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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ASTROPOWER, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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ASTROPOWER, INC.
Solar Park
Newark, Delaware 19716-2000
Dear Shareholder:
Please accept my personal invitation to attend our Annual
Meeting of Shareholders on Wednesday, June 16, 1999 at 11:00 a.m. This year's
meeting will be held at the Company's manufacturing plant at Pencader Corporate
Center, Newark, Delaware.
The business to be conducted at the meeting is set forth in the
formal notice that follows. In addition, Management will provide a review of
1998 operating results and discuss the outlook for the future. After the formal
presentation, the Directors and Management will be available to answer any
questions that you may have.
Your vote is important. I urge you to complete, sign and return
the enclosed proxy card.
I look forward to seeing you on June 16.
Sincerely,
/s/ Allen M. Barnett
May 13, 1999 Allen M. Barnett
President and Chief Executive Officer
<PAGE>
AstroPower, Inc.
Solar Park
Newark, Delaware 19716-2000
Telephone: (302) 366-0400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TAKE NOTICE that the 1999 Annual Meeting of Shareholders of AstroPower, Inc., a
Delaware corporation (the "Company") will be held at the Company's Silicon-Film
manufacturing plant at Pencader Corporate Center, Newark, Delaware on:
Wednesday, June 16, 1999
at 11:00 a.m. (local time) for the following purposes:
1. To elect two directors to serve until the 2002 Annual Meeting of
Shareholders.
2. To amend AstroPower, Inc.'s 1989 Stock Option Plan so as to increase the
number of shares available under the Plan.
3. To approve the proposed AstroPower, Inc. 1999 Stock Option Plan.
4. To ratify the appointment of KPMG, LLP as independent accountants for the
1999 fiscal year.
5. To transact such other business as may properly come before the Meeting and
at any adjournments or postponements of the Meeting.
Accompanying this Notice is the Proxy Statement and Form of Proxy.
The Board of Directors set May 10, 1999, as the record date for the meeting.
This means that owners of the Company's Common Stock at the close of Business on
that date are entitled to (1) receive notice of the Meeting and (2) vote at the
Meeting and any adjournments or postponements of the Meeting. We will make
available a list of Shareholders of the Company as of the close of business on
May 10, 1999 for inspection during normal business hours from June 4 through
June 15, 1999, at the offices of the Company, Solar Park, Newark, Delaware.
This list will also be available at the meeting.
DATED: Newark, Delaware, May 13, 1999
BY ORDER OF THE BOARD OF DIRECTORS
ALLEN M. BARNETT
President and Chief Executive Officer
WE URGE YOU TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR
SHARES IN PERSON.
<PAGE>
ASTROPOWER, INC.
Solar Park
Newark, Delaware 19716-2000
PROXY STATEMENT
This Proxy Statement and accompanying proxy are first being sent to Shareholders
on or about May 13, 1999.
VOTING AND PROXIES
What is the purpose of the Annual Meeting?
At our Annual Meeting, Shareholders will act upon the matters outlined on the
previous page and described in this Proxy Statement, including the election of
directors, amending our 1989 Stock Option Plan, approval of the 1999 Stock
Option Plan and ratification of the appointment of our independent accountants.
In addition, management will respond to questions from Shareholders.
Who is entitled to vote?
Only holders of record at the close of business on May 10, 1999 of Common Stock
are entitled to vote. Each holder of Common Stock is entitled to one vote per
share. We are authorized to issue 25,000,000 Common Shares, par value $.01 per
share, and 5,000,000 shares of Preferred Stock, par value $.01 per share. There
were issued and outstanding 8,673,186 shares of Common Stock as of the close of
business on May 10, 1999. There are no shares of Preferred Stock outstanding.
How do I vote?
You can vote by filling out the accompanying proxy and returning it in the
postage paid return envelope that we have enclosed for you. Voting information
is provided on the enclosed form of proxy. If your shares are held in the name
of a bank or broker, follow the voting instructions on the form that you receive
from them.
What if my shares are held by a broker or nominee?
If you hold your shares in "street name" through a broker or other nominee, your
broker or nominee may not be permitted to exercise voting discretion as to some
of the matters to be acted upon. Thus, if you do not give your broker or
nominee specific instructions, your shares may not be voted on those matters and
will not be counted in determining the number of shares for approval.
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How will my proxy be voted?
Your proxy, when properly signed and returned to us, and not revoked, will be
voted in accordance with your instructions relating to the election of directors
and on Items 2, 3 and 4. We are not aware of any other matter that may be
properly presented other than the election of directors and Items 2, 3 and 4.
If any other matter is properly presented, the persons named in the enclosed
form of proxy will have discretion to vote in their best judgment.
What if I don't mark the boxes on my proxy?
Unless you give other instructions on your form of proxy, the persons named as
proxies will vote in accordance with the recommendations of the Board of
Directors. The Board's recommendation is set forth together with the
description of each Item in this Proxy Statement. In summary, the Board
recommends a vote For:
---
. the election of directors;
. amending our 1989 Stock Option Plan;
. approval of the 1999 Stock Option Plan; and
. the ratification of the appointment of KPMG, LLP as our independent
accountants for 1999.
Can I go to the Annual Meeting if I vote by proxy?
Yes. Attending the meeting does not revoke the proxy. However, you may revoke
your proxy at any time before it is actually voted by giving written notice to
the secretary of the meeting or by delivering a later dated proxy.
Will my vote be public?
No. As a matter of policy, Shareholder proxies, ballots and tabulations that
identify individual shareholders are kept confidential and are only available as
actually necessary to meet legal requirements.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority
in voting power of the outstanding shares of Common Stock entitled to vote will
constitute a quorum, permitting the meeting to conduct its business. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
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How many votes are needed to approve an Item?
The affirmative vote of shares representing a majority in voting power of the
shares of Common Stock, present in person or represented by proxy and entitled
to vote at the meeting, is necessary for approval of Items 2, 3 and 4. Proxies
marked as abstentions on these matters will not be voted and will have the
effect of a negative vote. The election of directors will be by a plurality of
the votes cast. A proxy marked to withhold authority for the election of one or
more directors will not be voted with respect to the director or directors
indicated.
PERSONS MAKING THE SOLICITATION
Solicitations will be made by mail and possibly supplemented by telephone or
other personal contact to be made without special compensation by regular
officers and employees of the Company. The Company may reimburse Shareholder's
nominees or agents (including brokers holding shares on behalf of clients) for
the cost incurred in obtaining from their principals authorization to execute
forms of proxy. No solicitation will be made by specifically engaged employees
or soliciting agents. The cost of solicitation will be borne by the Company.
ANNUAL REPORT
The Annual Report for the year ended December 31, 1998 containing financial and
other information about the Company is enclosed.
Item 1.
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members. The Amended and
Restated By-Laws of the Company provide for a classified Board of Directors. At
the 1998 Annual Meeting of Shareholders, the directors were divided into three
classes, with the directors of the first class elected for a term of one year,
the directors of the second class elected for a term of two years, and the
directors of the third class elected for a term of three years. Thereafter,
following such initial classification and election, directors elected to succeed
those directors whose terms expire are to be elected for a term of office to
expire at the third succeeding annual meeting of Shareholders after their
election and until their successors are duly elected and qualified. The term of
the office of directors in Class I expires at the 1999 Annual Meeting. The
Board of Directors proposes that the two nominees described below, both of whom
are currently serving as Class I directors, be re-elected to Class I for a new
term of three years and until their successors are duly elected and qualified.
All nominees and all current Class II and Class III directors were elected by
the Shareholders.
Each of the nominees has consented to serve a three-year term. If any of them
should become unavailable to serve as a director (which is not now expected),
the Board may designate a substitute nominee. In that case, the persons named
as proxies will vote for the substitute nominee designated by the Board.
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There are set forth below following the names of the nominees and Class II and
Class III directors, their present positions and offices with the Company, their
principal occupations during the past five years, directorships held with other
corporations, certain other information, their ages and the year first elected
as a director.
NOMINEES FOR DIRECTOR - CLASS I TERM - EXPIRING 2002
Clare E. Nordquist, age 63, has served as a director of the Company since 1995.
Mr. Nordquist is the Managing General Partner of Material Ventures Associates
LP, a venture capital partnership specializing in advanced technology materials
companies and serves as a director of Leading Edge Ceramics, LLC, a manufacturer
and distributor of ceramic powders and shapes; and Viox Corporation, a custom
producer of electronic grade, high purity glass powders utilized primarily in
electronics applications. Mr. Nordquist received a B.S. in Ceramic Engineering
from the University of Washington and an M.B.A. from the University of Denver.
Member of the Audit and Compensation Committees.
Charles R. Schaller, age 63, has served as director of the Company since 1989
and as Secretary from 1989 through March 1998. Mr. Schaller is a management
consultant specializing in the petrochemicals industry and a venture developer
concentrating in the area of specialty materials, and serves as Founding
Chairman and a Director of Medarex Inc., a publicly held biotechnology firm.
From 1985 to 1989, Mr. Schaller served as President and Chief Operating Officer
of Essex Vencap, Inc., a venture development subsidiary of Essex Chemical
Corporation. Mr. Schaller has more than 40 years of experience in sales,
marketing, management, business and venture development and management
consulting in the chemical, petrochemical and specialty materials areas. Mr.
