<PAGE> 1
SCHEDULE 14A INFORMATION
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Micrion Corporation
(Name of Registrant as Specified In Its Charter)
[ ]
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MICRION CORPORATION
ONE CORPORATION WAY
PEABODY, MASSACHUSETTS 01960
October 1, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Micrion Corporation (the "Company"), which will be held on Monday, November 3,
1997 at 10:00 A.M., at the offices of Choate, Hall & Stewart, 36th Floor,
Exchange Place, 53 State Street, Boston, Massachusetts.
The following Notice of Annual Meeting of Stockholders and Proxy Statement
describe the items to be considered by the stockholders and contain certain
information about the Company and its officers and directors.
Please sign and return the enclosed proxy card as soon as possible in the
envelope provided so that your shares can be voted at the meeting in accordance
with your instructions. Even if you plan to attend the meeting, we urge you to
sign and return promptly the proxy card. You may revoke it at any time before it
is exercised at the meeting or vote your shares personally if you attend the
meeting.
We look forward to seeing you.
Sincerely,
/s/ Nicholas P. Economou
-------------------------------------
NICHOLAS P. ECONOMOU
President and Chief Executive Officer
<PAGE> 3
MICRION CORPORATION
ONE CORPORATION WAY
PEABODY, MASSACHUSETTS 01960
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 3, 1997
The Annual Meeting of Stockholders of Micrion Corporation (the "Company")
will be held at the offices of Choate, Hall & Stewart, 36th Floor, Exchange
Place, 53 State Street, Boston, Massachusetts, on Monday, November 3, 1997 at
10:00 A.M., for the following purposes:
1. To elect the Board of Directors of the Company;
2. To approve the Company's Amended and Restated 1994 Omnibus Stock
Plan;
3. To ratify the Board of Directors' selection of KPMG Peat Marwick
LLP as the Company's independent auditors for the fiscal year ending
June 30, 1998; and
4. To transact such other business as may properly come before the
meeting, and any or all adjournments thereof.
Stockholders of record at the close of business on September 19, 1997 will
be entitled to notice of and to vote at the meeting and any adjournments
thereof.
By Order of the Board of Directors
/s/ Roslyn G. Daum
-----------------------
ROSLYN G. DAUM
Clerk
Dated: October 1, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE IN ORDER
THAT YOUR SHARES MAY BE REPRESENTED.
<PAGE> 4
MICRION CORPORATION
ONE CORPORATION WAY
PEABODY, MASSACHUSETTS 01960
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of common stock of Micrion
Corporation (hereinafter referred to as the "Company") in connection with the
solicitation of proxies to be voted at the Annual Meeting of Stockholders to be
held on November 3, 1997 and at any adjournments of that meeting. The enclosed
proxy is solicited on behalf of the Board of Directors of the Company. Each
properly signed proxy will be voted in accordance with the instructions
contained therein, and, if no choice is specified, the proxy will be voted in
favor of the proposals set forth in the Notice of Annual Meeting.
A person giving the enclosed proxy has the power to revoke it at any time
before it is exercised at the meeting, by written notice to the Clerk of the
Company, by sending a later dated proxy, or by revoking it in person at the
meeting.
The approximate date on which this Proxy Statement and the enclosed proxy
will first be sent to stockholders is October 1, 1997. The Company's Annual
Report to Stockholders for the year ended June 30, 1997 is being mailed together
with this Proxy Statement.
Only holders of common stock of record on the stock transfer books of the
Company at the close of business on September 19, 1997 (the "record date") will
be entitled to vote at the meeting. There were 4,050,791 shares of common stock
outstanding and entitled to vote on the record date.
Each share of common stock is entitled to one vote. The affirmative vote of
the holders of a plurality of the shares represented at the meeting, if a quorum
is present, is required for the election of directors. If a quorum is present,
approval of each other matter which is before the meeting will require the
affirmative vote of the holders of a majority of votes cast with respect to such
matter.
For purposes of the matters before the Annual Meeting, under the Company's
By-Laws, a quorum consists of a majority of the issued and outstanding shares
entitled to vote on such matters as of the record date. Shares as to which a
nominee (such as a broker holding shares in street name for a beneficial owner)
has no voting authority in respect of such matter will be deemed represented for
quorum purposes but will not be deemed to be voting on such matters, and
therefore will not be counted as negative votes as to such matters. Votes will
be tabulated by the Company's transfer agent subject to the supervision of
persons designated by the Board of Directors as inspectors.
STOCK OWNERSHIP OF DIRECTORS, NOMINEES, EXECUTIVE OFFICERS
AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of August 15, 1997 by (a) each
director and nominee for director of the Company, (b) each of the executive
officers named in the Summary Compensation Table below and (c) all current
directors and executive officers as a group. Except as otherwise indicated, each
person has sole investment and voting power with respect to the shares shown as
being beneficially owned by such person, based on information provided by
<PAGE> 5
such owners. To the Company's knowledge, no person beneficially owned 5% or more
of the Company's Common Stock as of August 15, 1997.
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCK OUTSTANDING
NAME BENEFICIALLY OWNED SHARES
- ----------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Nicholas P. Economou....................................... 119,000(1) 2.9
John A. Doherty............................................ 63,379(2) 1.6
Robert K. McMenamin........................................ 35,595(3) *
Billy W. Ward.............................................. 38,678(4) *
Charles J. Libby........................................... 35,286(5) *
Thomas W. Folger........................................... 12,500(6) *
Louis P. Valente........................................... 8,500(7) *
Charles M. McKenna......................................... 5,000(8) *
All current directors and executive officers as a group
(10 persons)............................................... 358,583(9) 8.6
</TABLE>
- ---------------
* Less than 1%.
(1) Includes options to purchase 36,995 shares which are exercisable within
60 days after August 15, 1997.
(2) Includes options to purchase 12,099 shares which are exercisable within
60 days after August 15, 1997.
(3) Includes options to purchase 10,849 shares which are exercisable within
60 days after August 15, 1997.
(4) Includes options to purchase 27,845 shares which are exercisable within
60 days after August 15, 1997, and 3,717 shares held in trust under the
Billy W. Ward Family Trust, as to which shares Mr. Ward shares voting and
investment power and disclaims beneficial ownership.
(5) Includes options to purchase 10,849 shares which are exercisable within
60 days after August 15, 1997.
(6) Includes options to purchase 7,500 shares which are exercisable within
60 days after August 15, 1997.
(7) Includes options to purchase 7,500 shares which are exercisable within
60 days after August 15, 1997.
(8) Consists of options to purchase 5,000 shares which are exercisable within
60 days after August 15, 1997.
(9) Includes options to purchase 143,473 shares which are exercisable within
60 days after August 15, 1997 held by executive officers and directors of
the Company.
