<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Vicor Corporation
(Name of Registrant as Specified In Its Charter)
(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[VICOR CORPORATE LOGO]
April 24, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
(the "Annual Meeting"). The Annual Meeting will be held:
<TABLE>
<S> <C>
DATE: June 25, 1998
TIME: 5:00 P.M.
PLACE: Andover Country Club
60 Canterbury Street
Andover, Massachusetts
</TABLE>
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the Annual Meeting. The accompanying Proxy Statement contains
discussion of the matters to be voted upon at the Annual Meeting. At the Annual
Meeting your management will report on the operations of the Corporation, and
directors and officers of the Corporation will respond to questions that
stockholders may have.
The Board of Directors encourages you to promptly complete, date, sign, and
return your Proxy Card. Return of the Proxy Card indicates your interest in the
Corporation's affairs. If you attend the Annual Meeting and wish to vote your
shares in person you may revoke your proxy at that time.
Sincerely Yours,
/s/ PATRIZIO VINCIARELLI
------------------------
PATRIZIO VINCIARELLI
President and Chairman of the Board
<PAGE> 3
VICOR CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 25, 1998
------------------------
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of Vicor Corporation (the "Corporation") will be held on
Thursday, June 25, 1998 at 5:00 p.m., at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, for the following purposes:
1. To fix the number of Directors at six and to elect six Directors to
hold office until the 1999 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified;
2. To approve and ratify the adoption of the 1998 Stock Option and
Incentive Plan; and
3. To consider and act upon any other matters which may properly be
brought before the Annual Meeting, or any adjournments or postponements
thereof.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on April 30, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. Any proxy may be revoked by a writing delivered to the Corporation
stating that the proxy is revoked or by delivery of a later dated proxy.
Stockholders of record who attend the Annual Meeting may vote in person by
notifying the Secretary, even if they have previously delivered a signed proxy.
By Order of the Board of Directors
MARK A. GLAZER
Secretary
Andover, Massachusetts
April 24, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU WISH TO
VOTE YOUR SHARES IN PERSON AT THE MEETING, YOUR PROXY MAY BE REVOKED.
<PAGE> 4
VICOR CORPORATION
23 FRONTAGE ROAD
ANDOVER, MASSACHUSETTS 01810
TELEPHONE (978) 470-2900
PROXY STATEMENT
FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 25, 1998
April 24, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Vicor Corporation (the "Corporation") from
holders of the outstanding shares of capital stock of the Corporation for use at
the 1998 Annual Meeting of Stockholders of the Corporation to be held on
Thursday, June 25, 1998 at 5:00 p.m., at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, and at any adjournments or postponements thereof
(the "Annual Meeting"). At the Annual Meeting, stockholders will consider the
matters set forth in the accompanying Notice of Annual Meeting.
This Proxy Statement and the accompanying Notice of Annual Meeting and
proxy card are first being sent to stockholders on or about May 13, 1998. The
Board of Directors has fixed the close of business on April 30, 1998 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of March 31, 1998, there were outstanding and
entitled to vote 30,756,463 shares of Common Stock and 12,169,309 shares of
Class B Common Stock of the Corporation. Each share of Common Stock entitles the
holder thereof to one vote per share and each share of Class B Common Stock
entitles the holder thereof to ten votes per share. Shares of Common Stock and
Class B Common Stock will vote together as a single class on the proposals set
forth in this Proxy Statement.
Stockholders of the Corporation are requested to complete, date, sign and
return the accompanying proxy card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Annual Meeting
and not revoked will be voted at the Annual Meeting as directed in the proxy. If
a properly executed proxy is submitted and no instructions are given, the proxy
will be voted FOR the fixing of the Board of Directors at six and the election
of the six nominees for Directors of the Corporation named in this Proxy
Statement and FOR the approval and ratification of the 1998 Stock Option and
Incentive Plan. It is not anticipated that any matters other than those set
forth in this Proxy Statement will be presented at the Annual Meeting. If other
matters are presented, proxies will be voted in accordance with the discretion
of the proxy holders.
<PAGE> 5
A stockholder of record may revoke a proxy at any time before it has been
exercised by (i) filing a written revocation with the Secretary of the
Corporation at the address of the Corporation set forth above; (ii) filing a
duly executed proxy bearing a later date; or (iii) appearing in person,
notifying the Secretary and voting by ballot at the Annual Meeting. Any
stockholder of record as of the Record Date attending the Annual Meeting may
vote in person whether or not a proxy has been previously given, but the
presence (without further action) of a stockholder at the Annual Meeting will
not constitute revocation of a previously given proxy.
Shares with respect to which votes have been withheld from any Director are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but such withheld votes have no legal effect under
Delaware law. Shares that reflect abstentions or "broker non-votes" (i.e.,
shares held by brokers that are represented at the Annual Meeting but as to
which such brokers have not received instructions from the beneficial owners
and, with respect to one or more but not all issues, such brokers do not have
discretionary voting power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
Annual Meeting. For purposes of determining whether a particular proposal has
passed, abstentions will be treated as votes cast against the proposal and
broker non-votes will have no effect on the outcome of the vote.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Corporation. In addition to the solicitation of proxies by mail,
the Directors, officers and employees of the Corporation may also solicit
proxies personally or by telephone without special compensation for such
activities. The Corporation will also request persons, firms and corporations
holding shares in their names or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners. The Corporation will reimburse such holders for their
reasonable expenses in connection therewith.
The Corporation's 1997 Annual Report including financial statements for the
fiscal year ended December 31, 1997, is being mailed to stockholders
concurrently with this Proxy Statement.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors of the Corporation has nominated the six individuals
named below for election as Directors. Each of the nominees is presently serving
as a Director of the Corporation. If elected, the nominees will serve until the
1999 Annual Meeting of Stockholders and until their respective successors shall
have been duly elected and qualified. Proxies will be voted for the nominees
named below unless otherwise specified in the proxy. Each of the nominees has
consented to serve as a Director. However, if any person nominated by the Board
of Directors fails to stand for election or is unable to accept election,
proxies solicited hereby will be voted either for the election of another person
or persons designated by the Board of Directors or to fix the number of
Directors at a lesser number and elect the nominees able and willing to serve.
Directors will be elected by a plurality of the votes cast by the holders of
Common Stock and Class B Common Stock voting on the election of Directors.
Holders of voting rights sufficient to elect each of the nominees named below
have indicated an intention to vote in favor of such nominees.
2
<PAGE> 6
INFORMATION REGARDING NOMINEES
The following table sets forth certain information as of March 31, 1998
with respect to the six nominees for election to the Board of Directors.
Information regarding the beneficial ownership of shares of the capital stock of
the Corporation by such persons is set forth under the section of this Proxy
Statement entitled "Principal and Management Stockholders."
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
---- --- -------------- ----------------------------------------
<S> <C> <C> <C>
Patrizio Vinciarelli.... 51 1981 President and Chairman of the Board of the
Corporation.
Richard E. Beede........ 49 1993 Senior Vice President, Marketing of the
Corporation.
Estia J. Eichten........ 51 1981 Senior Scientist with the Fermi National
Accelerator Laboratory in Batavia, Illinois;
President of VLT Corporation, a wholly-owned
subsidiary of the Corporation, since 1987.
Jay M. Prager........... 51 1993 Senior Vice President, Technology of the
Corporation.
David T. Riddiford...... 62 1984 General Partner of P.R. Venture Partners, L.P., a
venture capital affiliate of Pell, Rudman & Co.,
Inc., an investment advisory firm, since 1987;
general partner of the general partner of Venture
Founders Capital, a venture capital partnership,
since 1984. Mr. Riddiford is currently a Director
of Datawatch Corporation.
M. Michael Ansour....... 44 1993 Managing partner of Langdon Street Capital, L.P.,
an investment limited partnership in New York City,
since 1992; Vice President of Kellner DiLeo & Co.,
an investment firm in New York City, from 1989 to
1991.
</TABLE>
The Corporation's Board of Directors held four meetings during the fiscal
year ended December 31, 1997. Each of the Directors attended more than 75% of
the total number of meetings of the Board of Directors and meetings of the
committees of the Board of Directors on which he served. The Board of Directors
has established an Audit Committee and an Executive Compensation Committee. The
Audit Committee held four meetings in 1997. The Audit Committee is composed of
Messrs. Ansour, Eichten and Riddiford. The functions of the Audit Committee
generally include recommending the appointment of independent auditors,
reviewing with the independent auditors the scope and results of the audit
engagement, and monitoring the Corporation's internal financial and accounting
controls. The Executive Compensation Committee met twice in 1997. The Executive
Compensation Committee is composed of Messrs. Eichten and Riddiford. The
Executive Compensation Committee is responsible for establishing salaries,
bonuses and other compensation for the officers of the Corporation and
administering the Corporation's stock option and bonus plans pursuant to
authority delegated to it by the Board of Directors. The Board of Directors does
not have a standing nominating committee. The full Board of Directors performs
the function of such a committee.
