<PAGE>
As filed with the Securities and Exchange Commission on May 1, 1998.
Registration No. 333-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDIA ARTS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0354419
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
521 Charcot Avenue
San Jose, California 95131
--------------------------
(Address of Principal
Executive Offices) (Zip Code)
MEDIA ARTS GROUP, INC. EMPLOYEES STOCK OPTION PLAN
MEDIA ARTS GROUP, INC. CONSULTANT NONQUALIFIED STOCK OPTION AGREEMENTS
(Full title of plan)
--------------------
CRAIG A. FLEMING
President & Chief Executive Officer
Media Arts Group, Inc.
521 Charcot Avenue, San Jose, CA 95131
(408) 324-2020
-------------------------------------------------
(Name, address and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Price per Aggregate Offering Amount of
To Be Registered Registered (1) Share (2) Price (2) Registration Fee (2)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock 400,000 $16.02 $6,408,000 $1,890.00
$0.01 par value
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to General Instruction E on Form S-8.
(2) Estimated for the purpose of calculating the registration fee (i)
pursuant to Rule 457(h) on the basis of a weighted average exercise price per
share of outstanding options for an aggregate of 102,310 shares at $5.35 per
share and (ii) pursuant to Rule 457(c) for the remaining 297,690 shares
registered hereunder based on the average high and low prices for the
Registrant's Common Stock as reported on the Nasdaq National Stock Market on
April 27, 1998.
- ------------------------------------------------------------------------------
Page 1 of 41 Pages
Exhibit Index Appears on Page 10.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the
Section 10(a) prospectus is omitted from this
Registration Statement in accordance with Rule 428 under
the Securities Act of 1933, as amended, and the Note to
Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by Media Arts Group, Inc. (the "Registrant"),
are hereby incorporated by reference in this Registration Statement:
1. The Registrant's Registration Statement on Form S-8 (Registration No.
33-87090) filed with the Commission on December 6, 1994, except for the
incorporation by reference contained therein of the Registrant's
Prospectus dated August 3, 1994 filed by the Registrant pursuant to Rule
424(b) relating to its Registration Statement on Form S-1 (No.
33-79744);
2. The Registrant's Registration Statement on Form S-8 (Registration
No.333-00154) filed with the Commission on January 17, 1996;
3. The Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997 (including items incorporated by reference from the
Registrant's Proxy Statement for its 1997 Annual Meeting of
Stockholders);
4. The Registrant's Quarterly Report on Form 10Q for the quarterly periods
ended June 30, 1997, September 30, 1997 and December 31, 1997; and
5. The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A (No. 0-24294), filed on June 9, 1994
with the Commission pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") including any subsequent
amendment or report filed for the purpose of updating such description.
2
<PAGE>
In addition, all documents subsequently filed by the Registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference to this Registration
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supercedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), the Registrant's Amended and Restated Certificate of Incorporation
includes a provision that eliminates the personal liability of its directors
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Registrant or its stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of the law;
(iii) pursuant to Section 174 of the DGCL; or (iv) for any transaction from
which the director derived an improper personal benefit.
In addition, the Bylaws of the Registrant provide that (i) the
Registrant shall indemnify any person who was or is a party or is threatened
to be made a party to any action, suit or proceeding by reason of the fact
that he or she is or was a director or officer of the Registrant, or is or
was serving in certain capacities of other enterprises (including, for
example, subsidiaries of the Registrant) at the Registrant's request,
including those circumstances in which indemnification would otherwise be
discretionary; (ii) expenses incurred by a director or officer arising from a
threatened or pending action, suit or proceeding shall be paid by the
Registrant in advance of final disposition of the action upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if ultimately he is not entitled to indemnification; and (iii) the rights
conferred in the Bylaws are not exclusive and the Registrant is authorized to
enter into indemnification agreements with its directors, officers and
employees. The Bylaws permit the Registrant to maintain director and officer
liability insurance for its directors and officers whether or not the
Registrant would have the power or the obligation to indemnify them against
such liability under the indemnification provisions of the Bylaws.