ELECTION OF DIRECTORS
(ITEM 1 OF NOTICE)
There are currently five members of the Board of Directors. During the past
fiscal year, the Board of Directors amended the By-Laws of the Company to
provide that, beginning with the 1997 Annual Meeting, the directors shall be
classified, with respect to the time for which they hold office, into three
classes, as nearly equal in number as possible, with terms expiring at the 1998,
1999 and 2000 Annual Meetings. At each Annual Meeting after the 1997 Annual
Meeting, the successors to the class of directors whose term expires at that
meeting shall be elected to hold office for a term continuing until the Annual
Meeting held in the third year following the year of their election. The Board
has fixed the number of directors for the ensuing year at five and has nominated
Thomas W. Folger and Louis P. Valente for re-election to the Board of Directors
in the class, the term of which expires at the Annual Meeting in 2000;
Nicholas P. Economou and Charles M. McKenna for re-election in the class, the
term of which expires at the Annual Meeting in 1999; and Billy W. Ward for
re-election in the class, the term of which expires at the Annual Meeting in
1998.
Each of the nominees has consented to serve, if elected at the meeting, for
the above-described terms and until his successor is elected and qualified. The
shares represented by the enclosed proxy will be voted to elect the nominees
unless such authority is withheld by marking the proxy to that effect. The
nominees have agreed to serve, but in the event any becomes unavailable for any
reason, the proxy, unless authority has been withheld as to such nominee, may be
voted for the election of a substitute.
2
<PAGE> 6
The following information is furnished with respect to each nominee for
election as a director.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
EXPERIENCE DURING LAST FIVE YEARS;
NAME AND AGE AS OF OCTOBER 1, 1997 DIRECTORSHIPS OF PUBLIC COMPANIES
- ------------------------------------------ -------------------------------------------------
<S> <C>
NOMINEES FOR ELECTION FOR TERMS OF THREE YEARS EXPIRING IN 2000
Thomas W. Folger, 69...................... Mr. Folger, a Director of the Company since 1985,
has been a General Partner of the sole General
Partner of DeMuth, Folger & Wetherill, a venture
capital firm, since its formation in 1994, and a
General Partner of the sole General Partner of
DeMuth, Folger & Terhune, a venture capital firm,
since its formation in 1983. Prior to 1983,
Mr. Folger was Vice President and a member of the
Board of Directors of Kidder, Peabody & Co.
Incorporated. Mr. Folger is a director of
IEC Electronics Corp., a provider of contract
manufacturing services for electronics companies.
Louis P. Valente, 67...................... Mr. Valente, a Director of the Company since
1989, became a director of Palomar Medical
Technologies, Inc. on February 1, 1997, and on
May 15, 1997, he was elected President and Chief
Executive Officer of Palomar. Palomar designs,
manufactures and sells cosmetic lasers and
operates centers for cosmetic treatments. He was
a Senior Vice President of Acquisitions, Mergers
and Investments of EG&G, Inc., a diversified high
technology company, from 1991 until his
retirement in 1995, and was Vice President of
Corporate Development from 1984 through 1991.
Mr. Valente, a certified public accountant, is also
a director of several privately held companies.
NOMINEES FOR ELECTION FOR TERMS OF TWO YEARS EXPIRING IN 1999
Nicholas P. Economou, 48.................. Dr. Economou has been President and a Director of
the Company since February 1990 and Chief
Executive Officer since August 1993. Dr. Economou
joined the Company in 1984 as the Director of
Engineering and was subsequently promoted to Vice
President, Engineering, prior to becoming
President.
Charles M. McKenna, 52.................... Mr. McKenna, a Director of the Company since
1995, has been Vice President of Varian
Semiconductor Equipment and General Manager of
Varian's Ion Implant Systems, a semiconductor
equipment manufacturer, since 1989. He has
previously held technical positions with Varian
Corporation, IBM and Hughes Research
Laboratories.
NOMINEE FOR ELECTION FOR TERM OF ONE YEAR EXPIRING IN 1998
Billy W. Ward, 44......................... Mr. Ward, a Director of the Company since 1996,
has been Senior Vice President of the Company
since January 1996 and was Vice President and
Chief Engineer of the Company from 1983 through
January 1996, and a Director of the Company from
1983 to 1984, from 1988 to 1991, from 1993 to
1994 and since November 1996.
</TABLE>
3
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors has Audit and Compensation Committees. It does not
have a nominating or similar committee.
The Audit Committee, which periodically meets with management and the
Company's independent accountants, reviews the results and scope of the audit
and other services provided by the Company's independent accountants, the need
for internal auditing procedures and the adequacy of internal controls. The
directors currently serving on the Audit Committee are Messrs. Valente, Folger
and McKenna. The Audit Committee met once during fiscal 1997.
The Compensation Committee establishes salaries for officers and incentives
and other forms of compensation for officers and other key employees;
administers the various incentive compensation and benefit plans; and recommends
policies relating to such plans. The directors currently serving on the
Compensation Committee are Messrs. Valente, Folger and McKenna. The Compensation
Committee met six times during fiscal 1997.
During fiscal 1997, the Board of Directors of the Company held five
meetings. Each incumbent director attended at least 75% of the aggregate number
of the meetings of the Board and the meetings of the committees of the Board on
which he served.
DIRECTOR COMPENSATION
The Company's directors receive compensation in the amount of $1,500 for
each regularly scheduled, quarterly meeting of the Board of Directors attended
and an annual retainer of $4,000 and may be reimbursed for certain expenses in
connection with attendance at Board and committee meetings. Under the Company's
1994 Non-Employee Director Stock Option Plan, each non-employee director serving
as such on the date of the annual meeting of the Board of Directors held closest
to the fourth, eighth and any subsequent four-year anniversary of the date of
such director's election to the Board of Directors is entitled to receive on
such date an option to purchase 10,000 shares of Common Stock (subject to
vesting over sixteen quarterly periods), exercisable at a price per share equal
to fair market value on the date of grant. Any non-employee director, upon his
or her first election to the Board of Directors, is entitled to receive an
option to purchase 10,000 shares of Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report, prepared by the Compensation Committee of the Company's Board
of Directors (the "Committee"), addresses the Company's executive compensation
policies and the basis on which fiscal 1997 executive officer compensation
determinations were made. The Committee designs and approves all components of
executive pay.
To ensure that executive compensation is designed and administered in an
objective manner, the Committee's members are all non-employee directors. During
fiscal 1997, the Committee members were Thomas W. Folger, Charles M. McKenna and
Louis P. Valente.