DIRECTORS' COMPENSATION
Directors of the Corporation do not currently receive cash compensation for
service on the Board of Directors. Under the Corporation's 1993 Stock Option
Plan (the "1993 Plan"), each employee Director (other than Mr. Vinciarelli or
any other Director who holds in excess of 10% of the total number of shares of
the capital stock of the Corporation) and each non-employee Director
automatically receives non-qualified stock options upon election or re-election
as a Director. Such employee Directors and non-employee Directors automatically
receive non-qualified stock options to purchase up to 2,000 shares of the
Corporation's Common Stock, which vest in equal annual installments of 400
shares on each anniversary of the date of grant and expire 10 years from the
date of grant. Non-employee Directors receive additional non-qualified stock
options to purchase up to 2,000 shares of the Corporation's Common Stock that
vest in their entirety one year from the date of grant and expire 15 months from
the date of grant. All such options are exercisable at a price equal to the fair
market value of the Common Stock at the date of grant.
3
<PAGE> 7
EXECUTIVE OFFICERS
Executive officers are elected annually and serve at the discretion of the
Board of Directors. The following persons are the executive officers of the
Corporation.
Patrizio Vinciarelli, 51, President and Chief Executive Officer. Dr.
Vinciarelli founded Vicor in 1981 and has served as President since that time.
Richard E. Beede, 49, Senior Vice President, Marketing. Mr. Beede joined
the Corporation in 1984.
Jay M. Prager, 51, Senior Vice President, Technology. Prior to joining the
Corporation in 1987, Mr. Prager was Director, New Product Development, at the
Modicon Division of Gould, Inc., a manufacturer of industrial control equipment,
where he spent a total of nine years in various engineering and engineering
management roles.
Barry Kelleher, 49, Senior Vice President, International Operations. Prior
to joining the Corporation in 1993, Mr. Kelleher was employed at Computer
Products Inc., a manufacturer of power conversion products, since 1981, where he
held the position of Corporate Vice President and President of the Power
Conversion Group.
David W. Nesbitt, 52, Senior Vice President, North and South American
Sales. Mr. Nesbitt held the position of Vice President, Sales from 1989 to 1992
and Vice President, North American Sales from 1992 to 1995. Prior to joining the
Corporation in 1989, Mr. Nesbitt was employed at Siliconix, Inc., a manufacturer
of integrated circuits, from 1981 to 1989. He held the position of Central Area
Manager from 1981 to 1986, at which time he was promoted to Director, North
American Sales.
Mark A. Glazer, 45, Chief Financial Officer, Treasurer, Secretary and
Acting Vice President, Operations. Mr. Glazer held the position of Vice
President, Finance from 1993 to 1997 and Controller of the Corporation from 1988
to 1993. In April 1998, Mr. Glazer was appointed to the position of Acting Vice
President, Operations. Prior to joining the Corporation in 1988, Mr. Glazer was
employed by Analog and Digital Systems, Inc., a manufacturer of home and
automotive stereo equipment, from 1983 to 1988, where he held the position of
Controller from 1983 to 1986 and the position of Treasurer from 1986 to 1987, at
which time he was promoted to Vice President, Finance.
N. Douglas Powers, 51, Vice President, Chief Information Officer. Mr.
Powers held the position of Director, Management Information Systems of the
Corporation from 1989 to 1991 and Senior Director, Management Information
Systems from 1991 to 1993. Prior to joining the Corporation in 1989, Mr. Powers
was Director, Research and Technical Support at Stratus Computer, Inc., a
manufacturer of fault tolerant computer systems, from 1981 to 1989.
Larry C. Gretzinger, 50, Vice President, Quality. Prior to joining the
Corporation in 1997, Mr. Gretzinger was employed at Racal-Datacom, Inc., a
designer, manufacturer and service provider of data communications equipment,
where he held the position of Vice President, Corporate Quality from 1994 to
1997. Previous positions during his eight year tenure at Racal-Datacom, Inc.
included Director, Quality; Manager, Quality Systems; and Manager, Master
Scheduling.
Thomas A. St. Germain, 60, Vice President, Financial Services. Prior to
joining the Corporation in 1998, Mr. St. Germain was employed at Summa Four,
Inc., a manufacturer of specialized digital switches, since 1993, where he held
the position of Senior Vice President, Chief Financial Officer and Treasurer.
4
<PAGE> 8
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of the
Corporation's Common Stock and Class B Common Stock held by (i) each person or
entity that is known to the Corporation to be the beneficial owner of more than
five percent of the outstanding shares of either class of the Corporation's
common stock, (ii) each Director of the Corporation, (iii) each of the executive
officers of the Corporation named in the Summary Compensation Table, and (iv)
all Directors and executive officers as a group, based on representations of the
Directors and executive officers of the Corporation as of March 31, 1998, a
review of filings on Schedules 13D, 13F and 13G under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and holdings reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
with respect to December 31, 1997. Except as otherwise specified, the named
beneficial owner has sole voting and investment power over the shares. The
information in the table reflects shares outstanding of each class of common
stock on March 31, 1998, and does not, except as otherwise indicated below, take
into account conversions after such date of shares of Class B Common Stock into
Common Stock. Subsequent conversions of Class B Common Stock into Common Stock
will increase the voting control of persons who retain shares of Class B Common
Stock.
<TABLE>
<CAPTION>
PERCENT PERCENT CLASS B
TOTAL COMMON STOCK COMMON STOCK PERCENT
NAME OF NUMBER BENEFICIALLY BENEFICIALLY OF VOTING
BENEFICIAL OWNER(1) OF SHARES(2)(3) OWNED OWNED POWER(4)
------------------- --------------- ------------ --------------- ---------
<S> <C> <C> <C> <C>
Patrizio Vinciarelli........................ 20,984,646 32.4% 90.6% 78.8%
Estia J. Eichten............................ 1,245,964(5) 1.8% 5.7% 4.9%
M. Michael Ansour........................... 27,000 * * *
David T. Riddiford.......................... 212,285(6) * * *
Richard E. Beede............................ 140,576(7) * * *
Jay M. Prager............................... 140,535 * * *
David W. Nesbitt............................ 82,220 * * *
Barry Kelleher.............................. 43,972 * * *
All Directors and executive officers as a
group (12 persons)........................ 22,934,927 36.2% 97.0% 84.2%
Nevis Capital Management, Inc............... 2,804,395 9.1% * 1.8%
119 St. Paul Street, Baltimore, MD 21202
The Kaufmann Fund, Inc...................... 2,500,000 8.1% * 1.6%
140 East 45th Street, New York, NY 10017
</TABLE>
- ---------------
* Less than 1%
(1) The address of Mr. Eichten is: c/o Fermi National Accelerator Laboratory,
Kirk Road and Pine Street, Batavia, IL 60510. The address of each other
person named in the table, but not specified therein, is: c/o Vicor
Corporation, 23 Frontage Road, Andover, MA 01810.
(2) Includes shares issuable upon the exercise of stock options that have vested
or will vest within 60 days in the following amounts: Mr. Vinciarelli, 4,010
shares of Common Stock; Mr. Eichten, 4,000 shares of Common Stock; Mr.
Ansour, 4,000 shares of Common Stock; Mr. Riddiford, 4,000 shares of Common
Stock; Mr. Beede, 26,474 shares of Common Stock; Mr. Prager, 85,739 shares
of Common Stock and 54,500 shares of Class B Common Stock; Mr. Nesbitt,
82,220 shares of Common Stock; Mr. Kelleher, 43,972 shares of Common Stock;
and all Directors and executive officers as a group, 297,144 shares of
Common Stock and 69,500 shares of Class B Common Stock.
(3) The calculation of the number of shares includes the following: for Mr.
Vinciarelli, 9,960,998 shares of Common Stock representing 32.4% of such
class and 11,023,648 shares of Class B Common Stock representing 90.6% of
such class; and for Mr. Eichten, 555,264 shares of Common Stock representing
1.8% of such class and 690,700 shares of Class B Common Stock representing
5.7% of such class.
(4) The percentages have been determined in accordance with Rule 13d-3 under the
Exchange Act. As of March 31, 1998, a total of 42,925,772 shares of common
stock were outstanding, of which 30,756,463 were shares of Common Stock
entitled to one vote per share and 12,169,309 were shares of Class B Common
Stock entitled to ten votes per share. Each share of Class B Common Stock is
convertible into one share of Common Stock.
5
<PAGE> 9
(5) Includes 8,500 shares of Common Stock beneficially owned by Mr. Eichten's
spouse as to which Mr. Eichten disclaims beneficial ownership.
(6) Includes 101,236 shares of Common Stock held by Venture Founders Partners
Limited Partnership. Mr. Riddiford, a Director of the Corporation, is a
general partner of the general partner of Venture Founders Partners Limited
Partnership.
