1.		To elect six (6) directors to serve for one-year terms or until their successors are elected and qualified;
	2.		To ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accountants for the fiscal year ending September 30, 2010;
	3.		To approve an amendment to the Company’s Non-Employee Directors Stock Option Plan;
	4.		To approve an amendment to the Company’s 2007 Employee Stock Incentive Plan; and
	5.		To transact such other business as may properly come before the meeting or its adjournment.

 

 

 

 

 

---

 

 

	By Order of the Board of Directors:
	Bradley C. Anderson, Secretary

 

 

IMPORTANT: IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Michael Garnreiter
	Alfred W. Giese
	Egbert Jan Geert Goudena
	Jeong Mo Hwang
	Robert F. King
	Jong S. Whang

 

 

 

 

 

 

 

Name		Age		Position with the Company
Jong S. Whang		64		President, Chief Executive Officer and Director
Bradley C. Anderson		48		Vice President – Finance, Chief Financial Officer,
				Treasurer and Secretary
Robert T. Hass		59		Chief Accounting Officer
Michael Garnreiter		57		Director
Alfred W. Giese		71		Director
Egbert Jan Geert Goudena		60		Director
Jeong Mo Hwang		56		Director
Robert F. King		76		Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Audit – Michael Garnreiter (Chairman), Alfred W. Giese and Robert F. King
	Compensation and Stock Option – Alfred W. Giese (Chairman), Jeong Mo Hwang and Robert F. King
	Nominating and Governance – Michael Garnreiter (Chairman), Egbert Jan Geert Goudena and Jeong Mo Hwang
	Technology Strategy - Robert F. King (Chairman), Alfred W. Giese, Egbert Jan Geert Goudena, Jeong Mo Hwang and Jong S. Whang

 

 

 

 

 

			Fees Earned or		Option Awards		All other
Name			Paid in Cash ($)		($)(1)		Comp. ($)			Total ($)
Jong S. Whang (2)			-		-		-			-
Michael Garnreiter			47,225		18,761		0			65,986
Alfred W. Giese			60,950		20,305		28,900	(3)		110,155
Brian L. Hoekstra			30,600		18,761		0			49,361
Jeong Mo Hwang			18,100		1,432		0			19,532
Robert F. King			65,200		22,348		7,900	(3)		95,448

	(1)		Amounts represent the share-based compensation expense recognized for financial statement reporting purposes for fiscal year 2009. The grant date fair values of options awarded to our directors during fiscal year 2009 are as follows: Mr. Garnreiter - $9,509; Mr. Giese - $9,509; Mr. Hoekstra - $9,509; Dr. Hwang - $17,860; Mr. King - $9,509.
	(2)		Directors who are full-time employees of our company receive no additional compensation for serving as directors.
	(3)		Amount represents fiscal 2009 consulting fees for sales and marketing services which were discontinued prior to September 30, 2009. During fiscal 2010, directors will not earn consulting fees or other compensation outside of the fees paid to directors for service on the Board of Directors and committees thereof.

 

 

 

 

 

 

 

 

 

 

 

 

     Our Compensation Committee establishes our general compensation policies and specific compensation for each of our executive officers, and administers our stock option program. Our Compensation Committee is responsible for developing, administering and interpreting the compensation program for executive officers and other key employees. Our Compensation Committee was appointed by our board of directors, and consists entirely of independent, outside directors who are “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act.

 

     Our Compensation Committee may delegate some or all of its responsibilities to one or more subcommittees whenever necessary to comply with any statutory or regulatory requirements or otherwise deemed appropriate by our Compensation Committee. Our Compensation Committee has the authority to retain consultants and other advisors to assist with its duties and has sole authority to approve the fees and other retention terms of such consultants and advisors.

 

     Our Compensation Committee’s objective is to make the compensation packages of our executive officers sufficient to attract and retain persons of exceptional quality and to provide effective incentives to motivate and reward our executives for achieving our financial and strategic goals, which are essential to our long-term success and growth in shareholder value.

 

 

     Our executive compensation package for the fiscal year ended September 30, 2009 consisted of three main components: base salary, incentive cash bonuses and equity incentives. We believe it is important that the interests of our executives are aligned with those of our shareholders; therefore, equity incentive compensation, in the form of stock options and restricted stock grants, constitutes a significant portion of our total executive compensation.

 

     Within the context of the overall objectives of our compensation programs, we determined the specific amounts of compensation to be paid to each of our executives in fiscal year 2009 based on a number of factors including:

 

 

 

     Our Compensation Committee’s approach is to offer executives salaries competitive with those of other executives in the industry in which we operate. To that end, our Compensation Committee evaluates the competitiveness of base salaries annually based on information drawn from a variety of sources, including published and proprietary survey data and our own experience recruiting and retaining executives, although complete information is not easily obtainable. Our base salary levels are intended to be consistent with competitive practice and level of responsibility, with salary increases reflecting competitive trends, our overall financial performance and the performance of the individual executive. Salaries are adjusted to reflect individual roles and performance and may be increased at other times if a change in the scope of the officer’s responsibilities justifies such consideration or in order to maintain salary equity among executive officers. We believe that a competitive base salary is a necessary element of any compensation program designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can serve as an effective reward for the executives’ overall performance.

 

     During fiscal 2009, our Compensation Committee reviewed the base pay for our executive officers as reported in the American Electronics Association Salary Survey (AeA Survey) using parameters that best fit our company (for example, revenues, public companies, similarities in numbers of employees, and geographic region). Information on what specific companies comprised the AeA Survey was not available. Our Compensation Committee also reviewed the base pay for similar positions with two other comparable companies, BTU International, Inc. and Spire Corporation. Finally, our Compensation Committee took into consideration the expanded roles of our chief executive officer and chief financial officer as quasi chief marketing officer and chief operating officer, respectively. Based on that analysis, the base salary for our chief executive officer increased by approximately 27%, the base salary for our chief financial officer increased by approximately 24%, and the base salary for our chief accounting officer increased by approximately 7%.

 

     During fiscal 2009 the executive officers volunteered to reduce their base salaries by 10% which was agreed to by our Compensation Committee. Effective April 1, 2009, base salaries for our chief executive officer, our chief financial officer and our chief accounting officer decreased 10% from their then current levels.

 

 

     In addition to base salary, our executives are eligible to receive annual cash incentive bonuses comprised of (i) discretionary cash bonuses determined by the Compensation and Stock Option Committee and (ii) bonuses earned under the Company’s non-equity incentive bonus plan.

 

     The primary objectives of our discretionary bonuses and incentive bonus plan are to provide an incentive for superior work, to motivate our executives toward even higher achievement and business results, to tie our executives’ goals and interests to ours and our shareholders’ and to enable us to attract and retain highly qualified individuals. After the close of each fiscal year, our Compensation Committee reviews our actual financial performance against the incentive bonus plan performance criteria for each executive in determining year-end incentive bonuses, if any. In addition, our Compensation Committee may recommend discretionary bonuses for particular contribution to the goals of the company or where incentive bonuses do not adequately reflect the executive’s contributions during the year due to circumstances beyond the executive’s control.

