PALM DESERT ART, INC
2000 Stock Compensation Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Palm Desert Art, Inc. (the
"Company") 2000 Stock Compensation Plan (the "Plan") is to enable the Company
to offer to its key employees, officers, directors and consultants whose
past, present and/or potential contributions to the Company and its
Subsidiaries have been, are or will be important to the success of the
Company, an opportunity to acquire a proprietary interest in the Company.
The various types of compensation and long-term incentive awards which may be
provided under the Plan will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall
be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.
(d) "Committee" means the Compensation Committee of the Board
or any other committee of the Board, which the Board may designate to
administer the Plan or any portion thereof. The Committee shall consist of
disinterested persons appointed by the Board who, during the one year period
prior to commencement of service on the Committee, shall not have
participated in, and while serving and for one year after serving on the
Committee, shall not be eligible for selection as persons to whom awards of
Stock may be allocated, or to whom Stock Options may be granted under the
Plan or any other discretionary plan of the Company, under which participants
are entitled to acquire Stock or Stock Options of the Company. If no
Committee is so designated, then all references in this Plan to "Committee"
shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, par
value $.001 per share.
(f) "Company" means Palm Desert Art, Inc., a corporation
organized under the laws of the State of Delaware.
(g) "Continuous Status as an Employee" means the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of sick leave,
military leave, or any other leave of absence approved by the Board.
(h) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company
and for whom a withholding obligation exists under Section 3401 of the Code
by the employing corporation, as applicable. The payment of a director's fee
by the Company shall not be sufficient to constitute "employment" by the
Company.
(i) "Deferred Stock" means Stock to be received, under an award
made pursuant to Section 8 below, at the end of a specified deferral period.
(j) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
(k) "Effective Date" means the date set forth in Section 11.
(l) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means,
as of any given date: (i) if the Common Stock is listed on a national
securities exchange or quoted on the NASDAQ National Market or NASDAQ
SmallCap Market, the last sale price of the Common Stock in the principal
trading market for the Common Stock on the last trading day preceding the
date of grant of an award hereunder, as reported by the exchange or NASDAQ,
as the case may be; (ii) if the Common Stock is not listed on a national
securities exchange or quoted on the NASDAQ National Market or NASDAQ
SmallCap Market, but is traded in the over-the-counter market, the closing
bid price for the Common Stock on the last trading day preceding the date of
grant of an award hereunder for which such quotations are reported by the
National Quotation Bureau, Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Committee
shall determine, in good faith.
(m) "Holder" means a person who has received an award under the
Plan.
(n) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(o) "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(p) "Normal Retirement" means retirement from active employment
with the Company or any Subsidiary on or after age 65.
(q) "Other Stock-Based Award" means an award under Section 9
below that is valued in whole or in part by reference to, or is otherwise
based upon, Stock.
(r) "Parent" means any present or future parent corporation of
the Company, as such term is defined in Section 424(e) of the Code.
(s) "Plan" means the Palm Desert Art, Inc. 2000 Stock
Compensation, as hereinafter amended from time to time.
(t) "Restricted Stock" means Stock, received under an award
made pursuant to Section 7 below, that is subject to restrictions under said
Section 7.
(u) "SAR Value" [Intentionally omitted.]
(v) "Stock" means the Common Stock of the Company, par value
$.001 per share.
(w) "Stock Appreciation Right" [Intentionally omitted.]
(x) "Stock Option" or "Option" means any option to purchase
shares of Stock which is granted pursuant to the Plan.
(y) "Stock Reload Option" means any option granted under
Section 5.3 as a result of the payment of the exercise price of a Stock
Option and/or the withholding tax related thereto in the form of Stock owned
by the Holder or the withholding of Stock by the Company.
(z) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.
Section 2. Administration.