(7) Includes 600 shares of Common Stock beneficially owned by Mr. Beede's spouse
and 1,200 shares of Common Stock beneficially owned by two relatives as to
which Mr. Beede disclaims beneficial ownership.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 1995,
1996 and 1997 the compensation paid by the Corporation to the Chief Executive
Officer and the other four most highly compensated executive officers who earned
more than $100,000 during 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
------------------------------------------------- COMPENSATION AWARDS
OTHER ANNUAL -------------------
NAME AND COMPENSATION SHARES UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)
------------------ ---- --------- -------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
P. Vinciarelli..................... 1997 190,615 -- 8,820 10,574
President and Chief 1996 170,615 -- 6,680 5,369
Executive Officer 1995 158,609 -- 9,071 3,764
R. Beede........................... 1997 163,857 21,884 9,124 7,601
Sr. Vice President, 1996 151,846 14,207 7,965 6,126
Marketing 1995 141,356 24,256 13,432 5,682
J. Prager.......................... 1997 168,115 -- 9,119 9,620
Sr. Vice President, 1996 151,846 -- 10,558 8,236
Technology 1995 141,356 -- 9,638 7,364
B.Kelleher......................... 1997 145,914 13,667 9,465 2,626
Sr. Vice President, 1996 137,077 13,500 9,989 3,516
International Operations 1995 127,795 20,322 8,553 3,530
D. Nesbitt......................... 1997 147,712 17,967 9,040 3,866
Sr. Vice President, 1996 137,077 16,301 9,752 3,516
North and South American Sales 1995 128,314 24,302 9,209 8,530
</TABLE>
- ---------------
(1) This column sets forth the cost of providing certain perquisites and
benefits to the named executive officers. The amounts shown relate primarily
to automobile allowances, which were as follows: for Mr. Vinciarelli, $8,610
in 1997, $6,005 in 1996, and $8,861 in 1995; Mr. Beede, $6,650 in 1997,
$6,813 in 1996, and $12,850 in 1995; Mr. Prager, $8,909 in 1997, $9,206 in
1996, and $9,428 in 1995; Mr. Kelleher, $7,760 in 1997, $7,889 in 1996, and
$7,709 in 1995; and Mr. Nesbitt, $7,916 in 1997, $8,165 in 1996, and $8,178
in 1995.
6
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options during the
fiscal year ended December 31, 1997 to the Chief Executive Officer and each
other executive officer named in the Summary Compensation Table. All stock
options granted in 1997 relate to shares of the Corporation's Common Stock. No
stock appreciation rights ("SARs") have been granted by the Corporation.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
SHARES ANNUAL RATES OF STOCK
UNDERLYING PRICE APPRECIATION FOR
OPTIONS % OF TOTAL OPTIONS EXERCISE OR OPTION TERM
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -----------------------
NAME (#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- -------------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
P. Vinciarelli......... 2,260(1) 0.21% $16.37 3/03/1999 $ 3,792 $ 7,769
5,649(2) 0.52% $16.37 3/03/2007 $58,156 $147,380
659(3) 0.06% $15.18 4/24/2007 $ 6,098 $ 15,636
625(4) 0.06% $16.00 4/30/2007 $ 6,167 $ 15,743
563(5) 0.05% $17.75 5/15/2007 $ 7,321 $ 17,577
416(6) 0.04% $24.06 6/19/2007 $ 4,221 $ 12,650
402(6) 0.04% $24.87 6/19/2007 $ 3,753 $ 11,899
R. Beede............... 4,380(2) 0.41% $16.37 3/03/2007 $45,092 $114,272
1,221(2) 0.18% $16.37 3/03/2007 $12,570 $ 31,855
2,000(7) 0.11% $21.88 6/26/2007 $27,520 $ 69,742
J. Prager.............. 1,991(1) 0.06% $16.37 3/03/1999 $ 3,341 $ 6,844
3,783(2) 0.35% $16.37 3/03/2007 $38,946 $ 98,697
1,221(2) 0.11% $16.37 3/03/2007 $12,570 $ 31,855
625(4) 0.06% $16.00 4/30/2007 $ 6,167 $ 15,743
2,000(7) 0.18% $21.88 6/26/2007 $27,520 $ 69,742
B. Kelleher............ 855(2) 0.08% $16.37 3/03/2007 $ 8,802 $ 22,307
1,771(2) 0.16% $16.37 3/03/2007 $18,232 $ 46,205
D. Nesbitt............. 855(2) 0.08% $16.37 3/03/2007 $ 8,802 $ 22,307
3,011(2) 0.28% $16.37 3/03/2007 $30,998 $ 78,556
</TABLE>
- ---------------
(1) Options expiring March 3, 1999 were granted on March 3, 1997 and become
exercisable on November 3, 1997.
(2) Options expiring March 3, 2007 were granted March 3, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
(3) Options expiring April 24, 2007 were granted on April 24, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
(4) Options expiring April 30, 2007 were granted on April 30, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
(5) Options expiring May 15, 2007 were granted on May 15, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
(6) Options expiring June 19, 2007 were granted on June 19, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
(7) Options expiring June 26, 2007 were granted on June 26, 1997 and vest and
become exercisable at a rate of 20% per year over five years from the date
of grant.
The table also shows the value of the options granted at the end of the
option terms if the price of the Corporation's Common Stock were to appreciate
annually by 5% and 10%, respectively. There is no assurance
7
<PAGE> 11
that the price of the Common Stock will appreciate at the rates shown in the
table. If the price of the Common Stock appreciates, the value of the Common
Stock held by all stockholders will increase.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth the shares acquired and the value realized
upon exercise of stock options during the fiscal year ended December 31, 1997 by
the Chief Executive Officer and each other executive officer named in the
Summary Compensation Table and certain information concerning the number and
value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(2)
SHARES ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------------ -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
P. Vinciarelli............... 4,744 $ 6,547 3,515 7,684 $ 37,868 $ 76,487
R. Beede..................... 2,110 $ 4,494 23,026 15,665 $ 377,358 $171,568
J. Prager.................... 4,220 $ 9,495 138,005 15,145 $3,369,163 $160,708
B. Kelleher.................. 1,903 $ 2,626 42,678 35,561 $ 670,205 $541,190
D. Nesbitt................... 6,903 $103,546 80,313 10,166 $1,762,205 $ 93,651
</TABLE>
- ---------------
(1) Equal to the market value of the Corporation's Common Stock on the date of
exercise, less the option exercise price. All values assume conversion of
any shares of Class B Common Stock to Common Stock.
(2) Equal to the market value of shares covered by in-the-money options on
December 31, 1997, less the aggregate option exercise price. Options are
in-the-money if the market value of the shares covered thereby is greater
than the option exercise price. All values assume conversion of any shares
of Class B Common Stock to Common Stock.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Executive Compensation Committee of the Board of Directors of the
Corporation (the "Committee") consists of David T. Riddiford and Estia J.
Eichten, both of whom are non-employee directors. The Committee establishes the
terms of and grants awards under the Corporation's 1993 Plan and other benefit
plans. The Committee also approves compensation policies for executive officers.
Compensation Policies for Executive Officers
The Corporation's compensation program for executive officers currently
consists primarily of a base salary and awards of stock options. In addition to
base salary, the Corporation provides certain benefits to executive officers,
such as the use of an automobile and enhanced health insurance coverage, that
are not available to employees generally.
Salary levels for executive officers are proposed by management and
approved by the Committee. In connection with salary adjustments made in the
beginning of 1997, the Committee reviewed compensation information from a
national survey of the high tech industry. This survey contained data from over
four hundred companies, including the Corporation. The survey included
information from certain of the companies contained in the peer group used in
formulating the Stock Performance Graph appearing on page 10, but was not
limited to those companies. The Committee believes that salary levels for
executive officers of the Corporation are slightly below the median salary
levels of the companies surveyed.
The primary element of the Corporation's incentive compensation program has
been the granting of options to purchase shares of the Corporation's Common
Stock under the Corporation's 1993 Plan. Substantially all of the Corporation's
employees, including its executive officers, participate in the Corpora-
8
<PAGE> 12
tion's 1993 Plan. The 1993 Plan is designed to give each participating employee
an ownership interest in the Corporation and to align the interests of the
executive officers with those of the Corporation's stockholders.
Stock options are granted to employees and executive officers based upon
guidelines established by the Board of Directors and the Committee. Annual
continuation awards ("Continuation Awards") were granted to executive officers
in 1997 based on a formula which calculates the product of two times the
executive officer's merit increase (based on the executive officer's performance
review) divided by the market value per share of the Corporation's Common Stock
on the date of grant. The number of shares to be granted was approved by the
Committee, and was not based on any corporate or business unit performance
measures. All Continuation Awards were made with a 5-year vesting schedule.
In addition to Continuation Awards under the 1993 Plan, the Corporation has
in the past granted short-term "bonus" stock options to all eligible employees
and officers (except those who participate in the Corporation's sales incentive
plan), that were exercisable for approximately two years. These grants have been
designed to provide a short-term incentive under the 1993 Plan. In 1997, the
Corporation granted "bonus" options at a rate of twenty percent of base salary
to all participating executive officers and employees of the Corporation.
Management recommends the grant of these options and the Committee does not use
specific or weighted criteria relating to performance of the Corporation in
determining whether to grant these awards. Although options of this type have
typically been granted over the past few years at the rate of twenty percent of
base salary to all eligible employees, this program is discretionary and may be
changed in the future.
Finally, to the extent applicable to the Corporation, the Committee intends
to review and to take any necessary and appropriate steps to ensure that the
Corporation complies with certain income tax regulations, which if not satisfied
would limit the deductibility of executive compensation above specified amounts.
