Employees Stock Option Plan - Media Arts Group Inc.
MEDIA ARTS GROUP, INC.
EMPLOYEES STOCK OPTION PLAN
---------------------------
Amended and Restated as of October 22, 1997
MEDIA ARTS GROUP, INC. hereby adopts a stock option plan for the benefit of
certain persons and subject to the terms and provisions set forth below.
1. DEFINITIONS. The following terms shall have the meanings set forth
below whenever used in this instrument:
(a) The word "Board" shall mean the Board of Directors of the
Company.
(b) The word "Code" shall mean the United States Internal Revenue
Code of 1986, as amended, or successor provisions of future
United States revenue laws (Title 26 of the United States
Code).
(c) The word "Committee" shall mean the Compensation Committee of
the Board, which committee shall satisfy the requirements of
(i) Rule 16b-3((c)(2)(i) under the Exchange Act, as such Rule
may be amended in the future and (ii) Section 162(m) of the
Code, as such Section may be amended in the future.
(d) The words "Common Stock" shall mean the common stock, $.01 par
value, of the Company.
(e) The word "Company" shall mean Media Arts Group, Inc., a
Delaware corporation, and any successor thereto which shall
maintain this Plan.
(f) The word "Disability" shall mean the Optionee's inability to
engage in substantial gainful activity for the Company by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months, as determined by the Committee
pursuant to written certificate of such Disability from a
physician acceptable to the Committee.
(g) The word "Employee" shall mean any person who is determined by
the Committee to be a high-level executive officer or other
valuable managerial or technical employee of either the
Company or any Subsidiary.
(h) The words "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
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(i) The words "Incentive Stock Option" shall mean any option which
qualifies as an Incentive Stock Option under terms of Section
422 of the Code.
(j) The word "Officer" shall mean an officer of the Company or any
Subsidiary, as defined in Rule 16a-1(f) under the Exchange
Act, as such Rule may be amended in the future.
(k) The word "Optionee" shall mean any Employee to whom a stock
option has been granted pursuant to this Plan.
(l) The word "Plan" shall mean this instrument, the Media Arts
Group, Inc. Employees Stock Option Plan, as it is originally
adopted and as it may be amended hereafter.
(m) The word "Subsidiary" shall mean any corporation at least 50%
of the common stock of which is owned directly or indirectly
by the Company.
(n) The words "Substantial Shareholder" shall mean any Employee
who owns directly and through attribution more than 10% of the
total combined voting power of all classes of stock of either
the Company or any Subsidiary. Ownership shall be determined
in accordance with Section 424(d) of the Code and lawful
applicable regulations.
2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide
Employees of the Company and its Subsidiaries with greater incentive to serve
and promote the interests of the Company and its shareholders. The premise
of the Plan is that, if such persons acquire a proprietary interest in the
business of the Company or increase such proprietary interest as they may
already hold, then the incentive of such persons to work toward the Company's
continued success will be commensurably increased. Accordingly, the Company
will, from time to time during the effective period of the Plan, grant to
such Employees as may be selected to participate in the Plan options to
purchase Common Shares on the terms and subject to the conditions set forth
in the Plan. Options may be either Incentive Stock Options or non-qualified
stock options.
