-----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, VkWK8IuktcXijS60zxRUGdCFVpDaUIhPAfke3OH8wB92zXZZ8TpW4sSMEerwp26f oj3KivoGRH9MJseZTkUejA== 0000950134-98-006489.txt : 19980810 0000950134-98-006489.hdr.sgml : 19980810 ACCESSION NUMBER: 0000950134-98-006489 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19980807 EFFECTIVENESS DATE: 19980807 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HASTINGS ENTERTAINMENT INC CENTRAL INDEX KEY: 0001054579 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 751386475 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-61007 FILM NUMBER: 98679862 BUSINESS ADDRESS: STREET 1: P O BOX 35350 CITY: AMARILLO STATE: TX ZIP: 79120-5350 BUSINESS PHONE: 8063512300 MAIL ADDRESS: STREET 1: P O BOX 35350 CITY: AMARILLO STATE: TX ZIP: 79120-5350 S-8 1 FORM S-8 1 As filed with the Securities and Exchange Commission on August 7, 1998 Registration No. 333- ================================================================================ UNITED STATES 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 of (I.R.S. Employer incorporation or organization) Identification No.) 3601 PLAINS BLVD., SUITE #1 79102 AMARILLO, TEXAS (Zip Code) (Address of Principal Executive Offices) --------------------------------------------- HASTINGS 1994 STOCK OPTION PLAN HASTINGS 1991 STOCK OPTION PLAN AMENDED 1996 INCENTIVE STOCK PLAN CHIEF EXECUTIVE OFFICER STOCK OPTION PLAN HASTINGS BOOKS, MUSIC & VIDEO, INC. MANAGEMENT STOCK PURCHASE PLAN HASTINGS ENTERTAINMENT, INC. 1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS HASTINGS ENTERTAINMENT, INC. 1998 STOCK GRANT PLAN FOR OUTSIDE DIRECTORS (Full Titles of the Plans) DENNIS MCGILL VICE PRESIDENT OF FINANCE, CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY HASTINGS ENTERTAINMENT, INC. 3601 PLAINS BLVD., SUITE #1 AMARILLO, TEXAS 79102 (806) 351-2300 (Name, address and telephone number, including area code, of agent for service) --------------------------------------------- With Copies To: KENT JAMISON, ESQ. LOCKE PURNELL RAIN HARRELL (A PROFESSIONAL CORPORATION) 2200 ROSS AVENUE, SUITE 2200 DALLAS, TEXAS 75201-6776 2 CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------------ OF SECURITIES AMOUNT TO MAXIMUM AGGREGATE OFFERING AMOUNT OF TO BE REGISTERED BE REGISTERED OFFERING PRICE PRICE (1) REGISTRATION FEE PER SHARE (1) - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock, $.01 Par Value To be issued under 632,375 shares $11.50(2) $7,272,312.50 $2,145.33 the Amended 1996 Incentive Stock Plan Issued under the 3,415 shares $10.68(3) $36,472.20 $10.76 1994 Stock Option Plan To be issued under 502,485 shares $11.50(2) $5,778,577.50 $1,704.68 the 1994 Stock Option Plan Issued under the 8,074 shares $9.24(4) $74,603.76 $22.01 1991 Stock Option Plan To be issued under 497,826 shares $11.50(2) $5,724,999.00 $1,688.87 the 1991 Stock Option Plan To be issued under 227,655 shares $11.50(2) $2,618,032.50 $772.32 the Management Stock Purchase Plan To be issued under 101,180 shares $11.50(2) $1,163,570.00 $343.25 the 1996 Stock Option Plan for Outside Directors To be issued under 25,295 shares $11.50(2) $290,892.50 $85.81 the 1998 Stock Grant Plan for Outside Directors To be issued under 404,720 shares $11.50(2) $4,654,280.00 $1,373.01 the Chief Executive Officer Stock Option Plan TOTAL 2,403,025 shares $27,613,739.96 $8,146.05 - ------------------------------------------------------------------------------------------------------------------------------------
(1) For the sole purpose of calculating the registration fee, the number of shares to be registered under this Registration Statement has been broken down into nine subtotals. In addition, pursuant to Rule 416 under the Securities Act of 1933, as amended, this Registration Statement also covers shares of Common Stock of the Company issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Estimated in accordance with Rule 457 (c) and (h) under the Securities Act of 1933, as amended, solely for purposes of calculating the registration fee, based on the average of the high and low prices reported on the Nasdaq National Market on August 4, 1998. (3) Computed in accordance with Rule 457(h) under the Securities Act of 1933, as amended. Such computation is based on the weighted average exercise price of $10.68 per share covering 3,415 shares presently outstanding under the Registrant's 1994 Stock Option Plan. (4) Computed in accordance with Rule 457(h) under the Securities Act of 1933, as amended. Such computation is based on the weighted average exercise price of $9.24 per share covering 8,074 shares presently outstanding under the Registrant's 1991 Stock Option Plan. -2- 3 PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS The information specified by Item 1 and Item 2 of Part I of Form S-8 is omitted from this filing in accordance with the provisions of Rule 428 under the Securities Act of 1933, as amended (the "Securities Act"), and the introductory Note to Part I of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The documents set forth below are incorporated by reference in this Registration Statement. All documents subsequently filed by Hastings Entertainment, Inc. (the "Company") pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered 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 a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. (1) The Company's prospectus dated June 11, 1998 and relating to the Form S-1 Registration Statement (Registration Statement No. 333-47969) filed pursuant to Rule 424(b) of the Securities Act; (2) All other reports filed with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the prospectus described in (1) above; and (3) The description of the Common Stock which is contained in the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on June 3, 1998 pursuant to Section 12 of the Exchange Act, and all amendments thereto and reports that have been filed for the purpose of updating such description. ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable. -3- 4 ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not Applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") permits a corporation to indemnify certain persons, including officers and directors and former officers and directors, and to purchase insurance with respect to liability arising out of their capacity or status as officers and directors. Article Thirteen of the Company's Third Restated Articles of Incorporation provides as follows: The Corporation shall indemnify any person who was, is or is threatened to be made a named defendant or respondent in a proceeding (as hereinafter defined) because the person (a) is or was a director or officer of the corporation or (b) while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, manager, partner, venturer, proprietor, trustee, employee, agent or similar functionary 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 that a corporation may grant indemnification to a person serving in such capacity under the Texas Business Corporation Act, as the same exists or may hereafter be amended. Such right shall include the right to be paid by the corporation for all expenses incurred in defending any such proceeding in advance of its final disposition to the maximum extent permitted under the Texas Business Corporation Act, as the same exists or may hereafter be amended. If a claim for indemnification or advancement of expenses hereunder is not paid in full by the corporation within 90 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim, and if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. It shall be a defense to any such action that such indemnification or advancement of costs of defense are not permitted under the Texas Business Corporation Act, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors or any committee thereof, special legal counsel or shareholders) to have made its determination prior to the commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances nor an actual determination by the corporation (including its Board of Directors or any committee thereof, special legal counsel or shareholders) that such indemnification or advancement is not permissible, shall be a defense to the action or create a presumption that such indemnification or advancement is not permissible. -4- 5 The corporation may additionally indemnify any person not covered by the grant of mandatory indemnification contained above to the fullest extent permitted by law. Neither the amendment nor repeal of this Article, nor the adoption of any provision of these Third Restated Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any proceeding that accrued or arose prior to such amendment, repeal or adoption of any inconsistent provision. As used herein, the term "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding. Article Fourteen of the Company's Third Restated Articles of Incorporation provides that no director of the Company shall be liable to the Company or its shareholders for monetary damages for an act or omission in the director's capacity as a director to the fullest extent permitted by the TBCA. In addition, Article IX of the Company's Amended and Restated Bylaws, provides that the Company shall indemnify any person who was, is or is threatened to be made a named defendant or respondent in a proceeding (as hereinafter defined) because the person is or was a director or officer of the Company or while a director or officer of the corporation, is or was serving at the request of the Company as a director, officer, manager, partner, venturer, proprietor, trustee, employee, agent or similar functionary 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 that a corporation may grant indemnification to a person serving in such capacity under the TBCA, as the same exists or may hereafter be amended. The Company has purchased directors' and officers' liability insurance. Subject to conditions, limitations and exclusions in the policy, the insurance covers amounts required to be paid for a claim or claims made against directors and officers for any act, error, omission, misstatement, misleading statement or breach of duty by directors and officers in their capacity as directors and officers of the Company. Reference is made to the Form of Indemnification Agreement by and between the Company and its directors and executive officers filed as Exhibit 10.1 to the Company's Registration Statement on Form S-1 (File No. 333-47969) declared effective on June 11, 1998, pursuant to which the Company does, to the extent permitted by applicable law, indemnify such directors and executive officers against all expenses, judgements, fines and penalties incurred in connection with the defense or settlement of any actions brought against them by reason of the fact that they were directors or executive officers of the Company or assumed certain responsibilities at the direction of the Company. -5- 6 ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable. ITEM 8. EXHIBITS. 5.1* Opinion of Locke Purnell Rain Harrell (A Professional Corporation). 23.1* Consent of KPMG Peat Marwick LLP. 23.2* Consent of Locke Purnell Rain Harrell (A Professional Corporation) (included in opinion filed as Exhibit 5.1). 24.1* Power of Attorney (included on the signature pages of this Registration Statement). 99.1* Hastings 1994 Stock Option Plan. 99.2* Hastings 1991 Stock Option Plan. 99.3* Amended 1996 Incentive Stock Plan. 99.4* Hastings Books, Music & Video, Inc. Management Stock Purchase Plan. 99.5* Hastings Entertainment, Inc. 1998 Stock Grant Plan for Outside Directors. 99.6* Hastings Entertainment, Inc. 1996 Stock Option Plan for Outside Directors. 