SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ZYGO CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] 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:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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[ ] 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
ZYGO CORPORATION
LAUREL BROOK ROAD
MIDDLEFIELD, CONNECTICUT 06455
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 17, 1999
The Annual Meeting of Stockholders of Zygo Corporation will be held at the
Hotel Inter-Continental New York, 111 E. 48th Street, New York, New York on
November 17, 1999, at 10:00 a.m. local time, for the following purposes:
1. To elect eight directors for the ensuing year.
2. To consider and act upon a proposal to approve the adoption of the
Zygo Corporation Amended and Restated Non-Employee Director Stock
Option Plan.
3. 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 30, 1999 are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Paul Jacobs,
Secretary
October 6, 1999
- --------------------------------------------------------------------------------
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 17, 1999
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 17,
1999, 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
that 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 6, 1999, 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 "for" the election of each of the nominees for
director as shown on the form of proxy, "for" approval of Proposal No. 2 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.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on September 30, 1999
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On September 30, 1999, there were 11,460,722 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.
<PAGE>
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. Each director elected will
hold office until the next Annual Meeting of Stockholders. The affirmative vote
of a plurality of the shares of Common Stock voting in person or by proxy is
required for the election of directors. Shares of Common Stock held by
stockholders present in person at the Annual Meeting that are not voted for a
nominee or shares held by stockholders represented at the Annual Meeting by
proxy from which authority to vote for a nominee has been properly withheld
(including broker non-votes) will not affect the election of the nominees
receiving the plurality of votes.
Each proxy received will be voted "FOR" the election of the nominees named
below unless otherwise specified in the proxy.
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.
<TABLE>
<CAPTION>
COMMON STOCK DEEMED
BENEFICIALLY OWNED AT
JUNE 30, 1999(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 Emeritus as of November 1998; 65 1970 415,930(b) 3.7%
Chairman of the Board from June 1970 to
November 1998.
Seymour E. Liebman Executive Vice President and General Counsel 50 1993 75,000(c) .7%
of Canon U.S.A., Inc. since February 1996;
from January 1992 until January 1996, Senior
Vice President Finance and General Counsel of
Canon U.S.A., Inc; Director of Energy
Conversion Devices, Inc.
Robert G. McKelvey Chairman and President of George McKelvey Co., 62 1983 139,370(d) 1.2%
Inc. (Investment Advisor and Securities
Broker-Dealer) for more than the last five
years.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK DEEMED
BENEFICIALLY OWNED AT
JUNE 30, 1999(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 more than the last 65 1993 88,500(e) .8%
five years; Director of Entergy Corporation,
Tidewater, Inc., ChemFirst, Piccadilly
Cafeterias, Inc., Howell Corporation, and
various foundations and public service
organizations.
J. Bruce Robinson President of the Company since February 1999, 57 1999 4,544 *
and previously with the Foxboro Company serving
as Vice President New Business Development
from 1998 to 1999, and President Worldwide Operations
from 1996 to 1998.
Robert B. Taylor Vice President and Treasurer of Wesleyan 52 1988 80,500(f) .7%
University for more than the last five years;
Director of Citizens Bank of Connecticut.
Gary K. Willis Chairman of the Board since November 1998, 54 1992 436,500(g) 3.8%
Chief Executive Officer of the Company for
more than the last five years, and previously
President of the Company from February 1992 to
February 1999; Director of Rofin-Sinar
Technologies, Inc. and Benthos Corporation.
Carl A. Zanoni Vice President, Technology of the Company 58 1970 547,900(h) 4.8%
since June 1998, and from April 1992 to June
1998 Vice President of Research, Development
and Engineering.
All directors and
officers as a group,
including those
named above (17 in
all) 2,510,182(i) 20.7%
(Footnotes on following page)
</TABLE>
<PAGE>
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* Less than 0.1 percent.
(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 54,000 shares of Common Stock which are
exercisable within 60 days.
(c) Consists of options to purchase 75,000 shares of Common Stock which are
exercisable within 60 days. Does not include 1,210,410 shares owned by
Canon Inc.
(d) Includes options to purchase 75,000 shares of Common Stock which are
exercisable within 60 days.
(e) Includes options to purchase 87,000 shares of Common Stock which are
exercisable within 60 days.
(f) Includes options to purchase 75,000 shares of Common Stock which are
exercisable within 60 days.
(g) Includes options to purchase 227,500 shares of Common Stock which are
exercisable within 60 days.
(h) Includes options to purchase 106,500 shares of Common Stock which are
exercisable within 60 days.
(i) Includes options to purchase 966,674 shares of Common Stock which are
exercisable within 60 days.
Five meetings of the Board of Directors were held in fiscal 1999.
The Board of Directors has an Audit Committee, Compensation and Stock
Option Committee, and 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. Two meetings of the
Audit Committee were held in fiscal 1999. Messrs. Murrill, Taylor, and John R.
