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Sample Business Contracts

Employee Qualified Stock Purchase Plan - Media Arts Group Inc.

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                               MEDIA ARTS GROUP, INC.
                       EMPLOYEE QUALIFIED STOCK PURCHASE PLAN

      Media Arts Group, Inc., a Delaware corporation (the "Company"), hereby
adopts this Employee Qualified Stock Purchase Plan (the "Q.S.P. Plan").

1.   PURPOSE.  The purpose of the Q.S.P. Plan is to assist employees of the
Company in acquiring stock ownership interests in the Company, pursuant to a
plan which qualifies as an "employee stock purchase plan" under Code Section
423.  The Q.S.P. Plan is intended to help employees provide for their future
security, and to encourage then to remain in the employ of the Company.

2.   DEFINITIONS.   Whenever one of the following terms is used in the Q.S.P.
Plan with the first letter or letters capitalized, it shall have the
following meaning, unless the context clearly indicates to the contrary (such
definitions to be equally applicable to the singular and plural forms of the
terms defined):

           (a) "Administrator" shall mean the Company, acting through its
chief executive officer or his or her delegate.

           (b) "Authorization Card" shall mean the form prescribed by the
Administrator, which shall include a form of stock purchase agreement
pursuant to which an Eligible Employee shall purchase shares of Stock under
the Q.S.P. Plan and a form of payroll deduction authorization pursuant to
which such Eligible Employee shall authorize the Company to deduct such
Eligible Employee's contributions under the Q.S.P. Plan.

           (c) "Base Pay" shall mean gross pay received by an Employee on
each Payday as cash compensation for services to the Company, excluding
overtime payments, sales commissions, incentive compensation, bonuses, and
other special-payments, except to the extent that the inclusion of any such
item is specifically designated by the Administrator.

           (d) "Board of Directors" shall mean the Board of Directors of the
Company.

           (e) "Code" shall mean the Internal Revenue Code of 1986, as amended.

           (f) "Company" shall mean Media Arts Group, Inc., a Delaware
corporation.

           (g) "Eligible Employee" shall mean any Employee who satisfies the
requirements of Section 4.

           (h) "Employee" shall mean any person who renders services to the
Company in the status of an employee within the meaning of Code Section
3121(d). "Employee" shall not include any director of the Company who does
not render services to the Company in the status of an employee within the
meaning of Code Section 3121(d).

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           (i) "Enrollment Period" shall mean the two week period preceding
each Offering Period determined in accordance with Subsection 6(b).

           (j) "Offering Period" shall mean each six month period as provided
in Section 5.  Options shall be granted on the first day of an Offering
Period and exercised on the last day of Offering Period, as provided in
Section 8.

           (k) "Option" shall mean an option granted to an Eligible Employee
to purchase shares of Stock under the Q.S.P. Plan.

           (l) "Option Price" shall mean the per share exercise price of
shares of Stock to be purchased pursuant to an Option, as provided in Section
9.

           (m) "Parent Corporation" shall mean any corporation, other than
the Company, in an unbroken chain of corporations ending with the Company if,
at the time of the granting of the Option, each of the corporations other
than the Company own stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

           (n) "Payday" of an Employee shall mean the regular and recurring
established day for payment of cash compensation to Employees in the same
classification or position.

           (o) "Q.S.P. Plan" shall mean the Media Arts Group, Inc. Employee
Qualified Stock Purchase Plan.

           (p) "Subsidiary Corporation" shall mean any corporation, other
than the Company, in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

           (q) "Stock" shall mean the shares of the Company's Common Stock,
$.01 par value.

3. STOCK SUBJECT TO THE Q.S.P. PLAN.

           (a) Subject to Section 14, the shares of Stock which may be sold
pursuant to Options granted under the Q.S.P. Plan shall not exceed 125,000
shares.

           (b) The Company shall reserve for issuance under the Q.S.P. Plan
125,000 shares of either the Company's authorized but unissued Stock or Stock
held in the Company's treasury.

           (c) Any adjustment to the number of shares of Stock reserved for
issuance under the Q.S.P. Plan shall be made only in accordance with Sections
14 (relating to recapitalization) and 17 (relating to amendments of the
Q.S.P. Plan).

