<PAGE> 1
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
LSI Industries Inc.
--------------------------------------------------
(Name of Registrant as Specified in its Charter)
LSI Industries Inc.
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i) (1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
____________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
(1)Set forth the amount on which the filing fee is calculated
and state how it was determined.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
$125.00
------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
------------------------------------------------------------
3) Filing Party:
LSI Industries Inc.
------------------------------------------------------------
4) Date Filed:
September 15, 1995
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<PAGE> 2
NOTICE OF ANNUAL MEETING TO SHAREHOLDERS
TO BE HELD NOVEMBER 16, 1995
Dear Shareholder:
We cordially invite you to attend our Annual Shareholders' Meeting to
be held at the Company's headquarters located at 10000 Alliance Road,
Cincinnati, Ohio on Thursday, November 16, 1995 at 10:00 a.m. Eastern Standard
Time. As this will be the first Shareholders' meeting to be held at LSI. We
plan to make it special by introducing our shareholders to the exciting
capabilities of our new "Image Center."
The purposes of this Annual Meeting are to consider and act upon the
following proposals:
1) To elect three Class A directors to hold office until the
Annual Meeting of Shareholders in 1997 and until their
respective successors are duly elected and qualified; and
2) To ratify the appointment of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year 1996;
and
3) To adopt the LSI Industries Inc. 1995 Stock Option Plan to
provide 450,000 Common Shares as available for grant under
such plan; and
4) To adopt the LSI Industries Inc. 1995 Directors' Stock Option
Plan to provide 75,000 Common Shares as available for grant
under such plan; and
5) To amend the Articles of Incorporation to increase the
authorized Common Shares from 13,000,000 up to 30,000,000
shares; and
6) To transact such other business as may properly be brought
before the meeting or any other adjournment thereof.
Shareholders of record at the close of business on Monday, September
18, 1995 are entitled to notice and to vote at the meeting. This notice is
given pursuant to order of the Board of Directors.
Following the meeting, we will review the Company's progress over the
last year and our plans for the future, and will have an open house at the
Cincinnati Operations. Our directors and executive officers will be available
to discuss the Company's business with you.
Yours truly,
/s/ Robert J. Ready
Robert J. Ready
Chairman of the Board and President
Dated: September 29, 1995
--
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, SIGN AND PROMPTLY
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED BY
WRITTEN NOTICE OR REVOCATION, THE SUBMISSION OF A LATER PROXY OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
<PAGE> 3
LSI INDUSTRIES INC.
10000 ALLIANCE ROAD
CINCINNATI, OHIO 45242
TELEPHONE (513) 793-3200
------------------------------------------
P R O X Y S T A T E M E N T
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 16, 1995
INTRODUCTION
The Board of Directors of LSI Industries Inc. ("LSI Industries" or the
"Company") is requesting your Proxy for the Annual Meeting of Shareholders on
November 16, 1995, and at any adjournment thereof, pursuant to the foregoing
Notice. This Proxy Statement and the accompanying proxy were first mailed on
September 29, 1995, to shareholders of record on September 18, 1995. On that
date 7,608,203 Common Shares were issued and outstanding and were entitled to
vote.
VOTING AT ANNUAL MEETING
GENERAL INFORMATION
- -------------------
Shareholders may vote in person or by proxy at the Meeting. Proxies
given may be revoked at any time by filing with the Company either a written
revocation or a duly executed proxy bearing a later date, or by appearing at
the meeting and voting in person. All shares will be voted as specified on
each properly executed proxy. If no choice is specified, the shares will be
voted as recommended by the Board of Directors, namely "FOR" Proposal 1 to
elect the three persons nominated as Class A directors by the Board of
Directors, "FOR" Proposal 2 (Ratification of Appointment of Independent
Accountants), "FOR" Proposal 3 (Adoption of the 1995 Stock Option Plan, "FOR"
Proposal 4 (Adoption of the 1995 Directors' Stock Option Plan), and "FOR"
Proposal 5 (Amendment of the Articles of Incorporation to increase the number
of authorized Common Shares from 13,000,000 to 30,000,000).
As of September 18, 1995, the record date for determining shareholders
entitled to notice of and to vote at the meeting, LSI Industries had 7,608,203
Common Shares outstanding. Each share is entitled to one vote. Only
shareholders of record at the close of business on September 18, 1995, will be
entitled to vote at the meeting. Abstentions and shares otherwise not voted
for any reason, including broker non-votes, will have no effect on the outcome
of any vote taken at the meeting, except as noted for Proposals 3, 4, and 5.
The principal shareholders have indicated their intention to vote in favor of
management proposals.
-1-
<PAGE> 4
PRINCIPAL SHAREHOLDERS
- ----------------------
As of September 18, 1995, the following persons are the only
shareholders known by the Company to own beneficially 5% or more of its
outstanding Common Shares:
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership Of Class
- ------------------------ -------------------- --------
<S> <C> <C>
Robert J. Ready 721,032 (a) 9.28%
James P. Sferra 493,945 (b) 6.36%
Donald E. Whipple 461,419 (c) 5.94%
<FN>
(a) Includes exercisable options for 79,545 shares and 130,488 shares held
in trust for Mr. Ready's children.
(b) Includes exercisable options for 38,286 shares and 26,931 shares held by
Mr. Sferra's children.
(c) Includes exercisable options for 32,030 shares and 16,155 shares held by Mr.
Whipple's children.
</TABLE>
The business address of Messrs. Ready, Sferra and Whipple is: 10000 Alliance
Road, Cincinnati, Ohio 45242. Such persons disclaim beneficial ownership of
shares held by or in trust for their children.
VOTING BY PROXY
- ---------------
All properly signed proxies will, unless a different choice is
indicated, be voted "FOR" the election of all three nominees for Class A
directors proposed by the Board of Directors, "FOR" ratification of the
selection of independent accountants, "FOR" adoption of the LSI Industries Inc.
