SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
IBIS TECHNOLOGY 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:
-----------------------------
[IBIS LOGO]
April 3, 2001
Dear Stockholder,
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Ibis Technology Corporation (the "Company") to be held at 10:00 a.m. (local
time) on Thursday, May 3, 2001 at the offices of the Company, 32 Cherry Hill
Drive, Danvers, Massachusetts 01923.
At the Annual Meeting, three persons will be elected to the Board of
Directors. The Company will also ask the stockholders to approve an amendment to
its 1997 Employee, Director and Consultant Stock Option Plan to increase by
600,000 shares the aggregate number of shares of Common Stock for which stock
options may be granted under this plan, and to ratify the selection of KPMG LLP
as the Company's independent public accountants for the fiscal year ending
December 31, 2001. The Board of Directors recommends A VOTE FOR these proposals.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth on
the card. This will ensure your proper representation at the Annual Meeting.
Sincerely,
/s/ Martin J. Reid
MARTIN J. REID
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
IBIS TECHNOLOGY CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 2001
To the Stockholders of Ibis Technology Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Ibis Technology
Corporation, a Massachusetts corporation (the "Company"), will be held on
Thursday, May 3, 2001 at the offices of the Company, 32 Cherry Hill Drive,
Danvers, Massachusetts 01923 at 10:00 a.m. (local time) for the following
purposes:
1. To elect three members to the Board of Directors to serve for a term ending
in 2004 and until their successors are duly elected and qualified.
2. To consider and act upon a proposal to approve an amendment to the 1997
Employee, Director and Consultant Stock Option Plan to increase by 600,000
shares the aggregate number of shares of Common Stock for which stock
options may be granted under this plan.
3. To consider and act upon a proposal to ratify the appointment of KPMG LLP as
the Company's independent public accountants for the fiscal year ending
December 31, 2001.
4. To transact such other business as may be properly brought before the Annual
Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on March 9, 2001 as
the record date for the determination of Stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in accordance
with the instructions on the proxy card. A pre-addressed, postage prepaid return
envelope is enclosed for your convenience.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Debra L. Nelson
DEBRA L. NELSON
Clerk
April 3, 2001
IBIS TECHNOLOGY CORPORATION
32 CHERRY HILL DRIVE
DANVERS, MA 01923
978-777-4247
________________________
PROXY STATEMENT
________________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Ibis Technology Corporation (the "Company"), a
Massachusetts corporation, of proxies, in the accompanying form, to be used at
the Annual Meeting of Stockholders to be held at the offices of the Company, 32
Cherry Hill Drive, Danvers, Massachusetts 01923 on Thursday, May 3, 2001 at
10:00 a.m. (local time), and any adjournments thereof (the "Meeting").
This Proxy Statement and the accompanying proxy are being mailed on or about
April 3, 2001 to all Stockholders entitled to notice of and to vote at the
Meeting.
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the three nominees for director named herein, FOR the amendment to
the 1997 Employee, Director and Consultant Stock Option Plan (the "1997 Plan")
to increase by 600,000 shares the aggregate number of shares of Common Stock for
which stock options may be granted under the 1997 Plan, and FOR the ratification
of the appointment of KPMG LLP as the Company's independent public accountants
for the fiscal year ending December 31, 2001. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before its use
by delivering to the Company a written notice of revocation or a duly executed
proxy bearing a later date. Any Stockholder who has executed a proxy but is
present at the Meeting, and who wishes to vote in person, may do so by revoking
his or her proxy as described in the preceding sentence. Shares represented by
valid proxies in the form enclosed, received in time for use at the Meeting and
not revoked at or prior to the Meeting, will be voted at the Meeting. The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of the Company's common stock, par value $.008 per share ("Common
Stock"), is necessary to constitute a quorum at the Meeting.
The affirmative vote of a plurality of the shares voted affirmatively or
negatively at the Meeting is required for the election of Directors. With
respect to all other matters to be acted upon at the Meeting, the affirmative
vote of a majority of the total number of shares voted either for or against the
proposal at the Meeting is required to approve a proposal.
With respect to the tabulation of votes on all matters, abstentions and
broker non-votes have no effect on the vote.
The close of business on March 9, 2001 has been fixed as the record date for
determining the Stockholders entitled to notice of and to vote at the Meeting.
As of the close of business on March 9, 2001, the Company had 8,361,972 shares
of Common Stock outstanding and entitled to vote. Holders of Common Stock are
entitled to one vote per share on all matters to be voted on by Stockholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their expenses
in
forwarding proxy material to such beneficial owners. Solicitation of proxies by
mail may be supplemented by telephone, telegram, telex and personal solicitation
by the directors, officers or employees of the Company. No additional
compensation will be paid for such solicitation. The Company has retained D. F.
King & Co., Inc. to assist in the solicitation of proxies at a cost of
approximately $5,000 plus reimbursement of expenses.
The Annual Report to Stockholders for the fiscal year ended December 31,
2000 is being mailed to the Stockholders with this Proxy Statement, but does not
constitute a part hereof.
SHARE OWNERSHIP
The following table sets forth certain information as of February 28, 2001
concerning the ownership of Common Stock by (i) each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares of
Common Stock, (ii) each current member of the Board of Directors, (iii) each
executive officer named in the Summary Compensation Table on p. 8 hereof, and
(iv) all current directors and executive officers as a group.
SHARES BENEFICIALLY
OWNED (1)
--------------------
NAME AND ADDRESS** NUMBER PERCENT
- ------------------------------------------------------------ --------- --------
Gilder Gagnon Howe & Co. LLC (2)
1775 Broadway, 26th Floor
New York, New York 10019.................................. 1,593,623 19.1%
Martin J. Reid (3).......................................... 135,000 1.6%
Julian G. Blake, Ph.D. (4).................................. 54,408 *
Debra L. Nelson, C.P.A. (5)................................. 53,150 *
Angelo V. Alioto (6)........................................ 37,473 *
Robert P. Dolan (7)......................................... 31,103 *
Robert L. Gable (8)......................................... 16,250 *
Peter H. Rose, Ph.D. (9).................................... 10,000 *
Leslie B. Lewis (10)........................................ 9,800 *
Donald F. McGuinness (11)................................... 8,200 *
Dimitri Antoniadis, Ph.D. (12).............................. 5,000 *
Lamberto Raffaelli (13)..................................... 3,750 *
Geoffrey Ryding, Ph.D. (14)................................. 3,644 *
Executive Officers and Directors as a group (12 Persons)
(15)...................................................... 370,378 4.3%
- ------------------------
* Represents beneficial ownership of less than 1% of the outstanding Common
Stock.
** Addresses are given for beneficial owners of more than 5% of the outstanding
Common Stock only.
(1) The number of shares of Common Stock issued and outstanding on February 28,
2001 was 8,360,472. The calculation of percentage ownership for each listed
beneficial owner is based upon the number of shares of Common Stock issued
and outstanding at February 28, 2001, plus shares of Common Stock subject to
options held by such person or group at February 28, 2001 and exercisable
within 60 days thereafter. The Company believes that all the persons and
entities named in the Table have the sole
2
voting and investment power with respect to all the shares as beneficially
owned by them, except as noted below.
(2) This information, except the percentage beneficially owned, is based solely
on a Schedule 13G filed on February 6, 2001 with the Securities and Exchange
Commission by Walter Weadock, a member of Gilder Gagnon & Howe. Certain
members and/or employees of Gilder Gagnon & Howe claim shared dispositive
power with respect to these shares.
(3) Includes 133,500 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(4) Includes 43,750 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(5) Includes 49,250 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(6) Includes 5,750 shares of Common Stock that may be acquired upon the exercise
of options within 60 days of February 28, 2001.
(7) Includes 8,109 shares of Common Stock that may be acquired upon the exercise
of options within 60 days of February 28, 2001.
(8) Includes 11,250 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(9) Consists of 10,000 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(10) Includes 7,500 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(11) Consists of 8,200 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(12) Consists of 5,000 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(13) Consists of 3,750 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(14) Includes 2,500 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of February 28, 2001.
(15) See footnotes 3 through 14 above.
