<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ATMI, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):..........
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:.................................
[ ] Fee paid previously with preliminary materials.
[ ] 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:
2) Form, Schedule or Registration Statement No:
3) Filing Party:
4) Date Filed:
<PAGE>
ATMI, INC.
7 COMMERCE DRIVE
DANBURY, CONNECTICUT 06810
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
To Our Stockholders:
The 1998 Annual Meeting of Stockholders of ATMI, Inc. (the "Company") will be
held at the Ethan Allen Inn, 21 Lake Avenue Extension, Danbury, Connecticut
06811 on Wednesday, May 20, 1998 at 10:00 a.m. (local time) for the following
purposes:
1. To elect two directors for terms to expire at the 2001 Annual Meeting of
Stockholders;
2. To approve the Company's 1998 Employee Stock Purchase Plan;
3. To approve the Company's 1998 Stock Plan;
4. To approve the proposed amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of authorized shares of
common stock;
5. To ratify the appointment by the Board of Directors of Ernst & Young LLP as
the Company's independent certified auditors for the fiscal year ending
December 31, 1998; and
6. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 15, 1998 are
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof.
By order of the Board of Directors,
Ward C. Stevens
Secretary
Dated: April 30, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
<PAGE>
ATMI, INC.
7 COMMERCE DRIVE
DANBURY, CT 06810
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
__________________________
This Proxy Statement is being furnished to the stockholders of ATMI, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders of the
Company to be held on May 20, 1998, and any adjournments or postponements
thereof (the "1998 Annual Meeting"). This Proxy Statement, the foregoing Notice
of Annual Meeting, the enclosed form of proxy and the Company's 1997 Annual
Report to Stockholders are first being mailed or given to stockholders on or
about April 30, 1998. As used in this Proxy Statement, references to the
"Company" include references to ATMI, Inc. and to its predecessor registrant,
Advanced Technology Materials, Inc.
PROXIES
A stockholder giving a proxy may revoke it at any time before it is voted by
executing and delivering to the Company another proxy bearing a later date, by
delivering a written notice to the Secretary of the Company stating that the
proxy is revoked, or by voting in person at the 1998 Annual Meeting. Any
properly executed proxy returned to the Company will be voted in accordance with
the instructions indicated thereon. If no instructions are indicated on the
proxy, the proxy will be voted for the election of the nominees for directors
named herein and in favor of the other proposals set forth in the Notice of
Annual Meeting.
VOTING SECURITIES
The record date for the determination of stockholders entitled to notice of
and to vote at the 1998 Annual Meeting was the close of business on April 15,
1998 (the "Record Date"). On the Record Date, there were 20,439,942 shares of
Common Stock, the Company's only voting securities, outstanding and entitled to
vote. Each share of Common Stock is entitled to one vote. The presence, in
person or by proxy, of the holders of a majority of the shares of Common Stock
entitled to be voted at the 1998 Annual Meeting is necessary to constitute a
quorum for the transaction of business. Abstentions and broker non-votes will
be included in the calculation of the number of votes represented at the 1998
Annual Meeting for purposes of determining whether a quorum has been achieved.
Votes will be tabulated at the 1998 Annual Meeting by one or more inspectors of
election appointed by the Board of Directors.
<PAGE>
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of the
Record Date, by: (i) each person known by the Company to own beneficially more
than five percent of the outstanding Common Stock of the Company; (ii) each
director and nominee for director of the Company; (iii) each executive officer
of the Company named in the Summary Compensation Table on page 6; and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
indicated, all shares are owned directly. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Shares Beneficially Owned Percent of Class
- - ------------------------------------ ------------------------- ----------------
<S> <C> <C>
Stephen H. Siegele 2,541,305 12.4%
6805 Capital of Texas Highway
Suite 330
Austin, Texas 78731
Lamonte H. Lawrence 2,073,922 10.1%
100 Sir Francis Drake Boulevard
Ross, California 94957
Eugene G. Banucci (1) 323,382 1.6%
Duncan W. Brown (2) 176,671 *
Daniel P. Sharkey (3) 80,375 *
Peter S. Kirlin (3) 68,074 *
Robert S. Hillas (4) 40,977 *
Mark A. Adley (5) 26,000 *
John A. Armstrong (6) 18,000 *
Stephen H. Mahle (7) 9,600 *
James M. Burns (8) 8,470 *
All directors and executive
officers as a group (13 persons) (9) 5,564,015 26.6%
</TABLE>
____________
* Less than 1% of the outstanding Common Stock.
(1) Includes 117,175 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 6,159 shares either owned
or issuable upon exercise of options within 60 days of the Record Date by
Dr. Banucci's spouse. Dr. Banucci disclaims beneficial ownership of the
shares held by his spouse.
(2) Includes 73,537 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 4,634 shares either owned
or issuable upon exercise of option within 60 days of the Record Date by Dr.
Brown's spouse. Dr. Brown claims beneficial ownership of the shares held by
his spouse.
(3) Consists entirely of shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date.
(4) Includes 21,250 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date.
(5) Includes 23,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date.
2
<PAGE>
(6) Includes 16,000 shares issuable upon exercise of options that are
exercisable with 60 days of the Record Date.
(7) Includes 9,500 shares issuable upon exercise of options that are exercisable
within 60 days of the Record Date.
(8) Includes 7,000 shares issuable upon exercise of options that are exercisable
within 60 days of the Record Date.
(9) Includes 499,647 shares issuable to executive officers, directors and their
spouses pursuant to options which are exercisable within 60 days of the
Record Date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors and persons who beneficially own more
than ten percent of the Company's Common Stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
the Company with copies of all such forms they file. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons, the Company believes that during the fiscal year
ended December 31, 1997, all such reports were timely filed, except (i) a Form 4
for John A. Armstrong reporting the partial exercise of an option, and (ii) a
Form 4 for James M. Burns reporting the purchase of shares of Common Stock, were
filed late.
1.ELECTION OF DIRECTORS
The Board of Directors is classified into three classes. The two directors
serving in Class I have terms expiring at the 1998 Annual Meeting. The Board of
Directors has nominated the Class I directors currently serving on the Board of
Directors, John A. Armstrong and Robert S. Hillas, for election to serve
directors of the Company until the 2001 Annual Meeting of Stockholders of the
Company and until their successors are elected and qualified or until their
earlier resignation or removal. Each of the nominees has indicated a
willingness to serve as a director, but if for any reason either nominee should
be unavailable to serve as a director at the time of the 1998 Annual Meeting, a
contingency which the Board of Directors does not expect, a different person
designated by the Board of Directors may be nominated in his stead.
If a quorum of the holders of Common Stock is present at the 1998 Annual
Meeting, the election of directors will require the affirmative vote of a
plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote. Abstentions by holders of such shares and broker
non-votes with respect to the election of directors will be included in
determining the presence of such quorum but will not be included in determining
whether nominees have received the vote of such plurality.
The following sets forth certain information regarding the nominees named
above and the other directors of the Company whose terms will continue after the
1998 Annual Meeting.
Nominees for Terms Expiring in 2001
JOHN A. ARMSTRONG, PH.D., age 63, has served as a director of the Company
since 1993. Dr. Armstrong is currently an Adjunct Professor of Physics at the
University of Massachusetts. Previously, he was Vice President of Science and
Technology for IBM from 1987 until his retirement in 1993.
ROBERT S. HILLAS, age 49, has served as a director of the Company since 1987.
Mr. Hillas has been a Managing Director of E.M. Warburg, Pincus & Co. LLC since
1993. From 1985 to 1992, Mr. Hillas served as a General Partner of DSV
Management Ltd., the General Partner of DSV Partners IV, a venture capital
limited partnership, and from 1981 to 1992, as a General Partner of DSV Partners
III, a venture capital limited partnership. Mr. Hillas is also a director of
Transition Systems, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR SUCH NOMINEES.
---
3
<PAGE>
CONTINUING DIRECTORS
Terms Expiring in 1999:
MARK A. ADLEY, age 38, has served as a director of the Company since 1991.
Since 1996, Mr. Adley has been a Managing Director at Credit Suisse First Boston
Corporation, where he was a Director from 1994 to 1996. From 1992 through 1993,
Mr. Adley served as an investment manager for Clipper Asset Management
Corporation, the General Partner of The Clipper Group, L.P. ("Clipper"). During
1991, Mr. Adley served as an investment manager for Clipper. Mr. Adley was a
Director at CS First Boston Merchant Bank during 1990 and, at The First Boston
Corporation, was a Vice President from 1989 to 1990 and an Associate from 1985
to 1988.
EUGENE G. BANUCCI, PH.D., age 54, a founder of the Company, has served as
President, Chief Executive Officer, Chairman of the Board and director since
1986. Previously, Dr. Banucci served in a variety of executive and managerial
positions. From 1984 to 1986, he was a director of American Cyanamid Company's
Chemical Research Division, with responsibility for the research, development
and technical service activities of the Chemicals Group.
LAMONTE H. LAWRENCE, age 59, has served as a director of the Company since
October 1997. Mr. Lawrence served as the President and Chief Executive Officer
of Lawrence Semiconductor Laboratories, Inc. ("LSL"), now a wholly-owned
subsidiary of the Company, from its inception in 1988 until October 1997. In
1983, Mr. Lawrence founded U.S. Semiconductor Corp., where he served as
President from its inception in 1983 to 1987.
Terms Expiring in 2000:
STEPHEN H. MAHLE, age 52, has served as a director of the Company since March
1996. Mr. Mahle has been Senior Vice President of Medtronic, Inc., a medical
device manufacturer, and President of its pacing business since January 1998.
From 1995 to 1998, he was President of the Brady Pacing Business, a division of
Medtronic, Inc. From 1989 to 1995, Mr. Mahle served as Vice President and
General Manager of the Brady Pacing Business. Previously, Mr. Mahle served in a
variety of marketing and product development roles for Medtronic, Inc.
STEPHEN H. SIEGELE, age 38, has served as President of the Company's ADCS
division and as a director of the Company since October 1997. Mr. Siegele
served as the President and Chief Executive Officer of Advanced Delivery &
Chemical Systems Nevada, Inc. and its affiliates (collectively, the "ADCS
Group") from February 1994 until October 1997 and has served as a director since
its inception in 1988. From 1988 to 1994, Mr. Siegele served as Vice President
of the ADCS Group. Prior to that time, Mr. Siegele served in sales and
engineering positions at Intel Corporation and Olin Hunt Specialty Products,
Inc.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The standing committees of the Board of Directors are the Audit Committee, the
Compensation Committee and the Nominating Committee.
The Audit Committee is currently comprised of Mark A. Adley, John A. Armstrong
and Robert S. Hillas. The Audit Committee oversees the Company's system of
internal accounting controls, recommends to the Board of Directors and the
stockholders the appointment of a firm of independent certified auditors to
conduct the annual audit of the Company's financial statements, reviews the
scope of the audit, reviews reports from the independent certified auditors, and
makes such recommendations to the Board of Directors in connection with the
annual audit as it deems appropriate. The Audit Committee met twice during
1997.
The Compensation Committee is currently comprised of Mark A. Adley, Robert S.
Hillas and Stephen H. Mahle. The Compensation Committee reviews the
compensation of officers of the Company and the Company's compensation policies
and practices. The Compensation Committee also administers the 1987, 1995 and
1997 Stock Plans, including recommending the grant of stock options thereunder.
The Compensation Committee met twice during 1997.
4
<PAGE>
The Nominating Committee is currently comprised of Eugene G. Banucci, Lamonte
H. Lawrence and Stephen H. Siegele. The Nominating Committee has the authority
to recommend to the Board of Directors criteria for the selection of candidates
for director, evaluate candidates and recommend nominees to serve as directors.
The Nominating Committee met twice during 1997.
The Board of Directors held eight meetings during 1997. Each director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board of Directors and (ii) the total number of meetings held by all
committees of the Board on which such director served.
DIRECTOR COMPENSATION
The Company's directors do not receive any cash compensation for service on
the Board of Directors or any committee thereof but are reimbursed for expenses
incurred in connection with attending meetings of the Board of Directors and any
committee thereof. In October 1993, the Company granted options for the
purchase of 22,500 shares of Common Stock at an exercise price of $3.56 per
share to John A. Armstrong in consideration of consulting services performed for
the Company. In December 1994, the Company granted options for the purchase of
22,500 shares of Common Stock at an exercise price of $5.50 per share to Robert
S. Hillas in consideration of his services on the Board of Directors. In May
1995, the Company granted options for the purchase of 22,500 shares of Common
Stock at an exercise price of $8.50 per share to Mark A. Adley in consideration
of his services on the Board of Directors. In March 1996, the Company granted
options for the purchase of 22,500 shares of Common Stock at an exercise price
of $10.50 per share to Stephen H. Mahle in consideration of his services on the
Board of Directors. In each case, the exercise price for the options granted
was the fair market value of the Common Stock on the date of grant, and the
options granted were subject to certain vesting provisions.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information regarding the compensation
paid by the Company for the years ended December 31, 1997, 1996 and 1995 to the
Company's Chief Executive Officer and each of the other four most highly
compensated executive officers in 1997 (together, the "Named Executive
Officers") for services in all capacities to the Company and its subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Awards
------
Annual Compensation Securities All Other
----------------------------- Underlying Compen-
Name and Principal Position Year Salary ($) Bonus ($) Options (#) sation ($)(1)
- - ------------------------------------- ---- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Eugene G. Banucci 1997 210,000 125,000 25,000 3,769
President, Chief Executive Officer 1996 181,300 40,000 - 2,121
and Chairman of the Board 1995 155,250 40,000 35,000 2,875
James M. Burns (2) 1997 200,000 80,000 35,000 -
President - EcoSys Division 1996 - - - -
1995 - - - -
Peter S. Kirlin 1997 150,000 50,000 20,000 2,700
Executive Vice President 1996 111,100 30,000 - -
1995 96,560 35,000 25,000 400
Daniel P. Sharkey 1997 130,000 50,000 15,000 1,903
Vice President, Chief Financial 1996 110,000 20,000 - 1,678
Officer and Treasurer 1995 103,000 25,000 15,000 1,583
Duncan W. Brown 1997 149,167 10,000 5,000 2,073
President - Epitronics Division 1996 103,000 8,000 - 1,988
1995 98,000 15,000 10,000 1,932
</TABLE>
__________________
(1) Represents premiums paid for life insurance and long-term disability
policies of which the Company is not the beneficiary and flexible spending
contributions toward health care costs not covered by Company plans.
(2) Mr. Burns joined the Company on January 2, 1997.
Mr. Stephen H. Siegele, the President of the ADCS division, joined the
Company on October 13, 1997 in connection with the Company's acquisition of the
ADCS Group. In 1997, the Company paid Mr. Siegele a base salary of $89,000 for
the period in 1997 during which he was employed by the Company. Had Mr. Siegele
been employed by the Company for all of 1997, he would have been the Company's
most highly compensated executive officer.