99.7* Chief Executive Officer Stock Option Plan. - --------------- * Filed herewith. ITEM 9. UNDERTAKINGS. The Company 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; (ii) To reflect in the prospectus any facts or events arising after the effective date of this 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 this Registration Statement; -6- 7 (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; (2) That, for the purpose of determining any liability under the Securities Act, 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; (4) That, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act 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; (5) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company 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 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 Securities Act and will be governed by the final adjudication of such issue. -7- 8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company 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 August 7, 1998. HASTINGS ENTERTAINMENT, INC. By: /s/ Dennis McGill ----------------------------------------- Dennis McGill, Vice President of Finance, Chief Financial Officer, Treasurer and Secretary -8- 9 POWER OF ATTORNEY KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints each of Dennis McGill and Jeffrey G. Shrader, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done on and about the premises as fully and to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or 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 by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE ---------- ----- ---- /s/ John H. Marmaduke Chairman of the Board, August 7, 1998 ------------------------------ President and Chief Executive John H. Marmaduke Officer (Principal Executive Officer) /s/ Dennis McGill Vice President of Finance, August 7, 1998 ------------------------------- Chief Financial Officer, Dennis McGill Treasurer and Secretary (Principal Financial and Accounting Officer) /s/ Phillip Hill Senior Vice President, Chief August 7, 1998 ------------------------------- Operating Officer and Director Phillip Hill /s/ Leonard L. Berry Director August 7, 1998 ------------------------------- Leonard L. Berry /s/ Peter A. Dallas Director August 7, 1998 ------------------------------- Peter A. Dallas /s/ Gaines L. Godfrey Director August 7, 1998 ------------------------------- Gaines L. Godfrey /s/ Craig R. Lentzsch Director August 7, 1998 ------------------------------- Craig R. Lentzsch /s/ Stephen S. Marmaduke Director August 7, 1998 ------------------------------- Stephen S. Marmaduke /s/ Jeffrey G. Shrader Director August 7, 1998 ------------------------------- Jeffrey G. Shrader /s/ Ron G. Stegall Director August 7, 1998 ------------------------------- Ron G. Stegall
-9- 10 INDEX TO EXHIBITS
Exhibit Number Exhibit ------ ------- 5.1* Opinion of Locke Purnell Rain Harrell (A Professional Corporation). 23.1* Consent of KPMG Peat Marwick LLP. 23.2* Consent of Locke Purnell Rain Harrell (A Professional Corporation) (included in opinion filed as Exhibit 5.1). 24.1* Power of Attorney (included on the signature pages of this Registration Statement). 99.1* Hastings 1994 Stock Option Plan. 99.2* Hastings 1991 Stock Option Plan. 99.3* Amended 1996 Incentive Stock Plan. 99.4* Hastings Books, Music & Video, Inc. Management Stock Purchase Plan. 99.5* Hastings Entertainment, Inc. 1998 Stock Grant Plan for Outside Directors. 99.6* Hastings Entertainment, Inc. 1996 Stock Option Plan for Outside Directors. 99.7* Chief Executive Officer Stock Option Plan.
- -------------- * Filed herewith. EX-5.1 2 OPINION OF LOCKE PURNELL RAIN HARRELL 1 EXHIBIT 5.1 August 7, 1998 Hastings Entertainment, Inc. 3601 Plains Blvd., Suite #1 Amarillo, Texas 79102 Re: Registration of 2,403,025 shares of Common Stock, par value $.01 per share, pursuant to a Registration Statement on Form S-8 Ladies and Gentlemen: We have acted as counsel for Hastings Entertainment, Inc., a Texas corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement on Form S-8 (the "Registration Statement"), of 2,403,025 shares of Common Stock, par value $.01 per share, of the Company (the "Common Stock") to be offered pursuant to the Hastings 1994 Stock Option Plan, Hastings 1991 Stock Option Plan, Amended 1996 Incentive Stock Plan, Chief Executive Officer Stock Option Plan, Hastings Books, Music & Video, Inc. Management Stock Purchase Plan, Hastings Entertainment, Inc. 1996 Stock Option Plan for Outside Directors and Hastings Entertainment, Inc. 1998 Stock Grant Plan for Outside Directors (the "Plans"). Based upon our examination of such documents and the investigation of such matters of law as we have deemed relevant or necessary in rendering this opinion, we hereby advise you that we are of the opinion that: Assuming, with respect to shares of Common Stock issued after the date hereof, (i) the receipt of proper consideration for the issuance thereof in excess of par value thereof, (ii) the availability of a sufficient number of shares of Common Stock authorized by the Company's Articles of Incorporation then in effect, (iii) compliance with the terms of any agreement entered into in connection with any options or restricted stock under the Plans, and (iv) no change occurs in the applicable law or the pertinent facts, the shares of Common Stock purchasable upon the exercise of any option granted under or issued upon the awarding of any restricted stock under, the Plans will upon issuance be duly authorized and validly issued, fully paid and non-assessable shares of Common Stock. 2 Hastings Entertainment, Inc. August 7, 1998 Page 2 We consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement filed by the Company with the Securities and Exchange Commission for the registration under the Securities Act, of 2,403,025 shares of Common Stock of the Company covered by the Plans. By so consenting, we do not thereby admit that our firm's consent is required by Section 7 of the Securities Act. Very truly yours, LOCKE PURNELL RAIN HARRELL (A Professional Corporation) By: /s/ Kent Jamison ---------------------------------- Kent Jamison EX-23.1 3 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Hastings Entertainment, Inc.: We consent to the use of our reports incorporated herein by reference and to the reference to our firm under the heading "Experts" in the registration statement on Form S-1 incoporated herein by reference. /s/ KPMG PEAT MARWICK LLP Dallas, Texas August 5, 1998 EX-99.1 4 HASTINGS 1994 STOCK OPTION PLAN 1 EXHIBIT 99.1 HASTINGS BOOKS, MUSIC & VIDEO, INC. 1994 STOCK OPTION PLAN ARTICLE 1 - GENERAL 1.1 Purpose. The purposes of this 1994 Stock Option Plan (the "Plan") are to: (1) closely associate the interests of the management of Hastings Books, Music & Video, Inc. ("Hastings") and its subsidiaries and affiliates (collectively referred to as the "Company") with the shareholders by reinforcing the relationship between participants' rewards and shareholder gains; (2) provide management with an equity ownership in the Company commensurate with Company performance, as reflected in increased shareholder value; (3) maintain competitive compensation levels; and (4) provide an incentive to management for continuous employment with the Company. 1.2 Administration. (a) The Plan shall be administered by the Board of Directors of Hastings or by a committee named by the Board (either being referred to herein as the "Committee"). (b) The Committee shall have the authority, in its sole discretion and from time to time to: (i) designate the employees, classes of employees, directors, or other individuals eligible to participate in the Plan; (ii) award options under the Plan in form and amount as the Committee shall determine; (iii) impose limitations, restrictions and conditions upon any award as the Committee shall deem appropriate; and (iv) interpret the Plan, adopt, amend, and rescind rules and regulations relating to the Plan, and make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. (c) Decisions and determinations of the Committee on all matters relating to the Plan shall be in its sole discretion and shall be conclusive. No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any award thereunder. 1.3 Eligibility for Participation. Participants in the Plan shall be selected by the Committee from the directors, the 2 executive officers and other key employees of the Company who occupy responsible managerial or professional positions and who have the capability of making a substantial contribution to the success of the Company, or any other individual whose participation the Committee determines is in the best interest of the Company. In making this selection and in determining the form and amount of awards, the Committee shall consider any factors deemed relevant, including the individual's functions, responsibilities, value of services to the Company, and past and potential contributions to the Company's profitability and sound growth. 1.4 Types of Awards Under Plan. Awards under the Plan may be in the form of: (i) Stock Options, as described in Article 2; or (ii) Incentive Stock Options, as described in Article 3. 1.5 Aggregate Limitation on Awards.Shares of stock which may be issued under the Plan shall be authorized and unissued or treasury shares of Common Stock of Hastings ("Common Stock"). The maximum number of shares of Common Stock which may be issued under the Plan shall be 100,000. 1.6 Effective Date and Term of Plan. (a) The Plan shall become effective on the date approved by the holders of a majority of the shares of Common Stock present in person or by proxy and entitled to vote at the 1994 Annual Meeting of Shareholders of Hastings. (b) No awards of Incentive Stock Options shall be made under the Plan after the tenth anniversary of its effective date, provided, however, that the Plan and all awards made under the Plan prior to that date shall remain in effect until the awards have been satisfied or terminated in accordance with the Plan and the terms of the awards. ARTICLE 2 - STOCK OPTIONS 2.1 Award of Stock Options. The Committee may from time to time, and subject to the provisions of the Plan and the other terms and conditions the Committee prescribes, grant to any participant in the Plan one or more options to purchase for cash or shares of previously owned Common Stock the number of shares of Common Stock ("Stock Options") allotted by the Committee. The date a Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. 2.2 Stock Option Agreements. The grant of a Stock Option shall be evidenced by a written Award of Stock Option ("Agreement"), executed by the Company and the employee receiving the Stock Option (the "optionee"), in the form the Committee determines. 3 2.3 Stock Option Price. The option price per share of Common Stock shall be established by the Committee for the particular award. 2.4 Term and Exercise. Each Stock Option shall be exercisable at the times and in the amounts the Committee specifies in the Agreement and unless a different period is provided by the Committee or another section of this Plan, may be exercised during a period of ten (10) years from the date of grant (the "option term"). No Stock Option shall be exercisable after the expiration of its option term. 2.5 Manner of Payment. Each Agreement shall set forth the procedure governing its exercise, and shall provide that, upon exercise the optionee shall pay to the Company, in full, the option price with cash or with previously owned Common Stock. ARTICLE 3 - INCENTIVE STOCK OPTIONS 3.1 Award of Incentive Stock Options. The Committee may, from time to time and subject to the provisions of the Plan and other terms and conditions the Committee prescribes, grant to any participant in the Plan one or more incentive stock options (intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended) ("Incentive Stock Options") to purchase for cash or shares of previously owned Common Stock the number of shares of Common Stock allotted by the Committee. The date an Incentive Stock Option is granted means the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be granted to any owner of 10% or more of the total combined voting powers of Hastings unless the option price per share shall be 110% of the fair market value of a share of Common Stock on the date of grant and the option states that it is not exercisable after the expiration of 5 years from the date of its grant. 