AMERICAN TECHNICAL CERAMICS CORP, DEF 14A, 2000-10-16

AMERICAN TECHNICAL CERAMICS CORP
DEF 14A, 2000-10-16
ELECTRONIC COMPONENTS & ACCESSORIES

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AMERICAN TECHNICAL CERAMICS CORP.
17 STEPAR PLACE
HUNTINGTON STATION, NEW YORK 11746

-------------------------------------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 2000

-------------------------------------------------------

To the Stockholders of
AMERICAN TECHNICAL CERAMICS CORP.:

The Annual Meeting of Stockholders of American Technical Ceramics Corp., a
Delaware corporation (the "Company"), will be held at 2201 Corporate Square
Boulevard, Jacksonville, Florida 32216, on Wednesday, November 15, 2000 at 10:00
a.m., Eastern Standard Time, for the following purposes:

1. To elect six directors;

2. To consider and act upon a proposal to adopt the American Technical
Ceramics Corp. 2000 Incentive Stock Plan;

3. To ratify the appointment of KPMG LLP as the independent public
accountants to audit the Company's consolidated financial statements
for the fiscal year ending June 30, 2001; and

4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

Only stockholders of record at the close of business on October 6, 2000,
the record date fixed by the Board of Directors, are entitled to notice of, and
to vote at, the meeting. A complete list of stockholders of the Company as of
the record date will be open to examination by any stockholder for any purpose
germane to the meeting during ordinary business hours on or after November 5,
2000 at the place of the meeting. The transfer books of the Company will not be
closed.

Your attention is directed to the accompanying Proxy Statement.
Stockholders unable to attend the meeting in person are urged to date, sign and
mail promptly the enclosed proxy card in the postpaid envelope to ensure that
your shares are represented at the meeting. If you attend the meeting, you may
vote in person if you wish to do so, even though you have sent in your proxy.

BY ORDER OF THE BOARD OF DIRECTORS

KATHLEEN M. KELLY
Secretary

Huntington Station, New York
October 13, 2000

<PAGE>

AMERICAN TECHNICAL CERAMICS CORP.

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Technical Ceramics Corp., a
Delaware corporation (the "Company"), to be voted at the Annual Meeting of
Stockholders (the "Annual Meeting") and any adjournment or postponement thereof.
The Annual Meeting will be held at 10:00 a.m., Eastern Standard Time, on
Wednesday, November 15, 2000, at the Company's facility at 2201 Corporate Square
Boulevard, Jacksonville, Florida 32216. The principal executive offices of the
Company are located at 17 Stepar Place, Huntington Station, New York 11746. It
is expected that this Proxy Statement and the accompanying proxy card will first
be mailed or delivered to stockholders entitled to notice of, and to vote at,
the Annual Meeting on or about October 13, 2000.

VOTING SECURITIES AND VOTING RIGHTS

Only holders of record of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), at the close of business on October 6, 2000 will be
entitled to notice of, and to vote at, the Annual Meeting. As of October 6,
2000, there were 7,942,438 shares of Common Stock issued and outstanding. A
majority of the outstanding shares of Common Stock present in person or by proxy
shall constitute a quorum at the Annual Meeting. Each outstanding share of
Common Stock is entitled to one vote on all matters, which vote may be given in
person or by proxy duly authorized in writing. There are no cumulative voting
rights.

All proxies received pursuant to this solicitation will be voted, and,
where a choice is specified as to the proposals described in the foregoing
Notice of Annual Meeting of Stockholders, they will be voted in accordance with
that specification. If no specific instructions are given with respect to the
matters to be acted upon, the shares of Common Stock represented by a signed
proxy will be voted FOR all of the Board's nominees for director, FOR the
proposal to adopt the American Technical Ceramics Corp. 2000 Incentive Stock
Plan (the "2000 Incentive Stock Plan"), FOR the proposal to ratify the
appointment of KPMG LLP as the independent public accountants to audit the
Company's consolidated financial statements for the fiscal year ending June 30,
2001 and in accordance with the proxy holders' best judgment as to any other
matters as may properly come before the Annual Meeting. Stockholders who have
executed proxies may revoke them at any time before they are voted by submitting
a later dated proxy or by written notice delivered to the Secretary of the
Company. Personal attendance at the meeting without submitting a later dated
proxy or a written notice of revocation to the Secretary shall not serve to
revoke any proxy.

The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Annual Meeting in person or by proxy and entitled to vote
is necessary for the election of directors, the adoption of the 2000 Incentive
Stock Plan and the ratification of KPMG LLP as the Company's independent public
accountants to audit the Company's consolidated financial statements for the
fiscal year ending June 30, 2001. Accordingly, an abstention is the equivalent
of a vote against the election of any nominee for election to the Board of
Directors of the Company, the adoption of the 2000 Incentive Stock Plan or the
proposal to ratify the appointment of KPMG LLP. In the event a broker that is a
record holder of Common Stock of the Company does not return a signed proxy, the
shares of Common Stock represented by such proxy will not be considered present
at the Annual Meeting and, therefore, will not be considered in determining the
presence of a quorum. Broker non-votes will have no effect on the outcome of the
vote for the election of directors, the adoption of the 2000 Incentive Stock
Plan or the ratification of KPMG LLP as the Company's independent accountants.

As of October 6, 2000, 4,447,130 shares of Common Stock (approximately 56%
of the issued and outstanding shares of Common Stock) were held of record and
beneficially owned by Victor Insetta, who is the President, Chief Executive
Officer and a director of the Company. His shareholdings are sufficient to
assure election of the nominees for election as directors as set forth herein,
to adopt the 2000 Incentive Stock Plan, to ratify the appointment of KPMG LLP as
the independent public accountants to audit the Company's consolidated financial
statements for the fiscal year ending June 30, 2001 and to take action on any
other matters as may properly come before the Annual Meeting.

<PAGE>

The Company will bear the entire cost of the solicitation of proxies by
the Board of Directors. Proxies will be solicited by mail, and may be solicited
personally by telephone or facsimile transmission, by directors, officers and
regular employees of the Company, without additional remuneration.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of October 6, 2000, certain information
with respect to the ownership of the Company's Common Stock by (i) all persons
who are known by the Company to be the beneficial owners of more than 5% of the
outstanding shares of Common Stock, (ii) each of the directors of the Company,
(iii) each of the executive officers of the Company listed in the table under
the caption "Executive Compensation -- Summary Compensation Table," and (iv) all
directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class
------------------------------------------- --------------------------------------------- ----------------
<S> <C> <C>
VICTOR INSETTA 4,455,130 (2) 56.1%
2201 Corporate Square Boulevard
Jacksonville, Florida

JOSEPH COLANDREA 210,400 (3) 2.6%
911 South Ocean Boulevard
Boca Raton, Florida

STUART P. LITT 47,100 (4) *
One Norden Lane
Huntington Station, New York

RICHARD MONSORNO 94,360 (5) 1.2%
2201 Corporate Square Boulevard
Jacksonville, Florida

MICHAEL GIACALONE 13,160 (6) *
2201 Corporate Square Boulevard
Jacksonville, Florida

JUDAH WOLF 17,000 (7) *
2201 Corporate Square Boulevard
Jacksonville, Florida

CHESTER E. SPENCE 22,000 (8) *
269 Windsor Place
Brooklyn, New York

THOMAS J. VOLPE 4,000 *
1271 Avenue of the Americas
New York, New York

O. JULIAN GARRARD III 4,000 *
3871 Little Lane
Jacksonville, Florida

DOV S. BACHARACH 2,000 *
560 Sylvan Avenue
Englewood Cliffs, New Jersey

RUBIN BLUMKIN 2,000 *
7720 Hearth Stone Avenue
Boynton Beach, Florida

All executive officers and directors as a 4,684,424 (2) 58.7%
group (12 persons)

</TABLE>
------------
* Less than one percent.

(1) All shares are beneficially owned, and the sole voting and investment
power over such shares is held, by the persons named, except to the extent
described in the following footnotes.

2
<PAGE>

(2) Includes 8,000 shares which Mr. Insetta may acquire pursuant to options
which are presently exercisable or which vest within 60 days. Does not
include (i) 210,400 shares owned by Mr. Colandrea which are subject to a
Restated Shareholders' Agreement, dated April 15, 1985, among the Company
and Messrs. Insetta and Colandrea (the "Restated Shareholders' Agreement"),
(ii) 2,500 shares owned by Mr. Insetta's wife, as to which Mr. Insetta
disclaims beneficial ownership, and (iii) shares subject to Voting and
Transfer Agreements entered into in connection with options granted under a
stock option plan which has expired. Pursuant to the Restated Shareholders'
Agreement, Messrs. Insetta and Colandrea have agreed that, so long as they
own shares of Common Stock, they will vote their shares for the election of
either three designees of Mr. Insetta (if Mr. Insetta elects not to be a
director) or of Mr. Insetta and two of his designees, and for the election
of Mr. Colandrea (if Mr. Colandrea elects to be a director) to the Board of
Directors of the Company. Mr. Colandrea has waived his right to be
designated as a director indefinitely until written notice is served to the
contrary at least 90 days prior to the next scheduled annual meeting. No
such notice has been given relative to the Company's Annual Meeting to be
held November 15, 2000. The Restated Shareholders' Agreement will terminate
upon the death of Mr. Insetta or at such time as Mr. Insetta does not own
at least 10% of the outstanding shares of Common Stock. The Restated
Shareholders' Agreement also provides for certain rights of first refusal
and registration rights. The Voting and Transfer Agreements referred to
above contain provisions requiring the holders of shares purchased upon the
exercise of options granted under said plan to vote such shares for the
election as directors of the Company of certain persons (currently Victor
Insetta). The Company has not regularly enforced these provisions.

(3) Does not include 4,447,130 shares owned by Mr. Insetta which are subject to
the Restated Shareholders' Agreement. See Note (2) above. By virtue of such
agreement, Mr. Colandrea may be deemed to beneficially own the shares owned
by Mr. Insetta.

(4) Includes 7,500 shares which Mr. Litt may acquire pursuant to options which
are presently exercisable or which vest within 60 days.

(5) Includes 3,000 shares which Mr. Monsorno may acquire pursuant to options
which are presently exercisable or which vest within 60 days.

(6) Includes 5,500 shares which Mr. Giacalone may acquire pursuant to options
which are presently exercisable or which vest within 60 days.

(7) Includes 8,000 shares which Mr. Wolf may acquire pursuant to options which
are presently exercisable or which vest within 60 days.

(8) Includes 6,000 shares owned jointly with Mr. Spence's wife which are
presently exercisable or which vest within 60 days.

COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
beneficially more than ten percent of the Company's Common Stock to file with
the Securities and Exchange Commission initial reports of beneficial ownership
and reports of changes in beneficial ownership of the Common Stock. Officers,
directors and persons owning more than ten percent of the Common Stock are
required to furnish the Company with copies of all such reports. Based solely on
a review of copies of such reports furnished to the Company, the Company
believes that, during the fiscal year ended June 30, 2000, there were no
deviations from the Section 16(a) filing requirements applicable to its
officers, directors and persons owning beneficially more than ten percent of the
Common Stock.

3
<PAGE>

PROPOSAL 1

ELECTION OF DIRECTORS

Six directors are to be elected to serve until the next Annual Meeting of
stockholders or until their respective successors are elected and qualified. Mr.
Rubin Blumkin, a director of the Company since 1984, has chosen not to seek
reelection as a director. On August 22, 2000, the Board adopted a resolution
decreasing the membership of the Board of Directors from seven to six, effective
with this Annual Meeting.

Set forth in the table below is certain information, as of October 6,
2000, with respect to the nominees of the Board of Directors of the Company for
election as directors and is based on the records of the Company and information
provided to it. All of the nominees are presently directors of the Company.
Absent instructions to the contrary, it is the intention of the persons named in
the enclosed proxy to vote for the election as directors of the persons named in
the table below. If any such nominee should become unavailable for any reason,
which the Board of Directors has no reason to anticipate, the persons named in
the enclosed proxy reserve the right to substitute another person of their
choice in his place.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION
AS A DIRECTOR OF THE COMPANY OF EACH OF THE NOMINEES SET FORTH BELOW.

