SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material under Rule 14a-12
AMTECH SYSTEMS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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AMTECH SYSTEMS, INC.
131 SOUTH CLARK DRIVE
TEMPE, ARIZONA 85281
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 28, 2003
Dear Shareholder:
The 2003 Annual Meeting of Shareholders of AMTECH SYSTEMS, INC., an Arizona
corporation (the "Company"), will be held at the Hilton Phoenix Airport Hotel,
2435 South 47th Street, Phoenix, Arizona, on Friday, February 28, 2003, at 10:00
a.m., Phoenix, Arizona time, for the following purposes:
1. To elect four (4) directors to serve for one-year terms or until their
successors are elected and qualified;
2. To transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice. The Company is presently aware of no other
business to come before the annual meeting.
The Board of Directors has fixed the close of business on January 13, 2003,
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at the annual meeting or any postponement or
adjournment thereof. Shareholders are reminded that their shares of the
Company's common stock can be voted at the annual meeting only if they are
present at the annual meeting in person or by valid proxy. A copy of the
Company's 2002 Annual Report, which includes our audited financial statements,
was mailed with this Notice and Proxy Statement to all shareholders of record on
the Record Date.
Management of the Company cordially invites you to attend the Annual
Meeting. Your attention is directed to the attached Proxy Statement for a
discussion of the foregoing proposal and the reasons why the Board of Directors
encourages you to vote for approval of such proposal.
By Order of the Board of Directors
/s/ Robert T. Hass
Robert T. Hass, Secretary
Tempe, Arizona
January 24, 2003
IMPORTANT: IT IS IMPORTANT THAT YOUR SHAREHOLDINGS BE REPRESENTED AT THIS
MEETING. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
AMTECH SYSTEMS, INC.
131 SOUTH CLARK DRIVE
TEMPE, ARIZONA 85281
PROXY STATEMENT
This Proxy Statement is being furnished to shareholders of Amtech Systems,
Inc., an Arizona corporation (the "Company"), in connection with the
solicitation of proxies by our Board of Directors for use at the 2003 Annual
Meeting of Shareholders of the Company to be held on Friday, February 28, 2003,
at 10:00 a.m., Phoenix, Arizona time, and any adjournment or postponement
thereof (the "Annual Meeting"). A copy of the Notice of the Meeting accompanies
this Proxy Statement. This Proxy Statement and the accompanying form of Proxy
were first mailed on or about January 24, 2003 to all shareholders entitled to
vote at the Annual Meeting.
STOCKHOLDERS ENTITLED TO VOTE
Shareholders of record at the close of business on January 13, 2003 (the
"Record Date"), are entitled to notice of and to vote at the Annual Meeting and
at any and all adjournments or postponements of the Annual Meeting. At the close
of business on the Record Date, 2,689,571 shares of common stock, $.01 par value
(the "Common Stock"), were issued and outstanding. Except as set forth below
with respect to the ability to cumulate votes for directors, each share of
Common Stock entitles its owner to one vote. The holders of a majority of shares
entitled to vote at the Annual Meeting must be present in person or represented
by proxy in order to constitute a quorum for all matters to come before the
Annual Meeting.
HOW TO ATTEND THE MEETING
If you are a shareholder of record, which means you hold your shares in
your name, you may attend the meeting. If you own shares in the name of a bank,
broker or other holder of record ("street name"), you will need to ask your
broker or bank for a copy of the proxy they received from us. You will need to
bring the proxy with you to the Annual Meeting.
HOW TO VOTE
If you are a shareholder of record, you may vote by mail or in person. To
vote by mail, sign, date and return your proxy card in the enclosed postage-paid
envelope. All valid proxies received before the Annual Meeting, and not revoked,
will be exercised. If you sign and return your proxy card, but do not give
voting instructions and authority to vote is not specifically withheld, the
shares represented by that proxy will be voted as recommended by our Board of
Directors. If you have specified a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specifications so made.
All stockholders may vote in person at the Annual Meeting (unless they are
street name holders without a legal proxy). If your shares are held in a street
name, you will receive instructions from the holder of record that you must
follow in order for your shares to be validly voted.
We are not aware of any other matters to be presented at the Annual Meeting
except those described in this Proxy Statement. However, if any other matters
not described in this Proxy Statement are properly presented at the Annual
Meeting, the proxies will use their own judgment to determine how to vote your
shares. If the Annual Meeting is adjourned, your Common Stock may be voted by
the proxies on the new meeting date as well, unless you have revoked your proxy
prior to that time.
VOTING CHOICES
For each proposal presented, you may vote one of the following ways:
1. For the proposal
2. Against the proposal
3. Abstain from voting
Proxies that are signed and returned with no instructions will be voted FOR
election of all Director nominees.
CHANGING YOUR VOTE
You may change your vote at any time before the proxy is exercised. A
shareholder can revoke a proxy by:
* Delivering to our executive offices, to the attention of our corporate
Secretary prior to the vote at the Annual Meeting, a written
instrument of revocation bearing a date later than the date of the
proxy.