3.2 Incentive Stock Option Agreements. The grant of an Incentive Stock Option shall be evidenced by a written Incentive Stock Option Agreement ("Agreement"), executed by the Company and the employee receiving the Incentive Stock Option (the "optionee"), stating the number of shares of Common Stock subject to the Incentive Stock Option in the form the Committee determines. 3.3 Incentive Stock Option Price. The option price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be 100% of the fair market value of a share of Common Stock on the date the Incentive Stock Option is granted, provided that Incentive Stock Options granted to any owner of 10% or more of the total combined voting powers of Hastings shall be 110% of the fair market value of a share of common stock on the date of grant. 4 3.4 Term and Exercise. Each Incentive Stock Option shall be exercisable at such times and in the amounts the Committee specifies in the Incentive Stock Option Agreement and unless a shorter period is provided by the Committee or another section of this Plan, may be exercised during a period of ten years from the date of grant (the "option term"). No Incentive Stock Option shall be exercisable after the expiration of its option term. 3.5 Applicability of Stock Options Sections.Section 2.5, Manner of Payment, applicable to Stock Options, shall apply equally to Incentive Stock Options. 3.6 Maximum Amount of Incentive Stock Options.The aggregate fair market value (determined on the date the option is granted) of Common Stock with respect to which an Incentive Stock Option may become exercisable for the first time during any calendar year by an optionee shall not exceed $100,000. 3.7 Death of an Optionee. (a) Upon the death of the optionee, any Incentive Stock Option exercisable on the date of death may be exercised by the optionee's estate or by a person who acquires the right to exercise Incentive Stock Option by bequest or inheritance or by reason of the death of the optionee, provided that the exercise occurs within both the remaining option term and one year after the optionee's death. (b) The provisions of this Section shall apply notwithstanding the fact that the optionee's employment may have terminated prior to death, but only to the extent of any Incentive Stock Options exercisable on the date of death. 3.8 Retirement or Disability.Upon the termination of the optionee's employment by reason of permanent disability (as determined by the Committee), the optionee may, within 12 months from the date of termination, exercise any Incentive Stock Options to the extent such options are exercisable during the 12-month period. Upon termination of optionee's employment due to retirement with the consent of the Company, the optionee may, within 3 months after termination, exercise any Options to the extent the options were exercisable on the date of termination of employment. 3.9 Termination for Other Reasons.Except as provided in Sections 3.7 and 3.8 or except as otherwise determined by the Committee, all Incentive Stock Options shall terminate upon the termination of the optionee's employment. ARTICLE 4 - MISCELLANEOUS 4.1 General Restriction. Each award under the Plan shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration, or 5 qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the grantee of an award with respect to the disposition of shares of Common Stock, is necessary or desirable as a condition of, or in connection with, the granting of the award or the issue or purchase of shares of Common Stock thereunder, the award may not be consummated in whole or in part unless the listing, registration, qualification, consent, approval, or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee. 4.2 Non-Assignability. No award under the Plan shall be assignable or transferable by the optionee, except by will or by the laws of descent and distribution. During the life of the optionee, an award shall be exercisable only by the optionee or by optionee's guardian or legal representative. 4.3 Withholding Taxes. Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the grantee to remit to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery of any certificate for the shares. Alternatively, the Company may issue or transfer the shares of Common Stock net of the number of shares sufficient to satisfy the withholding tax requirements. For withholding tax purposes, the shares of Common Stock shall be valued at their fair market value on the date the withholding obligation is incurred. 4.4 Right to Terminate Employment. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any participant the right to continued employment by the Company or effect any right which the Company may have to terminate the employment of the participant. 4.5 Non-Uniform Determinations. The Committee's determinations under the Plan (including without limitation determinations of the persons to receive awards, the form, amount and timing of such awards, the terms and provisions of awards, and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan, whether or not the persons are similarly situated. 4.6 Rights as a Shareholder. The recipient of any award under the Plan shall have no rights as a shareholder with respect to the award unless and until certificates for shares of Common Stock are issued to the recipient. 4.7 Definitions. In this Plan: (a) "Subsidiary" means any corporation of which, at the time more than 50% of the shares entitled to vote generally in an 6 election of directors are owned directly or indirectly by Hastings or any subsidiary thereof. (b) "Affiliate" means any person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Hastings. (c) "Fair market value" as of any date of any share of Common Stock means the fair market value of shares determined by the Committee in the manner it may deem appropriate. In no event shall the fair market value of any share of Common Stock be less than its par value. (d) "Option" means Stock Option and Incentive Stock Option. (e) "Option price" means the purchase price per share of Common Stock deliverable upon the exercise of a Stock Option or Incentive Stock Option. (f) "Change of Control" means any merger, transfer of assets, or transfer of voting shares in the Company resulting in members of the Marmaduke family owning, directly or indirectly, less than 50% of the voting shares of the Company. 4.8 Leaves of Absence. The Committee shall be entitled to make such rules, and regulations, and determinations as it deems appropriate under the Plan in respect to any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing, the Committee shall be entitled to determine (i) whether or not any leave of absence shall constitute a termination of employment within the meaning of the Plan, and (ii) the impact, if any, of any leave of absence on awards under the Plan theretofore made to any recipient who takes leave of absence. 4.9 Adjustments. If the outstanding Common Stock changes by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares, or the like, the Committee may appropriately adjust the number of shares of Common Stock which may be issued under the Plan, the number of shares of Common Stock subject to Options theretofore granted under the Plan, the Option Price of Options theretofore granted under the Plant, and any and all other matters deemed appropriate by the Committee. 4.10 Acceleration. Unless the Committee provides otherwise in an Option Agreement, the exercise date of all Options shall be accelerated and such options may be exercised immediately if a Change of Control occurs. 4.11 Amendment of the Plan. The Committee may, without further action by the shareholders and without receiving further 7 consideration from the participants, amend this Plan or condition or modify awards under this Plan except for amendments which applicable law or regulation require approval by the Shareholders. EX-99.2 5 HASTINGS 1991 STOCK OPTION PLAN 1 EXHIBIT 99.2 HASTINGS BOOKS, MUSIC & VIDEO, INC. 1991 STOCK OPTION PLAN ARTICLE 1 - GENERAL 1.1 PURPOSE. The purposes of this 1991 Stock Option Plan (the "Plan") are to: (1) closely associate the interests of the management of Hastings Books, Music & Video, Inc. ("Hastings") and its subsidiaries and affiliates (collectively referred to as the "Company") with the shareholders by reinforcing the relationship between participants' rewards and shareholder gains; (2) provide management with an equity ownership in the Company commensurate with Company performance, as reflected in increased shareholder value; (3) maintain competitive compensation levels; and (4) provide an incentive to management for continuous employment with the Company. 1.2 ADMINISTRATION. (a) The Plan shall be administered by the Board of Directors of Hastings or by a committee named by the Board (either being referred to herein as the "Committee"). (b) The Committee shall have the authority, in its sole discretion and from time to time to: (i) designate the employees, classes of employees, directors, or other individuals eligible to participate in the Plan; (ii) award options under the Plan in form and amount as the Committee shall determine; (iii) impose limitations, restrictions and conditions upon any award as the Committee shall deem appropriate; and (iv) interpret the Plan, adopt, amend, and rescind rules and regulations relating to the Plan, and make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. (c) Decisions and determinations of the Committee on all matters relating to the Plan shall be in its sole discretion and shall be conclusive. No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any award thereunder. 1.3 ELIGIBILITY FOR PARTICIPATION. Participants in the Plan shall be selected by the Committee from the directors, the 1 2 executive officers and other key employees of the Company who occupy responsible managerial or professional positions and who have the capability of making a substantial contribution to the success of the Company, or any other individual whose participation the Committee determines is in the best interest of the Company. In making this selection and in determining the form and amount of awards, the Committee shall consider any factors deemed relevant, including the individual's functions, responsibilities, value of services to the Company, and past and potential contributions to the Company's profitability and sound growth. 1.4 TYPES OF AWARDS UNDER PLAN. Awards under the Plan may be in the form of: (i) Stock Options, as described in Article 2; or (ii) Incentive Stock Options, as described in Article 3. 1.5 AGGREGATE LIMITATION ON AWARDS. Shares of stock which may be issued under the Plan shall be authorized and unissued or treasury shares of Common Stock of Hastings ("Common Stock"). The maximum number of shares of Common Stock which may be issued under the Plan shall be 100,000. 