<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant: [X]
Filed by a Party other than the Registrant: [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for
Use of the
Commission Only
(as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MEDIA 100 INC.
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(Name of Registrant as Specified in Its Charter)
THE BOARD OF DIRECTORS OF MEDIA 100 INC.
----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
----------------
(2) Aggregate number of securities to which transaction
applies:
----------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined:)
---------------- ---------------------------------------------
--------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------
(5) Total fee paid:
-----------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------
(2) Form, Schedule or Registration Statement no.:
-----------------
(3) Filing Party:
-------------------------------------------------
(4) Date Filed:
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<PAGE>
MEDIA 100 INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 14, 1999
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To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Media 100
Inc., a Delaware corporation (the "Company"), will be held at the offices of the
Company, 290 Donald Lynch Boulevard, Marlboro, Massachusetts 01752, on
Wednesday, April 14, 1999 at 10:00 a.m. for the following purposes:
1. To elect six directors;
2. To increase the number of shares of Common Stock authorized for issuance
under the 1986 Employee Stock Purchase Plan by 200,000 shares to a total of
1,000,000 shares;
3. To increase the number of shares of Common Stock authorized for issuance
under the Key Employee Incentive Plan (1992) by 200,000 shares to a total of
2,200,000 shares; and
4. To transact any and all other business that may properly come before the
meeting and any adjournments or postponements thereof.
All stockholders of record at the close of business on March 3, 1999 are
entitled to notice of and to vote at this meeting.
Stockholders are requested to sign and date the enclosed proxy and return it
in the enclosed envelope. The envelope requires no postage if mailed in the
United States. The Company's 1998 Annual Report to Stockholders, which contains
financial statements and other information of interest to stockholders, is
enclosed with this Notice and the accompanying Proxy Statement.
By order of the Board of Directors
Steven D. Shea
SECRETARY
MARCH 15, 1999
<PAGE>
MEDIA 100 INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 14, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Media 100 Inc., a Delaware corporation (the
"Company"), for the Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held on Wednesday, April 14, 1999 at 10:00 a.m. at the principal
executive offices of the Company, located at 290 Donald Lynch Boulevard,
Marlboro, Massachusetts 01752, and any adjournments or postponements thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting.
This Proxy Statement and attached form of proxy first being distributed to
stockholders on or about March 15, 1999. The Company's 1998 Annual Report to
Stockholders, which includes the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1998, accompanies this Proxy Statement.
VOTING RIGHTS AND OUTSTANDING SHARES
As of March 3, 1999, the Company had outstanding 8,285,073 shares of common
stock of the Company (the "Common Stock"). Each share of Common Stock entitles
the holder of record thereof at the close of business on March 3, 1999, the
record date for the Annual Meeting, to one vote on the matters to be voted upon
at the meeting. As of March 3, 1999, the last reported sale price of the Common
Stock on the Nasdaq National Market was $4.94.
The expenses of preparing, printing and assembling the materials used in the
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, the Company may also utilize the
services of some of its officers and employees (who will receive no compensation
therefor in addition to their regular salaries) to solicit proxies personally
and by mail, telephone and telegraph from brokerage houses and other
stockholders.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted. If the stockholder specifies in the proxy how
the shares are to be voted, they will be voted as specified. If the stockholder
does not specify how the shares are to be voted, they will be voted (i) to elect
the six nominees listed under "Election of Directors," or the nominees for which
approval has not been withheld, (ii) in favor of increasing the number of shares
of Common Stock authorized for issuance under the 1986 Employee Stock Purchase
Plan, as amended (the "1986 Plan"), by 200,000 shares to a total of 1,000,000
shares, and (iii) in favor of increasing the number of shares of Common Stock
authorized for issuance under the Key Employee Incentive Plan (1992), as amended
(the "1992 Plan"), by 200,000 shares to a total of 2,200,000 shares. Should any
person so named be unable or unwilling to serve as director, the persons named
in the form of proxy for the Annual Meeting intend to vote for such other person
as the Board of Directors may recommend. Any stockholder has the right to revoke
his or her proxy at any time before it is voted by attending the meeting and
voting in person or filing with the Secretary of the Company a written
instrument revoking the proxy or delivering another newly executed proxy bearing
a later date.
At the date hereof, management of the Company has no knowledge of any
business other than that described in the notice for the Annual Meeting which
will be presented for consideration at such meeting. If any other business
should come before such meeting, the persons appointed by the enclosed form of
proxy shall have discretionary authority to vote all such proxies as they shall
decide.
QUORUM, REQUIRED VOTES AND METHOD OF TABULATION
Consistent with state law and under the Company's by-laws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed by
the
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Company to act as election inspectors for the meeting. The six nominees for
election as directors at the Annual Meeting who receive the greatest number of
votes properly cast for the election of directors shall be elected directors.
The affirmative vote of a majority of the shares present or represented by proxy
and voting at the Annual Meeting is required for the approval of the other
matters to be voted on.
The election inspectors will count the total number of votes cast "for"
approval of proposals, other than the election of directors, for purposes of
determining whether sufficient affirmative votes have been cast. The election
inspectors will count shares represented by proxies that withhold authority to
vote for a nominee for election as a director or that reflect abstentions and
"broker non-votes" (i.e., shares represented at the meeting held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or persons entitled to vote and (ii) the broker or nominee does not have
the discretionary voting power on a particular matter) only as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum, but neither abstentions nor broker non-votes have any
effect on the outcome of voting on the matter.
1. ELECTION OF DIRECTORS
At the Annual Meeting it is intended that the Company's Board of Directors
be elected to hold office until the next Annual Meeting and until their
successors shall have been duly elected and qualified. Information regarding
nominees is set forth below. All nominees are currently directors of the
Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- -------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
John A. Molinari.................................. 36 Chief Executive Officer and Director
B. Robert Feingold................................ 53 President, Chief Operating Officer and Director
Maurice L. Castonguay............................. 47 Director
Roger W. Redmond.................................. 45 Director
Bruce I. Sachs.................................... 39 Director
Paul J. Severino.................................. 52 Director
</TABLE>
Mr. Molinari has been a director since June 1995. He has been President of
the Company from November 1996 until October 1998 and has been Chief Executive
Officer of the Company since November 1996. Prior to November 1996, he served as
Vice President and General Manager of the Company's multimedia group from 1990
to November 1996.
Mr. Feingold has been a director since October 1998. He has been President
and Chief Operating Officer since October 1998. Prior to joining the Company,
Mr. Feingold served as Vice President and Division Manager of the Functional
Board Test Division of Teradyne, Inc. from 1996 until 1998. Teradyne is a
supplier of automatic test equipment for the electronics industry. From 1990 to
1995, Mr. Feingold served as Director and Chief Operating Officer of Enviroplan,
Inc., an air quality monitoring systems/ consulting business.
Mr. Castonguay has been a director since February 1997. He has been Chief
Financial Officer and Vice President of Finance and Administration of Matrix
One, Inc., a supplier of product information and business process management
software and services for the extended enterprise, since January 1999. Prior to
that, he was Chief Financial Officer, Treasurer and Vice President of Finance
and Administration of Stratus Computer, Inc., a provider of fault tolerant
computer systems, from August 1997 to December 1998. He left Stratus after it
was acquired by Ascend Communications, Inc. Prior to that, he was employed by
Gradient Technologies, Inc., a provider of distributed computing and security
solutions for the enterprise and intranet markets, where he was Chief Financial
Officer, Treasurer and Vice President of Finance from March 1996 to August 1997.
Prior to that, he was employed by Xylogics, Inc., a supplier of remote access
communications products, where he was Chief Financial Officer and Vice President
of Finance from 1990 to March 1996. He left after it was acquired by Bay
Networks, Inc.
Mr. Redmond has been a director since February 1998. He has been a Managing
Director at John G. Kinnard and Company since November 1998. Prior to that, he
was President and Chief Executive Officer
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of Teletraining Systems, Inc., a provider of training for distance educators,
from August 1997 to October 1998. Prior to that, he was a Managing Director of
Piper Jaffray, Inc., an investment banking firm, for thirteen years. Mr. Redmond
is also a director of Spire Corporation, a provider of photovoltaic module
manufacturing equipment, optoelectronic products and biomedical processing
services.
Mr. Sachs has been a director since December 1996. He has been Executive
Vice President and General Manager, Carrier Signaling and Management Group of
Ascend Communications, Inc., a provider of wide area networking solutions for
telecommunications carriers, internet service providers and corporate customers,
since October 1998. Prior to that, he was President and Chief Executive Officer
of Stratus Computer, Inc., a provider of fault tolerant computer systems, since
May 1997. Prior to that, he was employed by Bay Networks, Inc., a supplier of
internetworking communication products, where he was Executive Vice President
and General Manager of the Internet Telecom Business Group from May 1996 to May
1997, and President and General Manager of the Remote Access Business Unit from
December 1995 to May 1996. Prior to that, he was employed by Xylogics, Inc., a
supplier of remote access communications products, where he was President and
Chief Executive Officer from 1993 to the company's acquisition by Bay Networks,
Inc. in December 1995, and Executive Vice President from 1992 to 1993. Mr. Sachs
is also director of Vertex Pharmaceuticals Inc., a provider of small molecule
pharmaceuticals using structure-based drug design.
Mr. Severino has been a director since April 1985. He has been the Chairman
of NetCentric Corporation, a provider of internet protocol telephony
applications, since August 1997 and Chief Executive Officer since February 1998.
Prior to that, he served as NetCentric's Acting Chief Executive Officer from
August 1997 to February 1998. He is the founder and former Chairman of Bay
Networks, Inc., a supplier of internetworking communication products, where he
served as Chairman of the Board from October 1994 to October 1996, and as
President and Chief Executive Officer from 1985 to October 1994. Mr. Severino is
also a director MTDC (Massachusetts Telecommunications Development Corporation).
BOARD OF DIRECTORS
During the fiscal year ended November 30, 1998, the Company's Board of
Directors held thirteen meetings and acted by written consent on two additional
occasions. Each of the directors attended at least 75% of the aggregate of the
meetings of the Board and all committees of the Board on which he served which
were held while he was a director. There are two committees of the Board of
Directors: an Audit Committee and a Compensation Committee. There is no
Nominating Committee.
The Audit Committee reviews with management and the Company's independent
public accountants the Company's financial statements, the accounting principles
applied in their preparation, the scope of the audit, any comments made by the
public accountants upon the financial condition of the Company and its
accounting controls and procedures, and such other matters as the committee
deems appropriate. The Audit Committee is comprised of two members, Messrs.
Castonguay and Redmond. During the fiscal year ended November 30, 1998, the
Audit Committee met on three occasions.
The Compensation Committee reviews salary policies and compensation of
officers and other members of management and approves compensation plans. The
Compensation Committee also administers the Company's stock option and purchase
plans. The Compensation Committee is comprised of two members, Messrs. Sachs and
Severino. During the fiscal year ended November 30, 1998, the Compensation
Committee met on seven occasions and acted by written consent on two additional
occasions.
During the fiscal year ended November 30, 1998, the Company compensated each
director who is not also an employee of the Company ("Non-Employee Directors")
$8,000 per year plus $1,000 per Board meeting attended and $500 per Committee
meeting attended for services as a director. In addition, each Non-Employee
Director has been granted options to purchase Company Common Stock under the
Company's Key Employee Incentive Plan (1992) and, in the case of Mr. Severino,
also under the Company's Key Employee Incentive Plan (1982).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the fiscal year ended
November 30, 1998 were Messrs. Sachs and Severino.
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<PAGE>
2. APPROVAL OF INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE
1986 EMPLOYEE STOCK PURCHASE PLAN (THE "1986 PLAN")
Under the 1986 Plan, eligible employees of the Company and its subsidiaries
are given the option to purchase shares of Common Stock at the lower of 85% of
fair market value at the date of grant of the option or 85% of fair market value
at the date of exercise of the option by means of payroll deductions.
