Document:

EX-4.3 Amended & Restated '01 Share Incentive Plan

 

Exhibit 4.3

CLAXSON INTERACTIVE GROUP INC.

AMENDED AND RESTATED 2001 SHARE INCENTIVE PLAN

 

 

CLAXSON INTERACTIVE GROUP INC.

AMENDED AND RESTATED 2001 SHARE INCENTIVE PLAN

SECTION 1. PURPOSE; DEFINITIONS

     The purpose of the Plan is to enable the Company to attract, retain and
motivate directors, officers, employees and/or consultants and to provide the
Company and its Subsidiaries and Affiliates with a share plan providing
incentives directly linked to the financial performance of the Company’s
businesses and to increases in the value of the Company for its shareholders.

     For purposes of the Plan, the following terms are defined as set forth
below:

     (a) “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, is controlled by, controls, or is under common control
with, such Person.

     (b) “Awards” mean Share Options or Restricted Shares granted pursuant to
the Plan.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Cause” means, unless otherwise provided in a written Award agreement,
(i) “Cause,” as defined in any individual Agreement to which the participant is
a party, or (ii) if there is no such Individual Agreement or if it does not
define Cause: (A) the willful refusal of the participant to perform in any
material respect the participant’s duties or responsibilities or the failure of
the participant to comply in any material respect with the Company’s policies
and procedures, (B) the participant’s conviction of, or entry of a plea of
guilty or nolo contendere to, a felony, (C) the participant’s fraud or other
illegal conduct in the performance of the participant’s duties for the Company,
or (D) the participant’s willful and material violation of applicable U.S.
(federal, state, or local) or non-U.S. securities laws or regulations, or of
applicable stock exchange rules and regulations. The Committee shall, unless
otherwise provided in an Individual Agreement with the participant, have the
sole discretion to determine whether “Cause” exists, and its determination
shall be final.

     (e) “Change in Control” has the meaning set forth in Section 7(b).

     (f) “Cisneros Entities” means Carlton Investments LLC, Carlyle Investments
LLC, any Affiliate of either Carlton Investments LLC or Carlyle Investments
LLC, and any member or members of the Cisneros Family.

     (g) “Cisneros Family” shall mean Ricardo Cisneros or Gustavo Cisneros,
members of their immediate families and their lineal descendants, any trusts or
entities established primarily for the benefit of any such persons, and any
entities controlled directly or indirectly by any such individuals or entities.

     (h) “Code” means the U.S. Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

 

 

     (i) “Combination Agreement” means that Combination Agreement dated October
30, 2000, as amended as of June 26, 2001 and August 7, 2001, by and among
Claxson Interactive Group Inc., (formerly known as New Site Inc.), Carlyle
Investments LLC and Carlton Investments LLC, (as assignees of Newhaven Overseas
Corp.), Ibero-American Media Partners II Ltd., Hicks, Muse, Tate & Furst Latin
America Fund, L.P., Hicks, Muse, Tate & Furst Latin America Private Fund, L.P.,
HMLA 1-SBS Coinvestors, L.P., and El Sitio, Inc.

     (j) “Combination Agreement Effective Time” shall mean the Effective Time
(as defined in the Combination Agreement).

     (k) “Commission” means the U.S. Securities and Exchange Commission or any
successor agency.

     (l) “Committee” means the Committee referred to in Section 2.

     (m) “Common Shares” means Class A Common Shares of the Company, par value
US $.01 per share.

     (n) “Company” means Claxson Interactive Group Inc., a British Virgin
Islands international business company.

     (o) “Covered Employee” means a participant designated prior to the grant
of an Award who is or may be a “covered employee” within the meaning of Section
162(m)(3) of the Code in the year in which such Award is, or is expected to be,
taxable to such participant.

     (p) “Disability” means, unless otherwise provided in a written Award
agreement, (i) “Disability” as defined in any Individual Agreement to which the
participant is a party, or (ii) if there is no such Individual Agreement or if
it does not define “Disability,” permanent and total disability as determined
under the Company’s Long-Term Disability Plan applicable to the participant,
or, if no such Long-Term Disability Plan is applicable, the inability of the
participant to perform in all material respects his or her duties and
responsibilities to the Company, its Subsidiaries, and its Affiliates, by
reason of a mental or physical disability or infirmity which is reasonably
expected to be permanent and which has continued for a period of six
consecutive months.

     (q) “Eligible Individuals” mean directors, officers, employees and
consultants of the Company or any of its Subsidiaries or Affiliates, and
prospective employees and consultants who have accepted offers of employment or
consultancy from the Company or its Subsidiaries or Affiliates, who are
providing, or will provide, bona fide services to the Company, or its
Subsidiaries or Affiliates.

     (r) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

     (s) “Fair Market Value” means, except as otherwise provided by the
Committee, as of any given date, the closing per-share sales price for the
Common Shares as reported on Nasdaq (or other such market or exchange on which
such prices are regularly quoted) for the immediately preceding date, or if the
Common Shares are regularly traded on Nasdaq (or other

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such market or exchange) but were not traded on Nasdaq (or other such
market or exchange) on such immediately preceding date, then on the next
preceding date on which Common Shares were traded on Nasdaq (or such other
market or exchange on which such shares were traded), all as reported by such
source as the Committee may select. If there is no market or exchange upon
which Common Shares are regularly traded, the Fair Market Value shall mean the
value established by the Committee in good faith.

