TOUCHTUNES MUSIC CORPORATION
2000 LONG - TERM INCENTIVE PLAN
1. Definitions. In this Plan, except where the context otherwise
indicates, the following definitions shall apply:
1.1 "Affiliate" means a corporation, partnership, business trust,
limited liability company or other form of business organization at least a
majority of the total combined voting power of all classes of stock or other
equity interests of which is owned by the Company, either directly or through
one or more other Affiliates.
1.2 "Agreement" means a written agreement evidencing an Award.
1.3 "Award" means a grant of an Option, Performance Award,
Restricted Stock, or Incentive Shares.
1.4 "Board" means the Board of Directors of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Committee" means such committee(s), subcommittee(s) or
person(s) appointed by the Board to administer this Plan or to make and/or
administer specific Awards hereunder. If no such appointment is in effect at
any time, "Committee" shall mean the Board.
1.7 "Common Stock" means the Class A voting common stock, par value
$.001 per share, of the Company.
1.8 "Company" means TouchTunes Music Corporation, and any successor
thereto.
1.9 "Date of Exercise" means the date on which the Company receives
notice of the exercise of an Option in accordance with the terms of Section
7.1.
1.10 "Date of Grant" means the date on which an Option is granted.
1.11 "Eligible Person" means any person who is (a) an Employee (b)
hired to be an Employee, (c) a Non-Employee Director or (d) a consultant or
independent contractor to the Company or an Affiliate and who is determined by
the Committee to render key services to the Company or an Affiliate.
1.12 "Employee" means any person determined by the Committee to be an
employee of the Company or an Affiliate.
1.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.14 "Fair Market Value" means an amount equal to the then fair
market value of a Share as determined by the Committee pursuant to a reasonable
method adopted in good faith for such purpose, or, unless otherwise determined
by the Committee, if the Shares are traded on a securities exchange or
automated dealer quotation system, fair market value shall be the last sale
price for a Share, as of the relevant date, on such securities exchange or
1
automated dealer quotation system as reported by such source as the Committee
may select.
1.15 "Incentive Shares" means an award providing for the contingent
grant of Shares pursuant to the provisions of Section 9.
1.16 "Incentive Stock Option" means an Option granted under this Plan
that the Company designates as an incentive stock option under Section 422 of
the Code.
1.17 "Non-Employee Director" means any member of the Company's or an
Affiliate's Board of Directors who is not an Employee.
1.18 "Nonstatutory Stock Option" means an Option granted under this
Plan that is not an Incentive Stock Option.
1.19 "Option" means an option to purchase Shares granted under this
Plan in accordance with the terms of Section 6.
1.20 "Option Period" means the period during which an Option may be
exercised.
1.21 "Option Price" means the price per Share at which an Option may
be exercised.
1.22 "Participant" means an Eligible Person who has received an Award
hereunder.
1.23 "Performance Award" means a performance award granted under the
Plan in accordance with the terms of Section 10.
1.24 "Performance Goals" means performance goals established by the
Committee which may be based on earnings or earnings growth, sales, return on
assets, cash flow, total shareholder return, equity or investment, regulatory
compliance, satisfactory internal or external audits, improvement of financial
ratings, achievement of balance sheet or income statement objectives, or any
other objective goals established by the Committee, and may be absolute in
their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. Such performance standards may be
particular to an Eligible Person or the department, branch, Affiliate or other
division in which he or she works, or may be based on the performance of the
Company or the Company and its Affiliates generally, and may cover such period
as may be specified by the Committee.
1.25 "Plan" means the TouchTunes Music Corporation 2000 Long-Term
Incentive Plan, as amended from time to time.
1.26 "Restricted Stock" means Shares awarded under the Plan pursuant
to the provisions of Section 8.
1.27 "Section 422 Employee" means any person who is determined by the
Committee to be an employee of the Company or a parent or subsidiary
corporation of the Company as defined in Section 424 of the Code (but
substituting "the Company" for "employer corporation").