In 1998, the Company's stockholders approved an increase in the number of
shares authorized for issuance under the 1986 Plan from 600,000 to 800,000. As
of March 3, 1999, 142,420 shares of Common Stock remain available for future
grants under the 1986 Plan. The Board of Directors believes that the shares
currently available for grant under the Company's 1986 Plan are not sufficient
for the Company's stock purchase program. As a result, the Board of Directors
has approved, and submitted to the stockholders for approval, an increase of
200,000 in the number of shares that may be purchased under the 1986 Plan for a
total of 1,000,000 shares, subject to adjustment as described below. The Board
of Directors recommends a vote in favor of this increase.
The Compensation Committee administers the 1986 Plan, determines all
questions arising thereunder, and adopts, administers and interprets such rules
and regulations relating to the Plan as it deems necessary or advisable.
The 1986 Plan permits the Company to grant six-month options to
participating employees to purchase shares. Each employee of the Company or one
of its subsidiaries having at least one month of continuous service on the date
of grant is eligible to participate in the 1986 Plan, except for any employee
who immediately after the grant of an option would be deemed under the Internal
Revenue Code of 1986, as amended, to own 5% or more of the Common Stock.
Options are granted twice yearly, on January 1 and July 1, and are
exercisable through accumulations of payroll deductions (of not less than 2% nor
more than 10% of compensation), for the number of whole shares determined by
dividing the balance in the employee's withholding account on the last day of
the option period by the purchase price per share for the stock determined under
the 1986 Plan. The purchase price for the shares will be the lower of 85% of the
fair market value of the stock at the time of grant or 85% of said value at the
time of exercise.
The number of shares each employee is entitled to purchase is subject to
proportionate reduction in the event the number of shares then available under
the 1986 Plan is otherwise insufficient. No employee will be granted an option
under the 1986 Plan which would permit his or her right to purchase shares to
accrue at a rate which exceeds $25,000 in fair market value of Common Stock
(determined at the time the option is granted) for any calendar year (or $12,500
for any option period).
An employee may at any time prior to exercise cancel his or her option, and
upon such cancellation, payments made by the employee shall be returned to him
or her without interest. Each employee's rights in an option will be exercisable
during his or her lifetime only by him or her and may not be sold, pledged,
assigned, or otherwise transferred other than by will or the laws of descent and
distribution. Upon termination of an employee, any option shall be deemed
cancelled and all payments made by the employee shall be returned to him or her
without interest. The employee may elect to have the amount credited to his or
her withholding account at the time of his or her death applied to the exercise
of his or her option for the benefit of named beneficiaries. Nothing in the 1986
Plan is to be construed so as to give an employee the right to be retained in
the service of the Company.
In the event there is a change in the outstanding stock of the Company due
to a stock dividend, stock split, combination of shares, recapitalization,
merger or other change in the capital stock of the Company, the aggregate number
of shares available under the 1986 Plan and under any outstanding options, the
option price, and other relevant provisions, will be appropriately adjusted. The
Company will have the right to amend the 1986 Plan at any time, but cannot make
an amendment (other than as stated above) relating to the aggregate number of
shares available under the Plan or the option price without the
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<PAGE>
approval of the stockholders. The Company may suspend or terminate the 1986 Plan
at any time, but such termination will not affect the rights of employees
holding options at the time of termination.
FEDERAL TAX EFFECTS. THE FOLLOWING DISCUSSION OF UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF STOCK RIGHTS GRANTED
UNDER THE 1986 PLAN IS BASED UPON THE PROVISIONS OF THE CODE AS IN EFFECT ON THE
DATE OF THIS PROXY STATEMENT, CURRENT REGULATIONS, AND EXISTING ADMINISTRATIVE
RULINGS OF THE INTERNAL REVENUE SERVICE. IT IS NOT INTENDED TO BE A COMPLETE
DISCUSSION OF ALL OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
1986 PLAN OR OF THE REQUIREMENTS THAT MUST BE MET IN ORDER TO QUALIFY FOR THE
DESCRIBED TAX TREATMENT. IN ADDITION, THERE MAY BE FOREIGN, STATE OR LOCAL TAX
CONSEQUENCES THAT ARE NOT DISCUSSED HEREIN.
In general, for United States federal income tax purposes, a participating
employee will not recognize taxable income upon the grant or exercise of an
option awarded under the 1986 Plan.
An employee who purchases shares under the 1986 Plan and disposes of such
shares within two years after the first day of the applicable option period will
recognize ordinary income on the difference between the price paid per share and
the fair market value on the last day of that option period. The Company will
generally be entitled to a deduction in the amount of this income, subject to
possible limitation in the case of certain of the Company's officers.
In addition to ordinary income, an employee who sells shares within this
two-year period will recognize a capital gain or loss on the difference between
the amount realized on the sale and the employee's basis in the shares (i.e.,
the price paid by the employee under the 1986 Plan plus ordinary income
recognized by reason of the sale). A loss in connection with a sale to a family
member or certain other related parties would not be allowable for federal
income tax purposes.
If the employee disposes of shares purchased under the 1986 Plan more than
two years after the first day of the applicable participation period or dies at
any time while holding the shares, ordinary income will be recognized equal to
the lesser of (i) the excess of the fair market value of the shares at the time
of disposition or death over the price paid under the 1986 Plan, or (ii) 15% of
the fair market value of the shares on the first day of the applicable
participation period. The Company would not be entitled to a deduction for this
amount. In addition to ordinary income, a capital gain will be recognized on the
excess, if any, of the amount realized on a sale over the employee's basis in
the shares (i.e., the price paid by the employee under the 1986 Plan plus any
ordinary income recognized by reason of such sale).
As of March 3, 1999, approximately 225 employees were eligible to
participate in the 1986 Plan. Participation in the plan is discretionary on the
part of eligible employees, and the number of shares allocable to any
participant depends on the amount of that person's payroll deduction and the
applicable purchase price of the shares with respect to any option period.
Therefore, the Company cannot now determine the number of shares that may be
received by any particular person or group under the Plan. As of March 3, 1999,
the last reported sale price of the Common Stock on the Nasdaq National Market
was $4.94.
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STOCK OPTIONS GRANTED UNDER THE 1986 PLAN SINCE ITS INCEPTION. Since its
inception, and through December 31, 1998, the following persons have received
stock options pursuant to the 1986 Plan:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION NUMBER OF OPTIONS(1)
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
John A. Molinari, Chief Executive Officer and Director...................................... --
B. Robert Feingold, President, Chief Operating Officer, and Director........................ --
Anthony B. Dolph, Vice President, Marketing................................................. --
Anthony M. Scotto, Vice President, Product Development...................................... --
Maurice L. Castonguay, Director............................................................. --
Roger W. Redmond, Director.................................................................. --
Bruce I. Sachs, Director.................................................................... --
Paul J. Severino, Director.................................................................. --
All Current Executive Officers as a Group................................................... --
All Current Directors who are not Executive Officers as a Group............................. --
All Employees who are not Executive Officers as a Group..................................... 657,580
</TABLE>
- ------------------------
(1) Such number represents the total number of options granted to the person or
group in question under the 1986 Plan, without taking into account those
options which have been exercised, terminated or expired. The dollar value
of options is equal to the difference between the exercise price of the
options granted and the fair market value of the Company's Common Stock at
the date of exercise. Accordingly, such dollar value is not readily
ascertainable.
3. APPROVAL OF INCREASE IN NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER THE
KEY EMPLOYEE INCENTIVE PLAN (1992) (THE "1992 PLAN")
The 1992 Plan provides for the grant of incentive stock options,
non-incentive stock options and stock appreciation rights to key employees,
advisers, consultants and directors of the Company or any of its participating
subsidiaries.
In 1996, the Company's stockholders approved an increase in the number of
shares authorized for issuance under the 1992 Plan from 1,000,000 to 2,000,000.
As of March 3, 1999, 229,424 shares of Common Stock remain available for future
grants under the 1992 Plan. The Company's stock option program is the principal
incentive tool used to motivate key employees to create long-term value for
shareholders. Providing key employees with an opportunity to participate in an
increase in stock value not only encourages equity ownership by management, but
also more closely aligns management interests with the interests of all
shareholders. The Board of Directors believes that the shares currently
available for grant under the Company's 1992 Plan are not sufficient for the
Company's stock option program. As a result, the Board of Directors has
approved, and submitted to the stockholders for approval, an increase of 200,000
in the number of shares that may be purchased under the 1992 Plan for a total of
2,200,000 shares, subject to adjustment as described below. The Board of
Directors recommends a vote in favor of this increase.
The 1992 Plan is administered by the Compensation Committee. The
Compensation Committee is responsible for the day-to-day administration of the
1992 Plan, including the selection of participants in the 1992 Plan,
determination of the terms and provisions of awards granted under the 1992 Plan
(subject to certain limitations set forth in the 1992 Plan) and interpretation
of the provisions of the 1992 Plan and resolution of disputes thereunder, which
determinations shall be conclusive.
The exercise price of all options granted under the 1992 Plan (other than
options granted to non-employee directors) is determined by the Compensation
Committee and, in the case of incentive options, may not be less than 100% (110%
in the case of incentive stock options granted to persons owning or treated as
owning more than 10% of the total combined voting power of all classes of the
Company's stock) of the fair market value of the Common Stock on the date of
grant. Unless otherwise specified by the Compensation Committee, each option
vests as to 20% of the shares of the first anniversary of the date
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<PAGE>
of grant and an additional 20% on each anniversary thereafter, which vesting
schedule may be accelerated in certain circumstances. No option may be exercised
later than 10 years (five years in the case of incentive options granted to any
10% beneficial owners) after the date of grant.
Stock appreciation rights ("SARs") may be granted in tandem or independent
of options. SARs will entitle recipients to receive upon exercise, with respect
to each share of common stock to which the SAR relates, payment in cash or
shares of Common Stock (as determined by the Board of Directors) equal to the
difference between the fair market value of the Common Stock on the date the SAR
is exercised, as may be adjusted by the Compensation Committee, and the fair
market value on the date the SAR was granted. The Compensation Committee may
adjust the fair market value of the Common Stock on the date of exercise to
account for dividends on the Common Stock, and in such limited circumstances as
it may specify following a change in control of the Company, by reference to a
specified value for the Common Stock during the period immediately preceding the
change in control, as the Compensation Committee determines.
The rights of a 1992 Plan participant in an award granted under the 1992
Plan are exercisable during his lifetime only by him and may not be sold,
pledged, assigned, or otherwise transferred other than by will or the laws of
descent and distribution. Nothing in the 1992 Plan is to be construed so as to
give a participant the right to be retained in the service of the Company. In
the event of the death of a participant, all options held by the participant may
be exercised by the participant's executor or administrator for a period of one
year (or as extended by the Compensation Committee) following the participant's
death for all or any of the shares which the participant was entitled to
purchase immediately prior to his death.
In the event of the termination of a participant's (other than a
non-employee director's) employment or service with the Company for any reason
other than death, all awards held by the participant shall immediately terminate
unless the Compensation Committee determines that such awards as were
exercisable immediately prior to termination shall remain exercisable for a
period of time after termination. Employment shall not be considered terminated
in the case of any bona fide leave of absence approved by the Board of Directors
for purposes of the 1992 Plan so long as reemployment is guaranteed by statute
or contract or in the case of a transfer of employment between the Company and
one of its subsidiaries or between subsidiaries or between the Company and a
corporation issuing or assuming an option in a merger, reorganization,
acquisition or other transaction to which Section 424(a) of the Code applies.
The 1992 Plan currently provides for the grant of non-incentive options
covering 10,000 shares of the Company's Common Stock to each non-employee
director of the Company serving on April 8, 1992 and for the grant of
non-incentive options covering 10,000 shares of Common Stock to each
non-employee director initially elected to the Board of Directors after April 8,
1992 on the date such director is elected. All such options shall be exercisable
with respect to 20% of the shares on the first anniversary of the date of grant
and an additional 20% on each subsequent anniversary and shall expire not later
than 10 years from the date of grant. All unexpired options granted to a
non-employee director that are exercisable on the date such director ceases to
be a director for any reason other than death (which shall terminate
immediately) shall remain exercisable for a period of six months following such
termination, but shall terminate immediately if the director was removed for
cause or resigned under circumstances which in the opinion of the Board of
Directors casts such discredit on the Company or him so as to justify
termination of his options.