<TABLE>
<CAPTION>
Year First
Elected or
Appointed as a
Name Age Business Experience During the Past Five Years Director
------------------------------------ ----- ------------------------------------------------------------------------- --------------
<S> <C> <C> <C>
VICTOR INSETTA 60 President and Chief Executive Officer of the Company and Director. 1966

O. JULIAN GARRARD III (1) (2) 54 Partner of Garrard & Garrard, C.P.A., a certified public accounting 1988
firm specializing in taxation.

CHESTER E. SPENCE (2) 60 Retired since July 1999. Consultant to the Company from May 1998 to 1985
June 1999. Prior thereto, Vice President-Marketing and Sales of the
Company from August 1993 to April 1998.

STUART P. LITT 58 Senior Vice President - Operations of the Company since September 1996. 1993
Prior thereto, associate of OEM Capital, an investment banking firm
specializing in the electronics industry, since December 1992. Consultant
to electronics companies from September 1990 to December 1992.

THOMAS J. VOLPE (2) 64 Senior Vice President - Financial Operations of The Interpublic Group 1999
of Companies, Inc., an organization of advertising agencies and
communications services companies, since March 1986.

DOV S. BACHARACH (2) 36 Founder and Managing Director of GEI Industries, Inc., an international 2000
consulting firm since January 1998. Vice President of International
Operations at Wyle Electronics, an electronics distributor, from 1996
until December 1997. Prior thereto, President and Chief Operating
Officer of the Ginsbury Group, an electronic components engineering
and distribution company, from 1988 to December 1995 when it was sold
to Wyle Electronics.
</TABLE>

(1) Member of Compensation Committee
(2) Member of Audit Committee

4
<PAGE>

There are no family relationships between or among any directors or
executive officers of the Company. See footnotes (2) and (3) to the table under
the caption "Security Ownership of Certain Beneficial Owners and Management" for
information concerning agreements among certain stockholders as to the election
of directors. Also see "Certain Relationships and Related Transactions" for
information concerning the lease of certain real property owned by an entity in
which Mr. Insetta holds a general partnership interest.

BOARD MEETINGS; COMMITTEES OF THE BOARD OF DIRECTORS

During the fiscal year ended June 30, 2000, the Board of Directors held
nine meetings. All of the directors attended at least 75% of the meetings held
during the fiscal year ended June 30, 2000 during their tenure as a director.
Mr. Tom Volpe was appointed to the Board of Directors on June 2, 1999, effective
with the first meeting of the Board of Directors held subsequent to his
appointment. Mr. Volpe attended the meeting of the Board of Directors held on
August 4, 1999 and all subsequent meetings. Mr. Dov S. Bacharach was appointed
to the Board of Directors on January 3, 2000 and attended all subsequent
meetings.

The Board of Directors has created a standing Audit Committee. The Audit
Committee, which held four formal meetings and communicated informally several
times during the fiscal year ended June 30, 2000, currently consists of Messrs.
Bacharach, Blumkin, Garrard, Spence and Volpe. Mr. Volpe was appointed to the
committee on November 19, 1999. Mr. Bacharach was appointed to the committee on
April 26, 2000. Among other things, the Audit Committee reviews the scope and
procedures of the audit activities of the independent accountants and their
reports on their examinations. It also reviews reports from the Company's
financial management and independent accountants on compliance with corporate
policies and the adequacy of the Company's internal accounting controls. Each of
Messrs. Blumkin, Garrard and Spence attended all four of the meetings held by
the Audit Committee during the fiscal year ended June 30, 2000. Messrs. Volpe
and Bacharach each attended all meetings subsequent to his appointment.

The Board of Directors has also created a Compensation Committee, which
currently consists of Messrs. Blumkin and Garrard. The Compensation Committee is
authorized, subject to the Certificate of Incorporation and By-Laws of the
Company and the Delaware General Corporation Law, to exercise all power and
authority of the Board of Directors with respect to the compensation of
employees of the Company. The Compensation Committee did not hold a meeting
during the fiscal year ended June 30, 2000.

The Board does not have a nominating committee. This function is performed
by the Board as a whole.

Each of the non-employee directors of the Company receives a fee of $1,000
plus expenses for each meeting, excluding teleconference meetings, of the Board
of Directors and, if a member of a Committee, each Committee meeting that he
attends. In addition, for the fiscal year ended June 30, 2000 each non-employee
director received a stock award of 2,000 shares of Common Stock. Payments in
respect of income taxes resulting from such awards were paid by the Company on
behalf of the directors. The Company intends to continue to grant annual stock
awards to non-employee directors, contingent on adequate attendance at meetings
of the Board and any committee of which the director is a member.

5
<PAGE>

EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE

The following table sets forth compensation paid over each of the last
three fiscal years to the President and Chief Executive Officer of the Company
and to the four other most highly compensated executive officers of the Company
whose compensation exceeded $100,000 (collectively, the "Named Executive
Officers"):
<TABLE>
<CAPTION>
Name and Principal Fiscal Year Restricted Stock All Other
Position Ended June 30 Salary ($) Bonus ($)(1) Awards ($) Compensation ($)
----------------------------------- ------------- --------------- ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C> <C>
VICTOR INSETTA 2000 311,470 734,891 -- 5,390 (4)
President, Chief Executive 1999 278,596 174,489 -- 5,159 (4)
Office and Director 1998 273,195 190,480 (2) 190,478 (3) 4,938 (4)

STUART LITT 2000 168,173 69,781 -- 15,703 (7)
Senior Vice President - 1999 165,000 16,380 236,851 (5)(6) 14,448 (7)
Operations and Director 1998 161,689 32,827 196,688 (5) 4,507 (7)

RICHARD MONSORNO 2000 170,563 69,781 -- 7,652 (8)
Senior Vice President - 1999 162,350 16,380 190,525 (9) 6,458 (8)
Technology 1998 169,643 32,827 -- 6,740 (8)

MICHAEL C. GIACALONE 2000 120,529 94,530 79,036 (11) 1,873 (12)
Vice President - Advanced 1999 29,635 -- -- --
Products Operations (10)

JUDAH WOLF 2000 92,423 426,327 79,036 (11) 6,209 (14)
Vice President - Thin Film 1999 90,000 81,259 -- 4,691 (14)
Operations (13)

</TABLE>

(1) Includes amounts paid in the applicable fiscal year in respect of such
fiscal year and amounts earned for such fiscal year and paid in a
subsequent fiscal year.

(2) Represents the cash portion of the bonus paid to Mr. Insetta in respect of
the fiscal year ended June 30, 1998 pursuant to his employment agreement.
See "Executive Compensation -- Employment Agreements."

(3) Represents the fair market value of the stock portion of the bonus paid to
Mr. Insetta in respect of the fiscal year ended June 30, 1998 pursuant to
his employment agreement which consists of 40,908 shares of Common Stock
(based upon the closing sale price of the Company's Common Stock on the
American Stock Exchange on June 30, 1998 of $4.66 per share). See
"Executive Compensation -- Employment Agreements."

(4) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Insetta of $5,390, $5,159, and $4,938 for fiscal
years 2000, 1999 and 1998, respectively.

(5) Includes, with respect to fiscal year 1999, and represents, with the
respect to fiscal year 1998, the fair market value of restricted stock
awards aggregating 5,704 and 20,834 shares, respectively, of Common Stock
granted to Mr. Litt in fiscal years 1999 and 1998 in connection with his
employment by the Company based upon the closing sale prices of the
Company's Common Stock on the American Stock Exchange on the dates of grant
(which prices ranged from $4.66 to $9.94 per share). As of June 30, 2000,
the value of the 26,538 shares of Common Stock issued to Mr. Litt was
$739,747 (based upon the closing sale price of the Company's Common Stock
on the American Stock Exchange on such date of $27.875 per share). See
"Executive Compensation -Employment Agreements."

6
<PAGE>

(6) Includes the fair market value of two stock bonus awards of 20,000 shares
of Common Stock each granted on March 2, 1999 and June 2, 1999 (based upon
the closing sale prices of the Company's Common Stock on the American Stock
Exchange on March 2, 1999 and June 2, 1999 of $3.32 and $3.47 per share,
respectively) and payments made on behalf of Mr. Litt in respect of income
taxes on such awards. As of June 30, 2000, the value of the 40,000 shares
of Common Stock issued to Mr. Litt pursuant to these stock bonus awards was
$1,115,000 (based upon the closing sale price of the Company's Common Stock
on the American Stock Exchange on June 30, 2000 of $27.875 per share).

(7) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Litt of $5,878, $4,623 and $4,507 for fiscal years
2000, 1999 and 1998, respectively, and income recorded for fiscal year 1999
as a result of the partial forgiveness of a loan made by the Company to Mr.
Litt for the purpose of payment of income taxes on stock grants. See
"Executive Compensation -- Employment Agreements."

(8) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Monsorno of $5,941, $4,637 and $4,808 for fiscal
years 2000, 1999 and 1998, respectively, and income recorded for fiscal
years 2000, 1999 and 1998 of $1,711, $1,821 and $1,932, respectively, as a
result of the partial forgiveness of a loan made by the Company to Mr.
Monsorno for the purpose of paying income taxes on a 10,000 share stock
bonus made to him in April 1994.

(9) Represents the fair market value of two stock bonus awards of 20,000 shares
of Common Stock each granted on March 2, 1999 and June 2, 1999 (based upon
the closing sale prices of the Company's Common Stock on the American Stock
Exchange on March 2, 1999 and June 2, 1999 of $3.32 and $3.47 per share,
respectively) and payments made on behalf of Mr. Monsorno in respect of
income taxes on such awards. As of June 30, 2000, the value of the 40,000
shares of Common Stock issued to Mr. Monsorno pursuant to these stock bonus
awards was $1,115,000 (based upon the closing sale price of the Company's
Common Stock on the American Stock Exchange on June 30, 2000 of $27.875 per
share).

(10) Mr. Giacalone was appointed Vice President - Advanced Products Operations
of the Company in March 1999. The information contained in the table
represents the compensation paid to Mr. Giacalone during the full fiscal
year in all capacities. Mr. Giacalone was not an executive officer of the
Company in fiscal year 1998.

(11) Includes the fair market value of a stock bonus award of 2,000 shares of
Common Stock granted to each of Mr. Giacalone and Mr. Wolf (based upon the
closing sale prices of the Company's Common Stock on the American Stock
Exchange on June 30, 2000 of $27.875 per share) and payments made on behalf
of Mr. Giacalone and Mr. Wolf in respect of income taxes on such awards. As
of June 30, 2000, the value of the 2,000 shares of Common Stock issued to
each of Messrs. Giacalone and Wolf pursuant to these stock bonus awards was
$55,750 (based upon the closing sale price of the Company's Common Stock on
the American Stock Exchange on June 30, 2000 of $27.875 per share).

(12) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Giacalone of $1,873 for fiscal year 2000.

(13) Mr. Wolf was appointed Vice President - Thin Film Operations of the Company
on March 3, 1999. The information contained in the table represents the
compensation paid to Mr. Wolf during the full fiscal year in all
capacities. Mr. Wolf was not an executive officer of the Company in fiscal
year 1998.

(14) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Wolf of $6,209 and $4,691 for fiscal years 2000 and
1999, respectively.

7
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information concerning options
granted to the Named Executive Officers during the fiscal year ended June 30,
2000. Options were granted pursuant to the Company's 1997 Stock Option Plan and
2000 Incentive Stock Plan.

