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:
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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 15, 2000
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 15, 2000, at 10:00 a.m. local time, for the following purposes:
1. To elect nine directors for the ensuing year.
2. To consider and act upon a proposal to approve the adoption of the
Zygo Corporation Employee Stock Purchase 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 18, 2000 are entitled to notice of and to vote at the
meeting.
By Order of the Board of Directors
PAUL JACOBS,
Secretary
October 13, 2000
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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>
[THIS PAGE INTENTIALLY LEFT BLANK]
<PAGE>
ZYGO CORPORATION
LAUREL BROOK ROAD
MIDDLEFIELD, CONNECTICUT 06455
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 15, 2000
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 15,
2000, 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 13, 2000, 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 18, 2000
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On September 18, 2000, there were 14,520,049 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
Nine 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 nine 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, 2000(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>
John Berg ............ President and Chief 37 2000 532,984 3.7%
Technical Officer of Zygo
TeraOptix since May 2000,
President and Chief
Technical Officer of
Firefly Technologies from
1997 to 2000, and held
senior management and key
engineering positions at
Digital Papyrus
Corporation from 1995 to
1997.
Paul F. Forman ....... Chairman Emeritus as of 66 1970 407,530(b) 2.9%
November 1998; Chairman
of the Board from June
1970 to November 1998.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK DEEMED
BENEFICIALLY OWNED AT
JUNE 30, 2000(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>
R. Clark Harris ...... Partner of NorthEast 63 2000 8,000(c) 0.1%
Ventures since June 1998;
from May 1995 to May 1998,
President of Uniphase
Telecommunication
Products; Director of New
Focus Inc.
Seymour E. Liebman ... Executive Vice President 51 1993 78,000(d) 0.5%
and General Counsel 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 63 1983 142,370(e) 1.0%
George McKelvey Co., Inc.
(Investment Advisor and
Securities Broker-Dealer)
for more than the last
five years.
J. Bruce Robinson .... President and Chief 58 1999 22,044(f) 0.2%
Executive Officer of the
Company since November
1999, and as President of
the Company from February
1999 to November 1999; and
previously with The
Foxboro Company served as
President Worldwide
Operations from 1996 to
1998; and President of
Foxboro Europe from 1990
to 1996.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK DEEMED
BENEFICIALLY OWNED AT
JUNE 30, 2000(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>
Patrick Tan .......... Vice President of Business 40 2000 336,363 2.4%
Operations of Zygo
TeraOptix since May 2000,
and previously with
Firefly Technologies as
Vice President of Business
Operations from 1997 to
2000. Held management and
engineering positions at
Quantum Corporation from
1994 to 1997.
Robert B. Taylor ..... Vice President and 53 1988 65,500(g) 0.5%
Treasurer of Wesleyan
University for more than
the last five years;
Director of Citizens Bank
of Connecticut.
Carl A. Zanoni ....... Vice President, Technology 59 1970 550,650(h) 3.9%
of the Company since June
1998, and from April 1992
to June 1998, Vice
President of Research,
Development and
Engineering.
All directors and .... 2,657,739(i) 18.0%
executive officers
as a group,
including those
named above (15
in all)
</TABLE>
(Footnotes on following page)
4
<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. The address for all named
persons is c/o Zygo Corporation, Laurel Brook Road, Middlefield,
Connecticut 06455.
(b) Includes options to purchase 3,000 shares of Common Stock, which are
exercisable within 60 days.
(c) Consists of options to purchase 8,000 shares of Common Stock, which are
exercisable within 60 days.
(d) Consists of options to purchase 78,000 shares of Common Stock, which are
exercisable within 60 days. Does not include 1,210,410 shares owned by
Canon Inc.
(e) Includes options to purchase 78,000 shares of Common Stock, which are
exercisable within 60 days.
(f) Includes options to purchase 17,500 shares of Common Stock, which are
exercisable within 60 days.
(g) Includes options to purchase 60,000 shares of Common Stock, which are
exercisable within 60 days.
(h) Includes options to purchase 4,250 shares of Common Stock, which are
exercisable within 60 days.
(i) Includes options to purchase 568,374 shares of Common Stock, which are
exercisable within 60 days.
Ten meetings of the Board of Directors were held in fiscal 2000.
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. Four meetings of the
Audit Committee were held in fiscal 2000. Messrs. Forman, McKelvey, and Taylor
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. Harris,
Liebman and McKelvey presently are the members of the Compensation and Stock
Option Committee. The Compensation and Stock Option Committee met twice during
fiscal 2000.
5
<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. Robinson, Forman, and Liebman
presently are the members of the Nominating Committee. The Nominating Committee
had one meeting during fiscal 2000.
Each director attended at least 80% of the total number of meetings held
during fiscal 2000 of the Board and Committees on which he served, except for
Messrs. Berg and Tan, who joined the Board of Directors in May 2000, at 11%.
As originally adopted, effective March 11, 1997, each director who is not a
full-time employee of, or consultant to the Company (a "Non-Employee Director")
received 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 was 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 provided that an option to purchase 25,000 shares of Common Stock
automatically was to 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 then
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.
Effective September 24, 1999, under the Company's Amended and Restated
Non-Employee Director Stock Option Plan (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) instead is 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. Each other
Non-Employee Director (including individuals who may have been new Non-Employee
Directors in prior years) is 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 defines 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, Non-Employee Directors 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. Each
Non-Employee Director also is reimbursed for out-of-pocket expenses incurred as
a result of attendance at a board or committee meeting.
