EXHIBIT 10.31


 


AGREEMENT


 


This Agreement is entered into as of the 24th day of
March, 2005 by and between Ibis Technology Corporation, a Massachusetts
corporation (the “Company”) and William Schmidt (the “Executive”).


 


WHEREAS the Executive is Chief Financial Officer of
the Company and has been employed in such capacity since May 2004;


 


WHEREAS because of the skills and experience of the
Executive and his knowledge of the Company, his service to the Company is very
important to the future success of the Company;


 


WHEREAS the Executive desires to enter into this
Agreement to provide him with certain financial protection in the event that
his employment terminates for certain reasons in connection with or within a
period of time after a change of control of the Company; and


 


WHEREAS the Board of Directors of the Company has
determined that it is in the best interests of the Company to enter into this
Agreement.


 


NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Executive agree as follows:


 


1.             DEFINITIONS.


 


(a)           Cause.  As used herein, “Cause” shall mean a
termination for one or more of the following reasons, as determined by a
majority vote of the Board: 
(i) Executive’s continuing failure to render services to the
Company in accordance with his assigned duties and such failure of performance
continues for a period of more than 120 days after notice thereof has been
provided to the Executive by the Board; (ii) the Executive’s willful
misconduct or gross negligence; (iii) the Executive is convicted of a
felony, either in connection with the performance of his obligations to the
Company or which conviction materially adversely affects his ability to perform
such obligations, or materially adversely affects the business activities,
reputation, goodwill or image of the Company; (iv) willful disloyalty,
deliberate dishonesty, and breach of fiduciary duty; (v) the commission by
the Executive of an act of fraud, embezzlement or deliberate disregard of the
rules or policies of the Company which results in significant loss, damage or
injury to the Company; (vi) the Executive’s willful unauthorized
disclosure of any trade secret or confidential information of the Company; or
(vii) Executive’s willful commission of an act which constitutes unfair
competition with the Company or which induces any employee or customer of the
Company to break a contract with the Company.


 


In making any determination under this Section 1(a),
the Board shall act fairly and in utmost good faith and shall give the
Executive an opportunity to appear and be heard at a meeting of the Board or
any committee thereof and present evidence on his behalf.  For purposes of this Section, no act, or
failure to act, by the Executive shall be considered “willful” unless


 


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done, or admitted to be done, by the Executive in bad
faith and without reasonable belief that such action or omission was in the
best interest of the Company.


 


(b)           Change
Of Control.  As used herein, a “Change
of Control” shall be deemed to have occurred if (i) there is a sale or
transfer of all or substantially all of the assets of the Company in one or a
series of transactions; (ii) any “person,” as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended (or any
successor provision) (the “Exchange Act”), together with all “affiliates” and “associates”
(as such terms are defined in Rule 12b-2 under the Exchange Act or any
successor provision) of such person, shall become the “beneficial owner” or “beneficial
owners” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act or any
successor provision), directly or indirectly, of securities of the Company
representing in the aggregate thirty percent (30%) or more of either
(1) the then outstanding shares of common stock of the Company or
(2) the combined voting power of all then outstanding securities of the
Company having the right under ordinary circumstances to vote in an election of
the Board of Directors of the Company (hereafter referred to as an “Acquisition”);
PROVIDED, that, notwithstanding the foregoing, an Acquisition shall not be
deemed to have occurred for purposes of this clause (ii) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of common stock or other voting securities outstanding,
increases (x) the proportionate number of shares of common stock
beneficially owned by any person to thirty percent (30%) or more of the common
stock then outstanding or (y) the proportionate voting power represented
by the voting securities beneficially owned by any person to thirty percent
(30%) or more of the combined voting power of all then outstanding voting
securities; or (iii) there is a merger or consolidation between the
Company and an entity other than a subsidiary of the Company in which the
Company is not the continuing or surviving corporation and pursuant to which
the holders of the Company’s voting stock immediately prior to such merger or
consolidation would not be the holders immediately after such merger or
consolidation of at least 50% of the voting stock of the continuing or
surviving corporation.


