SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
VICOR CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX): [X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
VICOR CORPORATE LOGO
April 26, 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders (the "Annual Meeting") of Vicor Corporation (the "Corporation").
The Annual Meeting will be held:
DATE: June 27, 2002
TIME: 5:00 P.M. local time
PLACE: Andover Country Club
60 Canterbury Street
Andover, Massachusetts
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the Annual Meeting. The accompanying Proxy Statement contains a
discussion of the matters to be voted upon at the Annual Meeting. At the Annual
Meeting, your management will report on the operations of the Corporation and
the directors and officers of the Corporation will be available to respond to
appropriate questions from stockholders.
The Board of Directors encourages you to promptly complete, date, sign,
and return your Proxy Card. Return of the Proxy Card indicates your interest in
the Corporation's affairs. If you attend the Annual Meeting and wish to vote
your shares in person, you may revoke your proxy at that time.
Sincerely yours,
LOGO
PATRIZIO VINCIARELLI
PRESIDENT AND CHAIRMAN OF THE BOARD
VICOR CORPORATION
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 27, 2002
---------------
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders (the
"Annual Meeting") of Vicor Corporation (the "Corporation") will be held on
Thursday, June 27, 2002 at 5:00 p.m., local time, at the Andover Country Club,
60 Canterbury Street, Andover, Massachusetts, for the following purposes:
1. To fix the number of Directors at seven and to elect seven Directors to
hold office until the 2003 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified;
2. To approve the Corporation's Amended and Restated 2000 Stock Option and
Incentive Plan; and
3. To consider and act upon any other matters which may be properly brought
before the Annual Meeting and at any adjournments or postponements
thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on April 30, 2002
as the record date for determining the stockholders entitled to receive notice
of and to vote at the Annual Meeting and any adjournments or postponements
thereof. Only stockholders of record at the close of business on that date will
be entitled to receive notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
You are requested to fill in and sign the enclosed Proxy Card, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by a writing
delivered to the Corporation stating that the proxy is revoked or by delivery of
a later dated proxy. Stockholders of record who attend the Annual Meeting may
vote in person by notifying the Secretary, even if they have previously
delivered a signed proxy.
By Order of the Board of Directors
MARK A. GLAZER
SECRETARY
Andover, Massachusetts
April 26, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE YOUR
SHARES IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD.
VICOR CORPORATION
25 FRONTAGE ROAD
ANDOVER, MASSACHUSETTS 01810
TELEPHONE (978) 470-2900
-------------------------
PROXY STATEMENT
-------------------------
FOR THE 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 27, 2002
April 26, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Vicor Corporation (the "Corporation") from
holders of the outstanding shares of capital stock of the Corporation for use at
the 2002 Annual Meeting of Stockholders (the "Annual Meeting") of the
Corporation to be held on Thursday, June 27, 2002 at 5:00 p.m., local time, at
the Andover Country Club, 60 Canterbury Street, Andover, Massachusetts, and at
any adjournments or postponements thereof. At the Annual Meeting, stockholders
will be asked to consider and vote on the proposals set forth in this Proxy
Statement.
This Proxy Statement and the accompanying Notice of Annual Meeting and
Proxy Card are first being sent to stockholders on or about May 17, 2002. The
Board of Directors has fixed the close of business on April 30, 2002 as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Annual Meeting (the "Record Date"). Only stockholders of
record at the close of business on the Record Date will be entitled to receive
notice of and to vote at the Annual Meeting. As of March 31, 2002, there were
outstanding and entitled to vote 30,476,430 shares of Common Stock and
11,930,848 shares of Class B Common Stock of the Corporation. Each share of
Common Stock entitles the holder thereof to one vote per share and each share of
Class B Common Stock entitles the holder thereof to ten votes per share. Shares
of Common Stock and Class B Common Stock will vote together as a single class on
the proposals set forth in this Proxy Statement.
Stockholders of the Corporation are requested to complete, date, sign and
return the accompanying Proxy Card in the enclosed postage-prepaid envelope.
Shares represented by a properly executed proxy received prior to the vote at
the Annual Meeting and not revoked will be voted at the Annual Meeting as
directed on the proxy. If a properly executed proxy is submitted and no
instructions are given, the proxy will be voted FOR the fixing of the Board of
Directors at seven and the election of the seven nominees for Directors of the
Corporation named in this Proxy Statement and FOR the Corporation's Amended and
Restated 2000 Stock Option and Incentive Plan. It is not anticipated that any
matters other than those set forth in this Proxy Statement will be presented at
the Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the discretion of the proxy holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by (1) filing a written revocation with the Secretary of the
Corporation at the address of the Corporation set forth above; (2) filing a duly
executed proxy bearing a later date; or (3) appearing in person, notifying the
Secretary and voting by ballot at the Annual Meeting. Any stockholder of record
as of the Record Date attending the Annual Meeting may vote in person whether or
not a proxy has been previously given, but the presence (without further action)
of a stockholder at the Annual Meeting will not constitute revocation of a
previously given proxy. The presence, in person or by proxy, of holders of a
majority in interest of all stock issued, outstanding and entitled to vote at
the Annual Meeting shall constitute a quorum for the transaction of business at
the Annual Meeting. Shares that reflect abstentions or "broker non-votes" (i.e.,
shares held by brokers or other nominees that are represented at the Annual
Meeting but as to which such brokers or nominees have not received instructions
from the beneficial owners or persons entitled to vote such shares and, with
respect to one or more but not all proposals, such brokers or nominees do not
have discretionary voting power to vote such shares) will be counted for
purposes of determining whether a quorum is present for the transaction of
business at the Annual Meeting.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Corporation. In addition to the solicitation of proxies by mail,
the Directors, officers and employees of the Corporation may also solicit
proxies personally or by telephone without special compensation for such
activities. The Corporation will also request persons, firms and corporations
holding shares in their names or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners. The Corporation will reimburse such holders for their
reasonable expenses in connection therewith.
The Corporation's 2001 Annual Report (the "Annual Report"), including
financial statements for the fiscal year ended December 31, 2001, is being
mailed to stockholders concurrently with this Proxy Statement. The Annual
Report, however, is not part of the proxy solicitation materials.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Corporation has nominated the seven
individuals named below for election as Directors. Each of the nominees is
presently serving as a Director of the Corporation. If elected, the nominees
will serve until the 2003 Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified. Properly executed proxies
will be voted for the nominees named below unless otherwise specified in the
proxy. The Board of Directors anticipates that each of the nominees, if elected,
will serve as a Director. However, if any person nominated by the Board of
Directors fails to stand for election or is unable to accept election, proxies
solicited hereby will be voted either for the election of another person
designated by the Board of Directors or to fix the number of Directors at a
lesser number and elect the nominees able and willing to serve. A plurality of
the votes cast by the holders of Common Stock and Class B Common Stock, voting
together as a single class, for a nominee for Director shall elect such nominee.
Accordingly, abstentions, broker non-votes and votes withheld from any Director
will have no effect on this proposal. Holders of voting rights sufficient to
elect each of the nominees named below have indicated an intention to vote in
favor of such nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL OF THE
NOMINEES.
INFORMATION REGARDING NOMINEES
The following sets forth certain information as of March 31, 2002 with
respect to the seven nominees for election to the Board of Directors.
Information regarding the beneficial ownership of shares of the capital stock of
the Corporation by such persons is set forth in the section of this Proxy
Statement entitled "Principal and Management Stockholders." There is no family
relationship among any of the Directors or executive officers of the
Corporation.
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
- -------------------- --- -------------- ----------------------------------------
Patrizio Vinciarelli... 55 1981 Chairman of the Board, President and Chief Executive Officer
of the Corporation.
Estia J. Eichten....... 55 1981 Senior Scientist with the Fermi National Accelerator Laboratory in
Batavia, Illinois; President of VLT Corporation, a wholly-owned
subsidiary of the Corporation, from 1987 to July 2000. Mr. Eichten
is currently a Director of VLT, Inc., a wholly-owned subsidiary of
the Corporation.
Jay M. Prager......... 55 1993 Senior Vice President, Technology of the Corporation.
Barry Kelleher....... 53 1999 Senior Vice President, Global Operations of the Corporation.
2
INFORMATION REGARDING NOMINEES (CONTINUED)
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
- -------------------- --- -------------- ----------------------------------------
David T. Riddiford... 66 1984 General Partner of the general partner of PR Venture Partners,
Limited Partnership, a venture capital affiliate of Pell, Rudman &
Co., Inc., an investment advisory firm, since 1987; General Partner
of the general partner of Venture Founders Capital, a venture
capital partnership, since 1984. Mr. Riddiford is currently a
Director of Datawatch Corporation, a provider of enterprise
reporting and business intelligence solutions and support center
software.
M. Michael Ansour... 48 1993 Managing Member of March Partners LLC, an investment limited
liability company in New York City, since 1992.
Samuel Anderson..... 45 2001 Founder, Chairman, Chief Executive Officer and President of
GreatWall Semiconductor since its inception in 2002. Vice
President of Corporate Business Development of ON Semiconductor
Corporation from 1999 to 2001. Director of Operations of Motorola,
Inc.'s Components Mixed Signal Operations and various positions in
Motorola's Semiconductor Products Sector from 1984 to 1999.
The Corporation's Board of Directors held four meetings during the fiscal
year ended December 31, 2001. Each of the Directors attended more than 75% of
the total number of meetings of the Board of Directors and meetings of the
committees of the Board of Directors on which he served during 2001. The Board
of Directors has established an Audit Committee and an Executive Compensation
Committee. The Board of Directors does not have a standing nominating committee.
The full Board of Directors performs the function of such a committee.
AUDIT COMMITTEE - The Board of Directors has established and will continue
to have an Audit Committee that complies with the listing standards of the
National Association of Securities Dealers ("NASD"). The Audit Committee is
composed of Messrs. Anderson, Ansour and Riddiford. Information regarding the
functions performed by the Audit Committee and the number of meetings held
during the fiscal year is set forth in the section of this Proxy Statement
entitled "Report of the Audit Committee." The Audit Committee is governed by a
written charter approved by the Board of Directors, a copy of which was filed
with the Securities and Exchange Commission (the "SEC") on April 27, 2001 as
Appendix A to the Corporation's Proxy Statement for the 2001 Annual Meeting of
Stockholders. The Board of Directors has determined that the members of the
Audit Committee are "independent" under the rules of the NASD listing standards.