Rockwell presently are the members of the Audit Committee.
The Compensation and Stock Option Committee determines or recommends the
compensation of certain executive officers and key employees, is empowered to
grant stock options to key employees and directors of the Company 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. Liebman,
McKelvey, and Michael R. Corboy presently are the members of the Compensation
and Stock Option Committee. The Compensation and Stock Option Committee met two
times during fiscal 1999.
<PAGE>
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. Stockholders who wish
to propose director candidates for consideration by the Nominating Committee may
do so by writing to the Company's Secretary, giving the candidate's name,
biographical data and qualifications. Messrs. Willis, Liebman, and Rockwell
presently are the members of the Nominating Committee. The Nominating Committee
had three meetings during fiscal 1999.
Each director attended at least 75% of the total number of meetings held
during fiscal 1999 of the Board and Committees on which he served.
Effective March 11, 1997, each director who is not a full-time employee of,
or consultant to the Company (a "Non-Employee Director") receives a meeting fee
of $1,500 per meeting attended, whether board or committee, in person or by
telephone. Pursuant to the Zygo Corporation Non-Employee Director Stock Option
Plan (the "Non-Employee Director Plan"), each Non-Employee Director has been
granted an option to purchase 75,000 shares of Common Stock, vesting at 15,000
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 an
option to purchase 25,000 shares of Common Stock automatically will be granted
to each person who is subsequently elected to the Board of Directors (and, who
is on such election, a Non-Employee Director) at the time of such election, and
to each Non-Employee Director (including presently existing Non-Employee
Directors) on the fifth anniversary of the date on which an option was
previously granted to that Non-Employee Director, provided that he has
continuously served as a director of the Company through such fifth anniversary.
On September 24, 1999, the Board of Directors adopted, subject to
stockholder approval, the Company's Amended and Restated Non-Employee Director
Stock Option Plan (the "Amended and Restated Director Plan"). Under the Amended
and Restated Director Plan, if adopted, each new Non-Employee Director (other
than a person who was previously an employee of the Company or any of its
subsidiaries) instead will be granted an option to purchase 8,000 shares of
Common Stock on his or her first day of service as a Non-Employee Director or,
if such first day of service is at least nine months after the Company's last
Annual Meeting, the date of the first Annual Meeting occurring after his or her
first day of service; and each other Non-Employee Director (including
individuals who may have been new Non-Employee Directors in prior years) will be
granted an option to purchase 3,000 shares of Common Stock on the date of each
Annual Meeting during his or her service as a Non-Employee Director. The Amended
and Restated Director Plan redefines a Non-Employee Director as a director who
is not also an employee of the Company or any of its subsidiaries and the term
"Non-Employee Director" as used in this Proxy Statement has this meaning with
respect to all references to Non-Employee Directors under the Amended and
Restated Director Plan. All options will be exercisable at a per share exercise
price equal to the fair market value of the Common Stock on the date of grant,
will be fully exercisable on the date of grant and will have a ten year term. In
addition, to the extent Proposal No. 2 is adopted, Non-Employee Directors will
receive $1,000 for each board meeting attended in person, $500 for each board
meeting attended by telephone connection, and $500 for committee meetings
attended. This revised option plan and fee payment will become effective
immediately after the Annual Meeting to which this Proxy Statement relates,
subject to approval by the stockholders of Proposal No. 2.
<PAGE>
Each Non-Employee Director also is reimbursed for out-of-pocket expenses
incurred as a result of attendance at a board or committee meeting. In addition,
as a result of a Services Agreement between Paul F. Forman and the Company
(described later in this Proxy Statement), from July 1, 1994 through September
30, 1999 Mr. Forman was not considered a Non-Employee Director, and instead
received 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, 1999, the Compensation Committee
consisted of Messrs. Seymour E. Liebman, Robert G. McKelvey, and Michael R.
Corboy. Mr. Liebman is the Executive Vice President and General Counsel of Canon
U.S.A., Inc., an affiliate of Canon Inc. ("Canon"). Canon Sales Co., Inc., a
subsidiary of Canon, acts as an exclusive distributor of certain of the
Company's products in Japan. Sales to Canon and Canon Sales Co., Inc. aggregated
approximately $13,375,000 for fiscal 1999. 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. See "Certain Relationships and Related Transactions" later
in this Proxy Statement.