3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on
February 1, 1994, subject to approval by holders of a majority of the
outstanding shares of voting capital stock of the Company. In the event that
the foregoing condition is not satisfied within twelve (12) months after the
date the Plan is adopted, the Plan and any options granted hereunder shall be
null and void. If, however, the Plan is so approved, subject to the
provisions of Section 8, no further shareholder approval shall be required
with respect to the granting of any options pursuant to the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in
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writing by all of the members, shall be acts of the Committee. Subject to
the terms and conditions of the Plan, the Committee shall have full and final
authority in its absolute discretion:
(a) To select the Employees to whom options will be granted;
(b) To determine the number of shares of Common Stock subject to
any option;
(c) To determine the time or times when options will be granted;
(d) To determine the option price of shares of Common Stock
subject to an option;
(e) To determine the time or times when each option may be
exercised and the duration of the exercise period;
(f) To determine at the time of grant of an option whether and to
what extent such option is an Incentive Stock Option under
Section 422 of the Code and regulations thereunder as the same
or any successor statute or regulations may at the time be in
effect;
(g) To determine whether stock appreciation rights shall be made
part of any option grant pursuant to Section 9 hereof (such
determination to be made after the Committee has consulted
with the Chief Financial Officer of the Company regarding the
impact of such a grant upon the earnings of the Company), the
method of valuing the stock appreciation rights and whether
the stock appreciation rights may be exercised in lieu of or
in addition to the related option;
(h) To prescribe the form of the option agreements governing the
options which are granted under the Plan and to set the
provisions of such option agreements as the Committee may deem
necessary or desirable provided such provisions are not
contrary to the terms and conditions of either the Plan or,
where the option is an Incentive Stock Option, Section 422 of
the Code and regulations thereunder as the same or any
successor statute or regulations may at the time be in effect;
(i) To adopt, amend and rescind such rules and regulations as, in
the Committee's opinion, may be advisable in the
administration of the Plan; and
(j) To construe and interpret the Plan, the rules and regulations
and the instruments evidencing options granted under the Plan
and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
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Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its
rules and regulations, shall, to the extent permitted by law be conclusive
and binding upon all Optionees under the Plan and upon any person claiming
under or through such an Optionee. Neither the Committee nor any of its
members shall be liable for any act taken by the Committee pursuant to the
Plan. No member of the Committee shall be liable for the act of any other
member.
5. PERSONS ELIGIBLE FOR OPTIONS. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its Subsidiaries.
Notwithstanding the preceding sentence, an Employee who renounces in writing
any right he may have to receive stock options under the Plan shall not be
eligible to receive any stock options under the Plan. No option shall be
granted to any Employee during any period of time when he is on leave of
absence. The Committee may grant more than one option, with or without stock
appreciation rights, to the same Employee.
6. SHARES SUBJECT TO THE PLAN. Subject to the provisions of
Section 9 concerning payment for stock appreciation rights in shares of
Common Stock and subject to the provisions of the next succeeding paragraph
of this Section 6, the aggregate number of shares of Common Stock for which
options may be granted under the Plan shall be 1,124,863 shares of Common
Stock. Either treasury or authorized and unissued shares of Common Stock, or
both, in such amounts, within the maximum limits of the Plan, as the
Committee shall from time to time determine, may be so issued. All shares of
Common Stock which are the subject of any lapsed, expired or terminated
options may be made available for reoffering under the Plan to any Employee.
If an option granted under this Plan is exercised pursuant to the terms and
conditions determined by the Committee under Subsection 7(d), and a stock
appreciation right is not granted in conjunction with the option pursuant to
Section 9, any shares of Common Stock which are the subject thereof shall not
thereafter be available for reoffering under the Plan to any Employee. If a
stock appreciation right is granted in conjunction with an option pursuant to
Section 9, and if the option agreement with the Optionee provides that
exercise of the stock appreciation right shall be in lieu of exercise of the
options, and the stock appreciation right is thereafter exercised in whole or
in part, then the option or the portion thereof with respect to which the
stock appreciation right was exercised shall be deemed to have been exercised
and the shares of Common Stock which otherwise would have been issued upon
exercise of such option, to the extent not used in payment for the stock
appreciation rights, may be made available for reoffering under the Plan to
any Employee.
In the event that subsequent to the date of adoption of the Plan by the
Board, the outstanding shares of Common Stock are, as a result of a stock
split, stock dividend, combination or exchange of shares, exchange for other
securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization, spin-off, split-off, split-up or other such
change (including, without limitation, any transaction described in Section
424(a) of the Code) or a special dividend or other distribution to the
Company's shareholders, increased or decreased or changed into or exchanged
for a different number or kind of shares of stock or other securities of the
Company, then (i) there shall automatically be substituted for each share of
Common Stock subject to an unexercised
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option granted under the Plan and each share of Common Stock available for
additional grants of options under the Plan the number and kind of shares of
stock or other securities into which each outstanding share of Common Stock
shall be exchanged, (ii) the option price per share of Common Stock or unit
of securities shall be increased or decreased proportionately so that the
aggregate purchase price for the securities subject to the option shall
remain the same as immediately prior to such event, and (iii) the Committee
shall make such other adjustments to the securities subject to options, the
provisions of the Plan, and option agreements as may be appropriate,
equitable, in order to prevent dilution or enlargement of option rights and
in compliance with the provisions of Section 424(a) of the Code to the extent
applicable and any such adjustment shall be final, binding and conclusive as
to each Optionee. Any such adjustment may, in the discretion of the
Committee, provide for the elimination of fractional shares.
