service, granted or awarded
equity securities pursuant to this Plan or any other plan of the
Company or any of its affiliates, except that:
(i) participation in a formula plan meeting the
conditions in paragraph (c)(2)(ii) of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the
"1934 Act") shall not a member of the Board from being a
Disinterested Person
(ii) participation in an ongoing securities
acquisition plan meeting the conditions in paragraph (d)(2)(i)
of Rule 16b-3 promulgated under the 1934 Act shall not
disqualify a member of the Board from being a Disinterested
Person; and
(iii) an election to receive an annual retainer fee
in either cash or an equivalent amount of securities, or
partly in cash and partly in securities, shall not disqualify
a member of the Board from being a Disinterested Person.
(g) "Effective Date of Grant" means the date on which the
granting of an Award is authorized by the Committee, unless otherwise
provided in the Award.
(h) "Eligible Employee" means any individual (other than one
who receives retirement benefits, stipends, consulting fees,
honorariums, and the like, or who is a full time employee of any firm
other than the Company or a Subsidiary) who:
(i) performs services for the Company or a
Subsidiary, including any individual who is standing an
officer of the Company or a Subsidiary; and
(ii) is included on the regular payroll of the
Company or a Subsidiary.
(i) "Fair Market Value" means the closing sale price on a
specified date of a Share on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not listed on such
exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the
closing bid quotation with respect to a Share on a specified date on
the National Association of Securities Dealers, Inc. Automated
Quotations Systems or any system then in use, or if no such quotations
are available, the fair market value on a specified date of a Share as
determined by the Board in good faith.
(j) "Incentive Stock Option" shall have the meaning given that
term under the appropriate sections of the Internal Revenue Code of
1986, as it may be amended from time to time, and any regulations or
rulings promulgated thereunder.
(k) "Nonqualified Stock Option" means any Option granted under
the Plan which is not an Incentive Stock Option.
(l) "Option" means an Award granted under Section 6 of the
Plan and includes Nonqualified Stock Options and Incentive Stock
Options.
(m) "Option Price" means the purchase price per Share subject
to an Option which shall be fixed by the Committee, but shall not be
less than 100% of its Fair Market Value on the Effective Date of Grant.
(n) "Performance Share" means an Award granted under Section 8
of the Plan.
(o) "Permanent and Total Disability" shall have the meaning
given that term under the member appropriate sections of the Internal
Revenue code of 1986, as it may be amended from time to time, and any
regulations or rulings promulgated thereunder.
(p) "Restricted Stock Award" means an Award granted under
Section 9 of the Plan.
(q) "Share" means one share of the Common Stock, par value
$.01 per Share, of the Company.
(r) "Stock Appreciation Right" or "SAR" means the right
granted under Section 7 of the Plan, to receive a payment equal to the
excess of the Fair Market Value per Share on the date of exercise over
the Option Price per Share, multiplied by the number or Shares called
for by the related Option, or portion thereof, as specified in Section
7 of the Plan.
(s) "Subsidiary" means any subsidiary of the Company which is
considered an affiliate for purposes of and included in the filing of
the Company's consolidated federal income tax return.
3. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") of two or more Directors who are not Eligible Employees, which
shall be designated by and serve at the pleasure of the Board. The Committee
shall have all of the powers of the Board with respect to the Plan. A member of
the Board may serve as a member of the Committee only if such person is a
Disinterested Person. Each member of the Committee may be removed at any time,
with or without cause, by resolution of the Board and any vacancy occurring in
the membership of the Committee may be filled by appointed by the Board. Any and
all decisions or determinations of the Committee shall be made either: (i) by a
majority vote of the members of the Committee at a meeting, or (ii) without a
meeting by the unanimous written approval of the members of the Committee.
Except as specifically limited by the provisions of the Plan, the
Committee in its sole discretion shall have the full and final authority to:
(a) Determine which Eligible Employees shall be granted
Awards.
(b) Determine the time or times when Awards will be made.
(c) Determine the terms and conditions to which the payment of
Awards may be subject.
(d) Prescribe the form or forms evidencing Awards.
(e) Establish Company-wide, store-wide or individual
performance goals for purposes of the Plan.
(f) Interpret the provisions of the Plan and decide all
questions of fact arising in its application.
(g) Prescribe such rules and procedures for Plan
administration as from time to time it may deem advisable.
Any action, decision, interpretation or determination by the committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of
Awards.
No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any Award
granted hereunder, and, as provided in paragraph (e) of Section 12, all members
shall be indemnified by the Company for any liability and expenses which may
occur through any claim or cause of action.