2.1 Committee Membership. The Plan shall be administered by the
Board or a Committee. Committee members shall serve for such term as the
Board may in each case determine, and shall be subject to removal at any time
by the Board.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4.2 hereof, to award, pursuant to the terms of the Plan:
(i) Stock Options, (ii) Restricted Stock; (iii) Deferred Stock; (iv) Stock
Reload Options; and/or (v) Other Stock-Based Awards. For purposes of
illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):
(a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options,
Restricted Stock, Deferred Stock, Stock Reload Options and/or Other Stock-
Based Awards may from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but
not limited to, number of shares, share price, any restrictions or
limitations, and any vesting, exchange, surrender, cancellation,
acceleration, termination, exercise or forfeiture provisions, as the
Committee shall determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with
or apart from other equity awarded under this Plan and cash awards made by
the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the
Plan under such rules and procedures as the Committee may establish,
including the crediting of interest on deferred amounts denominated in cash
and of dividend equivalents on deferred amounts denominated in Stock;
(f) to determine the extent and circumstances under which Stock
and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new
awards of any other type for previously granted awards of the same type,
which previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 10 hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any award issued under the Plan (and to determine
the form and substance of all Agreements relating thereto), and to otherwise
supervise the administration of the Plan. Subject to Section 10 hereof, all
decisions made by the Committee pursuant to the provisions of the Plan shall
be made in the Committee's sole discretion and shall be final and binding
upon all persons, including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options (including but limited to Stock Reload Options rights
granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive
Stock Option under such Section 422.
Section 3. Stock Subject to Plan.
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for distribution under the Plan shall be 1,000,000
shares. Shares of Stock under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. If any shares of Stock
that have been optioned cease to be subject to a Stock Option, or of any
shares of Stock that are subject to any Restricted Stock, Deferred Stock
award, Stock Reload Option or Other Stock-Based Award granted hereunder are
forfeited or any such award otherwise terminates without a payment being made
to the Holder in the form of Stock, such shares shall again be available for
distribution in connection with future grants and awards under the Plan.
Only net shares issued upon a stock-for-stock exercise (including stock used
for withholding taxes) shall be counted against the number of shares
available under the Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of
any merger, reorganization, consolidation, recapitalization, dividend (other
than a cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under
the Plan, in the number and exercise price of shares subject to outstanding
Options, in the number of shares and in the number of shares subject to, and
in the related terms of, other outstanding awards (including but not limited
to awards of Restricted Stock, Deferred Stock, Stock Reload Options and Other
Stock-Based Awards) granted under the Plan as may be determined to be
appropriate by the Committee in order to prevent dilution or enlargement of
rights, provided that any fractional shares resulting from such adjustment
shall be eliminated by rounding to the next lower whole number of shares.
Section 4. Eligibility.
4.1 General. Awards may be made or granted to key employees,
officers, directors and consultants who are deemed to have rendered or to be
able to render significant services to the Company or its Subsidiaries and
who are deemed to have contributed or to have the potential to contribute to
the success of the Company. No Incentive Stock Option shall be granted to
any person who is not an employee of the Company or a Subsidiary at the time
of grant.
4.2 Directors' Awards. [Intentionally Omitted]
Section 5. Stock Options.
5.1 Grant and Exercise. Stock Options granted under the Plan may be
of two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock
Options. Any Stock Option granted under the Plan shall contain such terms,
not inconsistent with this Plan, or with respect to Incentive Stock Options,
the Code, as the Committee may from time to time approve. The Committee
shall have the authority to grant Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options and may be granted alone or in
addition to other awards granted under the Plan. To the extent that any
Stock Option intended to qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Non-Qualified Stock Option. An
Incentive Stock Option may only be granted within the ten year period
commencing from the Effective Date and may only be exercised within ten years
of the date of grant (or five years in the case of an Incentive Stock Option
granted to optionee ("10% Stockholder") who, at the time of grant, owns Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or a Parent or Subsidiary.
5.2 Terms and Conditions. Stock Options granted under the Plan shall
be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may be less than 100% of the Fair Market Value of the Stock
as defined above; provided, however, that (i) the exercise price of an
Incentive Stock Option shall not be less than 100% of the Fair Market Value
of the Stock (110%, in the case of 10% Stockholder); and (ii) the exercise
price of a Non-Qualified Stock Option shall not be less than 85% of the Fair
Market Value of the Stock as defined above.