Schaller received a B.E. in Chemical Engineering from Yale University and is a
graduate of the Harvard Business School Program for Management Development.
Member of the Compensation Committee.
INCUMBENT DIRECTORS - CLASS II - TERM EXPIRING 2000
Dr. George S. Reichenbach, age 69, has served as a director of the Company since
1989. Dr. Reichenbach was a Managing Director of Advent International
Corporation, a venture capital firm from January 1, 1987 to August 1, 1998 and
continues to serve as a consultant to them. He serves as a director of
Progressive Systems Technology, a semiconductor capital equipment manufacturer.
Previously, Dr. Reichenbach worked at the Massachusetts Institute of Technology
where has served as an Assistant Professor and Associate Professor of Mechanical
Engineering and in 1956 joined the Norton Company, a manufacturer of industrial
products, initially as director of research and development and subsequently was
Corporate Vice-President in charge of several of Norton's world wide businesses.
Dr. Reichenbach received a B.S. in Mechanical Engineering from Yale University
and a Sc.D. in Mechanical Engineering from the Massachusetts Institute of
Technology. Member of the Compensation Committee.
Dr. George W. Roland, age 59, served as President and Chief Executive Officer of
the Company's Solar Power Business from 1996 to December 31, 1998 at which time
he retired as an officer and employee. He continues to serve as a director and
has served as such since 1997. Dr. Roland is currently a consultant and
private investor. From 1995 to 1996, Dr. Roland served as Vice President and
General Manager of the Company's Solar Power Business. From 1993 to June 1995
Dr. Roland served as President of Siemens Solar Industries, LP, an affiliate of
Siemens Corporation (USA). Prior to that, Dr. Roland served in various
positions, including Vice President and Division Manager of the Metalworking
Systems Division, at Kennametal, Inc. Dr. Roland began his industry career in
1968 as a research and development engineer at Westinghouse Electric
Corporation's Research and Development Center in Pittsburgh, Pennsylvania,
throughout which time he has been awarded 15 U.S. patents
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and has authored numerous technical publications. Dr. Roland received a B.S. in
Geology from Acadia University and a Ph.D. in Geological Science from Lehigh
University.
INCUMBENT DIRECTORS - CLASS III - TERM EXPIRING 2001
Dr. Allen M. Barnett, age 58, is a founder of the Company and has served as its
President and Chief Executive Officer and as a director since the Company's
incorporation as a separate entity in 1989. From 1983 to 1989 Dr. Barnett
served as General Manager of the AstroPower Division of Astrosystems, Inc. From
1976 to 1993 Dr. Barnett was a Professor of Electrical Engineering at the
University of Delaware. From 1976 to 1979 Dr. Barnett served as Director of the
Institute of Energy Conversion at the University of Delaware. Dr. Barnett is a
technical expert in thin-film materials and devices and has been active in
photovoltaic research and development since 1975, during which time he has been
awarded 21 U.S. patents, authored or co-authored numerous technical publications
and garnered several professional awards. Dr. Barnett has served as President
and is currently on the Board of Directors of the Solar Energy Industries
Association and serves on a number of national and international committees in
the field. Dr. Barnett received a B.S. and M.S. in Electrical Engineering from
the University of Illinois, and a Ph.D. in Electrical Engineering from Carnegie
Institute of Technology.
Gilbert Steinberg, age 68, has served as a director of the Company since 1989.
Mr. Steinberg is Vice President and Chief Financial Officer of Astrosystems,
Inc, which was a manufacturer of electronic, electromechancial and power
conversion devices until February, 1996 at which time its shareholders voted for
a Plan of Liquidation. Mr. Steinberg is one of Astrosystems officers
supervising the liquidation. Mr. Steinberg is the founder of Mentortech, Inc.,
a publicly held company specializing in software development and computer
training consulting. Mr. Steinberg received a B.S. in Industrial Engineering at
the Massachusetts Institute of Technology and an M.S. in Mathematics from
Adelphi College. Member of the Audit and Compensation Committees.
OUR EXECUTIVE OFFICERS
Dr. Allen M. Barnett, age 58, President and Chief Executive Officer of the
Company. See "Election of Directors" above.
Peter C. Aschenbrenner, age 43, has served as Vice President, Marketing and
Sales since 1995 and from 1994 to 1995 Mr. Aschenbrenner served as Director of
Marketing of the Company. From 1991 to 1994 Mr. Aschenbrenner served in a
number of capacities with Siemens Solar Industries, LP, including Director of
Marketing from 1992 to 1994 and Director of Technology Development from 1991 to
1992. From 1988 to 1990 Mr. Aschenbrenner served as Co-Managing Director of
Photovoltaic Electric GmBH, a joint venture between Siemens AG and Arco Solar,
Inc. He served in various positions with Arco Solar from 1978 to 1988. Mr.
Aschenbrenner received a B.A. in Product Design from Stanford University.
Louis C. DiNetta, age 48, has served as Vice President, Advanced Optoelectronic
Products since 1996. He joined the AstroPower Division of Astrosystems, Inc. in
1985. Mr. DiNetta is responsible for the research and development of new
photonic energy conversion devices and related optoelectronic products. From
1976 to 1985 Mr. DiNetta worked at the Institute of Energy Conversion at the
University of Delaware, where he was responsible for planning and organization
of device fabrication, as well as process and equipment development to support
various research projects. Mr. DiNetta received a B.S.A.S. in Physics from the
University of Delaware.
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Dr. Robert B. Hall, age 58, has served as Vice President and Chief Scientist
since joining the AstroPower Division of Astrosystems, Inc. in 1983. Dr. Hall's
responsibilities include research and development of thin-film crystalline
materials and ceramic structures for thin-film polycrystalline devices. From
1974 to 1983 Dr. Hall served as Manager, Device Development at the Institute of
Energy Conversion at the University of Delaware. Dr. Hall has more than 18
years of solar cell development experience. His accomplishments include
development of copper sulfide/cadmium sulfide CdS as the first thin film solar
cell with greater than 10.0% conversion efficiency, development of the first
zinc phosphide solar cell and the development of a reliable deposition process
for copper indium selenide solar cells. Dr. Hall received a B.A. in Physics
from Gettysburg College and an M.S. and Ph.D. in Physics from the University of
Delaware.
Richard K. McDowell, 59, was elected Vice President, Manufacturing in March,
1998. He joined AstroPower in October of 1996. Most of his career was spent
with Unisys Corporation in various management positions. His last assignment
was Director of Operations, Plant Manager - Huntsville. Mr. McDowell received a
B.S. in Physics from Lasalle College.
Thomas J. Stiner, age 44, has served as Chief Financial Officer of the Company
since December 1997. From June 1993 to November 1997, Mr. Stiner served as
Controller and Treasurer. Mr. Stiner was elected Vice President in 1995. From
1984 to 1993 Mr. Stiner served as a Senior Manager at KPMG, LLP. Mr. Stiner is
a Certified Public Accountant and received a B.S. in Business Administration
from Bloomsburg University.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of March 31,
1999 by (i) each Shareholder who is known by the Company to own beneficially 5%
or more of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each named executive officer and (iv) all directors and
executive officers of the Company as a group. Except as otherwise indicated,
the Company believes that the beneficial owners of the Common Stock listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to such shares, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Shares Percent of Total
------------------------------------ ------------ --------------------
<S> <C> <C>
Cede & Company*............................................................... 5,613,874 60.5%
P.O. Box 20
Bowling Green Station
New York, NY 10004
Astrosystems, Inc. (2).......................................................... 668,750 7.2%
1220 Market Street, Suite 603
Wilmington, DE 19801
The Dow Chemical Company........................................................ 560,832 6.0%
2030 Dow Center
Midland, MI 48674
</TABLE>
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<TABLE>
<S> <C> <C>
Dr. Allen M. Barnett (3)........................................................ 1,492,331 16.1%
Peter C. Aschenbrenner (4)...................................................... 54,104 **
Louis C. DiNetta (5)............................................................ 30,958 **
Dr. Robert B. Hall (6).......................................................... 91,166 **
Thomas J. Stiner (7)............................................................ 74,408 **
Richard K. McDowell (8)......................................................... 14,400 **
Dr. George S. Reichenbach (9)................................................... 10,000 **
Charles R. Schaller (10)........................................................ 15,250 **
Clare E. Nordquist (11)......................................................... 10,000 **
Gilbert Steinberg (2)........................................................... 678,750 7.3%
Dr. George W. Roland (12)..................................................... 182,500 2.0%
Greenville Capital Management Inc. (13)................................. 542,612 5.8%
P.O. Box 220
Rockland DE 19732
Wellington Management Company, LLP(14).............................. 833,000 9.0%
75 State Street
Boston, MA 02109
All directors and executive officers as a group (eleven persons) (15) 2,653,867 28.6%
</TABLE>
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* This company is nominee for beneficial owners of these shares whose
identity is unknown to the Company.
** Less than one percent.
(1) Applicable percentage of ownership is based on 9,284,378 shares of Common
Stock outstanding as of March 31, 1999 and treats as outstanding all shares
(629,637) issuable on exercise of options exercisable within 60 days of the
date hereof held by beneficial owners that are included in the first
column.