1.28 "Share" means a share of Common Stock.
2
1.29 "Ten-Percent Stockholder" means a Participant who (applying the
rules of Section 424(d) of the Code) owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or an
Affiliate.
2. Purpose. This Plan is intended to assist the Company and its
Affiliates in attracting and retaining Eligible Persons of outstanding ability
and to promote the identification of their interests with those of the
stockholders of the Company and its Affiliates.
3. Administration. The Committee shall administer this Plan and shall
have plenary authority, in its discretion, to grant Options, Restricted Stock,
Incentive Shares and Performance Awards to Eligible Persons, subject to the
provisions of this Plan. The Committee shall have plenary authority and
discretion, subject to the provisions of this Plan, to determine the Eligible
Persons to whom Awards shall be granted, the terms (which terms need not be
identical) of all Awards, including without limitation the Option Price of
Options, the time or times at which Awards are made, the number of Shares
covered by Awards, whether an Option shall be an Incentive Stock Option or a
Nonstatutory Stock Option, any exceptions to non-transferability, any
Performance Goals applicable to Awards, any provisions relating to vesting, and
the period during which Options may be exercised and Restricted Stock shall be
subject to restrictions. In making these determinations, the Committee may
take into account the nature of the services rendered or to be rendered by the
Award recipients, their present and potential contributions to the success of
the Company and its Affiliates, and such other factors as the Committee in its
discretion shall deem relevant. Subject to the provisions of the Plan, the
Committee shall have plenary authority to interpret the Plan, prescribe, amend
and rescind rules and regulations relating to it, and make all other
determinations deemed necessary or advisable for the administration of this
Plan. The determinations of the Committee on the matters referred to in this
Section 3 shall be binding and final.
4. Eligibility. Options, Restricted Stock, Incentive Shares and
Performance Awards may be granted only to Eligible Persons; provided, however,
that Incentive Stock Options may not be granted to Eligible Persons who are not
Employees.
5. Stock Subject to Plan.
5.1 Subject to adjustment as provided in Section 11, (a) the maximum
number of Shares that may be issued under this Plan is 7,000,000 Shares plus an
additional number each year equal to fifteen percent (15%) (or such lesser
number as approved by the Board) of any Shares newly issued by the Company
during such year (other than pursuant to a capital adjustment described in
Section 11), and (b) the maximum number of Shares with respect to which an
Employee may be granted Options under this Plan during its term is 3,000,000
Shares. Notwithstanding the foregoing, subject to adjustment as provided in
Section 11, Incentive Stock Options may not be granted under the Plan with
respect to more than 15,000,000 Shares.
5.2 If an Option expires or terminates for any reason without having
been fully exercised, if Shares of Restricted Stock are forfeited or if Shares
covered by an Incentive Share Award or Performance Award are not issued or are
forfeited, the unissued or forfeited Shares that had been subject to the Award
shall become available for the grant of additional Awards. In no event shall
3
Shares which, under this Plan, are authorized to be used in payment of any
Incentive Shares or Performance Awards be deemed to be unavailable for purposes
of the Plan until such Shares have been issued in payment of such Awards in
accordance with the provisions of Sections 9 and 10.
6. Options.
6.1 Options granted under this Plan to Eligible Persons shall be
either Incentive Stock Options or Nonstatutory Stock Options, as designated by
the Committee; provided, however, that Incentive Stock Options may not be
granted to Eligible Persons who are not Section 422 Employees. Each Option
granted under this Plan shall be clearly identified either as a Nonstatutory
Stock Option or an Incentive Stock Option and shall be evidenced by an
Agreement that specifies the terms and conditions of the grant. Options shall
be subject to the terms and conditions set forth in this Section 6 and such
other terms and conditions not inconsistent with this Plan as the Committee may
specify.
