SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Zygo Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Zygo Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/x/ 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: _________________________________________________
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___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
ZYGO CORPORATION
Laurel Brook Road
Middlefield, Connecticut 06455
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 16, 1995
The Annual Meeting of Stockholders of Zygo Corporation will be held at the
offices of the Company, Laurel Brook Road, Middlefield, Connecticut, on November
16, 1995, at 10:00 a.m. local time, for the following purposes:
1. To elect eight directors for the ensuing year.
2. To consider and vote upon a proposal to amend the Company's Restated
Certificate of Incorporation to increase the number of shares of Common Stock
authorized for issuance from 10,000,000 to 15,000,000 shares.
3. To consider and vote upon a proposal to amend the Company's Amended and
Restated Non-Qualified Stock Option Plan to increase the number of shares of
Common Stock authorized for issuance under the Plan from 975,000 to 1,425,000
shares.
4. To consider and approve the Company's entering into indemnity agreements
with its directors and officers.
5. To act upon any other matter that may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on September 22, 1995, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Paul Jacobs,
Secretary
October 10, 1995
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YOUR VOTE IS IMPORTANT
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Please fill in, date, sign, and return your proxy promptly in the enclosed
stamped envelope whether or not you plan to be present at the meeting. You may
still vote in person if you attend the meeting.
<PAGE>
ZYGO CORPORATION
Laurel Brook Road
Middlefield, Connecticut 06455
Proxy Statement
Annual Meeting of Stockholders To Be Held November 16, 1995
Proxy Solicitation
This Proxy Statement is furnished to the holders of Common Stock, par value
$.10 per share (the "Common Stock"), of Zygo Corporation (the "Company") in
connection with the solicitation by the Board of Directors of the Company of
proxies for use at the Annual Meeting of Stockholders to be held on November 16,
1995, or at any adjournment thereof, pursuant to the accompanying Notice of
Annual Meeting of Stockholders. The purposes of the meeting and the matters to
be acted upon are set forth in the accompanying Notice of Annual Meeting of
Stockholders. The Board of Directors is not currently aware of any other matters
which will come before the meeting.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about
October 10, 1995, and will be solicited chiefly by mail; however, certain
officers, directors, and employees of the Company, none of whom will receive
additional compensation therefor, may solicit proxies by telephone, telegram, or
other personal contact. All solicitation expenses, including costs of preparing,
assembling, and mailing proxy material, will be borne by the Company.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby to approve Proposal Nos. 1, 2, 3 and 4 as set
forth herein and in the accompanying Notice of Annual Meeting of Stockholders
and in accordance with their best judgment on any other matters which may
properly come before the meeting.
<PAGE>
Record Date and Voting Rights
Only stockholders of record at the close of business on September 22, 1995,
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On September 22, 1995, there were 3,933,886 shares of
Common Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock present in person or by proxy and entitled to
vote will constitute a quorum at the Annual Meeting.
On July 20, 1995, the Company's Board of Directors declared a 3 for 2 stock
split effected in the form of a 50% stock dividend, payable on August 21, 1995
to stockholders of record at the close of business on August 1, 1995. All share
and option information included in this Proxy Statement has been adjusted, to
the extent necessary, to reflect such stock split as if it had occurred prior to
the date as of which the information is given.
Proposal No. 1 - Election of Board of Directors
Eight directors (constituting the entire Board) are to be elected at the
Annual Meeting. The enclosed proxy, unless otherwise specified, will be voted to
elect as directors the eight nominees named below, all of whom are presently
directors of the Company. Each director elected will hold office until the next
Annual Meeting of Stockholders.
All nominees have consented to serve as directors. If a nominee should not
be available for election as contemplated, the shares represented by the proxy
will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve.
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<PAGE>
<TABLE>
<CAPTION>
Common Stock deemed
beneficially owned at
August 31, 1995 (a)
Principal occupation -------------------------
during past five years Number % of
and certain other Director of Common
Name directorships Age since shares Stock
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul F. Forman Chairman from June 1970 and, 61 1970 273,060 (b) 6.9%
from June 1970 to August
1993, Chief Executive
Officer and from June 1970
to November 1993, Treasurer;
from June 1991 to February
1992, acting President; and,
from February 1992 to
November 1993, Secretary of
the Company.
Michael R. Corboy President and Chief Execu- 65 1993 21,000 (c) 0.5%
tive Officer of Corboy
Investment Company since
January 1992; Chairman and
Chief Executive Officer of
Amtech Corporation from
December 1987 until December
1991; Director of The Kirby
Foundation; the Aquinas
Funds, Networth, Inc., and
Wyle Electronics.
Seymour E. Senior Vice President 46 1993 7,500 (d) 0.2%
Liebman Finance and General Counsel
Canon U.S.A., Inc. since
January 1992; from January
1990 until December 1991,
Vice President Finance and
General Counsel Canon U.S.A.
Inc.
Robert G. Chairman, President, George 58 1983 53,100 (e) 1.3%
McKelvey McKelvey Co., Inc.
(Investment Advisor and
Securities Broker-Dealer)
for more than the last five
years.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock deemed
beneficially owned at
August 31, 1995 (a)
Principal occupation -------------------------
during past five years Number % of
and certain other Director of Common
Name directorships Age since shares Stock
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul W. Murrill Professional Engineer for 61 1993 14,250 (f) 0.4%
more than the last five
years; Director of Entergy
Corporation, Tidewater,
Inc., First Mississippi
Corporation, FirstMiss Gold,
Inc., Piccadilly Cafeterias,
Inc., Howell Corporation,
various foundations and
public service
organizations.
Robert B. Taylor Vice President and Treasurer 48 1988 9,750 (g) 0.2%
of Wesleyan University since
April 1985; Director of
Middlesex Mutual Assurance
Co. and Farmers and
Mechanics Bank.
Gary K. Willis President and Chief 50 1992 155,250 (h) 3.9%
Executive Officer since
August 1993; from February
1992 until August 1993,
President and Chief
Operating Officer of the
Company; from October 1990
until January 1992,
independent consultant.
Carl A. Zanoni Vice President, Research, 54 1970 289,110 (i) 7.3%
Development and Engineering
of the Company since April
1992; from February 1989
until March 1992, Vice
President, Research and
Development, Chief Scientist
and, from June 1970 until
February 1989, Vice
President, Engineering of
the Company.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock deemed
beneficially owned at
August 31, 1995 (a)
Principal occupation -------------------------
during past five years Number % of
and certain other Director of Common
Name directorships Age since shares Stock
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
All directors and
officers as a
group, including
those named
above (10 in all)
(d)(e) 852,270 (j) 20.6%
</TABLE>
(a) The persons named and all directors and officers as a group in the
table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, except for shares
which can be acquired by the exercise of stock options.
(b) Includes options to purchase 39,000 shares of Common Stock which are
exercisable within 60 days.
(c) Includes options to purchase 13,500 shares of Common Stock which are
exercisable within 60 days.
(d) Consists of options to purchase 7,500 shares of Common Stock which are
exercisable within 60 days. Does not include 786,000 shares owned by
Canon Inc.
(e) Includes options to purchase 7,500 shares of Common Stock which are
exercisable within 60 days.
(f) Includes options to purchase 13,500 shares of Common Stock which are
exercisable within 60 days.
(g) Includes options to purchase 7,500 shares of Common Stock which are
exercisable within 60 days. Does not include 397,500 shares owned by
Wesleyan University.
(h) Includes options to purchase 56,250 shares of Common Stock which are
exercisable within 60 days.
(i) Includes options to purchase 36,450 shares of Common Stock which are
exercisable within 60 days.
(j) Includes options to purchase 202,950 shares of Common Stock which are
exercisable within 60 days.
Eight meetings of the Board of Directors were held in fiscal 1995. In
addition, the Board acted twice by unanimous written consent.
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<PAGE>
The Board of Directors has an Audit Committee, Compensation Committee,
Amended and Restated Non-Qualified Stock Option Plan Committee (the
"Non-Qualified Plan Committee"), and a Nominating Committee to assist it in the
discharge of its responsibilities.
The Audit Committee reviews the scope, plan, and results of the annual
audit, any non-audit services provided by the independent public accountants,
the procedures and policies with respect to internal accounting controls, and
recommends the firm to be employed as independent auditors. Three meetings of
the Audit Committee were held in fiscal 1995. Effective November 1994, Messrs.
Murrill and Taylor are the members of the Audit Committee.
The Compensation Committee determines the compensation of the executive
officers, recommends to the Board and the Non-Qualified Plan Committee awards
under the Company's Amended and Restated Non-Qualified Stock Option Plan (the
"Non-Qualified Plan"), and recommends to the Board amendments to existing
employee benefit plans and adoption of any new benefit plans. Messrs. Corboy,
Liebman and McKelvey are the members of the Compensation Committee. There were
three meetings of the Compensation Committee held in fiscal 1994.
The Non-Qualified Plan Committee is empowered to grant stock options to key
employees and directors of the Company under the Company's Non-Qualified Plan.
Messrs. Liebman and McKelvey are the members of the Non-Qualified Plan
Committee. The Non-Qualified Plan Committee met one time during fiscal 1995 and,
in addition, acted twice by unanimous written consent during the year.
The Nominating Committee considers candidates (and potential candidates)
for the office of director of the Company, who are brought to its attention from
whatever source, and recommends to the full Board the names of those persons,
willing to serve, whom they believe it will be in the Company's overall best
interest to have fill any available vacancy or vacancies. Messrs. Willis,
Liebman, and McKelvey are the members of the Nominating Committee. No formal
meetings of the Nominating Committee were held during fiscal 1995 as the entire
Board addressed this task at its meetings.
