UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
ATMI, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ATMI, INC.
7 COMMERCE DRIVE
DANBURY, CONNECTICUT 06810
(203) 794-1100
April 21, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held at ATMI's corporate offices at 6 Commerce Drive, Danbury,
Connecticut 06810 at 10:00 a.m. on Wednesday, May 21, 2003. On the following
pages you will find the formal Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted at the meeting. Accordingly, please
date, sign, and return the enclosed proxy card promptly.
I hope that you will attend the meeting. I look forward to seeing you
there.
Sincerely,
/s/ Eugene G. Banucci
--------------------------------------
EUGENE G. BANUCCI
Chief Executive Officer and Chairman
of the Board
ATMI, INC.
7 COMMERCE DRIVE
DANBURY, CONNECTICUT 06810
(203) 794-1100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 2003
To Our Stockholders:
The 2003 Annual Meeting of Stockholders of ATMI, Inc. (the "Company") will
be held at the Company's corporate offices at 6 Commerce Drive, Danbury,
Connecticut on Wednesday, May 21, 2003 at 10:00 a.m. (local time) for the
following purposes:
1. To elect two directors for terms to expire at the 2006 Annual Meeting of
Stockholders;
2. To approve the proposed amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of authorized shares of
common stock;
3. To approve the Company's 2003 Stock Plan;
4. To approve an amendment to the Company's 1998 Employee Stock Purchase Plan
to increase the number of shares reserved for issuance under the Employee
Stock Purchase Plan;
5. To ratify the appointment by the Board of Directors of Ernst & Young LLP as
the Company's independent auditors for the fiscal year ending December 31,
2003;
6. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 11, 2003 are
entitled to receive notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
By order of the Board of Directors,
/s/ OLIVER A. ZITZMANN
--------------------------------------
Oliver A. Zitzmann
Secretary
Dated: April 21, 2003
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
ATMI, INC.
7 COMMERCE DRIVE
DANBURY, CONNECTICUT 06810
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2003
---------------------------------
This proxy statement is being furnished to the stockholders of ATMI, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders of the
Company to be held on May 21, 2003 at the Company's corporate offices at 6
Commerce Drive, Danbury, Connecticut, and any adjournments or postponements
thereof (the "2003 Annual Meeting"). This proxy statement, the foregoing Notice
of Annual Meeting, the enclosed form of proxy, and the Company's 2002 Annual
Report to Stockholders are first being mailed or given to stockholders on or
about April 21, 2003. As used in this proxy statement, references to the
"Company" include references to ATMI, Inc. and to its predecessor registrant,
Advanced Technology Materials, Inc.
PURPOSE OF ANNUAL MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting. Each
proposal is described in more detail in this proxy statement.
PROXIES
A stockholder giving a proxy may revoke it at any time before it is voted
by way of any of the following methods:
- by executing and delivering to the Company another proxy bearing a later
date,
- by delivering a written notice to the Secretary of the Company stating
that the proxy is revoked, or
- by attending the 2003 Annual Meeting and voting in person.
Any properly executed proxy returned to the Company will be voted in
accordance with the instructions indicated thereon. If no instructions are
indicated on the proxy, the proxy will be voted (i) FOR the election of the
nominees for directors named herein, (ii) FOR the approval of the amendment to
the Company's Certificate of Incorporation as proposed herein, (iii) FOR the
approval of the Company's 2003 Stock Plan as proposed herein, (iv) FOR the
approval of the amendment to the Company's 1998 Employee Stock Purchase Plan as
proposed herein, (v) FOR the ratification of the appointment of Ernst & Young
LLP as the independent auditors of the Company for the fiscal year ending
December 31, 2003 and (vi) with respect to any other matters that may properly
come before the 2003 Annual Meeting, at the discretion of the proxy holders,
unless they are directed by the proxy to do otherwise. The Company does not
currently anticipate any other business will be presented for action at the 2003
Annual Meeting.
VOTING SECURITIES
The record date for the determination of stockholders entitled to receive
notice of and to vote at the 2003 Annual Meeting was the close of business on
April 11, 2003 (the "Record Date"). On the Record Date, there were 30,760,917
shares of Common Stock, the Company's only outstanding voting securities,
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote. The presence, in person or by proxy, of
the holders of a majority of the shares of Common Stock entitled to be voted at
the 2003 Annual Meeting is necessary to constitute a quorum for the transaction
of business. Abstentions and broker non-votes will be included in the
calculation of the number of votes represented at the 2003 Annual Meeting for
purposes of determining whether a quorum has been achieved. Votes will be
tabulated at the 2003 Annual Meeting by one or more inspectors of election
appointed by the Board of Directors.
2
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of the
Record Date by: (i) each executive officer of the Company named in the Summary
Compensation Table on page 7; (ii) each director and nominee for director of the
Company; (iii) each person known by the Company to own beneficially more than
five percent of the outstanding Common Stock of the Company; and (iv) all
current directors and executive officers of the Company as a group. Except as
indicated by footnote, all shares are owned directly. Except as indicated by
footnote, and subject to community property laws where applicable, the persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them.
<Table>
<Caption>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED OF CLASS
- --------------------------------------- ------------ --------
T. Rowe Price Associates(2)................................. 3,954,800 12.9
100 East Pratt St.
Baltimore, MD 21202
FMR Corp.(2)................................................ 2,696,672 8.8
82 Devonshire Street
Boston, Massachusetts 02109
State Street Research(2).................................... 2,236,900 7.3
One Financial Center, 30th Floor
Boston, MA 02111-2690
Kern Capital Management, LLC(3)............................. 1,685,100 5.5
114 West 47th Street, Suite 1926
New York, NY 10036
Eugene G. Banucci(4)........................................ 437,470 1.4
Daniel P. Sharkey(5)........................................ 161,227 *
Douglas A. Neugold(6)....................................... 111,675 *
Robert S. Hillas(7)......................................... 87,607 *
Mark A. Adley(8)............................................ 73,573 *
Stephen H. Mahle(9)......................................... 46,231 *
C. Douglas Marsh(10)........................................ 44,889 *
Michael J. Yomazzo(11)...................................... 38,109 *
All current directors and executive officers as a group (8
persons)(12).............................................. 1,000,781 3.3
</Table>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Except as otherwise noted, the address for all stockholders is c/o ATMI,
Inc., 7 Commerce Drive, Danbury, Connecticut 06810.
(2) As reported on Schedule 13G dated February 14, 2003 as filed with the
Securities and Exchange Commission (the "SEC").
(3) As reported on Schedule 13G dated February 14, 2003 as filed with the SEC
by Kern Capital Management, LLC ("KCM") and by Robert E. Kern, Jr. and
David G. Kern, its principals and controlling members. Robert E. Kern, Jr.
and David G. Kern, as controlling members of KCM, may be deemed beneficial
owners of the securities of the Company owned by KCM.
(4) Includes 236,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 17,030 shares either
owned or issuable upon exercise of options within 60 days of the Record
Date by Dr. Banucci's spouse. Dr. Banucci disclaims beneficial ownership
of the shares held by his spouse.
3
(5) Includes 138,500 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date.
(6) Includes 111,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date.
(7) Includes 45,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date, 1,629 phantom stock units
(as described below under the heading "Director Compensation"), which are
automatically convertible into shares of common stock upon the occurrence
of certain specified events, including death or termination of status as a
director ("Phantom Stock Units"), and 5,000 shares owned by Mr. Hillas'
spouse. Mr. Hillas disclaims beneficial ownership of the shares held by
his spouse.
(8) Includes 66,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 1,573 Phantom Stock
Units.
(9) Includes 44,500 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 1,131 Phantom Stock
Units.
(10) Includes 35,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 1,230 Phantom Stock
Units.
(11) Includes 35,000 shares issuable upon exercise of options that are
exercisable within 60 days of the Record Date and 1,608 Phantom Stock
Units.
(12) Includes 719,000 shares issuable to executive officers, directors, and
their spouses pursuant to options that are exercisable within 60 days of
the Record Date and 7,171 Phantom Stock Units.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors and
persons who beneficially own more than ten percent of the Company's Common Stock
to file reports of ownership and changes in ownership with the SEC and to
furnish the Company with copies of all such forms they file. Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons, the Company believes that during the fiscal year
ended December 31, 2002, all such reports were timely filed except for one late
filing for Eugene Banucci relating to the acquisition by Dr. Banucci of
approximately 1,118 shares and by his wife of approximately 427 shares, in
single transactions, through the Company's Employee Stock Purchase Plan.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is classified into three classes. The two directors
serving in Class III have terms expiring at the 2003 Annual Meeting. The Board
of Directors has nominated the Class III directors currently serving on the
Board of Directors, Stephen H. Mahle and C. Douglas Marsh, for election to serve
as directors of the Company until the 2006 Annual Meeting of Stockholders of the
Company and until their successors are elected and qualified or until their
earlier resignation, death or removal. Each of the nominees has indicated a
willingness to serve as a director, but if for any reason any nominee should be
unavailable to serve as a director at the time of the 2003 Annual Meeting, a
contingency which the Board of Directors does not expect, a different person
designated by the Board of Directors may be nominated in his stead.
If a quorum of the holders of Common Stock is present at the 2003 Annual
Meeting, the election of directors will require the affirmative vote of a
plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote. Abstentions by holders of such shares and broker
non-votes with respect to the election of directors will be included in
determining the presence of such quorum but will not be included in determining
whether nominees have received the vote of such plurality.
4
NOMINEES FOR TERMS EXPIRING IN 2006
The following table sets forth information regarding the nominees for
re-election as Class III Directors:
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Stephen H. Mahle............................................ 57 Director
C. Douglas Marsh............................................ 57 Director
</Table>
STEPHEN H. MAHLE has served as a director of the Company since 1996. Mr.
Mahle has been Senior Vice President of Medtronic, Inc., a medical device
manufacturer, and President of its cardiac rhythm management business since
January 1998. From 1995 to 1997, he was President of the Brady Pacing Business,
a division of Medtronic, Inc. From 1989 to 1995, Mr. Mahle served as Vice
President and General Manager of the Brady Pacing Business.
C. DOUGLAS MARSH has served as a director of the Company since April 2000.
Mr. Marsh has been the Vice President, Business Integration, U.S. Investor
Relations of ASM Lithography Holding NV, a seller of photolithography equipment
to the semiconductor industry, since July 1998. From 1991 to July 1998, he
served as Vice President, Worldwide Sales and President, U.S. Operations at ASM
Lithography.
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE STOCKHOLDERS VOTE FOR SUCH NOMINEES.
CONTINUING DIRECTORS
The following table sets forth information regarding our directors whose
terms continue after the 2003 Annual Meeting. The terms for Directors in Class I
expire at the 2004 Annual Meeting of Stockholders of the Company, and the terms
for Directors in Class II expire at the 2005 Annual Meeting of Stockholders of
the Company.
<Table>
<Caption>
NAME AGE CLASS POSITION
- ---- --- ----- --------
Robert S. Hillas................... 54 I Director
Michael J. Yomazzo................. 60 I Director
Mark A. Adley...................... 43 II Director
Eugene G. Banucci.................. 59 II Chief Executive Officer, Chairman
of the Board and Director
</Table>
CLASS I DIRECTORS -- TERMS EXPIRING IN 2004
ROBERT S. HILLAS has served as a director of the Company since 1987. Mr.
Hillas was the President, Chief Executive Officer and Chairman of the Board of
Envirogen, Inc., an environmental systems and services company, from April 1998
to March 2003. From 1993 to April 1998, Mr. Hillas served as a Managing Director
of E.M. Warburg, Pincus & Co. LLC, an asset management firm.
MICHAEL J. YOMAZZO has served as a director of the Company since April
2000. Mr. Yomazzo has been Vice Chairman of the Board of Directors of
Photronics, Inc., a manufacturer of photomasks, which are photographic quartz
plates containing microscopic images of electronic circuits which are used in
the manufacture of semiconductors, since January 1, 1999 and has been a member
of that Board since 1977. He served as Chief Executive Officer of Photronics
from August 1997 until December 1998 and as President from January 1994 until
December 1998.
CLASS II DIRECTORS -- TERMS EXPIRING IN 2005
MARK A. ADLEY has served as a director of the Company since 1991. Since
March 2002, Mr. Adley has been a Managing Director of Mergers & Acquisitions at
Banc of America Securities. From 1996 to 2001, Mr. Adley was a Managing Director
at Credit Suisse First Boston Corporation, an investment banking firm, where he
was a Director from 1994 to 1996.
5
EUGENE G. BANUCCI, PH.D., a founder of the Company, has served as Chief
Executive Officer, Chairman of the Board and Director since 1986. Previously,
Dr. Banucci served in a variety of executive and managerial positions, including
serving as President from 1986 to April 2000. From 1984 to 1986, he was a
director of American Cyanamid Company's Chemical Research Division, with
responsibility for the research, development, and technical service activities
of the Chemicals Group.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The standing committees of the Board of Directors are the Audit Committee,
the Compensation Committee, and the Corporate Governance Committee.
The Audit Committee is currently composed of Robert S. Hillas (chairman),
Mark A. Adley, and Michael J. Yomazzo. In the determination of the Board of
Directors, each of the members of the Audit Committee is an "independent"
director, as defined in the listing standards of the National Association of
Securities Dealers. The Audit Committee operates under a written charter adopted
on December 16, 1999 by the Board of Directors and amended by the Board of
Directors on April 16, 2001, a copy of which is attached as Appendix A. See the
"Report of the Audit Committee" for more information about the responsibilities
of the Audit Committee. The Audit Committee met 2 times in person during 2002,
in addition to holding 5 telephonic meetings including 4 held to review the
Company's quarterly results. The Board has determined that each of these
Committee members is financially literate and that one or more Committee members
has accounting or financial management expertise.