 

 

     Under our non-equity incentive bonus plan, participants can earn a target bonus equal to a specified percentage of their base salary by achieving 100% of pre-defined performance objectives. The participant’s bonus calculation is based upon achieving performance objectives established in each of the following categories: (i) bookings; (ii) revenue; (iii) gross margin; and (iv) operating profit. Objectives established for participants in these categories may be either at the corporate level, the operating division level or both. In addition, individual performance objectives may be established for certain participants. In order to be eligible for a bonus with respect to any of the above performance categories, the participant must achieve not less than 80% (90% in the case of gross margin) of the applicable performance objective. At these minimum levels, 20% of the bonus for the category is eligible for payment. The bonus calculation percentage with respect to any performance category increases by 4% (8% with respect to gross margin) for each 1% improvement in performance over the minimum level up to 100%, and by 1% (10% with respect to gross margin) for each 1% improvement in performance over 100%, up to a maximum of 150% (200% with respect to gross margin) of the participant’s target bonus.

 

     Mr. Whang’s target bonus for fiscal 2009 was 60% of his base salary, or $210,000; Mr. Anderson’s target bonus was 50% of base salary, or $122,500; Mr. Hass’ target bonus was 25% of base salary, or $37,000. The bonus of the three executive officers was calculated solely upon the basis of performance objectives at the corporate level. If fiscal 2009 performance was equivalent to 80% (90% with respect to gross margin) of performance objectives in all corporate performance categories, Mr. Whang’s bonus calculation would be $42,000, Mr. Anderson’s bonus calculation would be $24,500, and Mr. Hass’ bonus calculation would be $7,400. If fiscal 2009 performance was 150% (110% with respect to gross margin) of performance objectives in all corporate performance categories, Mr. Whang’s bonus calculation would be $315,000, Mr. Anderson’s bonus calculation would be $183,750, and Mr. Hass’ bonus calculation would be $55,500.

 

     Notwithstanding the calculation of any bonus amount under the fiscal 2009 bonus plan, (i) no bonuses would have been payable based on achievement of corporate level objectives if consolidated operating profit was less than 3%; (ii) no bonuses would have been payable based on achievement of divisional level objectives if division operating profit (before corporate expense allocation) was less than 5%; and (iii) all bonus payments were subject to the discretionary approval of our Compensation Committee.

 

     For fiscal 2009, there were no bonuses awarded pursuant to the non-equity incentive bonus plan. However, our Compensation Committee awarded a discretionary bonus to Mr. Whang in the amount of $95,000, to Mr. Anderson in the amount of $50,000, and to Mr. Hass in the amount $12,000. Our Compensation Committee awarded Mr. Whang a discretionary bonus primarily due to (1) guiding the company through a difficult year and achieving positive earnings before interest, taxes, depreciation, amortization, impairment and restructuring charges; (2) continued execution of our solar strategy by introducing to the market another solar product; and (3) managing a 28% reduction in headcount during the fiscal year. Our Compensation Committee awarded Mr. Anderson a discretionary bonus primarily due to (1) achieving positive earnings before interest, taxes, depreciation, amortization, impairment and restructuring charges;(2) managing a 28% reduction in headcount during the fiscal year; (3) accelerating the quarterly and annual close process; and (4) achieving a successful second year of Sarbanes-Oxley 404 compliance with lower costs and no significant deficiencies noted. Our Compensation Committee awarded Mr. Hass a discretionary bonus primarily due to (1) achieving a successful second year of Sarbanes-Oxley 404 compliance with lower costs and with no significant deficiencies noted; and (2) accelerating a sizable tax refund during fiscal 2009.

 

 

 

     From time to time, we grant stock options and shares of restricted stock in order to provide certain of our executives with a competitive total compensation package, and to reward them for their contribution to the long-term price performance of the common stock. These equity incentive awards are in the form of stock options and restricted stock grants to align the interests of our executives with our shareholders by providing our executives with strong incentives to increase shareholder value. Our board of directors does not apply a rigid formula in allocating stock options or restricted stock to our executives as a group or to any particular executive. Instead, our board of directors exercises its judgment and discretion and considers, among other things, the executive’s past performance and contributions, and the executive’s anticipated future contributions and responsibilities, competitive factors, the amount of stock-based equity compensation already held by the executive, the non-equity compensation received by the executive and the total number of options and shares of restricted stock to be granted to all participants during the year.

 

     Our Compensation Committee has discretion to determine the vesting schedule of the stock options and restricted period of the restricted stock granted under our 1998 Stock Option Plan and our 2007 Employee Stock Incentive Plan. The vesting period and restricted period provide added incentive for the executive to continue his or her employment with us.

 

     In fiscal 2009, we granted options to purchase a total of 219,000 shares of common stock, of which options to purchase a total of 99,000 shares were granted to our named executive officers, representing 45% of all options granted in fiscal 2009. In fiscal 2009, we granted 100,000 shares of restricted stock, of which 68,000 shares of restricted stock were granted to our named executive officers. The number of stock options and shares of restricted stock granted to each executive is set forth in the “Grants of Plan-Based Awards” table below. The dollar amount recognized as expense with respect to such grants, as determined for financial statement reporting purposes, for each individual named executive officer is set forth in the column “Option Awards” and “Stock Awards” in the “Summary Compensation Table.” The exercise price of each stock option granted under our plan is based on the fair market value of our common stock on the grant date.

 

 

     All of our executive officers are eligible for benefits offered to employees generally, including life, health, disability and dental insurance and our 401(k) plan. Consistent with our compensation philosophy is our intent to maintain our current benefits for our executive officers. Our Compensation Committee, in its discretion, may revise the executive officers’ benefits if it deems it advisable.

 

 

     Our chief executive officer has an employment agreement that provides various benefits triggered by such employment-related actions as termination without cause, resignation with good reason and/or termination without cause following a change in control. See “Employment Agreement with Chief Executive Officer” below for a description of such provisions. Additionally, our chief financial officer and chief accounting officer have agreements that provide for severance payments and change of control payments. See “Change of Control Agreement with Chief Financial Officer” and “Severance and Change of Control Agreements with Chief Accounting Officer” below for a description of such provisions. Each of the employment agreements and change in control agreements has been amended to ensure compliance with Section 409A of the Internal Revenue Code.

 

 

     In setting the terms of and determining whether to approve these severance and change in control arrangements, our Compensation Committee or board of directors, as applicable, recognized that executives often face challenges securing new employment following a termination of their existing employment and that distractions created by uncertain job security may have a detrimental impact on their performance. None of these benefits are triggered by a change in control unless our named executive officer’s employment is terminated without cause following such change in control.

 

 

     In the review and establishment of our compensation programs, we consider the anticipated accounting and tax implications to us and our executives. For example, we may utilize restricted stock as forms of equity compensation incentives in response to changes in the accounting treatment of equity awards. While we consider the applicable accounting and tax treatment, these factors alone are not determinative, and we also consider the cash and non-cash impact of the programs and whether a program is consistent with our overall compensation philosophy and objectives.

 

 

     The Compensation and Option Committee, which is composed entirely of independent, outside directors, establishes the general compensation policies of the Company, and specific compensation for each executive officer of the Company, and administers the Company’s stock option program.

 

     The Compensation and Option Committee has reviewed and discussed the Compensation Discussion and Analysis included above with management and based on such review and discussions the Compensation and Option Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

RESPECTFULLY SUBMITTED,

Robert King, Chairman

Alfred W. Giese

 

 

     The following table sets forth information regarding compensation for services rendered to Amtech during the fiscal years ended September 30, 2009, 2008 and 2007 by our named executive officers who received annual compensation exceeding $100,000 during such period.