3
<PAGE>
The Registrant has obtained a policy of directors' and officers'
liability insurance for its directors and officers to insure directors and
officers against the costs of defense, settlement or payment of a judgment
under certain circumstances. The Registrant has entered into employment
agreements with certain of its executive officers and indemnity agreements
with certain of its directors that provide indemnity as allowed by Section
145 of the DGCL and the Bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ------ -------
<S> <C>
5.1 Opinion of Latham & Watkins
10.1 Media Arts Group, Inc. Employees Stock Option Plan
10.2 Form of Media Arts Group, Inc. Consultant Nonqualified Stock
Option Agreement
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Latham & Watkins (incorporated in Exhibit 5.1)
24.1 Power of Attorney (incorporated in the Signature Page to the
Registration Statement)
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, 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 this Registration Statement
(or the most recent post-
4
<PAGE>
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in this 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 a 20% 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 this
Registration Statement or any material change to such
information in this 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 this 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) The undersigned Registrant hereby further 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 that is incorporated by reference in this 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.
(c) 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 Commission such indemnification is against
public policy as
5
<PAGE>
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.
6
<PAGE>
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 caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Jose, State of California, on
April 30, 1998.
MEDIA ARTS GROUP, INC.
By: /s/ Craig A. Fleming
--------------------------------
Craig A. Fleming
President & Chief Executive Officer
(Principal Executive Officer)
By: /s/ Raymond A. Peterson
--------------------------------
Raymond A. Peterson
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Greg H.L. Nash
--------------------------------
Greg H.L. Nash
Controller
(Principal Accounting Officer)
7
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints James F. Landrum, Jr. and Raymond A. Peterson,
and each of them, his true and lawful attorneys-in-fact and agents, each with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in order to effectuate the same as fully, to all intents and purposes,
as he might or could do in person, hereby ratifying and confirming all that
each of said attorneys-in-fact and agents, or any of them, may lawfully 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 by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Craig A. Fleming President & Chief Executive Officer April 30, 1998
- --------------------------- (Principal Executive Officer)
Craig A. Fleming
/s/ Raymond A. Peterson Senior Vice President, Chief Financial April 30, 1998
- --------------------------- Officer (Principal Financial Officer)
Raymond A. Peterson
/s/ Greg H.L. Nash Controller April 30, 1998
- --------------------------- (Principal Accounting Officer)
Greg H.L. Nash
/s/ Kenneth E. Raasch Chairman April 30, 1998
- ---------------------------
Kenneth E. Raasch
/s/ Michael L. Kiley Director April 30, 1998
- ---------------------------
Michael L. Kiley
/s/ Thomas Kinkade Director April 30, 1998
- ---------------------------
Thomas Kinkade
/s/ Norman T. Mahoney Director April 30, 1998
- ---------------------------
Norman T. Mahoney
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Norman A. Nason Director April 30, 1998
- ---------------------------
Norman A. Nason
</TABLE>
9
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
NUMBER EXHIBIT NUMBERS
- ------ ------- -------
<S> <C> <C>
5.1 Opinion of Latham & Watkins 11
10.1 Media Arts Group, Inc. Employees Stock Option Plan 13
10.2 Form of Media Arts Group, Inc. Consultant Nonqualified 27
Stock Option Agreement
23.1 Consent of Price Waterhouse LLP 40
23.2 Consent of Latham & Watkins (incorporated in Exhibit 5.1) 11
24.1 Power of Attorney (incorporated in the Signature Pages to 7
the Registration Statement)
</TABLE>
10
<PAGE>
EXHIBIT 5.1
OPINION OF LATHAM & WATKINS
11
<PAGE>
April 30, 1998
Media Arts Group, Inc.
521 Charcot Avenue
San Jose, California 95131
Re: MEDIA ARTS GROUP, INC. COMMON STOCK $0.01 PAR VALUE
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement") which Media Arts Group, Inc. (the "Company")
intends to file with the Securities and Exchange Commission in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 400,000 shares of Common Stock, par value of $0.01 per share
(the "Shares") to be sold by the Company under the Media Arts Group, Inc.
Employees Stock Option Plan and Media Arts Group, Inc. Consultant
Nonqualified Stock Option Agreements dated as of May 21, 1997, June 19, 1997,
August 29, 1997, September 10, 1997, October 1, 1997, October 31, 1997 and
December 1, 1997 (collectively, the "Plans"). We are familiar with the
proceedings undertaken and to be taken in connection with the authorization,
issuance and sale of the Shares. Additionally, we have examined such
questions of law and fact as we have considered necessary or appropriate for
purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized, and upon issuance of the Shares under the terms of the
Plans and delivery and payment therefor of legal consideration in excess of
the aggregate par value of the Shares issued, such Shares will be validly
issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ LATHAM & WATKINS
LATHAM & WATKINS
12
<PAGE>
EXHIBIT 10.1
MEDIA ARTS GROUP, INC. EMPLOYEES STOCK OPTION PLAN
13
<PAGE>
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.
