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 19, 2008)
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 2,375,000 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
1
shareholders, provided the outside
director is either reelected or continues to serve as an outside
director, 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
conditions as may be prescribed by the
