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EXHIBIT A
SHOPSMITH, INC.
1997 STOCK OPTION PLAN
Section 1. Purposes.
The purposes of the 1997 Stock Option Plan (the “Plan”) are (i) to provide incentives to
officers and other key employees of the Company upon whose judgment, initiative and efforts
the long-term growth and success of the Company are largely dependent; (ii) to assist the
Company in attracting and retaining key employees of proven ability; and (iii) to increase the
identity of interests of such key employees with those of the Company’s shareholders by
providing such employees options to acquire Shares of the Company, Stock Appreciation Rights
and Limited Rights.
Section 2. Definitions.
(a) “Acquisition Transaction” means (i) the merger or consolidation of the Company
into or with another corporation, if the Company (or another corporation controlled by the
Company immediately prior to such transaction) will not be the surviving corporation or will
become a subsidiary of another corporation not controlled by the Company immediately prior to
such transaction, (ii) the sale of all or substantially all of the assets of the Company, or (iii) the
liquidation of the Company.
(b) “Affiliate” means a person, corporation or other entity controlling, controlled by
or under common control with the Company.
(c) “Board” means the Board of Directors of the Company.
(d) “Code” means the Internal Revenue Code of 1986, as amended.
(e) “Committee” means the Committee referred to in Section 4.
(f) “Company” means Shopsmith, Inc.; when used in the Plan with reference to
employment, “Company” shall include any Subsidiary of the Company.
(g) “Designation of Beneficiary” means the written designation by the Holder of the
person or entity to receive the Holder’s options and any related Stock Appreciation Rights and
Limited Rights upon the Holder’s death, which designation shall be in such form as prescribed
by the Committee and filed with the Committee or an officer designated by the Committee.
(h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(i) “Fair Market Value” means the fair market value of a Share as determined by the
Committee, based on quoted market prices (if any).
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(j) “Family Members” means children, stepchildren, grandchildren, parents,
stepparents, grandparents, spouse, siblings (including half-brothers and sisters), nephews, nieces
and in-laws.
(k) “Grantee” means the person who received the option and any related Stock
Appreciation Right or Limited Right from the Company.
(l) “Holder” means the person(s) or entity who owns the option and any related
Stock Appreciation Right or Limited Right, whether the Grantee, Transferee, heir or other
beneficiary.
(m) “Incentive Stock Option” means an option granted under the Plan or any other
plan of the Company that qualifies as an incentive stock option under Section 422 of the Code.
(n) “Limited Right” means the right defined in Section 11(a).
(o) “Nonstatutory Option” means an option granted under the Plan that by its term
does not qualify as an Incentive Stock Option.
(p) “Qualified Domestic Relations Order” means a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
(q) “Share” or “Shares” means the Common Shares, without par value, of the
Company.
(r) “Stock Appreciation Right” means the right defined in Section 10(a).
(s) “Subsidiary” means any corporation or other entity more than 50% of the voting
interests of which are owned or controlled, directly or indirectly, by the Company.
(t) “Tax Date” means the date as of which the amount of a withholding tax payment
with respect to the exercise of an option is calculated.
(u) “Tender Offer” means a tender offer or a request or invitation for tenders or an
exchange offer subject to regulation under Section 14(d) of the Exchange Act and the rules and
regulations thereunder, as the same may be amended, modified or superceded from time to time.
(v) “Transferee” means the person who received the option and any related Stock
Appreciation Right or Limited Right from the Grantee during the Grantee’s lifetime in
accordance with the Plan.
Section 3. Shares Subject to the Plan.
The maximum number of Shares that may be issued under the Plan is 250,000, subject to
the adjustment provided in Section 13. Such Shares may be either authorized and unissued or
treasury Shares. Any Shares subject to an option that for any reason has terminated or expired or
has been canceled prior to being fully exercised may again be subject to option under the Plan.
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Shares covered by an option as to which option rights have terminated by reason of the exercise
of a Stock Appreciation Right or Limited Right, and Shares that have been surrendered to, or
withheld by, the Company to satisfy all or a portion of the option price or a tax withholding
obligation, shall not be available for the grant of options under the Plan.
Section 4. Administration.
