Document:

<PAGE>

                                                                   EXHIBIT 10.49

[LETTERHEAD]                                                   December 27, 2000

Dear Mr. Reid:

         This letter is to confirm our understanding with respect to (i) your
future employment by Ibis Technology Corporation, a Massachusetts corporation
(the "Company"), (ii) your agreement not to compete with the Company and (iii)
your agreement to protect and preserve information and property which is
confidential and proprietary to the Company, subject to your agreement with the
terms hereof as indicated by your execution of this letter on the final page
(the terms and conditions agreed to in this letter shall hereinafter be referred
to as the "Agreement"). In consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, we have agreed as
follows:

         1. EMPLOYMENT. The Company will employ you, and you agree to work for
the Company, as its Chairman, President and Chief Executive Officer, to have
such responsibilities, duties and authority as are customary to such position,
including, without limitation, general supervision and responsibility for the
general management and operation of the Company and its subsidiaries, if any.
You will also have such other responsibilities, duties and authority as may from
time to time be assigned to you by the Board of Directors of the Company (the
"Board") that are consistent with such position. You will also, if so elected,
serve as an officer or director of the Company or any subsidiary or affiliate of
the Company. You agree to devote your full business time and energies to the
business and affairs of the Company and its subsidiaries, if any; however,
nothing contained in this Section 1 shall be deemed to prevent or limit your
right to: (a) make passive investments in the securities of any publicly-owned
corporation, or (b) make any other passive investments with respect to which you
are not obligated or required to, and which you do not in fact, devote any
substantial efforts which interfere with your fulfillment of your duties
hereunder.

         2. TERM OF EMPLOYMENT. (a) Your employment pursuant to the terms of
this Agreement shall continue until December 31, 2003; provided, however, that
notwithstanding the foregoing your employment hereunder shall be terminated by
the first to occur of the following:

                  (i) Immediately upon your death;

                  (ii) Upon notice from the Company following your inability,
         due to illness, accident or any other physical or mental incapacity, to
         perform the services provided for hereunder for an aggregate of 180
         business days within any one year period during the term hereof, as
         determined pursuant to Section 8 herein;

                  (iii) By the Company upon notice, for Cause, as defined
         herein, and as set forth below;

                  (iv) By the Company, upon notice subject to Section 3 hereof,
         without Cause; or

                  (v) By you, upon notice to the Company, PROVIDED, that if you
         do not give at least 60 days prior written notice of your intention to
         terminate your employment hereunder, you will forfeit all unused

<PAGE>

         vacation, prepaid benefits, any unpaid incentive compensation, and any
         stock options which have not vested as of the date such notice is
         given.

         The right of the Company to terminate your employment hereunder to
which you hereby agree, shall be exercisable by written notice sent to you by
the Company and shall be effective as of the date of such notice.

         (b) The Company may, by majority vote of the Board or its Compensation
Committee, immediately and unilaterally, terminate your employment hereunder for
Cause at any time upon ten (10) days' advance written notice to you. Termination
of your employment by the Company shall constitute a termination for Cause if
such termination is for one or more of the following reasons: (i) your
continuing failure to render services to the Company in accordance with your
assigned duties consistent with Section 1 of this Agreement and such failure of
performance continues for a period of more than 120 days after notice thereof
has been provided to you by the Board or its Compensation Committee; (ii) your
willful misconduct or gross negligence; (iii) you are convicted of a felony,
either in connection with the performance of your obligations to the Company or
which conviction materially adversely affects your ability to perform such
obligations, or materially adversely affects the business activities,
reputation, good will or image of the Company; (iv) willful disloyalty,
deliberate dishonesty, breach of fiduciary duty or breach of the terms of this
Agreement; (v) the commission by you 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) your willful
unauthorized disclosure of any trade secret or confidential information of the
Company; or (vii) your 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 2(b), the Board or its
Compensation Committee shall act fairly and in utmost good faith and shall give
you an opportunity to appear and be heard at a meeting of the Board or any
committee thereof and present evidence on your behalf. For purposes of this
Section, no act, or failure to act, on your part shall be considered "willful"
unless done, or admitted to be done, by you in bad faith and without reasonable
belief that such action or omission was in the best interest of the Company.

         3. COMPENSATION. (a) In consideration for your services under this
Agreement, you shall be paid at the annual rate of Two Hundred Twenty Thousand
Dollars ($220,000.00) subject to increase from time to time by action of the
Board in accordance with your performance and the Company's performance ("Base
Salary"), and payable at such intervals as may be agreed upon by the Company and
you, less any amounts required to be withheld under applicable law. Such
compensation will be reduced by any disability payments which you receive, after
taking into account the tax benefits (if any) of such payments.

         (b) In the event your employment shall be terminated by the Company
without Cause, the Company shall continue to pay you your Base Salary then in
effect and the cost of your health insurance for a period of one year following
any such termination. All payments made under this section 3(b) shall be made at
the times and at the rate specified in section 3(a) hereof.

         (c) In the event your employment shall be terminated by the Company for
Cause, no further compensation or benefits of any kind shall be payable to you
hereunder (except for any health insurance benefits required by applicable law).

         4. BONUSES. You will be entitled to such bonuses as are determined from
time to time by the Board or its Compensation Committee in its discretion,
taking into account, among other factors, your performance and the Company's
performance.

                                      -2-
<PAGE>

         5. EXPENSES. The Company will reimburse you for travel, entertainment
and other business expenses reasonably incurred by you in connection with the
business of the Company to the extent and in a manner consistent with then
Company policy and appropriate to someone in a position of your stature.

         6. BENEFITS. In connection with your employment hereunder, you will be
entitled during your employment to the following additional benefits:

         (a) At the Company's expense, such fringe benefits as the Company may
provide from time to time for its senior management.

         (b) You shall be entitled to no less than the number of vacation days
in each calendar year determined in accordance with the Company's vacation
policy as in effect from time to time, but not less than four (4) weeks in any
calendar year (prorated in any calendar year during which you are employed
hereunder for less than the entire such year in accordance with the number of
days in such calendar year in which you are so employed). You shall also be
entitled to all paid holidays and personal days given by the Company to its
executives.

         (c) The Company shall furnish you with office space, stenographic
assistance and such other facilities and services as shall be suitable to and
appropriate for your position and for the performance of your duties as set
forth herein.

         (d) In addition to the foregoing, you shall also be entitled to
participate in any employee benefit plans which the Company provides or may
establish for the benefit of its executive employees generally.

         7. TERMINATION UPON DEATH OR DISABILITY. Your employment by the Company
shall terminate upon your death, or if, by virtue of total and permanent
disability, you are unable to perform your duties hereunder.

         The determination that, by virtue of total and permanent disability,
you are unable to perform your duties hereunder shall be made by a physician
chosen by the Company and reasonably satisfactory to you (or your legal
representative). The cost of such examination shall be borne by the Company.
Without limiting the generality of the foregoing, you shall be conclusively
presumed to be totally and permanently disabled hereunder if for reasons
involving mental or physical illness or physical injury you fail to perform your
duties hereunder for a period aggregating one hundred eighty (180) days or more
in any twelve (12) consecutive month period.