6
<PAGE>
In addition, pursuant to the terms of a Services Agreement between Paul F.
Forman and the Company (described later in this Proxy Statement), Mr. Forman was
deemed not to be a Non-Employee Director for the period commencing July 1, 1994
and ending September 30, 1999. During that time, Mr. Forman received an annual
retainer of $20,000 for his participation on the Board of Directors. Since
September 30, 1999, Mr. Forman is deemed a Non-Employee Director and is retained
occasionally by the Company for consulting on a per diem basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 2000, the Compensation Committee
consisted of Messrs. Seymour E. Liebman, Robert G. McKelvey, and Paul W.
Murrill. As of June 30, 2000, the Compensation Committee consisted of Mr.
Liebman and Mr. McKelvey. Mr. Murrill resigned from the Company's Board of
Directors in May 2000. 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 $16,463,000 for fiscal 2000. 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.
7
<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 2000 fiscal year and the other four most highly
compensated executive officers of the Company ("named executives") whose cash
compensation exceeded $100,000 for the year ended June 30, 2000 for services in
all capacities to the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------------------------------------------------------------------------------------------------------
SECURITIES ALL OTHER
NAME & PRINCIPAL POSITION FISCAL OTHER ANNUAL UNDERLYING COMPENSATION
HELD DURING FISCAL 2000 YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS (2)(3)(4)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis (5) 2000 $200,961 $ --- $10,800 --- $ 4,328
Chairman, Director 1999 $255,769 $ --- $10,800 --- $19,925
1998 $241,923 $ --- $10,800 25,000 $26,239
J. Bruce Robinson (6) 2000 $268,269 $ --- $10,800 20,000 $43,448
President, Chief Executive 1999 $ 81,731 $ --- $ 3,738 50,000 $55,112
Officer, Director 1998 $ --- $ --- $ --- --- $ ---
Brian J. Monti (7) 2000 $169,804 $ --- $10,385 25,000 $66,228
Vice President, Worldwide 1999 $ --- $ --- $ --- --- $ ---
Sales and Marketing 1998 $ --- $ --- $ --- --- $ ---
Robert A. Smythe 2000 $155,700 $ --- $10,800 5,000 $ 5,382
Vice President, 1999 $134,615 $ --- $10,800 --- $ 1,011
Engineering 1998 $126,635 $ --- $10,800 --- $14,798
Carl A. Zanoni 2000 $207,308 $ --- $10,800 20,000 $ 5,559
Vice President, 1999 $195,192 $ --- $10,800 --- $13,833
Technology, Director 1998 $189,712 $ --- $10,800 15,000 $20,147
(Footnotes on following page)
</TABLE>
8
<PAGE>
----------
(1) Amounts paid as automobile allowance.
(2) Includes aggregate amounts of $2,600, $0, $0, $3,654, and $3,831 in fiscal
2000, $18,197, $0, $0, $8,283, and $12,105 in fiscal 1999, and $24,511, $0,
$0, $13,300, and $18,419 in fiscal 1998, paid or contributed on behalf of
Messrs. Willis, Robinson, Monti, Smythe, 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 $1,728, $1,728, $1,728, $1,728, and $1,728 in fiscal 2000, $1,728,
$1,728, $0, $1,728, and $1,728 in fiscal 1999, and $1,728, $0, $0, $1,498,
and $1,728 in fiscal 1998 for Messrs. Willis, Robinson, Monti, Smythe, and
Zanoni, respectively, representing the value of life insurance provided to
the named executives.
(4) Includes relocation expenses of $41,720 and $64,500 for Messrs. Robinson
and Monti, respectively, in fiscal 2000 and $53,384 in fiscal 1999 for Mr.
Robinson.
(5) Mr. Willis resigned as Chief Executive Officer of the Company on November
17, 1999.
(6) Mr. Robinson became President of the Company on February 22, 1999 and Chief
Executive Officer of the Company on November 17, 1999.
(7) Mr. Monti became an officer of the Company on July 1, 1999.
9
<PAGE>
<TABLE>
OPTION PLAN BENEFITS GRANTED DURING FISCAL 2000
<CAPTION>
Potential Realized Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants Term
----------------------------------------------------------------------------------------------------------------------
No. of % of Total
Securities Options
Underlying Granted to Exercise Price
Options Employees in or Base Price Expiration
Name and Position Granted (1) 2000 per Share (2) Date 5% 10%
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis --- --- --- --- --- ---
Chairman of the Board
J. Bruce Robinson 20,000 11.1% $ 9.50 8/18/09 $119,490 $ 302,811
President, Chief Executive
Officer, Director
Brian J. Monti 20,000 11.1% $11.75 7/01/09 $147,790 $ 374,529
Vice President, Worldwide 5,000 2.8% $23.81 2/09/10 $ 74,879 $ 189,759
Sales and Marketing
Robert A. Smythe 5,000 2.8% $ 9.50 8/18/09 $ 29,872 $ 75,703
Vice President, Engineering
Carl A. Zanoni 5,000 2.8% $ 9.50 8/18/09 $ 29,872 $ 75,703
Vice President, Technology, 15,000 8.3% $43.94 6/01/10 $414,486 $1,050,388
Director
</TABLE>
--------------
(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.