Each director attended at least 75% of the total number of meetings of the
Board and Committees on which he served.
Pursuant to the Zygo Corporation Non-Employee Director Stock Option Plan
(the "Non-Employee Director Plan"), each director who was not an employee of, or
consultant to, the Company (a "Non-Employee Director") was granted in August
1994 an option to purchase 37,500 shares of Common Stock, vesting at 7,500
shares per year, exercisable at the fair market value of a share of Common Stock
on the date of grant. The Non-Employee Director Plan further provides that
options to purchase an additional 37,500 shares of Common Stock automatically
will be granted to each Non-Employee Director on the fifth anniversary of the
date on which an option was previously granted to the Non-Employee Director,
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<PAGE>
provided that he has continuously served as a director of the Company through
such fifth anniversary. Until November 1993, each Non-Employee Director who was
a designee of either Canon Inc. ("Canon") or Wesleyan University ("Wesleyan")
pursuant to the terms of a stockholders' agreement, received a yearly fee of
$5,500 (subsequently increased to $13,000 effective December 1, 1993) plus $500
for each Board of Directors' meeting attended. Prior to August 1994, each other
Non-Employee Director received an alternative package of, at the option of the
director, (i) a yearly fee of $13,000 plus $500 for each Board of Directors'
meeting attended, (ii) an option to purchase 30,000 shares of Common Stock,
vesting at 6,000 shares per year, exercisable at the fair market value of a
share of Common Stock on the date of grant, or (iii) a combination of these two
alternatives. Each Non-Employee Director also is and was reimbursed for his
out-of-pocket expenses. No additional fees are or were paid for committee
participation or special assignments. Effective July 1, 1994, Paul F. Forman
receives an annual retainer of $20,000 for his participation on the Board of
Directors.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 1995, the Compensation Committee
consisted of Messrs. Seymour E. Liebman, Michael R. Corboy, and Robert G.
McKelvey. Mr. Liebman was a director-designee of Canon, a principal stockholder
of the Company. Canon Sales Co., Inc., a subsidiary of Canon, serves as the
exclusive distributor of the Company's products in Japan. Sales to Canon and
Canon Sales Co., Inc. aggregated approximately $9,550,000 for fiscal 1995.
Selling prices were based, generally, on the normal terms given to domestic
distributors. In addition, the Company and Canon have entered into agreements
providing for confidential exchanges of certain technology. The Company has
received royalty payments from Canon under certain of those agreements, which
payments, in the aggregate, are not material. In addition, the Company has
entered into certain research and development contracts with Canon, pursuant to
which the Company has received funding. See "Certain Relationships and Related
Transactions" later in this Proxy Statement.
Executive Compensation
The following table contains information concerning the cash compensation
paid or to be paid by the Company, as well as certain other compensation paid or
accrued, during the fiscal years indicated, to the Chief Executive Officer of
the Company during the 1995 fiscal year and the other most highly compensated
executive officers of the Company ("named executives") whose cash compensation
exceeded $100,000 for the year ended June 30, 1995, for services in all
capacities to the Company.
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<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Name Other (1) All(2)(3)
& Principal Position Annual Number of Other
Held During Fiscal 1995 Year Salary Bonus Compensation Stock Options Compensation
- ----------------------- ---- ------ ----- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis 1995 $186,923 $45,600 $10,800 45,000 $ 5,900
President and Chief Executive 1994 $175,673 $35,000 $ 7,200 15,000 $ 4,680
Officer, Director 1993 $168,942 $ 0 $ 7,200 7,500 (4) $ 9,600
Mark J. Bonney 1995 $133,742 $32,400 $10,800 30,000 $ 4,573
Vice President, Finance and 1994 $126,946 $25,600 $ 7,200 10,500 $ 2,579
Administration, Treasurer, (5) 1993 $ 41,292 $ 5,000 $ 2,400 22,500 (6) $15,526
Chief Financial Officer
Carl A. Zanoni 1995 $153,317 $37,080 $10,800 30,000 $ 5,816
Vice President, Research, 1994 $146,263 $29,500 $ 7,200 10,500 $ 4,300
Development and Engineering, 1993 $138,338 $ 5,000 $ 7,200 7,500 $ 4,581
Director
</TABLE>
(1) Amounts paid as automobile allowances.
(2) Includes aggregate amounts of $4,100, $2,974 and $4,023 in fiscal 1995
and $2,808, $1,000 and $2,481 in fiscal 1994 paid or contributed on
behalf of Messrs. Willis, Bonney and Zanoni, respectively, and $1,000
and $2,828 in fiscal 1993 paid or contributed on behalf of Messrs.
Willis and Zanoni, respectively, under the Company's Defined
Contribution Profit Sharing Plan. Contributions made under the profit
sharing component of the Plan are determined annually by the Board of
Directors, based on each employee's compensation, and vest at the rate
of 20% per year of service to the Company. Employees are fully vested
in contributions made in the discretion of the Company under the
401(k) component of the Plan.
(3) Includes $1,800, $1,599 and $1,793 in fiscal 1995, $1,872, $1,579 and
$1,819 in fiscal 1994 and $1,872, $526 and $1,753 in fiscal 1993 for
Messrs. Willis, Bonney and Zanoni, respectively, representing the
value of life insurance provided to the named executives.
(4) Includes $6,728 of relocation costs paid on behalf of Mr. Willis.
(5) Mr. Bonney joined the Company on March 1, 1993.
(6) Includes $15,000 paid to Mr. Bonney for relocation expenses.
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<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realized Value
% of At Assumed Annual Rates of
Total Options Stock Price Appreciation
Granted to For Option Term
Options Employees Exercise Price Expiration ----------------------------
Name Granted (1) in Fiscal Year Per Share (2) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis 45,000 20.83% $4.00 8/24/04 $113,201 $286,874
Mark J. Bonney 30,000 13.89% $4.00 8/24/04 $ 75,467 $191,249
Carl A. Zanoni 30,000 13.89% $4.00 8/24/04 $ 75,467 $191,249
</TABLE>
(1) Options vest ratably over four years on the anniversary of the grant.
In connection with the issuance of these options, option grants for
the next two years were foregone. See "Committee Report to
Stockholders -- 1995 Compensation to Chief Executive Officer" later in
this Proxy Statement.
(2) The exercise price of all options granted during fiscal 1995 was equal
to the market value of the underlying Common Stock on the day of the
grant.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Value of Unexercised
Unexercised Options at In-the-Money Options
June 30, 1995 at June 30, 1995 (1)
----------------------------------------------------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis 0 0 41,250 71,250 $ 730,001 $1,307,501
Mark J. Bonney 0 0 11,625 51,375 $ 221,066 $ 959,442
Carl A. Zanoni 0 0 26,325 43,425 $ 508,982 $ 806,089
</TABLE>
(1) Zygo Corporation Common Stock price at June 30, 1995 was $22.50
(adjusted for the effect of the 3 for 2 stock split referred to
earlier in this Proxy Statement).
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<PAGE>
Committee Report to Stockholders
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
The Compensation Committee is comprised of three non-employee directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties entail
reviewing the Company's compensation practices and recommending compensation for
executives and key employees.
Compensation Philosophy
The Company believes that a strong, explicit link should exist between
executive compensation and the value delivered to stockholders. This belief has
been adhered to by developing both short-term and long-term incentive pay
programs which provide competitive compensation and mirror Company performance.
The overall objectives of this strategy are to attract and retain the best
possible executive talent, to motivate these executives to achieve the goals
inherent in the Company's strategy, to link executive and stockholder interests
through equity-based plans and to provide a compensation package that recognizes
individual contributions as well as overall business results.
Pay Mix and Measurement. The Company's executive compensation is based on
three components, base salary, short-term incentives, and long-term incentives,
each of which is intended to serve the overall compensation philosophy. In
awarding salary increases and bonuses, the Compensation Committee did not relate
the various elements of corporate performance to each element of executive
compensation. Rather, the Compensation Committee considered whether the
compensation package as a whole adequately compensated each executive for the
Company's performance and an executive's contribution to such performance.
Base Salary. Base salaries for executive officers are initially determined
by evaluating the responsibilities of the position held and the experience of
the individual, and by reference to the competitive marketplace for executive
talent, including a comparison to base salaries for comparable positions at
other companies. Annual salary adjustments are determined by evaluating overall
Company performance and the performance of each executive officer taking into
account new responsibilities. Individual performance ratings take into account
such factors as achievement of the operating plan and attainment of specific
individual objectives.
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<PAGE>
Short-Term Incentives. At the start of each fiscal year, target levels of
financial performance are established by senior management of the Company during
the budgeting process and approved by the Board of Directors. An incentive award
opportunity is established for each employee based on the employee's level of
responsibility, potential contribution, the success of the Company, and
competitive considerations.
The employee's actual award is determined at the end of the fiscal year
based on the Company's achievement of its pretax profit and revenue goals and an
assessment of the employee's individual performance, including contributions in
a number of specific areas, such as quality, customer satisfaction, innovation,
and efficiency. All awards made to senior executives are approved by the
Compensation Committee.
Long-Term Incentives. Stock options are granted from time to time to reward
key employees' contributions. The grant of options is based primarily on a key
employee's potential contribution to the Company's growth and profitability.
Options are granted at the prevailing market value of the Company's Common Stock
and will only have value if the Company's stock price increases. Generally,
grants of options vest in equal amounts over four or five years and the
individual must continue to be employed by the Company for such options to vest.
All option grants are approved by the Non-Qualified Plan Committee.