 

 

												Non-Equity
								Stock		Option		Incentive Plan		All Other
						Bonus		Awards		Awards		Compensation		Compensation
Name and Principal Position		Year		Salary ($)		($) (1)		($) (2)		($) (2)		($) (3)		($)		Total ($)
Jong S. Whang,		2009		315,539		95,000		72,304		124,948		-		23,502	(5)	631,293
Chief Executive Officer and Director (4)		2008		272,788		-		27,346		79,229		200,000		20,404	(6)	599,767
		2007		240,385		-		-		28,114		115,248		12,514	(7)	396,261
Bradley C. Anderson,		2009		222,210		50,000		25,336		94,861		-		10,773	(8)	403,180
Chief Financial Officer		2008		196,408		-		13,673		69,443		107,307		10,427	(8)	397,258
		2007		176,154		-		-		38,053		69,149		9,846	(8)	293,202
Robert T. Hass,		2009		138,689		12,000		11,206		20,392		-		7,027	(8)	189,315
Chief Accounting Officer		2008		135,946		-		4,102		13,211		37,395		7,754	(8)	198,408
		2007		120,000		-		-		6,870		23,050		5,438	(8)	155,358

(1)		Represents discretionary cash bonuses awarded on December 21, 2009, for fiscal year 2009.
(2)		Amounts represent the share-based compensation expense recognized for financial statement reporting purposes.
(3)		On December 6, 2007 and December 9, 2008, the board of directors awarded non-equity incentive plan compensation to executives for their fiscal 2007 and 2008 performance, respectively, in the amounts indicated. There was no non-equity incentive plan compensation awarded for fiscal 2009 performance.
(4)		Directors who are full-time employees of our company receive no additional compensation for serving as directors.
(5)		Amount represents car allowance of $12,046, payments in lieu of participating in benefit plans of $9,396 and $2,060 of life insurance premiums paid by our company for which Mr. Whang’s spouse is the beneficiary.
(6)		Amount represents car allowance of $9,092, payments in lieu of participating in benefit plans of $9,252 and $2,060 of life insurance premiums paid by our company for which Mr. Whang’s spouse is the beneficiary.
(7)		Amount represents payments in lieu of participating in benefit plans of $10,454 and $2,060 of life insurance premiums paid by our company for which Mr. Whang's spouse is the beneficiary.
(8)		Amount primarily represents car allowance.

 

 

 

     The following table sets forth grants of plan-based awards made to our named executive officers in fiscal 2009 and related fair value compensation for fiscal 2009:

 

 

All Other

All Other

Stock

Option

Awards:

Awards:

Grant Date

Number of

Number of

Exercise or

Fair Value of

Date Grant

Estimated Future Payouts Under

Shares of

Securities

Base Price

Stock and

Approved

Non-Equity Incentive Plan Awards

Stock or

Underlying

of Options

Option

Grant Date

by Board

Threshold

Maximum

Units (#)

Options (#)

Awards

Awards ($)

Name

(1)

(1)

($)

Target($)

($)

(1)

(1)

($/Sh) (2)

(3)

Jong S. Whang

12/9/2008

12/9/2008

42,000

210,000

315,000

50,000

60,000

3.80

327,418

Bradley C. Anderson

12/9/2008

12/9/2008

24,500

122,500

183,750

10,000

30,000

3.80

106,709

Robert T. Hass

12/9/2008

12/9/2008

7,400

37,000

55,500

8,000

9,000

3.80

51,013

(1)		The stock and option awards listed above vest in four (4) equal annual installments commencing with the first anniversary of the date of grant.
(2)		The exercise price is equal to the closing price of the Company’s Common Stock on the date of the grant.
(3)		See Stock-Based Compensation under Note 1 to the consolidated financial statements included in our Form 10-K filed November 24, 2009 for a discussion of the assumptions used to value equity based compensation.

 

 

 

 

 

		Option Awards								Stock Awards
												Market
		Number of		Number of						Number of		Value of
		Securities		Securities						Shares or		Shares or
		Underlying		Underlying						Units of		Units of
		Unexercised		Unexercised		Options		Option		Stock That		Stock that
		Options (#)		Options (#)		Exercise		Expiration		Have Not		have Not
Name		Exercisable		Unexercisable		Price ($)		Date		Vested (#)		Vested ($)
Jong S. Whang		135,000				6.53		3/15/2011
		15,000		15,000		6.90		12/8/2016
		7,500		22,500		14.79		12/6/2017
				60,000		3.80		12/9/2018
										57,500		304,750
Bradley C. Anderson		6,000		4,000		8.51		4/24/2016
		5,000		5,000		6.90		12/8/2016
		10,000		10,000		7.30		2/19/2017
		3,750		11,250		14.79		12/6/2017
				30,000		3.80		12/9/2018
										13,750		72,875
Robert T. Hass		20,000				5.88		3/16/2011
		2,500		2,500		6.90		12/8/2016
		1,250		3,750		14.79		12/6/2017
				9,000		3.80		12/9/2018
										9,125		48,363

 

 

     The following table shows all stock options exercised and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2009, which ended on September 30, 2009.

 

 

		Option Awards				Stock Awards
		Number of
		Shares		Value		Number of
		Acquired		Realized		Shares		Value
		on		on		Acquired		Realized on
		Exercise		Exercise		on Vesting		Vesting
Name		(#)		($)(1)		(#)		($)(2)
Jong S. Whang		-		-		2,500		8,700
Bradley C. Anderson		-		-		1,250		4,350
Robert T. Hass		-		-		375		1,305

(1)		The value realized equals the difference between the option exercise price and the fair market value of Amtech common stock on the date of exercise, multiplied by the number of shares for which the option was exercised.
(2)		The value realized equals the fair market value of Amtech common stock on the vesting date, multiplied by the number of shares that vested.

 

     None of our named executive officers receive pension benefits.

 

 

 

 

 

     On April 13, 2007, we entered into an employment agreement with Jong S. Whang, our chief executive officer. Below is a summary of the terms and conditions of Mr. Whang’s employment agreement.

 

 

 

     Mr. Whang’s employment agreement provides for an employment period commencing on the date of the employment agreement and continuing for an initial term of three years. Thereafter, the employment period will continue for successive one-year terms unless either we or Mr. Whang provides written notice of termination of the employment period at least 120 days prior to the end of any given term. If Mr. Whang remains in the full time employ of our company beyond the employment period without any written agreement, his employment agreement will be deemed to continue on a month to month basis and either party will have the right to terminate the employment agreement at the end of any ensuing calendar month with written notice of at least 30 days.

 

 

     Pursuant to his employment agreement, Mr. Whang received an initial base salary of $250,000 per annum. Mr. Whang’s base salary is reviewed on an annual basis by our Compensation Committee and can be increased, but not decreased below $250,000, at the discretion of our Compensation Committee. Mr. Whang’s current base salary is $350,000 per annum.

 

 

     Mr. Whang is also entitled to an annual cash bonus for each fiscal year that will be determined in accordance with an annual bonus plan adopted by our Compensation Committee. The annual bonus plan may not be any less favorable to Mr. Whang than the bonus plan for fiscal 2009 that was adopted by our Compensation Committee on December 9, 2008. The terms of Mr. Whang’s 2009 bonus plan are described below in more detail under the section “Other Agreements and Compensatory Arrangements.”