1995 Stock Option Plan, "FOR" adoption of the 1995 Directors' Stock Option
Plan, and "FOR" Amendment of the Company's Articles of Incorporation to
increase the number of authorized Common Shares from 13,000,000 to 30,000,000.
If any other matters come before the meeting or any adjournment, each
proxy will be voted in the discretion of the individuals named as proxies on
the card.
SHAREHOLDER PROPOSALS
- ---------------------
Shareholders who desire to have proposals included in the Notice for
the 1996 Shareholders' Meeting must submit their proposals to the Company at
its offices on or before June 3, 1996.
PROPOSAL 1. ELECTION OF DIRECTORS
- ----------------------------------
The Company's Code of Regulations provides that the Board of Directors
be composed of two classes of directors, Class A and Class B, with each class
elected for a two-year term. One class is elected annually. The terms of the
Class A directors expire at this 1995 Annual Meeting of Shareholders while the
terms of the Class B directors expire at the 1996 Annual Meeting of
Shareholders.
-2-
<PAGE> 5
The Board is nominating for reelection its present Class A directors,
namely, Michael J. Burke, Robert J. Ready, and John N. Taylor, Jr. Proxies
solicited by the Board will be voted for the election of these three nominees.
All class A directors elected at the Annual Meeting will be elected to
hold office for two years and until their successors are elected and qualified.
In voting to elect directors, shareholders are entitled to one vote
for each share held of record. Shareholders are not entitled to cumulate their
votes in the election of directors.
Should any of the nominees become unable to serve, proxies will be
voted for any substitute nominee designated by the Board. Nominees receiving
the highest number of votes cast for the positions to be filled will be
elected.
RECOMMENDATION OF THE BOARD OF DIRECTORS
----------------------------------------
The Board of Directors recommends a vote in FAVOR of each of the
directors nominated in this Proxy Statement. Nominees receiving the
highest number of votes will be elected.
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------
The Board of Directors appointed Price Waterhouse LLP as the Company's
independent accountants for fiscal 1996. Price Waterhouse LLP has been the
independent accounting firm for the Company since the public offering in March
1985. Although not required by law, the Board is seeking shareholder
ratification of its selection. If ratification is not obtained, the Board
intends to continue the employment of Price Waterhouse LLP at least through
fiscal 1996.
Representatives of Price Waterhouse LLP are expected to be present at
the Shareholders' Meeting and will be given an opportunity to comment, if they
so desire, and to respond to appropriate questions that may be asked by
shareholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
----------------------------------------
The Board of Directors recommends a vote in FAVOR of Proposal 2. The
affirmative vote of a majority of the sum of Common Shares voting at
the meeting is required for ratification of this proposal.
PROPOSAL 3. ADOPTION OF THE LSI INDUSTRIES INC. 1995 STOCK OPTION PLAN
- -----------------------------------------------------------------------
A Stock Option Plan was originally established in 1985 as an incentive
stock option plan for employees. At the 1987 Annual Shareholders' Meeting,
shareholders approved the grant of nonqualified stock options to employees of
the Company. At the 1987, 1988, and 1994 Annual Shareholders' Meetings,
shareholders approved an increase of shares of Common Stock. This 1985 Plan
had 1,051,875 shares authorized for grant. At the February 1995 expiration of
this Plan, 160,951 shares had not been granted and are no longer available to
be granted as options. A total of 457,815 options which had been granted
pursuant to this 1985 Stock Option Plan were outstanding as of June 30, 1995.
-3-
<PAGE> 6
On May 2, 1995, the Board of Directors unanimously adopted, subject to
shareholder approval, the new 1995 Stock Option Plan (see Exhibit I),
approximately 850 persons to make available for grant under the Plan 450,000
shares (300,000 shares before giving effect to the August 4, 1995 three-for-two
stock split) of Common Stock to employees, approximately 850 persons. The 1995
Plan is essentially the same as the 1985 Plan.
The Compensation Committee of the Board of Directors shall administer
the 1995 Plan. Subject to the express provisions of the Plan, the Committee
shall have the authority to establish the terms and conditions of option
agreements, which need not be uniform.
The 1995 Stock Option Plan provides that options may be granted either
as incentive stock options or as nonqualified stock options. Options may be
granted for varying periods of from one to ten years. Employees who own 10% or
more of the Company's outstanding Common Shares may be granted incentive stock
options only for terms of five years or less. Options do not become
exercisable until at least one year from the date of grant. Thereafter, the
right to exercise options vests at a schedule determined at the time of grant.
The Committee determines the exercise prices of all options that are granted.
However, an incentive stock option may only be granted with an exercise price
equal to the market value of the Common Shares on the date of grant. In
addition, in the case of employees who beneficially own more than 10% of the
Company's Common Shares, an incentive stock option may be granted only if the
option price is at least 110% of the market value of the Common Shares on the
date of grant.
There are presently options outstanding for the purchase of 313,500
shares under this new Plan, subject to adoption of the 1995 Stock Option Plan
by the shareholders.
The following table sets forth information through September 1, 1995
for options which have been granted under the 1995 Stock Option Plan to the
persons named in the Summary Compensation Table and to all other grantees, as a
group. No options have been granted under the Plan to non-employee Directors
of LSI Industries.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
Number of of Share Price Appreciation
Options Granted(1)(2) for Option Term (3)
--------------------- ---------------------------
5% 10%
-- ---
<S> <C> <C> <C>
Robert J. Ready 22,500 $ 79,875 $ 176,175
James P. Sferra 15,000 $ 53,250 $ 117,450
Donald E. Whipple 3,000 $ 10,650 $ 23,490
Peter F. Carey 15,000 $ 53,250 $ 117,450
Ronald S. Stowell 15,000 $ 53,250 $ 117,450
All Executive Officers
as a group (5 persons) 70,500 $ 250,275 $ 552,015
All other employees 313,500 $1,112,925 $2,454,705
<FN>
(1) The number of options reflect the 3-for-2 stock split declared
July 26, 1995 effective August 4, 1995.