4. SHARES SUBJECT TO PLAN. The Shares that may be made subject to
Awards granted under the Plan shall not exceed 500,000 Shares in the aggregate.
Shares shall be made available to satisfy Awards either from Shares reacquired
by the Company or from authorized but unissued Shares. To the extent that an
Award lapses, is cancelled or the rights of its holder terminate, any Shares
which were subject to such Award shall again be available for the grant of an
Award.
5. EFFECTIVE DATE AND TERM OF PLAN. The Plan is effective as of
September 21, 1993, the date of its original adoption by the Board, subject to
approval by the affirmative vote of the holders of a majority of the Shares
present or represented and entitled to vote at the Annual Meeting of
Shareholders of the Company, which is scheduled to be held on December 9, 1993.
Awards may be granted from time to time under the terms and conditions
of the Plan, but no Awards may be granted after expiration of 10 years from the
date of adoption of the Plan by the Board. The Plan shall continue in effect
until all matters relating to payment or termination of previously granted
Awards and administration of the Plan have been settled.
6. STOCK OPTIONS. Subject to the terms and conditions of the Plan, the
Committee may grant Options on such terms and conditions as the Committee may
determine. More than one Option may be granted to the same Eligible Employee.
(a) STOCK OPTION AGREEMENT. Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement, the form of which shall
have been approved by the Committee. The Agreement shall be executed by
the Company and the Eligible Employee and shall set forth the terms and
conditions of the Option.
(b) INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS.
The Committee in its sole discretion may designate whether an Option is
to be considered an Incentive Stock Option ("ISO") or a Nonqualified
Stock Option. The Committee may grant both an ISO and a Nonqualified
Stock Option to the same individual. However, where both an ISO and a
Nonqualified Stock Option are awarded at one time, such Options shall
be deemed to have been awarded in separate grants, shall be clearly
identified, and in no event will the exercise of one such Option affect
the right to exercise the other such Option.
(c) TERM OF OPTIONS. Each Option shall be for a term of ten
years or less from the Effective Date of Grant. An Option shall become
exercisable in such amounts, at such events or occurrences and upon
such other terms and conditions as shall be determined by the Committee
and provided in such Option. The Committee may in its sole discretion
accelerate the date on which any Option may be exercised and may
accelerate the vesting of any Shares subject to any Option or
previously acquired by the
exercise of any Option. Unless otherwise expressly provided in the
Option Agreement for the Option, such Option shall become fully vested
and exercisable immediately:
(i) If there occurs any transaction (which shall
include a series of transactions occurring within sixty (60)
days or occurring pursuant to a plan), that has the result
that stockholders of the Company immediately before such
transaction cease to own at least fifty-one percent (51%) of
the voting stock of the Company or of any entity that results
from the participation of the Company in a reorganization,
recapitalization, consolidation, merger, share exchange,
liquidation or any other form of corporate transaction;
(ii) If the stockholders of the Company shall approve
a plan of merger, consolidation, share exchange,
reorganization, recapitalization, liquidation or dissolution
in which the Company does not survive, unless (a) the approved
merger, consolidation, share exchange, reorganization,
recapitalization, liquidation or dissolution is subsequently
abandoned, or (b) the entity surviving or resulting from such
transaction is controlled by substantially the same persons as
was the Company, assumes all obligations of the Company under
the Option, and has a financial condition and operations
substantially equivalent or superior to those of the Company
immediately prior to the transaction; or
(iii) If the stockholders of the Company shall
approve a plan for the sale, lease, exchange or other
disposition of all or substantially all of the property and
assets of the Company (unless such plan is subsequently
abandoned).
(d) EXERCISE OF OPTIONS. Any person entitled to exercise an
Option may do so in whole or in part by delivering to the Secretary of
the Company at its principal executive office a written notice of
exercise. The written notice shall specify the number of Shares for
which an Option is being exercised and shall be accompanied by full
payment of the Option Price for the Shares being purchased. To the
extent that an SAR included in an Option is exercised, such Option
shall be deemed to have been exercised, and shall not be deemed to have
lapsed.
(e) PAYMENT OF OPTION PRICE. In the discretion of the
Committee, payment of the purchase price may be made in cash, by the
tender of Shares, or both. If payment by the tender of Shares is
permitted, the Fair Market Value of each such Share shall be determined
as of the day the Shares are tendered for payment or, if no sale has
been made on such date, then on the last preceding day on which such
sale shall have been made. Any excess of the value of the tendered
Shares over the purchase price will be returned to the option holder as
follows:
(i) Any whole Shares remaining in excess of the
purchase price will be returned to the holder of the Option in
kind, and may be represented by one or more certificates as
determined by the Company in its sole discretion.