Compensation Philosophy
The Company's executive compensation policies are intended to attract,
retain, motivate and reward executives who can lead the Company in achieving its
long-term growth and earnings goals. The objective of the Committee is to
implement a compensation program that will provide appropriate incentives while,
at the same time, encourage executive officers to increase their equity
ownership in the Company and thereby align their interests with those of the
Company's stockholders. The compensation program consists primarily of three
components, namely (a) base salary, (b) bonus and (c) stock options. Each of
these factors are further described below. In addition, executive officers are
eligible to participate, on a non-discriminatory basis, in various benefit
programs provided to all full-time employees, including the Company's stock
purchase plan,
4
<PAGE> 8
401(k) plan and group medical, disability and life insurance programs. The
Committee believes that executive compensation packages should be viewed as a
whole in order to assess properly their appropriateness.
In establishing total compensation packages for the Company's executive
officers, the Committee takes into account the compensation packages offered to
executives of other semiconductor capital equipment companies of similar
stature. The Committee uses this comparative data primarily as benchmarks to
ensure that the Company's executive compensation packages are competitive. The
Committee seeks to maintain total compensation within the broad middle range of
comparative pay. The Committee generally meets quarterly and at other times that
it deems are necessary and, from time to time, confers with outside advisors
concerning acceptable industry practices. Individual amounts are based not only
on comparative data, but also on such factors as length of service with the
Company and the Committee's judgment as to individual contributions. These
factors are not assigned specific mathematical weights.
Salary
Base salaries are reviewed annually. It is the Committee's intention to pay
slightly below-market base salary but provide a significant equity ownership
opportunity to create incentives for the Company's executive officers to
maximize the Company's growth and success while increasing stockholders' value
over the long term. Changes in base salary from year to year depend upon such
factors as individual performance, cost of living changes and the economic and
business conditions affecting the Company. Executive officer base salaries are
set at the beginning of each calendar year.
Dr. Economou's base salary was increased from $165,000 to $200,000 on
January 1, 1997, an increase of 21%. This increase was largely based on his
contributions to the Company's meeting its growth and profit objectives and
establishing the fundamental technological base necessary to enhance its
prospects.
Bonus
Executive bonuses are determined in accordance with achievement of the
Company's goals for the most recent fiscal year. The amounts are intended to
reward management for achieving certain milestones set out at the beginning of
the fiscal year. Among others, operating profit, sales growth, bookings and
asset management are taken into account.
Stock Options
As noted above, stock options are an important component of total executive
compensation. Stock options are considered long-term incentives that link the
long-term interests of management with those of the Company's stockholders.
Stock options that the Committee has granted vest over a four year period from
the date of grant at the rate of 6.25% per fiscal quarter, commencing at the end
of the quarter in which they are granted. Option exercise prices are set at 100%
of the fair market value of the stock at the date of the grant and expire after
ten years. The Committee has absolute discretion to determine the recipients and
the number of options to be awarded. Each award is at the Committee's discretion
and is not subject to any specific formula or criteria. The Committee generally
awards options on an annual basis. The number of shares for which options were
granted to executive officers in fiscal 1997 was determined by the Committee
based upon several factors, including the executive's position, his past and
future expected performance, the comparative data described above, and the
number of shares under options previously granted. These factors were evaluated
in a qualitative manner and were not assigned predetermined weights.
5
<PAGE> 9
Section 162(m)
Section 162(m) of the Internal Revenue Code which became effective
January 1, 1994, generally limits the deductibility of annual compensation for
certain officers to $1 million. It is the general intention of the Committee to
assure that officer compensation will meet the Section 162(m) requirements for
deductibility. However, the Committee reserves the right to use its judgment to
authorize compensation payments which may be in excess of the limit when the
Committee believes such payment is appropriate, after taking into consideration
changing business conditions or the officer's performance, and is in the best
interest of the shareholders. The Committee will review its policy concerning
Section 162(m) on a year-by-year basis.
Compensation Committee
Thomas W. Folger
Charles M. McKenna
Louis P. Valente
6
<PAGE> 10
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following performance graph assumes an investment of $100 on May 11,
1994 (the date the Company's common stock was first registered under Section 12
of the Securities Exchange Act of 1934) and compares the changes thereafter in
the market price of the Company's common stock with a broad market index (Nasdaq
Stock Market (U.S.)) and an industry index (H & Q Technology). The Company paid
no dividends during the periods shown; the performance of the indexes is shown
on a total return (dividend reinvestment) basis. The graph lines merely connect
fiscal year-end dates and do not reflect fluctuations between those dates.
[MICRION PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
5/11/94 6/30/94 6/30/95 6/30/96 6/30/97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Micrion Corporation $ 100 $ 114 $ 245 $ 264 $ 309
Nasdaq Stock Market-US 100 99 132 169 206
H & Q Technology 100 97 172 201 263
</TABLE>
THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION AND THE
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN INFORMATION ABOVE SHALL NOT BE
DEEMED "SOLICITING MATERIAL" OR INCORPORATED BY REFERENCE INTO ANY OF THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION BY IMPLICATION OR
BY ANY REFERENCE IN ANY SUCH FILING TO THIS PROXY STATEMENT.
7
<PAGE> 11
EXECUTIVE OFFICER COMPENSATION
The following summary compensation table sets forth the compensation paid
or accrued for services rendered in fiscal 1997, 1996 and 1995 to the chief
executive officer and the other four most highly compensated executive officers
of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ ------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND FISCAL BONUS(S) COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($) ($)(1) OPTIONS(#) ($)
- ----------------------------- ------ -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas P. Economou......... 1997 $183,268 $25,000 $ 10,800 20,000 $ 6,590(2)
President and Chief 1996 159,716 50,000 10,800 35,000 3,432
Executive Officer 1995 147,540 50,000 10,800 15,000 961
John A. Doherty.............. 1997 155,785(3) -- 10,800 6,667 3,865(4)
Senior Vice President, 1996 146,076(5) 10,000 11,145 7,500 16,086
Marketing 1995 109,504(6) 15,000 12,960 7,500 624
Robert K. McMenamin.......... 1997 188,394(7) -- 10,800 6,666 3,515(8)
Vice President, Sales 1996 144,239(9) 7,000 10,800 5,000 1,948
1995 109,392(10) 10,000 10,800 7,500 568
Billy W. Ward................ 1997 150,587 10,000 -- -- 5,540(11)
Senior Vice President,
Chief 1996 126,547 18,000 -- 50,000 19,790
Engineer 1995 100,336 45,000 -- 7,500 649
Charles J. Libby............. 1997 118,001 10,000 -- 6,667 4,320(12)
Vice President, 1996 107,432 20,000 -- 5,000 2,259
Engineering 1995 103,680 25,000 -- 7,500 655
</TABLE>
- ---------------
(1) Includes annual personal car allowance in the amount of $10,800.
