SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act ofPROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No.(AMENDMENT NO. )
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/X/[X] Definitive Proxy Statement
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/ /[ ] Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12Section 240.14a-12
VEECO INSTRUMENTS INC.
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(Name of Registrant as Specified In Its Charter)
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VEECO INSTRUMENTS INC.
TERMINAL DRIVE
PLAINVIEW, NEW YORK 11803
April 12, 199913, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the Veeco Instruments Inc. ("Veeco")
Annual Meeting of Stockholders to be held at 9:30 a.m. (New York City time) on
May 14, 1999,12, 2000, at the Corporate Center, 395 North Service Road, Lower Auditorium,
Melville, New York.
The purposes of the Annual Meeting are (i) to (i) elect directors, (ii) consider
and vote upon an amendment to
approve the Veeco Instruments Inc. Amended and Restated
1992 Employees'Company's 2000 Stock Option Plan to increase the number of shares of Veeco
common stock for which stock options may be granted pursuant to such plan from
2,126,787 shares to 2,826,787 shares,and (iii) consider and vote upon an amendment
to the Amended and Restated Veeco Instruments Inc. 1994 Stock Option Plan for
Outside Directors to increase the number of shares of Veeco common stock for
which stock options may be granted pursuant to such plan from 115,000 shares to
215,000 shares and (iv) ratify the appointment
of auditors. These matters are described in the formal Notice of Annual Meeting
of Stockholders and the accompanying Proxy Statement.
Your Board of Directors recommends a vote "FOR" each of the listed
nominees for Director and "FOR" each of the other proposals.
Your vote is very important. It is important that your shares be
represented at the meeting, whether or not you are personally able to attend.
Accordingly, you are requested to sign, date and return the enclosed proxy
promptly. If you do attend the Annual Meeting, you may still revoke your proxy
and vote in person. Your cooperation is greatly appreciated.
Sincerely,
/s/ Edward H. Braun
Edward H. Braun
CHAIRMAN, CHIEF EXECUTIVE
OFFICER AND PRESIDENTChairman, Chief Executive Officer
and President
VEECO INSTRUMENTS INC.
TERMINAL DRIVE
PLAINVIEW, NEW YORKNY 11803
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 199912, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Veeco Instruments Inc. ("Veeco") will be held at 9:30 a.m. (New
York City time) on May 14, 1999,12, 2000, at the Corporate Center, 395 North Service
Road, Lower Auditorium, Melville, New York for the purpose of considering and
acting upon the following matters as set forth in the accompanying Proxy
Statement:
1. Election of three (3)two directors;
2. Approval of a proposed amendment to the Veeco Instruments Inc. Amended
and Restated 1992 Employees'2000 Stock Option Plan, as amended to date, to increase
the number of shares of the common stock of Veeco, par value $.01 per share, for
which stock options may be granted pursuant to such plan from 2,126,787 shares
to 2,826,787 shares;Plan;
3. Approval of a proposed amendment to the Amended and Restated Veeco
Instruments Inc. 1994 Stock Option Plan for Outside Directors, as amended to
date, to increase the number of shares of the common stock of Veeco, par value
$.01 per share, for which stock options may be granted pursuant to such plan
from 115,000 shares to 215,000 shares;
4. Ratification of the appointment of Ernst & Young LLP as auditors for
Veeco for the fiscal year ending December 31, 1999;2000; and
5.4. The transaction of such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 1, 1999March 20, 2000
are entitled to notice of and to vote at the Meeting. A certified list of
stockholders entitled to vote at the Meeting will be available for examination,
during business hours, by any stockholder for any purpose germane to the Meeting
for a period of not less than ten days immediately preceding the Meeting at the
offices of Veeco, Terminal Drive, Plainview, New York 11803.
By order of the Board of Directors,
/s/ John F. Rein, Jr.
John F. Rein, Jr.
SECRETARYSecretary
April 12, 199913, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR
NOT YOU INTEND TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE STAMPED AND ADDRESSED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE. STOCKHOLDERS CAN HELP VEECO AVOID UNNECESSARY EXPENSE AND DELAY BY
PROMPTLY RETURNING THE ENCLOSED PROXY CARD. THE BUSINESS OF THE MEETING TO BE
ACTED UPON BY THE STOCKHOLDERS CANNOT BE TRANSACTED UNLESS AT LEAST 50% OF THE
OUTSTANDING SHARES OF VEECO'S COMMON STOCK ARE REPRESENTED AT THE MEETING.
VEECO INSTRUMENTS INC.
TERMINAL DRIVE
PLAINVIEW, NEW YORKNY 11803
PROXY STATEMENT
GENERAL
This Proxy Statement is being furnished to the stockholders (the
"Stockholders") of Veeco Instruments Inc., a Delaware corporation ("Veeco"), in
connection with the Annual Meeting of Stockholders of Veeco to be held at 9:30
a.m. (New York City time) on May 14, 1999,12, 2000, at the Corporate Center, 395 North
Service Road, Lower Auditorium, Melville, New York (the "Meeting"). Accompanying
this proxy statement ("Proxy Statement") is a notice of such Meeting and a form
of proxy solicited by Veeco's Board of Directors. Audited financial statements
of Veeco for the fiscal year ended December 31, 19981999 are contained in Veeco's
Annual Report which has been mailed with this Proxy Statement. These materials
are being mailed to Stockholders on or about April 13, 2000.
Proxies in the accompanying form which are properly executed and duly
returned to Veeco and not revoked prior to the voting at the Meeting will be
voted as specified. If no contrary specification is made and if not designated
as broker non-votes, the shares of common stock ("Shares") of Veeco, $.01$0.01 par
value per share ("Common Stock"), represented by the enclosed proxy will be
voted (a) FOR the election of the nominees for director ("Directors") (Proposal
1), (b) FOR the approval of the amendment to the Veeco Instruments Inc. Amended and Restated
1992 Employees'2000 Stock Option Plan
(as amended to date, the "Employees'(the "2000 Plan") (Proposal 2), FOR the approval of the amendment to the Amended and Restated
Veeco Instruments Inc. 1994 Stock Option Plan for Outside Directors (as amended
to date, the "Directors' Plan") (Proposal 3), and(c) FOR the ratification of the appointment
of Ernst & Young LLP as auditors (Proposal 4)3). In addition, the shares of Common StockShares
represented by the enclosed proxy will be voted by the persons named therein, in
such persons' discretion, with respect to any other business which may properly
come before the Meeting or any adjournments or postponements thereof. Any
Stockholder giving a proxy has the power to revoke it at any time prior to the
voting by filing with the Secretary of Veeco written notice of revocation or a
duly executed proxy bearing a later date or by voting in person at the Meeting.
The Board of Directors has fixed the close of business on April 1, 1999,March 20, 2000
(the "Record Date"), as the record date for the determination of the
Stockholders who are entitled to receive notice of and to vote at the Meeting.
The holders of 50% of the voting power of all issued and outstanding shares of
Common Stock present in person, or represented by proxy, shall constitute a
quorum at the Meeting. Directors shall be elected by a plurality of the votes
cast at the Meeting (Proposal 1). An affirmative vote by the holders of a
majority of the votes cast at the Meeting at which a quorum is present is
required for approval of each of Proposals 2 and 4. An affirmative vote by the holders of a majority of the outstanding shares
entitled to vote thereon is required for Proposal 3.
On April 1, 1999, the record dateRecord Date for the Meeting, Veeco had outstanding 15,921,01718,137,390
shares of Common Stock. Each share of Common Stock is entitled to one vote with
respect to (i) the election of Directors (Proposal 1), (ii) the
proposed amendment to the Employees' Plan (Proposal 2), (iii) the proposed
amendment to the Directors' Plan (Proposal 3), (iv) the ratificationeach of the
appointment of Ernst & Young LLP as auditors (Proposal 4), and (v) any other matters to be voted upon at the Meeting. On April 4,
2000, the Company mailed to Stockholders a separate proxy statement relating to
a special meeting of stockholders to be held on May 5, 2000 (the "Special
Meeting") to consider and vote upon a proposed merger of CVC, Inc. ("CVC") with
the Company (the "CVC Merger") and an amendment to the Company's certificate of
incorporation to increase its authorized capital stock. Upon consummation of the
CVC Merger, which is expected to occur shortly after the Special Meeting, the
Company will issue approximately 5.0 million shares of Common Stock to the
holders of common stock of CVC.
In accordance with the laws of the State of Delaware, shares represented
by proxies marked as abstentions or designated as broker non-votes will be
counted for purposes of determining a quorum. Shares represented by proxies
marked as abstentions will also be treated as present for purposes of
determining the outcome of a vote on any matter, but will not constitute a vote
"for" or "against" any matter and, thus, will be disregarded in the calculation
of votes cast for the election of Directors. Shares represented by proxies
designated as broker non-votes, however, will not be treated as present for
purposes of determining the outcome of a vote on any matter.
PROPOSAL 1--ELECTION1
ELECTION OF DIRECTORS
Veeco's Certificate of Incorporation provides for a Board of Directors
elected by Stockholders which is divided into three classes of Directors serving
staggered terms. Class IIIII Directors, to be elected at the Meeting, will each
serve a three-year term until the 20022003 Annual Meeting of Stockholders. TheAs of the
date of this mailing, the Board of Directors was comprised of eight members.
Upon consummation of the CVC Merger, the size of the Company's Board of
Directors will be comprisedincreased to ten and Christine B. Whitman and Douglas A.
Kingsley, two current directors of nine (9) members, withCVC, will become Directors of the Company.
Upon consummation of the CVC Merger, Class I toof the Board of Directors will
consist of three (3)four members, Class II towill consist of three (3) members and Class III
towill consist of three (3) members. The continuing Class I Directors are Heinz K.
Fridrich, Roger D. McDaniel and Irwin H. Pfister, who will serve the remainder
of a three-year term until the 2001 Annual Meeting of Stockholders. In addition,
upon consummation of the CVC Merger, Douglas A. Kingsley will join the Board as
a Class I Director to serve until the 2001 Annual Meeting of Stockholders. The
continuing Class IIIII Directors are Edward H. Braun, Virgil Elings, Ph.D.Joel A. Elftmann, Paul R. Low and Richard A.
D'AmoreWalter J.
Scherr, who will serve the remainder of a three-year term until the 20002002 Annual
Meeting of Stockholders.
At the Meeting, three (3)two Class IIIII Directors will be elected for a three-year
term expiring at the 20022003 Annual Meeting of Stockholders. The Board of Directors
has nominated JoelEdward H. Braun and Richard A. Elftmann and Paul R. Low,D'Amore, currently Class IIIII
Directors, for re-election, and has nominated Walter J. Scherr, currentlyre-election. In addition, upon consummation of the CVC Merger,
Christine B. Whitman will join the Board as a Class IIII Director with a term expiring atto serve until
the 20012003 Annual Meeting of Stockholders to serve as a
Class II Director.and will become President and Chief
Operating Officer of the Company.
Directors are elected by a plurality of the votes cast at the Meeting.
Unless authority to vote is specifically withheld by appropriate designation on
the face of the proxy or a broker or nominee has indicated on the face of the
proxy its lack of discretionary authority to vote, the persons named in the
accompanying proxy intend to vote the shares represented thereby for the persons
whose names are set forth above as Directors of Veeco. Accordingly, only proxies
marked "FOR" the nominees or unmarked (other than broker non-votes) will be
counted as "votes" in determining the election of Directors.
The Board of Directors recommends that Stockholders vote FOR the Director
nominees named above, and, unless a Stockholder gives instructions on the proxy
card to the contrary or a broker non-vote is indicated on the proxy card, the
appointees named thereon intend to so to vote. Management does not contemplate that
any of the nominees for Director will be unable to serve, but if such a
situation should arise, it is the intention of the persons named in the
accompanying proxy to vote for the election of such other person or persons as
the remaining members of the Board of Directors may recommend.
2
SECURITY OWNERSHIP
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 20, 2000 (unless otherwise
specified below) by (i) each person known by Veeco to own beneficially more than
five percent of the outstanding shares of Common Stock, (ii) each director of
Veeco, (iii) the Chief Executive Officer and each of the next four most highly
compensated executive officers of Veeco (the "Named Officers") and (iv) all
executive officers and directors of Veeco as a group. Unless otherwise
indicated, Veeco believes that each of the persons or entities named in the
table exercises sole voting and investment power over the shares of Common Stock
that each of them beneficially owns, subject to community property laws where
applicable.
Shares of Common Stock
Beneficially Owned (1) Percentage of
---------------------- Total Shares
Name of Beneficial Owner Shares Options Total Outstanding(1)
------------------------ ------ ------- ----- --------------
5% or Greater Stockholders:
---------------------------
James P. Wyant, Ph.D. (2) 975,127 -- 975,127 5.4%
Directors:
----------
Edward H. Braun (3) 125,019 97,333 222,352 1.2%
Richard A. D'Amore 16,701 30,999 47,700 *
Joel A. Elftmann (4) 2,000 30,999 32,999 *
Heinz K. Fridrich -- 14,000 14,000 *
Paul R. Low -- 30,999 30,999 *
Roger McDaniel -- 14,000 14,000 *
Irwin H. Pfister -- 14,000 14,000 *
Walter J. Scherr -- 18,668 18,668 *
Named Executive Officers:
-------------------------
Don R. Kania, Ph.D -- 13,666 13,666 *
Emmanuel N. Lakios 1,232 28,667 29,899 *
John F. Rein, Jr 1,946 62,833 64,779 *
Joseph Z. Rivlin 293 -- 293 *
All Directors and Executive
Officers as a Group (16 persons) 187,577 412,162 599,739 3.2%
- -----------
* Denotes less than 1% interest.
(1) A person is deemed to be the beneficial owner of securities owned or
which can be acquired by such person within 60 days of the measurement
date upon the exercise of warrants and/or stock options. Each person's
percentage ownership is determined by assuming that warrants and stock
options beneficially owned by such person (but not those owned by any
other person) have been exercised.
(2) Share ownership information is based on information contained in an
amendment to a schedule 13D filed with the Securities and Exchange
Commission on February 11, 2000. Dr. Wyant shares voting and dispositive
power with respect to these shares with his wife, Louise A. Wyant.
(3) Mr. Braun is also Chairman, Chief Executive Officer and President of the
Company.
(4) Includes 2,000 shares of Common Stock held by the Elftmann Family Limited
Partnership, of which Mr. Elftmann is the general partner.
3
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Directors and executive officersExecutive Officers of Veeco, and their ages, as of March 31, 1999,20,
2000, are as follows:
NAME AGE POSITIONName Age Position
- --------------------------------------------------------- --- -------------------------------------------------------------
Directors (1):
- --------------
Edward H. Braun...................................... 59Braun (2) 60 Director, Chairman, Chief Executive Officer and President (3)
Richard A. D'Amore................................... 45D'Amore 46 Director (1) (2) (3)(4)(5)
Joel A. Elftmann..................................... 59Elftmann 60 Director (1) (2)
Virgil Elings, Ph.D.................................. 59 Director(4)
Heinz K. Fridrich.................................... 66Fridrich 67 Director John A. Gurley....................................... 43 Director(4)
Dr. Paul R. Low...................................... 66Low 67 Director (1) (2) (3)(5)
Roger D. McDaniel.................................... 60McDaniel 61 Director (3)(5)
Irwin H. Pfister..................................... 54Pfister 55 Director (4)
Walter J. Scherr..................................... 73Scherr 74 Director
Executive Officers:
- -------------------
Don R. Kania, Ph.D................................... 44 Chief Technology Officer
John P. Kiernan...................................... 37 Vice President--Corporate Controller
Emmanuel N. Lakios................................... 37 President--Process Equipment
Robert P. Oates......................................Ph.D. 45 Vice President, --General Manager Metrology Group-California
John P. Kiernan 38 Vice President, Corporate Controller
Lloyd J. LaComb, Jr., Ph.D. 39 Vice President, General Manager Metrology Group-Arizona
Emmanuel N. Lakios 38 President, Process Equipment Group
Robert P. Oates 46 Vice President, General Manager Industrial Measurement Group
John F. Rein, Jr..................................... 52Jr. 53 Executive Vice President--Finance,President, Finance, Chief Financial Officer, Treasurer
and Secretary
Joseph F. Rivlin..................................... 63Z. Rivlin 64 Executive Vice President--WorldwidePresident, Worldwide Field Operations
Francis Steenbeke.................................... 53Steenbeke 54 Vice President--InternationalPresident, International Sales and Marketing
- ----------------------------------
(1) MemberUpon consummation of the Audit Committee
(2) MemberCVC Merger, Christine B. Whitman, age 48, will
become President and Chief Operating Officer and a Director of the
Compensation CommitteeCompany and Douglas A. Kinglsey, age 37, will become a Director of the
Company.
(2) Mr. Braun is also Chairman, Chief Executive Officer and President of the
Company.
(3) Member of the Nominating CommitteeCommittee.
(4) Member of the Audit Committee.
(5) Member of the Compensation Committee.
EDWARD H. BRAUN has been a Director, Chairman, Chief Executive Officer
and President of Veeco since January 1990. Prior to 1990, Mr. Braun was employedserved as
the
Executive Vice President and Chief Operating Officer of Veeco Instruments
Inc. (now Lambda Electronics, Inc.), the company from which Veeco acquired its
business operations (the "Predecessor").Veeco's predecessor. Mr.
Braun joined the Predecessorpredecessor in 1966 as a Regional Sales Manager/Sales Engineer and held numerous positions with the
Predecessor,predecessor, including Director of Marketing, Director of Operations, and
General Manager. Mr. Braun is a member of the boardboards of Semiconductor Equipment
and Materials International ("SEMI"), of which he was Chairman of the Board in
1993.1993, and International Disk Drive Equipment and Materials Association (IDEMA).
RICHARD A. D'AMORE has been a Director of Veeco since January 1990. Mr.
D'Amore has been a General Partner of North Bridge Venture Partners since 1992.
In addition to Veeco, Mr. D'Amore is a director of Solectron Corporation,
Silverstream Software and Xionics Document Technologies.Centra Software.
JOEL A. ELFTMANN has been a Director of Veeco since May 1994. Mr.
Elftmann is a co-founder of and has been the Chairman of the Board and President of FSI
International ("FSI"), a manufacturer of semiconductor processing products,
since 1983. From August 1983 through August 1989, and from May 1991 through
the present,December, 1999, he also served as Chief Executive Officer of FSI. 3
VIRGIL ELINGS, Ph.D. has been a Director of Veeco sinceFrom May 1998. Dr. Elings
co-founded Digital Instruments, Inc. ("Digital") in 19871991
to January 1998 and hasfrom August 1999 to December 1999, he also served as
its
President since that time. Previously, Dr. Elings was Professor of Physics at
the University of California, Santa Barbara. Dr. Elings has a Ph.D. in Physics
from Massachusetts Institute of Technology and a B.S. in Mechanical Engineering
from Iowa State University.FSI.
4
HEINZ K. FRIDRICH has been a Director of Veeco since May 1998. Mr.