 

 

     Pursuant to Mr. Whang’s employment agreement, any currently outstanding options held by Mr. Whang will remain in full force and effect in accordance with our stock option plans and applicable stock option agreements. Mr. Whang will also be issued an annual grant of stock options by our Compensation Committee within 90 days after the end of each fiscal year during his employment period. All of the options granted to Mr. Whang will be incentive stock options within the meaning of the Internal Revenue Code of 1986, or if they do not qualify as incentive stock options, they will be non-qualified stock options. The amount and terms of the grants will be determined by our Compensation Committee, but may not be any less favorable to Mr. Whang than the terms of the options previously granted to Mr. Whang on December 9, 2008.

 

 

     Mr. Whang will be entitled to receive from our company cash in lieu of participating in the benefit plans offered to executive officers of our company. We will provide Mr. Whang with an annual automobile allowance of not less than $12,000 (annual allowance is currently $12,000), a life insurance policy in the face amount of $250,000 and such other benefits as we may deem appropriate from time to time.

 

 

     Mr. Whang’s employment is “at will” and either we or Mr. Whang can terminate his employment agreement at any time, with or without “cause” or “good reason” (as those terms are defined in Mr. Whang’s employment agreement), upon 30 days written notice. Mr. Whang’s employment agreement can also be terminated by us due to the disability of Mr. Whang after at least 30 days’ written notice by us of our intention to terminate his employment.

 

 

 

     If we terminate the employment of Mr. Whang against his will and without cause (including by giving notice of termination of his employment agreement as described above), or if Mr. Whang terminates his employment for good reason, Mr. Whang is entitled to receive salary, incentive compensation and vacation accrued through the date of termination, plus (i) an amount equal to two years of Mr. Whang’s base salary in effect on the date of termination (which would have been either $700,000 or $630,000 if terminated during fiscal 2009, depending on whether such termination took place prior to or after April 1, 2009); (ii) a pro-rata portion of the amount of incentive compensation he would earn for the fiscal year in which the termination occurs if the results of operations of our company for such fiscal year were annualized; and (iii) full vesting of all outstanding stock options and restricted stock held by Mr. Whang.

 

     If Mr. Whang voluntarily terminates his employment other than for good reason, if we terminate Mr. Whang’s employment for cause, or if Mr. Whang’s employment is terminated due to his death or disability, Mr. Whang will be entitled to receive salary and accrued vacation through the date of termination only. However, in the event Mr. Whang’s employment is terminated due to his death or disability, he will also be entitled to receive (i) a pro-rata portion of the amount of incentive compensation he would earn for the fiscal year in which the termination occurs if the results of operations of Amtech for such fiscal year were annualized, and (ii) full vesting of all outstanding stock options held by him.

 

 

     Mr. Whang agreed that during the term of his employment agreement he would not engage in certain activities in which he would be competing with us or our subsidiaries. He also agreed that for a period of two years after the end of the term of his employment agreement he would not engage in certain activities in which he would be competing with us or our subsidiaries and he would not own, directly or indirectly, more than a 5% interest in entities which compete with us or our subsidiaries.

 

 

     In the event that Mr. Whang’s employment with us is terminated either (i) by us for any reason other than for cause during a “pending change in control” (as that term is defined in Mr. Whang’s employment agreement) of our company or within one year following the occurrence of a “change in control” (as that term is defined in Mr. Whang’s employment agreement), or (ii) by Mr. Whang for good reason within one year following the occurrence of a change in control of our company, then Mr. Whang will be entitled to receive within 30 days of the date of termination of his employment (provided, however, if such 30 day period begins in one calendar year and ends in another calendar year, Mr. Whang will not have the right to designate the calendar year of payment), in lieu of the severance payment otherwise payable, (i) an amount equal to three years of his base salary in effect on the date of termination of his employment, (ii) the maximum amount of the incentive compensation which he could earn for the fiscal year in which the termination occurs, and (iii) full vesting of all outstanding stock options he holds.

 

 

     On March 10, 2008, we entered into a Change of Control Severance Agreement with Bradley C. Anderson, our chief financial officer. Below is a summary of the terms and conditions of the agreement.

 

 

     The term of the agreement with Mr. Anderson commenced on March 10, 2008 and continues for an initial term of three years. Thereafter, the employment period will continue for successive one-year terms unless either we or Mr. Anderson provides written notice of termination of the employment period at least 120 days prior to the end of any given term.

 

 

 

     In the event that Mr. Anderson’s employment with us is terminated (other than as a consequence of death or disability) either (i) by us for any reason other than for cause during a “pending change in control” (as the term is defined in Mr. Anderson’s change of control agreement) or within one year following the occurrence of a “change in control” (as the term is defined in Mr. Anderson’s change of control agreement), or (ii) by Mr. Anderson for good reason within one year following the occurrence of a change in control, then Mr. Anderson will be entitled to receive from the Company the following: (i) an amount equal to two years of his base salary in effect on the date of termination of his employment (which would have been equal to either $490,000 or $441,000 if terminated during fiscal 2009, depending on whether such termination took place prior to or after April 1, 2009); (ii) the maximum amount of the incentive compensation which he could earn for the fiscal year in which the termination occurs; and (iii) full vesting of all outstanding stock options and restricted stock he holds.

 

 

     In 1992, we entered into a severance agreement with Robert T. Hass, now our Chief Accounting Officer, which provides for a minimum severance of 90 days under terms similar to those described above for Mr. Whang. Mr. Hass is entitled to a lump sum severance payment equal to one year’s base salary should his employment be terminated within one year following a change in control pursuant to a separate agreement entered into in 1998 (which would have been equal to either $148,000 or $133,200 if terminated during fiscal 2009, depending on whether such termination took place prior to or after April 1, 2009).

 

 

     On December 9, 2008, our Compensation Committee approved the following compensation arrangements for J.S. Whang, President and Chief Executive Officer, Bradley C. Anderson, Vice President and Chief Financial Officer, and Robert T. Hass, Chief Accounting Officer: (i) salaries of $350,000, $245,000 and $148,000, effective December 1, 2007, for Messrs. Whang, Anderson and Hass, respectively; (ii) bonuses for fiscal 2007 of $200,000, $107,307, and $35,227 for Mr. Whang, Mr. Anderson, and Mr. Hass, respectively; and (iii) incentive stock options to purchase 60,000, 30,000 and 9,000 shares for Mr. Whang, Mr. Anderson and Mr. Hass, respectively; and (iv) restricted stock grants of 50,000, 10,000 and 8,000 shares for Mr. Whang, Mr. Anderson and Mr. Hass, respectively. Each of the options granted to the named individuals has an exercise price of $3.80 (the closing price of Amtech’s common stock on December 9, 2008). The options expire ten years from the date of grant, and vest 25% per year on the first through fourth anniversaries of the grant date. The restricted stock vests 25% per year on the first through fourth anniversaries of the grant date.

