Exhibit 10.3


 


DIGITAL MEDIACOM, INC.


1999-2000 STOCK OPTION PLAN


 


ARTICLE 1.

ESTABLISHMENT AND PURPOSE


 


1.1           Establishment.  Digital Mediacom, Inc. (the “Company”)
hereby establishes a plan providing for the grant of stock options to certain
eligible individuals who have or will render services to the Company and any
Subsidiary.  This plan shall be known as
the Digital Mediacom, Inc. Stock Option Plan (the “Plan”).


 


1.2           Purpose. 
The purpose of the Plan is to advance the interests of the Company and
its shareholders by enhancing the Company’s ability to attract and retain
qualified persons to perform services for the Company by providing incentives
to such persons to put forth maximum efforts for the Company and by rewarding
persons who contribute to the achievement of the Company’s economic objectives.


 


ARTICLE 2.

DEFINITIONS


 


The following terms have the meanings
set forth below, unless the context otherwise requires:


 


2.1           “Affiliate” means with respect to any
Person, (i) any Person directly or indirectly controlling, controlled by,
or under common control with such Person, (ii) any person owning or
controlling ten percent (10%) or more of the outstanding voting interests
of such Person, (iii) any officer, director, or general partner of such
Person, or (iv) any Person who is an officer, director, general partner or
holder of ten percent (10%) or more of the voting interests of any Person
described in clauses (i) through (iii) of this
sentence.  For purposes of this
definition, the term “controls,” “is controlled by,” or “is under common
control with” shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person or
power to direct or cause the direction of the management and policies of a
person or entity, whether through the ownership of voting securities, by
contract or otherwise.


 


2.2           “Board” means the Board of Directors of the
Company.


 


2.3           “Code” means the Internal Revenue Code of
1986, as amended.


 


2.4           “Committee” means the group of individuals
administering the Plan, as provided in Article 3 of the Plan.


 


2.5           “Common Stock” means the common stock of
the Company, no par value, or the number and kind of shares of stock or other
securities into which such Common Stock may be changed in accordance with Section 4.3
of the Plan.


 





















 


2.6           “Conversion Right” means the right, if
granted pursuant to Section 6.6 below, of a Participant to require the
Company to convert an Option, in whole or in part at any time after it becomes
exercisable and prior to its expiration, into shares of Common Stock without
the payment of any exercise price.  If a
Participant is granted a Conversion Right, then upon exercise of the Option or
a part thereof, the Company .shall deliver to the Participant
(subject to Article 9 below) that number of shares of Common Stock
computed by multiplying (A) the number of Option Shares underlying the
Option or part thereof being exercised by (B) the quotient obtained by
dividing (x) the difference between (i) the aggregate Fair Market
Value for the Option Shares underlying the Option (or part thereof being
exercised) immediately prior to the exercise of the Conversion Right and (ii) the
aggregate exercise price for the Option (or part thereof being exercised) by
(y) the aggregate Fair Market Value for the Option Shares underlying the
Option (or part thereof being exercised) immediately prior to the exercise of
the Conversion Right.


 


2.7           “Disability” means the permanent and total
disability of the Participant within the meaning of Section 22(e)(3) of
the Code.


 


2.8           “Eligible Recipient” means all employees
(including, without limitation, officers and directors who are also employees),
directors, consultants and independent contractors of the Company.


 


2.9           “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


2.10         “Fair Market Value” means, with respect to
the Common Stock, the following:


 


(a)          If the Common Stock is listed or
admitted to unlisted trading privileges on any national securities exchange or
is not so listed or admitted but transactions in the Common Stock are reported
on The Nasdaq National Market®, the last sale price of the Common
Stock on such exchange or reported by The Nasdaq National Market®
System as of such date (or, if no shares were traded on such day, as of the
next preceding day on which there was such a trade).


 


(b)          If the Common Stock is not so listed
or admitted to unlisted trading privileges or reported on The Nasdaq National
Market®, and bid and asked prices therefor in the over-the-counter
market are reported by The Nasdaq SmallCap MarketSM, the Nasdaq
Bulletin Board, or the National Quotation Bureau, Inc. (or any comparable
reporting service), the mean of the closing bid and asked prices as of such
date, as so reported by the applicable Nasdaq® system, or, if not so reported
thereon, as reported by the National Quotation Bureau, Inc. (or such
comparable reporting service).


 


(c)          In all other cases, such price as the
Committee determines in good faith in the exercise of its reasonable
discretion.