Fridrich is a courtesy professor in the Department of Industrial and Systems
Engineering of the University of Florida. He joined the University of Florida in
19941999 after 43 years with IBM. He began his career in Germany in 1950 and held a number of
key management positions in Europe and the U.S.IBM, including serving as Vice President and General
Manager of IBM's largest development and manufacturing site for semiconductors
and electronic packaging. In 1987, he was electedpackaging, and most recently as IBM Vice President responsible
for worldwide manufacturing and quality until he retired
in 1993. Mr. Fridrich graduated as a Diplom Ingenieur in Electrical Engineering
in Germany and holds a Master of Science degree in Industrial Management from
the Massachusetts Institute of Technology. He is a member of the German Society
of Engineers and a Fellow of the Royal Academy of Engineering in the U.K.quality. He is also a director of Central Hudson
Gas & Electric Company in Poughkeepsie, New
York and Solectron Corp. in Milpitas, California. Prior to his retirement he was
a member of the National Research Council and the Industrial Advisory Board of
the American Society of Mechanical Engineers.
JOHN A. GURLEY has been a Director of the Company since May 1998. Mr. Gurley
co-founded Digital in 1987 and has served as its Vice President since that time.
Previously, he designed flight simulators for Link Flight Simulation. Mr. Gurley
has an M.S. in Physics from the University of California, Santa Barbara.
DR. PAUL R. LOW has been a Director of Veeco since May 1994. Dr. Low has
been the President and Chief Executive Officer of PRL Associates, a technology
consulting firm, since founding the firm in 1992. Previously, Dr. Low was Vice
President-General Manager, Technology Products for IBM Inc. from 1989 through 1992
and a member of IBM's Management Board from 1990 to 1992. Dr. Low is also a
director of Applied Materials Corporation, Integrated Packaging Assembly Corp.,
Solectron Corporation, VLSI Technology and Xionics Document Technologies.
ROGER D. MCDANIEL has been a Director of Veeco since May 1998. From 1997
to April 1999, Mr. McDaniel iswas President and Chief Executive Officer and a director of
Integrated Process
Equipment Corp. (NASDAQ National Market: IPEC)SpeedFam-IPEC, Inc., a leading manufacturer of chemical-mechanical planarization
(CMP) equipment for the semiconductor industry. IPEC is headquartered in San Jose, California with operations in
Phoenix, Arizona; Portland, Oregon; and a subsidiary, IPEC Precision, a
manufacturer of advanced wafer polishing and metrology equipment, located in
Bethel, Connecticut. Through August 1996, Mr.
McDaniel was Chief Executive Officer of MEMC Electronic Materials, Inc., the
world's second-largest producer of silicon wafers. Mr. McDaniel is a member of the Board of Directors,Director
and past Chairman of SEMI--an international industry association of more than 2,000
semiconductor material and equipment manufacturers located in Asia, Europe and
the United States.SEMI. He also is a memberdirector of the board of Fluoroware, Inc. and of
Anatel. A member of the U.S. Korea Committee on Business Cooperation, which is
sponsored by the U.S. Department of Commerce and the Korean Ministry of Trade,
Industry and Energy, Mr. McDaniel also serves on the Advisory Board to St. Louis
University's Institute of International Business.SpeedFam-IPEC.
IRWIN H. PFISTER has been a Director of Veeco since May 1998. Mr. Pfister
is Executive Vice President and corporate officer of Schlumberger Ltd. He is responsible for the
management of the Test and Transactions Group, an international business segment
serving the semiconductor, financial, telecom and retail petroleum industries.IP network domains. Mr.
Pfister joined Schlumberger in May of 1986 and has held several management
positions. From January of 1990 to June of 1997, Mr. Pfister was President of the
Semiconductor Automated Test Equipment division.Solutions Group.
WALTER J. SCHERR has been a Director of Veeco since January 1990. Since
December 1995, Mr. Scherr has been employed by Veeco as a consultant. From
December 1993 through December 1995, he was 4
Executive Vice President of Veeco.
From January 1990 through December 1993, he was the Chief Financial Officer of
Veeco. Mr. Scherr joined the Predecessor in 1986 as the General Manager of the
Predecessor's UPA Technology Division of the Predecessor's Instrument Group. Prior to joining
the Predecessor, Mr. Scherr was the principal and founder of Visual Sciences,
Inc./Panafax (the first publicly traded facsimile company); prior. Prior to that, he
held a variety of other financial and operating management positions with Litton
Industries and Sperry Gyroscope Co.
DON R. KANIA, Ph.D.PH.D. has been Vice President, General Manager of the
California Metrology Group since May 1999. Prior thereto, he was Chief
Technology Officer of Veeco since January 1998. Starting in 1993, Dr. Kania was
a senior manager at Lawrence Livermore Laboratory where he directed the Advanced
Microtechnology Program in the development of advanced sensors for data storage,
extreme ultraviolet lithography for semiconductor manufacturing and several
other leading-edge technologies. From 1991 to 1993, Dr. Kania was Research
Director at Crystallume, a thin film diamond company. Dr. Kania's other
experience includes nine years of research experience at the Department of
Energy's Los Alamos and Livermore Laboratories.
JOHN P. KIERNAN has been Vice President-CorporatePresident, Corporate Controller of Veeco
since November 1998. From February 1995 to November 1998, Mr. Kiernan was
Corporate Controller of Veeco. Prior to joining Veeco, Mr. Kiernan was an Audit
Senior Manager at Ernst & Young LLP from October 1991 through January 1995 and
held various audit staff positions with Ernst & Young LLP from June 1984 through
September 1991.
LLOYD J. LACOMB, JR., PH.D. has been Vice President, General Manager of
the Arizona Metrology Group since October 1998. From March 1998 to September
1998, Dr. LaComb was Vice President of Engineering & Operations, and from July
1997 to March 1998 he was Director of Engineering for the Arizona Metrology
Group. Prior to joining Veeco, Dr. LaComb was Director of Engineering for Alara
from January 1997 to July 1997,
5
Director of Advanced Development for Tencor Instruments from 1996 to 1997 and
Director of Engineering of Tencor Instruments from 1995 to 1996.
EMMANUEL N. LAKIOS has been President-ProcessPresident, Process Equipment Group since
February 1998. From June 1997 to February 1998, Mr. Lakios was Executive Vice
President of Worldwide Field Operations. From June 1991 to June 1997, Mr. Lakios
was Vice President and General Manager of Process Equipment. Prior to 1991, Mr.
Lakios was employed in various other positions within Veeco. Mr. Lakios joined
the Predecessor in June 1984 as an engineer and held positions of Program
Manager, Product Marketing Manager and Director of Engineering.
ROBERT P. OATES has been Vice President-GeneralPresident, General Manager, Industrial
Measurement Group since March 1995. From September 1994 until March 1995, Mr.
Oates was Vice President and General Manager-XRF Thickness Measurement Systems
of Veeco, and he was Vice President and Treasurer of Veeco from January 1993
through September 1994. From January 1990 through December 1992, he was
Assistant Treasurer of Veeco. Mr. Oates was employed by the Predecessor from
1976 to 1990, where he held a variety of financial positions.
JOHN F. REIN, JR. has been Executive Vice President-Finance, Chief
Financial Officer, Treasurer and Secretary of Veeco since April 2000. Prior
thereto, he was Vice President-Finance and Chief Financial Officer of Veeco
since December 1993, and became Treasurer and Secretary of Veeco in October
1994. Prior to joining Veeco, Mr. Rein served for eight years as Vice
President-ControllerPresident-Finance for Axsys Technologies, Inc. From 1979 to 1986, Mr. Rein was
Treasurer of Industrial General Corporation; priorCorporation. Prior to that, he was on the audit
staff of Ernst & Young LLP.
JOSEPH E.Z. RIVLIN has been Executive Vice President-WorldwidePresident, Worldwide Field
Operations since July 1998. Prior to joining Veeco, Mr. Rivlin was Vice
President of Sales at Electro-Scientific Industries since 1994. From 1986 to
1994, he served as President and CEO of XRL, Inc., a semiconductor equipment
supplier.
FRANCIS STEENBEKE has been Vice President-International Sales and
Marketing of Veeco since January 1990. Mr. Steenbeke joined the Predecessor in
1968 as a sales engineer and held a variety of general management and sales
positions with the Predecessor until January 1990.
ADDITIONAL DIRECTORS AND EXECUTIVE OFFICER FOLLOWING CONSUMMATION OF THE CVC
MERGER
Upon consummation of the CVC Merger, the following persons will become
executive officers and/or directors of the Company:
CHRISTINE B. WHITMAN joined CVC Products in 1978 and has served as
President and Chief Executive Officer of CVC since its acquisition of CVC
Products in 1990. In addition, she served as Chairman of CVC until consummation
of the CVC Merger. Ms. Whitman received a BA from Syracuse University and is a
member and Secretary of the Board of Directors of SISA, formerly known as
SEMI/SEMATECH. She also serves as a member of the Board of Directors of Frontier
Telephone of Rochester and The M&T Bank. Ms. Whitman serves on the Executive
Committee of the Board of Directors of the Industrial Management Council, the
Board of Trustees for the Greater Rochester Chamber of Commerce, the United Way
Board of Directors, the Al Sigl Center Partners' Foundation Board of Governors
and is a member of the Board of Trustees of Rochester Institute of Technology.
DOUGLAS A. KINGSLEY was a director of CVC until consummation of the CVC
Merger. Mr. Kingsley is a Senior Vice President of Advent International
Corporation, a venture capital firm, where he has been employed since 1990. From
1985 through 1988 Mr. Kingsley was a sales engineer for Teradyne, Inc., a
manufacturer of automatic test equipment for the electronics industry. Mr.
Kingsley is a graduate of Dartmouth College and Harvard Business School. He is a
director of LeCroy Corporation and a member of the Board of Overseers of the
Boston Symphony Orchestra.
6
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors of Veeco has established an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee reviews
the scope and results of the audit and other services provided by Veeco's
independent auditors. The Compensation Committee sets the compensation levels of
senior management and administers the Veeco Instruments Inc. 1992 Employees'
Stock Option Plan (the "Employees' Plan") and the Veeco Instruments Inc.
5
Employees Stock Purchase Plan. All members of the Compensation Committee are (x)
"Non-Employee Directors,"Directors" within the meaning of Rule 16b-3 adopted by the
Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"), and (y)
"outside directors" within the meaning of Section 162(m)(4)(C) of the Internal
Revenue Code of 1986, as amended (the "Code") and any applicable regulations.
The Nominating Committee searches for persons qualified to serve on the Board of
Directors and makes recommendations to the Board of Directors with respect
thereto. The Nominating Committee will consider nominees recommended by
Stockholders. No formal procedures are required to be followed by Stockholders
in submitting such recommendations. The Audit and Compensation Committees eachCommittee currently consists of
Richard A.Messrs. D'Amore, Paul R.Elftmann, Fridrich and Pfister. The Compensation Committee
currently consists of Messrs. D'Amore, Low and Joel A. Elftmann.McDaniel. The Nominating
Committee currently consists of Edward H.Messrs. Braun, Richard A. D'AmoreLow and Paul R.
Low.McDaniel. During the
fiscal year ended December 31, 1998,1999, the Compensation Committee and the
Nominating Committee each met once and the Audit Committee met twice.
During the fiscal year ended December 31, 1998,1999, Veeco's Board of
Directors held fiveseven meetings (including regularly scheduled and special
meetings). All of the current Directors attended at least 75% of the meetings of
the Board of Directors and of the Board of Directors committees of which they
were members during the fiscal year ended December 31, 1998.1999.
Class I Directors hold office until the 2001 Annual Meeting of
Stockholders, Class II Directors hold office until the 2002 Annual Meeting of
Stockholders and Class III Directors hold office until the 20002003 Annual Meeting
of Stockholders. Executive officers are appointed by the Board of Directors and
hold office until their successors are chosen and qualified, subject to earlier
removal by the Board of Directors.
67
COMPENSATION
EXECUTIVE COMPENSATION--ANNUALCOMPENSATION -- ANNUAL COMPENSATION
The following table sets forth a summary of annual and long-term
compensation awarded to, earned by, or paid to the Chief Executive Officer of
Veeco and each of the four most highly compensated executive officers (as
defined in Rule 3b-7 promulgated under the Securities Exchange Act) of Veeco (otherother than the
Chief Executive Officer) whose total annual salary and bonus for
the year ended December 31, 1998 was in excess of $100,000Officer (collectively, the "Named Officers"):
ANNUAL COMPENSATION LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS(#)SALARY BONUS (1) COMPENSATION (2) OPTIONS (#) COMPENSATION (3)
- --------------------------- ---- ------ --------- ---------------- ----------- ----------- ----------------- ------------- -------------------------------
Edward H. Braun.............. 1998 1997 $ 344,875 $ 50,000 $ 10,200Braun .......................... 1999 $396,625 $246,000 -- 100,000 $ 3,434(4)(5)$3,924
Chairman, Chief Executive 1996 315,131 185,000 10,200 60,000 2,352(4)(5)1998 344,875 50,000 -- 100,000 3,434
Officer and President 288,950 55,000 10,200 12,000 1,800(4)
David S. Perloff (10)........1997 315,131 185,000 -- 60,000 2,352
John F. Rein, Jr ......................... 1999 215,000 90,000 -- 40,000 3,776
Executive Vice President, 1998 200,000 30,000 -- 40,000 3,685
Finance, Chief Financial Officer, 1997 225,000175,480 80,000 -- 42,000 2,847
Treasurer and Secretary
Emmanuel N. Lakios ....................... 1999 212,000 170,000 -- 40,000 2,970
President, Process Equipment 1998 200,000 20,000 1,632(4)(5)(9)
President--Metrology 1996 38,942-- 20,000 3,221
Group 1997 185,539 120,000 -- 32,000 1,605
Don R. Kania, Ph.D ....................... 1999 202,538 73,000 $46,896 (4) 30,000 1,976
Vice President, General 1998 172,500 50,000 -- 90,00025,000 251
Manager, Metrology Group 1997 -- -- -- -- --
California (5)
Joseph Z. Rivlin ......................... 1999 192,500 97,679 82,442 (6) 22,000 4,673
Executive Vice President, World 1998 88,943 81,130 -- Emanuel N. Lakios............ 199830,000 954
Wide Field Operations (7) 1997 200,000 20,000 8,400 20,000 3,221(4)(5)(6)
President--Process Equipment 1996 185,539 120,000 8,400 32,000 1,605(4)(5)(6)
143,720 242,033 8,400 12,000 2,094(4)(5)(6)
John F. Rein, Jr............. 1998 1997 200,000 30,000 8,400 40,000 3,685(4)(5)(6)
Vice President--Finance, 1996 175,480 80,000 8,400 42,000 2,847(4)(5)(6)
Chief Financial Officer, 151,186 30,000 8,400 10,000 2,259(4)(5)(6)
Treasurer and Secretary
Francis Steenbeke (7)........ 1998 1997 169,894 25,000 22,200(8) 10,000 -- Vice President--International 1996 147,570 40,000 44,400(8) 10,000 -- Sales and Marketing 142,910 40,000 44,400(8) 8,000-- -- --
- -------------------------------------------------------
(1) Amounts shown include the dollar value of base salary (cash and non-cash)
earned and received by the Named Officers.
(2) Bonuses listed for 1998 includea particular year represent bonuses for thepaid with respect
to such year ended December 31,
1998,even though all or part of which weresuch bonuses may have been paid
during the first quarter of the subsequent year. Bonus amount includes
commissions paid to Mr. Rivlin.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in March 1999. Bonuses listed for 1997
include bonusesthe form of perquisites and other personal benefits
has been omitted in those instances where such compensation did not
exceed the lesser of $50,000 or 10% of the total annual salary and bonus
for the year ended December 31, 1997, all or part of which
were paid in March 1998. Bonuses listedexecutive officer for 1996 include bonuses for the
year ended December 31, 1996, all or part of which were paid in February
1997.such fiscal year.
(3) Unless otherwise described in other notes to this table, reflects
reimbursement for automobile-related expenses. Does not include any discount
a Named Officer received on the purchase of Common Stock from Veeco under
the Employees' Stock Purchase Plan since full-time employees generally are
eligible to participate in such plan.
(4) Reflects payments by Veeco of premiums for group term life insurance.
(5) Reflectsinsurance and
supplemental long-term disability insurance and contributions by Veeco to
Veeco's 401(k) Plan.
(6) Reflects payments by Veeco of premiums for supplemental long-term disability
insurance.
(7) Certain components of Mr. Steenbeke's compensation have been paid in French
Francs. In 1998, Mr. Steenbeke was paid 1,001,013 French Francs in salary.
In 1997, Mr. Steenbeke was paid 859,740 French Francs in salary. In 1996,
Mr. Steenbeke was paid 813,156 French Francs in salary and 227,600 French
Francs in bonus.
(8) For 1998, includesPlan, as applicable.
(4) Includes a $4,200$7,800 car allowance and an $18,000 housinga $39,096 relocation allowance paid
to Mr. Steenbeke. For 1997 and 1996, includesDr. Kania.
(5) Dr. Kania joined Veeco in January 1998.
(6) Includes an $8,400 car allowance and a $36,000 housing$74,042 relocation allowance paid
to Mr. Steenbeke. The allowances were
provided becauseRivlin.
(7) Mr. Steenbeke was required to perform services forRivlin joined Veeco in the United States for six months during 1998 and for the entire year in 1997
and 1996.
(9) Reflects payments by Veeco of premiums for short-term disability insurance.
(10) Effective January 1, 1999 Mr. Perloff became Vice President--Business
Development.July 1998.
8
The following table sets forth certain information concerning individual
grants of stock options made during 19981999 to the Named Officers. Also reported
are potential realizable values of each such stock option at assumed annual
rates of stock price appreciation for the term of the option representing the
product of (a) the difference between: (i) the product of the closing price per
share of Common Stock as reported by the Nasdaq National Market ("NASDAQ") on
the date of the grant ($22.937532.125 on June 15, 1998)23, 1999) and the sum of one plus the
adjusted stock price appreciation rate (5% and 10%) compounded annually over the
7
term of the option (10 years) and (ii) the exercise price of the option
($24.00)29.8125); and (b) the number of shares of Common Stock underlying the option
grant at December 31, 1998.1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL REALIZABLE
----------------------------
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE OROPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE PRICEEXERCISE OPTION TERMS ($)
OPTIONS/SARSOPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------------------------
NAME GRANTED(1)GRANTED (1) FISCAL YEAR SHARE($SHARE ($)(2) DATE(3)DATE (3) 5% 10%
- ----------------------------- ------------- ------------------- ----------- ----------- ------------ ------------------------- -------- -- ---
Edward H. Braun..............Braun 100,000 10.12% $ 24.0012.09% $29.8125 6/14/2008 $ 1,509,347 $ 3,824,982
David S. Perloff............. 20,000 2.02% $ 24.00 6/14/2008 $ 301,869 $ 764,996
Emmanuel N. Lakios........... 20,000 2.02% $ 24.00 6/14/2008 $ 301,869 $ 764,99622/2009 $1,874,892 $4,751,345
John F. Rein, Jr.............Jr 40,000 4.05%4.84% $29.8125 6/22/2009 $ 24.00749,957 $1,900,538
Emmanuel N. Lakios 40,000 4.84% $29.8125 6/14/200822/2009 $ 603,739749,957 $1,900,538
Don R. Kania, Ph.D 30,000 3.63% $29.8125 6/22/2009 $ 1,529,993
Francis Steenbeke............ 10,000 1.01%562,468 $1,425,403
Joseph Z. Rivlin 22,000 2.66% $29.8125 6/22/2009 $ 24.00 6/14/2008 $ 150,935 $ 382,498412,476 $1,045,296
- -----------------------------------
(1) OnRepresents option grants made on June 15, 1998,23, 1999 pursuant to the Employees'
Plan,Plan. One third of the options to acquire an
aggregate of 190,000 shares of Common Stock were granted to certain Named
Officers of Veeco. The options granted to the Named Officers become exercisable as follows: (i) for one-thirdon each of the shares covered thereby, on
the first
anniversarythree anniversaries of the grant date; (ii) for an additional one-third of
the shares covered thereby, on the second anniversary of the grant date; and
(iii) for the remaining shares covered thereby, on the third anniversary of
the grant date. See "Veeco Instruments Inc. Amended and Restated 1992
Employees' Stock Option Plan."
