MODIFIED AND RESTATED STOCK OPTION AGREEMENT
Exhibit
10.14
MODIFIED
AND RESTATED
MODIFIED
AND RESTATED STOCK OPTION AGREEMENT (the “Agreement”), dated as
of August 29, 2007, between Global Music International, Inc., a
Florida corporation (the “Company”), and [ ] (the
“Optionee”):
WITNESSETH
WHEREAS,
the Company granted the Optionee on [], 2007 (the “Grant Date”) a
non-qualified stock option (the “Original Option”) to acquire ___shares
of the Company’s common stock (the “Common Stock”) at an
exercise price of $1.00 per share which was exercisable during the period
commencing with the Grant Date through [ ], 2012;
WHEREAS,
to avoid the imposition of additional tax contemplated by Section 409A of the
Internal Revenue Code of 1986, as amended, the Company and the
Optionee desire, in accordance with transition relief granted in Internal
Revenue Service Notice 2005-1 as modified by Internal Revenue Service Notice
▇▇▇▇-▇▇ ,▇▇ modify the Original Option so that its exercise price is
$2.00 per share, representing the last reported sales price of a share of Common
Stock on the Original Grant Date and that as so modified, the
exercise price shall be further modified in accordance with Treasury Regulation
Section 1.409A-1(b)(5)(v)(B) (which defines this change as a "modification"
of a stock right which is treated as a grant of a new stock right as of the
date
of the change that does not constitute a deferral of compensation within the
meaning of Section 409A) so that the exercise price is $1.15 per share,
reflecting the last reported sales price of a share of Common Stock on August
29, 2007, the date the Board of Directors of the Company approved the
modifications described above (the “Modifications”);
WHEREAS,
other than the Modifications, the terms and conditions of the Original
Option as amended and restated by this Agreement are identical.
NOW,
THEREFORE, in consideration of the mutual promises set forth herein,
and for other good and valuable consideration, the Company and the Optionee
hereby agree as follows:
1. Grant. The
Company has granted to the Optionee as of the Grant Date a non-qualified stock
option (the “Option”) to purchase all or any part of an aggregate of
[__________] shares of the Common Stock (the
“Shares”).
2. Number
of Shares. This Option shall be exercisable for an aggregate of
___________Shares.
3. Exercise
Price. The exercise price shall be $1.15 per share (the
“Exercise Price”).
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4. Medium
and Time of Payment. The Option shall be exercised by a written notice
signed by the Optionee which identifies this Agreement and states the number
of
Shares then being purchased (the “Exercise Notice”), delivered to the
attention of the Company’s Secretary at the address for the Company as set forth
in Section 15. The exercise date shall be the date such notice is
received by the Company. The Exercise Notice shall be accompanied by
the Exercise Price, which is payable either by: (a) cash payment, certified
or bank check or money order, equal to the aggregate Exercise Price for the
Shares being purchased; (b) a certificate(s) representing Common
Stock owned by the Optionee, if not subject to any restrictions, with a Fair
Market Value equal to the aggregate Exercise Price for the Shares being
purchased; (c) a cashless exercise, pursuant to which
the Optionee shall be issued that number of Shares as is determined
by multiplying the number of Shares being purchased hereunder by a fraction,
the
numerator of which shall be the difference between the then Fair Market Value
of
the Common Stock and the Exercise Price, and the denominator of which shall
be
the then Fair Market Value of the Common Stock; (d) such other manner as may
be
authorized by the Board and permitted under applicable law; or (e) by a
combination of the methods described in clauses (a), (b, (c) and (d) above;
provided, however, that in the event the Company determines at any time
or from time to time that any of such exercise procedures may have an
adverse impact on the Company’s financial statements, the
Company may limit or prohibit the Optionee from using any such method of
exercise, other than the procedure set forth in Section 4(a). The Exercise
Notice shall state the method or methods being utilized by the Optionee to
purchase Shares hereunder. “Fair Market Value” of a share of Common Stock as of
a specified date shall mean the closing price of a share of Common
Stock on the principal securities exchange (including the Nasdaq Stock Market
and the Over the Counter Bulletin Board) on which such shares are traded on
the
day immediately preceding the date as of which Fair Market Value is being
determined, or on the next preceding date on which such shares are traded if
no
shares were traded on such immediately preceding day, or if the shares are
not
traded on a securities exchange, Fair Market Value shall be deemed to be the
average of the high bid and low asked prices of the shares in the market on
which such shares trade on the day immediately preceding the date as of which
Fair Market Value is being determined or on the next preceding date on which
such high bid and low asked prices were recorded. In no case shall
Fair Market Value be determined with regard to restrictions other than
restrictions which, by their terms, will never lapse. Upon acceptance
of the Exercise Notice and receipt of payment in full, the Company shall cause
to be issued a certificate representing the shares of Common Stock so
purchased.