 


2.11         “Incentive Stock Option” means a right to
purchase Common Stock granted to an Eligible Recipient pursuant to Article 6
of the Plan that qualifies as an “incentive stock option” within the meaning of
Section 422 of the Code.


 


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2.12         “Non-Qualified Stock Option” means a right
to purchase Common Stock granted to an Eligible Recipient pursuant to Article 6
of the Plan that does not qualify as an Incentive Stock Option.


 


2.13         “Option” means an Incentive Stock Option or
a Non-Qualified Stock Option.


 


2.14         “Option Shares” means the shares of Common
Stock issuable upon exercise of an Option.


 


2.15         “Participant” means an Eligible Recipient
who receives one or more Options under of the Plan.


 


2.16         “Person” means any individual, corporation,
partnership, group, association, or other “person” (as such term is used in Section 14(d) of
the Exchange Act), other than the Company, a wholly-owned Subsidiary of the
Company, or any employee benefit plan sponsored by the Company or a
wholly-owned Subsidiary of the Company.


 


2.17         “Previously Acquired Shares” mean shares of
Common Stock that are already owned by the Participant.


 


2.18         “Retirement” means the retirement of a
Participant pursuant to and in accordance with the regular or, if approved by
the Board for purposes of the Plan, any early retirement plan or practice of
the Company or Subsidiary then covering the Participant


 


2.19         “Securities Act” means the Securities Act
of 1933, as amended.


 


2.20         “Subsidiary” means any subsidiary
corporation of the Company within the meaning of Section 424(f) and (g) of
the Code.


 


ARTICLE 3.

PLAN ADMINISTRATION


 


3.1           The Committee.  The Plan shall be administered by the Board,
or by a committee of the Board consisting of not less than two persons;
provided, however, that from and after the date on which the Company first
registers a class of its equity securities under Section 12 of the
Exchange Act, the Plan shall be administered to the extent provided herein by a
committee appointed by the Board consisting of not less than two members of the
Board.  Members of such a committee, if
established, shall be appointed from time to time by the Board, shall serve at
the pleasure of the Board and may resign at any time upon written notice to the
Board.  A majority of the members of such
a committee shall constitute a quorum. 
Such a committee shall act by majority approval of the members, shall
keep minutes of its meetings and shall provide copies of such minutes to the
Board.  Action of such a committee may be
taken without a meeting if unanimous written consent is given.  Copies of minutes of such a committee’s
meetings and of its actions by written consent shall be provided to the Board
and kept with the corporate records of the Company.  As used in this Plan, the term “Committee”
will refer to the Board or to such a committee, if established.


 


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3.2           Authority of the Committee.


 


(a)          In accordance with and subject to the
provisions of the Plan, the Committee shall have the authority to recommend to
the Board for its consideration and approval (i) the Eligible Recipients
who shall be selected as Participants, (ii) the nature and extent of the
Options to be granted to each Participant (including the number of shares of
Common Stock to be subject to each Option, the exercise price and the manner in
which Options will vest or become exercisable), (iii) the time or times
when Options will be granted, (iv) the duration of each Option, (v) the
restrictions and other conditions to which the exercisability or vesting of
Options may be subject, and (vi) such other provisions of the Options as
the Committee may deem necessary or desirable and as consistent with the terms
of the Plan.  The Committee shall
determine the form or forms of the option agreements with Participants which
shall evidence the particular terms, conditions, rights, and duties of the
Company and the Participants with respect to Options granted pursuant to the
Plan, which agreements shall be consistent with the provisions of the Plan.


 


(b)          With the consent of the Participant
affected thereby and subject to the consideration and approval of the Board,
the Committee may amend or modify the terms of any outstanding Option in any
manner, provided that the amended or modified terms are permitted by the Plan
as then in effect.  Without limiting the
generality of the foregoing sentence, the Committee may, with the consent of
the Participant affected thereby and subject to consideration and approval of
the Board, modify, the exercise price, number of shares, or other
terms and conditions of an Option, extend the term of an Option, accelerate the
exercisability or vesting or otherwise terminate any restrictions relating to
an Option, accept the surrender of any outstanding Option, or, to the extent
not previously exercised or vested, authorize the grant of new Options in
substitution for surrendered Options.