(2) Represents the closing price per share of Common Stock as reported by
NASDAQ on the last datetrading day immediately preceding the date of grant on which a sale was reported.
See "Veeco Instruments Inc. Amended and Restated 1992 Employees' Stock
Option Plan."grant.
(3) Options may terminate at an earlier date upon the occurrence of certain
events. See "Veeco Instruments Inc. Amended and Restated 1992 Employees'
Stock Option Plan."
The following table sets forth certain information concerning the number
of shares of Common Stock acquired upon the exercise of options by the Named
Officers during 19981999 and the value realized upon such exercises determined by
calculating the positive spread between the exercise price of the options
exercised and the closing price of the Common Stock on the date of exercise.
Also reported are the number of options to purchase Common Stock held by the
Named Officers as of December 31, 19981999 and values for "in-the-money" options
that represent the positive spread between the exercise price of the outstanding
options ($13.37514.50 to $31.00) and the closing price ($53.125)46.8125) of the Common Stock
on December 31, 19981999 as reported by NASDAQ.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SECURITIES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE -------------------------- ---------------------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
---- ----------- -------- ------------ ----------- --------------------------- ------------ ---------------------------
Edward H. Braun............... 33,000 $ 649,250 19,999 144,001 $ 483,307 $ 4,033,693
David S. Perloff..............Braun -- -- 13,333 96,667 $ 349,991 $ 2,595,009
Emmanuel N. Lakios............ 19,666 $ 345,007 6,667 45,334 $ 147,525 $ 1,258,01577,332 186,668 $1,603,808 $3,577,942
John F. Rein, Jr.............. 37,500Jr 15,000 $593,438 48,833 80,667 $1,038,253 $1,534,216
Emmanuel Lakios 10,000 $239,250 18,000 64,001 $ 1,191,625 33,166 71,334331,305 $1,177,354
Don R. Kania, Ph.D 3,000 $ 1,088,59986,063 5,333 46,667 $ 1,962,276
Francis Steenbeke............. 10,999119,326 $ 185,526882,924
Joseph Z. Rivlin 10,000 $ 64,688 -- 19,33442,000 -- $ 0 $ 582,606845,250
89
EMPLOYMENT AGREEMENTS
Each of Messrs. Braun and Rein has entered into an employment agreement
with Veeco. Mr. Braun's employment agreement provides that he will be Chairman
and Chief Executive Officer of Veeco, with a minimum base salary of $470,000 per
year and the potential for a performance-based cash bonus of up to one-hundred
percent of his base salary. The employment agreement also provides that if Mr.
Braun's employment with Veeco is terminated either (i) by Veeco for any reason
other than death, disability or "for cause" (as defined in the agreement to
cover specified serious misconduct), or (ii) if Mr. Braun resigns for "good
reason" (as defined in the agreement to cover a downgrading of Mr. Braun by
Veeco, the failure to elect Mr. Braun as a member of Veeco's Board of Directors
or non-fulfillment by Veeco of certain contractual commitments to Mr. Braun),
Mr. Braun will be entitled to a lump-sum severance payment equal to 24 months of
base salary. Upon any such termination, Mr. Braun will also have the vesting of
any options to purchase stock of Veeco which options were granted after the date
of the employment agreement and which are held by him at the time of such
termination accelerated and will have one year (or to the end of the original
term of the options, if earlier) to exercise all such options. In the event that
Mr. Braun's employment with Veeco is terminated on account of death or
disability, Mr. Braun will be entitled to a lump-sum severance payment equal to
12 months of base salary. In addition, the agreement provides that the Company
will continue to provide certain health care benefits to Mr. Braun for a period
of five years following any termination of his employment.
Mr. Rein's employment agreement provides that he will be Executive Vice
President, Finance, Chief Financial Officer, Treasurer and Secretary of Veeco,
with a minimum base salary of $250,000 per year and the potential for a
performance-based cash bonus of up to eighty percent of his base salary. The
employment agreement also provides that if Mr. Rein's employment with Veeco is
terminated either (i) by Veeco for any reason other than death, disability or
"for cause" (as defined in the agreement to cover specified serious misconduct),
or (ii) if Mr. Rein resigns for "good reason" (as defined in the agreement to
cover a downgrading of Mr. Rein by Veeco or non-fulfillment by Veeco of certain
contractual commitments to Mr. Rein), Mr. Rein will be entitled to a lump-sum
severance payment equal to 24 months of base salary. Upon any such termination,
Mr. Rein will also have the vesting of any options to purchase stock of Veeco
which options were granted after the date of the employment agreement and which
are held by him at the time of such termination accelerated and will have one
year (or to the end of the original term of the options, if earlier) to exercise
all such options. In the event that Mr. Rein's employment with Veeco is
terminated on account of death or disability, Mr. Rein will be entitled to a
lump-sum severance payment equal to 12 months of base salary.
In addition, the Company has entered into an employment agreement with
Christine B. Whitman which will become effective upon consummation of the CVC
Merger. The employment agreement provides that Ms. Whitman will be President and
Chief Operating Officer of Veeco, with a minimum base salary of $300,000 per
year and the potential for a performance-based cash bonus of up to $150,000. The
agreement also provides that Veeco will make best efforts to make Ms. Whitman a
member of Veeco's Board of Directors. The employment agreement also provides
that if Ms. Whitman's employment with Veeco is terminated either (i) by Veeco
for any reason other than death, disability or "for cause" (as defined in the
agreement to cover specified serious misconduct), or (ii) if Ms. Whitman resigns
for "good reason" (as defined in the agreement to cover a downgrading of Ms.
Whitman by Veeco, the failure to elect Ms. Whitman as a member of Veeco's Board
of Directors, any person other than Ms. Whitman succeeds Edward H. Braun as
Veeco's Chief Executive Officer or non-fulfillment by Veeco of certain
contractual commitments to Ms. Whitman), Ms. Whitman will be entitled to a
lump-sum severance payment equal to 24 months of base salary. Upon any such
termination, Ms. Whitman will also have the vesting of any options to purchase
stock of Veeco held by her at the time of such termination accelerated and will
have one year (or to the end of the original term of the options, if earlier) to
exercise all such options. In the event that Ms. Whitman's employment with Veeco
is terminated on account of death or disability, Ms. Whitman will be entitled to
a lump-sum severance payment equal to 12 months of base salary.
10
DIRECTOR COMPENSATION
Directors, other than those who are employees of Veeco, receive a per
meeting fee of $2,000 for attendance in person at Board of Directors and
committee meetings (where such committee meetings are held apart from Board
meetings) and a per meeting fee of $1,000 for participation in telephonic Board
or committee meetings. Pursuant to the Directors'Veeco Instruments Inc. 1994 Stock Option
Plan for Outside Directors (the "Directors' Plan"), each non-employee Director
who meets the eligibility criteria for such plan receives an annual grant of
7,000 options.options with an exercise price equal to the fair market value of a share
of Common Stock on the date of grant. In 1998,1999, Richard A. D'Amore, Joel A.
Elftmann, Heinz K. Fridrich, Dr. Paul R. Low, Roger D. McDaniel and Irwin H.
Pfister each received grants of 7,000 options. Mr. Braun, the Chairman, Chief
Executive Officer and President of Veeco, receives no compensation for his
service as a Director.
Veeco is party to an agreement with Walter J. Scherr, a Director of
Veeco, pursuant to which he is employed as a consultant to Veeco with respect to
acquisitions and new business opportunities, as well as other matters. During
1998, Mr.
Scherr received $67,500 pursuant$132,500 in such consultative capacity with respect to such consulting arrangement.1999. On
June 15, 1998,23, 1999, Mr. Scherr also received options to purchase 7,000 shares of
Common Stock at an exercise price of $24.00$29.8125 per share pursuant to the
Employees' Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Veeco's Compensation Committee is comprised of Messrs. D'Amore, ElftmannLow and
Low.McDaniel.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Compensation Committee of the Board of Directors is comprised of
three outside, non-employee directors. The Committee reviews and approves all of
Veeco's executive compensation programs. The Compensation program is based on
the following principles:
a. Executive officers' compensation should be tied to annual
performance goals that maximize Stockholderstockholder value.
b. Veeco emphasizes variable incentive compensation in order to
ensure continuously improving corporate performance and to align
the interests of executive officers with those of the
Stockholders.stockholders.
c. Compensation must be competitive in order to attract, motivate and
retain the management talent needed to achieve Veeco's business
objectives.
In determining competitive levels, the committee reviews information of
comparative companies from both independent survey data and public company
filings.
COMPONENTS OF COMPENSATION
Veeco's executive compensation program consists of three principal
elements:
a. Base Salary--Base salaries have been set within salary ranges
based on a
compensation reportreports published by Radford Associates and
a study performed by Ernst & Young LLP on comparable size and type
manufacturing companies. Individual salary increases are based on
the officer's contribution to Veeco and the relationship of
current pay to the current value of the job.
11
b. Annual Incentive Awards--Annual incentive awards are based on
performance against objectives in the calendar year and are
ordinarily payable in the first quarter of the succeeding year.
Incentive awards for executive officers are a percentage of base
salary. The percentage can range to up to 80%100% of base salary for
the chief executive officer and up to 60%80% of base salary for the
other executive officers for achievement of 110%120% of business plan
objectives. In exceptional circumstances, when Veeco or a business
unit exceeds 110%120% of planned objectives, the Compensation
Committee may selectively make incentive awards at a higher level.
Annual incentive awards are based on selected financial criteria
tied to the annual business plan. In 1998,1999, this plan
9
was
objectively based on operating income criteria and subjectively on
the ability of executive management to strategically position
Veeco for growth.
c. Stock Option Grants--Stock option grants are awarded as a
recognition of exceptional current performance and an expectation
of continued high quality contribution to enhancing Stockholder
value. The committee believes that stock options encourage
officers to relate their long-term economic interests to those of
other Stockholders. Stock options are granted at fair market value
on the date of grant and vest over three years. The options have
an exercise period of ten years from the date of grant.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation of Veeco's Chief Executive Officer, Edward H. Braun, is
determined by the Compensation Committee in accordance with the policies
described above relating to all executive officers' compensation. In particular,
the Compensation Committee established Mr. Braun's base salary after an
evaluation of his personal performance and the committee's objective to have his
base salary comparable with salaries being paid to similarly situated chief
executive officers. Mr. Braun received a bonus of $50,000$246,000 in 1998.1999. Mr. Braun's
bonus was based upon the financial performance of Veeco compared to that of
Veeco's peer companies, as well as the strategic initiatives and acquisitions
accomplished during the year, including the merger with Digital Instruments,Ion Tech, Inc.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Code limits to $1,000,000 per year Veeco's tax
deduction for compensation paid to each of the Named Officers, unless certain
requirements are met. The Compensation Committee believes it unlikely in the
short term that such limitation will affect Veeco. The Compensation Committee's
present intention is to structure executive compensation so that it will be
fully deductible, while maintaining flexibility to take actions which it deems
to be in the best interest of Veeco and the Stockholders but which may result in
Veeco paying certain items of compensation that may not be fully deductible.
Submitted by the Compensation Committee:
Richard A. D'Amore
Paul R. Low
Joel A. Elftmann
10Roger D. McDaniel
12
CUMULATIVE TOTAL RETURN
OF VEECO, PEER GROUP AND[GRAPH]
Quarterly NASDAQ
MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
11/29/94 12/94 3/95 6/95 9/95 12/95 3/96 6/96 9/96
VEECO INSTRUMENTS INC. 100.00 92.57 128.00 153.14 240.00 132.57 137.14 129.14 132.57
PEER GROUP INDEX 100.00 86.57 111.34 158.69 176.75 130.26 111.32 97.54 92.64
NASDAQ MARKET INDEX 100.00 100.09 103.04 112.73 125.61 124.60 130.35 140.01 143.87
12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98
VEECO INSTRUMENTS INC. 201.14 268.57 354.29 577.71 201.14 340.00 227.43 288.00 485.71
PEER GROUP INDEX 120.24 145.07 205.58 279.00 170.52 193.58 158.48 130.50 221.79
NASDAQ MARKET INDEX 150.64 142.98 169.15 197.22 184.79 216.57 222.16 200.23 260.29
ASSUMES $100 INVESTED ON NOV. 29, 1994
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DEC. 31, 1998
QUARTERLY VEECO
PERIOD INSTRUMENTS NASDAQ
ENDING INC. PEER GROUP MARKET INDEX
- --------------- ------------- ----------- -------------
11/29/94..... 100.00 100.00 100.00
12/31/94..... 92.57 86.68 100.09
3/31/95...... 128.00 112.90 103.04
6/30/95...... 153.14 160.56 112.73
9/30/95...... 240.00 178.42 125.61
12/31/95..... 132.57 129.09 124.60
3/31/96...... 137.14 109.50 130.35
6/30/96...... 129.14 96.85 140.01
9/30/96...... 132.57 92.02 143.87
12/31/96..... 201.14 120.29 150.64
3/31/97...... 268.57 145.07 142.48
6/30/97...... 354.29 205.58 169.15
9/30/97...... 577.71 279.00 197.22
12/31/97..... 201.14 170.52 184.79
3/31/98...... 340.00 193.58 216.57
6/30/98...... 227.43 158.48 222.16
9/30/98...... 288.00 130.50 200.23
12/31/98..... 485.71 221.79 260.29
Period Ending Veeco Peer Group Index Market Index
------------- ----- ---------------- ------------
12/31/94 100.00 100.00 100.00
3/31/95 138.27 128.20 102.95
6/30/95 165.43 186.81 112.63
9/30/95 259.26 206.75 125.49
12/31/95 143.21 152.20 124.48
3/31/96 148.15 130.07 130.23
6/30/96 139.51 113.77 139.88
9/30/96 143.21 107.60 143.74
12/31/96 217.28 140.48 150.50
3/31/97 290.12 170.13 142.85
6/30/97 382.72 241.65 169.00
9/30/97 624.07 328.51 197.04
12/31/97 217.28 198.86 184.62
3/31/98 367.28 226.09 216.37
6/30/98 245.68 184.77 221.96
9/30/98 311.11 152.52 200.04
12/31/98 524.69 257.68 260.05
3/31/99 364.81 353.82 290.54
6/30/99 335.80 433.22 316.14
9/30/99 276.54 452.69 321.29
12/31/99 462.35 750.13 474.52
Information is presented beginning with November 29,December 31, 1994 the date on which
the Common Stock was registered under Section 12 of the Exchange Act, and assumes $100
invested on November 29,December 31, 1994 and reinvestment of dividends, if any. The peer
group chosen by Veeco consists of the following corporations: Applied Materials,
Inc., FSI International, Inc., KLA-Tencor Corporation, Kulicke & Soffa Ind., LAM Research Corp., Mattson
Technology, Inc., Novellus Systems, Inc., Silicon Valley Group, Inc. and
Ultratech Stepper, Inc.
1113
PROPOSAL 2--AMENDMENT TO
THE2
VEECO INSTRUMENTS INC.
AMENDED AND RESTATED
1992 EMPLOYEES'2000 STOCK OPTION PLAN
The Board of Directors has determined that it would be in the best
interests of Veeco to amendadopt the 2000 Plan in order to provide for the grant of
additional stock options to the Company's employees, directors and consultants.
As of March 20, 2000, options to purchase 1,916,355 Shares in the aggregate
(with a weighted average exercise price per share and term to expiration of
$29.02 and 8.5 years, respectively) had been granted and were outstanding under
the Employees' Plan and the Directors' Plan and options to provide that the number of shares of
Common Stock for which stock options (the "Stock Options") may be granted
pursuant to such plan be increased from 2,126,787 shares to 2,826,787 shares.
Pursuant topurchase 105,992 and
80,003 Shares under the Employees' Plan no employee may be granted Stock Options to
purchase more than 100,000 shares, inand the aggregate, of stock in any calendar
year. As of March 31, 1999, Stock Options to purchase 1,487,921 shares, in the
aggregate, granted pursuant to such plan were outstanding, and Stock Options to
purchase 116,706 sharesDirectors' Plan, respectively,
remained available for future grant. In addition, upon consummation of the CVC
Merger, the Company will assume options to purchase approximately 908,400
additional Shares (with a weighted average exercise price per share and term to
expiration of $11.42 and 5.6 years, respectively), which options were granted to
employees or directors of CVC prior to the CVC Merger. Without adoption of the
2000 Plan, the Company would have the ability to grant thereunder. The
proposed amendment would make 700,000 additional shares available for issuance
upon exercise of Stock Options granted underoptions to purchase only
185,995 Shares. As such, the Employees' Plan. The Board of Directors believes that an increase in the
number of Stock Optionsoptions available for grant pursuant to the Employees' Plan is necessary in order to provide Veeco
with an effective incentive to attract and retain key employees. In addition,
the 2000 Plan reflects changes in applicable laws or interpretations thereof
issued since adoption of the Employees' Plan and the Directors' Plan, thereby
making the 2000 Plan a more effective executive incentive and retention tool.
Section 1.6 of the By-Laws of Veeco provides that corporate action to be
taken by stockholder vote, other than the election of directors, shall be
authorized by a majority of the votes cast at a meeting of the stockholders.
Therefore, the approval of the amendment toadoption of the Employees'2000 Plan requires the
affirmative vote of a majority of the votes cast at the Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT TOADOPTION OF THE
EMPLOYEES'2000 PLAN IS IN THE BEST INTERESTS OF VEECO AND THE STOCKHOLDERS. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR APPROVALADOPTION OF THE AMENDMENT TO THE
EMPLOYEES'2000 PLAN AS DESCRIBED ABOVE AT
THE MEETING AND IT IS INTENDED THAT PROXIES NOT MARKED TO THE CONTRARY AND NOT
DESIGNATED AS BROKER NON-VOTES WILL BE SO VOTED.
IN THE EVENT THAT PROPOSAL 2 IS NOT APPROVED BY THE STOCKHOLDERS AT
THE MEETING, THE EMPLOYEES' PLAN IN EFFECT AS OF THE DATE HEREOF WILL REMAIN IN
FULL FORCE AND EFFECT.
VEECO INSTRUMENTS INC. AMENDED AND RESTATED 1992 EMPLOYEES'2000 STOCK OPTION PLAN
The following is a summary descriptionGENERAL. On April 3, 2000, the Compensation Committee of the Employees' Plan in effect as
of the date hereof. The Employees' Plan was adopted and approved by the Board of
Directors andadopted the Stockholders in 1992, and became effective on April 15,1992Veeco Instruments Inc. 2000 Stock Option Plan (the "Effective Date""2000
Plan"). The first amendment and restatement, subject to the approval of the Employees'Company's shareholders. The 2000 Plan was approved and adopted by the Board of Directors and the Stockholders on
October 15, 1994. The Employees' Plan was restatedis
being submitted to shareholders in January 1995, further
amended and restated in June 1995 and May 1996, and further amended in May 1997,
July 1997 and May 1998.
