-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PzUa9UrgBApo4sqRnK3YDUzB5GussAuZYB5e8FypL0SMfCNXC3khhYZTG+sm0uzm qk4eHi9EmbVV8NdPCLEs1A== 0000802851-97-000014.txt : 19970806 0000802851-97-000014.hdr.sgml : 19970806 ACCESSION NUMBER: 0000802851-97-000014 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19970804 EFFECTIVENESS DATE: 19970804 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOGIC DEVICES INC CENTRAL INDEX KEY: 0000802851 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 942893789 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-32819 FILM NUMBER: 97651201 BUSINESS ADDRESS: STREET 1: 1320 ORLEANS DRE CITY: SUNNYVALE STATE: CA ZIP: 94089 BUSINESS PHONE: 4087373300 MAIL ADDRESS: STREET 1: 628 EAST EVELYN AVE CITY: SUNNYVALE STATE: CA ZIP: 94086 S-8 1 As filed with the Securities and Exchange Commission on August , 1997 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 LOGIC DEVICES INCORPORATED (Exact name of Company as specified in its charter) CALIFORNIA 94-2893789 (State or other jurisdiction of incor- (I.R.S. Employer poration or organization) Identification No.) 1320 ORLEANS DRIVE SUNNYVALE, CALIFORNIA 94089 (Address of principal executive offices) LOGIC DEVICES INCORPORATED 1996 STOCK INCENTIVE PLAN (Full title of the plan) William J. Volz, President Logic Devices Incorporated 1320 Orleans Drive Sunnyvale, California 94089 (Name and address of agent for service) (408) 542-5400 (Telephone number, including area code, of agent for service) WITH COPIES TO: DAVID R. SELMER, ESQ. BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG 333 WEST WACKER DRIVE, SUITE 2700 CHICAGO, ILLINOIS 60606 (312) 984-3100 CALCULATION OF REGISTRATION FEE Proposed Proposed Title of Maximum Maximum Securities Offering Aggregate Amount of to be Amount to be Price Offering Registration Registered Register(1) per Share(2) Price(1)(2) Fee(2) Common Stock, no par value 600,000 $ 2 1/16 $ 2 1/16 $ 375.00 (1) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the "Securities Act"), this Registration Statement also registers such indeterminate number of additional shares as may be issuable under the Logic Devices Incorporated 1996 Stock Incentive Plan (the "Plan") in connection with share splits, share dividends or similar transactions. (2) Estimated pursuant to Rule 457(h) under the Securities Act, solely for the purpose of calculating the registration fee, based on the average of the bid and asked prices for the Company's common stock as reported within five business days prior to the date of this filing. PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS The document(s) containing the information specified in Part I of Form S-8 will be sent or given to participants in the Logic Devices Incorporated 1996 Stock Incentive Plan (the "Plan") as specified by Rule 428(b)(1) promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). Such document(s) are not being filed with the Commission, but constitute (along with the documents incorporated by reference into the Registration Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the requirements of Section 10(a) of the Act. I-1 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following documents previously or concurrently filed by Logic Devices Incorporated (the "Company") with the Commission are hereby incorporated by reference into this Registration Statement: (a) The Company's Annual Report on Form 10-K (the "Annual Report") filed by the Company (SEC File No. 0-17187) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the Commission on April 15, 1997. (b) The Company's Amendment to the Annual Report on Form 10-K/A (the "Amendment to the Annual Report") filed by the Company (SEC File No. 0- 17187) under the Exchange Act, with the Commission on April 29, 1997. (c) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Annual Report referred to in (a) above. All documents subsequently filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed incorporated by reference into this Registration Statement and to be a part thereof from the date of the filing of such documents. Any statement contained in the documents incorporated, or deemed to be incorporated, by reference herein or therein shall be deemed to be modified or superseded for purposes of this Registration Statement and the prospectus which is a part hereof (the "Prospectus") to the extent that a statement contained herein or therein or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein or therein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement and the Prospectus. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company's Restated Articles of Incorporation and Bylaws require the Company to indemnify officers and directors of the Company to the full extent permitted by Section 317 of the California General Corporation Law, as amended. Section 317 of the California General Corporation Law, as amended, makes provisions for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable. II-1 ITEM 8. EXHIBITS. See the Exhibit Index following the signature page in this Registration Statement, which Exhibit Index is incorporated herein by reference. ITEM 9. UNDERTAKINGS. (a) The undersigned Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to the Registration Statement to: (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any facts or events arising after the effective date of the Registration Statement which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement, provided however, that provisions (i) and (ii) of this undertaking are inapplicable if the information to be filed thereunder is contained in periodic reports filed by the Company pursuant to Sections 13 or 15(d) of the Exchange Act and incorporated by reference into the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Company hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Company's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provision, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the Company of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES THE COMPANY. Pursuant to the requirements of the Securities Act, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on July 31, 1997. LOGIC DEVICES INCORPORATED By: /S/ WILLIAM J. VOLZ William J. Volz President By: /S/ TODD J. ASHFORD Todd J. Ashford Chief Financial Officer and Secretary POWER OF ATTORNEY Know all men by these presents, that each person whose signature appears below constitutes and appoints William J. Volz and Todd J. Ashford, and each of them, his true and lawful attorney-in-fact and agent, each with full power of substitution and re-substitution, for them and in their name, place and stead, in any and all capacities to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by each of the following persons in the capacities indicated on the dates indicated below on July 31, 1997. SIGNATURE TITLE /S/ WILLIAM J. VOLZ President and Director (Principal Executive William J. Volz Officer) /S/ TODD J. ASHFORD Chief Financial Officer and Secretary (Principal Financial and Accounting Todd J. Ashford Officer) /S/ HOWARD L. FARKAS Chairman of the Board Howard L. Farkas /S/ BURTON W. KANTER Director Burton w. Kanter /S/ ALBERT MORRISON, JR. Director Albert Morrison, Jr. /S/ BRUCE B. LUSIGNAN Director Bruce B. Lusignan II-3 LOGIC DEVICES INCORPORATED EXHIBIT INDEX TO FORM S-8 REGISTRATION STATEMENT Exhibit Incorporated Filed Page No. Description Herein by Reference To Herewith No. 4.1 Company's Common (incorporated by reference to Stock Exhibit 3.1 of a Registration Statement on Form S-18 as filed with SEC on August 23, 1988, SEC File No. 33-23763-LA) 5.1 Opinion of Barack Ferrazzano Kirschbaum X II-5 Perlman & Nagelberg 23.1 Consent of Meredith, Cardozo and Lanz LLP X II-6 24.1 Power of Attorney Included on Signature Page to the Registration Statement 99.1 Logic Devices Incorporated 1996 Stock Incentive Plan X II-7 II-4 EXHIBIT 5.1 July 17, 1997 Logic Devices Incorporated 1320 Orleans Drive Sunnyvale, California 94089 Ladies and Gentlemen: We have acted as counsel to Logic Devices Incorporated (the "Corporation") in connection with the preparation of a Registration Statement on Form S-8 (the "Registration Statement") to be filed on or about July 31, 1997 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to 600,000 shares (the "Securities") of common stock, no par value, of the Corporation which may be issued after the effectiveness of the Registration Statement from time to time pursuant to the Logic Devices Incorporated 1996 Stock Incentive Plan (the "Plan"). We have examined the Plan and the originals or photostatic or certified copies of such records of the Corporation, certificates of officers of the Corporation and of public officials and such other documents as we have deemed relevant and necessary as the basis for the opinion set forth below. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as photostatic or certified copies and the authenticity of the originals of such copies. We have also made inquiries of officers and employees of the Corporation and of such others as deemed necessary for purposes of this opinion. Based upon our examination and inquiries referred to above and subject to the assumptions stated, we are of the opinion that when options to purchase the Securities have been duly authorized by the administrators of the Plan and the board of directors of the Corporation, and duly executed, authenticated, issued and delivered by the Corporation, when the Registration Statement, as it may be amended, has become effective under the Securities Act, when there has been compliance with applicable securities or blue sky laws of various jurisdictions, and when the Securities authorized have been duly executed, authenticated, issued and delivered against payment therefor in accordance with the terms of the Plan, with the terms of the particular options