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EXHIBIT 4.3
[1998 STOCK INCENTIVE PLAN]
WHEREHOUSE ENTERTAINMENT, INC.
(the "Company")
EMPLOYEE INCENTIVE STOCK OPTION AWARD AGREEMENT
THIS AGREEMENT is between the Company and the Optionee named below and evidences
the Company's grant to the Optionee of a Incentive Stock Option to purchase
shares of the Company's Common Stock. The Option is granted pursuant to and
subject to the Company's 1998 Stock Incentive Plan (the "Plan") and the Terms
and Conditions for Incentive Stock Options Granted Under the Plan (the "Terms"),
incorporated herein by this reference.
OPTIONEE: ____________________ EXERCISE PRICE
PER SHARE: $_______(1), (2)
NUMBER OF SHARES: ____________________(1)
GRANT DATE: ___________ __, ____ EXPIRES: ______ __,____(2), (3)
VESTING SCHEDULE: % VESTING DATES OF VESTING(1), (2), (3)
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Optionee accepts the Option and agrees to and acknowledges receipt of a copy of
the Plan and the Terms.
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(1) Subject to adjustment under Section 4.3 of the Plan.
(2) With respect to Optionees who are also 10% shareholders of the Company on
the Grant Date, the Exercise Price of the ISO must be at least 110% of the Fair
Market Value on the Grant Date and the term of the Option must be no longer than
five years. Any Option granted to such a 10% shareholder that does not meet
these requirements will be rendered a Nonqualified Stock Option.
(3) Subject to early termination if the Optionee's employment terminates or in
certain other circumstances. See Sections 3 through 5 of the Terms and Sections
1.6 and 4.2 of the Plan for exceptions and additional details regarding possible
early termination of the Option.
WHEREHOUSE ENTERTAINMENT, INC. AGREED AND ACKNOWLEDGED:
(a Delaware corporation)
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By: _______________________________ Optionee's Signature
Its:_______________________________ _________________________________
Address
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City, State, Zip Code
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[1998 STOCK INCENTIVE PLAN]
TERMS AND CONDITIONS FOR
NONQUALIFIED OPTIONS GRANTED UNDER THE
1998 STOCK INCENTIVE PLAN
1. Exercisability of Option. The Option shall vest and become
exercisable in percentage installments of the aggregate number of shares of
Common Stock of the Company as set forth in the Award Agreement. The Option may
be exercised only to the extent the Option is exercisable and vested and during
the Optionees lifetime, only by the Optionee.
(a) Cumulative Exercisability. To the extent the
Optionee does not in any year purchase all the shares that the
Optionee may then exercise, the Optionee has the right
cumulatively thereafter to purchase any shares not so
purchased until the Option terminates or expires.
(b) No Fractional Shares. Fractional share interests
shall be disregarded, but may be cumulated.
2. Method of Exercise of Option. To the extent vested, the
Option may be exercised by the delivery to the Company of an Exercise Agreement
(a form of which is attached as Exhibit I) from the Optionee stating the number
of shares to be purchased pursuant to the Option and accompanied by payment:
(a) made in cash or electronic funds transfer, or by
certified or cashier's check payable to the order of the
Company, in the full amount of the purchase price of the
shares and amounts required to satisfy any applicable
withholding taxes, or
(b) by the delivery of shares that have been held by
the Optionee for at least six months, in accordance with
Section 2.2.2(vi) of the Plan, unless otherwise provided by
the Committee.
Other payment methods may be permitted only if expressly
authorized by the Committee with respect to this Option or all options under the
Plan. The Option is non-transferable and may be exercised only by the Optionee,
except as the Committee may otherwise expressly permit.
3. Continuance of Employment Required. The vesting schedule
requires continued service through each applicable vesting date as a condition
to the vesting of the applicable installment and rights and benefits under this
Agreement. Partial service, even if substantial, during any vesting period will
not entitle the Optionee to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of employment
or service as provided in Section 4 below or under the Plan.
4. Effect of Termination of Employment or Death. If the
Optionee's employment by either the Company or any subsidiary terminates, the
Option and all other rights and benefits under this Agreement terminate except
that the Optionee may, at any time within the
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following periods after the Severance Date, exercise the Option to the extent
the Option was exercisable on the Severance Date and has not otherwise expired:
(a) Termination by the Company or a subsidiary, other
than a Termination for Cause (as defined below) --- for a
period of 30 days
(b) Voluntary resignation (other than in anticipation
of or in connection with a Termination for Cause) --for a
period of 30 days
(c) Retirement --- for a period of 6 months (but
after 3 months of such period, the Option will not be
exercisable as an ISO)
(d) Total Disability or death of Optionee --- for a
period of 6 months
Notwithstanding the foregoing exercise periods after the Severance Date, the
Option will qualify as an ISO under Section 422 of the Code only if it is
exercised within the applicable exercise periods for ISOs and meets all other
requirements of the Code for ISOs. If an Option is not exercised within such
applicable exercise periods or does not meet such other requirements, the Option
will be rendered a Nonqualified Stock Option.