         For purposes of this Section 8, the termination date in the event of
death shall be the date of death and in the event of such total and permanent
disability shall be the earlier of the date of such physician's examination
pursuant to which such determination is made or the first business day after
which such 180 days has expired.

         In the event of such a termination of employment as a result of your
death or total and permanent disability, the Company shall have no further
obligations hereunder except as provided in Section 9 hereof and except as
provided below in this Section 8:

         (a) In the event of death, the Company shall pay to your estate
amounts, at the annual Base Salary rate in effect on the termination date, in
monthly payments, for a period of twelve (12) months following the termination
date (or, in lieu of the obligation to make such payments, or in partial
satisfaction of the obligation to make such payments, the Company may provide
you with one or more life insurance policies, in which event the

                                      -3-
<PAGE>

death benefit payable thereunder shall reduce, on a dollar-for-dollar basis, the
amount of the payments which the Company would otherwise be obligated to make
under this Section 8(a)); and

         (b) In the event of total and permanent disability, the Company shall
pay to you (or your estate) amounts, at the annual Base Salary rate in effect on
the termination date, payable in monthly payments, for a period of twelve (12)
months following the termination date. Amounts to which you would otherwise be
entitled under this subparagraph (b) shall be reduced by the amount of any
disability insurance proceeds actually paid to you or paid for your benefit (or
to your estate or legal representatives) with respect to such twelve (12) months
following the termination date under any disability policy provided by the
Company, after taking into account the tax benefits (if any) of such payments.

         8. ACCRUED COMPENSATION. In the event of any termination of your
employment for any reason, you (or your estate) shall be paid such portion of
your Base Salary and bonuses as has accrued by virtue of your employment during
the period prior to termination and has not yet been paid, together with any
amounts for expense reimbursement and similar items which have been properly
incurred in accordance with the provisions hereof prior to termination and have
not yet been paid. Such amounts shall be paid within ten (10) days of the
termination date. The amount due to you (or your estate) under this Section 9 in
payment of any bonus shall be a proportionate amount of the bonus, if any, that
had been determined by the Board pursuant to Section 4 and would otherwise have
been due to you as if such termination had not occurred.

         9. PROHIBITED COMPETITION. You agree and covenant that, with respect to
the business of the Company, until your termination of employment, whether or
not such termination is voluntary or involuntary, and for a period of one (1)
year following such termination, you shall not, without the prior written
consent of the Company, for yourself or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business which is directly or
indirectly competitive with the business of the Company, including, without
limiting the generality of the foregoing, any business engaged in manufacturing,
marketing or sale of SIMOX wafers or the design and development of associated
manufacturing equipment and processing techniques; PROVIDED, HOWEVER, that
nothing contained herein shall preclude you from purchasing or owning stock in
any such business if such stock is publicly traded, and provided that your
holdings do not exceed three percent (3%) of the issued and outstanding capital
stock of such business. You further agree that during such time, you will not
attempt to or hire, or assist in the hiring of any director, officer or employee
or agent of the Company, or encourage any person to terminate his or her
employment or business relationship with the Company, encourage any customer or
supplier of the Company to terminate its relationship with the Company, or
obtain or assist in obtaining, for the benefit of any person or entity other
than the Company or a Subsidiary, any customer or supplier of the Company.

         10. PROTECTED INFORMATION. You shall not, without the prior written
consent of the Company, use, except in the course of performance of your duties
for the Company, disclose or give to others any fact or information which was
disclosed to or developed by you during the course of performing services for
the Company, and is not generally available to the public, unless if such
information is so generally available as a result of your fault, including but
not limited to information and facts concerning business plans, customers,
prospects, client lists, or any other scientific, technical, trade or business
secret or confidential or proprietary information of the Company.

         11. OWNERSHIP OF IDEAS, COPYRIGHTS AND PATENTS. You agree that all
ideas, discoveries, creations, manuscripts and properties, innovations,
improvements, know-how, inventions, developments, apparatus,

                                      -4-
<PAGE>

techniques, methods, and formulae (all of the foregoing being hereinafter
referred to as "the inventions") which may be used in the business of the
Company, whether patentable, copyrightable or not, which you may conceive or
develop during your term of employment with the Company, alone or in conjunction
with another, or others, whether during or out of regular business hours, and
whether at the request, or upon the suggestion of the Company, or otherwise,
shall be the sole and exclusive property of the Company, and that you shall not
publish any of the inventions without the prior consent of the Company. You
hereby assign to the Company all of your right, title and interest in and to all
of the foregoing. You further represent and agree that to the best of your
knowledge and belief none of the inventions will violate or infringe upon any
right, patent, copyright, trademark or right of privacy, or constitute libel or
slander against or violate any other rights of any person, firm or corporation,
and that you will use your best efforts to prevent any such violation.

         At any time during or after your term of employment with the Company,
you agree that you will fully cooperate with the Company, its attorneys and
agents, in the preparation and filing of all papers and other documents as may
be required to perfect the Company's rights in and to any of such inventions,
including, but not limited to, joining in any proceeding to obtain letters
patent, copyrights, trademarks or other legal rights of the United States and of
any and all other countries on such inventions, provided that the Company will
bear the expense of such proceedings, and that any patent or other legal right
so issued to you, personally, shall be assigned by you to the Company without
charge by you.

         12. DISCLOSURE TO FUTURE EMPLOYERS. You agree that you will provide,
and that the Company may similarly provide in its discretion, a copy of the
covenants contained in Sections 10, 11 and 12 of this Agreement to any business
or enterprise which you may directly, or indirectly, own, manage, operate,
finance, join, control or in which you participate in the ownership, management,
operation, financing, or control, or with which you may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise.

         13. RECORDS. Upon termination of your relationship with the Company,
you shall deliver to the Company any property of the Company which may be in
your possession including products, materials, memoranda, notes, records,
reports, or other documents or photocopies of the same.

         14. NO CONFLICTING AGREEMENTS. You represent and warrant that you have
no commitments or obligations inconsistent with this Agreement and you agree to
indemnify and hold the Company harmless against loss, damage, liability or
expense arising from any claim based upon circumstances alleged to be
inconsistent with such representation and warranty.

         15. PARTIES. This Agreement is personal and shall in no way be subject
to assignment by you except as contemplated hereby. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its successors
and assigns either by merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the business of the Company
and shall be binding upon and shall inure to the benefit of you, your heirs,
executors, administrators, personal and legal representatives, distributees,
devisees, legatees, successors and permitted assigns. If you should die while
any amounts would still be payable to you hereunder if you had continued to live
(other than amounts to which you would be entitled by reason of continued
employment), all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisees, legatees or
other designees or, if there be no such designee, to your estate. The Company
agrees that a successor in interest by merger, operation of law, consolidation,
assignment, purchase or otherwise of a controlling interest in the business of
the Company will be informed prior to such event of the existence of this
Agreement. The Company will require any successor (whether direct or indirect,
by purchase,

                                      -5-
<PAGE>

merger, operation of law, consolidation, assignment or otherwise of a
controlling interest in the business, stock or other assets of the Company) to
assume expressly and agree to perform this Agreement. As used in this Agreement,
"the Company" shall mean the Company as hereinbefore defined and any successor
as aforesaid.