The Plan shall be administered by a Committee of the Board. The Committee shall have
and exercise all the power and authority granted to it under the Plan. Subject to the provisions of
the Plan, the Committee shall in its sole discretion determine the persons from the class
described in Section 5(a) to whom, and the times at which, options shall be granted; whether and
to what extent any option that is granted shall be accompanied by Stock Appreciation Rights or
and/or Limited Rights; the number of Shares to be subject to each option and each Stock
Appreciation Right or Limited Right; the option price per Share; and the duration and other
terms of each option. The Committee shall also interpret the Plan, prescribe, amend and rescind
rules and regulations relating to the Plan, and make all other determinations necessary or
advisable for the administration of the Plan, and such determinations shall be conclusive. A
majority of the Committee shall constitute a quorum, and the acts of a majority of the members
present at a meeting at which a quorum is present, or acts reduced to or approved in writing by
all members of the Committee, shall be acts of the Committee.
Section 5. Eligibility.
(a) Grant of Options. The Committee may grant one or more Incentive Stock
Options or Nonstatutory Options to any officer or other key employee of the Company.
(b) Grant of Stock Appreciation Rights and Limited Rights. Any option or portion
thereof granted under the Plan may include a Stock Appreciation Right and/or Limited Right.
Such right may be granted at the time the option is granted, or it may be granted in respect of an
outstanding option at any time prior to its exercise, cancellation, termination or expiration.
Section 6. Options and Option Terms.
(a) Option Agreement. The terms of each option granted under the Plan, including
designation as either an Incentive Stock Option or a Nonstatutory Option, shall be set forth in a
written stock option agreement approved by the Committee.(b) Terms of All Options. The following terms and provisions shall apply to all
options granted under the Plan: (1) Except as set forth in Section 7(b), no option may be granted under the
Plan at a purchase price per Share (the “Option Price”) that is less than the Fair Market
Value of a Share on the date the option is granted.
(2) No option may be exercised more than ten years after the date of grant of
the option.
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(3) At the time an option is granted, the Committee may provide that the
option may be exercised in full or in part only after the passage of a specified period or
periods of time following the date of grant or only if specified conditions have been
satisfied.
(4) Except as provided in Sections 6(b)(5) and 6(b)(6), an option may be
exercised only if the Grantee has been continuously employed by the Company since the
date of grant of the option. Whether authorized leave of absence or absence for military
or governmental service shall constitute a termination of employment shall be determined
by the Committee.
(5) At the time an option is granted, or at such other time as the Committee
may determine, the Committee may provide that, if the Grantee of the option ceases to be
employed by the Company for any reason (including retirement or disability) other than
death, the option will continue to be exercisable by the Holder (to the extent it was
exercisable on the date the Grantee ceased to be employed) for such additional period
(not to exceed the remaining term of such option) after such termination of employment
as the Committee may provide.
(6) At the time an option is granted, or at such other time as the Committee
may determine, the Committee may provide that, if the Grantee of the option dies while
employed by the Company or while the Holder is entitled to the benefits of any additional
exercise period established by the Committee with respect to such option in accordance
with Section 6(b)(5), then the option will continue to be exercisable (to the extent it was
exercisable on the date of death) by the person or persons (including the Holder’s estate)
to whom the Holder’s rights with respect to such option have passed by will or by the
laws of descent and distribution or, if permitted by Section 12(a), the Holder’s designated
beneficiary, for such additional period after death (not to exceed the remaining term of
such option) as the Committee may provide.
(7) In the event any Acquisition Transaction is authorized or approved by
either the Board or the shareholders of the Company, the Committee shall have the
authority in its sole discretion to cancel, effective upon not less than 30 days’ notice, any
option granted under the Plan. Promptly after such cancellation, the Company shall pay
in cash to the Holder of each canceled option an amount equal to the excess of the
aggregate Fair Market Value on the effective date of such cancellation of the Shares then
subject to the option (whether or not the option is then fully exercisable) over the
aggregate Option Price of such Shares.
(8) At the time an option is granted, the Committee may provide for any
restrictions or limitations on the exercise of the option and/or on the transferability of the
Shares issuable upon the exercise of such option, or specify other terms, conditions and
restrictions in addition to those set forth herein, as it may deem appropriate.