<PAGE>
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 1999 fiscal year and the other four (five for fiscal
1999) most highly compensated executive officers of the Company ("named
executives") whose cash compensation exceeded $100,000 for the year ended June
30, 1999 for services in all capacities to the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------------- -----------------------------
NAME OTHER (1) ALL (3)(4)(5)
& PRINCIPAL POSITION FISCAL ANNUAL NUMBER OF (2) OTHER
HELD DURING FISCAL 1999 YEAR SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
- ----------------------- ------ ------ ----- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis 1999 $255,769 $ -- $10,800 -- $19,925
Chairman, Chief 1998 $241,923 $ -- $10,800 25,000 $26,239
Executive Officer, Director 1997 $208,368 $79,455 $10,800 -- $39,968
J. Bruce Robinson (6) 1999 $ 81,731 $ -- $ 3,738 50,000 $55,112
President, Director 1998 $ -- $ -- $ -- -- $ --
1997 $ -- $ -- $ -- -- $ --
Ahmad Akrami (7) 1999 $138,462 $ -- $10,800 -- $10,446
Vice President, Marketing, 1998 $134,615 $ -- $ -- -- $15,779
Sales, and Customer Service 1997 $103,366 $ -- $ -- -- $ --
Mark J. Bonney 1999 $183,462 $ -- $10,800 -- $13,501
Vice President, 1998 $175,962 $ -- $10,800 15,000 $19,814
Operations 1997 $155,488 $39,617 $10,800 -- $30,492
Francis E. Lundy (8) 1999 $160,000 $ -- $10,800 -- $12,060
Vice President, 1998 $161,539 $ -- $ -- 10,000 $18,258
New Business Development 1997 $130,385 $39,000 $ -- -- $14,908
Carl A. Zanoni 1999 $195,192 $ -- $10,800 -- $13,833
Vice President, 1998 $189,712 $ -- $10,800 15,000 $20,147
Technology, Director 1997 $168,707 $40,666 $10,800 -- $32,861
(Footnotes on following page)
</TABLE>
<PAGE>
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(1) Amounts paid as automobile allowance.
(2) In 1998, stock option grants to each of Messrs. Willis, Bonney, Lundy and
Zanoni, were terminated and new options were granted in an exchange rate of
4 for 10, effective August 18, 1998. Mr. Robinson was granted an option to
purchase 50,000 shares of Common Stock on February 22, 1999.
(3) Includes aggregate amounts of $18,197, $0, $8,718, $11,773, $10,332, and
$12,105 in fiscal 1999, $24,511, $0, $14,051, $18,086, $16,645, and $18,419
in fiscal 1998, and $38,440, $0, $0, $28,764, $13,180, and $31,144 in
fiscal 1997 paid or contributed on behalf of Messrs. Willis, Robinson,
Akrami, Bonney, Lundy, 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.
(4) Includes $1,728, $0, $1,728, $1,728, $1,728, and $1,728 in fiscal 1999,
$1,728, $0, $1,728, $1,728, $1,613, and $1,728 in fiscal 1998, and $1,728,
$0, $0, $1,728, $1,728, and $1,728 in fiscal 1997 for Messrs. Willis,
Robinson, Akrami, Bonney, Lundy, and Zanoni, respectively, representing the
value of life insurance provided to the named executives.
(5) Includes $53,384 relocation expenses for Mr. Robinson.
(6) Mr. Robinson became an officer of the Company on February 22, 1999.
(7) Mr. Akrami became an officer of the Company on August 19, 1997. Salary data
is provided since the merger with NexStar Automation, Inc. on September 12,
1996.
(8) Mr. Lundy became an officer of the Company on August 19, 1997. Salary data
is provided since the acquisition of Technical Instruments Co. on August 8,
1996.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
% OF AT ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO FOR OPTION TERM
GRANTED EMPLOYEES EXERCISER PRICE EXPIRATION ---------------------------------
NAME (1) IN FISCAL YEAR PER SHARE(2) DATE 5% 10%
---- ------- -------------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Bruce Robinson 50,000 41.8% $10.88 2/22/09 $341,711 $866,347
</TABLE>
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(1) Options vest ratably over four years on the anniversary of the grant.
(2) The exercise price 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 OPTIONS AT IN-THE-MONEY OPTIONS
SHARES JUNE 30, 1999 AT JUNE 30, 1999
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis 0 $ 0 225,000 10,000 $2,079,825 $ 6,280
J. Bruce Robinson 0 $ 0 0 50,000 $ 0 $27,900
Ahmad Akrami 0 $ 0 20,000 24,000 $ 0 $ 2,512
Mark J. Bonney 0 $ 0 126,000 6,000 $1,204,263 $ 3,768
Francis E. Lundy 0 $ 0 20,000 24,000 $ 0 $ 2,512
Carl A. Zanoni 27,000 $231,195 105,000 6,000 $ 997,530 $ 3,768
</TABLE>
<PAGE>
COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation and Stock Option 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 and Stock Option 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 goals and consistent with stockholders'
interests. Our specific duties entail reviewing the Company's compensation
practices and determining or recommending compensation for certain executive
officers 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 and Stock Option
Committee did not relate the various elements of corporate performance to each
element of executive compensation. Rather, the Compensation and Stock Option
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.
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 and Stock Option Committee.
<PAGE>
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 years and the individual must
continue to be employed by the Company for such options to vest.