14
<PAGE>
(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
15
<PAGE>
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.
16
<PAGE>
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
17
<PAGE>
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.
18
<PAGE>
(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
-------------------------------
And: /s/ JAMES F. LANDRUM, JR.
------------------------------
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EXHIBIT 10.2
FORM OF MEDIA ARTS GROUP, INC.
CONSULTANT NONQUALIFIED STOCK OPTION AGREEMENT
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MEDIA ARTS GROUP, INC.
CONSULTANT NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), is
made and entered into as of ____________ between MEDIA ARTS GROUP, INC., a
Delaware corporation (the "Company"), and _________________ ("Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Option; Effective Date.
1.1 GRANT. The Company hereby grants to Optionee a
NONQUALIFIED stock option (the "NQO") to purchase all or any part of an
aggregate of _______ shares (the "NQO Shares") of the Company's common stock
("Common Stock") on the terms and conditions set forth herein.
1.2 EFFECTIVE DATE. The effective date of this NQO is
_____________ ("Effective Date").
2. EXERCISE PRICE. The exercise price for purchase of the shares
of Common Stock covered by this NQO shall be $____ per share.
3. TERM. Subject to Section 5.2, this NQO shall expire on the
tenth anniversary of the Effective Date.
4. ADJUSTMENT OF NQOS. The Company shall adjust the number and
kind of shares and the exercise price thereof in the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
spin-off, sale of substantial assets, or other change in corporate structure
affecting the Common Stock; provided, that the number of shares subject to
this NQO shall always be rounded down to the nearest whole number.
5. EXERCISE OF OPTIONS.
5.1 TIME OF EXERCISE. This NQO shall be exercisable with
respect to 100% of the NQO Shares commencing on __________.
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5.2 EXERCISE AFTER TERMINATION OF CONSULTANT STATUS. In the
event that Optionee ceases to be a consultant of the Company or any of its
subsidiaries for any reason other than death or permanent disability, this
NQO may be exercised at any time within three months after the date of
termination (but in no event after the expiration date of this NQO), but not
thereafter. If Optionee's termination is due to death or permanent
disability, or Optionee dies or becomes disabled within the period that this
NQO remains exercisable after termination, this NQO may be exercised by the
Optionee in the case of disability, by the Optionee's personal representative
or by the person to whom this NQO is transferred by will or the laws of
descent and distribution, at any time within one year after the death or one
year after the disability, as the case may be, of Optionee (but in no event
after the expiration of this NQO).
5.3 MANNER OF EXERCISE. Optionee may exercise this NQO, or
any portion of this NQO, by giving written notice to the Company at its
principal executive office, to the attention of the Secretary of the Company,
accompanied by a copy of the Stock Purchase Agreement in substantially the
form attached hereto as Exhibit 1 executed by Optionee (or at the option of
the Company such other form of stock purchase agreement as shall then be
acceptable to the Company), payment of the exercise price and payment of any
applicable withholding taxes. The date the Company receives written notice
of an exercise hereunder accompanied by payment will be considered as the
date this NQO was exercised.
Promptly after receipt of written notice of exercise of the NQO,
the Company shall, without stock issue or transfer taxes to the Optionee or
other person entitled to exercise, deliver to the Optionee or other person a
certificate or certificates for the requisite number of Shares. The Optionee
or transferee of the Optionee shall not have any privileges as a shareholder
with respect to any NQO Shares covered by this NQO until the date of issuance
of a stock certificate.
5.4 PAYMENT. Payment in full, in cash, shall be made for all
NQO Shares purchased at the time written notice of exercise of the NQO is
given to the Company, and proceeds of any payment shall constitute general
funds of the Company. At the time of exercise of the NQO (or at such later
time(s) as the Company may prescribe), the Optionee shall remit to the
Company
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all United States federal and state withholding taxes determined by the
Company to be applicable.