 


(c)          The Committee shall have the authority
to interpret the Plan and, subject to the provisions of the Plan, to establish,
adopt, and revise such rules and regulations relating to the Plan as it
may deem necessary or advisable for the administration of the Plan.  The Committee’s decisions and determinations
under the Plan need not be uniform and may be made selectively  among
Participants, whether or not such Participants are similarly situated.  Each determination, interpretation, or other
action made or taken by the Committee pursuant to the provisions of the Plan
shall be conclusive and binding for all purposes and on all persons, including,
without limitation, the Company and its Subsidiaries, the shareholders of the
Company, the Committee and each of its members, the directors, officers, and
employees of the Company and its Subsidiaries, and the Participants and their
respective successors in interest.  No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under the Plan.


 


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ARTICLE 4.

STOCK SUBJECT TO THE PLAN


 


4.1           Number of Shares.  Subject to adjustment as provided in Section 4.3
below, the maximum number of shares of Common Stock that shall be authorized
and reserved for issuance under the Plan shall be 1,500,000 shares of Common
Stock of the Company.


 


4.2           Shares Available for Use.  Shares of Common Stock that may be issued
upon exercise of Options shall be applied to reduce the maximum number of
shares of Common Stock remaining available for use under the Plan.  Any shares of Common Stock that are subject
to an Option (or any portion thereof) that lapses, expires, or for any reason
is terminated unexercised shall automatically again become available for use
under the Plan.  Also, Previously
Acquired Shares which are tendered to the Company in satisfaction or partial
satisfaction of the Exercise Price pursuant to Section 6.6 or in
satisfaction or partial satisfaction of withholding obligations pursuant to Article 10
shall become available for use under the Plan to the extent permitted by Rule 16b-3
of the Exchange Act.


 


4.3           Adjustments to Shares.


 


(a)          In the event of a reorganization,
merger, consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, extraordinary
dividend or divestiture (including a spin-off), or any other change in the
corporate structure or shares of the Company, the Committee (or, if the Company
is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation) shall make appropriate adjustment
(which determination shall be conclusive) as to the number and kind of
securities subject to and reserved under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind, and
exercise price of securities subject to outstanding Options.  Without limiting the generality of the
foregoing, in the event that any of such transactions are effected in such a
way that holders of Common Stock shall be entitled to receive stock,
securities, or assets, including cash, with respect to or in exchange for such
Common Stock, all Participants holding outstanding Options shall upon the
exercise of such Options receive, in lieu of any shares of Common Stock they
may be entitled to receive, such stock, securities, or assets, including cash,
as would have been issued to such Participants if their Options had been
exercised and such Participants had received Common Stock prior to such
transaction.


 


(b)          Notwithstanding Section 4.3(a),
there  shall be no adjustment to the shares authorized pursuant to
this Plan for an event described in Section 4.3(a) which occurs
before or simultaneously with the Effective Date of this Plan.


 


ARTICLE 5.

PARTICIPATION


 


Participants in the Plan shall be
those Eligible Recipients who, in the judgment of the Committee, have
performed, are performing, or during the term of an Option will perform,


 


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services
in the management, operation, and development of the Company or any Subsidiary
or Affiliate thereof, and significantly contributed, are significantly
contributing, or are expected to significantly contribute to the achievement of
corporate economic objectives.  Eligible
Recipients may be granted from time to time one or more Options, as may be
recommended by the Committee in its sole discretion to the Board of Directors
for its consideration and approval.  The
number, type, terms, and conditions of Options granted to various Eligible
Recipients need not be uniform, consistent, or in accordance with any plan,
regardless of whether such Eligible Recipients are similarly situated.  Upon determination by the Committee and
consideration and approval by the Board that an Option is to be granted to an
Eligible Recipient, written notice shall be given such person, specifying the
terms, conditions, rights and duties related thereto.  Each Eligible Recipient to whom an Option is
to be granted shall enter into an agreement with the provisions of the Plan,
specifying such terms, conditions, rights and duties.  Options shall be deemed to be granted as of
the date specified in the grant resolution of the Board, and the related option
agreements shall be dated as of such date.


 


ARTICLE 6.

STOCK OPTIONS


 


6.1           Grant. 
An Eligible Recipient may be granted one or more Options under the Plan
and such Options shall be subject to such terms and conditions, consistent with
the other provisions of the Plan, as shall be determined by the Committee in
its sole discretion upon the consideration and approval of the Board.  The Committee may recommend to the Board
whether an Option is to be considered an Incentive Stock Option or a
Non-Qualified Stock Option; provided, however, that an Incentive Stock Option
shall be granted only to an Eligible Recipient who is an employee of the
Company or a Subsidiary or Affiliate thereof. 
The terms of the agreement relating to a Non-Qualified Stock Option
shall expressly provide that such Option shall not be treated as an Incentive
Stock Option.  Options shall be granted
for no cash consideration unless minimal cash consideration is required by
applicable law.