(b) Option Term. Subject to the limitations in Section 5.1,
the term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Committee. If the Committee provides, in its discretion, that any
Stock Option is exercisable only in installments, i.e., that it vests over
time, the Committee may waive such installment exercise provisions at any
time at or after the time of grant in whole or in part, based upon such
factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the
term of the Option, by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased. Such notice shall
be accompanied by payment in full of the purchase price, which shall be in
cash or, unless otherwise provided in the Agreement, in shares of Stock
(including Restricted Stock and other contingent awards under this Plan) or,
partly in cash and partly in such Stock, or such other means which the
Committee determines are consistent with the Plan's purpose and applicable
law. Cash payments shall be made by wire transfer, certified or bank check
or personal check, in each case payable to the order of the Company;
provided, however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option is exercised
until the Company has confirmed the receipt of good and available funds in
payment of the purchase price thereof. Payments in the form of Stock shall
be valued at the Fair Market Value of a share of Stock on the date prior to
the date of exercise. Such payments shall be made by delivery of stock
certificates in negotiable form which are effective to transfer good and
valid title thereto to the Company, free of any liens or encumbrances.
Subject to the terms of the Agreement, the Committee may, in its sole
discretion, at the request of the Holder, deliver upon the exercise of a Non-
Qualified Stock Option a combination of shares of Deferred Stock and Common
Stock; provided that, notwithstanding the provisions of Section 8 of the
Plan, such Deferred Stock shall be fully vested and not subject to
forfeiture. A Holder shall have none of the rights of a stockholder with
respect to the shares subject to the Option until such shares shall be
transferred to the Holder upon the exercise of the Option.
(e) Transferability. No Stock Option shall be transferable by
the Holder otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder's lifetime,
only by the Holder.
(f) Termination by Reason of Death. If a Holder's employment
by the Company or a Subsidiary terminates by reason of death, any Stock
Option held by such Holder, unless otherwise determined by the Committee at
the time of grant and set forth in the Agreement, shall be fully vested and
may thereafter be exercised by the legal representative of the estate or by
the legatee of the Holder under the will of the Holder, for a period of one
year (or such other greater or lesser period as the Committee may specify at
grant) from the date of such death or until the expiration of the stated term
of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary terminates by reason of
Disability, any Stock Option held by such Holder, unless otherwise determined
by the Committee at the time of grant and set forth in the Agreement, shall
be fully vested and may thereafter be exercised by the Holder for a period of
one year (or such other greater or lesser period as the Committee may specify
at the time of grant) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option, whichever
period is the shorter.
(h) Other Termination. Subject to the provisions of Section
12.3 below and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the
Company or a Subsidiary at the time of grant and if such Holder's employment
by the Company or any Subsidiary terminates for any reason other than death
or Disability, the Stock Option shall thereupon automatically terminate,
except that if the Holder's employment is terminated by the Company or a
Subsidiary without cause or due to Normal Retirement, then the portion of
such Stock Option which has vested on the date of termination of employment
may be exercised for the lesser of three months after termination of
employment or the balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case
of an Incentive Stock Option, the amount of aggregate Fair Market Value of
Stock (determined at the time of grant of the Option) with respect to which
Incentive Stock Options are exercisable for the first time by a Holder during
any calendar year (under all such plans of the Company and its Parent and any
Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any
time offer to buy out a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish and communicate to the
Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock Option shall
be confirmed by, and shall be subject to the terms of, the Agreement executed
by the Company and the Holder.
5.3 Stock Reload Option. The Committee may also grant to the Holder
(concurrently with the grant of an Incentive Stock Option and at or after the
time of grant in the case of a Non-Incentive Stock Option) a Stock Reload
Option up to the amount of shares of Stock held by the Holder for at least
six months and used to pay all or part of the exercise price of an Option
and, if any, withheld by the Company as payment for withholding taxes. Such
Stock Reload Option shall have an exercise price of the Fair Market Value as
of the date of the Stock Reload Option grant. Unless the Committee
determines otherwise, a Stock Reload Option may be exercised commencing one
year after it is granted and shall expire on the date of expiration of the
Option to which the Reload Option is related.
Section 6. Stock Appreciation Rights. [Intentionally omitted.]
Section 7. Restricted Stock.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom, and the time or times at which,
grants of Restricted Stock will be awarded the number of shares to be
awarded, the price (if any) to be paid by the Holder, the time or times
within which such awards may be subject to forfeiture (the "Restriction
Period"), the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the awards.