The Compensation Committee is currently composed of Stephen H. Mahle
(chairman), Mark A. Adley, and C. Douglas Marsh. The Compensation Committee
reviews the compensation of officers of the Company and the Company's
compensation policies and practices. The Compensation Committee also administers
the 1987, 1995, 1997, 1998, and 2000 Stock Plans, including approval of the
grant of stock options thereunder. The Compensation Committee met 1 time during
2002.
The Corporate Governance Committee is currently composed of Michael J.
Yomazzo (chairman), Robert S. Hillas, and C. Douglas Marsh. The Corporate
Governance Committee reviews all issues regarding corporate governance and
establishes and maintains corporate governance principles for the Company. The
Corporate Governance Committee met 2 times during 2002.
During 2002, Michael J. Yomazzo was appointed as the lead independent
director of the Board of Directors. In this role, Mr. Yomazzo acts as the
chairperson when the independent members of the Board of Directors are meeting
in executive session and leads the deliberations of the Board's independent
directors on topics such as corporate governance and independence.
The Board of Directors held 5 meetings during 2002. Each director attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings held by all committees of the
Board on which such director served.
DIRECTOR COMPENSATION
The Company's outside directors do not receive any cash compensation for
service on the Board of Directors or any committee thereof but do participate in
the Company's Non-Employee Directors' Deferred Compensation Program. Under the
Program, established in 2001, each non-employee Director defers receipt of all
retainers and meeting fees on a quarterly basis into individual "phantom stock
accounts," established at the point of deferral, equivalent to phantom shares of
the Company's Common Stock valued at each quarter-end closing price. Each
non-employee Director receives $1,250 worth of phantom stock units per quarter
as a retainer and phantom stock units worth $1,000 per Board meeting and $500
per Committee meeting attended. The phantom shares are exchangeable into shares
of Common Stock upon the occurrence of certain specified events, including the
death of the Director or termination of his status as a Director. The outside
Directors are reimbursed for expenses incurred in connection with attending
meetings of the Board of Directors and any committee thereof. The Company has
also made grants of stock options to its outside directors as follows: in
December 1994, the Company granted options for the purchase of 22,500 shares of
Common Stock at an
6
exercise price of $5.50 per share to Robert S. Hillas in consideration of future
services on the Board of Directors. In May 1995, the Company granted options for
the purchase of 22,500 shares of Common Stock at an exercise price of $8.50 per
share to Mark A. Adley in consideration of future services on the Board of
Directors. In March 1996, the Company granted options for the purchase of 22,500
shares of Common Stock at an exercise price of $10.50 per share to Stephen H.
Mahle in consideration of future services on the Board of Directors. In January
1998, the Company granted options for the purchase of 25,500, 25,000 and 2,000
shares of Common Stock at an exercise price of $24.25 to Mark A. Adley, Robert
S. Hillas, and Stephen H. Mahle, respectively, in consideration of future
services on the Board of Directors. In April 2000, the Company granted options
for the purchase of 50,000 shares of Common Stock at an exercise price of $45.63
per share to each of Michael J. Yomazzo and C. Douglas Marsh and an option for
the purchase of 5,000 shares of Common Stock at an exercise price of $40.13 per
share to Mark A. Adley in consideration of future services on the Board of
Directors. In May 2000, the Company granted options for the purchase of 25,000
shares of Common Stock at an exercise price of $37.63 per share to each of Mark
A. Adley, Robert S. Hillas, and Stephen H. Mahle in consideration of future
services on the Board of Directors. In January 2002, the Company granted options
for the purchase of 5,000 shares of Common Stock at an exercise price of $23.85
per share to each of Robert S. Hillas, Stephen H. Mahle, C. Douglas Marsh and
Michael J. Yomazzo in consideration of future services on the Board of
Directors. In each case, the exercise price for the options granted was the fair
market value of the Common Stock on the date of grant, and the options granted
were subject to certain vesting provisions.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's executive officers (other than Eugene G. Banucci, for whom information
is set forth under Class II Directors, above):
EXECUTIVE OFFICERS
<Table>
<Caption>
NAME AGE POSITION
- ---- --- --------
Daniel P. Sharkey......................... 44 President
Douglas A. Neugold........................ 46 Vice President, Chief Financial Officer,
and Treasurer
</Table>
DOUGLAS A. NEUGOLD has served as President since May 2000. Until his
appointment as President, Mr. Neugold served as Executive Vice President of the
ATMI Materials segment since February 1999. In January 1998, Mr. Neugold joined
ATMI as Vice President of the NovaSource division, and since July 1998 served as
President of that division. Previously, Mr. Neugold served in a variety of
executive and managerial positions with the Electronic Materials Division of
Johnson Matthey. From 1995 to 1997, he served as Vice President, and later as
President of the Semiconductor Packages business. From 1993 to 1995, Mr. Neugold
served as Director of Asian Operations, and prior to that served in a variety of
business and marketing management positions focused on semiconductor technology.
DANIEL P. SHARKEY has served as Chief Financial Officer since joining ATMI
in 1990, and has served as Vice President and Treasurer since 1993. From 1987 to
1990, Mr. Sharkey was Vice President of Finance and Administration for Adage,
Inc., a manufacturer of high-performance computer graphics terminals. From 1983
to 1987, he was Corporate Controller for CGX Corporation. Previously, Mr.
Sharkey served as an Audit Supervisor for KPMG.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information regarding the
compensation paid by the Company for the years ended December 31, 2002, 2001,
and 2000 to the Company's Chief Executive Officer and both of the Company's
other executive officers (together, the "Named Executive Officers") for services
in all capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
FISCAL -------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- --------------------------- ------ --------- -------- ------------ ------------------
Eugene G. Banucci....................... 2002 373,731 -- 50,000 8,610
Chief Executive Officer 2001 375,962 -- 75,000 8,520
Chairman of the Board and Director 2000 372,155 281,000 50,000 11,930
Douglas A. Neugold...................... 2002 279,769 -- 40,000 6,750
President 2001 290,577 -- 55,000 6,750
2000 264,655 180,000 55,000 3,842
Daniel P. Sharkey....................... 2002 204,839 -- 20,000 6,522
Vice-President, Chief Financial 2001 213,077 -- 25,000 6,112
Officer, and Treasurer 2000 203,690 123,000 30,000 3,896
</Table>
- ---------------
(1) Represents premiums paid for life insurance and long-term disability
policies of which the Company is not the beneficiary, flexible spending
contributions toward health care costs not covered by Company plans, and
the ATMI 401(k) Profit Sharing Plan Company Match received by the executive
in that year.
OPTION GRANTS
The following table sets forth certain information with respect to stock
options granted to the Named Executive Officers during the year ended December
31, 2002.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL
PERCENTAGE REALIZABLE VALUES AT
OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED(1) 2002 SHARE DATE 5% 10%
- ---- ---------- ---------- --------- ---------- -------- ----------
Eugene G. Banucci.... 50,000 5.25% $23.85 01/01/2012 $749,957 $1,900,538
Douglas A. Neugold... 40,000 4.20% $23.85 01/01/2012 $599,965 $1,520,430
Daniel P. Sharkey.... 20,000 2.10% $23.85 01/01/2012 $299,983 $ 760,215
</Table>
- ---------------
(1) Options granted vest ratably over five years on each of the first five
anniversary dates of the grant date.
(2) The potential realizable value is the pre-tax gain that an option holder
would realize at the time of the option expiration date if (a) he or she
exercised all of the options on their expiration date and (b) the Company's
stock price grew between the date of grant and the exercise date at the
annual rate assumed in the column. This pre-tax gain is calculated by
multiplying the number of options by the difference between the assumed
stock price on the option expiration date and the option exercise price.
THE
8
HYPOTHETICAL VALUES REFLECTED IN THIS TABLE REPRESENT ASSUMED RATES OF
APPRECIATION ONLY; THESE ASSUMED RATES ARE SET BY SEC RULES AND, THEREFORE,
ARE NOT INTENDED TO FORECAST FUTURE PRICE APPRECIATION, IF ANY, OF THE
COMPANY'S COMMON STOCK. ACTUAL GAINS, IF ANY, ON STOCK OPTION EXERCISES AND
COMMON STOCK HOLDINGS ARE DEPENDENT ON, AMONG OTHER FACTORS, THE FUTURE
PERFORMANCE OF THE COMMON STOCK AND OVERALL STOCK MARKET CONDITIONS. THERE
CAN BE NO ASSURANCE THAT THE AMOUNTS REFLECTED IN THIS TABLE WILL BE
ACHIEVED.
STOCK OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning option exercises and
option holdings as of December 31, 2002 with respect to the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002 DECEMBER 31, 2002(1)
ACQUIRED ON VALUE ----------------------------------- -----------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE (#) UNEXERCISABLE (#) EXERCISABLE ($) UNEXERCISABLE ($)
- ---- ------------ ------------ --------------- ----------------- --------------- -----------------
Eugene G. Banucci.... 0 0 179,000 172,000 416,245 16,200
Douglas A. Neugold... 11,000 162,250 71,200 136,800 4,160 18,120
Daniel P. Sharkey.... 7,875 235,436 111,500 76,000 490,525 5,400
</Table>
- ---------------
(1) Based on $18.52 per share, the fair market value of the Company's Common
Stock as of December 31, 2002, minus the exercise price per share of the
options.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Eugene G. Banucci and
Daniel P. Sharkey, effective October 10, 1997, and Douglas A. Neugold, effective
April 26, 2000. Pursuant to the agreements, Dr. Banucci will act as Chief
Executive Officer and Chairman of the Board of the Company, Mr. Neugold will act
as President of the Company, and Mr. Sharkey will act as Vice President, Chief
Financial Officer and Treasurer of the Company, for certain annual base
salaries. Salaries are subject to increase from time to time to take into
account appropriate cost of living adjustments and general compensation
increases based on performance, at the discretion of the Board of Directors.
Each employee will also be eligible to receive additional compensation,
including awards of performance bonuses at levels commensurate with other
employees of the Company of equivalent position and grants of employee stock
options, in each case in the discretion of the Compensation Committee of the
Board of Directors.
The employment agreements each were for an initial term of two years, after
which employment continues at will, subject to the terms of the agreements. Each
of the employment agreements expires on the earliest to occur of (i) the death
of the employee, (ii) the termination of the agreement by the Company due to the
incapacity of the employee, (iii) the termination of the agreement by the
Company with or without cause, or (iv) the termination of the agreement by the
employee for just cause. Under the terms of the agreements, if the Company
terminates the employee without cause, or if the employee terminates the
agreement for just cause, the Company will pay the employee his annual base
salary then in effect for a period of 18 months after termination in the case of
Dr. Banucci, for a period of 12 months after termination in the case of Mr.
Neugold, and for a period of nine months after termination in the case of Mr.
Sharkey. The Company will also provide the employee during such period with
medical, dental, life and disability insurance benefits on the same basis the
Company would have provided the employee the benefits during such period had he
continued to be an employee of the Company.
9
The employment agreements restrict each employee from competing with the
Company during the term of the agreement and for a period of 36 months after the
termination of employment in the case of Dr. Banucci and Mr. Neugold, or 24
months after the termination of employment in the case of Mr. Sharkey.
The employment agreements also provide that any termination associated with
a change in control of the Company (including resignation by the employee for
just cause such as a significant decrease in the employee's duties or authority)
would result in the acceleration of vesting of options granted to them. In
addition, the employees would be entitled to any bonuses under any bonus plans
then in effect as if fully earned. Benefits payable under the agreements upon a
change in control may subject the employee to an excise tax as "excess parachute
payments" under Section 280G of the Internal Revenue Code of 1986, as amended.
The Company will reimburse the employee for all excise taxes paid, but the
reimbursement will constitute an excess parachute payment and will be subject to
further excise tax. Such further excise tax will trigger further reimbursement
by the Company. The Company will not be allowed to take a deduction for federal
income tax purposes for the excess parachute payments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between any of the Company's executive
officers or members of the Company's Board of Directors or Compensation
Committee and any other company's executive officers, Board of Directors or
compensation committee.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed of independent directors of
the Company, is responsible for administering the Company's executive
compensation program and reviewing and making recommendations to the Board of
Directors with respect to the compensation of executive officers and other
senior management and the Company's overall compensation policy. In connection
with such responsibilities, the Compensation Committee has authority to
administer the Company's 1987, 1995, 1997, 1998, and 2000 Stock Plans, including
the approval of the grant of stock options and other awards thereunder. All
other actions of the Compensation Committee are subject to the approval of the
Board of Directors.
The Company's executive compensation program is intended to attract and
retain talented executives and senior management by offering competitive
compensation opportunities. Furthermore, the Company's compensation program is
designed to motivate and reward high-performing individuals based on variable
compensation tied to overall corporate, separate business unit and individual
performance and the creation of stockholder value. The Company's philosophy is
that the combination of performance-based and stock-based compensation serves to
maximize annual and long-term results and, ultimately, stockholder value. The
components of the Company's executive compensation program include base salary,
annual cash incentives, and long-term stock option incentives. The Compensation
Committee has discretion as to the composition and components awarded in a
particular year to each executive officer.
Components of Executive Compensation
Base Salary. The Compensation Committee annually reviews executive
officers' base salaries. The Compensation Committee evaluates management's
recommendations based on the results achieved by each executive officer relative
to the assigned goals of the recently completed year as well as competitive
salary practices of other similar companies.