In the event there is a change in the outstanding stock of the Company due
to a stock dividend, stock split, combination of shares, recapitalization,
merger in which the Company is the surviving corporation or other capital
change, the aggregate number of shares available under the 1992 Plan and under
the outstanding options, the option price, and other relevant provisions, will
be appropriately adjusted. In the event of a consolidation or merger in which
the Company is not the surviving corporation or which results in the acquisition
of all the Company's outstanding stock by a single entity, or in the event of
the sale of
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substantially all of the Company's assets, all outstanding awards shall
terminate (including the options to non-employee directors to the extent the
Compensation Committee determines it may do so in accordance with applicable
requirements of Rule 16b-3 of the Securities Exchange Act of 1934), provided
that the Board of Directors shall either make all such outstanding awards
exercisable immediately prior to consummation of such merger, consolidation or
sale of assets or arrange to have the surviving or acquiring entity grant
replacement awards having equivalent terms and provisions.
The Compensation Committee has the power to amend the 1992 Plan or amend any
outstanding award for the purpose of satisfying the requirements of Section 422
of the Code or of any changes in applicable laws or regulations, to comply with
any applicable laws and requirements of foreign jurisdictions or for any other
lawful purpose as long as such amendment will not adversely affect the rights of
any participant (without his consent) under any awards previously granted. The
1992 Plan provides for additional indemnification by the Company of members of
the Board against liabilities arising in respect of actions taken by the Board
in administering the 1992 Plan.
FEDERAL TAX EFFECTS. THE FOLLOWING DISCUSSION OF UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF STOCK RIGHTS GRANTED
UNDER THE 1992 PLAN IS BASED UPON THE PROVISIONS OF THE CODE AS IN EFFECT ON THE
DATE OF THIS PROXY STATEMENT, CURRENT REGULATIONS, AND EXISTING ADMINISTRATIVE
RULINGS OF THE INTERNAL REVENUE SERVICE. IT IS NOT INTENDED TO BE A COMPLETE
DISCUSSION OF ALL OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
1992 PLAN OR OF THE REQUIREMENTS THAT MUST BE MET IN ORDER TO QUALIFY FOR THE
DESCRIBED TAX TREATMENT. IN ADDITION, THERE MAY BE FOREIGN, STATE OR LOCAL TAX
CONSEQUENCES THAT ARE NOT DISCUSSED HEREIN.
The grant of an option does not produce taxable income to the participant or
a deduction for the Company. Upon the exercise of a nonstatutory option, the
participant will realize ordinary income (subject to withholding where the
option was awarded in connection with employment) equal to the excess of the
fair market value of the shares acquired upon exercise over the exercise price.
The Company will be entitled to a corresponding deduction if it satisfies
applicable tax reporting requirements with respect to such income. The Company
will not be entitled to a deduction with respect to any gain or loss recognized
upon a subsequent disposition of the shares. The exercise of an incentive stock
option does not produce ordinary taxable income to the participant, nor is the
Company entitled to a deduction upon exercise. However, exercise of an incentive
stock option results in additional alternative minimum taxable income ("AMTI")
equal to the excess of the fair market value of the shares acquired upon
exercise over the exercise price. This increase in AMTI may result in an
alternative minimum tax liability for the participant. If shares acquired upon
exercise of an incentive stock option are not disposed of within two years from
the date of grant of the incentive stock option nor within one year after
exercise, any gain or loss recognized upon a subsequent sale or exchange of the
shares will be a long-term capital gain or loss. The Company will not be
entitled to a deduction in this case. However, a participant who disposes of
such shares within either the one-year or two-year periods (a "disqualifying
disposition") will realize ordinary income in the year of the disqualifying
disposition (and the Company will be entitled to a deduction) equal in general
to the excess of the fair market value of the shares at time of exercise over
the exercise price. Any additional gain upon disposition of the shares will be
taxed as short- or long-term capital gain for which the Company will not be
entitled to a deduction. Where the disqualifying disposition is an arm's-length
sale or exchange for less than the fair market value of the shares at time of
exercise, the participant's ordinary income and the Company's deduction will be
limited to the gain, if any, on the sale or exchange. For purposes of applying
the foregoing rules, an incentive stock option will be treated as a nonstatutory
option to the extent that it, together with other incentive stock options
granted to the participant after 1986 under any plan of the Company or its
subsidiaries, first becomes exercisable in any calendar year for stock having a
fair market value (determined as of the time of grant of the option) in excess
of $100,000. Also, an incentive stock
8
<PAGE>
option will be treated as a nonstatutory option if it is exercised more than
three months following termination of employment (with exceptions in the case of
termination by reason of death of disability). In limited circumstances, awards
that are made or that become exercisable in connection with a change in control
of the Company could result in a loss of deduction to the Company and a 20%
additional tax in the hands of the award recipient. Also, Section 162(m) of the
Code imposes a $1,000,000 limit on the deduction the Company may claim for
remuneration to its top five officers in any year. There are a number of
exceptions to this limitation, including an exception for certain
performance-based compensation. Stock options qualify for the exception, to the
extent granted by a board committee composed exclusively of two or more "outside
directors" (as defined), under a shareholder-approved plan that limits the
number of options that can be granted to any eligible employee in a specified
period, and must be granted with an exercise price not less than the fair market
value of the stock on the date of grant. Under the transition rules, the
"outside director" and option limit rules did not apply to options granted under
the 1992 Plan as in effect prior to the amendments submitted for shareholder
approval at this Annual Meeting, but will apply to the 1992 Plan, as amended.
The Compensation Committee currently has only one "outside director" due to the
vacancy left by Mr. Dow, and therefore stock options granted would not qualify
for the performance-based compensation exemption under Section 162(m) until
another "outside director" joins such committee. In other respects, stock
options awarded under the 1992 Plan are intended to qualify for the exception.
As of March 3, 1999, approximately 241 key employees, advisors, consultants
and directors were eligible to participate in the 1992 Plan. As of March 3,
1999, 1,464,095 shares were subject to outstanding options granted under the
1992 Plan and no shares were subject to SARs granted under the 1992 Plan. As of
March 3, 1999, the last reported sale price of the Common Stock on the Nasdaq
National Market was $4.94.
STOCK OPTIONS GRANTED UNDER THE 1992 PLAN SINCE ITS INCEPTION. Since its
inception, and through February 1, 1999, the following persons have received
stock options pursuant to the 1992 Plan:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION NUMBER OF OPTIONS(1)
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
John A. Molinari, Chief Executive Officer and Director (2).................................. 431,404
B. Robert Feingold, President, Chief Operating Officer, and Director........................ 150,000
Anthony B. Dolph, Vice President, Marketing................................................. 100,000
Anthony M. Scotto, Vice President, Product Development...................................... 115,000
Maurice L. Castonguay, Director............................................................. 10,000
Roger W. Redmond, Director.................................................................. 10,000
Bruce I. Sachs, Director.................................................................... 10,000
Paul J. Severino, Director.................................................................. 20,000
All Current Executive Officers as a Group................................................... 796,404
All Current Directors who are not Executive Officers as a Group............................. 50,000
All Employees who are not Executive Officers as a Group..................................... 2,695,895
</TABLE>
- ------------------------
(1) Such number represents the total number of options granted to the person or
group in question under the 1992 Plan, without taking into account those
options which have been exercised, terminated or expired. In addition, the
amounts shown reflect options granted pursuant to the Stock Option Repricing
Program. See the Compensation Committee Report on Executive Compensation.
The dollar value of options is equal to the difference between the exercise
price of the options granted and the fair market value of the Company's
Common Stock at the date of exercise. Accordingly, such dollar value is not
readily ascertainable.
(2) Persons who have received five percent or greater of options granted under
the 1992 Plan.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
Common Stock owned as of February 1, 1999 (except as noted below) by (i) each
person (or group of affiliated persons) known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each of the
Company's directors, (iii) the Chief Executive Officer and each of the other
individuals named in the Summary Compensation
Table (hereafter referred to as the "Named Executive Officers") and (iv) all
current executive officers and directors as a group. Except as otherwise
indicated in the footnotes to this table, the Company believes that each of the
persons or entities named in this table has sole voting and investment power
with respect to all the shares of Common Stock indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
-----------------------
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS OWNED(1) PERCENT(1)
- ----------------------------------------------------------------------------------------- ---------- -----------
Maurice L. Castonguay (2)................................................................ 29,000 *
55 Fairbanks Boulevard
Marlboro, Massachusetts 01752
John A. Molinari (3)..................................................................... 189,036 2.20%
c/o Media 100 Inc.
290 Donald Lynch Boulevard
Marlboro, Massachusetts 01752
B. Robert Feingold....................................................................... -- --
c/o Media 100 Inc.
290 Donald Lynch Boulevard
Marlboro, Massachusetts 01752
Roger W. Redmond (4)..................................................................... 2,000 *
77 Garden Drive
Burnsville, Minnesota 55337
Bruce I. Sachs (5)....................................................................... 44,000 *
55 Fairbanks Boulevard
Marlboro, Massachusetts 01752
Paul J. Severino (6)..................................................................... 100,340 1.17%
17 Msgr. O'Brien Highway
Cambridge, Massachusetts 02141
Anthony B. Dolph (7)..................................................................... 23,000 *
c/o Media 100 Inc.
290 Donald Lynch Boulevard
Marlboro, Massachusetts 01752
Anthony M. Scotto (8).................................................................... 24,750 *
c/o Media 100 Inc.
290 Donald Lynch Boulevard
Marlboro, Massachusetts 01752
All executive officers and directors as a group (7 persons in all) (9)................... 412,126 4.80%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
-----------------------
DIRECTORS AND NAMED EXECUTIVE OFFICERS OWNED(1) PERCENT(1)
- ----------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
ADDITIONAL 5% STOCKHOLDERS
Alfred A. Molinari, Jr. (10)............................................................. 1,055,080 12.28%
c/o Data Translations, Inc.
100 Locke Drive
Marlboro, Massachusetts 01752
West Highland Capital, Inc. (11)......................................................... 950,000 11.06%
300 Drake's Landing Road, Suite 290
Greenbrae, California 94904
The Clark Estates, Inc. (12)............................................................. 475,700 5.54%
One Rockefeller Plaza
New York, New York 10020
Dimensional Fund Advisors Inc. (13)...................................................... 469,000 5.46%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ------------------------
* Represents less than 1%.
(1) The number and percent of the outstanding shares of Common Stock treat as
outstanding all shares issuable on options exercisable within sixty days of
February 1, 1999 held by a particular beneficial owner that are included in
the first column.
(2) Includes 4,000 shares subject to options exercisable within sixty days of
February 1, 1999.
(3) Includes 68,424 shares subject to options exercisable within sixty days of
February 1, 1999.
(4) Includes 2,000 shares subject to options exercisable within sixty days of
February 1, 1999.
(5) Includes 4,000 shares subject to options exercisable within sixty days of
February 1, 1999.
(6) Includes 40,000 shares subject to options exercisable within sixty days of
February 1, 1999.
(7) Includes 23,000 shares subject to options exercisable within sixty days of
February 1, 1999.
(8) Includes 24,750 shares subject to options exercisable within sixty days of
February 1, 1999.
(9) Includes 166,174 shares subject to options exercisable within sixty days of
February 1, 1999.
(10) Includes 88,593 shares subject to options exercisable within sixty days of
February 1, 1999.