EXECUTIVE COMPENSATION COMMITTEE - The Executive Compensation Committee is
composed of Messrs. Eichten, Riddiford and Ansour. The Executive Compensation
Committee is responsible for establishing salaries, bonuses and other
compensation for the officers of the Corporation and administering the
Corporation's stock option and bonus plans pursuant to authority delegated to it
by the Board of Directors. The Executive Compensation Committee met once in
2001.
DIRECTORS' COMPENSATION
Directors of the Corporation do not currently receive cash compensation
for their service on the Board of Directors. In 2001, each employee Director,
other than any Director who held in excess of 10% of the total number of shares
of the capital stock of the Corporation (i.e., Mr. Vinciarelli), and each
non-employee Director received a discretionary grant of non-qualified stock
options upon election as a Director under the Corporation's 1998 Stock Option
and Incentive Plan (the "1998 Plan"). Each non-employee Director and each
employee Director, other than Mr. Vinciarelli, received non-qualified stock
options to purchase up to 6,234 and 3,117 shares, respectively, of Common Stock.
Forty percent (40%) of these options became exercisable seven months after the
date of grant, with the remainder becoming exercisable in three equal annual
installments of 20% thereafter. All such options are exercisable at a price per
share equal to $16.04, the last reported sale price per share of Common Stock on
the date of grant.
3
EXECUTIVE OFFICERS
Executive officers hold office until the first meeting of the Board of
Directors following the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier death, resignation
or removal. The following persons are the executive officers of the Corporation.
Patrizio Vinciarelli, 55, Chairman of the Board, President and Chief
Executive Officer. Dr. Vinciarelli founded the Corporation in 1981 and has
served as Chairman, President and Chief Executive Officer since that time.
Jay M. Prager, 55, Senior Vice President, Technology since 1991. Mr.
Prager held the position of Vice President, Systems Engineering from 1987 to
1991. Prior to joining the Corporation in 1987, Mr. Prager was Director, New
Product Development, at the Modicon Division of Gould, Inc., a manufacturer of
industrial control equipment, where he spent a total of nine years in various
engineering and engineering management roles.
Barry Kelleher, 53, Senior Vice President, Global Operations since March
1999. Mr. Kelleher held the position of Senior Vice President, International
Operations from 1993 to 1999. Prior to joining the Corporation in 1993, Mr.
Kelleher was employed at Computer Products Inc., a manufacturer of power
conversion products, since 1981, where he held the position of Corporate Vice
President and President of the Power Conversion Group.
David W. Nesbitt, 56, Senior Vice President, North and South American
Sales since 1995. Mr. Nesbitt held the position of Vice President, Sales from
1989 to 1992 and Vice President, North American Sales from 1992 to 1995. Prior
to joining the Corporation in 1989, Mr. Nesbitt was employed at Siliconix, Inc.,
a manufacturer of integrated circuits, from 1981 to 1989, where he held the
position of Central Area Manager from 1981 to 1986, at which time he was
promoted to Director, North American Sales.
Mark A. Glazer, 49, Chief Financial Officer, Treasurer, and Secretary
since 1997. From April 1998 to March 1999, Mr. Glazer was Acting Vice President,
Operations. Mr. Glazer held the position of Vice President, Finance from 1993 to
1997 and Controller of the Corporation from 1988 to 1993. From 1983 to 1988, Mr.
Glazer was employed by Analog and Digital Systems, Inc., a manufacturer of home
and automotive stereo equipment, where he was Controller from 1983 to 1986 and
Treasurer from 1986 to 1987, after which time he was promoted to Vice President,
Finance.
Thomas A. St. Germain, 64, Vice President, Financial Services since 1998.
From 1993 to 1998, Mr. St. Germain was employed at Summa Four, Inc., a
manufacturer of specialized digital switches, where he held the position of
Senior Vice President, Chief Financial Officer and Treasurer.
H. Allen Henderson, 54, Vice President, Vicor Corporation since 1999;
President, Westcor Division since March 1999; and President and Chief Executive
Officer, VLT, Inc. since July 2000. Mr. Henderson held the position of General
Manager of the Westcor Division from 1987 to 1999 and Sales Manager from 1985 to
1987. Prior to joining the Corporation in 1985, Mr. Henderson was employed at
Boschert, Inc., a manufacturer of power supplies, since 1984, where he held the
position of Director of Marketing.
Douglas W. Richardson, 54, Vice President, Chief Information Officer since
November 2000. From 1996 to 2000, Mr. Richardson held the position of Director,
Application Development and Manager, Computer Integrated Manufacturing of the
Corporation from 1994 to 1996. Prior to joining the Corporation in 1994, Mr.
Richardson was a Program Manager and Director of Quality Management from 1982 to
1994 for ITP Systems, a subsidiary of PricewaterhouseCoopers, specializing in
manufacturing automation systems.
Richard E. Zengilowski, 47, Vice President, Human Resources since August
2001. Prior to joining the Corporation in 2001, Mr. Zengilowski was employed by
Simplex Time Recorder Co., a manufacturer and distributor of life safety
equipment and automated time and attendance products, from 1992 to 2001, where
he held the position of Assistant General Counsel from 1992 to 1998 and Director
of Legal Affairs, Human Resources from 1998 to 2001.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of the
Corporation's Common Stock and Class B Common Stock held by (1) each person or
entity that is known to the Corporation to be the beneficial owner of more than
five percent of the outstanding shares of either class of the Corporation's
common stock, (2) each Director of the Corporation, (3) each of the
4
executive officers of the Corporation named in the Summary Compensation Table,
and (4) all Directors and executive officers as a group, based on
representations of the Directors and executive officers of the Corporation as of
March 1, 2002, a review of filings on Schedules 13D, 13F and 13G under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and holdings
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") as of December 31, 2001. Except as otherwise specified, the
named beneficial owner has sole voting and investment power over the shares. The
information in the table reflects shares outstanding of each class of common
stock on March 1, 2002, and does not, except as otherwise indicated below, take
into account conversions after such date of shares of Class B Common Stock into
Common Stock. Subsequent conversions of Class B Common Stock into Common Stock
will increase the voting control of persons who retain shares of Class B Common
Stock. The percentages have been determined as of March 1, 2002 in accordance
with Rule 13d-3 under the Exchange Act, and are based on a total of 42,405,376
shares of common stock that were outstanding on such date, of which 30,474,528
were shares of Common Stock entitled to one vote per share and 11,930,848 were
shares of Class B Common Stock entitled to 10 votes per share. Each share of
Class B Common Stock is convertible into one share of Common Stock at any time
upon the election of the holder thereof.
PERCENT OF
TOTAL PERCENT OF CLASS B
NUMBER OF COMMON STOCK COMMON STOCK PERCENT
SHARES BENEFICIALLY BENEFICIALLY BENEFICIALLY OF VOTING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED (2) (3) OWNED OWNED POWER
---------------------------------------- ------------- ----- ----- -----
Patrizio Vinciarelli............................. 20,977,548 32.6% 92.4% 80.1%
Estia J. Eichten................................. 1,273,712 (4) 1.9% 5.8% 5.0%
David T. Riddiford............................... 108,200 (5) * * *
David W. Nesbitt................................. 66,687 * * *
M. Michael Ansour................................ 32,798 * * *
Jay M. Prager.................................... 29,291 * * *
Mark A. Glazer................................... 26,553 * * *
Barry Kelleher................................... 24,941 * * *
Samuel Anderson.................................. 5,494 * * *
All Directors and executive officers as a group
(13 persons)................................... 22,580,994 35.3% 98.3% 85.4%
John Hancock Advisers, LLC (6)
101 Huntington Avenue, Boston, MA 02199....... 3,303,091 10.8% * 2.2%
David R. Wilmerding, III (7)
c/o Nevis Capital Management, Inc.
1119 St. Paul Street, Baltimore, MD 21202..... 2,808,048 9.2% * 1.9%
- -------------------
* Less than 1%
(1) The address of Mr. Eichten is: c/o Fermi National Accelerator Laboratory,
Kirk Road and Pine Street, Batavia, IL 60510. The address of each other
person named in the table, but not specified therein, is: c/o Vicor
Corporation, 25 Frontage Road, Andover, MA 01810.
(2) Includes shares issuable upon the exercise of options to purchase Common
Stock that are exercisable or will become exercisable on or before May 1,
2002 in the following amounts: Mr. Vinciarelli, 23,346 shares of Common
Stock; Mr. Eichten, 15,798 shares of Common Stock; Mr. Riddiford, 15,798
shares of Common Stock; Mr. Nesbitt, 66,687 shares of Common Stock; Mr.
Ansour, 13,798 shares of Common Stock; Mr. Prager, 28,995 shares of Common
Stock; Mr. Glazer, 26,553 shares of Common Stock; Mr. Kelleher, 24,391
shares of Common Stock; Mr. Anderson, 5,494 shares of Common Stock; and
all Directors and executive officers as a group, 256,330 shares of Common
Stock.
(3) The calculation of the total number of Common Stock shares beneficially
owned includes the following: for Mr. Vinciarelli, 11,023,648 shares of
Class B Common Stock; for Mr. Eichten, 690,700 shares of Class B Common
Stock;
5
for Mr. Ansour, 18,000 shares of Class B Common Stock; and for all
Directors and executive officers as a group, 11,732,348 shares of Class B
Common Stock.
(4) Includes 8,750 shares of Common Stock beneficially owned by Mr. Eichten's
spouse as to which Mr. Eichten disclaims beneficial ownership. In
addition, Mr. Eichten is a trustee of the Belle S. Feinberg Memorial
Trust, which holds 70,700 shares of Common Stock as to which Mr. Eichten
disclaims beneficial ownership.
(5) Includes 4,500 shares of Common Stock beneficially owned by Mr.
Riddiford's spouse as to which Mr. Riddiford disclaims beneficial
ownership.
(6) Information reported is based upon a Schedule 13G/A filed on February 12,
2002. This schedule 13G/A indicates that the reporting person has direct
beneficial ownership of the 3,303,091 shares and that, through their
parent subsidiary relationship to the reporting person, John Hancock
Financial Services, Inc., John Hancock Life Insurance Company, John
Hancock Subsidiaries, LLC and The Berkeley Financial Group, LLC have
indirect, beneficial ownership of the same shares.