7. OPTION PROVISIONS.
(a) OPTION PRICE. The option price per share of Common Stock
which is the subject of an option under the Plan shall be determined by the
Committee at the time of grant but shall not be less than one hundred percent
(100%) of the fair market value of a share of Common Stock on the date the
option is granted; provided, however, that if an Employee to whom an
Incentive Stock Option is granted is at the time of the grant a Substantial
Shareholder, the option price per share of Common Stock shall be determined
by the Committee but shall never be less than one hundred ten percent (110%)
of the fair market value of a share of Common Stock on the date the option is
granted. Such fair market value shall be determined in accordance with
procedures to be established by the Committee. The date on which the
Committee approves the granting of an option shall be deemed for all purposes
hereunder the date on which the option is granted.
(b) PERIOD OF OPTION. The Committee shall determine when each
option is to expire but no option shall be exercisable after ten (10) years
have elapsed from the date upon which the option is granted; provided,
however, that no Incentive Stock Option granted to a person who is a
Substantial Shareholder at the time of the grant of such option shall be
exercisable after five (5) years have elapsed from the date upon which the
option is granted. Each option shall be subject to earlier termination as
provided in Subsection 7(e) hereunder.
(c) LIMITATION ON EXERCISE AND TRANSFER OF OPTION. Except as the
Committee may otherwise provide with respect to Options granted to Employees
who are not Officers, no Option (or any related stock appreciation right
described in Section 9) may be exercised in whole or in part during the six
months after the Option is granted. Except as otherwise provided in the
event of an Optionee's death, only the Optionee may exercise an option,
provided that a guardian or other legal representative who has been duly
appointed for such Optionee may exercise an option on behalf of the Optionee.
No option granted hereunder shall be transferable other than (i) by the Last
Will and Testament of the Optionee or, if the Optionee dies intestate, by the
applicable laws of descent and distribution, or (ii) to the extent approved
by the Committee, pursuant to a qualified domestic relations order as defined
by the Code or the rules thereunder. No option granted hereunder may be
pledged or hypothecated, nor shall any such option be subject to execution,
attachment or similar process.
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(d) CONDITIONS GOVERNING EXERCISE OF OPTION. The Committee may,
in its absolute discretion, either require that, prior to the exercise of any
option granted hereunder, the Optionee shall have been an employee for a
specified period of time after the date such option was granted, or make any
option granted hereunder immediately exercisable. Each option shall be
subject to such additional restrictions or conditions with respect to the
right to exercise and the time and method of exercise as shall be prescribed
by the Committee. Upon satisfaction of any such conditions, the option may
be exercised in whole or in part at any time during the option period, but
this right of exercise shall be limited to whole shares, unless the Committee
shall otherwise provide. Options shall be exercised by the Optionee giving
written notice to the Secretary of the Company at its principal office, by
certified mail, return receipt requested, of the Optionee's exercise of the
option and the number of shares with respect to which the option is being
exercised. Such notice shall be accompanied either by (1) full payment of
the purchase price in cash or (2) with the consent of the Committee (i)
shares of Common Stock having a fair market value on the date the option is
exercised equal to that portion of the purchase price for which payment in
cash is not made, or (ii) pursuant to a loan, which the Company may make
available, evidenced by a promissory note, the terms and conditions of which
shall be determined by the Committee in its sole and absolute discretion or
(iii) shares of Common Stock issuable to the Optionee upon exercise of the
option, with a fair market value on the date of option exercise equal to the
purchase price of the shares with respect to which such option or portion
thereof is exercised or (iv) payment may be made by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell shares of Common Stock and to deliver all or
part of the sales proceed to the Company in payment of the purchase price and
any withholding taxes, if applicable. Such notice shall be deemed delivered
when deposited in the mails. Notwithstanding anything in the foregoing to
the contrary, in the event of a "change in control" the Committee shall have
the authority and power: (i) to cause all outstanding options to be
immediately exercisable notwithstanding any vesting limitation otherwise
previously imposed on such options; and (ii) to accelerate the termination
date of all such options. Thereafter, upon such determination, an Optionee
may exercise any and all outstanding options (in whole or in part), whether
or not such options are by their terms fully exercisable at such time and the