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4.   ELIGIBILITY.   Each Employee of the Company who on the first day of any
Enrollment Period:

           (a) has been employed by the Company for not less than one (1) year;

           (b) is customarily employed by the Company for more than twenty
(20) hours per week; and

           (c) is customarily employed by the Company for more than five (5)
months per calendar year,

shall become an Eligible Employee on such day.

5.   OFFERING PERIODS.  Options shall be granted under the Q.S.P. Plan in
successive six month Offering Periods, commencing on July 1 and January 1 of
each year, until the earlier of the maximum number of shares subject to sale
pursuant to Options have been sold, or the Q.S.P. Plan is terminated.  The
First Offering Period shall commence on July 1, 1998.

6.   PARTICIPATION IN THE Q.S.P. PLAN.

          (a)    Each Eligible Employee may elect to participate in the
Q.S.P. Plan for an Offering Period by submitting to the Administrator a
completed and executed Authorization Card in accordance with subsection (b). 
An Eligible Employee who elects to participate in the Q.S.P. Plan for an
Offering Period shall elect on such Authorization Card a whole percentage of
Base Pay (such percentage not to exceed 10% of Base Pay) to be withheld by
payroll deduction, which upon the exercise of the Option granted to such
Eligible Employee with respect to such Offering Period, shall be contributed
to the Company as payment for shares of Stock purchased pursuant to the
Option.

          (b)    The Authorization Card must be submitted to the
Administrator during the two-week period commencing one month prior to the
first day of the Offering Period and ending two weeks prior to the first day
of the Offering Period in order to participate in the Q.S.P. Plan during such
Offering Period.

          (c)    Except as otherwise provided in subsection (b) and Section
11, an Employee's Authorization Card shall operate with respect to each
Offering Period commencing after delivery of the Authorization Card to the
Administrator for which such Employee is an Eligible Employee.

7.   PAYROLL DEDUCTIONS.

          (a)    Cash compensation payable to an Eligible Employee who elects
to participate in the Q.S.P. Plan for an Offering Period shall be reduced
each Payday through payroll deductions by an amount equal to the whole
percentage of Base Pay payable on such Payday elected by the Eligible
Employee under Section 6.

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          (b)    The amount of each Eligible Employee's payroll deduction
shall be held by the Company and credited to an account established for such
Eligible Employee.  The Company shall not pay any interest on the funds
credited to an Eligible Employee's account under the Q.S.P. Plan.

          (c)    An Eligible Employee participating in the Q.S.P. Plan may
change his or her payroll deduction percentage for any Offering Period by
submitting a new Authorization Card to the Administrator during the
Enrollment Period for such Offering Period.  Such change in payroll deduction
percentage shall become effective on the first day of the Offering Period.

          (d)    During a leave of absence from the Company which is approved
by the Company and which meets the requirements of Treasury Regulation
Section 1.421-7(h)(2), an Eligible Employee may continue to participate in
the Q.S.P. Plan by making cash payments to the Company on each Payday equal
to the dollar amount of the payroll deduction made for such Eligible Employee
for the Payday next preceding the first day of such Eligible Employee's leave
of absence.

8.   GRANT OF OPTIONS; EXERCISE OF OPTIONS.

          (a)    Each Eligible Employee participating in the Q.S.P. Plan
shall be granted an option on the first day of the Offering Period for each
Offering Period for which such Eligible Employee elects to participate.  The
term of each Option shall end on the last day of the Offering Period for
which the Option is granted, and such Option shall expire immediately
thereafter.  The number of shares of Stock subject to each Option shall be
the quotient of the total payroll deductions made for the Eligible Employee
during the Offering Period, divided by the Option Price, excluding fractional
shares of Stock; provided, however, that the number of shares of Stock
subject to each Option shall not exceed 250 shares.

          (b)    Except as otherwise provided in subsection (c), each
Eligible Employee participating in the Q.S.P. Plan shall be deemed to have
exercised his or her Option on the last day of the Offering Period, to the
extent that the balance of payroll deductions credited to such Eligible
Employee's account under the Q.S.P. Plan is sufficient to purchase, at the
Option Price, whole shares of Stock.  No fractional shares of Stock shall be
purchased upon the exercise of the Option and any funds credited to such
Eligible Employee's account, remaining after the purchase of whole shares of
Stock upon exercise of an option, shall remain credited to such Eligible
Employee's account and carried forward for purchase of shares of Stock
pursuant to the Option, if any, granted to such Eligible Employee for the
next following Offering Period.