(7) Information reported is based upon a Schedule 13G/A filed on February 13,
2002. This Schedule 13G/A indicates that the reporting person (i) has sole
dispositive and sole voting power with respect to 153,500 of the shares,
and (ii) shares dispositive and voting power with respect to 2,654,548 of
the shares with Nevis Capital Management, Inc. and Jon C. Baker. David R.
Wilmerding, III and Jon C. Baker each control 50% of Nevis Capital
Mangement, Inc., a registered investment advisor under the Investment
Advisers Act of 1940.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 1999,
2000 and 2001 the compensation paid by the Corporation to the Chief Executive
Officer and the other four most highly compensated executive officers who earned
more than $100,000 during 2001.
ANNUAL COMPENSATION
-------------------------------------------
LONG TERM
COMPENSATION
AWARDS
-----------------
OTHER ANNUAL SHARES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS (#)
- --------------------------- ---- ------- ----- ---------------- -----------
Patrizio Vinciarelli......................... 2001 $ 238,193 $ -- $ 9,933 7,182
President and Chief 2000 228,846 -- 9,784 8,030
Executive Officer 1999 213,846 -- 9,435 12,370
Jay M. Prager............................... 2001 201,300 -- 10,056 10,506
Sr. Vice President, 2000 194,231 -- 9,490 7,362
Technology 1999 184,154 -- 9,686 18,335
David W. Nesbitt............................. 2001 182,738 40,257 8,597 6,594
Sr. Vice President, 2000 175,154 58,666 9,080 3,923
North and South American Sales 1999 164,231 15,868 9,452 6,857
Barry Kelleher............................... 2001 194,685 18,614 10,515 10,053
Sr. Vice President, 2000 186,077 44,114 9,093 4,955
Global Operations 1999 173,462 5,151 9,034 17,000
Mark A. Glazer............................... 2001 166,208 -- 10,943 6,206
Chief Financial Officer 2000 159,231 -- 12,620 4,926
1999 149,308 -- 9,879 8,956
- -------------------
6
(1) This column sets forth the cost of providing certain perquisites and
benefits to the named executive officers. The amounts shown relate
primarily to automobile allowances, which were as follows: for Mr.
Vinciarelli, $9,668 in 2001, $8,043 in 2000, and $9,247 in 1999; Mr.
Prager, $9,931 in 2001, $9,240 in 2000, and $9,498 in 1999; Mr. Nesbitt,
$7,310 in 2001, $8,043 in 2000, and $8,005 in 1999; Mr. Kelleher, $8,340
in 2001, $8,180 in 2000, and $7,875 in 1999; and Mr. Glazer, $8,745 in
2001, $8,326 in 2000, and $8,215 in 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options during the
fiscal year ended December 31, 2001 to the Chief Executive Officer and each
other executive officer named in the Summary Compensation Table. All stock
options granted in 2001 were options to purchase shares of the Corporation's
Common Stock. No stock appreciation rights ("SARs") have been granted by the
Corporation. The table also shows the value of the options at the end of the
option terms assuming the price of the Corporation's Common Stock appreciates
annually by 5% and 10%, respectively. The options will only have value if they
are exercised, and that value will depend entirely on the share price on the
exercise date. Potential realizable values are based on assumed compound annual
appreciation rates specified by the SEC and are not intended to forecast
possible future appreciation, if any, of the price of the Common Stock. There
can be no assurance that the price of the Common Stock will appreciate at the
rates shown in the table. A total of 1,232,953 options to purchase Common Stock
were granted to the Corporation's employees during fiscal year ended December
31, 2001.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF SHARES PERCENT OF ANNUAL RATES OF STOCK
UNDERLYING TOTAL OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
NAME GRANTED EMPLOYEES BASE PRICE EXPIRATION -----------------------
- ---- (#) IN FISCAL YEAR ($/SH) DATE 5% 10%
------------------ -------------------- ------------ ---------- ---- ----
Patrizio Vinciarelli... 905(1) 0.07% $35.75 2/29/2004 $ 5,245 $ 11,036
6,277(2) 0.51 13.63 10/12/2011 53,805 136,353
Jay M. Prager.......... 724(1) 0.06 35.75 2/29/2004 4,196 8,829
1,361(3) 0.11 17.63 4/16/2011 15,090 38,241
3,117(4) 0.25 16.04 7/28/2004 8,113 17,072
5,304(2) 0.43 13.63 10/12/2011 45,465 115,217
David W. Nesbitt....... 416(5) 0.03 35.75 1/31/2011 9,353 23,702
1,361(3) 0.11 17.63 4/16/2011 15,090 38,241
4,817(2) 0.39 13.63 10/12/2011 41,291 104,638
Barry Kelleher......... 337(5) 0.03 35.75 1/31/2011 7,577 19,201
1,475(3) 0.12 17.63 4/16/2011 16,354 41,444
3,117(4) 0.25 16.04 7/28/2004 8,113 17,072
5,124(2) 0.42 13.63 10/12/2011 43,922 111,307
Mark A. Glazer......... 576(1) 0.05 35.75 2/29/2004 3,338 7,024
1,248(3) 0.10 17.63 4/16/2011 13,837 35,066
4,382(2) 0.36 13.63 10/12/2011 37,562 95,189
- -----------
(1) These options were granted on January 31, 2001. Forty percent became
exercisable on August 31, 2001 and the remainder will become exercisable
in three equal annual installments of 20% beginning August 31, 2002.
7
(2) These options were granted on October 12, 2001 and become exercisable in
five equal annual installments on each anniversary of the date of grant.
(3) These options were granted on April 16, 2001 and become exercisable in
five equal annual installments on each anniversary of the date of grant.
(4) These options were granted on June 28, 2001. Forty percent became
exercisable on January 28, 2002 and the remainder will become exercisable
in three equal annual installments of 20% beginning January 28, 2003.
(5) These options were granted on January 31, 2001. Twenty percent became
exercisable on August 31, 2001 and the remainder will become exercisable in
four equal annual installments of 20% beginning August 31, 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the shares acquired and the value realized
upon exercise of options to purchase Common Stock during the fiscal year ended
December 31, 2001 by the Chief Executive Officer and each other executive
officer named in the Summary Compensation Table and certain information
concerning the number and value of unexercised options.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY
SHARES ACQUIRED VALUE OPTIONS AT FISCAL YEAR END (#) OPTIONS AT FISCAL YEAR END ($) (1)
------------------------------ ----------------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- --------------
Patrizio Vinciarelli... -- $ -- 22,094 17,194 $ 25,471 $ 32,748
Jay M. Prager.......... -- -- 26,101 24,418 15,250 29,698
David W. Nesbitt....... 10,000 189,754 68,434 12,950 549,194 23,732
Barry Kelleher......... -- -- 21,895 23,290 75,965 38,507
Mark A. Glazer......... 6,056 101,232 25,557 14,157 55,938 21,968
- ----------
(1) Equal to the aggregate market value of shares covered by in-the-money
options on December 31, 2001 (based on the last reported sale price of the
Corporation's Common Stock on NASDAQ on December 31, 2001 of $16.20 per
share), less the aggregate option exercise price. Options are in-the-money
if the market value of the shares covered thereby is greater than the
option exercise price.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Executive Compensation Committee of the Board of Directors of the
Corporation (the "Compensation Committee") consists of David T. Riddiford, Estia
J. Eichten, and M. Michael Ansour, none of whom are employees of the
Corporation. The Compensation Committee establishes the terms of and grants
awards under the Corporation's 1993 Stock Option Plan (the "1993 Plan"), the
1998 Plan, the 2000 Stock Option and Incentive Plan (the "Original 2000 Plan")
and other benefit plans. The Compensation Committee also approves compensation
policies for executive officers.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Corporation's compensation program for executive officers currently
consists primarily of a base salary and awards of stock options. In addition to
base salary, the Corporation provides certain benefits to executive officers,
such as automobile allowances and enhanced health insurance coverage, that are
not available to employees generally. Salary levels for executive officers are
proposed by management and approved by the Compensation Committee.
The primary element of the Corporation's incentive compensation program
has been the granting of options to purchase shares of the Corporation's Common
Stock under the Corporation's 1993 Plan, 1998 Plan and Original 2000 Plan.
Substantially all of the Corporation's employees, including its executive
officers, participate in the 1993 Plan, the 1998 Plan and the Original 2000
Plan. The 1993 Plan, the 1998 Plan and the Original 2000 Plan are designed to
give each participating
8
employee an ownership interest in the Corporation and to align the interests of
the employees with those of the Corporation's stockholders.
Stock options are granted to employees and executive officers based upon
guidelines established by the Board of Directors and the Compensation Committee.
The number of continuation option awards ("Continuation Awards") granted to
executive officers in 2001 was based on a formula that calculates the quotient
obtained by dividing (A) the product of two times the executive officer's merit
salary increase (based on the executive officer's performance review) by (B) the
market value per share of the Corporation's Common Stock on the date of grant.
The number of options to be granted was approved by the Compensation Committee
and was not based on any corporate or business unit performance measures. All
Continuation Awards were made with a five-year vesting schedule.
In addition to Continuation Awards under the 1993 Plan, the 1998 Plan and
the Original 2000 Plan, the Corporation began a Quarterly Profit Option Plan
(the "QPOP") in 2000. Options under the QPOP are granted to all eligible
employees and officers under the 1993 Plan, the 1998 Plan and the 2000 Plan.
Under the QPOP, the number of shares available for grant each quarter is based
on a formula, which calculates the quotient obtained by dividing (A) the sum of
(1) 50% of the current quarter's net income plus (2) two times the increase in
net income (if any) between the current quarter and the corresponding quarter of
the prior year, by (B) the market value per share of the Corporation's Common
Stock on the date of grant. Options granted under the QPOP are based upon an
employee's salary and length of service. For eligible employees and officers,
their portion of the QPOP option award is determined by calculating their
pro-rata share of the employee salary pool. (The employee salary pool is the sum
of each employee's base salary multiplied by a percentage which is based on such
employee's length of service with the Corporation.) For eligible employees and
officers having less than five years of service, a rate of 40% of base salary is
used. The rate increases to 50% at five years of service and then increases an
additional 2% for each year of service up to a maximum of 70% at 15 years of
service. Forty percent (40%) of the options become exercisable seven months
after the date of grant, with the remainder vesting in three equal annual
installments of 20% thereafter.
