EXHIBIT 4.1
INSIGNIA SYSTEMS, INC.
2003 INCENTIVE STOCK OPTION PLAN
(Adopted by Board of Directors February 24,
2003)
(Approved by Shareholders on May 20,
2003)
(Amended through February 20,
2007)
1.
Purpose . The
purpose of this Plan is to provide a means whereby Insignia
Systems, Inc. (the “Company”), may be able, by granting
options to purchase stock in the Company, to attract, retain and
motivate capable and loyal employees, directors, consultants and
advisors of the Company and its subsidiaries, for the benefit of
the Company and its shareholders. Both incentive stock options
which qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code (the “Code”), and nonqualified
stock options which do not qualify for favorable tax treatment, may
be granted under the Plan.
2.
Reservation of Shares
. A total of 1,875,000 shares of the authorized but
unissued shares of Common Stock of the Company, par value $.01 per
share, is reserved for issue upon the exercise of options granted
under the Plan. If any option expires or terminates for any reason
without having been exercised in full, the unpurchased shares
covered thereby shall become available for additional options which
may be issued to persons eligible under the Plan so long as it
remains in effect. Shares reserved for issue as provided herein
shall cease to be reserved upon termination of the Plan.
3.
Administration .
The Plan shall be administered by the Compensation Committee of the
Board of Directors (the “Committee”). The Committee
shall be appointed by the Board of Directors and shall be comprised
solely of two or more “non-employee directors” within
the meaning of SEC Rule 16b-3. Each member of the Committee shall
also be an “outside director” within the meaning of
Code Section 162(m). The Committee shall have the full power to
construe and interpret the Plan and to establish and amend rules
and regulations for its administration. The Committee shall
determine which persons shall be granted options hereunder, the
number of shares for which each option shall be granted, the types
of options to be granted, and any limitations on the exercise of
options in addition to those imposed by this Plan. The Committee
may also waive any restrictions on the exercise of outstanding
options and approve amendments to outstanding options, provided
there is no conflict with the terms of the Plan. The Committee
shall apply such criteria as it deems appropriate in determining
the persons to whom options are granted and the number of shares to
be covered by each option.
4.
Eligibility . An
option may be granted to any employee, director, consultant or
advisor of the Company or its subsidiaries, except that no
consultant or advisor shall be granted options in connection with
the offer and sale of securities in a capital raising transaction
on behalf of the Company. The maximum number of shares for which
any person may be granted options under the Plan in any year is
limited to 100,000 shares.
5.
Option Grants To Outside
Directors . Each outside director of
the Company shall automatically be granted an option to purchase
10,000 shares of Common Stock on the date first appointed or
elected as a director. Each outside director shall also
automatically be granted an option to purchase 5,000 shares of
Common Stock on (a) the date of each subsequent annual meeting of
the shareholders, provided the outside director is either reelected
or continues to serve as an outside director,
1
or (b) the anniversary of the prior year’s
grant in any year in which there is no meeting of the shareholders.
In no event shall a director receive more than one grant in any
fiscal year.
The period within which an option granted to an
outside director must be exercised shall be the earlier of (a) ten
years from the date of grant, or (b) 90 days after the director
ceases to be a director for any reason. Options granted to outside
directors shall be immediately exercisable in full when
granted.
6.
Exercise Price .
The per share exercise price for each option shall be determined by
the Committee at the time of grant, provided that the per share
exercise price for any incentive stock option, and any option
granted to an outside director, shall be not less than the fair
market value of the Common Stock on the date the option is granted.
In making such determination, the Committee shall rely on market
quotations, if available, but if not available, upon independent
appraisals of the stock or such other information deemed
appropriate by the Committee.
7.
Changes in Present Stock
. In the event of a recapitalization, merger,
consolidation, reorganization, stock dividend, stock split or other
change in capitalization affecting the Company’s present
capital stock, appropriate adjustment may be made by the Committee
in the number and kind of shares and the option price of shares
which are or may become subject to options granted or to be granted
hereunder.
8.
Exercise of Option . Receipt by the Company of a written notice from an optionee,
specifying the number of shares to be purchased, and accompanied by
payment of the purchase price for such shares, shall constitute
exercise of the option as to such shares. The date of receipt by
the Company of such written notice shall be the date of exercise of
the option. The Company may accept payment from a broker and, upon
receipt of written instructions from the optionee, deliver the
purchased shares to the broker.
9.
Option Agreement Provisions
. Each option granted under the Plan shall be
evidenced by a Stock Option Agreement executed by the Company and
the optionee, and shall be subject to the following terms and
conditions, and such other terms and condit
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