Exhibit (d)(3)
FIRECOM, INC.
DISTRIBUTORS STOCK OPTION PLAN
FIRECOM, INC., a New York corporation (the "Company"), hereby
establishes and sets forth the terms of the Firecom, Inc. Distributors Stock
Option Plan (the "Plan").
1. PURPOSE OF PLAN
The purpose of this Plan is to enable the Company to attract and
retain outside persons of the highest caliber to serve as distributors of the
products of the Company, as such persons can make important contributions to the
success of the Company. The Plan will seek to achieve this purpose by means of
grants of options to acquire shares of common stock of the Company (the "Common
Stock") under the terms of this Plan.
2. ADMINISTRATION OF THE PLAN
2.1 Grants of options under the Plan shall be administered by
the Distributors Option Plan Committee of the Company's Board of Directors (the
"Committee") or in its absence or inability to act by the Board of Directors of
the Company. The Committee shall have the authority to (a) administer the Plan
in accordance with its express terms; (b) determine all questions arising in
connection with the administration, interpretation, and application of the Plan;
(c) correct any defect, supply any information, and reconcile any inconsistency
in such manner and to such extent as shall be deemed necessary or advisable to
carry out the purposes of the Plan; (d) prescribe, amend, and rescind rules and
regulations relating to the administration of the Plan; and (e) make all other
determinations necessary or advisable for the administration of the Plan.
2.2 All determinations made by the Board of Directors and the
Committee in good faith in matters referred to in this Section 2 shall be final,
conclusive, and binding on all persons. The Committee shall have all powers
necessary or appropriate to accomplish its duties under the Plan.
3. ELIGIBLE DISTRIBUTORS
Each Person (an individual or entity) designated by the Committee to
participate in the Plan who on a Grant Date (as defined in Section 4.1 below) in
any year during the term of the Plan meets the following requirements shall be
eligible to participate in the Plan ("Eligible Distributor"):
(a) The Person has been a distributor of the Company's products
for a period of at least three years from the date (the
"Enrollment Date") the Committee has designated the
distributor to participate in the Plan, with average annual
Net Sales (during the fiscal period May 1 to April 30), over
a period of three years of not less than $100,000, of which
average annual Net Sales over such period shall be not less
than $50,000 of control equipment (i.e. not peripheral
devices).
(b) The term "Net Sales" shall mean sales by the Company to such
distributor, less returns, allowances or uncollected
receivables.
An eligible Distributor will cease to be eligible for further
participation in the Plan if such Person does not meet the foregoing eligibility
requirements on any Grant Date.
4. GRANTS OF OPTIONS TO ELIGIBLE DISTRIBUTOR.
4.1 On the first business day of the month following the date on
which a Distributor becomes an Eligible Distributor (each such date will be
referred to as a "Grant Date"), each Eligible Distributor shall receive an
option to acquire one (1) share of Common Stock of the Company for each $10 of
average annual Net Sales by the Distributor in question during the three-year
period immediately preceding the Grant Date. The exercise price of each option
shall be the Fair Market Value (as defined in Section 4.2 below) of the Common
Stock on the Enrollment Date (for distributors who become eligible Distributors
thereafter then on the first business day following such date). All grants of
options to Eligible Distributors shall occur automatically without further
action of the Committee or Board of Directors.
4.2 For purposes of this Plan, the term "Fair Market Value" on
any date means the average of the last sales price (or, if no last sales price
is reported, the average of the high bid and low asked prices) for a share of
Common Stock on the 20 trading days preceding the designated day (or, if such
day is not a trading day, on the next preceding trading day) as reported on
NASDAQ or, if not reported on NASDAQ, as reported on the OTC Bulletin Board, or
if not traded on the OTC Bulletin Board, as quoted by the National Quotation
Bureau Incorporated, or, if the Common Stock is listed on an exchange, on the
principal exchange on which the Common Stock is listed.
4.3 All options granted to Eligible Distributors hereunder shall
be exercisable from the Grant Date for a period of five (5) years.
4.4 The terms of the Plan relating to options to be granted
Eligible Distributors including any provisions of this Section 4, shall be
subject to amendment, interpretation, other modification and termination by the
Committee or the Board of Directors, provided that no change or termination
shall affect any option then outstanding.
5. OPTION AGREEMENT AND EXERCISE OF OPTIONS
5.1 Each option shall be evidenced by a written agreement
executed by the Company and the Eligible Distributor as soon as practicable
after determination of the number of shares subject to each option. Such
agreement shall contain the terms of the option as specified herein, together
with such other terms, conditions and provisions not inconsistent with such
terms and conditions as the Company deems advisable.