(2) Represents 668,750 shares held by Astrosystems, Inc. Mr. Steinberg, a
director of the Company is an officer, director and Shareholder of
Astrosystems, Inc. and disclaims beneficial ownership of shares held by
Astrosystems, Inc. except to the extent of his pecuniary interest therein.
Includes 10,000 shares subject to options exercisable within 60 days from
the date hereof.
(3) Includes 1,181,365 shares held by a family trust of which Dr. Barnett is a
beneficiary and also 250,260 shares subject to options exercisable within
60 days from the date hereof. Dr. Barnett disclaims beneficial ownership
of the shares held by the trust except to the extent of his pecuniary
interest therein.
(4) Includes 47,437 shares subject to options exercisable within 60 days from
the date hereof.
(5) Includes 22,875 shares subject to options exercisable within 60 days from
the date hereof.
(6) Includes 11,250 shares subject to options exercisable within 60 days from
the date hereof.
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(7) Includes 66,075 shares subject to options exercisable within 60 days from
the date hereof.
(8) Includes 9,250 shares subject to options exercisable within 60 days from
the date hereof.
(9) Includes 10,000 shares subject to options exercisable within 60 days from
the date hereof.
(10) Includes 10,000 shares subject to options exercisable within 60 days from
the date hereof.
(11) Includes 10,000 shares subject to options exercisable within 60 days from
the date hereof.
(12) Includes 182,500 shares subject to options exercisable within 60 days from
the date hereof.
(13) The following information has been obtained from Schedule 13G dated January
21, 1999 filed by Greenville Capital Management, Inc.
The persons filing the Schedule 13G were Greenville Capital Management,
Inc. ("Greenville") a corporation organized under the laws of the State of
Delaware. Greenville is an investment adviser registered under Section 203
of the Investment Advisors Act of 1940. Greenville has sole power to
dispose of or to direct the disposition of these shares. The person who
signed the Schedule 13G certified that to the best of her knowledge and
belief the securities referred to in the Schedule 13G were acquired in the
ordinary course of business and were not acquired for the purpose of and do
not have the effect of changing or influencing the control of the issuer of
such securities and were not acquired in connection with or as a
participant in any transaction having such purposes or effect.
(14) The following information has been obtained from Schedule 13G dated
December 31, 1998 filed by Wellington Management Company, LLP.
The persons filing the Schedule 13G were Wellington Management Company LLP
("WMC") a limited liability partnership organized under the laws of the
State of Massachusetts. WMC, a Parent Holding Company is an Investment
Adviser registered under Section 203 of the Investment Advisors Act of
1940. The identity and the classification of the relevant subsidiary are:
Wellington Trust Company, NA, 75 State Street, Boston, MA 02109, a wholly-
owned subsidiary of WMC and a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934.
The securities as to which the Schedule was filed by WMC, in its capacity
as investment adviser, are owned of record by clients of WMC. Those clients
have the right to receive, or the power to direct the receipt of, dividends
from, or the proceeds from the sale of, such securities. No such client is
known to have such right or power with respect to more than five percent of
this class of securities.
WMC has shared power to vote or to direct the vote with respect to 713,000
shares and shared power to dispose or to direct the disposition with
respect to 833,000 shares.
The person who signed the Schedule 13G certified that to the best of his
knowledge and belief the securities referred to in the Schedule 13G were
acquired in the ordinary course of business and were not acquired for the
purpose of and do not have the effect of changing or influencing the
control of the issuer of such securities and were not acquired in
connection with or as a participant in any transaction having such purpose
or effect.
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(15) Includes an aggregate of 629,637 shares held by all directors and officers
that are subject to options exercisable within 60 days from the date
hereof. See Notes (2) through (13) above.
Director's Meetings
The Board of Directors of the Company met seven (7) times during the year ended
December 31, 1998. In 1998, the Company had an Audit Committee and a
Compensation Committee which also serves as the Stock Option Committee. The
Audit Committee reviews the scope and plan of the annual audit, reviews the
audit results and report thereon, oversees action taken by the Company's
independent accountants and reviews the Company's internal controls. In 1998,
the Audit Committee was composed of Messrs. Nordquist and Steinberg. Two
meetings of the Audit Committee were held in 1998.
The Compensation Committee makes recommendation concerning salaries and
incentive compensation for executive officers of the Company and administers the
Company's employee stock option plans. In 1998, the Compensation Committee was
composed of Messrs. Nordquist, Reichenbach, Schaller and Steinberg. One
meeting of the Compensation Committee was held in 1998.
The Audit and Compensation Committees are composed of directors who are not
officers or employees of the Company ("Outside Directors").
In addition to participation at Board and Committee Meetings, the Company's
directors discharge their responsibilities throughout the year through personal
meetings and other communications, including considerable telephone contact with
the CEO and others regarding matters of interest and concern to the Company.
Compensation of Directors
Beginning April 1, 1998, the Company agreed to pay each non-employee director
$1,000 per Board Meeting attended in person, $250 per meeting attended
telephonically, and $250 for each Committee meeting attended. Directors who are
also employees of the Company receive no additional compensation for serving as
directors. The Company reimburses all of its directors for travel and out-of-
pocket expenses in connection with their attendance at meetings of the Board of
Directors or Committees thereof. The Company's Outside Directors are also
eligible to receive stock options under the Company's 1998 Non-Employee
Directors Stock Option Plan approved by Shareholders at the 1998 Annual Meeting.
Each of the Outside Directors was granted an option on May 14, 1998, under the
Directors' Plan to purchase 20,000 shares of Common Stock, 5,000 of which vested
as of that date, and 5,000 of which vest on each of the first, second and third
anniversary of such date, provided such director is still a director on each
such date. Each director who joins the Board of Directors after the Directors'
Plan was originally adopted will be granted an option, on the first day of his
term, to purchase 20,000 shares of Common Stock, 5,000 of which vest on the date
he or she becomes a Director, and 5,000 of which vest on each of the first,
second and third anniversary of such date, provided he or she is still a
director on such date. If the number of shares available to grant under the
Directors' Plan on a scheduled date of grant is insufficient to make all the
grants, then each eligible director will receive an option to purchase a pro
rata number of the available shares.
The option price per share for the options granted was $10.25 and the option
price per share for later grants will be, the fair market value of the shares of
Common Stock on the date of grant. Under the Directors' Plan, fair market value
is generally
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the closing price of the Common Stock on the NASDAQ National Market on the last
business day prior to the date on which the value is to be determined. The
options granted under the Directors' Plan are exercisable for a term of ten
years from the date of grant, subject to earlier termination. The right of
exercise is cumulative so that if any option is not exercised to the maximum
extent permissible during any exercise period, it shall be exercisable, in whole
or in part, with respect to all unexercised options prior to the expiration date
or the earlier termination of the option.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's common stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the
"SEC") and the NASDAQ National Market ("NASDAQ"). Such persons are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the Company, or
written presentation that no other reports were required, the Company believes
that during 1998 all Section 16(a) filing requirements applicable to its
officers and directors were complied with, except that each executive officer
and director filed a late Form 3 Report of Initial Statement of Beneficial
Ownership of Securities with the SEC and NASDAQ.
11
<PAGE>
[Stock Performance graph appears here]
<TABLE>
<CAPTION>
ASSUMES $100 INVESTED ON FEB. 13, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 2/13/1998 3/31/1998 6/30/1998 9/30/1998 12/31/1998
ASTROPOWER INC. 100.00 134.95 129.13 104.85 149.51
Semiconductors, Related Device 100.00 98.78 90.38 89.19 130.92
NASDAQ Market Index 100.00 112.72 115.63 104.22 135.48
</TABLE>
The above graph compares the one-year cumulative return of the Company on a
quarterly and annual basis with the comparable return of two indices. The
Industry Index represents the industry or line-of-business of the Company. The
graph assumes $100 invested on February 13, 1998, the date of the Company's
initial public offering. The comparison assumes that all dividends are
reinvested.
The Industry Index represents Semiconductors, Related Device, and is comprised
of 118 corporations, compiled from the SIC Code within which the Company is
listed.
12
<PAGE>
EXECUTIVE COMPENSATION
Report of Compensation Committee
In 1998, the Company's executive compensation program was administered by the
Compensation Committee of the Board of Directors. The Committee makes
recommendations on all of the three key components of the Company's executive
compensation program: base salary, contractual incentive awards and long-term
incentives.
The Company's executive compensation program is structured to help the Company
achieve its business objectives by:
- providing compensation opportunities that will attract, motivate and
retain highly qualified managers and executives
- linking executives' total compensation to company and individual job
performance
- providing an appropriate balance between incentives focused on
achievement of annual business plans and longer term incentives tied
to increases in Shareholder value
The Company's executive compensation program is designed to provide competitive
compensation opportunities for all corporate officers. The Company's total
compensation levels fall in the low to middle of the range of rates paid by
other employers of similar size and complexity, although complete comparative
information is not easily obtainable, and no formal survey or analysis of
compensation paid by other companies was undertaken.
Base Salaries
The Company's salary levels are intended to be consistent with competitive
practices and levels of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company, and the
performance of the individual.