3
MANAGEMENT
DIRECTORS
The Company's Restated Articles of Organization, as amended (the "Articles
of Organization"), and Restated By-Laws (the "By-Laws") provide for the
Company's business to be managed by or under the direction of the Board of
Directors. Under the Articles of Organization and By-Laws, the number of
directors is fixed from time to time by the Board of Directors. The Board of
Directors currently consists of eight members, classified into three classes as
follows: Dimitri Antoniadis, Robert L. Gable and Martin J. Reid constitute a
class with a term which expires at the upcoming Meeting (the "Class I
directors"), Peter H. Rose, Donald F. McGuinness and Lamberto Raffaelli
constitute a class with a term ending in 2002 (the "Class II directors"), and
Geoffrey Ryding and Leslie B. Lewis constitute a class with a term ending in
2003 (the "Class III directors"). At each annual meeting of stockholders,
directors are elected for a full term of three years to succeed those directors
whose terms are expiring.
On February 5, 2001, the Board of Directors voted to nominate Dimitri
Antoniadis, Robert L. Gable and Martin J. Reid for election at the Meeting for a
term of three years to serve until the 2004 Annual Meeting of Stockholders, and
until their respective successors have been elected and qualified. Peter H.
Rose, Donald F. McGuinness and Lamberto Raffaelli (Class II directors) and
Geoffrey Ryding and Leslie B. Lewis (Class III directors) will serve until the
Annual Meeting of Stockholders to be held in 2002 and 2003, respectively, and
until their respective successors have been elected and qualified.
The names of the Company's current directors and certain information about
them are set forth below:
NAME AGE POSITION
- ------------------------------------- -------- --------------------------------------------------------
Martin J. Reid....................... 59 President, Chief Executive Officer and Chairman
Dimitri Antoniadis, Ph.D............. 54 Director
Robert L. Gable (1).................. 70 Director
Leslie B. Lewis (1).................. 60 Director
Donald F. McGuinness (2)............. 68 Director
Lamberto Raffaelli (2)............... 50 Director
Peter H. Rose, Ph.D. (1)............. 76 Director
Geoffrey Ryding, Ph.D. (2)........... 59 Director
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
The following is a brief summary of the background of each director of the
Company:
MARTIN J. REID joined Ibis in December 1997 as President and Chief Executive
Officer and as a director. In May 2000, Mr. Reid was elected to serve as
Chairman of the Company's Board of Directors. From 1991 to 1996, Mr. Reid was
President and Chief Executive Officer of Alpha Industries, a publicly-held
manufacturer of a broad range of Gallium Arsenide products and silicon
integrated circuits for the semiconductor industry. He served as a director of
Alpha Industries from 1985 to January 1998, of Secure Technology from 1997 to
August 1998 and of Asahi America from 1997 to November 1999, which merged with
Asahi Organic Chemical in December 1999.
4
DIMITRI ANTONIADIS, PH.D. was appointed to the Board of Directors in 1996.
He is a Professor of Electrical Engineering at Massachusetts Institute of
Technology (MIT) and has been a member of the faculty since 1978.
ROBERT L. GABLE was appointed to the Board of Directors in 1997. He has been
a director and advisor (November 1998--October 1999), Chairman
(June 1990--July 1998) and Chief Executive Officer (June 1990--October 1997) of
Unitrode Corporation, a publicly held company which was acquired by Texas
Instruments in October 1999. Mr. Gable is also a director of New England
Business Service, Inc. and Evercel, Inc., each of which is a publicly-held
company.
LESLIE B. LEWIS was appointed to the Board of Directors in 1998. Since 1985,
he has been President of Asahi America, Inc., which merged with Asahi Organic
Chemical in December 1999. He has been Chief Executive Officer of Asahi since
1989 and Chairman since 1996. He is also Chairman of Quail Piping
Products, Inc.
DONALD F. MCGUINNESS was appointed to the Board of Directors in 1996. He has
been the Chairman (November 1988--present) President and Chief Executive Officer
(November 1988 to February 1999) of White Electronic Designs, Inc., a
publicly-held company which was acquired by Bowmar Instrument Corporation in
October 1998.
LAMBERTO RAFFAELLI was appointed to the Board of Directors in 1998. From
1994 to December 2000, he was President and Chief Executive Officer of
Arcom, Inc., which was acquired by Quandrant-Vectron, a division of Dover
Corporation International, in September 1999.
PETER H. ROSE, PH.D. has served as director of the Company since 1988. He
has been Vice President of Research at Orion Equipment, Inc. since 1998. In
July 1993, Dr. Rose founded and became Chairman of Krytek Corporation, a
manufacturer of aerosol cleaning equipment for the semiconductor industry which
merged with Beta Gamma, LLC in September 1999. He is a director of Ion Implant
Services, Orion Equipment, Inc., Epion Corporation and Niton Corporation.
GEOFFREY RYDING, PH.D. joined Ibis in May 1992 as President and Chief
Operating Officer and as a director. In December 1993, he was elected as Chief
Executive Officer of the Company. He resigned as President and Chief Executive
Officer effective December 1, 1997. He has been a director of Orion
Equipment, Inc. since August 1997 and President of Orion since January 1998.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
MEETING ATTENDANCE. During the fiscal year ended December 31, 2000, there
were four meetings of the Board of Directors and the Board of Directors acted by
unanimous written consent on one occasion. No director attended fewer than 75%
of the total number of meetings of the Board and of committees of the Board on
which he served during fiscal 2000.
AUDIT COMMITTEE. The Audit Committee has three members and currently
consists of Lamberto Raffaelli, Donald F. McGuinness and Geoffrey Ryding.
Mr. McGuinness and Dr. Ryding were appointed to the Audit Committee in
February 2000. In January 2000, the Audit Committee consisted of Richard
Hodgson, Dimitri Antoniadis and Lamberto Raffaelli. The Audit Committee met five
times in 2000. The Audit Committee reviews the engagement of the Company's
independent accountants, reviews annual financial statements, considers matters
relating to accounting policy and internal controls and reviews the scope of
annual audits.
5
COMPENSATION COMMITTEE. The Compensation Committee has three members and
currently consists of Peter H. Rose, Robert L. Gable and Leslie B. Lewis.
Mr. Lewis was appointed to the Compensation Committee in February 2000. In
January 2000, the Compensation Committee consisted of Donald F. McGuinness,
Robert L. Gable and Peter H. Rose. The Compensation Committee met once during
fiscal 2000 and acted by unanimous written consent on ten occasions. The
Compensation Committee reviews, approves and makes recommendations on the
Company's compensation policies, practices and procedures to help ensure that
legal and fiduciary responsibilities of the Board of Directors are carried out
and that such policies, practices and procedures contribute to the success of
the Company; and further, administers stock and employee benefit plans,
including the Company's 1988 Stock Option Plan, the 1993 Employee, Director and
Consultant Stock Option Plan (the "1993 Plan"), the 1997 Employee, Director and
Consultant Stock Option Plan (the "1997 Plan") and the Ibis Technology
Corporation 2000 Employee Stock Purchase Plan.
NOMINATING COMMITTEE. The Company does not have a standing Nominating
Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Compensation Committee consists of three members, Peter H. Rose, Leslie B. Lewis
and Robert L. Gable. No executive officer or employee of the Company is a member
of the Compensation Committee.
COMPENSATION OF DIRECTORS
Pursuant to the Company's 1993 Plan and 1997 Plan, each non-employee
director of the Company then serving as a director is automatically granted
non-qualified stock options to purchase 1,250 shares of Common Stock following
each Annual Meeting of Stockholders of the Company, and any new non-employee
directors will be automatically granted non-qualified stock options to purchase
1,250 shares of Common Stock upon election to the Board. These options vest in
full immediately prior to the annual meeting following the date the options are
granted and have an exercise price equal to the fair market value of the Common
Stock on the date of grant. Non-employee directors of the Company have been
automatically granted the following options under the 1993 and 1997 Plans as of
December 31, 2000:
AGGREGATE WEIGHTED AVERAGE
DIRECTOR OPTION GRANTS EXERCISE PRICE
- ------------------------------------------------ ------------- ----------------
Peter H. Rose, Ph.D............................. 8,750(1) $13.99
Dimitri Antoniadis, Ph.D........................ 6,250(1) $16.85
Donald F. McGuinness............................ 6,250(1) $16.85
Robert L. Gable................................. 5,000(1) $20.38
Leslie B. Lewis................................. 3,750(1) $23.29
Lamberto Raffaelli.............................. 3,750(1) $23.29
Geoffrey Ryding................................. 3,750(1) $23.29
- ------------------------
(1) All options have vested with the exception of an option for 1,250 shares
granted immediately following the Company's 2000 Annual Meeting. Such option
was granted at an exercise price of $36.25 per share and vests in full
immediately prior to the Meeting.
