EXHIBIT10.3

 

MEDIA100 INC.

KeyEmployee Incentive Plan (1992),as amended through May 5, 2000

1.          Plan;Purpose; General.  The purpose ofthis Key Employee Incentive Plan (1992) (the "Plan") is to advancethe interests of Media 100 Inc. (formerly Data Translation, Inc.) (the"Company") by enhancing the ability of the Company and itssubsidiaries to attract and retain selected advisers, consultants, keyemployees and directors, by creating for such persons incentives and rewardsfor their contributions to the success of the Company, and by encouraging suchpersons to become owners of shares of the Company's Common Stock, par value$0.01 per share (the "common stock" or "stock").  Options granted pursuant to the Plan may beincentive stock options as defined in Section 422 of the Internal Revenue Codeof 1986, as amended (the "Code") (such options being referred toherein as "incentive options") or non-incentive options.  The proceeds received from the sale of stockpursuant to the Plan shall be used for general corporate purposes.  Except as otherwise expressly provided withrespect to an option grant, no option granted pursuant to the Plan shall be anincentive option.

2.          EffectiveDate of Plan.  This Plan will becomeeffective upon approval by at least a majority of the votes cast at the nextduly called Annual Meeting of Stockholders of the Company at which a quorumrepresenting a majority of the voting power of all outstanding voting stock ofthe Company is, either in person or by proxy, present and voting thereon or atany adjournment thereof.  Grants ofawards under the Plan may be made prior to that date (but after Board adoptionof the Plan), subject to approval of the Plan by such shareholders.1

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1  The Plan was approved by the requisite voteof stockholders at the Annual Meeting of Stockholders of the Company held onApril 8, 1992.

 

3.          Administrationof the Plan.  The Plan will beadministered by the Board of Directors (the "Board") of theCompany.  The Board will have authorityto take all action necessary or appropriate hereunder, to interpret itsprovisions, and to decide all questions and resolve all disputes which mayarise in connection therewith.  Suchdeterminations of the Board shall be conclusive and shall bind all parties.

             TheBoard may, in its discretion, delegate some or all of its powers with respectto the Plan to the Executive Compensation and Stock Option Committee or anyother committee (the "Committee"), in which event all references tothe Board hereunder, except the references in Section 11 hereof, shall bedeemed to refer to the Committee.  TheCommittee, if one is appointed, shall consist of not fewer than two members,and each member of the Committee shall be, at the time of his appointment andat any time he exercises discretion in administering the Plan, a"non-employee director" as that term is defined in Rule 16b-3 adoptedpursuant to the Securities Exchange Act of 1934, as amended.  A majority of the members of any such Committeeshall constitute a quorum, and all determinations of the Committee shall bemade by a majority of its members.  Anydetermination of the Committee under the Plan may be made without notice ormeeting of the Committee by a writing signed by a majority of the Committeemembers.

4.          Eligibility.  The "Participants" in the Planwill be such key employees, including part-time employees, advisers,consultants and directors whether or not they are employees, of the Company orof any of its present or future subsidiaries (as defined in Section 10) as may beselected from time to time by the Board in its discretion.

             Noincentive option shall be granted to a Participant who is not an"employee" as defined in the provisions of the Code or regulationsthereunder applicable to incentive options. No incentive option shall be granted to a Participant who at the time ofgrant owns, directly or indirectly through application or the attribution rulesof Section 424(d) of the Code, stock possessing more than 10% of the totalcombined voting power of all classes of stock of the Company or of itssubsidiaries (a "Ten-Percent Shareholder") unless (i) the optionprice at the time it is granted is at least 110% of the fair market value ofthe stock subject to the option, and (ii) the period of the option does not exceedfive years from the date of grant.