     (t) “Founders” has the meaning set forth in the Combination Agreement.

     (u) “Hicks Muse Entities” means Hicks, Muse, Tate & Furst Latin America
Fund, L.P., Hicks, Muse, Tate & Furst Latin America Private Fund, L.P., HMLA
1-SBS Coinvestors, L.P., and any Affiliate of any of Hicks, Muse, Tate & Furst
Latin America Fund, L.P., Hicks, Muse, Tate & Furst Latin America Private Fund,
L.P., or HMLA 1-SBS Coinvestors, L.P.

     (v) “Incentive Share Option” means any Share Option designated as, and
qualified as, an “incentive stock option” within the meaning of Section 422 of
the Code.

     (w) “Individual Agreement” means any written employment, consulting or
similar agreement between a participant and the Company or one of its
Subsidiaries or Affiliates.

     (x) “Non-Qualified Share Option” means any Share Option that is not an
Incentive Share Option.

     (y) “Performance Goals” means the performance goals that may be
established by the Committee in writing in connection with the grant of
Restricted Shares. In the case of Qualified Performance-Based Awards, (i) such
goals shall be based on the attainment of specified levels of one or more of
the following measures: earnings per share, sales, net profit after tax,
operating profit, cash generation, unit volume, return on equity, increase in
working capital, return on capital or shareholder return, and (ii) such
Performance Goals shall be set by the 162(m) Committee (and ratified by the
Board) within the time period prescribed by, and otherwise structured and
administered in a manner designed to satisfy, Section 162(m) of the Code and
related regulations.

     (z) “Person” means an individual, entity or group (within the meaning of
Sections 13(d)(3) or 14(d)(2) of the Exchange Act).

     (aa) “Plan” means the Claxson Interactive Group Inc. 2001 Share Incentive
Plan, as set forth herein and as hereinafter amended from time to time.

     (bb) “Qualified Performance-Based Award” means an Award of Restricted
Shares designated as such by the Board at the time of grant, based upon a
determination that (i) the recipient is or may be a “covered employee” within
the meaning of Section 162(m)(3) of the Code in the year in which the Company
would expect to be able to claim a tax deduction with respect to such Award and
(ii) the Committee wishes such Award to qualify for the Section 162(m)
Exemption.

     (cc) “Restricted Shares” means an Award granted under Section 6.

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     (dd) “Restricted Shares Agreement” is defined in Section 6(c)(vi).

     (ee) “Retirement” means retirement from active employment or other service
with the Company, a Subsidiary or Affiliate at or after age 65.

     (ff) “Section 162(m) Exemption” means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.

     (gg) “Share Option” means an Award granted under Section 5.

     (hh) “Share Option Agreement” is defined in Section 5(m).

     (ii) “Subsidiary” means any corporation, partnership, joint venture or
other entity during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company or any successor to
the Company.

     (jj) “Termination of Service” means the termination of the participant’s
employment with, or performance of services for, the Company and any of its
Subsidiaries or Affiliates. A participant employed by, or performing services
for, a Subsidiary or an Affiliate shall also be deemed to incur a Termination
of Service if the Subsidiary or Affiliate ceases to be such a Subsidiary or an
Affiliate, as the case may be, and the participant does not immediately
thereafter become an employee of, or service provider for, the Company or
another Subsidiary or Affiliate. A temporary absence from employment because of
illness, vacation, leave of absence, or transfer among the Company and its
Subsidiaries and Affiliates shall not be considered to constitute a Termination
of Service.

     In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.

SECTION 2. ADMINISTRATION

     The Plan shall be administered by the Compensation Committee or such other
committee of the Board as the Board may from time to time designate (the
“Committee”); provided, however, that the grant and terms (including any
Performance Goals and target levels of achievement) of any Qualified
Performance-Based Award shall be determined by a separate subcommittee (the
“162(m) Committee”) composed solely of not less than two non-employee directors
who qualify as “independent directors” within the meaning of Rule 4200 of the
National Association of Securities Dealers, and as “outside directors” within
the meaning of Section 162(m) of the Code, which shall be appointed by, and
serve at the pleasure of, the Board; provided, further, that should any
participant be subject to Section 16 of the Exchange Act (to the extent, if
any, that Section 16 of the Exchange Act is applicable) with respect to Common
Shares subject to an Award, the Committee shall take all steps necessary to
ensure that such Award is granted in a manner designed to ensure that future
transactions with respect to such Common Shares will be exempt from the
short-swing profit recovery provisions of Section 16 of the Exchange Act (to
the extent, if any, that Section 16 of the Exchange Act is applicable),
including, if necessary, delegating the responsibilities to grant and establish
the terms of such Award to another committee or to a subcommittee.

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     The Committee shall have authority to grant Share Options pursuant to the
terms of the Plan to Eligible Individuals. The Board shall have the authority
to award Restricted Shares pursuant to the terms of the Plan to Eligible
Individuals.

     Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

     (a) To select the Eligible Individuals to whom Share Options may from time
to time be granted;

     (b) To determine whether and to what extent Incentive Share Options,
Non-Qualified Share Options, or any combination thereof are to be granted
hereunder;

     (c) To determine the number of Common Shares to be covered by each Share
Option granted hereunder;

     (d) To determine the terms and conditions of any Share Option granted
hereunder (including, but not limited to, the option price (subject to Section
5(a))), any vesting condition, restriction or limitation (which may be related
to the performance of the participant, the Company or any Subsidiary or
Affiliate), based on such factors as the Committee shall determine;

     (e) Subject to Section 8, to modify, amend or adjust the terms and
conditions of any Share Option, at any time or from time to time; and

     (f) To determine to what extent and under what circumstances Common Shares
and other amounts payable with respect to an Award may be deferred by a
participant.

     Except to the extent reserved to the Board, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable, to
interpret the terms and provisions of the Plan and of any Award issued under
the Plan (and any agreement relating thereto), to correct any defect or supply
any omission or reconcile any inconsistency in the manner the Committee deems
necessary or desirable, and to otherwise supervise the administration of the
Plan.

     The Committee may act only by a majority of its members then in office,
except that the Committee may, except to the extent prohibited by applicable
law or the applicable rules of a stock exchange or automated interdealer
securities market, allocate all or any portion of its responsibilities and
powers to any one or more of its members; provided that no such allocation may
be made that would cause Awards or other transactions under the Plan to cease
to be exempt from Section 16(b) of the Exchange Act (to the extent, if any,
that Section 16 of the Exchange Act is applicable) or, unless otherwise
permitted by the Board at any time, cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption. Any such allocation may be revoked by the Committee
or by the Board at any time.

     Any determination made by the Committee or pursuant to allocated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the

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Committee or the members thereof to whom authority has been allocated at
the time of the grant of the Award or, unless in contravention of any express
term of the Plan, at any time thereafter. All decisions made by the Committee
or the members thereof to whom authority has been allocated pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and Plan participants, unless determined otherwise by the Board.

     Any authority granted to the Committee may also be exercised by the full
Board, except to the extent that the grant or exercise of such authority would
cause any Award or transaction to become subject to (or lose an exemption
under) the short-swing profit recovery provisions of Section 16 of the Exchange
Act (to the extent, if any, that Section 16 of the Exchange Act is applicable).
To the extent that any permitted action taken by the Board conflicts with
action taken by the Committee, the Board action shall control.

SECTION 3. COMMON SHARES SUBJECT TO PLAN

     The maximum number of Common Shares that may be delivered to participants
and their beneficiaries under the Plan shall be 930,000, subject to adjustment
in accordance with this Section 3. No participant, other than the Chief
Executive Officer, Chief Financial Officer and Chief Operating Officer of the
Pay Television Division of the Company, may be granted Share Options covering
in excess of 85,000 Common Shares in any fiscal year of the Company; provided,
however, that Roberto Vivo-Chaneton, the initial Chairman of the Board and
Chief Executive Officer of the Company, shall receive an initial grant of Share
Options covering 185,389 Common Shares. None of the Chief Executive Officer,
Chief Financial Officer and Chief Operating Officer of the Pay Television
Division of the Company, may be granted Share Options covering in excess of
225,000 Common Shares in any fiscal year of the Company. Shares subject to an
Award under the Plan may be authorized and unissued shares or may be treasury
shares.

     If any Award is forfeited, or if any Share Option terminates, expires or
lapses without being exercised, Common Shares subject to such Awards shall
again be available for distribution in connection with Awards under the Plan.
To the extent any Common Shares subject to an Award are not delivered to a
participant because such shares are used to satisfy an applicable
tax-withholding obligation, such Common Shares shall not be deemed to have been
delivered for purposes of determining the maximum number of Common Shares
available for delivery under the Plan. The maximum number of Common Shares that
may be issued pursuant to Share Options intended to be Incentive Share Options
shall be 930,000 Common Shares. The maximum number of Common Shares that may be
issued pursuant to Share Options shall be 930,000 Common Shares. No more than
85,000 Common Shares may be subject to Qualified Performance-Based Awards
granted to any participant in any calendar year; provided, however, that each
of the Chief Executive Officer, Chief Financial Officer and Chief Operating
Officer of the Pay Television Division of the Company, may be granted up to
225,000 Common Shares in any calendar year that are subject to Qualified
Performance-Based Awards.

     In the event of any change in corporate capitalization (including, but not
limited to, a change in the number of Common Shares outstanding), such as a
stock split or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of Common Shares or
property of the Company, any reorganization (whether or not

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such reorganization comes within the definition of such term in Section
368 of the Code) or any partial or complete liquidation of the Company, the
Committee or Board may make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the Plan, and the maximum
limitation upon Share Options to be granted to any participant, in the number,
kind and option price of shares subject to outstanding Share Options, in the
number and kind of shares subject to outstanding Restricted Shares granted
under the Plan and/or such other equitable substitution or adjustments as it
may determine to be appropriate in its sole discretion; provided, however, that
the number of shares subject to any Award shall always be a whole number.

SECTION 4. ELIGIBILITY

     Share Options may be granted by the Committee under the Plan to Eligible
Individuals selected by the Committee, in its discretion. Restricted Shares may
be granted by the Board under the Plan to Eligible Individuals selected by the
Board, in its discretion.

SECTION 5. SHARE OPTIONS

     Share Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Share Options; and
Non-Qualified Share Options. Any Share Option granted under the Plan shall be
either an Incentive Share Option or a Non-Qualified Share Option, as the
Committee shall determine.