Annual Incentives. Annual incentives are designed to provide executive
officers with a potential cash award based on the achievement of annual
financial and operating objectives. These objectives and potential award amounts
are approved by the Compensation Committee and the Board of Directors on an
annual basis in advance and are based upon operating plans approved by the Board
of Directors. The Compensation Committee approves specific objectives for each
executive officer. In 2002, these objectives included the performance of
business divisions, the achievement of budgeted financial performance, and the
successful completion of certain management objectives and strategic
transactions. Based on the financial performance of the Company, no cash bonuses
were awarded to the executive officers for 2002.
10
Long-term Incentives. The Compensation Committee may also recommend to the
Board of Directors the grant to officers of stock options under the Company's
1995, 1997, 1998, and 2000 Stock Plans that are distinct from stock options
granted as annual incentives. These options, which vest over time, are awarded
to officers based on their continued contribution to the Company's achievement
of financial and operating objectives. These awards are designed to align the
interests of the Company's officers with the interests of the Company's
stockholders and to motivate the Company's officers to remain focused on the
overall long-term performance of the Company. In 2002, executive officers
received grants of non-qualified stock options. These options were granted at
the fair market value of the Common Stock on the date of grant. The options
become exercisable over a five-year period and have a ten-year term. In
determining the number of stock options granted to executive officers, the
Compensation Committee took into account position levels, individual performance
and the number of shares available for issuance under the Company's 1995, 1997,
1998, and 2000 Stock Plans.
Chief Executive Officer Compensation
During 2002, the Company's Chief Executive Officer, Eugene G. Banucci,
participated in the same executive compensation program provided to other
executive officers of the Company as described above. In determining adjustments
to Dr. Banucci's base salary, the Compensation Committee considers market rates
of compensation paid to chief executive officers of comparable companies, the
Company's financial performance and the fulfillment of a series of objectives
during the previous fiscal year established jointly at the beginning of the year
by the Compensation Committee and the Chief Executive Officer. The objectives
used to determine base salary for fiscal 2002 consisted of organization and
strategy development, merger and acquisition activity, and certain financial
objectives. Over the course of 2002, Dr. Banucci received a base salary of
$373,731, which represented a 1% decrease compared to his base salary in 2001.
In December 2002, based upon the Company's financial performance during 2002,
the Compensation Committee authorized no cash bonus for 2002. On January 1,
2002, Dr. Banucci was granted non-qualified stock options to purchase 50,000
shares of Common Stock at an exercise price of $23.85 per share, which was the
fair market value of the Common Stock on the date of the grant. The options
become exercisable over a five-year period and have a ten-year term.
The current members of the Compensation Committee:
Stephen H. Mahle, Chairman
Mark A. Adley
C. Douglas Marsh
11
Stock Performance Graph
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the return on the Total Return Index for the Nasdaq
Stock Market (U.S.) and the Nasdaq Electronic Components Stock Index. The
measurement assumes a $100 investment as of December 31, 1997 with all dividends
reinvested. The data presented are on an annual basis for the five years ended
on December 31, 2002.
STOCK PERFORMANCE GRAPH
[STOCK PERFORMANCE GRAPH]
<Table>
<Caption>
NASDAQ
NASDAQ ELECTRONIC
STOCK COMPONENTS
DATE ATMI MARKET INDEX
---------- ------- ------- ----------
12/31/1997 $100.00 $100.00 $100.00
12/31/1998 $104.12 $140.99 $154.49
12/31/1999 $136.33 $261.48 $287.34
12/31/2000 $ 80.41 $157.42 $236.14
12/31/2001 $ 98.35 $124.89 $160.91
12/31/2002 $ 76.37 $ 86.33 $ 86.19
</Table>
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no relationships or related transactions in fiscal year 2002
which are required by law to be disclosed in this proxy statement.
REPORT OF THE AUDIT COMMITTEE
Pursuant to the audit committee charter, a copy of which is attached as
Appendix A, the responsibilities of the Audit Committee fall within four broad
categories:
- Audit Process. The Audit Committee reviews the coordination of the
audit effort between management and the independent auditors and the
audit scope and plan of the independent auditors. It recommends to the
Board of Directors the appointment of the independent auditors, reviews
their fees, and approves any change in independent auditors. It obtains
from the independent auditors a written statement concerning their
independence and reviews their independence.
- Financial Reporting. The Audit Committee reviews the independent
auditors' report and opinion on the Company's financial statements and
reviews with management the financial statements; it recommends approval
of the financial statements to the Board of Directors. It reviews the
independent auditors' summary of significant accounting, auditing and
internal control issues and other matters related to the conduct of the
audit. It reviews with management and the independent auditors
accounting policy changes and new accounting or reporting standards. It
reviews with the independent auditors their judgments about the quality
and appropriateness, not just the acceptability, of the Company's
accounting principles and estimates. The Audit Committee, or the Chair
of the Committee, reviews with management and the independent auditors
the Company's interim financial statements.
- Internal Controls. The Audit Committee reviews with management and the
independent auditors the adequacy of the Company's system of internal
accounting control and reviews reports from management summarizing
findings and the resolution of previously reported control issues. It
also reviews any significant risks or exposures.
- Other Matters. The Audit Committee monitors compliance with regulatory
matters. It reviews the audit committee charter on an annual basis. It
meets with management and the independent auditors at least annually in
separate executive sessions.
Please refer to the audit committee charter at Appendix A for a more
comprehensive description of the role and responsibilities of the Audit
Committee.
In connection with its duties, the Audit Committee has taken the following
actions:
- It has reviewed and discussed the audited financial statements with
management, which has responsibility for the preparation of the
financial statements.
- It has discussed with the independent auditors, which are responsible
for expressing an opinion on the financial statements in accordance with
generally accepted accounting principles, the matters required to be
discussed by Statement on Auditing Standards No. 61, "Communication with
Audit Committees," as amended.
- It has received from the independent auditors the written disclosures
describing any relationships between the independent auditors and the
Company and the letter confirming their independence required by
Independence Standards Board Standard No. 1, "Independence Discussions
with Audit Committees," and has discussed with the independent auditors
matters relating to their independence.
- It has reviewed fees paid to the independent auditors for audit services
as compared with fees paid for other services rendered by the
independent auditors, discussed the impact of fees paid for other
13
services on the auditors' independence and determined that such fees do
not impair the independence of the auditors.
Based on its review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements of
the Company for the year ended December 31, 2002 be included in the Company's
Annual Report on Form 10-K for filing with the SEC.
The current members of the Audit Committee:
Robert S. Hillas, Chairman
Mark A. Adley
Michael J. Yomazzo
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF ATMI'S AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has unanimously approved and recommended that the
stockholders of the Company consider and approve an amendment to Article IV of
the Company's Certificate of Incorporation, as amended (the "Certificate"), that
would increase the number of authorized shares of Common Stock from 50,000,000
shares to 100,000,000 shares (the "Amendment"). The affirmative vote of a
majority of shares of Common Stock outstanding as of the Record Date is required
to approve and adopt the Amendment. Accordingly, abstentions and broker non-
votes with respect to the Amendment will have the effect of votes against the
Amendment.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to amend the Certificate to give effect to the
proposed Amendment. If the Amendment is approved, the additional authorized
shares of Common Stock will be available for issuance from time to time for such
purposes and consideration as the Board of Directors may approve, and no further
vote of the stockholders of the Company will be sought unless such vote is
required for a particular issuance by law or the rules of any national
securities exchange on which the Common Stock may then be listed or the Nasdaq
Stock Market, as the case may be. The proposed increase in the number of
authorized shares of Common Stock has been recommended by the Board of Directors
to assure that an adequate supply of authorized but unissued shares is available
for certain potential offerings, acquisitions and financings and for general
corporate needs. The Board of Directors considers the proposed increase in the
number of authorized shares desirable because it will enable the Company to
pursue opportunities which the Board of Directors believes provide the Company
with the potential for growth and profit. It will give the Board of Directors
the necessary flexibility to issue shares of Common Stock in connection with
stock dividends and stock splits, acquisitions, financings, stock options and
employee benefits, and for other general corporate purposes without the expense
and delay incident to obtaining stockholder approval at the time of any such
action. Stockholders do not have preemptive rights to purchase additional shares
of Common Stock.
As of March 31, 2003, there were 30,756,501 shares of Common Stock issued
and outstanding, and approximately 7,195,785 shares of Common Stock were
reserved for issuance upon exercise of outstanding options, warrants and the
conversion of convertible debt.
If the Amendment is adopted, the amended portion of Article IV of the
Certificate, will provide as follows:
ARTICLE IV
CAPITAL STOCK
The total number of shares of all classes of stock which the corporation has
authority to issue is ONE HUNDRED-TWO Million (102,000,000), consisting of ONE
HUNDRED Million (100,000,000) shares of
14
Common Stock, par value $0.01 per share (the "Common Stock"), and Two Million
(2,000,000) shares of Preferred Stock with a par value of $0.01 per share (the
"Preferred Stock").
The only changes in Article IV which will be affected if the Amendment is
approved are the changes set forth in bold face type above. All other portions
of Article IV will remain unchanged.
POSSIBLE ANTI-TAKEOVER EFFECT
Although the Board of Directors has no present intention of issuing
additional shares for such purposes, the proposed increase in the number of
authorized shares of Common Stock could enable the Board of Directors to issue
additional shares to render more difficult or discourage an attempt by another
person or entity to obtain control of the Company. The issuance of additional
shares of Common Stock in a public or private sale, merger or similar
transaction would increase the number of outstanding shares and thereby could
dilute the proportionate interest of a party attempting to gain control of the
Company. In addition, the Company's Certificate provides the Board of Directors
with the authority to issue shares of the Company's preferred stock without
further stockholder approval and upon such terms and conditions, and having such
rights, privileges and preferences, as the Board of Directors may determine, all
of which could discourage or defeat a takeover attempt not considered by the
Board of Directors to be in the best interests of the Company and its
stockholders. The Board of Directors and management have no knowledge of any
current efforts to obtain control of the Company, and the Amendment is not being
proposed in response to any known takeover attempt.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE AMENDMENT IS ADVISABLE AND IN
THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE AMENDMENT.
PROPOSAL NO. 3
APPROVAL OF 2003 STOCK PLAN
The Board of Directors has unanimously adopted and recommended that the
stockholders consider and approve the Company's 2003 Stock Plan (the "2003 Stock
Plan"), under which an aggregate of 3,000,000 shares will be reserved for
issuance. To become effective, the 2003 Stock Plan must be approved by the
Company's stockholders. Such approval at the 2003 Annual Meeting will require
the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote. Abstentions by
holders of such shares with respect to voting on the 2003 Stock Plan will have
the effect of a vote against the 2003 Stock Plan; broker non-votes with respect
to voting on the 2003 Stock Plan will have no effect on the outcome of the vote.
In June 1987, the Company adopted the 1987 Stock Plan, which was approved
by the Company's stockholders in July 1987 and which has been amended from time
to time (the "1987 Stock Plan"). While there are options outstanding under the
1987 Stock Plan, the 1987 Stock Plan expired in 1997. In May 1995, the Company
adopted the 1995 Stock Plan, which was approved by the Company's stockholders in
May 1995 (the "1995 Stock Plan"). In April 1997, the Company adopted the 1997
Stock Plan, which was approved by the Company's stockholders in April 1997, and
which was amended in May 1997 (the "1997 Stock Plan"). In May 1998, the Company
adopted the 1998 Stock Plan, which was approved by the Company's stockholders in
May 1998 (the "1998 Stock Plan."). In April 2000, the Company adopted the 2000
Stock Plan, which was approved by the Company's stockholders in May 2000 (the
"2000 Stock Plan."). As of March 31, 2003, 1,679,314 shares of Common Stock had
been issued pursuant to the exercise of options granted under the 1987, 1995,
1997, 1998, and 2000 Stock Plans, options to purchase 4,597,959 shares were
outstanding under such plans and 238,560 shares were available for future grants
under the 1995, 1997, 1998 and 2000 Stock Plans. To assure that sufficient
shares are available to provide stock-based incentives to those employees,
directors, officers and consultants of the Company and any subsidiaries who will
be responsible for the Company's future growth and continued success, the Board
of Directors has adopted the 2003 Stock Plan. The 2003 Stock Plan will also give
the Company more flexibility to keep pace with competition in a highly
15
competitive employment environment. Following stockholder approval of the 2003
Stock Plan, or if stockholder approval of the 2003 Stock Plan is not obtained,
the Company may continue to grant awards under the 1995, 1997, 1998 and 2000
Stock Plans in accordance with their terms.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE 2003 STOCK PLAN IS ADVISABLE AND
IN THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE 2003 STOCK PLAN.
The following constitutes a brief discussion of the material features of
the 2003 Stock Plan and is qualified in its entirety by reference to the 2003
Stock Plan, the full text of which is attached hereto as Appendix B and is
incorporated herein by reference. All stockholders of the Company are urged to
read Appendix B in its entirety.
NATURE AND PURPOSE
The stated purpose of the 2003 Stock Plan is to secure for the Company and
any subsidiaries of the Company the benefits arising from capital stock
ownership and the receipt of capital stock-based incentives by those employees,
directors, officers and consultants of the Company and any subsidiaries who will
be responsible for the Company's future growth and continued success.
The 2003 Stock Plan is designed to meet these objectives by granting stock
incentive awards to those persons whose performance or potential contribution
will benefit the Company. The 2003 Stock Plan empowers the Company to grant to
employees (including officers), directors, and consultants of the Company and
its subsidiaries incentive and non-qualified stock options ("Options"), stock
appreciation rights ("SARs") and shares of stock subject to certain restrictions
on transferability ("Restricted Stock"). The 2003 Stock Plan also empowers the
Company to grant to eligible individuals any combination of any or all of these
Options, SARs and Restricted Stock, subject to certain limitations.
Persons to whom grants of Options, SARs or Restricted Stock, are made are
sometimes referred to as "participants." References to "incentive stock options"
are to incentive stock options within the meaning of Section 422 of the Code.