Each quarter, 15% of the options available under the QPOP are reserved for
Outstanding Contributor awards for eligible employees and officers. These awards
are intended to recognize and reward employees or teams of employees for
contributions beyond expected job performance. Nominations are submitted by
department managers and supervisors, which are reviewed and approved by a review
committee designated by the Corporation's officers. These options become
exercisable in five equal annual installments. All options granted under the
QPOP, including the Outstanding Contributor awards, are approved by the
Compensation Committee.
Finally, to the extent applicable to the Corporation, the Compensation
Committee intends to review and to take any necessary and appropriate steps to
ensure that the Corporation complies with certain income tax regulations, which,
if not satisfied, would limit the deductibility of executive compensation above
specified amounts.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee approves the annual salary for Mr. Vinciarelli,
the Corporation's Chief Executive Officer. The Compensation Committee does not
have specific criteria, either in terms of individual or corporate performance,
in evaluating the base salary of the Chief Executive Officer. In light of the
relatively low cash compensation paid to the Chief Executive Officer, the
Compensation Committee has not attempted to relate compensation of the Chief
Executive Officer to the performance of the Corporation. Based on salary data
from surveys and other sources, the Compensation Committee believes that the
Chief Executive Officer's salary is at the lower end of the range of salaries
for CEOs of comparable companies.
In 2001, the Compensation Committee determined to include Mr. Vinciarelli
in the granting of stock options described above as "QPOP" options. However, as
in prior years, the Corporation continued to exclude Mr. Vinciarelli from the
granting of Continuation Awards because of Mr. Vinciarelli's significant stock
holdings in the Corporation and the practice of basing such awards on
performance reviews that were typically prepared by Mr. Vinciarelli.
SUBMITTED BY THE EXECUTIVE COMPENSATION COMMITTEE:
M. Michael Ansour
Estia J. Eichten
David T. Riddiford
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Eichten, Riddiford, and Ansour serve on the Compensation
Committee. Messrs. Eichten, Riddiford and Ansour do not serve as officers of the
Corporation. The Corporation is not aware of any compensation committee
interlocks.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Corporation's financial reporting process
on behalf of the Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Annual Report with
management including a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Corporation's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent auditors the
auditors' independence from management and the Corporation, including the
matters in the written disclosures required by the Independence Standards Board,
and considered the compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the independent auditors the overall
scope and plans for their audit. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluation of the Corporation's internal controls, and the
overall quality of the Corporation's financial reporting. The Audit Committee
held four meetings during fiscal 2001.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board approved) that
the audited financial statements be included in the Corporation's Annual Report
on Form 10-K for the year ended December 31, 2001 for filing with the SEC.
SUBMITTED BY THE AUDIT COMMITTEE:
Samuel Anderson
M. Michael Ansour
David T. Riddiford
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as independent
auditors to audit the financial statements of the Corporation for the current
fiscal year. During the year ended December 31, 2001, the Corporation paid the
following fees to Ernst & Young LLP:
AUDIT FEES $189,000
FINANCIAL INFORMATION SYSTEMS
DESIGN AND IMPLEMENTATION FEES $ -
AUDIT RELATED FEES $ 16,000
ALL OTHER FEES $276,000
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Vinciarelli, the President and Chief Executive Office of the
Corporation, has borrowed funds from the Corporation pursuant to a series of
unsecured term notes. The notes have terms of eight years and are due at various
dates through March 2009. Each note bears interest at the greater of the prime
borrowing rate less 1%, or the applicable federal rate under the Internal
Revenue Code of 1986, as amended. The largest aggregate amount of all
indebtedness outstanding at any time during 2001 was $2,131,850, including
accrued interest. The aggregate amount of all loans outstanding as of April 24,
2002 was approximately $2,157,000 including accrued interest.
11
STOCKHOLDER RETURN PERFORMANCE GRAPH
The graph set forth below presents the cumulative, five-year stockholder
return for each of the Corporation's Common Stock, the Standard & Poor's 500
Index and an index of peer group companies selected by the Corporation (the
"Peer Group"). The Peer Group consists of the following eight publicly-traded
companies in the specialty electronic component industry: Analog Devices
Incorporated; Cypress Semiconductor Corporation; Dallas Semiconductor
Corporation; Integrated Device Technology Incorporated; Intel Corporation;
Linear Technology Corporation; LSI Logic Corporation and Xilinx Incorporated.
The Corporation's Common Stock began trading publicly on April 3, 1990. The
graph assumes an investment of $100 on December 31, 1996 in each of the
Corporation's Common Stock, the Standard & Poor's 500 Index and the Peer Group,
and assumes reinvestment of all dividends. The graph is market
capitalization-weighted. The historical information set forth below is not
necessarily indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG VICOR CORPORATION, S&P 500 INDEX
AND AN INDEX OF PEER GROUP COMPANIES
MEASUREMENT PERIOD VICOR S&P PEER GROUP
(FISCAL YEAR COVERED) CORPORATION 500 INDEX COMPANIES
-----------------------------------------------------------------------
Measurement Pt-12/31/96 $100.00 $100.00 $100.00
FYE 12/31/97 $162.55 $133.36 $106.15
FYE 12/31/98 $ 53.93 $171.47 $174.26
FYE 12/31/99 $242.71 $207.56 $263.10
FYE 12/31/00 $182.03 $188.66 $204.14
FYE 12/31/01 $ 97.08 $166.24 $205.59
12
PROPOSAL 2
APPROVAL OF THE
AMENDED AND RESTATED
2000 STOCK OPTION AND INCENTIVE PLAN
PROPOSAL
Subject to approval by the stockholders, the Board of Directors on March
9, 2002 voted to amend and restate the Corporation's Original 2000 Plan, which
amendment would increase by 2,000,000 the number of shares of Common Stock
authorized under the Original 2000 Plan, from 2,000,000 to 4,000,000 shares. A
summary of the principal features of the Amended and Restated 2000 Stock Option
and Incentive Plan (the "Amended and Restated 2000 Plan") is set forth below.
This summary is qualified in its entirety by the full text of the Amended and
Restated 2000 Plan, which has been filed with the SEC as an appendix to this
Proxy Statement. Based solely on the closing price of Common Stock as reported
on the NASDAQ National Market on April 24, 2002 of $14.10 per share, the maximum
aggregate market value of the additional 2,000,000 shares of Common Stock
reserved for issuance would be $28,200,000.
The Amended and Restated 2000 Plan is administered by the Executive
Compensation Committee (the "Committee"). The Committee, in its discretion, may
grant a variety of stock incentive awards based on the Common Stock of the
Corporation. These awards include stock options (both incentive options and
non-qualified options), stock appreciation rights, restricted stock, performance
shares, unrestricted stock, deferred stock and dividend equivalent rights.
Subject to adjustment for stock splits, stock dividends and similar
events, the total number of shares of Common Stock that may be issued under the
Amended and Restated 2000 Plan is 4,000,000 shares, of which no more than
100,000 shares will be available for grants in the form of unrestricted stock,
restricted stock or performance shares. In order to satisfy the
performance-based compensation exception to the $1 million cap on the
Corporation's tax deduction imposed by Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), the Amended and Restated 2000 Plan also
provides that stock options or stock appreciation rights with respect to no more
than 100,000 shares of Common Stock may be granted to any one individual in any
one calendar year. The shares issued by the Corporation under the Amended and
Restated 2000 Plan may be authorized but unissued shares, or shares reacquired
by the Corporation. To the extent that awards under the Amended and Restated
2000 Plan do not vest or otherwise revert to the Corporation, the shares of
Common Stock represented by such awards may be the subject of subsequent awards.
The Amended and Restated 2000 Plan will become effective only if Proposal
2 is approved by the stockholders.
RECOMMENDATION
The Board of Directors believes that stock options and other stock-based
incentive awards serve an important role in the success of the Corporation and
that it will be necessary to continue making these awards to attract, motivate
and retain the caliber of directors, officers and employees upon whose judgment,
initiative and efforts the Corporation largely depends for the successful
conduct of its business. The Board of Directors anticipates that providing such
persons with a direct stake in the Corporation will assure a closer
identification of the interests of participants in the Amended and Restated 2000
Plan with those of the Corporation, thereby stimulating their efforts on the
Corporation's behalf and strengthening their desire to remain with the
Corporation. The Board of Directors believes that the Amended and Restated 2000
Plan is necessary to provide for an adequate number of stock-based incentive
awards available for grant.
The Board of Directors believes that the proposed Amended and Restated
2000 Plan will help the Corporation to achieve its goals by keeping the
Corporation's incentive compensation program dynamic and competitive with those
of other companies. Accordingly, the Board of Directors believes that the
Amended and Restated 2000 Plan is in the best interests of the Corporation and
its stockholders and recommends that the stockholders approve the Amended and
Restated 2000 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
THE AMENDED AND RESTATED 2000 PLAN.
13
SUMMARY OF THE AMENDED AND RESTATED 2000 PLAN
The following description of certain features of the Amended and Restated
2000 Plan is intended to be a summary only and is qualified in its entirety by
the full text of the Amended and Restated 2000 Plan which has been filed with
the SEC as an appendix to this Proxy Statement.
PLAN ADMINISTRATION; ELIGIBILITY. The Amended and Restated 2000 Plan is
administered by the Committee, which is comprised of not less than two Directors
who are not employed by the Corporation or its subsidiaries ("Independent
Directors").
The Committee, in its discretion, may grant a variety of stock incentive
awards based on the Common Stock of the Corporation. It has full power to
select, from among the employees eligible for awards, the individuals to whom
awards will be granted, to make any combination of awards to participants, and
to determine the specific terms and conditions of each award, subject to the
provisions of the Amended and Restated 2000 Plan. The Committee may permit
Common Stock, and other amounts payable pursuant to an award, to be deferred. In
such instances, the Committee may permit interest, dividends or deemed dividends
to be credited to the amount of deferrals.
Persons eligible to participate in the Amended and Restated 2000 Plan will
be those employees and other key persons of the Corporation and its subsidiaries
who are responsible for or contribute to the management, growth or profitability
of the Corporation and its subsidiaries, as selected from time to time by the
Committee. Approximately 1,600 persons will be eligible to participate in the
Amended and Restated 2000 Plan. Independent Directors will also be eligible for
certain awards under the Amended and Restated 2000 Plan.