         16. INVALIDITY. We mutually intend this Agreement to be enforced as
written. However, if any term or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a duly authorized court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
term or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, each term and
provision of this Agreement shall be valid and be enforceable to the fullest
extent permitted by law and the illegal or unenforceable term or provision shall
be deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.

         17. NOTICES. All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same in hand or by
depositing such notice or communication in the mail, sent by certified or
registered mail, return receipt requested, postage prepaid, or by delivery by
overnight courier, with a receipt obtained therefor, if to you, at the address
listed above or if to the Company: Ibis Technology Corporation, 32 Cherry Hill
Drive, Danvers, MA 01923, Attn: Board of Directors, or such other address as
either party furnishes to the other by like notice, provided, however, that any
notice of a change of address shall be effective only upon receipt.

         18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between us in relation to the subject matter hereof and there are
no promises, representations, conditions, provisions or terms related thereto
other than those set forth or referred to in this Agreement and the exhibits
hereto. This Agreement supersedes all previous understandings, agreements and
representations between the Company and you regarding your employment by the
Company, whether written or oral.

         19. HEADINGS. All captions in this Agreement are intended solely for
the convenience of the parties, and none shall be deemed to affect the meaning
or construction of any provision hereof.

         20. WAIVER. No failure of the Company or you to exercise any power
reserved to it or you, respectively, by this Agreement, or to insist upon strict
compliance by you or the Company, respectively, with any obligation or condition
hereunder, and no custom or practice of the parties at variance with the terms
hereof, shall constitute a waiver of the Company's or your right, as the case
may be, to demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto shall not
affect or impair the waiving party's rights with respect to any subsequent
default of the same, similar or different nature, nor shall any delay,
forbearance or omission of either party to exercise any power or right arising
out of any breach or default by the other party of any of the terms, provisions
or covenants hereof, affect or impair our or your right to exercise the same,
nor shall such constitute a waiver by the Company or you, as the case may be, of
any right hereunder, or the right to declare any subsequent breach or default
and to terminate this Agreement prior to the expiration of its term.

         21. SUBSIDIARIES. As used herein, the term "Subsidiaries" shall mean
all entities a majority of the equity of which entitling the holder thereof to
vote is owned by the Company or a Subsidiary.

         22. GOVERNING LAW. This Agreement shall be construed under and be
governed in all respects by the law of the Commonwealth of Massachusetts.

                                      -6-
<PAGE>

         23. AMENDMENT. No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.

         24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original and such
counterparts together constituting one agreement.

         If you agree with the terms of your employment as set forth in this
Agreement, please execute the duplicate copy hereof in the space provided below.

/s/ Robert L. Gable            /s/ Leslie B. Lewis            /s/ Peter H. Rose
-------------------            -------------------            -----------------
Robert L. Gable                Leslie B. Lewis                Peter H. Rose

ACCEPTED AND AGREED

as of December 27, 2000:

/s/ Martin J. Reid
------------------
Martin J. Reid

                                      -7-<PAGE>

                                                                   EXHIBIT 10.50

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS WITH ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

                                LICENSE AGREEMENT

                                     BETWEEN

                   INTERNATIONAL BUSINESS MACHINES CORPORATION

                                       AND

                           IBIS TECHNOLOGY CORPORATION

FIA-2000-0027                               1

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

  SECTION                                                                          PAGE
<S>         <C>                                                                  <C>

    1.       DEFINITIONS ..............................................             4

    2.       SCOPE ....................................................             7

    3.       LICENSES .................................................             9

    4.       CONFIDENTIAL INFORMATION .................................             9

    5.       COMPENSATION .............................................            13

    6.       TERMINATION ..............................................            17

    7.       REPRESENTATIONS AND DISCLAIMERS ..........................            19

    8.       TECHNOLOGY TRANSFER & TECHNICAL
             ASSISTANCE ...............................................            22

    9.       APPLICABLE LAW ...........................................            24

    10.      MISCELLANEOUS ............................................            26
</TABLE>

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 2 of 36

<PAGE>

             This License Agreement (the "Agreement") is by and between
INTERNATIONAL BUSINESS MACHINES CORPORATION (referred to as "IBM") and IBIS
TECHNOLOGY CORPORATION (referred to as "IBIS"), each referred to as a "Party"
or, collectively referred to as the "Parties".

WHEREAS:     IBIS has previously developed expertise in products for the
implantation and annealing of semiconductor wafers with oxygen;

WHEREAS:     IBM has developed an improved method of implantation and annealing;

WHEREAS:     IBIS wishes to operate in its facility implantation machines and
associated equipment owned by IBM and/or owned by IBIS;

WHEREAS:     IBIS and IBM wish to execute simultaneously herewith agreements on
the consignment of such implantation machines and associated equipment and on
the purchase of wafers by IBM implanted and annealed by IBIS;

WHEREAS:     IBIS wishes to sell products incorporating IBM's trade secrets; and

WHEREAS:     IBM wishes to receive royalties from IBIS;

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 3 of 36

<PAGE>

             NOW THEREFORE, in consideration of the contributions of knowledge
and skill in the areas of their respective expertise, in the cooperative
undertaking specified herein, and in view of the mutual promises, commitments
and efforts relating thereto, it hereby is agreed between the Parties as
follows:

1   DEFINITIONS

             Words shall have their normally accepted meanings as employed in
this Agreement. The terms "herein", "hereunder" and "hereof", unless
specifically limited, shall refer to the entire Agreement. The words "shall" and
"will" are mandatory, the word "may" is permissive, the word "or" is not
exclusive, the words "includes" and "including" are not limiting and the
singular includes the plural. The following terms shall have the described
meanings:

1.1 "Confidential Information" shall mean technical and business information
relating to oxygen implantation and annealing methods and disclosed by or on
behalf of a Party that is subject to the applicable restrictions on disclosure
of this Agreement.

1.2 "Consigned Equipment" shall mean the following equipment presently owned by
IBM: two model 1000 oxygen implant tools manufactured by IBIS (IBM tool numbers
36F1070AA and 36F107AD),

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 4 of 36

<PAGE>

Kokusai Furnace (12J0503AA), Mini-environment (15J0518AA), IPEC Accumap
(15J0525AA) and Mapper (15J0521AA).

1.5 "Effective Date" shall mean December 15, 2000.

1.6 "IBM Improvements" shall mean any change, upgrade, modification or revision
actually introduced into the Licensed Process by IBM and practiced in production
of implanted wafers in IBM's East Fishkill facility or in a substitute IBM
facility.

1.7 "Licensed Process" shall mean the process for implanting silicon wafers with
oxygen and annealing, as practiced for commercial production in IBM's East
Fishkill, NY, facility on the Effective Date, referred to within IBM as Route
7M00. IBM represents that the twenty (20) wafers delivered to IBIS on or about
November 10, 2000 were implanted and annealed with the Licensed Process. [*].

