Exhibit 10.3(a)
FORSTMANN & COMPANY, INC.
COMMON STOCK INCENTIVE PLAN
AS AMENDED AS OF MARCH 30, 1994
-------------------------------
ARTICLE I
DEFINITIONS
-----------
1.1 Affiliate means any "subsidiary corporation" or "parent corporation" as
---------
such terms are defined in Section 424 of the Code.
1.2 Agreement means a written agreement (including any amendment or supplement
---------
thereto) between the Company and a Participant specifying the terms and
conditions of an Option granted to such Participant.
1.3 Board means the Board of Directors of the Company.
-----
1.4 Code means the Internal Revenue Code of 1986, and any amendments thereto.
----
1.5 Committee means a committee of two or more members of the Board appointed
---------
to administer the Plan, who either are not eligible to participate in the Plan
and have not been granted existing securities under the Plan or any other plan
of the Company during the one year period prior to becoming a member of the
Committee, or who are otherwise deemed to be "disinterested persons" within the
meaning of Section 16 of the Securities Exchange Act of 1934 as in effect from
time to time and the rules promulgated thereunder.
1.6 Common Stock means the common stock, $.001 par value, of the Company.
------------
1.7 Company means Forstmann & Company, Inc.
-------
1.8 Date of Exercise means, with respect to an Option, the date that the Option
----------------
price is received by the Company.
1.9 Fair Market Value means, on any given date, the closing price of the Common
-----------------
Stock on the principal securities exchange on which the Common Stock is traded
on the day immediately preceding the date as of which Fair Market Value is being
determined, or on the next preceding date on which the Common Stock is traded if
no Common Stock was traded on such immediately preceding day. If the Common
Stock is not traded on a securities exchange,
but is reported by the National Association of Securities Dealers, Inc.
Automated Quotation System and market information is published on a regular
basis in The New York Times or The Wall Street Journal, then Fair Market Value
------------------ -----------------------
shall be deemed to be the average of the published high and low sales prices or
the published daily bid and asked prices of the Common Stock, as so published,
on the day immediately preceding the date as of which Fair Market Value is being
determined or on the next preceding date on which such prices were published.
If market information is not so published on a regular basis, then Fair Market
Value shall be deemed to be the average of the high bid and low asked prices of
the Common Stock in the over-the-counter market on the day immediately preceding
the date as of which Fair Market Value is being determined or on the next
preceding date on which such high bid and low asked prices were recorded as
reported by the National Association of Securities Dealers Automated Quotation
System, or, if not so reported, by a generally accepted reporting service. If
the Common Stock is not publicly traded, Fair Market Value shall be determined
by the Committee or the Board. In no case shall Fair Market Value be less than
the par value of a share of Common Stock.
1.10 Option means a stock option that entitles the holder to purchase from the
------
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.
1.11 Participant means an employee of the Company or of an Affiliate, including
-----------
an employee who is a member of the Board, who in each instance satisfies the
requirements of Article IV and is selected by the Committee to receive an
Option.
1.12 Plan means the Forstmann & Company, Inc. Common Stock Incentive Plan.
----
1.13 Ten Percent Shareholder means any individual owning more than ten percent
-----------------------
(10%) of the total combined voting power of all classes of stock of the Company
or of an Affiliate at the time any Option is granted to such individual. An
individual shall be considered to own any voting stock owned (directly or
indirectly) by or for his brothers, sisters, spouse, ancestors or lineal
descendants and shall be considered to own proportionately any voting stock
owned (directly or indirectly) by or for a corporation, partnership, estate or
trust of which such individual is a shareholder, partner or beneficiary.
ARTICLE II
PURPOSES
--------
The Plan is intended primarily to assist the Company and its Affiliates in
recruiting and retaining employees with ability and initiative by enabling them
to participate in the future success of the Company and its Affiliates and to
associate the interests of such employees with those of the Company or its
Affiliates and their shareholders. The Plan is intended to permit the grant of
both Options qualifying under Section 422 of the Code ("incentive stock
options")
-2-
and Options not so qualifying. No Option that is intended to be an incentive
stock option shall be invalid for failure to qualify as an incentive stock
option. The proceeds received by the Company from the sale of Common Stock
pursuant to the Plan shall be used for general corporate purposes.
ARTICLE III
ADMINISTRATION
--------------
Except as provided in this Article III, the Plan shall be administered by
the Committee. The Committee shall have authority to grant Options upon such
terms (not inconsistent with the provisions of the Plan) as the Committee may
consider appropriate. Such terms may include conditions (in addition to those
contained in the Plan) on the exercisability of all or any part of an Option.
The Committee may, in its discretion, accelerate the time at which any Option
may be exercised. In addition, the Committee shall have complete authority to
interpret all provisions of the Plan; to prescribe the form of any Agreement; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of the Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee. Any decision made, or action taken, by the Committee or in
connection with the administration of the Plan shall be final and conclusive.
No member of the Committee shall be liable for any act done in good faith with
respect to the Plan or any Agreement or Option. All expenses of administering
the Plan shall be borne by the Company.