FISCAL 1999 COMPENSATION TO CHIEF EXECUTIVE OFFICER
The compensation of Mr. Willis, the Chief Executive Officer of Zygo, has
been determined and adjusted on the same basis as used for all executives as
described above. During fiscal 1999, Mr. Willis received salary payments
totaling $255,769, a 5.7% increase over that received in fiscal 1998. Fiscal
1999 and 1998 data were calculated based upon 26 pay periods. Due to the
Company's financial performance versus its targets in fiscal 1999, Mr. Willis
did not receive a bonus under Zygo's Management Incentive Plan in fiscal 1999.
The Compensation and Stock Option 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 commensurately. The Compensation and Stock Option
Committee believes that compensation levels during 1999 adequately reflect the
Company's compensation goals and policies.
COMPENSATION AND STOCK OPTION COMMITTEE
Seymour E. Liebman
Robert G. McKelvey
Michael R. Corboy
<PAGE>
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 National Market--U.S.
Index and (ii) a group of peer companies weighted to reflect differing market
capitalizations. Companies in the peer group are ADE Corp., Cyberoptics Corp.,
Galileo Electro-Optics Corp., KLA-Tencor Corp., Medar, Inc., Nanometrics, Inc.,
Optical Coating Laboratory, Inc., Perceptron, Inc., and Robotic Vision Systems,
Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ZYGO CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND A PEER GROUP
[GRAPHICAL REPRESENTATIVE OF TABLE BELOW]
6/94 6/95 6/96 6/97 6/98 6/99
---- ---- ----- ----- ---- ----
ZYGO CORPORATION 100 519 1,010 1,419 684 528
PEER GROUP 100 204 181 259 155 327
NASDAQ STOCK MARKET US 100 133 171 208 274 393
* $100 INVESTED ON 06/30/94 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
<PAGE>
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 base salary payable to
Mr. Willis to $190,000 (or such higher amount as the Board may determine from
time to time) from $175,000, and to increase the monthly automobile allowance
from $600 to $900. In March 1996, Mark J. Bonney's employment agreement was
amended to increase his annual base salary to $150,000 (or such higher amount as
the Board may determine from time to time) from $135,000, and to increase the
monthly automobile allowance from $600 to $900. The amended agreements further
authorize the Board at its discretion to automatically extend the term of the
employment agreements for successive one year periods, unless either the Company
or Mr. Willis, or the Company or Mr. Bonney, as applicable, gives the other
notice of termination at least 30 days prior to the end of that contract year,
and provides for certain severance payments.
In January 1999, the Company entered into an employment agreement with Mr.
Robinson. Under the employment agreement, Mr. Robinson receives an annual base
salary of $250,000, or such higher amount as the Board may determine from time
to time. The term of Mr. Robinson's employment under the employment agreement is
one year from February 22, 1999, subject to automatic one-year renewal terms
unless terminated by either party upon 30 day prior written notice. The
employment agreement also provides that the Company and Mr. Robinson will enter
into a Non-Qualified Stock Option Agreement providing for the grant of a stock
option to purchase 50,000 shares of the Company's Common Stock, at the market
price on the date of grant, with 25% of the shares vesting at the end of each of
the first four years.
The employment agreements grant to each of Messrs. Willis, Bonney, and
Robinson a severance package in the event the Company terminates his employment
(other than for justifiable cause, disability, or death) with the Company. Under
the package, Messrs. Willis, Bonney, and Robinson would be provided with their
base salary from the time of their involuntary termination to 12 months, 6
months and 12 months thereafter, respectively. In addition, in the event they
resign within 90 days of a "Change in Control", as defined, of the Company, the
agreements generally provide for (i) the continued payment of their respective
salaries for a one-year period, and (ii) the continuation, for a period of the
lesser of three years in the case of Mr. Willis, and one year in the case of Mr.
Bonney and Mr. Robinson, 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, Mr. Bonney or Mr. Robinson, as the case
may be (or, in the case of Mr. Bonney, the funds necessary to obtain reasonably
equivalent coverage to the extent the Company's benefit programs do not provide
for such continuation of benefits). The severance coverage for Mr. Willis and
Mr. Robinson additionally provides for the automatic vesting of all stock
options to purchase shares of the Company's Common Stock then held by Mr. Willis
or Mr. Robinson, as the case may be.
Mr. Bonney resigned as an executive officer of the Company in August 1999,
with no severance obligation owed by the Company. Mr. Bonney has agreed to
continue to be available to the Company on a limited basis to assist in
transition matters.
<PAGE>
In August 1993, the Company entered into a Services Agreement with Paul F.
Forman providing for the retention of Mr. Forman 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. Pursuant to his Agreement, Mr.
Forman received salary payments of $148,271 for the year of employment and a
one-time payment of $149,500 upon his termination from active employment, and
receives 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. The Services
Agreement further provided that all outstanding unvested stock options from the
Company to Mr. Forman vested effective at the conclusion of the fiscal year
ended June 30, 1994 (options for 20,475 shares of Common Stock). The Agreement
is terminable (with all payment obligations thereunder terminating) by Mr.