5.          Grantof Awards.  Subject to the expressprovisions of the Plan, the Board shall have the sole authority and discretion(a) to determine which Participants will be granted awards; (b) to grant awardsconsisting of options or stock appreciation rights ("SARs"), or bothto Participants; (c) to determine whether the options granted to anyParticipants shall be incentive options or non-incentive options; (d) todetermine the time or times when awards will be granted and the number ofshares of common stock to be subject to each award; (e) to determine the optionprice of the shares subject to each option in accordance with Section 6(a)hereof and the value of the shares subject to each SAR on the exercise date ofsuch SAR in accordance with Section 6(d) hereof, and the method of payment ofsuch price; (f) to determine the time or times when each award becomesexercisable and the duration of the exercise period; (g) to impose additionalconditions or restrictions on any award, such conditions or restrictions, ifany, to be set forth in the award form or other instrument evidencing theaward; (h) to prescribe the form or forms of any instruments evidencing anyawards granted under the Plan and of any other instruments required under thePlan and to make changes in such forms from time to time; (i) to determine theprice, vesting schedule and other attributes of awards granted to Participantsworking abroad; and (j) to adopt, amend and rescind rules and regulations forthe administration of the Plan and the awards and for its own acts andproceedings.  Subject to Section 12hereof, the Board shall also have the authority, in its sole discretion, bothgenerally and in particular instances, to waive compliance by a Participantwith any obligation to be performed by him under an award, to waive anycondition or provision of an award, and to amend or cancel any award (and if anaward is cancelled, to grant a new award on such terms as the Board shallspecify) except that the Board may not take any action with respect to anoutstanding award that would adversely affect the rights of the Participantunder such award without such Participant's consent.  Nothing in the preceding sentence shall be construed as limitingthe power of the Board to make adjustments required by Section 8(c) hereof.

             Noaward shall be granted on or after February 20, 2002 but awards previouslygranted may extend beyond that date.

6.          Termsand Conditions of Awards.

a.          Exercise Price of Options.  The purchase price per share for sharesissuable upon exercise of options shall be determined by the Board but in thecase of incentive options shall not be less than 100% (110% in the case of anincentive option granted to a Ten-Percent Shareholder) of the fair market valueof the stock on the date of grant; nor shall the option price be less, in thecase of an original issue of authorized stock, than par value per share.  For this purpose, "fair marketvalue" will be determined as set forth in Section 10 hereof.

b.          Period of Options.  An option shall be exercisable during suchperiod or periods as the Board may specify. The latest date on which an option may be exercised (the "FinalExercise Date") shall be the date which is ten years (five years, in thecase of an incentive option granted to a Ten-Percent Shareholder) from the datethe option was granted or such earlier date as may be specified by the Board atthe time the option is granted.

c.          Exercise of Options.

(i)          Unless the Board at the time of grantor at any other time otherwise specifies in the case of a particular option oroptions, each option shall first become exercisable with respect to one-fifthof the shares covered by it upon the completion of one year from the date ofthe grant of the option (the "Initial Exercise Date"), and withrespect to an additional one-fifth each succeeding year until the optionbecomes exercisable with respect to all of the shares covered by it.

(ii)         In the case of options intended to beincentive options, any award forms or other instruments evidencing such optionsshall contain such provisions relating to exercise and other matters as arerequired of incentive options under the applicable provisions of the Code andTreasury Regulations, as from time to time in effect.

(iii)        A person electing to exercise part orall of his options shall give written notice to the Company, as specified bythe Board, of his election and of the number of shares he has elected topurchase, such notice to be accompanied by the instrument evidencing suchoption and any other documents required by the Board, and shall at the time ofsuch exercise tender the purchase price of the shares he has elected topurchase.  If the notice of election toexercise is given by the executor or administrator of a deceased Participant,or by the person or persons to whom the option has been transferred by theParticipant's will or the applicable laws of descent and distribution, theCompany will be under no obligation to deliver shares pursuant to such exerciseunless and until the Company is satisfied that the person or persons givingsuch notice is or are entitled to exercise the option.

(iv)       In the case of an option that is not anincentive option, the Board shall have the right to require that theParticipant exercising the option remit to the Company an amount sufficient tosatisfy any federal, state, or local withholding tax requirements (or makeother arrangements satisfactory to the Company with regard to such taxes) priorto the delivery of any common stock pursuant to the exercise of theoption.  If permitted by the Board,either at the time of the grant of the option or the time of exercise, theParticipant may elect, at such time and in such manner as the Board mayprescribe, to satisfy such withholding obligation by (i) delivering to theCompany common stock owned by such individual having a fair market value equalto such withholding obligation, or (ii) requesting that the Company withholdfrom the shares of common stock to be delivered upon exercise of the option anumber of shares of common stock having a fair market value equal to suchwithholding obligation.

