-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LEdHibuRKIz742BrIiKDPnPweGBr3NdDmBXyYN1RO/FRyErCPtqV99FlwP+GLowX 7KlEDzrsoIz18WubzC7fTQ== 0001116502-04-000974.txt : 20040420 0001116502-04-000974.hdr.sgml : 20040420 20040420092509 ACCESSION NUMBER: 0001116502-04-000974 CONFORMED SUBMISSION TYPE: S-8 POS PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20040420 EFFECTIVENESS DATE: 20040420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SINGING MACHINE CO INC CENTRAL INDEX KEY: 0000923601 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 953795478 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 POS SEC ACT: 1933 Act SEC FILE NUMBER: 333-99543 FILM NUMBER: 04741801 BUSINESS ADDRESS: STREET 1: 6601 LYONS ROAD STREET 2: BLDG A-7 CITY: COCONUT CREEK STATE: FL ZIP: 33073 BUSINESS PHONE: 9545961000 MAIL ADDRESS: STREET 1: 6601 LYONS ROAD BLDG CITY: COCONUT CREEK STATE: FL ZIP: 33073 S-8 POS 1 singing-s8pos.txt THE SINGING MACHINE As filed with the Securities and Exchange Commission on April 20, 2004 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 POST EFFECTIVE AMENDMENT NO. 1 TO FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 The Singing Machine Company, Inc. ---------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 95-3795478 - -------- ------------------- (State or Jurisdiction of (I.R.S. Employer (Incorporation or organization) Identification No.) The Singing Machine Company, Inc. 6601 Lyons Road, Bldg. A-7 Coconut Creek, FL 33073 ----------------------- (Address of Principal Executive Office) The Singing Machine Company, Inc. Year 2001 Stock Option Plan, as Amended ------------------------------------------------------ (Full Title of the Plan) Yi Ping Chan, Chief Operating Officer The Singing Machine Company, Inc. 6601 Lyons Road, Bldg. A-7 Coconut Creek, FL 33073 ----------------------- (Name and Address of Agent for Service) CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount Title of Each Class of Amount Offering Aggregate of Securities to be to be Price Per Offering Registration Registered Registered(1) Share Price Fee - ---------------------- ------------- --------- ------------- ------------ Common Stock (2) 21,750 $ 3.27 $ 71,122.50 $ 6.54 Common Stock(2) 60,000 $ 4.23 $ 253,800.00 $23.35 Common Stock(3) 1,868,250 $11.58 $2,163,433.50 $1,990.36 ---------- ------ ------------- --------- TOTAL 1,950,000 $2,020.25(4) ========= ========= - ---------- (1) This Registration Statement also covers such indeterminate amount of securities as may be offered or sold pursuant to the Year 2001 Stock Option Plan, as amended, to prevent dilution, pursuant to Rule 416(a) under the Securities Act of 1933, as amended. (2) Calculated in accordance with Rule 457 based upon the price at which outstanding options can be exercised. (3) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 (c) and (h) on the average high and low sale prices of the common stock reported on the American Stock Exchange. (4) The Registrant previously paid $2,020.25 in connection with the filing of its Registration Statement on Form S-8 (SEC File No. 333-99543) on September 13, 2002 to register 1,950,000 shares of its common stock. 1 EXPLANATORY NOTE On September 13, 2002, we filed with the Securities and Exchange Commission ("SEC') a Registration Statement on Form S-8, No. 333-99543, pertaining to our Year 2001 Stock Option Plan, which provided for the granting of stock options to eligible participants under the Plan. At our Annual Shareholder Meeting held on February 26, 2004, our shareholders approved an amendment to our Year 2001 Plan which permits us to award stock awards to eligible participants under the Year 2001 Stock Option Plan in addition to stock options. We are filing this Post Effective Amendment to file our Year 2001 Stock Option Plan, as amended, which is attached as Exhibit 10.1 No additional securities are being registered. PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS EXPLANATORY NOTE The Singing Machine Company, Inc. (the "Company," "we," "us" or the "Registrant") has prepared this Registration Statement on Form S-8 under the Securities Act of 1933, as amended to register 1,950,000 shares of our common stock, which will be awarded to eligible persons pursuant to options and stock awards granted under our Year 2001 Stock Option Plan , as amended (the "Plan"). ITEM 1. PLAN INFORMATION The documents containing the information specified in Part I of Form S-8 will be sent or given to participants in our Plan as specified by Rule 428(b)(1) under the Securities Act. Such documents are not filed with the Securities and Exchange Commission either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act. These documents and the documents incorporated by reference in this Registration Statement pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act relating to the Plan. ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION Upon written or oral request, any of the documents incorporated by reference in Item 3 of Part II of this Registration Statement (which documents are incorporated by reference in this Section 10(a) Prospectus), other documents required to be delivered to eligible participants pursuant to Rule 428(b) or additional information about our Plan and its administrators are available without charge by contacting: The Singing Machine Company, Inc. 6601 Lyons Road, Bldg. A-7 Coconut Creek, FL 33073 Attn: Chief Financial Officer (954) 596-1000 2 PART II INFORMATION REQUIRED IN REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference - ----------------------------------------------- The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to documents we file with the SEC. The information incorporated by reference is considered to be part of this Registration Statement. Information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), until all the shares covered by this Registration Statement have been sold or deregistered: o Annual Report on Form 10-KSB/A for the year ended March 31, 2003, filed on July 17, 2003; o Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 filed on August 14, 2003; o Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003 filed on November 14, 2003; o Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2003 filed on February 17, 2003; o Definitive Proxy Statement filed on January 21, 2004; o Current Reports on Form 8-K filed on May 6, 2003, May 22, 2003; June 5, 2003, June 30, 2003, July 7, 2003, July 15, 2003, August 1, 2003, August 15, 2003, August 28, 2003, November 7, 2003, February 17, 2004, February 26, 2004 and April 14, 2004; o All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Registrant's document referred to in (a) above; and o The description of our common stock contained in our Registration Statement on Form 8-A filed with the SEC on October 19, 1994 and Amendment No. 1 to the Registration Statement on Form 8-A filed with the SEC on March 2, 2001 and any amendments thereto, or reports filed for the purpose of updating such description. 3 We hereby undertake to provide without charge to each person, including any beneficial owner, to whom a copy of the prospectus has been delivered, on the written request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in this prospectus, other than exhibits to such documents. Written requests for such copies should be directed to our Chief Financial Officer, The Singing Machine Company, Inc., 6601 Lyons Road, Bldg. A-7, Coconut Creek, FL 33073. Item 4. Description of Securities - --------------------------------- Not Applicable. Item 5. Interests of Named Experts and Counsel - ---------------------------------------------- Not Applicable. 4 Item 6. Indemnification of Directors and Officers - ------------------------------------------------- As a Delaware corporation, we are subject to the Delaware General Corporation Law. Section 102(b)(7) of Delaware law enables a corporation in its certificate of incorporation to eliminate or limit personal liability of members of its Board of Directors for monetary damages for breach of a director's fiduciary duty of care. Article 10 of our Certificate of Incorporation provides that a director shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware or (iv) for any transaction from which the director derived an improper personal benefit and contains a comparable provision. Under Section 174 of Delaware law, directors are subject to personal liability if they declare dividends or have the corporation buy back, acquire or purchase shares of its common stock in circumstances which are not permitted by Delaware law. Under Delaware law, directors can not declare dividends unless the company has legally available surplus, as such term is defined under Delaware law, or the dividends are declared out of net profits in the fiscal year in which the dividend is declared. Additionally, directors can not authorize the acquisition, purchase or redemption of shares of a company's common stock unless such transaction is authorized by a company's articles of incorporation. Section 145 of Delaware law permits a corporation organized under Delaware law to indemnify directors and officers with respect to any matter in which the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the company, and with respect to any criminal action or proceeding, he had no reasonable cause to believe his conduct was unlawful. Article VI of our Bylaws provides that our officers, directors, employees or agent shall be indemnified to the full extent permitted by Delaware law. Article VI also provides that we may advance expenses to a director if he prior to the final disposition of the action. However, if required under Delaware law, we may require an officer or director to give us an undertaking in advance of the final disposition that he will repay all amounts so advanced, if it shall ultimately be determined that such officer or director is not entitled to be indemnified under these by-laws or otherwise. The above discussion of Delaware law and our certificate of incorporation and bylaws is not intended to be exhaustive and is qualified in its entirety by our certificate of incorporation, bylaws and Delaware law. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange commission, this indemnification is against public policy as expressed in the securities laws, and is, therefore unenforceable. 5 Item 7. Exemption From Registration Claimed - ------------------------------------------- Not Applicable Item 8. Exhibits - ---------------- 5.1 Opinion of Adorno & Yoss, P.A.