Committee may authorize the acceptance of the surrender of the right to
exercise such option or any portion thereof, but in no event after the
expiration of the term of the option. The term "change in control" shall
include, but not be limited to: (i) the first purchase of shares pursuant to
a tender offer or exchange (other than a tender offer or exchange by the
Company) for all or part of the Company's common stock of any class or any
securities convertible into such common stock; (ii) the receipt by the
Company of a Schedule 13D or other advise indicating that a person is the
"beneficial owner" (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of twenty percent (20%) or more of the
Company's Common Stock calculated as provided in paragraph (d) of said Rule
13d-3; (iii) the date of approval by shareholders of the Company of an
agreement providing for any consolidation or merger of the Company in which
the Company will not be the continuing or surviving corporation or pursuant
to which shares of capital stock, of any class or any securities convertible
into such capital stock, of the Company would be converted into cash,
securities, or other property, other than a merger of the Company in which
the holders of common stock of all classes of the Company immediately pror to
the merger would have the same proportion of ownership of common stock of the
surviving corporation immediately after the merger; (iv) the date of the
approval by shareholders of the Company of any sale, lease, exchange, or
other transfer (in one
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transaction or a series of related transactions) of all or substantially all
the assets of the Company; (v) the adoption of any plan or proposal for the
liquidation (but not a partial liquidation) or dissolution of the Company; or
(vi) such other event as the Committee shall, in its sole and absolute
discretion, deem to be a "change in control." The manner of application and
interpretation of the foregoing provisions shall be determined by the
Committee in its sole and absolute discretion.
(e) TERMINATION OF EMPLOYMENT, ETC. If an Optionee ceases to be an
employee of the Company and all Subsidiaries, his or her option shall, unless
otherwise provided in the option agreement between the Optionee and the
Company, terminate on the date he or she ceases to be an employee and neither
he or she nor any other person shall have any rights after the date he or she
ceases to be an employee to exercise all or any part of the option. An
Optionee's employment shall not be deemed to have terminated while he or she
is on a temporary military, sick or other bona fide leave of absence from the
Company or a Subsidiary approved in writing by the Company, such as a leave
of absence as is described in Section 1.421-7(h) of the Federal Income Tax
Regulations or any lawful successor regulations thereto; provided, however,
that the Committee may impose such terms and conditions with respect to such
leaves as it deems proper as are consistent with such regulations.
If the stock option is an Incentive Stock Option, no option agreement shall
(i) permit any Optionee to exercise any Incentive Stock Option
more than three (3) months after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the original
term of the option) if the reason for the Optionee's cessation as an employee
was other than his death or his Disability; or
(ii) permit any Optionee to exercise any Incentive Stock Option
more than one (1) year after the date the Optionee ceased to be an employee
of the Company and all Subsidiaries (but not beyond the original term of the
option) if the reason for the Optionee's cessation as an employee was the
Optionee's Disability; or
(iii) permit any person to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be an employee of the
Company and all Subsidiaries (but not beyond the original term of the option)
if either (A) the reason for the Optionee's cessation as an employee was his
death or (B) the Optionee died within three (3) months after ceasing to be an
employee of the Company and all Subsidiaries.
If the stock option is a non-qualified stock option, no option agreement shall
(i) permit any Optionee to exercise any non-qualified stock option
more than six (6) months after the date the Optionee ceased to be an employee
of the Company and all Subsidiaries (but not beyond the original term of the
option) if the reason for the Optionee's cessation as an employee was other
than his death or his Disability; or
(ii) permit any Optionee to exercise any non-qualified stock option
more than one (1) year after the date the Optionee ceased to be an employee
of the Company and all Subsidiaries (but
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not beyond the original term of the option) if the reason for the Optionee's
cessation as an employee was the Optionee's Disability; or
(iii) permit any person to exercise any non-qualified stock option
more than one (1) year after the date the Optionee ceased to be an employee
of the Company and all Subsidiaries (but not beyond the original term of the
option) if either (A) the reason for the Optionee's cessation as an employee
was his death or (B) the Optionee died within three (3) months after ceasing
to be an employee of the Company and all Subsidiaries.