1995 Compensation to Chief Executive Officer
The compensation of Mr. Willis, the Chief Executive Officer of the Company,
has been determined and adjusted on the same basis as used for all executives as
described above. During fiscal 1995, Mr. Willis received salary payments
totaling $186,923, a 6.4% increase over that received in fiscal 1994. Mr. Willis
voluntarily froze his base compensation in fiscal 1994, and did not accept his
total contractual salary of $175,000 in fiscal 1993. Mr. Willis also earned a
$45,600 bonus under the Company's Management Incentive Plan for attaining
certain predetermined financial and nonfinancial objectives in fiscal 1995.
During fiscal 1995, Mr. Willis was granted non-qualified stock options to
purchase 45,000 shares of the Company's Common Stock in line with the Company's
long-term incentive program whereby stock options are granted as an incentive to
certain key employees. The Non-Qualified Plan Committee, in order to incentivize
management to aggressively pursue increased shareholder value, determined to
grant options to senior management, including Mr. Willis, for an increased
number of shares of Common Stock in fiscal 1995, and to forgo option grants to
these individuals for the next two years. See "Other Agreements and Other
Matters" later in this Proxy Statement.
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. As performance goals are met or
exceeded, resulting in increased value to stockholders, executives are rewarded
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<PAGE>
commensurately. The Compensation Committee believes that compensation levels
during 1995 adequately reflect the Company's compensation goals and policies.
COMPENSATION COMMITTEE
Michael R. Corboy
Seymour E. Liebman
Robert G. McKelvey
Performance Graph
The Stock Price Performance graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return of the Company's Common
Stock with the cumulative total return of (i) the NASDAQ Stock Market - U.S.
Index and (ii) an industry peer group index (the "Peer Index"). The graph
assumes $100 was invested on July 1, 1990, in each of the Company's Common
Stock, the stocks comprising the NASDAQ Index and the stocks comprising the Peer
Index, and the reinvestment of dividends. The industry peer group consists of
companies included by NASDAQ in the Company's principal SIC Code Classification,
namely SIC Code No. 3832.
[THE TABLE BELOW WAS REPRESENTED IN THE PRINTED BOOK AS A GRAPH]
COMPARISON OF FIVE YEAR CUMULATIIVE TOTAL RETURN*
AMONG ZYGO CORPORATION, THE NASDAQ STOCK MARKET -- US INDEX AND A PEER GROUP
Date ZYGO CORPORATION PEER GROUP NASDAQ STOCK MARKET -- US
- ---- ---------------- ---------- -------------------------
6/90 100 100 100
6/91 150 125 106
6/92 105 107 127
6/93 125 86 160
6/94 118 67 162
6/95 614 132 215
* $100 INVESTED ON 06/30/90 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
Other Agreements and Other Matters
In March 1995, Mr. Willis's employment agreement with the Company was
amended, effective October 1994, to increase the annual salary payable to Mr.
Willis to $190,000 from $175,000, and to increase the monthly automobile
allowance from $600 to $900. The amendment further automatically extends the
term of the employment agreement for successive one year periods, unless either
the Company or Mr. Willis gives the other notice of termination at least 30 days
prior to the end of that contract year, and provides for certain severance
payments.
The amended employment agreement grants to Mr. Willis a severance package
to cover him in the event the Company terminates his employment (other than for
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<PAGE>
justifiable cause, disability, or death) with the Company. Under the package, he
would be provided with his base salary from the time of his involuntary
termination to 12 months thereafter. In addition, in the event Mr. Willis
resigns within 90 days of a "Change in Control," as defined, of the Company, the
amendment provides for the continued payment of Mr. Willis' salary for a
one-year period. This amended severance coverage is in addition to (i) the
automatic vesting of all stock options to purchase shares of the Company's stock
then held by Mr. Willis and (ii) the continuation, for a period of the lesser of
three years or until covered by another plan, of all existing health insurance,
dental coverage, life insurance, AD&D, and long-term disability coverage then in
effect for Mr. Willis (provided that during the applicable period in which
benefits are being paid by the Company, Mr. Willis agrees to maintain a
consulting relationship with the Company which will not interfere with other
obligations of Mr. Willis), previously provided for in the event of a Change in
Control in the Company.
In August 1993, the Company entered into a Services Agreement with each of
Paul F. Forman and Sol F. Laufer, a former Vice President of the Company and a
beneficial owner of greater than five percent of the Company's Common Stock,
providing for the retention of Mr. Forman or Mr. Laufer, respectively, as an
executive officer of the Company through the end of the 1994 fiscal year and
thereafter as a consultant to the Company for an additional five years, in the
case of Mr. Forman, and an additional four years in the case of Mr. Laufer.
Pursuant to his Agreement, Mr. Forman received salary payments of $148,271 for
the year of employment, a one-time payment of $149,500 upon his termination from
active employment, and will receive a $20,000 retainer for board service for
each of the five years of his consultancy plus 80%, 60%, 40%, and 20% of his
salary at June 30, 1994, for each of the first through fourth years of his
consultancy, respectively. Pursuant to his Agreement, Mr. Laufer received salary
payments of $133,586 for the year of employment, a one-time payment of $135,000
upon his termination of employment, and will receive payments of 80%, 60%, 40%,
and 20% of his salary at June 30, 1994, for each of the four years of his
consultancy, respectively. Each of the Services Agreements further provided that
Mr. Forman or Mr. Laufer, as the case may be, would have all his outstanding
unvested stock options from the Company vested effective at the conclusion of
the fiscal year ended June 30, 1994 (options for 20,475 shares of Common Stock
in the case of Mr. Forman and 24,487 shares of Common Stock in the case of Mr.
Laufer, as of June 30, 1994). The Agreements are terminable (with all payment
obligations thereunder terminating) by Mr. Forman or Mr. Laufer, as the case may
be, at any time, and by the Company upon the death or disability of Mr. Forman
or Mr. Laufer or for justifiable cause (as defined in the Agreements); except
that if an Agreement terminates as a result of the death or disability of Mr.
Forman or Mr. Laufer, he (or his estate) will be entitled to receive the lesser
of twice his June 30, 1994, salary or the aggregate remaining compensation
payments otherwise required to be made under the Agreement.
The Services Agreements, which contain certain restrictions on soliciting
employees and others and are coexistent with certain Non-Competition Agreements
between Mr. Forman or Mr. Laufer and the Company, replace the Confidentiality
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and Non-Competition Agreements, dated October 25, 1983, entered into between Mr.
Forman and Mr. Laufer and the Company. Pursuant to these Confidentiality and
Non-Competition Agreements, upon the involuntary termination of his employment
by the Company without cause, Mr. Forman or Mr. Laufer was entitled to receive,
for each of the five years from the termination of his employment, an amount
equal to the highest annual compensation (salary plus bonus) received by him at
any time during that termination year or any of the three years immediately
preceding his termination, increasing each of the five years by 12% or, if
greater, the consumer price index increase for that year.
Certain Relationships and Related Transactions
Canon Sales Co., Inc., a subsidiary of Canon, serves as the exclusive
distributor of the Company's products in Japan. (See "Compensation Committee
Interlocks and Insider Participation" earlier in this Proxy Statement.) Canon
does not manufacture or sell interferometers which compete with the Company's
products. Canon has advised the Company that it does not presently plan to
manufacture or sell interferometers which would compete with the Company's
current products.
On November 30, 1993, in connection with the termination of a certain
Stockholders' Agreement, Canon, Wesleyan University, Paul F. Forman, Carl A.
Zanoni, Sol F. Laufer, and the Company entered into a Registration Rights
Agreement. In general, the Registration Rights Agreement grants to each of these
stockholders the right, until November 30, 1998, to have his or its shares of
Common Stock included in any registered public offering of the Company's
securities.
Principal Stockholders
The only stockholders who, as of August 31, 1995, have advised the Company
that they beneficially own (because of sole or shared voting or investment
power) more than 5% of the Company's outstanding Common Stock are set forth
below. Such beneficial owners have sole voting and investment power with respect
to the shares of Common Stock shown as owned by them, except for shares which
can be acquired by the exercise of options.
Percent of
Name and Address Number of Shares Common Stock
- --------------------------------------------------------------------------------
Canon Inc. 786,000 20.0%
Shinjuku Dai-Ichi Seimei Building
Tokyo 160, Japan
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Percent of
Name and Address Number of Shares Common Stock
- --------------------------------------------------------------------------------
Wesleyan University 397,500 10.1%
Middletown, Connecticut 06457
Paul F. Forman 273,060(1) 6.9%
15 Flying Point Road
Stony Creek, Connecticut 06405
Sol F. Laufer 213,810(2) 5.4%
730 Arbutus Street
Middletown, Connecticut 06457
Carl A. Zanoni 289,110(3) 7.3%
99 Long Hill Road
Middlefield, Connecticut 06457
(1) Includes options to purchase 39,000 shares of Common Stock which are
exercisable within 60 days.
(2) Includes options to purchase 45,750 shares of Common Stock which are
exercisable within 60 days.
(3) Includes options to purchase 36,450 shares of Common Stock which are
exercisable within 60 days.
Proposal No. 2 - Adoption of an Amendment to the
Company's Restated Certificate of Incorporation
The Board of Directors has approved and recommends that the stockholders of
the Company approve an amendment to Article FOURTH of the Company's Restated
Certificate of Incorporation (the "Charter") to increase the number of
authorized shares of Common Stock from 10,000,000 to 15,000,000 shares. Of the
10,000,000 shares of Common Stock presently authorized, 3,933,886 shares have
been issued and are outstanding as of September 22, 1995. An additional
1,275,000 shares in the aggregate are reserved for issuance under the
Non-Qualified Plan and the Zygo Corporation Non-Employee Director Stock Option
Plan (1,725,000 shares in the aggregate in the event Proposal No. 3 is adopted
by the stockholders).