1.8 "Licensed Product" shall mean: (a) silicon wafers or substrates implanted
with oxygen and annealed according to, with the aid of, based on or using
information disclosed hereunder (including the Licensed Process) that, as of the
date of disclosure, is not excluded from the obligations of confidentiality by
the provisions of Section 4.7; and (b) semiconductor devices and integrated
circuits formed on silicon substrates licensed according to the preceding
clause.

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 5 of 36

<PAGE>

1.9 "Net Revenue" shall mean the price charged or recognized (as determined
under United States generally accepted accounting principles) for Licensed
Products sold by IBIS in normal, bona fide, commercial transactions, without any
deductions other than for duties, taxes, freight and insurance, returns or
credit allowances on sales of such Licensed Products to the extent to which such
deductions are actually paid or allowed.

         In the case of Licensed Products sold to a Subsidiary or other entity
in other than an arm's length transaction, Net Revenue shall be deemed to be the
greater of: (a) gross receipts actually received; or (b) gross receipts
recognized (as determined under United States Generally Accepted Accounting
Principles) for Licensed Products based upon the invoice price generally
available to unaffiliated third parties for the sale, lease or disposition of
similar quantities of the same type of products or services; without any
deductions other than for duties, taxes, freight and insurance, returns or
credit allowances on sales of such Licensed Products to the extent to which such
deductions are actually paid or allowed.

1.10 "Subsidiary" shall mean a corporation, company, or other entity: (i) more
than fifty percent (50%) of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing authority)
are, now or hereafter, owned or controlled, directly or indirectly, by a Party
hereto, but such corporation, company, or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists; or (ii) which does
not have outstanding shares

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 6 of 36

<PAGE>

or securities, as may be the case in a partnership, joint venture or
unincorporated association, but fifty percent (50%) or more of whose ownership
interest representing the right to make the decisions for such corporation,
company or other entity is, now or hereafter, owned or controlled, directly or
indirectly, by a Party hereto, but such corporation, company, or other entity
shall be deemed to be a Subsidiary only so long as such ownership or control
exists.

         Notwithstanding the foregoing, for the purposes of this Agreement, an
entity more than 35% of whose shares or ownership interest is owned or
controlled by a Party and that has a licensing relationship with such Party
covering manufacturing process knowhow and imposing obligations on such Party to
provide updated knowhow to such entity shall be deemed to be a Subsidiary of
such Party.

1.11 "Term" shall mean the period of time this Agreement is in effect, which
will commence on the Effective Date and continue until the expiration of a
patent license agreement between the parties executed together herewith, unless
sooner terminated pursuant to Section 7.

2   SCOPE

2.1 IBIS agrees to make commercially reasonable efforts to market and sell
Licensed Products.

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 7 of 36

<PAGE>

2.2 IBIS shall, at its own expense and within two (2) months after the Effective
Date, transfer the Consigned Equipment presently located in IBM's facility in
East Fishkill, NY to its facility in Danvers, MA, install and power on the
Consigned Equipment. IBIS shall further, at its own expense, exert its best
commercial efforts to debug and make available for production the Consigned
Equipment by eight (8) months after the Effective Date. Terms for the
consignment of the Consigned Equipment shall be set forth in a consignment
agreement between the Parties, to be executed concurrently herewith.

2.3 IBM shall disclose the Licensed Process to IBIS as set forth in Section 8
below.

2.4 Each Party shall have a Program Manager and a Technical Coordinator as
follows:

               For IBM:         Program Manager:
                                Daniel J. Armbrust

                                Technical Coordinator:
                                Stephen R. Fox

               For IBIS:        Program Manager:
                                Martin J. Reid

                                Technical Coordinator:
                                Robert P. Dolan

         Each Party may change its Program Manager and/or Technical Coordinator
by giving written notice to the other Party.

FIA-2000-0027                                        IBM/IBIS CONFIDENTIAL IBIS
Know-How License 12-18-2000                                Page 8 of 36

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2.5 Each of the Program Managers shall be responsible for the representation of
his Party's interest under this Agreement. The Program Managers shall meet on a
regular basis to review progress.

2.6 The Technical Coordinators or their designees shall supervise the exchange
of information during the course of the Agreement.

3     LICENSES

3.1 IBM hereby grants to IBIS a worldwide, nonexclusive royalty-bearing license,
revocable only pursuant to Section 6, under IBM's trade secret rights in the
Licensed Process to make, import, export and sell Licensed Products.

3.2 No license is granted in this agreement by a Party to another Party under
any patent or trademark.

3.3 Nothing in this Agreement shall be construed as amending or modifying in any
way a patent license agreement between the parties signed concurrently herewith.

4     CONFIDENTIAL INFORMATION

4.1 The prior agreement between the Parties concerning confidential information,
having a term beginning on March 24, 2000 and

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relating to oxygen implantation technology and methods, is terminated as of the
Effective Date and all information disclosed thereunder shall be deemed to have
been disclosed on the Effective Date. The handling of all confidential
information exchanged between the Parties, including any confidential
information transferred under the prior agreement shall be in accordance with
this Section 4. All further disclosures of confidential information shall only
be made in accordance with this Section 4.

4.2 It is understood that receipt of Confidential Information under this
Agreement will not create any obligation in any way limiting or restricting the
assignment and/or reassignment of employees within the receiving Party.

4.3 For a confidentiality period as set forth below, the receiving Party agrees
to use the same care and discretion to safeguard Confidential Information of the
disclosing Party and to avoid release of such Confidential Information outside
of the receiving Party as it employs with similar embodiments of information of
its own which it does not desire to publish, disclose, or disseminate, but in no
event less than reasonable care.

4.4 Following the period of confidentiality as specified below, no obligation of
any kind is assumed by, or is to be implied against the receiving Party with
respect to any Confidential Information of the disclosing Party and the
receiving Party will be free to disclose, publish and disseminate such
Confidential Information to others without limitation.

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4.5 Disclosure of such Confidential Information of the disclosing Party will not
be precluded if such disclosure is:

         (a) in response to a valid order of a court or other governmental body;
provided, however, that the receiving Party will first have given notice to the
disclosing Party and made a reasonable effort to obtain a protective order
requiring that the information and/or documents so disclosed be used only for
the purposes for which the order was issued; or

         (b) otherwise required by law (including, without limitation,
applicable securities laws).

4.6 The obligations of confidentiality herein shall not apply to information
that:

         (a) Is already in the possession of the receiving Party or any of its
Subsidiaries without obligation of confidentiality;

         (b) Is independently developed by the receiving Party or any of its
Subsidiaries;

         (c) Is or becomes publicly available without breach of this Agreement;

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         (d) Is rightfully received by the receiving Party from a third party;

         (e) Is released for disclosure by the disclosing Party with its written
consent; or

         (f) Is required to be disclosed in a patent application.

4.7 All disclosures under this Agreement of Confidential Information by IBM or
IBIS, as the disclosing Party, shall preferably be made by or under the
supervision of its Technical Coordinator, or his designee, to the receiving
Party's Technical Coordinator, or his designee. Any such designee shall be
identified by a Party's Technical Coordinator in writing to the Technical
Coordinator of the other Party. In the event of inadvertent disclosure from one
Party to another, either Party may give notice to the other Party within six (6)
months of such inadvertent disclosure that such inadvertently disclosed
information was confidential and not within the scope of this Agreement and the
receiving Party shall promptly return such information and cease use thereof.

