8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 18, 2007

NEWPORT CORPORATION

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation)	000-01649 (Commission File Number)	94-0849175 (IRS Employer Identification No.)
1791 Deere Avenue, Irvine, California (Address of principal executive offices)		92606 (Zip Code)

(949) 863-3144
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
	Item 9.01 — Financial Statements and Exhibits.
SIGNATURES
Exhibit Index

Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b)      On September 18, 2007, Newport Corporation (the “Company”) and Robert G. Deuster, the Company’s Chairman and Chief Executive Officer, agreed that Mr. Deuster would resign as the Company’s Chief Executive Officer and as a director of the Company as of that date, and will retire from the Company effective as of October 5, 2007. In connection with Mr. Deuster’s retirement, the Company and Mr. Deuster have entered into a separation agreement dated September 18, 2007 (the “Separation Agreement”), which sets forth certain matters with respect to the terms of Mr. Deuster’s separation from the Company. Pursuant to the Separation Agreement, Mr. Deuster will receive (i) a cash severance payment equal to $490,000, representing one hundred percent (100%) of his current annual base salary; (ii) a payout under the Company’s annual cash incentive plan equal to $490,000, representing his target bonus assuming one hundred percent (100%) achievement of all company financial goals and one hundred percent (100%) payout of the portion of such target bonus based on overall individual performance; and (iii) payment by the Company of premiums for health insurance coverage under COBRA for a period of twelve (12) months. The Separation Agreement also includes an agreement by Mr. Deuster not to solicit for employment, hire or contract with any of the Company’s employees for a period of two years following his separation date and a release by Mr. Deuster of all potential claims by him against the Company and its affiliates.

     The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the Separation Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

(c)      The Company has appointed Robert J. Phillippy, 47, as President and Chief Executive Officer and as a member of the Company’s Board of Directors effective as of September 18, 2007. Since July 2004, Mr. Phillippy has served as the Company’s President and Chief Operating Officer. Prior to that, Mr. Phillippy served as Vice President and General Manager of the U.S. operations of the Company’s Industrial and Scientific Technologies Division (now a part of the Company’s Photonics and Precision Technologies Division) from August 1999 to July 2004, and as Vice President and General Manager of the Company’s Science and Laboratory Products Division from April 1996 to August 1999.

     In connection with Mr. Phillippy’s appointment as President and Chief Executive Officer, the Compensation Committee of the Company’s Board of Directors has approved, effective as of September 18, 2007, an increase in Mr. Phillippy’s base salary to $425,000 and an increase in Mr. Phillippy’s annual target incentive percentage under the Company’s annual cash incentive plan to one hundred percent (100%) of his annual base salary. Eighty percent (80%) of such target incentive will be payable based on the achievement of specified company financial goals and twenty percent (20%) will be payable at the discretion of the Compensation Committee based on overall individual performance. In addition, the Compensation Committee awarded to Mr. Phillippy on September 20, 2007 a total of 15,000 restricted stock units under the Company’s 2006 Performance-Based Stock Incentive Plan. Such restricted stock units will vest in two equal installments in the first quarter of 2009 and 2010, provided that the Company achieves certain specified financial performance goals for its fiscal years 2008 and 2009. Fifty percent (50%) of such award is tied to the achievement of net sales performance goals and fifty percent (50%) is tied to the achievement of earnings per share performance goals for such years.

     A copy of the press release issued by the Company announcing the retirement of Mr. Deuster and the appointment of Mr. Phillippy as President and Chief Executive Officer and as a director is attached to this report as Exhibit 99.1.

Item 9.01 — Financial Statements and Exhibits.

     (d)      Exhibits

Exhibit Number	Description
10.1	Separation Agreement, dated September 18, 2007, by and between the Company and Robert G. Deuster.
99.1	Press release issued by the Company, dated September 20, 2007.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NEWPORT CORPORATION
Date: September 20, 2007	By:	/s/ Jeffrey B. Coyne
		Jeffrey B. Coyne
		Senior Vice President, General Counsel and Corporate Secretary

Exhibit Index

Exhibit Number	Description
10.1	Separation Agreement, dated September 18, 2007, by and between the Company and Robert G. Deuster.
99.1	Press release issued by the Company, dated September 20, 2007.