          (c)    An Eligible Employee's Option shall not be exercised on the
last day of the Offering Period if such Eligible Employee instructs the
Administrator in writing at least two weeks prior to the last day of the
Offering Period that such Option is not to be exercised.  As soon as
practicable after receipt of such instruction, the Administrator shall pay to
such Eligible Employee in cash in one lump sum the balance of payroll
deductions credited to such Eligible Employee's account under the Q.S.P.
Plan, without the payment of any interest thereon.

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<PAGE>

          (d)    If the total number of shares of Stock for which options are
to be exercised on any date exceeds the number of shares remaining unsold
under the Q.S.P. Plan (after deduction of all shares for which Options have
theretofore been exercised), the Administrator shall make a pro rata
allocation of the available remaining shares in as nearly a uniform manner as
shall be practicable and any balance of payroll deductions credited to the
accounts of Eligible Employees which have not been applied to the purchase of
shares of Stock shall be paid to such Eligible Employees in cash in one lump
sum as soon as practicable, without payment of any interest thereon.

          (e)    Notwithstanding any provision in this Section to the
contrary, an Eligible Employee shall not be granted an Option:

                  (i)   if, immediately after the Option is granted, such
     Employee would own stock possessing 5% or more of the total combined
     voting power or value of all classes of stock of the Company, any Parent
     Corporation or any Subsidiary Corporation.  For purposes of determining
     stock ownership under this paragraph, the rules of Code Section 425(d)
     shall apply and stock which an Eligible Employee may purchase under
     outstanding options held by such Eligible Employee shall be treated as
     stock owned by such Eligible Employee; or

                 (ii)   which permits such Eligible Employee's rights to
     purchase stock under all employee stock purchase plans of the Company,
     any Parent Corporation or any Subsidiary Corporation, which qualify
     under Code Section 423, to accrue at a rate which exceeds $25,000 of the
     fair market value of such stock (determined at the time such option is
     granted) for each calendar year in which such option is outstanding at
     any time.  For purpose of the limitations imposed by this paragraph, the
     right to purchase stock under an option accrues when the option (or any
     portion thereof) first becomes exercisable during the calendar year, the
     right to purchase stock under an option accrues at the rate provided in
     the option (but in no case may such rate exceed $25,000 of fair market
     value of such stock determined at the time such option is granted for
     any one calendar year), and a right to purchase stock which has accrued
     under the option may not be carried over to any other option.

9.   OPTION PRICE.

               (a) The per share exercise price of each option (the "Option
Price") shall be an amount equal to the lesser of:

                  (i)    85% of the fair market value of a share of Stock on
     the date the Option is granted (the first day of the Offering Period); or

                  (ii)   85% of the fair market value of a share of the Stock
     on the date such option is exercised (the last day of the Offering
     Period).

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                  (iii)  For purposes of subsection (a), the fair market
     value of a share of Stock as of a given date shall be:

               (b) the closing price of a share of Stock on the principal
exchange on which shares of Stock are then trading, if any, on such date, or,
if shares were not traded on such date, then on the next preceding trading
day during which a sale occurred;

                  (i)    if such Stock is not traded on an exchange but is
     quoted on NASDAQ or a successor quotation system, the last sales price
     (if the Stock is then listed as a National Market issue under the NASD
     National Market System) or the mean between the closing representative
     bid and asked prices (in all other cases) for the Stock of such date as
     reported by NASDAQ or a successor quotation system;

                  (ii)   if such Stock is not publicly traded on an exchange
     and not quoted on NASDAQ or a successor quotation system, the mean
     between the closing bid and asked prices for the Stock on such date as
     determined in good faith by the Committee; or

                  (iii)  if the Stock is not publicly traded, the fair market
     value established by the Administrator acting in good faith.