10
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Numbers of Unexercised Options Value of Unexercised In-the-Money
at June 30, 2000 Options at June 30, 2000
------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary K. Willis --- --- 227,500 7,500 $20,139,208 $ 600,023
J. Bruce Robinson --- --- 12,500 57,500 $ 999,163 $4,623,748
Brian J. Monti --- --- --- 25,000 $ --- $1,916,260
Robert A. Smythe 1,800 $ 59,625 44,124 8,000 $ 3,910,421 $ 646,574
Carl A. Zanoni 105,000 $3,869,820 1,500 24,500 $ 120,005 $1,469,704
----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<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.
12
<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 2000 COMPENSATION TO CHIEF EXECUTIVE OFFICER
The compensation of Mr. Robinson, 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 2000, Mr. Robinson received salary payments
totaling $268,269. Due to the Company's financial performance versus its targets
in fiscal 2000, Mr. Robinson did not receive a bonus under Zygo's Management
Incentive Plan in fiscal 2000.
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 2000 adequately reflect the
Company's compensation goals and policies.
In general, Section 162(m) of the Internal Revenue Code of 1986 imposes a
$1 million limit on the amount of compensation the Company can deduct for a year
with respect to each of the certain executive officers. For this purpose,
certain performance based and other compensation is disregarded. The
Compensation and Stock Option Committee is mindful of the deductibility
limitation in making its compensation decisions. Nevertheless, there can be no
assurance that compensation realized with respect to any particular stock option
or other award will be fully deductible.
COMPENSATION AND STOCK OPTION COMMITTEE
R. Clark Harris
Seymour E. Liebman
Robert G. McKelvey
13
<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.,
KLA-Tencor Corp., Integral Vision, Inc., Nanometrics, 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]
6/95 6/96 6/97 6/98 6/99 6/00
---- ---- ---- ---- ---- ----
ZYGO CORPORATION 100 194 273 132 102 807
PEER GROUP 100 128 156 206 296 437
NASDAQ STOCK MARKET (U.S.) 100 79 124 69 137 278
* $100 INVESTED ON 06/30/95 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
14
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OTHER AGREEMENTS AND OTHER MATTERS
Effective November 18, 1999, Mr. Willis' previous employment agreement,
effective February 1992 and amended in 1993, 1994, and 1995 was terminated. A
new employment agreement was entered into with Mr. Willis on November 18, 1999.
Under the new agreement, Mr. Willis receives an annual base salary of $137,500,
in the role of Chairman of the Board of Directors of the Company. The term of
Mr. Willis' employment is three years, subject to automatic one-year renewal
terms unless terminated by either party upon thirty (30) days prior written
notice.
The agreement provides for Mr. Willis to receive certain insurance and
other benefits. For as long as Mr. Willis continues to render employment or
consulting services to the Company and has not attained age 65, and to the
extent permitted by the terms of the insurance policy of the insurer, the
Company will continue in effect the existing life insurance policy in the amount
of $600,000 and the existing key man life insurance policy in the amount of $1
million, both on the life of Mr. Willis. Upon the death of Mr. Willis, proceeds
from the key man policy received by the Company, less all costs and expenses
paid by the Company associated with this policy, and less a 5% annual rate of
return on the capital outlay for this policy, will be paid to Mr. Willis'
designated beneficiary. In addition, for so long as Mr. Willis continues to
render consulting services to the Company and has not attained age 65, Mr.
Willis is entitled to participate in the health insurance and short and long
term disability plans, provided by the Company for its employees, to the extent
permitted under the terms of the then existing plans and policies of plan
providers.
The employment agreements described above grant to Mr. Willis a severance
package in the event the Company terminates his employment (other than for
justifiable cause (as defined in each of the employment agreements), disability,
or death) with the Company, or in the event Mr. Willis resigns within 90 days of
a "Change in Control" of the Company. Under the package, Mr. Willis will be
provided with (i) the greater of one year's base salary or the entire remaining
amount of Mr. Willis salary through November 17, 2002 and (ii) the continuation,
of all existing health insurance, dental coverage, key man life insurance, AD&D
and long-term disability coverage then in effect at Mr. Willis expense, until he
attains age 65 contingent upon Mr. Willis maintaining a consulting relationship
with the Company during the applicable period.
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, commencing February 22, 1999, subject to automatic one-year renewal
terms unless terminated by either party upon thirty (30) days prior written
notice. The employment agreement also provided for the grant to Mr. Robinson 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 stock options vesting at the
end of each of the first four years.
Effective November 18, 1999, Mr. Robinson's employment agreement was
amended to change Mr. Robinson's position to Chief Executive Officer and to
increase his annual base salary to $275,000 (or such higher amount as the Board
may determine from time to time).
In July 1999, the Company entered into an employment agreement with Mr.
Monti to fill the position of Vice President - Sales & Marketing. Under the
agreement, Mr. Monti receives an annual base salary of $175,000 or such higher
amount as the Board may determine from time to time. The term of Mr. Monti's
agreement is one year
15
<PAGE>
and is subject to automatic one-year renewal terms unless terminated by either
party upon thirty (30) days prior written notice. The employment agreement with
Mr. Monti also provided for the grant to Mr. Monti of a stock option to purchase
20,000 shares of the Company's Common Stock, at the market price on the date of
grant, with 25% of the stock options vesting at the end of each of the first
four years.
The employment agreements described above grant to Messrs. Robinson and
Monti, a severance package in the event the Company terminates their employment
(other than for justifiable cause (as defined in each of the employment
agreements), disability, or death) with the Company. Under the package, Mr.
