EXHIBIT 4.2
SPEC'S MUSIC, INC.
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
SPEC'S MUSIC, INC.
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to help attract, retain and
compensate highly qualified individuals who are not current employees of Spec's
Music, Inc. (the "Company") as members of the Board of Directors and, by
encouraging ownership of a stock interest in the Company, to gain for the
Company the advantages inherent in directors having a greater personal financial
investment in the Company.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
"Annual Meeting Date" means 5:00 p.m. on the date of the annual meeting
of the Company's shareholders at which the Directors are elected.
"Board" means the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1996, as amended.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Company" refers to Spec's Music, Inc., a Florida corporation.
"Director" means a member of the Board.
"Effective Date" is the date specified in Section 14.1.
"Eligible Director" means any person who is a member of the
Board and who is not an employee, full time or part time, of the
Company.
"Fair Market Value" of the Common Stock on any date of
reference means the Closing Price on the business day immediately
preceding such date of the Common Stock. For this purpose, the Closing
Price of the Common Stock on any business day shall be (i) if such
Common Stock is listed or admitted for trading on any United States
national securities exchange, or if actual transactions are otherwise
reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting
system, as reported in any newspaper of general circulation, (ii) if
the Common Stock is quoted on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ"), or any similar system
of automated dissemination of quotations of securities prices in common
use, the closing bid quotation for such day of the Common Stock on such
system, or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low ask quotations for the Common Stock as
reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and ask quotations for the
Common Stock on at least 5 of the 10 preceding days.
"Initial Grant Date" means the date on which a person is first
elected as a member of the Board, or the Effective Date of this Plan in
the case of persons who were members of the Board prior to the adoption
of this Plan.
"Option" (when capitalized) means any stock option granted
under this Plan.
"Option Agreement" means the agreement between the Company and
the Optionee for the grant of an option.
"Option Period" means the ten year period between the date an
Option is granted and the expiration date of the Option.
"Optionee" means a person to whom a stock option is granted
under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
"Plan" shall mean this 1993 Non-employee Directors' Stock
Option Plan for the Company.
"Share(s)" shall mean a share or shares of the Common Stock.
3. SHARES AND OPTIONS. Subject to Section 9 of this Plan, the Company
may grant to Optionees from time to time Options to purchase an aggregate of up
to 50,000 Shares from authorized and unissued Shares. If any Option granted
under the Plan shall terminate, expire, or be cancelled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares.
4. GRANTS OF OPTIONS. Each Eligible Director shall receive an initial
grant of an Option to purchase 5,000 Shares on the Initial Grant Date. In
addition, commencing in 1994, each Eligible Director who is reelected to serve
as a director on the Annual Meeting Date, shall be granted an option to purchase
1,000 Shares each year on the Annual Meeting Date. Upon the grant of each
Option, the Company and the Eligible Director shall enter into an Option
Agreement, which shall specify the grant date and the exercise price and shall
include or incorporate by reference the substance of this Plan and such other
provisions consistent with this Plan as the Board may determine.
5. EXERCISE PRICE. The exercise price per Share of any Option shall be
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate exercise price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Board in its sole discretion have been made for the
Optionee's payment to the Company of the amount that is necessary for the
Company to withhold in accordance with applicable Federal or state tax
withholding requirements. The exercise price of any Shares purchased, and any
required tax payment, shall be paid in cash,
by the tender of Shares, or both. If payment is made in cash, it may be made by
certified or official bank check, personal check or money order. If payment is
made by the tender of Shares, 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 Optionee as follows:
(i) Any whole Shares remaining in excess of the purchase price
will be returned to the Optionee 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 Optionee in cash.
No Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are issued
to such person(s) under the terms of the Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 9 hereof.
7. EXERCISE SCHEDULE FOR OPTIONS.
7.1 Each Option granted hereunder upon the Initial Grant Date
shall be exercised in accordance with the following schedule:
PERCENTAGE OF NUMBER OF SHARES DATE FIRST AVAILABLE FOR EXERCISE
------------------------------ -----------------------------------
25% One year after the date of grant
25% Two years after the date of grant
25% Three years after the date of grant
25% Four years after the date of grant
7.2 Each Option granted hereunder upon an Eligible Director's
re-election to the Board shall become fully exercisable one year following its
grant.