 


6.2           Exercise. 
An Option shall become exercisable at such times and in such
installments (which may be cumulative) as shall be determined by the Committee
in its sole discretion at the time the Option is granted.  Upon the completion of its exercise period,
an Option, to the extent not then exercised, shall expire.


 


6.3           Exercise Price.


 


(a)           Incentive
Stock Options.  The per share
price to be paid by the Participant at the time an Incentive Stock Option is
exercised shall be determined by the Committee, in its discretion and upon the
consideration and approval of the Board, at the date of its grant; provided,
however, that such price shall not be less than (i) 100% of the Fair
Market Value of one share of Common Stock on the date the Option is granted, or
(ii) 110% of the Fair Market Value of one share of Common Stock on the
date the Option is granted if, at that time the Option is granted, the Participant
owns, directly or indirectly (as determined pursuant to Section 424(d) of
the Code), more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or


 


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parent corporation of the Company
(within the meaning of Sections 424(f) and 424(e), respectively, of the
Code).


 


(b)           Non-Qualified
Stock Options.  The per share
price to be paid by the Participant at the time a Non-Qualified Stock Option is
exercised shall be determined by the Committee in its sole discretion upon the
consideration and approval of the Board at the time the Option is granted.


 


6.4           Duration.


 


(a)          Incentive
Stock Options.  The period
during which an Incentive Stock Option may be exercised shall be fixed by the
Committee in its sole discretion upon consideration and approval of the Board
at the time such Option is granted; provided, however, that in no event shall
such period exceed ten (10) years from its date of grant or, in the
case of a Participant who owns, directly or indirectly (as determined pursuant
to Section 424(d) of the Code), more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation of the Company (within the meaning of Section 424(f) and
424(e), respectively, of the Code), five (5) years from its date of
grant.


 


(b)          Non-Qualified
Stock Options.  The period
during which a Non-Qualified Stock Option may be exercised shall be fixed by
the Committee in its sole discretion upon consideration and approval of the
Board at its date of grant.


 


(c)          Effect
of Termination of Employment or Other Service.  Notwithstanding this Section 6.4, except
as provided in Articles 7 and 8 of the Plan, only those Incentive Stock Options
granted to a Participant shall terminate and may no longer be exercised upon
the termination of the Participant’s employment or other status with the
Company, its Affiliates or Subsidiaries.


 


6.5           Manner of Exercise.  An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained
herein and in the agreement evidencing such Option, by delivery, in person or
through certified or registered mail, of written notice of exercise to the
Company at its principal executive office (Attention: Chief Financial Officer),
and by paying in full the total Option exercise price for the shares of Common
Stock purchased.  Such notice shall be in
a form satisfactory to the Committee and shall specify the particular Option (or
portion thereof) that is being exercised and the number of shares with respect
to which the Option is being exercised. 
Subject to compliance with Section 11.1 of the Plan, the exercise
of the Option shall be deemed effective upon receipt of such notice and payment
complying with the terms of the Plan and the execution of the agreement
evidencing such Option.  As soon as
practicable after the effective exercise of the Option, the Participant shall
be recorded on the stock transfer books of the Company as the owner of the
shares purchased, and the Company shall deliver to the Participant one or more
duly issued stock certificates evidencing such ownership.  If a Participant exercises any Option with
respect to some, but not all, of the shares of Common Stock subject to such
Option, the right to exercise such Option with respect to the remaining shares
shall continue until it expires or terminates in accordance with its
terms.  An Option shall only be
exercisable with respect to whole shares.


 


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6.6           Payment of Exercise Price.  The total purchase price of the shares to be
purchased upon exercise of an Option shall be paid entirely in cash (by
certified check or money order) provided, however, that the Committee, in its
sole discretion upon the original grant of the Option or thereafter, and upon
the consideration and approval of the Board, may allow such payments to be
made, in whole or in part, by transfer from the Participant to the Company of
Previously Acquired Shares or by exercise of a Conversion Right.  In determining whether or upon what terms and
conditions a Participant will be permitted to pay the purchase price of an
Option in a form other than cash, the Committee may consider all relevant facts
and circumstances including, without limitation, the tax and securities law
consequences to the Participant and the Company and the financial accounting
consequences to the Company.  In the
event the Participant is permitted to pay the purchase price of an Option in
whole or in part with Previously Acquired Shares, the value of such shares
shall be equal to their Fair Market Value on the date of exercise of the
Option.  No shares of the Common Stock
shall be delivered pursuant to the exercise of any Option until payment in full
of any amount required to be paid pursuant to the Plan or the applicable option
agreement is, or is arranged to be, received by the Company.