(2) Consists of (i) insurance premiums with respect to term life insurance in
the amount of $1,092 and (ii) Company contributions to 401(k) account in
the amount of $5,498.
(3) Includes sales commissions in the amount of $49,802.
(4) Consists of (i) insurance premiums with respect to term life insurance in
the amount of $686, (ii) Company contributions to 401(k) account in the
amount of $3,179.
(5) Includes sales commission in the amount of $45,943.
(6) Includes sales commissions in the amount of $10,389.
(7) Includes sales commissions in the amount of $92,038.
(8) Consists of (i) insurance premiums with respect to term life insurance in
the amount of $624 and (ii) Company contributions to 401(k) account in the
amount of $2,891.
(9) Includes sales commissions in the amount of $53,166.
(10) Includes sales commissions in the amount of $19,251.
(11) Consists of (i) insurance premiums with respect to term life insurance in
the amount of $936 and (ii) Company contributions of 401(k) account in the
amount of $4,604.
(12) Consists of (i) insurance premiums with respect to term life insurance in
the amount of $780 and (ii) Company contributions to 401(k) account in the
amount of $3,540.
8
<PAGE> 12
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table shows all stock option grants to the Named Executive
Officers during fiscal 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATE OF STOCK
PRICE APPRECIATION
NUMBER OF SHARES PERCENT OF TOTAL OPTIONS FOR OPTION TERM (1)
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION -------------------
NAME GRANTED(#) IN FISCAL YEAR PER SHARE DATE 5% 10%
- ---------------------------- ------------------ ------------------------ -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nicholas P. Economou........ 20,000(2) 31.8% $ 9.50 7/31/06 $119,490 $302,812
John A. Doherty............. 6,667(2) 10.6% 9.50 7/31/06 39,831 100,942
Robert K. McMenamin......... 6,666(2) 10.6% 9.50 7/31/06 39,826 100,927
Billy W. Ward............... -- -- -- -- -- --
Charles J. Libby............ 6,667(2) 10.6% 9.50 7/31/06 39,831 100,942
</TABLE>
- ---------------
(1) As required by the rules of the Securities and Exchange Commission,
potential values stated are based on the prescribed assumption that the
Company's common stock will appreciate in value from the date of grant to
the end of the option term at rates (compounded annually) of 5% and 10%,
respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the Company's common stock.
(2) These options vest in sixteen (16) equal quarterly installments, commencing
on July 31, 1996, the date of grant, subject to continuing employment.
FISCAL YEAR-END OPTION VALUES
During fiscal 1997, none of the Named Executive Officers exercised stock
options issued by the Company. The following table sets forth information
regarding the number of vested and unvested options and the unrealized value or
spread (the difference between the exercise price and the market value) of the
unexercised options issued by the Company and held by the Named Executive
Officers on July 1, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS(#) IN-THE-MONEY OPTIONS($)
------------------- -----------------------
NAME VESTED UNVESTED VESTED UNVESTED
- --------------------------------------------------- ------ -------- --------- ---------
<S> <C> <C> <C> <C>
Nicholas P. Economou............................... 30,745 39,375 $183,594 $248,906
John A. Doherty.................................... 10,120 11,563 60,157 73,596
Robert K. McMenamin................................ 9,026 10,156 53,730 63,328
Billy W. Ward...................................... 23,938 33,594 148,535 212,403
Charles J. Libby................................... 9,037 10,156 53,732 63,333
</TABLE>
APPROVAL OF AMENDED AND RESTATED
1994 OMNIBUS STOCK PLAN
(ITEM 2 OF NOTICE)
The Board of Directors has adopted, subject to stockholder approval,
certain amendments to the Company's 1994 Omnibus Stock Plan and directed that
such Plan, as amended and restated to reflect these amendments (the "Plan"), be
submitted to the stockholders for their approval.
BACKGROUND
The Plan was adopted in 1994 prior to the Company's initial public offering
and thereafter was amended to increase the number of shares available for
issuance thereunder. The Plan provides for the issuance of shares of Common
Stock pursuant to the grant of incentive stock options ("ISOs") to employees
(currently 260) and the grant of nonqualified stock options ("NSOs") or
restricted stock to employees, consultants, directors (currently five) and
officers of the Company. To date only stock options have been issued under the
9
<PAGE> 13
Plan. An aggregate of 676,290 options have been granted, 668,739 of which remain
outstanding (5,457 having been exercised and 2,094 having been forfeited) as of
August 15, 1997 (209,900 of which are subject to approval of the Plan, as
amended and restated, by the stockholders). The amendments to the Plan approved
by the Board include an increase in the number of shares reserved for issuance
under the Plan from 500,000 to 1,000,000.
The following summary of the Plan does not purport to be complete and is
qualified in its entirety by reference to the full text of the Plan, which is
attached as Appendix A to this Proxy Statement.
ADMINISTRATION
The Plan is administered by the Compensation Committee (the "Committee") of
the Board of Directors which consists of two or more members of the Board who
are "non-employee directors" and "outside directors" within the meanings of the
securities laws and the Internal Revenue Code (the "Code"), respectively.
Members of the Committee serve at the pleasure of the Board of Directors.
Subject to the provisions of the Plan, the Committee has the authority to select
the optionees or restricted stock recipients and determine the terms of the
options or restricted stock granted, including: (i) the number of shares, (ii)
option exercise terms, (iii) the exercise or purchase price (which in the case
of an ISO cannot be less than the market price of the Common Stock as of the
date of grant and in the case of an NSO cannot be less than 85% of the market
price of the Common Stock as of the date of grant), (iv) type and duration of
transfer or other restrictions, and (v) the time and form of payment for
restricted stock and upon exercise of options.
SHARES AVAILABLE FOR ISSUANCE
The stock subject to options and awards is authorized but unissued shares
of the Company's common stock or shares of treasury common stock. Any shares
subject to an option which for any reason expires or is terminated unexercised
as to such shares and any restricted stock which is reacquired by the Company as
a result of the exercise of a repurchase option may again be the subject of an
option or award under the Plan.
TRANSFERABILITY OF OPTIONS
Previously, under the Plan, options could not be transferred, except in
limited circumstances under the laws of descent and distribution. The amendments
approved by the Board give the Committee discretionary authority to permit
greater transferability in the case of any option, including transfers to
members of the participant's family. In no event shall an ISO be transferable
other than as permitted under the rules proscribed in the Code with respect to
ISOs.
EXERCISE AND TERMINATION OF OPTIONS
No ISO may be exercised more than 60 days following termination of
employment unless the termination is due to death or disability, in which case
the option is exercisable for a maximum of 180 days after such termination. The
maximum term of any option granted under the Plan is ten years. If an employee
to whom an ISO is granted is, on the date of the grant, the owner of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, then the ISO may not have a term longer than five years.