6
In addition, Dr. Antoniadis and Messrs. McGuinness, Gable, Lewis and
Raffaelli were each granted an option to purchase 7,500 shares upon their
election to the Board of Directors in July 1996, July 1996, July 1997,
November 1998 and November 1998, respectively, at exercise prices of $6.50,
$6.50, $9.75, $10.44 and $10.44, respectively. Each of these options vest in
three equal annual installments commencing one year from the date of grant.
The Company pays each non-employee director (Dr. Rose, Dr. Antoniadis,
Mr. McGuinness, Mr. Gable, Dr. Ryding, Mr. Lewis and Mr. Raffaelli) $1,000 for
each meeting of the Board of Directors and committees of the Board that each of
them attends, $250 for each telephonic Board and committee meeting in which they
participate and reimburses each of them for their expenses incurred in attending
such meetings. In 2000, the aggregate amount of compensation and reimbursement
for such expenses paid to all of these directors was approximately $26,000.
EXECUTIVE OFFICERS
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below. Except for the Chief
Executive Officer, who has an employment agreement with the Company, all
executive officers serve at the pleasure of the Board of Directors.
NAME AGE POSITION
- ---------------------------------- -------- -----------------------------------------
Debra L. Nelson, C.P.A............ 37 Chief Financial Officer, Treasurer and
Clerk
Angelo V. Alioto.................. 54 Vice President of Sales and Marketing
Julian G. Blake, Ph.D............. 56 Vice President of Engineering
Robert P. Dolan................... 41 Vice President of Wafer Manufacturing
DEBRA L. NELSON returned to Ibis in February 1998 as Chief Financial
Officer, Treasurer and Clerk. From November 1996 to January 1998 Ms. Nelson was
Chief Financial Officer of Rockport Trade Systems, Inc. Ms. Nelson originally
joined Ibis in January 1990 and became the Controller in May 1992 and its
Treasurer and Clerk in December 1993.
ANGELO V. ALIOTO joined the Company in 1990 as a Regional Sales Manager,
became Worldwide Sales Manager in 1991 and was elected as Vice President of
Sales in December 1993 and Vice President of Marketing in January 1996.
JULIAN G. BLAKE, PH.D. joined the Company in 1998 as Director of Technology.
In February 1999, he was appointed Vice President of Engineering. From 1983 to
1998, Dr. Blake was Technical Director at the Flat Panel Division and Chief
Scientist at the Semiconductor Equipment Operations of Eaton Corporation, a
publicly-held manufacturer of highly engineered products that serve industrial,
vehicle, construction, commercial and semiconductor markets.
ROBERT P. DOLAN joined the Company in 1988 as Production Manager. In
January 1997, he was appointed Vice President of Wafer Manufacturing.
7
EXECUTIVE COMPENSATION
The following table summarizes the compensation for services rendered to the
Company in all capacities during the Company's last three fiscal years paid to
or earned by: (i) the Chief Executive Officer of the Company (the "CEO") and
(ii) the four most highly compensated executive officers of the Company (other
than the CEO) as of December 31, 2000 whose salary and bonus earned during
fiscal 2000 exceeded $100,000 (all of these officers are referred to herein
collectively as the "Named Executive Officers"). Information is provided for
each fiscal year in which an individual served as our Chief Executive Officer
and for each other executive officer listed only for the fiscal years in which
they earned more than $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND FISCAL ------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS($) OPTIONS(#) COMPENSATION($)
- ---------------------------------------- -------- -------- -------- ------------ ---------------
Martin J. Reid (1)...................... 2000 $220,000 -- 50,000 $2,065(3)
President, Chief Executive Officer and 1999 $192,500 $31,800 50,000 $ 520(3)
Chairman 1998 $175,000 -- -- $ 900(3)
Debra L. Nelson......................... 2000 $112,000 -- 19,000 $ 200(3)
Chief Financial Officer, Treasurer and 1999 $105,200 $13,900 19,000 $ 60(3)
Clerk
Angelo V. Alioto........................ 2000 $138,000 -- 23,000 $ 550(3)
Vice President Marketing and Sales 1999 $129,700 $17,100 23,000 $ 220(3)
1998 $119,200 -- 25,000 $ 420(3)
Julian G. Blake, Ph.D. (2).............. 2000 $146,000 -- 25,000 $1,360(3)
Vice President Engineering 1999 $136,800 $18,100 25,000 $ 240(3)
Robert P. Dolan......................... 2000 $102,000 -- 17,000 $ 195(3)
Vice President Wafer Manufacturing 1999 $ 96,000 $12,700 17,000 $ 60(3)
- ------------------------
(1) Mr. Reid was appointed Chairman effective May 4, 2000.
(2) Dr. Blake was appointed Vice President of Engineering effective February 4,
1999.
(3) All Other Compensation consists of the dollar value of premiums paid by the
Company with respect to term life insurance for the benefit of each Named
Executive Officer in the amount of $100,000.
8
OPTION GRANTS
The following table sets forth certain information regarding each stock
option granted to a Named Executive Officer during fiscal 2000.
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 2000
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF STOCK PRICE
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OPTION TERM (3)
OPTIONS GRANTED TO PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
- ---- ------------- ----------- ------------ ---------- ---------- ----------
Martin J. Reid................. 50,000 19% $46.25 1/4/10 $1,456,875 $3,676,875
Debra L. Nelson................ 19,000 7% $46.25 1/4/10 $ 553,613 $1,397,213
Angelo V. Alioto............... 23,000 9% $46.25 1/4/10 $ 670,163 $1,691,363
Julian G. Blake, Ph.D.......... 25,000 10% $46.25 1/4/10 $ 728,438 $1,838,438
Robert P. Dolan................ 17,000 6% $46.25 1/4/10 $ 495,338 $1,250,138
- ------------------------
(1) Options were granted pursuant to the 1997 Plan. All options are incentive
stock options which vest in four equal annual installments commencing one
year from the date of grant, January 4, 2000. All options granted to the
Named Executive Officers terminate ten years after the grant date, subject
to earlier termination in accordance with the 1997 Plan and the applicable
option agreement. In the event of a change in control of the Company (as
defined in the 1997 Plan), all outstanding unvested options, including those
options included in this table, will become immediately vested, unless a
provision is made for the continuation of such options pursuant to the
applicable provisions of the 1997 Plan.
(2) Under the terms of the 1997 Plan, the exercise price of both incentive and
non-qualified stock options may be no less than the closing price of the
Common Stock for the trading day immediately preceding the grant date.
(3) Amounts represent hypothetical gains that could be achieved for the options
if exercised at the end of the option term. Those gains are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from the
date the respective options were granted to their expiration dates. Actual
gains, if any, on stock options, exercises and Common Stock holdings are
dependent on future performance of the Common Stock.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information regarding the exercises of options
by each of the Named Executive Officers during fiscal 2000. In addition, the
table includes the number of shares covered by both exercisable and
unexercisable stock options as of December 31, 2000 and the value of
"in-the-money" options as of that date. An option is "in-the-money" if the per
share fair market value of the underlying stock exceeds the option exercise
price per share.
9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF THE UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Martin J. Reid................. 15,000 $1,018,175 108,500 87,500 $1,041,750 $281,250
Debra L. Nelson................ 5,000 $ 364,338 23,083 49,917 $ 244,163 $296,462
Angelo V. Alioto............... 15,405 $1,152,954 -- 54,584 $ -- $224,174
Julian G. Blake, Ph.D.......... 10,000 $ 135,000 17,916 57,084 $ 147,494 $255,631
Robert P. Dolan................ 13,726 $ 936,212 -- 36,417 $ -- $171,462
- ------------------------
(1) The value of unexercised in-the-money options at December 31, 2000 is based
on the difference between the fair market value for the Company's Common
Stock of $19.25 (the closing sale price per share of the Company's Common
Stock as reported on the Nasdaq National Market on December 31, 2000) and
the per share option exercise price, multiplied by the number of shares of
Common Stock underlying such options.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The Company has an employment agreement with Martin J. Reid. This agreement
provides that Mr. Reid is to serve as President and Chief Executive Officer of
the Company until December 31, 2003 at an annual base salary of $220,000 subject
to increase from time to time as determined by action of the Board of Directors.
The agreement also provides that Mr. Reid will be paid bonuses as are determined
from time to time by the Board or its Compensation Committee in its discretion,
taking into account, among other factors, Mr. Reid's performance and the
Company's performance. See "Report of Compensation Committee on Executive
Compensation--Annual Incentive Bonuses." In the event that Mr. Reid's employment
is terminated by the Company without cause or in certain other circumstances,
Mr. Reid will be paid at his then annual base salary rate for a period of
12 months following the date of such termination and he will be entitled to be
paid for the cost of 12 months of health benefits. Mr. Reid may terminate his
employment at any time, but will forfeit certain benefits if he does not provide
the Company with at least 60 days prior written notice. This agreement also
contains a one-year post termination non-competition provision.
