-----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, L8yvP9OZHUq9KOUBm+QnplEHb1qkou8yOK4ajGKQVDqddIRT52C/i0n2J0UkDERr wfpLRU39W4iJzGnk64VIjA== 0000950134-02-007438.txt : 20020620 0000950134-02-007438.hdr.sgml : 20020620 20020620164526 ACCESSION NUMBER: 0000950134-02-007438 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020620 EFFECTIVENESS DATE: 20020620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HASTINGS ENTERTAINMENT INC CENTRAL INDEX KEY: 0001054579 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 751386375 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-90858 FILM NUMBER: 02683453 BUSINESS ADDRESS: STREET 1: 3601 PLANS BLVD STREET 2: SUITE 1 CITY: AMARILLO STATE: TX ZIP: 79102 BUSINESS PHONE: 8063512300 MAIL ADDRESS: STREET 1: P O BOX 35350 CITY: AMARILLO STATE: TX ZIP: 79120-5350 S-8 1 d97824sv8.txt FORM S-8 As filed with the Securities and Exchange Commission on June 20, 2002. Registration No. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------- HASTINGS ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) TEXAS 75-1386375 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 3601 PLAINS BOULEVARD AMARILLO, TEXAS 79102 (Address of principal executive offices) HASTINGS ENTERTAINMENT, INC. 2002 INCENTIVE STOCK PLAN (Full title of plan) JOHN H. MARMADUKE PRESIDENT AND CHIEF EXECUTIVE OFFICER HASTINGS ENTERTAINMENT, INC. 3601 PLAINS BOULEVARD AMARILLO, TEXAS 79102 (Name and address of agent for service) (806) 351-2300 (Telephone number, including area code, of agent for service) WITH COPIES TO: DAN CROW ROBERT L. ESTEP, ESQ. VICE PRESIDENT AND CHIEF FINANCIAL OFFICER JONES, DAY, REAVIS & POGUE 3601 PLAINS BOULEVARD 2727 NORTH HARWOOD STREET AMARILLO, TEXAS 79102 DALLAS, TEXAS 75201 (806) 351-2300 (214) 220-3939
---------- CALCULATION OF REGISTRATION FEE
=================================================================================================================================== Proposed Proposed Maximum Maximum Title of Amount Offering Aggregate Amount of Securities to to be Price per Offering Registration be Registered Registered (1) Share (2) Price (2) Fee (2) - ------------- -------------- --------- --------- ------------- Common Stock, par value $.01 per share................ 500,000 $6.53 $3,265,000 $300.38 ===================================================================================================================================
1. Represents shares under stock options and restricted, unrestricted and other stock grant provisions of the Hastings Entertainment, Inc. 2002 Incentive Stock Plan (the "Plan"). Pursuant to Rule 416, there are also registered hereunder such indeterminate number of additional shares as may become subject to awards under the Plan as a result of the antidilution provisions contained therein. 2. The registration fee with respect to these shares has been computed in accordance with paragraphs (c) and (h) of Rule 457, based upon the average of the reported high and low sale prices of shares of the common stock on the Nasdaq National Market System on June 18, 2002. EXPLANATORY NOTE The information called for by Part I of Form S-8 is included in the description of the Hastings Entertainment, Inc. 2002 Incentive Stock Plan (the "Plan") to be delivered to persons receiving shares pursuant to the Plan. Pursuant to the Note to Part I of Form S-8, this information is not being filed with or included in this Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, which we have filed with the Securities and Exchange Commission (the "Commission"), are incorporated by reference into this registration statement: (a) Our annual report on Form 10-K for the fiscal year ended January 31, 2002; (b) Our quarterly report on Form 10-Q for the fiscal quarter ended April 30, 2002; (c) The description of our common stock, par value $.01 per share, contained in our registration statement on Form 8-A12G (Commission File No. 000-24381), filed on June 3, 1998; and (d) The information set forth under the heading "Description of Capital Stock" in the prospectus that is part of the Registration Statement on Form S-1, as amended, originally filed on March 13, 1998 (Commission File No. 333-47969). In addition, all documents we subsequently file with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold, or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this registration statement and to be a part hereof from the date of filing of such documents. Any statement contained in later-dated documents supplements, modifies or supersedes statements contained in earlier-dated documents. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Our certificate of incorporation limits the liability of our directors to us or our shareholders for monetary damages for an act or omission in the director's capacity as a director, except to the extent that a director is found liable for (i) a breach of such directors duty of loyalty to us or our shareholders; (ii) an act or omission not in good faith that constitutes a breach of duty of the director to us or an act or omission that involves intentional misconduct or a knowing violation of the law; (iii) a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; or (iv) an act or omission for which the liability of a director is expressly provided by an applicable statute. Texas law provides that a director of a corporation may not be indemnified in respect of a proceeding in which the director (i) is found liable on the basis that personal benefit was improperly received by him or her, whether or not the benefit resulted from an action taken in the director's official capacity or (ii) is found liable to the corporation. This limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission. Article 2.02-1 of the Texas Business Corporation Act provides that a corporation may indemnify directors and officers, as well as other employees and individuals, against judgments, penalties (including excise and similar taxes), fines, settlements and reasonable expenses actually incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such actions, suits or proceedings, and any inquiry or investigation that could lead to such actions, suits or proceedings. But if the person is found liable to the corporation or is found liable on the basis that personal benefit was improperly received by the person, the indemnification (i) is limited to reasonable expenses actually incurred by the person in connection with the proceeding and (ii) shall not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the corporation. Our certificate of incorporation requires that we indemnify our directors and officers, and any other person who is or was serving at our request as a director, officer, manager, partner, venturer, proprietor, trustee, employee, agent or similar funcionary of another foreign or domestic corporation, limited liability company, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, to the fullest extent authorized by the Texas Business Corporation Act. Our certificate of incorporation also requires that we advance expenses incurred by such a person in connection with the defense of any proceeding arising out of that person's status or service to us. Our bylaws require that we indemnify our directors and officers to the fullest extent permitted by the Texas Business Corporation Act and may indemnify any person not covered by the grant of mandatory indemnification under our certificate of incorporation and bylaws to the fullest extent permitted by law. In addition, we have entered into indemnity agreements with certain of our executive officers and directors. We have procured insurance that purports (i) to insure us against certain costs of indemnification that may be incurred by us pursuant to the provisions referred to above or otherwise and (ii) to insure our directors and officers against certain liabilities incurred by them in the discharge of their functions as directors and officers except for liabilities arising from their own malfeasance. ITEM 8. EXHIBITS. The following is a list of all exhibits filed as a part of this registration statement on Form S-8, including those incorporated herein by reference. Exhibit Number Description of Exhibit 4.1 Third Restated Articles of Incorporation of the Company.(1) 4.2 Amended and Restated Bylaws of the Company.(1) 4.3 Specimen of Certificate of Common Stock of the Company.(1) 5.1 Opinion of Jones, Day, Reavis & Pogue. 23.1 Consent of Ernst & Young LLP. 23.2 Consent of KPMG LLP. 23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1). 24.1 Power of attorney (included on signature pages). 99.1 Hastings Entertainment, Inc. 2002 Incentive Stock Plan. - ---------- (1) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 Commission File No. 333-47969, filed March 13, 1998, and incorporated herein by reference. 2 ITEM 9. UNDERTAKINGS. A. The undersigned registrant hereby undertakes: (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 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 a 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; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (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. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this 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 registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant 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 Securities Act of 1933 and will be governed by the final adjudication of such issue. 3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant 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 registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Amarillo, State of Texas, on this 19th day of June, 2002. HASTINGS ENTERTAINMENT, INC. By: /s/ DAN CROW ------------------------------------------- Dan Crow Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) POWER OF ATTORNEY Each person whose signature appears below hereby authorizes and constitutes John H. Marmaduke and Dan Crow, and each of them singly, his or her true and lawful attorneys-in-fact with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities to sign and file any and all amendments to this report with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and he or she hereby ratifies and confirms all that said attorneys-in-fact or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.