Robinson would be provided his base salary from the time of his involuntary
termination to 12 months thereafter. In addition, in the event Mr. Robinson
resigns within 90 days of a "Change of Control", as defined therein, of the
Company, the agreement generally provides for (i) the continued payment of his
salary for a one-year period, and (ii) the continuation, for a period of the
lesser of one year 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. Robinson. The severance coverage for Mr.
Robinson additionally provides for the automatic vesting of options to purchase
shares of the Company's Common Stock then held by Mr. Robinson.
Mr. Monti's agreement provides for the continuation of his base salary for
six months from the date of his involuntary termination. In the event his
employment is terminated without justification and occurs after a "Change of
Control", the agreement provides for the (i) continuation of existing health,
dental and long term disability insurances, as well as AD&D coverage in effect
at the time of termination for a period of the lesser of six months or until
covered by another plan and (ii) continuation of Mr. Monti's salary for a period
of six months after the date of termination.
In connection with the Company's acquisition of Firefly Technologies, Inc.
(now called Zygo TeraOptix, Inc. or "ZTO") in May 2000, ZTO entered into an
employment agreement with, among others, each of John Berg and Patrick Tan, the
President and Vice President, Business Operations, respectively, of ZTO. The
employment agreements provide for a term of three years commencing May 5, 2000,
subject to automatic one-year renewal terms unless terminated by either party
upon sixty (60) days prior written notice. The employment agreements further
provide for Mr. Berg and Mr. Tan to receive, among other things, an annual base
salary of $200,000 and $175,000, respectively, or such higher amount as the
President of the Company may determine from time to time, and one year's base
salary as severance in the event his employment is terminated by the Company
(other than for justifiable cause (as defined in each of the agreements),
disability, or death) or by Mr. Berg or Mr. Tan, as applicable, for Good Reason
(as defined in each of the agreements). The severance coverage for each of
Messrs. Berg and Tan additionally provides for the automatic vesting of options
to purchase shares of the Company's common stock then held by Mr. Berg or Mr.
Tan, as applicable, in the event the employment is terminated by him for Good
Reason.
In August 1993, the Company entered into a Services Agreement with Paul F.
Forman (the "Services Agreement") 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 this Services 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 received 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 options to purchase Common Stock from the Company to Mr.
Forman vested effective at
16
<PAGE>
the conclusion of the fiscal year ended June 30, 1994 (options to purchase
20,475 shares of Common Stock). The Agreement was 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 Services Agreement); except that if the Services Agreement
terminated as a result of the death or disability of Mr. Forman, he (or his
estate) would have been 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 Services Agreement. In December 1996, the Company entered
into an amendment to the Services 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). Since September 30, 1999, Mr. Forman has
continued to serve as a member of the Company's board of directors and
occasionally been retained by the Company for consulting on a per diem basis.
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, replaced 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.
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 2000 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, except that
Messrs. Monti and Zanoni erroneously failed to file a Form 4 on a timely basis,
which were subsequently made on a Form 5. In addition, the Non-Employee
Directors erroneously failed to file on a timely basis the Form 5s reflecting
the receipt of their annual stock option grant, which filing have since
occurred.
17
<PAGE>
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.)
PRINCIPAL AND OTHER STOCKHOLDERS
The only stockholders who, as of June 30, 2000, 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. The following table also sets forth information regarding the beneficial
ownership of the Company's Common Stock by each executive officer named in the
Summary Compensation Table who is not otherwise listed as a nominee for election
to the Company's Board of Directors under Proposal No. 1 above. All such
beneficial owners have sole voting and investment power with respect to the
shares of Common Stock shown as owned by them. Unless otherwise indicated, the
address for the named persons is c/o Zygo Corporation, Laurel Brook Road,
Middlefield, Connecticut 06455.
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES COMMON STOCK
---------------- ---------------- ------------
Kopp Investment Advisors, Inc. 2,853,989(1) 20.1%
6600 France Avenue South
Suite 672
Edina, Minnesota 55435
Canon Inc. 1,210,410 8.5%
Shinjuku Dai-Ichi Seimei Building
Tokyo 160, Japan
Gary K. Willis 414,000(2) 2.9%
Chairman
Brian Monti 5,000(3) *
Vice President, Worldwide Sales
and Marketing
Robert Smythe 47,458(4) 0.3%
Vice President, Engineering
----------
* Less than 0.1 percent.
(1) Information derived from Nasdaq-AmEx Online as of July 27, 2000.
(2) Includes options to purchase 230,000 shares of Common Stock, which are
exercisable within 60 days.
(3) Consists of options to purchase 5,000 shares of Common Stock, which are
exercisable within 60 days.
(4) Includes options to purchase 46,374 shares of Common Stock, which are
exercisable within 60 days.
18
<PAGE>
PROPOSAL NO. 2 -- APPROVAL OF THE ADOPTION OF THE
ZYGO CORPORATION EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval at the Annual Meeting of Stockholders, the Zygo Corporation Employee
Stock Purchase Plan (the "Purchase Plan"). The Board of Directors believes that
the Purchase Plan will encourage broader stock ownership by employees who might
not otherwise own Common Stock and who, as owners of Common Stock, will have a
greater incentive to contribute to the profitability and long term growth of the
Company.
SUMMARY OF PROVISIONS OF THE PURCHASE PLAN
This summary of the Purchase Plan is qualified in its entirety by the
provisions of the Purchase Plan, a copy of which is attached hereto as Appendix
A.