6. NONASSIGNABILITY OF NQO. This NQO is not assignable or
transferable by Optionee except by will, the laws of descent and distribution
and to the extent approved by the Committee, pursuant to a qualified domestic
relations order as defined by the Code or the rules thereunder. Except as
otherwise provided in Section 5.2 in the event of an Optionee's death or
disability, only the Optionee may exercise the NQO. Any attempt to assign,
pledge, transfer, hypothecate or otherwise dispose of this NQO in a manner
not herein permitted, and any levy of execution, attachment or similar
process on this NQO, shall be null and void.
7. MARKET STANDOFF. Optionee hereby agrees that if so requested
by the Company or any representative of the underwriters in connection with
any registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "Act"), Optionee shall not sell or
otherwise transfer any shares acquired upon exercise of this NQO (the
"Exercised Shares") for a period of up to 365 days following the effective
date of a Registration Statement filed under the Act. The Company may impose
stop-transfer instructions with respect to the Exercised Shares subject to
the foregoing restrictions until the end of each such 365-day period.
8. RESTRICTION ON ISSUANCE OF SHARES.
8.1 LEGALITY OF ISSUANCE. The Company shall not be obligated
to sell or issue any Exercised Shares pursuant to this Agreement if such sale
or issuance, in the opinion of the Company and the Company's counsel, might
constitute a violation by the Company of any provision of law, including
without limitation the provisions of the Act.
8.2 REGISTRATION OR QUALIFICATION OF SECURITIES. The Company
may, but shall not be required to, register or qualify the sale of this NQO
or any Exercised Shares under the Act or any other applicable law. The
Company shall not be obligated to take any affirmative action in order to
cause the grant or exercise of this option or the issuance or sale of any
Exercised Shares pursuant thereto to comply with any law.
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9. RESTRICTION ON TRANSFER. Regardless of whether the sale of
the Exercised Shares has been registered under the Act or has been registered
or qualified under the securities laws of any state, the Company may impose
restrictions upon the sale, pledge or other transfer of Exercised Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Company and the Company's counsel, such restrictions are
necessary or desirable in order to achieve compliance with the provisions of
the Act, the securities laws of any state, or any other law.
10. STOCK CERTIFICATE RESTRICTIVE LEGENDS. Stock certificates
evidencing Exercised Shares may bear such restrictive legends as the Company
and the Company's counsel deem necessary or advisable under applicable law or
pursuant to this Agreement, including, without limitation, the following
legends:
"The offering and sale of the securities represented hereby
have not been registered under the Securities Act of 1933, as
amended (the "Act"). Any transfer of such securities will be
invalid unless a Registration Statement under the Act is in effect
as to such transfer or in the opinion of counsel for the Company
such registration is unnecessary in order for such transfer to
comply with the Act."
"The securities represented hereby are subject to restrictions
on transfer for a period of 365 days following the effective date
of a registration statement under the Act for an offering of the
Company's securities as more fully provided in an agreement
relating to the option to purchase such securities."
11. INFORMATION TO OPTIONEE. During the period this NQO is
outstanding, the Company shall provide Optionee on an annual or other
periodic basis financial and other information regarding the Company in
accordance with Rule 260.140.41.2 promulgated under the California Corporate
Securities Law of 1968, if applicable.
12. ASSIGNMENT; BINDING EFFECT. Subject to the limitations set
forth in this Agreement, this Agreement shall be binding upon and inure to
the benefit of the executors,
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administrators, heirs, legal representatives and successors of the parties
hereto; provided, however, that Optionee may not assign any of Optionee's
rights under this Agreement.
13. DAMAGES. Optionee shall be liable to the Company for all
costs and damages, including incidental and consequential damages, resulting
from a disposition of shares which is not in conformity with the provisions
of this Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts entered into and wholly to be performed within the State of
California by California residents. The parties agree that the exclusive
jurisdiction and venue of any action with respect to this Agreement shall be
in the Superior Court of California for the County of San Jose or the United
States District Court for the Northern District of California, and each of
the parties hereby submits to the exclusive jurisdiction and venue of such
courts for the purpose of such action. The parties agree that service of
process in any such action may be effected by delivery of the summons to the
parties in the manner provided for delivery of notices set forth in Section
15.
15. NOTICES. All notices and other communications under this
Agreement shall be in writing. Unless and until the Optionee is notified in
writing to the contrary, all notices, communications and documents directed
to the Company and related to the Agreement, if not delivered by hand, shall
be mailed, addressed as follows:
MEDIA ARTS GROUP, INC.
521 Charcot Avenue
San Jose, California 95131
Attn: James F. Landrum, Jr.