1.6 EFFECTIVE DATE AND TERM OF PLAN. (a) The Plan shall become effective on the date approved by the holders of a majority of the shares of Common Stock present in person or by proxy and entitled to vote at the 1992 Annual Meeting of Shareholders of Hastings. (b) Awards may be made under the Plan prior to its effective date, provided that all awards so made will be subject to approval of the Plan by the shareholders of Hastings within 12 months after the Plan is adopted by the Board of Directors of Hastings. (c) No awards of Incentive Stock Options shall be made under the Plan after the tenth anniversary of its effective date, provided, however, that the Plan and all awards made under the Plan prior to that date shall remain in effect until the awards have been satisfied or terminated in accordance with the Plan and the terms of the awards. ARTICLE 2 - STOCK OPTIONS 2.1 AWARD OF STOCK OPTIONS. The Committee may from time to time, and subject to the provisions of the Plan and the other terms and conditions the Committee prescribes, grant to any participant in the Plan one or more options to purchase for cash or shares of previously owned Common Stock the number of shares of Common Stock ("Stock Options") allotted by the Committee. The date a Stock Option is granted shall mean the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. 2 3 2.2 STOCK OPTION AGREEMENTS. The grant of a Stock Option shall be evidenced by a written Award of Stock Option ("Agreement"), executed by the Company and the employee receiving the Stock Option (the "optionee") in the form the Committee determines. 2.3 STOCK OPTION PRICE. The option price per share of Common Stock shall be established by the Committee for the particular award. 2.4 TERM AND EXERCISE. Each Stock Option shall be exercisable at the times and in the amounts the Committee specifies in the Agreement and unless a different period is provided by the Committee or another section of this Plan, may be exercised during a period of ten (10) years from the date of grant (the "option term"). No Stock Option shall be exercisable after the expiration of its option term. 2.5 MANNER OF PAYMENT. Each Agreement shall set forth the procedure governing its exercise, and shall provide that, upon exercise the optionee shall pay to the Company, in full, the option price with cash or with previously owned Common Stock. ARTICLE 3 - INCENTIVE STOCK OPTIONS 3.1 AWARD OF INCENTIVE STOCK OPTIONS. The Committee may, from time to time and subject to the provisions of the Plan and other terms and conditions the Committee prescribes, grant to any participant in the Plan one or more incentive stock options (intended to qualify Section 422 of the Internal Revenue Code of 1986, as amended) ("Incentive Stock Options") to purchase for cash or shares of previously owned Common Stock the number of shares of Common Stock allotted by the Committee. The date an Incentive Stock Option is granted means the date selected by the Committee as of which the Committee allots a specific number of shares to a participant pursuant to the Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be granted to any owner of 10% or more of the total combined voting powers of Hastings unless the option price per share shall be 110% of the fair market value of a share of Common Stock on the date of grant and the option states that it is not exercisable until the expiration of 5 years from the date of its grant. 3.2 INCENTIVE STOCK OPTION AGREEMENTS. The grant of an Incentive Stock Option shall be evidenced by a written Incentive Stock Option Agreement ("Agreement"), executed by the Company and the employee receiving the Incentive Stock Option (the "optionee"), stating the number of shares of Common Stock subject to the Incentive Stock Option in the form the Committee determines. 3.3 INCENTIVE STOCK OPTION PRICE. The option price per share of Common Stock deliverable upon the exercise of an Incentive Stock 3 4 Option shall be 100% of the fair market value of a share of Common Stock on the date the Incentive Stock Option is granted. 3.4 TERM AND EXERCISE. Each Incentive Stock Option shall be exercisable at such times and in the amounts the Committee specifies in the Incentive Stock Option Agreement and unless a shorter period is provided by the Committee or another section of this Plan, may be exercised during a period of ten years from the date of grant (the "option term"). No Incentive Stock Option shall be exercisable after the expiration of its option term. 3.5 APPLICABILITY OF STOCK OPTIONS SECTIONS. Section 2.5, Manner of Payment, applicable to Stock options, shall apply equally to Incentive Stock Options. 3.6 MAXIMUM AMOUNT OF INCENTIVE STOCK OPTIONS. The aggregate fair market value (determined on the date the option is granted) of Common Stock with respect to which an Incentive Stock Option may become exercisable for the first time during any calendar year by an optionee shall not exceed $100,000. 3.7 DEATH OF AN OPTIONEE. (a) Upon the death of the optionee, any Incentive Stock Option exercisable on the date of death may be exercised by the optionee's estate or by a person who acquires the right to exercise Incentive Stock Option by bequest or inheritance or by reason of the death of the optionee, provided that the exercise occurs within both the remaining option term and one year after the optionee's death. (b) The provisions of this Section shall apply notwithstanding the fact that the optionee's employment may have terminated prior to death, but only to the extent of any Incentive Stock Options exercisable on the date of death. 3.8 RETIREMENT OR DISABILITY. Upon the termination of the optionee's employment by reason of permanent disability (as determined by the Committee), the optionee may, within 12 months from the date of termination, exercise any Incentive Stock Options to the extent such options are exercisable during the 12-month period. Upon termination of optionee's employment due to retirement with the consent of the Company, the optionee may, within 3 months after termination, exercise any Options to the extent the options were exercisable on the date of termination of employment. 3.9 TERMINATION FOR OTHER REASONS. Except as provided in Sections 3.7 and 3.8 or except as otherwise determined by the Committee, all Incentive Stock Options shall terminate upon the termination of the optionee's employment. 4 5 ARTICLE 4 - MISCELLANEOUS 4.1 GENERAL RESTRICTION. Each award under the Plan shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration, or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state of federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the grantee of an award with respect to the disposition of shares of Common Stock, is necessary or desirable as a condition of, or in connection with, the granting of the award or the issue or purchase of shares of Common Stock thereunder, the award may not be consummated in whole or in part unless the listing, registration, qualification, consent, approval, or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee. 4.2 NON-ASSIGNABILITY. No award under the Plan shall be assignable or transferable by the optionee, except by will or by the laws of descent and distribution. During the life of the optionee, an award shall be exercisable only by the optionee or by optionee's guardian or legal representative. 4.3 WITHHOLDING TAXES. Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the grantee to remit to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery of any certificate for the shares. Alternatively, the Company may issue or transfer the shares of Common Stock net of the number of shares sufficient to satisfy the withholding tax requirements. For withholding tax purposes, the shares of Common Stock shall be valued at their fair market value on the date the withholding obligation is incurred. 4.4 RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any participant the right to continued employment by the Company or effect any right which the Company may have to terminate the employment of the participant. 4.5 NON-UNIFORM DETERMINATIONS. The Committee's determinations under the Plan (including without limitation determinations of the persons to receive awards, the form, amount and timing of such awards, the terms and provisions of awards, and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan, whether or not the persons are similarly situated. 4.6 RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan shall have no rights as a shareholder with respect 5 6 to the award unless and until certificates for shares of common Stock are issued to the recipient. 4.7 DEFINITIONS. In this Plan: (a) "SUBSIDIARY" means any corporation of which, at the time more than 50% of the shares entitled to vote Generally in an election of directors are owned directly or indirectly by Hastings or any subsidiary thereof. (b) "AFFILIATE" means any person or entity which directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Hastings. (c) "FAIR MARKET VALUE" as of any date of any share of Common Stock means the fair market value of shares determined by the Committee in the manner it may deem appropriate. In no event shall the fair market value of any share of Common Stock be less than its par value. (d) "OPTION" means Stock Option and Incentive Stock Option. (e) "OPTION PRICE" means the purchase price per share of Common Stock deliverable upon the exercise of a Stock Option or Incentive Stock Option. (f) "CHANGE OF CONTROL" means any merger, transfer of assets, or transfer of voting shares in the Company resulting in members of the Marmaduke family owning, directly or indirectly, less than 50% of the voting shares of the Company. 4.8 LEAVES OF ABSENCE. The Committee shall be entitled to make such rules, and regulations, and determination's as it deems appropriate under the Plan in respect to any leave of absence taken by the recipient of any award. Without limiting the generality of the foregoing the Committee shall be entitled to determine (i) whether or not any leave of absence shall constitute a termination of employment within the meaning of the Plan, and (ii) the impact, if any, of any leave of absence on awards under the Plan theretofore made to any recipient who takes leave of absence. 4.9 ADJUSTMENTS. If the outstanding Common Stock changes by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up, combination exchange of shares, or the like, the Committee may appropriately adjust the number of shares of Common Stock which may be issued under the Plan, the number of shares of Common Stock subject to Options theretofore granted under the Plan, the Option Price of Options theretofore granted under the Plant, and any and all other matters deemed appropriate by the Committee. 6 7 4.10 ACCELERATION. Unless the Committee provides otherwise in an Option Agreement, the exercise date of all Options shall be accelerated and such options may be exercised immediately if a Change of Control occurs. 4.11 AMENDMENT OF THE PLAN. (a) The Committee may, without further action by the shareholders and without receiving further consideration from the participants, amend this Plan or condition or modify awards under this Plan except for amendments which applicable law or regulation require approval by the Shareholders. 7 EX-99.3 6 AMENDED 1996 INCENTIVE STOCK PLAN 1 EXHIBIT 99.3 AMENDED 1996 INCENTIVE STOCK PLAN I. Purpose This 1996 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 (within the meaning of 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 (within the meaning of 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 common 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 by the Company, (2) any acquisition of Outstanding Company Common Stock 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 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 2 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, such 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 common 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 or more 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 form 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 corporation 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. (g) "Common Stock" means the $.01 par value Class A Common Stock of the Company. (h) "Company" means Hastings Books, Music & Video, Inc., a Texas corporation. 