* 10.1 The Singing Machine Company, Inc. Year 2001 Stock Option Plan, as amended* 23.1 Consent of Grant Thornton LLP* 23.2 Consent of Salberg &Company, P.A.* 23.3 Consent of Adorno & Yoss, P.A. (contained in Exhibit 5.1)* - ---------- * Filed herewith. Item 9. Undertakings - -------------------- A. We hereby undertake to: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or in the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the Registration Statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. 6 (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. We hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act against such liabilities (other than the payment by the Company in the successful defense of an action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, The Singing Machine Company, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Post Effective Amendment No. 1 to the Registration Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Coconut Creek, State of Florida, on April 19, 2004. THE SIGNING MACHINE COMPANY, INC. By: /s/ Yi Ping Chan ---------------------------- Interim Chief Executive Officer And Chief Operating Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Post Effective Amendment No. 1 to the Registration Statement on Form S-8 has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ Yi Ping Chan Interim Chief Executive Officer, April 19, 2004 - -------------------- Chief Operating Officer and Director Yi Ping Chan (Principal Executive Officer) /s/ Jeff Barocas Chief Financial Officer April 19, 2004 - -------------------- (Principal Financial and Jeff Barocas Accounting Officer) /s/ Josef A. Bauer Director April 19, 2004 - -------------------- Josef A. Bauer /s/ Bernard Appel Director April 19, 2004 - -------------------- /s/ Richard Ekstract Director April 19, 2004 - -------------------- Richard Ekstract /s/ Harvey Judkowitz Director April 19, 2004 - -------------------- Harvey Judkowitz 9 EXHIBIT INDEX ------------- 5.1 Opinion of Adorno & Yoss, P.A. 10.1 Year 2001 Stock Option Plan, as amended 23.1 Consent of Grant Thornton LLP 23.2 Consent of Salberg & Company, P.A. 23.3 Consent of Adorno & Yoss, P.A. (contained in Exhibit 5.1) EX-5.1 3 opinion-51.txt LEGAL OPINION EXHIBIT 5.1 ADORNO & YOSS A PROFESSIONAL ASSOCIATION 700 SOUTH FEDERAL HIGHWAY, SUITE 200 BOCA RATON, FLORIDA 33432 TELEPHONE (561) 393-5660 www.adorno.com Facsimile (561) 338-8698 The Singing Machine Company, Inc. 6601 Lyons Road Building A-7 Coconut Creek FL 33073 Re: Post Effective Amendment No. 1 to Registration Statement on Form S-8 (the "Registration Statement"); The Singing Machine Company, Inc. (the "Company") Year 2001 Stock Option Plan, As Amended (the "Plan") Ladies and Gentlemen: We refer to the Registration Statement on Post Effective Amendment No. 1 on Form S-8 (the "Registration Statement") to be filed by the Company under the Securities Act of 1933, as amended (the "Act"). The Registration Statement relates to an aggregate of 1,950,000 shares of common stock of the Company to be issued as stock awards and/or upon the exercise of options granted or to be granted under the Plan. In our capacity as counsel to the Company, we have examined the original, certified, conformed, photostat or other copies of the Company's Certificate of Incorporation, By-Laws, the Plan and various other agreements and corporate minutes provided to us by the Company and such other documents and instruments as we deemed necessary. In all such examinations, we have assumed the genuineness of all signatures on original documents, and the conformity to originals or certified documents of all copies submitted to us as conformed, photostat or other copies. In passing upon certain corporate records and documents of the Company, we have necessarily assumed the correctness and completeness of the statements made or included therein by the Company, and we express no opinion thereon. Subject to and in reliance upon the foregoing, we are of the opinion that the Shares to be issued as stock awards and/or upon exercise of options granted or to be granted under the Plan, when issued in accordance with the terms thereof, will be validly issued, fully paid and non-assessable. We hereby consent to the use of this opinion in the Registration Statement on Form S-8 to be filed with the Commission. Very truly yours, /s/ Adorno & Yoss, P.A. Date: April 19, 2004 EX-10.1 4 stockoptionplan.txt 2001 STOCK OPTION PLAN AS AMENDED EXHIBIT 10.1 THE SINGING MACHINE COMPANY, INC. YEAR 2001 STOCK OPTION PLAN, AS AMENDED TABLE OF CONTENTS PAGE 1. Administration.....................................................A-3 2. Grants.............................................................A-3 3. Shares Subject to the Plan. ......................................A-4 4. Eligibility for Participation. ...................................A-5 5. Granting of Options. .............................................A-5 6. Options - Termination of Employment for any Reason.................A-7 7. Stock Awards.......................................................A-7 8. Withholding of Taxes...............................................A-8 9. Transferability of Grants..........................................A-9 10. Change of Control..................................................A-9 