6
<PAGE>
OPTION GRANTS
The following table sets forth certain information with respect to stock
options granted to the Named Executive Officers during the year ended December
31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
INDIVIDUAL GRANTS Realizable Value At
------------------------------------------------------ Assumed Annual
Number of % of Total Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options Employees Price Expiration ---------------------
Name Granted(#)(1) in 1997 ($/sh) Date 5% ($) 10% ($)
- - --------------------- -------------- ----------- --------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Eugene G. Banucci 25,000 4.1% 17.25 1/1/07 271,211 687,301
James M. Burns 35,000 5.8% 16.88 1/2/07 371,441 941,304
Peter S. Kirlin 20,000 3.3% 17.25 1/1/07 216,969 549,841
Daniel P. Sharkey 15,000 2.5% 17.25 1/1/07 162,726 412,381
Duncan W. Brown 5,000 0.8% 17.25 1/1/07 54,242 137,460
</TABLE>
__________________
(1) Options granted vest ratably over five years on each of the first five
anniversary dates of the grant date.
(2) The dollar amounts under these columns are the result of calculations
assuming 5% and 10% growth rates as set by the Securities and Exchange
Commission and, therefore, are not intended to forecast future price
appreciation, if any, of the Company's Common Stock.
STOCK OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning option holdings as of
December 31, 1997 with respect to the Named Executive Officers.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at FY-End (#) at FY-End ($)(1)
on Value ---------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- - ----------------- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eugene G. Banucci - - 112,175 47,200 2,502,094 502,825
James M. Burns - - 0 35,000 - 258,125
Peter S. Kirlin - - 64,074 35,700 1,410,598 371,450
Daniel P. Sharkey - - 77,375 28,500 1,729,372 329,750
Duncan W. Brown - - 72,537 11,900 1,665,361 138,275
</TABLE>
__________________
(1) Based on the fair market value of the Company's Common Stock as of December
31, 1997 ($24.25) minus the exercise price of the options.
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Eugene G. Banucci, Daniel
P. Sharkey and Duncan W. Brown, effective October 10, 1997. Pursuant to the
agreements, Dr. Banucci will act as President, Chief Executive Officer and
Chairman of the Board of the Company, Mr. Sharkey will act as Vice President,
Chief Financial Officer and Treasurer of the Company, and Dr. Brown will act as
President of the Epitronics division of the Company, for annual salaries of
$210,000, $130,000 and $180,000, respectively. Salaries are subject to increase
from time to time to take into account appropriate cost of living adjustments
and general compensation increases based on performance, in the discretion of
the Board of Directors. Each employee will also be eligible to receive
additional compensation, including awards of performance bonuses at levels
commensurate with other employees of the Company of equivalent position and
grants of employee stock options, in each case in the discretion of the
Compensation Committee of the Board of Directors.
The employment agreements expire on the earliest to occur of (i) October 10,
1999, (ii) the death of the employee, (iii) the termination of the agreements
due to the incapacity of the employee, (iv) the termination of the agreements by
the Company with or without cause, or (v) the termination of the agreements by
the employee for just cause. Under the terms of the agreements, if the Company
terminates the employee without cause, or if the employee terminates the
agreement for just cause, the Company will pay the employee his annual base
salary then in effect for a period of 18 months after termination in the case of
Dr. Banucci and for a period of nine months after termination in the case of Mr.
Sharkey and Dr. Brown. The Company will also provide the employee during such
period with medical, dental, life and disability insurance benefits on the same
basis the Company would have provided the employee during such period had he
continued to be an employee of the Company.
The employment agreements restrict each employee from competing with the
Company during the term of the agreement and for a period of the later of
October 10, 2002 or 36 months after the termination of employment in the case of
Dr. Banucci or 24 months after the termination of employment in the case of Mr.
Sharkey and Dr. Brown. In the event the Company should seek to enforce such
non-competition provisions in a court, a court may, in exercising its
discretionary authority, determine not to enforce, or to limit enforcement of,
such provisions against an employee.
The employment agreements also provide that any termination associated with a
change in control of the Company (including resignation by the employee for just
cause such as a significant decrease in the employee's duties or authority)
would result in the acceleration of options outstanding (and as may be
subsequently granted) to them; provided that such acceleration of vesting shall
not occur if and to the extent that (i) the Company's independent accountant has
advised the Board of Directors that such acceleration could prohibit the
accounting treatment of the transaction which is a change in control as a
pooling of interests under Accounting Principles Board Opinion No. 16 (or any
successor opinion) and (ii) the Board of Directors intends to treat such
transaction as a pooling of interests, in which case options would continue to
vest as permitted within the terms of the applicable stock plans. In addition,
Dr. Banucci, Mr. Sharkey and Dr. Brown would be entitled to any bonuses under
any bonus plans then in effect as if fully earned. Benefits payable under the
agreements upon a change in control may subject the employee to an excise tax as
"excess parachute payments" under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). The Company will reimburse the employee for all
excise taxes paid, but the reimbursement will constitute an excess parachute
payment and will be subject to further excise tax. Such further excise tax will
trigger further reimbursement by the Company. The Company will not be allowed
to take a deduction for federal income tax purposes for the excess parachute
payments.
In December 1996, the Company entered into an employment agreement with James
M. Burns, the President of the EcoSys division. Pursuant to the agreement, Mr.
Burns will serve as President of EcoSys for an annual base salary of $200,000,
subject to increase in accordance with the policies of the Company, as
determined by the Board of Directors. For 1997 and 1998, Mr. Burns is also
eligible to receive special incentive compensation based upon EcoSys' pretax
income and market share in the front-end semiconductor environmental equipment
market for such years. Pursuant to the agreement, the Company paid Mr. Burns a
signing bonus of $40,000 and granted Mr. Burns options to purchase 35,000 shares
of Common Stock at an exercise price of $16.88 per share, which vest ratably
over five years.
8
<PAGE>
The Company may terminate Mr. Burns' employment agreement at any time. If the
Company terminates Mr. Burns without cause, the Company will pay Mr. Burns his
annual base salary then in effect for a period of nine months after termination.
The Company will also provide Mr. Burns during such period with medical benefits
at least equivalent to the benefits provided to Mr. Burns during his employment.
The employment agreement restricts Mr. Burns from competing with the Company
during the term of his employment and for a period of 24 months thereafter. In
the event the Company should seek to enforce such non-competition provisions in
a court, a court may, in exercising its discretionary authority, determine not
to enforce, or to limit enforcement of, such provisions against Mr. Burns.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996 and until October 10, 1997, the Compensation Committee of the
Board of Directors consisted of Gary A. Andersen and John A. Armstrong, and
since October 10, 1997 has consisted of Mark A. Adley, Robert S. Hillas and
Stephen H. Mahle. No executive officer of the Company served on the
compensation committee of another entity or on any other committee of the board
of directors of another entity performing similar functions during the last
fiscal year.
COMPENSATION COMMITTEE REPORT
The Compensation Committee, which is comprised of non-employee directors of
the Company, is responsible for administering the Company's executive
compensation program and reviewing and making recommendations to the Board of
Directors with respect to the compensation of executive officers and other
senior management and the Company's overall compensation policy. In connection
with such responsibilities, the Compensation Committee has authority to
administer the Company's 1987, 1995 and 1997 Stock Plans, including recommending
the grant of stock options and other awards thereunder. All other actions of
the Compensation Committee are subject to the approval of the Board of
Directors.
The Company's executive compensation program is intended to attract and retain
talented executives and senior management by offering competitive compensation
opportunities. Furthermore, the Company's compensation program is designed to
motivate and reward high-performing individuals based on variable compensation
tied to overall corporate, separate business unit and individual performance and
the creation of stockholder value. The Company's philosophy is that the
combination of performance-based and stock-based compensation serves to maximize
annual and long-term results and, ultimately, stockholder value. The components
of the Company's executive compensation program include base salary, annual cash
and stock option incentives and long-term stock option incentives. The
Compensation Committee has discretion as to the components awarded in a
particular year to each executive officer.
Components of Executive Compensation
Base Salary. The Compensation Committee annually reviews officers' base
salaries. The Compensation Committee evaluates management's recommendations
based on the results achieved by each officer relative to the assigned goals of
the recently completed year as well as competitive salary practices of other
similar companies.
Annual Incentives. Annual incentives are designed to provide officers with a
potential cash and/or stock option award based on the achievement of annual
financial and operating objectives. These objectives and potential award
amounts are approved by the Compensation Committee and the Board of Directors on
an annual basis in advance and are based upon operating plans approved by the
Board of Directors. The Compensation Committee approves specific objectives for
each officer.
In 1997, these objectives included the performance of business divisions, the
achievement of budgeted financial performance and the successful completion of
certain other strategic transactions. The Compensation Committee determined
cash bonus awards for each executive officer at the end of 1997 based upon the
achievement of specified objectives for each officer.
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For 1998 and future years, the Compensation Committee intends to continue to
consider utilizing both stock option grants and cash bonus awards to reward the
achievement of annual objectives. Accordingly, the relative mix of stock-based
versus cash incentives may differ from that utilized in 1997.
Long-term Incentives. The Compensation Committee may also recommend to the
Board of Directors the grant to officers of stock options under the Company's
1995 and 1997 Stock Plans that are distinct from stock options granted as annual
incentives. These options, which vest over time, are awarded to officers based
on their continued contribution to the Company's achievement of financial and
operating objectives. These awards are designed to align the interests of the
Company's officers with the interests of the Company's stockholders and to
motivate the Company's officers to remain focused on the overall long-term
performance of the Company. In 1997, executive officers received grants of non-
qualified stock options. These options were granted at the fair market value of
the Common Stock on the date of grant. The options become exercisable over a
five-year period and have a ten-year term. In determining the number of stock
options granted to executive officers, the Compensation Committee took into
account position levels, individual performance, the tax consequences of the
grant to the individual and the Company and the number of shares available for
issuance under the Company's 1995 and 1997 Stock Plans.
Chief Executive Officer Compensation
During 1997, the Company's most highly compensated executive officer was its
Chief Executive Officer, Eugene G. Banucci. Dr. Banucci participates in the
same executive compensation program provided to other executive officers and
senior management of the Company as described above. Approximately 50% of the
increase in Dr. Banucci's base salary is based on the Company's financial
performance, primarily earnings per share and revenue growth, in the previous
fiscal year. The other 50% is based on fulfillment of a series of objectives
during the previous fiscal year established at the beginning of the year by the
Compensation Committee in consultation with the Chief Executive Officer. The
objectives used to determine base salary for fiscal 1997 consisted of new
product introductions, market share growth and exceeding certain financial
objectives. In 1997, Dr. Banucci received a base salary of $210,000, which
included a 17% increase over his base salary in 1996. Dr. Banucci's base salary
in 1997 was established by an employment agreement between Dr. Banucci and the
Company. Dr. Banucci also received a cash bonus for 1997 of $125,000 based upon
the achievement of specified objectives and various strategic initiatives during
1997, including the integration of the ADCS Group and LSL with the Company's
existing businesses. Furthermore, on January 1, 1997, Dr. Banucci was granted
non-qualified stock options to purchase 25,000 shares of Common Stock at an
exercise price of $17.25 per share, which was the fair market value of the
Common Stock on the date of grant. The options become exercisable over a five-
year period and have a ten-year term .
Compensation Committee:
Mark A. Adley
Robert S. Hillas
Stephen H. Mahle
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Stock Performance Graph
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the return on the Total Return Index for the Nasdaq
Stock Market (U.S.) and the Nasdaq Electronic Components Stock Index. The
measurement assumes a $100 investment as of November 23, 1993 (the first day of
public trading after the Company's initial public offering) with all dividends
reinvested. The data presented are on an annual basis from the time of the
Company's initial public offering to the end of fiscal 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG ATMI, NASDAQ AND ELECTRONIC COMPONENT INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
ELECTRONIC
MEASUREMENT PERIOD COMPONENT
(FISCAL YEAR COVERED) ATMI NASDAQ INDEX
- - --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 11/23/93 $100 $100 $100
FYE 12/31/93 $ 84 $103 $103
FYE 12/31/94 $ 85 $100 $114
FYE 12/31/95 $143 $142 $188
FYE 12/31/96 $246 $175 $325
FYE 12/31/97 $346 $215 $341
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS
ACQUISITION OF THE ADCS GROUP
On October 10, 1997, the Company acquired the ADCS Group in exchange for
5,468,747 shares of the Company's Common Stock. Stephen H. Siegele, an
executive officer, director and greater than 5% stockholder of the Company, was
a principal holder of interests in the ADCS Group and received 3,741,305 shares
of Common Stock in the exchange. F.H.S. Investments, Ltd., of which Frederick
H. Siegele, Stephen H. Siegele's father, is the sole general partner, received
626,534 shares of Common Stock in exchange for its interests in the ADCS Group.
Stuart F. Siegele and Frederick J. Siegele, Stephen H. Siegele's brothers,
received 205,861 and 179,009 shares of Common Stock, respectively, in exchange
for their interests in the ADCS Group.
On October 10, 1997, in connection with the acquisition of the ADCS Group, the
Company and the holders of interests in the ADCS Group (the "ADCS Holders"),
including Stephen H. Siegele, F.H.S. Investments, Frederick J. Siegele and
Stuart F. Siegele, entered into an indemnification agreement (the
"Indemnification Agreement") with the Company. Pursuant to the Indemnification
Agreement, the Company will indemnify and hold harmless each of the ADCS Holders
and their respective heirs, affiliates, general partners, limited partners and
each of their respective successors and assigns (the "ADCS Indemnified Parties")
against any and all losses arising out of or relating to any breach of the
representations, warranties, or covenants of the Company in the merger and
exchange agreement executed in connection with the acquisition of the ADCS Group
(the "Merger and Exchange Agreement") or any document, certificate or agreement
delivered pursuant to the Merger and Exchange Agreement.
In addition, pursuant to the terms of the Indemnification Agreement, the ADCS
Holders will indemnify and hold harmless the Company, its subsidiaries, its
affiliates (including the ADCS Group and its subsidiaries) and their respective
successors and assigns (the "Company Indemnified Parties") against any and all
losses arising out of and relating to (i) any breach of the representations,
warranties and covenants of the ADCS Group and its subsidiaries contained in the
Merger and Exchange Agreement or any document, certificate or agreement
delivered pursuant to the Merger and Exchange Agreement and (ii) the following
tax matters: (1) any previously unpaid income taxes which may result from the
restructuring of the ADCS Group in 1996; (2) depreciation on tax returns filed
with respect to fiscal year 1996 and the period in 1997 prior to October 10,
1997; (3) state sales tax paid with respect to fiscal year 1996 and the period
in 1997 prior to October 10, 1997 to a state in which the ADCS Group had not
previously paid sales tax or franchise taxes; (4) disallowance of any deductions
for executive compensation; or (5) disallowance of any deductions for travel or
entertainment expenses taken on tax returns filed with the respect to fiscal
year 1996 and the period of 1997 prior to October 10, 1997. Notwithstanding the
foregoing indemnification, the Company has agreed to bear the costs of certain
proceedings involving the taxing authorities through a trial court determination
related to these tax matters. Furthermore, the Indemnification Agreement
provides that each ADCS Holder will severally indemnify the Company Indemnified
Parties for losses arising from breaches of such holder's representations,
warranties and covenants contained in any certificate or agreement delivered to
the Company in connection with consummation of the transactions contemplated by
the Merger and Exchange Agreement.