10.  ISSUANCE OF CERTIFICATES.

               (a) The Administrator shall, as soon as practicable after the
exercise of any Option, deliver to the Eligible Employee exercising the
Option a certificate evidencing the whole shares of Stock purchased by such
Eligible Employee under the Q.S.P. Plan from funds credited to such Eligible
Employee's account.

               (b) In the event the Administrator is required to obtain
authority to issue certificates for any shares of Stock purchased by an
Eligible Employee under the Q.S.P. Plan from any commissioner or agency, the
Administrator will seek to obtain such authority.  If the Administrator in
unable, after reasonable efforts, to obtain such authority, the Administrator
and the Company shall be relieved from all liability and shall pay to each
such Eligible Employee the balance of payroll deductions credited to each
such Eligible Employee's account under the Q.S.P. Plan in cash in one lump
sum as soon as practicable, without the payment of any interest thereon.

11.  CESSATION OF PARTICIPATION.

               (a) Except as otherwise provided in Subsection 7(d), an
Eligible Employee shall cease to participate in the Q.S.P. Plan in the event
that:

                  (i)    the Administrator receives written instructions from
     the Eligible Employee to terminate such Eligible Employee's
     participation in the Q.S.P. Plan;

                  (ii)   the Eligible Employee resigns or is discharged from
     employment by the Company, or has a leave of absence from the Company; or

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                (iii)  the Employee dies.

               (b) Upon cessation of participation by an Eligible Employee,
such Eligible Employee's payroll deductions shall cease.  If such cessation
of participation occurs during the last two weeks of an Offering Period, such
Eligible Employee's Option shall be exercised on the last day of the Offering
Period in accordance with Section 8(b).  Upon cessation of participation at
any other time, any balance of payroll deductions credited to such Eligible
Employee's account under the Q.S.P. Plan shall be paid to the Employee in
cash in one lump sum as soon as practicable after cessation of participation,
without payment of any interest thereon.

               (c) An Eligible Employee shall not be eligible to participate
in the Q.S.P. Plan during the Offering Period which immediately follows the
Offering Period during which such Employee voluntarily terminated
participation in the Q.S.P. Plan under paragraph (a)(i).

12.  TRANSFER OF OPTION.   Options granted pursuant to the Q.S.P. Plan shall
not be transferable by an Eligible Employee, other than by will or the laws
of descent and distribution, and shall be exercisable during the Eligible
Employee's lifetime only by such Eligible Employee.

13.  BENEFICIARY.   Each Eligible Employee shall designate on his or her
Authorization Card a beneficiary or beneficiaries and may, without such
beneficiaries consent, change such designation.  Any designation shall be
effective only after it is received by the Administrator and shall be
controlling over any disposition by will or otherwise.  Upon the death of an
Eligible Employee, the balance of payroll deductions credited to such
Eligible Employee's account shall be paid or distributed to the designated
beneficiary or beneficiaries, or in the absence of such designation, to the
executor or administrator of the Eligible Employee's estate, and in either
event the Administrator and the Company shall not be under any further
liability to anyone.

14.  RECAPITALIZATION.   If there shall be any change in the Stock subject to
the Q.S.P. Plan or the Stock subject to any Option, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
split, stock dividend (in excess of 2% of the fair market value of the Stock)
or other change in the corporate structure of the Company, appropriate
adjustments shall be made by the Administrator to the aggregate number of
shares subject to the Q.S.P. Plan and the number of shares and the price per
share subject to outstanding Options in order to preserve, but not to
increase, the benefits of the Eligible Employees hereunder; provided,
however, that subject to any required action by the shareholders, if the
Company shall not be the surviving corporation in any such merger,
consolidation or reorganization, every Option outstanding shall terminate,
unless the surviving corporation shall (subject to applicable provisions of
the Code) issue a new option therefor or assume (with appropriate changes)
the existing Option.  If the Option shall terminate by reason of such merger,
consolidation, or reorganization, then any provision herein to the contrary
notwithstanding, any option held by an Eligible Employee may be exercised, in
whole or in part, by such Eligible Employee at any time prior to or
concurrently with consummation of such merger, consolidation or
reorganization.