The principal featuresview of the Employees' Plan (as in effect as of the date
hereof) are summarized below:
The Employees' Plan provides for the granting of Stock Options to purchase
shares of Common Stock to certain key employees (each an "Optionee") of Veeco
and its subsidiaries, as such term is defined in Section 425 of the Code. The
total number of shares of Common Stock for which Stock Options may beCorporation's desire that options
granted under the Employees'2000 Plan maywill qualify as "performance-based compensation" for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). If the 2000 Plan is not exceed, in the aggregate, 2,126,787 shares,
and no employee may be granted Stock Options to purchase more than 100,000
shares, in the aggregate, in any calendar year. (If Proposal 2 is adoptedapproved by the Stockholders at the Meeting, then the Employees' Planshareholders, options granted
under it will be amended to
increaseof no force and effect.
PURPOSE. The purpose of the number of shares of Common Stock for which Stock Options may be
granted to 2,826,787.
The Employees'2000 Plan is intended to provide an incentive to certain key
employeesa means through which
the Company and its subsidiaries in orderaffiliates may attract capable persons to encourage them toenter and remain
in the employ of Veeco or any subsidiarythe Company and contributeaffiliates and to Veeco's success by granting
them Stock Options.
The Compensation Committee, in its sole discretion, at any time prior to
April 15, 2002, may authorize the granting of Stock Options to suchprovide a means whereby
employees, directors and consultants of the officers, managerial or supervisory personnel and
12
other key employees of VeecoCompany and its subsidiaries as it may select
(approximately 236 employees as of December 31, 1998),affiliates can
acquire and in such amounts as it
shall designate, subjectmaintain Common Stock ownership, thereby strengthening their
commitment to the provisionswelfare of the Employees' Plan.
Each Stock Option grantedCompany and affiliates and promoting an
identity of interest between stockholders and these employees. The number of
persons expected to an Optioneeparticipate is evidenced by a written agreement
(a "Stock Option Agreement") containing such provisions as approvedapproximately 400.
ADMINISTRATION. The 2000 Plan will be administered by the Compensation
Committee not inconsistent with the Employees' Plan and which need
not be identical in respect of each Optionee. Stock Options granted under the
Employees' Plan will have the following terms:
(a) EXERCISE PRICE. The exercise price (the "Exercise Price") of a Stock
Option equals the Fair Market Value (as defined below) per share of the
Common Stock covered by the Stock Option at the time that the Stock
Option is granted. "Fair Market Value" per share of Common Stock as of a
particular date means, unless otherwise determined by the Compensation
Committee, the closing price per share of the Common Stock as reported
by NASDAQ for the last preceding date on which a sale was reported. The
closing price per share of the Common Stock on April 6, 1999 as reported
by NASDAQ was $39.625 per share.
(b) TERM. No Stock Option may be exercised later than ten years from the
date such Stock Option was granted and a Stock Option may terminate at
an earlier date, as described below. No Stock Option may be transferred
by an Optionee other than by will or the laws of descent and
distribution. During the lifetime of an Optionee, the Stock Option is
exercisable only by such Optionee or, in the case of disability, by such
Optionee's personal representative.
(c) VESTING. Unless otherwise provided in any Stock Option Agreement, Stock
Options granted pursuant to the Employees' Plan become exercisable as
follows:
(1) with respect to one-third of the shares of the Common Stock covered
by the Stock Option, on the first anniversary date of the grant of
such Stock Option;
(2) with respect to an additional one-third of the shares of the Common
Stock covered by the Stock Option, on the second anniversary date of
the grant of such Stock Option; and
(3) with respect to the remaining one-third of the shares of the Common
Stock covered by the Stock Option, on the third anniversary date of
the grant of such Stock Option.
For purposes of the Employees' Plan and this Proxy Statement, the
term "Vested Options" means, with respect to any particular Optionee,
those Stock Options which have become exercisable; and vested shares
shall mean, with respect to any particular Optionee, those shares of
the Common Stock subject to one or more Vested Options.
(d) TERMINATION OF EMPLOYMENT. In the event (i) of a termination by Veeco of
an Optionee's employment (other than for Cause, as defined in the
applicable Stock Option Agreement), (ii) an Optionee voluntarily leaves
the employ of Veeco or (iii) an Optionee dies or becomes disabled (as
defined in the Employees' Plan) while the Optionee is employed by Veeco,
such Optionee, his estate or his legal guardian, as the case may be,
will be entitled to exercise the Optionee's Vested Options for a period
of 90 days following the date of such termination, voluntary departure,
death or disability. In the event that an Optionee's employment with
Veeco is terminated by Veeco for Cause (as defined in the applicable
Stock Option Agreement), such Optionee's right to exercise Vested
Options will immediately terminate and all of such Optionee's Stock
Options, whether or not vested, will be rendered null, void and
unexercisable. Upon the occurrence of any of the termination events set
forth above, non-Vested Options will terminate and be rendered null,
void and unexercisable. Non-Vested Options which are so terminated may
be reissued by Veeco pursuant to the Employees' Plan.
The aggregate purchase price for the Common Stock to be issued upon the
exercise of any Vested Options must be paid in full on the date of purchase.
Payment may be made either in cash or in such other
13
consideration as the Compensation Committee deems appropriate, including, but
not limited to, Common Stock already owned by the Optionee or Common Stock to be
acquired by the Optionee upon the exercise of Vested Options having a total fair
market value, as determined by the Compensation Committee, equal to the
aggregate purchase price, or a combination of cash and Common Stock having a
total fair market value as so determined, equal to the aggregate purchase price.
The total number of shares of Common Stock which may be issued under the
Employees' Plan, the number of shares of Common Stock which may be purchased
upon the exercise of Stock Options and the Exercise Price of such Stock Options
will be adjusted for any increase or decrease in the number of outstanding
shares of Common Stock resulting from the payment of a Common Stock dividend on
the Common Stock, a subdivision or combination of shares of the Common Stock or
a reclassification of the Common Stock and in the event of a consolidation or a
merger in which Veeco is the surviving corporation. After any merger of one or
more corporations into Veeco in which Veeco is the surviving corporation, or
after any consolidation of Veeco and one or more other corporations, each
Optionee will be entitled, at no additional cost, upon any exercise of his Stock
Options, to receive (subject to any required action by the Stockholders), in
lieu of the number of shares as to which such Stock Options will then be so
exercised, the number and class of shares of Common Stock or other securities to
which such Optionee would have been entitled pursuant to the terms of the
applicable agreement of merger or consolidation if at the time of such merger or
consolidation such Optionee had been a holder of record of a number of shares of
Common Stock equal to the number of shares to which such Optionee's Stock
Options may have then been so exercised. Comparable rights will accrue to each
Optionee in the event of successive mergers or consolidation of the character
described above.
In the event of any sale of all or substantially all of the assets of Veeco,
or any merger of Veeco into another corporation, or any dissolution or
liquidation of Veeco or, in the discretion of the Board of Directors, any
consolidation or other reorganization in which itDirectors. It is impossible or impracticable
to continue in effect any Stock Options, all Stock Options granted under the
Employees' Plan andintended, but not previously exercised will become exercisable by
Optionees who are at such time in the employ of Veeco, commencing ten days
before the scheduled closing of such event, and will terminate unless exercised
at least one business day before the scheduled closing of such event; provided,
however,required, that the
Board of Directors may, in its discretion, require instead
that all Stock Options granted under the Employees' Plan and not previously
exercised be assumed by such other corporationdirectors appointed to serve on the basis provided inCompensation Committee shall be
"Non-Employee Directors" (within the preceding paragraph.
Stock Options grantedmeaning of Rule 16b-3 under the Employees' Plan are intended to be
"nonqualified stock options" that will not be governed by the special tax
treatment applicable to "incentive stock options" described in Sections 421 and
422 of the Code. The following is a summary description of the Federal income
tax consequences of the Employees' Plan.
The grant of a Stock Option under the Employees' Plan is not taxable to the
Optionee at the time of grant. Upon the exercise of a Stock Option,
1. the Optionee will recognize taxable ordinary income in an amount equal
to the excess of the fair market value of the Common Stock acquired on
the date of exercise over the Exercise Price;
2. Veeco will be entitled to a deduction at the same time and in the same
amount as the Optionee recognizes income; and
3. upon a sale of the Common Stock so acquired, the Optionee will have
short-term or long-term capital gain or loss, as the case may be, in an
amount equal to the difference between the amount realized on such sale
and the tax basis of the Common Stock sold.
If payment of the Exercise Price is made entirely in cash, the tax basis of
the Common Stock will be equal to its fair market value on the date of exercise,
but not less than the Exercise Price, and the holding period will begin on the
day after the date of exercise. If, with the consent of the Compensation
14
Committee, the Optionee uses previously owned Common Stock to pay all or part of
the Exercise Price, the transaction will not be considered to be a taxable
disposition of the previously owned Common Stock. The Optionee's tax basis and
holding period of the previously owned Common Stock will be carried over to the
equivalent number of shares of Common Stock received on exercise. The tax basis
of the additional shares of Common Stock received upon exercise will be the fair
market value of the Common Stock on the date of exercise, but not less than the
amount of cash used in payment, and the holding period for such additional
shares of Common Stock will begin on the day after the date of exercise.
Veeco does not impose restrictions on the resale of shares of the Common
Stock obtained pursuant to the Employees' Plan; however, certain Optionees may
be subject to restrictions on resale imposed by federal or state securities laws
or by contract.
The Employees' Plan is administered by the Compensation Committee. The Board
of Directors may at any time terminate, amend or modify the Employees' Plan;
provided, however, that no such action of the Board of Directors, without the
approval of the Stockholders, may (i) effectuate any change for which
stockholder approval is required to qualify under Rule 16(b)-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or (ii) subject to certain
exceptions, effectuate any change inconsistent with) and "Outside Directors"
within the qualificationsmeaning of Stock
Options as "performance based" under Section 162(m) of the Code;Code, to the extent Rule 16b-3 and
provided,
further,162(m) are applicable; however, the fact that no amendment, modification or terminationa Compensation Committee member
shall fail to qualify under the foregoing requirements shall not invalidate any
award which is otherwise validly made under the 2000 Plan. The members of the
Employees'Compensation Committee may be changed at any time and from time to time in the
discretion of the Board of Directors of the Company. Subject to the terms of the
2000 Plan, mayand except
14
with respect to automatic grants to Non-Employee Directors, as discussed below,
the Compensation Committee shall have authority to grant options, to determine
the number of Shares for which each option shall be granted and the option price
or prices and to determine any conditions pertaining to the exercise or to the
vesting of each option. The Compensation Committee shall have full power to
construe and interpret the 2000 Plan and any 2000 Plan agreement executed
pursuant to the 2000 Plan, to establish and amend rules for its administration
and to establish in its discretion terms and conditions applicable to the
exercise of options. The determination of the Compensation Committee on all
matters relating to the 2000 Plan or any way affectother 2000 Plan agreement shall be
conclusive.
ELIGIBILITY. Any officer, employee, director or consultant of the Company
or any Stock Option theretoforeof its subsidiaries or affiliates shall be eligible to be designated a
participant under the 2000 Plan. The Compensation Committee has the sole and
complete authority to determine the participants to whom options shall be
granted under the Employees'2000 Plan.
NUMBER OF SHARES AUTHORIZED. A maximum of 1,250,000 aggregate Shares are
available for granting awards under the 2000 Plan. In no event may the aggregate
number of Shares with respect to which options are granted under the 2000 Plan
to any individual exceed 300,000 in any one calendar year. As described more
fully in the 2000 Plan, if an option expires or terminates for any reason during
the term of the 2000 Plan and prior to the exercise in full of such option, the
number of Shares previously subject to but not delivered under such option shall
be available to be awarded thereafter. As of the Record Date, the closing price
of one Share on the NASDAQ was $85.00.
In addition, if the Compensation Committee determines that certain
corporate transactions or events (as described in the 2000 Plan), such as a
stock split, affect the Shares such that an adjustment is determined by the
Compensation Committee in its discretion to be consistent with such event and
necessary or equitable to carry out the purposes of the 2000 Plan, the 2000 Plan
provides the Compensation Committee the discretion to appropriately adjust (a)
the maximum number of Shares and the classes or series of such Common Stock
which may be delivered pursuant to the 2000 Plan, (b) the number of Shares and
the classes or series of Common Stock subject to outstanding options, (c) the
option price per share of all Common Stock subject to outstanding options, and
(d) any other provisions of the 2000 Plan, provided, however, that (i) any
adjustments made in accordance with clauses (b) and (c) shall make any such
outstanding option as nearly as practicable, equivalent to such option
immediately prior to such change and (ii) no such adjustment shall give any
optionee any additional benefits under any outstanding option.
TERMS AND CONDITIONS OF AWARDS. Under the 2000 Plan, the Compensation
Committee may grant awards of options that are either nonqualified stock options
("NSOs") or incentive stock options ("ISOs"). In addition, automatic grants of
NSOs shall be made to non-employee Directors, as discussed below.
An option granted under the 2000 Plan provides a participant with the
right to purchase, within a specified period of time, a stated number of Shares
at the price specified in the option. Options granted under the 2000 Plan will
be subject to such terms, including exercise price and the conditions and timing
of exercise, not inconsistent with the 2000 Plan, as may be determined by the
Compensation Committee and specified in the applicable award agreement or
thereafter. The maximum term of an option granted under the 2000 Plan shall be
seven years from the date of grant.
The price per share of Common Stock paid by the participant with respect
to any NSO or ISO shall not be less than 100 percent of the fair market value of
one share on the date the option is granted. Payment in respect of the exercise
of an option may be made in cash or by check, except that the Compensation
Committee may, in its discretion, allow such payment to be made by surrender of
unrestricted Shares (at their fair market value on the date of exercise) which
have been held by the optionee for at least six months or have been purchased on
the open market, or by a combination of the foregoing. In addition, if and to
the extent provided for in the option agreement, payment may be deemed satisfied
through delivery of irrevocable instructions to a broker to sell the
15
Shares otherwise deliverable upon the exercise of the stock option and to
deliver promptly to the Company an amount equal to the aggregate exercise price.
AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS. Upon initial election to
office and thereafter annually on the date of the Company's annual meeting of
stockholders (provided that such date is at least 6 months following initial
election to office), each Director who is not then an employee of the Company
shall receive NSOs to purchase 7,000 Shares (Options granted to directors
pursuant to this paragraph may be referred to as "Director Options"). Subject to
the provisions of the Plan, each such Director Option shall have a term of seven
years, shall be fully vested and exercisable as of the date of grant and shall
have an exercise price equal to 100% of the fair market value of one Share on
the date of grant.
TRANSFERABILITY
Subject to the following paragraph, each option, and each right under any
option may be exercised, during the participant's lifetime, only by the
Participant or, if permissible under applicable law, by the participant's
guardian or legal representative, and may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a participant other
than by will or by the laws of descent and distribution provided that the
designation of a beneficiary will not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance for purposes of the 2000 Plan.
Notwithstanding the foregoing, the Compensation Committee may provide
that options granted under the 2000 Plan may be transferred by the participant
to whom such option was granted without consideration to certain Permitted
Transferees (as defined in the 2000 Plan), pursuant to the terms of the 2000
Plan and subject to such rules as the Compensation Committee may adopt to
preserve the purposes of the 2000 Plan.
CHANGE OF CONTROL. Upon a Change of Control of the Company (as defined in
the 2000 Plan), all options shall become immediately exercisable. In addition,
in the event of a Change of Control, the Compensation Committee may, in its
discretion and upon at least ten days prior notice to the optionholders, cancel
all outstanding options and pay the holders thereof the value of such options in
a form and an amount equal to what they would have received or been entitled to
receive had they exercised all such options immediately prior to such Change of
Control.
AMENDMENT. The Board may amend, alter, suspend, discontinue, or terminate
the 2000 Plan or any portion thereof at any time; PROVIDED, THAT no such action
may be taken without shareholder approval if such approval is necessary to
comply with any regulatory requirement, PROVIDED, FURTHER, THAT no such action
may lower the exercise price of a previously granted award or cancel and regrant
an option with the effect of repricing an option without shareholder approval,
and, PROVIDED, FURTHER, THAT no such action that would impair any rights under
any previous award shall be effective without the consent of the thenperson to whom
such award was made. In addition, the Board or the Compensation Committee is
authorized to amend the terms of any award granted under the 2000 Plan provided
that the amendment would not impair the rights of any participant without his
consent.
FEDERAL INCOME TAX CONSEQUENCES.
The following summary of the federal income tax consequences of the grant
and exercise of NSOs and ISOs awarded under the 2000 Plan and the disposition of
Shares purchased pursuant to the exercise of such options is intended to reflect
the current provisions of the Code and the regulations thereunder. This summary
is not intended to be a complete statement of applicable law, nor does it
address state and local tax considerations. Moreover, the federal income tax
consequences to any particular Participant may differ from those described
herein by reason of, among other things, the particular circumstances of such
Participant. FOR THESE REASONS, PARTICIPANTS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE CONSEQUENCES OF THEIR PARTICIPATION IN THE 2000
PLAN.
16
No income will be realized by an optionee upon grant of an NSO. Upon
exercise of an NSO, the optionee will recognize ordinary compensation income in
an amount equal to the excess, if any, of the fair market value of the
underlying stock over the option exercise price (the "Spread") at the time of
exercise. The Spread will be deductible by the Company for federal income tax
purposes, subject to the possible limitations on deductibility under sections
280G and 162(m) of the Code of compensation paid to executives designated in
those sections. The optionee's tax basis in the underlying Shares acquired by
exercise of an NSO will equal the exercise price plus the amount taxable as
compensation to the optionee. Upon sale of the Shares received by the optionee
upon exercise of the NSO, any gain or loss is generally long-term or short-term
capital gain or loss, depending on the holding period. The optionee's holding
period for Shares acquired pursuant to the exercise of an NSO will begin on the
date of exercise of such Option.
Pursuant to currently applicable rules under section 16(b) of the
Exchange Act, the grant of an Option (and not its exercise) to a person who is
subject to the reporting and short-swing profit provisions under section 16 of
the Exchange Act (a "Section 16 Person") begins the six-month period of
potential short-swing liability. The taxable event for the exercise of an Option
that has been outstanding at least six months ordinarily will be the date of
exercise. If an Option is exercised by a Section 16 Person within six months
after the date of grant, however, taxation ordinarily will be deferred until the
date which is six months after the date of grant, unless the person has filed a
timely election pursuant to section 83(b) of the Code to be taxed on the date of
exercise. Under current rules promulgated under Section 16(b) of the Exchange
Act, the six month period of potential short-swing liability may be eliminated
if the Option grant (i) is approved in advance by the Company's board of
directors (or a committee composed solely of two or more Non-Employee Directors)
or (ii) approved in advance, or subsequently ratified by the Company's
shareholders no later than the next annual meeting of shareholders.
Consequently, the taxable event for the exercise of an Option that satisfies
either of the conditions described in clauses (i) or (ii) above will be the date
of exercise.
