EXHIBIT 4.3
SPEC'S MUSIC, INC.
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
SPEC'S MUSIC, INC.
1996 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. Options granted under the Plan are intended to be
options which do not meet the requirements of Section 422 of the Code.
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 1986, 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 15.1.
"Eligible Director" means any person who is a member of the
Board and who is neither an employee, full time or part time, of the Company,
nor an independent contractor providing services to the Company, directly or
indirectly, other than as a director.
"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 Systems ("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.
"First Exercise Date" shall have the meaning set forth in
Section 6(a) of this Plan.
"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, as
applicable.
"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 period five (5) years from the date
an Option is granted.
"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 1996 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 One Hundred and Fifty Thousand (150,000) Shares. Such Shares may be
authorized and unissued Shares, Shares issued
and thereafter acquired by the Company, and/or Shares bought on the market for
purposes of this Plan. If any Option granted under this 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 Twenty Thousand (20,000) Shares on the Initial
Grant Date. In addition, commencing in 1996, each Eligible Director who is
re-elected to serve as a director on the Annual Meeting Date, shall be granted
an option to purchase Two Thousand (2,000) 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 the 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. VESTING AND EXERCISE OF OPTIONS. Each Option granted hereunder upon
an Eligible Director's re-election to the Board shall become fully exercisable
one year following its grant. An Option granted on the Initial Grant Date under
the Plan shall vest and become exercisable in installments as follows:
(a) the Options shall not vest nor be exercisable prior to the
expiration of thirty days from the Effective Date of this Agreement, or in the
case of the Options granted upon re-election
of a Director, such Options shall not vest nor be exercisable prior to the
expiration of thirty days from the Annual Meeting Date, (each, a "First Exercise
Date");
(b) after the First Exercise Date and until the three years after the
Effective Date or Annual Meeting Date, as applicable, the Options shall vest and
first become exercisable at the rate of Five Hundred and Fifty-Five (555) of the
Shares underlying the Options per month;
(c) the Options to purchase the remaining twenty (20) Shares shall vest
and be exercisable three (3) years after the Effective Date or Annual Meeting
Date, as applicable;
(d) 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 withholding
requirements. The exercise price of any Shares purchased, and any required tax
payment, shall be paid in full and in cash, by payment in cash or by certified,
cashier's or official bank check, personal check or money order, and the Company
shall not be required to deliver certificates for such Shares until such payment
has been made.
No Optionee shall be deemed to be a holder of any Shares subject to an Option,
nor shall an Optionee have any rights of a stockholder of the Company, 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
and upon an Eligible Director's re-election to the Board shall be exercised in
accordance with the Plan.
7.2 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).
7.3 The expiration date of an Option shall be five (5) years
from the date of grant of the Option, subject to earlier termination pursuant to
Section 8.
8. TERMINATION OF OPTION PERIOD. In the event an Optionee's
directorship is terminated, any Options that have not yet vested will terminate
on such date. An Optionee whose directorship is terminated for any reason other
than death or disability (as defined in the Americans With Disabilities Act of
1990 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 as defined in the Americans With Disabilities Act of 1990, the Option
or any portion thereof which was not exercisable on the date of termination
shall terminate on such date.
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 may not be transferred, sold, pledged or assigned 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 in
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 issuances of the Shares and are endorsed upon the
Share certificates.
12. RESTRICTIONS ON ISSUING SHARES. The exercise of each Option shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is
necessary or desirable as a condition of, or in connection with, such exercise
or the delivery or purchase of Shares pursuant thereto, then in any such event,
such exercise shall not be effective unless such withholding, listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
13. 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.
14. INTERPRETATION.
14.1 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.
14.2 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.
15. TERM OF PLAN, AMENDMENT AND TERMINATION OF THE PLAN.
15.1 This Plan is effective as of June 4, 1996, 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 the Shareholders of the Company, which is
scheduled to be held on December 10, 1996. 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 five years from the Effective Date.
15.2 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
five-year period described in Subsection 7.3; (iii) extend the termination date
of the Plan as set forth in Section
15.1; 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.
15.3 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.
16. RESERVATIONS 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.