(11) As reported in, and based solely upon, an Amendment No. 1 to Schedule
13G/A as filed on February 12, 1999 with the Securities and Exchange
Commission by West Highland Capital, Inc. (the "West Highland Schedule
13G"). According to the West Highland Schedule 13G, of the 950,000 shares
of the Company's Common Stock owned collectively by West Highland Capital,
Inc. and its affiliates (the "West Highland Shares"), (i) West Highland
Capital, Inc. beneficially owns all 950,000 of the West Highland Shares,
(ii) Lang H. Gerhard beneficially owns all 950,000 of the West Highland
Shares, (iii) Estero Partners, LLC beneficially owns 826,398 of the West
Highland Shares, (iv) West Highland Partners, L.P. beneficially owns
712,460 of the West Highland Shares, and (v) Buttonwood Partners, L.P.
beneficially owns 113,938 of the West Highland Shares. In each case, the
beneficial owner listed above shares voting and dispositive power over such
shares.
11
<PAGE>
(12) As reported in, and based solely upon, a Schedule 13D dated October 10,
1997 filed with the Securities and Exchange Commission by The Clark
Estates, Inc. and a discussion between the Company and The Clark Estates,
Inc.
(13) As reported in, and based solely upon, a Schedule 13G as filed on February
12, 1999 with the Securities and Exchange Commission by Dimensional Fund
Advisors Inc. (the "Dimensional Schedule 13G"). According to the
Dimensional Schedule 13G, Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial ownership of
469,000 shares of the Company's Common Stock. All of such shares are held
by four investment companies registered under the Investment Company Act of
1940 to which Dimensional furnishes investment advice and certain
investment vehicles for which Dimensional serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
EXECUTIVE OFFICERS
The executive officers of the Company as of March 15, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- -------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
John A. Molinari.................................. 36 Chief Executive Officer and Director
B. Robert Feingold................................ 53 President, Chief Operating Officer and Director
Anthony B. Dolph.................................. 40 Vice President, Marketing
Anthony M. Scotto................................. 43 Vice President, Product Development
</TABLE>
Mr. Molinari has been Chief Executive Officer since November 1996. He was
President from November 1996 until October 1998. Prior to that, he served as
Vice President and General Manager of the Company's multimedia group from 1990
to November 1996. See "Election of Directors."
Mr. Feingold has been President and Chief Operating Officer since October
1998. Mr. Feingold has been a director since October 1998. He has been President
and Chief Operating Officer since October 1998. Prior to joining the Company,
Mr. Feingold served as Vice President and Division Manager of the Functional
Board Test Division of Teradyne, Inc. from 1996 until 1998. Teradyne is a
supplier of automatic test equipment for the electronics industry. From 1990 to
1995, Mr. Feingold served as Director and Chief Operating Officer of
Environplan, Inc., an air quality monitoring systems/consulting business. See
"Election of Directors."
Mr. Dolph has been Vice President, Marketing since January 1998. Prior to
that, he served as Vice President, Business Development from October 1997 to
January 1998, as Vice President, Strategic Planning from November 1996 to
October 1997, and as director of marketing for the Company's multimedia group
from June 1994 to November 1996. Prior to joining the Company, he was employed
by Progress Software Corporation, a supplier of computer application technology
for the client/server market, where he was Director, Corporate Communications
from 1992 to June 1994.
Mr. Scotto has been Vice President, Product Development since November 1996.
Prior to that, he served as Vice President of Product Development for the
Company's multimedia group from June 1996 to November 1996. Prior to joining the
Company, he was employed by EMC Corporation, a supplier of computer storage
products and services, where he was Vice President, Software Engineering, Open
Storage Group from 1994 to June 1996. Prior to that, he was employed by GenRad,
Inc., a supplier of automatic test and measurement equipment, where he was Vice
President, Engineering and Customer Support from 1993 to 1994 and Director,
Engineering from 1992 to 1993.
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Chief Executive Officer and each of the other executive officers whose
cash compensation exceeded $100,000 annually for the fiscal years ended November
30, 1998, 1997 and 1996 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(1)
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(2)
- ----------------------------------------------------------------- ---- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
John A. Molinari (3)............................................. 1998 $200,000 $ 30,000 202,250 $ 288
Chief Executive Officer 1997 200,000 0 20,000 336
1996 140,000 105,000 60,000 235
B. Robert Feingold (4)........................................... 1998 26,154 50,000 150,000 65
President and Chief Operating Officer 1997 -- -- -- --
1996 -- -- -- --
Anthony B. Dolph (5)............................................. 1998 135,000 20,250 50,000 1,012
Vice President, Marketing 1997 125,250 25,750 30,000 210
1996 111,882 20,625 0 188
Anthony M. Scotto (6)............................................ 1998 170,000 30,344 75,000 806
Vice President, Product Development 1997 155,000 29,063 0 1,259
1996 75,558 24,219 40,000 63
</TABLE>
- ------------------------
(1) The Company has not issued stock appreciation rights or granted restricted
stock awards. In addition, the Company does not maintain a "long-term
incentive plan," as that term is defined in applicable rules. The amounts
shown reflect options granted pursuant to the Stock Option Repricing
Program. See the Compensation Committee Report on Executive Compensation.
(2) The amounts reported represent (i) the dollar value of premiums paid by the
Company on term life insurance for the benefit of the Named Executive
Officers and (ii) contributions to a defined contribution plan with respect
to Mr. Dolph in 1998 and Mr. Scotto in 1997 and 1998.
(3) Mr. Molinari was appointed Chief Executive Officer effective November 30,
1996. Mr. Molinari served as President from November 1996 until October
1998. Prior to that he was Vice President and General Manager of the
Company's multimedia group.
(4) Mr. Feingold was appointed President and Chief Operating Officer effective
upon his commencement of employment with the Company on October 13, 1998.
(5) Mr. Dolph was appointed an executive officer of the Company effective
November 30, 1996.
(6) Mr. Scotto commenced employment with the Company on June 24, 1996, and was
appointed an executive officer of the Company effective November 30, 1996.
13
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Feingold's offer letter with the Company provides that in the event Mr.
Feingold is terminated without cause or Mr. Feingold resigns following a
significant reduction in compensation (other than a reduction applicable to
executive officers generally) or following a major reduction in authority, the
Company will pay Mr. Feingold a lump sum payment equal to one times his current
salary, which is currently $200,000. Such payment is conditional on Mr.
Feingold's release of all claims against the Company. Upon termination without
cause, Mr. Feingold will also be subject to a one-year noncompetition agreement.
In addition, Mr. Feingold's offer letter provides that in the event of a change
in control, all 150,000 options granted to him upon commencement of his
employment with the Company under the 1992 Plan will immediately vest in full.
STOCK OPTIONS
The following table provides information concerning the grant of stock
options under the Key Employee Incentive Plan (1992) to the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------- STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS EXERCISE OPTION TERM (1)
UNDERLYING GRANTED TO OR BASE ------------------------
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE ($) ($)
- -------------------------------------------------- ---------- ------------ -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John A. Molinari (2).............................. 142,250 13.42% $3.94 1/19/08 $352,473.42 $893,236.87
10,000 .94% $3.29 3/19/08 $ 20,544.03 $ 52,200.69
50,000 4.72% $2.75 10/13/08 $ 86,473.01 $219,139.59
Anthony B. Dolph (2).............................. 50,000 4.72% $3.94 1/19/08 $123,892.24 $313,967.26
B. Robert Feingold (2)............................ 150,000 14.15% $2.75 10/13/08 $259,419.03 $657,418.76
Anthony M. Scotto (2)............................. 40,000 3.77% $3.94 1/19/08 $ 99,113.79 $251,173.81
35,000 3.30% $3.29 3/19/08 $ 71,904.11 $182,702.42
</TABLE>
- ------------------------
(1) The amounts shown reflect options granted pursuant to the Stock Option
Repricing Program. See the Compensation Committee Report on Executive
Compensation.
(2) The options for 142,250 shares granted to Mr. Molinari, the options for
50,000 shares granted to Mr. Dolph, the options for 40,000 shares granted to
Mr. Scotto were granted in connection with the Stock Option Repricing
Program. The replaced options, when initially granted, would have become
exercisable over five years, 20% on each anniversary of the grant, and would
have expired six years after grant. The replacement options are exercisable
as follows: replacement options that were granted in exchange for
exercisable old options become exercisable six months following the new
grant date; replacement options that were granted in exchange for
unexercisable old options become exercisable over four years from the new
grant date, 12.5% six months following the new grant date and 6.25%
quarterly thereafter. All other options granted are exercisable as follows:
25% one year from the date of grant and 6.25% quarterly thereafter. All
options expire ten years after the grant date.
14
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information, with respect to the Named
Executive Officers, concerning the unexercised options held as of the end of the
fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($)(1)
SHARES ACQUIRED VALUE --------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ---------------- ------------ ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John A. Molinari...................... 0 $0.00 59,564 142,686 $18,464.69 $110,232.82
Anthony B. Dolph...................... 0 $0.00 20,750 29,250 $ 6,432.50 $ 9,067.50
B. Robert Feingold.................... 0 $0.00 0 150,000 $ 0 $225,000.00
Anthony M. Scotto..................... 0 $0.00 14,000 61,000 $ 4,340.00 $ 41,660.00
</TABLE>
- ------------------------
(1) Market value of underlying securities at November 30, 1998, minus the
exercise price of "in-the-money" options. These amounts take into account
options granted pursuant to the Stock Option Repricing Program. See the
Compensation Committee Report on Executive Compensation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for reviewing the compensation of
the executive officers of the Company. The committee also grants stock options
under the Company's stock option plans and administers the Company's employee
stock purchase plan.
COMPENSATION PHILOSOPHY. The Company operates in a highly competitive and
rapidly evolving high technology business. The committee seeks to establish
compensation policies that provide management with a performance incentive, and
that align the interests of senior management with stockholder interests. The
program includes three principal components: salary, annual incentives, and
stock option awards. The committee considers the past performance and
anticipated future contribution of each executive officer in establishing the
total amount and mix of each element of compensation.
SALARY. The salaries of the executive officers (including the Chief
Executive Officer) are reviewed annually by the committee in light of survey
information developed by an independent compensation and benefits consultant.
The committee considers the median compensation levels for comparable positions
at other technology companies, but does not, as a matter of policy, fix
compensation of all executive officers as a percentage of such median levels.
Accordingly, compensation levels for an executive officer may be set by the
committee above or below such median levels, based on the committee's subjective
assessment of other factors, including the scope of an individual's
responsibilities, his or her prior level of experience and competition for
executives with the skills required by the Company. Based on the above
considerations, the base salaries of the executive officers were increased
during fiscal 1998 between 0% and 10% over the levels in effect at the end of
fiscal 1997.
ANNUAL INCENTIVES. The committee annually reviews and approves an executive
incentive plan which provides executive officers (including the Chief Executive
Officer) with the opportunity to earn specified percentages of their base salary
based upon targeted financial goals and, in certain instances, on the
achievement of individual objectives and a subjective assessment of the
executive's performance. For the last fiscal year, the financial targets
approved by the committee included goals for revenue and operating income, and
the percentage of the target incentive tied to each financial goal varied among
the executive officers depending on the scope of an individual's
responsibilities and the significance of an individual's anticipated
contribution to the overall objectives of the Company. The committee approved
the range of
15
<PAGE>
the target incentives for the executive officers at 25% to 38% of base
compensation, based on the above considerations. Incentive payments totaling
$75,750 under the fiscal 1998 plan were made with respect to the targeted
financial goals.
STOCK OPTION AWARDS. Stock Option awards are designed to align the
interests of the executive officers with the long-term interests of the
stockholders. The committee awards stock options generally at fair market value
on the date of grant, and such awards are subject to vesting periods which are
intended to encourage the executive officer to remain with the Company. The
timing and amount of stock option awards given to the executive officers in
fiscal 1998 were based in each case on the committee's subjective judgment of
the particular circumstances of the individual.