The Code requires that, for ISO treatment, Shares acquired through
exercise of an ISO cannot be disposed of before two years from the date of grant
of the Option and one year from the date of exercise. ISO holders will generally
incur no federal income tax liability at the time of grant or upon exercise of
such options. However, the spread at exercise will be an "item of tax
preference" which may give rise to "alternative minimum tax" liability for the
taxable year in which the exercise occurs at the time of exercise. If the
optionee does not dispose of the Shares before two years following the date of
grant and one year following the date of exercise, the difference between the
exercise price and the amount realized upon disposition of the Shares will
constitute long-term capital gain or loss, as the case may be. Assuming both
holding periods are satisfied, no deduction will be allowed to the Company for
federal income tax purposes in connection with the grant or exercise of the
Option. If, within two years following the date of grant or within one year
following the date of exercise, the holder of Shares acquired through the
Stock Option.
THE FULL TEXT OF THE PROPOSED RESOLUTION AMENDING THE EMPLOYEES'exercise of an ISO disposes of such Shares, the optionee will generally realize
ordinary taxable compensation at the time of such disposition equal to the
difference between the exercise price and the lesser of the fair market value of
the stock on the date of initial exercise or the amount realized on the
subsequent disposition, and such amount will generally be deductible by the
Company for federal income tax purposes, subject to the possible limitations on
deductibility under sections 280G and 162(m) of the Code for compensation paid
to executives designated in those sections.
The payment by an optionee of the exercise price, in full or in part,
with previously acquired Shares will not affect the tax treatment of the
exercise described above. No gain or loss generally will be recognized by the
optionee upon the surrender of the previously acquired Shares to the Company,
and Shares received by the optionee, equal in number to the previously
surrendered Shares, will have the same tax basis as the Shares surrendered to
the Company and will have a holding period that includes the holding period of
the Shares surrendered. The value of Shares received by the optionee in excess
of the number of Shares surrendered to the Company will be taxable to the
optionee. Such additional Shares will have a tax basis equal to the fair market
value of such additional Shares as of the date ordinary income is recognized,
and will have a holding period that begins on the date ordinary income is
recognized.
17
In general, Section 162(m) of the Code denies a publicly held corporation
a deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any employee during a specified
period, the exercise price is not less than the fair market value of the common
stock at the time of grant, and the plan under which the options are granted is
approved by stockholders and is administered by a committee comprised of outside
directors. The 2000 Plan is intended to satisfy these requirements with respect
to grants of options to covered employees.
NEW PLAN IS
ATTACHED HERETO AS EXHIBIT A.BENEFITS
Future grants of Stock Options under the Employees'2000 Plan are not currently
determinable. The table below, however, sets forth the Stock Options granted
under the Employees' Plan and the Directors' Plan to the Named Officers and
groups indicated during 19981999 and athe value of such Stock Options (all of(of which, only
those granted to Directors under the Directors' Plan are currently unexercisable)exercisable).
NUMBER OF
STOCK
NAME DOLLAR VALUE NUMBER OF
NAME & POSITION (1) STOCK OPTIONS
- ---------------------------------------------------------------------------------- --------------- ----------------- ---------------- -------
Edward H. Braun...................................................................
Chairman, Chief Executive Officer and President $ 2,912,500Braun $1,700,000 100,000
David S. Perloff..................................................................
Vice President--Business Development 582,500 20,000
Emmanuel N. Lakios................................................................
President--Process Equipment 582,500 20,000
John F. Rein, Jr..................................................................
Vice President--Finance, Chief Financial Officer, Treasurer and Secretary 1,165,000Jr 680,000 40,000
Francis Steenbeke.................................................................
Vice President--International Sales and Marketing 291,250 10,000Emmanuel N. Lakios 680,000 40,000
Don R. Kania 510,000 30,000
Joseph Z. Rivlin 374,000 22,000
Executive Group................................................................... 2,470,938 85,000
Non-ExecutiveGroup 1,241,000 73,000
Each Member of Non-Employee Director
Group...................................................... 203,875Group (6 persons) 119,000 7,000
Non-Executive Officer Employee Group.............................................. 20,355,813 706,000Group 7,828,444 494,666
- -----------------------------------
(1) Represents the positive spread between ("in the money" options) the
exercise price ($21.625-24.625-$47.4375)42.4375) of such Stock Options and the closing
price ($53.125)46.8125) of the Common Stock on December 31, 1998,1999, as reported by
NASDAQ.
15
PROPOSAL 3--AMENDMENT TO THE AMENDED
AND RESTATED VEECO INSTRUMENTS INC.
1994 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
The Board of Directors has determined that it would be in the best interests
of Veeco to amend the Directors' Plan to provide that the number of shares of
Common Stock for which Stock Options may be granted be increased from 115,000
shares to 215,000 shares. As of March 31, 1999, Stock Options to purchase 99,997
shares, in the aggregate, had been granted pursuant to such plan, and Stock
Options to purchase 15,003 shares remained available for grant thereunder. The
proposed amendment would make 100,000 additional shares available for issuance
upon exercise of Stock Options granted under the Directors' Plan. The Board of
Directors believes that an increase in the number of Stock Options available for
grant pursuant to the Directors' Plan is necessary in order to provide Veeco
with an effective method to attract, retain and compensate qualified
non-employee directors and increase such directors' proprietary and vested
interest in Veeco.
Section 7.1 of the Directors' Plan as in effect on the date hereof provides
that an amendment to such plan which increases the number of shares of Common
Stock for which Stock Options may be granted shall be authorized by a majority
of the shares of capital stock of Veeco outstanding and entitled to vote at a
meeting of the stockholders. Therefore, the approval of the amendment to the
Directors' Plan requires the affirmative vote of a majority of the shares of
Common Stock outstanding.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT TO THE
DIRECTORS' PLAN IS IN THE BEST INTERESTS OF VEECO AND THE STOCKHOLDERS. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
DIRECTORS' PLAN AS DESCRIBED ABOVE AT THE MEETING AND IT IS INTENDED THAT
PROXIES NOT MARKED TO THE CONTRARY AND NOT DESIGNATED AS BROKER NON-VOTES WILL
BE SO VOTED. IN THE EVENT THAT PROPOSAL 3
IS NOT APPROVED BY THE STOCKHOLDERS AT
THE MEETING, THE DIRECTORS' PLAN IN EFFECT AS OF THE DATE HEREOF WILL REMAIN IN
FULL FORCE AND EFFECT.
AMENDED AND RESTATED VEECO INSTRUMENTS INC. 1994 STOCK OPTION PLAN FOR OUTSIDE
DIRECTORS.
The following is a summary description of the Directors' Plan in effect as
of the date hereof. The Directors' Plan was adopted by the Board of Directors
and the Stockholders in October 1994, and became effective on October 13, 1994.
The Directors' Plan was restated in January 1995 and was further amended in May
1996 and May 1997.
The principal features of the Directors' Plan (as in effect as of the date
hereof) are summarized below:
The Directors' Plan provides for the grants of stock options to purchase
shares of Common Stock to each member of the Board of Directors of Veeco who is
not an employee of Veeco and who has not, within the immediately preceding year,
received any award of stock, stock options or stock appreciation rights under
any plan (other than certain plans providing for automatic awards) of Veeco
providing for such awards (such eligible directors being referred to herein as
the "Non-Employee Directors"). The total number of shares of Common Stock for
which Stock Options may be granted under the Directors' Plan may not exceed, in
the aggregate, 115,000 shares. (If Proposal 3 is adopted by the Stockholders at
the Meeting then the Directors' Plan will be amended to increase the number of
shares of Common Stock for which Stock Options may be granted to 215,000).
The purpose of the Directors' Plan is to increase the proprietary and vested
interest of the Non-Employee Directors in the growth and performance of Veeco by
granting them Stock Options. The Board of Directors believes that an increase in
the number of Stock Options granted to the Non-Employee Directors on an annual
basis is necessary to retain high-quality outside directors. As of the date
hereof, there are 6 Non-Employee Directors, and if each of the nominees for
Director of Veeco set forth in Proposal 1 is elected by the Stockholders at the
Meeting, there will continue to be 6 Non-Employee Directors.
16
Any individual who is elected or appointed to the office of Director as a
Non-Employee Director after the date of the adoption of the Directors' Plan will
receive a Stock Option to purchase 7,000 shares of Common Stock as of the date
of the meeting of the Board of Directors which such individual attends in such
capacity. In addition, each Non-Employee Director will receive a Stock Option to
Purchase 7,000 shares of Common Stock as of the date of each annual meeting of
Stockholders subsequent to such Non-Employee Director's election which occurs
during such Non-Employee Director's term of office.
Stock Options will be granted only pursuant to an Option Agreement, which
shall be executed by the optionee and an authorized officer of Veeco and which
shall contain such terms and conditions as the Board of Directors shall
determine, consistent with the Directors' Plan.
The Stock Options granted under the Directors' Plan have the following terms
and conditions:
(a) EXERCISE PRICE. The exercise price for the shares of Common Stock
subject to a Stock Option equals one hundred (100%) of the Fair Market Value
of a share as of the date the Stock Option is granted. "Fair Market Value"
shall mean the closing price per share as reported on NASDAQ for the last
preceding date on which a sale was reported. The price per share of Common
Stock on April 6, 1999 as reported by NASDAQ was $39.625 per share.
(b) VESTING. Each Stock Option granted pursuant to the Directors' Plan
is fully vested and exercisable immediately upon the grant of such Stock
Option.
(c) TERM. The term of a Stock Option is ten years from the date that it
is granted.
(d) TERMINATION OF SERVICE AS NON-EMPLOYEE DIRECTOR. If an optionee
ceases to be a Non-Employee Director for any reason (including his death or
disability) then all outstanding Stock Options held by such optionee will
remain exercisable by such optionee (or in the case of death or disability,
such optionee's estate or legal guardian, as the case may be) for the lesser
of 90 days following such event and the remaining term of such Stock Option.
Thereafter, such Stock Options will terminate.
No Stock Option granted under the Directors' Plan is transferable by the
optionee to whom granted otherwise than by will or the laws of descent and
distribution, and a Stock Option may be exercised during the lifetime of such
optionee only by the optionee or his guardian or legal representative. The terms
of such Stock Option must be binding upon the beneficiaries, executors,
administrators, heirs and successors of the optionee.
The purchase price for any shares of Common Stock purchased pursuant to the
exercise of a Stock Option must be paid in full upon such exercise in cash, by
check or, at the discretion of the Board of Directors and upon such terms and
conditions as the Board of Directors will approve, by transferring previously
owned shares to Veeco, having shares withheld or exercising pursuant to a
"cashless exercise" procedure, or any combination thereof.
In the event that shares of Common Stock are hereinafter changed into or
exchanged for a different number or kind of shares or other securities of Veeco,
or of another corporation, by reason of reorganization, merger or other
subdivision, consolidation, recapitalization, reclassification, stock split,
issuance of warrants or rights, stock dividend, combination of shares or similar
event, the Board of Directors will make appropriate adjustments in the number
and kind of shares of Common Stock subject to Stock Options under the Directors'
Plan, and the purchase price per share, to prevent dilution or enlargement of
the benefits granted to, or available for, optionees.
Stock Options granted under the Directors' Plan are intended to be
"nonqualified stock options" that will not be governed by the special tax
treatment applicable to "incentive stock options" described in Sections 421 and
422 of the Code. The following is a summary description of the Federal income
tax consequences of the Directors' Plan.
17
The grant of a Stock Option under the Directors' Plan is not taxable to the
Non-Employee Director at the time of grant. Upon the exercise of a Stock Option,
1. except as described below with respect to the exercise of a Stock Option
within six months of the date of grant, the Non-Employee Director will
recognize taxable ordinary income in an amount equal to the excess of
the fair market value of the shares acquired on the date of exercise
over the exercise price;
2. Veeco will be entitled to a deduction at the same time and in the same
amount as the Non-Employee Director recognizes income; and
3. upon a sale of the Common Stock so acquired, the Non-Employee Director
will have short-term or long-term capital gain or loss, as the case may
be, in an amount equal to the difference between the amount realized on
such sale and the tax basis of the shares sold.
If payment of the exercise price is made entirely in cash, the tax basis of
the shares will be equal to its fair market value on the date of exercise, but
not less than the exercise price, and the holding period will begin on the day
after the date of exercise. If the Non-Employee Director uses previously owned
shares to pay all or part of the exercise price, the transaction will not be
considered to be a taxable disposition of the previously owned shares. The
Non-Employee Director's tax basis and holding period of the previously owned
shares will be carried over to the equivalent number of shares received on
exercise. The tax basis of the additional shares received upon exercise will be
the fair market value of the shares on the date of exercise, but not less than
the amount of cash used in payment, and the holding period of such additional
shares will begun on the day of exercise.
If a Stock Option is exercised within six months of the date of grant and
the sale of the shares received on exercise at a profit could subject the
Non-Employee Director to a suit under Section 16(b) of the Securities and
Exchange Act, then, unless the Non-Employee Director makes an election under
Section 83(b) of the Code within thirty days after exercise to be taxed under
the general rules described above: (1) the Non-Employee Director will recognize
taxable ordinary income at the time that the sale of such shares is no longer
subject to such restriction (the end of the "Section 16(b) period"), (2) the
amount of such ordinary income will be equal to the excess of the fair market
value of the shares at the time over the exercise price, and the Non-Employee
Director's tax basis for the shares will be equal to their fair market value at
the time, (3) the Non-Employee Director's holding period for the shares will
begin at the end of the Section 16(b) period, and (4) any dividends he receives
on the shares before that time will be taxable to him as compensation income. If
previously owned shares are used to pay all or part of the exercise price, the
special rules described above will apply, using the fair market value of the
shares at the end of the Section 16(b) period.
Veeco does not impose restrictions on the resale of shares of Common Stock
obtained pursuant to the Directors' Plan; however, certain optionees may be
subject to restrictions on resale imposed by federal or state securities laws or
by contract.
The Directors' Plan is administered by the Board of Directors. The Board of
Directors may at any time terminate, suspend, amend or modify the Directors'
Plan; provided, however, that no such action of the Board of Directors, without
the approval of the Stockholders, may (i) increase the total number of shares of
Common Stock for which Stock Options may be issued under the Directors' Plan;
(ii) change in any respect the class of persons who constitute Non-Employee
Directors eligible to participate in such plan; (iii) change the requirement
that an Option be granted at Fair Market Value; (iv) extend the maximum period
for granting or exercising Stock Options; or (v) otherwise materially increase
the benefits accruing to optionees under such plan; and provided, further, that
no amendment, modification, suspension or termination of the Directors' Plan may
in any way affect any Stock Option theretofore granted under the Directors' Plan
without the consent of the then holder of the Stock Option.
THE FULL TEXT OF THE PROPOSED RESOLUTION AMENDING THE DIRECTORS' PLAN IS
ATTACHED HERETO AS EXHIBIT B.
18
PROPOSAL 4--RATIFICATIONRATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP,
independent certified public accountants, to examine the financial statements of
Veeco for the year ending December 31, 1999.2000. Ernst & Young LLP has been employed
as independent auditors of Veeco since 1990. Stockholders are asked to ratify
the action of the Board of Directors in making such an appointment.
If the appointment of Ernst & Young LLP for fiscal year 19992000 is not
ratified by the Stockholders, the selection of other independent auditors will
be considered by the Board of Directors.
18
Representatives of Ernst & Young LLP will be present at the Meeting and may make
a statement if they so desire. They also will be available to respond to
appropriate questions.
Section 1.6 of the Bylaws of Veeco provides that action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of the stockholders. Therefore, the
ratification of the appointment of Ernst & Young LLP as auditors requires the
affirmative vote of a majority of the votes cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS AND IT IS INTENDED THAT PROXIES NOT
MARKED TO THE CONTRARY AND NOT DESIGNATED AS BROKER NON-VOTES WILL BE SO VOTED.
19
SECURITY OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 31, 1999 (unless otherwise specified
below) by (i) each person known by Veeco to own beneficially more than five
percent of the outstanding shares of Common Stock, (ii) each director of Veeco,
(iii) each of the Named Officers and (iv) all executive officers and directors
of Veeco as a group. Unless otherwise indicated, Veeco believes that each of the
persons or entities named in the table exercises sole voting and investment
power over the shares that each of them beneficially owns, subject to community
property laws where applicable.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
---------------------------------- PERCENTAGE OF TOTAL
NAME OF BENEFICIAL OWNER SHARES OPTIONS(2) TOTAL SHARES OUTSTANDING
- ------------------------------------------------------- ---------- ---------- ---------- -------------------
James C. Wyant, Ph.D.(3)............................... 1,300,127 -- 1,300,127 8.2%
John A. Gurley......................................... 1,174,681 -- 1,174,681 7.4%
Virgil Elings(4)(5).................................... 990,873 -- 990,873 6.2%
Betty Elings-Wells(4)(6)............................... 923,531 -- 923,531 5.8%
Edward H. Braun........................................ 125,019 43,999 169,018 1.1%
Walter J. Scherr....................................... -- 13,002 13,002 *
Richard A. D'Amore..................................... 16,701 23,999 40,700 *
Paul R. Low............................................ -- 23,999 23,999 *
Joel A. Elftmann(7).................................... 2,000 23,999 25,999 *
John F. Rein, Jr....................................... 1,728 35,500 37,228 *
Francis Steenbeke...................................... 38,339 6,000 44,339 *
Emmanuel N. Lakios..................................... 1,232 15,334 16,566 *
Heinz K. Fridrich...................................... -- 7,000 7,000 *
Roger McDaniel......................................... -- 7,000 7,000 *
Irwin H. Pfister....................................... -- 7,000 7,000 *
All Executive Officers and Directors
as a Group (17 persons).............................. 2,362,359 225,831 2,588,190 16.0%
- ------------------------
* Denotes less than a 1% interest.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days of March 31, 1999 upon the exercise
of warrants and/or stock options. Each person's percentage ownership is
determined by assuming that warrants and stock options held by such person
(but not those held by any other person) which are exercisable within 60
days of March 31, 1999 have been exercised.
(2) Represents stock options exercisable within 60 days of March 31, 1999.
(3) Dr. Wyant shares voting and dispositive power over 1,300,127 shares of
Common Stock with his wife, Louise Wyant.
(4) Does not include 403,197 shares held by Jeffrey Elings and 436,930 shares
held by Michael Elings, sons of Virgil Elings and Betty Elings-Wells. Virgil
Elings and Betty Elings-Wells disclaim ownership to these shares.
(5) Does not include 923,531 shares held by Betty Elings-Wells, Virgil Elings'
former wife. Mr. Elings disclaims beneficial ownership of these shares.
(6) Does not include 990,873 shares held by Virgil Elings, Betty Elings-Wells'
former husband. Ms. Elings disclaims beneficial ownership of these shares.
(7) Includes 2,000 shares of Common Stock held by the Elftmann Family Limited
Partnership, a family limited partnership of which Mr. Elftmann is the
general partner.
20
CERTAIN TRANSACTIONS
On January 5, 1998, options to purchase 25,000 shares of Common Stock at an
exercise price of $24.4375 (fair market value on date of grant) were issued to
Don R. Kania under the Employees' Plan. On June 15, 1998, options to purchase
shares of Common Stock were issued to each of the following executive officers
in the following amounts pursuant to the Employees' Plan, all at an exercise
price of $24.00 per share (the fair market value at the date of grant): Edward
H. Braun, options to purchase 100,000 shares; David S. Perloff, options to
purchase 20,000 shares; Emmanuel N. Lakios, options to purchase 20,000 shares;
John F. Rein, Jr., options to purchase 40,000 shares; Francis Steenbeke, options
to purchase 10,000 shares; John P. Kiernan, options to purchase 15,000 shares;
and Robert P. Oates, options to purchase 10,000 shares. Also on June 15, 1998,
options to purchase 7,000 shares at an exercise price of $24.00 were issued to
Walter Scherr under the Employees' Plan. On July 3, 1998, options to purchase
30,000 shares of Common Stock at an exercise price of $23.25 (fair market value
on date of grant) were issued to Joseph Rivlin, under the Employees' Plan. On
November 4, 1998, options to purchase 5,000 shares of Common Stock at an
exercise price of $27.25 (fair market value on date of grant) were issued to
John P. Kiernan, under the Employees' Plan.