STOCK OPTIONS. The Amended and Restated 2000 Plan permits the granting of
(i) options to purchase Common Stock intended to qualify as incentive stock
options ("Incentive Options") under Section 422 of the Code and (ii) options
that do not so qualify ("Non-Qualified Options"). The option exercise price of
each option will be determined by the Committee, but it may not be less than
100% of the fair market value of the Common Stock on the date of grant in the
case of incentive stock options, and it may not be less than 85% of the fair
market value of the Common Stock on the date of grant in the case of
Non-Qualified Options.
The term of each option will be fixed by the Committee and may not exceed
ten (10) years from date of grant in the case of an Incentive Option. The
Committee will determine at what time or times each option may be exercised and,
subject to the provisions of the Amended and Restated 2000 Plan, the period of
time, if any, after retirement, death, disability or termination of employment
during which options may be exercised. Options may be made exercisable in
installments, and the exercisability of options may be accelerated by the
Committee.
Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Committee or, if the Committee so permits, by delivery of shares of Common
Stock that have been beneficially owned by the optionee for at least six (6)
months. The exercise price may also be delivered to the Corporation by a broker
pursuant to irrevocable instructions to the broker from the optionee.
At the discretion of the Committee, stock options granted under the
Amended and Restated 2000 Plan may include a "re-load" feature pursuant to which
an optionee exercising an option by the delivery of shares of Common Stock would
automatically be granted an additional stock option (with an exercise price
equal to the fair market value of the Common Stock on the date the additional
stock option is granted) to purchase that number of shares of Common Stock equal
to the number delivered to exercise the original stock option. The purpose of
this feature is to enable participants to maintain any equity interest in the
Corporation without dilution.
To qualify as Incentive Options, options must meet additional federal tax
requirements, including limits on the value of shares subject to Incentive
Options that first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders.
STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS. The Board of Directors may
grant Non-Qualified Options to Independent Directors in its discretion. The
ability of the Board of Directors to make such discretionary grants shall be in
lieu of any automatic grants of Non-Qualified Options under the 1993 Plan and
the 1998 Plan.
14
STOCK APPRECIATION RIGHT. The Committee may award a stock appreciation
right ("SAR") either as a freestanding award or in tandem with a stock option.
Upon exercise of the SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share specified in the related stock
option (or, in the case of a freestanding SAR, the price per share specified in
such right, which price may not be less than 100% of the fair market value of
the Common Stock on the date of grant) times the number of shares of Common
Stock with respect to which the SAR is exercised. This amount may be paid in
cash, Common Stock, or a combination thereof, as determined by the Committee. If
the SAR is granted in tandem with a stock option, exercise of the SAR cancels
the related option to the extent of such exercise.
RESTRICTED STOCK. The Committee may award shares of Common Stock to
participants subject to such conditions and restrictions as the Committee may
determine ("Restricted Stock"). These conditions and restrictions may include
the achievement of certain performance goals and/or continued employment (or
other business relationship) with the Corporation through a specified restricted
period. The purchase price of shares of Restricted Stock will be determined by
the Committee. If the performance goals and other restrictions are not attained,
the participants will forfeit their awards of Restricted Stock.
DEFERRED STOCK AWARDS. The Corporation may award phantom stock units to a
participant, subject to such conditions and restrictions as the Committee may
determine ("Deferred Stock Awards"). These conditions and restrictions may
include the achievement of certain performance goals and/or continued
employment. During the deferral period, the participant shall have no rights as
a stockholder, but may be credited with dividend equivalent rights (as described
below) with respect to the phantom stock units underlying his or her Deferred
Stock Award. At the end of the deferral period, the Deferred Stock Award, to the
extent vested, shall be paid to the participant in the form of shares of Common
Stock. In addition, the Committee may permit a participant to elect to receive a
portion of the cash compensation or Restricted Stock otherwise due to such
participant in the form of a Deferred Stock Award, subject to such terms and
conditions as the Committee may determine.
UNRESTRICTED STOCK. The Committee may grant shares (at no cost or for a
purchase price determined by the Committee) that are free from any restrictions
under the Amended and Restated 2000 Plan ("Unrestricted Stock"). Unrestricted
Stock may be issued to employees and key persons in recognition of past services
or other valid consideration, and may be issued in lieu of cash bonuses to be
paid to such employees and key persons.
Subject to the consent of the Committee, an employee or key person of the
Corporation may make an advance irrevocable election to receive a portion of his
compensation in Unrestricted Stock (valued at fair market value on the date the
cash compensation would otherwise be paid).
PERFORMANCE SHARE AWARDS. The Committee may grant performance share awards
to employees or other key persons entitling the recipient to receive shares of
Common Stock upon the achievement of individual or Corporation performance goals
and such other conditions as the Committee shall determine ("Performance Share
Awards").
DIVIDEND EQUIVALENT RIGHTS. The Committee may grant dividend equivalent
rights, which entitle the recipient to receive credits for dividends that would
have been paid if the recipient had held specified shares of Common Stock.
Dividend equivalent rights may be granted as a component of another award or as
a freestanding award. Dividend equivalents credited under the Amended and
Restated 2000 Plan may be paid currently or be deemed to be reinvested in
additional shares of Common Stock, which may thereafter accrue additional
dividend equivalents at fair market value at the time of deemed reinvestment or
on the terms then governing the reinvestment of dividends under the
Corporation's dividend reinvestment plan, if any. Dividend equivalent rights may
be settled in cash, shares, or a combination thereof, in a single installment or
installments, as specified in the award. Awards payable in cash on a deferred
basis may provide for crediting and payment of interest equivalents
15
TAX WITHHOLDING. Participants under the Amended and Restated 2000 Plan are
responsible for the payment of any federal, state or local taxes that the
Corporation is required by law to withhold upon any option exercise or vesting
of other awards. Participants may elect to have the minimum statutory tax
withholding obligations satisfied either by authorizing us to withhold shares of
Common Stock to be issued to an option exercise or other award, or by
transferring to the Corporation shares of Common Stock having a value equal to
the amount of such taxes.
ADJUSTMENTS FOR STOCK DIVIDENDS, MERGERS, ETC. The Committee will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Corporation or similar event, as of the effective date of such transaction, all
options and SARs shall become fully exercisable and all other awards shall
become fully vested, except as the Committee may otherwise determine with
respect to particular awards. Unless provision is made in connection with such a
transaction for the assumption of outstanding awards or the substitution of such
awards with new awards, the Amended and Restated 2000 Plan and all outstanding
options and awards shall terminate.
AMENDMENTS AND TERMINATION. The Board of Directors may at any time amend
or discontinue the Amended and Restated 2000 Plan and the Committee may at any
time amend or cancel outstanding awards for the purpose of satisfying changes in
the law or for any other lawful purpose. However, no such action may be taken
which adversely affects any rights under outstanding awards without the holder's
consent. Further, the Amended and Restated 2000 Plan amendments shall be subject
to approval by the Corporation's stockholders if and to the extent required by
the Code to preserve the qualified status of Incentive Options.
CHANGE OF CONTROL PROVISIONS. The Amended and Restated 2000 Plan provides
that in the event of a "Change of Control" (as defined in the Amended and
Restated 2000 Plan) of the Corporation, all stock options and stock appreciation
rights shall automatically become fully exercisable. In addition, at any time
prior to or after a Change of Control, the Committee may accelerate awards and
waive conditions and restrictions on any awards to the extent it may determine
appropriate.
EFFECTIVE DATE OF AMENDED AND RESTATED 2000 PLAN. The Amended and Restated
2000 Plan will become effective upon the affirmative vote of the holders of at
least a majority of the votes cast at the Annual Meeting. Accordingly,
abstentions and broker non-votes will have no effect on this proposal. Awards of
Incentive Stock Options may be granted under the Amended and Restated 2000 Plan
until March 9, 2012.
NEW AMENDED AND RESTATED 2000 PLAN BENEFITS. No grants have been made with
respect to the shares of Common Stock reserved for issuance under the Amended
and Restated 2000 Plan. The number of shares of Common Stock that may be granted
to executive officers and non-executive officers is indeterminable at this time,
as such grants are subject to the discretion of the Committee.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the principal federal income tax
consequences of option grants under the Amended and Restated 2000 Plan. It does
not describe all federal tax consequences under the Amended and Restated 2000
Plan, and it does not describe state or local tax consequences.
INCENTIVE OPTIONS. Under the Code, an employee will not realize taxable
income by reason of the grant or the exercise of an Incentive Option. If an
employee exercises an Incentive Option and does not dispose of the shares until
the later of (a) two years from the date the option was granted or (b) one year
from the date the shares were transferred to the employee, the entire gain, if
any, realized upon disposition of such shares will be taxable to the employee as
capital gain, and the Corporation will not be entitled to any deduction. If an
employee disposes of the shares within such one-year or two-year period in a
manner so as to violate the holding period requirements (a "disqualifying
disposition"), the employee generally will realize ordinary income in the year
of disposition, and the Corporation will receive a corresponding deduction, in
an amount equal to the excess of (1) the lesser of (x) the amount, if any,
realized on the disposition and (y) the fair market value of the shares on the
date the option was exercised over (2) the option exercise price. Any additional
gain realized on the disposition of the shares acquired upon exercise of the
option will be long-term or short-term capital gain and any loss will be
long-term or short-term capital loss depending upon the holding period for such
shares.
16
The employee will be considered to have disposed of his shares if he
sells, exchanges, makes a gift of or transfers legal title to the shares (except
by pledge or by transfer on death). If the disposition of shares is by gift and
violates the holding period requirements, the amount of the employee's ordinary
income (and the Corporation's deduction) is equal to the fair market value of
the shares on the date of exercise less the option price. If the disposition is
by sale or exchange, the employee's tax basis will equal the amount paid for the
shares plus any ordinary income realized as a result of the disqualifying
distribution. The exercise of an Incentive Option may subject the employee to
the alternative minimum tax.
Special rules apply if an employee surrenders shares of Common Stock in
payment of the exercise price of his Incentive Option.
An Incentive Option that is exercised by an employee more than three
months after an employee's employment terminates will be treated as a
Non-Qualified Option for federal income tax purposes. In the case of an employee
who is disabled, the three-month period is extended to one year and in the case
of an employee who dies, the three-month employment rule does not apply.
NON-QUALIFIED OPTIONS. There are no federal income tax consequences to
either the optionee, or the Corporation on the grant of a Non-Qualified Option.