STOCK OPTION REPRICING PROGRAM. In January 1998, the Compensation Committee
also reviewed outstanding options granted under the 1992 Plan and held by the
Company's employees and determined that many employees of the Company held
options at exercise prices that limited their effectiveness as a tool for
employee retention and as a long-term incentive. The Compensation Committee
recommended the stock option repricing program (the "Stock Option Repricing
Program") to the Board of Directors as a means of addressing this issue. Under
the Stock Option Repricing Program, current employees of the Company were
permitted to exchange all options granted to them under the 1992 Plan on a
one-for-one basis for new stock options with an exercise price of $3.94, the
fair market value of the Common Stock on January 26, 1998. All surrendered
options were combined into two replacement options--one for previously
fully-vested options, and one for previously unvested options. All previously
vested options were replaced with options that were fully vested as of July 19,
1998 (six months following the new grant date). All previously unvested options
were replaced with options having a four-year vesting schedule as follows: the
first 12.5% of the replacement options vested on July 19, 1998, with 6.25% of
the options vesting each quarter thereafter beginning October 19, 1998. All
replacement options expire ten years after the new grant date. Three executive
officers, Messrs. Molinari, Dolph and Scotto, elected to participate in the
Stock Option Repricing Program.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. Mr. Molinari's salary, annual
incentive opportunity and stock option award for fiscal 1998 were determined by
the committee in accordance with the philosophy described above. Mr. Molinari's
base salary was fixed at $200,000. Mr. Molinari's annual incentive opportunity
represented 25% of his base salary at target, and was based upon the Company's
achievement of certain targeted revenue and operating income goals. An incentive
payment of $30,000 was made to Mr. Molinari for fiscal 1998. In 1998, Mr.
Molinari was granted non-qualified stock options to purchase 10,000 shares at
the then fair market value of $3.29 per share and incentive stock options to
purchase 50,000 shares at the then fair market value of $2.75 per share, such
options becoming exercisable as follows: 25% one year from the date of grant and
6.25% quarterly thereafter. All such options expire ten years from the date of
grant. This grant was determined by the committee to be appropriate, in light of
Mr. Molinari's position as Chief Executive Officer, as well as his existing
level of stock options. In addition, Mr. Molinari participated in the Stock
Option Repricing Program pursuant to which he received a total of 142,250
options with an exercise price of $3.94.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
in any year to the company's chief executive officer or any of the four other
highest paid executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are satisfied. As
was the case in fiscal 1998, the committee anticipates that in fiscal 1999 all
compensation to executive officers will be fully deductible under Section
162(m). The committee therefore has not yet found it necessary to enact a policy
with respect to qualifying compensation paid to executive officers for
deductibility.
COMPENSATION COMMITTEE
Bruce I. Sachs
Paul J. Severino
16
<PAGE>
STOCK OPTION REPRICING PROGRAM
The following table sets forth certain information concerning the Stock
Option Repricing Program, including (i) the name and position of each executive
officer who participated in the repricing program, (ii) the date of any such
repricing, (iii) the number of securities underlying replaced options, (iv) the
per share market price of the underlying security at the time of the repricing,
(v) the original exercise price of the canceled option at the time of repricing,
(vi) the per share exercise price of the option received in exchange for the
existing option, and (vii) the original option term remaining at the date of
exchange. There have been no other stock option repricing programs of the
Company within the last ten years.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE EXERCISE PRICE NEW
DATE OF UNDERLYING OF COMMON STOCK OF COMMON STOCK EXERCISE
NAME AND POSITION REPRICING OPTIONS REPRICED AT TIME OF REPRICING AT TIME OF REPRICING PRICE
- ---------------------------------------- --------- ---------------- -------------------- -------------------- --------
<S> <C> <C> <C> <C> <C>
John Molinari, 1/26/98 60,000 $3.94 $16.91 $3.94
Chief Executive Officer 1/26/98 20,000 $3.94 $10.00 $3.94
and Director 1/26/98 27,846 $3.94 $ 6.42 $3.94
1/26/98 22,154 $3.94 $ 5.84 $3.94
1/26/98 1,250 $3.94 $ 3.93 $3.94
1/26/98 11,000 $3.94 $ 4.27 $3.94
Anthony B. Dolph, 1/26/98 20,000 $3.94 $ 6.43 $3.94
Vice President, Marketing 1/26/98 10,000 $3.94 $10.00 $3.94
1/26/98 20,000 $3.94 $ 4.63 $3.94
Anthony M. Scotto 1/26/98 40,000 $3.94 $ 7.74 $3.94
Vice President, Product Development
<CAPTION>
LENGTH OF ORIGINAL
OPTION TERM
REMAINING AT
NAME AND POSITION DATE OF REPRICING (1)
- ---------------------------------------- ---------------------
<S> <C>
John Molinari, 4 years
Chief Executive Officer 5 years
and Director 2 years
2 years
1 year
2 years
Anthony B. Dolph, 2 years
Vice President, Marketing 5 years
5 years
Anthony M. Scotto 5 years
Vice President, Product Development
</TABLE>
- ------------------------
(1) Approximate years remaining.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Alfred A. Molinari, Jr., a former director of the Company, is the
Chairman and Chief Executive Officer of DTI, and is the father of Mr. John A.
Molinari. Mr. Alfred A. Molinari, Jr. resigned as a director of the Company in
January 1998.
The Company and its former subsidiary, Data Translation, Inc. ("DTI"), were
parties to a Corporate Services Agreement, pursuant to which DTI provided
certain finance and administrative and manufacturing services and support to the
Company during the fiscal year ended November 30, 1997. The amount payable by
the Company to DTI under the agreement is based on the particular services being
provided during any monthly period. The Company may terminate any service upon
30 days prior written notice to DTI, and DTI may terminate any service upon 30
days prior written notice to the Company if it no longer provides such service
to its own organization. On November 18, 1997, the parties agreed to extend the
original term of the agreement until the earlier of the discontinuance or
termination of all services thereunder or September 30, 1998. For the fiscal
year ended November 30, 1998, the Company paid $81,651 for services provided by
DTI as described above.
17
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the CRSP Total Return Index for The Nasdaq Stock
Market (U.S. Companies) (the "Nasdaq Stock Market (U.S.) Index") and the CRSP
Index for Nasdaq Electronic Component Stocks (the "Nasdaq Electronic Component
Index") for the period of five fiscal years commencing with the fiscal year
ended November 30, 1994 and ending with the fiscal year ended November 30, 1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET (U.S.) INDEX NASDAQ ELECTRONIC COMPONENT INDEX MEDIA 100 INC. (MDEA)
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $100.20 $112.38 $125.00
1995 $142.87 $207.24 $325.00
1996 $174.91 $322.19 $189.58
1997 $217.89 $378.58 $82.18
1998 $267.19 $469.62 $76.55
</TABLE>
The above graph compares the performance of the Company with that of the
Nasdaq Stock Market (U.S.) Index, which is an index comprising all domestic
shares traded on the Nasdaq National Market and the Nasdaq SmallCap Market, and
the Nasdaq Electronic Component Index, which is an industry index. Both these
indices are prepared by the Center of Research in Securities Prices at the
University of Chicago, and weigh investment on the basis of market
capitalization.
The comparison of total return of investment (change in year-end stock price
plus reinvested dividends) for each of the periods assumes that $100 was
invested at the close of the market on November 30, 1993 in each of the Nasdaq
Stock Market (U.S.) Index and the Nasdaq Electronic Component Index and the
Company.
18
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who beneficially own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. Based solely on its review of the copies of such
reports received by it, and written representations from certain reporting
persons that no Forms 5 were required for those persons, the Company believes
that during the fiscal year ended November 30, 1998 all filing requirements
applicable to its officers, directors and such 10% beneficial owners were
complied with, except that Mr. Feingold failed to file a Form 3 within the
required time period and subsequently filed a Form 5 to reflect one transaction
relating to the grant of stock options to Mr. Feingold in connection with his
initial employment with the Company.
ADJOURNMENT OF MEETING
In the event that sufficient votes in favor of the election of the nominees
for director listed in this Proxy Statement (the "Nominees") or any other matter
presented hereunder are not received by April 14, 1999, the persons named as
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of the shares present in person or by proxy at the session of the
meeting to be adjourned. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Nominees and all such other matters. They will vote against any such adjournment
those proxies withholding authority to vote on any Nominee and voting against or
abstaining with respect to all other such matters. The Company will pay the
costs of any additional solicitation and of any adjourned meetings.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting of
Stockholders must be received at the Company's principal executive offices
located at 290 Donald Lynch Boulevard, Marlboro, Massachusetts 01752 not later
than November 16, 1999, in order to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting. The deadline for providing
timely notice to the Company of matters that stockholders of the Company
otherwise desire to introduce at the 20000 Annual Meeting of Stockholders is
January 30, 2000.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed Arthur Andersen LLP, who have served as the
Company's auditors since 1980, to examine the financial statements of the
Company for fiscal 1999. The Company expects that representatives of Arthur
Andersen LLP will be present at the Annual Meeting and available to respond to
appropriate questions, and such representatives will be given the opportunity to
make a statement if they desire to do so.
19
<PAGE>
APPENDIX A
MEDIA 100 INC.
1986 EMPLOYEE STOCK PURCHASE PLAN,
AS AMENDED THROUGH APRIL 15, 1998
SECTION 1. PURPOSE OF PLAN.
The Media 100 Inc. ("Media 100") 1986 Employee Stock Purchase Plan (the
"Plan") is intended to provide a method by which eligible employees of Media 100
(formerly Data Translation, Inc.) and its subsidiaries (collectively, the
"Company") may use voluntary, systematic payroll deductions to purchase shares
of Common Stock of Media 100 ("stock") and thereby acquire an interest in the
future of the Company. For purposes of the Plan, a subsidiary is any corporation
in which Media 100 owns, directly or indirectly, stock possessing 50% or more of
the total combined voting power of all classes of stock.
SECTION 2. OPTIONS TO PURCHASE STOCK.
Under the Plan, there is available an aggregate of not more than 800,000
shares of stock (subject to adjustment as provided in Section 16) for sale
pursuant to the exercise of options ("options") granted under the Plan to
employees of the Company ("employees"). The stock to be delivered upon exercise
of options under the Plan may be either shares of Media 100's authorized but
unissued stock, or shares of reacquired stock, as the Board of Directors of
Media 100 (the "Board of Directors") shall determine.
SECTION 3. ELIGIBLE EMPLOYEES.
Except as otherwise provided in Section 20, each employee who has completed
one month of continuous service in the employ of the Company shall be eligible
to participate in the Plan.
SECTION 4. METHOD OF PARTICIPATION.
Subject to the second paragraph of Section 8, the periods January 1 to June
30 and July 1 to December 31 of each year shall be option periods. Each person
who will be an eligible employee on the first day of any option period may elect
to participate in the Plan by executing and delivering, at least 15 days prior
to such day, a payroll deduction authorization in accordance with Section 5.
Such employee shall thereby become a participant ("participant") on the first
day of such option period and shall remain a participant until his participation
is terminated as provided in the Plan. Each participant shall execute, prior to
or contemporaneously with his election to participate in the Plan, the Company's
then standard form of Employee Agreement relating to confidentiality, inventions
and the like.
SECTION 5. PAYROLL DEDUCTIONS.
The payroll deduction authorization shall request withholding, at a rate of
not less than 2% nor more than 10%, from the participant's compensation, by
means of substantially equal payroll deductions over the option period. For
purposes of the Plan, "compensation" shall mean all compensation paid to the
participant by the Company including compensation paid as bonuses and
commissions, but excluding overrides, overseas allowances, and payments under
stock option plans and other employee benefit plans A participant may change the
withholding rate of his payroll deduction authorization by written notice
delivered to the Company at least 15 days prior to the first day of the option
period as to which the change is to be effective. All amounts withheld in
accordance with a participant's payroll deduction authorization shall be
credited to a withholding account for such participant.
A-1
<PAGE>
SECTION 6. GRANT OF OPTIONS.