DURATION
The 2003 Stock Plan provides that it will terminate upon the earlier of (i)
the tenth anniversary of the date of approval of the 2003 Stock Plan by the
stockholders of the Company or (ii) the date on which all shares available for
issuance under the 2003 Stock Plan shall have been issued pursuant to the
issuance and lapse of restrictions on Restricted Stock and the exercise of
Options and SARs granted thereunder. Options and SARs outstanding on the
termination date of the 2003 Stock Plan will continue to have full force and
effect in accordance with the provisions of the instruments evidencing the
Options and SARs. Pursuant to the 2003 Stock Plan, the Board of Directors may
modify, amend, terminate, or suspend the 2003 Stock Plan from time to time or at
any time without stockholder approval. Any such modification, amendment,
termination, or suspension of the 2003 Stock Plan will not impair the rights of
any person with respect to any Option, SAR or Restricted Stock previously
granted.
ADMINISTRATION
The 2003 Stock Plan will be administered by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions of
the 2003 Stock Plan are final and conclusive. The Board of Directors has the
authority, subject to the express provisions of the 2003 Stock Plan, to construe
the 2003 Stock Plan and its related agreements, to prescribe, amend, and rescind
the rules and regulations relating to the 2003 Stock Plan, to determine the
terms and provisions of the respective Option, SAR and Restricted Stock,
agreements, which need not be identical, and to make all other determinations in
the judgment of the Board of Directors necessary or desirable for the
administration of the 2003 Stock Plan. The Board of Directors may delegate any
or all of its powers under the 2003 Stock Plan to the Company's Compensation
Committee or other committee appointed by the Board of Directors and consisting
of at least two directors.
16
Members of the Compensation Committee serve at the discretion of the Board of
Directors. The 2003 Stock Plan provides that if Options, SARs or Restricted
Stock are to be approved by a committee, the committee members are intended to
be "outside directors" as that term is used in the regulation related to Section
162(m) of the Code and "non-employee directors" as that term is used in Rule
16b-3 under the Securities Exchange Act of 1934, as amended, or that other
committee members will recuse themselves.
SHARES SUBJECT TO THE 2003 STOCK PLAN
The stock to be offered under the 2003 Stock Plan consists of shares of the
Company's Common Stock. The last sale price for a share of the Company's Common
Stock as reported by the Nasdaq National Market on March 31, 2003 was $19.26.
The maximum number of shares of Common Stock in respect of which Options, SARs
and Restricted Stock, may be granted pursuant to the provisions of the 2003
Stock Plan may not exceed 3,000,000 (subject to adjustment for stock splits,
stock dividends, recapitalizations, and the like). The shares may be either
authorized and unissued shares, treasury shares or shares purchased on the open
market. If an Option or SAR expires or terminates without having been exercised
in full or if a share of Restricted Stock is forfeited, the unexercised or
reacquired shares will be available for subsequent grant under the 2003 Stock
Plan. Shares of Common Stock issued pursuant to the 2003 Stock Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as may be determined by the Compensation Committee.
ELIGIBILITY
All employees (including officers) of the Company or any of its
subsidiaries are eligible to receive incentive stock options pursuant to the
2003 Stock Plan. All employees (including officers), directors, and consultants
of the Company or any of its subsidiaries are eligible to receive non-qualified
options, SARs and Restricted Stock. As of March 31, 2003, approximately 1,017
persons were eligible to participate in the 2003 Stock Plan.
The selection of participants in, and the nature and size of grants under,
the 2003 Stock Plan are within the discretion of the Board of Directors.
However, under the 2003 Stock Plan, the maximum number of shares with respect to
which Options or SARs may be granted to any employee in any calendar year shall
be limited to 112,500 shares of Common Stock. The Board of Directors'
designation of a participant in any year does not require the Board of Directors
to designate such person to receive a grant in any other year. With respect to
the 2003 Stock Plan, the Board of Directors has made no determination regarding
the selection of particular participants to receive grants or the nature of any
grants to be made. However, the table below shows the number of Options granted
during 2002 under the 1995, 1997, 1998, and 2000 Stock Plans to such persons or
groups listed in such table.
<Table>
<Caption>
NUMBER OF OPTIONS
NAME AND POSITION GRANTED IN 2002
- ----------------- -----------------
Eugene G. Banucci........................................... 50,000
Chairman of the Board and Chief Executive Officer(1)
Douglas A. Neugold.......................................... 40,000
President(1)
Daniel P. Sharkey........................................... 20,000
Vice-President, Chief Financial Officer, and Treasurer(1)
All current executive officers as a group(1)................ 110,000
All current directors who are not executive officers as a
group(2).................................................. 20,000
All current employees, including all current officers who
are not executive officers, as a group.................... 823,010
</Table>
- ---------------
(1) All such options were non-qualified options and generally become
exercisable in 20% increments on each of the five anniversary dates from
the date of grant. They were granted at the exercise price ranging
17
from $13.60 to $33.55, the fair market value on the dates of grant. They
expire ten years from the respective dates of grant.
(2) All such options were non-qualified options, become 100% exercisable on the
first anniversary of the grant date and were granted with an exercise price
of $23.85, the fair market value on the date of grant.
INFORMATION AS OF DECEMBER 31, 2002
<Table>
<Caption>
NUMBER OF SECURITIES WEIGHTED-AVERAGE NUMBER OF SECURITIES
TO BE ISSUED UPON EXERCISE EXERCISE PRICE OF REMAINING AVAILABLE FOR
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, FUTURE ISSUANCE UNDER
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS EQUITY COMPENSATION PLANS(1)
- ------------- -------------------------- -------------------- ----------------------------
Equity compensation plans
approved by security
holders..................... 1,774,129 $22.60 739,260
Equity compensation plans not
approved by security
holders..................... -- -- --
--------- ------ -------
Total......................... 1,774,129 $22.60 739,260
========= ====== =======
</Table>
- ---------------
(1) Excludes securities reflected in "Number of Securities to Be Issued Upon
Exercise of Outstanding Options, Warrants and Rights" column.
OPTIONS AND SARS
OPTIONS
Options granted under the 2003 Stock Plan may be in the form of incentive
stock options or non-qualified stock options. Options may be granted under the
2003 Stock Plan on such terms and conditions not inconsistent with the
provisions of the 2003 Stock Plan and in such form as the Board of Directors may
from time to time approve.
The exercise price per share of Common Stock purchasable under an Option
granted under the 2003 Stock Plan shall be determined by the Board of Directors
at the time of grant, but shall not be less than the fair market value of Common
Stock on the date of grant. In the case of an incentive stock option to be
granted to a participant owning stock having more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary, the
exercise price per share shall be not less than 110% of the fair market value of
such stock on the date of grant.
The term of each Option granted under the 2003 Stock Plan shall be fixed by
the Board of Directors; however, the term of any Option may not exceed ten years
from the date of grant, except that the term of any incentive stock option
granted to a participant owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
may not exceed five years from the date of grant.
An Option granted under the 2003 Stock Plan shall be exercisable at such
time or times and subject to such conditions as shall be determined by the Board
of Directors at the date of grant and as set forth in the instrument evidencing
the Option. With respect to incentive stock options, the aggregate fair market
value (determined as of the date of grant) of the number of shares with respect
to which such incentive stock options are exercisable for the first time by a
participant during any calendar year may not exceed $100,000 or such other limit
as may be established under Section 422 of the Code.
An Option granted under the 2003 Stock Plan may be exercised as provided in
the instrument evidencing the option; however, no partial exercise of the Option
may be for less than ten shares. Payment of the exercise price may be made with
cash, with shares of Common Stock or with a combination of cash and stock. To
the extent permitted by law, the Board of Directors may also permit participants
to simultaneously exercise options and sell the shares of Common Stock thereby
acquired, pursuant to a brokerage or similar arrangement, approved in advance by
the Compensation Committee, and to use the proceeds from such sale
18
as payment of the purchase price. The Board of Directors may, in its discretion,
accelerate the date of exercise of any installments of any Options, provided
that, without the participant's written consent, no acceleration will be made
that would violate the annual vesting limitation contained in Section 422(d) of
the Code with respect to incentive stock options.
No shares of Common Stock will be issued under the 2003 Stock Plan unless
counsel for the Company is satisfied that such issuance will be in compliance
with applicable federal and state securities laws or any applicable listing
requirements of any national securities exchange on which the Common Stock is
then listed. Any participant in the 2003 Stock Plan may be required to represent
and agree in writing that the stock acquired by the participant is being
acquired for investment.
STOCK APPRECIATION RIGHTS
Under the 2003 Stock Plan, an SAR may be granted in tandem with, in
addition to, or independent of any other grant. An SAR is the right to receive,
without payment, an amount equal to the excess, if any, of the fair market value
of a share of Common Stock on the date of exercise over the grant price of such
share, multiplied by the number of shares as to which the SARs shall have been
exercised. The Company will pay such amount to the holder in cash or in shares
of Common Stock or a combination thereof, as the Board of Directors may
determine.
An SAR may be exercised by a participant in accordance with procedures
established by the Board of Directors.
EMPLOYMENT
An Option or SAR shall terminate if the participant ceases to be employed
by the Company or a subsidiary for any reason other than death, except that the
participant may (except as otherwise provided in the instrument evidencing the
Option or SAR) exercise within the three-month period following termination of
employment any unexpired portion of an Option or SAR that was otherwise
exercisable on the date of termination of employment. Except as otherwise
provided in the instrument evidencing the Option or SAR, if a participant dies
while an employee of the Company or a subsidiary, any Option or SAR granted to
such participant may be exercised by the participant's personal representatives
or heirs within six months of the participant's death to the extent that the
participant could have exercised the Option or SAR on the date of his or her
death.
TRANSFERABILITY
No Option or SAR granted under the 2003 Stock Plan, and no right or
interest therein, is assignable or transferable by a participant except by will
or the laws of descent and distribution or, with respect to non-qualified stock
options and SARs, to the extent the participant's agreement granting such
non-qualified stock option or SAR provides otherwise.
CHANGE IN CONTROL
The 2003 Stock Plan provides that if (i) the Company is merged or
consolidated with another entity and the Company is not the surviving
corporation, (ii) the property or stock of the Company is acquired by any other
entity, or (iii) the Company is reorganized or liquidated, then the Board of
Directors of the Company, or the board of directors of any entity assuming the
obligations of the Company, will, as to outstanding Options and SARs,
(1) make appropriate provision for the protection of any such outstanding
Options and SARs by the substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated,
acquiring or otherwise reorganized entity which will be issuable or
exercisable in respect of the shares of Common Stock,
19
(2) upon written notice to the participants, provide that all unexercised
Options and SARs must be exercised within a specified number of days
of the date of such notice or such Options and SARs will be
terminated, or
(3) upon written notice to the participants, provide that the Company or
the merged, consolidated, acquiring or otherwise reorganized entity
shall have the right, upon the effective date of any such merger,
consolidation, acquisition or reorganization, to purchase all Options
and SARs held by each participant and unexercised as of that date for
an amount and in the form determined pursuant to the 2003 Stock Plan.
RESTRICTED STOCK
The Board of Directors may grant a participant an award of Restricted
Stock, on such terms and conditions and subject to such restrictions as the
Board of Directors may determine. Such restrictions may include restrictions on
the pledging, sale, assignment, transfer or other disposition of such shares and
the requirement that the participant forfeit all or a portion of such shares to
the Company upon termination of employment. Each participant receiving an Award
may be required to enter into an agreement with the Company agreeing to such
restrictions. The Company (or a custodian designated by the Company) may retain
possession of any stock certificates with respect to Restricted Stock until the
restrictions lapse. Shares of Restricted Stock are held by the participant as
holder of record for all purposes, including voting and receipt of dividends,
except that the Board of Directors may direct that dividends be held by the
Company (or the custodian) until the underlying shares are free of restrictions.
TRANSFERABILITY
Shares of Restricted Stock may not be sold, assigned, transferred or
otherwise disposed of, except, subject to the terms of any stock restriction
agreement, by will or the laws of descent and distribution, and may not be
pledged or hypothecated as collateral for a loan, prior to the lapse of
restrictions on such shares. Any attempt by the participant to dispose of or
encumber the shares issued pursuant to an Award prior to the lapse of
restrictions on such shares will cause the participant's interest in such shares
to terminate.
EMPLOYMENT
Except as otherwise provided in any stock restriction agreement, if prior
to the lapse of the restrictions on the stock the participant ceases to be an
employee of the Company or a subsidiary for any reason, all such shares which
remain subject to restrictions shall be forfeited to the Company.
FEDERAL INCOME TAX CONSEQUENCES
Based on current provisions of the Code, and the existing regulations
thereunder, certain anticipated federal income tax consequences with respect to
the several types of grants are described below.
GRANT OF OPTIONS AND SARS
A participant will not recognize any taxable income at the time an Option
or SAR is granted, and the Company will not be entitled to a federal income tax
deduction at that time.
INCENTIVE STOCK OPTIONS
No ordinary income will be recognized by a participant holding an incentive
stock option at the time of exercise. The excess of the fair market value of the
shares at the time of exercise over the aggregate option exercise price will be
an adjustment to alternative minimum taxable income for purposes of the federal
"alternative minimum tax" at the date of exercise. If the participant holds the
shares for at least two years after the date the option was granted and one year
after the acquisition of such shares, the difference between the amount realized
upon disposition of the shares and the aggregate option exercise price will
constitute a
20
long-term capital gain or loss, as the case may be, and the Company will not be
entitled to a federal income tax deduction. If the shares are disposed of in a
sale, exchange or other "disqualifying disposition" (including the use of the
shares to exercise subsequent options) within two years after the date of grant
or within one year after the date of exercise, the participant will realize
taxable ordinary income in an amount equal to the excess of the fair market
value of the shares purchased at the time of exercise over the aggregate option
exercise price, and the Company will usually be entitled to a federal income tax
deduction equal to such amount. In addition, the participant will have a taxable
capital gain equal to the difference, if any, between:
(i) the amount realized upon disposition of the shares, and
(ii) the sum of the aggregate option exercise price plus the amount of
ordinary income on which the participant was taxed.