 


6.7           Rights as a Shareholder.  The Participant shall have no tights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares,
and no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine pursuant to Section 4.3 of the Plan.


 


6.8           Disposition of Common Stock Acquired Pursuant to the
Exercise of Incentive Stock Options. 
Prior to making a disposition (as defined in Section 424(c) of
the Code) of any shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option granted under the Plan before the expiration of two
years after its date of grant or before the expiration of one year after its
date of exercise and the date on which such shares of Common Stock were
transferred to the Participant pursuant to exercise of the Option, the
Participant shall send written notice to the Company of the proposed date of
such disposition, the number of shares to be disposed of, the amount of
proceeds to be received from such disposition and any other information
relating to such disposition that the Company may reasonably request.  The right of a Participant to make any such
disposition shall be conditioned on the receipt by the Company of all amounts
necessary to satisfy any federal, state, or local withholding and employment-related
tax requirements attributable to such disposition.  The Committee shall have the right, in its
sole discretion, to endorse the certificates representing such shares with a
legend restricting transfer and to cause a stop transfer order to be entered
with the Company’s transfer agent until such time as the Company receives the
amounts necessary to satisfy such withholding and employment-related tax
requirements or until the later of the expiration of two years from its date of
grant or one year from its date of exercise and the date on which such shares
were transferred to the Participant pursuant to the exercise of the Option.


 


6.9           Aggregate Limitation of Stock Subject to Incentive
Stock Options.  To the extent
that the aggregate Fair Market Value (determined as of the date an Incentive
Stock Option is granted) of the shares of Common Stock with respect to which
incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or


 


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any
Subsidiary or any parent corporation of the Company) exceeds $100,000 (or such
other amount as may be prescribed by the Code from time to time), such excess
Options shall be treated as Non-Qualified Stock Options.  The determination shall be made by taking
incentive stock options into account in the order in which they were
granted.  If such excess only applies to
a portion of an incentive stock option, the Committee, in its discretion, shall
designate which shares shall be treated as shares to be acquired upon exercise
of an incentive stock option.


 


ARTICLE 7.

EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE


 


7.1           Termination of Employment or Other Service Due to
Death, Disability, or Retirement.  Except
as otherwise provided in Article 8 of the Plan or as otherwise determined
by the Committee upon the consideration and approval of the Board either at
time an Option is granted or thereafter, in the event a Participant’s
employment or other service with the Company and all Subsidiaries or Affiliates
is terminated by reason of such Participant’s death, Disability, or Retirement,
all outstanding Options then held by the Participant shall become immediately
exercisable in full and remain exercisable after such termination for a period
of three months in the case of Retirement and one year in the case of death or
Disability (but in no event after the expiration date of any such Option).


 


7.2           Termination of Employment or Other Service for Reasons
Other than Death, Disability, or Retirement. 
Except as otherwise provided in Article 8 of the Plan or
as otherwise determined by the Committee upon the consideration and approval of
the Board either at the time an Option is granted or thereafter, in the event
of termination of the Participant’s employment or other status with the Company
and all Subsidiaries or Affiliates in relation to which the Option was granted
for any reason other than death, Disability, or Retirement, all rights of the
Participant under the Plan shall immediately terminate without notice of any
kind, and no Options then held by the Participant shall thereafter be
exercisable; provided, however, that if such termination is due to any reason
other than termination by the Company or any Subsidiary or Affiliate for “cause,”
all outstanding Options then held by such Participant shall remain exercisable
to the extent exercisable as of such termination for a period of three months
after such termination (but in no event after the expiration date of any such
Option).  For purposes of this Section 7.2,
“cause” shall be as defined in any employment or other agreement or policy
applicable to the Participant or, if no such agreement or policy exists, shall
mean (a) dishonesty, fraud, misrepresentation, embezzlement, or material
or deliberate injury or attempted injury, in each case related to the Company
or any Subsidiary, (b) any unlawful or criminal activity of a serious
nature, (c) any willful breach of duty, habitual neglect of duty, or
unreasonable job performance, or (d) any material breach of a
confidentiality or noncompetition agreement entered into with the Company or
any Subsidiary.