11. Limitations on Issuance or Transfer of Shares.....................A-10 12. Amendment and Termination of the Plan.............................A-10 13. Funding of the Plan...............................................A-11 14. Rights of Participants. ..........................................A-11 15. No Fractional Shares..............................................A-11 16. Headings..........................................................A-11 17. Effective Date of the Plan........................................A-11 18. Miscellaneous.....................................................A-11 A-2 THE SINGING MACHINE COMPANY, INC. YEAR 2001 STOCK OPTION PLAN, AS AMENDED The purpose of The Singing Machine Company, Inc. Year 2001 Stock Option Plan, as amended (the "Plan") is to provide (i) designated employees of The Singing Machine Company, Inc. (the "Company") and its subsidiaries, (ii) certain Key Advisors (as defined in Section 4(a)) who perform services for the Company or its subsidiaries and (iii) non-employee members of the Board of Directors of the Company (the "Board") with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards. The Company believes that the Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefiting the Company's shareholders, and will align the economic interests of the participants with those of the shareholders. 1. Administration. (a) Committee. The Plan shall be administered and interpreted by the Board of Directors or a committee appointed by the Board (the Board of Directors in such capacity or any committee appointed by the Board of Directors is referred to hereafter as the "Committee"). The Committee as appointed by the Board shall consist of two or more persons appointed by the Board, all of whom may be "outside directors" as defined under section 162(m) of the Internal Revenue Codes of 1986, as amended (the "Code") and related Treasury regulations and may be "non-employee directors" as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) Committee Authority. The Committee shall have the sole authority to, (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability and (iv) deal with any other matters arising under the Plan. (c) Committee Determinations. The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee's interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in, any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. A-3 2. Grants. Awards under the Plan may consist of grants of incentive stock options as described in Section 5 ("Incentive Stock Options"), nonqualified stock options as described in Section 5 ("Nonqualified Stock Options") (Incentive Stock Options and Nonqualified Stock Options may sometimes be collectively referred to as "Options") and stock awards ("Stock Awards") described in Section 7(hereinafter, collectively referred to as the "Grants"). All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual in a grant instrument (the "Grant Instrument") or an amendment to the Grant Instrument. In the event there is an inconsistency between the terms of the Grant Instrument and the terms of the Plan, the terms of the Plan shall govern. The Committee shall approve the form and provisions of each Grant Instrument. Grants under a particular Section of the Plan need not be uniform as among the grantees and individuals may receive more than one Grant under the Plan. 3. Shares Subject to the Plan. (a) Shares Authorized. Subject to the adjustment specified Shares below, the aggregate number of shares of common stock of the Company ("Shares" or "Common Stock") that may be awarded under the Plan is 1,950,000 shares. The maximum aggregate number of shares of Company Stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall not exceed 450,000 Options and 350,000 Stock Awards ("Award Limit"). The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent any Options made under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised, or if any shares of Common Stock underlying Stock Awards are forfeited for any reason, the shares subject to such Grants shall again be available for purposes of the Plan. However, to the extent Section 162(m) of the Code requires, such shares continue to be counted against the Award Limit. (b) Adjustments. Notwithstanding any other provision of the Plan, the Committee may: (1) at any time, make or provide such adjustments to the Plan or to the number and class of shares available thereunder, or (2) at the time of grant of any Awards, provide for such adjustments to such Awards as the Committee shall deem appropriate to prevent dilution or enlargement of rights, including without limitation, adjustments in the event of stock dividends, stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, spin-offs, reorganizations, liquidations and the like. Any adjustments determined by the Committee shall be final, binding and conclusive. A-4 With respect to Options which are granted to participants, the compensation of whom could be subject to limitation under Section 162(m) of the Code and which are limited to qualify as performance-based compensation under Section 162(m)(4)(c), no adjustment or action described in this Section 3(b) or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Option to fail to qualify under Section l62(m)(4)(c), or any successor provisions thereto. Furthermore, no adjustment or action shall be authorized to the extent the adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3, unless the Committee determines that the Option or other award is not to comply with such exemptive conditions. The number of shares of Company Stock subject to any Option shall always be rounded to the next whole number. 