(ii) Any partial Shares remaining in excess of the
purchase price will be returned to the holder of the Option in
cash.
(f) SPECIAL TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.
All ISOs granted under the Plan will be subject to the general
provisions applicable to all Options granted under the Plan, as well as
the following specific provisions:
(i) at the time the ISO is granted, if the Eligible
Employee beneficially owns stock representing more than 10% of
the total combined voting power of all classes of stock of
the total combined voting power of the Company or any parent
or subsidiary of the Company, then:
A. The Option Price must equal at least
110% of the Fair Market Value on the Effective Date
of Grant of the Shares subject to the ISO; and
B. The term of the ISO shall not be greater
than five years from the Effective Date of Grant.
(ii) The holder of the ISO must remain continuously
employed by the Company or any subsidiary of the Company from
the Effective Date of Grant until the date of exercise, unless
such exercise occurs within the grace period allowed following
termination of prior employment.
(iii) The aggregate Fair Market Value (determined at
the Effective Date of Grant of the ISO) of the Shares subject
to all ISOs granted to an Eligible Employee under this Plan
and any other plan of the Company and any parent or subsidiary
of the Company, within the meaning of Section 424 of the
Internal Revenue Code of 1986, as it may be amended, which
first became exercisable in any calendar year shall not exceed
$100,000.
(iv) Any Shares received pursuant to the exercise of
an ISO may not be sold within two years from the Effective
Date of Grant, nor within one year from the date of exercise.
If any Option is not granted, exercised, or held pursuant to
the provisions noted immediately above, it will be considered to be a
Nonqualified Stock Option to the extent that any or all of the grant is
in conflict with these restrictions.
(g) NON-TRANSFERABILITY. During the lifetime of an individual
to whom an Option has been granted, such Option is not transferable and
may be exercised only by such individual. Upon the death of the
Eligible Employee, the Option may be transferred to the beneficiaries
or heirs of the holder of the Option by will or by the laws of descent
and distribution.
(h) TERMINATION OF OPTIONS. An Option may be terminated as
follows:
(i) During the period of continuous employment with
the Company or a Subsidiary, an Option will be terminated only
if it has been fully exercised, has been surrendered upon the
exercise of a related SAR or has expired by its terms. For
purposes of the Plan, a leave or other to the absence approved
by the Committee shall not be deemed to be termination of
employment; however, in the event any such approved leave or
absence exceeds ninety days, the Option may be treated as a
Nonqualified Stock Option if so required by the Internal
Revenue Code as it exists at such time.
(ii) Upon termination of employment, for any reason
other than death or Permanent and Total Disability, the Option
will terminate at the end of the time period established by
the Committee; however, in the event such time period exceeds
three months, the Option may be treated as a Nonqualified
Stock Option if so required by the Internal Revenue Code as it
exists at such time.
(iii) Upon termination of employment by reason of
death, the Option will terminate at the end of one year
following the date of death.
(iv) Upon termination by reason of Permanent and
Total Disability, the option will terminate at the end of one
year following the date that the Committee determines that the
Eligible Employee is suffering a Permanent and Total
Disability.
Except as provided in Section 10 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the holder of the Option, or the beneficiaries or
heirs of such holder, to accrue additional rights under the Plan, or to
purchase more Shares through the exercise of an Option than could have
been purchased on the day that employment was terminated.
7. STOCK APPRECIATION RIGHTS. Subject to the terms and conditions of
the Plan, and such other terms and conditions as the Committee may impose, the
Committee may from time to time grant SARs in connection with all or part of any
Option at the time of the grant of the Option or at any time the during the term
of the Option.
(a) RIGHT TO EXERCISE. SARs shall be exercisable at such time
or times and only to the extent that the Option to which they relate
shall be exercisable as set forth in this Plan or such earlier times as
determined by the Committee; except that SARs granted to persons
subject to the provisions of Section 16(b) of the Securities Exchange
Act of 1934, as amended ("Section 16(b) Persons"), may not be exercised
within six months and one day of their Effective Date of Grant. SARS
shall be exercisable only when the Fair Market Value of the Shares
subject to the Option exceeds the Option Price.