10
<PAGE> 14
FISCAL 1997 OPTION GRANTS
The following table sets forth the number of outstanding options granted
during fiscal 1997 under the Plan to the specified individuals and groups.
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS
------------------------------------------------------------ -----------------
<S> <C>
Nicholas P. Economou........................................ 20,000
John A. Doherty............................................. 6,667
Robert K. McMenamin......................................... 6,666
Billy W. Ward............................................... --
Charles J. Libby............................................ 6,667
All current executive officers as a group (7 persons)....... 51,334
All employees who were not executive officers as a group.... 11,666
</TABLE>
ADJUSTMENT OF AWARDS
The Plan provides that the number and kind of shares which may be awarded
under the Plan or which are subject to outstanding awards, as well as the option
or grant price of any award, will be subject to adjustment in the event of a
stock dividend, stock split or other change in corporate structure or
capitalization or certain other transactions which, in the determination of the
Committee, would affect such shares.
AMENDMENTS
Previously, under the Plan, all amendments to the Plan needed to be
approved by the Board, and certain amendments needed to be approved by the
stockholders. The amendments to the Plan approved by the Board provide that
amendments may be approved by the Board or the Committee. Such future amendments
will not require stockholder approval under the Plan. The Company may continue
to seek stockholder approval in the future in order to comply with applicable
requirements of Nasdaq or exchanges on which its shares are listed, Section 422
of the Code (pertaining to ISOs), Section 162(m) of the Code, or other
applicable legal requirements.
FEDERAL INCOME TAX CONSEQUENCES
ISOS -- A participant who receives an ISO will recognize no taxable income
for regular federal income tax purposes upon either the grant or the exercise of
such ISO. However, when a participant exercises an ISO, the difference between
the fair market value of the shares purchased and the option price of those
shares will be includible in determining the participant's alternative minimum
taxable income.
If the shares are retained by the participant for at least one year from
date of exercise and two years from date of grant of the option, gain will be
taxable to the participant, upon sale of the shares acquired upon exercise of
the ISO, as a long-term capital gain. In general, the adjusted basis for the
shares acquired upon exercise will be the option price paid with respect to such
exercise. The Company will not be entitled to a tax deduction upon the exercise
of an ISO.
If the shares are sold within a period of one year from the date of
exercise or two years from the date of grant of the ISO, the participant will be
required to recognize ordinary income equal to the difference between the option
price and the lesser of the fair market value of the shares on the date of
exercise or the amount realized on the sale or exchange of the shares. In this
situation, the Company will be entitled to a tax deduction of an equal amount.
NSOS -- A participant will not recognize taxable income for federal income
tax purposes at the time an NSO is granted. However, the participant will
recognize compensation taxable as ordinary income at the time of exercise for
all shares which are not subject to a substantial risk of forfeiture. The amount
of such compensation will be the difference between the option price and the
fair market value of the shares on the date of exercise of the option. The
Company will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the participant is deemed to have recognized
compensation income
11
<PAGE> 15
with respect to shares received upon exercise of the NSO. The participant's
basis in the shares will be adjusted by adding the amount so recognized as
compensation to the purchase price paid by the participant for the shares.
The participant will recognize gain or loss when he disposes of shares
obtained upon exercise of a NSO in an amount equal to the difference between the
selling price and the participant's tax basis in such shares. Such gain or loss
will be treated as long-term or short-term capital gain or loss, depending upon
the holding period.
EFFECTIVE DATE AND TERM
Subject to approval by the stockholders, the Plan, as amended and restated,
became effective as of September 5, 1997, and awards may be made under the Plan,
as amended and restated, from and after that date. No awards may be made under
the Plan after September 5, 2007, but awards granted before then may extend
beyond that date.
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
(ITEM 3 OF NOTICE)
On the recommendation of the Audit Committee, the Board of Directors has
selected KPMG Peat Marwick LLP, independent certified public accountants, as
auditors of the Company for the fiscal year ending June 30, 1998. This firm has
audited the accounts and records of the Company since 1985. A representative of
KPMG Peat Marwick LLP will be present at the Annual Meeting to answer questions
from stockholders and will have an opportunity to make a statement if desired.
The selection of independent auditors is not required to be submitted to a
vote of the stockholders. The Board believes, however, it is appropriate as a
matter of policy to request that the stockholders ratify the appointment. If the
stockholders do not ratify the appointment, the Board will reconsider its
selection.
BY-LAW CHANGES
On March 28, 1997, the Board of Directors approved amendments to Articles I
and II of the Company's By-Laws. As amended, Article I now provides that a
special meeting of the stockholders may be called upon written application of
one or more stockholders who hold at least 40% in interest of the capital stock
entitled to vote thereat. Previously, the By-Laws provided that stockholders who
held at least 10% in interest could so call such a meeting.
As amended, Article II now provides that the provisions of Chapter 156B,
section 50A of the Massachusetts General Laws with respect to staggered terms
for directors shall apply to the Company. Commencing with the 1997 Annual
Meeting, the directors of the Company shall be classified, with respect to the
time for which they severally hold office, into three classes, as nearly equal
in number as possible, with terms expiring at the 1998, 1999 and 2000 Annual
Meetings. At each Annual Meeting after the 1997 Annual Meeting, the successors
to the class of directors whose term expires at that meeting shall be elected to
hold office for a term continuing until the Annual Meeting held in the third
year following the year of their election. At any meeting of the stockholders
called for the purpose, any director may be removed from office only for cause
by the affirmative vote of a majority of the outstanding shares. At any meeting
of the Board, any director may be removed from office for cause by vote of a
majority of the directors then in office. Vacancies and newly created
directorships, whether resulting from an increase in the size of the Board, from
the death, resignation, disqualification or removal of a director or otherwise,
shall be filled solely by the affirmative vote of a majority of the directors
then in office, even if less than a quorum; any director so elected shall hold
office for the remainder of the full term of the class of director in which the
vacancy occurred or the new directorship was created and until such director's
successor shall have been elected and qualified.
Under Massachusetts law, when a proposed by-law change is approved by the
Board, notice of the by-law change must be given no later than notice of the
annual meeting, and therefore is included here.
12
<PAGE> 16
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's officers and directors and persons who own more
than ten percent of its common stock to file reports with the Securities and
Exchange Commission disclosing their ownership of stock in the Company and
changes in such ownership. Copies of such reports are also required to be
furnished to the Company. Based solely on a review of the copies of such reports
received by it, the Company believed that, during fiscal 1997, all such filing
requirements were complied with.
STOCKHOLDER PROPOSALS FOR 1998 MEETING
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be presented on or before June 3, 1998 for
inclusion in the proxy materials relating to that meeting. Any such proposals
should be sent to the Company at its principal offices addressed to the Vice
President, Finance and Administration. Other requirements for inclusion are set
forth in Rule 14a-8 under the 1934 Act.