<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants for Option Term
---------------------------------------------------------------- ----------------------------------------
Percent of
Number of Total Options
Securities Granted to Exercise
Underlying Employees in Price
Options Granted Fiscal Year ($/Share)(1) Expiration Date 5% 10%
--------------- ------------ ------------ ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Victor Insetta 4,000 0.4% $ 21.45 4/11/2005 $ 23,700 $ 52,375
Stuart Litt 4,000 0.4% $ 19.50 4/11/2010 $ 49,050 $ 124,300
Rich Monsorno 4,000 0.4% $ 19.50 4/11/2010 $ 49,050 $ 124,300
Rich Monsorno 60,000 6.6% $ 23.50 4/26/2010 $ 886,750 $ 2,247,175
Michael Giacalone 10,000 1.1% $ 6.44 12/7/2009 $ 40,475 $ 102,600
Michael Giacalone 4,000 0.4% $ 19.50 4/11/2010 $ 49,050 $ 124,300
Michael Giacalone 40,000 4.4% $ 23.50 4/26/2010 $ 591,150 $ 1,498,125
Judah Wolf 20,000 2.2% $ 6.44 12/7/2009 $ 80,975 $ 205,200
Judah Wolf 4,000 0.4% $ 19.50 4/11/2010 $ 49,050 $ 124,300
Judah Wolf 40,000 4.4% $ 23.50 4/26/2010 $ 591,150 $ 1,498,125
</TABLE>

(1) All options were granted at an exercise price equal to the fair market
value of the Common Stock on the date of grant, except those granted to
Victor Insetta, which were granted at 110% of fair market value.

AGGREGATE OPTION EXERCISES DURING
THE FISCAL YEAR ENDED JUNE 30, 2000
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth certain information with respect to options
granted to the Named Executive Officers during the fiscal year ended June 30,
2000 pursuant to the Company's 1997 Stock Option Plan and 2000 Incentive Stock
Plan.
<TABLE>
<CAPTION>

Number of Shares Value of Unexercised In-
Underlying Unexercised the-Money Options at
Options at Fiscal Year End Fiscal Year End (1)
---------------------------- ---------------------------
Shares
Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Victor Insetta -- -- 8,000 8,000 $187,524 $119,324

Stuart Litt 2,500 $ 33,813 7,500 6,000 $178,563 $ 81,000

Richard Monsorno 7,000 $ 165,063 3,000 66,000 $ 71,625 $343,500

Michael Giacalone -- -- 5,500 60,500 $124,281 $581,344

Judah Wolf 7,000 $ 251,250 8,000 61,000 $178,813 $577,563
</TABLE>

(1) Based upon the closing sale price of the Common Stock on the American Stock
Exchange on June 30, 2000 of $27.875 per share.

8
<PAGE>

EMPLOYMENT AGREEMENTS

Victor Insetta

The Company has entered into an employment agreement with Victor Insetta,
the Company's President and Chief Executive Officer. The term of the agreement
currently expires on March 1, 2000. Pursuant to its terms, the agreement is
automatically renewed for successive one-year periods beginning on March 1, of
each year unless either party gives written notice of its election to terminate
the agreement at least 120 days prior to such March 1.

Pursuant to the agreement, Mr. Insetta was paid base compensation for the
fiscal year ended June 30, 2000 at the rate of $297,297 per annum through March
1, 2000, and at the rate of $323,162 per annum during the remainder of the
fiscal year. The agreement provides for further increases in Mr. Insetta's base
salary by the Board of Directors from time to time in its sole discretion. The
agreement also provides that, as additional annual compensation, Mr. Insetta is
also entitled to an amount equal to 5% of the Company's net income (before such
incentive compensation and before income taxes). In August 2000, Mr. Insetta
consented to an amendment to his employment agreement reducing Mr. Insetta's
incentive bonus from 5% of pre-tax income to 2 1/2% of pre-tax income effective
beginning with fiscal year 2001. In September 1998, the Company amended the
employment agreement, effective for the fiscal year ended June 30, 1998, to
allow the Company, at its option, to pay the additional annual compensation in
stock, cash or a combination thereof, subject to certain limitations. For the
fiscal years ended June 30, 2000 and 1999, the Company elected to pay all of Mr.
Insetta's additional compensation in cash. For the fiscal year ended June 30,
1998, the Company elected to pay 50% of Mr. Insetta's additional annual
compensation in cash and 50% in shares of Common Stock. See "Executive
Compensation -- Summary Compensation Table."

The agreement further provides, among other things, that if there is a
change of control of the Company or if Mr. Insetta's employment is terminated
prior to the scheduled expiration date other than for cause (as defined in the
agreement), death, disability, or voluntary termination apart from a change of
control, the Company is required to pay to Mr. Insetta, in a lump sum, an amount
equal to the greater of (i) all of the compensation due to Mr. Insetta under the
agreement through the end of the then existing term of the agreement, or (ii)
three times Mr. Insetta's average annual compensation under the agreement during
the five most recent taxable years prior to the taxable year in which the
termination took place as calculated in accordance with the Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). In addition, if Mr.
Insetta voluntarily terminates his employment with the Company, for a period
equal to the lesser of the remaining term of the agreement or one year, Mr.
Insetta has agreed that he will not, directly or indirectly, solicit those
persons or entities who are customers of the Company on the effective date of
his termination of employment for the purpose of purchasing multi-layer
capacitors; provided, however, that the foregoing restriction shall not apply if
Mr. Insetta terminates his employment because of a change of control of the
Company. In addition, Mr. Insetta has agreed that, for a period of one year
following the termination of his employment (other than termination by the
Company without cause), he will not divulge to any person any information which
is actually held in confidence by the Company, subject, however, to certain
conditions, including the Company having performed, and continuing to perform,
its obligations under the agreement.

The Company presently maintains a term life insurance policy in the
aggregate amount of $4,000,000 on the life of Mr. Insetta. The Company is named
as the beneficiary of this policy.

9
<PAGE>

Stuart Litt

In September 1996, the Company entered into an employment agreement with
Stuart P. Litt, the Company's Senior Vice President Operations. Pursuant to the
agreement, Mr. Litt was to be employed for a period of three years at an annual
base salary of $150,000. Mr. Litt's annual base salary was increased, effective
September 15, 1997, to $165,000. In addition, Mr. Litt received quarterly cash
bonuses equal to one half of one percent of the Company's net income (before
such incentive compensation and before income taxes) pursuant to the Company 's
officer and management employee bonus program. See "Executive Compensation --
Bonus Programs." The agreement provides that if Mr. Litt's employment by the
Company is terminated at any time after the first three years of employment, Mr.
Litt will be entitled to a severance payment of $100,000. As of September 1999,
the agreement between Mr. Litt and the Company expired (other than the provision
relating to severance). Mr. Litt is currently being employed by the Company
under the principal economic terms of the original agreement.

Pursuant to the agreement, the Board of Directors granted to Mr. Litt a
restricted stock award of 68,000 shares of Common Stock. Pursuant to this award,
Mr. Litt was to receive 48,000 shares in 24 monthly installments of 2,000 shares
on the 15th of each month commencing October 15, 1996, provided he was still
actively employed by the Company on each such date, and an additional 20,000
shares on December 15, 1996, again provided he was still actively employed by
the Company on such date. Through June 30, 1997, Mr. Litt had received 36,000
shares of Common Stock pursuant to this program. Subsequent to May 15, 1997, the
Company and Mr. Litt mutually agreed to terminate the monthly 2,000 share awards
while they discussed alternative structures for future awards.

In August 1997, the Board of Directors and Mr. Litt agreed to amend the
terms of Mr. Litt's restricted stock award program. On August 19, 1997, he was
awarded an additional 4,602 shares of Common Stock and the Company set aside
$11,700 for Mr. Litt to pay a portion of the income taxes payable by him in
respect of such award. Each subsequent month commencing September 1997 through
September 1998, Mr. Litt received a number of shares (rounded to the nearest
whole share) as follows:

Number
Date of Issuance of Shares
---------------- ---------
September 15, 1997 1,542
October 15, 1997 1,578
November 17, 1997 1,536
December 15, 1997 1,564
January 15, 1998 1,590
February 16, 1998 1,528
March 16, 1998 1,672
April 15, 1998 1,686
May 15, 1998 1,734
June 15, 1998 1,802
July 15, 1998 1,840
August 15, 1998 1,878
September 15, 1998 1,986
----------
Total 26,538
==========

Judah Wolf

In January 1998, the Company entered into a four year employment agreement
with Judah Wolf, the Company's Vice President - Thin Film Operations. The
agreement provides for annual base compensation of $90,000. In addition, Mr.
Wolf receives a quarterly incentive bonus equal to a percentage of the Thin Film
Profit Contribution (as defined in the agreement). The percentage to be applied
to the Thin Film Profit Contribution is 5.0% for calendar year 1998, 4.0%, for
calendar year 1999 and 3.5% for each of calendar years 2000 and 2001. Mr. Wolf
also receives a quarterly bonus pursuant to the Company's officer and management
employee bonus program equal to one half of one percent of the Company's net
income before such incentive compensation and

10
<PAGE>

income taxes, less an amount equal to one half of one percent of the Thin Film
Profit Contribution. See "Executive Compensation - - Bonus Programs."

The agreement may be terminated by the Company upon 30 days' notice. If
the agreement is terminated for reasons other than disability or cause, Mr. Wolf
is entitled to severance equal to the lesser of (i) $100,000, or (ii) 60% of his
highest total compensation for any consecutive 12 months during the last 24
months of Mr. Wolf's employment, payable in 24 equal monthly installments.

The agreement includes a provision that allows the Company to purchase
certain ceramic substrate inventory from Mr. Wolf. The Company exercised that
privilege in September 1998 and purchased approximately $200,000 of inventory
from Mr. Wolf in exchange for 25,400 shares of Common Stock (based upon the
closing sale price of the Company's Common Stock on the American Stock Exchange
on September 11, 1998 of $3.94 per share) and $100,000 in cash. The fair market
value of such stock on June 30, 2000 was $708,025 (based upon the closing sale
price of the Company's Common Stock on the American Stock Exchange on such date
of $27.875).

STOCK OPTION PLANS

In April 1997, the Company's Board of Directors adopted, and
in November 1997, the stockholders approved, the Company's 1997 Stock Option
Plan (the "1997 Plan"). The purpose of the 1997 Plan is to provide a means
whereby selected employees, officers, directors, agents, consultants and
independent contractors of the Company or of any parent or subsidiary thereof,
may be granted options to purchase shares of the Company's Common Stock, in
order to attract and retain the services or advice of such persons and to
provide added incentive to them by encouraging stock ownership in the Company.

The 1997 Plan provides for the grant of options to purchase up to 800,000
shares of Common Stock to employees, officers, directors, agents, consultants
and independent contractors of the Company or of any parent or subsidiary
thereof. Options may be either "incentive stock options" within the meaning of
Section 422 of the Code, or non-qualified options. Incentive stock options may
be granted only to employees of the Company, while non-qualified options may be
issued to non-employee directors, consultants and others, as well as to
employees of the Company.

The 1997 Plan is administered by the Board of Directors of the Company,
except to the extent the Board delegates its authority to a committee of the
Board. The administrator of the 1997 Plan is hereinafter referred to as the
"Plan Administrator." The Plan Administrator has the authority, in its
discretion, to determine all matters relating to the options and/or stock awards
to be granted under the 1997 Plan, including selection of the individuals to be
granted options, the number of shares to be subject to each option or award, the
time period during which the options may be partially or fully exercised, the
exercise price, the purchase price of stock awards, if any, and all other terms
and conditions of the options and awards, including the designation of such
options as incentive stock options or non-qualified stock options.

The exercise price of an incentive stock option may not be less than the
fair market value per share of the Common Stock on the date of grant (110% of
the fair market value of the Common Stock on such date in the case of incentive
stock options granted to employees who own more than 10% of the total combined
voting power of the Company on the date of grant (any such person, a "10%
Stockholder")), and not less than the par value per share of the Common Stock
with respect to non-qualified stock options.

The term of each stock option granted under the 1997 Plan shall be as
established by the Plan Administrator but shall not be more than 10 years from
the date of grant (five years in the case of an incentive stock option granted
to a 10% Stockholder). The Plan Administrator may establish a vesting schedule
with respect to any option granted under the 1997 Plan setting forth the time or
times at which portions of such option shall become exercisable.