3 (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" means during such time as the Common Stock of the Company is not publicly traded, the price per share of Common Stock of the Company established by a fair market evaluation of the Common Stock of the Company performed by an independent third party at the direction of the Company as the value of the Common Stock of the Company held by the Company's profit sharing plan. A.G. Edwards & Sons, Inc., currently provides such an evaluation annually for the Company's profit sharing plan. In the event more than one evaluation is performed annually, the evaluation immediately prior to the date of grant shall be the evaluation used. In the event the Common Stock of the Company becomes publicly traded, Fair Market Value shall mean the average of the opening and closing price of the stock on the day immediately preceding the date of the grant. In the event the Common Stock of the Company is not publicly traded and no evaluation is performed for the Company's profit sharing plan, the Fair Market Value shall be as determined by a majority of the disinterested directors of the Company. (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. The Board, or the Committee to the extent determined by the Board, 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 with respect to a Participant. (b) The Committee shall have authority to interpret and construe the provisions of the 4 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 125,000. (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. 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 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 5 incentive stock option shall not be less than 100% if 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 form 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. (c) Stock Option in lieu of Compensation Election. A right given with respect to a year 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 ownership of Common Stock. (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 VI. 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, no Award shall be assignable or transferable except by will, by the laws of descent and distribution and during the lifetime of a Participant, the Award shall be exercisable only by such Participant. No Award 6 granted under the Plan shall be subject to execution, attachment or process. (b) Termination of Employment or Other Relationship. The Committee shall determine the disposition of the grant of each 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. No adjustment will be made for dividends or other rights for which the record date is prior to such date. (d) No Obligation to Exercise. The grant of an Award shall impose no obligation upon the Participant to exercise 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) with previously owned Common Stock; (iv) by a combination of the methods described in (i) through (iii) above; or (v) 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) Restrictions on Sale and Exercise. With respect to officers and directors for purposes of Section 16 of the Exchange Act, and if required to comply with rules promulgated thereunder, (i) no Award providing for exercise, a vesting period, a restriction period or the attainment of performance standards shall permit unrestricted ownership of Common Stock by the Participant for at least six months from the date of grant, and (ii) Common Stock acquired pursuant to this Plan (other than Common Stock acquired as a result of the granting of a "derivative security") may not be sold for at least six months after acquisition. (h) Change in Control. In the event of a Change in Control, all Awards shall vest, become immediately exercisable and/or cease to be subject to any risk of forfeiture, as the case may be. IX. Termination, Modification and Amendments (a) The Plan may from time to time be terminated, modified or amended by the affirmative vote of the holders of a majority of the outstanding shares of the capital stock of the 7 Company present or represented and entitled to vote at a duly held stockholders meeting. (b) 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. (c) No termination, modification or amendment of the Plan may adversely affect the rights conferred by an Award without the consent of the recipient thereof. X. Recapitalization The aggregate number of shares of Common Stock as to which Awards may be granted to Participants, 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. XIII. Savings Clause This Plan is intended to comply in all aspects with applicable laws and regulations, including, with respect to those Employees who are officers or director for purposes of Section 16 of the Exchange Act, Rule 16b-3 under the Exchange Act. In case any one more of the 8 provisions of this Plan shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable 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 upon adoption by the Board, 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 efficient. No Award shall be granted after the termination of the Plan. EX-99.4 7 HASTINGS BOOKS, MUSIC & VIDEO, INC MGMT STOCK PLAN 1 EXHIBIT 99.4 MANAGEMENT STOCK PURCHASE PLAN I. PURPOSE The purpose of the Hastings Books, Music & Video, Inc. Management Stock Purchase Plan (the "Plan") is to provide equity incentive compensation to selected management employees of Hastings Books, Music & Video, Inc. ("Hastings"). Participants in the Plan may elect to receive restricted stock units ("RSUs") in lieu of a portion of their incentive bonus under the Corporate Officer Incentive Plan ("COIP") and Management Incentive Plan ("MIP"). Each RSU represents the right to receive one share of the Company's Common Stock (the "Stock") upon the terms and conditions stated herein. RSUs are granted at a discount of 25% from the fair market value of the Stock on the date of grant. So long as the participant remains employed by the Company for at least three years after the date of grant, his or her RSUs will be settled in shares of Stock after a period of deferral selected by the participant, or upon termination of employment, if earlier. II. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"). Each member of the Committee shall be a "disinterested person" within the meaning of Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934, as amended (the "Act"). The Committee shall have complete discretion and authority with respect to the Plan and its application, except as expressly limited herein. Determinations by the Committee shall be final and binding on all par-ties with respect to all matters relating to the Plan. Capitalized terms not otherwise defined herein shall have the meaning set forth in the COIP. III. ELIGIBILITY Management employees of the Company as designated by the Committee shall be eligible to participate in the Plan. IV. PARTICIPATION A. Restricted Stock Units. Participation in the Plan shall be used on the award of RSUs. Each RSU awarded to a participant shall be credited to a bookkeeping account established and maintained for that participant. B. Cost of RSUs: Fair Market Value of Stock. The "Cost" of each RSU shall be equal to 75% of the fair market value of the Stock on the date the RSU is awarded. For all purposes of the Plan, the "fair market value of the Stock" on any given date shall mean the average of the high and low sales price of the Company Stock on such date or if not publicly traded prior to such date, the most recent independent third-party evaluation of the stock prepared 2 for the Company's ASOP. C. Election to Participate. Each participant may elect to receive an award of RSUs under the Plan during the subsequent Performance Period by completing a Bonus Deferral and RSU Subscription Agreement ("Subscription Agreement"). The Subscription Agreement shall provide that the participant elects to receive RSUs in lieu of a specified portion of any incentive bonus for a Performance Period. Such portion may be expressed as the lesser of a specified percentage up to 50% of the participant's actual bonus amount for such Performance Period or a specified dollar amount up to 50% of the participant's bonus. In no event may a participant receive RSUs greater than the lesser of $25,000 or 50% of the actual bonus amount for such Performance Period. Any dollar amount specified must be at least $1,000; and any percentage specified must be at least 10% and not more than 50%. Amounts specified are entirely contingent on the amount of bonus actually awarded. Each Subscription Agreement shall specify a deferral period for the RSUs to which it pertains. The deferral period shall be expressed as a number of whole years, not less than three (3), beginning on the award date. Subscription Agreements must be received by the Company no later than thirty (30) days prior to the beginning of the Performance Period for which such bonus amount will be determined. A participant who is not subject to the short-swing profits rule of Section 16 of the Act may revise his or her Subscription Agreement with respect to the amount of elected RSUs no later than thirty (30) days after the beginning of the Performance Period for which such bonus amount has been awarded. D. Award of RSUs. Twice each year, on the date that incentive bonuses are paid or would otherwise be paid, the Company shall award RSUs to each participant as follows: Each participant's account shall be credited with a whole number of RSUs determined by dividing the amount (expressed in dollars) that is determined under his or her Subscription Agreement by the Cost of each RSU awarded on such date. No fractional RSU will be credited and the amount equivalent in value to the fractional RSU will be paid out to the participant currently in cash. V. VESTING AND SETTLEMENT OF RSUS A. Vesting. A participant shall be fully vested in each RSU three years after the date such RSU was awarded. B. Settlement After Vesting. With respect to each vested RSU, the Company shall issue to the participant one share of Stock at the end of the deferral period specified in the participant's subscription agreement pertaining to such RSU, or upon the participant's termination of employment or the termination of the Plan, if sooner. C. Settlement Prior to Vesting. 1. Voluntary Termination. If a participant voluntarily terminates his/her employment with the Company for reasons other than death or permanent disability, the participant's nonvested RSUs shall be canceled and he or she shall receive a cash payment equal to the lesser of (a) the Cost of such RSUs or (b) an amount equal to the number of such RSUs -2- 3 multiplied by the fair market value of the Stock on the date of the participant's termination of employment. 2. Involuntary Termination. If a participant's employment is terminated by the Company, or if the participant's employment terminates as a result of death or permanent disability, the participant's nonvested RSUs shall be canceled and he or she shall receive payment as follows: The number of nonvested RSUs awarded on each award date shall be multiplied by a fraction that is equal to the number of full years that the participant was employed by the Company after each such award date divided by three and the participant shall receive the resulting number of such RSUs in shares of Stock. With respect to the participant's remaining nonvested RSUs, the participant shall receive cash in an amount equal to the lesser of (a) the Cost of such RSUs or (b) an amount equal to the number of such RSUs multiplied by the fair market value of the Stock on the date of the participant's termination of employment. 