 


©             Good
Reason.  As used herein, a “Good
Reason” shall mean a material change in the Executive’s authority, functions,
duties or responsibilities as Chief Financial Officer of the Company
(including, without limitation, material changes in the control or managerial
structure of the Company) which would cause his position with the Company to
become of less dignity, responsibility, importance or scope than his position
on the date hereof or as of any subsequent date prior to the Change of Control,
a reduction in the Executive’s salary or a material reduction in benefits from
the amount of salary paid or the value of the benefits available on the date
hereof or as of any subsequent date prior to the Change of Control, a transfer
of the principal location of the place of performance of the Executive’s duties
from the Danvers, Massachusetts area without the Executive’s consent, or the
failure of the Board of Directors of the Company to elect the Executive as
Chief Financial Officer of the Company at any time such elections are made, or
removal from such office of the Company, PROVIDED that such material change is
not in connection with a termination of the Executive’s employment for Cause,
and, PROVIDED, FURTHER, that any notice of termination by the Executive for
Good Reason shall be given by him within ninety (90) days of when he becomes
aware of such change, of such failure or removal.


 





















 


2.             SEVERANCE
COMPENSATION.  In the event that at or
near the time of, in connection with, or within a period of two (2) years
after, a Change of Control, the Executive’s employment with the Company is
terminated either (i) by the Company other than for Cause or (ii) by
the Executive for a Good Reason, then the Company, within ten (10) days of the
applicable termination date, shall pay to the Executive, in addition to any
amounts due to Executive for services rendered prior to the termination date, a
lump sum amount equal to one (1) times the Executive’s highest Annual Salary
during the preceding three year period, including the year of such
termination.  Annual Salary shall mean
Executive’s annual base salary and bonus, excluding reimbursements and amounts
attributable to stock options and other non-cash compensation.


 


3.             CONTINUATION
OF BENEFITS.  In the event that at the
time of, in connection with, or within a period of (2) two years after a Change
in Control, the Executive’s employment with the Company is terminated either
(i) by the Company other than for Cause or (ii) by the Executive for
a Good Reason, then the Company shall arrange to provide the Executive with
life, disability, group dental and health insurance benefits substantially
similar to those the Executive was receiving, immediately prior to the
termination, until the earlier of (a) one (1) years following his
termination date, or (b) the date upon which she becomes eligible for such
coverage offered by a subsequent employer. 
Executive’s termination date shall be the date of any qualifying event
under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and
the COBRA coverage that may be available to Executive, if any, shall be offset
by any period of coverage provided hereunder.


 


3A.          SPECIFIED
EMPLOYEE.  Notwithstanding the provisions
of Sections 2 and 3, if the Executive is a “specified employee” within the
meaning of Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as
amended (the “Code”), then payment of the amount described in Section 2(a)
shall be made on the date which is six (6) months after the applicable
termination date or, if earlier, the date of death of the Executive, and the
benefit described in Section 3 shall commence on the date which is six (6)
months after the applicable termination date and, subject to the other
provisions of Section 3, continue until thirty (30) months after the
applicable termination date.


 


4.             NO
DUPLICATION OF COMPENSATION OR BENEFITS. 
The Executive’s severance compensation and benefits set forth in
Sections 2 and 3 above shall replace, and be provided in lieu of, any
severance compensation and benefits that may be provided to Executive under any
other agreement, PROVIDED, that this prohibition against duplication shall not
be construed to otherwise limit Executive’s rights as to payments or benefits
provided under any pension plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended), deferred compensation,
stock, stock option or similar plan sponsored by the Company.


 


5.             ENFORCEABILITY;
REDUCTION.


 


(a)           If
any provision of this Agreement shall be deemed invalid or unenforceable as
written, this Agreement shall be construed, to the greatest extent possible, or
modified, to the extent allowable by law, in a manner which shall render it
valid and enforceable and any limitation on the scope or duration of any
provision necessary to make it valid and enforceable


 


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shall be deemed to be a part thereof.  No invalidity or unenforceability of any
provision contained herein shall affect any other portion of this Agreement.


 


(b)           Notwithstanding
anything provided herein, if the Executive is a “disqualified individual” (as
defined in Section 280G of the Internal Revenue Code (“Code”), and the
severance compensation and continuation of benefits provided for in
Sections 2 and 3 hereof (collectively “Severance Compensation”) together
with any other payments which the Executive has the right to receive from the
Company (or its affiliates and subsidiaries), would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), the Severance
Compensation shall be reduced.  The
reduction shall be in an amount so that the present value of the total amount
received by the Executive from the Company (or its affiliates and subsidiaries)
will be one dollar ($1.00) less than three (3) times the Executive’s Base
Amount (as defined in Section 280G of the Code) so that no portion of the
amounts received by the Executive shall be subject to the excise tax imposed by
Section 4999 of the Code (excise tax).