4.8 All disclosures of information will be deemed to be nonconfidential unless
specifically designated at the time of disclosure as including the Confidential
Information of a Party.

4.8.1 Notwithstanding the foregoing, Inventions created and Confidential
Information disclosed in the course of joint work or discussions between the
Parties shall be deemed to be the Confidential

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Information of the employer(s) of the individuals creating or disclosing them,
whether or not the pertinent information is marked or summarized in a resume.
The Parties agree to make reasonable efforts to document and mark such joint
work or discussions.

4.9 IBIS's obligations of confidentiality with respect to the Licensed Process
shall extend until December 31, 2010. The confidentiality obligations of the
Parties with respect to confidential information disclosed hereunder, other than
the Licensed Process, shall extend until December 31, 2005.

5     COMPENSATION

5.1 IBIS shall pay to IBM a nonrefundable technology transfer fee of [*] upon
the signing of this Agreement.

5.2 From the Effective Date, and continuing through the Term, for each Licensed
Product sold, IBIS shall pay to IBM in the United States of America a royalty
comprising [*] of Net Revenue for each such Licensed Product sold by IBIS.

5.3 The royalties of this Section 5 shall accrue when a Licensed Product is
first sold. For the purpose of determining such royalty, Licensed Products shall
be considered sold when invoiced. If not invoiced, then Licensed Products are to
be considered sold when delivered or when paid for, if paid for before delivery.
If not invoiced,

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delivered or paid for before delivery, Licensed Products are to be considered
sold at the earlier of when put into use or when possession is transferred to a
third party. When Licensed Products are sold in conjunction with other products
or services provided by IBIS, IBIS agrees to separately invoice such Licensed
Products from such other products or services.

5.4 Accrued royalties shall be calculated and paid on a quarterly basis. Within
thirty (30) days of the end of a calendar quarter, IBIS shall deliver to IBM a
report showing the number of Licensed Products sold during such quarter, the Net
Revenue from such Licensed Products during such quarter, and the royalties
payable thereon. At such time, IBIS shall also make payment of such payable
royalties. Any royalties paid to IBM are nonrefundable, but overpayments shall
be credited against future royalties due hereunder. IBIS may deduct from the
accrued royalties calculation in this Section 6.6 those royalties accrued on
Licensed Products which have been returned to IBIS or for which credit
allowances have been made.

5.5 For a period ending two (2) years after the expiration or termination of
this Agreement, IBIS agrees to maintain adequate documentation and accounting
records for demonstration of compliance with all the provisions of this
Agreement, including the provisions concerning disclosure and use of the
Licensed Process. At IBM's request and expense, and upon thirty (30) days
written notice to IBIS, IBIS shall permit IBM or a mutually acceptable
independent third party auditor

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and/or technical expert to review all such documentation and accounting records
and/or to inspect IBIS's facilities during regular business hours.

5.6 IBIS shall be liable for interest on any and all overdue payments, fees, and
royalties required to be made to IBM under this Agreement, commencing on the
date such overdue payment, fee, or royalty becomes due, at an annual rate of
eighteen per cent (18%). If such interest rate exceeds the maximum legal rate in
the jurisdiction where a claim therefor is being asserted, the interest rate
shall be reduced to such maximum legal rate. Nothing in this Section 5.6 shall
limit IBM's rights under Section 6.

5.7 IBIS shall bear and pay, and indemnify and hold IBM harmless from any and
all taxes (including, without limitation, sales, use, royalty, value added, and
property taxes) imposed by any national government (including any political
subdivision thereof) of any country, as the result of the existence of this
Agreement or the exercise of rights hereunder, and IBM shall not be responsible
for any taxes that arise from the foregoing. Notwithstanding the foregoing, IBIS
shall not be liable for any taxes or assessments arising from the purchase by
IBM of goods and services hereunder or based on the net income of IBM.

5.8 IBIS shall pay all royalties and other payments due hereunder in the United
States of America in United States dollars.

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5.9 All royalties, fees, and payments to IBM that result from this Agreement are
to reference this Agreement and the license number assigned thereto and be sent
by electronic funds transfer to the following address:

               International Business Machines Corporation
               The Bank of New York
               1 Wall Street
               New York, New York 10286
               United States of America
               Credit Account No. 890-0209-674
               ABA No. 0210-0001-8

               A written statement containing the same information shall be
mailed to:

               Director of Licensing
               International Business Machines Corporation
               North Castle Drive, MD - NC119
               Armonk, New York, 10504-1785
               United States of America
               FAX: (914) 765-4380

with a copy to:

               Michael Poponiak
               International Business Machines Corporation
               2070 Route 52
               Hopewell Junction, NY 12533;

               Each Party may change the person to receive notice or its address
for receiving notice by giving written notice to the other Party.

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6     TERMINATION

6.1 In the event of any material default, the non-defaulting Party may give
written notice of such default (a "NOTICE OF DEFAULT") to the defaulting Party.
If the defaulting Party fails to cure such default within a cure period of
thirty (30) days after receiving the Notice of Default, the non-defaulting Party
may then terminate this Agreement by a second written notice (a "NOTICE OF
TERMINATION") to the defaulting Party. The Notice of Termination shall be
effective upon receipt.

6.2 Notwithstanding Section 6.1, in the event of any material default specified
in this Section 6.2, the non-defaulting Party may immediately terminate this
Agreement by giving a Notice of Termination without any Notice of Default. The
Notice of Termination shall be effective upon receipt. Circumstances where such
immediate termination is permitted by a Party are:

         (a) If the other Party becomes insolvent, is dissolved or liquidated,
has a petition in bankruptcy, reorganization, dissolution or liquidation or
similar action filed by or against it, is adjudicated a bankrupt, or has a
receiver appointed for its business.

         (b) If the other Party has all or a substantial portion of its capital
stock or assets expropriated or attached by any government entity.

         (c) If the other Party makes an assignment for the benefit of
creditors.

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         (d) If the other Party is subject to property attachment, court
injunction, or court order materially affecting its operations under this
Agreement.

         (e) If the other Party breaches its obligation of confidentiality under
Section 4.

         Circumstances where such immediate termination is permitted by IBM are:

         (f) If IBIS materially breaches the terms of its license
under Section 3.

6.3 If this Agreement is terminated by IBM due to material default under this
Agreement by IBIS:

         (a) all IBM Confidential Information previously transferred to, or in
the possession of, IBIS shall be returned, at IBIS's expense, to IBM forthwith,
but no later than thirty (30) days from the date of termination; (b) the
licenses granted to IBIS in Section 3 shall terminate.

6.4 If this Agreement is terminated by IBIS due to material default under this
Agreement by IBM:

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         (a) the licenses (and royalty obligations) of Section 3.1 and 5 shall
survive; and b) each Party's obligations of confidentiality shall survive.

6.5 In the event of termination by either Party for any reason, all financial
obligations due or accrued hereunder as of the date of termination shall remain
payable.