     The Committee shall have the authority to grant any optionee Incentive
Share Options, Non-Qualified Share Options or both types of Share Options;
provided, however, that grants hereunder are subject to the aggregate limit on
grants to individual participants set forth in Section 3. Incentive Share
Options may be granted only to employees of the Company and its subsidiaries or
parent corporation (within the meaning of Section 424(f) of the Code). To the
extent that any Share Option is not designated as an Incentive Share Option or
even if so designated does not qualify as an Incentive Share Option on or
subsequent to its grant date, it shall constitute a Non-Qualified Share Option.
Notwithstanding anything else contained herein, to the extent that any Share
Option is granted to an individual who the Committee determines to be a Covered
Employee, the responsibility to grant and establish the terms of such Share
Option shall be delegated to the 162(m) Committee, subject to the ratification
of such Award by the Board.

     The terms and provisions of Share Option Agreements need not be the same
for each participant, but must be in accordance with the terms of this Plan.
Each Share Option Agreement shall indicate on its face whether it is intended
to be an agreement for an Incentive Share Option or a Non-Qualified Share
Option. The grant of a Share Option shall occur on the date the Committee by
resolution selects an Eligible Individual to receive a grant of a Share Option,
determines the number of Common Shares to be subject to such Share Option to be
granted to such Eligible Individual and specifies the terms and provisions of
the Share Option. The Company shall notify an Eligible Individual of any grant
of a Share Option, and a written Share Option Agreement or Share Option
Agreement shall be duly executed and delivered by the Company to the
participant. Such Share Option Agreement or Share Option Agreements shall
become effective upon execution by the Company and the participant.

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     Share Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:

     (a) Option Price. The option price per Common Share purchasable under a
Share Option shall be determined by the Committee and set forth in the
applicable Share Option Agreement, and shall not be less than the Fair Market
Value of a Common Share on the date of grant.

     (b) Option Term. Unless otherwise determined by the Committee and
provided in the applicable Share Option Agreement, the term of each Share
Option shall be 10 years; provided, however, that no Incentive Share Option
shall under any circumstances be exercisable more than 10 years after the date
the Share Option is granted.

     (c) Exercisability. Unless determined otherwise by the Committee and
provided in the applicable Share Option Agreement, each Share Option shall
become vested and exercisable with respect to 30% of the Common Shares covered
thereby on the first anniversary of the date of grant, with respect to an
additional 30% of such Common Shares on the second anniversary of the date of
grant, and with respect to the remaining 40% of such Common Shares on the third
anniversary of the date of grant. The Board may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Board may determine. In addition, the Board may at any time accelerate the
exercisability of any Share Option. The exercise date of a Share Option shall
be the later of the date a notice of exercise is received by the Committee and,
if applicable, the date payment is received by the Committee pursuant to this
Section 5.

     (d) Method of Exercise.

     (i) Subject to the provisions of this Section 5, Share Options may
be exercised, in whole or in part, at any time during the option term by
giving written notice of exercise to the Company specifying the number of
Common Shares subject to the Share Option to be purchased. Such notice
shall be accompanied by payment in full of the option price by certified
or bank check or such other instrument as the Committee may accept. The
Committee may approve payment, in full or in part, by any of the
following methods:

     (1) Payment in the form of unrestricted Common Shares (by
delivery of such Common Shares or by attestation) already owned by
the optionee (based on the Fair Market Value of the Common Shares
on the date the Share Option is exercised); provided, however,
that, in the case of an Incentive Share Option, the right to make a
payment in the form of already owned Common Shares may be
authorized only at the time the Share Option is granted and
provided, further, that such already owned Common Shares have been
held by the optionee for at least six months at the time of
exercise or had been purchased on the open market;

     (2) Delivery of a copy of irrevocable instructions to a broker
to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the applicable portion of the option
price of such Share Option, and, if requested,
the amount of any U.S. (federal, state, or local) or non-U.S.
withholding taxes. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more
brokerage firms; or

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     (3) Instruction to the Committee to withhold a number of
Common Shares having a Fair Market Value on the date of exercise
equal to the applicable portion of the option price of such Share
Option.

     (ii) The Board may provide for Company loans to be made for purposes
of the exercise of Share Options.

     (iii) No Common Shares shall be issued until full payment therefor
has been made.

     (iv) Except as otherwise provided in Section 5(k) below, an optionee
shall have all of the rights of a shareholder of the Company holding
Common Shares (including, if applicable, the right to vote the Common
Shares and the right to receive dividends), when the optionee has given
written notice of exercise, has paid in full for such Common Shares and,
if requested, has given the representation described in Section 10(a).

     (e) Nontransferability of Share Options. No Share Option shall be
transferable (by means of sale, assignment, exchange, encumbrance,
hypothecation, pledge or otherwise) by the optionee other than (i) by will or
by the laws of descent and distribution or (ii) in the case of a Non-Qualified
Share Option, as otherwise expressly permitted by the Board. All Share Options
shall be exercisable, subject to the terms of this Plan, only by the optionee,
the guardian or legal representative of the optionee, or any person to whom
such option is transferred pursuant to this paragraph, it being understood that
the terms “holder” and “optionee” include such guardian, legal representative
and other permitted transferee.

     (f) Termination by Death. Unless otherwise determined by the Committee
and provided in the applicable Share Option Agreement, if an optionee incurs a
Termination of Service by reason of death, any Share Option held by such
optionee may thereafter be exercised, to the extent exercisable on the date of
death, or on such accelerated basis as the Committee may determine, for a
period of one year from the date of such death or until the expiration of the
stated term of such Share Option, whichever period is the shorter.