AVAILABLE SHARES. Subject to appropriate adjustment for stock splits and
other capital changes, the Company may sell an aggregate of 500,000 shares of
Common Stock under the Purchase Plan. Shares sold under the Purchase Plan may be
authorized and unissued or shares held by the Company in its treasury. The
Company may purchase shares for resale under the Purchase Plan.
ELIGIBILITY. Any employee of the Company or of any present or future
subsidiary corporation of the Company that is designated by the Compensation and
Stock Option Committee as an eligible subsidiary under the Purchase Plan
(including any officer or director who is also an employee) is eligible to
participate in the Purchase Plan as long as the employee customarily works at
least twenty hours per week and at least five months per year. No employee who
owns or holds options to purchase, or who as a result of his or her
participation in the Purchase Plan would own or hold options to purchase, 5% or
more of the Company's Common Stock may participate in the Purchase Plan. It is
not possible at this time to determine who may elect to participate in the
Purchase Plan.
PARTICIPATION IN THE PURCHASE PLAN. Participation in the Purchase Plan is
completely voluntary. Unless changed by the Compensation and Stock Option
Committee, each offering of Common Stock under the Purchase Plan will be for a
period of six months, with a new offering commencing every six months. If the
Purchase Plan is approved by the Company's stockholders, the first offering
under the Purchase Plan will commence on January 1, 2001. Participation in the
Purchase Plan is limited to eligible employees who authorize payroll deductions
pursuant to the Purchase Plan. At present, such payroll deductions may not
exceed 10% of an employee's base cash compensation. The amount of an employee's
payroll deductions under the Purchase Plan will be credited to an unfunded,
bookkeeping account maintained in the employee's name. Once an employee becomes
a participant in the Purchase Plan, the employee will automatically participate
in each successive offering until such time as the employee withdraws from the
Purchase Plan or the employee's employment terminates.
PURCHASE PRICE. The purchase price per share at which the shares of Common
Stock are sold under the Purchase Plan generally will be equal to 85% of the
lesser of the fair market value of the Common Stock on (a) the first day of the
applicable offering period or (b) the last day of the offering period. The
closing price of the Common Stock as reported on the Nasdaq National Market was
$76.125 per share on October 2, 2000.
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<PAGE>
PURCHASE OF SHARES. The number of shares of Common Stock a participant
purchases in each offering period is determined by dividing the total amount of
payroll deductions withheld from the participant's compensation by the purchase
price per share. Participants may not purchase shares of Common Stock having a
fair market value exceeding $25,000 in any calendar year. For this purpose, the
fair market value of Common Stock purchased in a given offering is determined as
of the first day of that offering. Furthermore, a participant may not purchase
more than 500 shares in a single offering, although this limit may be adjusted
by the Compensation and Stock Option Committee from time to time.
WITHDRAWAL FROM PARTICIPATION. An employee may elect to terminate his or
her participation at any time during an offering period. An employee's
participation will automatically terminate upon the termination for any reason
of his or her employment with the Company and its participating subsidiaries.
Upon termination of participation, payroll deductions will cease and the amount
credited to the participant's account will be paid in cash to the participant
(or the participant's beneficiary, in the event of his or her death). A
participant who voluntarily withdraws from the Purchase Plan during an offering
period may re-enroll for any subsequent offering period for which he or she is
an eligible employee.
ADMINISTRATION. The Purchase Plan will be administered by the Company's
Compensation and Stock Option Committee or such other committee appointed by the
Board of Directors from time to time. Subject to the provisions of the Purchase
Plan, the Compensation and Stock Option Committee, acting in its sole and
absolute discretion, will have full power and authority to construe, interpret
and apply the terms of the Purchase Plan.
AMENDMENT OR TERMINATION. The Board of Directors may amend or terminate the
Purchase Plan at any time, subject to stockholder approval in the case of
amendments increasing the number of shares of Common Stock which may be sold
under the Purchase Plan, changing the class of corporations whose employees are
eligible to participate in the Purchase Plan or otherwise requiring stockholder
approval under applicable law.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is intended only as general guidance as to the United
States federal income tax consequences under current law of participation in the
Purchase Plan, and does not attempt to describe all potential tax consequences.
Tax consequences are complex and subject to change, and a taxpayer's particular
situation may be such that some variation from the described rules is
applicable. Participants should consult their own tax advisors prior to the
disposition of any shares of Common Stock acquired pursuant to the Purchase
Plan.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). Amounts withheld from an employee's pay under the Purchase
Plan constitute ordinary income as if such amounts had been paid outright to the
employee. No income is recognized by an employee upon the purchase of shares at
the end of an offering period.
A participant may recognize ordinary income upon a sale or other
disposition of shares acquired under the Purchase Plan. In general, if the sale
or other disposition of shares acquired under the Purchase Plan occurs more than
two years after the beginning of the offering period in which the shares were
acquired, then gain recognized will be treated as ordinary income in an amount
up to the lesser of (a) the excess of the fair market value of the shares at
20
<PAGE>
the time of sale or other disposition over the purchase price, or (b) 15% of the
fair market value of the shares on the first day of the applicable offering
period. The balance of the gain, if any, will be treated as long-term capital
gain.
If the sale or other disposition occurs within said two-year period (a
"disqualifying disposition"), then the employee will recognize ordinary income
equal to the amount by which the fair market value of the Common Stock on the
date the shares were purchased exceeds the purchase price. The amount of the
ordinary income will be added to the employee's basis for the shares in
determining the capital gain or loss recognized on the sale or other
disposition.
