MakeMusic, Inc.
Executive Incentive Compensation Plan
1.1
Annual Incentive Compensation . The purpose of the
MakeMusic, Inc. Executive Incentive Compensation Plan (the
“Plan”) is to provide incentives and rewards to certain
key employees of MakeMusic, Inc. (the “Company”) in the
form of annual incentive compensation based on the achievement of
certain performance objectives, as well as individual
performance.
ARTICLE 2.
ADMINISTRATION
2.1
Administration and Delegation of Authority . The Plan
shall be administered by the Compensation Committee (the
“Committee”) of the Company’s Board of Directors,
which shall consist of not less than two (2) members of the
Board of Directors, each of whom is an “independent
director” within the meaning of NASDAQ Rule 4200(a)(15).
No member of such Committee shall participate in any decisions
concerning the payments to be made to him or her, or other matters
relating to his or her benefits hereunder. All actions of the
Committee shall be determined by a majority of its members at a
meeting at which a quorum is present, or by a majority of all
members in writing signed by all members, whether or not voting in
favor of such determination. A majority of all of the members shall
constitute a quorum.
2.2
Powers . Except as otherwise provided, and subject to
the provisions of the Plan, the Committee shall have full power and
authority to administer and interpret the Plan, to adopt and revise
rules, regulations and guidelines relating to the Plan and, to make
all other determinations necessary or advisable for the
administration of the Plan. Decisions and determinations by the
Committee shall be final and binding on all parties.
3.1
Selection of Participants and Plan Entry . The
Committee shall, from time to time, designate those key employees
who shall be eligible to participate in the Plan. Such designation
shall not be determinative of whether the employee is an
“officer” or “executive officer” for
purposes of the Securities Exchange Act of 1934, as amended. Any
key employee selected to participate in the Plan shall continue to
participate until otherwise determined by the Committee. The
Committee has discretion to change its selection of participants.
The Committee may, in its sole discretion, designate certain key
employees as being ineligible to participate in the Plan; provided,
however, that the discontinuation of a key employee’s
eligibility shall not alter, impair or reduce the value of any
annual incentive compensation earned by such key employee without
his or her consent. Hereafter, a key employee selected to
participate in the Plan shall be referred to as a
“Participant.”
ARTICLE 4. INCENTIVE COMPENSATION
PAYMENTS
4.1
Performance Objectives . On a date prior to or as
soon as practicable after the beginning of each fiscal year (the
“Determination Date”), the Committee shall determine
performance objectives and the weighted values thereof. The
performance objectives shall be any one, or a combination of,
(i) total revenue, (ii) net income,
(iii) shareholders’ equity, (iv) earnings
per
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share,
(v) return on equity, (vi) return on assets,
(vii) asset turns, (viii) total shareholder return,
(ix) net operating income, (x) cost controls,
(xi) cash flow, (xii) increase in revenue,
(xiii) increase in share price or earnings, (xiv) return
on investment, (xv) department or business unit performance
goals, (xvi) increase in market share,
(xvii) product-specific revenue, (xviii) operating margins,
(xix) financial performance that exceeds the financial
performance of the Company’s peers in the industry, and
(xx) individual performance goals, in all cases including, if
selected by the Committee and in its discretion, threshold, target
and maximum performance levels.
4.2
Determination of Annual Incentive Compensation
.
4.2.1
Determination of Incentive Compensation Components .
On the Determination Date, the Committee shall approve the
components of each Participant’s annual incentive
compensation. Each Participant’s annual incentive
compensation may be comprised of cash, restricted stock, other
equity awards, or a combination thereof, subject to the limitations
on the maximum values of each component set forth in
Sections 4.3 through 4.6 below. The performance objectives,
components of annual incentive compensation and the maximum values
thereof shall be communicated to each Participant as soon as
administratively practicable after the Determination Date. The
components of a Participant’s annual incentive compensation
and the maximum values thereof may vary from fiscal year to fiscal
year, and such components and values also may vary from Participant
to Participant.
4.2.2
Certification of Payout .
a. Total
Value of Payout . The total value of incentive compensation
earned by a Participant shall depend upon the level of achievement
of each performance objective, provided that if threshold
performance is not achieved for a particular performance objective,
the Participant will not receive incentive compensation for that
performance objective. After the completion of the fiscal year, and
not later than the fifteenth calendar day of the third month
following the end of the fiscal year during which the annual
incentive compensation was earned, the Committee will determine and
certify in writing the degree to which the performance objectives
have been achieved and calculate each Participant’s earned
incentive compensation. The Committee may, in its discretion,
increase or decrease the Participant’s maximum annual
incentive compensation.
b.
Forfeiture of Earned Amount . If, prior to the last
day of the fiscal year, the Participant terminates employment with
the Company for a reason other than death or disability and without
“Good Reason” (as defined below), or has been
terminated by the Company for “Cause” (as defined
below), the Participant shall not be entitled to annual incentive
compensation for that year, provided that the Committee may award
all or a portion of the earned amount in its discretion. If the
Participant terminates employment with the Company prior to the
last day of the fiscal year due to death or
“Disability” (as defined below), the Participant shall
be entitled to a prorated annual incentive compensation, based on
the
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number of days
in the fiscal year that the Participant was employed, or such other
amount as the Committee determines in its discretion.
i. Good
Reason . For purposes of this Plan, “Good
Reason” means: (i) a material change in the responsibility
and status as the employment responsibilities held by Participant;
(ii) a reduction of Participant’s annual base salary by
more than 10% unless such reduction is part of a general salary
reduction for all employees of similar rank to the Participant;
(iii) the failure by the Company to obtain an assumption of
its obligations under this Plan by any successor to the Company;
(iv) the relocation of Participant’s place of employment
by more than forty (40) miles from the Participant’s place of
employment during the preceding fiscal year. For purposes of the
foregoing, Participant shall not be considered to have been
assigned employment of lesser responsibility if Participant
manages, has control over, or serves in a similar position with a
subsidiary, division or operating unit of an acquiring entity that
generates revenues of comparable amounts to the revenues generated
by the Company before such acquisition. Notwithstanding the
foregoing, none of the forgoing events shall be considered
“Good Reason” if it occurs in connection with the
Participant’s death or disability.
ii.
Cause . For purposes of this Plan,
“Cause” means: (i) failure of Participant to
(x) faithfully, diligently or competently perform the material
duties, requirements and responsibilities of his or her employment
as assigned by the Company’s Chief Executive Officer of Board
of Directors, or (y) take reasonable direction consistent with
his or her position from the Company&rsq
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