Stock Options
The Company periodically grants incentive and non-qualified stock options to
purchase the Company's Common Stock in order to provide employees of the Company
with a competitive total compensation package and to reward them for their
contribution to the Company's short and long-term stock performance. These
stock options are designed to align the employees' interest with those of the
Shareholders. All options have an option price that is not less than the fair
market value of the stock on the date of grant. The terms of the options and
the dates after which they become exercisable are established by the Board with
respect to incentive stock options, within the parameters of the 1989 Stock
Option Plan and will be similarly established with respect to that 1999 Plan if
such Plan is approved by the Shareholders. The Company does not grant stock
appreciation rights.
13
<PAGE>
1998 Compensation
The President and CEO of the Company and the President and CEO of the Company's
Solar Power Business were compensated on a salary and pay-for-performance
approach. Taken into consideration are the achievement of financial and other
objectives determined each year by the Board of Directors, and the executive.
Contractual incentive awards of options to purchase 120,000 shares of Common
Stock at $10.00 per share (153% of fair market value at the date of grant) were
granted to the President and CEO and $27,033 was paid to the former President
and CEO of the Company's Solar Power Business for 1998.
Compliance with Section 162(m) of the Internal Revenue Code of 1986
Deductibility of Compensation Effective January 1, 1994, the Internal
Revenue Service under Section 162 (m) of the Internal Revenue Code will
generally deny the deduction of compensation paid to the President and the four
other highest paid executive officers required to be named in the Summary
Compensation Table to the extent such compensation exceeds $ 1 million per
executive per year subject to an exception for compensation that meets certain
"performance-based" requirements. Whether the Section 162 (m) limitations with
respect to an executive will be exceeded and whether the Company's tax deduction
for compensation paid in excess of the $ 1 million limit will be denied will
depend upon the resolution of various factual and legal issues that cannot be
resolved at this time. As to options granted under the 1989 Stock Option Plan,
the Committee intends to qualify to the extent practicable, such options under
the rules governing the Section 162 (m) limitation so that compensation
attributable to such options will not be subject to limitation under such rules.
As to other compensation, while it is not expected that compensation to
executives of the Company will exceed the Section 162 (m) limitation in the
foreseeable future (and no officer of the Company received compensation in 1998
which resulted under Section 162 (m) in the non-deductibility of such
compensation to the Company), various relevant considerations will be reviewed
from time to time, taking into account the interests of the Company and its
Shareholders, in determining whether to endeavor to cause such compensation to
be exempt from the Section 162 (m) limitation.
Respectfully submitted,
Compensation Committee
Clare E. Nordquist
Dr. George S. Reichenbach
Charles R. Schaller
Gilbert H. Steinberg
14
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Membership of the Compensation Committee for 1998 is set forth under "Report
of Compensation Committee." Except with respect to their compensation
arrangements, Dr. Barnett, President and CEO and Dr. Roland, formerly President
and CEO of the Company's Solar Power Business, participated in executive
compensation deliberations and recommendations of the Board of Directors.
During the fiscal year ended December 31, 1998, no executive officer of the
Company served on the board of directors or compensation committee of another
company that had an executive officer serving on the Company's Board of
Directors or Compensation Committee.
Certain Relationships and Related Transactions
At December 31, 1997, the Company owed its President and CEO $555,482 in the
form of salary, bonus and automobile reimbursements. The amounts are related to
the excess of his salary and bonus and auto allowance over the amounts actually
paid from July 1990 to March 1997. On December 15, 1997, the Company agreed
that one-third of this amount would be paid per year in each of 1998, 1999 and
2000, with interest on the unpaid balance at 6% per annum from January 1, 1998.
Accordingly the Company paid Dr. Barnett $184,786 in 1998 pursuant to such
agreement.
Summary Compensation Table
The following table sets forth information concerning the compensation of the
Chief Executive Officer of the Company and those other executive officers of the
Company whose total salary, bonus and other compensation earned for 1996, 1997
or 1998 exceeded $100,000:
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------------------------- ------
Securities
Underlying All Other
Name & Principal Position Year Salary ($) Bonus ($) Options (#) Compensation($) (1)
- ------------------------- ---- ---------- --------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Allen M. Barnett.................. 1998 $ 189,446 (2) $ -0- (2) 170,000 $5,000
President and Chief Executive 1997 191,458 (2) 50,000 (2) 203,250 4,750
Officer 1996 225,819 (2) 25,275 (2) 21,000 2,375
George W. Roland............. 1998 119,365 27,033 50,000 4,883
President and Chief Executive 1997 151,840 50,000 ---- 4,750
Officer, Solar Power Business 1996 139,034 (3) 15,000 187,500 2,375
Peter C. Aschenbrenner......... 1998 124,996 -0- 40,000 3,177 (4)
Vice President, Marketing 1997 116,449 20,000 19,875 1,353 (4)
and Sales 1996 106,779 7,000 -0- 1,416 (4)
Thomas J. Stiner.................. 1998 106,395 -0- 40,000 5,000
Vice President and Chief 1997 88,670 25,000 22,500 4,750
Financial Officer 1996 80,800 20,000 7,500 2,375
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Robert B. Hall 1998 96,661 -0- 15,000 5,000
Vice President and Chief
Scientist
</TABLE>
(1) Includes matching contributions by the Company under its 401(k) Plan.
(2) Dr. Barnett elected to postpone receipt of salary payments of $23,945 and
$79,047, for the years ended December 31, 1997 and 1996 respectively, as
well as the bonus amount for the year ended December 31, 1996. These
amounts are included in the above table. At December 31, 1997 the Company
owed Dr. Barnett an additional $427,215 relating to the postponement of
portions of his salary, bonus and other compensation for the period July
1990 to December 31, 1995. On December 15, 1997, the Company agreed that
one-third of this amount would be paid per year in each of 1998, 1999 and
2000, with interest on the unpaid balance at 6% per annum from January 1,
1998. Accordingly the Company paid Dr. Barnett $184,786 in 1998 pursuant
to such agreement. This amount is not included in the above table.
(3) Dr. Roland joined the Company in June 1995 and retired as an officer and
employee effective December 31, 1998.
(4) Includes $1,200 annual expense allowance for all years.
Stock Options
The following table provides information regarding grants of stock options made
during the fiscal year ended December 31, 1998 to the persons named in the
Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of % of Total Options Assumed Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Employees in Option Term
Options Fiscal Exercise Expiration ------------------------------
Name Granted (#) Year Price ($/share) Date 5% ($) 10% ($)
- -------------------------- -------------- ------------------- ---------------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Allen M. Barnett...... 50,000 6.94% $ 8.00 3/26/08 $251,558 $637,497
120,000 16.64% 10.00 8/20/08 70,538 823,119
Dr. George W. Roland...... 50,000 6.94% 8.00 3/26/08 251,558 637,497
Peter C. Aschenbrenner.... 40,000 5.55% 8.00 3/26/08 201,200 509,998
Thomas J. Stiner.......... 40,000 5.55% 8.00 3/26/08 201,200 509,998
Robert B. Hall........... 15,000 2.08% 8.00 3/26/08 75,450 191,249
</TABLE>
______________________
(1) Options awarded under the Plan generally provide for vesting over a period
of four years, with vesting occurring 25% per year on the anniversary date
of the option award. The Board of Directors has the discretion, subject to
plan limits, to modify the terms of outstanding options.
(2) All options were granted with an exercise price equal to or greater than
the fair market value of the Common Stock
16
<PAGE>
as determined on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the 10-year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent the Company's estimate of the
future Common Stock price. This table does not take into account any
appreciation in the price of the Common Stock to date, which exceeds the
hypothetical gains shown in the table.
Option Exercises and Holdings
The following table sets forth, for each person named in the Summary
Compensation Table above, information regarding the exercise of stock options
during the fiscal year ended December 31, 1997 and the year-end value of
unexercised options. No options were exercised by the Named Executive Officers
during 1997:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-money
Acquired Options at Year-End (#) Options at Year End ($)
on Value ----------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------- ---------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Allen M. Barnett................. -0- $ -0- 200,250 320,000 1,220,753 726,500
George W. Roland................. 10,000 54,250 222,500 65,000 1,252,675 165,950
Peter C. Aschenbrenner........... 5,000 23,150 37,468 54,907 210,945 149,126
Thomas J. Stiner................. 800 3,504 53,575 60,625 301,627 181,319
Robert B. Hall -0- -0- 9,750 26,250 76,393 87,788
</TABLE>
(1) Calculated on the basis of the fair market value of the Common Stock at
December 31, 1998 of $9.625 per share, minus the per share exercise price,
multiplied by the number of shares underlying the option. See note (3) of
the preceding table.
Benefit Plans
Stock Option Plan
The Company adopted a Stock Option Plan (the "Plan") in 1989 under which a total
of 1,800,000 shares are currently reserved for issuance to employees (including
officers and directors who are employees or consultants). Options granted
pursuant to the Plan may be either incentive stock options or non-qualified
stock options. The Plan is administered by the Compensation Committee of the
Board of Directors which selects the employees to whom the options are granted,
17
<PAGE>
determines the number of shares subject to each option, sets the time or times
when the options will be granted, determines the time when the options may be
exercised and establishes the market value of the shares at the date of grant
and exercise date. The Plan provides that the purchase price under the option
shall be at least 100 percent of the fair market value of the shares of the
Company's common stock at the date of grant. The options are not transferable.