The additional shares of Common Stock would be available for issuance from
time to time, as determined by the Board of Directors, for acquisitions of
properties or securities of other companies, employee benefit plans, equity
financings, stock dividends or splits, and other general corporate purposes. The
Company has in the past sought and continues to actively seek acquisition
candidates intended to increase stockholder values of the Company. Several of
the proposed acquisitions reviewed by the Company contemplated the issuance of
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the Company's Common Stock as partial consideration for the acquired businesses.
The Board of Directors therefore considers it important that the Company have a
sufficient number of authorized shares available for possible acquisitions and
other corporate purposes. No further action or authorization by the stockholders
would be necessary prior to the issuance of additional shares unless required
for a particular transaction by applicable law or regulatory agencies or by the
rules of any stock exchange on which the Company's securities may then be
listed. Stockholders of the Company have no preemptive rights to purchase
additional shares when issued.
Accordingly, the Board of Directors has adopted and recommends that the
stockholders approve the following resolution:
RESOLVED, that the Certificate of Incorporation of the
Corporation be amended to authorize the issuance of up to Fifteen
Million (15,000,000) shares of Common Stock, so that Article Fourth of
the Corporation's Certificate of Incorporation be amended (the
"Amendment") to read in its entirety as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Fifteen Million
(15,000,000). The par value of each of such shares is Ten
Cents ($.10). All such shares are of one class and are
shares of Common Stock."
Although not a factor in the Board of Directors' decision to propose the
amendment, one of the effects of the amendment to the Charter may be to enable
the Board to render more difficult or to discourage an attempt to obtain control
of the Company, since the issuance of these additional shares could be used to
dilute the stock ownership of persons seeking to obtain control or otherwise
increase the cost of obtaining control of the Company. As of September 22, 1995,
the Company's executive officers and directors, through their affiliation with
certain stockholders, may be deemed to beneficially own approximately 53.9% of
the then outstanding shares of Common Stock.
Vote Required.
The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding and entitled to vote at the Annual Meeting is required for the
adoption of the proposed amendment to the Company's Restated Certificate of
Incorporation.
The Board of Directors deems Proposal No. 2 to be in the best interests of
the Company and its stockholders and recommends that the stockholders vote "FOR"
the approval thereof.
Proposal No. 3 - Adoption of an Amendment to the Company's
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Amended and Restated Non-Qualified Stock Option Plan
By unanimous written consent on September 17, 1992, the Board of Directors
adopted, subject to stockholder approval, the Amended and Restated Non-Qualified
Stock Option Plan. The Non-Qualified Plan, as presently in existence, permits
the granting of options to purchase an aggregate of 975,000 shares of the
Company's Common Stock to present or future key employees of the Company or a
subsidiary of the Company and to directors of the Company, whether or not they
are employees of the Company. A "key employee" is defined as an officer or
employee who has substantial responsibility in the direction and management of
the Company or any division, branch or subsidiary of the Company. The Board of
Directors has unanimously adopted, subject to stockholder approval, an amendment
to the Non-Qualified Plan which would increase the number of shares of Common
Stock which may be issued thereunder from 975,000 shares to 1,425,000 shares. As
of September 1, 1995, the number of shares available for future grants under the
Non-Qualified Plan was 43,170.
The Board of Directors believes that approval of the amendment to increase
the number of shares which may be issued under the Non-Qualified Plan will serve
the best interests of the Company and its stockholders by permitting the
Non-Qualified Plan Committee to exercise needed flexibility in the
administration of the Non-Qualified Plan and the granting of options thereunder.
In addition, the Board believes that the ability to grant additional options
will help attract, motivate and retain key employees who are in a position to
contribute to the successful conduct of the business and affairs of the Company
as well as stimulate in such individuals an increased desire to render greater
service to the Company.
The Non-Qualified Plan is administered by a committee of at least two
members of the Board of Directors, chosen by the Board of Directors. The
Committee presently consists of Messrs. Corboy, Liebman and McKelvey. Each
member of the Committee must be a "disinterested person" in accordance with the
applicable provisions of Rule 16b-3, which requires, among other things, that no
member of the Committee may receive an option under the Non-Qualified Plan
within one year prior to his becoming a member or at any time while he is a
member. Subject to the provisions of the Non-Qualified Plan the Committee has
the authority to determine the individuals to whom stock options will be
granted, the number of shares to be covered by each option, the option price,
the option period, the vesting restrictions, if any, with respect to the
exercise of the option, and other terms and conditions.
The terms and conditions of each option granted under the Non-Qualified
Plan must be set forth in a Stock Option Agreement issued by the Company to the
optionee. Any such Stock Option Agreement must include certain provisions,
including that (i) the full purchase price of shares purchased under the option
will be paid upon exercise thereof, (ii) the option expire not later than ten
years from the date the option is granted, or prior thereto, if the optionee
ceases to be employed by the Company or a subsidiary thereof (otherwise than by
reason of the optionee's death) unless extended by the Committee acting in its
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sole discretion (provided that no such extension shall result in an option
having a term greater than ten years), and (iii) the option shall not be
transferrable other than by will or by the laws of descent and distribution and
is exercisable during the lifetime of the optionee only by him or her.
The Board may amend or terminate the Non-Qualified Plan, provided that any
amendment which would increase the aggregate number of shares of Common Stock as
to which options may be granted under the Non-Qualified Plan (except
anti-dilution adjustments), materially increase the benefits under the
Non-Qualified Plan, or modify the class of persons eligible to receive options
under the Non-Qualified Plan shall be subject to the approval of the
stockholders. No option may be granted under the Non-Qualified Plan after
September 2, 1997.
The table below indicates stock options which have been granted during the
1995 fiscal year under the Non-Qualified Plan to (i) each person named in the
Summary Compensation Table appearing earlier in this Proxy Statement, (ii) all
current executive officers of the Company as a group, (iii) all current
directors of the Company who are not executive officers of the Company as a
group and (iv) all employees of the Company, including all current officers of
the Company who are not executive officers of the Company, as a group:
Non-Qualified Stock Option Plan
Benefits Granted During Fiscal 1995
Name and Position Dollar Value ($) Number of Shares
- ----------------- ---------------- ----------------
Gary K. Willis
President and Chief
Executive Officer, Director $0 45,000
Mark J. Bonney
Vice President, Finance
and Administration,
Treasurer, Chief Financial
Officer 0 30,000
Carl A. Zanoni
Vice President, Research,
Development and
Engineering, Director 0 30,000
Executive Officers as a
Group 0 105,000
Non-Executive Officer
Director Group 0 0
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Name and Position Dollar Value ($) Number of Shares
- ----------------- ---------------- ----------------
Non-Executive Officer
Employee Group 0 219,000
Federal Income Tax Consequences
An optionee does not realize taxable income upon the grant of an option. In
general, an optionee realizes ordinary income when the option is exercised
(assuming the stock acquired is either transferrable or not subject to a
substantial risk of forfeiture) equal to the excess of the value of the stock
over the exercise price (i.e., the option spread), and the Company receives a
corresponding deduction if applicable withholding requirements are met. (If an
option is exercised within six months after the date of grant and if the
optionee is subject to the six-month restrictions on sale of Common Stock under
Section 16(b) of the Securities Exchange Act of 1934, the optionee generally
recognizes ordinary income on the date the restrictions lapse, unless an early
income recognition election is made.) Upon a later sale of the stock, the
optionee realizes capital gain or loss equal to the difference between the
selling price and the value of the stock at the time the option was exercised
(or, if later, the time ordinary income was recognized with respect to the
exercise.)
Accordingly, the Board of Directors recommends that the stockholders
approve the following resolution:
RESOLVED, that the total number of shares of the Corporation's
Common Stock which may be issued under the Corporation's Amended and
Restated Non-Qualified Stock Plan (the "Non-Qualified Stock Plan")
shall be increased to 1,425,000 shares, so that the first sentence of
Section 2 of the Plan be amended to read in its entirety as follows:
"Except as otherwise permitted pursuant to paragraph 6
hereof, the total number of shares of the Company's Common
Stock, par value $.10 per share, which may be issued under
the Non-Qualified Plan shall not exceed 1,425,000 (after
giving effect to the three for two stock split authorized by
the Company's Board of Directors on July 20, 1995) and may
be authorized and unissued shares or issued and reacquired
shares, as the Board of Directors may from time to time
determine."
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented by proxy and entitled to vote at the
Annual Meeting is required for the adoption of the proposed amendment to the
Non-Qualified Plan.
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The Board of Directors deems Proposal No. 3 to be in the best interests of
the Company and its stockholders and recommends that the stockholders vote "FOR"
the approval thereof.
PROPOSAL NO. 4 - Indemnity Agreements
with Directors and Officers
The Board of Directors has unanimously approved a proposal to authorize the
Company to enter into Indemnity Agreements ("Indemnity Agreements") with its
directors and officers. The Board of Directors believes that it is in the best
interests of the Company and its stockholders to provide the maximum
indemnification allowed by law to its directors and officers. The directors have
a direct personal interest in the approval of the form of Indemnity Agreements
and in any potential payments under the Indemnity Agreements arising from any
judgment or settlement of a derivative suit. The full text of the Indemnity
Agreement, in substantially the form the Company proposes to enter into with its
directors and officers, is attached as Appendix A. Stockholders are urged to
read the provisions of the proposed form of Indemnity Agreement in Appendix A
and the following discussion of the Indemnity Agreements is qualified by
reference thereto.