Compensation of Chief Executive Officer
The Committee approves the annual salary for Mr. Vinciarelli, the
Corporation's Chief Executive Officer. The Committee does not have specific
criteria, either in terms of individual or corporate performance, in evaluating
the base salary of the Chief Executive Officer. In light of the relatively low
cash compensation paid to the Chief Executive Officer, the Committee has not
attempted to relate compensation of the Chief Executive Officer to the
performance of the Corporation. Based on salary data from the survey discussed
above, and other sources, the Committee believes that the Chief Executive
Officer's salary is at the lower end of the range of salaries for CEOs of
comparable companies.
In 1997, the Committee determined to include Mr. Vinciarelli in the
granting of stock options described above as "bonus". However, as in prior
years, the Corporation continued to exclude Mr. Vinciarelli from the granting of
Continuation Awards because of Mr. Vinciarelli's significant stock holdings in
the Corporation and the practice of basing such awards on performance reviews
that were typically prepared by Mr. Vinciarelli.
Submitted by the Executive Compensation Committee:
Estia J. Eichten
David T. Riddiford
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Eichten and Mr. Riddiford serve on the Committee. Mr. Eichten serves as
President of VLT Corporation, the Corporation's licensing subsidiary, but
receives no compensation for such service. Mr. Riddiford does not serve as an
officer of the Corporation. The Corporation is not aware of any compensation
committee interlocks.
9
<PAGE> 13
INDEBTEDNESS OF MANAGEMENT
During 1997, the Corporation made five personal loans to Mr. Vinciarelli,
the President and Chief Executive Officer of the Corporation in the aggregate
amount of $246,511. The loans are for a term of five years, are unsecured and
bear interest at the higher of the prime rate less one percent or the applicable
federal rate under the Internal Revenue Code of 1986, as amended. Including
prior borrowings, the largest aggregate amount of all indebtedness outstanding
at any time during 1997 was $1,601,303, including accrued interest. The
aggregate amount of all such loans outstanding as of April 15, 1998 was
approximately $1,636,614, including accrued interest.
In November 1995, the Corporation made a personal loan to Mr. Nesbitt, the
Senior Vice President of North and South American Sales of the Corporation in
the amount of $66,000. The loan is for a term of five years, is unsecured and
bears interest at the prime rate less one percent. The largest aggregate amount
of this indebtedness outstanding at anytime during 1997 was $54,144. The
aggregate amount outstanding as of April 15, 1998 was approximately $37,446,
including accrued interest.
During 1997, the Corporation made two personal loans to Mr. Gretzinger,
Vice President, Quality of the Corporation in the aggregate amount of $45,000.
One note in the amount of $35,000 is secured by a mortgage on a certain real
estate. A note in the amount of $10,000 is for a term of five years and is
unsecured. Both notes bear interest at the prime rate less one percent. The
largest aggregate amount of this indebtedness outstanding at anytime during 1997
was $45,058. The aggregate amount outstanding as of April 15, 1998 was
approximately $45,500, including accrued interest.
10
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE GRAPH
The graph set forth below presents the cumulative, five-year stockholder
return for each of the Corporation's Common Stock, the Standard & Poor's 500
Index and an index of peer group companies selected by the Corporation (the
"Peer Group"). The Peer Group consists of ten publicly-traded companies in the
specialty electronic component industry: AMP Incorporated; Analog Devices
Incorporated; Burr-Brown Corporation; Cypress Semiconductor Corporation; Dallas
Semiconductor Corporation; Integrated Device Technology Incorporated; Intel
Corporation; Linear Technology Corporation; LSI Logic Corporation and Xilinx
Incorporated. The Corporation's Common Stock began trading publicly on April 3,
1990. The graph assumes an investment of $100 on December 31, 1992 in each of
the Corporation's Common Stock, the Standard & Poor's 500 Index, and the Peer
Group and assumes reinvestment of dividends. The graph is market
capitalization-weighted.
<TABLE>
<CAPTION>
Measurement Period Vicor S&P 500 Peer Group
(Fiscal Year Covered) Corporation Index Companies
<S> <C> <C> <C>
Measurement Pt - 12/31/92 100.00 100.00 100.00
12/31/93 126.03 110.08 138.20
12/31/94 141.10 111.53 157.28
12/31/95 219.18 153.45 249.29
12/31/96 182.87 188.68 473.46
12/31/97 297.26 251.63 507.06
</TABLE>
11
<PAGE> 15
PROPOSAL II
PROPOSAL TO APPROVE AND RATIFY THE
1998 STOCK OPTION AND INCENTIVE PLAN
PROPOSAL
The Board of Directors has adopted the 1998 Stock Option and Incentive Plan
(the "1998 Plan") for Directors, officers, employees and other key persons of
the Corporation and its subsidiaries, subject to the approval of the 1998 Plan
by the stockholders. Approximately 1,118 employees and three non-employee
Directors are eligible to participate in the 1998 Plan.
The 1998 Plan is administered by the Executive Compensation Committee of
the Board of Directors (the "Committee"). The Committee, in its discretion, may
grant a variety of stock incentive awards based on the Common Stock of the
Corporation. Awards under the 1998 Plan include stock options (both incentive
options and non-qualified options), stock appreciation rights, restricted stock,
performance shares, unrestricted stock, deferred stock and dividend equivalent
rights. These awards are described in greater detail below.
Subject to adjustment for stock splits, stock dividends and similar events,
the total number of shares of Common Stock that can be issued under the 1998
Plan is 2,000,000 shares, of which no more than 100,000 shares will be available
for grants in the form of unrestricted stock, restricted stock or performance
shares. In order to satisfy the performance-based compensation exception to the
$1 million cap on the Corporation's tax deduction imposed by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), the 1998 Plan also
provides that stock options or stock appreciation rights with respect to no more
than 100,000 shares of Common Stock may be granted to any one individual in any
one calendar year. The shares issued by the Corporation under the 1998 Plan may
be authorized but unissued shares, or shares reacquired by the Corporation. To
the extent that awards under the 1998 Plan do not vest or otherwise revert to
the Corporation, the shares of Common Stock represented by such awards may be
the subject of subsequent awards.
RECOMMENDATION
The Board of Directors believes that stock options and other stock-based
incentive awards can play an important role in the success of the Corporation by
encouraging and enabling the officers and other employees of the Corporation and
its Subsidiaries upon whose judgment, initiative and efforts the Corporation
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Corporation. The Board of Directors anticipates that
providing such persons with a direct stake in the Corporation will assure a
closer identification of the interests of participants in the 1998 Plan with
those of the Corporation, thereby stimulating their efforts on the Corporation's
behalf and strengthening their desire to remain with the Corporation.
The Board of Directors believes that the proposed 1998 Plan, which provides
for a greater range of stock-based incentive awards and permits greater
flexibility in the terms of such awards than the 1993 Plan, will help the
Corporation to achieve its goals by keeping the Corporation's incentive
compensation program dynamic and competitive with those of other companies.
Accordingly, the Board of Directors believes that the 1998 Plan is in the best
interests of the Corporation and its stockholders and recommends that the
stockholders approve the 1998 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE 1998 PLAN BE APPROVED AND
RATIFIED, AND THEREFORE RECOMMENDS A VOTE FOR THIS PROPOSAL.
12
<PAGE> 16
SUMMARY OF THE 1998 PLAN
The following description of certain features of the 1998 Plan is intended
to be a summary only. The summary is qualified in its entirety by the full text
of the 1998 Plan which is attached hereto as Exhibit A.
Plan Administration; Eligibility. The 1998 Plan is administered by the
Committee. All members of the Committee are Directors who are not also employees
of the Corporation or any of its subsidiaries.
The Committee has full power to select, from among the employees eligible
for awards, the individuals to whom awards will be granted, to make any
combination of awards to participants, and to determine the specific terms and
conditions of each award, subject to the provisions of the 1998 Plan. The
Committee may permit Common Stock, and other amounts payable pursuant to an
award, to be deferred. In such instances, the Committee may permit interest,
dividend or deemed dividends to be credited to the amount of deferrals.
Persons eligible to participate in the 1998 Plan will be those employees
and other key persons of the Corporation and its subsidiaries who are
responsible for or contribute to the management, growth or profitability of the
Corporation and its subsidiaries, as selected from time to time by the
Committee. Directors of the Corporation who are not employed by the Corporation
or its subsidiaries ("Independent Directors") will also be eligible for certain
awards under the 1998 Plan.
Stock Options. The 1998 Plan permits the granting of (i) options to
purchase Common Stock intended to qualify as incentive stock options ("Incentive
Options") under Section 422 of the Code and (ii) options that do not so qualify
("Non-Qualified Options"). The option exercise price of each option will be
determined by the Committee but may not be less than 100% of the fair market
value of the Common Stock on the date of grant in the case of incentive stock
options, and may not be less than 85% of the fair market value of the Common
Stock on the date of grant in the case of Non-Qualified Options.
The term of each option will be fixed by the Committee and may not exceed
ten years from date of grant in the case of an Incentive Option. The Committee
will determine at what time or times each option may be exercised and, subject
to the provisions of the 1998 Plan, the period of time, if any, after
retirement, death, disability or termination of employment during which options
may be exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Committee.
Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Committee or, if the Committee so permits, by delivery of shares of Common
Stock that have been beneficially owned by the optionee for at least six (6)
months. The exercise price may also be delivered to the Corporation by a broker
pursuant to irrevocable instructions to the broker from the optionee.
At the discretion of the Committee, stock options granted under the 1998
Plan may include a "re-load" feature pursuant to which an optionee exercising an
option by the delivery of shares of Common Stock would automatically be granted
an additional stock option (with an exercise price equal to the fair market
value of the Common Stock on the date the additional stock option is granted) to
purchase that number of shares of Common Stock equal to the number delivered to
exercise the original stock option. The purpose of this feature is to enable
participants to maintain an equity interest in the Corporation without dilution.
To qualify as Incentive Options, options must meet additional federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders.
Stock Options Granted to Independent Directors. The 1998 Plan provides for
the automatic grant of Non-Qualified Options to Independent Directors. Each
Independent Director, upon his or her reelection as a Director, will be
automatically granted Non-Qualified Options to acquire 2,000 shares of Common
Stock. The
13
<PAGE> 17
exercise price of each such Non-Qualified Option is the fair market value of the
Common Stock on the date of grant. Such Non-Qualified Options may not be
exercised before the first anniversary of the date of grant, except in the case
of death or disability, and shall expire twenty-seven (27) months from the date
of grant. In addition, each Independent Director, upon his or her reelection as
a Director, will be automatically granted Non-Qualified Options to purchase
2,000 shares of Common Stock (the "Long-Term Options"), which shall become
exercisable in five equal annual installments of 400 shares on each anniversary
of the date of grant. The exercise price of each such Long-Term Option is the
fair market value of the Common Stock on the date of grant. Any automatic grant
of options to an Independent Director under the 1998 Plan shall be made in lieu
of any automatic grant of options to such Independent Director under the 1993
Plan. The Committee may grant additional Non-Qualified Options to Independent
Directors in its discretion.
Stock Appreciation Right. The Committee may award a stock appreciation
right ("SAR") either as a freestanding award or in tandem with a stock option.
Upon exercise of the SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share specified in the related stock
option (or, in the case of freestanding SAR, the price per share specified in
such right, which price may not be less than 100% of the fair market value of
the Common Stock on the date of grant) times the number of shares of Common
Stock with respect to which the SAR is exercised. This amount may be paid in
cash, Common Stock, or a combination thereof, as determined by the Committee. If
the SAR is granted in tandem with a stock option, exercise of the SAR cancels
the related option to the extent of such exercise.
Restricted Stock. The Committee may award shares of Common Stock to
participants subject to such conditions and restrictions as the Committee may
determine ("Restricted Stock"). These conditions and restrictions may include
the achievement of certain performance goals and/or continued employment (or
other business relationship) with the Corporation through a specified restricted
period. The purchase price of shares of Restricted Stock will be determined by
the Committee. If the performance goals and other restrictions are not attained,
the participants will forfeit their awards of Restricted Stock.
Deferred Stock Awards. The Corporation may award phantom stock units to a
participant, subject to such conditions and restrictions as the Committee may
determine ("Deferred Stock Awards"). These conditions and restrictions may
include the achievement of certain performance goals and/or continued
employment. During the deferral period, the participant shall have no rights as
a stockholder, but may be credited with dividend equivalent rights (as described
below) with respect to the phantom stock units underlying his or her Deferred
Stock Award. At the end of the deferral period, the Deferred Stock Award, to the
extent vested, shall be paid to the participant in the form of shares of Common
Stock. In addition, the Committee may permit a participant to elect to receive a
portion of the cash compensation or Restricted Stock otherwise due to such
participant in the form of a Deferred Stock Award, subject to such terms and
conditions as the Committee may determine.
Unrestricted Stock. The Committee may grant shares (at no cost or for a
purchase price determined by the Committee) which are free from any restrictions
under the 1998 Plan ("Unrestricted Stock"). Unrestricted Stock may be issued to
employees and key persons in recognition of past services or other valid
consideration, and may be issued in lieu of cash bonuses to be paid to such
employees and key persons.
Subject to the consent of the Committee, an employee or key person of the
Corporation may make an advance irrevocable election to receive a portion of his
compensation in Unrestricted Stock (valued at fair market value on the date the
cash compensation would otherwise be paid).
Performance Share Awards. The Committee may grant performance share awards
to employees or other key persons entitling the recipient to receive shares of
Common Stock upon the achievement of
14
<PAGE> 18
individual or Corporation performance goals and such other conditions as the
Committee shall determine ("Performance Share Awards").
Dividend Equivalent Rights. The Committee may grant dividend equivalent
rights, which entitle the recipient to receive credits for dividends that would
have been paid if the recipient had held specified shares of Common Stock.
Dividend equivalent rights may be granted as a component of another award or as
a freestanding award. Dividend equivalents credited under the 1998 Plan may be
paid currently or be deemed to be reinvested in additional shares of Common
Stock, which may thereafter accrue additional dividend equivalents at fair
market value at the time of deemed reinvestment or on the terms then governing
the reinvestment of dividends under the Corporation's dividend reinvestment
plan, if any. Dividend equivalent rights may be settled in cash, shares, or a
combination thereof, in a single installment or installments, as specified in
the award. Awards payable in cash on a deferred basis may provide for crediting
and payment of interest equivalents.
Adjustments for Stock Dividends, Mergers, Etc. The Committee will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Corporation or similar event, as of the effective date of such transaction, all
options and SARs shall become fully exercisable and all other Awards shall
become fully vested, except as the Committee may otherwise determine with
respect to particular Awards. Unless provision is made in connection with such a
transaction for the assumption of outstanding Awards or the substitution of such
Awards with new Awards, the Plan and all outstanding options and Awards shall
terminate.
Amendments and Termination. The Board of Directors may at any time amend
or discontinue the 1998 Plan and the Committee may at any time amend or cancel
outstanding awards for the purpose of satisfying changes in the law or for any
other lawful purpose. However, no such action may be taken which adversely
affects any rights under outstanding awards without the holder's consent.
Further, Plan amendments shall be subject to approval by the Corporation's
stockholders if and to the extent required by the Code to preserve the qualified
status of Incentive Options.
Change of Control Provisions. The 1998 Plan provides that in the event of
a "Change of Control" (as defined in the 1998 Plan) of the Corporation, all
stock options and stock appreciation rights shall automatically become fully
exercisable. In addition, at any time prior to or after a Change of Control, the
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it may determine appropriate.
EFFECTIVE DATE OF THE 1998 PLAN
The 1998 Plan will become effective upon the affirmative vote of the
holders of at least a majority of the votes entitled to be cast at the Annual
Meeting. Accordingly, for the purposes of the vote on the 1998 Plan, abstentions
will have the same effect as votes against the 1998 Plan and broker non-votes
will have no effect on the results of the vote. Both abstentions and broker
non-votes will count towards the presence of a quorum. Awards of Incentive Stock
Options may be granted under the 1998 Plan until March 31, 2008.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the principal federal income tax consequences
of option grants under the 1998 Plan. It does not describe all federal tax
consequences under the 1998 Plan, nor does it describe state or local tax
consequences.
15
<PAGE> 19
INCENTIVE OPTIONS
Under the Code, an employee will not realize taxable income by reason of
the grant or the exercise of an Incentive Option. If an employee exercises an
Incentive Option and does not dispose of the shares until the later of (a) two
years from the date the option was granted or (b) one year from the date the
shares were transferred to the employee, the entire gain, if any, realized upon
disposition of such shares will be taxable to the employee as capital gain, and
the Corporation will not be entitled to any deduction. If an employee disposes
of the shares within such one-year or two-year period in a manner so as to
violate the holding period requirements (a "disqualifying disposition"), the
employee generally will realize ordinary income in the year of disposition, and
the Corporation will receive a corresponding deduction, in an amount equal to
the excess of (1) the lesser of (x) the amount, if any, realized on the
disposition and (y) the fair market value of the shares on the date the option
was exercised over (2) the option price. Any additional gain realized on the
disposition of the shares acquired upon exercise of the option will be
long-term, mid-term or short-term capital gain and any loss will be long-term,
mid-term or short-term capital loss depending upon the holding period for such
shares. The employee will be considered to have disposed of his shares if he
sells, exchanges, makes a gift of or transfers legal title to the shares (except
by pledge or by transfer on death). If the disposition of shares is by gift and
violates the holding period requirements, the amount of the employee's ordinary
income (and the Corporation's deduction) is equal to the fair market value of
the shares on the date of exercise less the option price. If the disposition is
by sale or exchange, the employee's tax basis will equal the amount paid for the
shares plus any ordinary income realized as a result of the disqualifying
distribution. The exercise of an Incentive Option may subject the employee to
the alternative minimum tax.
Special rules may apply if an employee surrenders shares of Common Stock in
payment of the exercise price of his Incentive Option.
An Incentive Option that is exercised by an employee more than three months
after an employee's employment termination will be treated as a Non-Qualified
Option for federal income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in the case of an
employee who dies, the three-month employment rule does not apply.