4. Eligibility for Participation. (a) Eligible Persons. All employees of the Company and its subsidiaries ("Employees"), including Employees who are officers or members of the Board, and members of the Board who are not Employees ("Non-Employee Directors") shall be eligible to participate in the Plan. Key advisors and consultants who perform services to the Company or any of its subsidiaries (collectively, the "Key Advisors") shall be eligible to participate in the Plan if the Key Advisors render bona fide services and such services are not in connection with the offer or sale of securities in a capital raising transaction. (b) Selection of Grantees. The Committee shall select the Employees, Non-Employee Directors and Key Advisors to receive Grants and shall determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines. Employees, Key Advisors and Non-Employee Directors who receive Grants under this Plan shall hereinafter be referred to as "Grantees." 5. Granting of Options. (a) Number of Shares. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Options to Employees, Non-Employee Directors and Key Advisors. (b) Type of Option and Price. (i) The Committee may grant Incentive Stock Options that are intended to qualify as "incentive stock options" within the meaning of section 422 of the Code or Nonqualified Stock Options that are-not intended to so qualify or any combination of Incentive Stock Options and Nonqualified Stock Options, all in accordance with the terms and conditions set forth herein. Incentive Stock Options may be granted only to Employees, Nonqualified Stock Options may be granted to Employees, Non-Employee Directors and Key Advisors. A-5 (ii) The purchase price (the "Exercise Price") of Company Stock subject to an Option shall be determined by the Committee and shall be equal to or greater than the Fair Market Value (as defined below) of a share of Company Stock on the date the Option is granted, provided, however, that (A) the Exercise Price of an Incentive Stock Option shall be equal to or greater than the Fair Market Value of a share of Company Stock on the date the Incentive Stock Option is granted; (B) an Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, unless the Exercise Price per share is not less than 110% of the Fair Market Value of Company Stock on the date of grant; (C) in the case of an Option intended to qualify as performance based compensation (as described in Section 162(m)(4)(c) of the Code), the Exercise Price shall not be less than 100% of the Fair Market Value of Company Stock on the date of grant; and (D) in the case of Nonqualified Stock Options granted to Non-Employee Directors, the Exercise Price shall equal 100% of the Fair Market Value of Company Stock on the date of grant. (iii)If the Company Stock is publicly traded, then the Fair Market Value per share shall be determined as follows: (x) if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq National Market, the average of the high and low sales prices on the relevant date or (if there were no trades on that date) the latest preceding date upon which sales were reported, or (y) if the Company Stock is not principally traded on such exchange or market; the mean between the last reported "bid" and "asked" prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily) Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or "bid" or "asked" quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee. (c) Option Term. The Committee shall determine the term of each Option. The term of any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, may not have a term that exceeds five years from the date of grant. (d) Vesting and Exercisability of Options. Options shall vest and become exercisable in accordance with such terms and conditions, consistent with the Plan, as may be determined by the Committee and, specified in the Grant Instrument or an amendment to the Grant Instrument. The Committee may accelerate the vesting and/or exercisability of any or all outstanding Options at any time for any reason. A Grantee may exercise an Option that has become exercisable, in whole or in part, by delivering a notice of exercise to the Company with payment of the Exercise Price. The Grantee shall pay the Exercise Price for an Option as specified by the Committee in cash. However, if permitted in writing by the Committee in the Grant Instrument the Grantee may pay the exercise price by (i) delivering, shares of Company Stock owned by the Grantee having a Fair Market Value on the date of exercise equal to the Exercise Price, (ii) pursuant to a broker assisted "cashless exercise" arrangement, (iii) by waiver of compensation due or accrued to the participant for services rendered or (iv) any other methods that the Committee may permit. The Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 7) at the time of exercise. A-6 (e) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary (within the meaning of section 424(f) of the Code). 