7.2 Terms and Conditions. Each Restricted Stock award shall be
subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of
the Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear
a legend to the effect that ownership of the Restricted Stock (and such
Retained Distributions), and the enjoyment of all rights appurtenant thereto,
are subject to the restrictions, terms and conditions provided in the Plan
and the Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of assignment,
each endorsed in blank, which will permit transfer to the Company of all or
any portion of the Restricted Stock and any securities constituting Retained
Distributions that shall be forfeited or that shall not become vested in
accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and
retain all regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute on such
Restricted Stock and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Stock, with the
exceptions that (i) the Holder will not be entitled to delivery of the stock
certificate or certificates representing such Restricted Stock until the
Restriction Period shall have expired and unless all other vesting
requirements with respect thereto shall have been fulfilled; (ii) the Company
will retain custody of the stock certificate or certificates representing the
Restricted Stock during the Restriction Period; (iii) other than regular cash
dividends and other cash equivalent distributions as the Board may in its
sole discretion designate, pay or distribute, the Company will retain custody
of all distributions ("Retained Distributions") made or declared with respect
to the Restricted Stock (and such Retained Distributions will be subject to
the same restrictions, terms and conditions as are applicable to the
Restricted Stock) until such time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall have been made, paid or
declared shall have become vested and with respect to which the Restriction
Period shall have expired; (iv) a breach of any of the restrictions, terms or
conditions contained in this Plan or the Agreement or otherwise established
by the Committee with respect to any Restricted Stock or Retained
Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the
Restriction Period with respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions, terms and conditions
(i) all or part of such Restricted Stock shall become vested in accordance
with the terms of the Agreement, and (ii) any Retained Distributions with
respect to such Restricted Stock shall become vested to the extent that the
Restricted Stock related thereto shall have become vested. Any such
Restricted Stock and Retained Distributions that do not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights
with respect to such Restricted Stock and Retained Distributions that shall
have been so forfeited.
Section 8. Deferred Stock.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or
in addition to other awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which grants
of Deferred Stock shall be awarded, the number of shares of Deferred Stock to
be awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which receipt of the shares will be
deferred, and all other terms and conditions of the awards.
8.2 Terms and Conditions. Each Deferred Stock award shall be subject
to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or
the Additional Deferral Period referred to in Section 8.2(c) below, where
applicable), share certificates shall be delivered to the Holder, or his
legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Vesting; Forfeiture. Upon the expiration of the Deferral
Period (or the Additional Deferral Period, where applicable) with respect to
each award of Deferred Stock and the satisfaction of any other applicable
limitations, terms or conditions, such Deferred Stock shall become vested in
accordance with the terms of the Agreement. Any Deferred Stock that does not
vest shall be forfeited to the Company and the Holder shall not thereafter
have any rights with respect to such Deferred Stock that has been so
forfeited.
(c) Additional Deferral Period. A Holder may request to, and
the Committee may at any time, defer the receipt of an award (or an
installment of an award) for an additional specified period or until a
specified event (the "Additional Deferral Period"). Subject to any
exceptions adopted by the Committee, such request must generally be made at
least one year prior to expiration of the Deferral Period for such Deferred
Stock award (or such installment).
Section 9. Other Stock-Based Awards.
9.1 Grant and Exercise. Other Stock-Based Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be
consistent with the purposes of the Plan including, without limitation,
purchase rights, shares of Common Stock awarded which are not subject to any
restrictions or conditions, convertible or exchangeable debentures, or other
rights convertible into shares of Common Stock and awards valued by reference
to the value of securities of or the performance of specified Subsidiaries.
Other Stock-Based Awards may be awarded either alone or in addition to or in
tandem with any other awards under this Plan or any other plan of the
Company.
9.2 Eligibility. The Committee shall determine the eligible persons
to whom and the time or times at which grants of such awards shall be made,
the number of shares of Common Stock to be awarded pursuant to such awards,
and all other terms and conditions of the awards.
9.3 Terms and Conditions. Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee.
Section 10. Amendment and Termination.
The Board may at any time, and from time to time, amend, alter, suspend
or discontinue any of the provisions of the Plan, but no amendment,
alteration, suspension or discontinuance shall be made which would impair the
rights of a Holder under any Agreement theretofore entered into hereunder,
without his consent.
Section 11. Term of Plan.