Each person who is a participant on the first day of an option period shall
as of such day be granted an option for such period. Such option shall be for
the number of shares of stock to be determined by dividing (a) the balance in
the participant's withholding account on the last day of the option period by
(b) the purchase price per share of the stock determined under Section 7, and
eliminating any fractional share from the quotient. The Company shall reduce on
a substantially proportionate basis the number of shares of stock receivable by
each participant upon exercise of his option for an option period in the event
that the number of shares then available under the Plan is otherwise
insufficient.
SECTION 7. PURCHASE PRICE.
The purchase price of stock issued pursuant to the exercise of an option
shall be 85% of the fair market value of the stock at (a) the time of grant of
the option or (b) the time at which the option is deemed exercised, whichever is
less. Fair market value shall be determined in accordance with the applicable
provisions of the Internal Revenue Code of 1986, as amended or restated from
time to time (the "Code") or regulations issued thereunder, or in the absence of
any such provisions or regulations, shall be deemed to be the last sale price at
which the stock is traded on the day in question or the last prior date on which
a trade occurred as reported in the Wall Street Journal; or, if the Wall Street
Journal is not published or does not list the stock, then in such other
appropriate newspaper of general circulation as the Board of Directors may
prescribe; or, if the last price at which the stock traded is not generally
reported, then the mean between the reported bid and asked prices at the close
of the market on the day in question or the last prior date when such prices
were reported.
SECTION 8. EXERCISE OF OPTIONS.
If an employee is a participant in the Plan on the last business day of an
option period, he shall be deemed to have exercised the option granted to him
for that period. Upon such exercise, the Company shall apply the balance of the
participant's withholding account to the purchase of the number of whole shares
of stock determined under Section 6, and as soon as practicable thereafter shall
issue and deliver certificates for said shares to the participant and shall
return to him the balance, if any, of his withholding account in excess of the
total purchase price of the shares so issued. No fractional shares shall be
issued hereunder.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to deliver any shares unless and until, in the opinion of the
Company's counsel, all requirements of applicable federal and state laws and
regulations (including any requirements as to legends) have been complied with,
nor, if the outstanding stock is at the time listed on any securities exchange,
unless and until the shares to be delivered have been listed (or authorized to
be added to the list upon official notice of issuance) upon such exchange, nor
unless or until all other legal matters in connection with the issuance and
delivery of shares have been approved by the Company's counsel.
SECTION 9. INTEREST.
No interest will be payable on withholding accounts.
SECTION 10. CANCELLATION AND WITHDRAWAL.
A participant who holds an option under the Plan may at any time prior to
exercise thereof under Section 8 cancel all (but not less than all) of his
option by written notice delivered to the Company. Upon such cancellation, the
balance in his withholding account shall be returned to him.
A participant may terminate his payroll deduction authorization as of any
date by written notice delivered to the Company and shall thereby cease to be a
participant as of such date. Any participant who
A-2
<PAGE>
voluntarily terminates his payroll deduction authorization prior to the last
business day of an option period shall be deemed to have canceled his option.
SECTION 11. TERMINATION OF EMPLOYMENT.
Except as otherwise provided in Section 12, upon the termination of a
participant's employment with the Company for any reason whatsoever, he shall
cease to be a participant, and any option held by him under the Plan shall be
deemed cancelled, the balance of his withholding account shall be returned to
him, and he shall have no further rights under the Plan. For purposes of this
Section 11, a participant's employment will not be considered terminated in the
case of sick leave or other bona fide leave of absence approved for purposes of
this Plan by Media 100 or a subsidiary or in the case of a transfer to the
employment of a subsidiary or to the employment of Media 100.
SECTION 12. DEATH OR RETIREMENT OF PARTICIPANT.
In the event a participant holds any option hereunder at the time his
employment with the Company is terminated (1) by his retirement with the consent
of the Company, and such retirement is within three months of the time such
option becomes exercisable, or (2) by his death whenever occurring, then such
participant (or in the event of death, his legal representative) may, by a
writing delivered to the Company on or before the date such option is
exercisable, elect either (a) to cancel any such option and receive in cash the
balance in his withholding account, or (b) to have the balance in his
withholding account applied as of the last day of the option period to the
exercise of his option pursuant to Section 8. In the event such participant (or
his legal representative) does not file a written election as provided above,
any outstanding option shall be treated as if an election had been filed
pursuant to subparagraph (a) above.
SECTION 13. PARTICIPANT'S RIGHTS NOT TRANSFERABLE, ETC.
All participants granted options under the Plan shall have the same rights
and privileges. Each participant's rights and privileges under any option
granted under the Plan shall be exercisable during his lifetime only by him, and
shall not be sold, pledged, assigned, or otherwise transferred in any manner
whatsoever except by will or the laws of descent and distribution. In the event
any participant violates the terms of this Section, any options held by him may
be terminated by the Company and upon return to the participant of the balance
of his withholding account, all his rights under the Plan shall terminate.
SECTION 14. EMPLOYMENT RIGHTS.
Neither the adoption of the Plan nor any of the provisions of the Plan shall
confer upon any participant any right to continued employment with Media 100 or
a subsidiary or affect in any way the right of the Company to terminate the
employment of a participant at any time.
SECTION 15. RIGHTS AS A SHAREHOLDER.
A participant shall have the rights of a shareholder only as to stock
actually acquired by him under the Plan.
SECTION 16. CHANGE IN CAPITALIZATION.
In the event of a stock dividend, stock split or combination of shares,
recapitalization, merger in which Media 100 is the surviving corporation or
other change in Media 100's capital stock, the number and kind of shares of
stock or securities of Media 100 to be subject to the Plan and to options then
outstanding or to be granted hereunder, the maximum number of shares or
securities which may be delivered under the Plan, the option price and other
relevant provisions shall be appropriately adjusted by the Board of Directors,
whose determination shall be binding on all persons. In the event of a
consolidation or merger in which Media 100 is not the surviving corporation or
in the event of the sale or transfer of substantially
A-3
<PAGE>
all Media 100's assets (other than by the grant of a mortgage or security
interest), all outstanding options shall thereupon terminate, provided that
prior to the effective date of any such merger, consolidation or sale of assets,
the Board of Directors shall either (a) return the balance in all withholding
accounts and cancel all outstanding options, or (b) accelerate the exercise date
provided for in Section 8, or (c) if there is a surviving or acquiring
corporation, arrange to have that corporation or an affiliate of that
corporation grant to the participants replacement options having equivalent
terms and conditions as determined by the Board of Directors.
SECTION 17. ADMINISTRATION OF PLAN.
The Plan will be administered by the Board of Directors. The Board of
Directors will have authority, not inconsistent with the express provisions of
the Plan, to take all action necessary or appropriate hereunder, to interpret
its provisions, and to decide all questions and resolve all disputes which may
arise in connection therewith. Such determinations of the Board of Directors
shall be conclusive and shall bind all parties.
The Board may, in its discretion, delegate its powers with respect to the
Plan to an Employee Benefit Plan Committee or any other committee (the
"Committee"), in which event all references to the Board of Directors hereunder,
including without limitation the references in Section 18, shall be deemed to
refer to the Committee. A majority of the members of any such Committee shall
constitute a quorum, and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee under the Plan may
be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members.
SECTION 18. AMENDMENT AND TERMINATION OF PLAN.
The Board of Directors may at any time or times amend the Plan or amend any
outstanding option or options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that (except to the extent explicitly
required or permitted herein) no such amendment will, without the approval of
the shareholders of Media 100, (a) increase the maximum number of shares
available under the Plan, (b) reduce the option price of outstanding options or
reduce the price at which options may be granted, or (c) amend the provisions of
this Section 18 of the Plan, and no such amendment will adversely affect the
rights of any participant (without his consent) under any option theretofore
granted.
The Plan may be terminated at any time by the Board of Directors, but no
such termination shall adversely affect the rights and privileges of holders of
the outstanding options.
SECTION 19. APPROVAL OF SHAREHOLDERS.
The Plan shall be subject to the approval of the shareholders of the
Company, which approval shall be secured within twelve months after the date the
Plan is adopted by the Board of Directors. Notwithstanding any other provisions
of the Plan, no option shall be exercised prior to the date of such approval.
For purposes of the foregoing, any increase in the number of shares described in
Section 2, other than pursuant to adjustment as provided in Section 16, shall be
treated as an adoption of the Plan with respect to the additional shares.
SECTION 20. LIMITATIONS ON ELIGIBILITY.
Notwithstanding any other provision of the Plan,
(a) An employee shall not be eligible to receive an option pursuant to the
Plan if, immediately after the grant of such option to him, he would (in
accordance with the provisions of Sections 423 and 425(d) of the Code)
own or be deemed to own stock possessing 5% or more of the total
A-4
<PAGE>
combined voting power or value of all classes of stock of the employer
corporation or of its parent or subsidiary corporation, as defined in
Section 425 of the Code.
(b) No employee shall be granted an option under the Plan which would permit
his rights to purchase shares of stock under all employee stock purchase
plans of the Company and any parent and subsidiary corporations to accrue
at a rate which exceeds $25,000 in fair market value of such stock
(determined at the time the option is granted) for each calendar year
during which any such option granted to such employee is outstanding at
any time, as provided in Sections 423 and 425 of the Code. Without
limiting the foregoing, the maximum number of shares for which an
employee may be granted an option under the Plan for any six-month option
period shall be the number of whole shares obtained by dividing $12,500
by the fair market value of one share of Common Stock on the date of
grant.
A-5
<PAGE>
APPENDIX B
MEDIA 100 INC.
1992 KEY EMPLOYEE INCENTIVE PLAN,
AS AMENDED THROUGH JANUARY 19, 1998
1. PLAN; PURPOSE; GENERAL. The purpose of this Key Employee Incentive Plan
(1992) (the "Plan") is to advance the interests of Media 100 Inc. (formerly Data
Translation, Inc.) (the "Company") by enhancing the ability of the Company and
its subsidiaries to attract and retain selected advisers, consultants, key
employees and directors, by creating for such persons incentives and rewards for
their contributions to the success of the Company, and by encouraging such
persons 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 be incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") (such options being referred to
herein as "incentive options") or non-incentive options. The proceeds received
from the sale of stock pursuant to the Plan shall be used for general corporate
purposes. Except as otherwise expressly provided with respect to an option
grant, no option granted pursuant to the Plan shall be an incentive option.
2. EFFECTIVE DATE OF PLAN. This Plan will become effective upon approval
by at least a majority of the votes cast at the next duly called Annual Meeting
of Stockholders of the Company at which a quorum representing a majority of the
voting power of all outstanding voting stock of the Company is, either in person
or by proxy, present and voting thereon or at any adjournment thereof. Grants of
awards under the Plan may be made prior to that date (but after Board adoption
of the Plan), subject to approval of the Plan by such shareholders.(1)
3. ADMINISTRATION OF THE PLAN. The Plan will be administered by the Board
of Directors (the "Board") of the Company. The Board will have authority, to
take all action necessary or appropriate thereunder, to interpret its
provisions, and to decide all questions and resolve all disputes which may arise
in connection therewith. Such determinations of the Board shall be conclusive
and shall bind all parties.
The Board may, in its discretion, delegate some or all of its powers with
respect to the Plan to the Executive Compensation and Stock Option Committee or
any other committee (the "Committee"), in which event all references to the
Board hereunder, except the references in Section 11 hereof, shall be deemed to
refer to the Committee. The Committee, 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 and at any time he exercises discretion in administering the
Plan, a "non-employee director" as that term is defined in Rule 16b-3 adopted
pursuant to the Securities Exchange Act of 1934, as amended. A majority of the
members of any such Committee shall constitute a quorum, and all determinations
of the Committee shall be made by a majority of its members. Any determination
of the Committee under the Plan may be made without notice or meeting of the
Committee by a writing signed by a majority of the Committee members.
4. ELIGIBILITY. The "Participants" in the Plan will be such key employees,
including part-time employees, advisers, consultants and directors whether or
not they are employees, of the Company or of any of its present or future
subsidiaries (as defined in Section 10) as may be selected from time to time by
the Board in its discretion.