OTHER MATTERS
The Company has no knowledge of any matters to be presented for action by
the stockholders at the Annual Meeting other than as set forth above. However,
the enclosed proxy gives discretionary authority to the persons named therein to
act in accordance with their best judgment in the event that any additional
matters should be presented.
The Company will bear the cost of the solicitation of proxies by
management, including the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of common stock.
By order of the Board of Directors
/s/ Roslyn G. Daum
----------------------
ROSLYN G. DAUM
Clerk
October 1, 1997
The Board hopes that stockholders will attend the meeting. WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A prompt response will greatly
facilitate arrangements for the meeting, and your cooperation will be
appreciated. Stockholders who attend the meeting may vote their stock personally
even though they have sent in their proxies.
13
<PAGE> 17
APPENDIX A
MICRION CORPORATION
AMENDED AND RESTATED
1994 OMNIBUS STOCK PLAN
------------------------
1. Purpose. This Micrion Corporation Amended and Restated 1994 Omnibus
Stock Plan (the "Plan") is intended to provide incentives (a) to the officers
and other employees of Micrion Corporation (the "Company"), its parent (if any)
and any present or future subsidiaries of the Company (collectively, "Related
Corporations") by providing them with opportunities to purchase stock in the
Company pursuant to options which qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
granted hereunder ("ISO" or "ISOs"); (b) to directors, officers, employees and
consultants of the Company and Related Corporations by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which do not qualify as ISOs ("NonQualified Option" or "Non-Qualified
Options"); and (c) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with opportunities to make
direct purchases of restricted stock in the Company ("Restricted Stock"). Both
ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation" as those
terms are defined in Section 424 of the Code.
2. Administration of the Plan. (a) The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board may appoint a
Compensation Committee (the "Committee") of two or more of its members to
administer the Plan. In the event the Company registers any class of any equity
security pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), each member of the Committee shall be a
"non-employee director" as defined in Rule 16b-3 under the Exchange Act. Subject
to ratification of the grant of each Option or Restricted Stock by the Board (if
so required by applicable state law), and subject to the terms of the Plan, the
Committee, if so appointed, shall have the authority to (i) determine the
employees of the Company and Related Corporations (from among the class of
employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Restricted
Stock) to whom Non-Qualified Options or Restricted Stock may be granted; (ii)
determine the time or times at which Options or Restricted Stock may be granted;
(iii) determine the option price of shares subject to each Option, which price
with respect to ISOs shall not be less than the minimum specified in paragraph
6, and the purchase price of Restricted Stock; (iv) determine whether each
Option granted shall be an ISO or a Non-Qualified Option; (v) determine (subject
to paragraph 7) the time or times when each Option shall become exercisable and
the duration of the exercise period; (vi) determine whether restrictions such as
repurchase options are to be imposed on shares subject to Options and to
Restricted Stock, and the nature of such restrictions, if any; and (vii)
interpret the Plan and prescribe and rescind rules and regulations relating to
it. If the Committee determines to issue a Non-Qualified Option, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Option or authorization or agreement for Restricted Stock
granted under it shall be final unless otherwise determined by the Board. The
Committee may from time to time adopt such rules and regulations for carrying
out the Plan as it may deem best. No member of the Board or the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Option or Restricted Stock granted under it.
(b) The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority of
the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. All
references in the Plan to the Committee shall mean the Board if there is no
Committee so appointed. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members
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<PAGE> 18
(with or without cause), and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any officer or
other employee of the Company or any Related Corporation. Those directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options and Restricted Stock may be granted to any director
(whether or not an employee), officer, employee or consultant of the Company or
any Related Corporation. The Committee may take into consideration an optionee's
individual circumstances in determining whether to grant an ISO or a
Non-Qualified Option or Restricted Stock. Granting of any Option or Restricted
Stock to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Options
or Restricted Stock.
4. Stock. The stock subject to Options and Restricted Stock shall be
authorized but unissued shares of Common Stock of the Company, no par value per
share (the "Common Stock"), or shares of Common Stock re-acquired by the Company
in any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 1,000,000, subject to adjustment as provided in paragraph 13. Any
such shares may be issued as ISOs, Non-Qualified Options or Restricted Stock so
long as the aggregate number of shares so issued does not exceed such number, as
adjusted. If any Option granted under the Plan shall expire or terminate for any
reason without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, or if any Restricted Stock shall be reacquired
by the Company by exercise of its repurchase option, the shares subject to such
expired or terminated Option and reacquired shares of Restricted Stock shall
again be available for grants of Options or Restricted Stock under the Plan.
5. Grants Under the Plan. Options or Restricted Stock may be granted
under the Plan at any time prior to September 5, 2007. Any such grants of ISOs
shall be subject to the receipt, within 12 months of September 5, 1997, of the
approval of Stockholders as provided in paragraph 17. The date of grant of an
Option under the Plan will be the date specified by the Committee at the time it
awards the Option; provided, however, that such date shall not be prior to the
date of award. The Committee shall have the right, with the consent of the
optionee, to convert an ISO granted under the Plan to a Non-Qualified Option
pursuant to paragraph 15.
6. Minimum Option Price. (a) The price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an employee owning stock possessing more than
ten percent of the total combined voting power of all classes of stock of the
Company or any Related Corporation, the price per share specified in the
agreement relating to such ISO shall not be less than 110 percent of the fair
market value of Common Stock on the date of grant.
(b) In no event shall the aggregate fair market value (determined at the
time the option is granted) of Common Stock for which ISOs granted to any
employee are exercisable for the first time by such employee during any calendar
year (under all stock option plans of the Company and any Related Corporation)
exceed $100,000.
(c) The price per share specified in the agreement related to each
Non-Qualified Option granted under the Plan shall not be less than eighty-five
percent (85%) of the fair market value of a share of Common Stock on the date of
such grant.
(d) If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
such stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the NASDAQ National
Market System, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National Market
System or on a
A-2
<PAGE> 19
national securities exchange. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as determined by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than ten years from the date of grant or, in the case of
ISOs granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, not more than five years from date of grant. Subject to
earlier termination as provided in paragraphs 9 and 10, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 15.
8. Exercise of Option. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
(a) The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
(b) Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
(c) Each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect to
which it is then exercisable.
(d) The Committee shall have the right to accelerate the date of exercise
of any installment; provided that the Committee shall not accelerate the
exercise date of any installment of any Option granted to any employee as an ISO
(and not previously converted into a Non-Qualified Option pursuant to paragraph
15) if such acceleration would violate the annual vesting limitation contained
in Section 422(d) of the Code which provides generally that the aggregate fair
market value (determined at the time the option is granted) of the stock with
respect to which ISOs granted to any employee are exercisable for the first time
by such employee during any calendar year (under all plans of the Company and
any Related Corporation) shall not exceed $100,000.