Signatures Title Date ---------- ----- ---- /s/ JOHN H. MARMADUKE Chairman of the Board, President and June 19, 2002 - ------------------------------------ Chief Executive Officer (Principal John H. Marmaduke Executive Officer) /s/ GAINES L. GODFREY Director June 19, 2002 - ------------------------------------ Gaines L. Godfrey /s/ PETER A. DALLAS Director June 19, 2002 - ------------------------------------ Peter A. Dallas /s/ STEPHEN S. MARMADUKE Director June 19, 2002 - ------------------------------------ Stephen S. Marmaduke /s/ JEFFREY G. SHRADER Director June 19, 2002 - ------------------------------------ Jeffrey G. Shrader /s/ RON G. STEGALL Director June 19, 2002 - ------------------------------------ Ron G. Stegall /s/ DARYL L. LANSDALE Director June 19, 2002 - ------------------------------------ Daryl L. Lansdale /s/ ANN S. LIEFF Director June 19, 2002 - --------------------------- Ann S. Lieff
4 INDEX TO EXHIBITS
Exhibit Number Description of Exhibit ------- ---------------------- 4.1 Third Restated Articles of Incorporation of the Company.(1) 4.2 Amended and Restated Bylaws of the Company.(1) 4.3 Specimen of Certificate of Common Stock of the Company.(1) 5.1 Opinion of Jones, Day, Reavis & Pogue. 23.1 Consent of Ernst & Young LLP. 23.2 Consent of KPMG LLP. 23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1). 24.1 Power of attorney (included on signature pages). 99.1 Hastings Entertainment, Inc. 2002 Incentive Stock Plan.
- ---------- (1) Previously filed as an exhibit to the Company's Registration Statement on Form S-1 Commission File No. 333-47969, filed March 13, 1998, and incorporated herein by reference. 5 EX-5.1 3 d97824exv5w1.txt OPINION/CONSENT OF JONES, DAY, REAVIS & POGUE EXHIBIT 5.1 [JONES, DAY, REAVIS & POGUE LETTERHEAD] June 19, 2002 Hastings Entertainment, Inc. 3601 Plains Boulevard Amarillo, Texas 79102 Re: Registration on Form S-8 of 500,000 Shares of common stock, par value $.01 per share, of Hastings Entertainment, Inc. Ladies and Gentlemen: We are acting as counsel to Hastings Entertainment, Inc., a Texas corporation (the "Company"), in connection with the registration pursuant to the Company's Registration Statement on Form S-8 (the "Registration Statement") of the offer and sale by the Company of up to 500,000 shares (the "Shares") of common stock, par value $.01 per share, of the Company under stock option and restricted, unrestricted and other stock grant provisions of the Company's 2002 Incentive Stock Plan (the "Plan"). We have examined such documents, records, and matters of law as we have deemed necessary for purposes of this opinion. Based on such examination and subject to the qualifications and limitations hereinafter specified, we are of the opinion that the Shares are duly authorized and, when issued and delivered in accordance with the provisions of the Plan, will be validly issued, fully paid and nonassessable. In rendering this opinion, we have (i) assumed that, when options for Shares are granted under the Plan, payment of the consideration provided for in the Plan will be made in an amount not less than the par value of such Shares, and where stock grants are awarded under the Plan, at the time of issuance and delivery of the Shares, the Company will make appropriate accounting adjustments to reflect the par value of the Shares so issued and delivered in the stated capital line of the Company's balance sheet, reflecting a transfer of the amount of such par value from surplus to stated capital, (ii) assumed the authenticity of all documents represented to us to be originals, the conformity to original documents of all copies of documents submitted to us, the accuracy and completeness of all corporate records made available to us by the Company, the accuracy of the statements contained in the certificates described in the following clause (iii) and the genuineness of all signatures that purport to have been made in a corporate, governmental, fiduciary or other capacity, and that the persons who affixed such signatures had authority to do so, and (iii) relied as to certain factual matters upon certificates of officers of the Company and public officials, and we have not independently checked or verified the accuracy of the statements contained in those certificates. In addition, our examination of matters of law has been limited to the laws of the State of Texas and the federal laws of the United States of America, in each case as in effect on the date of this letter. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. Very truly yours, /s/ JONES, DAY, REAVIS & POGUE Jones, Day, Reavis & Pogue EX-23.1 4 d97824exv23w1.