(b) PAYMENT. Upon exercise of SARS, the holder thereof shall
surrender the related option, or portion thereof, and shall be entitled
to receive, without additional
payment of cash to the Company (except for applicable withholding
taxes), payment of an amount equal to the excess of the Fair Market
Value per Share, on the date of such exercise, over the Option Price
per Share as provided in such Option, multiplied by the number of
Shares called for by the Option, or portion thereof, which is so
surrendered. Such amount shall be payable, in the sole discretion of
the Committee, in cash, in Shares, or any combination thereof. If the
Committee, in its sole discretion, elects to effect payment for SARs in
the form of cash to 16(b) Persons, then such persons must exercise the
SARs during the period beginning on the third business day following
the Company's release of quarterly or annual financial statements and
ending on the twelfth business day following the date of such release.
(c) NON-TRANSFERABILITY. An SAR is transferable only when the
underlying Option is transferable and under the same conditions.
8. PERFORMANCE SHARE AWARDS. Subject to the terms and conditions of the
Plan, and such other terms and conditions as the Committee may impose, the
Committee may from time to time grant Performance Share Awards to Eligible
Employees. Each Performance Share shall be the equivalent of one Share. The
Award of Performance Shares under the Plan shall not entitle the holder to any
dividend, voting or other rights of a shareholder.
(a) VALUE OF PERFORMANCE SHARE AWARDS. Each Performance Share
Award shall have a maximum value established by the Committee at the
time of the Effective Date of Grant. In determining the value of
Performance Share Awards, the Committee shall take into account an
Eligible Employee's responsibility level, performance, potential and
such other consideration as it deems appropriate.
(b) PERFORMANCE PERIODS. At the time a Performance Share Award
is made, the Committee shall establish a period of time (the
"Performance Period") applicable to such Award, which period shall not
be less than two years. Each Performance Share Award may have a
different Performance Period, at the discretion of the Committee.
(c) PERFORMANCE GOALS. For each Performance Period, the
Committee, in its discretion, may establish performance goals. In
establishing performance goals, the Committee may use any and all
measures of individual, store-wide or Company-wide performance as it
deems appropriate. Performance goals may vary among Eligible Employees;
provided, however, that such performance goals shall state a minimum
performance level below which no Performance Shares shall be issued,
and a full performance level at which or about which all performance
Shares shall be issued, and, in the Committee's discretion, may include
intermediate levels at which specified numbers of Performance Shares
shall be issued.
The Committee is authorized to adjust performance goals at any
time during a Performance Period if it determines that such adjustments
are warranted by changes in conditions, including but not limited to
acquisitions or dispositions or the occurrence of other unusual,
unforeseen or extraordinary events.
(d) PAYMENT. At the end of each Performance Period, the holder
of a Performance Share Award is entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Share Award,
based on the achievement of performance goals for such Performance
Period, as determined by the Committee. Payment shall be made in a lump
sum or in installments, as prescribed by the Committee. Any payment to
be made in Shares shall be based on the Fair Market Value of a Share on
the payment date. No payment of Performance Shares shall be made prior
to the end of a Performance Period. Shares delivered upon payment of
Performance Share Awards may be authorized but unissued Shares or
Shares reacquired by the Company.
(e) TERMINATION OF EMPLOYMENT. Except as otherwise determined
by the Committee, if a holder of a Performance Share Award terminates
employment with the Company or a Subsidiary for any reason other than
death, disability or retirement prior to the payment of any portion of
a Performance Share Award, the holder shall forfeit all rights to
receive any portion of the Performance Share Award remaining unpaid at
such termination. If the employment of a holder of a Performance Share
Award who has been in the continuous employment of the Company or a
Subsidiary since the Effective Date of Grant is terminated by reason of
death, disability or retirement prior to the expiration of the
Performance Period, the Performance Share Award shall be prorated for
service during the Performance Period and distributed as soon as
practicable following such event, subject to the discretion of the
Committee to decide otherwise. Performance Shares which are forfeited,
cancelled or not paid out in full may again be awarded under the Plan.
9. RESTRICTED STOCK AWARDS. Subject to the terms and conditions of the
Plan and such other terms and conditions as the Committee may impose, the
Committee may from time to time authorize Restricted Stock Awards to Eligible
Employees.
(a) RESTRICTION PERIODS. At the time a Restricted Stock Award
is made, the Committee shall establish a period of time (the
"Restriction Period" applicable to such Award which shall be not less
than two years nor greater than five years. Each Restricted Stock Award
may have a different Restriction period, at the discretion of the
Committee; provided, however, that the Restriction Period applicable to
a particular Restricted Stock Award shall not be changed.