The Company will be entitled to a deduction in the year of a disqualifying
disposition equal to the amount of ordinary income recognized by the participant
as result of the disposition. In all other cases, no deduction is allowed to the
Company.
The Purchase Plan is not qualified, nor is it intended to be qualified,
under Section 401(a) of the Code.
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 Purchase Plan. Shares of
Common Stock held by stockholders present in person at the Annual Meeting that
are not voted for approval of the Purchase Plan or shares held by stockholders
represented at the Annual Meeting by proxy from which authority to vote for the
Purchase 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.
21
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP ("KPMG") has been selected as the Company's independent auditors
for fiscal 2000. 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 2001
Annual Meeting of Stockholders of the Company must be received by the Company no
later than June 15, 2001 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 13, 2000
22
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23
<PAGE>
APENDIX A
ZYGO CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of the Zygo Corporation Employee Stock Purchase
Plan is to provide Eligible Employees of the Company and its Subsidiaries with a
means to acquire shares of Common Stock through payroll deductions. The Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code and shall be interpreted and construed accordingly.
2. DEFINITIONS. For purposes of the Plan, the following terms have the
following meanings:
(a) "ACCOUNT" shall mean the book keeping account established in the
name of each Participant to reflect the payroll deductions made on behalf
of the Participant.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" shall mean the committee appointed to administer the
Plan in accordance with Section 4 or, if no such committee is duly
constituted or appointed, the Board.
(e) "COMMON STOCK" shall mean the Company's common stock, par value
$0.10
(f) "COMPANY" shall mean Zygo Corporation, a Delaware corporation, and
any successor thereto.
(g) "COMPENSATION" shall mean the base compensation paid by the
Company or a Subsidiary to a Participant which is required to be reported
as wages on the Participant's Form W-2, including such additional amounts
which are not includible in gross income by reason of Sections 125,
402(e)(3) or 402(h)(1)(B) of the Code, and excluding any bonuses, overtime
pay, severance, sick leave, expense and relocation allowances, gains from
the exercise of stock options and other irregular payments (except
commissions).
(h) "EMPLOYEE" shall mean any person on the active employment payroll
of the Company or any of its Subsidiaries. Any person classified by the
Company or any of its Subsidiaries at the time services are provided as an
independent contractor or consultant shall not be eligible to participate
in the Plan during the period which he or she is so classified even if
later retroactively reclassified as an Employee during all or any part of
such period pursuant to applicable law or otherwise.
24
<PAGE>
(i) "ELIGIBLE EMPLOYEE" shall mean, with respect to an Offering
Period, any Employee on the Enrollment Date who satisfies each of the
following criteria:
(1) the Employee does not immediately after the grant, directly
or indirectly, own stock (as defined by the Code) and/or hold
outstanding options to purchase stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of
stock of the Company or a "parent corporation" or Subsidiary of the
Company;
(2) the Employee's customary employment is for twenty (20) hours
or more per week or such lesser number of hours established by the
Committee on a uniform and nondiscriminatory basis; and
(3) the Employee customarily works a minimum of five (5) months
per year, or such lesser number of months established by the Committee
on a uniform and nondiscriminatory basis.
If the Committee permits any Eligible Employee of a Subsidiary to participate in
the Plan during an Offering Period, then all Eligible Employees of that
Subsidiary shall also be permitted to participate in the Plan during such
Offering Period.
(j) "ENROLLMENT DATE" shall mean the first day of an Offering Period.
(k) "EXERCISE DATE" shall mean the last day of an Offering Period.
(l) "FAIR MARKET VALUE" for purposes of the Plan, unless otherwise
required by the Code, shall mean, as of any date, the closing sale price
per share of Common Stock as published by the principal national securities
exchange on which the Common Stock is 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 close of trading on such date, or if shares
of the Common Stock are not listed on a national securities exchange on
such date, the last reported trading price or, if none, the average of the
bid and asked prices in the over-the-counter market at the close of trading
on such date. If there is no such reported price for the Common Stock for
the date in question due to the applicable stock market not being open for
trading, then such price on the last preceding date for which such price
exists shall be determinative of Fair Market Value.
25
<PAGE>
(m) "OFFERING PERIOD" shall mean the six (6) month period commencing
on January 1, 2001 or such other date as established by the Committee, and
each successive six (6) month period thereafter. To the extent permitted
under Section 423 of the Code, the Committee shall have the power to change
the duration of future Offering Periods and the commencement dates thereof.
(n) "PARTICIPANT" shall mean any Eligible Employee for whom an Account
is maintained under the Plan.
(o) "PURCHASE PRICE" shall mean, subject to adjustment pursuant to
Section 10 hereof, eighty-five percent (85%) of the lesser of the Fair
Market Value of a share of Common Stock on (i) the Enrollment Date or (ii)
the Exercise Date.
(p) "PLAN" shall mean this Zygo Corporation Employee Stock Purchase
Plan, as amended from time to time.
(q) "SUBSIDIARY" shall mean any "subsidiary corporation" of the
Company (within the meaning of Section 424(f) of the Code) that is
designated by the Committee as an eligible Subsidiary under the Plan from
time to time.