Description and Effect of Indemnity Agreements
Section 145 of the Delaware General Corporation Law provides that a
director, officer, employee or agent of a corporation (i) shall be indemnified
by the corporation for all expenses of such litigation when he is successful on
the merits, (ii) may be indemnified by the corporation for the expenses,
judgments, fines and amounts paid in settlement of such litigation (other than a
derivative suit) even if he is not successful on the merits, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation (and in the case of a criminal proceeding, had no
reason to believe his conduct was unlawful), and (iii) may be indemnified by a
corporation for expenses of a derivative suit (a suit by a stockholder alleging
a breach by a director or officer of a duty owed to the corporation), even if he
is not successful on the merits, if he acted in good faith in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, provided that no such indemnification may be made in accordance
with clause (iii) if he is adjudged liable to the corporation, unless a court
determines that, despite such adjudication but in view of all the circumstances,
he is entitled to indemnification. The indemnification described in clauses (ii)
and (iii) above may be made only upon determination, by (i) a majority of a
quorum of disinterested directors, (ii) independent legal counsel or (iii) the
stockholders, that indemnification is proper because the applicable standard of
conduct has been met. A corporation may advance litigation expenses to a
director or officer prior to the final disposition of such action upon receipt
of an undertaking by such director or officer to repay such expenses if it is
ultimately determined that he is not entitled to be indemnified for them.
Section 145 also provides that the indemnification and advancement of expenses
provided by that Section are not exclusive of any other rights to which persons
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seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
The statutory indemnification scheme set forth in Section 145 has three
major limitations which are addressed by the Indemnity Agreements: (i) it is not
clear that a director or officer may be indemnified for amounts paid in
settlement of a derivative action; (ii) the Company is under no obligation to
advance litigation expenses to a director or officers; and (iii) except in the
case of litigation in which a director or officer is successful on the merits,
indemnification of a director or officer is discretionary rather than mandatory.
The Indemnity Agreements are based on the indemnification scheme set forth
in Section 145 of the Delaware General Corporation Law, with certain changes or
additions. The principal changes or additions are as follows:
First, the Indemnity Agreements establish the presumption that
the director or officer has met the applicable standard of conduct
required for indemnification. Indemnification will be made unless the
Board of Directors or independent counsel determines that the
applicable standard of conduct has not been met.
Second, the Indemnity Agreements provide that litigation expenses
shall be advanced to a director or officer at his request provided
that he undertakes to repay the amount advanced if it is ultimately
determined that he is not entitled to indemnification for such
expense.
Third, the Indemnity Agreements explicitly provide that the
indemnification provisions applicable to a derivative suit cover
amounts paid in settlement.
Fourth, in the event of a determination by the Board of Directors
or independent legal counsel that a director or officer did not meet
the standard of conduct required for indemnification, the Indemnity
Agreements allow such director or officer to contest this
determination by petitioning a court to make an independent
determination of whether such director or officer is entitled to
indemnification under the Indemnity Agreements.
Fifth, the Indemnity Agreements explicitly provide for partial
indemnification of costs and expenses in the event that a director or
officer is not entitled to full indemnification under the terms of the
Indemnity Agreement.
Finally, no indemnification will be provided under the Indemnity
Agreements if: (i) a final court adjudication determines that such
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indemnification is not lawful or the indemnitee's conduct was
knowingly fraudulent, deliberately dishonest or constituted willful
misconduct, (ii) in respect of any suit in which judgment is rendered
against the indemnitee for an accounting of profits made from a
purchase or sale of securities of the Company in violation of Section
16(b) of the Securities Exchange Act of 1934 (the "1934 Act") or of
any similar statutory provision, or (iii) in connection with certain
actions by the indemnitee against the Company or its directors,
officers or employees. The Indemnity Agreements also contain
provisions designed to protect the Company from unreasonable
settlements or redundant legal expenditures.
The SEC takes the position that indemnification of directors against
violations of the Securities Act of 1933 is against public policy and
unenforceable, and any time the Company registers securities with the SEC it
must execute an undertaking to submit to a court any indemnification claim
arising with respect to the registered securities for a determination whether
the clause is enforceable and to be bound by the court's decision. Accordingly,
any claim made by an indemnitee of the Company for indemnification under an
Indemnity Agreement with respect to a claim subject to the Company's undertaking
to the SEC will have to be submitted to a court before a final payment
thereunder would be made to the indemnitee.
By entering into Indemnity Agreements, directors and officers are assured
that indemnification will be provided by the Company as a contractual obligation
despite future changes in the By-laws or Charter of the Company. In addition,
the execution of Indemnity Agreements will provide to directors and officers the
additional benefits set forth above which are not explicitly provided for in
Section 145 of the Delaware General Corporation Law or in the Company's By-laws
or Charter. The Indemnity Agreements will be applicable only to claims asserted
after their effective dates. The Company knows of no recent, pending or
threatened litigation which might result in claims for indemnification under the
Indemnity Agreements or which would have resulted in claims for indemnification
had the Indemnity Agreements been in effect at the time of the litigation.
The Indemnity Agreements may have certain disadvantages to the Company and
its stockholders. The Company currently carries officers' and directors'
liability insurance in the amount of $6,000,000. Accordingly, any amounts
required to be paid under the Indemnity Agreements in excess of the amount of
coverage, will be paid out of the Company's funds, thus placing the Company's
assets and equity at risk and potentially adversely affecting a stockholder's
investment in the Company.
The Board of Directors is advancing the proposal on the Indemnity
Agreements, and the Indemnity Agreements will be entered into, in reliance upon
that provision of the Delaware indemnification statute which authorizes
indemnification beyond that expressly specified in the statute. The Board of
Directors will designate the directors and officers of the Company with whom the
Company will enter into such Indemnity Agreements. It is expected that Indemnity
Agreements will be entered into with each of the Company's directors and
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executive officers. If the Company's entering into Indemnity Agreements with its
directors and officers is approved, it is anticipated that similar agreements
may be entered, from time to time, with future directors and officers of the
Company.
Submission to Stockholders for Approval
Stockholder approval is not required for the Company to enter into the
Indemnity Agreements as proposed. The Board of Directors is seeking stockholder
approval because the directors would potentially benefit by entering into an
Indemnity Agreement with the Company. Approval of this proposal by the
stockholders will insulate the Indemnity Agreements against a challenge to their
legality in most instances. However, the Indemnity Agreements may not be upheld
if a court finds fraud, waste or other contravention of public policy in the
particular circumstances.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
THE DIRECTORS HAVE A DIRECT PERSONAL INTEREST IN THE APPROVAL OF THE FORM
OF INDEMNITY AGREEMENT AT THE POTENTIAL EXPENSE OF THE COMPANY'S STOCKHOLDERS.
Relationship With Independent Public Accountants
KPMG Peat Marwick LLP (KPMG) has been selected as the Company's independent
auditors for fiscal 1996. A representative of KPMG is expected to be present at
the Annual Meeting with the opportunity to make a statement if he so desires and
to be available to respond to appropriate questions.
Stockholder Proposals
All stockholder proposals which are intended to be presented at the 1996
Annual Meeting of Stockholders of the Company must be received by the Company no
later than June 13, 1996, for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
Other Matters Coming Before The Meeting
As of the date of this Proxy Statement, the Board of Directors does not
know of any matters to be presented to the meeting other than the matters set
forth in the attached Notice of Annual Meeting. If any other matter properly
comes before the meeting, it is intended that the holders of the proxies will
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vote thereon in their discretion.
By Order of the Board of Directors
Paul Jacobs,
Secretary
October 10, 1995
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APPENDIX A
INDEMNIFICATION AGREEMENT
This INDEMNITY AGREEMENT made and entered into as of ________, 1995, by and
between Zygo Corporation, a Delaware corporation (the "Company"), and
_________________________ (the "Indemnitee");
WHEREAS, highly competent persons are becoming more reluctant to serve
corporations as directors, officers or in other capacities unless they are
provided with adequate protection through insurance and indemnification against
inordinate risks of claims and actions against them arising out of their service
to and activities on behalf of the Company; and
WHEREAS, the current difficulties of obtaining adequate insurance have
increased the difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors has determined that the inability to
attract and retain such persons is detrimental to the best interests of the
Company's stockholders and that the Company should act to assure such persons
that there will be increased certainty of such protection in the future; and
WHEREAS, the Certificate of Incorporation and the bylaws of the Corporation
(collectively, the "Charter Documents") provide for the indemnification of the
officers and directors of the Corporation to the fullest extent permitted by the
General Corporation Law of the State of Delaware (the "GCL"); and
WHEREAS, in recognition of the foregoing, and in part to provide the
Indemnitee with specific contractual assurance that the protection promised by
such Charter Documents will be available to the Indemnitee (regardless of, among
other things, any amendment to or revocation of such Charter Documents or any
change in the composition of the Corporation's Board of Directors or acquisition
of the Corporation), the Corporation wishes to provide in this Agreement for the
indemnification of and the advancing of expenses to the Indemnitee to the full
extent permitted by law and as set forth in this Agreement; and
WHEREAS, the GCL specifically contemplates that agreements may be entered
into between the Corporation and its directors or officers with respect to their
indemnification; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
<PAGE>
WHEREAS, the Indemnitee is willing to serve, continue to serve and take on
additional service for or on behalf of the Company on the condition that he or
she be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the Indemnitee do hereby covenant and agree as
follows:
SECTION 1. Indemnification. The Company shall indemnify the Indemnitee to
the fullest extent permitted by applicable law in effect on the date hereof or
to such greater extent as such laws may thereafter from time to time permit.