In general, on the exercise of a Non-Qualified Option, the optionee has taxable
ordinary income equal to the excess of the fair market value of the Common Stock
received on the exercise date over the option price of the shares. The
optionee's tax basis for the shares acquired upon exercise of a Non-Qualified
Option is increased by the amount of such taxable income. The Corporation will
be entitled to a federal income tax deduction in an amount equal to such excess.
Upon the sale of the shares acquired by exercise of a Non-Qualified Option, the
optionee will realize long-term or short-term capital gain or loss depending
upon his or her holding period for such shares.
Special rules apply if an optionee surrenders shares of Common Stock in
payment of the exercise price of a Non-Qualified Option.
PARACHUTE PAYMENTS. The exercise of any portion of any option that is
accelerated due to the occurrence of a change of control may cause a portion of
the payments with respect to such accelerated options to be treated as
"parachute payments" as defined in the Code. Any such parachute payments may be
non-deductible to the Corporation, in whole or in part, and may subject the
recipient to a non-deductible 20% federal excise tax on all or portion of such
payment (in addition to other taxes ordinarily payable).
LIMITATION ON CORPORATION'S DEDUCTIONS. As a result of Section 162(m) of
the Code, the Corporation's federal tax deduction for certain awards under the
Plan may be limited to the extent that the Chief Executive Officer or other
executive officer whose compensation is required to be reported in the summary
compensation table receives compensation (other than performance-based
compensation) in excess of $1 million a year.
17
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain aggregated information as of the
end of the most recently completed fiscal year regarding equity securities
underlying awards made under the 1993 Plan, the 1998 Plan and the Original 2000
Plan. All equity compensation plans of the corporation have been approved by our
stockholders. This table does not include the 2,000,000 additional securities
that are the subject of the plan amendment for which the Corporation is seeking
stockholder approval.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF WEIGHTED-AVERAGE EXERCISE COMPENSATION PLANS
OUTSTANDING OPTIONS, PRICE OF OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN [A])
PLAN CATEGORY [A] [B] [C]
- --------------------------------- ------------------------------ ------------------------------- ------------------------------
Equity compensation plans
approved by security holders 3,774,920 $ 21.37 920,516
Equity compensation plans not
approved by security holders - - -
--------- ------ ---------
Total 3,774,920 $ 21.37 920,516
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and Directors, and persons who own more than 10% of a registered class
of the Corporation's equity securities (collectively, "Insiders"), to file
reports of ownership and changes in ownership with the SEC and NASDAQ. Insiders
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file. To the Corporation's knowledge, based solely on a
review of copies of such reports and written representations that no other
reports were required during the fiscal year ended December 31, 2001, all
transactions in the Corporation's securities that were engaged in by Insiders,
and therefore required to be disclosed pursuant to Section 16(a) of the Exchange
Act, were timely reported.
INDEPENDENT AUDITORS
The Corporation has selected Ernst & Young LLP as the independent auditors
for the Corporation for the fiscal year ending December 31, 2002. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will be given the opportunity to make a statement. The
representative is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2003 Annual Meeting
of Stockholders must be received by the Corporation on or before December 27,
2002 in order to be considered for inclusion in the Corporation's proxy
statement. These proposals must also comply with the rules of the SEC governing
the form and content of proposals in order to be included in the Corporation's
proxy statement and form of proxy and should be directed to: Vicor Corporation,
25 Frontage Road, Andover, Massachusetts 01810, Attention: Secretary. It is
suggested that any stockholder proposal be transmitted by certified mail, return
receipt requested.
18
Proxies solicited by the Board of Directors will confer discretionary voting
authority with respect to stockholder proposals, other than proposals to be
considered for inclusion in the Corporation's proxy statement described above,
that the Corporation receives at the above address after March 30, 2003. These
proxies will also confer discretionary voting authority with respect to
stockholder proposals, other than proposals to be considered for inclusion in
the Corporation's proxy statement described above, that the Corporation receives
on or before March 30, 2003, subject to SEC rules governing the exercise of this
authority.
19
EXHIBIT A
VICOR CORPORATION
AMENDED AND RESTATED
2000 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN: DEFINITIONS
The name of the plan is the Vicor Corporation Amended and Restated 2000
Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is to
encourage and enable the officers, employees, Independent Directors and other
key persons (including consultants) of Vicor Corporation (the "Company") and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"ACT" means the Securities Exchange Act of 1934, as amended.
"ADMINISTRATOR" is defined in Section 2(a).
"AWARD" or "AWARDS," except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards, Performance Share Awards and Dividend
Equivalent Rights.
"BOARD" means the Board of Directors of the Company.
"CHANGE OF CONTROL" is defined in Section 16.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"COMMITTEE" means the Committee of the Board referred to in Section 2.
"DEFERRED STOCK AWARD" means Awards granted pursuant to Section 8.
"DIVIDEND EQUIVALENT RIGHT" means Awards granted pursuant to Section 11.
"EFFECTIVE DATE" means the date on which the Plan is approved by
stockholders as set forth in Section 18.
"FAIR MARKET VALUE" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Administrator; provided,
however, that (i) if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), the
Fair Market Value on any given date shall not be less than the average of the
highest bid and lowest asked prices of the Stock reported for such date or, if
no bid and asked prices were reported for such date, for the last day preceding
such date for which such prices were reported, or (ii) if the Stock is admitted
to trading on a national securities exchange or the NASDAQ National Market
System, the Fair Market Value on any date shall not be less than the closing
price reported for the Stock on such exchange or system for such date or, if no
sales were reported for such date, for the last date preceding the date for such
a sale was reported.
"INCENTIVE STOCK OPTION" means any Stock Option designated and qualified
as an "incentive stock option" as defined in Section 422 of the Code.
A-1
"INDEPENDENT DIRECTOR" means a member of the Board who is not also an
employee of the Company or any Subsidiary.
"NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.
"OPTION" or "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5.
"PERFORMANCE SHARE AWARD" means Awards granted pursuant to Section 10.
"PRINCIPAL STOCKHOLDER" means Patrizio Vinciarelli, members of his
immediate family, any trusts of which he is a trustee or in which he or members
of his immediate family have substantial beneficial interest and upon his death,
his executors, administrators, personal representatives, heirs, legatees or
distributees.
"RESTRICTED STOCK AWARD" means Awards granted pursuant to Section 7.
"STOCK" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.
"STOCK APPRECIATION RIGHT" means any Award granted pursuant to Section 6.
"SUBSIDIARY" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50 percent or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations or entities in the chain.
"UNRESTRICTED STOCK AWARD" means any Award granted pursuant to Section 9.
SECTION 2. ADMINISTRATION OF THE PLAN: ADMINISTRATOR AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS
(a) COMMITTEE. The Plan shall be administered by either the Board or a
committee of not less than two Independent Directors (in either case, the
"Administrator").
(b) POWERS OF ADMINISTRATOR. The Administrator shall have the power
and authority to grant Awards consistent with the terms of the Plan, including
the power and authority:
(i) to select the individuals to whom Awards may from time to
time be granted;
(ii) to determine the time or times of grant, and the extent,
if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards,
Unrestricted Stock Awards, Performance Share Awards and Dividend
Equivalent Rights, or any combination of the foregoing, granted to any one
or more participants;
(iii) to determine the number of shares of Stock to be covered
by any Award;
(iv) to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the terms of the
Plan, of any Award, which terms and conditions may differ among individual
Awards and participants, and to approve the form of written instruments
evidencing the Awards;
(v) to accelerate at any time the exercisability or vesting of
all or any portion of any Award;
(vi) subject to the provisions of Section 5(a)(ii), to extend
at any time the period in which Stock Options may be exercised;
A-2
(vii) at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms
and provisions of the Plan and any Award (including related written
instruments); to make all determinations it deems advisable for the
administration of the Plan; to decide all disputes arising in connection
with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan participants.
(c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Act or "covered employees" within the
meaning of Section 162(m) of the Code. Any such delegation by the Administrator
shall include a limitation as to the amount of Awards that may be granted during
the period of the delegation and shall contain guidelines as to the
determination of the exercise price of any Option, the conversion ratio or price
of other Awards and the vesting criteria. The Administrator may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrator's delegate or delegates that were consistent
with the terms of the Plan.
(d) INDEMNIFICATION. Neither the Board nor the Committee, nor any
member of either or any delegatee thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and Committee (and any
delegatee thereof) shall be entitled in all cases to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or expense
(including, without limitation, reasonable attorneys' fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any directors' and
officers' liability insurance coverage which may be in effect from time to time.
SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 4,000,000 shares; provided that
not more than 100,000 shares shall be issued in the form of Unrestricted Stock
Awards, Restricted Stock Awards, or Performance Share Awards except to the
extent such Awards are granted in lieu of cash compensation or fees. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan. Subject to such
overall limitation, shares of Stock may be issued up to such maximum number
pursuant to any type or types of Award; provided, however, that Stock Options or
Stock Appreciation Rights with respect to no more than 100,000 shares of Stock
may be granted to any one individual participant during any one calendar year
period. The shares available for issuance under the Plan may be authorized but
unissued shares of Stock or shares of Stock reacquired by the Company and held
in its treasury.
(b) CHANGES IN STOCK. If, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar change in the Company's capital stock, the outstanding
shares of Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or additional
shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Stock or other
securities, the Administrator shall make an appropriate or proportionate
adjustment in (i) the maximum number of shares reserved for issuance under the
Plan, (ii) the number of Stock Options or Stock Appreciation Rights that can be
granted to any one individual participant, (iii) the number and kind of shares
or other securities subject to any then outstanding Awards under the Plan, and
(iv) the price for each share subject to any then outstanding Stock Options and
Stock Appreciation Rights under the Plan, without changing the aggregate
exercise price (i.e., the exercise price multiplied by the number of Stock
Options and Stock Appreciation Rights) as to which such Stock Options and Stock
Appreciation Rights remain exercisable. The adjustment by the Administrator
shall be final, binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but the Administrator
in its discretion may make a cash payment in lieu of fractional shares.
A-3
The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such adjustment shall be made in the case of an Incentive Stock Option, without
the consent of the participant, if it would constitute a modification, extension
or renewal of the Option within the meaning of Section 424(h) of the Code.
