Exhibit 4.13
PALM DESERT ART, INC.
1999 Stock Compensation Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Palm Desert Art, Inc. (the
"Company") 1999 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. 1999 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 450,000
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 February 16,
1999 ("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.
February 16, 1998
By: /s/ John Anderholt,
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Secretary