being exercised, and with the administrative procedures duly required by the administrators of the Plan, then subject to the final terms of the Securities being in compliance with then applicable law, the Securities will be legally issued, fully paid and non-assessable. While we have reviewed the California General Corporation Law, we call your attention to the fact that our firm only requires lawyers to be qualified to practice law in the State of Illinois and, in rendering the foregoing opinion, we assume such statute will be construed and interpreted in a fashion comparable to that of the Illinois Business Corporation Act. We consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. Very truly yours, BARACK FERRAZZANO KIRSCHBAUM PERLMAN & NAGELBERG II-5 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this Registration Statement on Form S-8, of our report dated April 2, 1997, on our audit of the consolidated balance sheets of Logic Devices Incorporated as of December 31, 1996 and 1995 and the related consolidated statements of income and cash flows and related schedules for each of the years on the three-year period ended December 31, 1996, which appears in the December 31, 1996 annual report on Form 10-K of Logic Devices Incorporated. Meredith, Cardozo & Lanz LLP San Jose, California July 31, 1997 II-6 LOGIC DEVICES INCORPORATED 1996 STOCK INCENTIVE PLAN 1. PURPOSE OF THE PLAN The LOGIC DEVICES INCORPORATED 1996 STOCK INCENTIVE PLAN (hereinafter referred to as the "Plan") is intended to provide a means whereby key individuals providing services to Logic Devices Incorporated (hereinafter referred to as the "Company") and its related corporations may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company, and to encourage them to remain with and devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its shareholders. Accordingly, directors, officers, employees and advisors will be eligible to acquire common stock of the Company (hereinafter referred to as "Shares") or otherwise participate in the financial success of the Company, on the terms and conditions established herein. For purposes of the Plan, a corporation shall be deemed a related corporation to the Company if such corporation would be a parent or subsidiary corporation with respect to the Company as defined in Section 424(e) or (f), respectively, of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the "Code"). 2. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Logic Devices Incorporated 1996 Stock Incentive Plan Administrative Committee (hereinafter referred to as the "Committee") which shall be comprised solely of two (2) or more non- employee directors appointed by the Board of Directors of the Company (hereinafter referred to as the "Board"). A non-employee director is any member of the Board who: (i) is not currently an officer of the Company or a related corporation; (ii) does not receive compensation for services rendered to the Company or a related corporation in any capacity other than as a director; (iii) does not possess an interest in any transaction with the Company for which disclosure would be required under the securities laws; or (iv) is not engaged in a business relationship with the Company for which disclosure would be required under the securities laws. The Committee shall have sole authority to select the individuals from among those eligible to whom awards shall be made under the Plan, to establish the amount of such award for each such individual and the time when certificates for Shares shall be issued, and to prescribe the legend to be affixed to the certificate. The Committee is authorized, subject to Board approval, to interpret the Plan and may from time to time adopt such rules, regulations, forms and agreements, not inconsistent with the provisions of the Plan, as it may deem advisable to carry out the Plan. All decisions made by the Committee in administering the Plan shall be subject to Board review. 1 3. SHARES SUBJECT TO THE PLAN The aggregate number of Shares that may be awarded to individuals under the Plan shall be 600,000 Shares. Any Shares that remain unissued at the termination of the Plan shall cease to be subject to the Plan, but until termination of the Plan, the Company shall at all times make available sufficient Shares to meet the requirements of the Plan. 4. STOCK OPTIONS a. Type of Options. The Company may issue options that constitute Incentive Stock Options ("Incentive Options") under Section 422 of the Code and options that do not constitute Incentive Options ("Nonqualified Options") to individuals under the Plan. The grant of each option shall be confirmed by a stock option agreement that shall be executed by the Company and the optionee as soon as practicable after such grant. The stock option agreement shall expressly state or incorporate by reference the provisions of the Plan and state whether the option is an Incentive Option or