3. Committee's Discretion. The Committee shall have complete discretion to determine the circumstances of a participant's termination of employment, including whether the same results from voluntary termination, permanent disability or termination by the Company, and the Committee's determination shall be final and binding on all parties and not subject to review or challenge by any participant or other person. VI. DIVIDEND EQUIVALENT AMOUNTS Whenever dividends (other than dividends payable only in shares of Stock) are paid with respect to Stock, each participant shall be paid an amount in cash equal to the number of his or her vested RSUs multiplied by the dividend value per share. In addition, each participant's account shall be credited with an amount equal to the number of such participant's nonvested RSUs multiplied by the dividend value per share. Amounts credited with respect to each nonvested RSU shall be paid, without interest, on the date the participant becomes vested in such RSU, or when the participant receives payment of his or her nonvested RSUs pursuant to Subsection V.(C). VII. DESIGNATION OF BENEFICIARY A participant may designate one or more beneficiaries to receive payments or shares of Stock in the event of his/her death. A designation of beneficiary shall apply to a specified percentage of a participant's entire interest in the Plan. Such designation, or any change therein, must be in writing and shall be effective upon receipt by the Company. If there is no effective designation of beneficiary, or if no beneficiary survives the participant, the participant's estate shall be deemed to be the beneficiary. VIII. SHARES ISSUABLE; MAXIMUM NUMBER OF RSUS; ADJUSTMENTS A. Shares Issuable. The aggregate maximum number of shares of Stock reserved and available for issuance under the Plan shall be 45,000. For purposes of this limitation, the shares of Stock underlying any RSUs that are canceled shall be added back to the shares of Stock -3- 4 available for issuance under the Plan. Shares subject to the Plan are authorized but unissued shares or shares that were once issued and subsequently re-acquired by the Company. B. Adjustments. In the event of a stock dividend, stock split or similar change in capitalization affecting the Stock, the Committee shall make appropriate adjustments in (i) the number and kind of shares of Stock or securities with respect to which RSUs shall thereafter be granted; (ii) the number and kind of shares remaining subject to outstanding RSUs; (iii) the number of RSUs credited to each participant's account; and (iv) the method of determining the cost of RSUs. In the event of any proposed merger, consolidation, sale, dissolution or liquidation of the Company, all non-vested RSUs shall become fully vested upon the effective date of such merger, consolidation, sale, dissolution or liquidation and the Committee in its sole discretion may, as to any outstanding RSUs, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and the number of shares subject to such RSUs as it may determine on an equitable basis and as may be permitted by the terms of such transaction, or terminate such RSUs upon such terms and conditions as it shall provide. In the case of the termination of any vested RSU, the Committee shall provide payment or other consideration which the Committee deems equitable in the circumstances. IX. AMENDMENT OR TERMINATION OF PLAN The Company reserves the right to amend or terminate the Plan at any time, by action of its Board of Directors, provided that no such action shall adversely affect a participant's rights under the Plan with respect to RSUs awarded and vested before the date of such action, and provided further, that the Plan amendments shall be subject to approval by the Company's shareholders to the extent required by the Act to ensure that awards are exempt under Rule 16b-3 promulgated under the Act. X. MISCELLANEOUS PROVISIONS A. No Distribution, Compliance with Legal Requirements. The Committee may require each person acquiring shares of Stock under the Plan to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued until all applicable securities law and other legal and stock exchange requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock as it deems appropriate. B. Withholding. Participation in the Plan is subject to any required tax withholding on wages or other income of the participant in connection with the Plan. Each participant agrees, by entering the Plan, that the Company shall have the right to deduct any such taxes, in its sole discretion, from any amount payable to the participant under the Plan or from any payment of any kind otherwise due to the participant. Participants who wish to avoid the withholding of shares of Stock otherwise issuable to them under the Plan should arrange with the Company to pay the amount of taxes required to be withheld in advance of the settlement date. C. Notices, Delivery of Stock Certificates. Any notice required or permitted to be -4- 5 given by the Company or the Committee pursuant to the Plan shall be deemed given when personally delivered or deposited in the United States mail, registered or certified, postage prepaid, addressed to the participant at the last address shown for the participant on the records of the Company. Delivery of stock certificates to persons entitled to receive them under the Plan shall be deemed effective for all purposes when the Company or a share transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to such person at his/her last known address on file with the Company. D. Nontransferability of Rights. During a participant's lifetime, any payment or issuance of shares under the Plan shall be made only to him/her. No RSU or other interest under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt by a participant or any beneficiary under the Plan to do so shall be void. No interest under the Plan shall in any manner by liable for or subject to the debts, contracts, liabilities, engagements or torts of a participant or beneficiary entitled thereto. E. Company's Obligations to be Unfunded and Unsecured. The Plan shall at all times be entirely unfunded, and no provision shall at any time be made with respect to segregating assets of the Company (including Stock) for payment of any amounts or issuance of any shares of Stock hereunder. No participant or other person shall have any interest in any particular assets of the Company (including Stock) by reason of the right to receive payment under the Plan, and any Participant or other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan. F. Governing Law. The terms of the Plan shall be governed construed, administered and regulated in accordance with the laws of the State of Texas. In the event any provision of this Plan shall be determined to be illegal or invalid for any reason, the other provisions shall continue in full force and effect as if such illegal or invalid provision had never been included herein. G. Effective Date of Plan. The Plan shall become effective as of the date of its approval by the holders of a majority of the shares of the Company's Common Stock, present or represented and entitled to vote at a meeting of the shareholders. -5- EX-99.5 8 HASTINGS ENTERTAINMENT, INC 1998 STOCK GRANT PLAN 1 EXHIBIT 99.5 HASTINGS ENTERTAINMENT, INC. STOCK GRANT PLAN FOR OUTSIDE DIRECTORS 1. PURPOSE. The purpose of this Stock Grant Plan for Outside Directors (the "Plan") is to enable Hastings Entertainment, Inc. ("Hastings") to attract and retain persons of outstanding competence to serve on its Board of Directors and strengthen the link between the Directors and Hastings stockholders by paying such persons a portion of their compensation in Hastings common stock (the "Award"). 2. DEFINITIONS. (a) The terms "Outside Directors" or "Participant" mean a member of the Board of Directors of Hastings who is not an employee within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA") of Hastings or any of its subsidiaries. A Director of Hastings which is also an employee of Hastings or any of its subsidiaries shall become eligible to participate in the Plan and shall be entitled to receive Award hereunder upon the termination of such employment. (b) The term "Committee" shall mean the Administrative Committee established pursuant to Section 9 hereof. (c) The term "Market Value" shall be 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). 3. ELIGIBILITY. All Outside Directors of Hastings shall be eligible to receive an Award hereunder. 4. SHARES SUBJECT TO THE PLAN. Subject to adjustment in accordance with Section 8 hereof, the total number of shares of common stock which may be granted under the Program is 5,000 (the "Shares"). The Shares shall be either previously authorized and unissued or treasury shares. 5. STOCK GRANT AWARD. (a) Annual Grants. Effective May 1, 1998, each Outside Director shall automatically receive a grant of Company stock with a value of $5,000.00, with such value based upon the offering price of the common stock of Hastings in its initial public offering. Outside Directors who are elected or appointed to the Board of Directors after such date shall automatically receive a grant of stock with a Market Value of $5,000.00 on the date of each such director's initial election or appointment to the Board of Directors. (The initial grant to an Outside Director is defined as the "Initial Grant"). Subject to the provisions hereof, on May 1st of each and every year after the Initial Grant, each Outside Director shall automatically receive an additional grant of common stock of the Company with a Market Value of $5,000.00 ("Annual Grant"). Initial Grants and Annual Grants are referred to as "Grants." 2 (b) Effectiveness. All shares granted shall be fully vested without restrictions. (c) Service as a Director. In the event that an Outside Director is subject to re-election in a year but does not intend to stand for re-election in such year, he shall not receive an Annual Grant for such year. 6. PAYMENT OF TAXES. If required to do so by applicable law, 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. 7. LIMITATION AS TO DIRECTORSHIP. Neither the Plan nor the granting of any Award hereunder nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that a Participant has a right to continue as a Director for any period of time. 8. RECAPITALIZATIONS. If as a result of stock dividend, stock split, recapitalization (or other adjustment in the stated capital of Hastings), or as the result of a merger, consolidation, or other reorganization, the common stock of Hastings is increased, reduced, or otherwise changed, the aggregate number of Shares shall be appropriately adjusted. 9. ADMINISTRATIVE COMMITTEE. The Committee shall have full power an authority to construe and administer the Plan. Any action taken under the provisions of the Plan by the Committee arising out of or in connection with the administration, construction, or effect of the Plan or any rules adopted thereunder shall, in each case, lie within the discretion of the Committee and shall be conclusive and binding upon Hastings and upon all Participants, and all persons claiming under or through any of them. The Committee shall have as members the Chief Executive Officer of Hastings and two other officers of Hastings designated by the Chief Executive Officer. In the absence of such designation, the other members of the Committee shall be the Senior Vice President and the Chief Financial Officer of Hastings. 10. EFFECTIVE DATE. The Plan shall be effective as of February 15, 1998. 