6. Options - Effect of Termination of Employment for any Reason (a) General Rule. The Committee shall establish and set forth in each Grant Instrument that evidences an Option whether the Option will continue to be exercisable, and terms and conditions of such exercise, if a Grantee ceases to be employed by, or to provide services to, the Company or its subsidiaries, which provisions may be waived or modified by the Committee at any time. If not so established in the Grant Instrument, the Option will be exercisable according to the following terms and conditions, which may be waived or modified by the Committee at any time. (b) Termination for Cause or Leaving Without Good Reason. No Option shall be exercisable after 30 days following the recipient's termination of employment with the Company or a subsidiary, unless such termination of employment occurs by reason of Disability or Retirement (as defined in this Section 6) or death. The Committee may, in its sole discretion, cause any Option to be forfeited upon an employee's termination of employment if the employee was terminated for one (or more) of the following reasons: (i) the employee's conviction, or plea of guilty or nolo contendere to the Commission, of a felony, (ii) the employee's commission of any fraud, misappropriation or misconduct which causes demonstrable injury to the Company or a subsidiary, (iii) an act of dishonesty by the employee resulting in or intended to result, directly or indirectly, in gain or personal enrichment at the expense of the Company or a subsidiary, (iv) any breach of the employee's fiduciary duties to the Company as an employee or officer or (v) the employee's leaving the Company without giving adequate notice of such departure. It shall be within the sole discretion of the Committee to determine whether the employee's termination was for one of the foregoing reasons, and the decision of the Committee shall be final and conclusive. (c) Disability or Retirement. Except as expressly provided otherwise in the written agreement relating to any Option granted under the Plan, in the event of the Disability or Retirement of a recipient of Options, the Options which are held by such recipient on the date of such Disability or Retirement, shall be exercisable at anytime until the expiration date of the Options, provided, however, that any Incentive Stock Option of such recipient shall no longer be treated as an Incentive Stock Option unless exercised within three (3) months of the date of such Disability or Retirement (or within one (1) year in the ease of an employee who is "disabled" within the meaning of Section 22(e)(3) of the Code). "Disability" shall mean any termination of employment with the Company or a subsidiary because of a long-term or total disability, as determined by the Committee in its sole discretion. "Retirement" shall mean a termination of employment with the Company or a subsidiary either (i) on a voluntary basis by a recipient who is at least 55 years of age and has at least 10 years of service with the Company or a subsidiary; (ii) on an involuntary basis (other than for cause) by a recipient who is at least 60 years of age; or (iii) otherwise with the written consent of the Committee in its sole discretion. The decision of the Committee shall be final and conclusive. (d) Death. In the event of the death of a recipient of Options while an employee of the Company or any subsidiary, Options which are held by such employee at the date of death, shall be exercisable by the beneficiary designated by the employee for such purpose (the "Designated ("Beneficiary") or if no Designated Beneficiary shall be appointed or if the Designated Beneficiary shall predecease the employee, by the employee's personal representatives, heirs or legatees at any time prior to the Expiration Date of the Option at which time such Options shall terminate. In the event of the death of a recipient of Options following a termination of employment due to Retirement Disability, if such death occurs before the Options are exercised, the Options which are held by such recipient on the date of termination of employment, whether or not otherwise exercisable on such date, shall be exercisable by such recipient's Designated Beneficiary, or if no Designated Beneficiary shall be appointed or if the Designated Beneficiary shall predecease such recipient, by such recipient's personal representatives, heirs, or legatees to the same extent such Options were exercisable by the recipient. 