Nonqualified Option. b. TERMS OF OPTIONS. Except as provided in subparagraphs (c) and (d) below, each option granted under the Plan shall be subject to the terms and conditions set forth by the Committee in the stock option agreement including, but not limited to, option price, vesting and option term. c. ADDITIONAL TERMS APPLICABLE TO ALL OPTIONS. Each option shall be subject to the following terms and conditions: (i) WRITTEN NOTICE. An option may be exercised only by giving written notice to the Company specifying the number of Shares to be purchased. (ii) METHOD OF EXERCISE. The aggregate option price may, subject to the terms and conditions set forth by the Committee in the stock option agreement, be paid in any one or a combination of cash, personal check, personal note, Shares already owned or Plan awards which the optionee has an immediate right to exercise. (iii) DEATH OF OPTIONEE. If an optionee terminates employment due to death prior to exercise in full of any options, his or her successor shall have the right to exercise 2 the options within a period of two (2) years after the date of such termination to the extent that the right was exercisable at the date of such termination, or subject to such other terms as may be determined by the Committee. (iv) TRANSFERABILITY. No option may be sold, transferred, assigned or encumbered by an optionee, except: (i) by will or the laws of descent and distribution; (ii) pursuant to a certified domestic relations order; (iii) to any trust maintained solely for the benefit of an optionee; (iv) to the legal guardian of an optionee, in the event of the mental incapacity of such optionee; or (v) to an optionee's "Family Group" (as hereinafter defined). For purposes of this subparagraph, the term "Family Group" shall mean, with respect to any optionee who is an individual: (a) the spouse, parents, siblings or descendants of such optionee, in each such case, if applicable, whether natural or by adoption; (b) the parents, siblings, spouses or descendants of any of the parties listed in clause (a) hereof, in each such case, if applicable, whether natural or adopted; (c) any trust established for the benefit of any of the persons identified in clauses (a) or (b) hereof; (d) any corporation or partnership, the principal equity owners of which are, directly or indirectly, either (x) persons or entities identified in clauses (a), (b) or (c) hereof, or (y) other corporations or partnerships satisfying the requirements of clauses (a), (b), (c) hereof or this clause (d). d. ADDITIONAL TERMS APPLICABLE TO INCENTIVE OPTIONS. Each Incentive Option shall be subject to the following terms and conditions: (i) OPTION PRICE. The option price per Share shall be not less than one hundred percent (100%) of the fair market value of such Share on the date the option is granted. Notwithstanding the preceding sentence, the option price per Share granted to an individual who, at the time such option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or related corporation (hereinafter referred to as a "10% Stockholder") shall not be less than one hundred and ten percent (110%) of the fair market value. (ii) TERM OF OPTION. No option may be exercised more than ten (10) years after the date of 3 grant. Notwithstanding the preceding sentence, no option granted to a 10% Stockholder may be exercised more than five (5) years after the date of grant. No option may be exercised more than three (3) months after the optionee terminates employment with the Company or related corporation; except that, if the optionee terminates employment due to his or her disability (within the meaning of Section 22(e)(3) of the Code), the Committee may extend such three (3) month period for up to an additional nine (9) months. (iii) ANNUAL EXERCISE LIMIT. The aggregate value of Shares which may first become exercisable during any calendar year shall not exceed $100,000. For purposes of the preceding sentence, the fair market value of each Share shall be determined on the date the option with respect to such Share is granted. (iv) TRANSFERABILITY. No option may be transferred, assigned or encumbered by an optionee, except by will or the laws of descent and distribution, and during the optionee's lifetime an option may only be exercised by him or her. 5. RESTRICTED STOCK AWARDS a. Grants. Restricted Stock Awards ("RSAs") under the Plan shall be in the form of Shares, restricted as to transfer and subject to forfeiture, and shall be evidenced by restricted stock agreements in such form and consistent with this Plan as the Committee shall approve from time to time. b. RESTRICTION PERIOD. RSAs awarded under the Plan shall be subject to such terms, conditions, and restrictions, including without limitation: prohibitions against transfer; substantial risks of forfeiture; attainment of performance objectives; repurchase by the Company or right of first refusal for such period or periods as