In case of a Termination for Cause or a voluntary resignation
in anticipation of or in connection with a Termination for Cause, the Option
shall terminate immediately, in its entirety.
"Termination for Cause" means a termination of service, based
upon a finding by the Company, acting in good faith and based on its reasonable
belief at the time, that the Participant:
(a) is or has been dishonest, incompetent, or
negligent in the discharge of his or her duties to the
Company; or has refused to perform stated or assigned duties;
or
(b) has committed a theft or embezzlement, or a
breach of confidentiality or unauthorized disclosure or use of
inside information, customer lists, trade secrets or other
confidential information, or a breach of fiduciary duty
involving personal profit, or a willful or negligent violation
of any law, rule or regulation or of Company rules or policy,
in any material respect; or has been convicted of a felony or
misdemeanor (other than minor traffic violations or similar
offenses); or
(c) has materially breached any of the provisions of
any agreement with the Company or a parent corporation; or
(d) has engaged in unfair competition with, or
otherwise acted intentionally in a manner injurious to the
reputation, business or assets of the Company; or has induced
a customer to break or terminate any contract with the Company
or an affiliate; or has induced any principal for whom the
Company (or an affiliate) acts as agent to terminate such
agency relationship.
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A Termination For Cause shall be deemed to occur (subject to
reinstatement upon a contrary final determination by the Board or Committee) on
the date when the Company first delivers notice to the Participant of a finding
of Termination For Cause and shall be final in all respects.
5. Change in Subsidiary's Status; Leaves of Absence. If the
Optionee is employed by an entity that ceases to be a subsidiary, this event is
deemed, for purposes of this Agreement, to be a termination of the Optionee's
employment by the Company other than a Termination for Cause. Absence from work
caused by military service, authorized sick leave or other leave approved in
writing by the Company or the Committee shall not be considered a termination of
employment by the Company for purposes of Section 4; provided that, unless
reemployment upon the expiration of such leave is guaranteed by contract or law,
such leave is for a period of not more than 90 days.
6. Notices. Any notice to be given shall be in writing and
addressed to the Company at its principal office, to the attention of the
General Counsel, and to the Optionee at his or her last address of record, or at
such other address as either party may hereafter designate in writing to the
other for purposes of notices in respect of the Option.
7. Optionee not a Stockholder. Neither the Optionee nor any
other person entitled to exercise the Option shall have any of the rights or
privileges of a stockholder of the Company as to any shares of Common Stock
until the issuance and delivery to him or her of a certificate evidencing the
shares registered in his or her name. No adjustment will be made for dividends
or other rights as to a stockholder for which a record date is prior to such
date of delivery.
8. No Employment Commitment by Company. Nothing contained in
these Terms and Conditions or the Award Agreement or in the Plan constitutes an
employment commitment by the Company, affects Optionee's status as an employee
at will who is subject to termination without cause, confers upon Optionee any
right to remain employed by the Company or any subsidiary, interferes in any way
with the right of the Company or any subsidiary at any time to terminate such
employment, or affects the right of the Company or any subsidiary to increase or
decrease Optionee's other compensation.
9. Additional ISO Provisions.
(a) ISO Value Limit. If the aggregate Fair Market
Value of Shares with respect to which ISOs (whether granted
under this Option or otherwise) first become exercisable by
the Participant in any calendar year exceeds $100,000 as
measured on the applicable Grant Dates, the limitations of
Section 2.3.1 of the Plan shall apply and to such extent this
Option will be rendered a Nonqualified Stock Option.
(b) Notice of Sale. The Participant agrees to notify
the Corporation of any sale or other disposition of any Shares
if such sale or disposition of any
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Shares occurs within two years after the Grant Date or within
one year after the date of exercise.
(c) Tax Withholding. If any portion of the Option is
rendered a NQSO in accordance with the terms hereof, the
Participant shall pay or make provision for the payment of any
applicable withholding taxes upon exercise of the Option as
provided in Section 6.5 of the Plan.
(d) Transferability. In accordance with Sections
1.9.1 and 1.9.2 of the Plan and the Code, the Option is not
transferable by the Optionee other than by will or the laws of
descent and distribution, and is exercisable during the
Optionee's lifetime only by the Optionee.
10. Effect of Award Agreement. The Award Agreement shall be
binding upon and inure to the benefit of any successor or successors of the
Company, except to the extent the Committee determines otherwise.
11. Choice of Law. The constructive interpretation,
performance and enforcement of the Award Agreement and the Option shall be
governed by the laws of the State of Delaware.