11
<PAGE>

Payment of the option exercise price shall be made in full at the time
notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check or personal check. The Plan
Administrator can determine at the time the option is granted for incentive
stock options, or at any time before exercise for non-qualified stock options,
that additional forms of payment will be permitted, including delivery of shares
of stock of the Company held by an optionee having a fair market value equal to
the exercise price, or withholding from the shares that would otherwise be
issued upon exercise of an option that number of shares having a fair market
value equal to the option exercise price.

Options granted under the 1997 Plan may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than (i) by will or by the applicable laws of descent and distribution,
(ii) pursuant to a qualified domestic relations order or (iii) as otherwise
determined by the Plan Administrator and set forth in the applicable Option
Agreement. No option shall be exercisable after termination of the recipient's
relationship with the Company or any parent or subsidiary of the Company unless
such termination occurs by reason of retirement with the consent of the Company
or death. In the event of the retirement of a recipient of options with the
consent of the Company, the options or unexercised portions thereof which were
otherwise exercisable on the date of retirement shall expire unless exercised
within a period of three months after the date of retirement.

In the event of the death of a recipient of options while an employee,
officer, director, agent, consultant or independent contractor of the Company or
any parent or subsidiary of the Company or in the event of the death of the
recipient within the three month period following termination of such person's
employment or other association with the Company by reason of retirement with
the consent of the Company, the options which were otherwise exercisable on the
date of such termination shall be exercisable by his or her personal
representatives, heirs, or legatees at any time prior to the expiration of one
year from the date of his or her death. In no event, however, shall an option be
exercisable after ten years from the date it is granted (five years in the case
of an incentive stock option granted to a 10% Stockholder). The Plan
Administrator may, if it determines that to do so would be in the Company's best
interests, provide in a specific case or cases for the exercise of options which
would otherwise terminate upon termination of a recipient's relationship with
the Company for any reason, upon such terms and conditions as the Plan
Administrator determines to be appropriate.

Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by the Company become available again for issuance under
the 1997 Plan.

The Board may at any time suspend, amend or terminate the 1997 Plan,
provided that, except in certain cases relating to mergers, consolidations,
reorganizations and similar transactions, the approval of the holders of a
majority of the Company's outstanding shares of voting capital stock present, in
person or by proxy, and entitled to vote at any meeting shall be necessary for
the adoption by the Board of any amendment which will: (i) increase the number
of shares which are to be reserved for the issuance upon exercise of options
under the 1997 Plan; (ii) permit the granting of stock options to a class of
persons other than those presently permitted to receive stock options under the
1997 Plan; or (iii) require shareholder approval under applicable law, including
Section 16(b) of the Securities Exchange Act of 1934 unless sooner terminated by
the Board, the 1997 Plan shall terminate on April 1, 2007.

As of June 30, 2000, there were seven executive officers, five directors
who are not employees of the Company and 682 employees who were not executive
officers who were eligible to participate in the 1997 Stock Option Plan and the
2000 Incentive Stock Plan. As of June 30, 2000, incentive stock options to
purchase 1,616,000 shares of Common Stock had been granted to 394 employees
under the 1997 Stock Option Plan and the 2000 Incentive Stock Plan (subject to
stockholder approval at the annual meeting) at exercise prices ranging from
$4.00 per share to $44.00 per share, including options to purchase 234,000
shares granted to the Named Executive Officers. See "Executive Compensation --
Option Grants in Last Fiscal Year."

For a description of the Company's 2000 Incentive Stock Plan and
information concerning options granted thereunder, see "Proposal 2 -- 2000
Incentive Stock Plan."

12
<PAGE>

BONUS PROGRAMS

The Company has a bonus program for officers other than Mr. Insetta and for
certain other management employees pursuant to which such officers and other
employees are eligible to receive quarterly cash bonuses equal to one half of
one percent of the Company's net income (before such bonuses and before income
tax). In the event of a net loss in any quarter, the amount of such net loss is
applied to reduce the bonus payable in future quarters in that fiscal year. In
the fiscal year ended June 30, 2000, the Company paid bonuses aggregating
$279,122 under this program, including bonuses to Mr. Litt, and Mr. Monsorno of
$69,781 and $69,781, respectively. See "Executive Compensation -- Summary
Compensation Table."

Mr. Giacalone participates in the above bonus program, in addition to a
bonus equaling 1% of profit from the Micrcap(R) product line. In the fiscal year
ended June 30, 2000, the Company paid Mr. Giacalone bonuses aggregating $94,530.
See "Executive Compensation -- Summary Compensation Table."

Mr. Wolf participates in a modified version of this bonus program as stated
in his employment agreement. In the fiscal year ended June 30, 2000, the Company
paid Mr. Wolf bonuses aggregating $426,327. See "Employment Agreements -- Judah
Wolf" and "Executive Compensation -- Summary Compensation Table."

401(K) SAVINGS PLAN

The Company has a 401(k) Savings Plan covering all employees. Pursuant to
this plan, eligible employees may elect to defer up to 15% of their eligible
gross earnings, but in no event more than $10,500 for the calendar year 2000. In
addition, contributions may be limited by certain other restrictions under the
Code. The Company contributes an amount based upon the employee's contributions,
up to 3% of such employee's gross earnings. Officers are eligible to participate
in this plan in the same manner as are all other employees. For the fiscal year
ended June 30, 2000, the Company's contributions to this plan were $440,836,
including contributions on behalf of Messrs. Insetta, Litt, Monsorno, Giacalone
and Wolf of $5,390, $5,878, $5,941, $1,873 and $6,209, respectively. See
"Executive Compensation -- Summary Compensation Table."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended June 30, 2000, the Compensation Committee of
the Board of Directors consisted of Messrs. Garrard and Blumkin. During the
fiscal year ended June 30, 2000, decisions with respect to officers'
compensation were made by the entire Board. See "Executive Compensation --
Report on Executive Compensation." No officer who serves as a director of the
Company participated in matters involving the evaluation of his own performance
or the setting of his own compensation. No officer who serves as a director of
the Company served on the board of directors of any other company.

REPORT ON EXECUTIVE COMPENSATION

The Board of Directors has established a Compensation Committee which
currently consists of Messrs. Garrard and Blumkin. While the Compensation
Committee has the power and authority of the Board of Directors with respect to
the compensation of employees, the Committee has historically provided
information and assistance to the full Board of Directors of the Company, which
has been the body responsible for making decisions with respect to employee
compensation issues. No officer of the Company who serves on the Board of
Directors or on the Compensation Committee participates in matters involving the
evaluation of his own performance or the setting of his own compensation.

13
<PAGE>

The Company seeks to establish compensation plans and policies which are
designed to (i) attract and retain highly qualified employees at all levels,
(ii) provide rewards that are closely linked to the Company's performance, and
(iii) align the interests of the Company's employees with those of its
stockholders through stock ownership. The Company monitors the compensation paid
to various levels of employees on both a geographic and industry basis.
Moreover, the Company has established bonus compensation programs for virtually
all levels of employees pursuant to which they are rewarded based upon the
overall profitability of the Company. Finally, the Company has over the past
several years awarded stock bonuses and stock options to several executive
officers and supervisory employees in order to reward them for their efforts on
behalf of the Company and to provide them with a direct stake in the Company's
future. In April 1997, the Board adopted the 1997 Stock Plan in order to expand
the universe of individuals who are important to the Company's success who may
be eligible for stock-based compensation. Having granted options for all of the
shares authorized for issuance under such plan, in April 2000, the Board adopted
the 2000 Incentive Stock Plan in order to enable the Company to continue to
utilize stock awards and options as a means of attracting and retaining
employees important to the Company's success. See "Proposal 2 -- 2000 Incentive
Stock Plan."

The base salary of Victor Insetta, the Company's President and Chief
Executive Officer, for fiscal year 2000 was based principally upon his rights
under the employment agreement described above. The agreement, which was entered
into in 1985 and has been amended several times, in base salary currently
provides for a minimum base salary of $323,162. Increases in base salary have
been consistent with cost of living increases granted to virtually all employees
of the Company. The Board also believed that they were warranted in order to
bring Mr. Insetta's base compensation in line with salaries being paid to other
chief executive officers of similar companies and in recognition of the
Company's performance.

Mr. Insetta's employment agreement also entitles him to annual incentive
compensation equal to 5% of the Company's net income (before such incentive
compensation and before income taxes) which for the fiscal year ended June 30,
2000 amounted to $734,891. In August 2000, Mr. Insetta consented to the
amendment to his employment agreement reducing his incentive compensation from
5% of pretax income to 2 1/2% of pretax income effective beginning with fiscal
year 2001. The Board believes that it is appropriate for the compensation of the
Chief Executive Officer of the Company to be based, in substantial part, on the
Company's overall performance.

In September 1998, Mr. Insetta's employment agreement was further amended
to allow the Company to pay Mr. Insetta's annual incentive compensation in cash,
Common Stock or a combination thereof. The determination of the manner of
payment is made each year by the Board of Directors, in its sole discretion,
subject to certain limitations. For the fiscal year ended June 30, 1998, the
Board (with Mr. Insetta abstaining) elected to pay 50% of Mr. Insetta's annual
incentive compensation in cash and 50% in Common Stock. This was done to
conserve cash and to more closely ally Mr. Insetta's overall compensation to the
performance of the Company's stock. For the fiscal years ended 1999 and 2000,
the Board (with Mr. Insetta abstaining) elected to pay 100% of Mr. Insetta's
annual incentive compensation in cash. The Board believed this was appropriate
in light of the Company's cash position and the current level of Mr. Insetta's
stock ownership in the Company.

Dov Bacharach
Rubin Blumkin
O. Julian Garrard III
Victor Insetta
Stuart P. Litt
Chester E. Spence
Thomas J. Volpe

October 13, 2000

14
<PAGE>

PERFORMANCE GRAPH

The graph below compares the cumulative total stockholder return on the
Common Stock from July 1, 1995 through June 30, 2000, with the cumulative total
return of the American Stock Exchange Total Return Index and a peer group of
companies selected by the Company. The peer group is composed of ten
publicly-held manufacturers of capacitors and other electronic components,
including the Company. Total cumulative return values were calculated based on
the assumption of $100 invested on July 1, 1995, assuming reinvestment of
dividends. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERICAN TECHNICAL CERAMICS CORP.,
THE AMEX MARKET VALUE INDEX AND A PEER GROUP

[GRAPHIC OMITTED]

* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JUNE 30.

<TABLE>
<CAPTION>
Fiscal Year Ended June 30 Cumulative Year Return
------------------------------------------------
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
American Technical Ceramics Corp. 64 115 74 67 442
Peer Group (1) 79 103 68 120 262
Amex Market Value 115 124 155 175 206
</TABLE>

----------
(1) Includes the Company and Aeroflex, Inc., AVX Corp., California Micro
Devices Corp., Cts Corp., Merrimac Industries, Inc., Micronetics Wireless,
Inc., Sawtek, Inc., Vari-1 Company, Inc., and Vishay Intertechnology, Inc.

15
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY LEASES

The Company presently leases certain real property from its President,
Chief Executive Officer and principal stockholder, Victor Insetta, and entities
controlled by him. In the case of each such lease, the Company has periodically
obtained appraisal letters indicating that the fixed rentals in effect did not
exceed fair market rentals in the area. The Company does not intend to lease any
additional real property from Mr. Insetta or entities controlled by him other
than renewals of existing leases and improvements and new construction that may
be made to existing leased properties.

FLORIDA FACILITY

The Company's Jacksonville, Florida facility (the "Florida Facility") is
leased by its wholly-owned subsidiary, American Technical Ceramics (Florida),
Inc. ("ATC-Florida"), from V.P.I. Properties Associates ("VPI"), a limited
partnership of which Mr. Insetta is the sole general partner and the limited
partnership interests are owned by members of his family. The lease, which was
amended several times, most recently as of May 16, 2000, to reflect the
construction of additional buildings on the premises, is for a term expiring in
2010. The Company has guaranteed ATC-Florida's obligations under the lease.