shall be determined by the Committee at the time of grant. The Committee shall have the power to permit, in its discretion, an acceleration of the expiration of the applicable restriction period with respect to any part or all of the RSAs awarded to a grantee. c. RESTRICTIONS UPON TRANSFER. RSAs awarded, and the right to vote underlying Shares and to receive dividends thereon, may not be sold, assigned, transferred, exchanged, pledged, hypothecated, or otherwise encumbered during the restriction period applicable to such Shares, except: (i) by will or the laws of descent and distribution; (ii) by 4 gifting for the benefit of descendants for estate planning purposes; or (iii) pursuant to a certified domestic relations order. Subject to the foregoing, and except as otherwise provided in the Plan, the grantee shall have all the other rights of a stockholder including, but not limited to, the right to receive dividends and the right to vote such Shares. d. CERTIFICATES. Each certificate issued in respect of RSAs awarded to a grantee shall be deposited with the Company, or its designee, and shall bear the following legend: "This certificate and the shares represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in the Logic Devices Incorporated 1996 Stock Incentive Plan and an Agreement entered into by the registered owner. Release from such terms and conditions shall be obtained only in accordance with the provisions of the Plan and Agreement, a copy of each of which is on file in the office of the Secretary of said Company." e. LAPSE OF RESTRICTIONS. The Agreement shall specify the terms and conditions upon which any restrictions upon Shares awarded under the Plan shall lapse, as determined by the Committee. Upon the lapse of such restrictions, Shares, free of the foregoing restrictive legend, shall be issued to the grantee or his or her legal representative. f. TERMINATION PRIOR TO LAPSE OF RESTRICTIONS. In the event of a grantee's termination of employment prior to the lapse of restrictions applicable to any RSAs awarded to such grantee, all Shares as to which there still remain restrictions shall be forfeited by such grantee without payment of any consideration to the grantee, and neither the grantee nor any successors, heirs, assigns, or personal representatives of such grantee shall thereafter have any further rights or interest in such Shares or certificates. 6. STOCK APPRECIATION RIGHTS a. Grants. Stock Appreciation Rights ("SARs") are rights entitling the grantee to receive cash or Shares having a fair market value equal to the appreciation in market value of a stated number of Shares from the date of grant to the date of exercise, or in the case of rights granted in tandem with or by reference to an option granted prior to the grant of such rights, from the date of grant of the related option to the date of exercise, which may be granted to such eligible directors, employees and advisers as may be selected by the Committee. 5 b. TERMS OF GRANT. SARs may be granted in tandem with or with reference to a related option, in which event the grantee may elect to exercise either the option or the SAR, but not both, as to the same Share subject to the option and the SAR, or the SAR may be granted independently of a related option. In the event of a grant with a related option, the SAR shall be subject to the terms and conditions of the related option. In the event of an independent grant, the SAR shall be subject to the terms and conditions determined by the Committee. SARs shall not be transferred, assigned or encumbered, except that SARs may be exercised by the executor, administrator or personal representative of the deceased grantee within two (2) years of the death of the grantee and transferred pursuant to a certified domestic relations order. c. PAYMENT UPON EXERCISE. Upon exercise of an SAR, the grantee shall be paid the excess of the then fair market value of the number of Shares to which the SAR relates over the fair market value of such number of Shares at the date of grant of the SAR or of the related option, as the case may be. Such excess shall be paid in cash or in Shares having a fair market value equal to such excess or in such combination thereof as the Committee shall determine. 7. FAIR MARKET VALUE For purposes of the Plan, fair market value of a Share shall mean the last reported transaction price reported on the exchange or market where traded. 