 


7.3           Modification of Effect of Termination.  Notwithstanding the provisions of this Article 7,
upon a Participant’s termination of employment or other status with the Company
and all Subsidiaries or Affiliates with respect to which Options were granted,
the Committee may, in its sole discretion upon the consideration and approval
of the Board (which may be exercised before or following such termination)
cause Options, or any portions thereof, then held by such Participant to become
exercisable and remain exercisable following such termination in the


 


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manner
determined by the Committee upon the consideration and approval of the Board;
provided, however, that no Option shall be exercisable after the expiration
date thereof and any Incentive Stock Option that remains unexercised more than
three months following employment termination by reason of Retirement or more
than one year following employment termination by reason of death or Disability
shall thereafter be deemed to be a Non-Qualified Stock Option.


 


7.4           Date of Termination.  Unless the Committee shall otherwise
determine in its sole discretion, a Participant’s employment or other service
shall, for purposes of the Plan, be deemed to have terminated on the date such
Participant ceases to perform services for the Company and all Subsidiaries or
Affiliates, as determined in good faith by the Committee.


 


ARTICLE 8.

CHANGE OF CONTROL


 


8.1           Change in Control.  For purposes of this Article 8, a “Change
in Control” of the Company shall mean (a) the sale, lease, exchange, or
other transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a corporation that is
not controlled by the Company, (b) the approval by the shareholders of the
Company of any plan or proposal for the liquidation or dissolution of the
Company, (c) any merger, consolidation, business combination,
reorganization or recapitalization of the Corporation in which the stockholders
of the Corporation immediately prior to such transaction own capital stock
representing less than fifty percent (50%) of the Corporation’s voting power
immediately after such transaction, or any transaction or series of related
transactions in which capital stock representing in excess of fifty
percent (50%) of the Corporation’s voting power is transferred or (d) individuals
who constitute the Board on the effective date of the Plan cease for any reason
to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the effective date of the Plan whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors comprising or deemed pursuant hereto to
comprise the Board on the effective date of the Plan (either by a specific vote
or by approval of the proxy statement of the Company in which such person is
named as a nominee for director) shall be, for purposes of this subsection (d),
considered as though such person were a member of the Board on the effective
date of the Plan.  Notwithstanding
anything in the foregoing to the contrary, no Change in Control shall be deemed
to have occurred for purposes of this Section 8.1 by virtue of any
transaction which stall have been approved by the affirmative vote of at least
a majority of the members of the Board or by the shareholders of the Company on
the effective date of the Plan.


 


8.2           Acceleration of Vesting.  If a Change of Control of the Company shall
be about to occur or shall occur, the Committee, in its sole discretion and
upon the consideration and approval of the Board, may determine that all outstanding
Options shall become immediately exercisable in full and shall remain
exercisable during the remaining term thereof, regardless of whether the
employment or other status of the Participants with respect to which Options
have been granted shall continue with the Company or any Subsidiary.


 


8.3           Cash Payment.  If
a Change in Control of the Company shall be about to occur or shall occur, then
the Committee, in its sole discretion upon the consideration and approval of


 


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the Board
and without the consent of any Participant effected thereby, may determine that
some or all Participants holding outstanding Options shall receive, with
respect to some or all of the shares of Common Stock subject to such Options,
as of the effective date of any such Change in Control of the Company, cash in
an amount equal to the excess of the Fair Market Value of such shares
immediately prior to the effective date of such Change in Control of the
Company over the exercise price per share of such Options.


 


8.4           Limitation on Change in Control Payments.  Notwithstanding anything in Sections 8.2
or 8.3 above to the contrary, if, with respect to a Participant, the
acceleration of the exercisability of an Option as provided in Section 8.2
or the payment of cash in exchange for all or part of an Option as provided in Section 8.3
above (which acceleration or payment could be deemed a “payment” within the
meaning of Section 280G(b)(2) of the Code), together with any other
payments which such Participant has the right to receive from the Company or
any corporation which is a member of an “affiliated group” (as defined in Section 1504(a) of
the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of
the Code), then the acceleration of exercisability and the payments to such
Participant pursuant to Sections 8.2 and 8.3 above shall be reduced
to the largest extent or amount as, in the sole judgment of the Committee, will
result in no portion of such payments being subject to the excise tax imposed
by Section 4999 of the Code.


 


ARTICLE 9.