The Indemnification Agreement limits the Company's liability for losses to the
aggregate value of the 750,000 shares of the Company's Common Stock which the
ADCS Holders were required to place in escrow as security for their
indemnification obligations. Stephen H. Siegele, F.H.S. Investments, Frederick
J. Siegele and Stuart F. Siegele have deposited in escrow certificates
representing 513,095, 85,924, 24,550 and 28,232 shares of Common Stock,
respectively. The Indemnification Agreement sets forth certain limits on the
parties' indemnification obligations, such as deductibles that must be reached
before a claim may be made, time deadlines before which claims must be made and
limitations on the amount of indemnification which may be paid. The ADCS
Holders, in the aggregate, shall not be liable for any damages in excess of the
aggregate value of the shares of the Company's Common Stock in the escrow funds
(valued at $16.00 per share), and no ADCS Holder shall be liable for any damages
in excess of such holder's escrow fund. The escrowed shares are divided and
held in three separate accounts, each of which will be available only for
certain specified claims, with an aggregate of 625,000 shares available solely
for claims arising under tax matter (1) discussed in the prior paragraph, an
aggregate of 75,000
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<PAGE>
shares available solely for claims arising under tax matters (2) through (5)
discussed in the prior paragraph and an aggregate of 50,000 shares available
solely for (i) claims for indemnification other than with respect to tax matters
(1) through (5), and (ii) claims against an ADCS Holder arising from breaches of
such holder's representations, warranties and covenants as discussed below,
provided that recourse will be limited to the escrow fund of the breaching ADCS
Holder.
Other than with respect to tax matters or fraud or intentional
misrepresentation, an indemnified party generally may not make any claim for
indemnification after October 10, 1998, and no such claim may be brought after
the date of issuance of the first independent audit report with respect to the
financial statements of the Company after October 10, 1997, if such claim is of
a type expected to be encountered in the course of an audit performed in
accordance with generally accepted auditing standards. The claims period for
claims with respect to the tax matters specified above or with respect to fraud
or intentional misrepresentation will extend for the statute of limitations
applicable to the matters which are the subject of such claims.
The escrow account consisting of 50,000 shares of Common Stock will be held in
escrow until the later of: (i) October 10, 1998; and (ii) the date on which all
claims regarding breaches of general representations and warranties by the ADCS
Group and the ADCS Holders are finally resolved and all amounts have been paid
in full from the escrow funds. The escrow accounts consisting of 625,000 shares
and 75,000 shares of Common Stock will be held in escrow until the later of: (i)
October 10, 1998; and (ii) the expiration of the applicable statute of
limitations with respect to the tax matters for which the ADCS Holders are
providing indemnification (unless a claim for tax matters is pending). A
portion of the escrow accounts consisting of 625,000 shares and 75,000 shares of
Common Stock may be released earlier if the Company determines that certain of
the escrowed shares are no longer required as security for the indemnification
obligations of the ADCS Holders.
While management of the Company believes that the indemnification provided by
the ADCS Holders will be adequate, because of the various limitations discussed
above, a possibility exists that the losses experienced by the Company could
exceed the value of the shares held in escrow because the shares held in escrow
are insufficient in number or, due to market conditions and potential stock
price volatility, in value to adequately compensate the Company for any losses
which are the subject of the indemnification. Furthermore, a possibility exists
that the losses which are the subject of the indemnification will be incurred
during periods other than those for which claims may be made with respect to
such losses. Consequently, losses for which there is insufficient
indemnification could have a material adverse effect on the Company.
The Company entered into employment agreements with each of Stephen H.
Siegele, Frederick H. Siegele and Frederick J. Siegele effective October 1997.
Pursuant to the agreements, Stephen H. Siegele, Frederick H. Siegele and
Frederick J. Siegele will act as President, Chief Technical Officer and General
Counsel of the ADCS division, respectively. The agreements provide for annual
salaries to Stephen H. Siegele, Frederick H. Siegele and Frederick J. Siegele of
$400,000, $150,000 and $160,000, respectively. Salaries are subject to increase
from time to time to take into account appropriate cost of living adjustments
and general compensation increases based on performance, in the discretion of
the Board of Directors. Each employee will also be eligible to receive
additional compensation, including awards of performance bonuses at levels
commensurate with other employees of the Company of equivalent position and
grants of employee stock options, in each case in the discretion of the
Compensation Committee of the Board of Directors.
The employment agreements expire on the earliest to occur of (i) October 10,
1999, (ii) the death of the employee, (iii) the termination of the agreements
due to the incapacity of the employee, (iv) the termination of the agreements by
the employer with or without cause or (v) the termination of the agreements by
the employee for just cause. Under the terms of the agreements, if the employer
terminates the employee without cause, or if the employee terminates the
agreement for just cause, the employer will pay the employee his annual base
salary then in effect for a period of 18 months after termination in the case of
Stephen H. Siegele and for a period of nine months after termination in the case
of Frederick H. Siegele and Frederick J. Siegele. The employer will also
provide the employee during such period with medical, dental, life and
disability insurance benefits on the same basis the employer would have provided
the employee during such period had he continued to be an employee of the
employer.
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The employment agreements restrict each employee from competing with the
employer during the term of the agreement and for a period of the later of
October 10, 2002 or 36 months after the termination of employment in the case of
Stephen H. Siegele or 24 months after the termination of employment in the case
of Frederick H. Siegele and Frederick J. Siegele. In the event the Company
should seek to enforce such non-competition provisions in a court, a court may,
in exercising its discretionary authority, determine not to enforce, or to limit
enforcement of, such provisions against an employee.
ACQUISITION OF LSL
On October 10, 1997, the Company acquired LSL in exchange for 3,671,349 shares
of the Company's Common Stock. Lamonte H. Lawrence, a director and greater than
5% stockholder of the Company, was the principal stockholder of LSL and received
3,597,922 shares of Common Stock in exchange for his shares of LSL's common
stock.
Under the terms of the merger agreement executed in connection with the
acquisition of LSL (the "LSL Merger Agreement"), the Company will indemnify and
hold harmless each of the former stockholders of LSL (the "LSL Stockholders"),
including Lamonte H. Lawrence, against any and all losses arising out of (i) the
conduct of the business or ownership of LSL after the Company's acquisition
thereof, and (ii) any breach of the representations, warranties, or covenants of
the Company contained in the LSL Merger Agreement. Losses do not include any
loss resulting from a diminution in the value of the Company's Common Stock
received in the acquisition of LSL. Further, the Company will indemnify and
hold harmless each of Lamonte H. Lawrence, Lawrence Semiconductor Investments,
Inc. ("LSI") and Lawrence Semiconductor Research Laboratories, Inc. ("LSRL"), of
which Mr. Lawrence is sole stockholder, against any and all losses arising out
of a breach by LSL of any obligation guaranteed by Mr. Lawrence, LSI or LSRL.
In addition, pursuant to the terms of the LSL Merger Agreement, the LSL
Stockholders will indemnify and hold harmless LSL, the Company, Welk Acquisition
Corporation, and each of their officers, directors, employees, agents,
representatives and affiliates (the "Company Indemnified Parties") against any
and all losses arising out of any breach of the representations, warranties and
covenants of LSL contained in the LSL Merger Agreement. Each LSL Stockholder
will also severally indemnify the Company Indemnified Parties for each LSL
Stockholder's pro rata share of losses arising from any breach of the
representations, warranties and covenants of LSL contained in the LSL Merger
Agreement with respect to taxes and environmental matters (the "Special
Indemnities").
The LSL Merger Agreement sets forth certain limits on the parties'
indemnification obligations, such as deductibles that must be reached before a
claim may be made, time deadlines before which claims must be made and
limitations on the amount of indemnification which may be paid. Except with
respect to the Special Indemnities, the LSL Stockholders, in the aggregate,
shall not be liable for any losses in excess of the aggregate value of the
183,568 shares of the Company's Common Stock valued at $21.00 per share which
the LSL Stockholders were required to place in escrow as security for their
indemnification obligations. Mr. Lawrence has placed 179,896 shares into the
escrow fund. With respect to the Special Indemnities, Mr. Lawrence is
individually and personally liable for his pro rata portion, or 98%, of any
losses.
Other than with respect to the Special Indemnities and certain covenants, an
indemnified party generally may not make any claim for indemnification after
October 10, 1998, and no such claim may be brought after the date of issuance of
the first independent audit report with respect to the financial statements of
the Company after the Company's acquisition of LSL if such claim is of a type
expected to be encountered in the course of an audit performed in accordance
with generally accepted auditing standards. With respect to the Special
Indemnities, the claims period will extend for the statute of limitations
applicable to the matters which are the subject of such claims.
While management of the Company believes that the indemnification provided by
the LSL Stockholders will be adequate, because of the various limitations
discussed above, a possibility exists that the losses experienced by the Company
could exceed the value of the shares held in escrow because the shares held in
escrow are insufficient in number or, due to market conditions and potential
stock price volatility, in value to adequately compensate the
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<PAGE>
Company for any losses which are the subject of the indemnification.
Furthermore, a possibility exists that the losses which are the subject of the
indemnification will be incurred during periods other than those for which
claims may be made with respect to such losses. Consequently, losses for which
there is insufficient indemnification could have a material adverse effect on
the Company or the other parties entitled to indemnification.
On October 10, 1997, LSL and LSI, a corporation wholly owned by Lamonte H.
Lawrence, entered into a consulting agreement (the "Consulting Agreement").
Pursuant to the Consulting Agreement, Mr. Lawrence's employment by LSL
terminated, LSL's obligations under any employment agreement ceased, and LSL
retained LSI as an independent consultant for a three-year period (the
"Consulting Term") on an independent contractor basis. Consulting services
under the Consulting Agreement are provided exclusively by Mr. Lawrence. During
each of the three twelve-month periods of the Consulting Term, Mr. Lawrence will
render consulting services as mutually agreed by LSI and LSL. In consideration
of the consulting services to be provided, LSL will pay LSI a per diem of
$2,880, but in no event will the total fee payable to LSI total less than
$250,000 for the first twelve-month period. Such minimum was determined as
approximately one-third of Mr. Lawrence's compensation from LSL in 1996, as Mr.
Lawrence, on behalf of LSI, is expected to devote approximately one-third of his
time during the year to LSL-related matters. The Company will permit LSI to
become a participating employer in the Company's health insurance program, but
only for the benefit of Mr. Lawrence. The Consulting Agreement may be
terminated by LSI after one year upon thirty days' written notice to LSL, may
only be terminated by LSL for cause and terminates automatically upon Mr.
Lawrence's disability or death.
OTHER
In October 1997, LSL converted existing notes receivable from Lamonte H.
Lawrence bearing interest at 7% and due upon demand into a promissory note in
the principal amount of $1,000,779 bearing interest at 8% per annum. The note
is due and payable on October 9, 1998.
In March 1997, the Company loaned Peter S. Kirlin $60,000 in exchange for Dr.
Kirlin's promissory note bearing interest at 6% per annum. In July 1997, the
Company loaned Dr. Kirlin an additional $50,000 in exchange for Dr. Kirlin's
promissory note bearing interest at 6% per annum. In December 1997, Dr. Kirlin
prepaid an aggregate of $23,120 due under the notes and the Company consolidated
the two notes into one promissory note in the principal amount of $86,880
bearing interest at 6% per annum. The note is due and payable on June 30, 1998.
2. 1998 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has unanimously adopted and recommended that the
stockholders consider and approve the Company's 1998 Employee Stock Purchase
Plan (the "Purchase Plan"), under which an aggregate of 500,000 shares will
be reserved for issuance. To become effective, the Purchase Plan must be
approved by the Company's stockholders. Such approval at the 1998 Annual Meeting
will require the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy and entitled to vote.
Abstentions by holders of such shares with respect to voting on the Purchase
Plan will have the effect of a vote against the Purchase Plan; broker non-votes
with respect to voting on the Purchase Plan will have no effect on the outcome
of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE PURCHASE PLAN IS ADVISABLE AND
IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE PURCHASE PLAN.
- - ---
The following constitutes a brief discussion of the material features of the
Purchase Plan and is qualified in its entirety by reference to the Purchase
Plan, the full text of which is attached hereto as Appendix A and is
incorporated herein by reference. All stockholders of the Company are urged to
read Appendix A in its entirety.
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PURPOSE
The purpose of the Purchase Plan is to provide employees (including officers)
of the Company and subsidiaries designated by the Board of Directors (each a
"Designated Subsidiary") with an opportunity to purchase Common Stock of the
Company through payroll deductions and to assist the Company in attracting,
retaining and motivating valued employees.
ADMINISTRATION
The Purchase Plan may be administered by the Board of Directors or the
Compensation Committee or other committee appointed by the Board of Directors
and consisting of at least two directors. All questions of interpretation or
application of the Purchase Plan will be determined by the Board of Directors or
its committee, and its decisions will be final, conclusive and binding upon all
participants.
SHARES SUBJECT TO THE PURCHASE PLAN
The stock to be offered under the Purchase Plan consists of shares of the
Company's Common Stock. The total number of shares of Common Stock reserved for
issuance under the Purchase Plan is 500,000 shares (subject to adjustment for
stock splits, stock dividends, stock combinations, recapitalizations and the
like). The shares may be either authorized and unissued shares, treasury shares
or shares purchased on the open market.
ELIGIBILITY
Each employee (including officers) of the Company (or a Designated Subsidiary)
who has been employed by the Company or a Designated Subsidiary for at least six
months, except for employees who are scheduled to work less than 20 hours per
week or less than five months per calendar year, is eligible to participate in
an offering under the Purchase Plan, subject to certain limitations imposed by
Section 423 of the Code, and subject to limitations on stock ownership as set
forth in the Purchase Plan. Eligible employees become participants in the
Purchase Plan by filing with the payroll office of the Company an enrollment
form authorizing payroll deductions prior to the applicable offering date. As
of March 31, 1998, there were approximately 307 employees eligible to
participate in the Purchase Plan.
PARTICIPATION IN AN OFFERING
Each offering of Common Stock under the Purchase Plan extends for a period of
six months ("Offering Period"), unless the participant withdraws or terminates
employment earlier. The Board of Directors or its committee may change the
length of Offering Periods without stockholder approval. To participate in the
Purchase Plan, each eligible employee must authorize payroll deductions pursuant
to the Purchase Plan. Such payroll deductions must be at least 1%, and may not
exceed 15% of a participant's regular salary, base straight time gross earnings,
commissions, payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses and other compensation. Once an employee becomes a
participant in the Purchase Plan, the employee will automatically participate in
each successive Offering Period until such time as the employee withdraws from
the Purchase Plan or the employee's employment terminates.
GRANT OF OPTION
At the beginning of each Offering Period, each participant is automatically
granted an option to purchase shares of the Company's Common Stock. The option
is exercised at the end of each Offering Period to the extent of the payroll
deductions accumulated during such Offering Period.
PURCHASE PRICE
Shares of Common Stock may be purchased under the Purchase Plan at a price
equal to 85% of the lesser of the fair market value of the Common Stock on (i)
the first day of the Offering Period or (ii) the last day of the
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Offering Period. The fair market value of the Common Stock on any relevant date
will be equal to (i) the average of the high and low prices for the Common Stock
as quoted on the principal national securities exchange on which the Common
Stock is then traded if the Common Stock is listed on any national securities
exchange, or (ii) the last reported sales price for the Common Stock (or the
closing bid, if no sales were reported) on The Nasdaq Stock Market if the Common
Stock is not then traded on a national securities exchange, or (iii) the closing
bid price (or average of bid prices) last quoted by an established quotation
service for over-the-counter securities, if the Common Stock is not then
reported on The Nasdaq Stock Market, each as reported in The Wall Street
Journal. The last sale price for the Company's Common Stock as reported by the
Nasdaq National Market on April 13, 1998 was $28.00 per share.