* Duly executing and delivering to our executive offices, to the
attention of our corporate Secretary prior to the vote at the Annual
Meeting, a proxy relating to the same shares bearing a later date.
* Voting by ballot at the Annual Meeting, provided that the shareholder
notifies our corporate Secretary at the Annual Meeting of his or her
intention to vote in person at any time prior to the voting of the
proxy.
HOW VOTES ARE COUNTED
Inspectors of election will be appointed for the Annual Meeting. The
inspectors of election will determine whether or not a quorum is present and
will tabulate votes cast by proxy or in person at the Annual Meeting. If you
have returned valid proxy instructions or attend the Annual Meeting in person,
your Common Stock will be counted for the purpose of determining whether there
is a quorum. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter. Abstentions and broker non-votes will be included in the
determination of the number of shares represented for a quorum.
COST OF THIS PROXY SOLICITATION
We will pay the cost of preparing and mailing the Notice and Proxy
Statement, including the charges and expenses of brokerage firms, banks and
others who forward solicitation material to beneficial owners of the Common
Stock. We will solicit proxies by mail. Proxies may also be solicited by
officers and directors of the Company personally or by telephone or facsimile,
without additional compensation. Computershare will serve as our proxy
solicitation agent. In such capacity, Computershare will coordinate the
distribution of proxy materials to beneficial owners of Common Stock and oversee
the return of proxy cards. The fee for all these services is estimated to be
approximately $5,000.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
September 30, 2002 ("Annual Report") has been mailed concurrently with the
mailing of the Notice of Annual Meeting and Proxy Statement to all shareholders
entitled to notice of and to vote at the Annual Meeting. The Annual Report is
not incorporated into this Proxy Statement and is not considered proxy
soliciting material.
The information contained in the "Report of the Compensation and Option
Committee," "Audit Committee Report," and "Comparison of Stock Performance"
below shall not be deemed "filed" with the Securities and Exchange Commission or
subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
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Securities Exchange Act of 1934, and shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Securities Act
of 1934.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
Proposal 1: Election of Four Directors The four nominees for director who receive
the most votes will be elected. Cumulative
voting is allowed with respect to the
election of directors.
PROPOSALS
PROPOSAL NO. 1 --- ELECTION OF DIRECTORS
NUMBER OF DIRECTORS TO BE ELECTED
Our Board of Directors currently consists of four members. Until his death
on August 25, 2002, Donald F. Johnston served as the fifth member of our Board
of Directors. Following Mr. Johnston's death, our Board of Directors determined
to reduce the size of our Board of Directors to four members until such time as
a qualified candidate could be found to replace Mr. Johnston. The Company
expects to complete its candidate search by the May 2003 Board of Directors'
meeting.
Each director elected will hold office for one year or until his successor
is elected and qualified. If any director resigns or otherwise is unable to
complete his term in office, our Board may elect another director for the
remainder of the resigning director's term.
VOTE REQUIRED
The four nominees receiving the highest number of votes cast at the Annual
Meeting will be elected. There is cumulative voting in the election of
directors. This means that each shareholder present at the Annual Meeting,
either in person or by proxy, will have an aggregate number of votes in the
election of directors equal to four (the number of persons nominated for
election as directors) multiplied by the number of shares of Common Stock of the
Company held by such shareholder on the Record Date. The resulting aggregate
number of votes may be cast by the shareholder for the election of any single
nominee, or the shareholder may distribute such votes among any number or all of
the nominees. The four nominees receiving the highest number of votes will be
elected to our Board of Directors.
NOMINEES OF THE BOARD
Our Board of Directors is responsible for supervision of the overall
affairs of the Company. Our Board has nominated the following individuals to
serve on our Board of Directors for the following year:
Jong S. Whang
Robert T. Hass
Alvin Katz
Bruce R. Thaw
All of these nominees are currently serving on our Board of Directors. Each
of the nominees has agreed to be named in this Proxy Statement and to serve if
elected. See below for information regarding each of the nominees listed above.
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Our Board of Directors recommends a vote FOR the election of the four
nominees under Proposal No. 1. Our Board of Directors intends to vote its
proxies for the election of the nominees, for a term to expire at the next
Annual Meeting. In that regard, our Board of Directors solicits authority to
cumulate such votes.
If any nominee should become unavailable for any reason, which our Board of
Directors does not anticipate, the proxy will be voted for any substitute
nominee or nominees who may be selected by our Board of Directors prior to or at
the Annual Meeting. The information concerning the nominees and their share
holdings in the Company has been furnished by them to the Company.
INFORMATION CONCERNING DIRECTORS AND OFFICERS
The following table sets forth information regarding the officers and
directors (who are also director nominees) of the Company, including
biographical data for at least the last five years.