</TABLE>
-4-
<PAGE> 7
(2) All options are subject to adoption of the 1995 Stock Option
Plan by the Shareholders.
(3) Potential realizable value is net of option exercise price,
but before taxes associated with exercise. These amounts
represent compounded rates of appreciation and exercise of the
options immediately prior to expiration of their five year
term. Actual gains, if any, are dependent on the future
performance of the Common Shares, and overall market
conditions. The amounts in this table may not necessarily be
achieved.
There are no federal income tax consequences to either the Company or
the recipient of an option upon the grant or exercise of an incentive stock
option. If a person sells or otherwise disposes of stock acquired upon the
exercise of an incentive stock option within one year of the date of exercise
or two years from the date of grant, the gain equal to the excess of the amount
realized over the amount paid for the stock will be taxed as ordinary income.
The Company will be entitled to an income tax deduction to the same extent. If
the shares are held for more than one year following the date of exercise and
two years from the date of grant, any gain realized thereafter will be taxed as
a capital gain, in which case the Company will not be entitled to any
deduction.
With respect to non-qualified stock options, there are no federal
income tax consequences upon the grant of an option. A person exercising a
non-qualified stock option will recognize ordinary income to the extent of the
difference between the exercise price and the fair market value of the Common
Shares on the date of exercise, and the Company will be entitled to a
corresponding deduction. Upon any sale of that stock, the difference between
the amount realized and the fair market value on the date of the exercise will
be treated as a capital gain or loss.
In the event of any changes in the outstanding Common Stock by way of
a stock dividend, split-up, recapitalization, combination or exchange, the
number and class of shares of Common Stock authorized to be the subject of
options under the 1995 Plan and the number and class of Common Stock and option
price for each option which is outstanding shall be correspondingly adjusted by
the Committee. The Committee shall also make appropriate adjustments to
reflect any spin-off of assets, extraordinary dividends or other distributions
to shareholders.
In the event of the dissolution or liquidation of the Company or any
merger, consolidation or combination in which the Company is not the surviving
corporation or in which the outstanding common shares of the Company are
converted into cash, other securities or other property, each outstanding
option shall 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. Each such holder shall have the right during such
period following notice to exercise the portion of the option which is vested
at the time of such notice.
On September 21, 1995 the closing price of the Company's Common
Shares was $21.50.
-5-
<PAGE> 8
RECOMMENDATION OF THE BOARD OF DIRECTORS
----------------------------------------
The Board of Directors recommends a vote in FAVOR of Proposal 3. The
affirmative vote of the holders of a majority of the sum of Common
Shares voting and abstaining is required for adoption of the LSI
Industries Inc. 1995 Stock Option Plan.
PROPOSAL 4. ADOPTION OF THE LSI INDUSTRIES INC. 1995 DIRECTORS' STOCK OPTION
- -----------------------------------------------------------------------------
PLAN
----
The Company did not grant stock options to its non-employee directors
prior to fiscal year 1995. The Board of Directors believes that the Company
needs a stock option plan for its non-employee directors to more closely
identify their interests with shareholders in achieving market performance for
the Common Shares, and to encourage ownership of the Company's Common Shares by
its directors.
Accordingly, on May 2, 1995 the Board of Directors unanimously
adopted, subject to shareholder approval, the 1995 Directors' Stock Option Plan
(see Exhibit II) to make available for grant under the Plan 75,000 shares
(50,000 shares before giving effect to the August 4, 1995 three-for-two stock
split) of Common Stock to non-employee directors.
The Compensation Committee of the Board of Directors shall administer
the 1995 Plan. Subject to the express provisions of the Plan, the Committee
shall have the authority to establish the terms and conditions of option
agreements, which need not be uniform.
The 1995 Directors' Stock Option Plan provides that options will be
granted as non-qualified stock options. Options will be granted for ten years
and are exercisable at date of grant. Each eligible non-employee director
shall annually be granted an option to purchase 1,000 shares of Common Stock.
In recognition of their service to the Company to date, the following directors
were granted options on the May 2, 1995 adoption of this Plan as follows:
<TABLE>
<CAPTION>
Number of Shares Potential Realizable Value
(after giving effect to at Assumed Annual Rates
the Three-for-Two of Share Price Appreciation
Stock Split(1) for Option Term (2)
----------------------- --------------------------
5% 10%
-- ---
<S> <C> <C> <C>
Michael J. Burke 15,000 $96,000 $243,150
Allen L. Davis 15,000 $96,000 $243,150
John N. Taylor, Jr. 4,500 $28,800 $ 72,945
<FN>
(1) These options are subject to adoption of the 1995 Directors'
Stock Option Plan by the Shareholders, and none of the above
options are exercisable until after such adoption.
(2) Potential realizable value is net of option exercise price,
but before taxes associated with exercise. These amounts
represent compounded rates of appreciation and exercise of the
options immediately prior to expiration of their ten year
term. Actual gains, if any, are dependent on the future
performance of the Common Shares, and overall market
conditions. The amounts in this table may not necessarily be
achieved.
</TABLE>
-6-
<PAGE> 9
Neither the optionee nor the Company will incur any federal tax
consequences as a result of the grant of an option. Upon exercise of an
option, the optionee generally must recognize ordinary income equal to the
difference between the exercise price and the fair market value of Common Stock
on the date of exercise. The Company will be entitled to a tax deduction of
the same amount. Upon a disposition of option shares acquired under the 1995
Plan, the difference between the sale proceeds and the market value of the
shares at the time of exercise will be treated by the optionee as a capital
gain or loss, either long-term or short-term, depending on how long the shares
have been held. The Company will not be entitled to a deduction in connection
with a disposition of option shares.