No incentive option shall be granted to a Participant who is not an
"employee" as defined in the provisions of the Code or regulations thereunder
applicable to incentive options. No incentive option shall be granted to a
Participant who at the time of grant owns, directly or indirectly through
application or the attribution rules of Section 424(d) of the Code, stock
possessing more than 10% of the total combined
- ------------------------
(1) The Plan was approved by the requisite vote of stockholders at the Annual
Meeting of Stockholders of the Company held on April 8, 1992.
B-1
<PAGE>
voting power of all classes of stock of the Company or of its subsidiaries (a
"Ten-Percent Shareholder") unless (i) the option price at the time it is granted
is at least 110% of the fair market value of the stock subject to the option,
and (ii) the period of the option does not exceed five years from the date of
grant.
5. GRANT OF AWARDS. Subject to the express provisions of the Plan, the
Board shall have the sole authority and discretion (a) to determine which
Participants will be granted awards; (b) to grant awards consisting of options
or stock appreciation rights ("SARs"), or both to Participants; (c) to determine
whether the options granted to any Participants shall be incentive options or
non-incentive options; (d) to determine the time or times when awards will be
granted and the number of shares of common stock to be subject to each award;
(e) to determine the option price 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 of such SAR in accordance with Section 6(d) hereof, and
the method of payment of such price; (f) to determine the time or times when
each award becomes exercisable and the duration of the exercise period; (g) to
impose additional conditions or restrictions on any award, such conditions or
restrictions, if any, to be set forth in the award form or other instrument
evidencing the award; (h) to prescribe the form or forms of any instruments
evidencing any awards granted under the Plan and of any other instruments
required under the Plan and to make changes in such forms from time to time; (i)
to determine the price, vesting schedule and other attributes of awards granted
to Participants working abroad; and (j) to adopt, amend and rescind rules and
regulations for the administration of the Plan and the awards and for its own
acts and proceedings. Subject to Section 12 hereof, the Board shall also have
the authority, in its sole discretion, both generally and in particular
instances, to waive compliance by a Participant with any obligation to be
performed by him under an award, to waive any condition or provision of an
award, and to amend or cancel any award (and if an award is cancelled, to grant
a new award on such terms as the Board shall specify) except that the Board may
not take any action with respect to an outstanding award that would adversely
affect the rights of the Participant under such award without such Participant's
consent. Nothing in the preceding sentence shall be construed as limiting the
power of the Board to make adjustments required by Section 8(c) hereof.
No award shall be granted on or after February 20, 2002 but awards
previously granted may extend beyond that date.
6. TERMS AND CONDITIONS OF AWARDS.
a. EXERCISE PRICE OF OPTIONS. The purchase price per share for shares
issuable upon exercise of options shall be determined by the Board
but in the case of incentive options shall not be less than 100%
(110% in the case of an incentive option granted to a Ten-Percent
Shareholder) of the fair market value of the stock on the date of
grant; nor shall the option price be less, in the case of an original
issue of authorized stock, than par value per share. For this
purpose, "fair market value" will be determined as set forth in
Section 10 hereof.
b. PERIOD OF OPTIONS. An option shall be exercisable during such period
or periods as the Board may specify. The latest date on which an
option may be exercised (the "Final Exercise Date") shall be the date
which is ten years (five years, in the case of an incentive option
granted to a Ten-Percent Shareholder) from the date the option was
granted or such earlier date as may be specified by the Board at the
time the option is granted.
c. EXERCISE OF OPTIONS.
(i) Unless the Board at the time of grant or at any other time
otherwise specifies in the case of a particular option or
options, each option shall first become exercisable with respect
to one-fifth of the shares covered by it upon the completion of
one year from the date of the grant of the option (the "Initial
Exercise Date"), and with respect to an additional one-fifth
each succeeding year until the option becomes exercisable with
respect to all of the shares covered by it.
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<PAGE>
(ii) In the case of options intended to be incentive options, any
award forms or other instruments evidencing such options shall
contain such provisions relating to exercise and other matters
as are required of incentive options under the applicable
provisions of the Code and Treasury Regulations, as from time
to time in effect.
(iii) A person electing to exercise part or all of his options shall
give written notice to the Company, as specified by the Board,
of his election and of the number of shares he has elected to
purchase, such notice to be accompanied by the instrument
evidencing such option and any other documents required by the
Board, and shall at the time of such exercise tender the
purchase price of the shares he has elected to purchase. If the
notice of election to exercise 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 the
Participant's will or the applicable laws of descent and
distribution, the Company will be under no obligation to
deliver shares pursuant to such exercise unless and until the
Company is satisfied that the person or persons giving such
notice is or are entitled to exercise the option.
(iv) In the case of an option that is not an incentive option, the
Board shall have the right to require that the Participant
exercising the option remit to the Company an amount sufficient
to satisfy any federal, state, or local withholding tax
requirements (or make other arrangements satisfactory to the
Company with regard to such taxes) prior to the delivery of any
common stock pursuant to the exercise of the option. If
permitted by the Board, either at the time of the grant of the
option or the time of exercise, the Participant may elect, at
such time and in such manner as the Board may prescribe, to
satisfy such withholding obligation by (i) delivering to the
Company common stock owned by such individual having a fair
market value equal to such withholding obligation, or (ii)
requesting that the Company withhold from the shares of common
stock to be delivered upon exercise of the option a number of
shares of common stock having a fair market value equal to such
withholding obligation.
In the case of an incentive option, if at the time the option is
exercised the Board determines that under applicable law and
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 received upon exercise, the Board may require as a
condition of exercise that the Participant exercising the option
agree (i) to inform the Company promptly of any disposition (within
the meaning of Section 424(c) of the Code and the regulations
thereunder) of common stock received upon exercise, and (ii) to give
such security as the Board deems adequate to meet the potential
liability of the Company for the withholding of tax, and to augment
such security from time to time in any amount reasonably deemed
necessary by the Board to preserve the adequacy of such security.
d. STOCK APPRECIATION RIGHTS. The Board in its discretion may grant SARs
either in tandem with or independent of options awarded under the
Plan. Except as hereinafter provided, each SAR will entitle the
Participant to receive upon exercise, with respect to each share of
common stock to which the SAR relates, the excess of (i) the share's
value on the date of exercise, over (ii) the share's fair market
value on the date it was granted. For purposes of clause (i), "value"
shall mean fair market value; provided, that the Board may adjust
such value to take into account dividends on the stock and may also
grant SARs that provide, in such limited circumstances following a
change in control of the Company (as determined by the Board) as the
Board may specify, that "value" for purposes of clause (i) is to be
determined by reference to a specified value (which may include an
average of values) for the common stock during a period immediately
preceding the change in control, all as determined by the Board. The
amount payable to a Participant upon exercise of an SAR
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<PAGE>
shall be paid either in cash or in shares of common stock, as the
Board determines. Each SAR shall be exercisable during such period or
periods and on such terms as the Board may specify. No SAR shall be
exercisable after the date which is ten years from the date of grant.
e. PAYMENT FOR AND DELIVERY OF SHARES. Shares which are subject to
options shall be issued only upon receipt by the Company of full
payment of the purchase price for the shares as to which the award is
exercised. The purchase price shall be payable by the option holder
to the Company either (i) in cash or by check, bank draft or money
order payable to the order of the Company; or (ii) if so permitted by
the Board (which in the case of an incentive option, shall specify
such method of payment at the time of grant), (A) through the
delivery of shares of common stock (duly owned by the option holder
and for which the option holder has good title free and clear of any
liens and encumbrances and which, in the case of common stock
acquired from the Company, shall have been held for at least six
months) having a fair market value on the last business day preceding
the date of exercise equal to the purchase price or (B) by delivery
of a promissory note of the option holder to the Company, such note
to be payable on such terms as are specified by the Board or (C) by
delivery of an unconditional and irrevocable undertaking by a broker
to deliver promptly to the Company sufficient funds to pay the
exercise price; or (iii) by a combination of the permissible forms of
payment as provided in (i) and (ii) above; provided, that if the
common stock delivered upon exercise of the option is an original
issue of authorized common stock, at least so much of the exercise
price as represents the par value of such common stock shall be paid
other than with a personal check or promissory note of the person
exercising the option.
The Company shall not be obligated to deliver any shares unless
and until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, nor,
if the outstanding common stock is at the time listed on any
securities exchange, unless and until the shares to be delivered have
been listed (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 connection with the issuance and delivery of
shares have been approved by the Company's counsel. Without limiting
the generality of the foregoing, the Company may require from the
person exercising an option such investment representation or such
agreement, if any, as counsel for the Company may consider necessary
in order to comply with the Securities Act of 1933, as amended, and
may require that such person agree that any sale of the shares will
be made only on a national securities exchange or in such other
manner as is permitted by the Board and that he will notify the
Company before he makes any disposition of the shares whether by
sale, gift or otherwise.
A Participant shall have the rights of a shareholder only as to
shares actually acquired by him under the Plan.
f. NONTRANSFERABILITY OF AWARDS. No award may be sold, assigned or
otherwise transferred or disposed of in any manner whatsoever other
than by will or by the laws of descent and distribution, and during
the Participant's lifetime the award may be exercised only by him.
g. FORFEITURE OF AWARDS UPON TERMINATION OF EMPLOYMENT. If a
Participant's (other than a non-employee director's) employment or
service with the Company and its subsidiaries terminates for any
reason other than death, the portion of any award held by the
Participant that was not exercisable immediately prior to such
termination of employment or service shall immediately expire and
except as the Board may otherwise determine, in its sole discretion,
the remaining portion, if any, of the award shall continue to be
exercisable for a period of ninety (90) days immediately following
the date of termination of the Participant's employment or other
service with the Company and its subsidiaries. Notwithstanding the
foregoing, if the Participant was terminated for cause all awards
held by the Participant
B-4
<PAGE>
immediately prior to such termination, whether or not then
exercisable, shall immediately expire.(2) For purposes of this
Section 6(g), employment shall not be considered terminated (i) in
the case of sick leave or other bona fide leave of absence approved
for purposes of the Plan by the Board, so long as the Participant's
right to reemployment is guaranteed either by statute or by contract,
(ii) in the case of a transfer of employment between the Company and
a subsidiary or between subsidiaries, or to the employment of a
corporation (or a parent or subsidiary corporation of such
corporation) issuing or assuming an option 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 its wholly-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) shall apply only in the case of
Participants whose transfer of employment to DTI occurs in connection
with the Distribution; AND FURTHER PROVIDED, that in the case of any
such Participant, post-Distribution service for DTI shall be treated
for purposes of this paragraph as service for the Company and any
post-Distribution termination of employment with DTI shall be treated
for purposes of this paragraph as a termination of employment with
the Company and its subsidiaries. The Company may require that any
Participant described in clause (iii) above provide, prior to any
post-Distribution exercise of an award hereunder by such Participant
and as a condition thereto, evidence satisfactory to the Company as
to the period of such Participant's employment with DTI.
h. DEATH. If a Participant dies at a time when he is entitled to
exercise an option, then at any time or times within one year after
his death (or such further period as the Board may allow) such option
may be exercised, as to all or any of the shares which the
Participant was entitled to purchase immediately prior to his death,
by his executor or administrator or the person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, and except as so exercised such option will expire at
the end of such period. In no event, however, may any option be
exercised after the Final Exercise Date.
i. CONFIDENTIALITY AGREEMENT. Each Employee, including employees of DTI
who received options while employees of the Company, shall execute,
prior to or contemporaneously 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.
- ------------------------
(2) The preceding two sentences were adopted by amendment dated January 19,
1998 and are effective as to awards granted, regranted or amended on or
after such date, except as the Board may otherwise determine; provided, that
any incentive option granted prior to such date that is amended on or after
such date shall not be subject to such amendment without the consent of the
Participant holding the option if application of such amendment would cause
the option (as amended) to fail to qualify as an incentive stock option.