11. AMENDMENT. The Plan may be amended or repealed by the Board of Directors of Hastings, provided that any such action shall not adversely affect any Participant's rights under the Plan with respect to Award which were made prior to such action. In no event shall the provisions of the Plan be amended more than once every six months, other to comport with changes in the Internal Revenue Code of 1986, as amended, ERISA, or the rules thereunder. 12. EXPENSES OF THE PLAN. All costs and expenses of the adoption and administration of the Plan shall be borne by Hastings and none of such expenses shall be charged to any Participant. 13. COMPLIANCE WITH RULE 16b-3. It is the intention of Hastings that the Plan comply in all respects with Rule 16b-3 under Section 16(b) of the Securities Exchange Act of 1933 (the 3 "Exchange Act") and that Participants remain disinterested persons ("disinterested persons") for purposes of administering other employee benefit plans of Hastings and having such other plans be exempt from Section 16(b) of the Exchange Act. Accordingly, if any Plan provision is later found to not be in compliance with Rule 16b-3 or if any Plan provision would disqualify Plan Participants from remaining disinterested persons, that provision shall be deemed null and void, and in all events the Plan shall be construed in favor of its meeting the requirements of Rule 16b-3. EX-99.6 9 HASTINGS ENTERTAINMENT 1996 STOCK PLAN OUSTIDE DIR 1 EXHIBIT 99.6 HASTINGS ENTERTAINMENT, INC. STOCK OPTION PLAN FOR OUTSIDE DIRECTORS 1. Purpose. The purpose of this Stock Option Plan for Outside Directors (the "Program") is to enable Hastings Entertainment, Inc. ("Hastings") to attract and retain persons of outstanding competence to serve on its Board of Directors and strengthen the link between the Directors and Hastings stockholders by paying such persons a portion of their compensation in Hastings common stock and options to purchase such stock (collectively, the "Awards"). 2. Definitions. (a) The terms "Outside Directors" or "Participant" mean a member of the Board of Directors of Hastings who is not an employee (within the meaning of the Employee Retirement Income Security Act of 1974) of Hastings or any of its subsidiaries. A Director of Hastings which is also an employee of Hastings or any of its subsidiaries shall become eligible to participate in the Program and shall be entitled to receive Awards hereunder upon the termination of such employment. (b) The term "Service" shall mean service as an Outside Director. (c) The term "Disability" means a permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. (d) The term "Retirement" shall mean normal retirement as an Outside Director under the policy adopted by Hastings. (e) The term "Committee" shall mean the Administrative Committee established pursuant to Section 10 hereof. (f) The term "Fair Market Value" (i) if the stock is publicly traded, shall be 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 ASOP. 3. Eligibility. All Outside Directors of Hastings shall be eligible to receive Awards hereunder. 4. Shares Subject to the Program. Subject to adjustment in accordance with Section 9 hereof, the total number of common stock which may be granted as Options, as defined herein, under the Program is 20,000 shares ("Shares"). The Shares shall be either previously authorized and unissued shares or treasury shares. Any Shares subject to the unexercised portion of any Option granted under the Program which expires or terminates without being exercised shall again be available for Awards under the Program. 2 5. Stock Option Awards. (a) Annual Grants. Subject to the maximum number of Shares available under the Program, each Outside Director shall automatically receive on June 1, 1997, an Option to purchase 500 Shares ("Initial Option"). Subject to the maximum number of Shares available under the Program, Outside Directors who are elected or appointed to the Board of Directors after such date shall automatically receive an Initial Option to purchase 500 Shares on the date of such Outside Director's initial election or appointment to the Board of Directors. Commencing with the first anniversary of the grant of an Initial Option to an Outside Director and annually thereafter, each such Outside Director shall automatically receive an additional Option to purchase 500 Shares ("Annual Option") (Initial Options and Annual Options are referred to as "Options"). (i) Option Terms. Each Option and the issuance of Shares thereunder shall be subject to the following terms: (A) Option Agreement. Each Option shall be evidenced by an option agreement ("Agreement") duly executed on behalf of Hastings. Each Agreement shall comply with and be subject to the terms and conditions of the Program. Any Agreement may contain such other terms, provisions and conditions not inconsistent with the Program as may be determined by the Committee. (B) Option Exercise Price. The Option exercise price shall be the Fair Market Value of the Shares subject to the Option on the date of grant thereof. (ii) Exercisability; Vesting. Subject to paragraph (iv) immediately below and Sections 8 and 9 hereof, each Option shall become exercisable with respect to 100 of the Shares subject thereto on each of the first, second, third, fourth and fifth anniversaries of the date of grant of the Initial Option, provided that the Participant optionee ("Optionee") has continued to serve as an Outside Director until such anniversary date. Upon the date an Optionee ceases to be an Outside Director for any reason, all unvested portion of any Option shall immediately become vested. (The exercise date of each Initial and Annual Option is referred to as the "Exercise Date"). No portion of an Option shall be deemed vested until its Exercise Date. (iii) Time and Manner of Exercise of Option. (a) From and after its Exercise Date, an Option may be exercised in whole or in part at any time and from time to time; provided, however, that only whole Shares will be issued pursuant to the exercise of any Option. (b) Subject to Section 6 hereof, any Option may be exercised by giving written notice, signed by the person exercising the Option, stating the number of Shares with respect to which the Option is being exercised with payment to be made, in whole or in part in (i) cash or (ii) shares of Hastings common stock at their Fair Market Value. The notice of exercise shall be irrevocable. The Committee may provide for other methods of payment, including through broker-assisted same day transactions. 3 (iv) Terms of Options. Each Option shall expire ten (10) years from the date of grant, but shall be subject to earlier expiration under the following circumstances: (A) In the event that an Optionee ceases to be an Outside Director for any reason other than the Optionee's death or resignation from the Board due to a Disability, Retirement, a Merger of Consolidation event (as provided in Section 9 (a)), or a "Change in Control" (as hereinafter defined), the Options granted to such Optionee shall automatically expire nine (9) months following the date such Optionee ceases to be an Outside Director. (B) In the event of an Optionee's death, Disability or Retirement, a Merger or Consolidation event (as provided in Section 9 (a)) or a "Change in Control" (as hereinafter defined), all Options granted to such Optionee shall immediately vest and become exercisable and shall then expire three (3) years thereafter. After the date of the Optionee's death, the Options held by such optionee may be exercised by the Optionee's legal representatives or the estate, by any person or persons whom the optionee shall have designated in writing on forms prescribed by and filed with Hastings or, if no such designation has been made, by the person or persons to whom the Optionee's rights have passed by will or the laws of descent and distribution. (b) Transferability. During an Optionee's lifetime, an Option may be exercised only by the Optionee or the Optionee's legal representative. Options granted under the Program and the rights and privileges conferred thereby shall not be subject to execution, attachment or similar process and may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or the laws of descent and distribution or a "qualified domestic relations order" as defined in the Internal Revenue Code of 1986 ("Code") or the Employee Retirement Income Security Act ("ERISA") except that, to the extent permitted by applicable law and Rule 16b-3 under Sections 16(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), the Committee may permit an Optionee to designate in writing during the Optionee's lifetime a beneficiary to receive and exercise Options in the event of the Optionee's death, as provided herein. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Option under the Program or of any right or privilege conferred thereby, contrary to the provisions of the Program, or the sale or levy or any attachment or similar process upon rights and privileges conferred hereby, shall be null and void. (c) Optionee's or Successor's Rights as Stockholder. Neither an Optionee nor an Optionee's successors in interest shall have any rights as a stockholder of Hastings with respect to any Shares subject to an Optionee granted to such person until such person becomes a holder of record of such Shares. 6. Payment of Taxes. If required to do so by applicable law, 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 which (a) shall have vested in accordance herewith, and (b) are acquired upon the exercise of Options on the date such Options are exercised, Hastings, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind otherwise due to a Participant any federal, state or locate taxes of any kind required by law to be withheld with respect to any vested Shares or to the delivery of common stock issued 4 pursuant to the exercise of Options under the Program. Subject to Committee approval, a Participant may elect to (i) apply a portion of fees earned in respect of his or her Service as an Outside Director or (ii) deliver shares of Hastings common stock to satisfy, in whole or in part, the amount of Hastings is required to withhold for taxes in connection with a vesting of Shares or an exercise of an Option under the Program. Such election must be made on or before the date the amount of tax to be withheld is determined, and if applicable, subject to rules, regulations and interpretations of the Commission or the Commission Staff under Section 16(b) of the Exchange Act. Once made, the election shall be irrevocable. The withholding tax obligation that may be paid by the delivery of shares may not exceed Hastings' minimum federal, state and local withholding tax obligations in connection with Shares vested or Options exercised. The value of any Hastings shares to be delivered will be based on the Market Value of such stock on the day of delivery. 7. Limitation As To Directorship. Neither the Program nor the granting of any Awards hereunder nor any other action taken pursuant to the Program shall constitute or be evidence of any agreement or understanding, express or implied, that a Participant has a right to continue as a Director for any period of time. 8. Recapitalizations. If as a result of stock dividend, stock split, recapitalization (or other adjustment in the stated capital of Hastings), or as the result of a merger, consolidation, or other reorganization, the common stock of Hastings is increased, reduced, or otherwise changed, the aggregate number of Shares for which Options may be granted, the number of Shares covered by each grant and each outstanding Option and exercise price per Share shall be appropriately adjusted, and if by virtue thereof a Participant shall be entitled to new or additional or different Options, such options to which the Participant shall be entitled shall be subject to the same terms, conditions, and restrictions herein contained relating to the original date and terms and conditions governing Options. 