Forman, at any time, and by the Company upon the death or disability of Mr.
Forman or for justifiable cause (as defined in the Agreement); except that if
the Agreement terminates as a result of the death or disability of Mr. Forman,
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. In December 1996, the Company entered into an
amendment agreement with Mr. Forman, providing for the extension of the term of
the existing Services Agreement until September 30, 1999, with Mr. Forman
receiving annually for the last 15 months of the amended Services Agreement 20%
of his salary at June 30, 1994 (in addition to the retainer previously provided
for).
The Services Agreement, which contains certain restrictions on soliciting
employees and others and is coexistent with a non-competition agreement between
Mr. Forman and the Company, replaces the Confidentiality and Non-Competition
Agreement, dated October 25, 1983, entered into between Mr. Forman and the
Company. Pursuant to the Confidentiality and Non-Competition Agreement, upon the
involuntary termination of his employment by the Company without cause, Mr.
Forman 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.
In August of 1996, the Company completed the acquisition of its now
subsidiary, Zygo Advanced Imaging Systems, formerly known as Technical
Instruments Company ("TIC"). In connection with the transaction, Mr. Lundy
entered into a three year employment contract with TIC providing for, among
other things, an annual salary of not less than $150,000. In August of 1997, Mr.
Lundy was elected as a Vice President of the Company.
In September of 1996, the Company completed the acquisition of its now
subsidiary, Zygo Automation Systems, formerly known as Nexstar Corporation
("Nexstar"). In connection with the transaction, Mr. Akrami entered into a three
year employment contract with Nexstar providing for, among other things, an
annual salary of not less than $125,000. Mr. Akrami served as a Vice President
of the Company from August 1997 until his resignation in September 1999.
<PAGE>
In August 1997, the Company completed the acquisition of its now
subsidiary, Sight Systems, Inc. ("SSI"), for approximately 287,400 shares of
Common Stock. David Grant, the principal shareholder of SSI, received
approximately 70% of the consideration paid by the Company in the transaction as
his pro rata percentage. Additionally, in connection with the transaction, Mr.
Grant entered into a three year employment agreement with SSI providing for,
among other things, an annual salary of not less than $120,000. Mr. Grant served
as a Vice President of the Company from August 1998 until his resignation in
August 1999.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Executive officers, directors and greater than ten percent beneficial owners are
required by the SEC to furnish the Company with copies of all Section 16(a)
forms they filed.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1999 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Canon Sales Co., Inc., a subsidiary of Canon, acts as a distributor of
certain of the Company's products in Japan. (See "Compensation Committee
Interlocks and Insider Participation" earlier in this Proxy Statement.)
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 (collectively, the "Principal Stockholders"), and the
Company entered into a Registration Rights Agreement. In general, the
Registration Rights Agreement grants to each of the Principal 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. There
was no registered public offering of the Company's securities during the fiscal
year ended June 30, 1999.
During the fiscal year ended June 30, 1999 the Company made purchases of
approximately $163,600 from Technical Instrument-San Francisco, an entity
principally owned by Francis E. Lundy. Price for products purchased are based on
normal terms and conditions.
<PAGE>
PRINCIPAL STOCKHOLDERS
The only stockholders who, as of June 30, 1999, 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.
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES COMMON STOCK
- ---------------- ---------------- ------------
Kopp Investment Advisors, Inc. 2,769,550(1) 24.7%
6600 France Avenue South
Suite 672
Edina, Minnesota 55435
Canon Inc. 1,210,410 10.9%
Shinjuku Dai-Ichi Seimei Building
Tokyo 160, Japan
- ----------
(1) Information derived from Carsons, I/B/E/S, updated June 30, 1999
<PAGE>
PROPOSAL NO.2-APPROVAL OF THE ADOPTION OF THE ZYGO CORPORATION
AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On September 24, 1999, the Board of Directors adopted, subject to
stockholder approval, the Company's Amended and Restated Director Plan pursuant
to which options to acquire an aggregate of 600,000 shares of Common Stock may
be granted to Non-Employee Directors. The Board adopted the Amended and Restated
Director Plan in order to change the frequency of, and the number of shares of
Common Stock covered by, the automatic option grants made to Non-Employee
Directors. The Board of Directors believes that such changes are necessary and
appropriate in order to enable the Company to continue to attract, retain and
motivate highly-skilled individuals to serve on the Board of Directors and to
provide incentives for such individuals to work for the best interests of the
Company and its stockholders through ownership of its Common Stock. In
conjunction with its adoption of the Amended and Restated Director Plan, the
Board of Directors has suspended the option grants to purchase 25,000 shares of
Common Stock that would have been made on August 25, 1999 (on the date of the
upcoming Annual Meeting, in the case of Paul F. Forman) to each of Messrs.