5. Term
and Exercise of the Option. The Option shall be exercisable
beginning as of the Original Grant Date and continuing until 5:00 p.m., New
York
City time, on [__________] (such date referred to herein as the "Expiration
Date").
6. Non-transferability. The
Option or any right or interest of the Optionee therein, may not be pledged,
assigned, hypothecated, encumbered or otherwise transferred or assigned other
than by will or the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionee only by the Optionee or his or her guardian
or legal representative.
7. Representations
and Warranties of Optionee.
(a)
Optionee represents and warrants that this Option is being acquired by Optionee
for Optionee’s personal account, for investment purposes only, and not with a
view to the distribution, resale or other disposition thereof.
(b) Optionee
acknowledges that the Company may issue Shares upon the exercise of the Option
without registering such Shares under the Securities Act of 1933, as amended
(the “Securities Act”), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that his or
her exercise of the Option may be expressly conditioned upon his or her delivery
to the Company of an investment certificate including such representations
and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon
exercise of an Option may be unregistered, Optionee may be required to hold
the
Shares indefinitely unless they are subsequently registered for resale under
the
Securities Act or an exemption from such registration is available.
(c) Optionee
hereby acknowledges that, in addition to certain restrictive legends that the
securities laws of the state in which Optionee resides may require, each
certificate representing the Shares may be endorsed with the following
legend:
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THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”); THEY HAVE BEEN ACQUIRED BY THE
HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
AND ANY APPLICABLE STATE SECURITIES LAW OF RECEIPT BY THE ISSUER OF AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS NOT REQUIRED.
8. Adjustment
in the Shares and Exercise Price. If the Shares, as presently
constituted, shall be changed into or exchanged for a different number or kind
of shares or other securities of the Company or of another entity (whether
by
reason of merger, consolidation, recapitalization, reclassification, split,
reverse split, combination of shares, or otherwise) or if the number of Shares
shall be increased through the payment of a share dividend, the Optionee shall
receive upon exercise of the Option the number and kind of shares or other
securities into which each outstanding Share shall be so changed, or for which
each such Share shall be exchanged, or to which each such Share shall be
entitled, as the case may be. The exercise price and other terms of
the Option shall be appropriately amended to reflect the foregoing
events. If there shall be any other change in the number or kind of
the outstanding Shares, or of any shares or other securities into which the
Shares shall have been changed, or for which the Shares shall have been
exchanged, then, if the Board of Directors shall, in its sole discretion,
determine that such change equitably requires an adjustment in the Option,
such
adjustment shall be made in accordance with that
determination. Notice of any adjustment shall be given by the Company
to the Optionee.
9. Stop-Transfer
Notices. Optionee understands and agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate “stop-transfer” instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
10. No
Limitation on Rights of the Company. The grant of this Option
shall not in any way affect the right or power of the Company to make
adjustments, reclassifications, or changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any
part
of its business or assets.
11. Rights
as a Shareholder. The Optionee shall have the rights of a
shareholder with respect to the Shares covered by the Option only upon becoming
the holder of record of those Shares.
12.
Compliance with Applicable Law; Interpretation of
Agreement.