7.3 Notwithstanding the foregoing provisions, each outstanding
Option shall become fully exercisable immediately:
(a) if there occurs any transaction (which shall
include a series of transactions occurring within 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 51 percent 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;
(b) 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 (i) the approved
merger, consolidation, share exchange, reorganization,
recapitalization, liquidation or dissolution is subsequently
abandoned, or (ii) the entity surviving or resulting from such
transaction (x) is controlled by substantially the same
persons as was the Company, (y) assumes all obligations of the
Company under the Option, and (z) has a financial condition
and operations substantially equivalent or superior to those
of the Company immediately prior to the transaction; or
(c) if the stockholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
7.4 The expiration date of an Option shall be 10 years from
the date of grant of the Option, subject to earlier termination pursuant to
Section 8.
8. TERMINATION OF OPTION PERIOD. An Optionee whose directorship
terminates for any reason other than death or disability (as defined in Section
105(d)(4) of the Code) shall be entitled to exercise any Options which are then
exercisable only within the thirty day period after the date he ceases to serve
as a director, after such thirty day period, such Options shall be null and
void. In the case of termination of the directorship by reason of the Director's
death or disability within the meaning of Section 105(d)(4) of the Code, the
Option or any portion thereof which was not exercisable on the date of
termination shall be accelerated and become immediately exercisable, and the
period to exercise such Option shall be twelve months, subject to the earlier
expiration of the Option Period. The estate of an Optionee who dies, or a person
who acquires the right to exercise an Option, including any portion of such
Option which was not exercisable at the time of death, by bequest or inheritance
or by reason of the death of the Optionee, may exercise the Option only within
the twelve-month period after the death of the Optionee, subject to the earlier
expiration of the Option Period.
9. ADJUSTMENT OF SHARES.
9.1 Options Agreements evidencing Options shall be subject to
adjustment by the Board as to the number and price of Shares subject to such
Options 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. 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 Board,
whose determination shall be conclusive.
9.2 Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made
with respect to, the number or exercise price of the Shares then subject to
outstanding Options granted under the Plan.
9.3 Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceedings, whether of a similar
character or otherwise.
10. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Board may require such agreements or
undertakings, if any, as the Board may deem necessary or advisable to assure
compliance with any applicable law or regulation including, but not limited to,
the following:
(a) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that Optionee is
acquiring the Shares to be issued for investment and not with a view
to, or for sale connection with, the distribution of any such Shares;
and
(b) a representation, warranty and/or agreement to be bound by
any legends that are, in the opinion of the Board, necessary or
appropriate to comply with the provisions of any securities law deemed
by the Board to be applicable to the issuance of the Shares and are
endorsed upon the Share certificates.
12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan,
provided that the Board does not have any discretion with respect to the grant
of options under the Plan.
13. INTERPRETATION.
13.1 If any provision of the Plan should be held invalid or
illegal for any reason, 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 this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors promulgated under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and this Plan
is intended to constitute a "Formula Plan" pursuant to Rule 16b-3(c)(2)(ii). To
the extent any provision of the Plan or action by the
Board hereunder is inconsistent with the foregoing requirements, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Board.
13.2 The determinations and the interpretation and
construction of any provision of the Plan by the Board shall be final and
conclusive. This Plan shall be governed by the laws of the State of Florida.
Headings contained in this Plan are for convenience only and shall in no manner
be construed as part of this Plan. Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is appropriate.
14. TERM OF PLAN. Amendment and Termination of the Plan.
14.1 This 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. This Plan shall continue in effect
until all Options granted hereunder have expired or been exercised, unless
sooner terminated under the provisions relating thereto. No Option shall be
granted after 10 years from the Effective Date.
14.2 The Board may from time to time amend, terminate or
suspend the Plan or any Option; provided, however that, except to the extent
provided in Section 9, no such amendment may (i) without approval by the
Company's shareholders, increase the number of Shares reserved for Options or
change the class of persons eligible to receive Options or involve any other
change or modification requiring shareholder approval under Rule 16b-3 of the
1934 Act; (ii) permit the granting of Options that expire beyond the maximum
10-year period described in Subsection 7.4; (iii) extend the termination date of
the Plan as set forth in Section 14.1; or (iv) give the directors discretion
with respect to the grant of options; and, provided further, that, except to the
extent otherwise specifically provided in Section 8, no amendment, termination
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee. Any termination or suspension of the Plan shall not affect Options
already granted and such Options shall remain in full force and effect as if
this Plan had not been terminated or suspended. No Option may be granted while
the Plan is suspended or after it is terminated.
14.3 Notwithstanding anything else contained herein, the
provisions of this Plan which govern the number of Options to be awarded to
Directors, the exercise price per share under each such Option, when and under
what circumstances an Option will be granted, and the period within which each
Option may be exercised, shall not be amended more than once every six months
(even with shareholder approval), other than to conform to changes in the Code,
or the rules promulgated thereunder, and under the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission.
15. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of the Plan.