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Jong S. Whang 57 President, Chief Executive Officer and Director
Robert T. Hass 52 Vice President-Finance, Chief Financial Officer,
Treasurer, Secretary and Director
Alvin Katz 73 Director
Bruce R. Thaw 50 Director
JONG S. WHANG has been President, Chief Executive Officer and a Director of
the Company since its inception and was one of its founders. Mr. Whang's
responsibilities as President include the sales effort for the Company's
semiconductor equipment business and development of new products and business
opportunities in that industry. He has twenty-eight years of experience in the
semiconductor industry, including time spent in both processing and
manufacturing of equipment components and systems. From 1973 until 1979, he was
employed by Siltronics, Inc., initially as a technician working with chemical
vapor deposition and later as manager of the quartz fabrication plant with
responsibility of providing technical marketing support. From 1979 until 1981,
he was employed by U.S. Quartz, Inc. as manufacturing manager. In 1981 he left
U.S. Quartz to form the Company.
ROBERT T. HASS has been Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary of the Company since June 3, 1992. Mr. Hass has served
as a Director of the Company since February 29, 1996. From 1991 until May 1992,
he operated a financial consulting practice under the name of Hass Financial
Consulting Services. From 1985 to 1991, Mr. Hass served as Director of
Accounting Services and then Controller for Lifeshares Group, Inc., a holding
company that owned and operated real estate development and insurance
subsidiaries, and from 1988 to 1991 served as Controller and Chief Accounting
Officer of some of Lifeshares Group's subsidiaries. From 1984 to 1985, he served
as Vice President-Finance and Treasurer of The Victorio Company, a privately
owned holding company which owned and operated agriculture, chemical, commercial
real estate brokerage, marketing research and commodities futures brokerage
businesses. From 1977 to 1984, he was employed in various capacities including
Vice President, Chief Financial Officer and Treasurer by Altamil Corporation,
then a public company, which manufactures truck equipment, wire-bound
containers, and precision aluminum forgings. From 1972 to 1977, he was employed
as an auditor with Ernst & Ernst, now known as Ernst & Young. He is a Certified
Public Accountant.
ALVIN KATZ has been a Director of the Company since May 1, 1995. From 1981
to 1997, he was an adjunct professor of business management at the Florida
Atlantic University in Boca Raton, Florida. From 1991 until the company was sold
in September 1992, he was Chief Executive Officer of Odessa Engineering Corp., a
company engaged in the manufacture of pollution monitoring equipment. From 1957
to 1976, Mr. Katz held various managerial positions with United Parcel Service,
including District Manager and Corporate Manager of Operations Planning,
Research and Development. He is also a Director of Nastech Pharmaceutical
Company, Inc., a company engaged in research, development and marketing of
nasally delivered pharmaceuticals. From 1994 to 2002, Mr. Katz was a Director of
Blimpie International, a fast food franchiser. From 1999 to 2000, he was also
President of BMAC, a biomedical automation company.
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BRUCE R. THAW has been a Director of the Company since May 1, 1995. Mr.
Thaw is currently the President and Chief Executive Officer of Bulbtronics,
Inc., a national distributor of technical and specialty light sources and
related products. Mr. Thaw is a practicing attorney and was admitted to the bar
of the State of New York in 1978 and the California State Bar in 1983. Mr. Thaw
is also a director of SafeNet, Inc., a publicly traded company that designs,
manufactures and markets computer network security systems and products, and
Nastech Pharmaceutical Company, Inc., a publicly traded company engaged in drug
delivery technology. Mr. Thaw does not render legal services to the Company.
INFORMATION ABOUT BOARD AND COMMITTEE MEETINGS AND DIRECTOR COMPENSATION
Our Board of Directors held five (5) meetings during fiscal 2002. No
director attended less than 75% of all Board meetings while he served as such
director or less than 75% of all committee meetings on which he served as a
committee member. Our Board has the authority under the Company's Bylaws to
increase or decrease the size of our Board and fill vacancies, and the directors
chosen to fill such vacancies will hold office until the Company's next annual
meeting or until their successors are elected and qualified.
The Audit Committee, the Compensation and Option Committee and the Finance
Committee are the standing committees of our Board of Directors. These
committees are comprised as follows:
COMPENSATION
AUDIT(1) AND OPTION(1) FINANCE
-------- ------------- -------
A. Katz A. Katz
B. R. Thaw A. Katz B. R. Thaw
----------
(1) Mr. Donald F. Johnston served as a member of these committees until his
death on August 25, 2002. Our Board of Directors expects that any candidate
subsequently elected to our Board will be appointed to serve on these
committees.
The Audit Committee held ten (10) meetings during the 2002 fiscal year. The
Audit Committee is responsible for maintaining communication between our Board,
the Company's independent auditors and members of financial management with
respect to the Company's financial affairs in general, including financial
statements and audits, the adequacy and effectiveness of the Company's internal
accounting controls and systems and the retention and termination of the
independent auditors.
The Audit Committee is composed of outside directors who are not officers
or employees of the Company or its subsidiaries. In the opinion of our Board and
as "independent" is defined under the listing rules of the Nasdaq Stock Market,
these directors are independent of management and free of any relationship that
would interfere with their exercise of independent judgment as members of this
committee.
The Compensation and Option Committee held one (1) meeting during the 2002
fiscal year. The Compensation and Option Committee makes recommendations
concerning officer compensation, employee benefit programs and retirement plans.
The Finance Committee did not hold any meetings during the 2002 fiscal
year. The Finance Committee is responsible for communication between our Board,
the Company's lender or prospective lender(s) and other financial sources and
members of financial management.