In the event of any changes in the outstanding Common Stock by way of
a stock dividend, split-up, recapitalization, combination or exchange, the
number and class of shares of Common Stock authorized to be the subject of
options under the 1995 Plan and the number and class of Common Stock and option
price for each option which is outstanding shall be correspondingly adjusted by
the Committee. The Committee shall also make appropriate adjustments to
reflect any spin-off of assets, extraordinary dividends or other distributions
to shareholders.
In the event of the dissolution or liquidation of the Company or any
merger, consolidation or combination in which the Company is not the surviving
corporation or in which the outstanding common shares of the Company are
converted into cash, other securities or other property, each outstanding
option shall 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. Each such holder shall have the right during such
period following notice to exercise the portion of the option which is vested
at the time of such notice.
On September 21, 1995 the closing price of the Company's Common
Shares was $21.50.
RECOMMENDATION OF THE BOARD OF DIRECTORS
----------------------------------------
The Board of Directors recommends a vote in FAVOR of Proposal 4. The
affirmative vote of the holders of a majority of the sum of Common
Shares voting and abstaining is required for adoption of the LSI
Industries Inc. 1995 Directors' Stock Option Plan.
PROPOSAL 5. AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE THE
- -----------------------------------------------------------------------
AUTHORIZED COMMON SHARES
- ------------------------
LSI Industries Inc. shareholders have previously authorized the Company
in the Articles of Incorporation to issue 13,000,000 Common Shares. At the
record date for the Shareholders' Meeting, September 18, 1995, the Company had
7,608,203 common shares outstanding, with an additional 921,069 shares
(assuming Shareholder adoption of Proposals 3 and 4 of this Proxy Statement)
reserved for the Company's Stock Option Plans. Therefore, of the 13,000,000
shares authorized by the Articles of Incorporation, 4,470,728 are available for
issuance for general corporate purposes.
The Board of Directors has determined that it would be advisable to
amend the Articles of Incorporation to authorize the Company to issue up to
30,000,000 Common Shares (increased from the current maximum of 13,000,000) and
believes that it would be advisable to have these additional shares authorized
for issuance from time to time. Stock issuances by LSI
-7-
<PAGE> 10
Industries could involve sales for cash, issuances for acquisitions, further
option or other incentive plans, stock splits, stock dividends, or other
similar occurrences. The issuance of additional Common Shares through stock
dividends or splits will not affect the percentage ownership of shareholders.
Issuance for stock options and other benefit plans, and for acquisitions would
affect the percentage of stock ownership but their effect upon earnings per
share would depend upon the earnings realized from the cash received or
business acquired in such stock issuances. There are no plans, understandings,
or arrangements or prospects to issue additional Common Shares except upon the
exercise of stock options.
Ohio law allows the directors to issue authorized common shares
without notice to or approval of shareholders except in certain limited
instances involving certain types of mergers and acquisitions. Issuances of
additional shares could dilute the equity interest of current shareholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
----------------------------------------
The Board of Directors has approved the amendment to the Articles of
Incorporation to increase total authorized Common Shares to 30,000,000
and recommends a vote in FAVOR of Proposal 5. The affirmative vote of
the holders of a two-thirds of the outstanding Common Shares is
required for approval of this Amendment to the Articles of
Incorporation. The failure to vote, abstentions, and broker non-
votes will have the same effect as a vote against the proposal.
OTHER MATTERS
- -------------
Any other matters considered at the meeting, including adjournment,
will require the affirmative vote of a majority of shares voting.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
The directors and executive officers of LSI Industries are:
<TABLE>
<CAPTION>
Common Shares
Beneficially Owned
------------------
Name and Age Position Amount Percentage
------------ -------- ------ ----------
<S> <C> <C> <C>
Robert J. Ready (a) President and Chairman 721,032 (d) 9.28%
55 of the Board
James P. Sferra (a) Executive Vice President- 493,945 (d) 6.36%
56 Manufacturing and Director
Donald E. Whipple (a) President, LSI Lighting 461,419 (d) 5.94%
59 Systems and Insight
Graphic Systems,
Secretary and Director
John N. Taylor, Jr. (b)(c) Director 355,950 (e) 4.58%
60
Michael J. Burke (b)(c) Director and Assistant 15,000 *
52 Secretary
</TABLE>
-8-
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
Allen L. Davis (b)(c) Director 11,812 *
53
Peter F. Carey President, SGI Integrated 27,526 (e) *
48 Graphic Systems, Inc.
Ronald S. Stowell Chief Financial Officer and 10,799 (e) *
45 Treasurer
All Directors and Executive Officers --------- ------
as a Group (Eight Persons) 2,097,483 27.01%
========= ======
<FN>
_________________________________________
Information as of September 1, 1995
(a) Executive Committee Member
(b) Compensation Committee Member
(c) Audit Committee Member
(d) See "Principal Shareholders"
(e) Includes exercisable options for Mr.Carey of 14,214 shares and for Mr. Stowell of 6,299 shares;
and indirect beneficial ownership for Mr. Taylor of 207,900 shares
* Less than 1%
</TABLE>
Robert J. Ready is the founder of the Company and has been its
President and a Director since 1976. Mr. Ready was appointed Chairman of the
Board of Directors in February 1985. Mr. Ready is also a Director of Meridian
Diagnostics, Inc. (a Nasdaq listed company) and of Superior Label Systems, Inc.
James P. Sferra shared in the formation of the Company. Mr. Sferra
has served as Corporate Vice President of Manufacturing since November 1989 to
November 1992, and as Executive Vice President-Manufacturing since then. Prior
to that, he served as Vice President-Manufacturing of the LSI Lighting Systems
division. Mr. Sferra has served as a Director since 1976.