Without diminishing the scope of the indemnification provided by this Section 1,
the rights of indemnification of the Indemnitee provided hereunder shall include
but shall not be limited to those rights hereinafter set forth, except that no
indemnification shall be paid to the Indemnitee:
(a) on account of any suit in which judgment is rendered against the
Indemnitee for an accounting of profits made from the purchase or sale by
the Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto
or similar provisions of any federal, state or local statutory law;
(b) on account of the Indemnitee's conduct which is finally adjudged
to have been knowingly fraudulent or deliberately dishonest, or to
constitute willful misconduct;
(c) to the extent expressly prohibited by applicable law;
(d) for which payment is actually made to the Indemnitee under a valid
and collectible insurance policy or under a valid and enforceable indemnity
clause, Charter Document or agreement, except in respect of any excess
beyond payment under such insurance, clause, Charter Document or agreement;
(e) if a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful (and, in this
respect, both the Company and the Indemnitee have been advised that the
Securities and Exchange Commission believes that indemnification for
liabilities arising under the federal securities laws is against public
policy and is, therefore, unenforceable and that claims for indemnification
should be submitted to the appropriate court for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
the Indemnitee, or any proceeding by the Indemnitee against the Company or
its directors, officers, employees or other Indemnitees, unless (i) such
indemnification is expressly required to be made by law, (ii) the
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proceeding was authorized by the Board of Directors of the Company, (iii)
such indemnification is provided by the Company, in its sole discretion,
pursuant to the powers vested in the Company under applicable law, or (iv)
except as provided in Sections 11 and 12 hereof.
SECTION 2. Action or Proceeding Other Than an Action by or in the Right of
the Company. The Indemnitee shall be entitled to the indemnification rights
provided in this Section if he or she is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative in nature, other than
an action by or in the right of the Company, by reason of the fact that he or
she is or was a director, officer, employee, agent or fiduciary of the Company,
or is or was serving at the request of the Company as a director, officer,
employee, agent or fiduciary of any other entity, including, but not limited to,
another corporation, partnership, joint venture, trust, or by reason of anything
done or not done by him or her in any such capacity. Pursuant to this Section,
the Indemnitee shall be indemnified against all expenses (including attorneys'
fees), costs, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding (including, but not limited to, the investigation, defense or
appeal thereof), if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
SECTION 3. Actions by or in the Right of the Company. The Indemnitee shall
be entitled to the indemnification rights provided in this Section if he or she
is a person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he or she is or was a director, officer, employee, agent or fiduciary of
the Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of another entity, including, but not
limited to, another corporation, partnership, joint venture, trust, or by reason
of anything done or not done by him or her in any such capacity. Pursuant to
this Section, the Indemnitee shall be indemnified against all expenses
(including attorneys' fees), costs and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding (including, but not limited to, the investigation, defense or appeal
thereof) if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company; provided,
however, that no such indemnification shall be made in respect of any claim,
issue, or matter as to which applicable law expressly prohibits such
indemnification by reason of any adjudication of liability of the Indemnitee to
the Company, unless and only to the extent that, the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such expenses and costs which such court
shall deem proper.
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SECTION 4. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of this Agreement, to the extent
that the Indemnitee has served as a witness on behalf of the Company or has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 2 and 3 hereof, or in defense of any claim,
issue or matter therein, including, without limitation, the dismissal of any
action without prejudice, he or she shall be indemnified against all costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 5. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses (including attorneys' fees), costs, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with the investigation, defense, appeal or settlement of such suit,
action, investigation or proceeding described in Section 2 or 3 hereof, but not,
however, for all of the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such expenses (including reasonable
attorneys' fees), costs, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or her to which the
Indemnitee is entitled.
SECTION 6. Determination of Entitlement to Indemnification. Upon written
request by the Indemnitee for indemnification pursuant to Section 2 or 3 hereof,
the entitlement of the Indemnitee to indemnification pursuant to the terms of
this Agreement shall be determined by the following person or persons who shall
be empowered to make such determination: (a) the Board of Directors of the
Company by a majority vote of a quorum consisting of Disinterested Directors (as
defined in Section 17 below); (b) if such a quorum is not obtainable or, even if
obtainable, if the Board of Directors by the majority vote of Disinterested
Directors so directs, by Independent Counsel (as defined in Section 17 below) in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee, or (c) by the stockholders. Such Independent Counsel shall be
selected by the Board of Directors and approved by the Indemnitee. Upon failure
of the Board to so select such Independent Counsel or upon failure of the
Indemnitee to so approve, such Independent Counsel shall be selected by the
Chancellor of the State of Delaware or such other person as the Chancellor shall
designate to make such selection. Such determination of entitlement to
indemnification shall be made not later than 45 days after receipt by the
Company of a written request for indemnification. Such request shall include
documentation or information which is necessary for such determination and which
is reasonably available to the Indemnitee. Any costs or expenses (including
attorneys' fees) incurred by the Indemnitee in connection with his or her
request for indemnification hereunder shall be borne by the Company. The Company
hereby indemnifies and agrees to hold the Indemnitee harmless therefrom
irrespective of the outcome of the determination of the Indemnitee's entitlement
to indemnification. If the person making such determination shall determine that
the Indemnitee is entitled to indemnification as part (but not all) of the
application for indemnification, such person shall reasonably prorate such
partial indemnification among such claims, issues or matters.
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<PAGE>
SECTION 7. Presumptions and Effect of Certain Proceedings. The Secretary of
the Company shall, promptly upon receipt of the Indemnitee's request for
indemnification, advise in writing the Board of Directors or such other person
or persons empowered to make the determination as provided in Section 6 that the
Indemnitee has made such request for indemnification. Upon making such request
for indemnification, the Indemnitee shall be presumed to be entitled to
indemnification hereunder and the Company shall have the burden of proof in the
making of any determination contrary to such presumption. If the person or
persons so empowered to make such determination shall have failed to make the
requested indemnification within 45 days after receipt by the Company of such
request, the requisite determination of entitlement to indemnification shall be
deemed to have been made and the Indemnitee shall be absolutely entitled to such
indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 2 or 3 hereof by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself: (a) create a presumption that the Indemnitee did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, that the Indemnitee had reasonable cause to believe that his or her
conduct was unlawful; or (b) otherwise adversely affect the rights of the
Indemnitee to indemnification except as may be provided herein.
SECTION 8. Advancement of Expenses and Costs. All reasonable expenses and
costs incurred by the Indemnitee (including attorneys' fees, retainers and
advances of disbursements required of the Indemnitee) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
at the request of the Indemnitee within twenty days after the receipt by the
Company of a statement or statements from the Indemnitee requesting such advance
or advances from time to time. The Indemnitee's entitlement to such expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the expenses and costs
incurred by him or her in connection therewith and shall include or be
accompanied by an undertaking by or on behalf of the Indemnitee to repay such
amount if it is ultimately determined that the Indemnitee is not entitled to be
indemnified against such expenses and costs by the Company as provided by this
Agreement or otherwise.
SECTION 9. Remedies of the Indemnitee in Cases of Determination not to
Indemnify or to Advance Expenses. In the event that a determination is made that
the Indemnitee is not entitled to indemnification hereunder or if payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 6 and 7, or if expenses are not advanced pursuant to
Section 8, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of his or her entitlement to such indemnification or advance.
Alternatively, the Indemnitee at his or her option may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association, such award to be made within sixty days
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<PAGE>
following the filing of the demand for arbitration. The Company shall not oppose
the Indemnitee's right to seek any such adjudication or award in arbitration or
any other claim. Such judicial proceeding or arbitration shall be made de novo
and the Indemnitee shall not be prejudiced by reason of a determination (if so
made) that he or she is not entitled to indemnification. If a determination is
made or deemed to have been made pursuant to the terms of Section 6 or Section 7
hereof that the Indemnitee is entitled to indemnification, the Company shall be
bound by such determination and is precluded from asserting that such
determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court or before any such arbitrator that
the Company is bound by all the provisions of this Agreement and is precluded
from making any assertions to the contrary. If the court or arbitrator shall
determine that the Indemnitee is entitled to any indemnification hereunder, the
Company shall pay all reasonable expenses (including attorneys' fees) and costs
actually incurred by the Indemnitee in connection with such adjudication or
award in arbitration (including, but not limited to, any appellant proceedings).
SECTION 10. Notification and Defense of Claim. Promptly after receipt by
the Indemnitee of notice of the commencement of any action, suit or proceeding,
the Indemnitee will, if a claim in respect thereof is to be made against the
Company under this Agreement, notify the Company in writing of the commencement
thereof; but the omission to so notify the Company will not relieve it from any
liability that it may have to the Indemnitee otherwise than under this Agreement
or, to the extent such failure has not materially prejudiced the rights of the
Company to defend any such claim, under this Agreement. Notwithstanding any
other provision of this Agreement, with respect to any such action, suit or
proceeding as to which the Indemnitee notifies the Company of the commencement
thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided in this Section 10(b), to the extent
that it may wish, the Company, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnitee. After notice from the Company to
the Indemnitee of its election to so assume the defense thereof, the
Company shall not be liable to the Indemnitee under this Agreement for any
legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The Indemnitee shall have the
right to employ his or her own counsel in such action, suit or proceeding,
but the fees and expense of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the expense of
the Indemnitee unless (i) the employment of counsel by the Indemnitee has
been authorized by the Company, (ii) the Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and
the Indemnitee in the conduct of the defense of such action or (iii) the
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<PAGE>
Company shall not in fact have employed counsel to assume the defense of
the action, in each of which cases the fees and expenses of counsel shall
be at the expense of the Company. The Company shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on
behalf of the Company or as to which the Indemnitee shall have made the
conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner that would impose any penalty or limitation
on the Indemnitee without the Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent to any
proposed settlement.