Under the lease, VPI has agreed to make available to ATC-Florida up to
$1,800,000 to construct one or more buildings at the Florida Facility ("New
Construction") pursuant to plans and specifications to be approved by VPI. VPI
will be the owner of the New Construction and all other improvements located at
the Florida Facility.

Under the lease, initially, ATC-Florida is responsible to pay to VPI, as
fixed rent, annually, the sum of $502,404 per annum (adjusted as hereinafter
provided), payable in 12 equal monthly installments. This fixed rental will be
increased as of each date on which ATC-Florida occupies or could occupy any
building to be constructed in connection with any New Construction to an amount
equal to the fair market rental for the Florida Facility, giving effect to such
New Construction, as determined by an appraiser selected by ATC-Florida and
approved by VPI. The fixed rental shall also be adjusted upward (but not
downward) annually based upon the increase, if any, in the Consumer Price Index
for all Urban Consumers for the last reported month available on October 1 of
each year during the lease compared to such index for the same month in the
previous calendar year. In no event may the monthly payments in respect of fixed
rent under the lease be less than the monthly payments of principal and interest
due and payable by VPI in connection with the financing for the Florida
Facility. ATC-Florida is also obligated to pay all expenses arising in
connection with the Florida Facility, including all real estate taxes,
assessments, insurance, utilities and repairs.

The Company, through ATC-Florida, has the right at the end of the lease
term to purchase the Florida Facility at its fair market value and has a right
of first offer to purchase the Florida Facility if VPI elects to sell it in the
interim.

In the fiscal year ended June 30, 2000, the aggregate rental paid by
ATC-Florida under this lease was $504,923. In addition, the Company incurred
expenses of $126,772 for real estate taxes and $287,045 for utilities.

16
<PAGE>

NEW YORK PROPERTY

Since July 1976, the Company has leased from Mr. Insetta the land and
building at 15 Stepar Place, Huntington Station, New York (the "New York
Property"). The lease for the New York Property expired in February 1996. The
Company leased the New York Property on a month-to-month basis on the same terms
as the terms provided in the lease until January 1, 1997 when the lease was
renewed and extended for a five-year term. The lease was amended and restated as
of September 25, 1998. The base rent is based upon the annual payments of
principal and interest payable under the mortgage encumbering such property. The
base rent reflects an adjustment upward commencing January 1, 1990 and as of
each succeeding calendar year based upon the increase in the Consumer Price
Index for All Urban Consumers (New York City) over the Consumer Price Index for
All Urban Consumers (New York City) for January 1989. Current monthly
installments are $41,790. The Company is also responsible for payment of all
real estate taxes and all utilities and repairs relating to the property. During
the fiscal year ended June 30, 2000, the total amount of rent paid by the
Company for this facility was $495,000. In addition, the Company incurred
expenses of $59,998 for real estate taxes, $230,672 for utilities and $100,603
for leasehold improvements.

The Company has the option to purchase the New York Property at any time
during the lease at its fair market value and a right of first offer if Mr.
Insetta elects to sell it in the interim.

INVENTORY

See "Executive Compensation - - Employment Agreements" for information
concerning the purchase by the Company of certain inventories of ceramic
substrate from Judah Wolf, the Company's Vice President - Thin Film Operations.

17
<PAGE>

PROPOSAL 2

2000 INCENTIVE STOCK PLAN

DESCRIPTION OF THE 2000 INCENTIVE STOCK PLAN

In April 2000, the Company's Board of Directors adopted the American
Technical Ceramics Corp. 2000 Incentive Stock Plan (the "2000 Incentive Stock
Plan"), subject to the approval by the stockholders. The purpose of the 2000
Incentive Stock Plan is to provide a means whereby selected employees, officers,
directors, agents, consultants and independent contractors of the Company or of
any parent or subsidiary thereof, may be granted stock awards, incentive stock
options and/or non-qualified stock options to purchase shares of the Company's
Common Stock, in order to attract and retain the services or advice of such
persons and to provide added incentive to them by encouraging stock ownership in
the Company. It is the intention of the Company that the 2000 Incentive Stock
Plan comply in all respects with Section 16(b) and Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

The 2000 Incentive Stock Plan shall be administered by the Board of
Directors of the Company, except to the extent the Board delegates its authority
to a committee of the Board. The administrator of the 2000 Incentive Stock Plan
is hereinafter referred to as the "Plan Administrator." The Plan Administrator
has the authority, in its discretion, to determine all matters relating to the
options and stock awards to be granted under the 2000 Incentive Stock Plan,
including selection of the individuals to be granted options, and/or stock
awards, the number of shares to be subject to each option or stock award, the
exercise price of each option, the consideration, if any, to be paid in respect
of each stock award, and all other terms and conditions of the options and stock
awards.

The 2000 Incentive Stock Plan provides for the grant of awards of or
options to purchase up to 600,000 shares of Common Stock (subject to adjustment
for stock splits, combinations and the like). Effective April 24, 2000 the
Company declared a 2-for-1 stock split of the Company's Common Stock effected in
the form of a 100 percent stock dividend which increased the available grant of
awards of or options to purchase provided by the 2000 Incentive Stock Plan to
1,200,000. If any option or stock award granted under the 2000 Incentive Stock
Plan shall expire, be surrendered, exchanged for another option or award,
canceled or terminated for any reason without having become vested or exercised
in full, the shares subject thereto shall thereupon again be available for
purposes of the 2000 Incentive Stock Plan.

Options granted under the 2000 Incentive Stock Plan may be either
"incentive stock options", as defined in Section 422 of the Code, or
"non-qualified stock options." An incentive stock option may be granted only to
an individual who, at the time the option is granted, is an employee of the
Company or any parent or subsidiary of the Company. A non-qualified stock option
and a stock award may be granted to any director, employee, officer, agent,
consultant or independent contractor of the Company or any parent or subsidiary
of the Company.

The term of each stock option granted under the 2000 Incentive Stock Plan
shall be as established by the Plan Administrator but shall not be more than 10
years from the date of grant (five years in the case of an incentive stock
option granted to a 10% Stockholder). The Plan Administrator may establish a
vesting schedule with respect to any option granted under the 2000 Incentive
Stock Plan setting forth the time or times at which portions of such option
shall become exercisable.

18
<PAGE>

exercise for nonqualified stock options, that additional forms of payment will
be permitted, including delivery of shares of stock of the Company held by an
Optionee having a fair market value equal to the exercise price, or withholding
from the shares that would otherwise be issued upon exercise of an option that
number of shares having a fair market value equal to the option exercise price.

Options granted under the 2000 Incentive Stock Plan may not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than (i) by will or by the applicable laws
of descent and distribution, (ii) pursuant to a qualified domestic relations
order, or (iii) as otherwise determined by the Plan Administrator and set forth
in the applicable Option Agreement. No option shall be exercisable after
termination of the recipient's relationship with the Company or any parent or
subsidiary of the Company unless such termination occurs by reason of retirement
with the consent of the Company or death. In the event of the retirement of a
recipient of options with the consent of the Company, the options or unexercised
portions thereof which were otherwise exercisable on the date of retirement
shall expire unless exercised within a period of three months after the date of
retirement. In the event of the death of a recipient of options while an
employee, officer, director, agent, consultant or independent contractor of the
Company or any parent or subsidiary of the Company or in the event of the death
of the recipient within the three month period following termination of such
person's employment or other association with the Company by reason of
retirement with the consent of the Company, the options which were otherwise
exercisable on the date of such termination shall be exercisable by his or her
personal representatives, heirs, or legatees at any time prior to the expiration
of one year from the date of his or her death. In no event, however, shall an
option be exercisable after ten years from the date it is granted (five years in
the case of an incentive stock option granted to a 10% Stockholder). The Plan
Administrator may, if it determines that to do so would be in the Company's best
interests, provide in a specific case or cases for the exercise of options which
would otherwise terminate upon termination of a recipient's relationship with
the Company for any reason, upon such terms and conditions as the Plan
Administrator determines to be appropriate.

The Plan Administrator may issue or transfer the shares covered by a
stock award to the grantee thereof at the time the stock award is granted, or at
any time subsequent thereto, or in installments from time to time, as the Plan
Administrator shall determine. Such awards may be granted either alone, in
addition to, or in tandem with any other type of award granted under the 2000
Incentive Stock Plan. The Plan Administrator, in its discretion, may make such
awards either with or without consideration and noncontingent or contingent upon
attainment of certain performance objectives to be achieved during a period of
time, or upon continued service with the Company. The measure of whether and to
what degree such objectives have been attained and the resulting awards will be
determined by the Plan Administrator.

Payment of the consideration, if any, for any stock award shall be made
in such forms (including, without limitation, cash, check, promissory notes and,
subject to applicable laws and regulations, securities of the Company) and at
such times as the Plan Administrator shall determine. Stock awards and the
shares of Common Stock issuable pursuant thereto shall be subject to such
restrictions on sale or other disposition as the Plan Administrator shall
determine and as shall exist under applicable law.

Upon the issuance of shares pursuant to a stock award and the
fulfillment of the vesting requirements and other requirements of the stock
award, if any, the grantee shall, with respect to such shares, be and become a
stockholder of the Company fully entitled to receive dividends, to vote and to
exercise all other rights of a stockholder except to the extent otherwise
provided in the stock award. Unless the Plan Administrator shall determine
otherwise, neither the grantee nor any party to which the grantee's rights and
privileges under the award may pass shall be, or have any of the rights or
privileges of, a stockholder of the Company with respect to any of the shares
issuable upon the vesting of and/or payment of any award granted under the 2000
Incentive Stock Plan unless and until such award has so vested and/or payment
for such award has been made in full.

The Plan Administrator may choose, at the time of the grant of the
stock award or any time thereafter, to include as part of such award an
entitlement to receive dividends or dividend equivalents, subject to such terms
as the Plan Administrator may establish. All dividends or dividend equivalents
which are not paid currently may, at the Plan Administrator's discretion, accrue
interest and be paid to a grantee at a later date.

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<PAGE>

The Board may at any time suspend, amend or terminate the 2000
Incentive Stock Plan, provided that, except in certain cases relating to
mergers, consolidations, reorganizations and similar transactions, the approval
of the holders of a majority of the Company's outstanding shares of voting
capital stock present, in person or by proxy, and entitled to vote at any
meeting shall be necessary for the adoption by the Board of any amendment which
will: (i) increase the number of shares which are to be reserved for the
issuance upon award of stock or exercise of options under the 2000 Incentive
Stock Plan; (ii) permit the granting of stock options or awards to a class of
persons other than those presently permitted to receive stock options or awards
under the 2000 Incentive Stock Plan; or (iii) require shareholder approval under
applicable law, including Section 16(b) of the Exchange Act. Unless sooner
terminated by the Board, the 2000 Incentive Stock Plan shall terminate on April
1, 2010.

The following table sets forth certain information with respect to options
granted pursuant to the 2000 Incentive Stock Plan during the fiscal year ended
June 30, 2000. All grants are subject to stockholder approval. There have been
no stock awards granted under the plan. The Company does not currently know nor
is it determinable the number of options or awards that the Company will grant
under the 2000 Incentive Stock Plan to any person in the future.

<TABLE>
<CAPTION>
Number of Options Exercise Price
Name and Position Granted (#) Range ($) Expiration Date
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Victor Insetta
President, Chief Executive Officer and Director 4,000 21.45 April, 2005

Stuart Litt
Senior Vice President - Operations and Director 4,000 19.50 April, 2010

Richard Monsorno
Senior Vice President - Technology 64,000 19.50-23.50 April, 2010

Michael C. Giacalone
Vice President - Advanced Products Operations 44,000 19.50-23.50 April, 2010

Judah Wolf
Vice President - Thin Film Operations 44,000 19.50-23.50 April, 2010

All Executive Officers as a Group 248,000 19.50-23.50 April, 2010

Non-Employee Directors as a Group 0

All Other Employees 486,000 19.50-44.00 April, 2010
</TABLE>

As of October 4, 2000, the closing sales price of the Company's Common Stock on
the American Stock Exchange was $15.00.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 2000 INCENTIVE STOCK PLAN UNDER
CURRENT LAW

The following is a brief description of the federal income tax
consequences of stock options and stock awards, which may be granted under the
2000 Incentive Stock Plan under present tax laws.