11.1 Effective Date. The Plan shall be effective as of March 20, 2000
("Effective Date"). Any awards granted under the Plan prior to approval of
the Plan by the shareholders of the Company shall be effective when made
(unless otherwise specified by the Committee at the time of grant), but may
be, but are not necessarily required to be, conditioned upon and/or subject
to, such approval of the Plan by the Company's stockholders.
11.2 Termination Date. Unless terminated by the Board, this Plan
shall continue to remain effective until such time no further awards may be
granted and all awards granted under the Plan are no longer outstanding.
Notwithstanding the foregoing, grants of Incentive Stock Options may only be
made during the ten year period following the Effective Date.
Section 12. General Provisions.
12.1 Written Agreements. Each Stock Option, Restricted Stock or
Deferred Stock award granted under the Plan shall be confirmed by, and shall
be subject to the terms of the Agreement executed by the Company and the
Holder. The Committee may terminate any award made under the Plan if the
Agreement relating thereto is not executed and returned to the Company within
sixty (60) days after the Agreement has been delivered to the Holder for his
or her execution.
12.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein
shall give any such Holder any rights that are greater than those of a
general creditor of the Company.
12.3 Employees.
(a) Engaging in Competition With the Company. In the event an
employee Holder terminates his employment with the Company or a Subsidiary
for any reason whatsoever, and within one year after the date thereof accepts
employment with any competitor of, or otherwise engages in competition with,
the Company, the Committee, in its sole discretion may require such Holder to
return to the Company the economic value of any award which was realized or
obtained (measured at the date of exercise, vesting or payment) by such
Holder at any time during the period beginning on that date which is six
months prior to the date of such Holder's termination of employment with the
Company.
(b) Termination for Cause. The Committee may, in the event an
employee is terminated for cause, annul any award granted under this Plan to
such employee and, in such event, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise, vesting or
payment) by such Holder at any time during the period beginning on that date
which is six months prior to the date of such Holder's termination of
employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan or
in any award hereunder shall be deemed to confer upon any employee of the
Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, nor shall it interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of any of its employees
at any time.
12.4 Investment Representations. The Committee may require each
person acquiring shares of Stock pursuant to a Stock Option or other award
under the Plan to represent to and agree with the Company in writing that the
Holder is acquiring the shares for investment without a view to distribution
thereof.
12.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
12.6 Withholding Taxes. Not later than the date as of which an amount
first becomes includable in the gross income of the Holder for Federal income
tax purposes with respect to any Option or other award under the Plan, the
Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award
that gives rise to the withholding requirement. The obligations of the
Company under the Plan shall be conditional upon such payment or arrangements
satisfactory to the Company and the Company or the Holder's employer (if not
the Company) shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Holder from
the Company or any Subsidiary.
12.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of
the State of Delaware (without regard to choice of law provisions).
12.8 Other Benefit Plans. Any award granted under the Plan shall not
be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Subsidiary and shall not affect any
benefits under any other benefit plan no or subsequently in effect under
which the availability or amount of benefits is related to the level of
compensation (unless required by specific reference in any such other plan to
awards under this Plan).
12.9 Non-Transferability. Except as otherwise expressly provided in
the Plan, no right or benefit under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbranced or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
12.10 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness
of a registration statement under the Securities Act of 1933, as amended, and
(ii) the rules and regulations of any securities exchange on which the Stock
may be listed.
12.11 Conflicts. If any of the terms or provisions of the Plan
conflict with the requirements of (with respect to Incentive Stock Options),
Section 422 of the Code, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of said
Section 422 of the Code. Additionally, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, such
provision shall be deemed to be incorporated herein with the same force and
effect as if such provision had been set out at length herein.
12.12 Non-Registered Stock. The shares of Stock being distributed
under this Plan have not been registered under the Securities Act of 1933, as
amended (the "1933 Act"), or any applicable state or foreign securities laws
and the Company may, but has no obligation to any Holder to, register the
Stock or assist Holder in obtaining an exemption from the various
registration requirements, or list the Stock on a national securities
exchange or inter-dealer quotation system.
Accepted by the Board of Directors:
PALM DESERT ART, INC.
March 20, 2000
By: /s/ John Anderholt,
-------------------
Secretary