All current committee members are expected to be nominated for re-election
at a Board meeting to be held following the Annual Meeting of Shareholders.
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DIRECTORS' COMPENSATION
Directors who are full-time employees of the Company receive no additional
compensation for serving as directors. Directors who are not employees of the
Company receive an annual retainer of $6,000 and fees of $700 per Board meeting
attended and $250 per committee meeting attended. In addition, under the
Company's Non-Employee Directors Stock Option Plan, each outside director
receives an annual grant of options to purchase 5,000 shares of Common Stock.
The exercise price of the options is set at the fair market value of Common
Stock on the date of grant. Each option has a term of ten years and becomes
exercisable in three equal installments commencing on the first anniversary of
the date of grant and continuing for the two successive anniversaries
thereafter. In the event of disability (as defined in the plan) or death of an
outside director, all options remain exercisable for a period of twelve months
following the date such person ceased to be a director, but only to the extent
such option was exercisable on the date the director ceased to be a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Option Committee is presently composed of Mr. Katz.
Mr. Johnston also served on the Compensation Committee prior to his death. Mr.
Katz is not, and Mr. Johnston was not, an officer or employee of the Company.
EXECUTIVE COMPENSATION
The following table sets forth information regarding annual and long-term
compensation for services rendered to the Company during the fiscal years ended
September 30, 2002, 2001 and 2000 by the Company's Chief Executive Officer and
the other most highly compensated executive officer of the Company who received
annual compensation exceeding $100,000 during such periods (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
-------------------------------------- ------------
NAME AND FISCAL OTHER ANNUAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) COMPENSATION STOCK AWARDS COMPENSATION(4)
------------------ ---- --------- -------- ------------ ------------ ---------------
Jong S. Whang 2002 $ 150,722 $ 11,085 -- -- $ --
President and Chief 2001 168,044 69,397 -- -- 16,656
Executive Officer 2000 175,817 122,622 -- -- 1,242
Robert T. Hass 2002 $ 102,000 $ 18,000 -- -- $ --
Vice President- 2001 111,059 1,468 -- -- 2,911
Finance 2000 99,750 9,500 -- -- 615
----------
(1) Neither Messrs. Whang nor Hass received personal benefit perquisites in
excess of the lesser of $50,000 or 10% of their aggregate salary and bonus.
(2) Effective March 15, 2001, Mr. Whang entered into a five year employment
agreement with the Company. The agreement specifies an annual base salary
of $188,402. For fiscal 2000, this column includes an accrued retrospective
salary increase of $14,250. As of April 1, 2001, Mr. Whang voluntarily
reduced his annual salary by 20% to $150,722 and Mr. Hass voluntarily
reduced his annual salary by 15% to $102,000.
(3) See "Employment Agreements" below for a description of how Mr. Whang's
incentive compensation is determined. The amount reflected in this column
in fiscal 2000 for Mr. Whang includes a discretionary bonus of $32,550, in
addition to the $89,716 in incentive compensation earned by Mr. Whang under
his February 1997 employment agreement.
(4) Amounts for Messrs. Whang and Hass consist of Company matching
contributions in the Amtech Systems, Inc. 401(k) Plan. The amount for Mr.
Whang also includes a payment made in lieu of vacation.
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OPTION GRANTS
The following table contains information regarding stock option grants
during the 2002 fiscal year to the Named Executive Officers.
OPTIONS GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL STOCK AT ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE ON PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE DATE OF FOR OPTION TERM (3)
OPTIONS EMPLOYEES PRICE GRANT EXPIRATION --------------------------------
NAME GRANTED IN FISCAL 2001 ($/SHARE) ($/SHARE) DATE 0% 5% 10%
---- ------- -------------- --------- --------- ---- ---- ---- ----
Robert T. Hass 5,000(1) 11.1% $4.50(2) $4.50 7/19/12 -0- $ 14,150 $ 35,859
----------
(1) All options were granted to Mr. Hass on July 19, 2002 under the Company's
1998 Stock Option Plan. The options granted become exercisable as follows:
20% on July 19, 2003 and an additional 20% on each one-year anniversary
thereafter.
(2) The exercise price was set at 100% of closing price of the Company's Common
Stock on grant day, July 19, 2002, as reported on the NASDAQ National
Market.
(3) Reflects the value of the stock option on the date of grant assuming (i)
for the 0% column, no appreciation in the Company's stock price from the
date of grant over the term of the option, (ii) for the 5% column, a five
percent annual rate of appreciation in the Company's stock price over the
term of the option, and (iii) for the 10% column, a ten percent annual rate
of appreciation in the Company's stock price over the term of the option,
in each case without any discounting to present value. The actual gains, if
any, on stock option exercises are dependent upon the future performance of
the Company's Common Stock. Accordingly, the amounts reflected in this
table may not necessarily be indicative of the actual results obtained.
OPTION EXERCISES
There were no exercises of stock options during fiscal 2002 by any of the
Named Executive Officers.