6.6 Except as stated in Sections 6.3, 6.4, and 6.5, to the extent a particular
right or obligation herein does not have a specifically identified survival
period, all rights and obligations in this Section or in any other Section in
this Agreement which by their nature survive the expiration or termination of
this Agreement will remain in effect beyond any termination for the time period
reasonably necessary to accomplish their purpose and shall bind and inure to the
benefit of the parties, their legal representatives and successors. By way of
example and not as a limitation, sections 7, 9 and 10 shall survive any
expiration or termination of this Agreement.

7     REPRESENTATIONS AND DISCLAIMERS

7.1 IBIS recognizes that equipment and wafer purchases are complex decisions and
that IBM can make no commitment that IBM or IBM's Subsidiaries will purchase any
products from IBIS.

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7.2 This Agreement is nonexclusive. IBM and IBIS recognize and agree that each
has been and may continue to be active in the development of technology, and/or
manufacture and sale of products indirectly or directly relating to the
technologies, processes and products contemplated by this Agreement, and IBIS
acknowledges and agrees that IBM will not be precluded by this Agreement from
pursuing such activities independent of IBIS, including with third parties, and
further, IBM acknowledges and agrees that IBIS will not be precluded by this
Agreement from pursuing such activities independent of IBM, including with third
parties.

7.3 IBM and IBIS each represent that they have the right to disclose the
information disclosed hereunder and to grant the licenses granted hereunder.

7.4 Nothing contained in this Agreement will be construed as:

7.4.1 conferring on either Party any rights to use in advertising, publicity, or
other marketing activities any name, trade name, trademark, or other designation
of the other Party hereto, including any contraction, abbreviation, or
simulation of any of the foregoing without the prior written and signed
agreement of the other Party; or

7.4.2 conferring by implication, estoppel, or otherwise upon either Party
hereunder any license or other right except the licenses and rights expressly
granted hereunder to a Party hereto; or

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7.4.3 a warranty or representation that the manufacture, sale, lease, use, or
other disposition of systems, processes, circuits, devices, packages, software,
and products licensed hereunder will be free from infringement of intellectual
property rights of third parties; or

7.4.4 a warranty that the recipient Party will successfully manufacture
products, or a particular volume of products, using the Licensed Process; or

7.4.5 an obligation on either Party to bring or prosecute actions or suits
against third parties for infringement, or to defend actions or suits from third
parties for infringement, or to secure and/or maintain any of its intellectual
property rights; or

7.4.6 in any way limiting the rights which a Party has outside the scope of this
Agreement.

7.5 ALL INFORMATION, TECHNOLOGY, IMPROVEMENTS, INVENTIONS, CONFIDENTIAL
INFORMATION, INTELLECTUAL PROPERTY RIGHTS, BACKGROUND INTELLECTUAL PROPERTY
RIGHTS, LICENSED PROCESS, PRODUCTS, MATERIALS, ASSISTANCE, AND SERVICES PROVIDED
BY EITHER PARTY HEREUNDER ARE PROVIDED "AS IS" WITHOUT ANY WARRANTY OF ANY KIND,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF NONINFRINGEMENT AND THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

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7.6 Each Party acknowledges its responsibility to make its own evaluation of the
risks of bringing any product based on information provided under this Agreement
to market, or otherwise to use such information.

7.7 Each Party disclaims any warranty that the recipient will be able to
reproduce the results of the disclosing Party and each Party acknowledges that
it may be not be able to use disclosed information without further research and
development.

7.8 IBM disclaims any warranty under Section 2-312 of the Uniform Commercial
Code that the information disclosed hereunder or that the transfer by IBIS of
articles made by IBIS with the aid of such information will be free of claims of
infringement of patents of third parties. IBIS disclaims any warranty under
Section 2-312 of the Uniform Commercial Code that information disclosed
hereunder or that the transfer by IBM of articles made by IBM with the aid of
the such information will be free of claims of infringement of patents of third
parties. Nothing in this Agreement will override these disclaimers or operate,
expressly or by implication, to grant a warranty of noninfringement of third
party patents.

8     TECHNOLOGY TRANSFER AND TECHNICAL ASSISTANCE

8.1 Subject to Sections 8.2 and 8.3, IBM shall provide to IBIS in IBM's
facilities in the United States the recipe for the Licensed Process and limited
technology transfer and technical assistance in operation, setup and
qualification procedures for the Licensed Process.

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8.2 During the period from the Effective Date through three (3) months from the
Effective Date, IBM agrees to provide at no additional cost to IBIS technology
transfer and technical assistance as provided in Section 8.1 up to a total limit
of two hundred fifty (250) person-hours.

8.3 The IBM and IBIS Technical Coordinators shall keep accurate records of all
limited technical assistance performed and shall compare records for accuracy
and provide access to such records to the other Party once a quarter or pursuant
to a schedule mutually agreed to. Queries made by IBIS from its facilities shall
be logged at a minimum of one person-hour.

8.4 IBIS, at its own cost and expense, shall be responsible for acquiring the
necessary equipment, materials, and services required to implement the Licensed
Process.

8.5 After the earlier to occur of the exhaustion of the two hundred fifty
hundred (250) person-hours of the limited transfer assistance and limited
technical assistance specified in Sections 8.1 and 8.2 and the expiration of the
three month period specified in Section 8.2, IBM agrees to provide, in IBM's
facilities in the U.S.A., up to an additional one hundred twenty (120)
person-hours of transfer assistance and technical assistance to IBIS, subject to
the availability of requisite personnel within IBM, for a period ending on six
(6) months after the Effective Date. IBIS agrees to pay IBM for such limited
additional transfer and technical assistance provided to IBIS at a rate that is
the higher of Two Hundred

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and Fifty ($250.00) dollars per person-hour or the then-current rate, plus
reasonable travel and living expenses. IBIS may make site visits to IBM's East
Fishkill facilities upon reasonable notice to IBM and upon mutual agreement of
the Parties. A maximum of five (5) IBIS employees may visit IBM's facilities at
any one time. The travel and living expenses of such visiting IBIS employees
shall be at the sole expense of IBIS. The amount of limited additional transfer
assistance and technical assistance shall be defined and determined by mutual
agreement.

8.6 IBM shall invoice charges monthly for the limited additional transfer
assistance and technical assistance provided for in this Section 8.

8.7 IBM shall be under no obligation hereunder to provide transfer or technical
assistance to any person or entity other than IBIS, and in particular, not to
suppliers or customers of IBIS.

8.8 IBM will not be obligated to disclose to or to grant rights under IBM
Improvements to IBIS, but may make such disclosure and/or grant such rights in
its sole discretion.

9     APPLICABLE LAW

9.1 This Agreement shall be construed and the legal relations between the
Parties shall be determined in accordance with the law of the State of New York,
U.S.A. without regard to the conflict of law provisions

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thereof. Any proceedings to enforce this Agreement, or to resolve disputes
relating to this Agreement, shall be brought in the United States District Court
for the Southern District of New York, Westchester County Division and the
Parties hereby consent to the exclusive jurisdiction and venue of such court.
IBM and IBIS waive the right to trial by jury in any matter relating to this
Agreement and agree that any proceeding hereunder shall be tried by a judge
without a jury.