In September 1999, the Company entered Change of Control Agreements with
Martin J. Reid and Debra L. Nelson. In the event that Mr. Reid's or
Ms. Nelson's employment is terminated in connection with a Change of Control of
the Company, they will be paid a lump sum equal to (i) twice the highest annual
salary for the preceding three year period for Mr. Reid and (ii) the highest
annual salary for the preceding three year period for Ms. Nelson. Annual salary
includes base salary and bonus and excludes reimbursements and amounts
attributable to stock options and other non-cash compensation. Under the
agreements, each of Mr. Reid and Ms. Nelson will also be provided health
benefits for a period of time following termination or until the date they
become eligible for such coverage offered by a subsequent employer if earlier.
Mr. Reid is entitled to these benefits for two years and Ms. Nelson is entitled
to these benefits for one year. These severance compensation and benefits shall
replace, and be provided in lieu of any severance compensation and benefits that
may be provided under any other agreement.
10
All of the Company's employees are subject to certain confidentiality and
non-competition obligations. Each employee has also agreed that all inventions,
discoveries and developments which may be used in the Company's business and
that are developed by such employee during his or her employment with the
Company are the Company's property and the employee will assign his or her
rights therein to the Company.
In the event of a change in control of the Company (as defined in the 1993
and 1997 Plans), all outstanding unvested options will become immediately
vested, unless provision is made for the continuation of such options pursuant
to the applicable provisions of the 1993 and 1997 Plans.
11
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee consists of Peter H. Rose, Leslie B. Lewis and
Robert L. Gable, all non-employee, independent members of the Board of
Directors. It is the responsibility of the Compensation Committee to review,
approve and make recommendations regarding the Company's compensation policies,
practices and procedures to help ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and that such
policies, practices and procedures contribute to the success of the Company; and
further to administer stock and employee benefit plans.
BASE SALARY AND BENEFITS
The compensation philosophy of the Company is to maintain executive base
salary at a competitive level to enable the Company to attract and retain key
executive and employee talent needed to accomplish the Company's goals. In
determining appropriate base salary levels and other compensation elements, the
Compensation Committee considers the scope of responsibility, prior experience,
past accomplishments, and data obtained through participation in industry
surveys, as well as by monitoring developments in key industries such as the
semiconductor industry. Periodic adjustments in base salary relate to individual
performance against pre-established objectives and to competitive factors.
Executive officers are also entitled to participate in benefit plans generally
available to employees.
ANNUAL INCENTIVE BONUSES
The Company, along with each executive officer, establishes goals related
specifically to that officer's areas of responsibility. The Compensation
Committee of the Board, in its discretion, may award bonuses to executive
officers, and the Company pays bonuses based on each executive officer's
progress toward completing the established goals and financial performance goals
for the Company.
STOCK OPTIONS
The Compensation Committee believes that granting stock options on an
ongoing basis provides officers with a strong economic interest in maximizing
stock price appreciation over the longer term. The Company believes that the
practice of granting stock options is critical to retaining and recruiting the
key talent necessary at all employee levels to ensure the Company's continued
success. Options are granted to all permanent employees, and particularly to key
employees likely to contribute significantly to the Company. In determining the
size of an option grant to an executive officer, the Company considers not only
competitive factors, changes in responsibility and the executive officer's
achievement of pre-established goals, but also the number and term of options
previously granted to the officer. In addition, the Company usually makes a
significant grant of options when an executive officer joins the Company. The
Compensation Committee determines the size of option grants to executive
officers.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Martin J. Reid was appointed to the position of President and Chief
Executive Officer effective December 1, 1997 and continues his employment with
the Company under an employment agreement which terminates on December 31, 2003.
Mr. Reid was paid an annual base salary of $220,000 during 2000 and his base pay
is subject to increase from time to time by action of the Board. The agreement
also provides that Mr. Reid will be paid bonuses as are determined from time to
time by the Board or its
12
Compensation Committee in its discretion, taking into account, among other
factors, Mr. Reid's performance and the Company's performance. See "--Annual
Incentive Bonuses." In the event that Mr. Reid's employment is terminated by the
Company without cause or in certain other circumstances, Mr. Reid will be paid
at his then annual base salary rate for a period of 12 months following the date
of such termination and he will be entitled to be paid for the cost of
12 months of health benefits. Mr. Reid may terminate his employment at any time,
but will forfeit certain benefits if he does not provide the Company with at
least 60 days prior written notice. On December 1, 1997, Mr. Reid was granted
options to purchase 140,000 shares of common stock at fair market value on the
date of grant. Of the 140,000 options granted to Mr. Reid, 35,000 vested
immediately and the remaining 105,000 vest in three equal annual installments
commencing one year from the grant date. In addition, on February 4, 1999 and on
January 4, 2000, Mr. Reid was granted options to purchase 50,000 shares each of
Common Stock at fair market value of the date of grant. The options vest in four
equal annual installments commencing one year from the grant date.
In September 1999, the Company entered into a Change of Control Agreement
with Mr. Reid. In the event that Mr. Reid's employment is terminated in
connection with a Change of Control of the Company, Mr. Reid will be paid twice
his highest annual salary during the preceding three year period. Annual salary
includes base salary and bonus and excludes reimbursements and amounts
attributable to stock options and other non-cash compensation. Under this
agreement, Mr. Reid will also be provided health benefits until the earlier of
two years following his termination or the date he becomes eligible for such
coverage offered by a subsequent employer. These severance compensation and
benefits shall replace, and be provided in lieu of any severance compensation
and benefits that may be provided under any other agreement.
Mr. Reid's salary and bonus structure is consistent with that received by
his counterparts in similar-sized companies in semiconductor--related industries
and other comparable companies.
THE COMPENSATION COMMITTEE:
Robert L. Gable
Leslie B. Lewis
Peter H. Rose
13
REPORT OF AUDIT COMMITTEE
The Audit Committee of the Board of Directors, which consists entirely of
directors who meet the independence and experience requirements of the Nasdaq
Stock Market, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the
integrity of the Company's financial reporting process, its compliance with
legal and regulatory requirements and the quality of its internal and external
audit processes. The role and responsibilities of the Audit Committee are set
forth in a written Charter adopted by the Board, which is attached as
APPENDIX A to this Proxy Statement. The Audit Committee reviews and reassesses
the Charter annually and recommends any changes to the Board for approval. The
Audit Committee is responsible for overseeing the Company's overall financial
reporting process. In fulfilling its responsibilities for the financial
statements for the fiscal year ended December 31, 2000, the Audit Committee took
the following actions:
- Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2000 with management and KPMG LLP, the Company's
independent auditors;
- Discussed with KPMG LLP the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit; and
- Received written disclosures and the letter from KPMG LLP regarding its
independence as required by Independence Standards Board Standard No. 1.
The Audit Committee further discussed with KPMG LLP their independence.
The Audit Committee also considered the status of pending litigation,
taxation matters and other areas of oversight relating to the financial
reporting and audit process that the Committee determined appropriate.
Based on the Audit Committee's review of the audited financial statements
and discussions with management and KPMG LLP, the Audit Committee recommended to
the Board that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE:
Donald F. McGuiness
Lamberto Rafaelli
Geoffrey Ryding
14
PERFORMANCE GRAPH
The following graph compares the annual cumulative total stockholder return
(assuming reinvestment of dividends) from investing $100 on January 1, 1996 and
plotted at the end of each fiscal year thereafter, in each of (i) the Company's
Common Stock, (ii) the Nasdaq Stock Market, and (iii) the Media General
Financial Services SIC Code Index 3674--Semiconductors, Related Devices--which
consists of other companies in the semiconductor industry. It should be noted
that the Company has not paid any dividends on the Common Stock, and no
dividends are included in the representation of the Company's performance. The
stock price performance on the graph below is not necessarily indicative of
future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1/1/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Ibis Technology Corporation $100.00 $78.87 $87.32 $119.01 $559.15 $216.90
SIC Code index $100.00 $160.99 $167.77 $252.59 $543.46 $403.82
Nasdaq Market index $100.00 $124.27 $152.00 $214.39 $378.12 $237.66
RELATIVE DOLLAR VALUES
1/1/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Ibis Technology Corporation $100.00 $ 78.87 $ 87.32 $119.01 $559.15 $216.90
SIC Code Index $100.00 $160.99 $167.77 $252.59 $543.46 $403.82
Nasdaq Market Index $100.00 $124.27 $152.00 $214.39 $378.12 $237.66
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2000, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
CERTAIN TRANSACTIONS
In 2000, the Company was not a party to any transaction or business
relationship in which the amount involved exceeded $60,000 involving any of its
officers, directors or 5% stockholders.