7. Stock Awards. (a) General Terms. The Committee shall determine the number of shares of Company Stock that will be subject to each Grant of Stock Awards to Employees, Non-Employee Directors and Key Advisors. Stock Awards are (i) grants of shares of the Company's common stock that may or may not be subject to vesting conditions and/or (ii) rights to purchase shares of the Company's common stock at a price that is determined by the Committee but which will not be less than the Fair Market Value of the Company Stock on the date of grant. Stock Awards shall be subject to the terms, conditions and restrictions determined by the Committee at the time the Stock Award is granted. Such terms, conditions and restrictions may (but need not) include, without limitation, restrictions on transfer, vesting provisions, forfeiture provisions and repurchase rights by the Company. (b) Stock Award Agreements. Each Stock Award granted under the Plan shall be evidenced by a Stock Award Agreement between the recipient and the Company. Such Agreement, and the Shares issued or to be issued pursuant to the Award, shall be subject to all applicable terms of the Plan and of the Stock Award Agreement. The provisions of the various Stock Award Agreements entered into under the Plan need not be identical. (c) Vesting. If a Stock Award is granted subject to forfeiture, vesting and/or repurchase provisions or restrictions, the Committee may, in its discretion, accelerate in whole or in part the schedule governing such vesting provisions or the lapsing of such restrictions or otherwise provide for the waiver of any such provisions or restrictions under such circumstances and subject to such conditions as it deems appropriate, consistent with the terms of the Plan. The certificates evidencing Shares subject to such provisions and restrictions, although issued in the name of the participant, shall be held by the Company or a third party designated by the Committee in escrow to enforce such provisions and restrictions. A-7 8. Withholding of Taxes. (a) Required Withholding. All Grants under the Plan shall be subject applicable federal (including FICA), state and local tax withholding requirements. The Company shall have the right to deduct from any wages paid to the Grantee, any federal, state or local taxes required by law to be withheld with respect to such Grants. In the case of Options, the Company may require the Grantee or other person receiving such shares to pay to the Company the amount of any such taxes that the Company is required to withhold with respect to such Grants, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Grants. (b) Election to Withhold Shares. If the Committee so permits, a Grantee may elect to satisfy the Company's income tax withholding obligation with respect to an Option and having shares withheld up to an amount that does not exceed the Grantee's maximum marginal rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee and shall be subject to the prior approval of the Committee. 9. Transferability of Grants. (a) No Transferability of Grants. Except as provided below, only the Grantee may exercise rights under a Grant during the Grantee's lifetime. A Grantee may not assign, pledge or transfer those rights except by will or by the laws of descent and distribution. When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee must furnish proof satisfactorily to the Company of his or her right to receive the Grant under the Grantee's will or under applicable laws of descent and distribution. (b) Non-Transferability of Grants. Notwithstanding the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified Stock Options or Stock Awards to family members or other persons or entities according to such terms as the Committee may approve. A-8 10. Change of Control. (a) Change of Control. As used herein, a "Change of Control" -shall be deemed to have occurred upon the consummation of any of the following transactions: (i) any merger or consolidation of the Company or other transaction (other than sales of equity by the Company for the purpose of raising cash for its own account) where the shareholders of the Company immediately prior to such transaction will not beneficially own immediately after such transaction shares entitling such shareholders to more than 50% of all votes to which all shareholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (ii) the sale or other disposition of all or substantially all of the assets of the Company; (iii) any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the owner or beneficial owner of Company securities, after the date of this. Agreement, having 30% or more of the combined voting power of the then outstanding securities of, the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made), or (iv) the persons who were directors of the Company before certain transactions (as described here in) shall cease to constitute a majority of the Board of the Company, or any successor to the Company, as the direct or indirect result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, any combination of the foregoing transactions or any other transaction(s) or series of transactions that result in the composition of the Board changing. The definition of "Change of Control" as used in this Plan may be expanded by the Committee in individual Grant Instruments that it awards to Grantees. (b) Notice of Change of Control. Upon a Change of Control as defined in the Plan or any other definition of change of control that is approved by the Committee (collectively, "Change of Control"), the Company shall provide each Grantee who has outstanding Options or Stock Award with written notice of such Change of Control. The Committee may, in its sole discretion, provide in a Grant Instrument that upon a Change of Control all outstanding Options issued to the Grantee under the Grant Instrument shall automatically accelerate and become fully exercisable and all outstanding Stock Awards shall automatically be vested. 