SHARES PURCHASED
The number of shares of Common Stock a participant purchases in an Offering
Period is determined by dividing the total amount of payroll deductions withheld
from the participant's compensation during that Offering Period by the purchase
price determined as described above. Any payroll deductions not applied to the
purchase of shares will generally be applied to the purchase of shares in
subsequent Offering Periods. In addition to the limitation on the maximum
payroll deduction, the option granted to the participant may not give a
participant the right to purchase shares under the Purchase Plan at a rate per
calendar year in excess of $25,000 (based on the market price on the first day
of an Offering Period).
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including retirement
or death, or the failure of the participant to remain in the continuous
scheduled employ of the Company or a Designated Subsidiary for at least 20 hours
per week (or five months per year) during the applicable Offering Period,
cancels his or her option and participation in the Purchase Plan immediately.
In such event, the payroll deductions credited to the participant's account will
be returned to him or her or, in the case of death, to the person or persons
entitled thereto as provided in the Purchase Plan.
WITHDRAWAL
A participant may withdraw from an Offering Period at any time without
affecting his or her eligibility to participate in future Offering Periods.
However, once a participant withdraws from a particular Offering Period, that
participant may not participate again in the same Offering Period.
CHANGES IN CAPITAL
In the event any change is made in the Company's capitalization during an
Offering Period, such as a stock split, stock combination or stock dividend,
which results in an increase or decrease in the number of shares of Common Stock
outstanding without receipt of consideration by the Company, appropriate
adjustment shall be made in the purchase price and in the number of shares
subject to options under the Purchase Plan.
AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at any time and for any reason terminate or amend
the Purchase Plan, except that without the approval of the stockholders of the
Company, the Board of Directors may not (i) increase the number of shares of
Common Stock available for sale under the Purchase Plan or (ii) materially
modify the eligibility for participation in the Purchase Plan. Termination of
the Purchase Plan shall not affect options previously granted, except in the
case of an acquisition of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan and the right of participants to make purchases thereunder
are intended to qualify under the provisions of Section 423 of the Code. Under
these provisions, no income will be taxable to a participant until
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<PAGE>
the shares purchased under the Purchase Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax, and the amount of the tax will depend upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
first day of the Offering Period and one year from the date the shares are
purchased, the participant will recognize ordinary income measured as the lesser
of (a) the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or (b) an amount equal to 15% of
the fair market value of the shares as of the first day of the Offering Period.
Any additional gain will be treated as long-term capital gain. If the shares are
sold or otherwise disposed of before the expiration of these holdings periods,
the participant will recognize ordinary income generally measured as the excess
of the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on the holding
period. The Company is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent of ordinary income
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above.
Because the tax consequences to a participant may vary depending upon the
participant's individual situation, and because such tax consequences are
subject to change due to changes in tax laws or regulations, each participant
should consult his or her personal tax advisor regarding the federal, and any
state, local or foreign, tax consequences to the participant.
3. 1998 STOCK PLAN
The Board of Directors has unanimously adopted and recommended that the
stockholders consider and approve the Company's 1998 Stock Plan (the "1998 Stock
Plan"), under which an aggregate of 2,000,000 shares will be reserved for
issuance. To become effective, the 1998 Stock Plan must be approved by the
Company's stockholders. Such approval at the 1998 Annual Meeting will require
the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote. Abstentions by
holders of such shares with respect to voting on the 1998 Stock Plan will have
the effect of a vote against the 1998 Stock Plan; broker non-votes with respect
to voting on the 1998 Stock Plan will have no effect on the outcome of the vote.
In June 1987, the Company adopted the 1987 Stock Plan, which was approved by
the Company's stockholders in July 1987 and which has been amended from time to
time (the "1987 Stock Plan"). While there are options outstanding under the
1987 Stock Plan, the 1987 Stock Plan expired in 1997. In May 1995, the Company
adopted the 1995 Stock Plan, which was approved by the Company's stockholders in
May 1995 (the "1995 Stock Plan"). In May 1997, the Company adopted the 1997
Stock Plan (the "1997 Stock Plan"), which was approved by the Company's
stockholders in May 1997. As of March 31, 1998, 531,969 shares of Common Stock
had been issued pursuant to the exercise of options granted under the 1987, 1995
and 1997 Stock Plans, options to purchase 1,798,061 shares were outstanding
under such plans and 185,803 shares were available for future grants under the
1995 and 1997 Stock Plans. To assure that sufficient shares are available to
provide stock-based incentives to those employees, directors, officers and
consultants of the Company and any subsidiaries who will be responsible for the
Company's future growth and continued success, the Board of Directors has
adopted the 1998 Stock Plan. In addition, if the Company completes its proposed
acquisition of NOW Technologies, Inc. ("NOW Technologies"), outstanding options
to purchase the common stock of NOW Technologies will be converted into options
to purchase the Company's Common Stock under the Company's stock plans. The
Company may not have sufficient shares available for grant under its
existing stock plans to provide for the conversion of all outstanding NOW
Technologies options. If necessary, therefore, if the 1998 Stock Plan is
approved by the Company's stockholders, a portion of the shares reserved under
the 1998 Stock Plan will be allocated to the potential conversion of outstanding
NOW Technologies options into Company options. Following stockholder approval of
the 1998 Stock Plan, or if stockholder approval is not obtained, the Company may
continue to grant awards under the 1995 and 1997 Stock Plans in accordance with
their terms.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE 1998 STOCK PLAN IS ADVISABLE AND
IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE 1998 STOCK PLAN.
- - ---
18
<PAGE>
The following constitutes a brief discussion of the material features of the
1998 Stock Plan and is qualified in its entirety by reference to the 1998 Stock
Plan, the full text of which is attached hereto as Appendix B and is
incorporated herein by reference. All stockholders of the Company are urged to
read Appendix B in its entirety.
NATURE AND PURPOSE
The stated purpose of the 1998 Stock Plan is to secure for the Company and any
subsidiaries of the Company the benefits arising from capital stock ownership
and the receipt of capital stock-based incentives by those employees, directors,
officers and consultants of the Company and any subsidiaries who will be
responsible for the Company's future growth and continued success.
The 1998 Stock Plan is designed to meet these objectives by granting stock
incentive awards to those persons whose performance or potential contribution
will benefit the Company. The 1998 Stock Plan empowers the Company to grant to
employees (including officers), directors and consultants of the Company and its
subsidiaries incentive and non-qualified stock options ("Options"), stock
appreciation rights ("SARs") and restricted stock awards ("Awards"). The 1998
Stock Plan also empowers the Company to grant to eligible individuals any
combination of any or all of these Options, SARs and Awards, subject to certain
limitations.
Persons to whom grants of Options, SARs and Awards are made are sometimes
referred to as "participants." References to "incentive stock options" are to
incentive stock options within the meaning of Section 422 of the Code.
DURATION
The 1998 Stock Plan provides that it will terminate upon the earlier of (i)
the tenth anniversary of the date of approval of the 1998 Stock Plan by the
stockholders of the Company or (ii) the date on which all shares available for
issuance under the 1998 Stock Plan shall have been issued pursuant to Awards and
the exercise or cancellation of Options and SARs granted thereunder. Options,
SARs and Awards outstanding on the termination date of the 1998 Stock Plan will
continue to have full force and effect in accordance with the provisions of the
instruments evidencing the Options, SARs and Awards. Pursuant to the 1998 Stock
Plan, the Board of Directors may modify, amend, terminate or suspend the 1998
Stock Plan from time to time or at any time without stockholder approval,
including amending the 1998 Stock Plan to increase the number of shares of
Common Stock subject to the 1998 Stock Plan. Any such modification, amendment,
termination or suspension of the 1998 Stock Plan will not impair the rights of
any person with respect to any Option, SAR or Award previously granted.
ADMINISTRATION
The 1998 Stock Plan may be administered by the Board of Directors of the
Company, or a Compensation Committee or other committee, appointed by the Board
of Directors and consisting of at least two directors, whose construction and
interpretation of the terms and provisions of the 1998 Stock Plan are final and
conclusive. The Board of Directors has delegated many of its powers under the
1998 Stock Plan to the Company's Compensation Committee. Members of the
Compensation Committee serve at the discretion of the Board of Directors. The
Compensation Committee may recommend to the Board of Directors the grant of
Options and SARs, issue shares upon exercise of such Options and SAR, and may
recommend to the Board of Directors the grant of Awards, all as provided in the
1998 Stock Plan. The Compensation Committee has the authority, subject to the
express provisions of the 1998 Stock Plan, to construe the 1998 Stock Plan and
its related agreements, to prescribe, amend and rescind the rules and
regulations relating to the 1998 Stock Plan, to determine the terms and
provisions of the respective Option, SAR and Award agreements, which need not be
identical, and to make all other determinations in the judgment of the
Compensation Committee necessary or desirable for the administration of the 1998
Stock Plan. The 1998 Stock Plan provides that if Options, SARs and Awards are
to be approved solely by a committee, the committee members must be "outside
directors" as that term is used in the regulation related to Section 162(m) of
the Code and "non-employee directors" as that term is used in Rule 16b-3 under
the Securities Exchange Act of 1934, as amended.
19
<PAGE>
SHARES SUBJECT TO THE 1998 STOCK PLAN
The stock to be offered under the 1998 Stock Plan consists of shares of the
Company's Common Stock. The last sale price for the Company's Common Stock as
reported by the Nasdaq National Market on April 13, 1998 was $28.00 per share.
The maximum number of shares of Common Stock in respect of which Options, SARs
and Awards may be granted pursuant to the provisions of the 1998 Stock Plan may
not exceed 2,000,000 (subject to adjustment for stock splits, stock dividends,
recapitalizations and the like). The shares may be either authorized and
unissued shares, treasury shares or shares purchased on the open market. If the
Company reacquires unvested shares issued pursuant to Awards under the 1998
Stock Plan, or if an Option or SAR expires or terminates without having been
exercised in full, the reacquired or unexercised shares will be available for
subsequent grant under the 1998 Stock Plan. Shares of Common Stock issued
pursuant to the 1998 Stock Plan may be subject to such restrictions on transfer,
repurchase rights or other restrictions as may be determined by the Compensation
Committee.
ELIGIBILITY
All employees (including officers) of the Company or any of its subsidiaries
are eligible to receive incentive stock options pursuant to the 1998 Stock Plan.
All employees (including officers), directors and consultants of the Company or
any of its subsidiaries are eligible to receive non-qualified options, SARs and
Awards. As of March 31, 1998, approximately 403 persons were eligible to
participate in the 1998 Stock Plan.
The selection of participants in, and the nature and size of grants under, the
1998 Stock Plan are within the discretion of the Compensation Committee, subject
to approval by the Board of Directors. However, under the 1998 Stock Plan, the
maximum number of shares with respect to which Options or SARs may be granted to
any employee shall be limited to 112,500 shares of Common Stock in any calendar
year. The Board of Director's designation of a participant in any year does not
require the Board of Directors to designate such person to receive a grant in
any other year. With respect to the 1998 Stock Plan, other than the allocation
of shares with respect to the potential conversion of outstanding NOW
Technologies options into Company options, the Board of Directors has made no
determination regarding the selection of particular participants to receive
grants or the nature of any grants to be made, and it is not determinable what,
if any, grants the Board of Directors may have made under the 1998 Stock Plan
had it been in effect in 1997. However, the table below shows the number of
Options granted under the 1995 and 1997 Stock Plans to such persons or groups
listed in such table during 1997.
<TABLE>
<CAPTION>
Numbers of Options
Name and Position Granted in 1997(1)
----------------- ------------------
<S> <C>
Eugene G. Banucci, President, Chief Executive Officer
Chairman of the Board and Director................................ 25,000
James M. Burns, President - EcoSys Division....................... 35,000
Peter S. Kirlin, Executive Vice President......................... 20,000
Daniel P. Sharkey, Vice President
Chief Financial Officer and Treasurer........................... 15,000
Duncan W. Brown, President - Epitronics Division.................. 5,000
All current executive officers as a group......................... 125,000
All current directors who are not executive officers
as a group........................................................ 0
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
All current employees, including all current officers
who are not executive officers, as a group........................ 450,890
</TABLE>
___________
(1) All such options were non-qualified options and generally become exercisable
in 20% increments on each of the five anniversary dates from the date of
grant. They were granted at exercise prices ranging from $16.88 to $29.38,
the fair market value on the dates of grant. They expire ten years from the
respective dates of grant.
OPTIONS AND SARS
Options
Options granted under the 1998 Stock Plan may be in the form of incentive
stock options or non-qualified stock options. Options may be granted under the
1998 Stock Plan on such terms and conditions not inconsistent with the
provisions of the 1998 Stock Plan and in such form as the Board of Directors may
from time to time approve.
The Option exercise price per share of Common Stock purchasable under an
Option granted under the 1998 Stock Plan shall be determined by the Board of
Directors at the time of grant. The exercise price of an incentive stock
option, however, shall not be less than the fair market value of Common Stock on
the date of grant or, in the case of an incentive stock option to be granted to
a participant owning stock having more than 10% of the total combined voting
power of all classes of stock of the Company or any subsidiary, the exercise
price per share shall be not less than 110% of the fair market value of such
stock on the date of grant. The exercise price of a non-qualified stock option
shall not be less than 50% of the fair market value of Common Stock on the date
of grant.
The term of each Option granted under the 1998 Stock Plan shall be fixed by
the Board of Directors; however, the term of any Option may not exceed ten years
from the date of grant, except that the term of any incentive stock option
granted to a participant owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
may not exceed five years.
An Option granted under the 1998 Stock Plan shall be exercisable at such time
or times and subject to such conditions as shall be determined by the Board of
Directors at the date of grant and as set forth in the instrument evidencing the
Option. With respect to incentive stock options, the aggregate fair market
value (determined as of the date of grant) of the number of shares with respect
to which such incentive stock options are exercisable for the first time by a
participant during any calendar year may not exceed $100,000 or such other limit
as may be established under Section 422 of the Code.
An Option granted under the 1998 Stock Plan may be exercised as provided in
the instrument evidencing the option; however, no partial exercise of the Option
may be for less than ten shares. Payment of the exercise price may be made with
cash, with shares of Common Stock or with a combination of cash and stock. The
Compensation Committee may also permit participants to simultaneously exercise
options and sell the shares of Common Stock thereby acquired, pursuant to a
brokerage or similar arrangement, approved in advance by the Compensation
Committee, and to use the proceeds from such sale as payment of the purchase
price. The Compensation Committee may, in its discretion, accelerate the date
of exercise of any installments of any Options, provided that no acceleration
will be made that would violate the annual vesting limitation contained in
Section 422(d) of the Code with respect to incentive stock options.
No shares of Common Stock will be issued under the 1998 Stock Plan unless
counsel for the Company is satisfied that such issuance will be in compliance
with applicable federal and state securities laws or any applicable listing
requirements of any national securities exchange on which the Common Stock is
then listed. Any participant in the 1998 Stock Plan may be required to
represent and agree in writing that the stock acquired by the participant is
being acquired for investment.
21
<PAGE>
Stock Appreciation Rights
Under the 1998 Stock Plan, an SAR may be granted in tandem with, in addition
to, or independent of any other grant. An SAR is the right to receive, without
payment, an amount equal to the excess, if any, of the fair market value of a
share of Common Stock on the date of exercise over the grant price of such
share, multiplied by the number of shares as to which the SARs shall have been
exercised. The Company will pay such amount to the holder in cash or in shares
of Common Stock or a combination thereof, as the Compensation Committee may
determine.