(c) MERGERS AND OTHER TRANSACTIONS. In the case of (i) the dissolution
or liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company on a consolidated basis to an unrelated person or entity,
(iii) a merger, reorganization or consolidation in which the holders of the
Company's outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction, (iv) the sale of all of
the Stock of the Company to an unrelated person or entity or (v) any other
transaction in which the owners of the Company's outstanding voting power prior
to such transaction do not own at least a majority of the outstanding voting
power of the relevant entity after the transaction (in each case, a
"Transaction"), as of the effective date of such Transaction, all Options and
Stock Appreciation Rights that are not exercisable shall become fully
exercisable and all other Awards which are not vested shall become fully vested,
except as the Administrator may otherwise specify with respect to particular
Awards. Upon the effectiveness of the Transaction, the Plan and all outstanding
Options, Stock Appreciation Rights and other Awards granted hereunder shall
terminate, unless provision is made in connection with the Transaction for the
assumption of Awards heretofore granted, or the substitution of such Awards of
new Awards of the successor entity or parent thereof, with appropriate
adjustment as to the number and kind of shares and, if appropriate, the per
share exercise prices, as provided in Section 3(b) above. In the event of such
termination, each optionee shall be permitted to exercise for a period of at
least 15 days prior to the date of such termination all outstanding Options and
Stock Appreciation Rights held by such optionee which are then exercisable or
become exercisable upon the effectiveness of the Transaction.
(d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the
Plan in substitution for stock and stock based awards held by employees of
another corporation who become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Administrator may direct
that the substitute awards be granted on such terms and conditions as the
Administrator considers appropriate in the circumstances. Any substitute Awards
granted under the Plan shall not count against the share limitations set forth
in Section 3 (a).
SECTION 4. ELIGIBILITY
Participants in the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons of the Company and its
Subsidiaries who are responsible for or contribute to the management, growth or
profitability of the Company and its Subsidiaries as are selected from time to
time by the Administrator in its sole discretion.
SECTION 5. STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
A-4
No Incentive Stock Option shall be granted under the Plan after March 9,
2012.
(a) STOCK OPTIONS GRANTED TO EMPLOYEES AND KEY PERSONS. The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary. Stock Options granted pursuant
to this Section 5(a) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Administrator shall deem desirable. If the
Administrator so determines, Stock Options may be granted in lieu of cash
compensation at the participant's election, subject to such terms and conditions
as the Administrator may establish, as well as in addition to other
compensation.
(i) EXERCISE PRICE. The exercise price per share for the Stock
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Administrator at the time of grant but shall not be less
than 100 percent of the Fair Market Value on the date of grant in the case
of Incentive Stock Options, or 85 percent of the Fair Market Value on the
date of grant, in the case of Non-Qualified Stock Options. If an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10 percent of the combined voting power of
all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
option price of such Incentive Stock Option shall be not less than 110
percent of the Fair Market Value on the grant date.
(ii) OPTION TERM. The term of each Stock Option shall be fixed
by the Administrator, but no Incentive Stock Option shall be exercisable
more than ten years after the date the option is granted. If an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10 percent of the combined voting power of
all classes of stock of the Company or any parent or subsidiary
corporation and an Incentive Stock Option is granted to such employee, the
term of such option shall be no more than five years from the date of
grant.
(iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options
shall become exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the
grant date; provided, however, that Stock Options granted in lieu of
compensation shall be exercisable in full as of the grant date. The
Administrator may at any time accelerate the exercisability of all or any
portion of any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option
and not as to unexercised Stock Options.
(iv) METHOD OF EXERCISE. Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the purchase
price may be made by one or more of the following methods to the extent
provided in the Option Award agreement:
(A) In cash, by certified or bank check or other
instrument acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership)
of shares of Stock that are not then subject to restrictions under any
Company plan and that have been beneficially owned by the optionee for at
least six months or have been purchased by the participant on the open
market, if permitted by the Administrator in its discretion. Such
surrendered shares shall be valued at Fair Market Value on the exercise
date;
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and
acceptable to the Company for the purchase price; provided that in the
event the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter into
such agreements of indemnity and other agreements as the Administrator
shall prescribe as a condition of such payment procedure; or
A-5
(D) By the optionee delivering to the Company a promissory
note if the Board has expressly authorized the loan of funds to the
optionee for the purpose of enabling or assisting the optionee to effect
the exercise of his Stock Option; provided that at least so much of the
exercise price as represents the par value of the Stock shall be paid
other than with a promissory note.
Payment instruments will be received subject to collection. The delivery
of certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Stock Option or
applicable provisions of laws.
(v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
required for "incentive stock option" treatment under Section 422 of the
Code, the aggregate Fair Market Value (determined as of the time of grant)
of the shares of Stock with respect to which Incentive Stock Options
granted under this Plan and any other plan of the Company or its parent
and subsidiary corporations become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. To the extent
that any Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.
(b) RELOAD OPTIONS. At the discretion of the Administrator, Options
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the number delivered to exercise the original Option with an Option term
equal to the remainder of the original Option term unless the Administrator
otherwise determines in the Award agreement for the original Option grant.
(c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS. The Board of
Directors, in its discretion, may grant Non-Qualified Stock Options to
Independent Directors. The terms and conditions of any such grant may vary among
individual Independent Directors. The ability of the Board of Directors to make
such discretionary grants shall be in lieu of any automatic grant of options
under the Company's 1993 Stock Option Plan and 1998 Stock Option and Incentive
Plan.
(d) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee or by the optionee's legal
representative or guardian in the event of the optionee's incapacity.
Notwithstanding the foregoing, the Administrator, in its sole discretion, may
provide in the Award agreement regarding a given Option that the optionee may
transfer, without consideration for the transfer, his Non-Qualified Stock
Options to members of his immediate family, to trusts for the benefit of such
family members, or to partnerships in which such family members are the only
partners, provided that the transferee agrees in writing with the Company to be
bound by all of the terms and conditions of this Plan and the applicable Option.
(e) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement, or subject to Section 14 below, in
writing after the Award agreement is issued, an optionee's rights in all Stock
Options shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.
A-6
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is
an Award entitling the recipient to receive an amount in cash or shares of Stock
or a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price Stock
Appreciation Right, which price shall not be less than 100 percent of the Fair
Market Value of the Stock on the date of grant (or more than the option exercise
price per share, if the Stock Appreciation Right was granted in tandem with a
Stock Option) multiplied by the number of shares of Stock with respect to which
the Stock Appreciation Right shall have been exercised, with the Administrator
having the right to determine the form of payment.
(b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights may be granted by the Administrator in tandem with, or
independently of, any Stock Option granted pursuant to Section 5 of the Plan. In
the case of a Stock Appreciation Right granted in tandem with a Non-Qualified
Stock Option, such Stock Appreciation Right may be granted either at or after
the time of the grant of such Option. In the case of a Stock Appreciation Right
granted in tandem with an Incentive Stock Option, such Stock Appreciation Right
may be granted only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.
(c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Administrator, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Options
shall be exercisable at such time or times and to the extent that the
related Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the
applicable portion of any related Option shall be surrendered.
(iii) All Stock Appreciation Rights shall be exercisable during
the participant's lifetime only by the participant or the participant's
legal representative.
(d) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement, or subject to Section 14 below, in
writing after the Award agreement is issued, an optionee's rights in all Stock
Appreciation Rights shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.
SECTION 7. RESTRICTED STOCK AWARDS
(a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an
Award entitling the recipient to acquire, at par value or such other higher
purchase price determined by the Administrator, shares of Stock subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Stock"). Conditions may be based on continuing employment (or
other business relationship) and/or achievement of pre-established performance
goals and objectives. The grant of a Restricted Stock Award is contingent on the
participant executing the Restricted Stock Award agreement. The terms and
conditions of each such agreement shall be determined by the Administrator, and
such terms and conditions may differ among individual Awards and participants.
(b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a participant shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 7(d) below, and the participant shall be
required, as a condition of the grant, to deliver to the Company a stock power
endorsed in blank.
A-7
(c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. If a
participant's employment (or other business relationship) with the Company and
its Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination at
its original purchase price, from the participant or the participant's legal
representative.
(d) VESTING OF RESTRICTED STOCK. The Administrator at the time of
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 14 below, in writing after the Award agreement is issued, a
participant's rights in any shares of Restricted Stock that have not vested
shall automatically terminate upon the participant's termination of employment
(or other business relationship) with the Company and its Subsidiaries and such
shares shall be subject to the Company's right of repurchase as provided in
Section 7(c) above.
(e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Restricted
Stock Award agreement may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Restricted Stock.
SECTION 8. DEFERRED STOCK AWARDS
(a) NATURE OF DEFERRED STOCK AWARDS. A Deferred Stock Award is an
Award of phantom stock units to a participant, subject to restrictions and
conditions as the Administrator may determine at the time of grant. Conditions
may be based on continuing employment (or other business relationship) and/or
achievement of pre-established performance goals and objectives. The grant of a
Deferred Stock Award is contingent on the participant executing the Deferred
Stock Award agreement.
The terms and conditions of each such agreement shall be determined by the
Administrator, and such terms and conditions may differ among individual Awards
and participants. At the end of the deferral period, the Deferred Stock Award,
to the extent vested, shall be paid to the participant in the form of shares of
Stock.
(b) ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF COMPENSATION.
The Administrator may, in its sole discretion, permit a participant to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such participant in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.
(c) RIGHTS AS A STOCKHOLDER. During the deferral period, a participant
shall have no rights as a stockholder; provided, however, that the participant
may be credited with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Deferred Stock Award, subject to such terms and
conditions as the Administrator may determine.
(d) RESTRICTIONS. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.
(e) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a participant's right in all
Deferred Stock Awards that have not vested shall automatically terminate upon
the participant's termination of employment (or cessation of business
relationship) with the Company and its Subsidiaries for any reason.
A-8
SECTION 9. UNRESTRICTED STOCK AWARDS
GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any participant pursuant to
which such participant may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of cash compensation due to such
participant.
SECTION 10. PERFORMANCE SHARE AWARDS
(a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is
an Award entitling the recipient to acquire shares of Stock upon the attainment
of specified performance goals. The Administrator may make Performance Share
Awards independent of or in connection with the granting of any other Award
under the Plan. The Administrator in its sole discretion shall determine whether
and to whom Performance Share Awards shall be made, the performance goals, the
periods during which performance is to be measured, and all other limitations
and conditions.