9. Termination of Employment. If an ISO optionee ceases to be employed by
the Company or any Related Corporation other than by reason of death or
disability as provided in paragraph 10, no further installments of his ISOs
shall become exercisable, and his ISOs shall terminate after the passage of 60
days from the date of termination of his employment, but in no event later than
on their specified expiration dates except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 15. Leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the employee after the
approved period of absence. Employment shall also be considered as continuing
uninterrupted during any other bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute.
Nothing in the Plan shall be deemed to give any grantee of any Option or
Restricted Stock the right to be retained in employment or other service by the
Company or any Related Corporation for any period of time. ISOs granted under
the Plan shall not be affected by any change of employment within or among the
Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. In granting any Non-
Qualified Option, the Committee may specify that such Non-Qualified Option shall
be subject to the restrictions set forth herein with respect to ISOs, or to such
other termination or cancellation provisions as the Committee may determine.
10. Death; Disability; Dissolution. If an optionee ceases to be employed
by the Company and all Related Corporations by reason of his death, any Option
of his may be exercised, to the extent of the number
A-3
<PAGE> 20
of shares with respect to which he could have exercised it on the date of his
death, by his estate, personal representative or beneficiary who has acquired
the Option by will or by the laws of descent and distribution, at any time prior
to the earlier of the Option's specified expiration date or 180 days from the
date of the optionee's death.
If an optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any Option held by him on the date of termination of employment, to the extent
of the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the Option's specified expiration date
or 180 days from the date of the termination of the optionee's employment. For
the purposes of the Plan, the term "disability" shall have the meaning assigned
to it in Section 22(e)(3) of the Code or any successor statute.
In the case of a partnership, corporation or other entity holding a
Non-Qualified Option, if such entity is dissolved, liquidated, becomes insolvent
or enters into a merger or acquisition with respect to which such optionee is
not the surviving entity, such Option shall terminate immediately.
11. Assignability. Subject to the provisions of this Section 11, (a) no
Option shall be transferable otherwise than by will, by the laws of descent and
distribution, or by operation of a "qualified domestic relations order," as that
term is defined in the Code, and (b) during the lifetime of the Optionee, rights
under the Option may be exercised only by the Optionee, the Optionee's guardian
or legal representative, or by the assignee of the Option under such a
"qualified domestic relations order." Notwithstanding the foregoing, the
Committee may provide for greater transferability in the case of any Option
including, without limitation, transfer to one or more members of the Optionee's
family. Unless otherwise provided by the Committee, the conditions and criteria
governing the exercise or payment of such an Option (by way of example
accelerated vesting upon death or disability or the attainment of performance
goals applicable to the Optionee), shall, following any permitted transfer,
continue to be determined by reference to the Optionee and not the transferee.
In no event shall ISOs awarded under the Plan be transferable other than as
permitted under the rules prescribed in or under the Code for incentive stock
options. An award that is intended to be exempt under Rule 16b-3 under the
Exchange Act or any successor rule, or that is intended to qualify for the
performance-based exception under Section 162(m) of the Code, shall be
transferable only to the extent consistent with such exemption or qualification.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including transfer and repurchase restrictions applicable to
shares of Common Stock issuable upon exercise of Options. The Committee may from
time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. Adjustments. Upon the happening of any of the following described
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided:
(a) In the event shares of Common Stock shall be sub-divided or combined
into a greater or smaller number of shares or if, upon a merger, consolidation,
reorganization, split-up, liquidation, combination, recapitalization or the like
of the Company, the shares of Common Stock shall be exchanged for other
securities of the Company or of another corporation, each optionee shall be
entitled, subject to the conditions herein stated, to purchase such number of
shares of common stock or amount of other securities of the Company or such
other corporation as were exchangeable for the number of shares of Common Stock
which such optionee would have been entitled to purchase except for such action,
and appropriate adjustments shall be made in the purchase price per share to
reflect such subdivision, combination, or exchange.
(b) In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall at
the time be subject to option hereunder, each optionee upon
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<PAGE> 21
exercising an Option shall be entitled to receive (for the purchase price paid
upon such exercise) the shares as to which he is exercising his Option and, in
addition thereto (at no additional cost), such number of shares of the class or
classes in which such stock dividend or dividends were declared or paid, and
such amount of cash in lieu of fractional shares, as he would have received if
he had been the holder of the shares as to which he is exercising his Option at
all times between the date of grant of such Option and the date of its exercise.
(c) Notwithstanding the foregoing, any adjustments made pursuant to
subparagraph (a) or (b) shall be made only after the Committee, after consulting
with counsel for the Company, determines whether such adjustments with respect
to ISOs will constitute a "modification" of such ISOs as that term is defined in
Section 424 of the Code, or cause any adverse tax consequences for the holders
of such ISOs. No adjustments shall be made for dividends paid in cash or in
property other than securities of the Company.
(d) No fractional shares shall actually be issued under the Plan. Any
fractional shares which, but for this subparagraph (d), would have been issued
to an optionee pursuant to an Option, shall be deemed to have been issued and
immediately sold to the Company for their fair market value, and the optionee
shall receive from the Company cash in lieu of such fractional shares.
(e) Upon the happening of any of the foregoing events described in
subparagraphs (a) or (b) above, the class and aggregate number of shares set
forth in paragraph 4 hereof which are subject to Options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events specified in such subparagraphs. The Committee
shall determine the specific adjustments to be made under this paragraph 13, and
subject to paragraph 2, its determination shall be conclusive.
14. Means of Exercising Options. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor either (i) in United
States dollars in cash or by check, or (ii) at the discretion of the Committee,
through delivery of shares of Common Stock having fair market value equal as of
the date of the exercise to the cash exercise price of the Option, or (iii) at
the discretion of the Committee, by delivery of the optionee's personal recourse
note bearing interest payable not less than annually at no less than 100% of the
lowest applicable Federal rate, as defined in Section 1274(d) of the Code, or
(iv) at the discretion of the Committee, by any combination of (i), (ii) and
(iii) above. If the Committee exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (ii) or
(iii) of the preceding sentence, such discretion shall be exercised in writing
at the time of the grant of the ISO in question. The holder of an Option shall
not have the rights of a shareholder with respect to the shares covered by his
Option until the date of issuance of a stock certificate to him for such shares.
Except as expressly provided above in paragraph 13 with respect to change in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificates are issued.
15. Conversion of ISOs into Non-Qualified Options: Termination of
ISOs. The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but not be limited to, extending the exercise period
or reducing the exercise price of the appropriate installments of such Options.