SECTION 11. Other Rights to Indemnification. The indemnification and
advancement of expenses (including attorneys' fees) and costs provided by this
Agreement shall not be deemed exclusive of any other rights to which the
Indemnitee may now or in the future be entitled under any provision of a Charter
Document, agreement, vote of stockholders or Disinterested Directors, provision
of law or otherwise.
SECTION 12. Attorneys' Fees and Other Expenses to Enforce Agreement. In the
event that the Indemnitee is subject to or intervenes in any proceeding in which
the validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce his or her rights under, or to
recover damages for breach of, this Agreement, the Indemnitee, if he or she
prevails in whole or in part in such action, shall be entitled to recover from
the Company and shall be indemnified by the Company against any actual expenses
for attorneys' fees and disbursements reasonably incurred by him or her.
SECTION 13. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of: (a) ten years after the Indemnitee has ceased to
occupy any of the positions or have any relationships described in Sections 2
and 3 of this Agreement; and (b) the final termination of all pending or
threatened actions, suits, proceedings or investigations to which the Indemnitee
may be subject by reason of the fact that he or she is or was a director,
officer, employee, agent or fiduciary of the Company or is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary of
any other entity, including, but not limited to, another corporation,
partnership, joint venture or trust, or by reason of anything done or not done
by him or her in any such capacity. The indemnification provided under this
Agreement shall continue as to the Indemnitee even though he or she may have
ceased to be a director or officer of the Company. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of the Indemnitee and his or her spouse, assigns, heirs, devises,
executors, administrators or other legal representatives. Nothing in this
Agreement shall confer upon the Indemnitee the right to continue in the employ
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<PAGE>
of the Company or affect the right of the Company to terminate the Indemnitee's
employment at any time in the sole discretion of the Company, with or without
cause.
SECTION 14. Severability. If any provision or provisions of this Agreement
shall be held invalid, illegal or unenforceable for any reason whatsoever, (a)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifest by the provision held invalid, illegal or unenforceable.
SECTION 15. Identical Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 16. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 17. Definitions. For purposes of this Agreement:
(a) "Disinterested Director" shall mean a director of the Company who
is not or was not a party to the action, suit, investigation or proceeding
in respect of which indemnification is being sought by the Indemnitee.
(b) "Independent Counsel" shall mean a law firm or a member of a law
firm that neither is presently nor in the past five years has been retained
to represent: (i) the Company or the Indemnitee in any matter material to
either such party, or (ii) any other party to the action, suit,
investigation or proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel"
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or the Indemnitee in an action to determine
the Indemnitee's right to indemnification under this Agreement.
SECTION 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
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<PAGE>
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 19. Subrogation. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all the rights
of recovery of the Indemnitee, who shall execute all instruments and documents
required and shall do everything that may be necessary to secure such rights,
including the execution of such instruments and documents as may be necessary to
enable the Corporation effectively to bring suit to enforce such rights.
SECTION 20. No Duplicative Payment. The Corporation shall not be liable
under this Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that the Indemnitee has otherwise actually
received such payment under any insurance policy, contract, agreement or
otherwise.
SECTION 21. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand or courier, on the date of delivery, or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to the Indemnitee, to:
____________________
____________________
____________________
____________________
(b) If to the Company, to:
Zygo Corporation
Laurel Brook Road
P.O. Box 448
Middlefield, Connecticut 06455-0448
Attention: President
with a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.
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<PAGE>
SECTION 22. Governing Law. The parties hereto agree that this Agreement
shall be governed by, construed and enforced in accordance with, the Laws of the
State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ZYGO CORPORATION
By:____________________________
INDEMNITEE
-------------------------------
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<PAGE>
Written Plan document relating to the Zygo Corporation (the "Company")
Amended and Restated Non-Qualified Stock Option Plan which is to be acted on at
the Company's 1995 Annual Meeting of Stockholders. The Written Plan document is
filed as an Appendix to the Company's Proxy Statement but is not a part thereof.
Copies of this document will not be sent to Stockholders.
<PAGE>
ZYGO CORPORATION
AMENDED AND RESTATED NON-QUALIFIED
STOCK OPTION PLAN
1. Purpose
The purpose of the Zygo Corporation Amended and Restated Non-Qualified
Stock Option Plan (the "Non-Qualified Plan") is to aid Zygo Corporation and its
subsidiaries (the "Company") in attracting and retaining people of exceptional
ability by enabling selected individuals to purchase a proprietary interest in
the business, thereby stimulating in such individuals an increased desire to
render greater service, which will contribute to the continued growth and
success of the Company.
2. Amount and Source of Stock
Except as otherwise permitted pursuant to paragraph 6 hereof, the total
number of shares of the Company's Common Stock, par value $.10 per share, which
may be issued under the Non-Qualified Plan shall not exceed 1,425,000 and may be
authorized and unissued shares or issued and reacquired shares, as the Board of
Directors may from time to time determine. If an option shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares covered thereby shall be added to the shares otherwise available for
options under the Non-Qualified Plan.
3. Effective Date and Term of Plan
The Non-Qualified Plan became effective on September 3, 1987, the date on
which it was initially approved by affirmative vote of the Board of Directors of
the Company. The term during which options may be granted under the
Non-Qualified Plan commenced on its effective date and, subject to the approval
of the stockholders of the Company, shall continue as hereby amended and
restated until the tenth anniversary of such date.
4. Administration and Eligibility
(a) The Non-Qualified Plan will be administered by a committee (the
"Committee") consisting of at least two directors appointed by and serving at
the pleasure of the Board. If a Committee is not so established, the Board will
perform the duties and functions ascribed herein to the Committee. Each member
of the Committee shall be a "disinterested person" in accordance with the
applicable provisions of Rule 16b-3 under the Securities Exchange Act of 1934.
Subject to the provisions of the Non-Qualified Plan, the Committee, acting in
its sole and absolute discretion, will have full power and authority to grant
options under the Non-Qualified Plan, to interpret the provisions of the
Non-Qualified Plan and option agreements under the Non-Qualified Plan, to
supervise the administration of the Non-Qualified Plan, and to take such other
action as may be necessary or desirable in order to carry out the provisions of
the Non-Qualified Plan. A majority of the members of the Committee will
constitute a quorum. The Committee may act by the vote of a majority of its
<PAGE>
members present at a meeting at which there is a quorum or by unanimous written
consent. The decision of the Committee as to any disputed question, including
questions of construction, interpretation and administration, will be final and
conclusive on all persons. The Committee will keep a record of its proceedings
and acts and will keep or cause to be kept such books and records as may be
necessary in connection with the proper administration of the Non-Qualified
Plan.
(b) Options may be granted under the Non-Qualified Plan to present or
future key employees of the Company or a subsidiary of the Company and to
directors of the Company, whether or not they are employees of the Company. A
"key employee" is an officer or employee who has substantial responsibility in
the direction and management of the Company or any division, branch or
subsidiary.
5. Options
The terms and conditions of each option granted under the Non-Qualified
Plan shall be set forth in a Stock Option Agreement issued by the Company to the
optionee. Such terms and conditions shall include the following as well as such
other provisions, not inconsistent with the provisions of the Non-Qualified
Plan, as may be deemed advisable:
(a) The number of shares subject to the option.
(b) The purchase price per share.
(c) A provision that the full purchase price of shares purchased
under the option shall be paid upon exercise thereof.
(d) A provision permitting exercise of the option either in whole or
from time to time in part, but only for full shares.
(e) The dates after which the option may be exercised, in whole or in
part.
(f) A provision for the termination of the option, not later than ten
years from the date the option is granted, or prior thereto, if
the optionee ceases to be a director of the Company or employed
by the Company or a subsidiary thereof (otherwise than by reason
of the optionee's death) unless extended by the Committee acting
in its sole discretion (provided that no such extension shall
result in an option having a term greater than ten years).
(g) A provision that the option shall not be transferrable other than
by will or by the laws of descent and distribution and is
exercisable during the lifetime of the optionee, only by him or
her.
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<PAGE>
(h) A provision that the Company's obligation to sell and deliver
stock under the option is subject to such compliance with federal
and state laws, rules and regulations applying to the
authorization, issuance or sale of securities as the Company
deems necessary or advisable.
6. Adjustments Upon Changes in Stock
If (i) the Company shall at any time be involved in a complete or partial
liquidation or reorganization, including a merger, consolidation, or sale or
distribution of assets, (ii) the Company shall declare a stock dividend or
subdivide or combine its Common Stock, or (iii) any other event shall occur
which in the judgment of the Board of Directors necessitates action by way of
adjusting the terms of the option, the Board of Directors shall forthwith take
any such action as in its judgment shall be necessary to preserve to the
optionee rights substantially proportionate to the rights existing prior to such
event or, in the case of a liquidation or reorganization, terminate the option
upon notice given at least thirty (30) days prior to the effective date of the
transaction, or provide for its assumption by any surviving, consolidated, or
successor corporation; provided, that in the event that the option is
terminated, the option shall be exercisable until the effective date of such
liquidation or reorganization in whole or in part as to all shares then subject
thereto, without regard to any installment exercise provisions. Notwithstanding
the foregoing, the right to exercise options without regard to any installment
exercise provisions shall not apply to any option holder who initiated the
transaction resulting in the application of this paragraph 6 unless such person
initiated the transaction pursuant to instructions or authority from the
Company. For the purpose of the foregoing, actions taken by members of an option
holder's family shall be deemed to have been taken by him.