Donald E. Whipple shared in the formation of the Company. Mr. Whipple
has served as President of the LSI Lighting Systems and the Insight Graphics
divisions of LSI Industries since November 1989 and November 1991,
respectively. Prior to that, he served as Executive Vice President of the
Company. Mr. Whipple has served as Director and as Secretary since 1976.
John N. Taylor, Jr. was elected a Director of the Company in November
1992. Mr. Taylor is Chairman and Chief Executive Officer of Kurz-Kasch, Inc.,
a private manufacturer of plastic-based components used in the manufacture of
precision industrial products, headquartered in Dayton, Ohio. Prior to that,
Mr. Taylor had founded and was Chairman and Chief Executive Officer of
Component Technology Corp., a Nasdaq listed company in Erie, Pennsylvania,
until its sale in 1989.
Michael J. Burke was elected a Director and Assistant Secretary of the
Company in February 1985. Mr. Burke is a Managing Partner of the Cincinnati
law firm of Keating, Muething & Klekamp, counsel to the Company, and has been
associated with that firm since 1968.
-9-
<PAGE> 12
Allen L. Davis was elected a Director of the Company in February 1985.
Mr. Davis has been the President and Chief Executive Officer, and a Director of
Provident Bancorp, Inc. and The Provident Bank, Cincinnati, Ohio since 1986 and
1984, respectively.
Ronald S. Stowell has served as Chief Financial Officer since joining
the Company in December 1992 and was appointed Treasurer in November 1993.
Prior to that, and since 1985, Mr. Stowell served as Corporate Controller of
Essef Corporation, Chardon, Ohio, a manufacturer of high performance composite
and engineered plastics products.
Peter F. Carey has been President of SGI Integrated Graphic Systems
since November 1993 and was the Executive Vice President and Chief Operating
Officer since October 1991. From 1990 to September 1991 he was Executive Vice
President of Stout Industries, a screen printer of point of purchase signs.
Prior to that he was Vice President of Marketing of PlastiLine, Inc., a
manufacturer of outdoor signs.
BOARD MATTERS
- -------------
The Board of Directors met six times during fiscal 1995. The
Executive Committee did not meet during fiscal 1995.
The Audit Committee is responsible for reviewing the Company's
internal accounting operations. It also recommends the appointment of the
Company's independent accountants and reviews the relationships between the
Company and these independent accountants. The Audit Committee met two times
during fiscal 1995.
The Compensation Committee is responsible for establishing
compensation levels for management for administering the Company's Stock Option
Plans. The Compensation Committee met five times during fiscal 1995. The
Company does not have a Nominating Committee.
Directors who are not employees of the Company receive $11,000 per
year for serving as a Director plus $1,000 for each meeting attended.
Committee members receive $750 per year for serving as Chairman of a committee
plus $600 for each committee meeting attended. Directors who are employees of
the Company do not receive any compensation for serving as a Director. All
directors attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and Committees of which they were members.
As further discussed under Proposal 4, non-employee directors receive
an annual grant of an option to purchase 1,000 common shares. The option is
fully vested at the time of grant and has a ten year life. During fiscal year
1995 and in recognition of past years of service, the following stock options
were granted: Michael J. Burke, 15,000; Allen B. Davis, 15,000; and John N.
Taylor, Jr., 4,500.
EXECUTIVE COMPENSATION
- ----------------------
The following table sets forth information regarding annual,
long-term, and other compensation for the Chief Executive Officer and each of
the other four most highly compensated executive officers at June 30, 1995
during each of the last three fiscal years for services rendered to the Company
and its subsidiaries.
-10-
<PAGE> 13
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------ Long-Term Compensation
Other Annual ---------------------- All Other
Name and Compensation Restricted # of Compensation
Principal Position Year Salary Bonus (1) Stock Awards Options(2) (3)
- ------------------ ---- ------ ----- --- ------------- ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Ready 1995 $350,000 $175,000 $13,152 -- -- $47,869
Chairman, President 1994 335,000 164,150 16,192 -- 27,563 27,800
and Chief Executive 1993 232,000 35,000 14,185 -- 30,555 38,600
Officer
James P. Sferra 1995 260,000 130,000 13,015 -- -- 24,666
Executive Vice President, 1994 250,000 122,500 13,190 -- 10,238 30,200
Manufacturing 1993 240,000 20,000 15,408 -- 11,340 22,400
Donald E. Whipple 1995 245,000 122,500 13,600 -- -- 26,020
President, LSI Lighting 1994 235,000 115,150 13,496 -- 9,608 32,700
Systems and Insight 1993 229,000 -- 15,540 -- 10,868 24,600
Graphic Systems
Peter F. Carey 1995 147,000 73,500 9,600 -- -- 14,617
President, SGI Integrated 1994 140,000 68,600 9,600 -- 13,703 16,300
Graphic Systems, Inc. 1993 130,000 67,600 8,400 -- 6,143 8,500
Ronald S. Stowell 1995 115,000 57,500 12,019 -- -- 18,598
Chief Financial Officer 1994 95,000 56,550 11,682 -- 8,663 9,000
and Treasurer 1993 49,600(4) 8,000 5,301 -- 6,300 --
<FN>
______________________
(1) Other Annual Compensation consists of automobile allowances for all executive officers as well as professional
fee allowances for Mr. Ready, Mr. Sferra, and Mr. Whipple.
(2) Represents stock options awarded under the Company's 1985 Stock Option Plan. The number of options granted
reflect the 3-for-2 stock split declared July 26, 1995 and effective August 4, 1995.
(3) All Other Compensation includes pension and profit-sharing plan contributions, and premiums paid on long-
term disability and life insurance policies, and payment of accrued vacation.
(4) Mr. Stowell was first employed as Chief Financial Officer of the Company in November 1992.
