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EXHIBIT 1
LSI INDUSTRIES INC.
1995
Stock Option Plan
ARTICLE 1.
OBJECTIVES
LSI INDUSTRIES INC. ("LSI") has established this Stock Option Plan
effective May 2, 1995 as an incentive to the attraction and retention of
dedicated and loyal employees of outstanding ability, to stimulate the efforts
of such persons in meeting the Company's objectives and to encourage ownership
of the Company's Common Stock by employees.
ARTICLE 2.
DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the
definition which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
A. "CODE" means the Internal Revenue Code of 1986.
B. The "COMPANY" means LSI and any subsidiary of LSI as
the term "subsidiary" is defined in Section 424(f) of the Code.
C. "DATE OF EXERCISE" means the date on which the
Company has received a written notice of exercise of an Option, in
such form as is acceptable to the Committee, and full payment of the
purchase price.
D. "DATE OF GRANT" means the date on which the Committee
makes an award of an Option.
E. "ELIGIBLE EMPLOYEE" means any individual who performs
services for the Company and is treated as an employee for federal
income tax purposes.
F. "FAIR MARKET VALUE" means the last sale price
reported on any stock exchange or over-the-counter trading system on
which Shares are trading on the last trading day prior to a specified
date or, if no last sale price is reported, the average of the closing
bid and asked prices for a Share on the last trading day prior to any
specified date. If no sale has been made on such prior trading day,
then prices on the last preceding day on which any such sale shall
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have been made shall be used in determining Fair Market Value under
either method prescribed in the previous sentence.
G. "INCENTIVE STOCK OPTION" shall have the same meaning
as given to that term by Section 422 of the Code.
H. "NONQUALIFIED STOCK OPTION" means any Option granted
under the Plan which is not considered an Incentive Stock Option.
I. "OPTION" means the right to purchase a stated number
of Shares at a specified price. The option may be granted to an
Eligible Employee subject to the terms of this Plan, and such other
conditions and restrictions as the Committee deems appropriate. Each
Option shall be designated by the Committee to be either an Incentive
Stock Option or a Nonqualified Stock Option.
J. "OPTION PRICE" means the purchase price per Share
subject to an Option and shall be fixed by the Committee, but shall
not be less than 100% of the Fair Market Value of a Share on the Date
of Grant in the case of an Incentive Stock Option.
K. "PERMANENT AND TOTAL DISABILITY" shall mean any
medically determinable physical or mental impairment rendering an
individual unable to engage in any substantial gainful activity, which
disability can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12
months.
L. "PLAN" means this 1995 Stock Option Plan as it may be
amended from time to time.
M. "SHARE" means one share of the Common Stock, no par
value, of the Company.
ARTICLE 3.
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Company. The
Committee shall be comprised solely of three or more directors each of whom
shall be (i) a "disinterested person" as defined under Rule 16b-3 of the
Securities and Exchange Act of 1934 (the "Act") and (ii) an "outside director"
to the extent required by Section 162(m) of the Internal Revenue Code ("Section
162(m)"). Each director serving on the Committee shall be ineligible to
receive options under this Plan and none shall have, within the twelve months
prior to their appointment to the Committee and while serving on such
Committee, received options or an interest in other shares pursuant to any
plans of the Company or any of its affiliates. Notwithstanding the foregoing,
to the extent relevant state law now
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or hereafter permits, the Committee may be comprised solely of two or more such
directors.
Actions shall be taken by a majority of the Committee.
3.2 Except as specifically limited by the provisions of the Plan,
the Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted
Options;
B. Determine the number of Shares which may be subject
to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock
Option or Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide all
questions of fact arising in its application; and
G. Prescribe such rules and procedures for Plan
administration as from time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the
Committee with respect to the application or administration of this Plan shall
be final and binding upon all persons, and need not be uniform with respect to
its determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any
Option granted hereunder, and to the extent permitted by law, all members shall
be indemnified by the Company for any liability and expenses which may occur
through any claim or cause of action.
ARTICLE 4.
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under
the Plan shall not exceed 300,000 Shares in the aggregate.
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Except as provided in Section 4.2, upon lapse or termination of any Option for
any reason without being completely exercised, the Shares which were subject to
such Option may again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may
be granted to any employee during each fiscal year of the Company is 50,000.