In May 1998, 42,000 options, in the aggregate, were granted to the
non-employee directors pursuant to the Directors' Plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires Veeco's officers and
directors, and persons who own more than ten percent of a registered class of
Veeco's equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. These persons are required by
regulation of the Commission to furnish Veeco with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain persons that no Forms 5 were required for
those persons, Veeco believes that during the fiscal year ended December 31,
1998,1999, Veeco's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
21
OTHER MATTERS
The Board of Directors knows of no other matters to come before the
Meeting. Should any other business properly come before the Meeting, the persons
named in the enclosed form of proxy will vote on such matters in accordance with
their best judgment.
Proposals which Stockholders wish to include in Veeco's proxy materials
relating to the 2001 Annual Meeting of Stockholders must be received by Veeco no
later than December 12, 2000. Any such proposals will comply with the
requirements of the Securities and Exchange Commission's proxy solicitation
rules.
The cost of preparing and mailing this Proxy Statement and the
accompanying proxy, and the cost of solicitation of proxies on behalf of the
Board of Directors, will be borne by Veeco. Veeco has retained Georgeson
Shareholder Communications Corp.Inc. ("SCC"GSC") to solicit proxies. SCCGSC may contact
Stockholders by mail, telephone, telex, telegraph and personal interviews. SCCGSC
will receive from Veeco a fee of $7,500 for such services, plus reimbursement of
out-of-pocket expenses, and Veeco has agreed to indemnify SCCGeorgeson against
certain liabilities and expenses in connection with such solicitation, including
liabilities under the federal securities laws. Some personal solicitation also
may be made by directors, officers and employees without special compensation,
other than reimbursement for expenses.
Proposals which Stockholders wish to include in Veeco's proxy materials
relating to the 2000 Annual Meeting of Stockholders must be received by Veeco no
later than December 14, 1999. Any such proposals will comply with the
requirements of the Securities and Exchange Commission's proxy solicitation
rules.
PLEASE PROMPTLY COMPLETE AND RETURN YOUR PROXY IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE.
By order of the Board of Directors,
/s/ John F. Rein, Jr.
JOHN F. REIN, JR.
SECRETARYSecretary
Plainview, New York
April 12, 1999
2213, 2000
19
EXHIBITAPPENDIX A
RESOLUTION APPROVING AMENDMENT TO
VEECO INSTRUMENTS INC.
AMENDED AND RESTATED
1992 EMPLOYEES'2000 STOCK OPTION PLAN
RESOLVED,(EFFECTIVE AS OF _________, 2000)
1. PURPOSE
The purpose of the Plan is to provide a means through which the Company and
its Affiliates may attract capable persons to enter and remain in the employ of
the Company and Affiliates and to provide a means whereby employees, directors
and consultants of the Company and its Affiliates can acquire and maintain
Common Stock ownership, thereby strengthening their commitment to the welfare of
the Company and Affiliates and promoting an identity of interest between
stockholders and these employees.
The Plan provides for granting Incentive Stock Options and Nonqualified
Stock Options.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
"Affiliate" means (i) any entity that directly or indirectly is controlled
by, or is under common control with the Company, and (ii) any entity in which
the Company has a significant equity interest, in either case as determined by
the Committee.
"Board" means the Board of Directors of the Company.
"Cause" means the Company or an Affiliate having "cause" to terminate a
Participant's employment or service, as defined in any existing employment,
consulting or any other agreement between the Participant and the Company or a
Subsidiary or Affiliate or, in the absence of such an employment, consulting or
other agreement, upon (i) the determination by the Committee that the
Veeco Instruments Inc. AmendedParticipant has ceased to perform his duties to the Company, an Affiliate (other
than as a result of his incapacity due to physical or mental illness or injury),
which failure amounts to an intentional and Restated 1992
Employees'extended neglect of his duties to
such party, (ii) the Committee's determination that the Participant has engaged
or is about to engage in conduct materially injurious to the Company or and
Affiliate, (iii) the Participant having been convicted of, or pleaded guilty or
no contest to, a felony or a crime involving moral turpitude or (iv) the failure
of the Participant to follow instruction of the Board or his direct superiors.
"Change in Control, shall, unless in the case of a particular Option the
applicable Stock Option Plan (asAgreement states otherwise or contains a different
definition of "Change in Control", be deemed to occur upon:
(i) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended to date,(the "Exchange Act")) (each, a "Person") of beneficial
ownership (within the
"Employees' Plan") be
further amended to increase1
meaning of Rule 13d-3 promulgated under the numberExchange Act) of 30% or more
(on a fully diluted basis) of either (A) the then outstanding shares of
Common Stock, taking into account as outstanding for this purpose such
Common Stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any similar
right to acquire such common stock (the "Outstanding Company Common Stock")
or (B) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); PROVIDED, HOWEVER, that for
purposes of the Plan, the following acquisitions shall not constitute a
Change of Control: (I) any acquisition by the Company, (II) any acquisition
by any employee benefit plan sponsored or maintained by the Company or any
Affiliate, (III) any acquisition by any Person which complies with clauses
(A), (B) and (C) of subsection (v) of this Section 2(f), or (IV) in respect
of an Award held by a particular Participant, any acquisition by the
Participant or any "affiliate" (within the meaning of 17 C.F.R. Section
230.405) of the Participant (persons described in clauses (I), (II), and
(IV) being referred to hereafter as "Excluded Persons");
(ii) Individuals who, on the date hereof, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the date hereof, whose election or nomination for election
was approved by a vote of at least two-thirds of the Incumbent Directors
then on the Board (either by a specific vote or by approval of the proxy
statement of the Corporation in which such person is named as a nominee for
director, without written objection to such nomination) shall be deemed to
be an Incumbent Director; PROVIDED, HOWEVER, that no individual initially
elected or nominated as a director of the Corporation as a result of an
actual or threatened election contest with respect to directors or as a
result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed
to be an Incumbent Director;
(iii) the dissolution or liquidation of the Company;
(iv) the sale of all or substantially all of the business or assets of
the Company; or
(v) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company
that requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (A)
more than 50% of the total voting power of (x) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of sufficient voting securities eligible to elect a
majority of the directors of the Surviving Corporation (the "Parent
2
Corporation"), is represented by the Outstanding Company Voting Securities
that were outstanding immediately prior to such Business Combination (or,
if applicable, is represented by shares into which the Outstanding Company
Voting Securities were converted pursuant to such Business Combination),
(B) no Person (other than any Excluded Person), is or becomes the
beneficial owner, directly or indirectly, of 30% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors.
"Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
"Committee" means a committee of at least two people as the Board may
appoint to administer the Plan or, if no such committee has been appointed by
the Board, the Board. Unless the Board is acting as the Committee or the Board
specifically determines otherwise, each member of the Committee shall, at the
time he takes any action with respect to a Option under the Plan, be an Eligible
Director. However, the mere fact that a Committee member shall fail to qualify
as an Eligible Director shall not invalidate any Option granted by the Committee
which Option is otherwise validly made under the Plan.
"Common Stock" means the common stock, par value $.01$0.01 per share, of
the Company.
"Company" means Veeco Instruments Inc.
"Date of Grant" means the date on which the granting of an Option is
authorized, or such other date as may be specified in such authorization or, if
there is no such date, the date indicated on the applicable Stock Option
Agreement.
"Disability" means, unless in the case of a particular Option, the
applicable Option Agreement states otherwise, entitled to receive benefits under
the long-term disability plan of the Company, a Subsidiary or Affiliate, as may
be applicable to the Participant in question, or, in the absence of such a plan,
the complete and permanent inability by reason of illness or accident to perform
the duties of the occupation at which a Participant was employed or served when
such disability commenced or, as determined by the Committee based upon medical
evidence acceptable to it.
"Effective Date" means the date that the Plan is approved by the
Board, subject to the approval of the stockholders of the Company.
"Eligible Director" means a person who is (i) a "non-employee
director" within
3
the meaning of Rule 16b-3 under the Exchange Act, or a person meeting any
similar requirement under any successor rule or regulation and (ii) an "outside
director" within the meaning of Section 162(m) of the Code, and the Treasury
Regulations promulgated thereunder; PROVIDED, HOWEVER, that clause (ii) shall
apply only with respect to grants of Options with respect to which the Company's
tax deduction could be limited by Section 162(m) of the Code if such clause did
not apply.
"Eligible Person" means any (i) individual regularly employed by the
Company, a Subsidiary or Affiliate who satisfies all of the requirements of
Section 6; PROVIDED, HOWEVER, that no such employee covered thereby from 2,126,787by a collective
bargaining agreement shall be an Eligible Person unless and to the extent that
such eligibility is set forth in such collective bargaining agreement or in an
agreement or instrument relating thereto; (ii) director of the Company or an
Affiliate or (iii) consultant or advisor to the Company, a Subsidiary or an
Affiliate who may be offered securities pursuant to Form S-8 (which, as of the
Effective Date, includes only those who (A) are natural persons and (B) provide
BONA FIDE services to the Company, a Subsidiary or Affiliate other than in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the Company's securities).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value", on a given date means (i) if the Stock is listed
on a national securities exchange, the closing price on the primary exchange
with which the Stock is listed and traded on the date prior to such date, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported; (ii) if the Stock is not listed on any national
securities exchange but is quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on a
last sale basis, the closing price reported on the date prior to such date, or,
if there is no such sale on that date, then on the last preceding date on which
a sale was reported; or (iii) if the Stock is not listed on a national
securities exchange nor quoted in the NASDAQ on a last sale basis, the amount
determined by the Committee to be the fair market value based upon a good faith
attempt to value the Stock accurately and computed in accordance with applicable
regulations of the Internal Revenue Service.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an incentive
stock option as described in Section 422 of the Code and which otherwise meets
the requirements set forth herein.
"Mature Shares" means shares of Stock owned by a Participant which are
not
4
subject to any pledge or other security interest and have either been held by
the Participant for six months, previously acquired by the Participant on the
open market or meet such other requirements as the Committee may determine
necessary in order to avoid an accounting earnings charge on account of the use
of such shares to 2,826,787 shares, and,
therefore, Section 3pay the Option Price or satisfy a withholding obligation in
respect of an Option.
"Non-Employee Director" means a member of the Employees'Board who is not an
employee of the Company or any Affiliate.
"Nonqualified Stock Option" means an Option granted by the Committee
to a Participant under the Plan be amendedwhich is not designated by the Committee as an
Incentive Stock Option.
"Normal Termination" means termination of employment or service with
the Company and restated Affiliates:
(i) on account of death or Disability; or
(ii) by the Company, a Subsidiary or Affiliate without Cause;
(iii)in its
entiretythe case of Options granted pursuant to read as follows:
"3. Stock. The stockSection 7(a)(ii)
hereof, a resignation from or a failure to be madere-elected
to the subjectBoard.
"Option" means an award granted under Section 7.
"Option Period" means the period described in Section 7(d).
"Option Price" means the exercise price for an Option as described in
Section 7(a).
"Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Option pursuant to
Section 6.
"Plan" means this Veeco Instruments Inc. 2000 Stock Option Plan.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock" means the Common Stock or such other authorized shares of
stock of the Company as the Committee may from time to time authorize for use
under the Plan.
"Stock Option Agreement" means any agreement between the Company and a
Participant who has been granted an Option pursuant to Section 7 which defines
the rights and obligations of the parties thereto.
5
"Subsidiary" means any subsidiary of the Company as defined in Section
424(f) of the Code.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
The Plan is effective as of the Effective Date; provided that the
effectiveness of the Plan and the validity and exercisability of any and all
Options granted pursuant to the Plan is contingent upon approval of the Plan by
the shareholders of the Company in a manner intended to comply with the
shareholder approval requirements of Sections 162(m) and 422(b)(i) of the Code.
The expiration date of the Plan, on and after which no Options may be
granted hereunder, shall be the tenth anniversary of the Effective Date;
PROVIDED, HOWEVER, that the administration of the Plan shall continue in effect
until all matters relating to Options previously granted have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. A majority of the members of
the Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan and applicable law, the
Committee shall have the power, in addition to other express powers and
authorizations conferred on the Committee by the Plan, to: (i) designate
Participants; (ii) determine the type or types of Options to be granted to a
Participant; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Options; (iv) determine the terms and conditions of any
Options; (v) determine whether, to what extent, and under what circumstances
Options may be settled or exercised in cash, Stock, other securities, other
Options or other property, or canceled, forfeited or suspended and the method or
methods by which Options may be settled, exercised, canceled, forfeited or
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Options, other property and other amounts
payable with respect to an Option shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret,
administer reconcile any inconsistency, correct any default and/or supply any
omission in the Plan and any instrument or agreement relating to, or Option
granted under, the Plan; (viii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all designations,
6
determinations, interpretations and other decisions under or with respect to the
Plan or any Option or any documents evidencing Options shall be shareswithin the sole
discretion of the common stockCommittee, may be made at any time and shall be final,
conclusive and binding upon all parties, including, without limitation, the
Company, any Affiliate, any Participant, any holder or beneficiary of Veeco, par value $.01 per share (the "Stock"), whether
authorizedany
Option, and unissuedany shareholder.
(c) Notwithstanding the above, no Committee member holding Options
granted pursuant to Section 7(a)(ii) hereof may participate in any action of the
Committee with respect to any claim or treasury stock, anddispute regarding only that Committee
member.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Options to one or more
Eligible Persons; PROVIDED, HOWEVER, that:
(a) Subject to Section 9, the totalaggregate number of shares of Stock forin
respect of which Stock Options may be granted under the Plan shall not exceed
in the aggregate, 2,826,787 shares, subject
to adjustment in accordance with the provisions of Section 11
hereof. To the extent consistent with Section 162(m) of the Code,
and the regulations promulgated thereunder, any shares which were
the subject of unexercised portions of any terminated or expired
Stock Options may again be subject to Stock Options1,250,000;
(b) Shares authorized under the Plan."
EXHIBIT B
RESOLUTION APPROVING AMENDMENT TO
AMENDED AND RESTATED VEECO INSTRUMENTS INC.
1994 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
RESOLVED, thatPlan shall be deemed to have been used
in settlement of Options whether or not they are actually delivered. In the
Amended and Restated Veeco Instruments Inc. 1994 Stockevent any Option Plan for Outside Directors (as amended to date, the "Directors' Plan")shall be further amended to increasesurrendered, terminate, expire, or be forfeited, the
number of shares of Common Stock covered thereby
from 115,000 shares to 215,000 shares, and, therefore, Section 2.1 of the
Directors' Plan be amended and restated in its entirety to read as follows:
"2.1 Shares Subject to Plan.
The maximum number of Shares that may be issued or transferred
pursuant to Options under this Plan shall be 215,000. Veeco shall
reserve such number of Shares for the purposes of the Plan, out of
its authorized but unissued Shares or out of Shares held in
Veeco's treasury, or partly out of each. If any Shares that have
been subject to an Option cease to beno longer subject thereto such Shares
may againshall thereupon be the subject of Options hereunder."
Appendix A
VEECO INSTRUMENTS INC.
AMENDED AND RESTATED 1992 EMPLOYEES' STOCK OPTION PLAN
1. PURPOSES. The Veeco Instruments Inc. Amendedreleased
and Restated 1992
Employees' Stock Option Plan (the "Plan") is intended to provide an incentive to
certain key employees (each an "Optionee") of Veeco Instruments Inc., a Delaware
corporation (the "Company") and its subsidiaries in order to encourage them to
remain in the employ of the Company and contribute to the Company's success by
granting them stock options. The stock options granted by the Company pursuant
to the terms and conditions of the Plan shall thereafter be referred to herein as the
"Stock Options". References herein to the employees of the "Company" shall be
deemed to include employees of the Company's subsidiaries, as such term is
defined in Section 425 of the Internal Revenue Code of 1986, as amended and any
applicable regulations (the "Code"), and references to employment by the Company
shall be deemed to include employment by any such subsidiary.
2. ADMINISTRATION. (a) The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors (the "Board") of the
Company. The Committee shall consist of at least three directors of the Company
appointed by the Board, who shall hold office at the pleasure of the Board. All
members of the Committee must be (x) "disinterested persons," as such term is
described in Rule 16b-3 adopted by the Securities and Exchange Commissionavailable for new grants under the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"),
if and as such Rule is in effect, and (y) "outside directors" as such term is
defined in Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.
(b) It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its terms and provisions. Subject
to the express provisions of the Plan, the Committee shall have the power and
authority to interpret the Plan, to adopt such rules and regulations for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules, to determine the
terms and provisions of the respectivePlan;
(c) Stock Option Agreements (as hereinafter
defined) and other granting documents, and to make all other determinations
necessary or advisable for the administration of the Plan.
(c) The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a telephonic or other meeting or by a
memorandum or other written
A-1
instrument signed by a majority of the Committee.
(d) Members of the Committee may receive such compensation for their
services as may be determined by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, or other persons to assist it in its
administration of the Plan. The Committee, the Company and its officers and
directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all holders,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Stock Options, and all members of the
Committee shall be fully protecteddelivered by the Company in respect to any such action,
determination or interpretation.
3. STOCK. The stock to be made the subjectsettlement of any Stock OptionOptions granted
under the Plan shallmay be shares ofauthorized and unissued Stock or Stock held in the
common stocktreasury of the Company par value
$.01or may be purchased on the open market or by private
purchase;
(d) Subject to Section 9, no person may be granted Options under the
Plan during any calendar year with respect to more than 300,000 shares of Stock;
provided that such number shall be adjusted pursuant to Section 9 only in a
manner which will not cause the Options granted under the Plan to fail to
qualify as "performance-based compensation" under Section 162(m) of the Code;
(e) Without limiting the generality of the preceding provisions of
this Section 5, the Committee may, but solely with the Participant's consent,
agree to cancel any Option under the Plan and issue a new Option in substitution
therefor upon such terms as the Committee may in its sole discretion determine,
provided that the substituted Option satisfies all applicable Plan requirements
as of the date such new Award is made, provided further that, without
shareholder approval, no such action may lower the exercise price of a
previously
7
granted option.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. TERMS OF OPTIONS
(a) OPTION GRANTS.
(i) ELIGIBLE PERSONS. The Committee is authorized to grant
one or more Incentive Stock Options or Nonqualified Stock Options to any
Eligible Person; PROVIDED, HOWEVER, that no Incentive Stock Options shall be
granted to any Eligible Person who is not an employee of the Company or a
Subsidiary. Each Option so granted shall be subject to the following conditions
of this Section 7, or to such other conditions as may be reflected in the
applicable Stock Option Agreement.
(ii) ELIGIBLE DIRECTORS. In addition to discretionary grants
of Options pursuant to Section 7(a)(i), each Participant who is a Non-Employee
Director of the Company shall receive upon initial election to office and
thereafter annually on the date of the Company's annual meeting of stockholders
(provided that such date is at least 6 months following such Eligible Director's
initial election to office) an Option to acquire 7,000 shares of Common Stock at
a price equal to the Fair Market Value of the shares of Common Stock subject to
such Option on the Date of Grant.