</TABLE>
STOCK OPTIONS
- -------------
No stock options were granted to the individuals named in the Summary
Compensation Table in fiscal 1995.
<TABLE>
<CAPTION>
Fiscal 1995 Option Exercises and Year-End Values
Number of Value of
Shares Unexercised Options Unexercised In-the-Money
Acquired on Value at Fiscal Year-End Options at Fiscal Year-End(1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------- -------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
Robert J. Ready -- -- 82,616 / 41,188 $ 783,603 / $394,489
James P. Sferra -- -- 39,389 / 15,200 $ 373,689 / $145,578
Donald E. Whipple 13,936 $105,085 25,060 / 14,491 $ 242,160 / $138,885
Peter F. Carey -- -- 11,221 / 14,925 $ 101,089 / $120,482
Ronald S. Stowell -- -- 5,315 / 9,648 $ 47,100 / $ 78,511
</TABLE>
-11-
<PAGE> 14
(1) In-the-Money Options are options for which the market value of the
underlying Common Share exceeds the exercise price. Calculation is
based upon the market value of the underlying securities at fiscal
year-end, minus the exercise price.
Executive officers are entitled to participate in the Company's Stock
Option Plan. Options granted to individual employees or directors are
determined by the Compensation Committee of the Board of Directors. A total of
450,000 shares are reserved for issuance under the new 1995 Stock Option Plan
if approved by shareholders (see Proposal 3).
CORPORATE PERFORMANCE GRAPH
- ---------------------------
The following graph compares the cumulative total shareholder return
on the Company's Common Shares during the five fiscal years ended June 30,
1995, with a cumulative total return on the Nasdaq Stock Market Index (U.S.
companies) and the Dow Jones Electrical Equipment Index. The comparison
assumes $100 was invested July 1, 1990 in the Company's common shares and in
each of the indexes presented, it assumes reinvestment of dividends.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
LSI Nasdaq Dow Jones
Industries Market Index Electrical
July 1 Inc. (U.S.) Equipment Index
------ ---------- ------------ ---------------
<S> <C> <C> <C>
1990 100 100 100
1991 46.59 105.89 105.20
1992 29.87 127.25 104.38
1993 44.24 159.99 119.82
1994 97.48 161.61 117.70
1995 191.98 215.33 147.11
</TABLE>
-12-
<PAGE> 15
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 1995.
The LSI Industries Inc. Compensation Committee annually establishes
salaries, bonuses and stock option awards for executive officers and key
management personnel. The Committee reviews the performance of its executive
officers on an individual basis and also reviews each executive's performance
in connection with the Company's overall performance. The Committee desires to
establish executive compensation that enhances the Company's overall
fundamental objective of providing long-term value for its shareholders and
employees. The Committee believes that the interests of management and
shareholders can be more closely aligned by providing executives with
competitive levels of compensation that will enable LSI Industries to attract
and retain executives with the highest qualifications by recognizing
exceptional individual performance and by tying executive pay to overall
corporate performance.
The Committee uses base salaries, incentive compensation arrangements
and stock options designed to tie a portion of the executive's compensation to
the stock market performance of LSI's Common Shares. This year the
Compensation Committee worked on a plan for the 1996 fiscal year and also
worked on a compensation plan for three years to coincide with the Company's
three year strategic plan.
BASE COMPENSATION
- -----------------
The Committee annually reviews the base salaries of the Company's
executive officers. The Committee individually reviews each executive's level
of responsibility, potential, and salary levels offered by competitors. The
executive's particular division of the Company is reviewed, and its
contribution to the overall results of the Company are assessed. The Committee
uses this information to determine the executive's base compensation level and
performance goals for the upcoming year.
The Committee applies a collective, subjective evaluation of the above
factors to determine the annual base compensation level of its executive
officers in light of the Company's performance and, in certain cases, its
various divisions. The Committee does not utilize a particular objective
formula as a means of establishing annual base compensation levels. Mr.
Ready's salary was established on the same basis. The Committee employed a
compensation expert who determined that the Company's compensation levels were
in the high range for its top executive officers and in the middle range for
its other executive officers. This compensation expert also assisted the
Compensation Committee in connection with the adoption of the new LSI
Industries Inc. 1995 Stock Option Plan (see Proposal 3) and the LSI Industries
Inc. 1995 Directors' Stock Option Plan (see Proposal 4). The Committee did not
compare the Company's executive compensation with the level of compensation
paid by companies in the Dow Jones Electrical Equipment Index, nor did it
attempt to correlate executive compensation levels with the Company's relative
performance as shown in the Corporate Performance Graph above.
INCENTIVE COMPENSATION
- ----------------------
The Committee made its incentive compensation awards for performance
during fiscal 1995 by examining net earnings for the year and determining that
a bonus pool of approximately $559,000 should be made available for bonuses to
executive officers. From the amount
-13-
<PAGE> 16
determined, the Committee allocated bonuses to various executive officers based
on the Committee's analysis of the performance of the particular individual and
his contribution to the success of the Company or the particular division for
which he was primarily responsible. Mr. Ready's bonus was handled in the same
manner as the other executive officers. This process resulted in the bonuses
shown in the Summary Compensation Table.
STOCK OPTION GRANTS
- -------------------
The shareholders of LSI Industries established a stock option plan to
provide a method of attracting, retaining and providing appropriate incentives
to key employees. The Committee is responsible for the administration of this
Plan both with respect to executive officers and all other employees. To that
end, the Committee determines which employees receive options, the time of
grant and the number of shares subject to the option. All option prices are
set at 100% of market value on the date of grant.
Compensation Committee
----------------------
Michael J. Burke
Allen L. Davis
John N. Taylor, Jr.