(b) OTHER TERMS AND CONDITIONS. Shares issued in connection
with a Restricted Stock Award shall be represented by a stock
certificate registered in the name of the holder of such Restricted
Stock Award. Until the expiration of the Restriction period the holder
shall have the right to enjoy all shareholder rights with the exception
that:
(i) The holder shall not be entitled to delivery of
the certificate representing the Shares.
(ii) The Company may issue Shares subject to such
restrictive legends and/or stop transfer instructions as it
deems appropriate and/or provide for retention of custody of
the Shares by the Company or by an agent designated by the
Company.
(iii) The holder may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of the Shares.
(iv) If the holder's continuous employment with the
Company or any Subsidiary shall terminate for any reason other
than those specified below in paragraph (d) of this Section 9,
the Restricted Stock Award shall be forfeited immediately and
all rights of the holder to Shares issued in connection with a
Restricted Stock Award shall terminate immediately without any
further obligation on the part of the Company or a Subsidiary.
(v) Cash and stock dividends may be either currently
paid or withheld by the Company for the holder's account.
(c) DISTRIBUTION OF RESTRICTED STOCK AWARD. If the holder of a
Restricted Stock Award remains in the continuous employment of the
Company or a Subsidiary during the entire Restriction Period, upon the
expiration of the Restriction Period all restrictions applicable to
Shares issued in connection with the Restricted Stock Award shall
lapse, and the certificate or certificates representing the Shares
shall be delivered to the holder of the Restricted Stock Award.
(d) TERMINATION OF EMPLOYMENT. If the employment of a holder
of a Restricted Stock Award who has been in the continuous employment
of the Company or a Subsidiary during the entire Restriction Period is
terminated by reason of death, disability or retirement prior to the
expiration of the Restriction Period, the Restricted Stock Award shall
be prorated for service during the Restriction Period and distributed
to the holder (or in the event of the holder's death, the beneficiary)
as soon as practicable following such event, subject to the discretion
of the Committee to decide otherwise. Restricted Stock which is
forfeited, cancelled or not paid out in full may again be awarded under
the Plan.
(e) PAYMENT FOR RESTRICTED STOCK. A holder shall not be
required to make any payment for Shares received pursuant to a
Restricted Stock Award.
10. CHANGES IN CAPITAL STRUCTURE. Options, SARS, Restricted Stock
Awards, Performance Share Awards, and any agreements evidencing such Awards
shall be subject to adjustment by the Committee as to the number and price of
shares or other considerations subject to such Awards in the event of changes in
the outstanding Shares by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Option or Award. In the event of any such change in the
outstanding Shares, the aggregate number of Shares available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive.
11. AMENDMENT OR DISCONTINUANCE OF PLAN. The Board may at any time
amend, suspend, or discontinue the Plan; provided, however, that no amendments
by the Board shall, without further approval of the shareholders of the Company:
(a) Change the class of Eligible Employees.
(b) Except as provided in Section 10 hereof, increase the
number of Shares which may be subject to Awards granted under the Plan.
(c) Extend the maximum term of the Plan or of Options or
Restricted Stock granted thereunder.
(d) Permit the granting of Awards to the individuals who are
then members of the Committee.
(e) Permit the granting of Awards to the individuals who are
then members of the Committee.
No amendment to the Plan shall alter or impair any awards granted under
the Plan without the consent of the holders thereof.
12. GENERAL.
(a) NO RIGHTS OF EMPLOYMENT. Nothing in the Plan nor in any
agreement entered pursuant to the Plan shall confer upon any Eligible Employee
any right to continued employment by the Company or a Subsidiary, nor shall it
impair any right of the Company or a Subsidiary to terminate such employment.
(i) INTERPRETATION. If any provision of the Plan
should be held invalid or illegal for any mason, such
determination shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced
as if such provision had never been included in the Plan.
Without limiting the generality of the foregoing, transactions
under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors promulgated under
the 1934 Act. To the extent any provision of the Plan or any
action by the Committee or the Board hereunder is inconsistent
with the foregoing requirement it shall be deemed null and
void, to the extent permitted by law and deemed advisable by
the Committee or the Board. This Plan shall be governed by the
laws of the State of Florida. Headings contained in the Plan
are for convenience only and shall in no manner be construed
as part of the Plan. Any reference to the masculine, feminine,
or neuter gender shall be a reference to such other gender as
is appropriate.