(b) RIGHTS AS A STOCKHOLDER. A participant receiving a Performance
Share Award shall have the rights of a stockholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a stock certificate evidencing the acquisition of
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the Performance Share Award agreement (or in a
performance plan adopted by the Administrator).
(c) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.
(d) ACCELERATION, WAIVER, ETC. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 14, amend any or all of the goals, restrictions or
conditions applicable to a Performance Share Award.
SECTION 11. DIVIDEND EQUIVALENT RIGHTS
(a) DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an
Award entitling the recipient to receive credits based on cash dividends that
would have been paid on the shares of Stock specified in the Dividend Equivalent
Right (or other award to which it relates) if such shares had been issued to and
held by the recipient. A Dividend Equivalent Right may be granted hereunder to
any participant as a component of another Award or as a freestanding award. The
terms and conditions of Dividend Equivalent Rights shall be specified in the
grant. Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional equivalents. Any such
reinvestment shall be at Fair Market Value on the date of reinvestment or such
other price as may then apply under a dividend reinvestment plan sponsored by
the Company, if any. Dividend Equivalent Rights may be settled in cash or shares
of Stock or a combination thereof, in a single installment or installments. A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award. A Dividend Equivalent Right granted as a
component of another Award may also contain terms and conditions different from
such other award.
(b) INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.
A-9
(c) TERMINATION. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 14 below, in
writing after the Award agreement is issued, a participant's rights in all
Dividend Equivalent Rights or interest equivalents shall automatically terminate
upon the participant's termination of employment (or cessation of business
relationship) with the Company and its Subsidiaries for any reason.
SECTION 12. TAX WITHHOLDING
(a) PAYMENT BY PARTICIPANT. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant. The Company's obligation to deliver stock certificates
to any participant is subject to and conditioned on tax obligations being
satisfied by the participant.
(b) PAYMENT IN STOCK. Subject to approval by the Administrator, a
participant may elect to have the minimum statutory required tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award a number of
shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company shares of Stock owned by the participant with a minimum aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the minimum statutory withholding amount due.
SECTION 13. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or
(b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.
SECTION 14. AMENDMENTS AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. The Administrator may provide substitute Awards at the
same or reduced exercise or purchase price or with no exercise or purchase price
in a manner not inconsistent with the terms of the Plan, but such price, if any,
must satisfy the requirements which would apply to the substitute or amended
Award if it were then initially granted under this Plan, but no such action
shall adversely affect rights under any outstanding Award without the holder's
consent. If and to the extent determined by the Administrator to be required by
the Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code or to ensure that compensation earned
under Stock Options and Stock Appreciation Rights qualifies as performance-based
compensation under Section 162(m) of the Code, if and to the extent intended to
so qualify, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. Nothing in this
Section 14 shall limit the Board's authority to take any action permitted
pursuant to Section 3(c).
A-10
SECTION 15. STATUS OF PLAN
With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Administrator shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other arrangements to meet
the Company's obligations to deliver Stock or make payments with respect to
Awards hereunder, provided that the existence of such trusts or other
arrangements is consistent with the foregoing sentence.
SECTION 16. CHANGE OF CONTROL PROVISIONS
Upon the occurrence of a Change of Control as defined in this Section 16:
(a) Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option and Stock Appreciation Right shall automatically become
fully exercisable.
(b) Each outstanding Restricted Stock Award and Performance Share Award
shall be subject to such terms, if any, with respect to a Change of Control as
have been provided by the Administrator in the Award agreement, or subject to
Section 14 above, in writing after the Award agreement is issued.
(c) "CHANGE OF CONTROL" shall mean the occurrence of any one of the
following events:
(i) any "PERSON," as such term is used in Sections 13(d) and
14(d) of the Act (other than the Company, any of its Subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its Subsidiaries),
together with all "affiliates" and "associates" (as such terms are defined
in Rule 12b-2 under the Act) of such person, shall become the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25 percent or more
of the combined voting power of the Company's then outstanding securities
having the right to vote in an election of the Company's Board of
Directors ("Voting Securities") (in such case other than as a result of an
acquisition of securities directly from the Company); or
(ii) persons who, as of the Effective Date, constitute the
Company's Board of Directors (the "Incumbent Directors") cease for any
reason, including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of the
Company subsequent to the Effective Date shall be considered an Incumbent
Director if such person's election was approved by or such person was
nominated for election by either (A) a vote of at least a majority of the
Incumbent Directors or (B) a vote of at least a majority of the Incumbent
Directors who are members of a nominating committee comprised, in the
majority, of Incumbent Directors; or
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate 50 percent or more of the voting
shares of the corporation issuing cash or securities in the consolidation
or merger (or of its ultimate parent corporation, if any), (B) any sale,
lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of
all or substantially all of the assets of the Company or (C) any plan or
proposal for the liquidation or dissolution of the Company.
A-11
Notwithstanding the foregoing, a "Change of Control" shall not be deemed
to have occurred for purposes of the foregoing clause (i) solely as the result
of an acquisition of securities by the Company which, by reducing the number of
shares of Voting Securities outstanding, increases the proportionate number of
shares of Voting Securities beneficially owned by any person to 25 percent or
more of the combined voting power of all then outstanding Voting Securities;
provided, however, that if any person referred to in this sentence shall
thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "CHANGE OF CONTROL" shall be deemed to have occurred for
purposes of the foregoing clause (i).
SECTION 17. GENERAL PROVISIONS
(a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.
(b) DELIVERY OF STOCK CERTIFICATES. Stock certificates to participants
under this Plan shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such certificates in the
United States mail, addressed to the participant, at the participant's last
known address on file with the Company.
(c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.
(d) TRADING POLICY RESTRICTIONS. Option exercises and other Awards
under the Plan shall be subject to such Company's insider-trading-policy-related
restrictions, terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from time to time.
(e) LOANS TO PARTICIPANTS. The Company shall have the authority to
make loans to participants hereunder (including to facilitate the purchase of
shares) and shall further have the authority to issue shares for promissory
notes hereunder.
(f) DESIGNATION OF BENEFICIARY. Each participant to whom an Award has
been made under the Plan may designate a beneficiary or beneficiaries to
exercise any Award or receive any payment under any Award payable on or after
the participant's death. Any such designation shall be on a form provided for
that purpose by the Administrator and shall not be effective until received by
the Administrator. If no beneficiary has been designated by a deceased
participant, or if the designated beneficiaries have predeceased the
participant, the beneficiary shall be the participant's estate.
SECTION 18. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present. Subject to such approval by the stockholders and to the requirement
that no Stock may be issued hereunder prior to such approval, Stock Options and
other Awards may be granted hereunder on and after adoption of this Plan by the
Board.
A-12
SECTION 19. GOVERNING LAW
This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: March 9, 2002
DATE APPROVED BY STOCKHOLDERS:
A-13
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------- 1. Proposal to elect the following Directors: For All With- For All
VICOR CORPORATION Nominees hold Except
- ---------------------------- (01) M. Michael Ansour (04) Jay M. Prager [ ] [ ] [ ]
COMMON STOCK (02) Estia J. Eichten (05) David T. Riddiford
(03) Barry Kelleher (06) Patrizio Vinciarelli
(07) Samuel Anderson
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE NOMINEE(S).
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. Proposal to approve the Amended and For Against Abstain
Restated 2000 Stock Option and Incentive Plan. [ ] [ ] [ ]
------------- Mark box at right if an address change or comment has [ ]
Please be sure to sign and date this Proxy. Date been noted on the reverse side of this card.
- ------------------------------------------------------------
- ---Stockholder sign here------Co-owner sign here------------
Detach Card Detach Card
VICOR CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Card,
which includes issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this Proxy Card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the 2002 Annual Meeting of Stockholders on
June 27, 2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation
Form of Proxy
COMMON VICOR CORPORATION COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 27, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark A.
Glazer, and each of them, as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Common Stock of Vicor Corporation (the "Corporation") held by the
undersigned at the close of business on April 30, 2002, at the Annual Meeting of
Stockholders to be held at the Andover Country Club, 60 Canterbury Street,
Andover, Massachusetts, on Thursday, June 27, 2002 at 5:00 p.m., local time, and
at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR, FOR THE APPROVAL AND
RATIFICATION OF THE AMENDED AND RESTATED 2000 STOCK OPTION AND INCENTIVE PLAN
AND, IN THE DISCRETION OF THE PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING. A stockholder wishing to vote in accordance with the
Board of Directors' recommendation need only sign and date this proxy and return
it in the envelope provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of Stockholders, the Proxy Statement with respect thereto and
the Corporation's 2001 Annual Report to Stockholders and hereby revokes any
proxy or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------- 1. Proposal to elect the following Directors: For All With- For All
VICOR CORPORATION Nominees hold Except
- ---------------------------- (01) M. Michael Ansour (04) Jay M. Prager [ ] [ ] [ ]
CLASS B COMMON STOCK (02) Estia J. Eichten (05) David T. Riddiford
(03) Barry Kelleher (06) Patrizio Vinciarelli
(07) Samuel Anderson
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE NOMINEE(S).
YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. Proposal to approve the Amended and For Against Abstain
Restated 2000 Stock Option and Incentive Plan. [ ] [ ] [ ]
------------- Mark box at right if an address change or comment has [ ]
Please be sure to sign and date this Proxy. Date been noted on the reverse side of this card.
- ------------------------------------------------------------
- ---Stockholder sign here------Co-owner sign here------------
Detach Card Detach Card
VICOR CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Card,
which includes issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this Proxy Card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the 2002 Annual Meeting of Stockholders on
June 27, 2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation
Form of Proxy
CLASS B COMMON VICOR CORPORATION CLASS B COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 27, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark A.
Glazer, and each of them, as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Class B Common Stock of Vicor Corporation (the "Corporation") held by
the undersigned at the close of business on April 30, 2002, at the Annual
Meeting of Stockholders to be held at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, on Thursday, June 27, 2002 at 5:00 p.m., local
time, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR, FOR THE APPROVAL AND
RATIFICATION OF THE AMENDED AND RESTATED 2000 STOCK OPTION AND INCENTIVE PLAN
AND, IN THE DISCRETION OF THE PROXIES, UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING. A stockholder wishing to vote in accordance with the
Board of Directors' recommendation need only sign and date this proxy and return
it in the envelope provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of Stockholders, the Proxy Statement with respect thereto and
the Corporation's 2001 Annual Report to Stockholders and hereby revokes any
proxy or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------