NON-QUALIFIED STOCK OPTIONS
Taxable ordinary income will be recognized by the participant at the time
of exercise of a non-qualified stock option in an amount equal to the excess of
the fair market value of the shares purchased at the time of such exercise over
the aggregate option exercise price. The Company will usually be entitled to a
corresponding federal income tax deduction. At the time of a subsequent sale of
the shares, the participant will generally recognize a taxable capital gain or
loss based upon the difference between the aggregate selling price of the shares
and the aggregate fair market value of the shares at the time of exercise.
STOCK APPRECIATION RIGHTS
Upon the exercise of an SAR, the participant will realize taxable ordinary
income on the amount of cash received and/or the then current fair market value
of the shares of Common Stock received, and the Company will usually be entitled
to a corresponding federal income tax deduction. The participant's basis in any
shares of Common Stock received will be equal to the amount of ordinary income
upon which the participant was taxed. Upon any subsequent disposition, any gain
or loss realized will be a capital gain or loss.
In order for the full value of SARs to be deductible by the Company for
federal income tax purposes, the Company may intend for such SARs to be treated
as "qualified performance-based compensation," in which case, such SARs granted
shall be subject to additional requirements.
RESTRICTED STOCK
Unless a participant makes the election described below, a participant
receiving shares of Restricted Stock will not recognize income, and the Company
will not be allowed a deduction, at the time of grant, assuming no portion of
the award is vested at the time of grant. While the restrictions on the shares
are in effect, a participant will recognize compensation income equal to the
amount of the dividends received (unless the dividends also are held by a
custodian and are subject to forfeiture), and the Company will be allowed a
deduction in a like amount. When the restrictions on the shares are removed or
lapse, the fair market value of the shares (and any dividends whose restrictions
also lapse on that date) on the date the restrictions are removed or lapse in
excess of the amount, if any, paid by the participant will be ordinary income to
the participant in the year in which such restrictions are removed or lapse, and
such amount will be allowed as a deduction for federal income tax purposes to
the Company. Upon disposition of the shares, the gain or loss recognized by the
participant shall be equal to the difference between the amount realized on such
disposition and the fair market value of the shares on the date the restrictions
were removed or lapsed. Such amount will be treated as capital gain or loss, and
the capital gain or loss will be short-term or long-term depending upon the
period of time the shares are held by the participant following the removal or
lapse of the restrictions. If the restrictions do not lapse and the shares are
forfeited by the participant and thus returned to the Company, there will be no
federal income tax consequences to either the participant or the Company. If
permitted by the Compensation Committee, by properly filing an election pursuant
to Section 83(b) of the Code with the Internal Revenue Service within 30 days
after the date of grant (assuming that the date of grant is the date the
participant acquires a beneficial interest in the Restricted Stock), a
participant's ordinary income and commencement of the holding period and the
Company's deduction will be determined as of the date of grant.
21
In such a case, the amount of ordinary income recognized by such a participant
and deductible by the Company will be equal to the fair market value of the
shares as of the date of grant. If such election is made and a participant
thereafter forfeits his or her stock, no refund or deduction will be allowed for
the amount previously included in such participant's income.
SPECIAL RULES
To the extent a participant pays all or part of the option exercise price
of a non-qualified stock option by tendering shares of Common Stock owned by the
participant, the tax consequences described above apply except that the number
of shares received upon such exercise which is equal to the number of shares
surrendered in payment of the option exercise price shall have the same tax
basis and holding period as the shares surrendered. The additional shares
received upon such exercise shall have a tax basis equal to the amount of
ordinary income recognized on such exercise and a holding period which commences
on the date of exercise. To preserve the Company's deductions with respect to
the non-qualified options and SARs, the Board of Directors may be required to
set the exercise or grant price for such non-qualified options and SARs at the
fair market value of a share of Common Stock on the date of grant.
WITHHOLDING TAXES
Withholding taxes must be paid by the participant at the time of exercise
of any non-qualified stock option or SAR prior to the delivery of shares and at
the time the restriction lapse on Restricted Stock.
SECTION 162(M)
Under Section 162(m) of the Code, the Company is not entitled to a federal
income tax deduction for compensation in excess of $1 million paid in any year
to its chief executive officer and its four other most highly compensated
executive officers, subject to certain exceptions. Compensation that qualifies
as "performance-based" under Section 162(m) is exempt from this limitation.
Options and SARs granted under the 2003 Stock Plan at an exercise price that is
not less than the fair market value of Company Common Stock on the date of grant
are designed to satisfy the requirements for the performance-based exemption.
GENERAL
Because the tax consequences to a participant may vary depending upon the
participant's individual situation, and because such tax consequences are
subject to change due to changes in tax laws or regulations, each participant
should consult his or her personal tax advisor regarding the federal, and any
state, local or foreign, tax consequences to the participant.
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO 1998 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has unanimously adopted and recommended that the
stockholders consider and approve an amendment to the Company's 1998 Employee
Stock Purchase Plan (the "Purchase Plan"), under which an additional aggregate
of 500,000 shares will be reserved for issuance. The proposed amendment is set
forth in Appendix C hereto. To become effective, the amendment to the Purchase
Plan must be approved by the Company's stockholders. Such approval at the 2003
Annual Meeting will require the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or represented by proxy and
entitled to vote. Abstentions by holders of such shares with respect to voting
on the amendment to the Purchase Plan will have the effect of a vote against the
amendment; broker non-votes with respect to voting on the amendment will have no
effect on the outcome of the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THAT AMENDING THE
PURCHASE PLAN IS ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY
AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE PURCHASE PLAN.
22
The Purchase Plan was adopted by the Company's Board of Directors on
February 6, 1998 and approved by the Company's stockholders at an annual meeting
held on May 20, 1998. The following constitutes a brief discussion of the
material features of the Purchase Plan and is qualified in its entirety by
reference to the proposed amendment (attached as Appendix C hereto) and the
Purchase Plan, the full text of which is incorporated herein by reference from
the Company's Registration Statement on Form S-8, filed with the SEC on June 2,
1998. All stockholders of the Company are urged to read the proposed amendment
and the Purchase Plan in their entirety.
PURPOSE
The purpose of the Purchase Plan is to provide employees (including
officers) of the Company and subsidiaries designated by the Board of Directors
(each a "Designated Subsidiary") with an opportunity to purchase Common Stock of
the Company through payroll deductions.
ADMINISTRATION
The Purchase Plan may be administered by the Board of Directors or the
Compensation Committee or other committee appointed by the Board of Directors
and consisting of at least two directors. All questions of interpretation or
application of the Purchase Plan will be determined by the Board of Directors or
its committee, and its decisions will be final and binding upon all parties.
SHARES SUBJECT TO THE PURCHASE PLAN
The stock to be offered under the Purchase Plan consists of shares of the
Company's Common Stock. As of April 1, 2003, 347,815 shares had been issued
pursuant to the Purchase Plan and 152,185 shares (out of the originally-reserved
500,000 shares) remained available for issuance under the Purchase Plan. The
total number of shares of Common Stock reserved for issuance under the Purchase
Plan is 1,000,000 shares (subject to adjustment for stock splits, stock
dividends, stock combinations, recapitalizations and the like), of which 500,000
shares were reserved under the Purchase Plan as originally adopted and 500,000
shares were added by this amendment to the Purchase Plan. The shares may be
either authorized and unissued shares, treasury shares or shares purchased on
the open market.
ELIGIBILITY
Each employee (including officers) of the Company (or certain subsidiaries)
who has been employed by the Company or the subsidiary for at least six months,
except for employees who are scheduled to work less than 20 hours per week or
less than five months per calendar year, is eligible to participate in an
offering under the Purchase Plan, subject to certain limitations imposed by
Section 423 of the Code, and subject to limitations on stock ownership as set
forth in the Purchase Plan. Eligible employees become participants in the
Purchase Plan by filing with the payroll office of the Company an enrollment
form authorizing payroll deductions prior to the applicable offering date. As of
March 31, 2003, there were approximately 918 employees eligible to participate
in the Purchase Plan.
PARTICIPATION IN AN OFFERING
Each offering of Common Stock under the Purchase Plan extends for a period
of six months ("Offering Period"), unless the participant withdraws or
terminates employment earlier. The Board of Directors or its committee may
change the length of Offering Periods without stockholder approval. To
participate in the Purchase Plan, each eligible employee must authorize payroll
deductions pursuant to the Purchase Plan. Such payroll deductions must be at
least 1% and may not exceed 15% of a participant's regular salary (base straight
time gross earnings). Once an employee becomes a participant in the Purchase
Plan, the employee will automatically participate in each successive Offering
Period until such time as the employee withdraws from the Purchase Plan or the
employee's employment terminates.
23
GRANT OF OPTION
At the beginning of each Offering Period, each participant is automatically
granted an option to purchase shares of the Company's Common Stock. The option
is exercised at the end of each Offering Period to the extent of the payroll
deductions accumulated during such Offering Period.
PURCHASE PRICE
Shares of Common Stock may be purchased under the Purchase Plan at a price
equal to 85% of the lesser of the fair market value of the Common Stock on
(i) the first day of the Offering Period or
(ii) the last day of the Offering Period.
The fair market value of the Common Stock on any relevant date will be
equal to:
(i) the average of the high and low prices for the Common Stock as quoted
on the principal national securities exchange on which the Common
Stock is then traded if the Common Stock is listed on any national
securities exchange, or
(ii) the last reported sales price for the Common Stock (or the closing
bid, if no sales were reported) on The Nasdaq Stock Market if the
Common Stock is not then traded on a national securities exchange,
or
(iii) the closing bid price (or average of bid prices) last quoted by an
established quotation service for over-the-counter securities, if
the Common Stock is not then reported on The Nasdaq Stock Market,
each as reported in The Wall Street Journal.
The last sale price for the Company's Common Stock as reported by the
Nasdaq National Market on March 31, 2003 was $19.26 per share.
SHARES PURCHASED
The number of shares of Common Stock a participant purchases in an Offering
Period is determined by dividing the total amount of payroll deductions withheld
from the participant's compensation during that Offering Period by the purchase
price determined as described above. Any payroll deductions not applied to the
purchase of shares will generally be applied to the purchase of shares in
subsequent Offering Periods. In addition to the limitation on the maximum
payroll deduction, the option granted to the participant may not give a
participant the right to purchase shares under the Purchase Plan at a rate per
calendar year in excess of $25,000 (based on the market price on the first day
of an Offering Period).
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement or death, or the failure of the participant to remain in the
continuous scheduled employ of the Company or certain subsidiaries for at least
20 hours per week (or five months per year) during the applicable Offering
Period, cancels his or her option and participation in the Purchase Plan
immediately. In such event, the payroll deductions credited to the participant's
account will be returned to him or her or, in the case of death, to the person
or persons entitled thereto as provided in the Purchase Plan.
WITHDRAWAL
A participant may withdraw from an Offering Period at any time without
affecting his or her eligibility to participate in future Offering Periods.
However, once a participant withdraws from a particular Offering Period, that
participant may not participate again in the same Offering Period.
24
CHANGES IN CAPITAL
In the event any change is made in the Company's capitalization during an
Offering Period, such as a stock split, stock combination or stock dividend,
which results in an increase or decrease in the number of shares of Common Stock
outstanding without receipt of consideration by the Company, appropriate
adjustment shall be made in the purchase price and in the number of shares
subject to options under the Purchase Plan.
AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at any time and for any reason terminate or
amend the Purchase Plan, except that without the approval of the stockholders of
the Company, the Board of Directors may not
(i) increase the number of shares of Common Stock available for sale
under the Purchase Plan or
(ii) materially modify the eligibility for participation in the Purchase
Plan.
Termination of the Purchase Plan shall not affect options previously granted,
except in the case of an acquisition of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Section 423 of the
Code. Under these provisions, no income will be taxable to a participant until
the shares purchased under the Purchase Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax, and the amount of the tax will depend upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
first day of the Offering Period and one year from the date the shares are
purchased, the participant will recognize ordinary income measured as the lesser
of (a) the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or (b) an amount equal to 15% of
the fair market value of the shares as of the first day of the Offering Period.
Any additional gain will be treated as long-term capital gain. If the shares are
sold or otherwise disposed of before the expiration of these holdings periods,
the participant will recognize ordinary income generally measured as the excess
of the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on the holding
period. The Company is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent of ordinary income
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above.
Because the tax consequences to a participant may vary depending upon the
participant's individual situation, and because such tax consequences are
subject to change due to changes in tax laws or regulations, each participant
should consult his or her personal tax advisor regarding the federal, and any
state, local or foreign, tax consequences to the participant.
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has appointed Ernst & Young
LLP as independent auditors to audit the consolidated financial statements of
the Company for the fiscal year ending December 31, 2003 and has determined that
it would be desirable to request that the stockholders ratify such appointment.
Ernst & Young LLP served as the Company's independent auditors for the fiscal
year ended December 31, 2002 and has reported on the Company's consolidated
financial statements for such year. Representatives of Ernst & Young LLP are
expected to be present at the 2003 Annual Meeting, will have the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions from stockholders.
25
While stockholder ratification is not required for the appointment of Ernst
& Young LLP since the Audit Committee of the Board of Directors has the
responsibility for appointing the Company's independent auditors, the
appointment is being submitted for ratification at the 2003 Annual Meeting with
a view towards soliciting the stockholders' opinions, which the Audit Committee
of the Board of Directors will take into consideration in future deliberations.