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Hastings Entertainment, Inc. 2002 Incentive Stock Plan of our report dated March 22, 2002, with respect to the consolidated financial statements and schedule of Hastings Entertainment, Inc. included in its Annual Report (Form 10-K) for the year ended January 31, 2002, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP -------------------------------- Ernst & Young LLP Fort Worth, Texas June 17, 2002 EX-23.2 5 d97824exv23w2.txt CONSENT OF KPMG LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to Hastings Entertainment, Inc. 2002 Incentive Stock Plan for Outside Directors of our report dated June 13, 2000, relating to the consolidated statements of operations, shareholders' equity and cash flows for the year ended January 31, 2000 of Hastings Entertainment, Inc. and subsidiaries (the "Company"), and the related financial statement schedule for the year ended January 31, 2000, which report appears in the Company's Annual Report (Form 10-K) for the year ended January 31, 2002, filed with the Securities and Exchange Commission. /s/ KPMG LLP ------------------------------------ KPMG LLP Dallas, Texas June 19, 2002 EX-99.1 6 d97824exv99w1.txt 2002 INCENTIVE STOCK PLAN EXHIBIT 99.1 HASTINGS ENTERTAINMENT, INC. 2002 INCENTIVE STOCK PLAN I. PURPOSE This 2002 Incentive Stock Plan (the "Plan") is intended to attract, retain and provide incentives to Employees, officers, Directors and consultants of the Company, and to thereby increase overall shareholders' value. The Plan generally provides for the granting of stock, stock options, stock appreciation rights, restricted shares, other stock-based awards or any combination of the foregoing to the eligible participants. II. DEFINITIONS (a) "Award" includes, without limitation, stock options (including incentive stock options within the meaning of Section 422(b) of the Code), stock appreciation rights, stock awards, restricted share awards, dividend equivalent rights, or other awards that are valued in whole or in part by reference to, or are otherwise based on, the Common Stock ("other Common Stock-based Awards"), all on a stand alone, combination or tandem basis, as described in or granted under this Plan. (b) "Award Agreement" means a written agreement setting forth the terms and conditions of each Award made under this Plan. (c) "Board" means the Board of Directors of the Company. (d) "Change in Control" means: (i) An acquisition by any person (as the term "person" is used in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")) who is not as of the effective date of the Plan the beneficial holder of at least 10 % of the Company's then outstanding common stock, of beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of 30 % or more of either (x) the then outstanding common stock (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding capital stock entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (1) any acquisition of Outstanding Company Common Stock and Outstanding Company Voting Securities by the Company, (2) any acquisition of Outstanding Company Common Stock and Outstanding Company Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (3) any acquisition of Outstanding Company Common Stock and Outstanding Company Voting Securities by any person pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this definition; or (ii) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the "Incumbent Board") ceased for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who becomes a Director subsequent to such effective date whose election, or nomination for election by the Company's stockholders was approved by a vote of at least a majority of those individuals who are Directors and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person or legal entity other than the Board shall not be so considered as a member of the Incumbent Board; or (iii) The approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company ("Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding common stock, and the combined voting power of the then outstanding capital stock entitled to vote generally in the election of directors, as the case may be, of the company resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no person (other then the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 30% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed with respect to the Company prior to the Corporate Transaction and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the board of directors of the company resulting from such Corporate Transaction; or (iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. (e) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (f) "Committee" means the Compensation Committee of the Board or such other committee of the Board as may be designated by the Board from time to time to administer this Plan. All members of the Compensation Committee or such other committee, which in either case may not be less than two Directors, are intended at all times to qualify as "outside directors" within the meaning of Section 162(m) of the Code and as "Non-Employee Directors" within the 2 meaning of Rule 16b-3 under Section 16 of the Exchange Act; provided, however, that the failure of a member of such Committee to so qualify shall not be deemed to invalidate any Award