An SAR may be exercised by a participant in accordance with procedures
established by the Compensation Committee. The Compensation Committee may also
determine that an SAR shall be automatically exercised on one or more specified
dates.
Employment
An Option or SAR shall terminate if the participant ceases to be employed by
the Company or a subsidiary for any reason other than death, except that the
participant may (except as otherwise provided in the instrument evidencing the
Option or SAR) exercise within the three-month period following termination of
employment any unexpired portion of an Option or SAR that was otherwise
exercisable on the date of termination of employment. Except as otherwise
provided in the instrument evidencing the Option or SAR, if a participant dies
while an employee of the Company or a subsidiary, any Option or SAR granted to
such participant may be exercised by the participant's personal representatives
or heirs within six months of the participant's death to the extent that the
participant could have exercised the Option or SAR on the date of his or her
death.
Transferability
No Option or SAR granted under the 1998 Stock Plan, and no right or interest
therein, is assignable or transferable by a participant except by will or the
laws of descent and distribution or, with respect to non-qualified stock options
and SARs, to the extent the participant's agreement granting such non-qualified
stock option or SAR provides otherwise.
AWARDS
The Board of Directors may grant a participant an Award of shares of Common
Stock, on such terms and conditions and subject to such restrictions as the
Board of Directors may determine. Such restrictions may include restrictions on
the pledging, sale, assignment, transfer or other disposition of such shares and
the requirement that the participant forfeit all or a portion of such shares to
the Company upon termination of employment. Each participant receiving an Award
may be required to enter into a stock restriction agreement with the Company
agreeing to such restrictions. Shares issued pursuant to an Award are held by
the participant as holder of record for all purposes, including voting and
receipt of dividends.
Transferability
Shares of Common Stock issued pursuant to an Award may not be sold, assigned,
transferred or otherwise disposed of, except, subject to the terms of any stock
restriction agreement, by will or the laws of descent and distribution, and may
not be pledged or hypothecated as collateral for a loan, prior to the lapse of
restrictions on such shares. Any attempt by the participant to dispose of or
encumber the shares issued pursuant to an Award prior to the lapse of
restrictions on such shares will cause the participant's interest in such shares
to terminate.
Employment
Except as otherwise provided in any stock restriction agreement, if prior to
the lapse of the restrictions on the stock the participant ceases to be an
employee of the Company or a subsidiary for any reason, all such shares which
remain subject to restrictions shall be forfeited to the Company.
22
<PAGE>
CHANGE IN CONTROL
The 1998 Stock Plan provides that if (i) the Company is merged or consolidated
with another corporation and the Company is not the surviving corporation, (ii)
the property or stock of the Company is acquired by any other corporation, or
(iii) the Company is reorganized or liquidated, then the Board of Directors of
the Company, or the board of directors of any corporation assuming the
obligations of the Company, will, as to outstanding Options, SARs and Awards,
(1) make appropriate provision for the protection of any such outstanding
Options, SARs and Awards by the substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated or otherwise
reorganized corporation which will be issuable or exercisable in respect of the
shares of Common Stock, (2) upon written notice to the participants, provide
that all unexercised Options and SARs must be exercised within a specified
number of days of the date of such notice or such Options and SARs will be
terminated, or (3) upon written notice to the participants, provide that the
Company or the merged, consolidated or otherwise reorganized corporation shall
have the right, upon the effective date of any such merger, consolidation, sale
of assets or reorganization, to purchase all Options, SARs and Awards held by
each participant and unexercised as of that date for an amount and in the form
determined pursuant to the 1998 Stock Plan.
FEDERAL INCOME TAX CONSEQUENCES
Based on current provisions of the Code, and the existing regulations
thereunder, certain anticipated federal income tax consequences with respect to
the several types of grants are described below.
Grant of Options and SARs
A participant will not recognize any taxable income at the time an Option or
SAR is granted, and the Company will not be entitled to a federal income tax
deduction at that time.
Incentive Stock Options
No ordinary income will be recognized by a participant holding an incentive
stock option at the time of exercise. The excess of the fair market value of
the shares at the time of exercise over the aggregate option exercise price will
be an adjustment to alternative minimum taxable income for purposes of the
federal "alternative minimum tax" at the date of exercise. If the participant
holds the shares for the greater of two years after the date the option was
granted or one year after the acquisition of such shares, the difference between
the amount realized upon disposition of the shares and the aggregate option
exercise price will constitute a long-term capital gain or loss, as the case may
be, and the Company will not be entitled to a federal income tax deduction. If
the shares are disposed of in a sale, exchange or other "disqualifying
disposition" (including the use of the shares to exercise subsequent options)
within two years after the date of grant or within one year after the date of
exercise, the participant will realize taxable ordinary income in an amount
equal to the excess of the fair market value of the shares purchased at the time
of exercise over the aggregate option exercise price, and the Company will
usually be entitled to a federal income tax deduction equal to such amount. In
addition, the participant will have a taxable capital gain equal to the
difference, if any, between: (i) the amount realized upon disposition of the
shares, and (ii) the sum of the aggregate option exercise price plus the amount
of ordinary income on which the participant was taxed.
Non-Qualified Stock Options
Taxable ordinary income will be recognized by the participant at the time of
exercise of a non-qualified stock option in an amount equal to the excess of the
fair market value of the shares purchased at the time of such exercise over the
aggregate option exercise price. The Company will usually be entitled to a
corresponding federal income tax deduction. At the time of a subsequent sale of
the shares, the participant will generally recognize a taxable capital gain or
loss based upon the difference between the aggregate selling price of the shares
and the aggregate fair market value of the shares at the time of exercise.
23
<PAGE>
Stock Appreciation Rights
Upon the exercise of an SAR, the participant will realize taxable ordinary
income on the amount of cash received and/or the then current fair market value
of the shares of Common Stock received, and the Company will usually be entitled
to a corresponding federal income tax deduction. The participant's basis in any
shares of Common Stock received will be equal to the amount of ordinary income
upon which the participant was taxed. Upon any subsequent disposition, any gain
or loss realized will be a capital gain or loss.
In order for the full value of SARs to be deductible by the Company for
federal income tax purposes, the Company may intend for such SARs to be treated
as "qualified performance-based compensation," in which case, such SARs granted
shall be subject to additional requirements.
Awards
Unless a participant makes the election described below, a participant
receiving a restricted Award will not recognize income, and the Company will not
be allowed a deduction, at the time of grant of such Award, assuming no portion
of the Award is vested at the time of grant. While the restrictions on the
shares are in effect, a participant will recognize compensation income equal to
the amount of the dividends received, and the Company will be allowed a
deduction in a like amount. When the restrictions on the shares are removed or
lapse, the fair market value of the shares on the date the restrictions are
removed or lapse in excess of the amount, if any, paid by the participant will
be ordinary income to the participant in the year in which such restrictions are
removed or lapse, and such amount will be allowed as a deduction for federal
income tax purposes to the Company. Upon disposition of the shares, the gain or
loss recognized by the participant shall be equal to the difference between the
amount realized on such disposition and the fair market value of the shares on
the date the restrictions were removed or lapsed. Such amount will be treated as
capital gain or loss, and the capital gain or loss will be short-term or long-
term depending upon the period of time the shares are held by the participant
following the removal or lapse of the restrictions. If the restrictions do not
lapse and the shares are forfeited by the participant and thus returned to the
Company, there will be no federal income tax consequences to either the
participant or the Company. If permitted by the Compensation Committee, by
properly filing an election pursuant to Section 83(b) of the Code with the
Internal Revenue Service within 30 days after the date of grant (assuming that
the date of grant is the date the participant acquires a beneficial interest in
the Award), a participant's ordinary income and commencement of the holding
period and the Company's deduction will be determined as of the date of grant.
In such a case, the amount of ordinary income recognized by such a participant
and deductible by the Company will be equal to the fair market value of the
shares as of the date of grant. If such election is made and a participant
thereafter forfeits his or her stock, no refund or deduction will be allowed for
the amount previously included in such participant's income.
Special Rules
To the extent a participant pays all or part of the option exercise price of a
non-qualified stock option by tendering shares of Common Stock owned by the
participant, the tax consequences described above apply except that the number
of shares received upon such exercise which is equal to the number of shares
surrendered in payment of the option exercise price shall have the same tax
basis and holding period as the shares surrendered. The additional shares
received upon such exercise shall have a tax basis equal to the amount of
ordinary income recognized on such exercise and a holding period which commences
on the date of exercise. To preserve the Company's deductions with respect to
the non-qualified options and SARs, the Board of Directors may be required to
set the exercise or grant price for such non-qualified options and SARs at the
fair market value of a share of Common Stock on the date of grant.
Withholding Taxes
Withholding taxes must be paid by the participant at the time of exercise of
any non-qualified stock option or SAR prior to the delivery of shares. In
respect of Awards, withholding taxes must be paid by the participant when
ordinary income to the participant is recognized for tax purposes.
24
<PAGE>
Section 162(m)
Under Section 162(m) of the Code, the Company is not entitled to a federal
income tax deduction for compensation in excess of $1 million paid in any year
to its chief executive officer and its four other most highly compensated
executive officers, subject to certain exceptions. Compensation that qualifies
as "performance-based" under Section 162(m) is exempt from this limitation.
Options and SARs granted under the 1998 Stock Plan at an exercise price that is
not less than the fair market value of Company Common Stock on the date of grant
are designed to satisfy the requirements for the performance-based exemption.
However, Awards granted under the 1998 Stock Plan would not qualify for the
performance-based exemption under Section 162(m).
General
Because the tax consequences to a participant may vary depending upon the
participant's individual situation, and because such tax consequences are
subject to change due to changes in tax laws or regulations, each participant
should consult his or her personal tax advisor regarding the federal, and any
state, local or foreign, tax consequences to the participant.
4. AMENDMENT TO CERTIFICATE OF INCORPORATION
INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has unanimously approved and recommended that the
stockholders of the Company consider and approve an amendment to Article IV of
the Company's Certificate of Incorporation, as amended (the "Certificate"), that
would increase the number of authorized shares of Common Stock from 30,000,000
shares to 50,000,000 shares (the "Amendment"). The affirmative vote of a
majority of shares of Common Stock outstanding as of the Record Date is required
to approve and adopt the Amendment. Accordingly, abstentions and broker non-
votes with respect to the Amendment will have the effect of votes against the
Amendment.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to amend the Certificate to give effect to the
proposed Amendment. If the Amendment is approved, the additional authorized
shares of Common Stock will be available for issuance from time to time for such
purposes and consideration as the Board of Directors may approve, and no further
vote of the stockholders of the Company will be sought unless such vote is
required for a particular issuance by law or the rules of any national
securities exchange on which the Common Stock may then be listed or the Nasdaq
Stock Market, as the case may be. The proposed increase in the number of
authorized shares of Common Stock has been recommended by the Board of Directors
to assure that an adequate supply of authorized but unissued shares is available
for certain potential offerings, acquisitions and financings and for general
corporate needs. The Board of Directors considers the proposed increase in the
number of authorized shares desirable because it will enable the Company to
pursue opportunities which the Board of Directors believes provide the Company
with the potential for growth and profit. It will give the Board of Directors
the necessary flexibility to issue shares of Common Stock in connection with
stock dividends and stock splits, acquisitions, financings, stock options and
employee benefits, and for other general corporate purposes without the expense
and delay incident to obtaining stockholder approval at the time of any such
action. Stockholders do not have preemptive rights to purchase additional
shares of Common Stock.
On the Record Date, there were 20,439,942 shares of Common Stock issued and
outstanding, and approximately 1,797,261 shares of Common Stock were reserved
for issuance upon exercise of outstanding options. In addition, if the Company
completes its proposed acquisition of NOW Technologies, the Company will issue a
minimum of 1,319,856 shares of Common Stock and a maximum of 1,586,164 shares of
Common Stock.
25
<PAGE>
If the Amendment is adopted, the amended portion of Article IV of the
Certificate, will provide as follows:
ARTICLE IV
Capital Stock
-------------
The total number of shares of all classes of stock which the corporation
has authority to issue is FIFTY-TWO Million (52,000,000), consisting of
FIFTY Million (50,000,000) shares of Common Stock, par value $0.01 per
share (the "Common Stock"), and Two Million (2,000,000) shares of Preferred
Stock with a par value of $0.01 per share (the "Preferred Stock").
The only changes in Article IV which will be effected if the Amendment is
approved are the changes set forth in bold face type above. All other portions
of Article IV will remain unchanged.
POSSIBLE ANTI-TAKEOVER EFFECT
Although the Board of Directors has no present intention of issuing additional
shares for such purposes, the proposed increase in the number of authorized
shares of Common Stock could enable the Board of Directors to issue additional
shares to render more difficult or discourage an attempt by another person or
entity to obtain control of the Company. The issuance of additional shares of
Common Stock in a public or private sale, merger or similar transaction would
increase the number of outstanding shares and thereby could dilute the
proportionate interest of a party attempting to gain control of the Company. In
addition, the Company's Certificate provides the Board of Directors with the
authority to issue shares of the Company's preferred stock without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine, all of
which could discourage or defeat a takeover attempt not considered by the Board
of Directors to be in the best interests of the Company and its stockholders.
The Board of Directors and management have no knowledge of any current efforts
to obtain control of the Company, and the Amendment is not being proposed in
response to any known takeover attempt.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE AMENDMENT IS ADVISABLE AND IN
THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE AMENDMENT.
- - ---
5. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as independent certified
auditors to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 1998 and has determined that it would be
desirable to request that the stockholders ratify such selection. The
affirmative vote of a majority of the outstanding shares of Common Stock present
at the 1998 Annual Meeting in person or by proxy is necessary for the
ratification of the appointment by the Board of Directors of Ernst & Young LLP
as independent certified auditors. Ernst & Young LLP served as the Company's
independent certified auditors for the fiscal year ended December 31, 1997 and
has reported on the Company's consolidated financial statements for such year.
Representatives of Ernst & Young LLP are expected to be present at the 1998
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders.
While stockholder ratification is not required for the selection of Ernst &
Young LLP since the Board of Directors has the responsibility for selecting the
Company's independent certified auditors, the selection is being submitted for
ratification at the 1998 Annual Meeting with a view towards soliciting the
stockholders' opinions, which the Board of Directors will take into
consideration in future deliberations.
26
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ERNST & YOUNG
---
LLP AS INDEPENDENT CERTIFIED AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1998.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
1998 Annual Meeting. If, however, any other business should properly come
before the 1998 Annual Meeting, the persons named in the accompanying proxy will
vote the proxy as in their discretion they may deem appropriate, unless they are
directed by the proxy to do otherwise.
COST OF SOLICITING PROXIES
The cost of soliciting proxies will be paid by the Company. In addition to
the solicitation of proxies by mail, proxies may be solicited by personal
interview, telephone and similar means by directors, officers or regular
employees of the Company, none of whom will be specially compensated for such
activities. The Company has retained Morrow & Company, Inc. to assist in the
solicitation of proxies, for an estimated fee of $5,000, plus reimbursement of
certain out-of-pocket expenses.
STOCKHOLDERS PROPOSALS FOR 1999
Any proposal intended to be presented by a stockholder at the Company's 1999
Annual Meeting of Stockholders must be presented to the Company no later than
the close of business on December 31, 1998. Proposals should be addressed to
Dean Hamilton, ATMI, Inc., 7 Commerce Drive, Danbury, Connecticut 06810.
