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Exhibit 10.31
STOCK OPTION AGREEMENT
(OUTSIDE DIRECTORS)
THIS AGREEMENT, entered into as of the _____ day of
__________, 1998, by and between CAMELOT MUSIC HOLDINGS, INC., a Delaware
corporation (the "Company"), and ________________ (the "Optionee").
W I T N E S S E T H
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WHEREAS, the Board of Directors of the Company has established
the Camelot Music Holdings, Inc. 1998 Outside Directors' Stock Option Plan (the
"Plan"); and
WHEREAS, the Plan provides that the Optionee, as an eligible
director of the Company shall be granted an option to purchase the number of
shares of Common Stock, par value $.01 per share ("Shares"), of the Company set
forth in Section 1 hereof, upon the terms and subject to the conditions of the
Plan and this Agreement.
NOW, THEREFORE, the Company and the Optionee hereby agree with
respect to such stock options as follows:
1. Effective as of the date of this Agreement, the Company
grants to the Optionee, upon the terms and subject to the conditions hereinafter
set forth, the right and option to purchase all or any part of an aggregate of
____________ (_______) Shares (such collective right and option being
hereinafter referred to as the "Option"), at a price of $_________ per share
("Option Price").
2. The term of the Option shall be for a period of ten (10)
years from the date hereof, and the Option shall expire at 5:00 p.m., North
Canton, Ohio time on the last day of the term of the Option, which date is
_____________ or, if earlier, on the applicable expiration date provided for in
paragraphs 4 and 5 hereof.
3. Except as provided in paragraph 6 hereof, the Option shall
not be exercisable to any extent until one (1) year from the date hereof. The
Optionee shall be entitled to exercise the Option with respect to the number of
Shares indicated below on or after the date indicated opposite such number
below:
(a) Number of Shares That Date as of Which Option
May be Exercised May Be Exercised
__________ ____________, 19___
__________ ____________, 19___
__________ ____________, 19___
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To the extent that the Option has become exercisable with respect to a number of
Shares, as provided above, the Option may thereafter be exercised by the
Optionee either as to all or part of such whole Shares at any time or from time
to time prior to expiration of the Option, pursuant to paragraph 2 hereof.
Except as provided in paragraphs 4 and 5 hereof, the Option may not be exercised
at any time unless the Optionee shall continue to be at the time of exercise an
eligible Outside Director of the Company.
4. If the Optionee ceases to be an eligible Outside Director,
the Option shall terminate upon the earlier of the date which is three (3)
months after the date of the cessation of his directorship or the last day of
the term of the Option. Nothing contained in this Agreement shall confer upon
the Optionee any right to continue as an Outside Director of the Company.
5. If the Optionee dies while an eligible Outside Director,
such person or persons as shall have acquired, by will or by the laws of descent
and distribution, the right to exercise the Option (the "Personal
Representative") may exercise the Option to the extent of the purchase rights,
if any, which had accrued as of the date of the Optionee's death pursuant to
paragraph 3 hereof and which have not theretofore been exercised. Such accrued
purchase rights shall in any event terminate upon the earlier of the date which
is three (3) months after the date of the Optionee's death or the last day of
the term of the Option.
6. In the event of a "change in control" the eligible Outside
Director shall have the immediate right and option (notwithstanding the
provisions of paragraph 3) to exercise the Option with respect to all Shares
covered by the Option, which exercise, if made, shall be irrevocable. The term
"change in control" shall include, but not be limited to: (i) the first purchase
of shares pursuant to a tender offer or exchange (other than a tender offer or
exchange by the Company) for all or part of the Company's shares of any class of
common stock or any securities convertible into such common stock; (ii) the
receipt by the Company of a Schedule 13D or other advice indicating that a
person is the "beneficial owner" (as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of twenty percent (20%) or more of the
Company's shares of capital stock calculated as provided in paragraph (d) of
said Rule 13d-3; (iii) the date of approval by stockholders of the Company of an
agreement providing for any consolidation or merger of the Company in which the
Company will not be the continuing or surviving corporation or pursuant to which
shares of capital stock, of any class or any securities convertible into such
capital stock, of the Company would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of shares of
all classes of the Company's capital stock immediately prior to the merger would
have the same proportion of ownership of common stock of the surviving
corporation immediately after the merger; (iv) the date of the approval by
stockholders of the Company of any sale, lease, exchange, or other transfer (in
one transaction or a series of related transactions) of all or substantially all
the assets of the Company; or (v) the adoption of any plan or proposal for the
liquidation (but not a partial liquidation) or dissolution of the Company.
7. In the event of any change in the number of outstanding
Shares through the declaration of share dividends, share splits, or
consolidations, through recapitalization, or by reason of any other increase or
decrease in the number of outstanding Shares effected without
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receipt of consideration by the Company, the number of Shares then covered by
the Option and the Option Price shall be appropriately adjusted consistent with
such change. The determination of the Board of Directors of the Company as to
any such adjustment shall be conclusive and binding upon the Optionee and upon
the Personal Representative.
8. The Option may be exercised by delivery to the Secretary of
the Company at its corporate office, 8000 Freedom Avenue, N.W., North Canton,
Ohio 44720, of a completed Notice of Exercise of Option (obtainable from the
Secretary of the Company) setting forth the number of whole Shares with respect
to which the Option is being exercised together with a certified or cashier's
check payable to the Company in the amount of the total purchase price for such
Shares.
9. Upon receipt by the Company prior to the expiration of the
Option of a duly completed Notice of Exercise of Option accompanied by a
certified or cashier's check, as provided in paragraph 8 hereof, in full payment
for the Shares being purchased pursuant to such Notice (and, with respect to any
Option exercised pursuant to paragraph 5 hereof by the Personal Representative,
accompanied in addition by proof satisfactory to the Board of Directors of the
Company as to the right of the Personal Representative, to exercise the Option),
the Company shall cause to be mailed or otherwise delivered to the Optionee or
the Personal Representative, as the case may be, within thirty (30) days of such
receipt, a certificate or certificates for the number of Shares so purchased.
Notwithstanding the foregoing, the delivery of such certificates is hereby
expressly conditioned upon obtaining an investment representation from the
Optionee or the Personal Representative in the form set forth at Section 6 of
the Plan or in such other form as the Company, in its sole discretion, shall
determine to be adequate. The Optionee or the Personal Representative shall not
have any of the rights of a shareholder with respect to the Shares covered by
the Option unless and until one or more certificates representing such Shares
shall be issued to the Optionee or the Personal representative.
10. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and the heirs, estate and
Personal Representative of the Optionee. The Option shall not be transferrable
other than by will or the laws of descent and distribution. The Option may be
exercised during the lifetime of the Optionee only by the Optionee.
11. This Agreement is subject to all of the terms, conditions,
and provisions of the Camelot Music Holdings, Inc. 1998 Outside Directors' Stock
Option Plan, as it may be amended from time to time, and to such rules,
regulations, and interpretations of the Plan as may be adopted by the Board of
Directors of the Company and in effect from time to time. In the event and to
the extent that this Agreement conflicts with or is inconsistent with the terms,
conditions, and provisions of the Plan, the Plan shall control, and this
Agreement shall be deemed to be modified accordingly.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its undersigned officer thereunto duly authorized,
and the Optionee has hereunto set his hand, all as of the day and year first
above written.
CAMELOT MUSIC HOLDINGS, INC.
By:
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Its:
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"Optionee"
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