     (g) Termination by Reason of Disability. Unless otherwise determined by
the Committee and provided in the applicable Share Option Agreement, if an
optionee incurs a Termination of Service by reason of Disability, any Share
Option held by such optionee may thereafter be exercised by the optionee, to
the extent it was exercisable on the date of such Termination of Service, or on
such accelerated basis as the Committee may determine, for a period of two
years from the date of such Termination of Service or until the expiration of
the stated term of such Share Option, whichever period is the shorter;
provided, however, that if the optionee dies within such period, any
unexercised Share Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable on the date of death for a period of one year from the date of
such death or until

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the expiration of the stated term of such Share Option, whichever period
is the shorter. In the event of Termination of Service by reason of Disability,
if an Incentive Share Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Share Option
shall thereafter be treated as a Non-Qualified Share Option.

     (h) Termination by Reason of Retirement. Unless otherwise determined by
the Committee and provided in the applicable Share Option Agreement, if an
optionee incurs a Termination of Service by reason of Retirement, any Share
Option held by such optionee may thereafter be exercised by the optionee, to
the extent it was exercisable on the date of such Termination of Service, or on
such accelerated basis as the Committee may determine, for a period of two
years from the date of such Termination of Service or until the expiration of
the stated term of such Share Option, whichever period is the shorter;
provided, however, that if the optionee dies within such period, any
unexercised Share Option held by such optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it
was exercisable on the date of death for a period of one year from the date of
such death or until the expiration of the stated term of such Share Option,
whichever period is the shorter. In the event of Termination of Service by
reason of Retirement, if an Incentive Share Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such Share Option shall thereafter be treated as a Non-Qualified
Share Option.

     (i) Other Termination. Unless otherwise determined by the Committee and
provided in the applicable Share Option Agreement: (A) if an optionee incurs a
Termination of Service for Cause, all Share Options held by such optionee shall
thereupon terminate; and (B) if an optionee incurs a Termination of Service for
any reason other than death, Disability, Retirement or for Cause, any Share
Option held by such optionee may be exercised, to the extent it was exercisable
on the date of Termination of Service, or on such accelerated basis as the
Committee may determine, for six months from the date of such Termination of
Service or until the expiration of the stated term of such Share Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such six-month period, any unexercised Share Option held by such
optionee shall, notwithstanding the expiration of such six-month period,
continue to be exercisable to the extent to which it was exercisable at the
time of death for a period of one year from the date of such death or until the
expiration of the stated term of such Share Option, whichever period is the
shorter. If an Incentive Share Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the Code, such Share
Option shall thereafter be treated as a Non-Qualified Share Option.

     (j) Cashing Out of Share Option. On receipt of written notice of
exercise, the Board may elect to cash out all or part of the portion of the
Common Shares for which a Share Option is being exercised by paying the
optionee an amount, in cash or Common Shares, equal to the product of (i) the
excess of the Fair Market Value of a Common Share over the per-Common Share
option price times (ii) the number of Common Shares for which the Share Option
is being exercised on the effective date of such cash-out.

     (k) Deferral of Option Shares. The Committee may from time to time
establish procedures pursuant to which an optionee may elect to defer, until a
time or times later than the exercise of a Share Option, receipt of all or a
portion of the Common Shares subject to such Share Option and/or to receive
cash at such later time or times in lieu of such deferred Common

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Shares, all on such terms and conditions as the Committee shall determine.
If any such deferrals are permitted, then notwithstanding Section 5(d)(iv)
above, an optionee who elects such deferral shall not have any rights as a
shareholder with respect to such deferred Common Shares unless and until shares
are actually delivered to the optionee with respect thereto, except to the
extent otherwise determined by the Committee.

     (l) Expiration of Share Options. Notwithstanding anything else contained
herein, Share Options shall expire and may not be exercised to any extent after
the earlier to occur of the following events: (i) the expiration of the stated
term or (ii) a Termination of Service of the participant, except to the extent
a post-Termination of Service exercise period is specified in the Award
agreement or in this Section 5 for all or a portion of the Share Option, after
which such portion of the Share Option shall expire. Upon such expiration, any
portion of the Share Option that has not already been exercised shall be
forfeited.

     (m) Award Agreement. Each Share Option shall be confirmed by, and subject
to, the terms of a written Share Option agreement (the “Share Option
Agreement”) duly executed by the Company and the participant.

SECTION 6. RESTRICTED SHARES

     (a) Administration. Awards of Restricted Shares may be awarded either
alone or in addition to other Awards granted under the Plan. The Board shall
determine the Eligible Individuals to whom and the time or times at which
grants of Restricted Shares will be awarded, the number of Common Shares to be
awarded to any Eligible Individual, the conditions for vesting, the time or
times within which such Awards may be subject to forfeiture and any other terms
and conditions of the Awards, in addition to those contained in Section 6(c).

     (b) Awards and Certificates. Awards of Restricted Shares shall be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more share certificates. Any
certificate issued in respect of Restricted Shares shall be registered in the
name of such participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award, substantially in
the following form:

     “The transferability of this certificate and the shares
represented hereby are subject to the terms and conditions
(including forfeiture) of the Claxson Interactive Group Inc.
2001 Share Incentive Plan and a Restricted Share Agreement.
Copies of such Plan and Agreement are on file at the offices
of Claxson Interactive Group Inc.”