3. AVAILABLE SHARES. Subject to adjustment as provided in Section 10, the
maximum number of shares of Common Stock that may be sold under the Plan shall
not exceed 500,000 shares. Such shares may be either authorized and unissued or
held by the Company in its treasury. The Committee may cause the Company to
purchase previously issued and outstanding shares of Common Stock in order to
enable the Company to satisfy its obligations hereunder. Subject to adjustment
pursuant to Section 10 or as otherwise determined by the Committee prior to the
commencement of any Offering Period, the maximum number of shares of Common
Stock a Participant may purchase during any Offering Period shall not exceed 500
shares.
4. ADMINISTRATION. The Plan shall be administered by the Company's
Compensation and Stock Option Committee or such other committee appointed by the
Board from time to time. Subject to the provisions of the Plan, the Committee,
acting in its sole and absolute discretion, shall have full power and authority
to interpret the provisions of the Plan, to change the time covered by an
Offering Period, 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. A majority of the members of the Committee shall
constitute a quorum. The Committee may act by the vote of a majority of its
members present at a meeting at which there is a quorum or by written consent.
The decision of the Committee, including questions of construction,
interpretation and administration, shall be final, binding and conclusive on all
persons. The Company shall indemnify and hold harmless each member of the
Committee and any employee or director of the Company or of a Subsidiary who
provides assistance or performs services in connection with the administration
or interpretation of the Plan against any loss, cost, liability (including any
sum paid in settlement of a claim with the approval of the Board), damage and
expense (including legal and other expenses incident thereto) arising out of or
incurred in connection with the Plan, unless and except to the extent
attributable to such person's fraud or wilful misconduct.
5. ELIGIBILITY AND ENROLLMENT. An Eligible Employee shall become a
Participant on the first Enrollment Date occurring on or after his or her
satisfaction of the Plan's eligibility requirements and completion of a
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<PAGE>
Plan enrollment form authorizing payroll deductions. Such enrollment form must
be filed with the Company prior to the applicable Offering Period and during the
enrollment period established by the Company. Payroll deductions for a
Participant shall commence with the first payroll and shall end with the last
payroll in the Offering Period to which such authorization is applicable, unless
sooner terminated by the Participant in accordance with the provisions hereof.
Notwithstanding any provisions of the Plan to the contrary, to the extent
required by applicable law, no Participant may be granted the right to purchase
Common Stock under the Plan if and to the extent that the Participant's right to
purchase stock under all employee stock purchase plans (within the meaning of
Section 423 of the Code) of the Company or a Subsidiary would accrue at a rate
which exceeds $25,000 in Fair Market Value (determined at the time of grant) in
accordance with the Code for each calendar year in which such right is
outstanding.
6. PAYROLL DEDUCTION. At the time a Participant enrolls in the Plan, he or
she must elect the amount to be deducted from each paycheck during the Offering
Period(s) covered by the election, provided that (i) unless otherwise determined
by the Committee with respect to future Offering Periods, no more than ten
percent (10%) of a Participant's Compensation may be withheld under the Plan on
any pay date, and (ii) the Committee, acting in its discretion and in a uniform
and nondiscriminatory manner, may establish a minimum required amount or
percentage of Compensation which must be withheld during an Offering Period. All
payroll deductions made for a Participant shall be credited to the Participant's
Account. Interest shall not accrue on any amounts credited to a Participant's
Account. The rate of a Participant's contribution, once established, shall
remain in effect for all subsequent Offering Periods unless changed by the
Participant in writing at such time and in such manner as the Committee may
prescribe.
7. PURCHASE OF SHARES. On each Exercise Date, the amount credited to a
Participant's Account shall be used to purchase a whole number of shares of
Common Stock, the number of which will be determined by dividing the amount
credited to the Participant's Account by the Purchase Price per share. Any
amount remaining in the Participant's Account shall be credited to the
Participant's Account as of the beginning of the next Offering Period. If the
total number of shares of Common Stock to be purchased as of an Exercise Date,
when aggregated with shares of Common Stock previously purchased under the Plan,
exceeds the number of shares then authorized under the Plan, a pro-rata
allocation of the available shares shall be made among the Participants based
upon the amounts in their respective Accounts as of the Exercise Date.
8. DISCONTINUANCE OR WITHDRAWAL; WITHHOLDING CHANGES.
(a) DISCONTINUANCE OR WITHDRAWAL. At any time during an Offering Period,
a Participant may notify the Company that he or she wishes to discontinue
contributions under the Plan. This notice shall be in writing and shall become
effective as soon as practicable following its receipt by the Company. A
Participant may elect to withdraw all, but not less than all, of the amount of
his or her Account at any time during an Offering Period, except on the Exercise
Date with respect to that Offering Period. If a withdrawal is made during an
Offering Period, no further contributions shall be permitted during that
Offering Period by the withdrawing Participant.
(b) WITHHOLDING CHANGES. At any time during an Offering Period, a
Participant may increase or decrease the rate of his or her payroll deductions
by completing or filing with the Company a new enrollment form authorizing a
change in payroll deduction rate. The Committee may, in its discretion, limit
the
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number of payroll deduction rate changes during any Offering Period. The change
in rate shall be effective as soon as practicable following the Company's
receipt of the new enrollment form.
(c) TERMINATION OF EMPLOYMENT. Any Participant whose employment with the
Company and its Subsidiaries is terminated for any reason before an Exercise
Date shall thereupon cease being a Participant. The total amount credited to the
Participant's Account during the Offering Period shall be returned to the
Participant or, in the case of a deceased Participant, to the Participant's
beneficiary, as soon as practicable after the Participant's termination of
employment.