16
ELECTION OF DIRECTORS
(NOTICE ITEM 1)
The Company's Restated Articles of Organization, as amended (the "Articles
of Organization"), and Restated By-Laws (the "By-Laws") provide for the
Company's business to be managed by or under the direction of the Board of
Directors. Under the Articles of Organization and By-Laws, the number of
directors is fixed from time to time by the Board of Directors. The Board of
Directors currently consists of eight members, classified into three classes as
follows: Dimitri Antoniadis, Robert L. Gable and Martin J. Reid constitute a
class with a term which expires at the upcoming Meeting (the "Class I
directors"), Peter H. Rose, Donald F. McGuinness and Lamberto Raffaelli
constitute a class with a term ending in 2002 (the "Class II directors"),
Geoffrey Ryding and Leslie B. Lewis constitute a class with a term ending in
2003 (the "Class III directors"). At each annual meeting of stockholders,
directors are elected for a full term of three years to succeed those directors
whose terms are expiring.
Pursuant to the Articles of Organization and By-Laws, on February 5, 2001
the Board of Directors voted to (i) set the size of the Board of Directors at
eight and (ii) nominate Dimitri Antoniadis, Robert L. Gable and Martin J. Reid
(the Class I directors) for election at the Meeting for a term of three years to
serve until the 2004 Annual Meeting of Stockholders, and until their respective
successors have been elected and qualified. Donald F. McGuinness, Peter H. Rose
and Lamberto Raffaelli (the Class II directors) and Geoffrey Ryding and Leslie
B. Lewis (the Class III directors) will serve until the Annual Meetings of
Stockholders to be held in 2002 and 2003, respectively, and until their
respective successors have been elected and qualified.
Unless authority to vote for any of the nominees named below is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable or
unwilling to serve, the shares represented by the enclosed proxy will be voted
for the election of such other person as the Board of Directors may recommend in
his place. The Board has no reason to believe that any nominee will be unable or
unwilling to serve.
The affirmative vote of a plurality of the shares voted affirmatively or
negatively at the Meeting is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF DIMITRI ANTONIADIS, ROBERT
L. GABLE AND MARTIN J. REID AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON
THE PROXY.
17
INCREASE IN THE AGGREGATE NUMBER OF SHARES
FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE COMPANY'S
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
(NOTICE ITEM 2)
GENERAL
The Company's Board of Directors and its Stockholders approved the 1997
Employee, Director and Consultant Stock Option Plan (the "1997 Plan") in
October 1997 and May 1998, respectively. A total of 750,000 shares of Common
Stock were initially reserved for issuance under the 1997 Plan. The 1997 Plan
may be amended by the Board of Directors or the Compensation Committee of the
Board of Directors, provided that any amendment approved by the Board of
Directors or the Compensation Committee which is of a scope that requires
Stockholder approval in order to ensure favorable federal income tax treatment
for any incentive stock options under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), is subject to obtaining such Stockholder
approval. The Board of Directors has voted to approve an amendment to the 1997
Plan to increase by 600,000 shares the aggregate number of shares of Common
Stock for which stock options may be granted under the 1997 Plan. This amendment
is being submitted for Stockholder approval at the Meeting to ensure continued
qualification of the 1997 Plan under (i) Section 162(m) of the Code,
(ii) Section 422 of the Code and (iii) Nasdaq rules. The Board believes that the
increase is advisable to give the Company the flexibility needed to attract,
retain and motivate employees, directors and consultants.
MATERIAL FEATURES OF THE 1997 PLAN
The purpose of the 1997 Plan is to attract, retain and motivate employees,
directors and consultants through the issuance of stock options and to encourage
ownership of shares of Common Stock by employees, directors and consultants of
the Company. The 1997 Plan is administered by the Compensation Committee.
Subject to the provisions of the 1997 Plan, the Compensation Committee
determines the persons to whom options will be granted, the number of shares to
be covered by each option and the terms and conditions upon which an option may
be granted, and has the authority to administer the provisions of the 1997 Plan.
All employees, directors and consultants of the Company and its affiliates
(approximately 122 people) are eligible to participate in the 1997 Plan.
Options granted under the 1997 Plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Code, or
(ii) non-qualified stock options. Incentive stock options may be granted under
the 1997 Plan to employees of the Company and its affiliates. Non-qualified
stock options may be granted to consultants, directors and employees of the
Company and its affiliates. Under the terms of the 1997 Plan, following each
annual meeting of stockholders of the Company, each non-employee director then
serving is automatically granted a non-qualified option to purchase 1,250 shares
of Common Stock and each new non-employee director is automatically granted a
non-qualified stock option to purchase 1,250 shares of Common Stock upon
election to the Board. These options vest in full immediately prior to the date
of the annual meeting following the grant date and have an exercise price equal
to the fair market value of the Common Stock on such grant date.
The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options which become exercisable in any
calendar year under any incentive stock option plan of the Company by an
employee may not exceed $100,000. Incentive stock options granted under the 1997
Plan may not be granted at a price less than the fair market value of the Common
Stock on the date
18
of grant, or 110% of fair market value in the case of options granted to an
employee holding 10% or more of the voting stock of the Company. Non-qualified
stock options granted under the 1997 Plan may not be granted at an exercise
price less than the fair market value of the Common Stock on the date of grant.
Incentive stock options granted under the 1997 Plan expire not more than ten
years from the date of grant, or not more than five years from the date of grant
in the case of incentive stock options granted to an employee holding 10% or
more of the voting stock of the Company. An option granted under the 1997 Plan
is exercisable, during the optionholder's lifetime, only by the optionholder and
is not transferable by him or her except by will or by the laws of descent and
distribution.
An incentive stock option granted under the 1997 Plan may, at the
Compensation Committee's discretion, be exercised after the termination of the
optionholder's employment with the Company (other than by reason of death,
disability or termination for cause as defined in the 1997 Plan) to the extent
exercisable on the date of such termination, at any time prior to the earlier of
the option's specified expiration date or 90 days after such termination. In
granting any non-qualified stock option, the Compensation Committee may specify
that such non-qualified stock option shall be subject to such termination or
cancellation provisions as the Compensation Committee shall determine. In the
event of the optionholder's death or disability, both incentive stock options
and non-qualified stock options generally may be exercised, to the extent
exercisable on the date of death or disability (plus a PRO RATA portion of the
option if the option vests periodically), by the optionholder or the
optionholder's survivors at any time prior to the earlier of the option's
specified expiration date or one year from the date of the optionholder's death
or disability. Generally, in the event of the optionholder's termination for
cause, all outstanding and unexercised options are forfeited.
If (i) the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if the Company shall issue any shares of
Common Stock as a stock dividend on its outstanding Common Stock, or
(ii) 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
Common Stock, the number of shares of Common Stock deliverable upon the exercise
of an option granted under the 1997 Plan shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend. If the Company is to be consolidated with or acquired by another
entity in a merger, sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Compensation Committee or the Board of
Directors of any entity assuming the obligations of the Company under the 1997
Plan (the "Successor Board"), shall, as to outstanding options under the 1997
Plan either (i) make appropriate provision for the continuation of such options
by substituting on an equitable basis for the shares then subject to such
options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition or securities of the successor
or acquiring entity; or (ii) upon written notice to the participants, provide
that all options must be exercised (either to the extent then exercisable or, at
the discretion of the Compensation Committee, all options being made fully
exercisable for purposes of such transaction) within a specified number of days
of the date of such notice, at the end of which period the options shall
terminate; or (iii) terminate all options in exchange for a cash payment equal
to the excess of the fair market value of the shares subject to each such option
(either to the extent then exercisable or, at the discretion of the Compensation
Committee, all options being made fully exercisable for purposes of such
transaction) over the exercise price thereof. In the event of a recapitalization
or reorganization of the Company (other than an Acquisition) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionholder upon
19
exercising an option under the 1997 Plan, shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such option prior to such recapitalization
or reorganization.