5.2 Each option granted to an Eligible Distributor shall expire
upon the earlier of (i) five (5) years after its Grant Date, and (ii) ninety
(90) days after the Eligible Distributor ceases to be a distributor of the
Company for any reason. Each option shall be exercisable in whole or in part at
any time during the period prior to its expiration.
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5.3 The exercise price of any shares purchased shall be paid in
full in cash or in shares of Common Stock or, in accordance with procedures
approved by the Committee, by cashless exercise through surrender of options.
Shares of Common Stock used to pay the exercise price will be valued based on
their Fair Market Value on the date the option is exercised.
5.4 Each certificate evidencing Common Stock issued upon
exercise of an option shall bear such legends as the Company, upon advice of
legal counsel, determines to be necessary or appropriate, including, without
limitation, a legend to the effect that the shares represented thereby may not
be disposed of unless the Company has received an opinion of counsel, acceptable
to the Company, that such disposition will not violate any federal or state
securities laws.
6. NONTRANSFERABILITY
An option shall not be transferable.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If the outstanding shares of Common Stock are increased, decreased,
changed into, or exchanged for a different number or kind of shares or
securities of the Company through stock dividend, reorganization, merger,
recapitalization, reclassification, stock split-up, or other material alteration
in the capital structure of the Company, an appropriate and proportionate
adjustment shall be made in the number and/or kind of shares as to which options
will thereafter automatically be granted. A corresponding adjustment shall be
made to change the number and/or kind of shares allocated to unexercised options
or portions thereof granted prior to any such change. However, any such
adjustment in the outstanding option shall be made without change in the total
price applicable to the unexercised portion of the options but with a
corresponding adjustment in the price for each share covered by the options. For
purposes of this Section 7, neither (a) the issuance of additional shares of
Common Stock or other securities of the Company in exchange for adequate
consideration (including services), nor (b) the conversion into Common Stock of
any securities of the Company now or hereafter outstanding, shall be deemed
material alterations in the capital structure of the Company. If the Board of
Directors shall determine the nature of a material alteration in the capital
structure of the Company is such that it is not feasible or advisable to make
adjustments to this Plan or to the options granted hereunder, such event shall
be subject to Section 8 below.
8. OTHER SIGNIFICANT EVENTS
Upon a reorganization, merger, or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation, upon the acquisition by any person, partnership, or corporation of
more than 25% of the outstanding shares of Common Stock, upon a sale of
substantially all of the property of the Company, or upon a material change in
the capital structure of the Company that is subject to this Section 8 in
accordance with the last sentence of Section 7 above, the Board of Directors of
the Company shall have the power to determine in their sole discretion, upon the
effective date of such event or within thirty (30) days thereafter, what effect,
it any, such event shall have upon options outstanding hereunder, including,
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without limitation, the power to cause such options to be surrendered and
canceled and payments to be made to the holders in exchange therefor and to
cause adjustments to be made in the number and/or kind of shares with respect to
which such options may be exercised and/or in the exercise prices and other
terms and conditions thereof. Upon the dissolution or liquidation of the
Company, the Plan shall terminate, and all options theretofore granted hereunder
shall terminate, unless provision be made in connection with such transaction
for the continuance of the Plan and for the assumption of options theretofore
granted or the substitution for such options of new options covering the stock
of a successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, in which
event the Plan and options theretofore granted shall continue in the manner and
under the terms so provided.
9. AMENDMENT OF THE PLAN
The Committee may, subject to Section 2 above, amend the Plan in any
respect. The Committee may at any time discontinue the Plan as to further grants
of options and on 30 days notice to a distributor cease any distributor's
participation in the Plan provided, that, without the consent of each Eligible
Distributor affected thereby, no amendment or discontinuation shall materially
alter or impair any rights of optionees under the Plan with respect to grants of
options made prior to the discontinuation.
10. GOVERNING LAW
All determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of New York and construed accordingly.
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CERTIFICATE OF ENROLLMENT
IN DISTRIBUTORS STOCK OPTION PLAN OF FIRECOM, INC.
This is to confirm that __________________________ ("Distributor") has
been selected by Firecom, Inc. to participate in the Firecom, Inc. Distributors
Stock Option Plan ("Plan"). For purposes of the Plan, the Enrollment Date of the
Distributor is _______________________. The exercise price of options for which
the Distributor is eligible under the Plan is $_______ per share.
A copy of the Plan is appended to this Certificate.
FIRECOM, INC.
By:_____________________________
Authorized Officer
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