EMPLOYMENT AND SEVERANCE AGREEMENTS
On March 15, 2001, the Company entered into a five (5) year employment
agreement with its President, Jong S. Whang. Under the terms of the agreement,
Mr. Whang is entitled to an annual base salary of $188,402, and base salary
increases of at least 5% to be determined by our Board of Directors at the end
of each year of the agreement. Mr. Whang is also entitled to receive annual
incentive cash compensation of up to 50% of his base salary, based on the follow
criteria: (i) a bonus equal to 2% of the annual earnings of the Company before
taxes and extraordinary items, and (ii) a bonus equal to 2% of the amount by
which the revenues of the Company for the applicable fiscal year exceeds such
revenues for the previous fiscal year. In addition, Mr. Whang was granted an
option to purchase 150,000 shares of Common Stock pursuant to the agreement.
These options were granted on March 15, 2001 and vest at the rate of 20% per
full year of service over a five-year period. To the extent not already
exercisable, the options become immediately exercisable upon: (i) the
dissolution or liquidation of the Company or a reorganization, merger or
consolidation in which all or substantially all prior shareholders do not
continue to own more than 60% of the then outstanding shares of Common Stock and
voting securities, (ii) the sale of all or substantially all of the assets of
the Company, or (iii) the occurrence of a change in control of the Company as
discussed in the agreement. The agreement also contains confidentiality and
non-compete provisions. Mr. Whang is also entitled to participate in any benefit
plans generally available to employees of the Company. Finally, the Company is
required to purchase a $250,000 life insurance policy on the life of Mr. Whang,
with his spouse as the beneficiary of such policy. To date, Mr. Whang has waived
the Company's compliance with the latter requirement.
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SEVERANCE AND CHANGE OF CONTROL PROVISIONS
If Mr. Whang is terminated other than for "cause" or he terminates his
employment for "good reason" (as such terms are defined in his employment
agreement), he is entitled to receive, as severance pay, salary, incentive
compensation and vacation accrued through the date of termination plus the
following: (i) an amount equal to two years of Mr. Whang's base salary in effect
on the termination date; (ii) a pro-rated portion of the amount of incentive
compensation Mr. Whang would earn for the fiscal year in which the termination
occurs if the results of operations of the Company for the period from the
beginning of such fiscal year to the termination date were annualized; (iii)
full vesting of all stock options issued under the employment agreement; and
(iv) vesting of a pro-rated portion of the number of stock options which would
have vested for the fiscal year in which the termination occurs.
Mr. Whang's employment agreement also provides for benefits should his
employment with the Company be terminated following a change in control. If Mr.
Whang's employment with the Company is terminated within one year following the
occurrence of a change of control, either by the Company for any reason other
than for cause or by Mr. Whang for good reason, the Company would be required to
pay him a lump sum payment equal to three years of his annual base salary in
effect on the termination date and the maximum amount of incentive compensation
which he could earn for the fiscal year in which the termination date occurs. In
addition, all stock options held by him but not vested would vest immediately.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company did not have any transactions during fiscal 2002 with any
director, director nominee, executive officer, security holder known to the
Company to own of record or beneficially more than 5% of the Company's Common
Stock, or any member of the immediate family of any of the foregoing persons, in
which the amount involved exceeded $60,000.
REPORT OF COMPENSATION AND OPTION COMMITTEE
The Compensation and Option Committee of the Company's Board of Directors
(the "Committee"), which is composed entirely of independent, outside directors,
establishes the general compensation policies of the Company and specific
compensation for each executive officer of the Company, and administers the
Company's stock option program. The Committee's objective is to make the
compensation packages of the executive officers of the Company sufficient to
attract and retain persons of exceptional quality, and to provide effective
incentives to motivate and reward Company executives for achieving the financial
and strategic goals of the Company essential to the Company's long-term success
and growth in shareholder value. The Company's executive compensation package
consists of three main components: base salary, incentive cash bonuses and stock
options.
BASE COMPENSATION
The Committee's approach is to offer executives salaries competitive with
those of other executives in the industry in which the Company operates. To that
end, the Committee evaluates the competitiveness of its base salary based on
information drawn from a variety of sources, including published and proprietary
survey data and the Company's own experience recruiting and retaining
executives, although complete information is not easily obtainable. The
Company's base salary levels are intended to be consistent with competitive
practice and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance of the Company and the
performance of the individual executive.
BONUSES
In addition to base salary, executives are eligible to receive a
discretionary annual bonus. At the beginning of each year, the Committee and the
Chief Executive Officer (the "CEO") review each individual executive's job
responsibilities and goals for the upcoming year. The amount of the bonus and
any performance criteria vary with the position and role of the executive within
the Company. In addition, for all executives, the Committee reviews the
Company's actual financial performance against its internally budgeted
performance in determining year-end bonuses, if any. However, the Committee does
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not set objective performance targets for executives other than the CEO and
sales and marketing personnel.
STOCK OPTION AND RESTRICTED STOCK GRANTS
The Company, from time to time, grants stock options and shares of
restricted stock in order to provide certain executives with a competitive total
compensation package and to reward them for their contribution to the long-term
price performance of the Company's Common Stock. Grants of stock options and
restricted stock are designed to align the executive's interest with that of the
shareholders of the Company. In awarding option grants, the Committee will
consider, among other things, the amount of stock and options presently held by
the executive, the executive's past performance and contributions, and the
executive's anticipated future contributions and responsibilities.