(9) Subject to the ten-year limitation set forth in Section 6(b)(2), the
Committee may waive or modify at any time, either before or after the granting of an
option, any condition, limitation or restriction with respect to the exercise of such option
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imposed by or pursuant to this Section 6 or in Section 7 in such circumstances as the
Committee may, in its discretion, deem appropriate; provided, however, that any such
waiver or modification with respect to an outstanding option shall be subject to the same
limitations applicable to amendments to outstanding options, as set forth in Section 6(b)(10).(10) Subject to the terms and provisions of the Plan, the Committee may amend
any outstanding option; provided, however, that (i) no such amendment may reduce the
Option Price of the option (except to set forth an adjustment in the Option Price made
pursuant to Section 13) or extend the maximum term during which the option, if fully
vested, may be exercised, and (ii) if the amendment would adversely affect the rights of
the Holder of the option, the consent of such Holder to such amendment must be
obtained.
Section 7. Additional Provisions Applicable to Incentive Stock Options.
(a) The following additional terms and provisions shall apply to all Incentive Stock
Options granted under the Plan, notwithstanding any provision of Section 6(b) to the contrary:
(1) No Incentive Stock Option shall be granted to an officer or other employee
who possesses directly or indirectly (as provided in Section 424(d) of the Code) at the
time of grant more than 10% of the voting power of all classes of capital shares of the
Company, any Subsidiary or any parent of the Company unless (i) the Option Price is at
least 110% of the Fair Market Value of the Shares subject to the Incentive Stock Option
on the date the Incentive Stock Option is granted, and (ii) the Incentive Stock Option is
not exercisable after the expiration of five years from the date of grant.
(2) The aggregate Fair Market Value (determined as of the time an Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock Options are
exercisable for the first time by any individual in any calendar year shall not exceed
$100,000, or such other maximum amount permitted by the Code.
(3) No Incentive Stock Option may be granted after June 10, 2007.
(b) The Committee may grant Incentive Stock Options and/or Nonstatutory Options
from time to time to employees of the Company who formerly were employed by a corporation
with which the Company or a Subsidiary entered into a transaction described in Section 424(a)
of the Code in substitution for Incentive Stock Options or Nonstatutory Options, as the case may
be, held by such persons. Any options so granted shall be on such terms and conditions as may
be necessary for the grant to be treated as a substitution under Section 424(a) of the Code. To the
extent contemplated by Section 424(a) of the Code, any options so granted need not comply with
the restrictions set forth in Section 6(b)(1) and 7(a)(1) above.
Section 8. Procedure for Exercise of Options; Payment.
An option granted under the Plan may be exercised by the Holder of an option giving
written notice of exercise to the Committee or to an officer of the Company designated by the
Committee. The Option Price for the Shares purchased shall be paid in full at the time such
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notice is given. An option shall be deemed exercised on the date the Committee receives written
notice of exercise, together with full payment for the Shares purchased. The Option Price shall
be paid to the Company either (i) in cash, (ii) by delivery to the Company of Shares already-
owned by the optionee, (iii) by the retention by the Company of Shares to be issued upon the
exercise of such option, or (iv) any combination of cash, already-owned Shares and/or retained
Shares. The Committee may, however, at any time and in its discretion, adopt guidelines limiting
or restricting the use of already-owned Shares and retained Shares to pay all or any portion of the
Option Price. To the extent that payment is being made by retention by the Company of Shares
to be issued, payment shall be deemed to have been made at the time the Holder gives written
instructions to the Company to so retain Shares. In the event already-owned Shares or retained
Shares are used to pay all or a portion of the Option Price, the amount credited for payment shall
be the Fair Market Value of the already-owned Shares or retained Shares on the date the option
is exercised.
Section 9. Tax Withholding.
With the approval of the Committee and subject to Section 12(b), the Grantee of an
option may elect to have the Company retain from the Shares to be issued upon the exercise of
such option a number of Shares, or may deliver to the Company a number of already-owned
Shares, having a Fair Market Value on the Tax Date equal to all or any part of the federal, state
and local withholding tax payments (whether mandatory or permissive) to be made on behalf of
the Grantee with respect to the exercise of the option (up to a maximum amount determined by
the Grantee’s top marginal tax rate) in lieu of making such payments in cash. The Committee
may establish from time to time rules or limitations with respect to the exercise of the rights
described in this paragraph.
Section 10. Stock Appreciation Rights.