 

     Our Compensation Committee also approved a bonus plan for fiscal 2009 in which Mr. Whang, Mr. Anderson and Mr. Hass are eligible to participate. Under the bonus plan, participants can earn a target bonus equal to a specified percentage of their base salary by achieving 100% of pre-defined performance objectives. The participant’s bonus calculation is based upon achieving performance objectives established in each of the following categories: (i) bookings; (ii) revenue; (iii) gross margin; and (iv) operating profit. Objectives established for participants in these categories may be either at the corporate level, the operating division level or both. In addition, individual performance objectives may be established for certain participants. In order to be eligible for a bonus with respect to any of the above performance categories, the participant must achieve not less than 80% (90% in the case of gross margin) of the applicable performance objective. At these minimum levels, 20% of the bonus for the category is eligible for payment. The bonus calculation percentage with respect to any performance category increases by 4% (8% with respect to gross margin) for each 1% improvement in performance over the minimum level up to 100%, and by 1% for each 1% improvement in performance over 100%, up to a maximum of 150% of the participant’s target bonus.

 

 

 

 

 

     The Board of Directors annually reviews the independence of the Audit Committee members in view of FINRA’s listing standards’ and the SEC’s definitions of independence for audit committee members. The Board has determined that each of the members of the Audit Committee meets those definitions and standards. Additionally, each member of the Audit Committee is financially literate, and one of the Audit Committee members, Michael Garnreiter, has financial management expertise as required by NASDAQ’s rules and meets the SEC’s definition of an “audit committee financial expert.”

 

 

     The Audit Committee meets regularly with the independent accountants without management present and also meets in executive session without any others present. The Audit Committee has reviewed the Company’s consolidated financial statements for the fiscal year ended September 30, 2009, as audited by its independent auditors, Mayer Hoffman McCann P.C. (“Mayer Hoffman”), and has discussed these financial statements with management. In addition, the Audit Committee has discussed with Mayer Hoffman the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. Furthermore, the Audit Committee has received the written disclosures and the letter from Mayer Hoffman required by applicable requirements of the Public Company Accounting Oversight Board regarding Mayer Hoffman’s communications with the Audit Committee concerning independence and has discussed with Mayer Hoffman its independence.

 

     Based upon the foregoing review and discussion, the Audit Committee recommended to our Board of Directors that the audited financial statements for the fiscal year ended September 30, 2009 be included in the Company’s Annual Report on Form 10-K for filing with the SEC.

 

	RESPECTFULLY SUBMITTED,
	Michael Garnreiter, Chairman
	Robert F. King

 

 

 

     Any service to be provided by the independent auditor that has not received general pre-approval under the Policy is required to be submitted to the Audit Committee for approval prior to the commencement of a substantial portion of the engagement. Any proposed service exceeding pre-approved cost levels is also required to be submitted to the Audit Committee for specific approval. For the years ended September 30, 2008 and 2009, all services rendered by the Company’s independent auditors were pre-approved by the Audit Committee pursuant to the pre-approval Policy.

 

     The Audit Committee will revise the list of general pre-approved services from time to time based on subsequent determinations. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.

 

 

     The following table sets forth the fees billed to us by our independent auditors for services rendered for the audit of our annual financial statements and the review of our quarterly financial statements for the fiscal years ended September 30, 2009 and 2008, and fees billed during those fiscal years for (i) services by our auditor that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees, (ii) services rendered in connection with tax compliance, tax advice and tax planning, and (iii) all other fees for services rendered.

 

			Year Ended			Year Ended
			Sept. 30, 2009			Sept. 30, 2008
	Audit Fees (1)		$	238,854		$	294,077
	Audit-Related Fees (2)			4,620			15,851
	Tax Fees			—			—
	All Other Fees			—			—
	Total Fees		$	243,474		$	309,928

(1)		Annual audit of the Company, review of financial statements included the Company’s reports on Form 10-Q and Form 10-K, including an audit of the Company’s internal control over financial reporting, and services normally provided by the accountant in connection with statutory and regulatory filings, including the Company’s registration statements related to our 2008 public offering.
(2)		Accounting and reporting advisory services related to acquisition activities.

23

 

     The policy of the Board is for it, or one of its committees, to review each related person transaction (as defined below) and determine whether it will approve or ratify that transaction. Any Board member who has any interest (actual or perceived) will not be involved in the consideration of Directors.

 

     For purposes of the policy, a “related person transaction” is any transaction, arrangement or relationship in which we are a participant, the related person (defined below) had, has or will have a direct or indirect material interest and the aggregate amount involved is expected to exceed $120,000 in any calendar year. “Related person” includes (a) any person who is or was (at any time during the last fiscal year) an officer, director or nominee for election as a director; (b) any person or group who is a beneficial owner of more than 5% of our voting securities; (c) any immediate family member of a person described in provisions (a) or (b) of this sentence; or (d) any entity in which any of the foregoing persons is employed, is a partner or has a greater than 5% beneficial ownership interest.

 

     In determining whether a related person transaction will be approved or ratified, the Board, or committee, will consider a multitude of factors including (a) the extent of the related person’s interest in the transaction; (b) the availability of other sources of comparable products or services; (c) whether the terms are competitive with terms generally available in similar transactions with persons that are not related persons; (d) the benefit to us; and (e) the aggregate value of the transaction.

 

 

     The following table sets forth certain information concerning the beneficial ownership of our common stock as of January 22, 2010, by (i) each director and executive officer of Amtech, including the named executive officers, (ii) all executive officers and directors of Amtech as a group. The information included in the tables below was determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and is based upon the information furnished by the persons listed below. Except as otherwise indicated, each shareholder listed possesses sole voting and investment power with respect to the shares indicated as being beneficially owned.

 

 

		No. of Shares of				Percent of
		Common Stock				Common Stock
Name and Address (1) (2)		Beneficially Held (3)				Ownership (3)
Officers and Directors:
Jong S. Whang		220,000		(4)		2.4	%
Bradley C. Anderson		51,500		(6)		*
Robert T. Hass		38,375		(5)		*
Michael Garnreiter		11,000		(7)		*
Alfred W. Giese		10,000		(8)		*
Egbert Jan Geert Goudena		0				*
Jeong Mo Hwang		0				*
Robert F. King		29,333		(9)		*
Director and Officer Total		360,208		(10)		4.0	%

____________________ 
 

*		Less than 1%.
(1)		Except as otherwise noted, the address for each person listed in this table is c/o Amtech Systems, Inc., 131 South Clark Drive, Tempe, Arizona 85281.

(2)		Mr. Whang is our President, CEO and is a director. Mr. Hass is the Chief Accounting Officer. Mr. Anderson is our Vice President-Chief Financial Officer, Treasurer and Secretary. Messrs. King, Garnreiter, Giese, Goudena and Hwang are directors of Amtech.
(3)		Based on 9,015,852shares of common stock outstanding as of January 22, 2010. The share amounts and percentages shown include shares of common stock actually owned as of January 22, 2010, and shares of common stock with respect to which the person had the right to acquire beneficial ownership within 60 days of such date pursuant to options or warrants. All shares of common stock that the identified person had the right to acquire within 60 days of January 22, 2010, upon the exercise of options or warrants, are deemed to be outstanding when computing the percentage of the securities owned by such person, but are not deemed to be outstanding when computing the percentage of the securities owned by any other person.

 

 25

---

(4)		Includes 187,500 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(5)		Includes 28,500 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(6)		Includes 43,500 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(7)		Includes 11,000 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(8)		Includes 10,000 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(9)		Includes 18,333 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.
(10)		Includes 297,833 shares issuable upon exercise of options exercisable within 60 days of January 22, 2010.