RIGHT TO WITHHOLD; PAYMENT OF WITHHOLDING TAXES


 


The Company is entitled to (a) withhold
and deduct from future wages of the Participant (or from other amounts which
may be due and owing to the Participant from the Company) or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state, and local withholding and employment-related
tax requirements (i) attributable to the grant or exercise of an Option or
to a disqualifying disposition of stock received upon exercise of an Incentive
Stock Option, or (ii) otherwise incurred with respect to an Option, or (b) require
the Participant promptly to remit the amount of such withholding to the Company
before taking any action with respect to the exercise of an Option or the
issuance of any stock certificate either to the Participant or any transferee.  The Committee, in its sole discretion, may
permit a Participant to pay all or a portion of such withholding liability
either by surrendering Previously Acquired Shares already owned by the
Participant or by electing to have the Company retain shares subject to the
Option, provided that the Committee determines that the fair market value of
the surrendered Previously Acquired Shares or the retained shares is equal to
such withholding liability.


 


ARTICLE 10.

RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS;

TRANSFERABILITY


 


10.1         Employment or Service.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any


 


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Eligible
Recipient or Participant at any time, or confer upon any Eligible Recipient or
Participant any right to continue in the employ or service of the Company or
any Subsidiary.


 


10.2         Restrictions on Transfer.  Other than pursuant to a qualified domestic
relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Options shall be
assignable or transferable, or subjected to any lien, during the lifetime of
the Participant, either voluntarily or involuntarily, directly or indirectly,
by operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce, or bankruptcy. 
In the event of a Participant’s death, such Participant’s rights and
interest in Options shall be transferable by testamentary will or the laws of
descent and distribution, and payment of any amounts due under the Plan shall
be made to, and exercise of any Options (to the extent permitted pursuant to Article 7
of the Plan) may be made by, the Participant’s legal representatives, heirs, or
legatees.  If, in the opinion of the
Committee, a Participant holding an Option is disabled from caring for his or
her affairs because of mental condition, physical condition, or age, any payments
due the Participant may be made to, and any rights of the Participant under the
Plan shall be exercised by, such Participant’s guardian, conservator, or other
legal personal representative upon furnishing the Committee with evidence
satisfactory to the Committee of such status.


 


10.3         Non-Exclusivity of the Plan.  Nothing contained in the Plan is intended to
amend, modify, or rescind any previously approved compensation plans or
programs entered into by the Company. 
The Plan will be construed to be in addition to any and all such other
plans or programs.  Neither the adoption
of the Plan nor the submission of the Plan to the shareholders of the Company
for approval will be construed as creating any limitations on the power or
authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.


 


ARTICLE 11.

SECURITIES LAW RESTRICTIONS


 


11.1         Share Issuances.  Notwithstanding any other provision of the
Plan or any agreements entered into pursuant hereto, the Company shall not be
required to issue or deliver any certificate for shares of Common Stock under
this Plan, and an Option shall not be considered to be exercised
notwithstanding the tender by the Participant of any consideration therefor,
unless and until each of the following conditions has been fulfilled:


 


(a)          (i) There shall be in effect with
respect to such shares a registration statement under the Securities Act and
any applicable state securities laws if the Committee, in its sole discretion,
shall have determined to file, cause to become effective, and maintain the
effectiveness of such registration statement; or (ii) if the Committee has
determined not to so register the shares of Common Stock to be issued under the
Plan, (A) exemptions from registration under the Securities Act and
applicable state securities laws shall be available for such issuance (as
determined by counsel to the Company) and (B) there shall have been
received from the Participant (or, in the event of death or disability, the
Participant’s heir(s) or legal representative(s)), any representations or


 


12





















 


agreements requested by the Company in
order to permit such issuance to be made pursuant to such exemptions; and


 


(b)          There shall have been obtained any
other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, in its sole discretion upon the advice of
counsel, deem necessary or advisable.


 


11.2         Share Transfers.  Shares of Common Stock issued pursuant to
Options granted under the Plan may not be sold, assigned, transferred, pledged,
encumbered, or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except pursuant to
registration under the Securities Act and applicable state securities laws or
pursuant to exemptions from such registrations. 
The Company may condition the sale, assignment, transfer, pledge,
encumbrance, or other disposition of such shares not issued pursuant to an
effective and current registration statement under the Securities Act and all
applicable state securities laws on the receipt from the party to whom the
shares of Common Stock are to be so transferred of any representations or
agreements requested by the Company in order to permit such transfer to be made
pursuant to exemptions from registration under the Securities Act and
applicable state securities laws.