Snr. Vice President & General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for the Optionee and related
to this Agreement, if not delivered by hand, shall be mailed to Optionee's
last known address as shown on the Company's books. Notices and
communications shall be mailed by first class mail, postage prepaid;
documents shall be mailed by registered mail, return receipt requested,
postage
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prepaid. All mailings and deliveries related to this Agreement shall be
deemed received only when actually received.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the Effective Date.
MEDIA ARTS GROUP, INC.
By:___________________________________
Chief Executive Officer & President
The Optionee hereby accepts and agrees to be bound by all of the
terms and conditions of this Agreement.
Optionee's spouse indicates by the execution of this NONQUALIFIED
Stock Option Agreement his/her consent to be bound by the terms thereof as to
his/her interests, whether as community property or otherwise, if any, in the
options granted hereunder, and in any Exercised Shares purchased pursuant to
this Agreement.
___________________________________
EXHIBITS
Exhibit 1 from Section 5.3 Stock Purchase Agreement
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EXHIBIT 1 FROM SECTION 5.3 OF THE
MEDIA ARTS GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
MEDIA ARTS GROUP, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of _________________, 199_, between MEDIA ARTS GROUP, INC., a
California corporation doing business in the State of California under the
name MAGI (the "Company"), and ___________ ("Purchaser").
THE PARTIES AGREE AS FOLLOWS:
1. PURCHASE OF SHARES. Pursuant to an NONQUALIFIED stock option
agreement ("Option Agreement") between the parties attached hereto as Exhibit
1, the Company hereby sells to Purchaser, and Purchaser hereby buys from the
Company, ______________ shares (the "Exercised Shares") of the Company's
Common Stock ("Common Stock") on the terms and conditions set forth herein
and in the Option Agreement, the terms and conditions of the Option Agreement
being hereby incorporated into this Agreement by reference.
2. PURCHASE PRICE. Purchaser shall purchase the Exercised Shares
from the Company, and the Company shall sell the Exercised Shares to
Purchaser, at a price of $_______ per share (the "Exercise Price"), for a
total purchase price of $_____ (the "Purchase Price").
3. MANNER OF PAYMENT. Purchaser shall pay the Purchase Price of
the Exercised Shares in cash.
4. STOCK CERTIFICATE RESTRICTIVE LEGENDS. Stock certificates
evidencing Exercised Shares may bear such restrictive legends as the Company
and the Company's counsel deem necessary or advisable under applicable law or
pursuant to this Agreement, including without limitation, the following
legends:
"The offering and sale of the securities represented hereby
have not been registered under the Securities Act of 1933, as
amended (the "Act"). Any transfer of such securities will be
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invalid unless a Registration Statement under the Act is in effect
as to such transfer or in the opinion of counsel for the Company
such registration is unnecessary in order for such transfer to
comply with the Act."
"The securities represented hereby are subject to restrictions
on transfer for a period of 365 days following the effective date
of a registration statement under the Act for an offering of the
Company's securities as more fully provided in an agreement
relating to the option to purchase such securities."
5. REPRESENTATIONS, WARRANTIES, COVENANTS, AND ACKNOWLEDGMENTS OF
PURCHASER. Purchaser hereby represents, warrants, covenants, acknowledges
and agrees that:
5.1 INVESTMENT. Purchaser is acquiring the Exercised Shares
for Purchaser's own account, and not for the account of any other person.
Purchaser is acquiring the Exercised Shares for investment and not with a
view to distribution or resale thereof except in compliance with applicable
laws regulating securities.
5.2 BUSINESS EXPERIENCE. Purchaser is capable of evaluating
the merits and risks of Purchaser's investment in the Company evidenced by
the purchase of the Exercised Shares.
5.3 RELATION OF COMPANY. Purchaser is presently a consultant
or advisor to, the Company and in such capacity has become personally
familiar with the business, affairs, financial condition and results of
operations of the Company.
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5.4 ACCESS TO INFORMATION. Purchaser has had the opportunity
to ask questions of, and to receive answers from, appropriate executive
officers of the Company with respect to the terms and conditions of the
transactions contemplated hereby and with respect to the business, affairs,
financial condition, and results of operations of the Company. Purchaser has
had access to such financial and other information as is necessary in order
for Purchaser to make a fully-informed decision as to investment in the
Company by way of purchase of the Exercised Shares, and has had the
opportunity to obtain any additional information necessary to verify any of
such information to which Purchaser has had access.