NON-QUALIFIED OPTIONS
There are no federal income tax consequences to either the optionee, or the
Corporation on the grant of a Non-Qualified Option. On the exercise of a
Non-Qualified Option, the optionee (except as described below) has taxable
ordinary income equal to the excess of the fair market value of the Common Stock
received on the exercise date over the option price of the shares. The
optionee's tax basis for the shares acquired upon exercise of a Non-Qualified
Option is increased by the amount of such taxable income. The Corporation will
be entitled to a federal income tax deduction in an amount equal to such excess.
Upon the sale of the shares acquired by exercise of a Non-Qualified Option, the
optionee will realize long-term, mid-term or short-term capital gain or loss
depending upon his or her holding period for such shares.
Special rules apply if an optionee surrenders shares of Common Stock in
payment of the exercise price of a Non-Qualified Option.
CAPITAL GAINS RATES
For transactions occurring after July 28, 1997, the Taxpayer Relief Act of
1997 has created three different types of capital gains for individuals:
short-term gains (on assets held for one year or less) which are taxed at
ordinary income rates; mid-term capital gains (from the sale of assets held more
than a year but not more than 18 months) which are taxed at a maximum rate of
28%; and long-term capital gains (from the sale of assets held more than 18
months) which are taxed at a maximum rate of 20%.
16
<PAGE> 20
PARACHUTE PAYMENTS
The exercise of any portion of any option that is accelerated due to the
occurrence of a change of control may cause a portion of the payments with
respect to such accelerated options to be treated as "parachute payments" as
defined in the Code. Any such parachute payments may be non-deductible to the
Corporation, in whole or in part, and may subject the recipient to a
non-deductible 20% federal excise tax on all or portion of such payment (in
addition to other taxes ordinarily payable).
LIMITATION ON CORPORATION'S DEDUCTIONS
As a result of Section 162(m) of the Code, the Corporation's federal tax
deduction for certain awards under the Plan may be limited to the extent that
the Chief Executive Officer or other executive officer whose compensation is
required to be reported in the summary compensation table receives compensation
(other than performance-based compensation) in excess of $1 million a year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and Directors, and persons who own more than 10% of a registered class
of the Corporation's equity securities (collectively, "Insiders"), to file
reports of ownership and changes in ownership with the SEC and NASDAQ. Insiders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Corporation's knowledge, based solely on a review
of copies of such reports and written representations that no other reports were
required during the fiscal year ended December 31, 1997, all transactions in the
Corporation's securities that were engaged in by Insiders, and therefore
required to be disclosed pursuant to Section 16(a) of the Exchange Act, were
timely reported.
INDEPENDENT AUDITORS
The Corporation has selected Ernst & Young LLP as the independent auditors
for the Corporation for the fiscal year ending December 31, 1998. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will be given the opportunity to make a statement. The
representative is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder wishing to present a proposal for inclusion in the
Corporation's Proxy Statement for the 1999 Annual Meeting of Stockholders must
submit the proposal to the Corporation so that it is received at the principal
executive offices of the Corporation, 23 Frontage Road, Andover, Massachusetts
01810, Attn: Secretary, not later than December 25, 1998. It is suggested that
any stockholder proposal be transmitted by certified mail, return receipt
requested.
17
<PAGE> 21
EXHIBIT A
VICOR CORPORATION
1998 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The name of the plan is the Vicor Corporation 1998 Stock Option and
Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable
the officers, employees, Independent Directors and other key persons (including
consultants) of Vicor Corporation (the "Company") and its Subsidiaries upon
whose judgment, initiative and efforts the Company largely depends for the
successful conduct of its business to acquire a proprietary interest in the
Company. It is anticipated that providing such persons with a direct stake in
the Company's welfare will assure a closer identification of their interests
with those of the Company, thereby stimulating their efforts on the Company's
behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Administrator" is defined in Section 2(a).
"Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend
Equivalent Rights.
"Board" means the Board of Directors of the Company.
"Change of Control" is defined in Section 16.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Committee of the Board referred to in Section 2.
"Deferred Stock Award" means Awards granted pursuant to Section 8.
"Dividend Equivalent Right" means Awards granted pursuant to Section 11.
"Effective Date" means the date on which the Plan is approved by
stockholders as set forth in Section 18.
"Fair Market Value" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Administrator; provided,
however, that (i) if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
Fair Market Value on any given date shall not be less than the average of the
highest bid and lowest asked prices of the Stock reported for such date or, if
no bid and asked prices were reported for such date, for the last day preceding
such date for which such prices were reported, or (ii) if the Stock is admitted
to trading on a national securities exchange or the NASDAQ National Market
System, the Fair Market Value on any date shall not be less than the closing
price reported for the Stock on such exchange or system for such date or, if no
sales were reported for such date, for the last date preceding the date for such
a sale was reported.
"Incentive Stock Option" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.
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"Independent Director" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5.
"Performance Share Award" means Awards granted pursuant to Section 10.
"Principal Stockholder" means Patrizio Vinciarelli, members of his
immediate family, any trusts of which he is a trustee or in which he or members
of his immediate family have a substantial beneficial interest and upon his
death, his executors, administrators, personal representatives, heirs, legatees
or distributees.
"Restricted Stock Award" means Awards granted pursuant to Section 7.
"Stock" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
"Stock Appreciation Right" means any Award granted pursuant to Section 6.
"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50
percent or more of the economic interest or the total combined voting power of
all classes of stock or other interests in one of the other corporations or
entities in the chain.
"Unrestricted Stock Award" means any Award granted pursuant to Section 9.
SECTION 2. ADMINISTRATION OF PLAN: ADMINISTRATOR AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) Committee. The Plan shall be administered by either the Board or a
committee of not less than two Independent Directors (in either case, the
"Administrator").
(b) Powers of Administrator. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the individuals to whom Awards may from time to time be
granted;
(ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Deferred Stock Awards, Unrestricted Stock
Awards, Performance Share Awards and Dividend Equivalent Rights, or any
combination of the foregoing, granted to any one or more participants;
(iii) to determine the number of shares of Stock to be covered by any
Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of all or
any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend at any
time the period in which Stock Options may be exercised;
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(vii) to determine at any time whether, to what extent, and under what
circumstances distribution or the receipt of Stock and other amounts
payable with respect to an Award shall be deferred either automatically or
at the election of the participant and whether and to what extent the
Company shall pay or credit amounts constituting interest (at rates
determined by the Administrator) or dividends or deemed dividends on such
deferrals; and
(viii) at any time to adopt, alter and repeal such rules, guidelines
and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan participants.
(c) Delegation of Authority to Grant Awards. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. Any such delegation by the Administrator
shall include a limitation as to the amount of Awards that may be granted during
the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Option, the conversion ratio or price
of other Awards and the vesting criteria. The Administrator may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrator's delegate or delegates that were consistent
with the terms of the Plan.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN: MERGERS: SUBSTITUTION
(a) Stock Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 2,000,000 shares; provided that
not more than 100,000 shares shall be issued in the form of Unrestricted Stock
Awards, Restricted Stock Awards, or Performance Share Awards except to the
extent such Awards are granted in lieu of cash compensation or fees. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, cancelled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan. Subject to such
overall limitation, shares of Stock may be issued up to such maximum number
pursuant to any type or types of Award; provided, however, that Stock Options or
Stock Appreciation Rights with respect to no more than 100,000 shares of Stock
may be granted to any one individual participant during any one calendar year
period. The shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the Company and held
in its treasury.
(b) Changes in Stock. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Company's capital stock, the outstanding
shares of Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Stock or other
securities, the Administrator shall make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options or Stock Appreciation Rights that can be
granted to any one individual participant, (iii) the number and kind of shares
or other securities subject to any then outstanding Awards under the Plan, and
(iv) the price for each share subject to any then outstanding Stock Options and
Stock Appreciation Rights under the Plan, without changing the aggregate
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exercise price (i.e., the exercise price multiplied by the number of Stock
Options and Stock Appreciation Rights) as to which such Stock Options and Stock
Appreciation Rights remain exercisable. The adjustment by the Administrator
shall be final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the Administrator
in its discretion may make a cash payment in lieu of fractional shares.
The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the participant, if it would constitute a modification, extension
or renewal of the Option within the meaning of Section 424(h) of the Code.
(c) Mergers and Other Transactions. In the case of (i) the dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the holders of the
Company's outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction, (iv) the sale of all of
the Stock of the Company to an unrelated person or entity or (v) any other
transaction in which the owners of the Company's outstanding voting power prior
to such transaction do not own at least a majority of the outstanding voting
power of the relevant entity after the transaction (in each case, a
"Transaction"), as of the effective date of such Transaction, all Options and
Stock Appreciation Rights that are not exercisable shall become fully
exercisable and all other Awards which are not vested shall become fully vested,
except as the Administrator may otherwise specify with respect to particular
Awards. Upon the effectiveness of the Transaction, the Plan and all outstanding
Options, Stock Appreciation Rights and other Awards granted hereunder shall
terminate, unless provision is made in connection with the Transaction for the
assumption of Awards heretofore granted, or the substitution of such Awards of
new Awards of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate, the per
share exercise prices, as provided in Section 3(b) above. In the event of such
termination, each optionee shall be permitted to exercise for a period of at
least 15 days prior to the date of such termination all outstanding Options and
Stock Appreciation Rights held by such optionee which are then exercisable or
become exercisable upon the effectiveness of the Transaction.