There are limitations on the amount of incentive stock options that an employee
can be granted in a single calendar year. The term of each option granted under
the Plan is determined by the Compensation Committee, but in no event may such
term exceed ten years. Options granted under the Plan generally provide for
vesting in four equal annual installments beginning on the first anniversary of
the date of grant. As of December 31, 1998, options to purchase an aggregate of
1,728,613 shares were outstanding at a weighted average exercise price of $5.88
per share and 71,387 shares remained available for future option grants under
the Plan. Between January 1, 1999 and March 31, 1999 options to purchase an
additional 190,308 shares were granted, exceeding the number of shares available
by 118,921 shares.
Compensatory Stock Plan
Prior to the adoption of the 1989 Plan, the Company had a compensatory stock
plan for the issuance of shares to employees and consultants. At December 31,
1998, the only remaining obligation under this plan was the reservation of
39,999 shares for issuance to a former consultant of the Company.
Retirement Savings Plan
The Company maintains a Retirement Savings Plan (the "401(k) Plan") which is
intended to qualify under Section 401(k) of the Internal Revenue Code.
Employees of the Company who have attained age 21 and completed at least one
month of service with the Company are eligible to make contributions to the
401(k) Plan on a pre-tax basis of up to 15% of the participant's compensation in
any year in accordance with limitations defined in the Code. Under the 401(k)
Plan, the Company may make a discretionary contribution to the Plan. The total
contribution made by a participant and by the Company on behalf of that
participant cannot exceed the lesser of 25% of the participant's annual
compensation or $30,000 for any one plan year. The pre-tax contributions made
by a participant and the earnings thereon are at all times fully vested. The
participant's interest in Company contributions and the earnings thereon will
become vested at the rate of 20% per year for each year of service with the
Company or, if earlier, upon such participant's death or disability. A
participant's fully vested benefit under the 401(k) plan may be distributed to
the participant upon his retirement, death, disability or termination of
employment or upon reaching age 59 1/2. At December 31, 1998, the Company had
accrued a contribution to the 401(k) Plan of $145,000. The Company's
contribution on behalf of the officers named under "Executive Compensation" were
as follows: Dr. Allen M. Barnett - $5,000; Dr. George W. Roland - $4,833; Peter
Aschenbrenner - $1,977; Thomas J. Stiner - $5,000 and Robert B. Hall - $5,000.
Employment Arrangements
Dr. Allen M. Barnett entered into a new employment agreement with the Company,
effective April 1, 1997 providing for a base salary of $175,000 per year. The
agreement is for an initial term ending March 31, 2000. After the initial term
the agreement will continue in effect for an indefinite period until the Company
or Dr. Barnett elects to terminate the agreement by written notice to the other
party at least six months prior to the effective date of termination. Other
principal terms of the agreement provide for yearly vesting of options to
purchase 37,500 shares of the Company's
18
<PAGE>
Common Stock at $5.33 per share and yearly bonuses of not less than $50,000 if
contemplated financial or other objectives determined each year by the Board of
Directors and Dr. Barnett are achieved. In 1998 this provision was revised to
eliminate the cash bonus for 1998 and to substitute options to purchase 120,000
shares of the Company's Common Stock at $10.00 per share in lieu of a cash
bonus. In the event of the termination of the agreement due to disability, or
death, Dr. Barnett or his estate would be entitled to receive his base salary
for the longer of the remaining term of the agreement or two years plus all
other compensation and benefits in the case of disability and a pro rata portion
in the case of death. In the event of termination due to a change of control of
the Company, Dr. Barnett would be entitled to a lump sum payment of one years
salary and bonus; a payment of salary and bonus from the date of termination
through the remaining term of the agreement and the immediate vesting of all
remaining options. In the event of termination (other than for death or
disability) Dr. Barnett is restricted from competing with the Company for one
year thereafter.
Dr. George W. Roland entered into an employment agreement with the Company
effective May 1, 1996, providing for a base salary of $155,000 per year for an
unspecified term. In the event of termination for any reason other than cause
(as defined in the employment agreement), the Company must pay him nine months
salary. Dr. Roland was granted a non-qualified option to acquire 187,500 shares
of the Company's Common Stock which vested on February 12, 1998 the effective
date of a registration statement covering the Company's public offering of
Common Stock. All vested options are exercisable, in whole or part in, at a
price of $4.00 per share upon the following terms and conditions: (i) at any
time for a period of seven years following the completion of the public
offering, provided that he is employed by the Company at the time of such
exercise; (ii) at any time for a period equal to the lesser of two years from
the date of his termination from the Company, or seven years from the date of
the public offering, provided that he shall not have been terminated by the
Company for cause and he shall have been employed by the Company at the time of
such public offering. Dr. Roland also was granted a qualified option to
purchase 60,000 shares of the Company's Common Stock at $4.00 per share in
connection with his initial employment in June 1995. Dr. Roland retired as an
officer and employee effective as of December 31, 1998, but remains a director
of the Company.
The Company's employment agreements with Dr. Barnett and Dr. Roland and its
employment arrangements with other executive officers and significant employees
impose customary confidentiality obligations and provide for the assignment to
the Company of all rights to any technology developed by the employee during the
time of his or her employment.
PROPOSAL TO AMEND TO 1989 STOCK OPTION PLAN
Item 2.
In December 1989, the Board of Directors and a majority of the Shareholders
adopted the 1989 Stock Option Plan (the "1989 Plan"). Under the 1989 Plan, the
Company's Board of Directors is currently authorized to grant options to
purchase up to 1,800,000 shares of Common Stock to employees of the Company,
including officers (See "Benefit Plans - Stock Option Plan" herein).
The 1989 Plan is intended to induce new employers to become associated with the
Company, and to provide a closer identity of interest between present employees
and the Company by encouraging their ownership of Common Stock of the Company.
Consistent with this intention, the Board of Directors believed it would be in
the best interest of the Company and its
19
<PAGE>
Shareholders to increase the number of shares currently available under the Plan
from 1,800,000 to 1,920,000, subject to Shareholder approval, solely for the
purpose of covering Options which have been granted in excess of the 1,800,000
shares available.
The Board of Directors recommends that the Shareholders vote For the following
---
resolution, approval of which requires an affirmative vote of a majority of the
outstanding shares:
RESOLVED, that the first sentence of paragraph 4 of the 1989 Stock Option
Plan adopted by the Board of Directors and approved by a majority of the
Shareholders, in December 1989 be amended to read as follows:
4. Stock Subject to Plan
---------------------
Subject to adjustment as provided in Section 15 below, the maximum
number of shares of Common Stock of the Company which may be issued
and sold under the Plan is 1,920,000 shares.
PROPOSAL TO APPROVE THE ASTROPOWER, INC.
1999 STOCK OPTION PLAN
Item 3.
Description of the Plan and Vote Required
On April 16, 1999, the Compensation Committee recommended that the Board of
Directors adopt the 1999 Stock Option Plan (the "1999 Plan"). On April 16,
1999, the Board of Directors adopted the 1999 Plan and directed that the 1999
Plan be submitted to the Shareholders at the 1999 Annual Meeting. The 1999 Plan
will become effective upon the affirmative vote of a majority of the votes cast
by holders of the shares of Company Common Stock voting in person or by proxy at
the Annual Meeting.
The purpose of the 1999 Plan is to advance the interests of the Company by
encouraging and enabling acquisition of a financial interest in the Company by
its officers, other key employees and consultants. The 1999 Plan is intended to
aid the Company in attracting and retaining key employees, to stimulate the
efforts of such employees and to strengthen their desire to remain in the
Company's employ.
No awards will be made under the Company's 1989 Stock Option Plan after the
1999 Plan is approved.
Summary Description of the 1999 Plan
The following summary of the 1999 Plan is qualified in its entirety by
reference to the text of the 1999 Plan, which is attached as Exhibit A. The
1999 Plan would be administered by the Compensation Committee (the "Committee").
Eligibility requirements for the members of the Committee shall comply with the
provisions of the Rule 16b-3 promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act") or any successor rule or regulation. The
20
<PAGE>
Committee has full and final authority, in its discretion, to select the key
employees who would be granted stock options and would determine the number of
shares subject to each option, the duration of each option and the terms and
conditions of each option granted.
The major provisions of the 1999 Plan are as follows:
Eligibility. The Committee is authorized to grant stock options to any
officer, including officers who are also Directors of the Company, and to other
key employees and consultants of the Company and its Majority-Owned Affiliated
Companies (as defined in the 1999 Plan). In certain circumstances, the
Committee also may grant stock options to key employees of Affiliated Companies
(as defined in the 1999 Plan).
Option Price. The option price will be 100% of the fair market value of
the Company's Common Stock on the date the option is granted. Fair market value
for purposes of the 1999 Plan is the closing market price of the Company's
Common Stock as reported on the NASDAQ National Market Consolidated Trading
Listing on the relevant date.
Duration of Options. Each stock option will terminate on the date fixed by
the Committee, which shall be not more than (a) ten years after the date of the
grant for ISOs (defined below) and (b) fifteen years after the date of grant for
options that are not ISOs.
Vesting. Options become exercisable when they have vested. The period
before the options become exercisable is sometimes called the accrual period.
Generally, no portion of any ISO is exercisable for a period of 12 months after
the date of grant, unless the Committee specifies other vesting provisions at
the time of grant. All options automatically become exercisable in full in the
event of a Change in Control (as defined in the 1999 Plan), death or disability
of the optionee or as decided by the Subcommittee. Upon retirement options held
at least one year shall become exercisable in full.