5.5 SPECULATIVE INVESTMENT. Purchaser's investment in the
Company represented by the Exercised Shares is highly speculative in nature
and is subject to a high degree of risk of loss in whole or in part. The
amount of such investment is within Purchaser's risk capital means and is not
so great in relation to Purchaser's total financial resources as would
jeopardize the personal financial needs of Purchaser or Purchaser's family in
the event such investment were lost in whole or in part.
5.6 REGISTRATION. Purchaser may bear the economic risk of
investment for an indefinite period of time in the event the sale to
Purchaser of the Exercised Shares is not registered under the Securities Act
of 1933, as amended (the "Act"), and the Exercised Shares cannot be
transferred by Purchaser unless such transfer is registered under the Act or
an exemption from such registration is available. The Company has made no
agreements or covenants to register the transfer of any of the Shares under
the Act. The Company has made no representations, warranties, or covenants
whatsoever as to whether any exemption from the Act, including without
limitation any exemption for limited sales in routine brokers' transactions
pursuant to Rule 144, will be available; if the exemption under Rule 144 is
available at all, it will not be available until at least two years after
payment of cash for the Exercised Shares and not then unless: (a) a public
trading market then exists in the Company's common stock; (b) adequate
information as to the Company's financial and other affairs and operations is
then available to the public; and (c) all other terms and conditions of Rule
144 have been satisfied.
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5.7 PUBLIC TRADING. The Company has made no representation,
covenant or agreement as to whether there will continue to be a public market
for its Common Stock.
5.8 TAX ADVICE. The Company has made no warranties or
representations to Purchaser with respect to the income tax consequences of
the transactions contemplated by this Agreement or the Option Agreement and
Purchaser is in no manner relying on the Company or its representatives for
an assessment of such tax consequences.
6. BINDING EFFECT. Subject to the limitations set forth in this
Agreement, this Agreement shall be binding upon, and inure to the benefit of,
the executors, administrators, heirs, legal representatives, successors and
assigns of the parties hereto.
7. TAXES. The Company may require Purchaser to pay to the
Company, any applicable withholding taxes resulting from the purchase of
Exercised Shares hereunder or from the lapse of any restrictions imposed on
the Exercised Shares.
8. DAMAGES. Purchaser shall be liable to the Company for all
costs and damages, including incidental and consequential damages, resulting
from a disposition of Exercised Shares which is not in conformity with the
provisions of this Agreement.
9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts entered into and wholly to be performed within the State of
California by California residents. The parties agree that the exclusive
jurisdiction and venue of any action with respect to this Agreement shall be
in the Superior Court of California for the County of San Jose or the United
States District Court for the Northern District of California, and each of
the parties hereby submits to the exclusive jurisdiction and venue of such
courts for the purpose of such action. The parties agree that service of
process in any such action may be effected by delivery of the summons to the
parties in the manner provided for delivery of notices set forth in Section
10.
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10. NOTICES. All notices and other communications under this
Agreement shall be in writing. Unless and until Purchaser is notified in
writing to the contrary, all notices, communications and documents directed
to the Company and related to the Agreement, if not delivered by hand, shall
be mailed, addressed as follows:
MEDIA ARTS GROUP, INC.
521 Charcot Ave.
San Jose, California 95131
Attn: James F. Landrum, Jr.
Snr. Vice President & General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for Purchaser and related to
this Agreement, if not delivered by hand, shall be mailed to Purchaser's last
known address as shown on the Company's books. Notices and communications
shall be mailed by registered mail, return receipt requested, postage
prepaid. All mailings and deliveries related to this Agreement shall be
deemed received only when actually received.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MEDIA ARTS GROUP, INC.
By ______________________________
Title ___________________________
Purchaser hereby accepts and agrees to be bound by all of the terms
and conditions of this Agreement.
_________________________________
Purchaser's spouse indicates by the execution of this Agreement her
consent to be bound by the terms herein as to her interests, whether as
community property or otherwise, if any, in the Exercised Shares hereby
purchased.
_________________________________
Purchaser's Spouse
EXHIBITS
Exhibit 1 from Section 1
39
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EXHIBIT 23.1
CONSENT OF PRICE WATERHOUSE LLP
40
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We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 15, 1998 which appears on
page F-2 of Media Arts Group, Inc.'s Registration Statement on Form S-1
dated February 19, 1998.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
April 30, 1998
41