 

In the case of an incentive option, if atthe time the option is exercised the Board determines that under applicable lawand regulations the Company could be liable for the withholding of any federal,state or local tax with respect to a disposition of the common stock receivedupon exercise, the Board may require as a condition of exercise that theParticipant exercising the option agree (i) to inform the Company promptly ofany disposition (within the meaning of Section 424(c) of the Code and theregulations thereunder) of common stock received upon exercise, and (ii) togive such security as the Board deems adequate to meet the potential liabilityof the Company for the withholding of tax, and to augment such security fromtime to time in any amount reasonably deemed necessary by the Board to preservethe adequacy of such security.

d.          Stock Appreciation Rights.  The Board in its discretion may grant SARseither in tandem with or independent of options awarded under the Plan.  Except as hereinafter provided, each SARwill entitle the Participant to receive upon exercise, with respect to eachshare of common stock to which the SAR relates, the excess of (i) the share'svalue on the date of exercise, over (ii) the share's fair market value on thedate it was granted.  For purposes ofclause (i), "value" shall mean fair market value; provided,that the Board may adjust such value to take into account dividends on the stockand may also grant SARs that provide, in such limited circumstances following achange in control of the Company (as determined by the Board) as the Board mayspecify, that "value" for purposes of clause (i) is to be determinedby reference to a specified value (which may include an average of values) forthe common stock during a period immediately preceding the change in control,all as determined by the Board.  Theamount payable to a Participant upon exercise of an SAR shall be paid either incash or in shares of common stock, as the Board determines.  Each SAR shall be exercisable during suchperiod or periods and on such terms as the Board may specify.  No SAR shall be exercisable after the datewhich is ten years from the date of grant.

e.          Payment for and Delivery of Shares.  Shares which are subject to options shall beissued only upon receipt by the Company of full payment of the purchase pricefor the shares as to which the award is exercised.  The purchase price shall be payable by the option holder to theCompany either (i) in cash or by check, bank draft or money order payable tothe order of the Company; or (ii) if so permitted by the Board (which in thecase of an incentive option, shall specify such method of payment at the timeof grant), (A) through the delivery of shares of common stock (duly owned bythe option holder and for which the option holder has good title free and clearof any liens and encumbrances and which, in the case of common stock acquiredfrom the Company, shall have been held for at least six months) having a fairmarket value on the last business day preceding the date of exercise equal tothe purchase price or (B) by delivery of a promissory note of the option holderto the Company, such note to be payable on such terms as are specified by theBoard or (C) by delivery of an unconditional and irrevocable undertaking by abroker to deliver promptly to the Company sufficient funds to pay the exerciseprice; or (iii) by a combination of the permissible forms of payment as providedin (i) and (ii) above; provided, that if the common stock delivered uponexercise of the option is an original issue of authorized common stock, atleast so much of the exercise price as represents the par value of such commonstock shall be paid other than with a personal check or promissory note of theperson exercising the option.

             The Company shall not be obligatedto deliver any shares unless and until, in the opinion of the Company'scounsel, all applicable federal and state laws and regulations have beencomplied with, nor, if the outstanding common stock is at the time listed onany securities exchange, unless and until the shares to be delivered have beenlisted (or authorized to be added to the list upon official notice of issuance)upon such exchange, nor unless and until all other legal matters in connectionwith the issuance and delivery of shares have been approved by the Company'scounsel.  Without limiting thegenerality of the foregoing, the Company may require from the person exercisingan option such investment representation or such agreement, if any, as counselfor the Company may consider necessary in order to comply with the SecuritiesAct of 1933, as amended, and may require that such person agree that any saleof the shares will be made only on a national securities exchange or in suchother manner as is permitted by the Board and that he will notify the Companybefore he makes any disposition of the shares whether by sale, gift orotherwise.