The 1997 Plan may be amended by the Stockholders of the Company. The 1997
Plan may also be amended by the Board of Directors or the Compensation
Committee, provided that any amendment approved by the Board of Directors or the
Compensation Committee which is of a scope that requires Stockholder approval in
order to ensure favorable federal income tax treatment for any incentive stock
options under Section 422 of the Code, is subject to obtaining such Stockholder
approval.
As of December 31, 2000, an aggregate of 714,654 shares had been issued upon
the exercise of options or are issuable upon the exercise of options outstanding
under the 1997 Plan. On February 28, 2001, the closing market price per share of
the Company's Common Stock was $25.00, as reported in the Nasdaq National Market
System.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of certain U.S. federal income tax
consequences of the issuance and exercise of options under the 1997 Plan:
INCENTIVE STOCK OPTIONS. An incentive stock option does not result in
taxable income to the optionee or deduction to the Company at the time it is
granted or exercised, provided that no disposition is made by the optionee of
the shares acquired pursuant to the option within two years after the date of
grant of the option nor within one year after the date of issuance of shares to
him (the "ISO holding period"). However, the difference between the fair market
value of the shares on the date of exercise and the option price will be an item
of tax preference includable in "alternative minimum taxable income." Upon
disposition of the shares after the expiration of the ISO holding period, the
optionee will generally recognize long term capital gain or loss based on the
difference between the disposition proceeds and the option price paid for the
shares. Such gain will be eligible for the 20 percent maximum rate introduced by
the Taxpayers Relief Act of 1997 if the shares have been held for more than
18 months after option exercise, otherwise such gain will be eligible for the
28% maximum rate. If the shares are disposed of prior to the expiration of the
ISO holding period, the optionee generally will recognize taxable compensation,
and the Company will have a corresponding deduction, in the year of the
disposition, equal to the excess of the fair market value of the shares on the
date of exercise of the option over the option price. Any additional gain
realized on the disposition will normally constitute capital gain. If the amount
realized upon such a disqualifying disposition is less than fair market value of
the shares on the date of exercise, the amount of compensation income will be
limited to the excess of the amount realized over the optionee's adjusted basis
in the shares.
NON-QUALIFIED STOCK OPTIONS. The grant of a non-qualified option will not
result in taxable income to the optionee or deduction to the Company at the time
of grant. The optionee will recognize taxable compensation, and the Company will
have a corresponding deduction, at the time of exercise in the amount of the
excess of the then fair market value of the shares acquired over the option
price. Upon disposition of the shares, the optionee will generally realize
capital gain or loss, and his basis for determining gain or loss will be the sum
of the option price paid for the shares plus the amount of compensation income
recognized on exercise of the option.
20
OPTION INFORMATION
Pursuant to the terms of the 1997 Plan, it is presently determinable that
the following options will be granted by the Company under the Plan:
NEW PLAN BENEFITS
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
NUMBER OF SHARES
COVERED BY
NAME OPTIONS TO BE GRANTED
- ---- ---------------------
Martin J. Reid.............................................. --
Debra L. Nelson............................................. --
Angelo V. Alioto............................................ --
Julian G. Blake, Ph.D....................................... --
Robert P. Dolan............................................. --
All current executive officers as a group................... --
All current directors who are not executive officers as a
group..................................................... 8,750(1)
All employees, including all current officers who are not
executive officers, as a group............................ --
- ------------------------
(1) Consists of non-qualified stock options to purchase 1,250 shares of Common
Stock to be granted to each of the seven non-employee directors of the
Company automatically following the Meeting. Each of these options will vest
in full immediately prior to the 2002 Annual Meeting of Stockholders and
will have an exercise price equal to the fair market value of the Common
Stock as of the date of grant.
The amount, if any, of stock options to be awarded to any of our other
executives under the 1997 Plan, directors or employees is not presently
determinable. The following table sets forth as of February 28, 2001, certain
information with respect to all options granted under the 1997 Plan to the
following individuals and groups since it was adopted:
NUMBER OF SHARES WEIGHTED AVERAGE
COVERED BY EXERCISE PRICE
NAME OPTIONS GRANTED PER SHARE
- ---- ---------------- ----------------
Martin J. Reid.............................................. 211,000 $18.98
Debra L. Nelson............................................. 44,000 $27.77
Angelo V. Alioto............................................ 77,000 $21.44
Julian G. Blake, Ph.D....................................... 96,000 $20.78
Robert P. Dolan............................................. 60,000 $21.06
All current executive officers as a group................... 488,000 $20.77
All current directors who are not executive officers as a
group..................................................... 17,500 $29.72
All employees, including all current officers who are not
executive officers, as a group............................ 209,154 $26.86
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to approve the increase in the aggregate
number of shares of Common Stock available under the 1997 Plan.
21
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT
TO THE 1997 PLAN TO INCREASE BY 600,000 SHARES THE AGGREGATE NUMBER OF SHARES
FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE 1997 PLAN, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
22
INDEPENDENT PUBLIC ACCOUNTANTS
(NOTICE ITEM 3)
The Board of Directors has appointed KPMG LLP, independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2001. The Board proposes that the Stockholders ratify
this appointment. KPMG LLP audited the Company's financial statements for the
fiscal year ended December 31, 2000. The Company expects that representatives of
KPMG LLP will be present at the Meeting, with the opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions.
The Company paid KPMG LLP a total of $47,000 for their audit of the
Company's annual financial statements for the fiscal year ended December 31,
2000 and for their review of the Company's Quarterly Reports on Form 10-Q filed
during the last fiscal year.
In the event that ratification of the appointment of KPMG LLP as the
independent public accountants for the Company is not obtained at the Meeting,
the Board of Directors will reconsider its appointment.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Meeting is required to ratify the appointment of the
independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES SOLICITED
BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
23
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at
the Meeting. If any other business is properly brought before the Meeting, it is
intended that proxies in the enclosed form will be voted in respect thereof in
accordance with the judgment of the persons voting the proxies.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement relating to the Annual
Meeting of Stockholders to be held in 2002, stockholder proposals must be
received no later than December 4, 2001. To be considered for presentation at
such meeting, although not included in the proxy statement, proposals must be
received no later than March 3, 2002 and no earlier than February 1, 2002. All
stockholder proposals should be marked for the attention of Clerk, Ibis
Technology Corporation, 32 Cherry Hill Drive, Danvers, MA 01923.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 (other than exhibits thereto) filed with the Securities and
Exchange Commission, which provides additional information about the Company,
may be obtained by any stockholder without charge at their request by writing
to:
Investor Relations
Ibis Technology Corporation
32 Cherry Hill Drive
Danvers, Massachusetts 01923
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors:
/s/ Debra L. Nelson
DEBRA L. NELSON
Clerk
April 3, 2001
24
APPENDIX A
IBIS TECHNOLOGY CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The purpose of the Audit Committee is to provide assistance to the board of
directors of the Corporation (the "Board") in fulfilling their responsibility to
the shareholders, potential shareholders, and investment community relating to
corporate accounting, reporting practices of the Corporation, and the quality
and integrity of the financial reports of the Corporation.
II. COMPOSITION
On or before June 14, 2001, the Audit Committee shall be comprised of three
or more directors as determined by the Board, each of whom shall be independent
directors, and free from any relationship that, in the opinion of the Board,
would interfere with the exercise of his or her independent judgment as a member
of the Audit Committee. All members of the Audit Committee shall have a working
familiarity with basic finance and accounting practices, and at least one member
of the Audit Committee shall have accounting or related financial management
expertise.
The members of the Audit Committee shall be elected by the Board. Unless a
Chairperson is elected by the Board, the members of the Audit Committee may
designate a Chairperson by majority vote of the full Audit Committee membership.
III. RESPONSIBILITIES AND DUTIES
The primary responsibility of the Audit Committee is to oversee the
Corporation's financial reporting process on behalf of the Board and report
their activities to the Board. The Audit Committee's job is one of oversight and
the Corporation's management is responsible for preparing the Corporation's
financial statements and the independent accountants are responsible for
auditing those financial statements. The Audit Committee does not provide any
expert or special assurance as to the Corporation's financial statements or any
professional certification as to the independent accountants' work.
The following functions shall be the principal recurring processes of the
Audit Committee in carrying out its oversight responsibilities. These processes
are set forth as a guide with the understanding that the Audit Committee may
diverge from this guide as appropriate given the circumstances.
1. Review and reassess, at least annually, the adequacy of this Charter. Make
recommendations to the Board, as conditions dictate, to update this Charter.
2. Review with management and the independent accountants the Corporation's
annual financial statements, including a discussion with the independent
accountants of the matters required to be discussed by Statement of Auditing
Standards No. 61 ("SAS No. 61").