6.2 The price per share of Common Stock at which an Incentive Stock
Option under this Plan may be exercised shall not be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the Date of
Grant. Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to a Section 422 Employee who, at the time of grant, is a Ten Percent
Shareholder, the exercise price per share shall not be less than one hundred
and ten percent (110%) of the Fair Market Value of the Common Stock on the date
on which the Option is granted.
6.3 The Option Period shall be determined by the Committee and
specifically set forth in the Agreement; provided, however, that an Option
shall not be exercisable after ten years (five years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder) from its Date of
Grant.
6.4 The Committee, in its discretion, may provide in an Agreement
for the right of a Participant to surrender to the Company an Option (or a
portion thereof) that has become exercisable and to receive upon such
surrender, without any payment to the Company (other than required tax
withholding amounts) that number of Shares (equal to the highest whole number
of Shares) having an aggregate fair market value as of the date of surrender
equal to that number of Shares subject to the Option (or portion thereof) being
surrendered multiplied by an amount equal to the excess of (i) the Fair Market
Value on the date of surrender over (ii) the Option Price, plus an amount of
cash equal to the fair market value of any fractional Share to which the
Participant would be entitled but for the parenthetical above relating to whole
number of Shares. Any such surrender shall be treated as the exercise of the
Option (or portion thereof).
7. Exercise of Options.
7.1 An Option may, subject to the terms of the applicable Agreement
under which it was granted, be exercised in whole or in part by the delivery to
the Company of written notice of the exercise, in such form as the Committee
may prescribe, accompanied, in the case of an Option, by (a) a full payment for
the Shares with respect to which the Option is exercised or (b) irrevocable
instructions to a broker to deliver promptly to the Company cash equal to the
exercise price of the Option. To the extent provided in the applicable Option
4
Agreement, payment may be made in whole or in part by delivery (including
constructive delivery) of Shares (provided that such Shares, if acquired
pursuant to an option granted hereunder or under any other plan maintained by
the Company or any Affiliate, have been held by the Participant for at least
six (6) months) valued at Fair Market Value on the Date of Exercise or by
delivery of a promissory note as provided in Section 7.2 hereof.
7.2 To the extent provided in an Agreement and permitted by
applicable law, the Committee may accept as partial payment of the Option Price
a promissory note executed by the Participant evidencing his or her obligation
to make future cash payment thereof. Promissory notes made pursuant to this
Section 7.2 shall be payable upon such terms as may be determined by the
Committee, shall be secured by a pledge of the Shares received upon exercise of
the Option, or other securities the Committee may deem to be acceptable for
such purposes, and shall bear interest at a rate fixed by the Committee.
8. Restricted Stock Awards.
8.1 Restricted Stock awards under this Plan shall consist of Shares
that are restricted as to transfer, subject to forfeiture, and subject to such
other terms and conditions as may be determined by the Committee. Such terms
and conditions may provide, in the discretion of the Committee, for the lapse
of such transfer restrictions or forfeiture provisions to be contingent upon
the achievement of one or more specified Performance Goals.
8.2 Restricted Stock awards under this Plan shall be evidenced by
Agreements specifying the terms and conditions of the Award. Each Agreement
evidencing an Award of Restricted Stock shall contain the following:
(a) prohibitions against the sale, assignment, transfer,
exchange, pledge, hypothecation, or other encumbrance of (i) the Shares awarded
as Restricted Stock, (ii) the right to vote the Shares, and (iii) the right to
receive dividends thereon, in each case during, the restriction period
applicable to the Shares; provided, however, that the Participant shall have
all the other rights of a stockholder including without limitation the right to
receive dividends and the right to vote the Shares;
(b) a requirement that each certificate representing Shares of
Restricted Stock shall be deposited with the Company, or its designee, and
shall bear the following legend:
"This certificate and the shares of stock represented
hereby are subject to the terms and conditions
(including the risks of forfeiture and restrictions
against transfer) contained in the TouchTunes Music
Corporation 2000 Long-Term Incentive Plan, and an
Agreement entered into between the registered owner
and TouchTunes Music Corporation. Release from such
terms and conditions shall be made only in accordance
with the provisions of this Plan and the Agreement, a
copy of each of which is on file in the office of the
Secretary of TouchTunes Music Corporation."