If any option is by the terms of the option agreement exercisable following
the Optionee's death, then such option shall be exercisable by the Optionee's
estate, or the person designated in the Optionee's Last Will and Testament,
or the person to whom the option was transferred by the applicable laws of
descent and distribution.
(f) LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS. During the
calendar year in which any Incentive Stock Options granted by the Company or
any Subsidiary first became exercisable by any Optionee, the aggregate fair
market value of the shares of Common Stock which are subject to such
Incentive Stock Options (determined as of the date the Incentive Stock
Options were granted) shall not exceed the sum of One Hundred Thousand
Dollars ($100,000.00). Options which are not designated as Incentive Stock
Options shall not be subject to the limitation described in the preceding
sentence and shall not be counted when applying such limitation.
(g) PROHIBITION OF ALTERNATIVE OPTIONS. It is intended that
Employees may be granted, simultaneously or from time to time, Incentive
Stock Options or other stock options, but no Employees shall be granted
alternative rights in Incentive Stock Options and other stock options so as
to prevent options granted as Incentive Stock Options under the Plan from
qualifying as such within the meaning of Section 422 of the Code.
(h) WAIVER BY COMMITTEE OF CONDITIONS GOVERNING EXERCISE OF
OPTION. The Committee may, in its discretion, waive any restrictions or
conditions set forth in an option agreement concerning an Optionee's right to
exercise any option and/or the time and method of exercise.
8. AMENDMENTS TO THE PLAN. The Committee is authorized to interpret
the Plan and from time to time adopt any rules and regulations for carrying
out the Plan that it may deem advisable. Subject to the approval of the
Board, the Committee may at any time amend, modify, suspend or terminate the
Plan. In no event, however, without the approval of the Company's
shareholders, shall any action of the Committee or the Board result in:
(a) Amending, modifying or altering the eligibility requirements
provided in Section 5 hereof;
(b) Increasing or decreasing, except as provided in Section 6
hereof, the maximum number of shares for which options may be
granted;
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(c) Decreasing the minimum option price per share at which options
may be granted under the Plan, as provided in Section 7(a)
hereof;
(d) Extending either the maximum period during which an option is
exercisable as provided in Section 7(b) hereof or the date on
which the Plan shall terminate as provided in Section 13
hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change which would cause any option granted
under the Plan as an Incentive Stock Option not to qualify as
an Incentive Stock Option within the meaning of Section 422 of
the Code;
except as necessary to conform the Plan and the option agreements to changes
in the Code or other governing law. No option may be granted during any
suspension of this Plan or after this Plan has terminated and no amendment,
suspension or termination shall, without the Optionee's consent, alter or
impair any of the rights or obligations under an option theretofore granted
to such Optionee under this Plan.
9. STOCK APPRECIATION RIGHTS. The Committee may provide, at the time
of the grant of a stock option and upon such terms and conditions as it deems
appropriate, that an Optionee shall have the right with respect to all or a
portion of the options granted to him to elect to surrender such options in
exchange for the consideration set forth in this Section 9 in lieu of
exercising such options. Alternatively, the Committee may provide, at the
time of the grant of a stock option and upon such terms and conditions as it
deems appropriate, that an Optionee shall have the right with respect to all
or a portion of the options granted to him to receive the considerations set
forth in this Section 9 upon exercising such options in addition to any
Common Stock purchased upon exercise thereof. Stock appreciation rights must
be specifically granted by the Committee; provided, however, the Committee
shall have no authority to grant stock appreciation rights except in
connection with the grant of a stock option pursuant to the Plan, and no
Optionee shall be entitled to such rights solely as a result of the grant of
an option to him. Stock appreciation rights, if granted, may be exercised
either with respect to all or a portion of the option to which they relate.