ARTICLE IV
ELIGIBILITY
-----------
4.1 General. Any employee of the Company or of any Affiliate (including any
-------
corporation that becomes an Affiliate after the adoption of the Plan) is
eligible to participate in the Plan if the Committee, in its sole discretion,
determines that such person has contributed or can be expected to contribute to
the profits or growth of the Company or an Affiliate. Any such employee may be
granted one or more Options. A director of the Company who is an employee of
the Company or an Affiliate may be granted Options under the Plan. A member of
the Committee may not participate in the Plan during the time that his or her
participation would prevent the Committee from being "disinterested" for
purposes of Section 16 of the Securities Exchange Act of 1934 as in effect from
time to time and the rules promulgated thereunder.
4.2 Grants. The Committee will designate individuals to whom Options are to be
------
granted and will specify the number of shares of Common Stock subject to each
grant. All Options
-3-
granted under the Plan shall be evidenced by Agreements which shall be subject
to applicable provisions of the Plan and to such other provisions as the
Committee may adopt. No Participant may be granted incentive stock options
(under all incentive stock option plans of the Company and its Affiliates) which
are first exercisable in any calendar year for Common Stock having an aggregate
Fair Market Value (determined as of the date an Option is granted) exceeding
$100,000. The preceding annual limitation shall not apply with respect to
Options that are not incentive stock options.
ARTICLE V
STOCK SUBJECT TO THE PLAN
-------------------------
5.1 Source of Shares. Upon the exercise of any Option, the Company may deliver
----------------
to the Participant authorized but unissued shares of Common Stock.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of Common
------------------------
Stock that may be issued pursuant to the exercise of Options is 700,000, subject
to increases and adjustments as provided in this Article V and Article IX.
5.3 Forfeitures, Etc.. If an Option is terminated, in whole or in part, the
-----------------
number of shares of Common Stock allocated to the Option or portion thereof may
be reallocated to other Options to be granted under the Plan.
ARTICLE VI
OPTION PRICE
------------
The price per share for Common Stock purchased on the exercise of an Option
shall be determined by the Committee on the date of grant. The price per share
for Common Stock purchased on the exercise of any Option that is an incentive
stock option shall not be less than the Fair Market Value on the date the Option
is granted; provided, however, that the price per share shall not be less than
-------- -------
110% of the Fair Market Value in the case of an incentive stock option that is
granted to a Ten Percent Shareholder.
ARTICLE VII
EXERCISE OF OPTIONS
-------------------
7.1 Ability to Exercise. An Option shall be exercisable commencing on the date
-------------------
of grant or on any other date thereafter established by the Committee, subject
to such limitations as are set
-4-
forth in the Agreement; provided, however, that the Participant must be an
-------- -------
employee of the Company or an Affiliate on the Date of Exercise of an incentive
stock option, except in the event of death, disability, termination of
employment without cause or a "change in control" (as defined in any change in
control agreement to which the Company and any such Participant are parties), in
which case such Participant must exercise such Options within the time periods
set forth in the Agreement.
7.2 Maximum Exercise Period. The maximum period in which an Option may be
-----------------------
exercised shall be determined by the Committee on the date of grant except that
no Option that is an incentive stock option shall be exercisable after the
expiration of ten years from the date such Option was granted, or after the
expiration of five years from the date such Option was granted to a Ten Percent
Shareholder. The terms of any Option may provide that it is exercisable for a
period less than such maximum period. All Options which are incentive stock
options shall terminate on the date the Participant's employment with the
Company terminates, except as provided in the Agreement with respect to death,
disability, termination of employment without cause or a "change in control" (as
described in Section 7.1 above).
7.3 Nontransferability. Any Option granted under the Plan shall be
------------------
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the entire Option must be transferred to the
same person or entity. During the lifetime of the Participant to whom the
Option is granted, the Option may be exercised only by the Participant. No
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation or liability of such Participant.
7.4 Employee Status. For purposes of determining the applicability of Section
---------------
422 of the Code (relating to incentive stock options), or in the event that the
terms of any Option provide that it may be exercised only during employment or
within a specified period of time after termination of employment, the Committee
may decide to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be deemed
interruptions of employment.
ARTICLE VIII
METHOD OF EXERCISE
------------------
8.1 Exercise. An Option granted under the Plan shall be deemed to have been
--------
exercised on the Date of Exercise. Subject to the provisions of Articles VII
and X, an Option may be exercised in whole at any time or in part from time to
time at such times and in compliance with such requirements as the Committee
shall determine. An Option granted under the Plan may be exercised with respect
to any number of whole shares less than the full number of whole shares for
which the Option could be exercised. A partial exercise of an Option shall not
affect the right
-5-
to exercise the Option from time to time in accordance with the Plan and the
applicable Agreement with respect to the remaining shares subject to the Option.