INDEPENDENT AUDITORS' FEES
Audit Fees. Ernst & Young LLP billed ATMI, Inc. and its affiliates an
aggregate amount of $508,000 and $608,000 for professional services rendered in
2002 and 2001, respectively, for the audit of ATMI's annual financial
statements, the reviews of the financial statements included in ATMI's reports
on Form 10-Q, and for services that are normally provided by the auditor in
connection with statutory and regulatory filings or engagements for those fiscal
years.
Audit-Related Fees. Ernst & Young LLP billed ATMI, Inc. and its affiliates
an aggregate amount of $38,000 and $15,000 for assurance and related services
rendered in 2002 and 2001, respectively, that are related to the performance of
the audit or review of the Company's financial statements other than the fees
disclosed in the foregoing paragraph. These fees related primarily to audits of
the 401(k) plan and internal controls reviews.
Tax Fees. Ernst & Young LLP billed ATMI, Inc. and its affiliates an
aggregate amount of $455,000 and $549,000 for professional services rendered in
2002 and 2001, respectively, for tax compliance, tax advice, and tax planning.
All Other Fees. None in 2002 and 2001.
Representatives of Ernst & Young LLP participated in all meetings of the
Audit Committee during 2002. The Audit Committee monitored the activities and
performance of Ernst & Young LLP, including the audit scope, audit fees, auditor
independence matters, and the extent to which Ernst & Young LLP was retained to
perform non-audit services. In its review of non-audit service fees, the Audit
Committee considered, among other things, the possible effect of the performance
of such services on Ernst & Young LLP's independence. After discussion with
management and Ernst & Young LLP, the Audit Committee considers the audit and
non-audit services provided by Ernst & Young LLP to have been consistent with
maintaining its independence.
VOTE REQUIRED
The ratification of the appointment by the Audit Committee of the Board of
Directors of Ernst & Young LLP as independent auditors for 2003 will require the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the 2003 Annual Meeting. Abstentions by holders of
such shares with respect to this matter will have the effect of a negative vote;
broker non-votes with respect to this matter will have no effect on the outcome
of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
2003 Annual Meeting. If, however, any other business should properly come before
the 2003 Annual Meeting, the persons named in the accompanying proxy will vote
the proxy as in their discretion they may deem appropriate, unless they are
directed by the proxy to do otherwise.
26
COST OF SOLICITING PROXIES
The cost of soliciting proxies will be paid by the Company. In addition to
the solicitation of proxies by mail, proxies may be solicited by personal
interview, telephone, and similar means by directors, officers, or regular
employees of the Company, none of whom will be specially compensated for such
activities.
STOCKHOLDER PROPOSALS FOR 2003
Stockholder proposals submitted for inclusion in next year's proxy
materials must be received by the Company no later than December 23, 2003 and
must comply with the requirements of the SEC's Rule 14a-8 under the Exchange
Act. Proposals should be addressed to Dean Hamilton, ATMI, Inc., 7 Commerce
Drive, Danbury, Connecticut 06810.
Any stockholder of record of the Company may nominate candidates for
election to the Board of Directors or present other business at an annual
meeting if a written notice is delivered to the Secretary of the Company at the
Company's principal executive offices not less than 60 days nor more than 90
days prior to the first anniversary of the preceding year's annual meeting. Such
written notice must set forth:
- as to each person whom the stockholder proposes to nominate for election
as a director, all information relating to such person that is required
to be disclosed in solicitations of proxies for election of directors
pursuant to the Exchange Act (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a
director if elected);
- as to any other business to be brought before the meeting:
- a brief description of the business,
- the reasons for conducting such business and
- any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and
- as to the stockholder and the beneficial owner, if any, on whose behalf
the nomination or proposal is made:
- the name and address of such stockholder and such beneficial owner and
- the number of shares of Common Stock that are held of record by such
stockholder and owned beneficially by such beneficial owner.
By order of the Board of Directors,
/s/ OLIVER A. ZITZMANN
--------------------------------------
Oliver A. Zitzmann
Secretary
Danbury, Connecticut April 21, 2003
27
APPENDIX A
ATMI, INC.
AUDIT COMMITTEE CHARTER
THE ROLE OF THE AUDIT COMMITTEE
The primary responsibility of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities reviewing the Corporation's audit
process, financial statements and financial reporting functions, systems of
internal accounting and financial controls, and compliance with legal and ethics
programs. The Committee has unrestricted access to the Corporation's records and
personnel, independent auditors or other individuals as deemed necessary. The
Audit Committee has the authority to conduct or authorize investigations into
any matters within the Committee's scope of responsibilities. The Committee is
empowered to retain independent counsel and other professionals to assist it in
the conduct of any investigation.
COMMITTEE COMPOSITION
The membership of the Audit Committee shall be composed of at least two
directors who are independent of the management of the Corporation and are free
from any relationship (as defined by the Blue Ribbon Committee or determined by
the Board) that may interfere with the exercise of their independent judgment as
a member of the Committee. All members of the Committee shall have (or obtain
within a reasonable timeframe) working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
FREQUENCY OF MEETINGS
The Audit Committee will meet periodically (e.g., two times a year) or more
frequently as deemed necessary to perform its required duties.
DUTIES OF THE AUDIT COMMITTEE
In fulfilling its responsibilities, the Audit Committee provides oversight
as follows:
Audit Process
- Have a clear understanding with management and the independent auditors
that they are ultimately accountable to the board of directors and to
the Audit Committee as the shareholders' representative.
- Reviews the coordination of the audit efforts between the independent
auditors and management to ensure completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources.
- Recommends to the Board of Directors the annual appointment of the
independent auditors (who are ultimately accountable to the Audit
Committee and the Board) to audit the Corporation's financial
statements, reviews their fee arrangements, and reviews and approves
their discharge.
- Obtains annually from the independent accountant a formal written
statement (consistent with Independence Standards, Board Standard #1)
that, in their professional judgment, they are independent of the
Company.
- Reviews annually with the independent auditors all significant
relationships (or services) the auditors have with the Corporation to
evaluate and assure the accountant's objectivity and independence.
- Reviews annually the audit scope and plan of the independent auditors.
- Reviews annually with management the risk assessment process and the
resulting Internal Audit Plan; reviews audit cycle coverage including
coverage provided for the more significant audit risk areas and related
staffing levels.
Financial Reporting
- Reviews the independent auditors' report(s) and auditor's opinion on the
Corporation's financial statements; reviews with management the
Corporation's financial statements and recommends their approval to the
Board.
- Reviews the independent auditors' summary of significant accounting,
auditing, and internal control issues identified during the audit along
with management's corrective action plans, and other matters related to
the conduct of the audit which are required to be communicated to the
Committee under Generally Accepted Auditing Standards.
- Reviews with management and the independent accountant's significant
accounting policy changes or new applicable accounting or reporting
standards adopted by management.
- Reviews with the independent accountant their judgments about the
quality and appropriateness, not just the acceptability, of the
Corporation's accounting principles and accounting estimates; obtains
sufficient information regarding the clarity of financial disclosures
and the degree of aggressiveness or conservatism in the Corporation's
accounting principles.
- Reviews with management and the independent accountant's interim
financial statements/reports prior to filing with the Securities and
Exchange Commission (SEC) or other regulatory agencies. The Chair of the
Committee may represent the entire Committee for purposes of this
review.
- Reviews with the independent auditors any significant matters identified
during interim financial reviews prior to filing interim financial
statements.
Internal Controls
- Reviews with management and the independent auditors the adequacy of the
Corporation's systems of internal control.
- Reviews periodic reports from management summarizing the results of
completed audits/reviews including significant findings, and the
resolution status of previously reported significant/key control issues,
along with management's responses thereto.
- Reviews with management and the independent auditors any significant
risks or exposures, including legal matters.
Ethical and Legal Compliance Programs
- Reviews periodically the Corporation's program for monitoring compliance
with the ATMI Securities Trading Policy and the Foreign Corrupt
Practices Act of 1977, including violations of such Policy or Act.
- Reviews the Corporation's legal compliance programs and policies, and
reports received from regulatory agencies: monitors the results of
compliance efforts.
Other Matters
- Reviews and updates, as needed, the Committee Charter on a periodic
basis, and obtains full Board approval of Charter.
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- Meets at least annually with management and the independent auditors in
separate executive sessions to discuss any matters that the Committee or
each of these groups believes should be discussed privately.
- Submits the minutes of all meetings of the Audit Committee to, or
discusses the matters at each meeting with, the Board of Directors.
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APPENDIX B
ATMI, INC.
2003 STOCK PLAN
SECTION 1 PURPOSE
The purpose of the 2003 Stock Plan (the "Plan") is to secure for ATMI, Inc.
(the "Company"), its parent (if any) and any subsidiaries of the Company
(collectively, the "Related Companies") the benefits arising from capital stock
ownership and the receipt of capital stock-based incentives by those employees,
directors, officers and consultants of the Company and any Related Companies who
will be responsible for the Company's future growth and continued success.
The Plan will provide a means whereby (a) employees of the Company and any
Related Companies may purchase stock in the Company pursuant to options which
qualify as "incentive stock options" ("Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"); (b)
directors, employees and consultants of the Company and any Related Companies
may purchase stock in the Company pursuant to options granted hereunder which do
not qualify as Incentive Stock Options ("Non-Qualified Options"); (c) directors,
employees and consultants of the Company and any Related Companies may receive
stock appreciation rights ("SARs") and (d) directors, employees and consultants
of the Company and any Related Companies may receive shares of stock in the
Company that are subject to restrictions on transferability and may be forfeited
("Restricted Stock"). Both Incentive Stock Options and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as "Options."
As used herein, the terms "parent" and "subsidiary" mean "parent corporation"
and "subsidiary corporation" as those terms are defined in Section 424 of the
Code. Options, SARs and Restricted Stock are referred to hereafter individually
as a "Plan Benefit" and collectively as "Plan Benefits." Directors, employees
and consultants of the Company and any Related Companies are referred to herein
as "Participants."
SECTION 2 ADMINISTRATION
2.1 BOARD OF DIRECTORS AND THE COMMITTEE. The Plan will be administered
by the Board of Directors of the Company whose construction and interpretation
of the terms and provisions hereof shall be final and conclusive. Any director
to whom a Plan Benefit is awarded shall be ineligible to vote upon his or her
Plan Benefit, but Plan Benefits may be granted to any such director by a vote of
the remainder of the directors, except as limited below. The Board of Directors
may in its sole discretion grant Options, issue shares upon exercise of such
Options and grant SARs and Restricted Stock, all as provided in the Plan. The
Board of Directors shall have authority, subject to the express provisions of
the Plan, to construe the Plan and its related agreements, to prescribe, amend
and rescind rules and regulations relating to the Plan, to determine the terms
and provisions of the respective Option, SAR and Restricted Stock agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. Notwithstanding the foregoing or any other provision of the Plan,
the Board may delegate to one or more officers of the Company the authority to
designate the Participants (other than such officer(s)) who will receive
Options, SARs or Restricted Stock under the Plan and the size and terms of each
such grant, to the fullest extent permitted by sec.157 of the Delaware General
Corporation Law (or any successor provision thereto). The Board of Directors may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final judge
of any such expediency. No director shall be liable for any action or
determination made in good faith. The Board of Directors may delegate any or all
of its powers under the Plan to a Compensation Committee or other Committee (the
"Committee") appointed by the Board of Directors consisting of at least two
members of the Board of Directors. While it is intended that at all times that
the Committee acts in connection with the Plan all the members of the Committee
shall be: (i) "outside directors" as that term is defined in Treas. Reg.
sec.1.162-27(e)(3) (or any successor regulation); and (ii) "non-employee
directors" within the meaning of Rule 16b-3 (or any successor rule) under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such terms are interpreted from time to time, the fact that
the Committee is not so comprised will not invalidate the grant of any Plan
Benefit that otherwise satisfies the terms of the Plan. If the Committee is so
appointed, all references to the Board of Directors herein shall mean and relate
to such Committee, unless the context otherwise requires.
2.2 COMPLIANCE WITH SECTION 162(M) OF THE CODE. Section 162(m) of the
Code generally limits the tax deductibility to publicly held companies of
compensation in excess of $1,000,000 paid to certain "covered employees"
("Covered Employees"). It is the Company's intention to preserve the
deductibility of such compensation to the extent it is reasonably practicable
and to the extent it is consistent with the Company's compensation objectives.
For purposes of this Plan, Covered Employees of the Company shall be those
employees of the Company described in Section 162(m)(3) of the Code.
SECTION 3 ELIGIBILITY
3.1 INCENTIVE STOCK OPTIONS. Participants who are employees of the
Company and any Related Company shall be eligible to receive Incentive Stock
Options pursuant to the Plan; provided that no person shall be granted an
Incentive Stock Option under the Plan who, at the time such Option is granted,
owns, directly or indirectly, Common Stock of the Company possessing more than
10% of the total combined voting power of all classes of stock of the Company or
of its Related Companies, unless the requirements of Section 6.6(b) hereof are
satisfied. In determining whether this 10% threshold has been reached, the stock
attribution rules of Section 424(d) of the Code shall apply. Directors who are
not regular employees are not eligible to receive Incentive Stock Options.
3.2 NON-QUALIFIED OPTIONS, SARS AND RESTRICTED STOCK. Non-Qualified
Options, SARs and Restricted Stock may be granted to any Participant.
3.3 GENERALLY. The granting of Plan Benefits is within the discretion of
the Board of Directors. The Board of Directors may take into consideration a
Participant's individual circumstances in determining whether to grant an
Incentive Stock Option, a Non-Qualified Option, SAR or Restricted Stock.