made by such Committee. (g) "Common Stock" means the $.01 par value Class A Common Stock of the Company. (h) "Company" means Hastings Entertainment, Inc., a Texas corporation. (i) "Director" means a member of the Board. (j) "Employee" means an employee of the Company or a Subsidiary. (k) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (l) "Fair Market Value" shall mean (i) if Hastings' common stock is publicly traded on a national market on the date in question, the average of the high and low sale price for Hastings' common stock on the date in question (or the most recent date prior thereto that sales take place), or (ii) if Hastings' common stock is not publicly traded on a national market on the date in question, the price as determined in the most recent valuation prepared for the Company's Associates' Stock Ownership Plan.. (m) "Participant" means an Employee, officer, Director or consultant who has been granted an Award under the Plan. (n) "Plan Year" means a calendar year. (o) "Subsidiary" means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than 50% by reason of stock ownership or otherwise. III. ELIGIBILITY Any Employee, officer, Director or consultant of the Company or Subsidiary selected by the Committee is eligible to receive an Award pursuant to Section VI hereof. IV. PLAN ADMINISTRATION (a) Except as otherwise determined by the Board, the Plan shall be administered by the Committee. For purposes of any action taken by the Committee, a majority of the members will constitute a quorum, and the actions of the members present at a meeting at which a quorum is present, or actions unanimously approved in writing, will be the acts of the Committee. The Board or the Committee shall periodically make determinations with respect to the participation of Employees, officers, Directors and consultants in the Plan and, except as otherwise required by law or this Plan, the grant terms of Awards, including vesting schedules, retirement and termination rights, payment alternatives such as cash, stock, contingent award or other means of payment consistent with the purposes of this Plan, and such other terms and conditions as the Board or the Committee deems appropriate which shall be contained in an Award Agreement 3 with respect to a Participant; provided, however, that only the Committee may make Awards intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code. (b) The Committee shall have authority to interpret and construe the provisions of the Plan and any Award Agreement and make determinations pursuant to any Plan provision or Award Agreement which shall be final and binding on all persons. No member of the Committee shall be liable for any action or determination made in good faith, and the members shall be entitled to indemnification and reimbursement in the manner provided in the Company's Certificate of Incorporation, as it may be amended from time to time. (c) The Committee shall have the authority at any time to provide for the conditions and circumstances under which Awards shall be forfeited. The Committee shall have the authority to accelerate the vesting of any Award and the time at which any Award becomes exercisable. V. CAPITAL STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN (a) The capital stock subject to the provisions of this Plan shall be shares of authorized but unissued Common Stock and shares of Common Stock held as treasury stock. Subject to adjustment in accordance with the provisions of Section X, and subject to Section V(c) below, the maximum number of shares of Common Stock that shall be available for grants of Awards under this Plan shall be 500,000. (b) The grant of a restricted share Award shall be deemed to be equal to the maximum number of shares which may be issued under the Award. Awards payable only in cash will not reduce the number of shares available for Awards granted under the Plan. (c) There shall be carried forward and be available for Awards under the Plan, in addition to shares available for grant under paragraph (a) of this Section V, all of the following: (i) any unused portion of the limit set forth in paragraph (a) of this Section V; (ii) shares represented by Awards which are cancelled, forfeited, surrendered, terminated, paid in cash or expire unexercised; and (iii) the excess amount of variable Awards which become fixed at less than their maximum limitations. (d) No Participant may be awarded options for more than 50,000 shares of Common Stock in any Plan Year. VI. AWARDS UNDER THIS PLAN As the Board or Committee may determine, the following types of Awards and other Common Stock-based Awards may be granted under this Plan on a stand alone, combination or tandem basis: (a) Stock Option. A right to buy a specified number of shares of Common Stock at a fixed exercise price during a specified time. Unless otherwise specifically provided in an Award Agreement, (i) the exercise price of each share of Common Stock covered by a stock option shall not be