8.2 Payment. Unless otherwise provided by the Agreement, payment of the Option
-------
price shall be made in cash, a cash equivalent, Common Stock or any other
consideration acceptable to the Committee. If the Agreement provides, payment
of all or part of the Option price may be made by surrendering shares of Common
Stock to the Company; provided, however, that shares of Common Stock may be
-------- -------
surrendered by a Participant who is subject to the reporting and other
provisions of Section 16 of the Securities Exchange Act of 1934 as in effect
from time to time in payment of all or part of the Option price only if the
surrendered shares have been held by the Participant for at least six months
prior to the Date of Exercise. If Common Stock is used to pay all or part of
the Option price, the shares surrendered must have a Fair Market Value
(determined as of the day preceding the Date of Exercise) that is not less than
such price or part thereof.
8.3 Loans. The Company, in accordance with the requirements of Regulation G of
-----
the Federal Reserve Board Regulations ("Regulation G"), may lend the Participant
all or part of the Option price as determined in accordance with Article VI
hereof, provided that the maximum loan amount shall not exceed the current
market value at the time of purchase by the Participant of the shares of Common
Stock acquired with the loan proceeds. The principal amount of the loan shall
be repayable in not more than five annual installments. The Participant shall
pay interest on the unpaid principal balance at such rate as the Committee shall
determine, which shall be no less than the minimum rate necessary to avoid
imputed interest or original issue discount under the Code. All shares of Common
Stock acquired with cash borrowed from the Company shall be pledged to the
Company as security for the repayment thereof. In the discretion of the Board,
shares of Common Stock may be released from such pledge proportionately as
payments of the note (together with interest) are made; provided, however, that
-------- -------
the Company, in accordance with the requirements of Regulation G, shall not
release any shares of Common Stock which would cause the amount outstanding
under a loan to exceed the "maximum loan value" of the remaining shares pledged
by the Participant, determined at the time of such release. While such shares
are so pledged, and so long as there has been no default in the installment
payments, such shares shall remain registered in the name of the Participant,
and he or she shall have the right to vote such shares and to receive all
dividends thereon.
8.4 Shareholder Rights. No Participant shall have any rights as a stockholder
------------------
with respect to shares subject to his or her Option until the Date of Exercise
of such Option.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The maximum number and kind of shares as to which Options may be granted
under the Plan shall be proportionately adjusted, and the terms of outstanding
Options shall be adjusted by
-6-
way of increase or decrease, as the Committee in the exercise of its reasonable
judgment shall determine to be equitably required, in the event that (a) the
Company (i) effects one or more stock dividends, stock splits, reverse stock
splits, subdivisions, consolidations or other similar events or (ii) engages in
a transaction to which Section 424 of the Code applies or (b) there occurs any
other event which in the judgment of the Committee necessitates such action.
Any determination made under this Article IX by the Committee shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services rendered, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reasons thereof shall be made with
respect to, outstanding Options.
ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
-----------------------------------------------------
No Option shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made, under the Plan except in compliance with all federal and state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all national
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any certificate issued to evidence shares of
Common Stock for which an Option is exercised may bear such legends and
statements as the Committee upon advice of counsel may deem advisable to assure
compliance with federal and state laws and regulations. No Option shall be
exercisable, no Common Stock shall be issued, no certificate for shares shall be
delivered and no payment shall be made, under the Plan until the Company has
obtained such consent or approval as the Committee may deem advisable from any
regulatory bodies having jurisdiction over such matters.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1 Effect on Employment. Neither the adoption of the Plan or its operation,
--------------------
nor any documents describing or referring to the Plan (or any part thereof)
shall confer upon any employee any right to continue in the employ of the
Company or an Affiliate or in any way affect any right and power of the company
or an Affiliate to terminate the employment of any employee at any time without
assigning a reason therefor.
-7-
11.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
-------------
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under the Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
11.3 Rules of Construction. Headings are given to the articles and sections of
---------------------
the Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
ARTICLE XII
AMENDMENT
---------
The Board may amend or terminate the Plan from time to time; provided,
--------
however, that no amendment may become effective until shareholder approval is
- -------
obtained if (i) the amendment materially increases the benefits accruing to
Participants under the Plan, (ii) the amendment materially increases the
aggregate number of shares of Common Stock that may be issued under the Plan, or
(iii) the amendment materially changes the requirements as to eligibility for
participation in the Plan. No amendment shall, without a Participant's consent,
adversely affect any rights of such Participant under any Option outstanding at
the time such amendment is made.
ARTICLE XIII
DURATION OF THE PLAN
--------------------
No Option may be granted under the Plan more than ten years after the
earlier of the date that the Plan is adopted by the Board or the date that the
Plan is approved by shareholders as provided in Article XIV. Options granted
before that date shall remain valid in accordance with their terms.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN
--------------------------
Options may be granted under the Plan upon its adoption by the Board;
provided, however, that no Option will be effective unless the Plan is approved
- -------- -------
by shareholders holding a majority of the Company's outstanding voting stock,
voting either in person or by proxy at a duly held shareholders' meeting within
twelve months of such adoption.
-8-
- -------------------
THIS PLAN WAS ADOPTED BY THE BOARD ON SEPTEMBER 18, 1992 AND AMENDED BY THE
BOARD ON DECEMBER 11, 1992 AND FEBRUARY 7, 1994.
-9-