2002 CEO COMPENSATION
Mr. Whang, the CEO, is paid an annual base salary of $188,402, pursuant to
the terms of his March 15, 2001 employment agreement with the Company. Mr.
Whang's increased base salary is based upon the compensation of executives in
comparable positions in the semiconductor industry, adjusted for the size of the
Company (total assets and revenues).
In connection with the execution of Mr. Whang's employment agreement, our
Board of Directors approved an incentive compensation plan for the CEO, which
provides for an annual cash bonus equal to 2% of the annual earnings of the
Company before taxes and extraordinary items, plus 2% of the amount by which the
revenues of the Company in an applicable fiscal year exceed such revenues for
the previous fiscal year. The total of such cash bonuses is limited to 50% of
Mr. Whang's base salary for the applicable fiscal year. Mr. Whang earned a bonus
of $11,085 in 2002 pursuant to such incentive compensation plan. Mr. Whang's
employment agreement with the Company incorporates the incentive compensation
plan described above. See "Employment and Severance Agreements," above.
RESPECTFULLY SUBMITTED,
Alvin Katz
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by our Board of Directors on
June 1, 2000, a copy of which was attached as an exhibit to the Company's Proxy
Statement for its 2001 Annual Meeting of Shareholders, the Audit Committee is
responsible for reviewing and discussing the audited financial statements with
management, discussing with the Company's auditors information relating to the
auditors' judgments about the quality of the Company's accounting principles,
recommending to our Board of Directors that the Company include the audited
financials in its Annual Report on Form 10-K and overseeing compliance with the
Securities and Exchange Commission requirements for disclosure of auditors'
services and activities.
REVIEW OF AUDITED FINANCIAL STATEMENTS
The Audit Committee has reviewed the Company's consolidated financial
statements for the fiscal year ended September 30, 2002, as audited by KPMG LLP
("KPMG"), the Company's independent auditors, and has discussed these financial
statements with management. In addition, the Audit Committee has discussed with
KPMG the matters required to be discussed by Statement of Auditing Standards 61,
"Communications with Audit Committees." Furthermore, the Audit Committee has
received the written disclosures and the letter from KPMG required by the
Independence Standards Board Standard No. 1 and has discussed with KPMG its
independence.
9
RECOMMENDATION
Based upon the foregoing review and discussion, the Audit Committee
recommended to our Board of Directors that the audited financial statements for
the fiscal year ended September 30, 2002, be filed with the Company's annual
report on Form 10-K for such period.
RESPECTFULLY SUBMITTED,
Alvin Katz
Bruce R. Thaw
DISCLOSURE OF AUDIT AND NON-AUDIT FEES
AUDIT FEES
The fees billed by Arthur Andersen LLP (the Company's auditors until July
2002) and KPMG (the Company's current auditors) for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended September 30, 2002 and for the review of the financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
fiscal year ended September 30, 2002 were $18,000 and $105,000, respectively.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During fiscal 2002, the Company did not engage its independent public
accountants to perform financial information systems design and implementation.
ALL OTHER FEES OF INDEPENDENT PUBLIC ACCOUNTANTS
During fiscal 2002, all other fees of the Company's independent public
accountants amounted to $4,985, which primarily consisted of accounting and tax
consultation services.
The Audit Committee of our Board of Directors considered whether the
provision of non-audit services is consistent with maintaining the auditors'
independence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of January 7, 2003, by (i)
each director of the Company, (ii) each executive officer of the Company,
including the Named Executive Officers, (iii) all executive officers and
directors of the Company as a group, and (iv) each person known to the Company
to be the beneficial owner of more than 5% of the Company's Common Stock. This
information was determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and is based upon the information furnished by
the persons listed below. Except as otherwise indicated, each shareholder listed
possesses sole voting and investment power with respect to the shares indicated
as being beneficially owned.
10
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS (1)(2) BENEFICIALLY HELD (3) OWNERSHIP (3)
----------------------- --------------------- -------------
Jong S. Whang 156,972(4) 5.7%
Robert T. Hass 10,375(5) *
Alvin Katz 82,667(6) 3.1%
Bruce R. Thaw 18,667(6) *
Directors and Executive Officers of
the Company as a group (5 persons) 268,681(7) 10.0%
5% STOCKHOLDERS:
Robert Sussman
520 Madison Avenue
41st Floor
New York, NY 10022 202,500(8) 7.5%
----------
* Less than 1%.
(1) Except as otherwise noted, the address for each person listed in this table
is c/o Amtech Systems, Inc., 131 South Clark Drive, Tempe, Arizona 85281.
(2) Mr. Whang is the Company's President, CEO and a director. Mr. Hass is the
Vice President-Finance, Chief Financial Officer, Treasurer, Secretary and a
director. Messrs. Katz and Thaw are presently directors.