9.1.1 No action, regardless of form, arising out of this Agreement may be
brought by a Party more than two (2) years after the cause of action has
accrued.

9.2 Each Party agrees to pay the other Party's attorney's fees and costs of
litigation if the first Party, for any reason whatever, brings suit against the
other Party and the other Party is finally adjudicated not to have liability.

9.3 If any sentence, paragraph, clause or combination of the same in this
Agreement is held by a court of competent jurisdiction to be unenforceable in
any jurisdiction, such sentence, paragraph, clause or combination of same shall
be unenforceable in the jurisdiction in which it is invalid and the remainder of
this Agreement shall remain binding on the Parties in such jurisdiction as if
such unenforceable provision had not been contained herein. The enforceability
of such sentence, paragraph, clause or combination of same in this Agreement,
shall be otherwise unaffected and shall remain enforceable in all other
jurisdictions.

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10    MISCELLANEOUS

10.1 IBIS shall indemnify, defend and hold harmless IBM, IBM Subsidiaries at any
level, and the affiliates, directors, officers, agents and employees of each of
IBM and IBM Subsidiaries at any level (collectively, the "INDEMNIFIED PERSONS"
and each, an "INDEMNIFIED PERSON") from and against:

         (1) all claims, demands, costs, liabilities, causes of action, actions,
obligations, and damages (including without limitation, reasonable attorneys'
fees, claims, demands or damages for business injury, property damage,
environmental harm, personal injury, and/or death, but excluding claims, demands
or damages relative to any third party's intellectual property rights which are
covered by item (2) below) of every kind and every nature, in law or in equity,
known or unknown, contingent or otherwise, past, present, or future brought by
or on behalf of any third party related to, arising from, or alleged to arise
from IBIS's (or any IBIS Subsidiaries' or any IBIS affiliates') development,
manufacture, use, misuse, advertising, labeling, marketing, sale, license,
transfer, transportation, storage, support, modification, distribution or
disposal of (a) any Confidential Information, IBM Improvements, Licensed
Product, Consigned Equipment, or Licensed Process (b) any other use of
Confidential Information, IBM Improvements, Licensed Product, Consigned
Equipment, or Licensed Process; and

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         (2) all claims, demands, costs, liabilities, causes of action, actions,
obligations, and damages (including without limitation, reasonable attorneys'
fees and/or claims, demands or damages for business injury) brought by or on
behalf of any third party related to, arising from, or alleged to arise from any
violation of any third party's intellectual property rights in any country by
(a) the use of any Confidential Information, IBM Improvements, Consigned
Equipment, Licensed Process or related process, or Licensed Product
manufactured, sold, licensed or transferred by IBIS (or by any IBIS Subsidiary
or any IBIS affiliate) by any party other than IBM or IBM Subsidiaries, or (b)
the sale, license or transfer of any Confidential Information, IBM Improvements,
Consigned Equipment, Licensed Process or related process, or Licensed Product by
IBIS (or by any IBIS Subsidiary or any IBIS affiliate) to any party other than
IBM or IBM Subsidiaries. IBM's Subsidiaries at any level, and the affiliates,
directors, officers, agents and employees of each of IBM and IBM Subsidiaries at
any level shall continue to be indemnified, defended and held harmless per
subsections (1) and (2) of this Section 10.1 even after they cease to be such
Subsidiaries, affiliates, directors, officers, agents and employees.
Notwithstanding the foregoing, IBIS' obligations of indemnification to IBM with
respect to third party claims based on: (a) the purchase of implanted wafers by
IBM from IBIS; (b) the implantation by IBIS of wafers supplied to it by IBM and
subsequent shipment of such wafers to IBM; or (c) the use by IBM of implanted
wafers included in (a) and (b) above shall be governed by terms no less
favorable to IBM as those set forth in purchase agreements or services
agreements between IBIS and third parties for comparable wafers.

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         (3) IBIS and IBIS's Subsidiaries at any level and affiliates of IBIS
release and covenant that they will not sue or otherwise make any claim against
any Indemnified Person, regarding any matter which, if it had been the subject
matter of a suit brought by a third party, would be subject to the provisions of
Section 10.1(1) and (2) above. Each Indemnified Person shall continue to be
released and the covenantors shall continue to covenant to them as provided
above even after they cease to be IBM, an IBM Subsidiary at any level, or an
affiliate, director, officer, agent or employee of IBM or an IBM Subsidiary at
any level. If IBIS or any IBIS Subsidiary at any level or any IBIS affiliate
violates this subsection (3) of Section 10.1, IBIS agrees to pay all costs and
expenses of defending against such claim or suit incurred by any Indemnified
Person, including reasonable attorneys' fees. IBIS shall cause IBIS's
Subsidiaries at any level and affiliates of IBIS or any IBIS Subsidiary at any
level to so release and not sue the Indemnified Persons as provided above.

10.1.1 Without limiting Section 10.1, above, IBIS agrees to pay all expenses of
the defense, including any amount in settlement, of all claims, demands,
proceedings and actions which may be asserted against any of the indemnitees
specified in Section 10.1, regardless of merit, and agrees to permit IBM, at
IBM's expense, to actively participate in the defense or settlement of any of
the claims demands, proceedings or actions described above and, in any claim or
action brought against IBIS and not IBM, at the option of IBM, to permit IBM, at
IBM's expense, to intervene in or become a party to any such claims, demands,
proceedings or actions. IBM agrees to permit IBIS, at IBIS's expense and option,
to actively

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participate in the defense or settlement of any of the claims or actions
described above and, in any such action brought against IBM and not IBIS. Each
Party shall promptly notify the other Party of any action, suit, proceeding,
claim or demand of which it becomes aware and relating to the indemnification
obligations under Section 10.1.

10.2 IBIS will be solely responsible for determining its prices and other terms
and conditions for its products sold to its customers. IBIS will be solely
responsible for marketing products to its customers, and IBM will have no
obligation to provide any support of any kind to IBIS's customers.

10.3 If any Party is rendered wholly or partially unable by force majeure to
carry out its obligations under this Agreement, and if that Party gives prompt
written notice and full particulars of such force majeure to the other Party,
the notifying Party will be excused from performance of its obligations
hereunder during the continuance of any inability so caused, but for no longer
period; provided that if payment cannot be made due to the existence of a
banking crisis or international payment embargo, such amount may be paid within
the following thirty (30) days. Such cause will be remedied by the notifying
Party as far as possible with reasonable speed and effort. For the purposes of
this Agreement, force majeure will mean acts of God, acts of public enemies or
terrorists, wars, other military conflicts, blockades, insurrections, riots,
epidemics, quarantine restrictions, landslides, lightning, earthquake, floods,
washouts, civil disturbances, restraints by or actions of any governmental body
(including export or security restrictions on

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information, material, personnel, equipment or otherwise), Year 2000 issues and
any other acts or events whatsoever, whether or not similar to the foregoing,
not within the control of the Party claiming excuse from performance, which by
the exercise of due diligence and commercially reasonable effort that Party will
not have been able to overcome or avoid. If the notifying Party cannot remedy
the force majeure situation and resume satisfactory performance within thirty
(30) calendar days of the notice, the other Party may at its option immediately
terminate this Agreement.