Granting of any Plan Benefit to any Participant shall neither entitle that
Participant to, nor disqualify that Participant from, participation in any other
grant of Plan Benefits.
SECTION 4 STOCK SUBJECT TO PLAN
Subject to adjustment as provided in Sections 8 and 9 hereof, the stock to
be offered under the Plan shall consist of shares of the Company's Common Stock,
$.01 par value, and the maximum number of shares which will be reserved for
issuance, and in respect of which Plan Benefits may be granted pursuant to the
provisions of the Plan, shall not exceed in the aggregate 3,000,000 shares. Such
shares may be authorized and unissued shares, treasury shares or shares
purchased on the open market. If an Option or SAR granted hereunder shall expire
or terminate for any reason without having been exercised in full or if a share
of Restricted Stock shall be forfeited, the unpurchased or forfeited shares
subject thereto shall again be available for subsequent grants of Plan Benefits
under the Plan. Stock issued pursuant to the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Board of Directors.
SECTION 5 GRANTING OF OPTIONS AND SARS
Plan Benefits may be granted under the Plan at any time after May 21, 2003
(the date of approval of the Plan by the stockholders of the Company) and prior
to May 21, 2013; provided, however, that nothing in the Plan shall be construed
to obligate the Company to grant Plan Benefits to a Participant or anyone
claiming under or through a Participant. The date of grant of Plan Benefits
under the Plan will be the date specified by the Board of Directors at the time
the Board of Directors grants such Plan Benefits; provided, however, that such
date shall not be prior to the date on which the Board of Directors takes such
action. The Board of Directors shall have the right, with the consent of a
Participant, to convert an Incentive Stock Option granted under the Plan to a
Non-Qualified Option pursuant to Section 6.7. Any Plan Benefit may be granted
alone or in addition to other Plan Benefits granted under the Plan.
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SECTION 6 PROVISIONS APPLICABLE TO OPTIONS AND SARS
6.1 PURCHASE PRICE AND SHARES SUBJECT TO OPTIONS AND SARS.
(a) The purchase price per share of Common Stock deliverable upon the
exercise of an Option shall be determined by the Board of Directors; provided,
however, that, except as modified in Section 6.6(b) hereof, the exercise price
shall not be less than the fair market value of such Common Stock on the day the
Option is granted.
(b) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such Options, (ii) shares of
Common Stock of the Company owned by the Participant having a fair market value
equal in amount to the exercise price of the Options being exercised, or (iii)
any combination of (i) and (ii). The fair market value of any shares of the
Company's Common Stock which may be delivered upon exercise of an Option shall
be determined by the Board of Directors in accordance with Section 6.1(c)
hereof. To the extent permitted by law, the Board of Directors may also permit
Participants, either on a selective or aggregate basis, to simultaneously
exercise Options and sell the shares of Common Stock thereby acquired, pursuant
to a brokerage or similar arrangement approved in advance by the Board of
Directors, and to use the proceeds from such sale as payment of the exercise
price of such shares.
(c) If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" of a share of the Company's
Common Stock for a specific date shall mean (i) the average (on such date) of
the high and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if such Common Stock is then
traded on a national securities exchange; (ii) the last reported sale price (on
such date) of the Common Stock on The Nasdaq Stock Market if the Common Stock is
not then traded on a national securities exchange; or (iii) the closing bid
price (or average of bid prices) last quoted (on such date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on The Nasdaq Stock Market. If the Company's Common Stock was not
traded on the date in issue, fair market value shall be determined as of the
last preceding business day for which such prices or quotes are available.
However, if the Common Stock is not publicly traded at the time an Option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Common Stock as determined by the Board of Directors after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
(d) The maximum number of shares with respect to which Options or SARs may
be granted to any employee, including any transactions contemplated by Treas.
Reg. sec.1.162-27(e)(2)(vi), shall be limited to 112,500 shares in any calendar
year.
6.2 DURATION OF OPTIONS AND SARS. Subject to Sections 6.5 and 6.6(b)
hereof, each Option and SAR and all rights thereunder shall expire on such date
as the Board of Directors may determine, but in no event later than ten years
from the day on which the Option or SAR is granted.
6.3 EXERCISE OF OPTIONS AND SARS.
(a) Subject to Section 6.6(b) hereof, each Option and SAR granted under
the Plan shall be exercisable at such time or times and during such period or
periods as shall be set forth in the instrument evidencing such Option or SAR.
To the extent that an Option or SAR is not exercised by a Participant when it
becomes initially exercisable, it shall not expire but shall be carried forward
and shall remain exercisable, on a cumulative basis, until the expiration of the
exercise period. No partial exercise may be for less than ten (10) full shares
of Common Stock (or its equivalent).
(b) The Board of Directors shall have the right to accelerate the date on
which any installment of any Option or SAR first becomes exercisable; provided
that, without the Participant's written consent, the Board of Directors shall
not accelerate the date on which any installment of any Incentive Stock Option
(not previously converted into a Non-Qualified Option pursuant to Section 6.7)
first becomes exercisable if such acceleration would violate the annual vesting
limitation contained in Section 422(d)(1) of the Code, which
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provides generally that the aggregate fair market value (determined at the time
the Option is granted) of the stock with respect to which Incentive Stock
Options granted to any Participant are exercisable for the first time by such
Participant during any calendar year (under all plans of the Company and any
Related Companies) shall not exceed $100,000.
6.4 NONTRANSFERABILITY OF OPTIONS AND SARS. No Option or SAR granted
under the Plan shall be assignable or transferable by the Participant, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, with respect to Non-Qualified Options and SARs, unless the
Participant's non-qualified stock option agreement granting such options (the
"Non-Qualified Stock Option Agreement") or the Participant's SAR agreement
granting such SARs (the "SAR Agreement") provides otherwise. Unless otherwise
provided by the Non-Qualified Stock Option Agreement or the SAR Agreement, as
applicable, during the life of the Participant, the Option or SAR shall be
exercisable only by the Participant. If any Participant should attempt to
dispose of or encumber the Participant's Options or SARs, other than in
accordance with the applicable terms of a Non-Qualified Stock Option Agreement
or SAR Agreement, the Participant's interest in such Options or SARs shall
terminate.
6.5 EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH ON OPTIONS AND SARS.
(a) Except as otherwise provided in the instrument evidencing the Plan
Benefit, if a Participant ceases to be employed by the Company or a Related
Company for any reason, including retirement but other than death, any Option or
SAR granted to such Participant under the Plan shall immediately terminate;
provided, however, that, except as otherwise provided in the instrument
evidencing the Plan Benefit, any portion of such Option or SAR which was
otherwise exercisable on the date of termination of the Participant's employment
may be exercised within the three-month period following the date on which the
Participant ceased to be so employed, but in no event after the expiration of
the exercise period. Except as otherwise provided in the instrument evidencing
the Plan Benefit, any such exercise may be made only to the extent of the number
of shares subject to the Option or SAR which were purchasable or exercisable on
the date of such termination of employment. If the Participant dies during such
three-month period, the Option or SAR shall be exercisable by the Participant's
personal representatives, heirs or legatees to the same extent and during the
same period that the Participant could have exercised the Option or SAR on the
date of his or her death, except as otherwise provided in the instrument
evidencing the Plan Benefit.
(b) Except as otherwise provided in the instrument evidencing the Plan
Benefit, if a Participant dies while an employee of the Company or any Related
Company, any Option or SAR granted to such Participant under the Plan shall be
exercisable by the Participant's personal representatives, heirs or legatees,
for the purchase of or exercise relative to that number of shares and to the
same extent that the Participant could have exercised the Option or SAR on the
date of his or her death. Except as otherwise provided in the instrument
evidencing the Plan Benefit, the Option or SAR or any unexercised portion
thereof shall terminate unless so exercised prior to the earlier of the
expiration of six months from the date of such death or the expiration of the
exercise period.
(c) For the purpose of the foregoing provisions of this Section 6.5, a
Participant shall be deemed to have ceased employment upon (i) the date the
Participant ceases to be employed by, or to provide consulting services for, the
Company or a Related Company, or any corporation (or any of its subsidiaries)
which assumes the Participant's Options or SARs in a transaction to which
Section 424(a) of the Code applies; (ii) the date the Participant ceases to be a
member of the Board of Directors of the Company; or (iii) in the case of a
Participant who is, at the time of reference, both an employee or consultant and
a Board member, the later of the dates determined pursuant to subparagraphs (i)
and (ii) above. For purposes of clause (i) above, a Participant who continues
his employment or consulting relationship with a Related Company subsequent to
its sale by the Company shall have a termination of employment upon the date of
such sale. The Board of Directors may in its discretion determine, in accordance
with applicable laws, whether any leave of absence or absence in military or
government service constitutes a cessation of employment for purposes of the
Plan and the impact, if any, of any such leave of absence on Options and SARs
theretofore granted under the Plan. Such determinations of the Board of
Directors shall be final and conclusive. A person whose status changes from
consultant, employee, or member of the Board to any other of such positions
without interruption shall
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not be considered to have ceased employment by reason of such change.
Notwithstanding the foregoing, an Option shall be treated as a Non-Qualified
Option to the extent that it remains exercisable for more than three months
after the Participant ceases to be an employee of the Company or any Related
Company for any reason other than death (unless death occurs within the three
months following such termination of employment) or disability, or for more than
one year following a Participant's ceasing to be an employee as the result of
becoming disabled, even if the Participant continues to be affiliated with the
Company as a director or consultant.
6.6 DESIGNATION OF INCENTIVE STOCK OPTIONS; LIMITATIONS. Options granted
under the Plan which are intended to be Incentive Stock Options qualifying under
Section 422 of the Code shall be designated as Incentive Stock Options and shall
be subject to the following additional terms and conditions:
(a) Dollar Limitation. The aggregate fair market value (determined
at the time the option is granted) of the Common Stock for which Incentive
Stock Options are exercisable for the first time during any calendar year
by any person under the Plan (and all other incentive stock option plans of
the Company and any Related Companies) shall not exceed $100,000. In the
event that Section 422(d)(1) of the Code is amended to alter the limitation
set forth therein so that following such amendment such limitation shall
differ from the limitation set forth in this Section 6.6(a), the limitation
of this Section 6.6(a) shall be automatically adjusted accordingly. An
Option shall be deemed to be a Non-Qualified Option to the extent that this
limitation is exceeded.
(b) 10% Stockholder. If any Participant to whom an Incentive Stock
Option is to be granted pursuant to the provisions of the Plan is on the
date of grant the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Related
Companies, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:
(i) The option exercise price per share of the Common Stock
subject to such Incentive Stock Option shall not be less than 110% of
the fair market value of one share of Common Stock on the date of grant,
determined in accordance with Section 6.1(c) hereof; and
(ii) The option exercise period shall not exceed five years from
the date of grant. In determining whether the 10% threshold has been
reached, the stock attribution rules of Section 424(d) of the Code shall
apply.
(c) Except as modified by the preceding provisions of this Section
6.6, all of the provisions of the Plan shall be applicable to Incentive
Stock Options granted hereunder.
6.7 CONVERSION OF INCENTIVE STOCK OPTIONS INTO NON-QUALIFIED OPTIONS;
TERMINATION OF INCENTIVE STOCK OPTIONS. The Board of Directors, at the written
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such Incentive Stock Options, regardless of whether the
Participant is an employee of the Company or a Related Company at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period of the appropriate installments of such Options. At the time of
such conversion, the Board of Directors (with the consent of the Participant)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Board of Directors in its discretion may determine, provided that
such conditions shall not be inconsistent with the Plan. Nothing in the Plan
shall be deemed to give any Participant the right to have such Participant's
Incentive Stock Options converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Board of Directors takes appropriate
action. The Board of Directors, with the consent of the Participant, may also
terminate any portion of any Incentive Stock Option that has not been exercised
at the time of such termination.
6.8 SPECIAL RULES FOR STOCK APPRECIATION RIGHTS. An SAR is the right to
receive, without payment, an amount equal to the excess, if any, of the fair
market value of a share of Common Stock on the date of exercise over the grant
price, multiplied by the number of shares with respect to which the SAR is
exercised.
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The grant of SARs under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the express terms of the Plan, as the Board of Directors shall
deem desirable:
(a) Grant. SARs may be granted in tandem with, in addition to or
completely independent of any other Plan Benefit.
(b) Grant Price. The grant price of an SAR may be the fair market
value of a share of Common Stock on the date of grant or such other price
as the Board of Directors may determine.
(c) Exercise. An SAR may be exercised by a Participant in accordance
with procedures established by the Board of Directors or as otherwise
provided in any agreement evidencing any SARs. The Board of Directors may
provide that an SAR shall be automatically exercised on one or more
specified dates.
(d) Form of Payment. Payment upon exercise of an SAR may be made in
cash, in shares of Common Stock or any combination thereof, as the Board of
Directors shall determine.
(e) Fair Market Value. Fair market value shall be determined in
accordance with Section 6.1(c) hereof with reference to the date of grant
or the date of exercise of an SAR, as applicable.
6.9 RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Option or SAR until the
date of issue of a stock certificate to the Participant for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
6.10 SPECIAL PROVISIONS APPLICABLE TO OPTIONS AND SARS GRANTED TO COVERED
EMPLOYEES. In order for the full value of Options and SARs granted to Covered
Employees to be deductible by the Company for federal income tax purposes, the
Company may intend for such Options and SARs to be treated as "qualified
performance-based compensation" as described in Treas. Reg. sec.1.162-27(e) (or
any successor regulation). In such case, Options and SARs granted to Covered
Employees shall be subject to the following additional requirements:
(a) such Options and SARs shall be granted only by the Committee; and
(b) the exercise price of such Options and the grant price of such
SARs granted shall in no event be less than the fair market value of the
Common Stock as of the date of grant of such Options or SARs, determined in
accordance with Section 6.1(c) hereof.