9. RIGHTS AS A STOCKHOLDER. No shares of Common Stock shall be issued under
the Plan until full payment therefor has been made. A Participant shall have no
rights as a stockholder with respect to any shares until the date a stock
certificate (or its equivalent) for such shares is issued to him or her. Except
as otherwise specifically 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 (or its equivalent) is issued.
10. CAPITAL CHANGES; REORGANIZATION; SALE.
(a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number and
class of shares of Common Stock which may be sold under the Plan and purchased
by a Participant, as well as the number and class of shares of Common Stock and
the price per share covered by each right outstanding under the Plan which has
not yet been exercised, shall be adjusted proportionately or as otherwise
appropriate 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 a 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.
(b) CASH, STOCK OR OTHER PROPERTY FOR STOCK. Except as otherwise
provided in this Section, in the event of an Exchange Transaction (as defined
below), each Participant shall be permitted to purchase Common Stock with the
balance of his or her Account immediately prior to such Exchange Transaction,
and any amount credited to a Participant's Account which is not used to purchase
Common Stock before the Exchange Transaction shall be distributed to the
Participant. Notwithstanding the preceding sentence, (i) if, as part of the
Exchange Transaction, the stockholders of the Company receive capital stock of
another corporation ("Exchange Stock") in exchange for their shares of Common
Stock (whether or not such Exchange Stock is the sole consideration), and if the
Board, in its sole discretion, so directs, then the rights of all Participants
to purchase shares of Common Stock shall be converted into rights to purchase
shares of Exchange Stock on an economically equivalent basis; and (ii) the
Board, acting in its discretion, may suspend operation of the Plan as of any
date that occurs after a contract is made which, if consummated, would result in
an Exchange Transaction and before the Exchange Transaction is consummated.
(c) DEFINITION OF EXCHANGE TRANSACTION. For purposes hereof, the term
"Exchange Transaction" shall mean a merger (other than a merger of the Company
in which the holders of Common Stock immediately prior to the merger have the
same proportionate ownership of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation of
a holding company), liquidation of the Company or any other similar transaction
or event so designated by the Board in its sole discretion, as a result of which
the stockholders of
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<PAGE>
the Company receive cash, stock or other property in exchange for or in
connection with their shares of Common Stock.
(d) DETERMINATION OF COMMITTEE TO BE FINAL. All adjustments under this
Section 10 shall be made by the Committee, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
11. AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan at
any time; provided, however, that, except as otherwise provided in Section 10
hereof, any amendment which increases the aggregate number of shares of Common
Stock which may be issued under the Plan, modifies the corporations or class of
corporations whose employees are offered options under the Plan or otherwise
requires stockholder approval under applicable law shall be subject to the
approval of the Company's stockholders.
12. TRANSFERABILITY. The rights of a Participant to purchase Common Stock
under the Plan are not assignable or transferable and may only be exercised
during the Participant's lifetime by the Participant. A Participant may file a
written designation of a beneficiary who is to receive the amount credited to
the Participant's Account in the event of the Participant's death during an
Offering Period. A Participant's beneficiary designation may be changed by the
Participant at any time by written notice. In the event of the death of a
Participant and in the absence of a validly designated beneficiary who is living
at the time of the Participant's death, the Participant's estate shall be deemed
to be his or her designated beneficiary.
13. NO RIGHTS CONFERRED. Nothing contained in the Plan shall be deemed to
give any individual any right to be retained in the employ of the Company and
its Subsidiaries or to interfere with the right of the Company and its
Subsidiaries to discharge him or her at any time.
14. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
15. LEGAL REQUIREMENTS. The Committee may impose such other conditions with
respect to the purchase of Common Stock hereunder, including, without
limitation, any conditions relating to the application of federal or state
securities laws and/or any exchange or listing requirements as it may deem
necessary or advisable.
16. GOVERNING LAW. The Plan shall be governed by the laws of the State of
Delaware, without regard to its principles of conflicts of law.
17. DECISIONS AND DETERMINATIONS. Any decision or determination made by the
Board pursuant to the provisions hereof and, except to the extent rights or
powers under the Plan are reserved specifically to the discretion of the Board,
all decisions and determinations of the Committee are final, binding and
conclusive.
18. EFFECTIVE DATE. The Plan shall become effective as of the date of its
adoption by the Board, subject to approval by the Company's stockholders within
twelve (12) months thereafter.
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ZYGO CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 15, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mr. J. Bruce Robinson and Mr. Michael J. Auth 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 18, 2000, at the Annual Meeting of Stockholders to be held on November
15, 2000, at 10:00am, 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 THE 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 HOTEL INTER-CONTINENTAL NEW
YORK, 111 EAST 48TH STREET, NEW YORK, NEW YORK ON NOVEMBER 15, 2000.
(continued and to be dated and signed on the reverse side)
PROPOSAL NO. 1 Election of Directors: The nine nominees are John Berg, Paul F.
Forman, R. Clark Harris, Seymour E. Liebman, Robert G. McKelvey,
J. Bruce Robinson, Patrick Tan, Robert B. Taylor, and
Carl A. Zanoni.
|_| For all listed |_| Withhold authority |_| For all nominees, except
nominees for all listed nominees withholding for the
following nominees
(strike names from
the list above)
PROPOSAL NO. 2 Proposal to approve the adoption of the Zygo Corporation Employee
Stock Purchase 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: __________________________________
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