The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Shares, the participant shall
have delivered an irrevocable stock power, endorsed in blank, relating to the
Common Shares covered by such Award.

     (c) Terms and Conditions. Awards of Restricted Shares shall be subject to
the following terms and conditions:

11

 

     (i) The Board may designate a potential Award of Restricted Shares
as a Qualified Performance-Based Award, in which case the grant, terms,
and conditions of such Award shall be determined by the 162(m) Committee,
and the grant or vesting, as applicable, of such Restricted Shares shall
be conditioned upon the attainment of Performance Goals selected by the
162(m) Committee, subject to the ratification of such Award by the Board.
If the Board does not designate an Award of Restricted Shares as a
Qualified Performance-Based Award, it may also condition the grant or
vesting thereof upon the attainment of Performance Goals. Regardless of
whether an Award of Restricted Shares is a Qualified Performance-Based
Award, the Board may also condition the grant or vesting thereof upon the
continued service of the participant. The conditions for grant or vesting
and the other provisions of Restricted Share Awards (including without
limitation any applicable Performance Goals) need not be the same with
respect to each recipient. The Board may at any time, in its sole
discretion, accelerate or waive, in whole or in part, any of the
foregoing restrictions.

     (ii) Subject to the provisions of the Plan and the applicable
Restricted Shares Agreement, during the period, if any, set by the Board,
commencing with the date of an Award for which a participant’s continued
service is required (the “Restriction Period”), and until the later of
(A) the expiration of the Restriction Period and (B) the date the
applicable Performance Goals (if any) are satisfied, the participant
shall not be permitted to sell, assign, transfer, pledge or otherwise
encumber Restricted Shares; provided, however, that the foregoing shall
not prevent a participant from pledging Restricted Shares as security for
a loan, the sole purpose of which is to provide funds to pay the option
price for Share Options.

     (iii) Except as provided in this Section 6(c)(iii) and Sections
6(c)(i) and 6(c)(ii) and the applicable Restricted Shares Agreement, the
participant shall have, with respect to Restricted Shares, all of the
rights of a shareholder of the Company holding Common Shares, including,
if applicable, the right to vote the Common Shares and the right to
receive any cash dividends. If so determined by the Board in the
applicable Restricted Shares Agreement, (A) cash dividends on the Common
Shares underlying the Restricted Shares Award shall be automatically
deferred and reinvested in additional Restricted Shares, held subject to
the vesting of the underlying Restricted Shares, or held subject to
meeting Performance Goals applicable only to dividends, and (B) dividends
payable in Common Shares shall be paid in the form of Restricted Shares,
held subject to the vesting of the underlying Restricted Shares, or held
subject to meeting Performance Goals applicable only to dividends.

Reinvestment of dividends in additional Restricted Shares at the time of any
dividend payment shall only be permissible if sufficient Common Shares are
available under Section 3 for such reinvestment (taking into account then
outstanding Share Options and other Awards).

     (iv) Except to the extent otherwise provided in the applicable
Restricted Shares Agreement or Section 6(c)(i), 6(c)(ii), 6(c)(v) or
7(a)(ii), upon a participant’s Termination of Service for any reason
during the Restriction Period or before the applicable Performance Goals
are satisfied, all Common Shares still subject to restriction shall be
forfeited by the participant; provided, however, that the Board shall
have the discretion to
waive, in whole or in part, any or all remaining restrictions with
respect to any or all of such participant’s Restricted Shares.

12

 

     (v) If and when any applicable Performance Goals are satisfied and
any applicable Restriction Period expires without a prior forfeiture of
the Restricted Shares, unlegended certificates for such shares shall be
delivered to the participant upon surrender of the legended certificates.

     (vi) Each Restricted Shares Award shall be confirmed by, and be
subject to, the terms of a written Restricted Shares agreement (the
“Restricted Shares Agreement”), duly executed by the Company and the
participant.

SECTION 7. CHANGE IN CONTROL PROVISIONS

     (a) Effect of Change in Control. Notwithstanding any other provision of
the Plan to the contrary, unless provided otherwise in an Award agreement, in
the event of a Change in Control;

     (i) Any Share Options outstanding as of the date such Change in
Control is determined to have occurred, and which are not then
exercisable and vested, shall become fully exercisable and vested;

     (ii) The restrictions and limitations applicable to any Restricted
Shares shall lapse, and such Restricted Shares shall become free of all
restrictions and limitations and become fully vested and transferable;
and

     (iii) The Board may make additional adjustments and/or settlements
of outstanding Awards as it reasonably deems appropriate and consistent
with the Plan’s purposes, including, without limitation, requiring the
payment of a cash amount in exchange for the cancellation of an Award
and/or requiring the issuance of a substitute award that will
substantially preserve the value, rights, and benefits as of the date of
the Change in Control of any affected Award previously granted.