SECTION 7 RESTRICTED STOCK
7.1 GRANTS OF RESTRICTED STOCK. The Board of Directors may grant a
Participant an award of Restricted Stock subject to such terms and conditions as
the Board of Directors deems appropriate, including, without limitation,
restrictions on the pledging, sale, assignment, transfer or other disposition of
such shares and the requirement that the Participant forfeit all or a portion of
such shares back to the Company upon termination of employment.
7.2 CONDITIONS. Unless the Board of Directors determines otherwise at the
time of the grant, awards of Restricted Stock shall be subject to the following
conditions:
(a) A Participant shall have no rights to an award of Restricted
Stock unless the Participant executes an agreement (a "Restricted Stock
Agreement") with the Company in a form and including such terms and
conditions as the Board of Directors deems appropriate.
(b) Any stock certificates evidencing shares of Restricted Stock
shall remain in the possession of the Company or such other custodian as
the Company in its sole discretion may determine until such shares are free
of the restrictions set forth herein. Dividends and other property paid in
respect of a share of Restricted Stock may be held by the Company or other
custodian until such share of Restricted Stock is free of restrictions.
B-6
(c) Certificates for shares issued pursuant to an Award shall bear a
legend to the effect that they are issued subject to specified
restrictions.
(d) Certificates representing the shares issued pursuant to an Award
shall be registered in the name of the Participant and shall be owned by
such Participant. Such Participant shall be the holder of record of such
shares for all purposes, including voting and receipt of dividends paid
with respect to such shares, except that such dividends my be held in
escrow until the underlying share is free of restrictions, as described in
paragraph (b) above.
(e) If required by the Board of Directors, a Participant receiving an
award of Restricted Stock shall not make, in connection with such award,
the election permitted under Section 83(b) of the Code.
7.3 NONTRANSFERABILITY. Shares of Restricted Stock may not be sold,
assigned, transferred, alienated, commuted, anticipated, or otherwise disposed
of (except, subject to the provisions of such Participant's Restricted Stock
Agreement, by will or the laws of descent and distribution), or pledged or
hypothecated as collateral for a loan or as security for the performance of any
obligation, or be otherwise encumbered, and are not subject to attachment,
garnishment, execution or other legal or equitable process, prior to the lapse
of restrictions on such shares, and any attempt at action in contravention of
this Section shall be null and void. If any Participant should attempt to
dispose of or encumber the Participant's shares of Restricted Stock prior to the
lapse of the restrictions imposed on such shares, the Participant's interest in
such shares shall terminate.
7.4 EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. Except as otherwise
provided in the instrument evidencing the award of Restricted Stock, if, prior
to the lapse of restrictions applicable to the Restricted Stock, the Participant
ceases to be an employee of the Company or the Related Companies for any reason,
any shares of Restricted Stock as to which the restrictions have not lapsed
shall be forfeited to the Company, effective on the date of the Participant's
termination of employment.
SECTION 8 REQUIREMENTS OF LAW
8.1 VIOLATIONS OF LAW. No shares shall be issued and delivered upon
exercise of any Option or the payment of any SAR unless and until, in the
opinion of counsel for the Company, any applicable registration requirements of
the Securities Act of 1933, as amended, any applicable listing requirements of
any national securities exchange or the Nasdaq Stock Market, as applicable, on
which stock of the same class is then listed, and any other requirements of law
or of any regulatory bodies having jurisdiction over such issuance and delivery,
shall have been fully complied with. Each Participant may, by accepting Plan
Benefits, be required to represent and agree in writing, for himself or herself
and for his or her transferees by will or the laws of descent and distribution,
that the stock acquired by him, her or them is being acquired for investment.
The requirement for any such representation may be waived at any time by the
Board of Directors. An Option or SAR may not be exercised if, in the
determination of the Board of Directors, such exercise would violate the
Sarbanes-Oxley Act of 2002 or other applicable law.
8.2 COMPLIANCE WITH RULE 16B-3. The intent of this Plan is to qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. To the extent any
provision of the Plan does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board of Directors and shall not affect the validity of the Plan. In the
event Rule 16b-3 is revised or replaced, the Board of Directors may exercise
discretion to modify this Plan in any respect necessary to satisfy the
requirements of the revised exemption or its replacement.
SECTION 9 RECAPITALIZATION
In the event that dividends are payable in Common Stock of the Company or
in the event there are splits, sub-divisions or combinations of shares of Common
Stock of the Company, the number of shares available under the Plan and the
maximum number of shares with respect to which Plan Benefits may be granted to
an employee in a calendar year shall be increased or decreased proportionately,
as the case may be, and the number of shares deliverable upon the exercise
thereafter of any Option previously granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate purchase
price, and the
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number of shares to which granted SARs relate shall be increased or decreased
proportionately, as the case may be, and the grant price of such SARs shall be
decreased or increased proportionately, as the case may be.
SECTION 10 REORGANIZATION
If the Company is merged or consolidated with another entity and the
Company is not the surviving corporation in such transaction, or the property or
stock of the Company is acquired by any other entity or in the case of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any entity assuming the obligations of the
Company hereunder, shall, as to outstanding Plan Benefits, (i) make appropriate
provision for the protection of any such outstanding Plan Benefits by the
substitution on an equitable basis of appropriate stock of the Company or of the
merged, consolidated, acquiring or otherwise reorganized entity which will be
issuable in respect of the shares of Common Stock of the Company; provided only
that the excess of the aggregate fair market value of the shares subject to the
Plan Benefits immediately after such substitution over the purchase or grant
price thereof is not more than the excess of the aggregate fair market value of
the shares subject to such Plan Benefits immediately before such substitution
over the purchase or grant price thereof, (ii) upon written notice to the
Participants, provide that all unexercised Plan Benefits must be exercised
within a specified number of days of the date of such notice or such Plan
Benefits will be terminated, and/or (iii) upon written notice to the
Participants, provide that the Company or the merged, consolidated, acquiring or
otherwise reorganized entity shall have the right, upon the effective date of
any such merger, consolidation, acquisition, reorganization or liquidation, to
purchase all Plan Benefits held by each Participant and unexercised as of that
date at an amount equal to the aggregate fair market value on such date of the
shares subject to the Plan Benefits held by such Participant over the aggregate
purchase or grant price therefor, such amount to be paid in cash or, if stock of
the merged, consolidated, acquiring or otherwise reorganized entity is issuable
in respect of the shares of the Common Stock of the Company, then, in the
discretion of the Board of Directors, in stock of such merged, consolidated,
acquiring or otherwise reorganized entity equal in fair market value to the
aforesaid amount. In any such case the Board of Directors shall, in good faith,
determine fair market value and may, in its discretion, advance the lapse of any
waiting or installment periods and exercise dates.
SECTION 11 NO SPECIAL EMPLOYMENT OR OTHER RIGHTS
Nothing contained in the Plan or in any Plan Benefit documentation shall
confer upon any Participant receiving a grant of any Plan Benefit any right with
respect to the continuation of his or her employment by or other relationship
with the Company (or any Related Company) or interfere in any way with the right
of the Company (or any Related Company), subject to the terms of any separate
employment or other written agreement to the contrary, at any time to terminate
such employment or other relationship or to increase or decrease the
compensation of the Participant from the rate in existence at the time of the
grant of any Plan Benefit.
SECTION 12 AMENDMENT OF THE PLAN
The Board of Directors may at any time and from time to time suspend or
terminate all or any portion of the Plan or modify or amend the Plan in any
respect, provided, however, that the Board of Directors, without stockholder
approval, may not increase the aggregate number of shares of the Company's
Common Stock subject to the Plan (except pursuant to Section 9 hereof). The
suspension or termination or any modification or amendment of the Plan shall
not, without the consent of a Participant, affect the Participant's rights under
any Plan Benefit previously granted. With the consent of the affected
Participant, the Board of Directors may amend outstanding agreements relating to
any Plan Benefit in a manner not inconsistent with the Plan. The Board of
Directors, however, may not, without stockholder approval, amend the exercise
price of any Option previously awarded pursuant to the Plan by either reducing
the exercise price of such Option or canceling such Option and granting a new
replacement Option with a lower exercise price. The Board of Directors hereby
reserves the right to amend or modify the terms and provisions of the Plan and
of any outstanding Options to the extent necessary to qualify any or all Options
under the Plan for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under
B-8
Section 422 of the Code; provided, however, that the consent of a Participant is
required if such amendment or modification would cause unfavorable income tax
treatment for such Participant.
SECTION 13 WITHHOLDING
The Company's obligation to deliver shares of stock upon the exercise of
any Option or SAR and to make payment upon exercise of any SAR shall be subject
to the satisfaction by the Participant of all applicable federal, state and
local income and employment tax withholding requirements.
SECTION 14 EFFECTIVE DATE AND DURATION OF THE PLAN
14.1 EFFECTIVE DATE. The Plan shall become effective as of May 21, 2003
(the date of approval of the Plan by the stockholders of the Company).
14.2 DURATION. Unless sooner terminated in accordance with Section 12
hereof, the Plan shall terminate upon the earlier of (i) the tenth anniversary
of the effective date or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the issuance lapsing
of restrictions or Restricted Stock and the exercise of Options and SARs granted
hereunder. If the date of termination is determined under (i) above, then Plan
Benefits outstanding on such date shall continue to have force and effect in
accordance with the provisions of the instruments evidencing such Plan Benefits.
SECTION 15 GOVERNING LAW
The Plan and all actions taken thereunder shall be governed by the laws of
the State of Delaware.
B-9
APPENDIX C
AMENDMENT TO 1998 EMPLOYEE STOCK PURCHASE PLAN
The ATMI, Inc. 1998 Employee Stock Purchase Plan is hereby amended in the
following respects, subject to approval by the stockholders of the Company:
1. The words "500,000 shares" in Section 12(a) shall be replaced by the
words "1,000,000 shares".
2. Section 22 shall be amended in its entirety to read as follows:
22. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan, as originally adopted, was effective as of April 14,
1998 and was approved by the Company's stockholders on May 20, 1998. The
Plan was amended, effective February 28, 2003 (the date of adoption of
the amendment by the Board), provided that no options granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder with respect to the additional shares added by the amendment,
until (i) the amendment to the Plan shall have been approved by the
stockholders of the Company on or before February 28, 2004 and (ii) the
Company shall have complied with all applicable requirements of the
Securities Act (including the registration of the shares of Common Stock
issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing
requirements of any stock exchange on which the Common Stock is listed
for trading and all other applicable requirements established by law or
regulation. In the event such stockholder approval is not obtained, or
such compliance is not effected, with twelve (12) months after the date
on which the amendment to the Plan is adopted by the Board, the
amendment to the Plan shall have no further force or effect, and all
sums collected from Participants hereunder with respect to the shares
added by the amendment to the Plan shall be refunded.
(b) Unless sooner terminated by the Board, the Plan shall
terminate upon the earlier of (i) April 14, 2008 with respect to the
initial 500,000 shares authorized under the Plan and on February 28,
2013 with respect to the additional 500,000 shares authorized by the
amendment to the Plan or (ii) the date on which all shares available for
issuance under the Plan have been sold pursuant to options exercised
under the Plan. No further options shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following
its termination.
APPENDIX D
FORM OF PROXY CARD
PROXY FOR THE 2003 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 21, 2003
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all proxies, hereby appoint(s) Eugene G. Banucci
and Daniel P. Sharkey, and each of them, with full power of substitution, as
proxies to represent and vote as designated herein, all shares of
stock of ATMI, Inc. (the "Company") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of the Company
to be held at Company Headquarters, 6 Commerce Drive, Danbury Connecticut 06810
on May 21, 2003, at 10:00 a.m. local time, and at any adjournment thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4, and 5. The undersigned may revoke this
proxy at any time before it is voted by executing and delivering to the Company
a proxy bearing a later date, by delivering a written notice to the Secretary of
the Company stating that the proxy is revoked, or by voting in person at the
meeting.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
PROPOSALS 2-5
CERTAIN CAPITALIZED TERMS USED IN THIS PROXY ARE DEFINED IN THE ACCOMPANYING
PROXY STATEMENT
2. To approve an amendment to the Company's Certificate of Incorporation,
as amended, to increase the number of authorized shares of the
Company's Common Stock from 50,000,000 shares to 100,000,000 shares.
3. To approve the Company's 2003 Stock Plan, under which an aggregate of
3,000,000 shares will be reserved for issuance.
4. To approve the amendment of the Company's 1998 Employee Stock Purchase
Plan, to increase the number of shares reserved for issuance by 500,000
shares, to an aggregate of 1,000,000 shares.
5. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ending
December 31, 2003.
DETACH HERE
X Please mark votes as in this example
The Board of Directors unanimously recommends a vote FOR Proposals 2, 3, 4, and
5.
<Table>
<Caption>
1. TO ELECT DIRECTORS NOMINEES FOR WITHHELD
- --------------------- -------- --- --------
Stephen H. Mahle
C. Douglas Marsh
For all nominees,
except as noted:
</Table>
<Table>
<Caption>
FOR AGAINST ABSTAIN
--- ------- -------
Proposal 2
Proposal 3
Proposal 4
Proposal 5
</Table>
SEE ABOVE FOR EXPLANATION OF PROPOSALS 2-5
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
Sign as name appears on stock certificate. Joint owners must both sign.
Attorney, executor, administrator, trustee, or guardian must give title. A
corporation or partnership must sign in its name by an authorized person.
Signature:
- --------------------------------------------------------- Date
- --------------------------------------
Signature:
- --------------------------------------------------------- Date
- --------------------------------------
D-2