Incentive Stock Options. There will be no federal income tax
consequences to either the recipient or the Company upon the grant of an
incentive stock option. Except as described below, the recipient will not have
to recognize any income upon the exercise of an incentive stock option, and the
Company will not be allowed any deduction, as long as the recipient does not
dispose of the shares within two years from the date the incentive stock option
was granted within one year from the date the shares were transferred to the
recipient (the "holding period requirement"). Upon a sale of the shares after
the holding period requirement is satisfied, the recipient will recognize a
long-term capital gain (or loss) measured by the excess (or deficit) of the
amount realized from such sale over the aggregate exercise price of such shares,
but no deduction will be allowed to the Company. If a

20
<PAGE>

recipient disposes of shares before the holding period requirement is satisfied,
the recipient will recognize ordinary income in the year of disposition, and the
Company will be entitled to a corresponding deduction, in an amount equal to the
lesser of (i) the excess of the fair market value of the shares on the date of
exercise over the aggregate exercise price of the shares, or (ii) the excess of
the amount realized from such disposition over the aggregate exercise price of
the shares. Where shares are sold before the holding period requirement is
satisfied, the recipient will also recognize a capital gain to the extent that
the amount realized from the disposition of the shares exceeded the fair market
value of the shares on the date of exercise.

A recipient may under certain circumstances be permitted to pay all or
a portion of the exercise price of an incentive stock option by delivering
Common Stock of the Company. If the Common Stock delivered by a recipient as
payment of the exercise price was acquired through a prior exercise of an
incentive stock option or an option granted under an employee stock purchase
plan, and if the holding period requirement applicable to such Common Stock has
not yet been met, the delivery of such Common Stock to the Company could be
treated as a taxable sale or disposition of such stock. In general, where a
recipient pays the exercise price of an incentive stock option by delivering
Common Stock of the Company, the recipient will have a zero tax basis in the
shares received that are in excess of the number of shares of Common Stock
delivered in payment of the exercise price.

Non-Qualified Stock Options. There will be no federal income tax
consequences to either the recipient or the Company upon the grant of a
non-qualified stock option. Upon the exercise of a non-qualified stock option,
the recipient will recognize ordinary compensation income in an amount equal to
the fair market value of each share on the date of exercise over the exercise
price, and the Company generally will be entitled to a federal income tax
deduction of the same amount.

If a recipient pays the exercise price of a non-qualified stock option
by surrendering Common Stock held by the recipient, then, to the extent the
shares received upon exercise of the option do not exceed the number of shares
delivered, the recipient will be treated as making a tax-free exchange of stock
and the new shares received will have the same tax basis and holding period
requirement as the shares surrendered. In such case, the recipient will
recognize ordinary compensation income in an amount equal to the fair market
value of the shares in excess of the shares delivered in payment of the option
price. The basis of such additional shares will equal their fair market value on
the date the option was exercised. If a recipient exercises a non-qualified
stock option on a cashless basis, the recipient will recognize compensation
income equal to the fair market value of the shares received and the recipient's
initial tax basis in such shares will equal their fair market value.

Stock Awards. A purchaser or recipient of restricted stock normally
will recognize no taxable income at the time such award is granted. A purchaser
or recipient of such award normally will realize taxable income on the date the
shares become transferable or are no longer subject to a substantial risk of
forfeiture or on the date of their earlier disposition. The amount of such
taxable income will equal the amount by which the fair market value of the
shares of Common Stock on the date such restrictions lapse (or any earlier date
on which the shares are disposed of) exceeds their purchase price, if any. An
employee may elect under Section 83(b) of the Code, however, to include in
income in the year of purchase or grant the excess of the fair market value of
the shares of Common Stock (without regard to any restrictions) on the date of
purchase or grant over its purchase price, if any.

A purchaser or recipient of Common Stock transferred without
restrictions will realize ordinary income in the year of the award in an amount
equal to the amount by which the fair market value of the shares of Common Stock
on the date of the award exceeds their purchase price, if any.

The Company will be entitled (provided it satisfies certain reporting
requirements) to a deduction for federal income tax purposes at the same time
and in the same amount as the stock award recipient is considered to be in
receipt of compensation income in connection with the receipt of unrestricted
stock, the lapse of restrictions with respect to restricted stock or the
election by the employee in the year of the award to include the appropriate
amount with respect to such award in income under Section 83(b) of the Code. In
addition, the Company will be entitled to a deduction with respect to dividends
paid on stock awards prior to the vesting of such awards and with respect to
which no Section 83(b) election has been made by the recipient.

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<PAGE>

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE 2000 INCENTIVE STOCK PLAN, WHICH IS DESIGNATED AS PROPOSAL 2 ON THE ENCLOSED
PROXY CARD.

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<PAGE>

PROPOSAL 3

RATIFICATION OF INDEPENDENT ACCOUNTANTS

KPMG LLP, the independent public accountants who have audited the
Company's financial statements for the past nine years, have been appointed by
the Board of Directors of the Company to audit the Company's consolidated
financial statements for the fiscal year ending June 30, 2001. The Board of
Directors believes that the selection of an independent accountant to audit the
financial statements of the Company prepared by management is an appropriate
matter for stockholder consideration. If the stockholders do not ratify the
selection of KPMG LLP, the Board of Directors will consider the selection of
another firm of independent certified public accountants to audit the Company's
consolidated financial statements for the fiscal year ending June 30, 2001.
Representatives of KPMG LLP may be present at the Annual Meeting and, if
present, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF KPMG LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30,
2001, WHICH IS DESIGNATED AS PROPOSAL 3 ON THE ENCLOSED PROXY CARD.

ANNUAL REPORT TO STOCKHOLDERS

The Company will provide to any stockholder, without charge, upon written
request to the Secretary of the Company, a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2000.

DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

The Company expects to hold its annual meeting of stockholders for the
fiscal year ending June 30, 2001 in November or December 2001. Stockholders who
intend to present proposals intended to be included in the Company's Proxy
Statement and form of proxy relating to such annual meeting must submit their
proposals in writing to the Secretary of the Company on or before June 15, 2001.
All proposals must comply with applicable Securities and Exchange Commission
rules and regulations.

OTHER MATTERS

Management of the Company knows of no business other than that referred to
in the foregoing Notice of Annual Meeting and Proxy Statement that may come
before the Annual Meeting. However, if other matters properly come before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote thereon in accordance with their judgement.

BY ORDER OF THE BOARD OF DIRECTORS

KATHLEEN M. KELLY
Secretary

October 13, 2000

23
<PAGE>

ANNEX A

AMERICAN TECHNICAL CERAMICS CORP.

2000 INCENTIVE STOCK PLAN

1. Purpose. The purpose of the American Technical Ceramics Corp. 2000
Incentive Stock Plan (this "Plan") is to provide a means whereby selected
employees, officers, directors, agents, consultants and independent contractors
of American Technical Ceramics Corp. (the "Company"), or of any parent or
subsidiary thereof (as defined below and referred to hereinafter as "Related
Corporations"), may be granted stock options and/or stock awards in order to
attract and retain the services or advice of such employees, officers,
directors, agents, consultants and independent contractors and to provide added
incentive to them by encouraging stock ownership in the Company.

As used herein, when referring to a subsidiary corporation or other entity,
the term "Related Corporation" shall mean any corporation (other than the
Company) or other entity in an unbroken chain of corporations ending with the
Company if, at the time of the granting of the option or stock award, another
corporation or entity in such chain (including the Company) owns 50% or more of
the total combined voting power of all of such corporation's or entity's classes
of stock or other interests. When referring to a parent corporation or other
entity, the term "Related Corporation" shall mean any corporation or other
entity in an unbroken chain of corporations or other entities ending with the
Company if, at the time of the granting of the option or stock award, each of
the corporations or other entities other than the Company owns stock or other
interests possessing 50% or more of the total combined voting power of all
classes of stock or other interests in one of the other corporations or other
entities in such chain.

2. Stock Subject to This Plan. The stock subject to this Plan shall be the
Company's common stock, par value $.01 per share (the "Common Stock"), presently
authorized but unissued or held in the Company's Treasury or subsequently
acquired by the Company. Subject to adjustment as provided in Section 7 hereof,
the aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under this Plan or as stock awards shall not exceed 600,000
shares as such Common Stock was constituted on the effective date of this Plan.
If any option granted under this Plan shall expire, be surrendered, exchanged
for another option, canceled or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of this Plan, including for replacement options or
stock awards which may be granted in exchange for such surrendered, canceled or
terminated options. If any stock award granted under this Plan shall be
forfeited because such stock award had not vested prior to a holder's
termination of his or her employment, or for any other reason, the forfeited
shares subject thereto shall thereupon again be available for purposes of this
Plan, including for replacement options or stock awards.

3. Administration.

3.1. Plan Administration. This Plan shall be administered by the Board
of Directors of the Company (the "Board"), except to the extent the Board
delegates its authority to a committee of the Board to administer this
Plan. The administrator of this Plan shall hereinafter be referred to as
the "Plan Administrator."

A-1
<PAGE>

3.2. Authority. Except for the terms and conditions explicitly set
forth in this Plan, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options and stock
awards to be granted under this Plan, including selection of the
individuals to be granted options and/or stock awards, the number of shares
to be subject to each option or stock award, the exercise price of each
option, the consideration, if any, to be paid in respect of each stock
award, and all other terms and conditions of options and stock awards,
including the designation of options as incentive stock options or
nonqualified stock options. Grants under this Plan need not be identical in
any respect, even when made simultaneously. The interpretation and
construction by the Plan Administrator of any terms or provisions of this
Plan or any option or stock award issued hereunder, or of any rule or
regulation promulgated in connection herewith, shall be conclusive and
binding on all interested parties, so long as such interpretations and
construction with respect to incentive stock options correspond to the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder.

3.3. Meetings; Action. The Plan Administrator may hold meetings at
such times and places as it shall determine. The acts of a majority of the
members of the Plan Administrator present at meetings at which a quorum
exists, or acts reduced to or approved in writing by all Plan Administrator
members, shall be valid acts of the Plan Administrator.

3.4. Section 16(b) Compliance and Bifurcation of Plan.

3.4.1. It is the intention of the Company that this Plan comply
in all respects with Section 16(b) and Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), to the extent applicable,
and, if any Plan provision is later found not to be in compliance with
such Section or Rule, as the case may be, the provision shall be
deemed null and void, and in all events the Plan shall be construed in
favor of its meeting the requirements of Section 16(b) and Rule 16b-3
under the Exchange Act. Notwithstanding anything in this Plan to the
contrary, the Board, in its absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of
this Plan to participants who are officers and directors or other
persons subject to Section 16(b) of the Exchange Act without so
restricting, limiting or conditioning this Plan with respect to other
participants.

3.4.2. For so long as the Company's common stock subject to this
Plan is registered under Section 12 of the Exchange Act, no option or
stock award shall be granted to a director or officer (subject to
Section 16 of the Exchange Act) of the Company by the Board unless (i)
approved in advance by the Board or the Plan Administrator in
accordance with the provisions of Rule 16b-3(d)(1) under the Exchange
Act (where the Plan Administrator, if not the entire Board, is a
committee of the Board composed solely of two or more non-employee
directors who satisfy the requirements of Rule 16b-3(b)(3) under the
Exchange Act), (ii) approved in advance, or subsequently ratified, by
the stockholders in accordance with the provisions of Rule 16b-3(d)(2)
under the Exchange Act, or (iii) absent approval as provided in clause
(i) or (ii) above, no officer or director of the Company may sell
shares received upon the exercise of an option or as a stock award
during the six month period immediately following the grant of such
option or stock award.