If an Option is cancelled, it continues to be counted against the maximum
number of Shares for which Options may be granted to an employee. If an Option
is repriced, the transaction is treated as a cancellation of the Option and a
grant of a new Option.
ARTICLE 5.
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may,
from time to time prior to May 2, 2005, grant Options to Eligible Employees on
such terms and conditions as the Committee may determine. More than one Option
may be granted to the same Eligible Employee.
ARTICLE 6.
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock
Options set forth in Article 9, each Option shall be for a term of from one to
ten years from the Date of Grant and may not be exercised during the first
twelve months of the term of said Option. Commencing on the first anniversary
of the Date of Grant of an Option, the Option may be exercised for 25% of the
total Shares covered by the Option with an additional 25% of the total Shares
covered by the Option becoming exercisable on each succeeding anniversary until
the Option is exercisable to its full extent. This right of exercise shall be
cumulative and shall be exercisable in whole or in part. The Committee in its
sole discretion may permit particular holders of Options to exercise an Option
to a greater extent than provided herein. The Committee may establish a
different exercise schedule and impose other conditions upon exercise for any
particular Option or groups of Options on the Date of Grant.
6.2 The holder of an Option must remain continuously in the
service of the Company as an employee for a period of at least twelve months;
provided, however, that employment shall be at the pleasure of the Board of
Directors or officers of the Company at such compensation as the Company shall
determine. Nothing contained in this Plan or in any Option granted pursuant to
it shall
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confer upon any employee any right to continue in the employ of the Company or
to interfere in any way with the right of the Company to terminate employment
at any time. So long as a holder of an Option shall continue to be an employee
of the Company, the Option shall not be affected by any change of the
employee's duties or position.
ARTICLE 7.
EXERCISE OF OPTIONS
Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to the Company, attention
Corporate Secretary, at its principal office. The written notice shall specify
the number of Shares for which an Option is being exercised and the grant date
of the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased.
ARTICLE 8.
PAYMENT OF OPTION PRICE
8.1 Payment of the Option Price may be made in cash, by the tender
of Shares, or both. Shares tendered shall be valued at their Fair Market
Value.
8.2 Payment through tender of Shares may be made by instruction
from the Optionee to the Company to withhold from the Shares issuable upon
exercise that number which have a Fair Market Value equal to the exercise price
for the Option or portion thereof being exercised.
ARTICLE 9.
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an
Option is to be considered an Incentive Stock Option or a Nonqualified Stock
Option. The Committee may grant both an Incentive Stock Option and a
Nonqualified Stock Option to the same individual. However, where both an
Incentive Stock Option and a Nonqualified Stock Option are awarded at one time,
such Options shall be deemed to have been awarded in separate grants, shall be
clearly identified, and in no event will the exercise of one such Option affect
the right to exercise the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock
Option will be subject to the general provisions applicable to all Options
granted under the Plan. In addition, the Incentive Stock Option shall be
subject to the following specific provisions:
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A. At the time the Incentive Stock Option is granted, if
the Eligible Employee owns, directly or indirectly, stock representing
more than 10% of (i) the total combined voting power of all classes of
stock of the Company, or (ii) a corporation that owns 50 percent or
more of the total combined voting power of all classes of stock of the
company, then:
(i) The Option Price must equal at least 110% of the
Fair Market Value on the Date of Grant; and
(ii) The term of the Option shall not be greater than
five years from the Date of Grant.
B. The aggregate Fair Market Value of Shares (determined
at the Effective Date of Grant) with respect to which Incentive Stock
Options are exercisable by an Eligible Employee for the first time
during any calendar year under this Plan or any other plan maintained
by the Company shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to
the provisions noted immediately above, it will be considered to be a
Nonqualified Stock Option to the extent that the grant is in conflict with
these restrictions.
ARTICLE 10.
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible
Employee to whom an Option has been granted, the Option may be transferred to
the beneficiaries or heirs of the holder of the Option by will or by the laws
of descent and distribution.
ARTICLE 11.
TERMINATION OF OPTIONS
11.1 An Option may be terminated as follows:
A. During the period of continuous employment with the
Company, an Option will be terminated only if it has been fully
exercised or it has expired by its terms.
B. Upon termination of employment for any reason, the
then exercisable portion of any Option will terminate upon the earlier
of (i) the first business day following expiration of
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the end of the three month period after the date of termination, or
(ii) the option expiration date set forth in the Option Agreement.