(3) The share amounts and percentages shown include the shares of Common Stock
actually owned as of January 7, 2003, and the shares of Common Stock with
respect to which the person had the right to acquire beneficial ownership
within 60 days of such date pursuant to options or warrants. All shares of
Common Stock that the identified person had the right to acquire within 60
days of January 7, 2003, upon the exercise of options or warrants are
deemed to be outstanding when computing the percentage of the securities
owned by such person, but are not deemed to be outstanding when computing
the percentage of the securities owned by any other person. The amounts and
percentages are based upon 2,689,571 shares of Common Stock outstanding as
of January 7, 2003.
(4) Includes (i) 9,488 shares held jointly with Mr. Whang's spouse and (ii)
72,517 shares issuable upon the exercise of presently exercisable options;
41,517 shares issuable at an exercise price of $1.126 per share; 1,000
shares issuable at an exercise price of $1.50 per share; and the balance of
30,000 shares issuable at an exercise price of $6.53 per share.
(5) Includes 10,250 shares issuable upon exercise of presently exercisable
options; 5,250 shares issuable at an exercise price of $1.126 per share;
and the balance of 5,000 shares issuable at an exercise price of $5.88 per
share.
(6) Includes 18,667 shares issuable upon exercise of presently exercisable
options; 11,000 shares issuable at an exercise price of $1.126 per share;
3,000 shares issuable at an exercise price of $1.50 per share; 3,000 shares
issuable at an exercise price of $6.813 per share; and the balance of 1,667
shares issuable at an exercise price of $5.88 per share.
(7) Includes 120,100 shares issuable upon exercise of presently exercisable
options; 70,767 shares issuable at an exercise price of $1.126 per share;
5,000 shares issuable at an exercise price of $1.50 per share; 6,000 shares
issuable at an exercise price of $6.813 per share; 30,000 shares issuable
at an exercise price of $6.53 per share; and the balance of 8,333 shares
issuable at an exercise price of $5.88 per share.
(8) Includes 2,500 shares jointly owned with Mr. Sussman's spouse.
11
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, as well as persons beneficially
owning more than 10% of the Company's outstanding Common Stock, to file certain
reports of ownership with the Securities and Exchange Commission (the "SEC")
within specified time periods. Such officers, directors and shareholders are
also required by SEC rules to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of such forms received by it during the fiscal
year ended September 30, 2002, or written representations from certain reporting
persons, the Company believes that between October 1, 2001 and September 30,
2002 all Section 16(a) filing requirements applicable to its officers, directors
and 10% shareholders were complied with.
COMPARISON OF STOCK PERFORMANCE
The following line graph compares cumulative total stockholder return,
assuming reinvestment of dividends, for: the Company's Common Stock, the NASDAQ
Composite Index and the NASDAQ Industrial Index. Because the Company did not pay
dividends on its Common Stock during the measurement period, the calculation of
the cumulative total stockholder return on the Company's Common Stock did not
include dividends. The following graph assumes that $100 was invested on October
1, 1997.
9/30/97 9/30/98 9/30/99 9/30/00 9/30/01 9/30/02
------- ------- ------- ------- ------- -------
AMTECH SYSTEMS, INC $100 $ 28 $ 37 $279 $ 92 $ 58
NASDAQ COMPOSITE INDEX $100 $100 $163 $218 $ 89 $ 70
NASDAQ Industrial Index $100 $ 75 $117 $149 $ 79 $ 68
CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On July 3, 2002, the Company dismissed its independent auditor, Arthur
Andersen LLP ("Andersen"), and appointed KPMG as its new independent auditor.
These actions were approved by the Company's Board of Directors upon the
recommendation of its Audit Committee. KPMG has reviewed the consolidated
financial statements of the Company for the quarter ended June 30, 2002 and
audited the consolidated financial statements of the Company for the fiscal year
ended September 30, 2002.
During the two fiscal years ended September 30, 2001 and 2000, and the
subsequent interim periods up to the date of Andersen's dismissal, there were no
disagreements between the Company and Andersen, as defined in Item 304 of
Regulation S-K, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to Andersen's satisfaction, would have caused Andersen to make
reference to the subject matter of such disagreement in connection with its
reports, and there were no reportable events as described under Item
304(a)(1)(v) of Regulation S-K.
12
The audit reports of Andersen on the consolidated financial statements of
the Company for each of the fiscal years ended September 30, 2001 and 2000 did
not contain an adverse opinion or disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended September 30, 2001 and 2000, and the
subsequent interim periods through the date of Andersen's dismissal, neither the
Company nor anyone on its behalf consulted with KPMG regarding the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Company's
consolidated financial statements, or any other matters or reportable events set
forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
The Company previously provided Andersen with a copy of the foregoing
disclosures when the Company filed a Current Report on Form 8-K disclosing the
dismissal of Andersen. Andersen has advised the Company that as of July 1, 2002,
it is no longer issuing any letters to the Securities and Exchange Commission
regarding matters such as these.
OTHER MATTERS
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended September 30,
2002, is enclosed herewith.