Exercise Period. The exercise period for ISOs (as defined below) granted
under the 1999 Plan may not exceed 10 years from the date of grant and, for
options that are not ISOs, 15 years from the date of grant. If an optionee's
employment by the Company is terminated for any reason, except death, disability
or retirement, the optionee has three months in which to exercise an option (but
only to the extent exercisable immediately after termination) unless the option
by its terms expires earlier. Termination or other changes in employment status
affects the exercise period. The Committee has the right to alter the terms of
any option at grant or while outstanding pursuant to the terms of the 1999 Plan
except the Option Price. The occurrence of a Change in Control while an
optionee is an employee shall have no effect on the duration of the exercise
period.
Payment. Payment for stock purchased on the exercise of a stock option
must be made in full at the time the stock option is exercised. Cashless
exercises are permitted, provided the exercise price is delivered to the Company
within three business days of the exercise. Also, Company Common Stock which
has been held by the optionee at least six months may be tendered in payment for
the exercise price. The 1999 Plan allows U.S. taxpayers to use shares of Common
Stock withheld upon exercise to satisfy U.S. federal, state and local income tax
liabilities due to the exercise.
Shares That May be Issued Under the 1999 Plan. A maximum of 600,000 shares
of the Company's Common Stock - which number may be adjusted as described below
- - would be issued or transferred pursuant to stock options granted under the
1999 Plan. If any stock option terminates or is canceled for any reason without
having been exercised in full, the shares of stock not issued or transferred
will then become available for additional grants of options. The shares
available represent approximately 6.9% of the Company's Common Stock issued and
outstanding on April 16, 1999. The number of
21
<PAGE>
shares available under the 1999 Plan is subject to adjustment in the event of
any stock split, stock dividend, recapitalization, spin-off or other similar
action.
Estimate of Benefits. The number of stock options that would be awarded to
the Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company pursuant to the 1999 Plan are not currently
determinable. In 1998, stock options to purchase 347,000 shares under the 1989
Plan were granted to all current executive officers as a group and approximately
373,975 options were granted to approximately 213 other employees, including all
current officers who are not executive officers. No awards were made to
Directors who are not executive officers.
Federal Income Tax Consequences to the Company and the Optionees
Incentive Stock Options. Some of the options granted under the 1999 Plan
may constitute "Incentive Stock Options" ("ISOs") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Under the
present federal tax laws, there will be no federal income tax consequences to
either the Company or an optionee upon the grant of an ISO, nor will an
optionee's exercise of an ISO result in federal income tax consequences to the
Company. Although an optionee will not realize ordinary income upon his
exercise of an ISO, the excess of the fair market value of the Common Stock
acquired at the time of exercise over the option price may constitute an
adjustment in computing alternative minimum taxable income under Section 56 of
the Code and, thus, may result in the imposition of the "alternative minimum
tax" pursuant to Section 55 of the Code on the optionee. If an optionee does
not dispose of Common Stock acquired through an ISO within one year of the ISO's
date of exercise, any gain realized upon a subsequent disposition of Common
Stock will constitute long-term capital gain to the optionee. If an optionee
disposes of the Common Stock within such one-year period, an amount equal to the
lesser of (i) the excess of the fair market value of the Common Stock on the
date of exercise over the option price or (ii) the actual gain realized upon
such disposition will constitute ordinary income to the optionee in the year of
the disposition. Any additional gain upon such disposition will be taxed as
short-term capital gain. The Company will receive a deduction in an amount
equal to the amount constituting ordinary income to an optionee.
Nonstatutory Options. Certain stock options which do not constitute ISOs
("nonstatutory options") may be granted under the 1999 Plan. Under present
federal income tax regulations, there will be no federal income tax consequences
to either the Company or the optionee upon the grant of a nonstatutory option.
However, the optionee will realize ordinary income upon the exercise of a
nonstatutory option in an amount equal to the excess of the fair market value of
the Common Stock acquired upon the exercise of such option over the option
price, and the Company will receive a corresponding deduction. The gain, if
any, realized upon a subsequent disposition of such Common Stock will constitute
short-or long-term capital gain, depending on the optionee's holding period.
The federal income tax consequences described in this section are based on
laws and regulations in effect on April 16, 1999, and there is no assurance that
the laws and regulations will not change in the future and affect the tax
consequences of the matters discussed in this section.
Termination of and Amendments to the 1999 Plan
The Board of Directors may terminate or amend the 1999 Plan from time to
time in any manner permitted by applicable laws and regulations, except that no
additional shares of the Company's Common Stock may be allocated to the 1999
Plan, without the approval of the Shareholders.
22
<PAGE>
Market Price of the Company's Common Stock
The average of the high and low market price of the Company's Common Stock
as reported on the NASDAQ National Market Consolidated Trading Listing for April
16, 1999, was $12.16 per share.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends that Shareholders vote
FOR the proposal to approve the 1999 Stock Option Plan, approval of which
requires an affirmative vote of a majority of the outstanding shares.
PROPOSAL TO RATIFY
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Item 4.
Management proposes the appointment of KPMG, LLP as independent accountants to
examine the financial statements of the Company for the fiscal year 1999. The
Board of Directors has directed that such appointment be submitted for
ratification by the Shareholders at the Meeting.
KPMG, LLP has served as the independent accountant for the Company since 1992.
A representative of KPMG, LLP is expected to be present at the Meeting and will
have the opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions.
The affirmative vote of a majority of the Common Shares present, in person or by
proxy, is required for ratification of the appointment of KPMG, LLP as the
independent accountants.
The Board of Directors recommends that Shareholders vote FOR ratification of the
---
appointment of KPMG, LLP.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WILL BE MAILED WITHOUT CHARGE TO SHAREHOLDERS UPON REQUEST.
REQUESTS SHOULD BE ADDRESSED TO THE COMPANY AT SOLAR PARK, NEWARK,
DELAWARE, ATTENTION: THOMAS J. STINER, CFO. THE FORM 10-K INCLUDES
CERTAIN EXHIBITS WHICH WILL BE PROVIDED ONLY UPON PAYMENT OF A FEE
COVERING THE COMPANY'S REASONABLE EXPENSES.
FUTURE PROPOSALS
The 2000 Annual Meeting is expected to be held on Wednesday, June 17, 2000. If
any Shareholder wishes to submit a proposal for inclusion in the Proxy Statement
for the Company's 1999 Annual Meeting, the rules of the United States Securities
and Exchange Commission require that such proposal be received at the company's
principal executive office by December 31, 1999.
23
<PAGE>
OTHER MATTERS
Management knows of no other matters to come before the meeting other than those
referred to in the Notice of Meeting. However, should any other matters properly
come before the meeting, the shares represented by the proxy solicited hereby
will be voted on such matters in accordance with the best judgment of the
persons voting the shares represented by the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Allen M. Barnett
President and Chief Executive Officer
24
<PAGE>
EXHIBIT A
ASTROPOWER, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose.
- ------------------
The purpose of the AstroPower, Inc. 1999 Stock Option Plan (the
"Plan") is to advance the interests of the AstroPower, Inc. (the "Company"), its
Affiliated Companies (as defined in Section 2) and all its shareholders by
encouraging and enabling the acquisition of a financial interest in the Company
by officers, other key employees and consultants of the Company or its
Affiliated Companies. In addition, the Plan is intended to aid the Company and
its Affiliated Companies to compete with other companies offering similar plans
in attracting and retaining key employees, to stimulate the efforts of such
employees and to strengthen their desire to remain in the employ of the Company
and its Affiliated Companies.
Section 2. Definitions.
- ----------------------
"Common Stock" means AstroPower, Inc. Common Stock, par value $.01 per
share.
"Affiliated Company" or "Affiliated Companies" means corporation(s) or
other business organization(s) in which the Company owns, directly or
indirectly, 20% or more of the voting stock or capital at the relevant time.
"Business Day" means a day on which the NASDAQ National Market is open
for securities trading.
"Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A under the Securities Exchange Act of 1934 (" 1934 Act") as in
effect on January 1, 1999, provided that such a change in control shall be
deemed to have occurred at such time as (i) any "person" (as that term is used
in Sections 13(d) and 14(d)(2) of the 1934 Act), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act as in effect on January 1,
1999) directly or indirectly, of securities representing 20% or more of the
combined voting power for election of directors of the then outstanding
securities of the Company or any successor of the Company; (ii) during any
period of two (2) consecutive years or less, individuals who at the beginning of
such period constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority of the Board of Directors, unless the
election or nomination for election of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors
at the beginning of the period; (iii) the shareholders of the Company approve
any merger or consolidation as a result of which the AstroPower, Inc. Common
Stock (as defined below) shall be changed, converted or exchanged (other than a
merger with a wholly owned subsidiary of the Company) or any liquidation of the
Company or any sale or other disposition of 50% or more of the assets or earning
power of the Company; or (iv) the shareholders of the Company approve any merger
or consolidation to which the Company is a party as a result of which the
persons who were shareholders of the Company immediately prior to the effective
date of the merger or consolidation shall have beneficial ownership of less than
50% of the combined voting power for election of directors of the surviving
corporation following the effective date of such merger or consolidation;
provided, however, that no Change in Control shall be deemed to have occurred
if, prior to such times as a Change in Control would otherwise be deemed to have
occurred, the Board of Directors determines otherwise.