(b) OPTION PRICE. The exercise price ("Option Price") per
share (the "Stock"), whether authorized and unissued of Stock for each Option shall be set by the Committee at the time of
grant but shall not be less than the Fair Market Value of a share of Stock on
the Date of Grant subject, in the case of an Incentive Stock Option, to
Section 7(g).
(c) MANNER OF EXERCISE AND FORM OF PAYMENT. No shares of
Stock shall be delivered pursuant to any exercise of an Option until payment in
full of the aggregate exercise price therefor is received by the Company.
Options which have become exercisable may be exercised by delivery of written
notice of exercise to the Committee accompanied by payment of the Option Price.
The Option Price shall be payable in cash and/or, treasury stock,
andat the totalsole discretion of the
Committee, shares of Stock valued at the Fair Market Value at the time the
Option is exercised (including by means of attestation of ownership of a
sufficient number of shares of Stock for whichin lieu of actual delivery of such shares
to the Company), provided that such shares of Stock Options may be granted
under the Plan shall not exceed,are Mature Shares, or, in
the aggregate, 2,126,787 shares, subject to
adjustment in accordance with the provisions of Section 11 hereof. To the extent
consistent with Section 162(m)discretion of the Code, andCommittee, either (i) in other property having a fair
market value on the regulations promulgated
hereunder, any shares which were the subjectdate of unexercised portions of any
terminated or expired Stock Options may again be subject to Stock Options under
the Plan.
4. AWARD OF STOCK OPTIONS. The Committee, in its sole discretion, at any
time priorexercise equal to the expirationOption Price, (ii) by
delivering to the Committee a copy of ten years fromirrevocable instructions to a stockbroker
to deliver promptly to the Effective Date (as
hereinafter defined), may authorize the grantingCompany an amount of Stock Options to suchloan proceeds, or proceeds of
the officers, managerial or supervisory personnel and other key employeessale of the Company as it may select, and in such amounts as it shall designate,Stock
8
subject to the provisions of this Section andOption, sufficient to pay the Option Price or (iii) by such other
applicable sections hereof;
PROVIDED, HOWEVER, that no Optionee shall be granted Stock Options (whether or
not exercised) to purchase more than 100,000 shares, in the aggregate, of Stock
in any calendar year. No member of the Committee or non-employee member of the
Board shall be eligible to receive any Stock Options or otherwise participate in
the Plan. Members of the Board who are not members of the Committee and who are
employees of the Company shall be eligible to receive Stock Options and
participate in the Plan.
Each Stock Option granted to an Optionee shall be
A-2
evidenced by a written agreement in such form and containing such provisions not
inconsistent with the Planmethod as the Committee shall from time to time approve (the
"Stock Option Agreement") and which need not be identical in respect of each
Optionee.
5. PRICE. The exercise price of a Stock Option shall be the Fair Market
Value (as defined below) per share of Stock covered by the Stock Option at the
time that the Stock Option is granted. The exercise price of a Stock Option, as
determined in accordance with the Plan and specified in the Optionee's Stock
Option Agreement shall hereinafter be referred to as the "Exercise Price." For
purposes of this Section 5, "Fair Market Value" per share of Stock as of a
particular date shall mean, unless otherwise determined by the Committee, the
closing price per share of Stock as reported on the National Association of
Securities Dealers Automated Quotation system (known as "NASDAQ"), for the last
preceding date on which a sale was reported.
6. TERM. A Stock Option may be exercised by the holder at such times as
may be specified in such Optionee's Stock Option Agreement, provided that no
Stock Option shall be exercised later than ten years from the date such Stock
Option was granted.
7. NONTRANSFERABILITY. (a) No Stock Option shall be transferable by an
Optionee other than by will or the laws of descent and distribution, and (b)
during the lifetime of an Optionee the Stock Option shall be exercisable only by
such Optionee or, in the case of disability, by such holder's personal
representative.
8. EXERCISE OF OPTIONS. (a)allow.
(d) VESTING.
(i) IN GENERAL. Unless otherwise provided in anya Stock Option
Agreement Stockor other written agreement between the Company and a Participant,
Options granted pursuant to the Plan shall vest and become exercisable as follows:
(i)(x) with respect to one-third of the shares of Stock covered
by the Stock Option, on the first anniversary date of the grantDate of such Stock
Option;
(ii)Grant;
(y) with respect to an additional one-third of the shares of
Stock covered by the Stock Option, on the second anniversary date of the grantDate of such Stock Option; and
(iii)Grant;
(z) with respect to the remaining one-third of the shares of
Stock covered by the Stock Option, on the third anniversary date of the grantDate of Grant.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
accelerate the exercisability of any Option, which acceleration shall not affect
the terms and conditions of any such Stock Option.
(b) For purposes of the Plan, the term "Vested
A-3
Options" shall mean,Option other than with respect to
any particular Optionee, those Stock
Optionsexercisability. If an Option is exercisable in installments, such installments
or portions thereof which have become exercisable pursuantshall remain exercisable until the
Option expires.
(ii) NON-EMPLOYEE DIRECTORS. Notwithstanding Section
7(d)(i), Options granted to Eligible Directors shall be immediately vested and
exercisable as of the provisionsDate of Section
8(a); the term "Vested Shares" shall mean, with respect to any particular
Optionee, those shares of Stock subject to one or more Vested Options; and the
term "Vesting Date" shall mean the date such Stock Options become Vested
Options.
9. TERMINATION OF EMPLOYMENT. (a) In the event (i) of a terminationGrant.
(e) OPTION PERIOD AND TERMINATION. An Option may be exercised by
the Company (otherholder thereof in accordance with Section 7(d) above; PROVIDED, HOWEVER,
that no Option shall be exercisable later than for Cause, as defined inseven years from the Date of
Grant (the "Option Period"). Notwithstanding the foregoing, unless the
applicable Stock Option Agreement) ofAgreement or other written agreement between the
Company and a Participant provides otherwise, an Optionee's employment, (ii) an Optionee voluntarily leavesOption shall expire earlier
than the employend of the Company or (iii) an Optionee shall die or become disabled (withinOption Period in the meaning of Section 22(e)(3)following circumstances:
(i) If prior to the end of the Code) whileOption Period, the
OptioneeParticipant shall undergo a Normal Termination, the Option shall expire on
the earlier of the last day of the Option Period or the date that is employed by
the Company, such Optionee, his estate or his legal guardian, as the case may
be, will be entitled to exercise the Optionee's Vested Options for a period of
90 days followingthree
months after the date of such termination, voluntary departure, death or
disability.
(b) In the eventNormal Termination; PROVIDED, HOWEVER, that
an Optionee'sany Participant whose employment with the Company, a Subsidiary or any
Affiliate is terminated and who is subsequently rehired by the Company, for Cause (as defined ina
Subsidiary or any Affiliate prior to the applicable Stock Option
Agreement), such Optionee's right to exercise Vested Options shall thereupon
terminate and all of such Optionee's Stock Options, whether or not vested, shall
be rendered null and void and shall become unexercisable.
(c) Upon the occurrence of anyexpiration of the events set forth in subparagraphs
(a) or (b) above, an Optionee's non-vested Stock Options shall terminate and be
rendered null and void.
10. PAYMENT FOR STOCK. (a) The aggregate purchase price of Stock issued
upon the exercise of any Vested Options granted hereunder shall be paid in full
on the date of purchase. Payment shall be made either in cash or in such other
consideration as the Committee deems appropriate, including, but not limited to,
Stock already owned by the Optionee or Stock to be acquired by the Optionee upon
exercise of Vested Options having a total fair market value, as determined by
the Committee, equal to the aggregate purchase price, or a combination of cash
and Stock having a total fair market value, as so determined, equal to the
aggregate purchase price.
(b) StockOption shall not
be issued upon the exercise of any Vested Options
unless and until the aggregate amount of federal, state or local taxes of any
kind required by lawconsidered to be withheld with respect to the exercise of such Stock
Options have been paid or satisfied or provision for their payment and
satisfaction has
A-4
been made upon such terms as the Committee may prescribe.
11. STOCK ADJUSTMENTS. (a) The total number of shares of Stock which may
be issued under the Plan, the number of shares of Stock which may be purchased
upon the exercise of Stock Options granted hereunder and the Exercise Price of
such Stock Options shall be appropriately adjusted for any increase or decrease
in the number of outstanding shares of Stock resulting from payment ofundergone a stock
dividend on the Stock, a subdivision or combination of shares of the Stock, or a
reclassification of the Stock, and (in accordance with the provisions contained
in the next following paragraph) intermination. In the event of a consolidation or a merger in
whichNormal
9
Termination, the CompanyOption shall beremain exercisable by the surviving corporation.
(b) Subject to paragraph (c) below, after any merger of one or more
corporations intoParticipant for the
Company in which the Company shall be the surviving
corporation, or after any consolidation of the Company and one or more other
corporations, each Optionee shall, at no additional cost, be entitled, upon any
exercise of his Stock Options, to receive (subject to any required action by
stockholders), in lieu of the number of shares as to which such Stock Options
shall then be so exercised, the number and class of shares of Stock or other
securities to which such Optionee would have been entitled pursuantperiod described above, only to the terms
ofextent the applicable agreement of merger or consolidation ifOption was exercisable at
the time of such merger or consolidation such Optionee had been a holder of record of a number of
shares of Stock equalNormal Termination.
(ii) If the Participant dies prior to the numberend of shares to which such Optionee's Stock
Options may have then been so exercised. Comparable rights shall accrue to each
Optioneethe Option
Period and while still in the event of successive mergersemploy or consolidations of the character
described above.
(c) In the event of any sale of all or substantially all of the assetsservice of the Company, a
Subsidiary or any mergerAffiliate, or following a Normal Termination but prior to the
expiration of an Option, the Option shall expire on the earlier of the Company into another corporation, or any
dissolution or liquidationlast
day of the Company or, inOption Period and the discretiondate that is one year after the date of
death of the Board,
any consolidationParticipant. In such event, the Option shall remain
exercisable by the person or persons to whom the Participant's rights under
the Option pass by will or the applicable laws of descent and distribution
until its expiration, only to the extent the Option was exercisable by the
Participant at the time of death.
(iii) If the Participant ceases employment or service with
the Company and Affiliates for reasons other reorganizationthan Normal Termination or
death, the Option shall expire immediately upon such cessation of
employment or service.
(f) OTHER TERMS AND CONDITIONS. Except as specifically provided
otherwise in which it is impossible or
impracticable to continue in effect anya Stock Options, all Stock OptionsOption Agreement, each Option granted under the Plan shall
be subject to the following terms and conditions:
(i) Each Option or portion thereof that is exercisable shall
be exercisable for the full amount of such exercisable portion or for any
part thereof.
(ii) Each Option shall cease to be exercisable, as to any
share of Stock, when the Participant purchases the share or when the Option
expires.
(iii) Subject to Section 8(h), Options shall not previously exercisedbe
transferable by the Participant except by will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime
only by him.
(iv) Each Option shall vest and become exercisable by Optionees who are at such timethe
Participant in accordance the employprovisions of the Company, commencing ten days
before the scheduled closing of such event, and shall terminate unless exercised
at least one business day before the scheduled closing of such event; PROVIDED,
HOWEVER, that the Board may, in its discretion, require instead that all Stock
Options granted under the Plan and not previously exercised be assumed by such
other corporation on the basis provided in the preceding paragraph.
(d) The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Board in its sole discretion.
Any such adjustment may
A-5
provide for the elimination of any fractional share which might otherwise become
subject to a Stock Option.
12. NO RIGHTS AS A STOCKHOLDER. An Optionee or a permitted transferee of a
Stock Option shall have no rights as a stockholder with respect to any Stock
covered by his Stock Option until he shall have become the holder of record of
such Stock, and, except for stock dividends as provided in Section 11 above, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights in respect
of such Stock for which the record date is prior to the date on which he shall
become the holder of record thereof.
13. AMENDMENT AND TERMINATION. The Board may at any time terminate, amend
or modify the Plan in any respect it deems to be in the best interests of the
Company; PROVIDED, HOWEVER, that no such action of the Board, without the
approval of the stockholders of the Company (which may be either before or after
Board action) may effectuate any change (i) inconsistent with the qualifications
of Stock Option as "performance based" under Section 162(m) of the Code (unless
the Board determines that awards affected by such changes are not intended to
qualify for such exception) or (ii) any other change for which stockholder
approval is required to qualify under Rule 16b-3 of the Securities Exchange Act;
and PROVIDED, FURTHER, that no amendment, modification or termination of the
Plan may in any manner affect any Stock Option theretofore granted under the
Plan without the consent of the then holder of the Stock Option.
14. INVESTMENT PURPOSE.7(d).
(v) At the time of any exercise of any Stockan Option, the CompanyCommittee
may, if it shall deem it necessary or desirable for any reason,in its sole discretion, require the Optioneea Participant to represent in writingdeliver to the
CompanyCommittee a written representation that it is his then
intentionthe shares to acquire the Stockbe acquired upon such
exercise are to be acquired for investment and not for resale or with a
view to the distribution thereof. 15. RIGHT TO TERMINATE EMPLOYMENT. Nothing contained herein or inUpon such a request by the Committee,
delivery of such representation prior to the delivery of any Stockshares issued
upon exercise of an Option Agreement shall restrictbe a condition precedent to the right of
the Participant or such other person to purchase any shares. In the event
certificates for Stock are delivered under the Plan with respect to which
such investment representation has been obtained, the Committee may cause
a legend or legends to be
10
placed on such certificates to make appropriate reference to such
representation and to restrict transfer in the absence of compliance
with applicable federal or state securities laws.
(vi) Each Participant awarded an Incentive Stock Option
under the Plan shall notify the Company to terminatein writing immediately after the
employmentdate he or she makes a disqualifying disposition of any OptioneeStock acquired
pursuant to the exercise of such Incentive Stock Option. A disqualifying
disposition is any disposition (including any sale) of such Stock before
the later of (a) two years after the Date of Grant of the Incentive Stock
Option or (b) one year after the date the Participant acquired the Stock by
exercising the Incentive Stock Option.
(g) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS.
Notwithstanding anything to the contrary in this Section 7, if an Incentive
Stock Option is granted to a Participant who owns stock representing more than
ten percent of the voting power of all classes of stock of the Company or of a
Subsidiary, the Option Period shall not exceed five years from the Date of Grant
of such Option and the Option Price shall be at least 110 percent of the Fair
Market Value (on the Date of Grant) of the Stock subject to the Option.
(h) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To
the extent the aggregate Fair Market Value (determined as of the Date of Grant)
of Stock for which Incentive Stock Options are exercisable for the first time by
any Participant during any calendar year (under all plans of the Company)
exceeds $100,000, such excess Incentive Stock Options shall be treated as
Nonqualified Stock Options.
(i) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option granted under
the Plan to be conditioned upon the granting to the Participant of a new option
for the same or a different number of shares as the option surrendered or
require such voluntary surrender as a condition precedent to a grant of a new
Option to such Participant. Such new Option shall be exercisable at an Option
Price, during an Option Period, and in accordance with any other terms or
conditions specified by the Committee at the time the new Option is granted, all
determined in accordance with or without Cause.
16. FINALITY OF DETERMINATIONS. Each determination, interpretation, or
other action made or taken pursuant to the provisions of the Plan without regard to the
Option Price, Option Period, or any other terms and conditions of the
Nonqualified Stock Option surrendered.
8. GENERAL
11
(a) ADDITIONAL PROVISIONS OF AN OPTION. Options granted to a
Participant under the Plan also may be subject to such other provisions (whether
or not applicable to the benefit awarded to any other Participant) as the
Committee determines appropriate including, without limitation, provisions to
assist the Participant in financing the purchase of Stock upon the exercise of
options, provisions for the forfeiture of or restrictions on resale or other
disposition of shares of Stock acquired under any Option, provisions giving the
Company the right to repurchase shares of Stock acquired under any Option in the
event the Participant elects to dispose of such shares, provisions allowing the
Participant to elect to defer the receipt of shares of Stock upon the exercise
of Options for a specified time or until a specified event, and provisions to
comply with Federal and state securities laws and Federal and state tax
withholding requirements. Any such provisions shall be reflected in the
applicable Stock Option Agreement.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise
specifically provided in the Plan, no person shall be entitled to the privileges
of ownership in respect of shares of Stock which are subject to Options
hereunder until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of Options in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required. Notwithstanding any terms or conditions of any
Option to the contrary, the Company shall be under no obligation to offer to
sell or to sell and shall be prohibited from offering to sell or selling any
shares of Stock pursuant to an Option unless such shares have been properly
registered for sale pursuant to the Securities Act with the Securities and
Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms and
conditions of such exemption have been fully complied with. The Company shall be
under no obligation to register for sale under the Securities Act any of the
shares of Stock to be offered or sold under the Plan. If the shares of Stock
offered for sale or sold under the Plan are offered or sold pursuant to an
exemption from registration under the Securities Act, the Company may restrict
the transfer of such shares and may legend the Stock certificates representing
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.
(d) TAX WITHHOLDING.
(i) A Participant may be required to pay to the Company or
any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Shares or other property deliverable
under any Option or from any compensation or other amounts owing to a
Participant the amount (in cash, Stock or other property) of any required tax
withholding and payroll taxes in respect of an Option, its exercise, or any
payment or transfer under an Option or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the
12
payment of such taxes.
(ii) Without limiting the generality of clause (i) above,
the Committee may, in its sole discretion, permit a Participant to satisfy, in
whole or in part, the foregoing withholding liability (but no more than the
minimum required withholding liability) by (A) delivery of shares of Stock owned
by the Participant (which shares must be Mature Shares) with a Fair Market Value
equal to such withholding liability or (B) having the Company withhold from the
number of shares of Stock otherwise issuable pursuant to the exercise of the
Option a number of shares with a Fair Market Value equal to such withholding
liability.
(e) CLAIM TO OPTIONS AND EMPLOYMENT RIGHTS. No employee of the
Company, a Subsidiary or Affiliate, or other person, shall have any claim or
right to be granted an Option under the Plan or, having been selected for the
grant of an Option, to be selected for a grant of any other Award. Neither the
Plan nor any action taken hereunder shall be construed as giving any Participant
any right to be retained in the employ or service of the Company, a Subsidiary
or an Affiliate.
(f) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his behalf in his capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and the Company
shall indemnify and hold harmless each member of the Committee and each other
employee, officer or director of the Company to whom any duty or power relating
to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless otherwise determined byarising out of such person's
own fraud or willful bad faith; PROVIDED, HOWEVER, that approval of the Board
be final and shall be binding and conclusiverequired for all purposes.
17.the payment of any amount in settlement of a claim against
any such person. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
(g) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to the
principles of conflicts of A-6law thereof, or principals of conflicts of laws of
any other jurisdiction which could cause the application of the laws of any
jurisdiction other than the State of Delaware.
(h) NONTRANSFERABILITY.
(i) Each Option shall be exercisable only by the Participant
during the Participant's lifetime, or, if permissible under applicable law, by
the Participant's legal guardian or representative. No Option may be assigned,
alienated, pledged, attached,
13
law principles thereof.