     (b) Definition of Change in Control. For purposes of the Plan, a “Change
in Control” shall mean the happening of any of the following events:

     (i) Any acquisition after which any Person (other than a Cisneros
Entity, a Hicks Muse Entity, or a Founder) becomes the “beneficial owner”
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of either (A) the then outstanding Common Shares of the
Company (the “Outstanding Company Common Shares”) or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of
this Section 7(b), the following acquisitions shall not constitute a
Change in Control: (W) any acquisition directly from the Company, (X) any
acquisition by the Company, (Y) any acquisition by any employee benefit
plan (or related trust or other fiduciary) sponsored or maintained by the
Company or any Affiliate, or (Z) any acquisition by any corporation
pursuant to a transaction that complies with Sections 7(b)(iii)(A) and
7(b)(iii)(B); or

13

 

     (ii) A change in the composition of the Board such that individuals
who, as of the Effective Date, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director of the
Company subsequent to the Effective Date whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board, or
who was elected or appointed to the Board directly by a class of
shareholders consisting solely of Cisneros Entities, Hicks Muse Entities,
or Founders, shall be considered as though such individual ‘were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
and, provided, further, that any individual who is a director of the
Company immediately following the Combination Agreement Effective Time
shall automatically be considered as though such individual were a member
of the Incumbent Board; or

     (iii) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of the assets or stock of another entity
(a “Business Combination”), in each case, unless, following such Business
Combination, (A) either (I) at least 50% of, respectively, the then
outstanding shares of common stock and the total voting power of (1) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (2) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 80% or more of the
voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by Outstanding
Company Common Shares and Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Outstanding Company Common Shares
or Outstanding Company Voting Securities, as the case may be, were
converted pursuant to such Business Combination), and such beneficial
ownership of common stock or voting power among the holders thereof is in
substantially the same proportion as the beneficial ownership of
Outstanding Company Common Shares and the voting power of such Company
Voting Securities among the holders thereof immediately prior to the
Business Combination or (II) the Hicks Muse Entities, the Cisneros
Entities, and the Founders hold, in the aggregate, at least 50% of both
the then outstanding shares of common stock and the total voting power of
(1) the Surviving Corporation, or (2) if applicable, the Parent
Corporation, and (B) no Person (other than a Cisneros Entity, a Hicks
Muse Entity, a Founder, any corporation resulting from such Business
Combination, or any employee benefit plan (or related trust or other
fiduciary) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, more
than 50% of the outstanding shares of common stock and the total voting
power of the outstanding voting securities eligible to elect directors of
the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), except to the extent that such ownership existed
prior to the Business Combination; or

14

 

     (iv) The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, other than the liquidation of
the Company into a Subsidiary.

provided, however, that notwithstanding anything in this Section 7(b) or in
this Plan to the contrary, the consummation of the transactions contemplated by
the Combination Agreement shall not be deemed a Change in Control for purposes
of this Plan.

SECTION 8. AMENDMENT AND TERMINATION

     (a) The Plan will terminate on the tenth anniversary of the Effective
Date. Under the Plan, Awards outstanding as of such date shall not be affected
or impaired by the termination of the Plan.

     (b) The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would materially and
adversely impair the rights of a participant under any Award theretofore
granted without the participant’s consent, except such an amendment made to
comply with applicable law, stock exchange rules or accounting rules. In
addition, no such amendment shall be made without the approval of the Company’s
shareholders to the extent such approval is required by applicable law or stock
exchange rules. The Board may amend the terms of any Award theretofore granted,
and the Committee may amend the terms of any Share Option theretofore granted
other than to accelerate vesting or extend exercisability, prospectively or
retroactively, but no amendment shall be made that would materially and
adversely impair the rights of any participant without the participant’s
consent except such an amendment made to cause the Plan or Award to comply with
applicable law, stock exchange rules or accounting rules. Subject to the above
provisions and to any applicable shareholder approval requirements, the Board
shall have authority to amend the Plan to take into account changes in law and
tax and accounting rules as well as other developments, and to grant Awards
which qualify for beneficial treatment under such rules.

SECTION 9. UNFUNDED STATUS OF PLAN

     It is intended that the Plan constitute an “unfunded” plan for incentive
and deferred compensation. The Committee may authorize the creation of trusts
or other arrangements to meet the obligations created under the Plan to deliver
Common Shares or make payments; provided, however, that unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the “unfunded” status of the Plan.

SECTION 10. GENERAL PROVISIONS

     (a) The Committee may require each person purchasing or receiving Common
Shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the Common Shares without a view to the
distribution thereof. The certificates for such Common Shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer. Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for Common Shares under the Plan prior to
fulfillment of all of the following conditions:

15

 

     (i) Listing or approval for listing upon notice of issuance, of such
shares on Nasdaq, or such other securities exchange as may at the time be
the principal market for the Common Shares;

     (ii) Any registration or other qualification of such shares of the
Company under any U.S. (federal, state, or local) or non-U.S. law or
regulation, or the maintaining in effect of any such registration or
other qualification which the Committee shall, in its absolute discretion
upon the advice of counsel, deem necessary or advisable; and

     (iii) Receipt of any other consent, approval, or permit from any
U.S. (federal, state, or local) or non-U.S. governmental agency which the
Committee shall, in its absolute discretion after receiving the advice of
counsel, determine to be necessary or advisable.

     (b) Nothing contained in the Plan shall prevent the Company or any
Subsidiary or Affiliate from adopting other or additional compensation
arrangements for its directors, officers, employees and/or consultants.

     (c) The Plan shall not constitute a contract for employment or services,
and adoption of the Plan shall not confer upon any individual any right to a
continued employment or services arrangement, nor shall it interfere in any way
with the right of the Company or any Subsidiary or Affiliate to terminate the
employment or services of any individual at any time.