The portion not exercisable will terminate on the date of termination
of employment. For purposes of the Plan, a leave of absence approved
by the Company shall not be deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or
becomes subject to a Permanent and Total Disability while employed or
within three months after termination of employment, such Option may
be exercised, to the extent exercisable on the date of the occurrence
of the event which triggers the operation of this paragraph, at any
time by the estate or guardian of such person or by those persons to
whom the Option may have been transferred by will or by the laws of
descent and distribution until the earlier of (i) the date which is
one year after the date of such death or occurrence of Permanent and
Total Disability, or (ii) the option expiration date set forth in the
Option Agreement.
11.2 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the Eligible Employee, or his beneficiaries or heirs, to
accrue additional rights under the Plan, or to purchase more Shares through the
exercise of an Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained herein, no
option may be exercised in any event after the expiration of ten years from the
date of grant of such option.
ARTICLE 12.
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of the
Company as a result of stock dividends, splitups, recapitalizations,
combinations of Shares or exchanges of Shares, the number and class of Shares
and price per share for each Option covered under the Plan and each outstanding
Option shall be correspondingly adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option
Price to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of the Company
or any merger, consolidation, exchange or other transaction in which the
Company is not the surviving corporation or in which the outstanding Shares of
the Company are converted into cash, other securities or other property, each
outstanding Option shall
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terminate as of a date fixed by the Committee provided that not less than 20
days' written notice of the date of expiration shall be given to each holder of
an Option and each such holder shall have the right during such period
following notice to exercise the Option as to all or any part of the Shares for
which it is exercisable at the time of such notice. The Committee, in its sole
discretion, may provide that Options in such circumstances may be exercised to
an extent greater than the number of shares for which they were exercisable at
the time of such a notice.
ARTICLE 13.
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a
written agreement in such form or forms as the Committee in its sole discretion
may determine.
13.2 Each optionee, by acceptance of an Option under this Plan,
shall be deemed to have consented to be bound, on the optionee's own behalf and
on behalf of the optionee's heirs, assigns and legal representatives, by all
terms and conditions of this Plan.
ARTICLE 14.
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of the Company may at any time amend,
suspend, or discontinue the Plan; provided, however, that no amendments by the
Board of Directors of the Company shall, without further approval of the
shareholders of the Company:
A. Change the class of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof,
increase the number of Shares which may be subject to Options granted
under the Plan.
C. Cause the Plan or any Option granted under the Plan
to fail to (i) qualify for exemption from Section 16(b) of the Act,
(ii) be excluded from the $1 million deduction limitation imposed by
Section 162(m), or (iii) qualify as an "Incentive Stock Option" as
defined by Section 422 of the Internal Revenue Code.
14.2 No amendment or discontinuance of the Plan shall alter or
impair any Option granted under the Plan without the consent of the holder
thereof.
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ARTICLE 15.
EFFECTIVE DATE
The Plan shall become effective as of May 2, 1995, having been adopted
by the Board of Directors of the Company on such date subject to approval by
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Company voting on the issue, and all Options granted prior to such
approval are expressly conditioned upon such approval being received. If
shareholder approval is not received within 12 months of the effective date,
Options granted pursuant to this Plan shall be null and void.
ARTICLE 16.
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the
Board of Directors or shareholders of the Company shall constitute the granting
of an Option. An Option shall be granted only at such time as a written Option
shall have been executed and delivered to the respective employee and the
employee shall have executed an agreement respecting the Option in conformance
with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options
will be issued in regular course after exercise of the Option and payment
therefor as called for by the terms of the Option but in no event shall the
Company be obligated to issue certificates more often than once each quarter of
each fiscal year. No persons holding an Option or entitled to exercise an
Option granted under this Plan shall have any rights or privileges of a
shareholder of the Company with respect to any Shares issuable upon exercise of
such Option until certificates representing such Shares shall have been issued
and delivered. No Shares shall be issued and delivered upon exercise of an
Option unless and until the Company, in the opinion of its counsel, has
complied with all applicable registration requirements of the Securities Act of
1933 and any applicable state securities laws and with any applicable listing
requirements of any national securities exchange on which the Company
securities may then be listed as well as any other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all
Options granted under the Plan unless terminated earlier in accordance with
Article 14; provided, however, that it shall otherwise terminate ten years
after the Effective Date.