With respect to all awards which are not subject to the foregoing amendment,
the following provision shall apply:
If a Participant's (other than a non-employee director's)
employment or service with the Company and its subsidiaries
terminates for any reason other than death, all awards held by the
Participant shall terminate unless the Board determines, in its
sole discretion, that such awards as were exercisable immediately
prior to termination shall continue to be exercisable for a period
of time after termination (but in no event beyond the Final
Exercise Date). If the Board determines that a post-termination
exercise period for exercisable awards is appropriate, such awards
shall terminate and be forfeited after completion of such period
to the extent not previously exercised, expired or terminated.
B-5
<PAGE>
7. REPLACEMENT AWARDS. The Company may grant awards under the Plan on
terms differing from those provided in Section 6, where such awards are granted
in substitution for awards held by employees of another corporation who
concurrently become employees of the Company or a subsidiary as the result of a
merger or consolidation of that corporation with the Company or a subsidiary, or
the acquisition by the Company or a subsidiary of property or stock of that
corporation. The Board may direct that the substitute awards be granted on such
terms and conditions as the Board considers appropriate in the circumstances.
Such awards will be in addition to those which may be granted under the Plan and
will not be counted as granted under the Plan.
8. SHARES SUBJECT TO PLAN.
a. NUMBER OF SHARES AND STOCK TO BE DELIVERED. Shares delivered pursuant
to this Plan shall in the discretion of the Board be authorized but
unissued shares of common stock or previously issued stock acquired
by the Company. Subject to adjustment as described below and
exclusive of the shares that are subject to the options provided for
in Section 13, the aggregate number of shares which may be delivered
under this Plan shall not exceed 2,000,000 shares of common stock of
the Company.
b. LIMITATIONS ON GRANTS TO INDIVIDUALS. Subject to adjustment as
described below and exclusive of the shares that are subject to the
options provided for in Section 13, the aggregate number of shares
for which options may be granted under this Plan to any individual in
any calendar year shall not exceed 250,000 shares of common stock of
the Company.
c. CHANGES IN STOCK. In the event of a stock dividend, stock split or
combination of shares, recapitalization, merger in which the Company
is the surviving corporation or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the
Company to be subject to the Plan and to options then outstanding or
to be granted thereunder, the maximum number of shares or securities
which may be delivered under the Plan, the option price and other
relevant provisions shall be appropriately adjusted by the Board,
whose determination shall be binding on all persons. In the event of
a consolidation or merger in which the Company is not the surviving
corporation or which results in the acquisition of substantially all
the Company's outstanding stock by a single person or entity, or in
the event of the sale or transfer of substantially all the Company's
assets, all outstanding awards shall thereupon terminate, provided
that at least twenty days prior to the effective date of any such
merger, consolidation or sale of assets, all outstanding awards shall
become exercisable immediately prior to consummation of such merger,
consolidation or sale of assets, unless the Board shall have arranged
for the surviving or acquiring corporation or an affiliate of that
corporation to assume the awards or to grant to the Participants
replacement awards having equivalent terms and conditions as
determined by the Board including, in the case of incentive options,
terms and conditions that satisfy the requirements of Section 424(a)
of the Code.
The Board may also adjust the number of shares subject to
outstanding awards granted under Sections 5 or 6 hereof, the exercise
price of outstanding options and the terms of outstanding options to
take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in the
immediately preceding paragraph), acquisitions or dispositions of
stock or property or any other event if it is determined by the Board
that such adjustment is appropriate to avoid distortion in the
operation of the Plan, including without limitation, the special
option adjustments made in connection with the Distribution and
described in Section 14 herein.
9. EMPLOYMENT RIGHTS. Neither the adoption of the Plan nor the grant of
awards shall confer upon any Participant any right to continued employment with
the Company or a subsidiary or affect in any way the right of the Company to
terminate the employment of a Participant at any time. Except as specifically
B-6
<PAGE>
provided by the Board, in its sole discretion, in any particular case, the loss
of existing or potential profit in awards granted under this Plan shall not
constitute an element of damages in the event of termination of the relationship
of a Participant even if the termination is in violation of an obligation of the
Company to the Participant by contract or otherwise.
10. DEFINITIONS.
a. For purposes of the Plan a subsidiary is any corporation (i) in which
the Company owns, directly or indirectly, stock possessing 50% or
more of the total combined voting power of all classes of stock, or
(ii) over which the Company has effective operating control;
provided, however, that no corporation shall be deemed a subsidiary
for the purpose of any provisions applicable to incentive options,
and no incentive options 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 common stock shall be determined in
accordance with the applicable provisions of the Code or regulations
issued thereunder, or in the absence of any such provisions or
regulations, shall be deemed to be the last sale price at which such
common stock 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 does not list the common stock, then in
such other appropriate newspaper of general circulation as the Board
may prescribe; or, if there is no sale of the common stock on the
date in question or the last price at which the common stock traded
is not listed, then the mean between the bid and asked price at the
close of the market on such day.
11. INDEMNIFICATION OF BOARD. In addition to and without affecting such
other rights of indemnification as they may have as members of the Board or
otherwise, each member of the Board shall be indemnified by the Company to the
extent legally possible against reasonable expenses, including attorneys' fees,
actually and reasonably incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which he may be
a party by reason of any action taken or failure to act under or in connection
with the Plan, or any option granted thereunder, and against all judgments,
fines and amounts paid by him in settlement thereof; provided that such payment
of amounts so indemnified is first approved by a majority of the members of the
Board who are not parties to such action, suit or proceeding, or by independent
legal counsel selected by the Company, in either case on the basis of a
determination that such member acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company; and
except that no indemnification shall be made in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such Board member
is liable for negligence or misconduct in his duties; and provided, further that
the Board member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
12. AMENDMENTS. The Board may at any time discontinue granting awards
under the Plan. The Board may at any time or times amend the Plan or amend any
outstanding award or awards for the purpose of satisfying the requirements of
Section 422 of the Code or of any changes in applicable laws or regulations, to
comply with any applicable laws and requirements of foreign jurisdictions or for
any other purpose that may at the time be permitted by law, provided that no
such amendment will adversely affect the rights of any Participant (without his
consent) under any award theretofore granted.
13. NON-EMPLOYEE DIRECTORS. Notwithstanding anything to the contrary
contained elsewhere herein:
a. ELIGIBLE DIRECTORS AND GRANT. Each director of the Company who is not
a full-time employee of the Company or any of its subsidiaries and is
a director on April 8, 1992 shall be automatically granted on such
date non-incentive stock options covering 10,000 shares of common
stock and each non-employee director who is initially elected after
April 8, 1992
B-7
<PAGE>
and prior to February 20, 2002 shall be granted on the date of such
election non-incentive stock options covering 10,000 shares of common
stock (notwithstanding the two-for-one split of the common stock
effected on July 31, 1995), all such options to be exercisable with
respect to one-fifth of the covered shares one year from the date of
grant and with respect to an additional one-fifth each succeeding
year.
b. TERMS OF OPTIONS. The Final Exercise Date of options granted pursuant
to Section 13(a) hereof shall be 10 years from the date of grant. If
a director's service with the Company terminates for any reason other
than death, in lieu of the provisions of Section 6(g) hereof, all
options held by the director that are exercisable on the date of
termination shall continue to be exercisable for a period of six
months, but shall terminate immediately if the director was removed
for cause or resigned under circumstances which in the opinion of the
Board of Directors casts such discredit on the Company or him as to
justify termination of his options. After completion of said
six-month period, such options shall terminate to the extent not
previously exercised, expired or terminated. All options held by a
director that are not exercisable on the date such director's service
with the Company terminates shall immediately terminate. The purchase
price for shares of common stock 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 of business on the date
the option is granted, determined in accordance with Section 10(b)
hereof; provided, however, that in no event shall the exercise price
be less than par value per share.
14. SPECIAL OPTION ADJUSTMENTS. Notwithstanding any other provision of the
Plan, each option outstanding under the Plan immediately prior to the
Distribution (an "affected option") shall be adjusted in accordance with Section
8.7 of the Distribution Agreement between the Company and DTI dated as of
November 19, 1996 (the "Distribution Agreement"). Except as otherwise provided
herein, the adjusted option shall have substantially the same terms as prior to
the Distribution. To the extent any such adjustment shall be treated as an
option grant for purposes of Section 8.7 of such Agreement, it shall be made in
accordance with the terms of said Section 8.7 and without regard to the
option-grant rules and limitations set forth in this Plan.]
B-8
<PAGE>
PROXY
MEDIA 100 INC.
ANNUAL MEETING OF STOCKHOLDERS,
April 14,1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John A. Molinari and Steven D. Shea, each
of them with power of substitution to each, to represent and to vote at the
Annual Meeting of Stockholders to be held on April 14, 1999 at 10:00 a.m., and
at any adjournments or postponements thereof all shares of Common Stock of the
Company as to which the undersigned would be entitled to vote if present. The
undersigned instructs such proxies, or their substitutes, to vote in such manner
as they may determine on any matters which may come before the meeting, and to
vote on the following as specified by the undersigned. All proxies heretofore
given by the undersigned in respect of said meeting are hereby revoked.
Unless otherwise specified in the boxes provided on the reverse side
hereof, the proxy will be voted FOR the election as directors of all nominees
named hereon or any of such nominees for which approval is not withheld, IN
FAVOR of increasing the number of shares of Common Stock authorized for issuance
under the 1986 Employee Stock Purchase Plan by 200,000 to a total of 1,000,000
shares, IN FAVOR of increasing the number of shares of Common Stock authorized
for issuance under the Key Employee Incentive Plan (1992) by 200,000 shares to a
total of 2,200,000 shares, and in their discretion of the name proxies as to any
other matter not known a reasonable time before this solicitation that may come
before this meeting or any adjournments or postponements thereof.
- ------------- -------------
|SEE REVERSE| CONTINUED AND TO BE SIGNED ON REVERSE SIDE |SEE REVERSE|
| SIDE | | SIDE |
- ------------- -------------
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
|X| Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR the following proposals:
PLEASE DO NOT FOLD THIS PROXY.
1. Election of Directors.
Nominees: Maurice L. Castonguay, John A. Molinari,
B. Robert Feingold, Roger W. Redmond,
Bruce I. Sachs, Paul J. Severino
---- ----
FOR | | | |WITHHELD
ALL | | | |FROM ALL
NOMINEES | | | |NOMINEES
---- ----
---- MARK HERE ----
| | FOR ADDRESS | |
| | CHANGE AND | |
| | NOTE BELOW | |
---- ----
--------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Increasing the number of shares of ----- ----- -----
Common Stock authorized for issuance | | | | | |
under the 1986 Employee Stock | | | | | |
Purchase Plan by 200,000 shares to a | | | | | |
total of 1,000,000 shares. ----- ----- -----
3. Increasing the number of shares of ----- ----- -----
Common Stock authorized for issuance | | | | | |
under the Key Employee Incentive Plan | | | | | |
(1992) by 200,000 shares to a total of | | | | | |
2,200,000 shares. ----- ----- -----
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
SPECIFIED, IF NO CHOICE IS SPECIFIED, THEN THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES
NAMED HEREON, OR ANY OF SUCH NOMINEES FOR WHICH
APPROVAL HAS NOT BEEN WITHHELD, AND IN FAVOR OF
INCREASING THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE UNDER THE 1986 EMPLOYEE STOCK
PURCHASE PLAN BY 200,000 SHARES TO A TOTAL OF 1,000,000
SHARES AND IN FAVOR OF INCREASING THE NUMBER OF
SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
UNDER THE KEY EMPLOYEE INCENTIVE PLAN (1992) BY 200,000
SHARES TO A TOTAL OF 2,200,000 SHARES. IN THEIR DISCRETION,
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Please sign your name exactly as it appears on your stock certificates,
write in the date and return this proxy as soon as possible. If the stock is
registered in more than one name, each joint owners should sign
personally. Attorneys, executors, administrators, trustees or guardians
must give full title as such. Only authorized offices should sign for
corporations and should state his or her title.
Signature: Date: Signature: Date:
--------------- ------- ----------------- ------