9. Acceleration Of Vesting of Stock Options. (a) Merger or Consolidation. Subject to the provisions of Section 5(a)(iv) hereof, in the event of a dissolution or a liquidation of Hastings or a merger or consolidation of Hastings in which Hastings is not the surviving corporation, any unexercised Options granted prior to the date of such dissolution, liquidation, merger or consolidation shall automatically become vested and exercisable, respectively, immediately prior to such date. (b) Change in Control. Subject to the provisions of Section 5(a)(iv) hereof, in the event of a Change in Control of Hastings, as hereinafter defined, any unexercised Options granted prior to the date of such event shall automatically become vested and exercisable, respectively, immediately prior to such date; provided, however, that upon an Optionee's request, the Committee shall provide for the purchase of any such unexercised Options for an amount of cash equal to the amount which would have been realized if such Option were exercised and sold on the date immediately preceding a Change in Control at the Market Value. The Committee may, in its discretion, include such further provisions and limitations in any Agreement entered into with respect to an Option as it may deem equitable and in the best interests of Hastings. 5 A "Change in Control" shall be deemed to have occurred if (a) absent prior approval by the Board of Directors, thirty percent (30%) or more of Hastings' outstanding securities entitled to vote in elections of Directors shall be beneficially owned, directly or indirectly, by any person, entity or group; or (b) individuals currently constituting the Board of Directors (or the successors of such individuals nominated by the Board of Directors on which such individuals or such successors constituted a majority) cease to constitute a majority of the Board of Directors. (c) Other. Notwithstanding anything to the contrary contained in the Program, the Committee shall have discretion to accelerate the vesting of Options awarded to an Outside Director on such terms and conditions as the Committee may deem appropriate in the event of extraordinary circumstances. 10. Administrative Committee. The committee shall have full power an authority to construe and administer the Program. Any action taken under the provisions of the Program by the Committee arising out of or in connection with the administration, construction, or effect of the Program or any rules adopted thereunder shall, in each case, lie within the discretion of the Committee and shall be conclusive and binding upon Hastings and upon all Participants, and all persons claiming under or through any of them. The Committee shall have as members the Chief Executive Officer of Hastings and two other officers of Hastings designated by the Chief Executive Officer. In the absence of such designation, the other members of the Committee shall be the Executive Vice President and the Chief Financial Officer of Hastings. 11. Approval; Effective Date. The Program is subject to the approval of a majority of the holders of Hastings' common stock present and entitled to vote at a meeting of shareholders. Subject to the receipt of such approval, the Program shall be effective August 6, 1996. 12. Amendment. The Program may be amended or repealed by the Board of Directors of Hastings, except that any amendment which would materially increase the benefits accruing to Participants, increase the number of Shares which may be issued under the Program, or materially modify the requirements as to eligibility for participation in the Program shall require the approval of a majority of the holders of Hastings' common stock present and entitled to vote at a meeting of shareholders, and provided further, that any such action shall not adversely affect any Participant's rights under the Program with respect to Awards which were made prior to such action. In no event shall the provisions of the Program be amended more than once every six months, other to comport with changes in the Code, ERISA, or the rules thereunder. 13. Expenses Of The Program. All costs and expenses of the adoption and administration of the Program shall be borne by Hastings and none of such expenses shall be charged to any Participant. 14. Compliance With Rule 16b-3. It is the intention of Hastings that the Program comply in all respects with Rule 16b-3 under Section 16(b) of the Exchange Act and that 6 Participants remain disinterested persons ("disinterested persons") for purposes of administering other employee benefit plans of Hastings and having such other plans be exempt from Section 16(b) of the Exchange Act. Accordingly, if any Program provision is later found to not be in compliance with Rule 16b-3 or if any program provision would disqualify Program Participants from remaining disinterested persons, that provision shall be deemed null and void, and in all events the Program shall be construed in favor of its meeting the requirements of Rule 16b-3. EX-99.7 10 CHIEF EXECUTIVE OFFICER STOCK OPTION PLAN 1 EXHIBIT 99.7 STOCK OPTION AGREEMENT Option Agreement made May 12, 1992, between Hastings Books, Music & Video, Inc., a Texas corporation, hereinafter referred to as the corporation, and John H. Marmaduke the Chief Executive Officer of the Corporation, hereinafter referred to as Marmaduke. RECITALS The corporation deems Marmaduke to be an important and valuable Chief Executive Officer and deems it to be in the corporation's best interest and in the interest of its shareholders to provide Marmaduke an incentive to increase his proprietary interest in the corporation and desires to enter into this Agreement to grant to him an option to purchase 80,000 shares of the common shares of the corporation on certain terms and conditions. In consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the corporation and Marmaduke agree as follows: 1. The corporation hereby irrevocably grants to Marmaduke, as a matter of separate agreement and not in lieu of salary or other compensation for services, the right and option, hereinafter called the "Option" to purchase all or any part of an aggregate of 80,000 full shares of authorized by non-issued common stock of the corporation on the terms and conditions herein set forth. Unless otherwise provided herein, this Option may not be exercised prior to February 1, 1997. Thereafter, the Option shall be exercisable in full or in part from time to time until January 31, 2007, at which time this Option shall terminate. 2 2. The purchase price of the shares of common stocks subject to this option shall be as follows:
Fiscal Year Option is Exercised Purchase Price per Share ------------------------------- ------------------------ (ending January 31) 1993 $39.20 1994 43.90 1995 49.17 1996 55.07 1997 61.68 1998 69.08 1999 77.37 2000 86.66 2001 97.06 2002 (and thereafter) 108.70
3. If the corporation shall issue any additional shares of stock by way of a stock dividend on, or split up, subdivision, or reclassification of outstanding common shares, then this Option shall be deemed to cover such additional shares to the extent that the same would have been issued to Marmaduke had such option been exercised in its entirety at the time of such issuance of additional shares, and there shall be a corresponding proportionate adjustment of the option price per share so that in the aggregate the option price for all shares then covered shall be the same as the aggregate option price for the shares remaining subject to the Option immediately prior to the issuance of such additional shares. 4. Anything contained herein to the contrary, upon the dissolution or liquidation of the corporation or upon any merger or consolidation in which the company is not the surviving corporation, prior to the time that this Option shall become exercisable, Marmaduke shall have the right, immediately prior to -2- 3 such dissolution, liquidation, merger, or consolidation, to exercise the Option in full even though not otherwise exercisable. 5. This Option shall not be transferrable by Marmaduke otherwise than by will and by the laws of dissent and distribution. During the lifetime of Marmaduke, the Option shall be exercised only by him. 6. If Marmaduke shall die at any time prior to the expiration of this Option, the person or persons to whom the Option shall have been transferred by Will or the laws of dissent or distribution shall have the right within one year from the date of Marmaduke's death, to exercise in whole or in part the unexercised portion of this Option, but only to the extent that this Option is exercisable on the date of Marmaduke's death. 7. Upon the termination of Marmaduke's employment by reason of permanent disability (as determined by the Board of Directors), Marmaduke may, within twelve (12) months from the date of termination exercise any portion of this option to the extent that such option is exercisable during the twelve (12) month period. Upon termination of Marmaduke's employment due to retirement with the consent of the Board of Directors, Marmaduke may, within three (3) months after termination, exercise any option to the extent this Option is exercisable on the date of termination of employment. Except as provided above, this Option shall terminate upon the termination of Marmaduke's employment with the corporation. 8. Payment for shares of stock purchased upon exercise of this Option shall be made in full in cash. -3- 4 9. The corporation will at all times during the terms of this Option reserve and keep available for issue such number of shares of its authorized and unissued common stock as will be sufficient to satisfy the requirements of this Option Agreement. 10. This Option may not be exercised until this Agreement shall have been submitted to and approved by the shareholders of the corporation or until the shareholders of the corporation have otherwise waived their preemptive rights, if any, with respect to the shares issuable upon exercise of this Option. 11. This Option Agreement shall be subject to and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in Amarillo, Texas, the day and year of first above written. HASTINGS BOOKS, VIDEO, INC. By: /s/ ILLEGIBLE ------------------------------------ Chairman of the Board /s/ JOHN H. MARMADUKE --------------------------------------- John H. Marmaduke -4- 5 AMENDMENT TO STOCK OPTION AGREEMENT WHEREAS, Hastings Entertainment, Inc. (the "Company") granted to JOHN H. MARMADUKE ("Recipient") a stock option for 80,000 shares of stock dated May 12, 1992, pursuant to that certain Option Grant Agreement No. 5; and WHEREAS, the grant agreement provided that the exercise price of the option would increase over time; and WHEREAS, the Board of Directors of the Company determined that it would be in the best interest of the Company to amend the exercise price for such option and fix it for the term of the option; and WHEREAS, Recipient is agreeable to the establishment of a fixed price for the option. NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Recipient have agreed as follows: 1. Option Grant Agreement No. 5 is amended as of January 15, 1998 to provide for a fixed exercise price of $56 per share for all shares granted under such Option Grant Agreement. 2. Except as amended herein, all terms and conditions of the Option Grant Agreement No. 5 shall remain in full force and effect. WHEREFORE, the parties have executed this Amendment to Option Grant Agreement No. 5 as of January 15, 1998. COMPANY: HASTINGS ENTERTAINMENT, INC. By: /s/ PHILLIP HILL ----------------------------------- Phillip Hill, Senior Vice President RECIPIENT: /s/ JOHN H. MARMADUKE ---------------------------- John H. Marmaduke -----END PRIVACY-ENHANCED MESSAGE-----