(a) Definition. “Stock Appreciation Right” means the right of a Holder to
surrender his or her right to purchase all or any portion of the Shares that the Holder is then
eligible to purchase under the related option (such Shares being herein referred to as
“Unpurchased Shares”) and to receive from the Company, without payment to the Company,
cash equal to the excess of the Fair Market Value of the Unpurchased Shares on the date the
Holder exercises his or her option for this purpose over the aggregate Option Price of the
Unpurchased Shares.
(b) Restrictions on Exercise. A Stock Appreciation Right shall be exercisable
only at such times as the related option is exercisable (and to the extent that the related option i s
then exercisable) and only at such times that the Fair Market Value of a Share exceeds the
Option Price under the related option.
(c) Cancellation. The right of a Holder to exercise a Stock Appreciation Right shall
be canceled if and to the extent that the related option or any related Limited Right is exerc ised.
The right of a Holder to exercise an option or any related Limited Right shall be canceled if and
to the extent that Shares covered by such option are used to calculate cash received upon the
exercise of a related Stock Appreciation Right.
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(d) Procedure for Exercise. A Holder shall exercise a Stock Appreciation Right
by giving written notice of such exercise, specifying the number of Shares as to which the right
is exercised, to the Committee or to an officer of the Company designated by the Committee.
Provided the exercise is valid and in accordance with the terms of the Plan, the Company shall
promptly pay to the Holder the cash to which he or she is entitled.
Section 11. Limited Rights.
(a) Definition. “Limited Right” means the right of a Holder, upon the happening
of an event permitting exercise described in Section 11(c), to surrender his or her right to
purchase all or any portion of the Shares that the Holder is then eligible to purchase under the
related option and to receive from the Company a cash payment based upon the relevant exercise
value set forth in Section 11(d).(b) Grant of Limited Rights. The Committee may grant Limited Rights with
respect to any option granted under the Plan either at the time the option is granted or at any time
thereafter prior to the exercise, cancellation, termination or expiration of such option. The
number of Limited Rights covered by any such grant shall not exceed, but may be less than, the
number of Shares covered by the related option. The term of any Limited Right shall be the same
as the term of the option to which it relates. The right of a Holder to exercise a Limited Right
shall be canceled if and to the extent that the related option is exercised or canceled, and the right
of a Holder to exercise an option and any related Stock Appreciation Right shall be canceled if
and to the extent a related Limited Right is exercised.(c) Events Permitting Exercise of Limited Rights. A Limited Right shall be
exercisable only if and to the extent that the related option is exercisable; provided, however, that
notwithstanding the foregoing, a Limited Right related to an Incentive Stock Option shall not be
exercisable unless the Fair Market Value of a Share on the date of exercise exceeds the Option
Price of a Share subject to the related option. A Limited Right that is otherwise exercisable may
be exercised only during the following periods: (1) during a period of 30 days following the date of expiration of a Tender
Offer (other than an offer by the Company) for Shares, if the offeror acquires Shares
pursuant to such Tender Offer;
(2) during a period of 30 days following the date of approval by the
shareholders of the Company of a definitive agreement to become a party to an
Acquisition Transaction;
(3) during a period of 30 days following the date upon which the Company is
provided a copy of a Schedule 13D (filed pursuant to Section 13(d) of the Exchange Act)
indicating that any “person” or “group” (as such terms are defined in Section 13(d)(3) of
such act) other than John R. Folkerth or a member of his family or an Affiliate of Mr.
Folkerth or his family, has become the holder of 25% or more of the outstanding voting
shares of the Company; and
(4) during a period of 30 days following a change in the composition of the
Board of Directors such that individuals who were members of the Board of Directors on
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the date one year prior to such change (or who were elected, or were nominated for
election by the Company’s shareholders, with the affirmative vote of at least two-thirds
of the directors then still in office who were directors at the beginning of such one-year
period) no longer constitute a majority of the Board of Directors (such a change in
composition is hereinafter referred to as a “Change in Composition of the Board”).
(d) Exercise of Limited Rights. Upon the exercise of a Limited Right, the Holder
thereof shall receive from the Company a cash payment equal to the excess of: (i) the aggregate
“exercise value” on the date of exercise (determined as provided below) of that number of Shares
as is equal to the number of Limited Rights being exercised over (ii) the aggregate Option Price
under the related option of that number of Shares as is equal to the number of Limited Rights
being exercised. A Holder shall exercise a Limited Right by giving written notice of such
exercise to the Committee or its designee. A Limited Right shall be deemed exercised on the date
the Committee or its designee receives such written notice. Provided the exercise is valid and in
accordance with the terms of the Plan, the Company shall promptly pay to the Holder the cash to
which he or she is entitled.