3. Review with management and the independent accountants the 10-Q prior to its
filing or prior to the release of earnings, including a discussion with the
independent accountants of the matters required to be discussed by SAS
No. 61. The Chairperson of the Audit Committee, or in his absence, any other
A-1
member of the Audit Committee, may represent the entire Audit Committee for
purposes of this review.
4. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment or termination of the
independent accountants. The Audit Committee and the Board have the ultimate
authority and responsibility to select, evaluate, and where appropriate,
replace the outside auditor. The independent accountants are ultimately
accountable to the Audit Committee and the entire Board for such
accountant's review of the financial statements and controls of the
Corporation. On an annual basis, the Audit Committee should review and
discuss with the accountants all significant relationships the accountants
have with the Corporation to determine the accountants' independence.
5. Oversee independence of the accountants by:
- receiving from the accountants, on at least an annual basis, a formal
written statement delineating all relationships between the accountants
and the Corporation consistent with Independence Standards Board Standard
1 ("ISB No. 1");
- reviewing, and actively discussing with the Board, if necessary, and the
accountants, on a periodic basis, any disclosed relationships or services
between the accountants and the Corporation or any other disclosed
relationships or services that may impact the objectivity and independence
of the accountants; and
- recommending, if necessary, that the Board take certain action to satisfy
itself of the auditor's independence.
6. The Audit Committee shall discuss with management and the independent
accountants the quality and adequacy of the Corporation's internal controls.
A-2
APPENDIX B
IBIS TECHNOLOGY CORPORATION
AMENDED AND RESTATED
1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this Ibis Technology Corporation 1997
Employee, Director and Consultant Stock Option Plan, have the following
meanings:
ADMINISTRATOR means the Board of Directors, unless it has
delegated power to act on its behalf to the Committee, in
which case the Administrator means the Committee.
AFFILIATE means a corporation which, for purposes of Section
424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
BOARD OF DIRECTORS means the Board of Directors of the
Company.
CODE means the United States Internal Revenue Code of 1986, as
amended.
COMMITTEE means the committee of the Board of Directors to
which the Board of Directors has delegated power to act under
or pursuant to the provisions of the Plan.
COMMON STOCK means shares of the Company's common stock, $.008
par value per share.
COMPANY means Ibis Technology Corporation, a Massachusetts
corporation.
DISABILITY or DISABLED means permanent and total disability as
defined in Section 22(e)(3) of the Code.
FAIR MARKET VALUE of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the
closing or last price of the Common Stock on the Composite
Tape or other comparable reporting system for the trading day
immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common Stock
for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the
mean between the bid and the asked price for the Common Stock
at the close of trading in the over-the-counter market for the
trading day on which Common Stock was traded immediately
preceding the applicable date; and
B-1
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.
ISO means an option meant to qualify as an incentive stock
option under Section 422 of the Code.
KEY EMPLOYEE means an employee of the Company or of an
Affiliate (including, without limitation, an employee who is
also serving as an officer or director of the Company or of an
Affiliate), designated by the Administrator to be eligible to
be granted one or more Options under the Plan.
NON-QUALIFIED OPTION means an option which is not intended to
qualify as an ISO.
OPTION means an ISO or Non-Qualified Option granted under the
Plan.
OPTION AGREEMENT means an agreement between the Company and a
Participant delivered pursuant to the Plan, in such form as
the Administrator shall approve.
PARTICIPANT means a Key Employee, director or consultant to
whom one or more Options are granted under the Plan. As used
herein, "Participant" shall include "Participant's Survivors"
where the context requires.
PLAN means this Ibis Technology Corporation 1997 Employee,
Director and Consultant Stock Option Plan.
SHARES means shares of the Common Stock as to which Options
have been or may be granted under the Plan or any shares of
capital stock into which the Shares are changed or for which
they are exchanged within the provisions of Paragraph 3 of the
Plan. The Shares issued upon exercise of Options granted under
the Plan may be authorized and unissued shares or shares held
by the Company in its treasury, or both.
SURVIVORS means a deceased Participant's legal representatives
and/or any person or persons who acquired the Participant's
rights to an Option by will or by the laws of descent and
distribution.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees
and directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and
Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares which may be issued from time to time pursuant to
this Plan shall be 1,350,000, or the equivalent of such number of Shares after
the Administrator, in its sole discretion, has interpreted the effect of any
stock split, stock dividend, combination, recapitalization or similar
transaction in accordance with Paragraph 16 of the Plan.
B-2
If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees,
directors and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options shall
be granted, provided, however, that in no event shall Options to
purchase more than 500,000 Shares be granted to any Participant in
any fiscal year; and
d. Specify the terms and conditions upon which an Option or Options may
be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Section 422 of the Code of those Options which are designated as
ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is the Committee.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants
in the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of an Option to a person not then an employee, director or consultant of
the Company or of an Affiliate; provided, however, that the actual grant of such
Option shall be conditioned upon such person becoming eligible to become a
Participant at or prior to the time of the delivery of the Option Agreement
evidencing such Option. ISOs may be granted only to Key Employees. Non-Qualified
Options may be granted to any Key Employee, director or consultant of the
Company or an Affiliate. The granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions
B-3
specifically required under this Plan, as the Administrator may deem appropriate
including, without limitation, subsequent approval by the shareholders of the
Company of this Plan or any amendments thereto.
A. NON-QUALIFIED OPTIONS: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest
of the Company, subject to the following minimum standards for any
such Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the option
price (per share) of the Shares covered by each Option,
which option price shall be determined by the Administrator
but shall not be less than one hundred percent (100%) of
the Fair Market Value per share of the Shares on the date
of the grant of the Option.
b. Each Option Agreement shall state the number of Shares to
which it pertains;
c. Each Option Agreement shall state the date or dates on
which it first is exercisable and the date after which it
may no longer be exercised, and may provide that the Option
rights accrue or become exercisable in installments over a
period of months or years, or upon the occurrence of
certain conditions or the attainment of stated goals or
events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase agreement in
form satisfactory to the Administrator providing for
certain protections for the Company and its other
shareholders, including requirements that:
i. The Participant's or the Participant's Survivors' right
to sell or transfer the Shares may be restricted; and
ii. The Participant or the Participant's Survivors may be
required to execute letters of investment intent and
must also acknowledge that the Shares will bear legends
noting any applicable restrictions.
e. DIRECTORS' OPTIONS: Upon the adjournment of each Annual
Meeting or Special Meeting in Lieu of an Annual Meeting of
the shareholders of the Company (collectively, the "Annual
Meeting"), commencing upon the adjournment of the Annual
Meeting to be held in 1998, each person who is not an
employee of the Company or of an Affiliate who is serving
as a Director of the Company upon the adjournment of such
Annual Meeting shall be granted a Non-Qualified Option to
purchase 1,250 Shares, provided, however, a person who is
not an employee of the Company or of an Affiliate who is
first elected to serve as a Director of the Company at any
meeting of stockholders other than the Annual Meeting or at
any meeting of the Board of Directors (or by the unanimous
written consent of the Directors) pursuant to the Company's
Restated Articles of Organization and its Restated By-Laws
shall be granted a Non-Qualified Option to purchase 1,250
Shares upon such election. Each such Option shall (i) have
an exercise price equal to the Fair Market Value (per
share) of the Shares on the date of grant of the Option,
(ii) have a term of ten (10) years, and (iii) become
exercisable immediately prior to the occurrence of the
Annual Meeting following the date the Option is granted.
Notwithstanding the provisions of Paragraph 23 concerning
amendment of the Plan, the provisions of this subparagraph
shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder.
B-4
B. ISOS: Each Option intended to be an ISO shall be issued only
to a Key Employee and be subject to the following terms and
conditions, with such additional restrictions or changes as
the Administrator determines are appropriate but not in
conflict with Section 422 of the Code and relevant regulations
and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described in
Paragraph 6(A) above, except clauses (a) and (e)
thereunder.
b. Option Price: Immediately before the Option is granted, if
the Participant owns, directly or by reason of the
applicable attribution rules in Section 424(d) of the Code:
i. Ten percent (10%) OR LESS of the total combined voting
power of all classes of share capital of the Company or
an Affiliate, the Option price per share of the Shares
covered by each Option shall not be less than one
hundred percent (100%) of the Fair Market Value per
share of the Shares on the date of the grant of the
Option.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or
an Affiliate, the Option price per share of the Shares
covered by each Option shall not be less than one
hundred ten percent (110%) of the said Fair Market
Value on the date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) OR LESS of the total combined voting
power of all classes of share capital of the Company or
an Affiliate, each Option shall terminate not more than
ten (10) years from the date of the grant or at such
earlier time as the Option Agreement may provide.
ii. More than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or
an Affiliate, each Option shall terminate not more than
five (5) years from the date of the grant or at such
earlier time as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in
any calendar year (under this or any other ISO plan of the
Company or an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000), provided
that this subparagraph (d) shall have no force or effect if
its inclusion in the Plan is not necessary for Options
issued as ISOs to qualify as ISOs pursuant to Section
422(d) of the Code.