(c) the terms and conditions upon which any restrictions
applicable to Shares of Restricted Stock shall lapse and new certificates free
5
of the foregoing legend shall be issued to the Participant or the Participant's
legal representative; and
(d) such other terms, conditions and restrictions as the
Committee in its discretion may specify, including without limitation terms
that condition the lapse of forfeiture provisions and transfer restrictions
upon the achievement of one or more specified Performance Goals.
9. Incentive Share Awards. Incentive Shares awarded under this Plan
shall be evidenced by an Agreement specifying the terms and conditions of such
Award. Incentive Share Awards shall provide for the issuance of Shares to a
Participant at such times and subject to such terms and conditions as
determined by the Committee, including without limitation terms that condition
the issuance of Shares upon the achievement of one or more specified
Performance Goals.
10. Performance Awards. Performance Awards granted under this Plan shall
be evidenced by an Agreement specifying the terms and conditions of such Award.
Performance Awards shall become payable on account of attainment of one or more
specified Performance Goals. Performance Awards may be paid by the delivery
of Common Stock or cash, or any combination of Common Stock and cash, as
specified in the Agreement. If a Performance Award is paid in cash, the Award
shall be deemed, for purposes of Section 5.1 hereof, to cover a number of
shares of Common Stock equal to the quotient obtained by dividing the dollar
amount of the Award payment by the Fair Market Value of a Share as of the date
of payment, rounded to the next highest whole number.
11. Capital Adjustments. In the event of any change in the outstanding
Common Stock by reason of any stock dividend, split-up, recapitalization,
reclassification, combination or exchange of shares, merger, consolidation,
liquidation or the like, the Committee may, in its discretion, provide for a
substitution for or adjustment in (a) the number and class of Shares subject to
outstanding Options, and Awards of Restricted Stock, Incentive Shares or
Performance Awards, (b) the Option Price of Options, (c) the aggregate number
and class of Shares for which Awards thereafter may be made under this Plan,
(d) the maximum number of Shares with respect to which an Employee may be
granted Options during the period specified in Section 5.1(b) and (e) the
maximum number of Shares with respect to which Incentive Stock Options may be
granted.
12. Termination or Amendment. The Board may amend, alter or terminate
this Plan in any respect at any time; provided, however, that, after this Plan
has been approved by the stockholders of the Company, no amendment, alteration
or termination of this Plan shall be made by the Board without approval of (a)
the Company's stockholders to the extent stockholder approval of the amendment
is required by applicable law or regulations or the requirements of the
principal exchange or interdealer quotation system on which the Common Stock is
listed or quoted, if any, and (b) each affected Participant if such amendment,
alteration or termination would adversely affect such Participant's rights or
obligations under any Award made prior to the date of such amendment,
alteration or termination.
13. Modification, Extension, Renewal, Substitution.
13.1 The Committee may modify, extend or renew outstanding Options,
or accept the surrender of outstanding Options granted under this Plan or
6
options granted under any other plan of the Company or an Affiliate (to the
extent not theretofore exercised), and authorize the granting of new Options
pursuant to this Plan in substitution therefor. Any substituted Options may
specify a lower exercise price than the surrendered options, a longer term than
the surrendered options, or have any other provisions that are authorized by
this Plan. Subject to the terms and conditions of this Plan, the Committee may
modify the terms of any outstanding Awards. Notwithstanding the foregoing,
however, no modification of an Award shall, without the consent of the
Participant, alter or impair any of the Participant's rights or obligations
under such Award.