EX-10.1

Exhibit 10.1

September 18, 2007

Mr. Robert G. Deuster
25 Cherry Hills Drive
Coto de Caza, CA 92679

Re:     Separation Agreement

Dear Bob:

You have agreed with the Board of Directors that you will retire from your positions with Newport Corporation (“Newport”). In order to document the terms of this agreement, as we have discussed Newport and you agree as follows (the “Agreement”):

1. Resignation: You hereby (a) resign as an employee, a director, and an officer of Newport and of each of its subsidiaries of which you are a director, (b) resign as Newport’s designated representative on the Board of Directors of Nexx Systems, Inc., and (c) waive notice of the meeting of Newport’s Board of Directors held on September 12, 2007 at which the terms of your resignation were discussed.

2. Separation Date: We have agreed that your employment with Newport will terminate effective as of October 5, 2007 (“Separation Date”). On your Separation Date, you will be issued a check that will include pay for all time worked through your Separation Date, as well as all vacation accrued and unused as of your Separation Date. Upon your Separation Date, all benefits will cease except as set forth herein.

3. Separation Benefits: In consideration for your release provided for in Section 5 below and your agreements in Sections 6 and 7 below, Newport agrees to pay to you the following:

     (a) Severance Pay: Newport will provide you with severance pay equal to $490,000 representing your annual base salary for 2007 as approved by the Compensation Committee, less applicable federal and state withholding taxes and deductions, which shall be payable in a lump sum upon the Separation Date.

     (b) AIP Payout: Newport will provide you with an incentive bonus payout for 2007 under Newport’s 2007 Annual Incentive Plan equal to $490,000, representing your target bonus assuming one hundred percent (100%) achievement of all financial goals and one hundred percent (100%) payout of the remainder of such target bonus based on overall individual performance. Such bonus, less applicable federal and state withholding taxes and deductions, shall be payable in a lump sum on January 15, 2008.

Mr. Robert G. Deuster
September 18, 2007
Page 2
 

4. Existing Benefits:

     (a) Stock Options: Your outstanding stock options will continue to be governed by the terms of your stock option agreements (each, an “Option Agreement”) and the 1992 Stock Incentive Plan or 2001 Stock Incentive Plan (each, a “Plan”), as applicable. Pursuant to the terms of your Option Agreements and the applicable Plans, all vesting of such options shall cease on your Separation Date, and you will have a period of ninety (90) days following your Separation Date to exercise any vested options. All applicable withholding taxes due upon the exercise of such options must be paid or withheld at the time of such exercise.

     (b) Performance-Based Restricted Stock Units: Pursuant to the terms of your Restricted Stock Unit Award Agreements and the 2006 Performance-Based Stock Incentive Plan (the “2006 Plan”), you will not be entitled to receive any additional shares subject to vesting based on the achievement of 2007 or later financial targets.

     (c) COBRA: You will be eligible to continue your current health insurance benefits under COBRA. Newport will pay the premiums for such coverage for a period of twelve (12) months. A certified COBRA package and an election form will be mailed to your home within two weeks of your Separation Date. If you fail to return your election form and do not elect COBRA coverage within 60 days of receiving your election form, your ongoing health insurance coverage will be cancelled.

     (d) Health Insurance Benefits: Your health insurance benefits (medical, dental, vision, and mental health) will terminate on the last day of the month in which the Separation Date occurs (but will be eligible for continuation under COBRA as stated above). All life insurance and disability plans will terminate as of your Separation Date.

     (e) 401(k); ESPP: If you are participating in Newport’s 401(k) Plan and/or Employee Stock Purchase Plan (ESPP), all contributions will end as of your Separation Date. You will be reimbursed on your Separation Date for any monies contributed to the ESPP during the calendar quarter in which your Separation Date occurs.

     (f) Continued Indemnity and Insurance Coverage: Newport will continue to indemnify you and maintain Directors and Officers insurance coverage for you for a minimum of five (5) years following your Separation Date. Newport will also continue to comply with applicable Nevada law regarding indemnification of current and former officers and directors, Newport’s current bylaws and your Indemnification Agreement dated May 22, 2002, with Newport.

     (g) Supplemental LTD Coverage: Newport will allow you to assume your existing supplemental long-term disability policy. Following your Separation Date, Newport will notify the carrier of your change in status, and premiums for continuation of such coverage will be billed directly to you.