     The following table sets forth certain information concerning the beneficial ownership of our common stock based on information received by the Company as of January 22, 2010, by each person known by us to be the beneficial owner of more than 5% of our common stock based on such filings.

 

						Percent of
			No. of Shares of			Common
			Common Stock			Stock
Name and Address of			Beneficially Held (1)			Ownership (1)
5% Shareholders:
Austin W. Marxe			894,635	(2)		9.92%	(2)
527 Madison Avenue, Suite 2600
New York, NY 10022
David M. Greenhouse			894,635	(2)		9.92%	(2)
527 Madison Avenue, Suite 2600
New York, NY 10022
Richard L. Scott			832,400	(3)		9.23%	(3)
700 11th Street South, Suite 101
Naples, FL 34102
Systematic Financial Management. L.P.			503,495	(4)		5.58%	(4)
300 Frank W. Burr Blvd.
Glenpointe East, 7th Floor
Teaneck, NJ 07666
Essex Investment Management Co. LLP			726,561	(5)		8.06%	(5)
125 High Street 29th floor
Boston, MA 02110-2702

(1)

Based on 9,015,852 shares of common stock outstanding as of January 22, 2010. The share amounts and percentages shown include shares of common stock actually owned as of January 22, 2010, and shares of common stock with respect to which the person had the right to acquire beneficial ownership within 60 days of such date pursuant to options or warrants. Any shares of common stock that the identified person had the right to acquire within 60 days of January 22, 2010, upon the exercise of options or warrants, are deemed to be outstanding when computing the percentage of the securities owned by such person, but are not deemed to be outstanding when computing the percentage of the securities owned by any other person.

 

(2)		Mr. Marxe and Mr. Greenhouse share voting and investment power over and beneficially own a total of 894,635 shares of common stock as of September 30, 2009. Mr. Marxe and Mr. Greenhouse are the controlling principals of AWM Investment Company, Inc., which is the general partner of MGP Advisers Limited Partnership, which is the general partner of Special Situations Fund III QP, L.P. which owns 601,699 shares of common stock. Mr. Marxe and Mr. Greenhouse are also members of SST Advisers, L.L.C., which is the general partner of Special Situations Technology Fund, L.P. and Special Situations Technology Fund II, L.P., which own 35,689 and 257,247 shares of common stock, respectively.
(3)		Mr. Scott is a controlling member of Amtech Investments LLC, a member-managed limited liability company which owns 832,400 shares of common stock.
(4)		Systematic Financial Management, L.P. (“Systematic”) beneficially owns 503,495 shares of common stock as of September 30, 2009. Systematic has sole dispositive power over all stock owned, and sole voting power with respect to 206,495 shares. Systematic considers itself to be an investment adviser in accordance with Section 240.13d-1(b)(1)(ii)(E) of the Securities Exchange Act of 1934 (the “Exchange Act”).

(5)

Essex Investment Management Company, LLC (“Essex”) beneficially owns 726,561 shares of common stock as of December 31, 2009. Essex has sole dispositive power over all stock owned, and sole voting power with respect to 721,196 shares. Essex considers itself to be an investment adviser in accordance with Section 240.13d-1(b)(1)(ii)(E) of the Exchange Act.

 

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, as well as persons beneficially owning more than 10% of our outstanding Common Stock, to file certain reports of ownership with the SEC within specified time periods. Such officers, directors and shareholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.

 

     Based solely on our review of such forms received by us during the fiscal year ended September 30, 2009, or written representations from certain reporting persons, we believe that between October 1, 2008 and September 30, 2009, all Section 16(a) filing requirements applicable to its officers, directors and 10% shareholders were complied with, except that Mr. Alfred Giese failed to timely file with respect to one (1) transaction.

 

 

 

 

 

 

     The Company’s stockholders are being asked to approve an amendment to the Non-Employee Directors Stock Option Plan (the “Amended Director Plan”), which amendment provides as follows:

     The proposed amendment was adopted by the Board on December 21, 2009, and will become effective upon shareholder approval at the Annual Meeting.

 

 

 

 

     The Amended Director Plan authorizes the grant of non-qualified stock options to our non-employee directors. The principal purposes of the Amended Director Plan are to provide incentives to non-employee directors of the Company to further the growth, development and financial success of the Company by personally benefiting through the ownership of Company stock, and to obtain and retain the services of non-employee directors who are considered essential to the long-range success of the Company. The approval by the shareholders of the Amended Director Plan will allow us to continue to align interests of directors with the shareholders of the Company.     

 

 

    Upon approval of the Amended Director Plan by the Company’s shareholders, Michael Garnreiter, Alfred Giese, Egbert Jan Geert Goudena, Jeong Mo Hwang and Robert King, assuming they are elected to the Board at the Annual Meeting, will be eligible to participate in the Amended Director Plan as non-employee directors.

 

     The following summary of the principal features of the Amended Director Plan is not a complete description of all the provisions of the Amended Director Plan. Any shareholder of the Company who wishes to obtain a copy of the Amended Director Plan may do so upon written request to the Corporate Secretary at the Company’s principal executive offices at 131 South Clark Drive, Tempe, Arizona 85281. The full text of the Non-Employee Directors Stock Option Plan and the full text of the proposed amendment have also been included as Appendix A to the Proxy Statement filed electronically with the Securities and Exchange Commission, a copy of which is available on the Company’s website at www.amtechsystems.com.

 

 

     The Amended Director Plan will be administered by the Compensation and Stock Option Committee of the Company’s Board of Directors. The interpretation and construction by the Committee of any provisions of, or the determination of any questions arising under, the Amended Director Plan or any rule or regulation established by the Committee pursuant to the Amended Director Plan, will be final, conclusive and binding on all persons interested in the Amended Director Plan.  

 

 

 

 

     The Amended Director Plan authorizes the granting of options the exercise of which would allow up to a maximum of 350,000 shares of the Common Stock to be acquired by the participants of such options. In order to prevent the dilution or enlargement of the rights of the participants under the Amended Director Plan, the number of shares of Common Stock authorized by the Amended Director Plan and the number of shares subject to outstanding options are subject to adjustment in the event of any increase or decrease in the number of shares of outstanding Common Stock resulting from a stock dividend, stock split, combination of shares, merger, reorganization, consolidation, recapitalization or other change in the corporate structure affecting the Company’s capital stock. If any option granted under the Amended Director Plan is forfeited or terminated, the shares of Common Stock that were underlying such option shall again be available for distribution in connection with options subsequently granted under the Amended Director Plan.

 

 

     The Amended Director Plan will terminate ten (10) years after the effective date of the Amended Director Plan, subject to earlier termination by the Board. No option may be granted under the Amended Director Plan after the termination date, but options previously granted may extend beyond such date.

 

 

 

     The Amended Director Plan provides for the grant of non-statutory stock options to the Company’s non-employee directors. Each non-employee director who joins the Board of Directors after January 1, 2010, will receive an option to acquire 6,000 shares, or such other number as the Board may determine, of the Company’s Common Stock. In addition to the foregoing option grant, a grant of options to purchase 5,000 shares, or such other number as the Board may determine, of the Company’s Common Stock will be made annually to each non-employee director on the first business day following the Company’s Annual Meeting of Shareholders each year, or such other date as may be determined by the Board, provided that such director has attended at least 75% of the meetings of the Board of Directors and of the Board Committees of which such non-employee director was a member in the preceding fiscal year. Pursuant to the Amended Director Plan, the Board also has the discretion to grant options, and determine the rights of such options, to directors who are departing in recognition of past service on the Board and any Board Committees.