10.4 Each Party agrees to comply with all applicable country, Federal, State,
and Local laws, rules, regulations, and ordinances, including those of any duly
constituted governmental authority having jurisdiction, and including without
limitation, all rules and regulations of the Occupational Health and Safety
Administration, Environmental Protection Agency, U.S. Department of Commerce,
and U.S. Department of Transportation, as applicable. Each Party will do all
things necessary to: (a) obtain in a timely manner all required licenses and
approvals; and (b) comply with all applicable laws, rules and regulations,
including, but not limited to, the Regulations of the United States Government
relating to the export and reexport of technical data, commodities, and products
produced as a result of the use of such data. Each Party hereto agrees that it
will not export or reexport, directly or indirectly, any technology, software
and/or commodities furnished under this Agreement, or the direct product
thereof, to any country, or the nationals thereof, specified in such laws,
rules, regulations, and ordinances referred to above as an

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unauthorized destination without first obtaining, as applicable, U.S. Government
approvals.

10.5 The captions used in this Agreement are for convenience of reference only
and are not to be used in interpreting the obligations of the Parties under this
Agreement.

10.6 Nothing contained herein, or done in pursuance of this Agreement, will
constitute the Parties as entering into a joint venture or partnership or will
constitute either Party hereto the agent for the other Party for any purpose or
in any sense whatsoever.

10.7 Either Party may disapprove the assignment of any of its former employees
to perform work under this Agreement on its premises by the other Party and such
personnel will not be so assigned. Each Party will take appropriate preventive
steps, before the assignment of any of its employees to perform work under this
Agreement, that such Party reasonably believes will ensure that its employees
will not engage in inappropriate conduct while on the other Party's premises.
Inappropriate conduct will include, but not be limited to: (a) being under the
influence of, or affected by, alcohol, illegal drugs or controlled substances or
engaging in their use, distribution or sale; (b) the possession of a weapon of
any sort; and (c) harassment, threats or violent behavior.

10.8 Representatives and personnel of each Party, during the time they are
present on the premises of the other Party will be subject to all rules and
regulations prevailing on such premises. Each Party will be

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<PAGE>

responsible for the payment of all compensation and expense of its respective
representatives and personnel. None of the representatives or personnel of
either Party will be considered, for any reason, to be an employee or agent of
the other.

10.9 Each Party represents that it has, or will have in place, established
procedures and agreements with its Subsidiaries, employees or others, including
subcontractors and vendors, whose services the Party may require, sufficient to
enable the Party to comply with all the provisions of this Agreement.

10.10 Any written notice or communication required to be made or given to either
Party hereto, pursuant to this Agreement, will be effective upon delivery and
will be sent by facsimile, reputable air courier or other means providing
verification of delivery, and addressed as set forth below, or to such other
address as is designated by written notice given to the other Party:

10.10.1 In the case of IBM:

                       Director of Licensing
                       International Business Machines Corporation
                       North Castle Drive, MD NC119
                       Armonk, New York 10504-1785
                       United States of America
                       FAX: (914) 765-4380

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with a copy to:
                       IP Counsel, East Fishkill
                       International Business Machines Corporation
                        2070 Route 52
                       Hopewell Junction, New York, U.S.A., 12533-6531
                       Fax: (845) 892-6363

10.10.2 In the case of IBIS:

                       Debra L. Nelson
                       IBIS Technology Corporation
                       32A Cherry Hill Drive
                       Danvers, MA 01923
                       Fax: (978) 777-6570

10.11 In no event will a Party be liable to the other Party for incidental
damages, lost profits, lost savings or any other such damages, including
consequential damages, regardless of whether the claim is for breach of
contract, breach of warranty, tort (including negligence), failure of a remedy
to accomplish its purpose or otherwise, even if such Party has been advised of
the possibility of such damages.

10.12 No failure on the part of any Party to exercise, and no delay in
exercising, any right, power, or remedy hereunder will operate as a waiver
thereof or as a waiver of any other right, power, or remedy hereunder or to the
performance of any Party; and no single or partial exercise by a Party of any
right, power, or remedy hereunder will preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy.

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10.13 Except for obligations under Section 5, and 10.1, each Party's maximum
cumulative liability to the other Party for any and all causes of action arising
hereunder or in any way relating thereto, regardless of form, shall be limited
to five hundred thousand dollars (US$500,000.00).

10.14 For the period of the Term, each Party agrees not to directly solicit or
recruit employees of the other Party who: (a) are directly involved in the
Project; or (b) have been or are assigned to perform work under this Agreement.
This does not restrict general solicitations for employment or the right of any
employee of one Party, on that employee's own initiative or in response to
general solicitations, to seek employment from the other Party.

10.15 Neither party will assign this agreement to a third party, except as
follows. Either Party may assign its rights, privileges, and obligations under
this Agreement in connection with a sale or other transfer of such Party's
entire business related to production, development and sale of SOI wafers. For
the avoidance of doubt: (a) a merger with, (b) sale of more than fifty per cent
of the stock to, or (c) acquisition by, a third party is included in the scope
of this Section 10.15. Except as provided in the following Section 10.15.1, no
other assignment of this Agreement, or assignment of rights or delegation of
obligations hereunder, is permitted. Any attempted assignment or delegation in
derogation of the foregoing shall be void.

10.15.1 IBM may, in its sole discretion, assign its right to receive payments
from IBIS under this Agreement to a third party.

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10.16 Subject to the provisions of Section 4, neither Party will disclose the
existence, terms and conditions, or subject matter of this Agreement.

10.17 This Agreement will not be binding upon the Parties until it has been
signed below by or on behalf of each Party, in which event it will be effective
as of the Effective Date. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and will supersede
all contemporaneous and previous communications, understandings and agreements,
whether oral or written, between the Parties relating to the subject matter
hereof. No amendment or modification of this Agreement will be valid or binding
upon the Parties unless made in writing and signed on behalf of such Parties by
their respective authorized representatives. The requirement of a signed writing
may only be waived in a signed writing.

                                      ####

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<PAGE>

         IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives, who by their signature
represent that they are so authorized, to be effective as of the Effective Date.

ACCEPTED AND AGREED TO:                ACCEPTED AND AGREED TO:
IBIS TECHNOLOGY                        INTERNATIONAL BUSINESS
CORPORATION                            MACHINES CORPORATION

By: /s/ MARTIN J. REID                 By: /s/ BIJAN DAVARI
    ------------------------------         ---------------------------------

Martin J. Reid                         Bijan Davari
President                              Vice President, Technology
IBIS Technology Corporation            and Emerging Products
                                       IBM Microelectronics Division
                                       2070 Route 52
                                       Hopewell Junction, NY 12533

Date  DEC 20, 2000                     Date  JAN 8, 2001
      -----------------------------          -------------------------------

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Know-How License 12-18-2000                                Page 36 of 36

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