             A Participant shall have the rightsof a shareholder only as to shares actually acquired by him under the Plan.

f.           Nontransferability of Awards.  No award may be sold, assigned or otherwisetransferred or disposed of in any manner whatsoever other than by will or bythe laws of descent and distribution, and during the Participant's lifetime theaward may be exercised only by him.

g.          Forfeiture of Awards uponTermination of Employment.  If aParticipant’s (other than a non-employee director’s) employment or service withthe Company and its subsidiaries terminates for any reason other than death,the portion of any award held by the Participant that was not exercisableimmediately prior to such termination of employment or service shallimmediately expire and except as the Board may otherwise determine, in its solediscretion, the remaining portion, if any, of the award shall continue to beexercisable for a period of ninety (90) days immediately following the date oftermination of the Participant’s employment or other service with the Companyand its subsidiaries.  Notwithstandingthe foregoing, if the Participant was terminated for cause all awards held bythe Participant immediately prior to such termination, whether or not thenexercisable, shall immediately expire.2  For purposes of this Section 6(g), employment shall not beconsidered terminated (i) in the case of sick leave or other bona fide leave ofabsence approved for purposes of the Plan by the Board, so long as theParticipant's right to reemployment is guaranteed either by statute or bycontract, (ii) in the case of a transfer of employment between the Company anda subsidiary or between subsidiaries, or to the employment of a corporation (ora parent or subsidiary corporation of such corporation) issuing or assuming anoption in a transaction to which Section 424(a) of the Code applies, or (iii)in the case of a transfer of employment between the Company and itswholly-owned subsidiary Data Translation, Inc. (formerly Data Translation II,Inc.) ("DTI") and subsequent distribution  of the stock of such subsidiary to the Company's stockholders(the "Distribution"); *provided*, that this clause (iii) shallapply only in the case of Participants whose transfer of employment to DTIoccurs in connection with the Distribution; *and further provided*, that in the case ofany such Participant, post-Distribution service for DTI shall be treated forpurposes of this paragraph as service for the Company and any post-Distributiontermination of employment with DTI shall be treated for purposes of thisparagraph as a termination of employment with the Company and itssubsidiaries.  The Company may requirethat any Participant described in clause (iii) above provide, prior to anypost-Distribution exercise of an award hereunder by such Participant and as acondition thereto, evidence satisfactory to the Company as to the period ofsuch Participant's employment with DTI.

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2  The preceding two sentences were adopted byamendment dated January 19, 1998 and are effective as to awards granted,regranted or amended on or after such date, except as the Board may otherwisedetermine; provided, that any incentive option granted prior to such date thatis amended on or after such date shall not be subject to such amendment withoutthe consent of the Participant holding the option if application of suchamendment would cause the option (as amended) to fail to qualify as anincentive stock option.  With respect toall awards which are not subject to the foregoing amendment, the followingprovision shall apply:

"Ifa Participant's (other than a non-employee director's) employment or servicewith the Company and its subsidiaries terminates for any reason other thandeath, all awards held by the Participant shall terminate unless the Boarddetermines, in its sole discretion, that such awards as were exercisableimmediately prior to termination shall continue to be exercisable for a periodof time after termination shall continue to be exercisable for a period of timeafter termination (but in no event beyond the Final Exercise Date). If theBoard determines that a post-termination exercise period for exercisable awardsis appropriate, such awards shall terminate and be forfeited after completionof such period to the extent not previously exercised, expired or terminated."

 

h.          Death.  If a Participant dies at a time when he isentitled to exercise an option, then at any time or times within one year afterhis death (or such further period as the Board may allow) such option may beexercised, as to all or any of the shares which the Participant was entitled topurchase immediately prior to his death, by his executor or administrator orthe person or persons to whom the option is transferred by will or theapplicable laws of descent and distribution, and except as so exercised suchoption will expire at the end of such period. In no event, however, may any option be exercised after the FinalExercise Date.

i.           Confidentiality Agreement.  Each Employee, including employees of DTIwho received options while employees of the Company, shall execute, prior to orcontemporaneously with the grant of any option to such Participant hereunder,the Company's then standard form of agreement relating to confidentiality,inventions and the like.