less than the Fair Market Value of the Common Stock on the date of the grant of such 4 stock option and (ii) 20% of the shares covered by the stock option shall become exercisable on the first anniversary of its grant and an additional 20% of such shares shall become exercisable on each of the second, third, fourth and fifth anniversary of its grant. (b) Incentive Stock Option. An Award which may be granted only to Employees in the form of a stock option which shall comply with the requirements of Code Section 422 or any successor section as it may be amended from time to time. The exercise price of any incentive stock option shall not be less than 100 % of the Fair Market Value of the Common Stock on the date of grant of the incentive stock option Award. An Employee who owns stock representing 10% of the voting power or value of all classes of stock of the Company or a Subsidiary shall only be granted an incentive stock option (i) with an exercise price of at least 110% of the Fair Market Value of the Common Stock on the date of the grant of such option and (ii) that expires 5 years from the date of its grant. Subject to adjustment in accordance with the provisions of Section X, the aggregate number of shares which may be subject to incentive stock option Awards under this Plan shall not exceed the maximum number of shares provided in paragraph (a) of Section V above. To the extent that Code Section 422 requires certain provisions to be set forth in a written plan, said provisions are incorporated herein by this reference. Award agreements intended to be incentive stock options shall expressly (i) include the limitations on assignability referred to in Section VIII(a) and (ii) provide that the option shall expire no later than the earlier of (A) 10 years after the date the option is granted, (B) one year after the Participant's termination of employment due to disability and (C) three months following the Participant's termination of employment for any other reason, except death. (c) Stock Option in Lieu of Compensation Election. A right given to a Director, officer or key Employee to elect to exchange annual retainers, fees or compensation for stock options. (d) Stock Appreciation Right. A right which may or may not be contained in the grant of a stock option or incentive stock option to receive the excess of the Fair Market Value of a share of Common Stock on the date the option is surrendered over the option exercise price or other specified amount contained in the Award Agreement. (e) Restricted Shares. A transfer of Common Stock to a Participant subject to forfeiture until such restrictions, terms and conditions as the Committee may determine are fulfilled. (f) Dividend Equivalent Right. A right to receive dividends or their equivalent in value in Common Stock, cash or in a combination of both with respect to any new or previously existing Award. (g) Stock Award. An unrestricted transfer of Common Stock to a Participant. (h) Other Stock-Based Awards. Other Common Stock-Based Awards which are related to or serve a similar function to those Awards set forth in this Section. 5 VII. AWARD AGREEMENTS Each Award under the Plan shall be evidenced by an Award Agreement setting forth the terms and conditions of the Award and executed by the Company and Participant. VIII. OTHER TERMS AND CONDITIONS (a) Assignability. Unless provided to the contrary in any Award Agreement, no Award of a stock option, stock appreciation right, dividend equivalent right or other similar right and no Award of restricted shares (unless the restriction has expired or been satisfied) (collectively, an "Outstanding Award") shall be assignable or transferable except by will, by the laws of descent and distribution and during the lifetime of a Participant. The Outstanding Award shall be exercisable by and accrue to the benefit of, only such Participant. No Outstanding Award granted under the Plan shall be subject to execution, attachment or process. (b) Termination of Employment or Other Relationship. Except as otherwise expressly provided in this Plan, the Committee shall determine the disposition of the grant of each Outstanding Award in the event of the retirement, disability, death or other termination of a Participant's employment or other relationship with the Company or a Subsidiary. (c) Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to shares covered by an Award until the date the Participant is the holder of record of such shares. No adjustment will be made for dividends or other rights for which the record date is prior to the date upon which the Participant becomes the holder of record of such shares. (d) No Obligation to Exercise. The grant of an Award shall impose no obligation upon the Participant to exercise any rights under the Award. (e) Payments by Participants. The Committee may determine that Awards for which a payment is due from a Participant may be payable: (i) in U.S. dollars by personal check, bank draft or money order