Mr. Robert G. Deuster
September 18, 2007
Page 3
 

     (h) Miscellaneous: You may keep your Newport-owned cellular phone, and you and Newport will cooperate to transfer such phone to your personal account no later than October 31, 2007. You agree to forward all work-related calls to the appropriate personnel at Newport. Newport’s IT staff will assist you in transferring any personal files on your Newport-owned laptop computer to a personal computer or to CD-ROMs.

5. Final Settlement and Release of All Claims: As a condition to receiving any of the separation benefits set forth above under Newport’s policies, you agree that this Agreement constitutes a full and final settlement of any and all claims, known or unknown, of any kind that you or your spouse or dependents may have to date against Newport or any of its parent or affiliated companies and their officers, directors, shareholders, employees, insurers, agents, successors, or assigns, including without limitation, with respect to your employment by Newport and the cessation thereof. To the fullest extent allowed by law, you hereby waive and release all such claims in return for the severance pay and benefits you will receive under this Agreement.

This release also includes any unknown claims that you are not aware of at this time. In that respect, you waive the protection of any law that might otherwise prevent you from waiving unknown claims, such as California Labor Code section 1542 which states:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

6. Non-Disparagement: You agree to use reasonable best efforts to not make, participate in the making of, or encourage any current or former Newport employees or any other person to make, any statements, written or oral, which disparage or defame the goodwill or reputation of Newport or its products, services, agents, representatives, directors, officers, shareholders, attorneys, employees, vendors, affiliates, successors or assigns, or any person acting by, through, under or in concert with any of them. Newport agrees that it will use its reasonable best efforts to ensure that Newport, the members of its Board of Directors, and Newport’s officers not make, participate in the making of, or encourage any current or former Newport employees or other persons to make any statements, written or oral, which disparage or defame you or your reputation or the services you have performed for Newport. Nothing in this paragraph shall prohibit either party from providing truthful testimony in response to a subpoena or other compulsory legal process. Newport shall prepare a press release regarding your transition, and will provide you with an advance copy of such release for your review and comment prior to issuing such release.

7. Solicitation or Hiring of Newport Employees: As a material inducement for Newport to enter into this Agreement, you agree that, for a period extending from the date hereof until that date which is two (2) years following your Separation Date, you will not, directly or indirectly, (a) solicit for employment, hire or contract with any employee of Newport or its subsidiaries, or (b) provide any assistance, advice or services to any other person or entity in connection with the solicitation for employment or contract, hiring of or contracting with any employee of Newport or its subsidiaries.

Mr. Robert G. Deuster
September 18, 2007
Page 4
 

8. Other Provisions:

     (a) You acknowledge that you have executed Newport’s Proprietary Information Agreement and agree that you will continue to abide by the terms of such agreement.

     (b) You agree to use reasonable efforts to cooperate with Newport in prosecuting or defending any legal action that relates in any manner to your employment. All reasonable out-of-pocket expenses incurred by you relating to such cooperation will be reimbursed by Newport.

     (c) You will be solely responsible for directly paying all outstanding amounts on any Newport credit card, including both business-related and personal charges. You must submit to Newport within two weeks of your Separation Date proper expense reports for business related charges in order to be reimbursed for such charges.

     (d) You agree to return all Newport property including, but not limited to, your badge, access card, keys, manuals, phone card, credit card, computer equipment, etc. to Jeff Coyne by the end of the business day on your Separation Date.

9. Entire Agreement: You agree that this Agreement sets forth all of the terms of your agreement with Newport and supersedes any and all agreements between you and Newport relating to your employment, except that any other agreements you have signed with Newport concerning confidential information shall remain in effect. You acknowledge that neither Newport nor its agents or attorneys, has made any promise or representation, express or implied, written or oral, not contained in this Agreement to induce you to execute this Agreement. You acknowledge that you have signed this Agreement voluntarily and without coercion, relying only on such promises, representations and warranties as are contained in this document and understand that you do not waive any right or claim that may arise after the date this Agreement becomes effective.

10. Modification: By signing below, you acknowledge your understanding that this Agreement may not be altered, amended, modified, or otherwise changed in any respect except by another written agreement that specifically refers to this Agreement, executed by your Newport’s authorized representatives.