TRANSACTIONS WITH AFFILIATES
During fiscal 1994, the Company had a $145,000 advance outstanding to
Ronald S. Stowell, Chief Financial Officer, that was associated with his
relocation upon hiring. No interest was paid on this advance which was made in
April 1993 and paid in full in August 1993.
During fiscal 1995, the Company paid The Provident Bank approximately
$87,000 in interest, bank service fees, and Trust fees under arms-length
transactions. Allen L. Davis, Chairman of the Audit Committee, is President
and Chief Executive Officer of The Provident Bank.
Transactions with affiliates have in the past and will in the future
be on terms no less favorable to the Company than those which could be obtained
from unaffiliated third parties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
Michael J. Burke, who is Chairman of the Compensation Committee, is a
co-managing partner of Keating, Muething & Klekamp, Cincinnati, Ohio, a law
firm to whom the Company paid approximately $185,000 for legal services in
fiscal 1995.
-14-
<PAGE> 17
OTHER MATTERS
LSI Industries is not aware of any other matters to be presented at
the meeting other than those specified in the notice.
By order of the Board of Directors
/s/ Donald E. Whipple
Donald E. Whipple
Secretary
Dated: September 29, 1995
-15-
<PAGE> 18
LSI INDUSTRIES INC.
PROXY The undersigned hereby appoints ALLEN L. DAVIS, JAMES P.
FOR SFERRA, and DONALD E. WHIPPLE or any one of them, proxies
ANNUAL of the undersigned, each with the power of substitution, to
MEETING vote all Common Shares which the undersigned would be entitled
to vote at the Annual Meeting of Shareholders of LSI Industries
Inc. to be held on November 16, 1995 at 10:00 A.M. Eastern time
at the Company's headquarters located at 10000 Alliance Road,
Cincinnati, Ohio and any adjournment of such meeting on the
matters specified below and in their discretion with respect to
such other business as may properly come before the meeting or
any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. AUTHORITY TO ELECT AS CLASS A DIRECTORS THE THREE NOMINEES BELOW.
FOR ___ WITHHOLD AUTHORITY ___
MICHAEL J. BURKE, ROBERT J. READY, AND JOHN N. TAYLOR, JR.
WRITE THE NAME OF ANY NOMINEE(S) FOR
WHOM AUTHORITY TO VOTE IS WITHHELD____________________________________
2. RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS CERTIFIED
PUBLIC ACCOUNTANTS FOR FISCAL 1996.
FOR___ AGAINST ___ ABSTAIN ___
3. ADOPTION OF THE LSI INDUSTRIES INC. 1995 STOCK OPTION PLAN TO PROVIDE
450,000 COMMON SHARES (300,000 SHARES BEFORE GIVING EFFECT TO THE
THREE-FOR-TWO STOCK SPLIT) AS AVAILABLE FOR GRANT UNDER SUCH PLAN.
FOR___ AGAINST ___ ABSTAIN ___
4. ADOPTION OF THE LSI INDUSTRIES INC. 1995 DIRECTORS' STOCK OPTION PLAN
TO PROVIDE 75,000 COMMON SHARES (50,000 SHARES BEFORE GIVING EFFECT TO
THE THREE-FOR-TWO STOCK SPLIT) AS AVAILABLE FOR GRANT UNDER SUCH PLAN.
FOR___ AGAINST ___ ABSTAIN ___
5. AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE THE MAXIMUM
NUMBER OF COMMON SHARES WHICH THE CORPORATION IS AUTHORIZED TO HAVE
OUTSTANDING UP TO 30,000,000 SHARES.
FOR___ AGAINST ___ ABSTAIN ___
THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A
CONTRARY CHOICE IS SPECIFIED.
(CONTINUED ON OTHER SIDE)
<PAGE> 19
________________, 1995 ______________________________________________
______________________________________________
IMPORTANT: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON INDICATING, WHERE
PROPER, OFFICIAL POSITION OR
REPRESENTATIVE CAPACITY. IN THE CASE OF
JOINT HOLDERS, ALL SHOULD SIGN.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<PAGE> 1
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
<PAGE> 2
- 2 -
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
<PAGE> 3
- 3 -
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.
<PAGE> 4
- 4 -
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
<PAGE> 5
- 5 -
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:
<PAGE> 6
- 6 -
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
<PAGE> 7
- 7 -
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
<PAGE> 8
- 8 -
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.
<PAGE> 9
- 9 -
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.
<PAGE> 1
EXHIBIT 2
LSI INDUSTRIES INC.
1995 DIRECTORS' STOCK OPTION PLAN
The purpose of the 1995 Directors' Stock Option Plan is to advance the
interests of LSI Industries Inc. and its shareholders by affording non-employee
members of the Company's Board of Directors an opportunity to increase their
proprietary interest in the Company by the grant of options to them under the
terms set forth herein. The Company believes that this Plan will give an
incentive to these members of the Board to increase revenues and profits and
otherwise serve to align their interest with shareholders.
1. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective
May 2, 1995, having been adopted by the Board of Directors on such date,
subject to approval by the affirmative vote of the holders of the majority of
the shares of Common Stock of the Company voting on the issue at the next
Annual Shareholders' Meeting. All options granted prior to such approval are
conditioned upon such approval being received. If shareholder approval is not
received within twelve months of the Effective Date, options granted pursuant
to this Plan shall be null and void.
2. SHARES SUBJECT TO THE PLAN. The shares to be issued upon the
exercise of the options granted under the Plan shall be shares of Common Stock,
no par value, of the Company. Either treasury or authorized and unissued
shares of Common Stock, or both, as the Board of Directors shall from time to
time determine, may be so issued. Shares of Common Stock which are the subject
of any lapsed, expired or terminated options may be made available for
reoffering under the Plan.
Subject to the provisions of Section 4 hereof, the aggregate number of
shares of Common Stock for which options may be granted under the Plan shall be
50,000.