7.          ReplacementAwards.  The Company may grant awardsunder the Plan on terms differing from those provided in Section 6, where suchawards are granted in substitution for awards held by employees of anothercorporation who concurrently become employees of the Company or a subsidiary asthe result of a merger or consolidation of that corporation with the Company ora subsidiary, or the acquisition by the Company or a subsidiary of property orstock of that corporation.  The Boardmay direct that the substitute awards be granted on such terms and conditionsas the Board considers appropriate in the circumstances.  Such awards will be in addition to thosewhich may be granted under the Plan and will not be counted as granted underthe Plan.

8.          Shares Subject to Plan.

a.          Number of Shares and Stock to beDelivered.  Shares deliveredpursuant to this Plan shall in the discretion of the Board be authorized butunissued shares of common stock or previously issued stock acquired by theCompany.  Subject to adjustment asdescribed below and exclusive of the shares that are subject to the optionsprovided for in Section 13, the aggregate number of shares which may bedelivered under this Plan shall not exceed 4,200,000 shares of common stock ofthe Company.

b.          Limitations on Grants toIndividuals.   Subject to adjustmentas described below and exclusive of the shares that are subject to the optionsprovided for in Section 13, the aggregate number of shares for which optionsmay be granted under this Plan to any individual in any calendar year shall notexceed 500,000 shares of common stock of the Company.

c.          Changes in Stock.  In the event of a stock dividend, stocksplit or combination of shares, recapitalization, merger in which the Companyis the surviving corporation or other change in the Company's capital stock, thenumber and kind of shares of stock or securities of the Company to be subjectto the Plan and to options then outstanding or to be granted thereunder, themaximum number of shares or securities which may be delivered under the Plan,the option price and other relevant provisions shall be appropriately adjustedby the Board, whose determination shall be binding on all persons.  In the event of a consolidation or merger inwhich the Company is not the surviving corporation or which results in theacquisition of substantially all the Company's outstanding stock by a singleperson or entity, or in the event of the sale or transfer of substantially allthe Company's assets, all outstanding awards shall thereupon terminate,provided that at least twenty days prior to the effective date of any suchmerger, consolidation or sale of assets, all outstanding awards shall becomeexercisable immediately prior to consummation of such merger, consolidation orsale of assets, unless the Board shall have arranged for the surviving oracquiring corporation or an affiliate of that corporation to assume the awardsor to grant to the Participants replacement awards having equivalent terms andconditions as determined by the Board including, in the case of incentiveoptions, terms and conditions that satisfy the requirements of Section 424(a)of the Code.

             TheBoard may also adjust the number of shares subject to outstanding awardsgranted under Sections 5 or 6 hereof, the exercise price of outstanding optionsand the terms of outstanding options to take into consideration materialchanges in accounting practices or principles, consolidations or mergers(except those described in the immediately preceding paragraph), acquisitionsor dispositions of stock or property or any other event if it is determined bythe Board that such adjustment is appropriate to avoid distortion in theoperation of the Plan, including without limitation, the special optionadjustments made in connection with the Distribution and described in Section 14herein.

9.          EmploymentRights.  Neither the adoption of thePlan nor the grant of awards shall confer upon any Participant any right tocontinued employment with the Company or a subsidiary or affect in any way theright of the Company to terminate the employment of a Participant at anytime.  Except as specifically providedby the Board, in its sole discretion, in any particular case, the loss ofexisting or potential profit in awards granted under this Plan shall notconstitute an element of damages in the event of termination of therelationship of a Participant even if the termination is in violation of anobligation of the Company to the Participant by contract or otherwise.

10.        Definitions.

a.          For purposes of the Plan a subsidiaryis any corporation (i) in which the Company owns, directly or indirectly, stockpossessing 50% or more of the total combined voting power of all classes ofstock, or (ii) over which the Company has effective operating control;provided, however, that no corporation shall be deemed a subsidiary for thepurpose of any provisions applicable to incentive options, and no incentiveoptions shall be granted to employees of such corporation, unless in each case,such corporation shall constitute a subsidiary as defined in clause (i) above.  For special rules relating to DTI, *see*Section 14, below.

b.          The fair market value of the commonstock shall be determined in accordance with the applicable provisions of theCode or regulations issued thereunder, or in the absence of any such provisionsor regulations, shall be deemed to be the last sale price at which such commonstock is traded on the date in question as reported in the Wall Street Journal;or, if the Wall Street Journal is not published at the date in question or doesnot list the common stock, then in such other appropriate newspaper of generalcirculation as the Board may prescribe; or, if there is no sale of the commonstock on the date in question or the last price at which the common stocktraded is not listed, then the mean between the bid and asked price at theclose of the market on such day.