11. Severability: Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement.

12. Governing Law; Legal and Equitable Remedies: This Agreement is governed by, and is to be interpreted according to, the laws of the State of California. Each party shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief without prejudice to any other rights or remedies the other party may have at law or in equity for breach of this Agreement.

Mr. Robert G. Deuster
September 18, 2007
Page 5
 

We believe that this covers the details of your resignation. If you agree, please execute this Agreement in the space provided below. Should you have any questions or concerns, please contact me.

Regards,

/s/ Kenneth F. Potashner

Kenneth F. Potashner
Chairman of the Board

I agree to the terms stated in this Agreement.

/s/ Robert G. Deuster	September 18, 2007
Robert G. Deuster	Date

EX-99.1

Exhibit 99.1

Press Release

Contact:
Charles F. Cargile, 949/863-3144
Newport Corporation, Irvine, CA
investor@newport.com
or
Dan Peoples, 858/552-8146
Makinson Cowell (US)

NEWPORT CORPORATION ANNOUNCES RETIREMENT OF
ROBERT G. DEUSTER, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER

     Irvine, CA. — September 20, 2007 — Newport Corporation (NASDAQ: NEWP) today announced that Robert G. Deuster, 57, Newport’s chairman and chief executive officer, will be retiring from Newport effective October 5, 2007. In anticipation of Mr. Deuster’s retirement, Robert J. Phillippy, 47, currently Newport’s president and chief operating officer, has assumed the role of chief executive officer and will serve on the company’s Board of Directors. Kenneth F. Potashner, 49, a member of the Board since 1998, has been appointed non-executive chairman of the Board.

     Mr. Phillippy is an 11-year veteran of Newport, and has served as the company’s president and chief operating officer since July 2004. During this time, he has played an instrumental role in driving the company’s most important initiatives, including the integration of the Spectra-Physics acquisition and the execution of the company’s integrated photonics solutions strategy. Prior to that time, Mr. Phillippy served as vice president and general manager of the U.S. operations of Newport’s Industrial and Scientific Technologies Division (now a part of the company’s Photonics and Precision Technologies Division), where he spearheaded the company’s transition from a provider of discrete components and instruments primarily for scientific research customers to a manufacturer of both components and integrated systems for both research and commercial applications.

     “On behalf of Newport, I would like to express our appreciation to Bob Deuster for his leadership and strategic vision over the past 11 years, which have helped make Newport a global leader in photonics,” said Mr. Potashner. “Going forward, Bob Phillippy’s skills and experience

make him the ideal candidate to lead Newport as we continue to pursue our goal of becoming the world’s leading supplier of integrated photonics solutions.”

     “Newport has been an important part of my life for more than a decade, and I have greatly enjoyed leading the company during this time of significant growth beyond its research market origins,” said Mr. Deuster. “We have planned for Bob Phillippy to be my successor in this position for some time, and I have great confidence that he, together with the rest of our strong, experienced management team, will continue to drive Newport to reach its tremendous potential.”

     “I am very excited by the opportunity to lead Newport,” said Mr. Phillippy. “Our primary markets are increasingly utilizing photonic technologies, we have outstanding products and capabilities to meet the needs of these markets and we have extremely talented people. This combination of excellent market opportunity, differentiated technological capability, and a strong team provides our company with great potential. We are confident in our ability to leverage this potential to create a very bright future for Newport.”

ABOUT NEWPORT CORPORATION

     Newport Corporation is a leading global supplier of advanced-technology products and systems to customers in the scientific research, microelectronics manufacturing, aerospace and defense/security, life and health sciences and precision industrial manufacturing markets. Newport’s innovative solutions leverage its expertise in high-power semiconductor, solid-state and ultrafast lasers, photonics instrumentation, sub-micron positioning systems, vibration isolation, optical subsystems and precision automation to enhance the capabilities and productivity of its customers’ manufacturing, engineering and research applications. Newport is part of the Standard & Poor’s SmallCap 600 Index and the Russell Microcap Index.

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SAFE HARBOR STATEMENT

     This news release contains forward-looking statements that are based on current expectations and involve risks and uncertainties. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. As discussed in Newport’s Annual Report on Form 10-K for the year ended December 30, 2006, assumptions relating to the foregoing involve judgments and risks with respect to a number of matters, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Newport. Although Newport believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by Newport or any other person that Newport’s objectives or plans will be achieved. Newport undertakes no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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