1. ADMINISTRATION. The Plan shall be administered by a committee
appointed in accordance with Article III, Section 6 of the Amended Code of
Regulations and consisting of three or more directors which directors may also
be eligible to participate in the Plan.
Subject to the express provisions of the Plan, the Committee shall
have the authority to establish the terms and conditions of such option
agreements, consistent with this Plan. Such agreements need not be uniform.
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4. ADJUSTMENTS TO COMMON STOCK AND OPTION PRICE.
4.1 In the event of changes in the outstanding Common
Stock of the Company as a result of stock dividends, split-ups,
recapitalizations, combinations or exchanges, the number and class of
shares of Common Stock authorized to be the subject of options under
this Plan and the number and class of shares of Common Stock and
Option Price for each option which is outstanding under this Plan
shall be correspondingly adjusted by the Committee.
4.2 The Committee shall make appropriate adjustments in
the Option Price to reflect any spin-off of assets, extraordinary
dividends or other distributions to shareholders.
4.3 In the event of the dissolution or liquidation of the
Company or any merger, consolidation, combination or other transaction
in which the Company is not the surviving corporation or in which the
outstanding shares of Common Stock of the Company are converted into
cash, other securities or other property, each outstanding option
issued hereunder shall 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.
5. ELIGIBLE DIRECTORS; GRANT OF OPTIONS. An Eligible Director
shall be each director of the Company, now serving as a director or elected
hereafter, who is not also an employee of the Company.
Each Eligible Director shall be granted an option to purchase 1,000
shares of Common Stock on the first business day after each Annual
Shareholders' Meeting. Such grant shall continue until the number of shares
provided for in this Plan in Section 2 are exhausted.
In recognition of their service to the Company to date, the following
directors shall also be granted options for the shares set forth opposite their
names on adoption of this Plan on May 2, 1995:
<TABLE>
<S> <C>
Michael J. Burke 10,000 shares
Allen L. Davis 10,000 shares
John N. Taylor 3,000 shares
</TABLE>
6. PRICE. The purchase price of the shares of Common Stock which
may be acquired pursuant to the exercise of any option granted pursuant to the
Plan shall be the last closing sale price reported immediately prior to the
date of grant ("Option Price").
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7. PERIOD OF OPTION. The term of each option shall be ten years
from the date of grant.
8. EXERCISE OF OPTIONS. An option may be exercised by an
Eligible Director as to all or part of the shares covered thereby by giving
written notice to the Company at its principal office, directed to the
attention of its Secretary, accompanied by payment of the Option Price in full
for shares being purchased. The payment of the Option Price shall be either in
cash or, subject to any conditions set forth in the option agreement, by
delivery of shares of Common Stock of the Company having a fair market value
equal to the purchase price on the date of exercise of the option, or by any
combination of cash and such shares. Payment may also be made by instruction
from the Optionee to withhold from the shares of Common Stock issuable upon
exercise of the option that number of shares of Common Stock which have a fair
market value, measured by the last closing sale price reported immediately
prior to the date of exercise, equal to the option price for the option or
portion thereof being exercised.
Unless there is in effect at the time of exercise a registration
statement under the Securities Act of 1933 permitting the resale to the public
of shares acquired under the Plan, the holder of the option shall, except to
the extent determined by the Committee that such is not required, (i) represent
and warrant in writing to the Company that the shares acquired are being
acquired for investment and not with a view to the distribution thereof, (ii)
acknowledge that the shares acquired may not be sold unless registered for sale
under said Act or pursuant to an exemption from such registration, and (iii)
agree that the certificates evidencing such shares shall bear a legend to the
effect of clauses (i) and (ii).
9. NONTRANSFERABILITY OF OPTIONS. No option granted under the
Plan shall be transferable otherwise than by will or by the laws of descent and
distribution, and an option may be exercised during the lifetime of the holder
only by him.
10. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee shall
cease to be an Eligible Director on account of disability or death, an option
theretofore granted to such Eligible Director may be exercised by the optionee
or, in the case of death, by the legal representative of the estate of the
deceased option holder or by the person or persons to whom such Eligible
Director's rights under the option shall pass by will or the laws of descent
and distribution, at any time within one year from the date the optionee ceased
to be an Eligible Director but only during the option period. "Disability"
shall have the meaning ascribed to it in Section 105(d)(4) of the Internal
Revenue Code of 1986, as amended.
<PAGE> 4
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11. RIGHTS AS A STOCKHOLDER. The holder of an option shall not
have of the rights of a stockholder of the Company with respect to the shares
subject to an option until a certificate or certificates for such shares shall
have been issued upon the exercise of the option.
12. AMENDMENT AND TERMINATION.
12.1 This Plan shall terminate ten years after its
effective date and thereafter no options shall be granted hereunder.
All options outstanding at the time of termination of the Plan shall
continue in full force and effect in accordance with and subject to
the terms and conditions of the Plan. The Board of Directors of the
Company at any time prior to that date may terminate the Plan or make
such amendments to it as the Board of Directors shall deem advisable;
provided, however, that except as provided in Section 4, the Board of
Directors may not, without shareholder approval, increase the maximum
number of shares as to which options may be granted under the Plan,
change the class of persons eligible to receive options under the Plan
or change the number of options to be granted to each eligible person
under the Plan. No termination or amendment of the Plan may, without
the consent of the holder of an option then existing, terminate his
option or materially and adversely affect his rights under such
option.
12.2 This Plan may not be amended more than once every six
months other than to conform with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules
thereunder.
13. AUTOMATIC TERMINATION OF OPTION. Notwithstanding anything
contained herein to the contrary, if at any time a holder of an option granted
under this Plan becomes an employee, officer or director of or a consultant to
an entity which the Committee determines is a competitor of the Company, such
option shall automatically terminate as of the date such conflicting
relationship was established.