8. AMENDMENT OR TERMINATION OF THE PLAN The Board may amend, suspend or terminate the Plan or any portion thereof at any time, but (except as provided in paragraph 3 hereof) no amendment shall be made without approval of the shareholders of the Company which shall (i) materially increase the aggregate number of Shares with respect to which awards may be made under the Plan, or (ii) change the class of persons eligible to participate in the Plan; provided, however, that no such amendment, suspension or termination shall impair the rights of any individual, without his or her consent, in any award theretofore made pursuant to the Plan. 9. TERM OF PLAN The Plan shall be effective upon the date of its adoption by the Board, subject to the approval of the Plan by a majority of the stockholders within twelve (12) months 6 before or after the date of adoption. Unless sooner terminated under the provisions of paragraph 8, options, SARs and RSAs shall not be awarded under the Plan after the expiration of ten (10) years from the effective date of the Plan. 10. DELIVERY AND REGISTRATION OF STOCK The Company's obligation to deliver Shares with respect to an award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the individual to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933 or any other federal, state or local securities legislation or regulation. It may be provided that any representation requirement shall become inoperative upon a registration of the Shares or other action eliminating the necessity of such representation under applicable securities legislation or regulation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange or automated quotation system on which Shares may then be listed, and (ii) the completion of such registration or other qualification of such Shares under any state or federal law, rule or regulation, as the Committee shall determine to be necessary or advisable. This Plan is intended to comply with Rule 16b-3. Any provision of the Plan which is inconsistent with said rule shall, to the extent of such inconsistency, be inoperative and shall not affect the validity of the remaining provisions of the Plan. 11. RIGHTS AS SHAREHOLDER Upon delivery of any Share to an individual, such individual shall have all of the rights of a shareholder of the Company with respect to such Share, including the right to vote such Share and to receive all dividends or other distributions paid with respect to such Share. 12. MERGER OR CONSOLIDATION In the event the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, the surviving corporation may exchange options and SARs issued under this Plan for options and SARs (with the same aggregate option price) to acquire and participate in that number of shares in the surviving corporation that have a fair market value equal to the fair market value (determined on the date of such merger or consolidation) of Shares that 7 the grantee is entitled to acquire and participate in under this Plan on the date of such merger, consolidation or change of control. 13. CHANGES IN CAPITAL AND CORPORATE STRUCTURE The aggregate number of Shares and interests awarded and which may be awarded under the Plan shall be adjusted to reflect a change in the outstanding Shares of the Company by reason of a recapitalization, reclassification, reorganization, stock split, reverse stock split, combination of shares, stock dividend or similar transaction. The adjustment shall be made in an equitable manner which will cause the awards to remain unchanged as a result of the applicable transaction. 14. SERVICE An individual shall be considered to be in the service of the Company or related corporation as long as he or she remains a director, employee or advisor of the Company or related corporation. Nothing herein shall confer on any individual the right to continued service with the Company or related corporation or affect the right of the Company or related corporation to terminate such service. 15. WITHHOLDING OF TAX To the extent the award, issuance or exercise of Shares, SARs or RSAs results in the receipt of compensation by an individual, the Company is authorized to withhold from any other cash compensation then or thereafter payable to such individual or to withhold sufficient Shares to pay any tax required to be withheld by reason of the receipt of the compensation. Alternatively, the individual may tender a personal check in the amount of tax required to be withheld. 8 TABLE OF CONTENTS Purpose of the Plan 1 Administration of the Plan 2 Shares Subject to the Plan 3 Stock Options 4 Type of Options 4 a Terms of Options 4 b Additional Terms Applicable to All Options 4 c Written Notice 4 c i Method of Exercise 4 c ii Death of Optionee 4 c iii Transferability 4 c iv Additional Terms Applicable to Incentive Options 4 d Option Price 4 d i Term of Option 4 d ii Annual Exercise Limit 4 d iii Transferability 4 d iv Restricted Stock Awards 5 Grants 5 a Restriction Period 5 b Restrictions Upon Transfer 5 c Certificates 5 d Lapse of Restrictions 5 e Termination Prior to Lapse of Restrictions 5 f Stock Appreciation Rights 6 Grants 6 a Terms of Grant 6 b Payment upon Exercise 6 c Fair Market Value 7 Amendment or Termination of the Plan 8 Term of Plan 9 Delivery and Registration of Stock 10 9 Rights as Shareholder 11 Merger or Consolidation 12 Changes in Capital and Corporate Structure 13 Service 14 Withholding of Tax 15 10 -----END PRIVACY-ENHANCED MESSAGE-----