(a) Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause
to
be issued or delivered any Shares or certificates evidencing Shares pursuant
to
the exercise of the Option, unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority, and the
requirements of any exchange upon which Shares are traded. The
Company shall in no event be obligated to register any securities pursuant
to
the Securities Act (as now in effect or as hereafter amended) or to take any
other action in order to cause the issuance and delivery of such Shares or
certificates evidencing Shares to comply with any such law, regulation or
requirement. The Board may require, as a condition of the issuance
and delivery of such Shares and certificates evidencing such Shares and in
order
to ensure compliance with such laws, regulations, and requirements, that the
Optionee make such covenants, agreements, and representations as the Board,
in
its sole discretion, considers necessary or desirable.
(b) The
Board of Directors shall have full and final authority to construe and interpret
this Agreement and correct defects, supply omissions and to make all other
determinations with respect as the Board deems advisable for the administration
of this Agreement and Option. The term “Board” as used in this
Agreement shall include any committee of the Board that is charged with
administering this Agreement and the Option.
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13. Agreement
Not a Contract of Employment. This Agreement is not a contract of
employment, and the terms of the engagement of the Optionee or the relationship
of the Optionee with the Company shall not be affected in any way by this
Agreement except as specifically provided herein. The execution of
this Agreement shall not be construed as conferring any legal rights upon the
Optionee for a continuation of engagement or relationship with the Company,
nor
shall it interfere with the right of the Company or any subsidiary thereof
to
discharge the Optionee and to treat him without regard to the effect which
that
treatment might have upon him as a Optionee.
14. Withholding. The
Company shall have the right to deduct and withhold from payments or
distributions of any kind otherwise due to the Optionee any federal, state
or
local taxes of any kind required by law to be so deducted and withheld with
respect to any shares issued upon exercise of the Option. Subject to
the prior approval of the Company, which may be withheld by the Company in
its
sole discretion, the Optionee may elect to satisfy such obligations, in whole
or
in part by (i) causing the Company to withhold Shares otherwise
issuable pursuant to the exercise of the Option, (ii) delivering to the Company
shares of common stock already owned by the Optionee, or (iii) delivering to
the
Company cash or a check to the order of the Company in an amount equal to the
amount required to be so deducted and withheld. The shares delivered
in accordance with method (ii) above or withheld in accordance with method
(i)
above shall have a Fair Market Value equal to such withholding obligation as
of
the date that the amount of tax to be withheld is to be
determined. The Optionee who has made (with the Company’s approval)
an election pursuant to method (i) or (ii) of this Section 14 may only satisfy
his or her withholding obligation with shares of Common Stock which
are not subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements.
15. Notices.
All notices, requests and demands given to or made upon the respective parties
hereto shall be deemed to have been given or made three business days after
the
date of mailing when mailed by registered or certified mail, postage prepaid,
or
on the date of delivery if delivered by hand, or on the date of delivery by
facsimile or by Federal Express or other reputable overnight delivery service,
addressed to the parties at their addresses set forth below (and in the case
of
delivery by facsimile transmission, the facsimile number set forth below) or
to
such other addresses or facsimile number furnished by notice given in accordance
with this Section 15: (a) if to the Company, to Global
Music International, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chief Executive Officer, (fax # ▇▇▇.▇▇▇.▇▇▇▇) (b) if to the
Optionee, to [ ].
16. Governing
Law. Except to the extent preempted by Federal law, this
Agreement shall be construed and enforced in accordance with, and governed
by,
Florida law, without regard to the choice of laws of such
state.
17. Entire
Agreement. This Agreement contains all of the understandings and
agreements between the Company and the Optionee concerning this Option and
supersedes all earlier negotiations and understandings, written or oral, between
the parties with respect thereto. The Company and the Optionee have made no
promises, agreements, conditions or understandings either orally or in writing,
that are not included in the Agreement.
18. Headings. The
headings of Sections and subsections herein are included solely for convenience
of reference and shall not affect the meaning of any of the provisions of the
Agreement.
19. Amendments.
The Agreement may be amended or modified at any time by an instrument in writing
signed by the parties hereto.
20. Counterparts. This
Agreement may be signed in any number of counterparts (which may be transmitted
by facsimile), each of which shall be an original, with the same effect as
if
the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by the other party hereto.
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IN
WITNESS WHEREOF, the Company and the Optionee have duly executed this
Modified and Restated Stock Option Agreement as of the date first written
above.
By: __________________________
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, President
and
Chief
Executive Officer
__________________________
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