   The amounts set forth in the table below reflect the number of automatic annual option grants that the Company anticipates will be made pursuant to the Amended Director Plan.

 

Name and Position		Dollar Value ($) (1)		Number of Units (2)
Michael Garnreiter, Director		34,647		5,000
Alfred W. Giese, Director		34,647		5,000
Egbert Jan Geert Goudena, Director		34,647		5,000
Jeong Mo Hwang, Director		34,647		5,000
Robert F. King, Director		34,647		5,000

 

____________________
 

1.		The dollar values of the number of units shown in this illustration are the grant date fair values of options, assuming that the market price of the underlying shares on the date of the grant was $11.00, the market value at the close of trading on January 7, 2010.
2.		Number of units represents the number of units that are automatically granted each year; however, under both the existing and amended plan, such number may be higher or lower at the discretion of the Board.

 

     Pursuant to the terms of the Amended Director Plan, each option granted, except options issued to departing directors, the terms of which may be determined by the Board, will vest one-third on the first anniversary of the option grant, an additional one-third on the second anniversary of the option grant and the remaining one-third on the third anniversary of the option grant, provided the optionee remains an Eligible Director (as defined in the Amended Director Plan) at such vesting dates. Accordingly, each option grant will be vested and exercisable with respect to the 33-1/3% of the underlying shares on the first anniversary of the date of grant, 66-2/3% of the underlying shares on the second anniversary, and 100% of the underlying shares on the third anniversary. The exercise price of all options granted under the Amended Director Plan will be the Fair Market Value (as defined in the Amended Director Plan) of the Company’s Common Stock on the grant date. All options granted under the Amended Director Plan will expire ten (10) years from the date of grant. Options are not transferrable other than by will, under the laws of descent and distribution, or pursuant to a qualified domestic relations order, and each option is exercisable during the lifetime of the optionee only by the optionee. Unexercised options terminate one year from the date an individual ceases to be a director of the Company due to death or disability. Unexercised options terminate thirty days from the date an individual ceases to be a director of the Company, or such other amount of time from such date as the Board may determine, due to any reason other than death or disability.

 

 

     Options granted under the Amended Director Plan will be evidenced by agreements consistent with the Amended Director Plan in such form as the Compensation and Option Committee may prescribe.

---

 

     The Amended Director Plan will not be a “qualified plan” as defined in Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Nonstatutory stock options (“NSOs”) do not qualify as “incentive stock options” under Section 422 of the Code.

 

     A recipient does not realize any compensation income upon the grant of an NSO. Additionally, the Company may not take a tax deduction at the time of the grant. Upon exercise of an NSO, a recipient realizes and must report as compensation income in an amount equal to the difference between the fair market value of the Common Stock on the date of exercise and the exercise price. The Company is entitled to take a deduction at the same time and in the same amount as the recipient reports as compensation income, provided the Company withholds federal income tax in accordance with the Code and applicable Treasury regulations.

 

     In addition to the foregoing federal tax considerations, the exercise of an option and the ultimate sale or other disposition of the shares of Common Stock acquired thereby will in most cases be subject to state income taxation.

 

 

     Assuming a quorum is present at the Annual Meeting, the affirmative vote of a majority of votes cast by holders of Common Stock represented and entitled to vote at the Annual Meeting is required to approve the Amended Director Plan.

 

 

     At the Annual Meeting, shareholders will be asked to approve an amendment to the Company’s 2007 Employee Stock Incentive Plan (the “Amended Employee Plan”), which amendment provides as follows:

 

     The proposed amendment was adopted by the Board on December 21, 2009, and will become effective upon shareholder approval at the Annual Meeting.

 

     As of January 22, 2010, 1,337 shares remain available for grant under the Amended Employee Plan, without giving effect to the amendment. The Board believes that the increase in shares available for issuance is necessary to establish a reserve of shares that would enable the grant of stock to employees. The Board of Directors considers the Amended Employee Plan to be important to the Company’s ability to appropriately compensate its officers and employees as the Company continues to grow. After giving effect to the increase, 901,337 shares will remain available for future grants of options under the Amended Employee Plan. The full text of the proposed amendment is attached as Appendix B.

 

 

 

 

     The following summary of the main features of the Amended Employee Plan is not a complete description of all the provisions of the Amended Employee Plan. Any shareholder of the Company who wishes to obtain a copy of the Amended Employee Plan may do so upon written request to the Corporate Secretary at the Company’s principal executive offices at 131 South Clark Drive, Tempe, Arizona 85281. The full text of the 2007 Employee Stock Incentive Plan and the full text of the proposed amendment have also been included as Appendix B to the Proxy Statement filed electronically with the Securities and Exchange Commission, a copy of which is available on the Company’s website at www.amtechsystems.com.

 

     The Amended Employee Plan authorizes the grant and issuance of two different types of Awards: Options (“Stock Options”), which can qualify as “incentive stock options” under the Internal Revenue Code, or as “non-qualified stock options;” and Restricted Stock, which is stock that is contingent on an employee satisfying conditions, including without limitation continued employment, passage of time or satisfaction of performance criteria.

 

    The Amended Employee Plan has a number of special terms and limitations, including:

• The exercise price for Stock Options granted under the plan must at least equal the Shares’ fair market value at the time the Stock Option is granted;
   
• The Amended Employee Plan expressly states that Stock Options granted under it can not be “repriced,” as defined in the Amended Employee Plan and
   
• Shareholder approval is required for certain types of amendments to the Amended Employee Plan.

     The Amended Employee Plan is designed to enable the Company to attract, retain and motivate its officers and other key employees, and to further align their interests with those of the shareholders of the Company, by providing for or increasing the proprietary interest of such persons in the Company. 

 

 

     The aggregate number of Shares that can be issued under the Amended Employee Plan may not exceed 1,400,000 (including pursuant to ISOs). If the outstanding Shares or other securities of the Company, or both, for which the Award is then exercisable or as to which the Award is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, or reorganization, the Committee may appropriately and equitably adjust the number and kind of Shares or other securities which are subject to the Plan or subject to any Awards theretofore granted, and the exercise or settlement prices of such Awards, so as to maintain the proportionate number of Shares or other securities without changing the aggregate exercise or settlement price, provided, however, that such adjustment shall be made so as to not affect the status of any Award intended to qualify as an ISO or as “performance based compensation” under Section 162(m) of the Code. For purposes of calculating the aggregate number of Shares issued under the Amended Employee Plan, only the number of shares actually issued upon exercise or settlement of an Award and not delivered to or retained by the Company upon cancellation, expiration or forfeiture of an Award shall be counted.

 

 

 

     The Amended Employee Plan authorizes the grant and issuance of the following types of Awards: Stock Options and Restricted Stock.