Stock appreciation rights shall not be transferable separate from the option
with respect to which they were granted and shall be subject to all of the
restrictions on transfer applicable to the said options. Stock appreciation
rights shall be exercisable only at such times and by such persons as are
specified in the option agreement governing the stock option with respect to
which the stock appreciation rights were granted. A stock appreciation right
shall provide that an Optionee shall have the right to receive a percentage,
not greater than One Hundred Percent (100%), of the excess over the option
price, if any, of the fair market value of the shares of Common Stock covered
by the option, as determined by the Committee as of the date of exercise of
the stock apprecation right, in the manner provided for herein. Such amount
shall be payable in one or more of the following manners, as shall be
determined by the Committee;
(a) in cash;
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(b) in shares of Common Stock having a fair market value equal to
such amount; or
(c) in a combination of cash and Common Stock;
provided, however, that stock appreciation rights may be settled only in cash
unless the Company shall have been subject to the reporting requirements of
Section 13(a) of the Exchange Act (and complied therewith) for at least a
one-year period prior to the settlement.
If payment is made in whole or in part in shares of Common Stock, such
payment shall thereby reduce the number of shares available for the grant of
options under this Plan.
In no event may any Optionee exercise any stock appreciation rights
granted hereunder unless such Optionee is then permitted to exercise the
option or the portion thereof with respect to which such stock appreciation
rights relate. If the option agreement with the Optionee provides that
exercise of the stock appreciation right shall be in lieu of exercise of the
option, then (i) upon the exercise of any stock appreciation rights, the
option or that portion thereof to which the stock appreciation rights relate
shall be canceled, and (ii) upon the exercise of the option or that portion
thereof to which the stock appreciation rights relate, the stock appreciation
rights shall be canceled, and the option agreement governing such option
shall be deemed amended as appropriate without any further action by the
Committee or the Optionee. If the option agreement with the Optionee
provides that exercise of the stock appreciation right shall be in addition
to exercise of the option, then (i) upon the exercise of any stock
appreciation rights, the option or that portion thereof to which the stock
appreciation rights relate shall be deemed exercised and (ii) upon the
exercise of the option, the stock appreciation rights corresponding thereto
shall be deemed exercised to the extent the option is exercised. The terms
of any stock appreciation rights granted hereunder shall be incorporated into
the option agreement which governs the option with respect to which the stock
appreciation rights are granted, and shall be such terms as the Committee
shall prescribe which are not inconsistent with this Plan. The granting of
an option or stock appreciation right shall impose no obligation upon the
Optionee to exercise such option or right. The Company's obligation to
satisfy stock appreciation rights shall not be funded or secured in any
manner.
10. CERTAIN TIMING REQUIREMENTS.
Unless the Committee determines that Rule 16b-3 is not applicable to the
participant, shares of Common Stock issuable to the Optionee upon exercise of
the Option may be used to satisfy the Option price (or if applicable, the tax
withholding consequences of such exercise) only (i) during the period
beginning on the third business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company
and ending on the twelfth business day following such date or (ii) pursuant
to an irrevocable written election by the Optionee to use shares of Common
Stock issuable to the Optionee upon exercise of the Option to pay all or part
of the Option price or the withholding taxes (subject to the approval of the
Committee) made at least 6 months prior to the payment of such Option price
or withholding taxes.
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Unless the Committee determines that Rule 16b-3 is not applicable to the
participant, any exercise by a participant of a stock appreciation right for
cash shall be made only (i) during the period beginning on the third business
day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the participant to receive cash, in whole or in part, upon
exercise of his stock appreciation right (subject to the approval of the
Committee) made at least 6 months prior to the exercise of the stock
appreciation right.
11. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee
may condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
"Optionee agrees that any shares of Common Stock of Media Arts
Group, Inc. which Optionee may acquire by virtue of the exercise of this
option shall be acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall become
inoperative in the event the shares of Common Stock of Media Arts Group, Inc.
which are subject to this option shall be registered under the Securities Act
of 1933, as amended, or in the event Media Arts Group, Inc. is otherwise
satisfied that the offer or sale of the shares of Common Stock which are
subject to this option may lawfully be made without registration under the
Securities Act of 1933, as amended".