Any stockholder of record of the Company may nominate candidates for election
to the Board of Directors if a written notice is delivered to the Secretary of
the Company at the Company's principal executive offices not less than 60 days
nor more than 90 days prior to the first anniversary of the preceding year's
annual meeting. Such written notice must set forth: (i) as to each person whom
the stockholder proposes to nominate for election as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors pursuant to the Securities Exchange Act of
1934, as amended (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected), and (ii)
as to the stockholder and the beneficial owner, if any, on whose behalf the
nomination is made (a) the name and address of such stockholder and such
beneficial owner and (b) the number of shares of common stock that are owned
beneficially and held of record by such stockholder and such beneficial owner
By order of the Board of Directors,
Ward C. Stevens
Secretary
Danbury, CT
April 30, 1998
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<PAGE>
APPENDIX A
ATMI, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
-------
The purpose of the 1998 Employee Stock Purchase Plan (the "Plan") is to
provide eligible employees of the Company and its Designated Subsidiaries with
an opportunity to purchase Common Stock of the Company through accumulated
payroll deductions. It is the intention of the Company to have the Plan qualify
as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue
Code of 1986, as amended. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. DEFINITIONS
-----------
(a) "Administrator" shall mean the Board or a compensation committee or
other committee consisting of two or more Board members appointed by
the Board to administer the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean ATMI, Inc. and any Designated Subsidiary of the
Company.
(f) "Compensation" shall mean all regular salary, base straight time gross
earnings, commissions, payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.
(g) "Designated Subsidiaries" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(h) "Employee" shall mean any individual who is an employee of the Company
for tax purposes whose customary employment with the Company is at least twenty
(20) hours per week and more than five (5) months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as continuing
intact while the individual is on sick leave or other leave of absence approved
by the Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by contract, the
employment relationship shall be deemed to have terminated on close of business
on the 90th day of such leave.
(i) "Enrollment Date" shall mean the first day of each Offering Period.
(j) "Exercise Date" shall mean the last day of each Offering Period.
(k) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:
(1) If the Common Stock is listed on any national securities exchange,
its Fair Market Value shall be the average of the high and low
prices for such stock as quoted on the principal national
securities exchange on which the Common Stock is then traded for
the last Trading Day prior to the time of determination, as
reported in The Wall Street Journal or such other source as the
Administrator deems reliable, or;
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(2) If the Common Stock is quoted on the Nasdaq National Market or the
Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the last reported sales price for such stock (or the
closing bid, if no sales were reported) as quoted by the Nasdaq
National Market or the Nasdaq SmallCap Market for the last Trading
Day prior to the time of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable, or;
(3) If the Common Stock is regularly quoted by an established quotation
service for over-the-counter securities but selling prices are not
reported, its Fair Market Value shall be the closing bid price (or
average of bid prices) for the Common Stock for the last Trading Day
prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable, or;
(4) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the
Administrator.
(l) "Offering Period" shall have the meaning set forth in Section 4 hereof.
(m) "Option Price" shall mean an amount equal to 85% of the Fair Market Value
of a share of Common Stock on the Enrollment Date or on the Exercise Date,
whichever is lower.
(n) "Participant" shall mean an Employee who has met the eligibility
requirements of Section 3 and who has elected to participate pursuant to an
election under Section 5(a).
(o) "Plan" shall mean this Employee Stock Purchase Plan.
(p) "Reserved Shares" shall mean the number of shares of Common Stock covered
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(q) "Subsidiary" shall mean a corporation, domestic or foreign, whether or
not such corporation now exists or is hereafter organized or acquired by the
Company or a Subsidiary, which would be a "subsidiary corporation" of the
Company as such term is defined in Section 424(f) of the Code or any successor
provision thereto.
(r) "Trading Day" shall mean a day on which national stock exchanges and The
Nasdaq Stock Market are open for trading.
3. ELIGIBILITY
-----------
(a) Any Employee (as defined in Section 2(h)), who shall be employed by the
Company for at least six months on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan:
(i) to the extent that, immediately after the grant, such Employee (or
any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting
power or value of all classes of the capital stock of the Company
(including any parent or Subsidiary of the Company); or
(ii) to the extent that his or her rights to purchase stock under all
employee stock purchase plans of the Company (and its parent or
Subsidiaries) accrues at a rate which exceeds Twenty-Five
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Thousand Dollars ($25,000) of the Fair Market Value of such stock
(determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time. If an
Employee's payroll deductions during an Offering Period exceed the
purchase price for the maximum number of shares of Common Stock that
may be purchased under an option outstanding in any calendar year,
the excess shall be retained in such Employee's account and applied
in the next Offering Period.
4. OFFERING PERIODS
----------------
The Plan shall be implemented by consecutive, six-month periods ("Offering
Periods") with a new Offering Period commencing on the first Trading Day on or
after January 1 and July 1 each year, or on such other date as the Administrator
shall determine, and continuing thereafter until terminated in accordance with
Section 19 hereof. The Administrator shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced at least ten (10) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.
5. PARTICIPATION
-------------
(a) An eligible Employee may become a Participant in the Plan by completing a
subscription agreement authorizing payroll deductions in the form of Exhibit A
to this Plan and filing it with the Company's payroll office at least ten (10)
business days prior to the applicable Enrollment Date.
(b) Payroll deductions for a Participant shall commence on the first payroll
following the Enrollment Date and shall end on the last payroll in the Offering
Period to which such authorization is applicable, unless sooner terminated by
the Participant as provided in Section 10 hereof.
(c) A Participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof
or modified as provided in Section 6 hereof.
6. PAYROLL DEDUCTIONS
------------------
(a) At the time a Participant files his or her subscription agreement, he or
she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not less than one percent (1%) and not exceeding
fifteen percent (15%) of the Compensation which he or she receives on each pay
day during the Offering Period, and the aggregate of such payroll deductions
during the Offering Period shall not exceed fifteen percent (15%) of the
Participant's Compensation during such Offering Period.
(b) All payroll deductions made for a Participant shall be credited to his or
her account under the Plan and shall be withheld in whole percentages only. A
Participant may not make any additional payments into such account.
(c) A Participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof and may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing or filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Administrator may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following ten (10) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly.
(d) At the time the option is exercised, in whole or in part, or at the time
some or all of the Company's Common Stock issued under the Plan is disposed of,
the Participant must make adequate provision for the Company's federal, state,
or other tax withholding obligations, if any, which arise upon the exercise of
the option or the disposition of the Common Stock. At any time, the Company
may, but shall not be obligated to, withhold
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from the Participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.
7. GRANT OF OPTION
---------------
On the Enrollment Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be deemed to have been granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Option Price) up to a number of shares of the Company's Common Stock
determined by dividing such Employee's payroll deductions accumulated prior to
such Exercise Date and retained in the Participant's account as of the Exercise
Date by the applicable Option Price; provided that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof. Exercise
of the option shall occur as provided in Section 8 hereof, unless the
Participant has withdrawn pursuant to Section 10 hereof. The option shall
expire on the last day of the Offering Period.
8. EXERCISE OF OPTION
------------------
Unless a Participant withdraws from the Plan as provided in Section 10
hereof, his or her option for the purchase of shares with payroll deductions
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to such option shall be purchased for such Participant at
the applicable Option Price with the accumulated payroll deductions in his or
her account at that time. No fractional shares shall be purchased; any payroll
deductions accumulated in a Participant's account which are not sufficient to
purchase a full share shall be retained in the Participant's account for the
subsequent Offering Period, subject to earlier withdrawal by the Participant as
provided in Section 10 hereof. During a Participant's lifetime, a Participant's
option to purchase shares hereunder is exercisable only by him or her.
9. DELIVERY
--------
As promptly as practicable after each Exercise Date on which a purchase of
shares occurs, the Company shall arrange the delivery to each Participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his or her option.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT
-------------------------------------
(a) A Participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the Participant's payroll deductions
credited to his or her account shall be paid to such Participant promptly after
receipt of notice of withdrawal, and such Participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a Participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the Participant delivers to
the Company a new subscription agreement.
(b) Upon a Participant's ceasing to be an Employee (as defined in Section
2(h) hereof), for any reason, he or she shall be deemed to have elected to
withdraw from the Plan, and the payroll deductions credited to such
Participant's account during the Offering Period but not yet used to exercise
the option shall be returned to such Participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof, and
such Participant's option shall be automatically terminated.
(c) A Participant's withdrawal from an Offering Period shall not have any
effect upon his or her eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the date of withdrawal from a prior Offering Period.
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11. INTEREST
--------
No interest shall accrue on the payroll deductions of a Participant in the
Plan, except where otherwise required by local law.
12. STOCK
-----
(a) The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock purchased
on the open market. The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 500,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18 hereof. If, on a given Exercise Date, the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
(b) The Participant shall have no interest or voting right in shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant or in the name of the Participant and
his or her spouse.
13. ADMINISTRATION
--------------
(a) The Plan shall be administered by the Administrator. The Administrator
shall have full and exclusive discretionary authority to construe, interpret and
apply the terms of the Plan, to determine eligibility and to adjudicate all
disputed claims filed under the Plan. Every finding, decision and determination
made by the Administrator shall, to the full extent permitted by law, be final
and binding upon all parties.
(b) Notwithstanding the provisions of Subsection (a) of this Section 13, in
the event that Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any successor provision ("Rule 16b-3")
provides specific requirements for the administrators of plans of this type, the
Plan shall be administered only by such a body and in such a manner as shall
comply with the applicable requirements of Rule 16b-3. Unless permitted by Rule
16b-3, no discretion concerning decisions regarding the Plan shall be afforded
to any person who is not a "non-employee director" as that term is used in Rule
16b-3.
14. DESIGNATION OF BENEFICIARY
--------------------------
(a) A Participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant's account under the
Plan in the event of such Participant's death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such Participant of such
shares and cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account under the
Plan in the event of such Participant's death prior to exercise of the option.
If a Participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
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15. TRANSFERABILITY
---------------
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 14 hereof) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 10
hereof.
16. USE OF FUNDS
------------
All payroll deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
17. REPORTS
-------
Individual accounts shall be maintained for each Participant in the Plan.
Statements of account shall be given to participating Employees at least
annually, which statements shall set forth the amounts of payroll deductions,
the Option Price, the number of shares purchased and the remaining cash balance,
if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
--------------------------------------------------------
LIQUIDATION, MERGER OR ASSET SALE
---------------------------------
(a) Subject to any required action by the stockholders of the Company, the
Reserved Shares, as well as the price per share, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) In the event of the proposed dissolution or liquidation of the Company,
the Offering Period then in progress shall be shortened by setting a new
Exercise Date (the "New Exercise Date"), and shall terminate immediately prior
to the consummation of such proposed dissolution or liquidation, unless provided
otherwise by the Board. The New Exercise Date shall be before the date of the
Company's proposed dissolution or liquidation. The Board shall notify each
Participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the Participant's option has been
changed to the New Exercise Date and that the Participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
Participant has withdrawn from the Offering Period as provided in Section 10
hereof.
(c) In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Board determines, in the exercise of its
sole discretion and in lieu of such assumption or substitution, to shorten any
Offering Period then in progress by setting a new Exercise Date (the "New
Exercise Date") or to cancel each outstanding right to purchase and refund all
sums collected from Participants during the Offering Period then in progress. If
the Board shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each Participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for his or her option has been changed to
the New Exercise Date and that his or her option will be exercised automatically
on the New Exercise Date, unless prior to such date he or she has withdrawn from
the Offering Period as provided in Section 10 hereof. For purposes of this
paragraph, an option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or
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merger, the option confers the right to purchase, for each share of Common Stock
subject to the option immediately prior to the sale of assets or merger, the
consideration (whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each share of Common
Stock held on the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the sale of assets or merger was
not solely common stock of the successor corporation or its parent (as defined
in Section 424(e) of the Code), the Board may, with the consent of the successor
corporation and the Participant, provide for the consideration to be received
upon exercise of the option to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserved Shares, as well as the price per
share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalization, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. AMENDMENT OR TERMINATION
------------------------
(a) The Board may at any time and for any reason terminate or amend the
Plan, except that without the approval of the stockholders of the Company, the
Board may not (i) increase the number of shares available for sale under the
Plan (except for permissible adjustments provided in the Plan), or (ii)
materially modify the requirements as to eligibility for participation in the
Plan. Except as provided in Section 18 hereof, no such termination can affect
options previously granted. Except as provided in Section 18 hereof, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any Participant. To the extent necessary to comply with
Rule 16b-3 or Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall otherwise obtain
stockholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Board or the Administrator shall be entitled to change the Offering Period,
limit the frequency and/or number of changes in the amount withheld during an
Offering Period, permit payroll withholding in excess of the amount designated
by a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the Board or
the Administrator determines in its sole discretion advisable, which are
consistent with the Plan.
20. NOTICES
-------
All notices or other communications by a Participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES
----------------------------------
Shares shall not be issued with respect to an option unless the exercise of
such option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
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As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. EFFECTIVE DATE AND TERM OF PLAN
-------------------------------
(a) The Plan shall become effective as of April 14, 1998 (the date of
adoption of the Plan by the Board), provided no options granted under the Plan
shall be exercised, and no shares of Common Stock shall be issued hereunder,
until (i) the Plan shall have been approved by the stockholders of the Company
on or before April 13, 1999 and (ii) the Company shall have complied with all
applicable requirements of the Securities Act (including the registration of the
shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange on which the Common Stock is listed
for trading and all other applicable requirements established by law or
regulation. In the event such stockholder approval is not obtained, or such
compliance is not effected, with twelve (12) months after the date on which the
Plan is adopted by the Board, the Plan shall terminate and have no further force
or effect, and all sums collected from Participants during the initial Offering
Periods hereunder shall be refunded.
(b) Unless sooner terminated by the Board, the Plan shall terminate upon the
earlier of (i) April 14, 2008 or (ii) the date on which all shares available for
issuance under the Plan have been sold pursuant to options exercised under the
Plan. No further options shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following its termination.
23. GENERAL PROVISIONS
------------------
(a) All costs and expenses incurred in the administration of the Plan shall
be paid by the Company.
(b) Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Company for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or of
the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.
(c) The provisions of the Plan shall be governed by the laws of the State of
Delaware, without resort to that state's conflict-of-laws rules.
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EXHIBIT A
ATMI, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_________ Original Application Enrollment Date: _________
_________ Change in Payroll Deduction Rate
_________ Change of Beneficiary(ies)
1. ___________________________ hereby elects to participate in the ATMI, Inc.
1998 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
___% of my Compensation on each payday (not to exceed 15%, including amounts
deferred under other employee stock purchase plans of the Company) during the
Offering Period in accordance with the Employee Stock Purchase Plan. (Please
note that no fractional percentages are permitted.)
3. I understand that these payroll deductions shall be accumulated for the
purchase of shares of Common stock at the applicable Option Price determined
in accordance with the Employee Stock Purchase Plan. I understand that if I
do not withdraw from an Offering Period, any accumulated payroll deductions
will be used to automatically exercise my option.
4. I understand that the Internal Revenue Code limits the amount that may be
purchased under all employee stock purchase plans of the Company to a maximum
of $25,000 worth of Company stock, based on the fair market value of the
stock on the first day of the Offering Period, per calendar year.
5. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my ability
to exercise the option under this Subscription Agreement is subject to
stockholder approval of the Employee Stock Purchase Plan.
6. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only):
_____________________________________________________________________________
7. I understand that if I dispose of any shares received by me pursuant to the
Plan within two years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time such shares
were purchased by me over the price which I paid for the shares. I hereby
agree to notify the Company in writing within 30 days after the date of any
disposition of my shares, and I will make adequate provision for federal,
state or other tax withholding obligations, if any, which arise upon the
disposition of the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available
to the Company any tax deductions or benefits attributable to sale
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or early disposition of Common Stock by me. If I dispose of such shares at
any time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such income
will be taxed as ordinary income only to the extent of an amount equal to the
lesser of (1) the excess of the fair market value of the shares at the time
of such disposition over the purchase price which I paid for the shares, or
(2) 15% of the fair market value of the shares on the first day of the
Offering Period. The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.
8. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan.
The effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
9. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Employee
Stock Purchase Plan:
NAME: (Please print) _________________________________________________
(First) (Middle) (Last)
Relationship
Employee's Social
Security Number:
Employee's Address:
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ________________________
____________________________________________
Signature of Employee
____________________________________________
Spouse's Signature (If beneficiary other than spouse)
A-10
<PAGE>
EXHIBIT B
ATMI, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the ATMI, Inc. 1998
Employee Stock Purchase Plan which began on _________________, 19 ___ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
__________________________________
__________________________________
__________________________________
Signature:
__________________________________
Date:
_______________________
A-11
<PAGE>
APPENDIX B
ATMI, INC.
1998 STOCK PLAN
SECTION 1. PURPOSE
- - --------- -------
The purpose of the 1998 Stock Plan (the "Plan") is to secure for ATMI, Inc.
(the "Company"), its parent (if any) and any subsidiaries of the Company
(collectively the "Related Companies") the benefits arising from capital stock
ownership and the receipt of capital stock-based incentives by those employees,
directors, officers and consultants of the Company and any Related Companies who
will be responsible for the Company's future growth and continued success.
The Plan will provide a means whereby (a) employees of the Company and any
Related Companies may purchase stock in the Company pursuant to options which
qualify as "incentive stock options" ("Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), (b)
directors, employees and consultants of the Company and any Related Companies
may purchase stock in the Company pursuant to options granted hereunder which do
not qualify as Incentive Stock Options ("Non-Qualified Option" or "Non-Qualified
Options"); (c) directors, employees and consultants of the Company and any
Related Companies may be awarded stock in the Company ("Awards"); and (d)
directors, employees and consultants of the Company and any Related Companies
may receive stock appreciation rights ("SARs"). Both Incentive Stock Options
and Non-Qualified Options are referred to hereafter individually as an "Option"
and collectively as "Options." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation" as those
terms are defined in Section 424 of the Code. Options, Awards and SARs are
referred to hereafter individually as a "Plan Benefit" and collectively as "Plan
Benefits." Directors, employees and consultants of the Company and any Related
Companies are referred to herein as "Participants."
SECTION 2. ADMINISTRATION
- - --------- --------------
2.1 BOARD OF DIRECTORS AND THE COMMITTEE. The Plan will be administered
------------------------------------
by the Board of Directors of the Company whose construction and interpretation
of the terms and provisions hereof shall be final and conclusive. Any director
to whom a Plan Benefit is awarded shall be ineligible to vote upon his or her
Plan Benefit, but Plan Benefits may be granted to any such director by a vote of
the remainder of the directors, except as limited below. The Board of Directors
may in its sole discretion grant Options, issue shares upon exercise of such
Options, grant Awards and grant SARs all as provided in the Plan. The Board of
Directors shall have authority, subject to the express provisions of the Plan,
to construe the Plan and its related agreements, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the respective Option, Award and SAR agreements, which need not be
identical, and to make all other determinations in the judgment of the Board of
Directors necessary or desirable for the administration of the Plan. The Board
of Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any related agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director shall be liable for any
action or determination made in good faith. The Board of Directors may delegate
any or all of its powers under the Plan to a Compensation Committee or other
Committee (the "Committee") appointed by the Board of Directors consisting of at
least two members of the Board of Directors. If Plan Benefits are to be
approved solely by a Committee, the members of the Committee shall at all times
be: (i) "outside directors" as that term is defined in Treas. Reg. (S)1.162-
27(e)(3) (or any successor regulation); and (ii) "non-employee directors" within
the meaning of Rule 16b-3 (or any successor rule) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as such terms are interpreted from
time to
B-1
<PAGE>
time. If the Committee is so appointed, all references to the Board of Directors
herein shall mean and relate to such Committee, unless the context otherwise
requires.
2.2 COMPLIANCE WITH SECTION 162(m) OF THE CODE. Section 162(m) of the
------------------------------------------
Code generally limits the tax deductibility to publicly held companies of
compensation in excess of $1,000,000 paid to certain "covered employees"
("Covered Employees"). It is the Company's intention to preserve the
deductibility of such compensation to the extent it is reasonably practicable
and to the extent it is consistent with the Company's compensation objectives.
For purposes of this Plan, Covered Employees of the Company shall be those
employees of the Company described in Section 162(m)(3) of the Code.
SECTION 3. ELIGIBILITY
- - --------- -----------
3.1 INCENTIVE STOCK OPTIONS. Participants who are employees shall be
-----------------------
eligible to receive Incentive Stock Options pursuant to the Plan; provided that
no person shall be granted any Incentive Stock Option under the Plan who, at the
time such Option is granted, owns, directly or indirectly, Common Stock of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Related Companies, unless the
requirements of Section 6.6(b) hereof are satisfied. In determining whether
this 10% threshold has been reached, the stock attribution rules of Section
424(d) of the Code shall apply. Directors who are not regular employees are not
eligible to receive Incentive Stock Options.
3.2 NON-QUALIFIED OPTIONS, AWARDS AND SARs. Non-Qualified Options, Awards
--------------------------------------
and SARs may be granted to any Participant.
3.3 GENERALLY. The Board of Directors may take into consideration a
---------
Participant's individual circumstances in determining whether to grant an
Incentive Stock Option, a Non-Qualified Option, an Award or an SAR. Granting of
any Option, Award or SAR for any Participant shall neither entitle that
Participant to, nor disqualify that Participant from, participation in any other
grant of Plan Benefits.
SECTION 4. STOCK SUBJECT TO PLAN
- - --------- ---------------------
Subject to adjustment as provided in Sections 9 and 10 hereof, the stock to
be offered under the Plan shall consist of shares of the Company's Common Stock,
$.01 par value, and the maximum number of shares which will be reserved for
issuance, and in respect of which Plan Benefits may be granted pursuant to the
provisions of the Plan, shall not exceed in the aggregate 2,000,000 shares.
Such shares may be authorized and unissued shares, treasury shares or shares
purchased on the open market. If an Option or SAR granted hereunder shall
expire or terminate for any reason without having been exercised in full, or if
the Company shall reacquire any unvested shares issued pursuant to Awards, the
unpurchased shares subject thereto and any unvested shares so reacquired shall
again be available for subsequent grants of Plan Benefits under the Plan. Stock
issued pursuant to the Plan may be subject to such restrictions on transfer,
repurchase rights or other restrictions as shall be determined by the Board of
Directors.
SECTION 5. GRANTING OF OPTIONS, SARs AND AWARDS
- - --------- ------------------------------------
Plan Benefits may be granted under the Plan at any time after May 20, 1998
(the date of approval of the Plan by the stockholders of the Company) and prior
to May 19, 2008; provided, however, that nothing in the Plan shall be construed
to obligate the Company to grant Plan Benefits to a Participant or anyone
claiming under or through a Participant. The date of grant of Plan Benefits
under the Plan will be the date specified by the Board of Directors at the time
the Board of Directors grants such Plan Benefits; provided, however, that such
date shall not be prior to the date on which the Board of Directors takes such
action. The Board of Directors shall have the right,
B-2
<PAGE>
with the consent of a Participant, to convert an Incentive Stock Option granted
under the Plan to a Non-Qualified Option pursuant to Section 6.7. Plan Benefits
may be granted alone or in addition to other grants under the Plan.
SECTION 6. SPECIAL PROVISIONS APPLICABLE TO OPTIONS AND SARs
- - --------- -------------------------------------------------
6.1 PURCHASE PRICE AND SHARES SUBJECT TO OPTIONS AND SARs.
-----------------------------------------------------
(a) The purchase price per share of Common Stock deliverable upon the
exercise of an Option shall be determined by the Board of Directors;
provided, however, that (i) in the case of an Incentive Stock Option, the
-------- -------
exercise price shall not be less than 100% of the fair market value of such
Common Stock on the day the Option is granted (except as modified in
Section 6.6(b) hereof), and (ii) in the case of a Non-Qualified Option, the
exercise price shall not be less than 50% of the fair market value on the
day such Option is granted.
(b) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of such Options, (ii)
shares of Common Stock of the Company owned by the Participant having a
fair market value equal in amount to the exercise price of the Options
being exercised, or (iii) any combination of (i) and (ii). The fair market
value of any shares of the Company's Common Stock which may be delivered
upon exercise of an Option shall be determined by the Board of Directors.
The Board of Directors may also permit Participants, either on a selective
or aggregate basis, to simultaneously exercise Options and sell the shares
of Common Stock thereby acquired, pursuant to a brokerage or similar
arrangement, approved in advance by the Board of Directors, and to use the
proceeds from such sale as payment of the purchase price of such shares.
(c) If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as
of the last business day for which the prices or quotes discussed in this
sentence are available prior to the date such Option is granted (the
"Determination Date") and shall mean (i) the average (on the Determination
Date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if such
Common Stock is then traded on a national securities exchange; (ii) the
last reported sale price (on the Determination Date) of the Common Stock on
The Nasdaq Stock Market if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of
bid prices) last quoted (on the Determination Date) by an established
quotation service for over-the-counter securities, if the Common Stock is
not reported on The Nasdaq Stock Market. However, if the Common Stock is
not publicly traded at the time an Option is granted under the Plan, "fair
market value" shall be deemed to be the fair value of the Common Stock as
determined by the Board of Directors after taking into consideration all
factors which it deems appropriate, including, without limitation, recent
sale and offer prices of the Common Stock in private transactions
negotiated at arm's length.
(d) The maximum number of shares with respect to which Options or SARs
may be granted to any employee, including any transactions contemplated by
Treas. Reg. (S)1.162(e)(2)(vi), shall be limited to 112,500 shares in any
calendar year.
6.2 DURATION OF OPTIONS AND SARs. Subject to Section 6.6(b) hereof, each
----------------------------
Option and SAR and all rights thereunder shall be expressed to expire on such
date as the Board of Directors may determine, but in no event later than ten
years from the day on which the Option or SAR is granted and shall be subject to
earlier termination as provided herein.
B-3
<PAGE>
6.3 EXERCISE OF OPTIONS AND SARs.
----------------------------
(a) Subject to Section 6.6(b) hereof, each Option and SAR granted
under the Plan shall be exercisable at such time or times and during such
period as shall be set forth in the instrument evidencing such Option or
SAR. To the extent that an Option or SAR is not exercised by a Participant
when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be exercisable, on a cumulative basis, until the
expiration of the exercise period. No partial exercise may be for less
than ten (10) full shares of Common Stock (or its equivalent).
(b) The Board of Directors shall have the right to accelerate the date
of exercise of any installments of any Option or SAR; provided that the
Board of Directors shall not accelerate the exercise date of any
installment of any Option granted to a Participant as an Incentive Stock
Option (and not previously converted into a Non-Qualified Option pursuant
to Section 6.7) if such acceleration would violate the annual vesting
limitation contained in Section 422(d)(1) of the Code, which provides
generally that the aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive Stock
Options granted to any Participant are exercisable for the first time by
such Participant during any calendar year (under all plans of the Company
and any Related Companies) shall not exceed $100,000.
6.4 NONTRANSFERABILITY OF OPTIONS AND SARs. No Option or SAR granted
--------------------------------------
under the Plan shall be assignable or transferable by the Participant, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, with respect to Non-Qualified Options and SARs, unless the
Participant's non-qualified stock option agreement granting such options (the
"Non-Qualified Stock Option Agreement") or the Participant's SAR agreement
granting such SARs (the "SAR Agreement") provides otherwise. Unless otherwise
provided by the Non-Qualified Stock Option Agreement or the SAR Agreement, as
applicable, during the life of the Participant, the Option or SAR shall be
exercisable only by the Participant. If any Participant should attempt to
dispose of or encumber the Participant's Options or SARs, other than in
accordance with the applicable terms of a Non-Qualified Stock Option Agreement
or SAR Agreement, the Participant's interest in such Options or SARs shall
terminate.
6.5 EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH ON OPTIONS AND SARs.
----------------------------------------------------------------
(a) Except as otherwise provided in the instrument evidencing the Plan
Benefit, if a Participant ceases to be employed by the Company or a Related
Company for any reason, including retirement but other than death, any
Option or SAR granted to such Participant under the Plan shall immediately
terminate; provided, however, that, except as otherwise provided in the
-------- -------
instrument evidencing the Plan Benefit, any portion of such Option or SAR
which was otherwise exercisable on the date of termination of the
Participant's employment may be exercised within the three-month period
following the date on which the Participant ceased to be so employed, but
in no event after the expiration of the exercise period. Except as
otherwise provided in the instrument evidencing the Plan Benefit, any such
exercise may be made only to the extent of the number of shares subject to
the Option or SAR which were purchasable or exercisable on the date of such
termination of employment. If the Participant dies during such three-month
period, the Option or SAR shall be exercisable by the Participant's
personal representatives, heirs or legatees to the same extent and during
the same period that the Participant could have exercised the Option or SAR
on the date of his or her death, except as otherwise provided in the
instrument evidencing the Plan Benefit.
(b) Except as otherwise provided in the instrument evidencing the Plan
Benefit, if the Participant dies while an employee of the Company or any
Related Company, any Option or SAR granted to such Participant under the
Plan shall be exercisable by the Participant's personal representatives,
heirs or legatees, for the purchase of or exercise relative to that number
of shares and to the same extent that the Participant could have exercised
the Option or SAR on the date of his or her death. Except as otherwise
provided in the instrument evidencing the Plan Benefit, the Option or SAR
or any unexercised portion
B-4
<PAGE>
thereof shall terminate unless so exercised prior to the earlier of the
expiration of six months from the date of such death or the expiration of
the exercise period.
6.6 DESIGNATION OF INCENTIVE STOCK OPTIONS; LIMITATIONS. Options granted
---------------------------------------------------
under the Plan which are intended to be Incentive Stock Options qualifying under
Section 422 of the Code shall be designated as Incentive Stock Options and shall
be subject to the following additional terms and conditions:
(a) Dollar Limitation. The aggregate fair market value (determined at
-----------------
the time the option is granted) of the Common Stock for which Incentive
Stock Options are exercisable for the first time during any calendar year
by any person under the Plan (and all other incentive stock option plans of
the Company and any Related Companies) shall not exceed $100,000. In the
event that Section 422(d)(1) of the Code is amended to alter the limitation
set forth therein so that following such amendment such limitation shall
differ from the limitation set forth in this Section 6.6(a), the limitation
of this Section 6.6(a) shall be automatically adjusted accordingly.
