As filed with the Securities and Exchange Commission on August __, 1999.
Registration No. 333 - _____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM S-8 AND FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Palm Desert Art, Inc.
(Exact name of issuer as specified in its charter)
Delaware 02-0429620
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
74-350 Alessandro Dr., Suite A-2, Palm Desert, CA 92260
(Address of Principal Executive Offices) (Zip Code)
Palm Desert Art, Inc. 1999 Stock Compensation Plan
(as amended on August 9, 1999)
(Full title of the plans)
Hugh G. Pike, President,
74-350 Alessandro Dr., Suite A-2,
Palm Desert, CA 92260
(Name and address of agent for service)
(760) 346-1192
(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: Upon grant
of shares or exercise of the options granted under the Stock Compensation
Plan, but in no event prior to the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. {x}
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered (1) per share offering price Registration Fee (2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.002 par value 700,000 $.92 $644,000 $179.03
<FN>
<F1> The aggregate amount of securities registered hereunder is 700,000
shares, to be issued from time to time pursuant to the Registrant's
1999 Stock Compensating Plan. Pursuant to Rule 416 promulgated under
the Securities Act of 1933, as amended, this Registration Statement
covers such additional shares of Common Stock to be offered or issued
to prevent dilution as a result of future stock splits, stock
dividends or similar transactions.
<F2> The fee with respect to 700,000 shares has been calculated pursuant to
paragraphs (h) and (c) of Rule 457 upon the basis of $.92 per share,
the average of the bid and asked price per share of the Registrant's
Common Stock on August 5, 1999, a date within five (5) business days
prior to the date of filing of this Registration Statement, as
reported by the Over The Counter Bulletin Board ("OTC Bulletin Board")
of the National Association of Securities Dealers, Inc. ("NASD").
</FN>
</TABLE>
EXPLANATORY NOTE
Pursuant to the introductory Note to Part I of Form S-8, the Plan
Information specified by Part I is not being filed with the Commission. This
Registration Statement on Form S-8 hereby registers 700,000 additional
shares of Common Stock pursuant to the Plan. A Registration Statements Form
S-8 (File No. 333-72793), registering an aggregate of 450,000 shares of
Common Stock under the Plan, were filed with the Commission on February 23,
1999
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3: DOCUMENTS INCORPORATED BY REFERENCE
The information in the following documents which we have filed with the
Commission (File No. 0- 17623) pursuant to the Exchange Act is incorporated
by reference in this Registration Statement:
(a) Our Annual Report on Form 10-KSB for the fiscal year ended April
30, 1998;
(b) Our Quarterly Report on Form 10-QSB for the quarterly period
ended January 31, 1999;
(c) Our Current Report on Form 8-K, filed on August 20, 1998
All documents and reports subsequently filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the termination of this offering is
incorporated by reference into this Registration Statement and will be a
part of this Registration Statement from the date of the filing of those
documents or reports. The information relating to us in this Registration
Statement should be read together with the information in the documents
incorporated by reference. Any statement contained in a document
incorporated by reference herein, unless otherwise indicated therein, speaks
as of the date of the document. Statements contained in this Registration
Statement may modify or replace statements contained in the documents
incorporated by reference.
ITEM 4: DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5: INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6: INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is permitted by Delaware law to indemnify any present or former
director, officer, employee or agent against all expenses and liabilities
reasonably incurred by him in connection with any legal action in which such
person is involved by reason of his position with the Company unless he is
adjudged liable for negligence or misconduct in the performance of his
duties as a director, officer, employee or agent.
In addition to such other rights of indemnification as they may have as
directors or as members of the committee (the "Committee") administering the
Company's 1999 Stock Compensation Plan (the "Plan"), under the terms of the
Plan the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney's fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any option granted thereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Board member is liable for negligence
or misconduct in the performance of his duties.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is therefore
unenforceable.
ITEM 7: EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8: EXHIBITS
Number Description
- ------ -----------
3.1 Registrant's Certificate of Incorporation, as amended*
3.2 Registrant's By-Laws**
4.13 Registrant's 1999 Stock Compensation Plan, as amended
5.1 Opinion of Francis D. Parisi, Esq.
23.1 Consent of Berry, Dunn, McNeil & Parker
23.2 Consent of Francis D. Parisi, Esq. (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
* Incorporated by reference to the Registrant's Registration Statement
Form 10 filed on April 17, 1989 (File No. 0-17623), and Form 10-KSB
for the fiscal year ended April 30, 1998 (File No. 0-17623), as filed
with the SEC on August 14, 1998.
** Incorporated by reference to the Registrant's Registration Statement
Form 10 filed on April 17, 1989 (File No. 0-17623).
ITEM 9: UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement; PROVIDED, HOWEVER,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Palm Desert, State of California, on August 9,
1999.
PALM DESERT ART, INC.
By: /s/ Hugh G. Pike
Hugh G. Pike, President
Know all persons by these presents, that each person whose signature appears
below, constitutes and appoints Hugh G. Pike and, jointly and severally, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign any amendment to this Registration Statement on Form
S-8 and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Hugh G. Pike Chairman of the Board August 9, 1999
Hugh G. Pike and President
(Principal Executive Officer)
/s/ William Smitherman Treasurer August 9, 1999
William Smitherman (Principal Financial Officer)
/s/ Jurg Mullhaupt Director August 9, 1999
Jurg Mullhaupt
/s/ Allan S. Wolfe Director August 9, 1999
Allan S. Wolfe
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 1,150,000
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, 1999
Amended August 9, 1999
By: /s/ John Anderholt,
Secretary
Exhibit 5.1
[Letterhead of Francis D. Parisi, Esq.]
August 9, 1999
Palm Desert Art, Inc.
74-350 Alessandro Dr., Suite A-2
Palm Desert, CA 92260
Dear Sirs or Madams:
I refer to the Registration Statement on Form S-8 (the Registration
Statement") to be filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Act"), on behalf of Palm
Desert Art, Inc (the "Company"), relating to an additional 700,000 to be
issued under the Palm Desert Art, Inc. 1995 Stock Compensation Plan (the
"Plan"). As counsel for the Company, I have examined such corporate
records, other documents, and such questions of law as we have considered
necessary or appropriate for the purposes of this opinion. Upon the basis
of such examination, I advise you that, in my opinion, hat the Shares to
be issued pursuant to the Plan, when issued and paid for under the Plan in
accordance with the terms of the Plan, will be duly authorized, validly
issued, fully paid and non-assessable. We hereby consent to the filing of
this opinion as an exhibit to the Registration Statement. This consent is
not be construed as an admission that I am a person whose consent is
required to be filed with the Registration Statement under the provisions
of the Act.
Very truly yours,
/s/ Francis D. Parisi, Esq.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of our
report dated June 17, 1998 in Palm Desert Art, Inc's Form 10-K for the
year ended April 30, 1998 and to all references to our Firm included in this
Registration Statement.
/S/ Berry, Dunn, McNeil & Parker
Portland, ME
August 9,1999