Forman, Corboy, Liebman, McKelvey, Murrill, and Taylor. The full text of the
Amended and Restated Director Plan is set forth in Exhibit A to this Proxy
Statement, and the following description is qualified in its entirety by
reference thereto.
Under the Amended and Restated Director Plan, each new Non-Employee
Director (other than a person who was previously an employee of the Company or
any of its subsidiaries) will be granted an option to purchase 8,000 shares of
Common Stock on his or her first day of service as a Non-Employee Director or,
if such first day of service is at least nine months after the Company's last
Annual Meeting, the date of the first Annual Meeting occurring after his or her
first day of service. In addition, each Non-Employee Director (other than a then
new Non-Employee Director) will be granted an option to purchase 3,000 shares of
Common Stock on the date of each Annual Meeting during his or her service as a
Non-Employee Director. All options will be exercisable at a per share exercise
price equal to the fair market value of the Common Stock on the date of grant,
will be fully exercisable on the date of grant and will have a ten year term. In
general, unless the Board of Directors determines otherwise, each Non-Employee
Director who ceases to serve as a director of the Company will have three months
to exercise his or her options. If Proposal No. 2 is adopted, Messrs. Forman,
Liebman, McKelvey, Murrill, and Taylor will each be granted an option to
purchase 3,000 shares of Common Stock on the date of the upcoming Annual Meeting
(in lieu of an option to purchase $25,000 shares of Common Stock which otherwise
would have been granted in 1999 under the Non-Employee Director Plan).
Prior to the amendment and restatement, the plan provided that an option to
purchase 25,000 shares (which was adjusted to 75,000 shares with respects to
grants made prior to the historical stock splits) of Common Stock would be
granted to each Non-Employee Director on the date of his or her initial election
or appointment to the Board of Directors. The original plan also provided that
an option to purchase an additional 25,000 shares would be granted to each
Non-Employee Director on the fifth anniversary of the date on which he or she
was previously granted an option under the plan. In general, such options become
exercisable in equal increments on each of the first five anniversaries of the
date of grant. As a result of the application of the plan provisions, there were
no options granted under the plan in fiscal 1999. The plan also previously
provided that each Non-Employee Director who ceased to serve as a director of
the Company had three months to exercise his or her options that were
exercisable on the date
<PAGE>
of cessation. Pursuant to the Amended and Restated Director Plan, if a
Non-Employee Director ceases to serve as a director on or after his or her
attainment of age seventy then, unless the Board of Directors determines
otherwise, such Non-Employee Director will have up to two years (rather than
three months) to exercise the then exercisable portion (determined as of the
date of cessation) of any option (including options granted prior to the
amendment and restatement of the plan) that is not fully exercisable on the date
cessation.
The aggregate number of shares of Common Stock available for issuance under
the plan has not been increased by the amendment and restatement of the plan. As
of September 24, 1999, options to purchase 450,000 shares, in the aggregate,
were outstanding under the plan, and 150,000 shares of Common Stock remained
available for issuance under the plan. As of September 24, 1999, the Company had
six Non-Employee Directors and the market value of the Common Stock was $12.38
per share.
The Amended and Restated Director Plan will be administered by the Board of
Directors. The Board of Directors may amend or terminate the Amended and
Restated Director Plan at any time, provided that, stockholder approval of any
such amendment shall be obtained to the extent such approval is necessary or
desirable to comply with applicable law or exchange requirements.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not recognize taxable income upon the grant of an option.
In general, an optionee will recognize ordinary income when the option is
exercised equal to the excess of the value of the Common Stock over the exercise
price, and the Company will receive a corresponding deduction at such time. Upon
a later sale of the Common Stock, the optionee will recognize 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.
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 approval of the Amended and Restated Director
Plan. Shares of Common Stock held by stockholders present in person at the
Annual Meeting that are not voted for approval of the Amended and Restated
Director Plan or shares held by stockholders represented at the Annual Meeting
by proxy from which authority to vote for the Amended and Restated Director Plan
has been properly withheld (including broker non-votes) will not be counted
toward the majority required for approval.
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.
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP ("KPMG") has been selected as the Company's independent auditors
for fiscal 1999. A representative of KPMG is expected to be present at the
Annual Meeting with the opportunity to make a statement if he or she so desires
and to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 2000
Annual Meeting of Stockholders of the Company must be received by the Company no
later than June 8, 2000 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
vote thereon in their discretion.
By Order of the Board of Directors
Paul Jacobs,
Secretary
October 6, 1999
<PAGE>
ZYGO CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of the Zygo Corporation Amended and Restated
Non-Employee Director Stock Option Plan (the "Plan") is to enable Zygo
Corporation, a Delaware corporation (the "Company"), to provide automatic grants
of stock options to members of its Board of Directors (the "Board") who are not
also employees of the Company or any of its subsidiaries ("Non-Employee
Directors"). The Plan is an amendment and restatement of the Zygo Corporation
Non-Employee Director Stock Option Plan in existence on the date hereof (the
"Original Plan"). Unless the context otherwise requires, all references herein
to the Plan shall include the Original Plan.