The Company shall not be required to issue any certificates for shares of
Common Stock upon the exercise of an option or a stock appreciation right
granted under the Plan prior to (i) obtaining any approval from any
governmental agency which the Committee shall, in its sole discretion,
determine to be necessary or advisable, (ii) the admission of such shares of
Common Stock to listing on any national securities exchange on which the
shares of Common Stock may be listed, (iii) completion of any registration or
other qualification of the shares of Common Stock under any state or federal
law or ruling or regulations of any governmental body which the Committee
shall, in its sole discretion, determine to be necessary or advisable, or the
determination by the Committee, in its sole discretion, that any registration
or other qualification of the shares of Common Stock is not necessary or
advisable, and (iv) obtaining an investment representation from the Optionee
in the form set forth above or in such other form as the Committee, in its
sole discretion, shall determine to be adequate.
12. GENERAL PROVISIONS.
(a) OPTION AGREEMENTS NEED NOT BE IDENTICAL. The form and
substance of option agreements and grants of stock appreciation rights,
whether granted at the same or different times, need not be identical.
(b) NO RIGHT TO BE EMPLOYED, ETC. Nothing in the Plan or in any
option agreement shall confer upon any Optionee any right to continue in the
employ or to be a consultant of the Company or a Subsidiary, or to serve as a
member of the Board, or to be entitled to receive any remuneration or
benefits not set forth in the Plan or such option agreement, or to interfere
with or limit either the right of the Company or a Subsidiary to terminate
his or her employment at any
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time or the right of the shareholders of the company to remove him or her as
a member of the Board with or without cause.
(c) OPTIONEE DOES NOT HAVE RIGHTS OF SHAREHOLDER. Nothing
contained in the Plan or in any option agreement shall be construed as
entitling any Optionee to any rights of a shareholder as a result of the
grant of an option until such time as shares of Common Stock are actually
issued to such Optionee pursuant to the exercise of an option or stock
appreciation right.
(d) SUCCESSORS IN INTEREST. The Plan shall be binding upon the
successors and assigns of the Company.
(e) NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of
the Company under the Plan and any distribution of Common Stock made
hereunder is limited to the obligations set forth herein with respect to such
distribution and no term or provision of the Plan shall be construed to
impose any liability on the Company or the Committee in favor of any person
with respect to any loss, cost or expense which the person may incur in
connection with or arising out of any transaction in connection with the
Plan, including, but not limited to, any liability to any Federal, state, or
local tax authority and/or any securities regulatory authority.
(f) TAXES. Appropriate provisions shall be made for all taxes
required to be withheld and/or paid in connection with the options or the
exercise thereof, and the transfer of shares of Common Stock pursuant
thereto, under the applicable laws or other regulations of any governmental
authority, whether Federal, state or local and whether domestic or foreign.
(g) USE OF PROCEEDS. The cash proceeds received by the Company
from the issuance of shares of Common Stock pursuant to the Plan will be used
for general corporate purposes or in such other manner as the Board of
Directors deems appropriate.
(h) EXPENSES. The expenses of administering the Plan shall be
borne by the Company.
(i) CAPTIONS. The captions and section numbers appearing in the
Plan are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of the Plan.
(j) NUMBER. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.
(k) GENDER. The use of the feminine, masculine or neuter pronoun
shall not be restrictive as to gender and shall be interpreted in all cases
as the context may require.
13. TERMINATION OF THE PLAN. The Plan shall terminate on February 1,
2004, and thereafter no options shall be granted under the Plan.
Notwithstanding the foregoing and subject to the approval of the Board, the
Committee may at any earlier time terminate the Plan and thereafter no
options shall be granted under the Plan. All options outstanding at the time
of termination of the
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Plan shall continue in full force and effect according to the terms of the
option agreements governing such options and the terms and conditions of the
Plan.
14. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware and any applicable federal
law.
15. VENUE. The venue of any claim brought hereunder by an Employee
shall be San Jose, California.
16. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein
to the Code or sections thereof, or to rules and regulations of the
Department of Treasury or of the Securities and Exchange Commission, shall
mean and include the Code sections thereof and such rules and regulations as
are now in effect or as they may be subsequently amended, modified,
substituted or superseded.
IN WITNESS WHEREOF, MEDIA ARTS GROUP, INC., by its appropriate officers
duly authorized, has executed this instrument as of October 22, 1997.
MEDIA ARTS GROUP, INC.
By: /s/ KENNETH E. RAASCH
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And: /s/ JAMES F. LANDRUM, JR.
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