18. EFFECTIVE DATE. Thesold or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company, a Subsidiary or an Affiliate;
provided that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(ii) Notwithstanding the foregoing, the Committee or its delegate
may, in its sole discretion, permit Nonqualified Stock Options to be transferred
by a Participant, without consideration, subject to such rules as the Committee
may adopt consistent with any applicable Stock Option Agreement to preserve the
purposes of the Plan, was originally adoptedto:
(A) any person who is a "family member" of the Participant, as such
term is used in the instructions to Form S-8 (collectively, the
"Immediate Family Members");
(B) a trust solely for the benefit of the Participant and his or her
Immediate Family Members;
(C) a partnership or limited liability company whose only partners or
shareholders are the Participant and his or her Immediate Family
Members; or
(D) any other transferee as may be approved either (a) by the Board
or the Committee in its sole discretion, or (b) as provided in
the applicable Stock Option Agreement;
(each transferee described in clauses (A), (B), (C) and the stockholders of the Company in 1992, and the Plan(D) above is effective as
of April 15, 1992 (the "Effective Date"); the amendment and restatement of the
Plan was approved and adopted by the Board and the stockholders on October 13,
1994. In accordance with the terms of the amended and restated Plan, andhereinafter
referred to as a result of"Permitted Transferee"); PROVIDED that the consummation on December 5, 1994 of an initial public offering ofParticipant gives
the Stock, the Plan was restated in January 1995 to reflect only those
provisions which are relevant to the Company as a public company and to make
other non-substantive changes therein. A further amendment and restatement of
the Plan was approved by the Board on April 19, 1995 and the stockholders of the
Company on June 15, 1995. On March 25, 1996, a further amendment and restatement
of the Plan was approved by the Board, subject to the approval of the
stockholders of the Company.
A-7
AMENDED AND RESTATED VEECO INSTRUMENTS INC.
1994 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
1. PURPOSE; DEFINITIONS.
The purpose of the Plan is to increase the proprietary and vested
interest of the Non-Employee Directors of the Company in the growth and
performance of the Company by granting them Options.
Whenever the following terms are used in the Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.
"BOARD" shall mean the Board of Directors of the Company.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMPANY" shall mean Veeco Instruments, Inc., a Delaware corporation,
and any successor corporation.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" per Share as of a particular date shall mean the
closing price per Share as reported on the National Association of Securities
Dealers Automated Quotation system (known as "NASDAQ") for the last preceding
date on which a sale was reported.
"NON-EMPLOYER DIRECTOR" shall mean a director of the Company who is
not an employee of the Company or a Subsidiary and has not, within one year
immediately preceding the determination of such director's eligibility, received
any award under any plan of the Company or a Subsidiary that entitles the
participants therein to acquire stock, stock options or stock appreciation
rights of any such company (other than any other plan under which participants'
entitlements are governed by provisions meeting the requirements of Rule
16b-3(c)(2)(ii) promulgated under the Exchange Act).
"OPTION" shall mean an option to purchase Shares granted pursuant to
the Plan. Options granted under the Plan are not intended to be "incentive stock
options" within the meaning of Section 422 of the Code.
"OPTION AGREEMENT" shall mean an Option Agreement to be entered into
between the Company and an Optionee, which shall set forthCommittee advance written notice describing the terms and conditions of the
Options granted toproposed transfer and the Committee notifies the Participant in writing that
such Optionee, anda transfer would comply with the requirements of the Plan. For purposes of
this paragraph, "delegate" shall be subsequently in
the form attached hereto as Exhibit A.
"OPTIONEE" shall mean a Non-Employee Director to whom an Option has
been
B-1
granted pursuantrefer to the Plan.
"PLAN" shall mean this Amended and Restated Veeco Instruments Inc.
1994 Stock Option Plan for Outside Directors, as hereinafter amended from time
to time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARE" shall mean a share of the Company's common stock, par value
$.01 per share.
"SUBSIDIARY" shall have the meaning set forth in Section 425 of the
Code and the regulations promulgated thereunder.
2. SHARES SUBJECT TO THE PLAN.
2.1 SHARES SUBJECT TO PLAN
The maximum number of Shares that may be issued or transferred
pursuant to Options under this Plan shall be 115,000. The Company shall reserve
such number of Shares for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly out
of each. If any Shares that have been subject to an Option cease to be subject
thereto, such Shares may again be the subject of Options hereunder.
2.2 CHANGES IN COMPANY'S SHARES
In the event that the outstanding Shares are hereafter changed into
or exchanged for a different number of kind of shares or other securitiesChief Executive Officer of the
Company, except with respect to the transfer of any of Chief Executive Officer's
own Options.
(iii) The terms of any Option transferred in accordance with the
immediately preceding sentence shall apply to the Permitted Transferee and any
reference in the Plan, or of another corporation, by reason of reorganization, merger or other
subdivision, consolidation, recapitalization, reclassification, stock split,
issuance of warrants or rights, stock dividend, combination of shares or similar
event, appropriate adjustmentsin any applicable Stock Option Agreement, to a
Participant shall be made by the Board in the number and kind
of Shares subjectdeemed to and which may be subject to Options under this Plan, and
the purchase price per Share, to prevent dilution or enlargement of the benefits
granted to, or available for, Optionees, including adjustmentsrefer to the maximum
number and kind of shares which mayPermitted Transferee, except that
(A) Permitted Transferees shall not be issued hereunder as Shares as set forth
in Section 2.1.
3. ELIGIBILITY FOR OPTION GRANTS.
Any Option grantedentitled to transfer any Non-Employee Director prior to the date of
the adoption of this Plan shall be subject to the terms and conditions set forth
herein. Any individual who is elected or appointed to the office of director as
a Non-Employee Director after the date of the adoption of this Plan shall
receive an Option to purchase 7,000 Shares as of the date of such election. In
addition, each Non-Employee Director shall receive an Option to purchase such
7,000 Shares as of the date of each Annual Meeting subsequent to such
Non-Employee Director's election which occurs during such Non-Employee
Director's form of office.
B-2
4. EXERCISABILITY OF OPTIONS.
Each Option granted pursuant to the Plan shall become exercisable
immediately upon the grant of such Option.
5. TERMS OF OPTIONS AND SHARES.
5.1 OPTION AGREEMENT
Options, shall be granted only pursuant to an Option Agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the Board shall determine,
consistent with the Plan.
5.2 TERMS
The Options granted hereunder shall have the following terms and
conditions:
(a) PRICE. The purchase price for the Shares subject to an Option
shall be one hundred percent (100%) of the Fair Market Value of a Share as
of the date the Option is granted.
(b) TERM. The term of an Option shall be ten years from the date
that it is granted.
(c) TERMINATION OF SERVICES AS NON-EMPLOYEE DIRECTOR. If an
individual ceases to be a Non-Employee Director for any reason (including
the death or disability (within the meaning of Section 22(e)(3) of the
Code) of such Optionee) then all outstanding Options held by such Optionee
shall remain exercisable by such Optionee (or in the case of death or
disability, such Optionee's estate or legal guardian, as the case may be)
for the lesser of 90 days following such event or the remaining term of
such Option. Thereafter, such Options shall terminate.
5.3 NON-TRANSFERABILITY
No Option granted under the Plan shall be transferable by the
Optionee to whom granted otherwiseother
than by will or the laws of descent and distribution, and an Option maydistribution; (B) Permitted Transferees
shall not be exercised during the lifetime of such
Optionee only by the Optionee or his guardian or legal representative. The terms
of such Optionentitled to exercise any transferred Options unless there shall be
binding uponin effect a registration statement on an appropriate form covering the beneficiaries, executors,
administrators, heirs and successors of the Optionee.
5.4 METHOD OF EXERCISE
The exercise of an Option shall be made only by a written notice
delivered in person or by mail to the Secretary of the Company at the Company's
principal executive office, specifying the number of Sharesshares to
be purchased and
accompanied by full payment therefor and otherwise in accordance with the Option
Agreement pursuant to which the Option was granted.
B-3acquired
14
The purchase price for any Shares purchased
pursuant to the exercise of ansuch Option if the Committee determines, consistent
with any applicable Stock Option Agreement, that such a registration statement
is necessary or appropriate, (C) the Committee or the Company shall not be
paid in full uponrequired to provide any notice to a Permitted Transferee, whether or not such
exercise in cash, by checknotice is or atwould otherwise have been required to be given to the discretionParticipant
under the Plan or otherwise, and (D) the consequences of termination of the
Board and upon such terms and conditions as the Board shall
approve,Participant's employment by, transferring previously owned Sharesor services to, the Company, having Shares
withhelda Subsidiary or exercising pursuant to a "cashless exercise" procedure, or any
combination thereof. Any Shares transferred to the Company as payment for the
purchase pricean
Affiliate under an Option shall be valued at their Fair Market Value on the
day preceding the date of exercise of such Option. If requested by the Board,
the Optionee shall deliver the Option Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such Option Agreement to the Optionee. Not less than one hundred
(100) Shares may be purchased at any time upon the exercise of an Option unless
the number of Shares so purchased constitutes the total number of shares then
purchasable under the Option or the Board determines otherwise in its sole
discretion.
5.5 RIGHTS AS STOCKHOLDER
No Optionee shall be deemed for any purpose to be or to have the
rights and privileges of the owner of any Shares subject to any Option unless
and until (a) the Option shall have been exercised pursuant to the terms
thereof, and (b) the Company shall have issued the Shares to the Optionee.
6. ADMINISTRATION.
The Plan shall be administered by the Board. Subject to the
provisions of the Plan, the Board shall be authorized to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan and
to make all other determinations necessary or advisable for the administration
of the Plan; provided, however, that the Board shall have no discretion with
respect to the selection of directors to receive Options under the Plan, the
number of shares subject to any such Options, the purchase price thereunder or
the timing of grants of Options under the Plan. The determination of the Board
in the administration of the Plan, as described herein, shall be final and
conclusive. The Secretary shall be authorized to implement the Plan in
accordance with its terms and to take such actions of a ministerial nature as
shall be necessary to effectuate the intent and purposes thereof.
7. OTHER PROVISIONS.
7.1 AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Board; provided,
however, that, except as provided in Section 2.2, no amendment shall be
effective unless approved by the affirmative vote of a majority of the votes
eligible to be cast at a meeting of stockholders of the Company held within
twelve (12) months of the date of adoption of such amendment, where such
amendment will:
B-4
(a) increase the number of Shares as to which Options may be granted
under the Plan, either individually or in the aggregate;
(b) change in any respect the class of persons who constitute
Non-Employee Directors eligible to participate in the Plan;
(c) change the requirement of Section 5.2(a) that the Option be
priced at Fair Market Value;
(d) extend the maximum period for granting or exercising Options
provided herein; or
(e) otherwise materially increase the benefits accruing to Optionees
under the Plan.
The provisions of Sections 3 and 5 may not be amended more than once
in every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules or
regulations promulgated under either statute.
From and after the Effective Date, neither the amendment, suspension
nor termination of the Plan shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option theretofore granted. No
Options may be granted during any period of suspension nor after termination or
expiration of the Plan.
7.2 REGULATIONS AND OTHER APPROVALS; GOVERNING LAW
(a) The Plan and the rights of all persons claiming hereunder shall
be construed and determined in accordance with the laws of the State of
Delaware without giving effect to the conflicts of law principles thereof.
(b) The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Board.
(c) The Board may make such changes in the Plan as may be necessary
or appropriate to comply with the rules and regulations of any government
authority.
(d) Each Option is subject to the requirement that, if at any time
the Board determines, in its sole discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is
B-5
necessary or desirable as a condition of, or in connection with, the grant
of an Option or the issuance of Shares, no Options shall be granted or
payment made for Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions as acceptable to the Board.
(e) In the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent required by the
Securities Act or regulations thereunder, and the Board may require any
individual receiving Shares pursuant to the Plan, as a condition precedent
to receipt of such Shares, to represent to the Company in writing that the
Shares acquired by such individual are being acquired for investment only
and not with a view to distribution. The certificate for such Shares shall
include any legend that the Board deems appropriate to reflect any
restrictions on transfer.
7.3 TITLES; CONSTRUCTION
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan. The masculine pronoun
shall include the feminine and neuter and the singular shall include the plural,
when the context so indicates.
7.4 TERM
An Option may be exercised by the holder at such times as may be
specified in such Optionee's Stock Option Agreement, provided that no Option
shall be exercised later than ten years from the date such Option was granted.
7.5 EFFECTIVE DATE
The Plan was originally adopted and approved by the Board and the
stockholders of the Company on October 13, 1994 and is effective as of October
13, 1994. In accordance with the terms of the Plan and as a resultthe applicable Stock Option Agreement
shall continue to be applied with respect to the Participant, following which
the Options shall be exercisable by the Permitted Transferee only to the extent,
and for the periods, specified in the Plan and the applicable Stock Option
Agreement.
(i) RELIANCE ON REPORTS. Each member of the consummationCommittee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and upon any other information furnished in connection with the Plan by
any person or persons other than himself.
(j) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company
or any Subsidiary except as otherwise specifically provided in such other plan.
(k) EXPENSES. The expenses of administering the Plan shall be
borne by the Company.
(l) PRONOUNS. Masculine pronouns and other words of masculine
gender shall refer to both men and women.
(m) TITLES AND HEADINGS. The titles and headings of the sections
in the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
(n) TERMINATION OF EMPLOYMENT. For all purposes herein, a person
who transfers from employment or service with the Company to employment or
service with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.
(o) SEVERABILITY. If any provision of the Plan or any Stock
Option Agreement is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any person or Option, or would
disqualify the Plan or any Option under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Option, such provision shall be stricken as to such jurisdiction, person or
Option and the
15
remainder of the Plan and any such Option shall remain in full force and effect.
9. CHANGES IN CAPITAL STRUCTURE
Options granted under the Plan and any Stock Option Agreements, the
maximum number of shares of Stock subject to all Options and Incentive Stock
Options stated in Section 5(a) and the maximum number of shares of Stock with
respect to which any one person may be granted Options during any period stated
in Section 5(d) shall be subject to adjustment or substitution, as determined by
the Committee in its sole discretion, as to the number, price or kind of a share
of Stock or other consideration subject to such Options or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company by reason of stock
or extraordinary cash dividends, stock splits, reverse stock splits,
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Option or (ii) in the event of any change in applicable
laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Participants, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan. Any adjustment in Incentive
Stock Options under this Section 9 shall be made only to the extent not
constituting a "modification" within the meaning of Section 424(h)(3) of the
Code, and any adjustments under this Section 9 shall be made in a manner which
does not adversely affect the exemption provided pursuant to Rule 16b-3 under
the Exchange Act. Further, with respect to Options intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, such
adjustments or substitutions shall be made only to the extent that the Committee
determines that such adjustments or substitutions may be made without causing
the Company to be denied a tax deduction on December 5, 1994account of Section 162(m) of the
Code. The Company shall give each Participant notice of an initial public offeringadjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all
purposes.
Notwithstanding the above, in the event of any of the Shares,following:
A. The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by shareholders
of the Company in a form other than stock or other equity interests of the
surviving entity;
B. All or substantially all of the assets of the Company are acquired
by another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo an
event described in clauses A, B or C above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the
16
affected persons, cancel any outstanding Options and pay to the holders
thereof, in cash or stock, or any combination thereof, the value of such
Options based upon the price per share of Stock received or to be received by
other shareholders of the Company in the event. The terms of this Section 9
may be varied by the Committee in any particular Stock Option Agreement.
10. EFFECT OF CHANGE IN CONTROL
Except to the extent reflected in a particular Stock Option
Agreement or other written agreement between the Company and a Participant:
(a) In the event of a Change in Control, notwithstanding any provision
of the Plan was restated in January, 1994 to reflect only those provisions which
are relevant to the contrary, all Options shall become immediately exercisable
with respect to 100 percent of the shares subject to such Option.
(b) In addition, in the event of a Change in Control, the Committee
may in its discretion and upon at least 10 days' advance notice to the affected
persons, cancel any outstanding Options and pay to the holders thereof, in cash
or stock, or any combination thereof, the value of such Options based upon the
price per share of Stock received or to be received by other shareholders of the
Company in the event.
(c) The obligations of the Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company. The Company agrees that it will make appropriate
provisions for the preservation of Participants' rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
11. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
12. AMENDMENTS AND TERMINATION
(a) AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or any portion thereof at any time;
17
PROVIDED that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement applicable to the
Plan (including as necessary to prevent the Company from being denied a public companytax
deduction on account of Section 162(m) of the Code); and PROVIDED FURTHER that
any such amendment, alteration, suspension, discontinuance or termination that
would impair the rights of any Participant or any holder or beneficiary of any
Option theretofore granted shall not to make other nonsubstantive
changes therein.
B-6that extent be effective without the
consent of the affected Participant, holder or beneficiary.
(b) AMENDMENT OF STOCK OPTION AGREEMENTS. The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Option theretofore granted or the associated Stock
Option Agreement, prospectively or retroactively; PROVIDED that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would impair the rights of any Participant in respect of any Option
theretofore granted shall not to that extent be effective without the consent of
the affected Participant.
* * *
As adopted by the Compensation Committee of the Board of Directors of Veeco
Instrument Inc. as of April 3, 2000.
18
VEECO INSTRUMENTS INC.
Terminal Drive
Plainview, NY 11803
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 14, 199912, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edward H. Braun and John F. Rein, Jr. or
either of them, each with full power of substitution and re-substitution,
proxies to vote at the Annual Meeting of Stockholders of Veeco Instruments Inc.
(the "Company") to be held on May 14, 199912, 2000 at 9:30 a.m. (New York City time) at
the Corporate Center, 395 North Service Road, Lower Auditorium, Melville, New
York and at all adjournments or postponements thereof, all shares of common
stock of the Company which the undersigned is entitled to vote as directed below,on
the reverse side, and in their discretion upon such other matters as may come
before the meeting.
The shares represented hereby will be voted in accordance with the choices
specified by the stockholder in writing on the reverse side. IF NOT OTHERWISE
SPECIFIED BY THE STOCKHOLDER, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED ON THE REVERSE SIDE
AND FOR THE OTHER MATTERS DESCRIBED ON THE REVERSE SIDE.
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!POSSIBLE.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
VEECO INSTRUMENTS INC.
MAY 12, 2000
Please detach and mail in the envelope provided.
/X/ Please mark your
votes as in this
example.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
FOR all nominees WITHHOLD AUTHORITY
listed (except as to vote for all
marked to the contrary) nominees listedWITHHELD
PROPOSAL 1.
Election of three (3)two (2) / / / /
Class IIIII Directors
NOMINEES: JoelEdward H. Braun
Richard A. Elfmann
Paul R. Low
Walter J. Scherr
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE THROUGH THE NOMINEE'S NAME ABOVE.)D'Amore
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike through the nominee's name above.
FOR ABSTAIN AGAINST
PROPOSAL 2. Approval of amendment to the Veeco
Instruments Inc. Amended and Restated 19922000 Stock Option Plan. / / / / / /
Employees' Stock Option Plan.
PROPOSAL 3. Approval of amendment to the Amended
and Restated Veeco Instruments Inc. 1994 Stock / / / / / /
Option Plan for Outside Directors.
PROPOSAL 4. Ratification of the appointment of
Ernst & Young LLP as auditors of the Company for / / / / / /
the fiscal year ending December 31, 1999.2000.
Transaction of such other business as may properly come before the Meeting or
any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
_______________________ _________________________ Date:Dated:___________, 19992000
Signature Signature if held jointly
Note: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.