4. Eligibility. An incentive stock option may be granted only to any
individual who, at the time the option is granted, is an employee of the Company
or any Related Corporation. A nonqualified stock option and a stock award may be
granted to any director, employee, officer, agent, consultant or independent
contractor of the Company or any Related Corporation, whether an individual or
an entity. Any party to whom an option is granted under this Plan shall be
referred to hereinafter as an "Optionee". Any party to whom a stock award is
granted under this Plan shall be referred to hereinafter as an "Awardee".

5. Options.

5.1. Terms and Conditions of Options. Options granted under this Plan
may be either "incentive stock options," as defined in Section 422 of the
Code, or non-qualified stock options. Options granted under this Plan shall
be evidenced by written agreements which shall contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall
deem advisable and which are not inconsistent with this Plan (each such
agreement being referred to hereinafter as an "Option Agreement").

A-2
<PAGE>

5.2. Number of Shares; Exercise and Price.

5.2.1. The maximum number of shares that may be purchased
pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as
established by the Plan Administrator, provided that, in the case of
an incentive stock option, the exercise price shall not be less than
the Fair Market Value (as defined in Section 5.2(b)) per share of the
Common Stock at the time the option is granted, and except that, with
respect to incentive stock options granted to 10% Stockholders (as
defined in Section 5.4(a)), the exercise price shall be as required by
Section 5.4. In the case of a nonqualified stock option, the exercise
price shall not be less than the par value per share of the Common
Stock.

5.2.2. For purposes of this Plan, the "Fair Market Value" per
share of the Common Stock shall mean the last reported sales price,
regular way, of the Common Stock on the date of the grant of the
option or stock award or on the date of the exercise of an option or
date of vesting of a stock award, as the case may be (or, if no sale
takes place on any such day, the closing bid price of the Common Stock
on such day), on the principal securities exchange or stock market
(including the National Association of Securities Dealers, Inc. (the
"NASD's") National Market System or Small Cap Market) on which the
Common Stock is admitted or listed for trading, or, if the Common
Stock is not listed on any such exchange or stock market on any such
day, the highest reported bid price for the Common Stock as furnished
by the NASD through NASDAQ, or a similar organization if NASDAQ is no
longer reporting such information, or, if the Common Stock is not
listed for trading on an exchange or stock market and is not quoted on
NASDAQ or any similar organization on any such day, the fair value of
a share of Common Stock on such day as determined by the Plan
Administrator in good faith.

5.3. Term and Maturity. Subject to the restrictions contained in
Section 5.4 with respect to granting incentive stock options to 10%
Stockholders (as defined in Section 5.4(a)), the term of each incentive
stock option shall be as established by the Plan Administrator and, if not
so established, shall be 10 years from the date it is granted. In no event
shall the term of any incentive stock option exceed 10 years. The term of
each nonqualified stock option shall be as established by the Plan
Administrator and, if not so established, shall be 10 years from the date
it is granted. The Plan Administrator may establish a vesting schedule with
respect to any option granted hereunder setting forth the time or times at
which portions of such option shall become exercisable.

5.4. Exercise Price and Term of Incentive Stock Options.

5.4.1. If incentive stock options are granted under this Plan to
employees who own more than 10% of the total combined voting power of
all classes of stock of the Company or any Related Corporation (each a
"10% Stockholder"), the term of such incentive stock options shall not
exceed five years and the exercise price shall be not less than 110%
of the Fair Market Value of the Common Stock at the time the incentive
stock option is granted. This provision shall control notwithstanding
any contrary terms contained in an Option Agreement or any other
document. The term and exercise price limitations of this provision
shall be amended to conform to any change required or permitted by a
change in the Code or by a ruling or pronouncement of the Internal
Revenue Service.

5.4.2. For purposes of this Section 5.4, stock owned by an
employee shall include all stock owned by him which is actually issued
and outstanding immediately before the grant of the incentive stock
option to the employee. In determining stock ownership, an employee
shall be deemed to own the stock owned, directly or indirectly, by or
for his or her brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries.
If an employee or a person related to the employee owns an option or
warrant to purchase stock of the Company, the stock subject to that
option or warrant shall not be counted in determining stock ownership
until exercised (and then shall be counted only with respect to the
number of shares as to which such option or warrant is exercised).

A-3
<PAGE>

5.5. Exercise. Subject to any vesting schedule described in Section
5.3 above, each option may be exercised in whole or in part; provided,
however, that no fewer than 100 shares (or the remaining shares then
purchasable under the option, if less than 100 shares) may be purchased
upon any exercise of an option hereunder and that only whole shares will be
issued pursuant to the exercise of any option. Options shall be exercised
by delivery to the Company of notice of the number of shares with respect
to which the option is exercised, together with payment of the exercise
price.

5.6. Payment of Exercise Price.

5.6.1. Payment of the option exercise price for the Common Stock
being purchased shall be made in full at the time the notice of
exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check or personal check (unless at
the time of exercise the Plan Administrator in a particular case
determines not to accept a personal check).

5.6.2. The Plan Administrator can determine, at the time the
option is granted for incentive stock options, or at any time before
exercise for nonqualified stock options, that additional forms of
payment will be permitted. To the extent permitted by the Plan
Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state
corporate law), an option may be exercised by:

5.6.2.1. delivery of a properly executed exercise notice,
together with delivery of shares of stock of the Company held by an
Optionee having a Fair Market Value on the date of exercise equal to
the option exercise price; provided, however, that payment in stock
held by an Optionee subject to Section 16(b) of the Exchange Act shall
not be made unless the stock shall have been owned by the Optionee for
a period of at least six months;

5.6.2.2. delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker, all in accordance
with the regulations of the Federal Reserve Board, to promptly deliver
to the Company the amount of sale or loan proceeds to pay the exercise
price and any federal, state or local withholding tax obligations that
may arise in connection with the exercise; provided, that the Plan
Administrator, in its sole discretion, may at any time determine that
this subparagraph (b)(ii), to the extent the instructions to the
broker call for an immediate sale of the shares, shall not be
applicable to any Optionee who is subject to Section 16(b) of the
Exchange Act, or is not an employee at the time of exercise; or

5.6.2.3. delivery of a properly executed exercise notice,
together with instructions to the Company to withhold from the shares
that would otherwise be issued upon exercise that number of shares
having a Fair Market Value on the date of exercise equal to the option
exercise price.

5.7. Assignability and Transferability of Option. Options granted
under this Plan and the rights and privileges conferred hereby may not be
transferred, assigned, pledged or hypothecated in any manner (whether by
operation of law or otherwise) other than (i) by will or by the applicable
laws of descent and distribution, (ii) pursuant to a qualified domestic
relations order as defined in Section 414(p) of the Code, or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, or (iii) as otherwise determined by the Plan Administrator and
set forth in the applicable Option Agreement. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of any option under this
Plan, or of any right or privilege conferred hereby, contrary to the Code
or to the provisions of this Plan, or the sale or levy or any attachment or
similar process upon the rights and privileges conferred hereby, shall be
null and void. The designation by an Optionee of a beneficiary does not, in
and of itself, constitute an impermissible transfer under this Section 5.7.

A-4
<PAGE>

5.8. Termination of Relationship or Death of Optionee.

5.8.1. No option shall be exercisable after termination of
employment with the Company or a Related Corporation unless such
termination of employment occurs by reason of retirement with the
consent of the Company or death. In the event of the retirement of an
Optionee with the consent of the Company, the options or unexercised
portions thereof which were otherwise exercisable on the date of
retirement shall expire unless exercised within a period of three
months after the date of retirement. In the event of the death of an
Optionee while an employee of the Company or a Related Corporation or
in the event of the death of the Optionee within the three month
period following termination of employment by reason of retirement
with the consent of the Company, the options which were otherwise
exercisable on the date of termination of employment shall be
exercisable by his or her personal representatives, heirs, or legatees
at any time prior to the expiration of one year from the date of his
or her death. In no event, however, shall an option be exercisable
after ten years from the date it is granted. In the event that an
Optionee ceases to be an employee of the Company or a Related
Corporation for any reason, including death or retirement, prior to
the lapse of any applicable vesting period, his or her option shall
terminate and be null and void. The Plan Administrator may, if it
determines that to do so would be in the Company's best interests,
provide in a specific case or cases for the exercise of options which
would otherwise terminate upon termination of employment with the
Company for any reason, upon such terms and conditions as the Plan
Administrator determines to be appropriate.

5.8.2. For purposes of Section 5.8(a), a transfer of relationship
between or among the Company and/or any Related Corporation shall not
be deemed to constitute a termination of employment with the Company
or any of its Related Corporations. For purposes of Section 5.8(a),
with respect to incentive stock options, employment shall be deemed to
continue while the Optionee is on military leave, sick leave or other
bona fide leave of absence (as determined by the Plan Administrator).
The foregoing notwithstanding, employment shall not be deemed to
continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.

5.9. Status of Stockholder. Neither the Optionee nor any party to
which the Optionee's rights and privileges under the option may pass shall
be, or have any of the rights or privileges of, a stockholder of the
Company with respect to any of the shares issuable upon the exercise of any
option granted under this Plan unless and until such option has been
exercised.

5.10. Modification and Amendment of Option. Subject to the
requirements of Code Section 422 with respect to incentive stock options
and to the terms and conditions and within the limitations of this Plan,
the Plan Administrator may modify or amend outstanding options granted
under this Plan. The modification or amendment of an outstanding option
shall not, without the consent of the Optionee, impair or diminish any of
his or her rights or any of the obligations of the Company under such
option. Except as otherwise provided in this Plan, no outstanding option
shall be terminated without the consent of the Optionee. Unless the
Optionee agrees otherwise, any changes or adjustments made to outstanding
incentive stock options granted under this Plan shall be made in such a
manner so as not to constitute a "modification" as defined in Code Section
424(h) and so as not to cause any incentive stock option issued hereunder
to fail to continue to qualify as an incentive stock option as defined in
Code Section 422(b).

5.11. Limitation on Value for Incentive Stock Options. As to all
incentive stock options granted under the terms of this Plan, to the extent
that the aggregate Fair Market Value (determined at the time the incentive
stock option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans
of the Company, a Related Corporation or a predecessor corporation) exceeds
$100,000, such options shall be treated as nonqualified stock options. The
previous sentence shall not apply if the Code is amended or if the Internal
Revenue Service publicly rules, issues a private ruling to the Company, any
Optionee, or any legatee, personal representative or distributee of an
Optionee or issues regulations, changing or eliminating such annual limit,
in which case the limitation shall be that provided by the Code or the
Internal Revenue Service, as the case may be.

A-5
<PAGE>

6. Stock Awards.

6.1. Terms and Conditions of Stock Awards. Stock awards granted under
this Plan shall be evidenced by written instruments or agreements which
shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with
this Plan (each such instrument or agreement being referred to hereinafter
as an "Award Agreement"). The Plan Administrator may issue or transfer the
shares covered by such award to the Awardee at the time the stock award is
granted, or at any time subsequent thereto, or in installments from time to
time, as the Plan Administrator shall determine. Such awards may be granted
either alone, in addition to, or in tandem with any other type of award
granted under this Plan. The Plan Administrator, in its discretion, may
make such awards either with or without consideration and noncontingent or
contingent upon attainment of certain performance objectives to be achieved
during a period of time, or upon continued service with the Company. The
measure of whether and to what degree such objectives have been attained
and the resulting awards will be determined by the Plan Adminsistrator.

6.2. Payment for Stock Awards. Payment of the consideration, if any,
for any stock award shall be made in such forms (including, without
limitation, cash, check, promissory notes and, subject to applicable laws
and regulations, securities of the Company) and at such times as the Plan
Administrator shall determine.