2. STOCK SUBJECT TO THE PLAN. Subject to adjustment pursuant to Section 6
below, the Company may issue and sell a total of 600,000 shares of its common
stock, $.10 par value (the "Common Stock"), pursuant to the Plan (inclusive of
shares covered by outstanding options granted under the Original Plan and shares
which have been issued pursuant to the exercise of options granted under the
Original Plan). Such shares may be either authorized and unissued or held by the
Company in its treasury. New options may be granted under the Plan with respect
to shares of Common Stock which are covered by the unexercised portion of an
option (including an option granted under the Original Plan) which terminates or
expires.
3. ADMINISTRATION. The Plan will be administered by the Board. Subject to
the provisions of the Plan and applicable law, the Board, acting in its sole and
absolute discretion, shall have full power and authority to interpret the
provisions of the Plan and option agreements made under the Plan, to supervise
the administration of the Plan, and to take such other action as may be
necessary or desirable in order to carry out the provisions of the Plan. The
decision of the Board as to any disputed question, including questions of
construction, interpretation and administration, shall be final and conclusive
on all persons.
4. AUTOMATIC OPTION GRANTS. During the term of the Plan, commencing on the
Effective Date (as defined below), options to purchase shares of Common Stock
will automatically be granted under the Plan to Non-Employee Directors as
follows:
(a) an option to purchase 8,000 shares of Common Stock will be granted
to each new Non-Employee Director (other than a director who previously was an
employee of the Company or any of its subsidiaries) on (i) the Non-Employee
Director's first day of service as a Non-Employee Director if such day is less
than nine months after the last duly held annual meeting of the Company's
stockholders, or (ii) the date of the first annual meeting of the Company's
stockholders that occurs on or after the Non-Employee Director's first day of
service as a Non-Employee Director if such first day of service is at least nine
months after the last duly held annual meeting of the Company's stockholders.
(b) an option to purchase 3,000 shares of Common Stock will be granted
to each Non-Employee Director on the date of each annual meeting of the
Company's stockholders, provided that such Non-Employee Director is not granted
an option pursuant to Section 4(a) above on such date.
<PAGE>
5. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan
shall be evidenced by a written agreement containing the following terms and
conditions:
(a) OPTION PRICE. The purchase price per share shall be equal to the
fair market value of a share of Common Stock on the date the option is granted.
For this purpose and for purposes of Section 5(d) hereof, the fair market value
of a share of Common Stock on any date will be equal to the closing sale price
per share as published by a national securities exchange on which shares of the
Common Stock are traded on such date or, if there is no sale of Common Stock on
such date, the average of the bid and asked prices on such exchange at the
closing of trading on such date.
(b) OPTION PERIOD. Notwithstanding anything herein to the contrary
(including, without limitation, Section 5(g) below), in no event may an option
be exercised more than ten years after the date on which the option is granted.
(c ) EXERCISE OF OPTIONS.
(1) Each option will be fully exercisable on the date the option
is granted. All or part of an option may be exercised at any time during the
option period, except that, without the consent of the Board, no partial
exercise of an option shall be made for less than 1,000 shares. An option may be
exercised by transmitting to the Company (i) a written notice specifying the
number of shares to be purchased, and (ii) payment in full of the purchase
price, together with the amount, if any, deemed necessary to enable the Company
to satisfy its income tax withholding obligations with respect to such exercise
(unless other arrangements acceptable to the Board are made with respect to the
satisfaction of such withholding obligations).
(2) The Company's obligation to sell and deliver shares upon
exercise of an 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. The Company shall be
entitled to postpone the time of delivery of certificates for shares of its
Common Stock for such additional time as the Company shall deem necessary or
desirable to enable it to (i) file a registration statement under the Securities
Act of 1933, as amended, with respect to the shares of Common Stock which may be
purchased under an option, or (ii) comply with the listing requirements of any
securities exchange upon which the Common Stock of the Company may be listed.
(d) PAYMENT OF OPTION PRICE. The purchase price of shares of Common
Stock acquired pursuant to the exercise of an option granted under the Plan
shall be payable in cash, check and/or shares of Common Stock which have been
owned by the optionee (free and clear of any liens or encumbrances) for at least
six months. If the shares of Common Stock are tendered as payment of the option
exercise price, the value of such shares shall be the fair market value as of
the date of exercise. If such tender would result in the issuance of fractional
shares of Common Stock, the Company shall instead return the difference in cash
or by check to the optionee.
(e) RIGHTS AS A STOCKHOLDER. No shares of Common Stock shall be issued
in respect of the exercise of an option granted under the Plan until full
payment therefor has been made. The holder of an option
<PAGE>
shall have no rights as a stockholder with respect to any shares covered by an
option until the date such shares are issued to him or her on the Company's
transfer records. Except as otherwise provided herein, no adjustments shall be
made for dividends or distributions of other rights for which the record date is
prior to the date such stock certificate is issued.