11. Limitations on Issuance or Transfer of Shares. No Company Stock shall be issued or transferred in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant made to any Grantee hereunder on such Grantee's undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan will be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon. A-9 12. Amendment and Termination of the Plan. (a) Amendment. The Board may amend or terminate the Plan at any time provided, however, that the Board shall not amend the Plan without shareholder approval if such approval is required by Section 162(m) of the Code. (b) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Plan is terminated earlier by Board or is extended by the Board with the approval of the shareholders. (c) Termination and Amendment to Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of the Grantee unless the Grantee consents. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended in accordance with the Plan or may be amended by agreement of the Company and the Grantee consistent with the Plan. (d) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns. 13. Funding of the Plan. This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant including unpaid installments of Grants. 14. Rights of Participants. Nothing in this Plan shall entitle any Employee, Key Advisor or other Grantee to any claim or right to be granted a Grant under this Plan. Neither this Plan nor an action taken hereunder shall be construed as giving any individual any rights to be retained by or the employ of the Company or any other employment rights. 15. No Fractional Shares. No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 16. Headings. Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control. 17. Effective Date of the Plan. (a) Effective Date. The Plan shall be effective as of June 1, 2001. A-10 (b) Public Offering. The provisions of the Plan that refer to a Public Offering, or that refer to, or are applicable to persons subject to, Section 16 of the Exchange Act or Section 162(m) of the Code, shall be effective for so long as such stock is so registered. 18. Miscellaneous. (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including Grants to employees thereof who become Employees of the Company, or for other proper corporate purposes, or (ii) limit the right of the Company to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a stock option or restricted stock grant made by such corporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Plan and from those of the substituted stock incentives. The Committee shall prescribe the provisions of the substitute grants. (b) Compliance with Law. The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section. (c) Successors. The obligations of the Company under this Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company. In the event of any of the foregoing, notwithstanding any other provision contained in this Plan, the Committee may at its discretion prior to the consummation of the transaction, offer to purchase, exchange, adjust, modify or cancel any Outstanding Options or Stock Awards, at such time and in such manner as the Committee deems appropriate. A-11 (d) Severability. In the event that any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not be included. (e) Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Instruments issued under the Plan shall exclusively be governed by and determined in accordance with the law of the State of Florida, without regard to conflicts of laws principles. Amended as of January 9, 2004 (Amendment approved by the shareholders at the Meeting held on February 26, 2004) THE SINGING MACHINE COMPANY, INC. By: /s/ April Green ----------------------- April Green Chief Financial Officer EX-23.1 5 consent-231.txt AUDITOR'S CONSENT CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated June 24, 2003 (except for Note 9, as to which the date is July 8, 2003 and Note 15, as to which the date is July 10, 2003)(which contains an explanatory paragraph relating to The Singing Machine Company, Inc.'s ability to continue as a going concern as described in Note 2 of the financial statements) accompanying the consolidated financial statements and schedule of The Singing Machine Company, Inc. and subsidiary contained in its Annual Report on Form 10-K for the fiscal year ended March 31, 2003. We hereby consent to the incorporation by reference of said report in the Registration Statement and to the use of our name as it appears under the caption "Experts." /s/ GRANT THORNTON LLP Miami, Florida April 15, 2004 EX-23.2 6 salbergconsent-232.txt AUDITOR'S CONSENT Consent of Independent Certified Public Accountants We consent to the use of our report dated May 23, 2002 (except for Note 3 as to which the date is July 14, 2003) on the consolidated financial statements of The Singing Machine Company, Inc. for the years ended March 31, 2002 and 2001 included herein on the registration statement of The Singing Machine Company, Inc. on Form S-8, dated April 8, 2004, and to the reference to our firm under the heading "Experts" in such registration statement. /s/ SALBERG & COMPANY, P.A. Boca Raton, Florida April 15, 2004 -----END PRIVACY-ENHANCED MESSAGE-----