     (d) The participant shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any U.S. (federal, state,
or local) or non-U.S. taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Company, withholding
obligations may be settled with Common Shares, including Common Shares that are
part of the Award that gives rise to the withholding requirement; provided,
that not more than the legally required minimum withholding may be settled with
Common Shares. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant. The Committee may establish
such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common Shares.

     (e) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant’s death are to be paid or by whom any rights of the
participant, after the participant’s death, may be exercised.

     (f) In the case of a grant of an Award to any employee of a Subsidiary of
the Company, the Company may, if the Committee so directs, issue or transfer
the Common Shares, if any, covered by the Award to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the Common Shares to the
employee in accordance with the terms of the Award specified by the Committee
pursuant to the provisions of the Plan. All Common Shares underlying
Awards that are forfeited or canceled should revert to the Company.

16

 

     (g) The Plan, the Share Option Agreements, the Restricted Share Agreements
and all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws.

     (h) Except as otherwise provided in the Plan, any Award agreement, or by
the Committee, Awards under the Plan are not transferable except by will or by
laws of descent and distribution.

     (i) In the event an Award is granted to an Eligible Individual who is
employed or providing services outside the United States and who is not
compensated from a payroll maintained in the United States, the Committee may,
in its sole discretion, modify the provisions of the Plan as they pertain to
such individual to comply with applicable non-U.S. law.

SECTION 11. EFFECTIVE DATE OF PLAN

     The Plan shall be effective on the date (the “Effective Date”) immediately
prior to the date upon which occurs the Combination Agreement Effective Time.
No Award may be granted under the Plan after the tenth anniversary of the
Effective Date, but Awards granted on or prior to such anniversary may extend
beyond that date.

17<PAGE>

                                                                     Exhibit 4.7

                    [LETTERHEAD OF BAM! ENTERTAINMENT, INC.]

January 26, 2004

Via Facsimile Only (212) 541-4434
Laurus Master Fund, Ltd.
825 Third Avenue, 14th Floor
New York, NY  10022
Attn:  John E, Tucker, Esq.

Re:  Modification of Secured Convertible Promissory Note & Common Stock Purchase
     Warrant

Dear Mr. Tucker:

Pursuant to our recent telephone conversations, there were certain drafting
errors in the secured convertible promissory note (the "Note") and common stock
purchase warrant (the "Warrant") each dated as of December 3, 2003 that were
issued by BAM! Entertainment, Inc. (the "Company") to Laurus Master Fund, Ltd.
("Laurus") pursuant to that certain securities purchase agreement (the
"Agreement") entered into by the parties and dated of even date therewith. The
following letter, when signed by the Company and by Laurus ("Letter"), will
amend, modify and form a part of each of the Note and Warrant effective as of
the date first written above. Unless specifically provided to the contrary
below, all terms defined in the Agreement, Note and Warrant will have the same
meanings when used below.

1. Section 1.2 of the Note erroneously states that the amortizing payments under
the Note shall begin on February 1, 2004; however, such payments should begin on
April 1, 2004. The Company and Laurus agree to amend Section 1.2 of the Note and
Section 1.2 of the Note is hereby amended to read in its entirety as follows:

      "1.2 Monthly Principal Payments. Amortizing payments of the aggregate
principal amount outstanding under this Note at any time (the "PRINCIPAL
AMOUNT") shall begin on April 1, 2004 and shall recur on the first calendar day
of each succeeding month thereafter until the Maturity Date (each, an
"AMORTIZATION DATE"). Subject to Section 3.4 below, beginning on the first
Amortization Date, the Borrower shall make monthly payments to the Holder on
each Repayment Date, each in the amount of $166,666.67, together with any
accrued and unpaid interest to date on such portion of the Principal Amount plus
any and all other amounts which are then owing under this Note but have not been
paid (collectively, the "MONTHLY AMOUNT")."

2. Recital (d)(iii) of the Warrant erroneously states that the third tranche
consists of 42,667 shares that may be issued at an exercise price of $2.33 per
share; however, the third tranche should consist of 41,667 shares so that the
aggregate number of shares issuable upon exercise of the Warrant in full is
166,667 shares of the Company's Common Stock. The Company and Laurus agree to
amend Recital (d)(iii) of the Warrant and Recital (d)(iii) of the Warrant is
hereby amended to read in its entirety as follows:

      "(iii) a price of $2.33, which is 175% of the average closing price of
Common Stock for th five (5) trading days immediately prior to the date hereof
for the last 41,667 shares acquired further to Section 4."

<PAGE>

3. The foregoing may be executed in one (1) or more counterparts, each of which
shall constitute an original and shall be binding upon each party hereto upon
their respective execution hereof.

4. Except as specifically amended and modified herein, the Agreement, Note and
Warrant shall be unaffected and remain in full force and effect.

                                          Very truly yours,

                                          BAM! Entertainment, Inc.

                                          By:  /s/ Stephen Ambler
                                               -------------------------
                                          Name: Stephen Ambler
                                          Title: Chief Financial Officer

ACCEPTED AND AGREED TO:

Laurus Master Fund, LTD.

By:  /s/ Illegible
     ----------------------------
Name:    Illegible
Title:  _________________________

cc:   Laurus Master Fund, Ltd. (fax:  345-949-9877)

                                       2

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