The “exercise value” of a Limited Right on the date of exercise shall be:
(1) in the case of an exercise during a period described in Section 11(c)(1), the
highest price per share paid pursuant to any Tender Offer that is in effect any time during
the 60-day period prior to the date that the Limited Right is exercised;
(2) in the case of an exercise during a period described in Section 11(c)(2), the
greater of: (i) the highest sale price of a Share during the 30-day period prior to the date
of shareholder approval of the Acquisition Transaction, as reported on the trading system
on which the Shares are then traded, or (ii) the highest fixed or formula per share price
payable pursuant to the Acquisition Transaction (if determinable on the date of exercise);
(3) in the case of an exercise during a period described in Section 11(c)(3), the
greater of: (i) the highest sale price of a Share during the 30-day period prior to the date
the Company is provided with a copy of the Schedule 13D, as reported on the trading
system on which the Shares are then traded, or (ii) the highest acquisition price of a Share
shown on such Schedule 13D; and
(4) in the case of an exercise during a period described in Section 11(c)(4), the
highest sale price of a share during the 30-day period prior to the date of the Change in
Composition of the Board, as reported on the trading system on which the Shares are then
traded.
Notwithstanding the foregoing, in no event shall the exercise value of a Limited Right
issued in connection with an Incentive Stock Option exceed the maximum permissible exercise
value for such a right under the Code and the regulations and interpretations issued pursuant
thereto. Any securities or property that form part or all of the consideration paid for Shares
pursuant to a Tender Offer or Acquisition Transaction shall be valued at the higher of (1) the
valuation placed on such securities or property by the person making such Tender Offer or the
other party to such Acquisition Transaction, or (2) the value placed on such securities or property
.
by the Committee. In the event that the Shares are not traded on any trading system, any
determination of exercise value that is to be made with reference to a trading system shall instead
be made with reference to the Fair Market Value of a Share. Section 12. Non-Transferability.
(a) General Rule. Except as otherwise provided in this Section 12, options, Stock
Appreciation Rights and Limited Rights may not be sold, pledged, assigned, hypothecated or
transferred other than by Designation of Beneficiary, or if none, by will or the laws of descent
and distribution upon the Holder’s death, and may be exercised during the lifetime of the Grantee
only by such Grantee or by his or her guardian or legal representative. All grants under the Plan,
with the exception of Incentive Stock Options and any Stock Appreciation Rights or Limited
Rights relating thereto, may be transferred pursuant to a Qualified Domestic Relations Order.(b) Permitted Transfers. Subject to this Section 12(b) and except as the Committee
may otherwise prescribe from time to time, the Committee may act to permit the transfer or
assignment of an option (together with any related Stock Appreciation Right or Limited Right)
by a Grantee for no consideration to the Grantee’s Family Members, trusts for the sole benefit of
the Grantee’s Family Members or partnerships whose only partners are Family Members of the
Grantee; provided, however, that any such permitted transfer or assignment shall not apply to an
option that is an Incentive Stock Option (but only if nontransferability is necessary in order for
the option to qualify as an Incentive Stock Option) and to any Stock Appreciation Rights or
Limited Rights related to an Incentive Stock Option. Any permitted transfer or assignment of an
option and any Stock Appreciation Right or Limited Right related thereto shall only be effective
upon receipt by the Committee or an officer of the Company designated by the Committee of an
instrument acceptable in form and substance to the Committee that effects the transfer or
assignment and that contains an agreement by the Transferee to accept and comply with all the
terms and conditions of the stock option award and the Plan. A Transferee shall possess all the
same rights and obligations as the Grantee under the Plan, except that the Transferee can
subsequently transfer such option and any related Stock Appreciation Rights or Limited Rights
only by (i) designation of beneficiary or, if none, will or the laws of descent and distribution, or
(ii) a transfer to a beneficiary or partner if the Transferee is a trust or partnership, respectively.