<PAGE>
"Committee" means a committee appointed by the Board of Directors in
accordance with the Company's By-Laws from among its members. Unless and until
its members are not qualified to serve on the Committee pursuant to the
provisions of the Plan, the Compensation Committee of the Board shall function
as the Committee. Eligibility requirements for members of the Committee shall
comply with Rule 16b-3 under the 1934 Act, or any successor rule or regulation.
"Disabled" or "Disability" means the optionee meets the definition of
"disabled" under Section 22(e) of the Internal Revenue Code of 1986, as,
amended.
"ISO means an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.
"Majority-Owned Affiliated Company" means a Affiliated Company in
which the Company owns, directly or indirectly, 50% or more of the of the voting
stock or capital on the date an Option is granted.
"NSO" means a non-statutory stock option that does not constitute an
ISO.
"Options" means ISOs and NSOs granted under this Plan.
"Retire" means to enter Retirement.
"Retirement" means an employee's termination of employment by reason
of retirement.
Section 3. Options.
- ------------------
The Company may grant ISOs and NSOs to those persons meeting the
eligibility requirements in Section 6.
Section 4. Administration.
- --------------------------
The Plan shall be administered by the Committee. No person, other than
members of the Committee, shall have any discretion concerning decisions
regarding the Plan. The Committee shall determine the key employees and
consultants of the Company and its Affiliated Companies (including officers,
whether or not they are directors) to whom, and the time or times at which,
Options will be granted; the number of shares to be subject to each Option; the
duration of each Option; the time or times within which the Option may be
exercised; the cancellation of the Option (with the consent of the holder
thereof); and the other conditions of the grant of the Option, at grant or while
outstanding, pursuant to the terms of the Plan. The provisions and conditions of
the Options need not be the same with respect to each optionee or with respect
to each Option.
The Committee may, subject to the provisions of the Plan, establish
such rules and regulations as it deems necessary or advisable for the proper
administration of the Plan, and may make determinations and may take such other
action in connection with or in relation to the Plan as it deems necessary or
advisable. Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific conditions and
provisions of the Options granted hereunder by the Committee, shall be final and
conclusive for all purposes and upon all persons including, but without
limitation, the Company, its Affiliated Companies, the Committee, the Board,
officers and the affected employees and consultants of the Company and/or its
Affiliated Companies, optionees and the respective successors in interest of any
of the foregoing.
2
<PAGE>
Section 5. Stock.
- -----------------
The Common Stock to be issued, transferred and/or sold under the Plan
shall be made available from authorized and unissued Common Stock or from the
Company's treasury shares. The total number of shares of Common Stock that may
be issued or transferred under the Plan pursuant to Options granted thereunder
may not exceed 600,000 shares (subject to adjustment as described below). Such
number of shares shall be subject to adjustment in accordance with Section 11.
Common Stock subject to any unexercised portion of an Option which expires or is
canceled, surrendered or terminated for any reason may again be subject to
Options granted under the Plan.
Section 6. Eligibility.
- -----------------------
Options may be granted to employees and consultants of the Company and
its Majority-Owned Affiliated Companies. The Committee may grant Options to
particular employee(s) or consultants of an Affiliated Company who within the
past eighteen (18) months were employee(s) or consultants of the Company or a
Majority-Owned Affiliated Company, and in instances to be determined by the
Committee in its sole discretion, employees or consultants of an Affiliated
Company who have not been employees or consultants of the Company or a Majority-
Owned Affiliated Company within the past eighteen (18) months.
Section 7. Awards of Options.
- ------------------------------
Except as otherwise specifically provided in this Plan, Options
granted pursuant to the Plan shall be subject to the following terms and
conditions:
(a) Option Price. The option price shall be 100% of the fair market
------------
value of the Common Stock on the date of grant. The fair market value of a share
of Common Stock shall be the closing market price at which a share of Common
Stock shall have been sold on the day preceding the date of grant, or on the
next preceding trading day if such date was not a trading date, as reported on
the NASDAQ National Market Consolidated Trading Listing or such other market as
the Company's Common Stock is regularly traded.
(b) Payment. The option price shall be paid in full at the time of
-------
exercise, except as provided in the next sentence. If an exercise is executed by
using the cashless method, the exercise price shall be paid in full no later
than the close of business on the fourth Business Day following the exercise.
Payment may be in cash or, upon conditions established by the
Committee, by delivery of shares of Common Stock owned for at least six (6)
months by the optionee.
The optionee, if a U.S. taxpayer, may elect to satisfy Federal, state
and local income tax liabilities due by reason of the exercise by the
withholding of shares of Common Stock.
If shares are delivered to pay the option price or if shares are
withheld for U.S. taxpayers to satisfy such tax liabilities, the value of the
shares delivered or withheld shall be computed on the basis of the reported
market price at which a share of Common Stock most recently traded prior to the
time the exercise order was processed. Such price will be determined by
reference to the NASDAQ National Market Consolidated Trading or to such other
market or on which the Company's Common Stock is regularly traded.
(c) Exercise May Be Delayed Until Withholding is Satisfied. The
------------------------------------------------------
Company may refuse to exercise an Option if the optionee has not made
arrangements satisfactory to the Company to satisfy the tax withholding which
the Company determines is necessary to comply with applicable requirements.
3
<PAGE>
(d) Duration of Options. The duration of Options shall be determined
-------------------
by the Committee, but in no event shall the duration of an ISO exceed ten (10)
years from the date of its grant or the duration of an NSO exceed fifteen (15)
years from the date of its grant.
(e) Other Terms and Conditions. Options may contain such other
--------------------------
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time, including vesting provisions;
provided, however, that, except in the event of a Change in Control or the
Disability or death of the optionee, no ISO Option shall be exercisable in whole
or in part for a period of twelve (12) months from the date on which the Option
is granted. The grant of an Option to any employee shall not affect in any way
the right of the Company and any Affiliated Company to terminate the employment
of the holder thereof.
(f) ISOs. The Committee, with respect to each grant of an Option to
----
an optionee, shall determine whether such Option shall be an ISO, and, upon
determining that an Option shall be an ISO, shall designate it as such in the
written instrument evidencing such Option. If the written instrument evidencing
an Option does not contain a designation that it is an ISO, it shall not be an
ISO.
The aggregate fair market value (determined in each instance on the
date on which an ISO is granted) of the Common Stock with respect to which ISOs
are first exercisable by any optionee in any calendar year shall not exceed
$100,000 for such optionee. If any subsidiary or Majority-Owned Affiliated
Company of the Company shall adopt a stock option plan under which options
constituting ISOs may be granted, the fair market value of the stock on which
any such incentive stock options are granted and the times at which such
incentive stock options will first become exercisable shall be taken into
account in determining the maximum amount of ISOs which may be granted to the
optionee under this Plan in any calendar year.
(g) 10% Shareholder. If any employee to whom an ISO is to be granted
---------------
under the Plan is, at the time of the grant of such option, the owner of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (after taking into account the attribution of stock
ownership rules of Section 425(d) of the Code), then the following special
provisions shall be applicable to the ISO granted to such individual:
(i) The purchase price per share of the Common Stock subject to
such ISO shall not be less than 110% of the fair market value of one share of
Common Stock at the time of grant; and
(ii) The option exercise period shall not exceed five years from
the date of grant.
Section 8. Nontransferability of Option.
- ----------------------------------------
No ISO granted pursuant to the Plan shall be transferable otherwise
than by will or by the laws of descent and distribution. During the lifetime of
an optionee, the ISO shall be exercisable only by the optionee personally or by
the Optionee's legal representative. Any NSO granted pursuant to the Plan shall
be transferrable to any member of such Optionee's "immediate family" (as such
term is defined in Rule 16a-1(c) promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or any
successor rule or regulation) or to a trust or family partnership whose
beneficiaries are members of such optionee's "immediate family" or to a
qualified charitable organization to which contributions are deductible for tax
purpose pursuant to Section 170 of the Internal Revenue Code of 1986, as
amended.
Section 9. Effect of Termination of Employment, Other Changes of Employment or
Employer Status, Death, Retirement or a Change in Control.
----------------------------------------------------------
4
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Event Impact on Vesting Impact on Exercise Period
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Employment terminates upon All options become immediately Option expiration date provided
Disability. vested. in grant continues to apply.
- --------------------------------------------------------------------------------------------------------------------
Employment terminates upon Option held at least 12 full Option expiration date provided
Retirement. calendar months become in grant continues to apply.
immediately vested; options held
less than 12 full calendar months
are forfeited.
- --------------------------------------------------------------------------------------------------------------------
Employment terminates upon All options become immediately Right of executor, administrator
death. vested. of estate (or other transferee
permitted by Section 8)
terminates on earlier of (1) 12
months from the date of death, or
(2) the expiration date provided
in the Option.
- --------------------------------------------------------------------------------------------------------------------
Employment terminates upon All options become immediately Option expiration date provided
Change in Control. vested. in grant continues to apply.