VOTING BY PROXY
In order to ensure that your shares will be represented at the Annual
Meeting, please sign and return the enclosed proxy in the envelope provided for
that purpose, whether or not you expect to attend. Any shareholder may, without
affecting any vote previously taken, revoke a written proxy by delivering to our
executive offices, to the attention of our corporate Secretary prior to the vote
at the Annual Meeting, written notice of revocation or a duly executed proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
INDEPENDENT AUDITORS
Our Board of Directors has selected KPMG as the Company's independent
public accountants for the fiscal year ending September 30, 2003. KPMG was
selected this year after the Company terminated its prior independent public
accountants, Arthur Andersen LLP ("Andersen") in July 2002. A representative of
KPMG is expected to be present at the Annual Meeting with the opportunity to
make a statement if he or she so desires and to be available to respond to
appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS FOR ACTION AT THE COMPANY'S NEXT ANNUAL
MEETING
Any shareholder who wishes to present any proposal for shareholder action
at the next Annual Meeting of Shareholders to be held in 2004, must be received
by the Company's Secretary, at the Company's offices, not later than September
18, 2003, in order to be included in the Company's proxy statement and form of
proxy for that meeting. Such proposals should be addressed to the Corporate
Secretary, Amtech Systems, Inc., 131 South Clark Drive, Tempe, Arizona 85281. If
a shareholder proposal is introduced at the 2004 Annual Meeting of Shareholders
without any discussion of the proposal in the Company's proxy statement, and the
shareholder does not notify the Company on or before December 10, 2003, as
required by SEC Rule 14(a)-4(c)(1), of the intent to raise such proposal at the
Annual Meeting of Shareholders, then proxies received by the Company for the
2004 Annual Meeting will be voted by the persons named in such proxies in their
discretion with respect to such proposal. Notice of such proposal is to be sent
to the above address.
13
HOUSEHOLDING OF PROXY MATERIALS
In December 2000, the Securities and Exchange Commission adopted new rules
that permit companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements with respect to two or more security holders
sharing the same address by delivering a single proxy statement addressed to
those security holders. This process, which is commonly referred to as
"householding," potentially means extra convenience for security holders and
cost savings for companies.
If you are currently receiving multiple copies of the Company's Proxy
Statement and Annual Report at your address and would like to request
householding of your communications, please contact your broker. Once you have
elected householding of your communications, householding will continue until
you are notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in householding, and would prefer to receive a
separate Proxy Statement and Annual Report, please notify your broker if you own
shares in street name, or direct your written request to Amtech Systems, Inc.,
131 South Clark Drive, Tempe, Arizona 85281, Attn: Secretary if you are a
shareholder of record.
By Order of the Board of Directors
/s/ Robert T. Hass
Robert T. Hass, Secretary
Tempe, Arizona
January 24, 2003
14
--------------------------------------------------------------------------------
PROXY - AMTECH SYSTEMS, INC.
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMTECH SYSTEMS,
INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Amtech Systems, Inc., an Arizona corporation (the
"Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders dated January 24, 2003, and hereby appoints Jong S. Whang and
Robert T. Hass, and each or either of them, proxies and attorneys-in-fact, with
full power of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Shareholders of AMTECH
SYSTEMS, INC. to be held at the Hilton Phoenix Airport Hotel, 2435 South 47th
Street, Phoenix, Arizona on Friday, February 28, 2003, at 10:00 a.m., Phoenix,
Arizona time, and at any adjournment(s) or postponement(s) thereof, and to vote
all shares of Common Stock that the undersigned would be entitled to vote if
then and there personally present, on the matters set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED ON THE REVERSE SIDE AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH MATTERS AS MAY COME BEFORE THE MEETING.
000000 0000000000 0 0000
AMTECH SYSTEMS, INC.
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY) 000000000.000 ext
ADD 1 000000000.000 ext
ADD 2
ADD 3 HOLDER ACCOUNT NUMBER
ADD 4
ADD 5 C 1234567890 J N T
ADD 6
[ ] Mark this box with an X if you have made
changes to your name or address details above.
--------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
--------------------------------------------------------------------------------
A ELECTION OF DIRECTORS
1. The Board of Directors recommends a vote FOR the listed nominees. In the
election of directors, you have an aggregate number of votes equal to the
number of shares held in the above referenced account multiplied by four
(4). Your votes will be allocated equally among the directors you have
voted for, or as marked in the space provided.
FOR WITHHOLD
01 - Jong S. Whang [ ] [ ] ________________ votes
02 - Robert T. Hass [ ] [ ] ________________ votes
03 - Alvin Katz [ ] [ ] ________________ votes
04 - Bruce R. Thaw [ ] [ ] ________________ votes
B AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
The undersigned agrees that the proxy holder is authorized to cumulate votes in
the election of directors and to vote for less than all of the nominees.
Please sign exactly as your name appears above. When shares are held in common
or in joint tenancy, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person. Please return in the enclosed, postage-paid envelope.
Signature 1 - Please keep signature within the box
[ ]
[ ]
Signature 2 - Please keep signature within the box
[ ]
[ ]
Date (mm/dd/yyyy)
[ / / ]
[ / / ]
1UPX HHH PPPP 001510