(d) Substitute Awards. The Administrator may grant Awards under the Plan
in substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Administrator may direct that the
substitute awards be granted on such terms and conditions as the Administrator
considers appropriate in the circumstances. Any substitute Awards granted under
the Plan shall not count against the share limitations set forth in Section
3(a).
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons of the Company and its
Subsidiaries who are responsible for or contribute to the management, growth or
profitability of the Company and its Subsidiaries as are selected from time to
time by the Administrator in its sole discretion.
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SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after March 31,
2008.
(a) Stock Options Granted to Employees and Key Persons. The Administrator
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or any Subsidiary. Stock Options granted pursuant to this Section
5(a) shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash compensation at the
participant's election, subject to such terms and conditions as the
Administrator may establish, as well as in addition to other compensation.
(i) Exercise Price. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Administrator at the time of grant but shall not be less
than 100 percent of the Fair Market Value on the date of grant in the case
of Incentive Stock Options, or 85 percent of the Fair Market Value on the
date of grant, in the case of Non-Qualified Stock Options. If an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10 percent of the combined voting power of
all classes of stock of the Company or any parent or subsidiary corporation
and an Incentive Stock Option is granted to such employee, the option price
of such Incentive Stock Option shall be not less than 110 percent of the
Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10 percent of the combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation and an
Incentive Stock Option is granted to such employee, the term of such option
shall be no more than five years from the date of grant.
(iii) Exercisability: Rights of a Stockholder. Stock Options shall
become exercisable at such time or times, whether or not in installments,
as shall be determined by the Administrator at or after the grant date;
provided, however, that Stock Options granted in lieu of compensation shall
be exercisable in full as of the grant date. The Administrator may at any
time accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods to the extent provided in the
Option Award agreement:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been beneficially
owned by the optionee for at least six months, if permitted by
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the Administrator in its discretion. Such surrendered shares shall be
valued at Fair Market Value on the exercise date;
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company for the purchase price; provided that in the event the
optionee chooses to pay the purchase price as so provided, the optionee
and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure; or
(D) By the optionee delivering to the Company a promissory note if
the Board has expressly authorized the loan of funds to the optionee for
the purpose of enabling or assisting the optionee to effect the exercise
of his Stock Option; provided that at least so much of the exercise
price as represents the par value of the Stock shall be paid other than
with a promissory note.
Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to
the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(v) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. To the extent that any Stock
Option exceeds this limit, it shall constitute a Non-Qualified Stock
Option.
(b) Reload Options. At the discretion of the Administrator, Options
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the number delivered to exercise the original Option with an Option term
equal to the remainder of the original Option term unless the Administrator
otherwise determines in the Award agreement for the original Option grant.
(c) Stock Options Granted to Independent Directors.
(i) Automatic Grant of Options.
(A) Each Independent Director shall receive grants of Options under
this Section 5(c) as follows:
(1) Each Independent Director, upon his or her re-election as a
Director, shall be granted Non-Qualified Stock Options to purchase
two thousand (2,000) shares of Stock (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction). Each
such Non-Qualified Stock Option shall become exercisable at the end
of twelve (12) months from the date of grant and shall expire
twenty-seven (27) months from the date of grant.
(2) Each Independent Director shall, upon his or her election or
re-election as a Director, be granted Non-Qualified Stock Options to
purchase two thousand (2,000) shares of Stock (appropriately adjusted
to reflect any stock split, stock dividend or similar transaction).
The
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Non-Qualified Stock Options granted pursuant to this section
5(c)(i)(A)(2) shall become exercisable in five equal annual
installments of four hundred (400) shares on each anniversary of the
date of grant, so as to be exercisable as to 100% of the shares
covered thereby from and after the fifth (5th) anniversary of the
date of grant, and shall expire ten (10) years from the date of
grant.
(B) Upon the date an Independent Director is first elected as a
Director of the Corporation, such Independent Director may receive
such number of Non-Qualified Stock Options as determined in the
discretion of the Administrator. The terms and conditions of any such
grant shall be determined in the discretion of the Administrator.
(C) The Administrator, in its discretion, may grant additional
Non-Qualified Stock Options to Independent Directors. The terms and
conditions of any such grant may vary among individual Independent
Directors.
(D) The exercise price per share for the Stock covered by a
Non-Qualified Stock Option granted under this Section 5(c) shall be
equal to the Fair Market Value of the Stock on the date of grant.
(E) Any automatic grant of Options to an Independent Director
under this Section 5(c) shall be made in lieu of any automatic grant
of options to such Independent Director under the Company's 1993
Stock Option Plan.
(ii) Exercise: Termination.
(A) Options granted under this Section 5(c) may be exercised
only by written notice to the Company specifying the number of shares
to be purchased. Payment of the full purchase price of the shares to
be purchased may be made by one or more of the methods specified in
Section 5(a)(iv). An optionee shall have the rights of a stockholder
only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.
(d) Non-transferability of Options. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee, or by the optionee's legal representative or
guardian in the event of the optionee's incapacity. Notwithstanding the
foregoing, the Administrator, in its sole discretion, may provide in the Award
agreement regarding a given Option that the optionee may transfer, without
consideration for the transfer, his Non-Qualified Stock Options to members of
his immediate family, to trusts for the benefit of such family members, or to
partnerships in which such family members are the only partners, provided that
the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Option.
(e) Termination. Except as may otherwise be provided by the Administrator
either in the Award agreement, or subject to Section 14 below, in writing after
the Award agreement is issued, an optionee's rights in all Stock Options shall
automatically terminate upon the participant's termination of employment (or
cessation of business relationship) with the Company and its Subsidiaries for
any reason.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock or
a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price Stock
Appreciation Right, which price shall not be less than 100 percent of the Fair
Market Value of the Stock on
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the date of grant (or more than the option exercise price per share, if the
Stock Appreciation Right was granted in tandem with a Stock Option) multiplied
by the number of shares of Stock with respect to which the Stock Appreciation
Right shall have been exercised, with the Administrator having the right to
determine the form of payment.
(b) Grant and Exercise of Stock Appreciation Rights. Stock Appreciation
Rights may be granted by the Administrator in tandem with, or independently of,
any Stock Option granted pursuant to Section 5 of the Plan. In the case of a
Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Administrator, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options shall be
exercisable at such time or times and to the extent that the related Stock
Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Option shall be surrendered.
(iii) All Stock Appreciation Rights shall be exercisable during the
participant's lifetime only by the participant or the participant's legal
representative.
(d) Termination. Except as may otherwise be provided by the Administrator
either in the Award agreement, or subject to Section 14 below, in writing after
the Award agreement is issued, an optionee's rights in all Stock Appreciation
Rights shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
SECTION 7. RESTRICTED STOCK AWARDS
(a) Nature of Restricted Stock Awards. A Restricted Stock Award is an
Award entitling the recipient to acquire, at par value or such other higher
purchase price determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing employment (or
other business relationship) and/or achievement of pre-established performance
goals and objectives. The grant of a Restricted Stock Award is contingent on the
participant executing the Restricted Stock Award agreement. The terms and
conditions of each such agreement shall be determined by the Administrator, and
such terms and conditions may differ among individual Awards and participants.
(b) Rights as a Stockholder. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 7(d) below, and the participant shall be
required, as a condition of the grant, to deliver to the Company a stock power
endorsed in blank.
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(c) Restrictions. Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the Restricted Stock Award agreement. If a participant's employment
(or other business relationship) with the Company and its Subsidiaries
terminates for any reason, the Company shall have the right to repurchase
Restricted Stock that has not vested at the time of termination at its original
purchase price, from the participant or the participant's legal representative.
(d) Vesting of Restricted Stock. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-
transferability of the Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed "vested." Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a participant's rights in any
shares of Restricted Stock that have not vested shall automatically terminate
upon the participant's termination of employment (or other business
relationship) with the Company and its Subsidiaries and such shares shall be
subject to the Company's right of repurchase as provided in Section 7(c) above.
(e) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock
Award agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
SECTION 8. DEFERRED STOCK AWARDS
(a) Nature of Deferred Stock Awards. A Deferred Stock Award is an Award of
phantom stock units to a participant, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the participant executing the Deferred Stock Award
agreement. The terms and conditions of each such agreement shall be determined
by the Administrator, and such terms and conditions may differ among individual
Awards and participants. At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be paid to the participant in the form of
shares of Stock.
(b) Election to Receive Deferred Stock Awards in Lieu of Compensation. The
Administrator may, in its sole discretion, permit a participant to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such participant in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.
(c) Rights as a Stockholder. During the deferral period, a participant
shall have no rights as a stockholder; provided, however, that the participant
may be credited with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Deferred Stock Award, subject to such terms and
conditions as the Administrator may determine.
(d) Restrictions. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.
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(e) Termination. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's right in all Deferred Stock
Awards that have not vested shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.
SECTION 9. UNRESTRICTED STOCK AWARDS
Grant or Sale of Unrestricted Stock. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any participant pursuant to
which such participant may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of cash compensation due to such
participant.