- --------------------------------------------------------------------------------------------------------------------
Termination of employment for Unvested options are forfeited. Expires upon earlier of 3 months
other reasons (Optionees should from termination date or option
be aware that the receipt of expiration date provided in grant.
severance does not extend their
termination date).
- --------------------------------------------------------------------------------------------------------------------
US military leave. Vesting continues during leave. Option expiration date provided
in grant continues to apply.
- --------------------------------------------------------------------------------------------------------------------
Eleemosynary service. Committee's discretion. Committee's discretion.
- --------------------------------------------------------------------------------------------------------------------
US FMLA leave of absence. Vesting continues during leave. Option expiration date provided
in grant continues to apply.
- --------------------------------------------------------------------------------------------------------------------
Company investment in Unvested options are forfeited. Expires upon earlier of 3 months
optionee's employer falls under from termination date or option
20% (this constitutes a expiration date provided in grant.
termination of employment under
the Plan, effective the date the
investment falls below 20%)
OR
employment is transferred to an
entity in which the Company's
ownership interest is less than
20%.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Employment transferred to Affiliated Vesting continues after transfer. Option expiration date provided in
Company. grant continues to apply.
- --------------------------------------------------------------------------------------------------------------------
Death after employment has Not applicable. Right of Executor, adminis-trator of
terminated but before option has estate (or other transferee permitted
expired (note that termination of by Section 8) terminates on earlier of
employment may have resulted in a (1) 12 months from the date of
change to the original option death, or (2) the Option expiration
expiration date provided in the that applied at the date of death (note
grant). that termination of employment may
have resulted in a change to the
original option expiration date
provided in the grant).
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
In the case of other leaves of absence not specified above, optionees
will be deemed to have terminated employment (so that options unvested will
expire and the option exercise period will end on the earlier of 6 months from
the date the leave began or the option expiration date provided in the grant),
unless the Committee identifies a valid business interest in doing otherwise in
which case it may specify what provisions it deems appropriate in its sole
discretion; provided that the Committee shall have no obligation to consider any
such matters.
Notwithstanding the foregoing provisions, the Committee may, in its
sole discretion, establish different terms and conditions pertaining to the
effect of an optionee's termination on the expiration or exercisability of
Options at the time of grant or (with the consent of the affected optionee)
outstanding Options. However, no Option can have a term of more than fifteen
years.
Section 10. No Rights as a Share Owner.
- ---------------------------------------
An optionee or a transferee of an optionee pursuant to Section 8 shall
have no right as a share owner with respect to any Common Stock covered by an
Option or receivable upon the exercise of an Option until the optionee or
transferee shall have become the holder of record of such Common Stock and no
adjustments shall be made for dividends in cash or other property or other
distributions or rights in respect to such Common Stock for which the record
date is prior to the date on which the optionee or transferee shall have in fact
become the holder of record of the share of Common Stock acquired pursuant to
the Option.
Section 11. Adjustment in the Number of Shares and in Option Price.
- -------------------------------------------------------------------
In the event there is any change in the shares of Common Stock through
the declaration of stock dividends, or stock splits or through recapitalization
or merger or consolidation or combination of shares or spin-offs or otherwise,
the Committee or the Board shall make such adjustment, if any, as it may deem
appropriate in the number of shares of Common Stock available for Options as
well as the number of shares of Common Stock subject to any outstanding Option
and the option price thereof. Any such adjustment may provide for the
elimination of any fractional shares which might otherwise become subject to any
Option without payment therefor.
Section 12. Cancellation And New Grant of Options.
- --------------------------------------------------
The Board shall have the authority to effect, at any time and from
time to time, with the consent of the affected Optionees, the cancellation of
any or all outstanding options under the Plan and the grant in substitution
therefor of new options under the Plan covering the same or different numbers of
shares of Common Stock having an option exercise price per share which may be
lower or higher than the exercise price per share of the cancelled options.
6
<PAGE>
Section 13. Regulatory Compliance and Listing.
- ----------------------------------------------
The delivery of any shares issuable upon exercise of an Option granted
under the Plan may be postponed by the Company for such period as may be
required to comply with any applicable requirements under the Federal or State
securities laws, any applicable listing or other requirements of any national
securities exchange and requirements under any other law or regulation
applicable to the delivery of such shares, and the Company shall not be
obligated to deliver any such shares under the Plan if such delivery shall
constitute a violation of any provision of any law or of any regulation of any
governmental authority or any national securities exchange. In addition, the
shares when delivered may be subject to conditions, including transfer
restrictions, if required to comply with applicable securities law.
Section 14. Amendments, Modifications and Termination of the Plan.
- -----------------------------------------------------------------
The Board or the Committee may terminate the Plan at any time. From
time to time, the Board or the Committee may suspend the Plan, in whole or in
part. From time to time, the Board or the Committee may amend the Plan, in whole
or in part, including the adoption of amendments deemed necessary or desirable
to qualify the Options under the laws of various countries (including tax laws)
and under rules and regulations promulgated by the Securities and Exchange
Commission with respect to employees who are subject to the provisions of
Section 16 of the 1934 Act, or to correct any defect or supply an omission or
reconcile any inconsistency in the Plan or in any Option granted thereunder, or
for any other purpose or to any effect permitted by applicable laws and
regulations, without the approval of the share owners of the Company. However,
in no event may additional shares of Common Stock be allocated to the Plan
without shareholder approval. Without limiting the foregoing, the Board of
Directors or the Committee may make amendments applicable or inapplicable only
to participants who are subject to Section 16 of the 1934 Act.
No amendment or termination or modification of the Plan shall in any
manner affect any Option theretofore granted without the consent of the
optionee, except that the Committee may amend or modify the Plan in a manner
that does affect Options theretofore granted upon a finding by the Committee
that such amendment or modification is in the best interest of holders of
outstanding Options affected thereby. Grants of ISOs may be made under this Plan
until ten years from the Effective Date or such earlier date as this Plan is
terminated, and grants of NSOs may be made until all of the shares of Common
Stock authorized for issuance hereunder (adjusted as provided in Section 11)
have been issued or until this Plan is terminated, whichever first occurs. The
Plan shall terminate when there are no longer Options outstanding under the
Plan, unless earlier terminated by the Board or by the Committee. Absent the
occurrence of any of the foregoing events, the Plan shall terminate upon the
close of business on the day next preceding the tenth anniversary of the date of
its adoption by the Board of Directors.
Section 15. Governing Law.
- -------------------------
The Plan and all determinations made and actions taken pursuant
thereto shall be governed by the laws of the State of Delaware and construed in
accordance therewith.
Section 16. Effective Date.
- ---------------------------
The Plan shall become effective when adopted by the Board of
Directors, but no ISO granted under the Plan shall become exercisable unless
and until the Plan shall have been approved by the Company's shareholders. If
such shareholder approval is not obtained within twelve months after the date of
the Board's adoption of the Plan, any ISO's previously granted under the Plan
shall terminate and no further ISO shall be granted. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval (as provided in Section
12) shall become effective when adopted by the Board of Directors, but no ISO
issued after the date of such
7
<PAGE>
amendment shall become exercisable (to the extent that such amendment to the
Plan was required to enable the Company to grant such ISO to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any ISO's granted on or
after the date of such amendment shall terminate to the extent that such
amendment to the Plan was required to enable the Company to grant such option to
a particular optionee. Subject to this limitation, Options may be granted under
the Plan at any time after the effective date and before the date fixed for
termination of the Plan.
Adopted by the Board of Directors
April 16, 1999
8
<PAGE>
ASTROPOWER, INC
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dr. Allen M. Barnett, Dr. George S.
Reichenbach and Gilbert H. Steinberg, and each of them individually with the
power of substitution, as Proxy or Proxies of the undersigned, to attend and act
for and on behalf of the undersigned at the Annual Meeting of Stockholders of
the Company to be held at the Company's Manufacturing Plant at Pencader
Corporate Center, Newark, Delaware on June 16, 1999, at 11:00 A.M., local time
and at any adjournment thereof, hereby revoking any prior Proxy or proxies.
This Proxy when properly executed will be voted as directed herein by the
undersigned. If no direction is made, shares will be voted FOR the election of
directors named in the proxy and FOR Proposals 2, 3 and 4.
(Continued and to be dated and signed on other side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ASTROPOWER, INC.
June 16, 1999
\/ Please Detach and Mail in the Envelope Provided \/
- --------------------------------------------------------------------------------
Please mark your
A [X] votes as in this
example.
Nominees: Clair E. Nordquist
Dr. George W. Roland
Dr. Allen M. Barnett
Dr. George S. Reichenbach
Withhold Charles R. Schatler
For Vote Gilbert H. Steinberg
1. To elect as [_] [_]
directors all
persons named
at right
For except - vote withheld from the following nominee(s)
For Against Abstain
2. Proposal to amend 1989 Stock Option [_] [_] [_]
Plan.
3. Proposal to approve 1999 Stock Option [_] [_] [_]
Plan.
4. To appoint KPMG, LLP [_] [_] [_]
as independent accountants of the
Company
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
IMPORTANT: Please date, sign, and return this Proxy Card
using the enclosed envelope.
Signature _____________Signature if held jointly________________Dated______,1999
NOTE: (Signature should conform exactly to name on Proxy. When shares are held
by joint tenants, both should sign. Executors, Administrators, guardians,
trustees, Attorneys and officers signing for corporation should give full
title.