6.3. Restrictions on Transfer. A stock award and the shares of Common
Stock issuable pursuant thereto shall be subject to such restrictions on
sale or other disposition as the Plan Administrator shall determine and as
shall exist under applicable law.

6.4. Status of Stockholder. Upon the issuance of shares pursuant to a
stock award and the fulfillment of the vesting requirements and other
requirements of the stock award, if any, the Awardee shall, with respect to
such shares, be and become a stockholder of the Corporation fully entitled
to receive dividends, to vote and to exercise all other rights of a
stockholder except to the extent otherwise provided in the stock award.
Unless the Plan Administrator shall determine otherwise, neither the
Awardee nor any party to which the Awardee's rights and privileges under
the award may pass shall be, or have any of the rights or privileges of, a
stockholder of the Company with respect to any of the shares issuable upon
the vesting of and/or payment for any award granted under this Plan unless
and until such award has so vested and/or payment for such award has been
made in full.

6.5. Modification and Amendment of Stock Award. The Plan Administrator
may modify or amend outstanding stock awards granted under this Plan. The
modification or amendment of an outstanding stock award shall not, without
the consent of the Awardee, impair or diminish any of his or her rights or
any of the obligations of the Company under such award.

6.6. Payment of Dividends. The Plan Administrator may choose, at the
time of the grant of the stock award or any time thereafter, to include as
part of such award an entitlement to receive dividends or dividend
equivalents, subject to such terms as the Plan Administrator may establish.
All dividends or dividend equivalents which are not paid currently may, at
the Plan Administrator's discretion, accrue interest and be paid to an
Awardee at a later date.

7. Adjustments.

7.1. Changes in Capitalization. The aggregate number and class of
shares for which options and stock awards may be granted under this Plan,
the number and class of shares covered by each outstanding option and stock
award, and the exercise price per share for each option or purchase price
per share, if any, for each stock award (but not the total price), shall
all be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock of the Company resulting from a split-up
or consolidation of shares or any like capital adjustment, or the payment
of any stock dividend in order to prevent dilution or enlargement of the
rights of the Optionees and Awardees.

A-6
<PAGE>

7.2. Merger, Consolidation, Reorganization or Liquidation.

7.2.1 Acceleration of Options and Awards.

(a) Except as provided in Section 7.2.1 (b), 7.2.2 or 7.2.3, in
the event of a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property
or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation
of the Company, as a result of which the stockholders of the Company
receive cash, stock or other property in exchange for or in connection
with their shares of Common Stock, (i) any option granted hereunder
shall terminate upon consummation of such merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation but the Optionee shall have the right within a specified
number of days after notice to the Optionee to exercise such
Optionee's option in whole or in part whether or not the vesting
requirements set forth in his or her Option Agreement have been
satisfied; and (ii) the vesting requirements and other contingent
provisions of any stock award shall terminate immediately prior to any
such merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation and, subject to compliance
with any other provisions of the stock award (including, without
limitation, any payment provisions), the Awardee shall be deemed to be
the owner of the full number of shares of Common Stock subject to his
or her stock award.

(b) The Plan Administrator, in its sole discretion, may determine
that, upon the occurrence of a transaction described in the Section
7.2.1 (a) each option or award outstanding hereunder shall terminate
within a specified number of days after notice to the holder, and such
holder shall receive, with respect to each share subject to such
option or award, an amount equal to the excess of the Fair Market
Value of such shares immediately prior to the occurrence of such
transaction over the exercise price per share of such option or
purchase price per share of such award (if any); such amount shall be
payable in cash, in one or more of the kinds of property payable in
such transaction, or in a combination thereof, as the Plan
Administrator, in its discretion, shall determine. The provisions
contained in the preceding sentence shall be inapplicable to an option
or an award granted within six (6) months before the occurrence of a
transaction described above if the holder of such option or award is
subject to the reporting requirements of Section 16(a) of the Exchange
Act.

7.2.2 Conversion of Options and Awards for Exchange Stock. If the
stockholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common
Stock in any transaction involving a merger (other than a merger of
the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of common stock in
the surviving corporation immediately after the merger),
consolidation, acquisition of property or stock, separation or
reorganization (other than a mere reincorporation or the creation of a
holding company), the Company and the corporation issuing the Exchange
Stock may determine, in their sole discretion, in lieu of the
treatment afforded by Section 7.2.1, that all options and stock awards
granted hereunder shall be converted into options to purchase or
awards of shares of Exchange Stock, as the case may be. The number of
shares of Exchange Stock subject to an option or stock award and the
exercise price or purchase price (if any) per share, as the case may
be, shall be determined in the same manner as used for determining the
number of shares of Exchange Stock the holders of Common Stock will
receive in such merger, consolidation, acquisition of property or
stock, separation or reorganization.

7.2.3 Termination of Merger, Consolidation, Reorganization or
Liquidation. If any merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation referred to in this
Section 7 is cancelled or otherwise terminated prior to the
consummation thereof, the terms of any option or award then
outstanding (including, without limitation, any terms relating to
vesting and other contingencies) shall be reinstated to its prior
form.

7.3. Fractional Shares. In the event of any adjustment in the number
of shares covered by an option or stock award, any fractional shares
resulting from such adjustment shall be disregarded and each such option or
stock award shall cover only the number of full shares resulting from such
adjustment.

A-7
<PAGE>

7.4. Determination of Board to Be Final. All Section 7 adjustments
shall be made by the Board, and its determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding and
conclusive on all parties.

8. Securities Regulation.

8.1. Compliance with Laws and Regulations. Shares shall not be issued
with respect to an option or a stock award granted under this Plan unless
such issuance shall comply with all relevant provisions of law, including,
without limitation, any applicable state securities laws, the Securities
Act of 1933 (the "Securities Act"), the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration
for the issuance and sale of any shares hereunder. If (i) the Company is
unable to obtain, from a regulatory body having requisite jurisdiction, the
authority its counsel deems necessary to lawfully issue and sell any shares
hereunder, or (ii) no exemption under the Securities Act or other
applicable law from registration for the issuance and sale of any shares
hereunder is available, then the Company shall not be liable in any respect
for the nonissuance or sale of shares as to which it was unable to obtain
the necessary authority or exemption.

8.2. Investment Intent; Stock Legends. As a condition to any exercise,
purchase, issuance or delivery of shares pursuant to an option or stock
award granted hereunder, the Company may require the Optionee or the
Awardee, as the case may be, to represent and warrant at the time of any
such exercise, issuance or purchase that the shares will be held only for
investment and without any present intention to sell or distribute such
shares. At the option of the Company, a stop transfer order with respect to
any such shares may be placed on the official stock books and records of
the Company, and a legend indicating that the stock may not be pledged,
sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not
in violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Company
may also require such other action or agreement by any Optionee or Awardee
as it may from time to time deem to be necessary or advisable. THE COMPANY
SHALL NOT BE OBLIGATED, BY REASON OF THIS PROVISION OR OTHERWISE, TO
UNDERTAKE REGISTRATION OF ANY OPTIONS OR ANY SECURITIES ISSUABLE UPON
EXERCISE THEREOF OR OF ANY STOCK AWARDS OR ANY SECURITIES ISSUABLE IN
CONNECTION THEREWITH.

8.3. Listing. Should any of the Company's capital stock of the same
class as the stock subject to options or stock awards granted hereunder be
listed on a national securities exchange, all stock issued hereunder if not
previously listed on such exchange shall be authorized by that exchange for
listing thereon prior to the issuance thereof.

9. Withholding Taxes. The Company or any Related Corporation shall have the
right to retain and withhold from any payment of cash or Common Stock under the
Plan the amount of taxes required by any government to be withheld or otherwise
deducted and paid with respect to such payment. At its discretion, the Company
may require an Optionee or Awardee, as the case may be, receiving shares of
Common Stock to reimburse the Company for any such taxes required to be withheld
by the Company and withhold the distribution to the Optionee or Awardee, as the
case may be, of such shares in whole or in part until the Company is so
reimbursed. In lieu thereof, but subject to applicable law, the Company shall
have the right to withhold from any other cash amounts due or to become due from
the Company to the Optionee, or Awardee, as the case may be, an amount equal to
such taxes or retain and withhold a number of shares having a market value not
less than the amount of such taxes required to be withheld by the Company to
reimburse the Company for any such taxes and cancel (in whole or in part) any
such shares so withheld. If required by Section 16(b) of the Exchange Act, the
election to pay withholding taxes by delivery of shares held by any person who
at the time of exercise is subject to Section 16(b) of the Exchange Act, shall
be made either six months prior to the date the option exercise becomes taxable
or at such other times as the Company may determine as necessary to comply with
Section 16(b) of the Exchange Act.

A-8
<PAGE>

10. Amendment and Termination.

10.1. Board Action. The Board may at any time suspend, amend or
terminate this Plan, provided that, except as set forth in Section 7, the
approval of the holders of a majority of the Company's outstanding shares
of voting capital stock shall be necessary for the adoption by the Board of
any amendment which will:

10.1.1. increase the number of shares which are to be reserved
for the issuance upon exercise of options or grant of stock awards
under this Plan;

10.1.2. permit the granting of stock options or stock awards to a
class of persons other than those presently permitted to receive stock
options or stock awards under this Plan; or

10.1.3. require stockholder approval under applicable law.

10.2. Automatic Termination. Unless sooner terminated by the Board,
this Plan shall terminate ten years from the date on which this Plan is
adopted by the Board. No option or stock award may be granted after such
termination or during any suspension of this Plan. The amendment or
termination of this Plan shall not, without the consent of the relevant
Optionee or Awardee, as the case may be, alter or impair any rights or
obligations under any option or stock award theretofore granted under this
Plan.

11. Continuation of Employment. Nothing in this Plan or in any option or
stock award granted pursuant to this Plan shall confer upon any Optionee or
Awardee any right to continue in the employ of the Company or of a Related
Corporation, or to interfere in any way with the right of the Company or of any
such Related Corporation to terminate his or her employment or other
relationship with the Company at any time.

12. Effectiveness Of This Plan. This Plan shall become effective upon
adoption by the Board so long as it is approved by the holders of a majority of
the Company's outstanding shares of voting capital stock at any time within 12
months after the adoption of this Plan.

Adopted by the Board of Directors on April 11, 2000 and approved by the
stockholders on _______________ .

A-9

<PAGE>

AMERICAN TECHNICAL CERAMICS CORP.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Victor Insetta and Kathleen M. Kelly, and each
of them, the attorneys and proxies of the undersigned, with power of
substitution, to represent and vote on behalf of the undersigned all the shares
of common stock of American Technical Ceramics Corp. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of American Technical
Ceramics Corp. to be held at 2201 Corporate Square Boulevard, Jacksonville,
Florida, 32216, on Wednesday, November 15, 2000 at 10:00 a.m., local time, and
any adjournment or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of and proxy statement for the Annual Meeting (receipt
of which is hereby acknowledged).

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.

Please mark boxes [ ] or [X] in blue or black ink.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2) AND (3).

<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS;

FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY [ ]
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES LISTED BELOW
</TABLE>

Victor Insetta, Dov S. Bacharach, O. Julian Garrard III, Stuart P. Litt,
Chester E. Spence, and Thomas J. Volpe

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON SPACE PROVIDED BELOW.)

--------------------------------------------------------------------------------
CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE.

--------------------------------------------------------------------------------

2. PROPOSAL TO ADOPT THE AMERICAN TECHNICAL CERAMICS CORP 2000 INCENTIVE STOCK
PLAN

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE CORPORATION FOR THE FISCAL YEAR ENDING JUNE 30, 2001.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

4. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.

I WILL [ ] WILL NOT [ ] ATTEND THE ANNUAL MEETING.

Please sign exactly as your names appear below. When shares
are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian,
please sign in full title as such. If a corporation, please
sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name
by authorized person.

DATE , 2000

------------------------------------------------------------
SIGNATURE(S)

PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.

ATC # 001-897 Rev. C; 9/00