13.2 Anything contained herein to the contrary notwithstanding,
Options, Restricted Stock, Incentive Shares and Performance Awards may, at the
discretion of the Committee, be granted under this Plan in substitution for
options and such other awards covering capital stock of another corporation
which is merged into, consolidated with, or all or a substantial portion of the
property or stock of which is acquired by, the Company or one of its
Affiliates. The terms and conditions of the substitute Awards so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Committee may deem appropriate in order to conform, in whole or part, to the
provisions of the awards in substitution for which they are granted. Such
substitute Options granted hereunder shall not be counted toward the Share
limit imposed by Section 5.1(b), except to the extent it is determined by the
Committee that counting such Options is required in order for Options hereunder
to be eligible to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Code.
14. Effectiveness of this Plan. This Plan and any amendments hereto
requiring stockholder approval pursuant to Section 12 are subject to approval
by vote of the stockholders of the Company at the next annual or special
meeting of stockholders following adoption by the Board. Subject to such
stockholder approval, this Plan and any amendments hereto are effective on the
date on which they are adopted by the Board.
15. Withholding. The Company's obligation to deliver Shares or pay any
amount pursuant to the terms of any Award hereunder shall be subject to
satisfaction of applicable federal, state and local tax withholding
requirements. To the extent provided in the applicable Agreement and in
accordance with rules prescribed by the Committee, a Participant may satisfy
any such withholding tax obligation by any of the following means or by a
combination of such means: (a) tendering a cash payment, (b) authorizing the
Company to withhold Shares otherwise issuable to the Participant, or (c)
delivering to the Company already-owned and unencumbered Shares.
16. Terms of this Plan. Unless sooner terminated by the Board pursuant
to Section 12, this Plan shall terminate on May 1, 2010, and no Awards may be
granted or awarded after such date. The termination of this Plan shall not
affect the validity of any Award outstanding on the date of termination.
17. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and reasonably
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
7
with this Plan or any Option, Restricted Stock, Incentive Shares or Performance
Awards granted hereunder, and against all amounts reasonably paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, if such members acted in good faith and in a manner
which they believed to be in, and not opposed to, the best interests of the
Company.
18. General Provisions.
18.1 The establishment of this Plan shall not confer upon any
Eligible Person any legal or equitable right against the Company, any Affiliate
or the Committee, except as expressly provided in this Plan.
18.2 This Plan does not constitute inducement or consideration for
the employment or service of any Eligible Person, nor is it a contract between
the Company or any Affiliate and any Eligible Person. Participation in this
Plan shall not give a an Eligible Person any right to be retained in the
service of the Company or any Affiliate.
18.3 Neither the adoption of this Plan nor its submission to the
stockholders, shall be taken to impose any limitations on the powers of the
Company or its Affiliates to issue, grant, or assume options, warrants, rights,
or restricted stock, or other awards otherwise than under this Plan, or to
adopt other stock option, restricted stock, or other plans or to impose any
requirement of stockholder approval upon the same.
18.4 Awards hereunder shall not be subject to the claims of creditors
and may not, in any way, be assigned, alienated or encumbered except to the
extent provided in an Agreement.
18.5 This Plan shall be governed, construed and administered in
accordance with the laws of the State of New York.
18.6 Section references herein are to sections of this Plan unless
otherwise indicated.
18.7 The Committee may require each person acquiring Shares pursuant
to Awards hereunder to represent to and agree with the Company in writing that
such person is acquiring the Shares without a view to distribution thereof.
The certificates for such Shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer. All certificates
for Shares issued pursuant to this Plan shall be subject to such stock transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed or
interdealer quotation system upon which the Common Stock is then quoted, and
any applicable federal or state securities laws. The Committee may place a
legend or legends on any such certificates to make appropriate reference to
such restrictions.
18.8 The Company shall not be required to issue any certificate or
certificates for Shares with respect to Awards under this Plan, or record any
person as a holder of record of such Shares, without obtaining, to the complete
satisfaction of the Committee, the approval of all regulatory bodies deemed
necessary by the Committee, and without complying to the Board's or Committee's
complete satisfaction, with all rules and regulations, under federal, state or
local law deemed applicable by the Committee.
8