11.        Indemnificationof Board.  In addition to andwithout affecting such other rights of indemnification as they may have asmembers of the Board or otherwise, each member of the Board shall beindemnified by the Company to the extent legally possible against reasonableexpenses, including attorneys' fees, actually and reasonably incurred inconnection with the defense of any action, suit or proceeding, or in connectionwith any appeal therein, to which he may be a party by reason of any actiontaken or failure to act under or in connection with the Plan, or any optiongranted thereunder, and against all judgments, fines and amounts paid by him insettlement thereof; provided that such payment of amounts so indemnified isfirst approved by a majority of the members of the Board who are not parties tosuch action, suit or proceeding, or by independent legal counsel selected bythe Company, in either case on the basis of a determination that such memberacted in good faith and in a manner he reasonably believed to be in or notopposed to the best interests of the Company; and except that noindemnification shall be made in relation to matters as to which it shall beadjudged in such action, suit or proceeding that such Board member is liablefor negligence or misconduct in his duties; and provided, further that theBoard member shall in writing offer the Company the opportunity, at its ownexpense, to handle and defend the same.

12.        Amendments.  The Board may at any time discontinuegranting awards under the Plan.  TheBoard may at any time or times amend the Plan or amend any outstanding award orawards for the purpose of satisfying the requirements of Section 422 of theCode or of any changes in applicable laws or regulations, to comply with anyapplicable laws and requirements of foreign jurisdictions or for any otherpurpose that may at the time be permitted by law, provided that no suchamendment will adversely affect the rights of any Participant (without hisconsent) under any award theretofore granted.

13.        Non-EmployeeDirectors.  Notwithstanding anythingto the contrary contained elsewhere herein:

a.          Eligible Directors and Grant.  Each director of the Company who is not afull-time employee of the Company or any of its subsidiaries and is a directoron April 8, 1992 shall be automatically granted on such date non-incentivestock options covering 10,000 shares of common stock and each non-employeedirector who is initially elected after April 8, 1992 and prior to February 20,2002 shall be granted on the date of such election non-incentive stock optionscovering 10,000 shares of common stock (notwithstanding the two-for-one splitof the common stock effected on July 31, 1995), all such options to beexercisable with respect to one-fifth of the covered shares one year from thedate of grant and with respect to an additional one-fifth each succeeding year.

b.          Terms of Options.  The Final Exercise Date of options grantedpursuant to Section 13(a) hereof shall be 10 years from the date of grant.  If a director's service with the Companyterminates for any reason other than death, in lieu of the provisions ofSection 6(g) hereof, all options held by the director that are exercisable onthe date of termination shall continue to be exercisable for a period of sixmonths, but shall terminate immediately if the director was removed for causeor resigned under circumstances which in the opinion of the Board of Directorscasts such discredit on the Company or him as to justify termination of hisoptions.  After completion of saidsix-month period, such options shall terminate to the extent not previouslyexercised, expired or terminated.  Alloptions held by a director that are not exercisable on the date such director'sservice with the Company terminates shall immediately terminate.  The purchase price for shares of commonstock issuable upon the exercise of options granted pursuant to Section 13(a)hereof shall be the fair market value of the common stock at the close ofbusiness on the date the option is granted, determined in accordance withSection 10(b) hereof; provided, however, that in no event shallthe exercise price be less than par value per share.

14.        SpecialOption Adjustments.  Notwithstandingany other provision of the Plan, each option outstanding under the Planimmediately prior to the Distribution (an "affected option") shall beadjusted in accordance with Section 8.7 of the Distribution Agreement betweenthe Company and DTI dated as of November 19, 1996 (the "DistributionAgreement"). Except as otherwise provided herein, the adjusted optionshall have substantially the same terms as prior to the Distribution.  To the extent any such adjustment shall betreated as an option grant for purposes of Section 8.7 of such Agreement, itshall be made in accordance with the terms of said Section 8.7 and withoutregard to the option-grant rules and limitations set forth in this Plan.