15.  RIGHTS AS A SHAREHOLDER.   An Eligible Employee shall have no rights as
a shareholder with respect to any shares of Stock covered by Options until
the date of the issuance of a

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certificate for such shares of Stock.  No adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior
to the date such certificate is issued, except as otherwise expressly
provided herein.

16.  COSTS; INDEMNIFICATIONS.

               (a) All costs and expenses incurred in administering the
Q.S.P. Plan shall be paid by the Company.

               (b) In addition to such other rights of indemnification as the
Administrator may have as a director or officer of the Company, the Company
shall indemnify and hold the Administrator harmless against any and all
liability, loss, costs, damages, attorneys' fees and other expenses the
Administrator may sustain or incur in connection with administration of the
Q.S.P. Plan, except for liability, loss, costs, damages, attorneys' fees and
other expenses caused by the negligence of the Administrator or his agent;
provided, that within 60 days after the institution of any action, suit or
proceeding the Administrator shall in writing offer the Company the
opportunity to handle, prosecute or defend the same, at the Company's own
expense.  The Administrator shall have the right, but not the obligation, to
adjust, settle, or compromise any claim, obligation, debt, demand, suit or
judgment against the Administrator, and if such settlement is approved by
independent legal counsel selected by the Company then the Company shall
reimburse the Administrator for all sums of money the Administrator may pay
or become liable to pay against which the Administrator is indemnified
hereunder.

17.  AMENDMENT OR TERMINATION OF THE Q.S.P. PLAN.   The Board of Directors
may at any time, with respect to any shares of Stock not then subject to
Options suspend or terminate the Q.S.P. Plan, and may amend the Q.S.P. Plan
from time to time as the Board of Directors may deem advisable; provided,
however, that except as provided in Section 14 hereof, the Board of Directors
shall not amend the Q.S.P. Plan in the following respects without the
affirmative vote of approval by a majority of the outstanding shares of Stock
of the Company:

               (a) To increase the maximum number of shares of Stock subject
to the Q.S.P. Plan;

               (b) To change the designation or class of
employees eligible to receive Options under the Q.S.P. Plan; or

               (c) In any manner which would cause the Q.S.P. Plan to no
longer be an employee stock purchase plan under Code Section 423.

18.  APPLICATION OF FUNDS.   The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options shall be deposited in the
account of the general corporate funds of the Company.

19.  APPROVAL OF SHAREHOLDERS.   The Q.S.P. Plan will be submitted for the
approval of the Company's shareholders within twelve months after the date of
the Board's initial adoption of

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the Plan.  Options may be granted prior to such shareholder approval,
provided that such options shall not be exercisable prior to the time when
the Q.S.P. Plan is approved by the shareholders, and provided further that if
such approval has not been obtained at the end of said twelve-month period,
all options previously granted under the Plan shall thereupon be canceled and
become null and void.

20.  NO RIGHTS AS AN EMPLOYEE.   Nothing in the Q.S.P. Plan shall be
construed to give any person the right to remain in the employ of the Company
or to affect the right of the Company to terminate the employment of any
person at any time with or without cause.

21.  TITLES.   Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Q.S.P. Plan.

22.  CONFORMITY TO SECURITIES LAWS.  The Plan is intended to conform to the
extent necessary with all provisions of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3.  Notwithstanding
anything herein to the contrary, the Plan shall be administered, and Options
shall be granted and may be exercised, only in such a manner as to conform to
such laws, rules and regulations.  To the extent permitted by applicable law,
the Q.S.P. Plan and Options granted hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

                                     * * * * *
          I hereby certify that the foregoing Q.S.P. Plan was adopted by the
Board of Directors of Media Arts Group, Inc. on the 28th day of May, 1998.

              /s/ James F. Landrum, Jr.                                   
               ---------------------------------
          Name:  James F. Landrum, Jr.
          Title:  Senior Vice President and General Counsel

          I hereby certify that the foregoing Q.S.P. Plan was duly approved
by affirmative vote of a majority of the outstanding shares of Stock of the
Company at the Annual Meeting of Shareholders of Media Arts Group, Inc. on
September 17, 1998.

          Executed on this 1st day of December, 1998.

            /s/ James F. Landrum, Jr.
               ----------------------------
          Name:  James F. Landrum, Jr.
          Title:  Senior Vice President and General Counsel

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