(b) 10% Stockholder. If any Participant to whom an Incentive Stock
---------------
Option is to be granted pursuant to the provisions of the Plan is on the
date of grant the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Related
Companies, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) The option price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110% of the fair
market value of one share of Common Stock on the date of grant; and
(ii) The option exercise period shall not exceed five years from
the date of grant.
In determining whether the 10% threshold has been reached, the stock
attribution rules of Section 424(d) of the Code shall apply.
(c) Except as modified by the preceding provisions of this Section
6.6, all of the provisions of the Plan shall be applicable to Incentive
Stock Options granted hereunder.
6.7 CONVERSION OF INCENTIVE STOCK OPTIONS INTO NON-QUALIFIED OPTIONS;
-----------------------------------------------------------------
TERMINATION OF INCENTIVE STOCK OPTIONS. The Board of Directors, at the written
- - --------------------------------------
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such Incentive Stock Options, regardless of whether the
Participant is an employee of the Company or a Related Company at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Board of Directors (with
the consent of the Participant) may impose such conditions on the exercise of
the resulting Non-Qualified Options as the Board of Directors in its discretion
may determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any Participant the right to
have such Participant's Incentive Stock Options converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Board of
Directors takes appropriate action. The Board of Directors, with the consent of
the Participant, may also terminate any portion of any Incentive Stock Option
that has not been exercised at the time of such termination.
6.8 STOCK APPRECIATION RIGHTS. An SAR is the right to receive, without
-------------------------
payment, an amount equal to the excess, if any, of the fair market value of a
share of Common Stock on the date of exercise over the grant price, which amount
will be multiplied by the number of shares with respect to which the SARs shall
have been exercised. The grant of SARs under the Plan shall be subject to the
following terms and conditions and shall
B-5
<PAGE>
contain such additional terms and conditions, not inconsistent with the express
terms of the Plan, as the Board of Directors shall deem desirable:
(a) Grant. SARs may be granted in tandem with, in addition to or
-----
completely independent of any Plan Benefit.
(b) Grant Price. The grant price of an SAR may be the fair market value of
-----------
a share of Common Stock on the date of grant or such other price as the Board of
Directors may determine.
(c) Exercise. An SAR may be exercised by a Participant in accordance with
--------
procedures established by the Board of Directors or as otherwise provided in any
agreement evidencing any SARs. The Board of Directors may provide that an SAR
shall be automatically exercised on one or more specified dates.
(d) Form of Payment. Payment upon exercise of an SAR may be made in cash,
---------------
in shares of Common Stock or any combination thereof, as the Board of Directors
shall determine.
(e) Fair Market Value. Fair market value shall be determined in accordance
-----------------
with Section 6.1(c) with the "Determination Date" being determined by reference
to the date of grant or the date of exercise of an SAR, as applicable.
6.9 RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a
-----------------------
stockholder with respect to any shares covered by an Option or SAR until the
date of issue of a stock certificate to the Participant for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
6.10 SPECIAL PROVISIONS APPLICABLE TO NON-QUALIFIED OPTIONS AND SARs
---------------------------------------------------------------
GRANTED TO COVERED EMPLOYEES. In order for the full value of Non-Qualified
- - ----------------------------
Options and SARs granted to Covered Employees to be deductible by the Company
for federal income tax purposes, the Company may intend for such Non-Qualified
Options and SARs to be treated as "qualified performance-based compensation" as
described in Treas. Reg. (S)1.162-27(e) (or any successor regulation). In such
case, Non-Qualified Options and SARs granted to Covered Employees shall be
subject to the following additional requirements:
(a) such options and rights shall be granted only by the Committee;
and
(b) the exercise price of such Options and the grant price of such
SARs granted shall in no event be less than the fair market value of the
Common Stock as of the date of grant of such Options or SARs.
SECTION 7. SPECIAL PROVISIONS APPLICABLE TO AWARDS
- - --------- ---------------------------------------
7.1 GRANTS OF AWARDS. The Board of Directors may grant a Participant an
----------------
Award subject to such terms and conditions as the Board of Directors deems
appropriate, including, without limitation, restrictions on the pledging, sale,
assignment, transfer or other disposition of such shares and the requirement
that the Participant forfeit all or a portion of such shares back to the Company
upon termination of employment.
7.2 CONDITIONS. Approvals of Awards may be subject to the following
----------
conditions:
(a) Each Participant receiving an Award shall enter into an agreement
(a "Stock Restriction Agreement") with the Company, if required by the
Board of Directors, in a form specified by the Board of Directors agreeing
to such terms and conditions of the Award as the Board of Directors deems
appropriate.
B-6
<PAGE>
(b) Shares issued and transferred to a Participant pursuant to an
Award may, if required by the Board of Directors, be deposited with the
Treasurer or other officer of the Company designated by the Board of
Directors to be held until the lapse of the restrictions upon such shares,
and the Participant shall execute and deliver to the Company stock powers
enabling the Company to exercise its rights hereunder.
(c) Certificates for shares issued pursuant to an Award shall, if the
Company shall deem it advisable, bear a legend to the effect that they are
issued subject to specified restrictions.
(d) Certificates representing the shares issued pursuant to an Award
shall be registered in the name of the Participant and shall be owned by
such Participant. Such Participant shall be the holder of record of such
shares for all purposes, including voting and receipt of dividends paid
with respect to such shares.
(e) If required by the Board of Directors, no Participant receiving an
Award shall make, in connection with such Award, the election permitted
under Section 83(b) of the Code.
7.3 NONTRANSFERABILITY. Shares issued pursuant to an Award may not be
------------------
sold, assigned, transferred, alienated, commuted, anticipated, or otherwise
disposed of (except, subject to the provisions of such Participant's Stock
Restriction Agreement, by will or the laws of descent and distribution), or
pledged or hypothecated as collateral for a loan or as security for the
performance of any obligation, or be otherwise encumbered, and are not subject
to attachment, garnishment, execution or other legal or equitable process, prior
to the lapse of restrictions on such shares, and any attempt at action in
contravention of this Section shall be null and void. If any Participant should
attempt to dispose of or encumber the Participant's shares issued pursuant to an
Award prior to the lapse of the restrictions imposed on such shares, the
Participant's interest in such shares shall terminate.
7.4 EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH ON AWARDS. Except as
------------------------------------------------------
otherwise provided in the instrument evidencing the Awards, if, prior to the
lapse of restrictions applicable to Awards, the Participant ceases to be an
employee of the Company or the Related Companies for any reason, Awards to such
Participant, as to which restrictions have not lapsed, shall be forfeited to the
Company, effective on the date of the Participant's termination of employment.
The Board of Directors shall have the sole power to decide in each case to what
extent leaves of absence shall be deemed a termination of employment.
SECTION 8. REQUIREMENTS OF LAW
- - --------- -------------------
8.1 VIOLATIONS OF LAW. No shares shall be issued and delivered upon
-----------------
exercise of any Option or the making of any Award or the payment of any SAR
unless and until, in the opinion of counsel for the Company, any applicable
registration requirements of the Securities Act of 1933, any applicable listing
requirements of any national securities exchange on which stock of the same
class is then listed, and any other requirements of law or of any regulatory
bodies having jurisdiction over such issuance and delivery, shall have been
fully complied with. Each Participant may, by accepting Plan Benefits, be
required to represent and agree in writing, for himself or herself and for his
or her transferees by will or the laws of descent and distribution, that the
stock acquired by him, her or them is being acquired for investment. The
requirement for any such representation may be waived at any time by the Board
of Directors.
8.2 COMPLIANCE WITH RULE 16b-3. The intent of this Plan is to qualify for
---------------------------
the exemption provided by Rule 16b-3 under the Exchange Act. To the extent any
provision of the Plan does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board of Directors and shall not affect the validity of the Plan. In the
event Rule 16b-3 is revised or replaced, the Board of Directors may exercise
discretion to modify this Plan in any respect necessary to satisfy the
requirements of the revised exemption or its replacement.
B-7
<PAGE>
SECTION 9. RECAPITALIZATION
- - --------- ----------------
In the event that dividends are payable in Common Stock of the Company or
in the event there are splits, sub-divisions or combinations of shares of Common
Stock of the Company, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of any Option previously granted
shall be increased or decreased proportionately, as the case may be, without
change in the aggregate purchase price, and the number of shares to which
granted SARs relate shall be increased or decreased proportionately, as the case
may be, and the grant price of such SARs shall be decreased or increased
proportionately, as the case may be.
SECTION 10. REORGANIZATION
- - ---------- --------------
If the Company is merged, consolidated with another corporation and the
Company is not the Surviving Corporation, or the property or stock of the
Company is acquired by any other corporation or in the case of a reorganization
or liquidation of the Company, the Board of Directors of the Company, or the
board of directors of any corporation assuming the obligations of the Company
hereunder, shall, as to outstanding Plan Benefits, (i) make appropriate
provision for the protection of any such outstanding Plan Benefits by the
substitution on an equitable basis of appropriate stock of the Company or of the
merged, consolidated or otherwise reorganized corporation which will be issuable
in respect of the shares of Common Stock of the Company; provided only that the
excess of the aggregate fair market value of the shares subject to the Plan
Benefits immediately after such substitution over the purchase or grant price
thereof is not more than the excess of the aggregate fair market value of the
shares subject to such Plan Benefits immediately before such substitution over
the purchase or grant price thereof, (ii) upon written notice to the
Participants, provide that all unexercised Plan Benefits must be exercised
within a specified number of days of the date of such notice or such Plan
Benefits will be terminated, or (iii) upon written notice to the Participants,
provide that the Company or the merged, consolidated or otherwise reorganized
corporation shall have the right, upon the effective date of any such merger,
consolidation, sale of assets or reorganization, to purchase all Plan Benefits
held by each Participant and unexercised as of that date at an amount equal to
the aggregate fair market value on such date of the shares subject to the Plan
Benefits held by such Participant over the aggregate purchase or grant price
therefor, such amount to be paid in cash or, if stock of the merged,
consolidated or otherwise reorganized corporation is issuable in respect of the
shares of the Common Stock of the Company, then, in the discretion of the Board
of Directors, in stock of such merged, consolidated or otherwise reorganized
corporation equal in fair market value to the aforesaid amount. In any such
case the Board of Directors shall, in good faith, determine fair market value
and may, in its discretion, advance the lapse of any waiting or installment
periods and exercise dates.
SECTION 11. NO SPECIAL EMPLOYMENT RIGHTS
- - ---------- ----------------------------
Nothing contained in the Plan or in any Plan Benefit documentation shall
confer upon any Participant receiving a grant of any Plan Benefit any right with
respect to the continuation of his or her employment by the Company (or any
Related Company) or interfere in any way with the right of the Company (or any
Related Company), subject to the terms of any separate employment agreement to
the contrary, at any time to terminate such employment or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of any Plan Benefit. Whether an authorized leave of absence
or absence in military or government service shall constitute termination of
employment shall be determined by the Board of Directors, in accordance with any
applicable laws.
SECTION 12. AMENDMENT OF THE PLAN
- - ---------- ---------------------
The Board of Directors may at any time and from time to time suspend or
terminate all or any portion of the Plan or modify or amend the Plan in any
respect. The termination or any modification or amendment of the Plan shall
not, without the consent of a Participant, affect the Participant's rights under
any Plan Benefit previously
B-8
<PAGE>
granted. With the consent of the affected Participant, the Board of Directors
may amend outstanding agreements relating to any Plan Benefit in a manner not
inconsistent with the Plan. The Board of Directors hereby reserves the right to
amend or modify the terms and provisions of the Plan and of any outstanding
Options to the extent necessary to qualify any or all Options under the Plan for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, provided, however, that the consent of a Participant is required if such
amendment or modification would cause unfavorable income tax treatment for such
Participant.
SECTION 13. WITHHOLDING
- - ---------- -----------
The Company's obligation to deliver shares of stock upon the exercise of
any Option or SAR or the granting of an Award and to make payment upon exercise
of any SAR shall be subject to the satisfaction by the Participant of all
applicable federal, state and local income and employment tax withholding
requirements.
SECTION 14. EFFECTIVE DATE AND DURATION OF THE PLAN
- - ---------- ---------------------------------------
14.1 EFFECTIVE DATE. The Plan shall become effective as of May 20, 1998
--------------
(the date of approval of the Plan by the stockholders of the Company).
14.2 DURATION. Unless sooner terminated in accordance with Section 10
--------
hereof, the Plan shall terminate upon the earlier of (i) the tenth anniversary
of the effective date or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to any Awards or the
exercise or cancellation of Options and SARs granted hereunder. If the date of
termination is determined under (i) above, then Plan Benefits outstanding on
such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such Plan Benefits.
SECTION 15. GOVERNING LAW
- - ---------- -------------
The Plan and all actions taken thereunder shall be governed by the laws of
the State of Delaware.
B-9
<PAGE>
DETACH HERE
ATMI, INC.
Proxy for the Annual Meeting of Stockholders
P to be held May 20, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
The undersigned, revoking all proxies, hereby appoint(s) Eugene G.
O Banucci and Daniel P. Sharkey, and each of them, with full power of
substitution, as proxies to represent and vote as designated herein, all
X shares of stock of ATMI, Inc. (the "Company") which the undersigned would
be entitled to vote if personally present at the Annual Meeting of
Y Stockholders of the Company to be held at the Ethan Allen Inn, 21 Lake
Avenue Extension, Danbury, Connecticut 06811, on May 20, 1998 at 10:00
a.m., local time, and at any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other
matters as properly may come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction is
given, this proxy will be voted FOR Proposals 1, 2, 3, 4 and 5. The
undersigned may revoke this proxy at any time before it is voted by
executing and delivering to the Company a proxy bearing a later date, by
delivering a written notice to the Secretary of the Company stating that
the proxy is revoked, or by voting in person at the meeting.
<PAGE>
<TABLE>
<CAPTION>
------------------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
------------------
PROPOSALS 2-5
CERTAIN CAPITALIZED TERMS USED IN THIS PROXY
ARE DEFINED IN THE ACCOMPANYING PROXY STATEMENT
2. To approve the Company's 1998 Employee Stock Purchase Plan, under which
an aggregate of 500,000 shares will be reserved for issuance.
3. To approve the Company's 1998 Stock Plan, under which an aggregate of
2,000,000 shares will be reserved for issuance.
4. To approve an amendment to the Company's Certificate of Incorporation,
as amended, to increase the number of authorized shares of the Company's
Common Stock from 30,000,000 shares to 50,000,000 shares.
5. To ratify the appointment by the Board of Directors of Ernst & Young LLP
as the Company's independent certified auditors for the fiscal year
ending December 31, 1998.
DETACH HERE
- - -----
X Please mark
- - ----- votes as in
this sample
The Board of Directors unanimously recommends a vote FOR Proposals 2,
3, 4 and 5.
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. To elect directors,
Nominees: John A. Armstrong and Robert S. Hillas Proposal 2. [_] [_] [_]
FOR WITHHELD
[_] [_] Proposal 3. [_] [_] [_]
[_] _____________________________________________ Proposal 4. [_] [_] [_]
For all nominees except as noted above
Proposal 5. [_] [_] [_]
</TABLE>
SEE ABOVE FOR EXPLANATION OF PROPOSALS 2-5
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
Sign as name appears on stock certificate.
Joint owners must both sign. Attorney,
executor, administrator, trustee or guardian
must give title. A corporation or partnership
must sign in its name by an authorized person.
<TABLE>
<S> <C> <C> <C>
Signature: _____________________________ Date_________________ Signature: _____________________________ Date_________________
</TABLE>