7. Amendment and Termination of the Plan
The Board may amend or terminate the Non-Qualified Plan. Except as
otherwise provided in the Non-Qualified Plan with respect to equity changes, any
amendment which would increase the aggregate number of shares of Common Stock as
to which options may be granted under the Non-Qualified Plan, materially
increase the benefits under the Non-Qualified Plan, or modify the class of
persons eligible to receive options under the Non-Qualified Plan shall be
subject to the approval of the stockholders. No amendment or termination may
affect adversely any outstanding option without the written consent of the
optionee.
8. Definition
The term "parent" and "subsidiary" shall have the meaning ascribed to such
terms by Section 424 of the Internal Revenue Code of 1986, as amended.
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<PAGE>
ZYGO CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
1. Stock Option granted to (Employee # ).
2. The date of this option grant is .
3. The total aggregate number of shares of Zygo Corporation common stock,
$.10 par value, that can be purchased pursuant to this option is .
4. The purchase price per share which may be purchased pursuant to this
option is $ .
5. This option can be exercised according to the following schedule:
25% of the total shares given in #3 above, may be
exercised after each anniversary date of the option
grant, beginning with the first anniversary.
6. The last day on which any option granted hereby may be exercised is
November 19, 2002.
7. The stock option granted hereby is subject to all of the provisions
set forth in pages 1 through 4 annexed.
ZYGO CORPORATION
By:______________________________
Paul F. Forman, Chairman & CEO
ATTEST:
____________________________
G.K. Willis, President & COO
ACCEPTED:
_______________________________
Name Date
<PAGE>
ZYGO CORPORATION
PROVISIONS RELATING TO NON-QUALIFIED STOCK OPTION
1. This option may be exercised by written notice to Zygo Corporation
("Zygo") stating the number of full shares with respect to which it is being
exercised, and accompanied by payment of the option price for the number of
shares so purchased and payment or arrangement for payment of any federal, state
or local income or other taxes incurred by reason of the exercise and required
to be withheld by Zygo. This option is not an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986.
2. Zygo's obligation to sell and deliver shares upon exercise of this
option is subject to such compliance with federal and state laws, rules and
regulations applying to the authorization, issuance or sale of securities as
Zygo deems necessary or advisable. If at the time of any exercise of this option
a Registration Statement under the Securities Act of 1933, as amended (the
"Act") shall not be effective with respect to the shares to be acquired on such
exercise, then, as a condition to such exercise and the delivery of the shares,
the Optionee shall deliver to Zygo a written statement, satisfactory in form and
substance to counsel for Zygo, confirming (a) the financial information
pertaining to Zygo as to which the Optionee had access and (b) that any shares
acquired by the Optionee upon exercise of this option will be acquired by the
Optionee for his or her own account for investment and not with a view to the
distribution or resale of any such shares. Any certificate for shares issued
upon the exercise of this option, may at Zygo's option, bear a legend stating
that the shares represented by such certificate were purchased only for
investment and may be transferred only if counsel for Zygo is satisfied that no
<PAGE>
violation of the Act is involved. Zygo shall be entitled to further postpone the
time of delivery of certificates for shares of its common stock for such
additional time as Zygo shall deem necessary or desirable to enable it (i) to
file a Registration Statement under the Act with the Securities and Exchange
Commission with respect, among others, to the shares of common stock which may
be purchased under this option, or (ii) to comply with the listing requirements
of any securities exchange upon which the common stock of Zygo may be listed.
3. This option shall during the Optionee's lifetime be exercisable only by
him or her, and neither it nor any right hereunder shall be transferable except
by will or the laws of descent and distribution, or be subject to attachment,
execution or other similar process. In the event of any attempt by the Optionee
to alienate, assign, pledge, hypothecate or otherwise dispose of this option or
of any right hereunder, except as provided for herein, or in the event of any
levy of any attachment, execution or similar process upon the rights or
interests hereby conferred, Zygo may terminate this option by notice to the
Optionee and it shall thereupon become null and void.
4. If, prior to the termination date, the Optionee shall cease to be a
director of Zygo or employed by Zygo, or a parent or subsidiary, thereof
(otherwise than by reason of the death of the Optionee), this option, and all
rights hereunder to the extent that this option shall not have been theretofore
exercised shall terminate and become null and void.
5. In the event of the death of the Optionee, prior to the termination
date, while employed by Zygo or a parent or subsidiary thereof, this option to
the extent that is shall not have been theretofore exercised may be exercised at
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<PAGE>
any time up to sixty (60) days following the date of death by the person or
persons to whom the Optionee's rights under this option shall pass by will or by
applicable laws of descent and distribution, and to the extent that such rights
shall not have been exercised within such sixty (60) day period shall terminate
and become null and void. Notwithstanding the foregoing, in the case of the
death of the Optionee, this option may be exercised only to the extent that it
could have been exercised by the Optionee under its terms on the date of death.
6. If (a) Zygo shall at any time be involved in a complete or partial
liquidation or reorganization, including a merger, consolidation or sale or
distribution of assets, (b) Zygo shall declare a stock dividend or subdivide or
combine its common stock, or (c) any other event shall occur which necessitates
action by way of adjusting the terms of the option, the Board of Directors shall
forthwith take any such action as shall be necessary to preserve to the Optionee
rights substantially proportionate to the rights existing prior to such event,
or, in the case of a liquidation or reorganization, terminate the option upon
notice given at least thirty (30) days prior to the effective date of the
transaction, or provide for its assumption by any surviving, consolidated or
successor corporation; provided, that in the event that the option is
terminated, the option shall be exercisable until the effective date of such
liquidation or reorganization in whole or in part as to all shares then subject
thereto, without regard to any installment exercise provisions. Notwithstanding
the foregoing, the right to exercise options without regard to any installment
exercise provisions shall not apply to any option holder who initiated the
transaction resulting in the application of this paragraph 6 unless such person
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<PAGE>
initiated the transaction pursuant to instructions or authority from the
Company. For the purpose of the foregoing, actions taken by members of any
option holder's family shall be deemed to have been taken by him.
7. Neither the granting of this option nor the exercise thereof shall be
construed as granting to the Optionee any right with respect to continuance of
employment by Zygo or any parent or subsidiary of Zygo. Neither the Optionee nor
any person entitled to exercise his or her rights in the event of his or her
death shall have any of the rights of a stockholder with respect to the shares
subject to this option, except to the extent that certificates for such shares
shall have been issued upon the exercise of this option as provided for herein.
8. For the purposes of this option, the terms "parent" and "subsidiary"
shall have the meaning described to such terms by Section 424 of the Internal
Revenue Code of 1986.
9. This option is granted pursuant to the Zygo Amended and Restated
Non-Qualified Stock Option Plan (the "Plan"), and is governed by the terms and
conditions of that Plan. The Optionee agrees to be bound by the terms and
conditions of this Agreement and the Plan (a copy of which the Optionee
acknowledges the Optionee has received) and any future amendments to the Plan
which do not alter or impair the Optionee's rights hereunder. In the event that
any controversy shall arise with respect to the nature, scope or extent of any
one or more rights conferred by this Agreement, the determination of the Plan
Committee, or if a Plan Committee is not established, of the Board of Directors
of Zygo, of the rights of the Optionee shall be final and binding upon the
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<PAGE>
Optionee and any other person who shall assert any right based upon this
Agreement.
10. This option shall be wholly void and of no effect after the termination
date.
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<PAGE>
PROXY
ZYGO CORPORATION
Annual Meeting of Stockholders, November 16, 1995
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Mr. Mark J. Bonney and Mr. Gary K. Willis
as Proxies, and each of them acting singly, with power of substitution to each,
and hereby authorizes them to represent and to vote, as designated below, all of
the shares of Common Stock of Zygo Corporation held of record by the undersigned
on September 22, 1995, at the annual meeting of stockholders to be held on
November 16, 1995, at 10:00 a.m., or any adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is made, this Proxy
will be voted for Proposal Nos. 1, 2, 3 and 4. In their discretion the Proxies
are authorized to vote upon such other business as may properly come before the
meeting.
Please mark, sign, date, and return this proxy card promptly using the enclosed
envelope.
I PLAN TO ATTEND THE MEETING IN MIDDLEFIELD, CONNECTICUT, ON NOVEMBER 16,
1995.
(Continued and to be dated and signed on reverse side)
<PAGE>
Proposal No. 1. Election of Directors: The eight nominees are Michael R.
Corboy, Paul F. Forman, Seymour E. Liebman, Robert G. McKelvey, Paul W.
Murrill, Robert B. Taylor, Gary K. Willis, and Carl A. Zanoni.
For all listed Withhold authority For all listed Nominees, except
Nominees for all listed Nominees withhold for the following
Nominees (write name(s)
below)
-------------------------------
Proposal No. 2. Adoption of an amendment to the Company's Restated Certificate
of Incorporation
For Against Abstain
Proposal No. 3. Adoption of an amendment to the Company's Amended and Restated
Non-Qualified Stock Option Plan.
For Against Abstain
Proposal No. 4. Approval of the Company's entering into indemnity agreements
with its directors and officers
For Against Abstain
Please sign exactly as name
appears hereon. All joint owners
should sign. When signing as
attorney, executor, administrator,
trustee, guardian or custodian for
a minor, please give full title as
such. If a corporation, please
sign full corporate name and
indicate the signer's office. If a
partnership, please sign in
partnership name by authorized
person.
Date: ______________________, 1995
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Signature
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Signature if held jointly
PLEASE MARK YOUR CHOICE LIKE THIS
|X| IN BLUE OR BLACK INK.
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