12. Defined Terms. Capitalized terms used herein or in the
Award Agreement and not otherwise defined herein shall have the meaning assigned
by the Plan.
13. Plan. The Option and all rights of Optionee thereunder are
subject to, and the Optionee agrees to be bound by, all of the terms and
conditions of the provisions of the Plan. Unless otherwise expressly provided in
these Terms and Conditions, provisions of the Plan that confer discretionary
authority on the Committee do not (and shall not be deemed to) create any
additional rights in the Optionee not expressly set forth in the Optionee's
Award Agreement or in a written amendment thereto. If there is any conflict or
inconsistency between the terms and conditions of this Award Agreement and of
the Plan, the terms and conditions of the Plan govern. The Participant
acknowledges receipt of a complete copy of the Plan and agrees to be bound by
its terms.
14. Arbitration. Any controversy or claim arising out of or
relating to this Award Agreement or the Plan, their enforcement or
interpretation, or because of an alleged breach, default, or misrepresentation
in connection with any of their provisions, shall, if the Company requests, be
submitted to arbitration, to be held in Los Angeles County, California in
accordance with California Civil Procedure Code Sections 1282-1284.2. In the
event that arbitration is instituted under this Section 14, the party prevailing
in any such litigation shall be entitled, in addition to all other relief, to
reasonable attorney's fees relating to such arbitration. The non-prevailing
party shall be responsible for all costs of the arbitration, including but not
limited to, the arbitration fees, court reporter fees, etc.
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Nonqualified Stock Option Award Agreement by Wherehouse Entertainment, Inc., I,
________________________, the spouse of the Participant therein named, do hereby
agree to be bound by all of the terms and provisions thereof and of the Plan.
DATED: _________________, _____.
_____________________________________
Signature of Spouse
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[1998 STOCK INCENTIVE PLAN]
EXHIBIT I
WHEREHOUSE ENTERTAINMENT, INC.
OPTION-EXERCISE AGREEMENT
The Purchaser (as identified in the signature below) is a
holder of an Incentive Stock Option ("Option") granted under the 1998 Stock
Incentive Plan (the "Plan") of Wherehouse Entertainment, Inc. (the
"Corporation") pursuant to an Award Agreement dated _________, ___________ (the
"Award"), and Purchaser desires to exercise the Option and purchase from the
Corporation _______ shares of its Common Stock, par value $.01 per share (the
"SHARES"), to be sold at a price of $___________ per share, in accordance with
and subject to the terms and conditions set forth in this Exercise Agreement;
SECTION 1. PURCHASE AND SALE OF COMMON STOCK.
The Corporation shall deliver to Purchaser a stock certificate
representing the Shares against delivery to the Corporation by Purchaser of the
purchase price in the sum of $__________ (which represents the product of the
$___________ price per share and the number of Shares, the "PURCHASE PRICE").
SECTION 2. INVESTMENT REPRESENTATIONS.
Purchaser has no need for liquidity in this investment, has
the ability to bear the economic risk of this investment, and can afford a
complete loss of the Purchase Price. Purchaser has received the Corporation's
consolidated financial information which includes information material to the
Corporation's financial condition, operations and prospects. Purchaser also
understands and acknowledges the restrictive legend provision contained in
Section 3 of Appendix A of the Plan.
SECTION 3. LIMITATIONS ON DISPOSITION, REPURCHASE RIGHTS.
The Shares are subject to and Purchaser hereby agrees to be
bound by the provisions of Section 1.7 of the Plan and Appendix A of the Plan,
incorporated herein by this reference, which shall continue in effect as to the
Shares.
SECTION 4. PLAN AND AWARD AGREEMENT.
All rights of the Purchaser under this Exercise Agreement are
subject to, and the Purchaser agrees to be bound by, all of the terms and
conditions of the provisions of the Plan and the Award Agreement, both of which
are incorporated herein by this reference. In the event of a conflict or
inconsistency between the terms and conditions of this Exercise Agreement and of
the Plan or the Award Agreement, the terms and conditions of the Plan or the
Award Agreement shall govern. The Purchaser acknowledges receipt of a copy of
the Plan, including all appendices thereto, and agrees to be bound by the terms
thereof. The Purchaser acknowledges reading and understanding the Plan and all
appendices thereto.
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IN WITNESS WHEREOF, the parties have duly executed this Exercise Agreement as of
the date first written above.
"THE CORPORATION"
WHEREHOUSE ENTERTAINMENT, INC.
a Delaware corporation
By:
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Title:
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"THE PURCHASER"
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Signature
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Print Name
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Address
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City, State, Zip Code
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Exercise
Agreement by the Wherehouse Entertainment, Inc., I, _______________________, the
spouse of the Purchaser therein named, do hereby agree to be bound by all of the
terms and provisions thereof and of the Plan.
DATED: _________________, _____
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Signature of Spouse
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