Unless the Committee otherwise prescribes, upon the exercise of a Nonstatutory Option
or its related Stock Appreciation Rights or Limited Rights by a Transferee, when and as
permitted in accordance with this Section 12(b), the Grantee is required to satisfy the applicable
withholding tax obligations by paying cash to the Company with respect to any income
recognized by the Grantee upon the exercise of such option, Stock Appreciation Right or Limited
Right by the Transferee. If the Grantee does not satisfy the applicable withholding tax
obligations on the exercise date of the option or related Stock Appreciation Right or Limited
Right, the Company shall, in the case of the exercise of an option, retain from the Shares to be
issued to the Transferee upon the exercise of the option a number of Shares having a Fair Market
Value on the Tax Date equal to the mandatory withholding tax payable by the Grantee or, in the
case of the exercise of a Stock Appreciation Right or Limited Right, deduct from the cash to be
delivered to the Transferee such amount as is equal to the mandatory withholding taxes payable
by the Grantee.
Section 13. Adjustments Upon Changes in Capitalization.
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In the event of a change in outstanding Shares by reason of a Share dividend,
recapitalization, merger, consolidation, split-up, combination or exchange of shares, or the like,
the maximum number of Shares subject to option during the existence of the Plan, the number of
Shares subject to each outstanding option and any related Stock Appreciation Right or Limited
Right, and the Option Price of each outstanding option shall be appropriately adjusted by the
Committee, whose determination in each case shall be conclusive.
Section 14. Conditions Upon Granting of Options, Stock Appreciation Rights and Limited Rights
and Issuance of Shares.
No option, Stock Appreciation Right or Limited Right shall be granted and Shares shall
not be issued upon the exercise of an option unless the grant or the issuance, as the case may be,
shall comply with all relevant provisions of state and federal law, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or trading system upon which the Shares
may then be listed or traded.
Section 15. Amendment and Termination of Plan.
(a) Amendment. The Board may from time to time amend the Plan in such respects
as the Board may deem advisable except that, other than with the approval of the shareholders of
the Company:
(1) the maximum number of Shares that may be optioned under the Plan
cannot be increased except in accordance with Section 13;
(2) the class of employees eligible for the grant of options may not be
changed;
(3) except as provided in Section 7(b), no option may be granted under the
Plan at an Option Price that is less than the Fair Market Value of a Share on the date the
option is granted; and
(4) no option may be granted that is exercisable more than ten years after the
date of grant of the option.
(b) Termination. The Board may at any time terminate the Plan.
(c) Effect of Termination. Any termination of the Plan shall not adversely affect any
option, Stock Appreciation Right or Limited Right previously granted and such option, Stock
Appreciation Right or Limited Right shall remain in full force and effect as if the Plan had not
been terminated.
Section 16. Notices.
Each notice relating to the Plan shall be in writing and delivered in person or by first
class mail (which may, but need not, be certified or registered mail) to the proper address. Each
notice shall be deemed to have been given on the date of actual receipt. Each notice to the
.
Company or the Committee shall be addressed as follows: Stock Option Committee, c/o
Corporate Treasurer, Shopsmith, Inc., 6530 Poe Avenue, Dayton, Ohio 45414-2591. Each notice
to a Holder of an option shall be addressed to such Holder at the Holder’s address shown on the
records of the Company. Anyone to whom a notice may be given under the Plan may designate a
new address by written notice to the other party to that effect.
Section 17. Employment.
Neither the Plan nor the grant or award of any option, Stock Appreciation Right or
Limited Right under the Plan shall confer upon any employee the right to continued employment
with the Company or affect in any way the right of the Company to terminate the employment of
an employee at any time and for any reason.
Section 18. Savings Provisions.
With respect to persons subject to Section 16 of the Exchange Act, transactions under the
Plan are intended to comply with all applicable conditions of Rules 16b-3 or any successor rule
promulgated under the Exchange Act. To the extent any provision of the Plan or action by the
Board or the Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board or the Committee.
Section 19. Shareholder Approval.
The Plan shall become effective upon its approval by the affirmative vote of the holders
of a majority of the outstanding Shares. Prior to the time such approval is obtained, the
Committee may grant options under the Plan so long as (i) no such option will become
exercisable prior to such shareholder approval, and (ii) all such options will terminate if such
shareholder approval is not obtained within one year after the date of the grant.
Section 20. Governing Law.
This Plan shall be governed by and construed in accordance with Ohio law.
Shopsmith, Inc. 6/24/97