 


The determination as to whether any reduction in
Severance Compensation is necessary and the amount of any such reduction shall
be made by the Company’s independent public accountants (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and to
the Executive within fifteen (15) business days of the Executive’s termination
date.  Any such determination by the
Accounting Firm shall be conclusive and binding upon the Executive and the
Company.  The Executive shall determine
which part of the Severance Compensation shall be eliminated or reduced
consistent with the requirements of this Section 5 and shall notify the
Company promptly in writing; PROVIDED, that if the Executive does not make such
determination within ten (10) business days of the receipt of the calculations
made by the Accounting Firm, the Company shall determine which part of the
Severance Compensation shall be eliminated or reduced consistent with the
requirements of this Section 5 and shall notify the Executive promptly in
writing of such election.


 


If through error or otherwise the Executive should
receive payments under this Agreement, together with other payments the
Executive has the right to receive from the Company (or its affiliates and
subsidiaries), in excess of one dollar ($1.00) less than three times his Base
Amount, the Executive shall immediately repay the excess to the Company upon
notification that an overpayment has been made.


 


6.             MITIGATION.  The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment provided for
herein be reduced by any compensation earned by the Executive as the result of
employment by another employer or by retirement benefits after the termination
date or otherwise.


 


7.             NOTICES.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party’s address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by
overnight courier, or (iv) sent by registered or certified mail, return
receipt requested, postage prepaid.


 





















 


If to the Company:


 


	
   

  	
  Ibis Technology Corporation

  
	
   

  	
   

  
	
   

  	
  32 Cherry Hill Drive

  
	
   

  	
   

  
	
   

  	
  Danvers, MA 01923

  
	
   

  	
   

  
	
   

  	
  Attn: Board of Directors

  



 


If to the Executive:


 


	
   

  	
  William Schmidt

  



 


All notices, requests, consents and other
communications hereunder shall be deemed to have been given either (i) if
by hand, at the time of the delivery thereof to the receiving party at the
address of such party set forth above, (ii) if made by telex, telecopy or
facsimile transmission, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise, (iii) if sent by overnight
courier, on the next business day following the day such notice is delivered to
the courier service, or (iv) if sent by registered or certified mail, on
the 5th business day following the day such mailing is made.


 


8.             ENTIRE
AGREEMENT.  This Agreement embodies the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof.  No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms
and provisions of this Agreement.


 


9.             MODIFICATIONS
AND AMENDMENTS.  The terms and provisions
of this Agreement may be modified or amended only by written agreement executed
by all parties hereto.


 


10.           WAIVERS
AND CONSENTS.  The terms and provisions
of this Agreement may be waived, or consent for the departure therefrom
granted, only by written document executed by the party entitled to the
benefits of such terms or provisions.  No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement,
whether or not similar.  Each such waiver
or consent shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or
consent.


 


11.           ASSIGNMENT.  The rights and obligations under this
Agreement may not be assigned by either party hereto without the prior written
consent of the other party.


 


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12.           INDEPENDENT
ADVICE; BENEFIT.  The Executive agrees
and acknowledges that he has had the opportunity to seek independent advice
from legal, accounting and tax advisors of his own choosing in connection with
this Agreement.  All statements,
representations, warranties, covenants and agreements in this Agreement shall
be binding on the parties hereto and shall inure to the benefit of the
respective successors and permitted assigns of each party hereto.  Nothing in this Agreement shall be construed
to create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.


 


13.           GOVERNING
LAW.  This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the law of the Commonwealth of Massachusetts, without giving effect
to the conflict of law principles thereof.


 


14.           JURISDICTION
AND SERVICE OF PROCESS.  Any legal action
or proceeding with respect to this Agreement may be brought in the courts of
the Commonwealth of Massachusetts or of the United States of America for the District
of Massachusetts.  By execution and
delivery of this Agreement, each of the parties hereto accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts.  Each of the
parties hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 7 hereof.


 


15.           NO
WAIVER OF RIGHTS, POWERS AND REMEDIES. 
No failure or delay by a party hereto in exercising any right, power or
remedy under this Agreement, and no course of dealing between the parties
hereto, shall operate as a waiver of any such right, power or remedy of the party.  No single or partial exercise of any right,
power or remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. 
The election of any remedy by a party hereto shall not constitute a
waiver of the right of such party to pursue other available remedies.  No notice to or demand on a party not expressly
required under this Agreement shall entitle the party receiving such notice or
demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.


 


16.           COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.


 





















 


IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IBIS TECHNOLOGY

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Authorized Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILLIAM SCHMIDT