At the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with the Plan. Nothing in the Plan shall be
deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
16. Restricted Stock. Each grant of Restricted Stock under the Plan shall
be evidenced by an instrument (a "Restricted Stock Agreement") in such form as
the Committee shall prescribe from time to
A-5
<PAGE> 22
time in accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions as the Committee, in its
discretion, shall establish:
(a) The Committee shall determine the number of shares of Common Stock to
be issued to an eligible person pursuant to the grant of Restricted Stock, and
the extent, if any, to which they shall be issued in exchange for cash, other
consideration, or both.
(b) Shares issued pursuant to a grant of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise disposed of, except by will or the
laws of descent and distribution, or as otherwise determined by the Committee in
the Restricted Stock Agreement, for such period as the Committee shall
determine, from the date on which the Restricted Stock is granted (the
"Restricted Period"). The Company will have the option to repurchase the Common
Stock at such price as the Committee shall have fixed in the Restricted Stock
Agreement which option will be exercisable (i) if the participant's continuous
employment or performance of services for the Company and the Related
Corporations shall terminate prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such repurchase option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such Restricted
Stock, or (iii) under such other circumstances as determined by the Committee in
its discretion. Such repurchase option shall be exercisable on such terms, in
such manner and during such period as shall be determined by the Committee in
the Restricted Stock Agreement. Each certificate for shares issued as Restricted
Stock shall bear an appropriate legend referring to the foregoing repurchase
option and other restrictions; shall be deposited by the stockholder with the
Company, together with a stock power endorsed in blank; or shall be evidenced in
such other manner permitted by applicable law as determined by the Committee in
its discretion. Any attempt to dispose of any such shares in contravention of
the foregoing repurchase option and other restrictions shall be null and void
and without effect. If shares issued as Restricted Stock shall be repurchased
pursuant to the repurchase option described above, the stockholder, or in the
event of his death, his estate, personal representative, or beneficiary who has
acquired the Option by will or by the laws of descent and distribution, shall
forthwith deliver to the Secretary of the Company the certificates for the
shares, accompanied by such instrument of transfer, if any, as may reasonably be
required by the Secretary of the Company. If the repurchase option described
above is not exercised by the Company, such repurchase option and the
restrictions imposed pursuant to the first sentence of this subparagraph (b)
shall terminate and be of no further force and effect.
(c) If a person who has been in continuous employment or performance of
services for the Company or a Related Corporation since the date on which
Restricted Stock was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability or by reason of early, normal or deferred
retirement under an approved retirement program of the Company or a Related
Corporation (or such other plan or arrangement as may be approved by the
Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Restricted Stock was granted to him and prior
to the end of the Restricted Period, the Committee may determine to cancel the
repurchase option (and any and all other restrictions) on any or all of the
shares of Restricted Stock; and the repurchase option shall become exercisable
at such time as to the remaining shares, if any.
17. Term and Amendment of Plan. This Plan shall expire on September 5,
2007 (except as to Options and Restricted Stock outstanding on that date). The
Board may terminate or amend the Plan in any respect at any time. No amendment
of the Plan shall adversely affect in a material manner any right of any
Optionee or purchaser of Restricted Stock without his written consent, under any
Option or Restricted Stock previously granted to him.
18. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options and Restricted Stock authorized under the
Plan shall be used for general corporate purposes.
19. Governmental Regulation. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
A-6
<PAGE> 23
20. Withholding of Additional Income Taxes. The Company, in accordance
with the Code, may, upon exercise of a Non-Qualified Option or the purchase of
Common Stock for less than its fair market value or the lapse of restrictions on
Restricted Stock or the making of a Disqualifying Disposition (as defined in
paragraph 21) require the employee to pay additional withholding taxes in
respect of the amount that is considered compensation includible in such
person's gross income.
21. Notice to Company of Disqualifying Disposition. Each employee who
receives ISOs shall agree to notify the Company in writing immediately after the
employee makes a disqualifying disposition of any Common Stock received pursuant
to the exercise of an ISO (a "Disqualifying Disposition"). Disqualifying
Disposition means any disposition (including any sale) of such stock before the
later of (a) two years after the employee was granted the ISO under which he
acquired such stock, or (b) one year after the employee acquired such stock by
exercising such ISO. If the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition will
thereafter occur.
22. Governing Laws; Construction. The validity and construction of the
Plan and the instruments evidencing Options and Restricted Stock shall be
governed by the laws of The Commonwealth of Massachusetts. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
A-7
<PAGE> 24
1294-PS-97
<PAGE> 25
DETACH HERE MIC 1
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MICRION CORPORATION
1997 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of MICRION CORPORATION, a Massachusetts
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated October 1, 1997, and hereby
P appoints Nicholas P. Economou and David M. Hunter, and both of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf
R and in the name of the undersigned, to represent the undersigned at the 1997
Annual Meeting of Stockholders of MICRION CORPORATION to be held on Monday,
O November 3, 1997 at 10:00 a.m., local time, at the offices of Choate, Hall &
Stewart, Exchange Place, 53 State Street, Boston, Massachusetts, and at any
X adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present,
Y on the matters set forth on the reverse side. Either of such attorneys or
substitutes shall have and may exercise all of the powers of said
attorneys-in-fact hereunder.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF
THE AMENDED AND RESTATED 1994 OMNIBUS PLAN, FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH MATTERS AS MAY COME BEFORE THE MEETING.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
<PAGE> 26
DETACH HERE
[X] Please mark
votes as in
this example
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS (to serve for the respective terms
set forth in the Proxy Statement):
Nominees: Nicholas P. Economou; Louis P. Valente; 2. PROPOSAL TO APPROVE THE FOR AGAINST ABSTAIN
Thomas W. Folger; Charles M. McKenna; COMPANY'S AMENDED AND [ ] [ ] [ ]
Bily W. Ward RESTATED 1994 OMNIBUS
FOR WITHHELD STOCK PLAN:
[ ] [ ]
[ ] ______________________________________ MARK HERE [ ] 3. PROPOSAL TO RATIFY THE FOR AGAINST ABSTAIN
For all nominees except as noted above FOR ADDRESS APPOINTMENT OF KPMG PEAT [ ] [ ] [ ]
CHANGE AND MARWICK LLP AS THE INDE-
NOTE BELOW PENDENT AUDITORS OF THE
COMPANY FOR THE 1998
FISCAL YEAR;
and upon such other matter or matters which may
properly come before the meeting and any adjournment(s)
thereof.
(This Proxy should be dated, signed by the stockholder(s)
exactly as his or her name appears hereon, and returned
promptly in the enclosed envelope. Persons signing in a
fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should
sign.)
Signature:_________________________ Date:________________________ Signature:____________________________ Date:________________
</TABLE>