 


11.3         Holding Period Requirements.  Any Options granted and any Common Stock
acquired pursuant to the exercise of Options under this Plan may be subject to
a six-month holding requirement from the grant date in order for the
transaction to be exempt from the short-swing trading profits provision of Section 16(b) of
the Exchange Act.


 


11.4         Legends.


 


(a)          Unless a registration statement under
the Securities Act and applicable state securities laws is in effect with
respect to the issuance or transfer of shares of Common Stock under the Plan,
each certificate representing any such shares shall be endorsed with a legend
in substantially the following form, unless counsel for the Company is of the
opinion as to any such certificate that such legend is unnecessary:


 


THE SECURITIES EVIDENCED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”),
OR UNDER APPLICABLE STATE SECURITIES LAWS. 
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE ACT AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.


 


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ARTICLE 12.

PLAN AMENDMENT; MODIFICATION AND TERMINATION


 


12.1         Amendment; Modification; Termination.  The Board may suspend or terminate the Plan
or any portion thereof at any time, and may amend the Plan from time to time in
such respects as the Board may deem advisable in order that Options under the
Plan shall conform to any change in applicable laws or regulations or in any
other respect the Board may deem to be in the best interests of the Company;
provided, however, that no such amendment shall be effective, without approval
of the shareholders of the Company, if shareholder approval of the amendment is
then required to comply with or obtain exemptive relief under any tax or
regulatory requirement the Board deems desirable to comply with or obtain
exemptive relief under, including without limitation, Rule 16b-3
under the Exchange Act or any successor rule or Section 422 of the
Code or under the applicable rules or regulations of any securities
exchange or the NASD.  No termination,
suspension, or amendment of the Plan shall alter or impair any outstanding
Option without the consent of the Participant affected thereby; provided,
however, that this sentence shall not impair the right of the Committee to take
whatever action it deems appropriate under Section 4.3 or Article 8
of the Plan.


 


ARTICLE 13.

EFFECTIVE DATE OF THE PLAN


 


13.1         Effective Date.  The Plan is effective as of November 18,
1999 the date adopted by the Board; provided, however, that no Incentive Stock
Options may be exercised until the Plan is adopted by the shareholders of the
Company in accordance with the requirements of the Code.


 


13.2         Duration of the Plan.  The Plan shall terminate at midnight on November 18,
2009, and may be terminated prior thereto by Board action, and no Option shill
be granted after such termination. 
Options outstanding upon termination of the Plan may continue to be
exercised in accordance with their terms.


 


ARTICLE 14.

MISCELLANEOUS


 


14.1         Construction and Headings.  The use of the masculine gender shall also
include within its meaning the feminine and the singular may include the plural
and the plural may include the singular, unless the context clearly indicates
to the contrary.  The headings of the
Articles, Sections, and subparts of the Plan are for convenience of reading
only and are not meant to be of substantive significance and shall not add or
detract from the meaning of such Article, Section, or subpart.


 


14.2         Governing Law.  The place of administration of the Plan shall
be conclusively deemed to be within the State of Minnesota, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Options shall be governed by
and construed exclusively and solely in accordance with the laws


 


14





















 


of the
State of Minnesota without regard to the conflict of laws provisions of any
jurisdictions.  All parties agree to
submit to the jurisdiction of the state and federal courts of Minnesota with
respect to matters relating to the Plan and agree not to raise or assert the
defense that such forum is not convenient for such party.


 


14.3         Successors and Assigns.  This Plan shall be binding upon and inure to
the benefit of the successors and permitted assigns of the Company, including,
without limitation, whether by way of merger, consolidation, operation of law,
assignment, purchase, or other acquisition of substantially all of the assets
or business of the Company, and any and all such successors and assigns shall
absolutely and unconditionally assume all of the Company’s obligations under
the Plan.


 


14.4         Survival of Provisions.  The rights, remedies, agreements,
obligations, and covenants contained in or made pursuant to the Plan, any
agreement evidencing an Option and any other notices or agreements in
connection therewith, including, without limitation, any notice of exercise of
an Option, shall survive the execution and delivery of such notices and
agreements and the delivery and receipt of shares of Common Stock and shall
remain in full force and effect.


 


IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by the Company, the Company
has caused this Plan to be signed by the undersigned officer, thereunto duly
authorized pursuant to the resolutions of the Board of Directors adopted on November 18,
1999.


 


	
   

  	
  DIGITAL MEDIACOM, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin Atkinson

  
	
   

  	
   

  	
  Kevin
  Atkinson

  
	
   

  	
   

  	
  Its:
  Chief Executive Officer

  



 


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