SECTION 10. PERFORMANCE SHARE AWARDS
(a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals, the periods
during which performance is to be measured, and all other limitations and
conditions.
(b) Rights as a Stockholder. A participant receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the Performance Share Award agreement (or in a performance plan
adopted by the Administrator).
(c) Termination. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Performance Share
Awards shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
(d) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 14, amend any or all of the goals, restrictions or
conditions applicable to a Performance Share Award.
SECTION 11. DIVIDEND EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A Dividend Equivalent Right is an Award
entitling the recipient to receive credits based on cash dividends that would
have been paid on the shares of Stock specified in the Dividend Equivalent Right
(or other award to which it relates) if such shares had been issued to and held
by the recipient. A Dividend Equivalent Right may be granted hereunder to any
participant as a component of another Award or as a freestanding award. The
terms and conditions of Dividend Equivalent Rights shall be specified in the
grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or
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<PAGE> 31
such other price as may then apply under a dividend reinvestment plan sponsored
by the Company, if any. Dividend Equivalent Rights may be settled in cash or
shares of Stock or a combination thereof, in a single installment or
installments. A Dividend Equivalent Right granted as a component of another
Award may provide that such Dividend Equivalent Right shall be settled upon
exercise, settlement, or payment of, or lapse of restrictions on, such other
award, and that such Dividend Equivalent Right shall expire or be forfeited or
annulled under the same conditions as such other award. A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other award.
(b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
(c) Termination. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a participant's rights in all Dividend Equivalent
Rights or interest equivalents shall automatically terminate upon the
participant's termination of employment (or cessation of business relationship)
with the Company and its Subsidiaries for any reason.
SECTION 12. TAX WITHHOLDING
(a) Payment by Participant. Each participant shall, no later than the date
as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant. The Company's obligation to deliver stock certificates
to any participant is subject to and conditioned on tax obligations being
satisfied by the participant.
(b) Payment in Stock. Subject to approval by the Administrator, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the participant with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.
SECTION 13. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
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<PAGE> 32
SECTION 14. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. The Administrator may provide substitute Awards at the
same or reduced exercise or purchase price or with no exercise or purchase price
in a manner not inconsistent with the terms of the Plan, but such price, if any,
must satisfy the requirements which would apply to the substitute or amended
Award if it were then initially granted under this Plan, but no such action
shall adversely affect rights under any outstanding Award without the holder's
consent. If and to the extent determined by the Administrator to be required by
the Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code or to ensure that compensation earned
under Stock Options and Stock Appreciation Rights qualifies as performance-based
compensation under Section 162(m) of the Code, if and to the extent intended to
so qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. Nothing in this
Section 14 shall limit the Board's authority to take any action permitted
pursuant to Section 3(c).
SECTION 15. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.
SECTION 16. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 16:
(a) Except as otherwise provided in the applicable Award agreement,
each outstanding Stock Option and Stock Appreciation Right shall
automatically become fully exercisable.
(b) Each outstanding Restricted Stock Award and Performance Share
Award shall be subject to such terms, if any, with respect to a Change of
Control as have been provided by the Administrator in the Award agreement,
or subject to Section 14 above, in writing after the Award agreement is
issued.
(c) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Act (other than the Principal Stockholder, the Company, any of
its Subsidiaries, or any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the
Company or any of its Subsidiaries), together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Act) of
such person, shall become the "beneficial owner" (as such term is
defined in Rule 13d-3 under the Act), directly or indirectly, of
securities of the Company representing 25 percent or more of the
combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of
Directors ("Voting Securities") (in such case other than as a result of
an acquisition of securities directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the
Company's Board of Directors (the "Incumbent Directors") cease for any
reason, including, without limitation, as a result of a tender
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<PAGE> 33
offer, proxy contest, merger or similar transaction, to constitute at
least a majority of the Board, provided that any person becoming a
director of the Company subsequent to the Effective Date shall be
considered an Incumbent Director if such person's election was approved
by or such person was nominated for election by either (A) a vote of at
least a majority of the Incumbent Directors or (B) a vote of at least a
majority of the Incumbent Directors who are members of a nominating
committee comprised, in the majority, of Incumbent Directors; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate 50 percent or more of the voting
shares of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C)
any plan or proposal for the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
have occurred for purposes of the foregoing clause (i) solely as the result of
an acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person to 25 percent or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).
SECTION 17. GENERAL PROVISIONS
(a) No Distribution: Compliance with Legal Requirements. The Administrator
may require each person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.
(b) Delivery of Stock Certificates. Stock certificates to participants
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the participant, at the participant's last
known address on file with the Company.
(c) Other Compensation Arrangements: No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
(d) Trading Policy Restrictions. Option exercises and other Awards under
the Plan shall be subject to such Company's insider-trading-policy-related
restrictions, terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from time to time.
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<PAGE> 34
SECTION 18. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a majority
of the votes cast at a meeting of stockholders at which a quorum is present.
Subject to such approval by the stockholders and to the requirement that no
Stock may be issued hereunder prior to such approval, Stock Options and other
Awards may be granted hereunder on and after adoption of this Plan by the Board.
SECTION 19. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed by,
and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: March 31, 1998
DATE APPROVED BY STOCKHOLDERS:
A-14
<PAGE> 35
Form of Proxy
COMMON VICOR CORPORATION COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 25, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark
A. Glazer, and each of them as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote
all shares of Common Stock of Vicor Corporation (the "Corporation") held by the
undersigned at the close of business on April 30, 1998, at the Annual Meeting
of Stockholders to be held at the Andover Country Club, 60 Canterbury Street,
Andover, Massachusetts, on Thursday, June 25, 1998 at 5:00 p.m., local time, and
at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR, FOR THE APPROVAL AND
RATIFICATION OF THE 1998 STOCK OPTION AND INCENTIVE PLAN AND, IN THE DISCRETION
OF THE PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. A stockholder wishing to vote in accordance with the Board of
Directors' recommendation need only sign and date this proxy and return it in
the envelope provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Corporation's 1997 Annual Report to Stockholders and hereby
revokes any proxy or proxies heretofore given. This proxy may be revoked at any
time before it is exercised.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
<PAGE> 36
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------ 1. Proposal to elect the following Directors:
VICOR CORPORATION For All With- For All
- ------------------------------------------ Nominees held Except
M. Michael Ansour Jay M. Prager [ ] [ ] [ ]
COMMON STOCK Richard E. Beede David T. Riddiford
Estia J. Eichten Patrizio Vinciarelli
If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s)
of the nominee(s). Your shares will be voted for the remaining
nominee(s).
For Against Abstain
2. To approve and ratify the adoption of the [ ] [ ] [ ]
1998 Stock Option and Incentive Plan.
------------ Mark box at right if an address change or comment has been [ ]
Please be sure to sign and date this Proxy Date noted on the reverse side of this card.
- -------------------------------------------------------------
- ---Stockholder sign here-----------Co-owner sign here--------
DETACH CARD DETACH CARD
VICOR CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot, which includes issues related to the
management and operation of your Corporation that require your immediate attention and approval. These are discussed in
detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and
return you proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on June 25, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation
</TABLE>
<PAGE> 37
Form of Proxy
CLASS B COMMON VICOR CORPORATION CLASS B COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 25, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark A.
Glazer, and each of them as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Class B Common Stock of Vicor Corporation (the "Corporation") held by
the undersigned at the close of business on April 30, 1998, at the Annual
Meeting of Stockholders to be held at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, on Thursday, June 25, 1998 at 5:00 p.m., local
time, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR, FOR THE APPROVAL AND
RATIFICATION OF THE 1998 STOCK OPTION AND INCENTIVE PLAN AND, IN THE DISCRETION
OF THE PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. A stockholder wishing to vote in accordance with the Board of
Directors' recommendation need only sign and date this proxy and return it in
the envelope provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Corporation's 1997 Annual Report to Stockholders and hereby
revokes any proxy or proxies heretofore given. This proxy may be revoked at any
time before it is exercised.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPLTY IN THE ENCLOSED
ENVELOPE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
- ------------------------------- -------------------------------
<PAGE> 38
<TABLE>
<S> <C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------ 1. Proposal to elect the following Directors:
VICOR CORPORATION For All With- For All
- ------------------------------------------ Nominees held Except
M. Michael Ansour Jay M. Prager [ ] [ ] [ ]
CLASS B COMMON STOCK Richard E. Beede David T. Riddiford
Estia J. Eichten Patrizio Vinciarelli
RECORD DATE SHARES:
If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s)
of the nominee(s). Your shares will be voted for the remaining
nominee(s).
For Against Abstain
2. To approve and ratify the adoption of the [ ] [ ] [ ]
1998 Stock Option and Incentive Plan.
------------ Mark box at right if an address change or comment has been [ ]
Please be sure to sign and date this Proxy Date noted on the reverse side of this card.
- -------------------------------------------------------------
- ---Stockholder sign here-----------Co-owner sign here--------
DETACH CARD DETACH CARD
VICOR CORPORATION
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot, which includes issues related to the
management and operation of your Corporation that require your immediate attention and approval. These are discussed in
detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and
return you proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on June 25, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation
</TABLE>