B-5
7. EXERCISE OF OPTIONS AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or the
Option Agreement. Payment of the purchase price for the Shares as to which such
Option is being exercised shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program
established with a securities brokerage firm, and approved by the Administrator,
or (e) at the discretion of the Administrator, by any combination of (a), (b),
(c) and (d) above. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the
Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation (including,
without limitation, state securities or "blue sky" laws) which requires the
Company to take any action with respect to the Shares prior to their issuance.
The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in Paragraph
6.B.d.
8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as
a shareholder with respect to any Shares covered by such Option, except after
due exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution, or (ii) as otherwise determined by the Administrator and set
forth in the applicable Option Agreement. The designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided above, an Option shall be exercisable, during the
Participant's lifetime, only by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.
B-6
10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE" OR DEATH OR
DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or consultant
of the Company or of an Affiliate (for any reason other than
termination "for cause", Disability, or death for which events
there are special rules in Paragraphs 11, 12, and 13,
respectively), may exercise any Option granted to him or her to the
extent that the Option is exercisable on the date of such
termination of service, but only within such term as the
Administrator has designated in the pertinent Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 12 or
13, in no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later than
three (3) months after the Participant's termination of employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who subsequently
becomes Disabled or dies after the termination of employment,
director status or consultancy, provided, however, in the case of a
Participant's Disability or death within three (3) months after the
termination of employment, director status or consultancy, the
Participant or the Participant's Survivors may exercise the Option
within one (1) year after the date of the Participant's termination
of employment, but in no event after the date of expiration of the
term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director
status or termination of consultancy, but prior to the exercise of
an Option, the Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause", then such
Participant shall forthwith cease to have any right to exercise any
Option.
e. A Participant to whom an Option has been granted under the Plan who
is absent from work with the Company or with an Affiliate because
of temporary disability (any disability other than a permanent and
total Disability as defined in Paragraph 1 hereof), or who is on
leave of absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to
have terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected by
any change of a Participant's status within or among the Company
and any Affiliates, so long as the Participant continues to be an
employee, director or consultant of the Company or any Affiliate.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all his or her outstanding Options have been
exercised:
B-7
a. All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not
limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or non-feasance
of duty, unauthorized disclosure of confidential information, and
conduct substantially prejudicial to the business of the Company or
any Affiliate. The determination of the Administrator as to the
existence of "cause" will be conclusive on the Participant and the
Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If
the Administrator determines, subsequent to a Participant's
termination of service but prior to the exercise of an Option, that
either prior or subsequent to the Participant's termination the
Participant engaged in conduct which would constitute "cause," then
the right to exercise any Option is forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of
"cause" for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with
respect to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on the date of
Disability; and
b. In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights as would
have accrued had the Participant not become Disabled prior to the
end of the accrual period which next ends following the date of
Disability. The proration shall be based upon the number of days of
such accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled and
had continued to be an employee, director or consultant or, if earlier, within
the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
B-8
13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death;
and
b. In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights which
would have accrued had the Participant not died prior to the end of
the accrual period which next ends following the date of death. The
proration shall be based upon the number of days of such accrual
period prior to the Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "1933
Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
a. The person(s) who exercise(s) such Option shall warrant to the
Company, prior to the receipt of such Shares, that such person(s)
are acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with,
the distribution of any such Shares, in which event the person(s)
acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such
grant:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of
counsel satisfactory to it that an exemption from registration
under such Act is then available, and (2) there shall have
been compliance with all applicable state securities laws."
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued
upon such particular exercise in compliance with the 1933 Act
without registration thereunder.
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the
B-9
rights of a Participant or a Participant's Survivors have not otherwise
terminated and expired, the Participant or the Participant's Survivors will have
the right immediately prior to such dissolution or liquidation to exercise any
Option to the extent that the Option is exercisable as of the date immediately
prior to such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Option granted to him or her hereunder which has not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the pertinent Option Agreement:
A. STOCK DIVIDENDS AND STOCK SPLITS. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) 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 Common Stock, the number of shares of Common Stock
deliverable upon the exercise of such Option may be appropriately increased or
decreased proportionately, and appropriate adjustments may be made in the
purchase price per share to reflect such events. The number of Shares subject to
options to be granted to directors pursuant to Paragraph 6(A)(e) shall also be
proportionately adjusted upon the occurrence of such events.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this Subparagraph) over the exercise
price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in Subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities which
would have been received if such Option had been exercised prior to such
recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
B-10
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
No fractional shares shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional shares equal to the Fair Market Value thereof.
19. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS.
The Administrator, at the written request of any Participant, may in
its discretion take such actions as may be necessary to convert such
Participant's ISOs (or any portions thereof) that have not been exercised on the
date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of
the Company or an Affiliate at the time of such conversion. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Administrator (with the consent of the Participant) may
impose such conditions on the exercise of the resulting Non-Qualified Options as
the Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
20. WITHHOLDING.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Participant's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Company may withhold from the Participant's compensation, if
any, or may require that the Participant advance in cash to the Company, or to
any Affiliate of the Company which employs or employed the Participant, the
amount of such withholdings unless a different withholding arrangement,
including the use of shares of the Company's Common Stock or a promissory note,
is authorized by the Administrator (and permitted by law). For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Participant may be required to advance the difference in cash to the Company
or the Affiliate employer. The Administrator in its discretion may condition the
exercise of an Option for less than the then Fair Market Value on the
Participant's payment of such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately
B-11
after the Key Employee makes a Disqualifying Disposition of any shares acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such shares before the later of (a) two
years after the date the Key Employee was granted the ISO, or (b) one year after
the date the Key Employee acquired Shares by exercising the ISO. If the Key
Employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
22. TERMINATION OF THE PLAN.
The Plan will terminate on the date which is ten (10) years from the
EARLIER of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination shall not affect any Option Agreements executed prior to the
effective date of such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan
may also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
Options granted, or Options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any modification or
amendment of the Plan shall not, without the consent of a Participant, adversely
affect his or her rights under an Option previously granted to him or her. With
the consent of the Participant affected, the Administrator may amend outstanding
Option Agreements in a manner which may be adverse to the Participant but which
is not inconsistent with the Plan. In the discretion of the Administrator,
outstanding Option Agreements may be amended by the Administrator in a manner
which is not adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from terminating
his or her own employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service by the Company
or any Affiliate for any period of time.
25. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
The Commonwealth of Massachusetts.
B-12
PROXY IBIS TECHNOLOGY CORPORATION PROXY
THIS PROXY IS BEING SOLICITED BY IBIS TECHNOLOGY CORPORATION'S
BOARD OF DIRECTORS
The undersigned hereby appoints Martin J. Reid and Debra L. Nelson, and each
of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of Ibis Technology Corporation (the "Company") registered in the
name provided herein which the undersigned is entitled to vote at the 2001
Annual Meeting of Stockholders to be held at the offices of the Company,
32 Cherry Hill Drive, Danvers, Massachusetts, at 10:00 a.m. local time on
Thursday, May 3, 2001, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed to
vote or act as follows on the proposals set forth in said Proxy.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3.
1. Election of three (3) Class I Directors: Dimitri Antoniadis, Robert L.
Gable and Martin J. Reid.
/ / FOR / / WITHHELD
/ / FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. Proposal to approve an amendment to the 1997 Employee, Director and
Consultant Stock Option Plan to increase by 600,000 shares the aggregate
number of shares of Common Stock for which stock options may be granted under
this Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the appointment of KPMG LLP as the Company's independent
public accountants for the fiscal year ending December 31, 2001.
/ / FOR / / AGAINST / / ABSTAIN
(SEE REVERSE SIDE)
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
Please sign exactly as name(s)
appears hereon. Joint owners
should each sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full title
as such.
_________________________________
Signature Date
_________________________________
Signature Date
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, JUST SIGN AND DATE ABOVE. YOU NEED NOT MARK ANY BOXES.