(f) NONTRANSFERABILITY OF OPTIONS. No option shall be assignable or
transferable except upon the optionee's death to a beneficiary designated by the
optionee in accordance with procedures established by the Board or, if no
designated beneficiary shall survive the optionee, pursuant to the optionee's
will or by the laws of descent and distribution. During an optionee's lifetime,
options may be exercised only by the optionee or the optionee's guardian or
legal representative. Notwithstanding the foregoing, the Board may determine at
any time that an option is transferable in whole or part to such persons, under
such circumstances, and subject to such conditions as the Board may prescribe.
(g) TERMINATION OF SERVICE. If an optionee ceases to serve as a
director of the Company for any reason, then, unless otherwise determined by the
Board at the time the option is granted or thereafter, each outstanding option
shall terminate on the date three months after the date of such cessation of
service. Notwithstanding the foregoing or the terms of any outstanding option,
if an optionee ceases to serve as a director of the Company on or after his or
her attainment of age seventy, then, unless otherwise determined by the Board at
the time the option is granted or thereafter: (i) each outstanding option that
is fully vested and exercisable on the date of such cessation shall terminate on
the date three months after the date of such cessation of service, and (ii) each
outstanding option that is not fully vested and exercisable on the date of such
cessation shall remain exercisable, but solely to the extent exercisable (i.e.,
vested) on the date of such cessation of service, until the date two years after
the date of such cessation of service and shall thereupon terminate. To the
extent that any portion of an option is not vested and exercisable on the date
of an optionee's cessation of service as a director of the Company, such portion
of the option shall immediately terminate.
(h) OTHER PROVISIONS. The Board may impose such other conditions with
respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws, as
it may deem necessary or advisable.
6. CAPITAL CHANGES, REORGANIZATION, SALE. The number and class of shares
covered by each outstanding option and the exercise price per share of each
outstanding option (but not those options to be granted) will be adjusted
proportionately or as otherwise deemed appropriate by the Board to reflect any
increase or decrease in the number of issued shares of Common Stock resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend, and/or to reflect a change in the character
or class of shares covered by the Plan arising from a readjustment or
recapitalization of the Company's capital stock. If (a) 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, or (b) any
other event shall occur which in the judgment of the Board necessitates action
by way of adjusting the terms of the option, then the Board shall 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 days prior to the effective date of the transaction or
provide for its assumption by any surviving, consolidated, or
<PAGE>
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.
7. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or terminate
the Plan at any time, provided that, the Board shall obtain stockholder approval
of any such amendment to the extent necessary or desirable to comply with
applicable law or exchange requirements. No amendment or termination may
adversely affect any outstanding option without the written consent of the
optionee.
8. NO RIGHTS CONFERRED. Nothing contained herein will be deemed to give any
individual any right to be retained or elected or re-elected as a member of the
Board.
9. GOVERNING LAW. The Plan and each option agreement shall be governed in
all respects by the laws of the State of Delaware without giving effect to the
provisions relating to conflicts of law.
10. TERM OF THE PLAN. The Plan, as amended and restated, shall be effective
upon its adoption by the Board and approval by the stockholders of the Company
in accordance with applicable law (the "Effective Date"). The Plan will
terminate on the date ten years after the Effective Date, unless sooner
terminated by the Board. The rights of optionees under options outstanding at
the time of the termination of the Plan shall not be affected solely by reason
of the termination of the Plan and shall continue in accordance with the terms
of the option (as then in effect or thereafter amended) and the Plan.
<PAGE>
PROXY
ZYGO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 17, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. J. Bruce Robinson 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 30, 1999, at the Annual Meeting of Stockholders to be
held on November 17, 1999, 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" ALL NOMINEES LISTED IN PROPOSAL NO. 1. AND "FOR" PROPOSAL
NO. 2 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 TO BE HELD AT THE OFFICES OF THE COMPANY,
LAUREL BROOK RD, MIDDLEFIELD, CONNECTICUT, ON NOVEMBER 17, 1999.
(Continued and to be dated and signed on reverse side)
<PAGE>
PROPOSAL NO. 1. Election of Directors: The eight nominees are Paul F. Forman,
Seymour E. Liebman, Robert G. McKelvey, Paul W. Murrill, J. Bruce Robinson,
Robert B. Taylor, Gary K. Willis and Carl A. Zanoni.
[ ] For all listed [ ] Withhold authority [ ] For all listed Nominees,
Nominees for all listed except withhold for the
Nominees following Nominees (write
name(s) below)
PROPOSAL NO. 2. Proposal to approve the adoption of the Zygo Corporation Amended
and Restated Non-Employee Director Stock Option Plan:
[ ] 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: _______________________, 1999
___________________________________
Signature
___________________________________
Signature if held jointly
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK.