payable to the order of the Company, by money transfers or direct account debits; (ii) pursuant to a broker-assisted "cashless exercise" program if established by the Company; (iii) by a combination of the methods described in (i) and (ii) above; or (iv) by such other methods as the Committee may deem appropriate. (f) Withholding. Except as otherwise provided by the Committee, (i) the deduction of withholding and any other taxes required by law will be made from all amounts paid in cash and (ii) in the case of payments of Awards in shares of Common Stock, the Participant shall be required to pay the amount of any taxes required to be withheld prior to receipt of such stock, or alternatively, a number of shares the Fair Market Value of which equals the amount required to be withheld may be deducted from the payment. (g) Change in Control. In the event of a Change in Control, all unvested, unexercisable or potentially forfeitable Awards shall vest, become immediately exercisable and/or cease to be subject to any risk of forfeiture, as the case may be. 6 (h) Payment of Taxes. Except to the extent withholding obligations are met pursuant to subsection (f) above, Participants shall pay to Hastings, in cash, any federal, state or local taxes of any kind required by law to be withheld with respect to any Shares granted hereunder. IX. TERMINATION, MODIFICATION AND AMENDMENTS (a) The Board may at any time terminate the Plan or from time to time make such modifications or amendments of the Plan as it may deem advisable; provided, however, that the Board shall not make any material amendments to the Plan which require stockholder approval under applicable law, rule or regulation unless the same shall be approved by the requisite vote of the Company's stockholders. (b) No termination, modification or amendment of the Plan may adversely affect the rights conferred by an Award prior to such termination, modification or amendment without the consent of the recipient thereof. X. RECAPITALIZATION The aggregate number of shares of Common Stock as to, or upon the basis of, which Awards may be granted to Participants under the Plan, the number of shares thereof covered by each outstanding Award, and the price per share thereof in each such Award, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares, effected without receipt of consideration by the Company, or other change in corporate or capital structure; provided, however, that any fractional shares resulting from any such adjustment shall be eliminated. The Committee may also make the foregoing changes and any other changes, including changes in the classes of securities available, to the extent it is deemed necessary or desirable to preserve the intended benefits of the Plan for the Company and the Participants in the event of any other reorganization, recapitalization, merger, consolidation, spin-off, extraordinary dividend or other distribution or similar transaction. XI. NO RIGHT TO EMPLOYMENT No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in the other relationship with, the Company or a Subsidiary. Further, the Company and each Subsidiary expressly reserve the right at any time to dismiss a Participant free from any liability, or any, claim under the Plan, except as provided herein or in any Award Agreement issued hereunder. XII. GOVERNING LAW To the extent that federal laws do not otherwise control, the Plan shall be construed in accordance with and governed by the laws of the State of Texas. 7 XIII. SAVINGS CLAUSE This Plan is intended to comply in all respects with applicable laws and regulations, including, with respect to those Employees who are officers or directors, Section 16 of the Exchange Act and Rule 16b-3 under the Exchange Act. In case any one more of the provisions of this Plan shall not so comply, and the remaining provisions of this Plan shall not be affected or impaired thereby, the non-complying provision shall be deemed null and void; however, to the extent permissible by law, any provision which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Plan to be construed in compliance with all applicable laws (including Rule 16b-3) so as to foster the intent of this Plan. XIV. EFFECTIVE DATE AND TERM The Plan shall become effective June 19, 2002, subject to approval of the Plan by the affirmative vote of the holders of a majority of the outstanding shares of the capital stock of the Company entitled to vote thereon within one year following adoption of the Plan by the Board. All Awards granted prior to such approval by the stockholders shall be subject to such approval and shall not be exercisable and/or transferable prior thereto. In the event such approval is not obtained within such one-year period, the Plan and all Awards granted thereunder shall be null and void. The Plan shall terminate on the tenth anniversary of the date on which it becomes effective. No Award shall be granted after the termination of the Plan. 8 -----END PRIVACY-ENHANCED MESSAGE-----