 

     Stock Options. Subject to the express provisions of the Amended Employee Plan and as discussed in this paragraph, the Committee has discretion to determine the vesting schedule of Stock Options, the events causing a Stock Option to expire, the number of shares subject to any Stock Option, the restrictions on transferability of a Stock Option, and such further terms and conditions, in each case not inconsistent with the Amended Employee Plan, as may be determined from time to time by the Committee. The Amended Employee Plan expressly provides that the Company can not “reprice” Stock Options. The exercise price for Stock Options may not be less than 100% of the fair market value of the Common Stock (as determined pursuant to the Amended Employee Plan) at the time the Stock Option is granted. The exercise price of an Stock Option may be paid through various means specified by the Committee, including in cash or check, or by a promissory note or other commitment to pay (including such a commitment by a stock broker to pay over proceeds from the sale of shares issuable under a Stock Option). Stock Options granted under the Amended Employee Plan may be either incentive stock options (“ISOs”) qualifying under Section 422 of the Tax Code or non-qualified stock options (“NQSOs”), which are not intended to qualify as ISOs.

 

     Restricted Stock. The Committee may make awards of restricted stock to participants, which will be subject to restrictions on transferability and other restrictions as the Committee may impose, including, without limitations on the right to vote restricted stock or the right to receive dividends, if any, on the restricted stock. These awards may be subject to forfeiture upon any conditions or criteria established by the Committee, including without limitation termination of employment or upon a failure to satisfy Qualifying Performance Criteria during the applicable restriction period. In addition, in the discretion of the Compensation Committee, awards of restricted stock may be issued upon participants meeting certain Qualifying Performance Criteria.

 

 

     Subject to shareholder approval of the Amended Employee Plan, the performance criteria for any Award that is intended to satisfy the requirements for “performance based compensation” under Code Section 162(m) shall be any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole, to a business unit or subsidiary, or based on comparisons of any of the performance measures relative to other companies, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee in the Award: (a) cash flow, (b) earnings per share or increases of same, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total shareholder return, (f) share price performance, (g) return on capital or investment, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) pre-tax or after-tax profit levels expressed in either absolute dollars, (p) revenues or revenue growth, (q) economic or cash value added, (r) results of customer satisfaction surveys, (s) other measures of performance, quality, safety, productivity or process improvement, (t) market share and (u) overhead or other expense reduction. These factors may have a minimum performance standard, a target performance standard and a maximum performance standard. The Committee shall appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year.

 

 

     Generally, Awards granted under the Amended Employee Plan may not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner prior to the vesting or lapse of any and all restrictions applicable thereto.

 

     The Amended Employee Plan has provisions designed so that it qualifies as an “eligible plan” under the margin provisions of Regulation U, by expressly providing that the Committee may, but is not required to, loan the amount necessary to purchase shares and/or pay taxes under any award. The Amended Employee Plan also provides that the Committee may, but need not, provide that the holder of an Award has a right under an Award to receive a number of shares, the amount of which is determined by reference to the value of the Award. Finally, the Amended Employee Plan does not limit the Company’s right to make other arrangements to provide stock options and other forms of compensation arrangements as it determines appropriate.

 

 

     The Company is unable to determine the option grants it anticipates will be made to its Named Executive Officers and directors under the Amended Employee Plan following the annual meeting. Accordingly, the table below sets forth the number of awards granted by the Company to each of its Named Executive Officers and each group indicated below for fiscal year 2009 pursuant to the Amended Employee Plan. The amounts set forth in the table below are meant to illustrate grants of awards that would have been made pursuant to the Amended Employee Plan, and do not represent awards discussed under “Executive Compensation” or “Director Compensation” elsewhere in this Proxy Statement, and were not granted in addition to such awards discussed elsewhere.

 

		Option Awards					Stock Awards
Name and Position		Dollar Value ($)			Number of		Dollar Value ($)			Number of
		(*)			Units		(*)			Units
Jong S. Whang, CEO		$	138,588		20,000		$	110,000		10,000
Bradley C. Anderson, CFO		$	69,294		10,000		$	55,000		5,000
Robert T. Hass, CAO		$	18,481		2,667		$	13,330		1,333
Executive Officers as a Group		$	226,363		32,667		$	178,330		16,333
Non-Executive Employees as a Group		$	438,860		63,333		$	76,670		7,667

 

 

     The Board of Directors may amend, alter or discontinue the Amended Employee Plan or any agreement evidencing an Award made under the Amended Employee Plan, but no such amendment shall, without the approval of the shareholders of the Company:

     The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan, but no amendment or alteration shall be made which would impair the rights of any Award holder, without such holder’s consent, under any Award theretofore granted; provided that no such consent shall be required if the Committee determines in its sole discretion and prior to the date of any change in control, recapitalization, stock dividend, stock split, reorganization, merger, consolidation or similar type transaction that such amendment or alteration either is required or advisable in order for the Company, the Plan, or any Award granted, to satisfy any law or regulation or to meet the requirements of any accounting standard.

 

     No Award granted under the Amended Employee Plan shall be granted pursuant to the Amended Employee Plan more than 10 years after the date of the Company stockholder’s adoption of the Amended Employee Plan.

 

 

     The following discussion of the federal income tax consequences of the Amended Employee Plan is intended to be a summary of applicable federal law as currently in effect. State and local tax consequences may differ, and tax laws may be amended or interpreted differently during the term of the Amended Employee Plan or of Awards thereunder. Because the federal income tax rules governing Awards and related payments are complex and subject to frequent change, and they depend on the Participant’s individual circumstances, participants are advised to consult their tax advisors prior to exercise of options or other Awards or dispositions of stock acquired pursuant to Awards.

 

 

     ISOs and NQSOs are treated differently for federal income tax purposes. ISOs are intended to satisfy the requirements of Section 422 of the Code. NQSOs need not satisfy such requirements.

 

 

     No taxable income will result to a Participant upon the grant of an ISO. Upon the exercise of an ISO, any excess of the fair market value of the stock over the option price is a tax preference item that may result in the imposition of the alternative minimum tax in the year of exercise. However, if any of such shares are disposed of by the Participant in a disqualifying disposition (see below) in the same taxable year as the exercise, there will be no item of tax preference as to such disposed shares, although the Participant will recognize ordinary income as discussed below. In cases where the exercise of the option does produce an item of tax preference, the basis of the stock for purposes of the alternative minimum tax will include the amount of such tax preference item.

 

     On the subsequent sale of stock acquired by the exercise of an ISO, gain or loss will be recognized in an amount equal to the difference between the amount realized on the sale and the Participant’s tax basis in the stock sold. The tax basis of stock acquired solely for cash will be equal to the amount of cash paid. If an ISO is exercised using previously acquired stock (or stock and cash) in payment, the Participant’s tax basis for the number of stock received equal to the number used in payment shall be the same as the Participant’s basis in the stock used as payment. The Participant’s aggregate tax basis in any additional stock received will be equal to the amount of cash paid (if any).

 

     If a disposition of stock does not take place until more than two years after grant and more than one year after exercise of the option, any gain or loss realized will be treated as long-term capital gain or loss. Under such circumstances, the Company will not be entitled to a deduction for income tax purposes in connection with the exercise of the option. If a disposition occurs within two years after grant or one year after exercise of the option, the difference between the fair market value of the stock on the date of exercise and the tax basis in the stock is taxable as compensation income to the Participant and is deductible by the Company for federal income tax purposes. Any additional amount realized on the disposition will be taxed as either long-term or short-term capital gain.

 

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