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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Therma-Wave, Inc.
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(Name of Registrant as Specified In Its Charter)
Therma-Wave, Inc.
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(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)(4) 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.
[_] 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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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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THERMA-WAVE, INC.
-----------------
1250 RELIANCE WAY
FREMONT, CALIFORNIA 94539
July 1, 2000
To our stockholders:
You are cordially invited to the 2000 Annual Meeting of Stockholders for
Therma-Wave, Inc.
DATE: July 31, 2000
TIME: 11:00 a.m., Pacific Daylight Time
PLACE: Fremont Marriott, 46100 Landing Parkway, Fremont, California 94538
At the Annual Meeting, you will have the opportunity to vote to:
. elect two directors; and
. approve an amendment to our 2000 Equity Incentive Plan to increase
the number of shares of common stock that may be issued under the plan
from 300,000 shares (plus any shares returned to the company as a
result of terminated options granted under our 1997 Plans and plus an
annual increase of one percent of the company's outstanding shares) to
a total of 3,300,000 shares (plus any shares returned to the company
as a result of terminated options granted under our 1997 Plans and
plus an annual increase of one percent of the company's outstanding
shares).
In addition to the formal items of business, Therma-Wave will review the
major developments of fiscal 2000 and answer questions that you may have about
the company and our activities.
This letter is your notice of the Annual Meeting and is being sent to
stockholders of record as of the close of business on June 15, 2000, who are the
only holders entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE, EVEN IF
YOU PLAN TO ATTEND THE MEETING. IF YOU DO ATTEND THE MEETING, YOU MAY PERSONALLY
VOTE, WHICH WILL REVOKE YOUR SIGNED PROXY. YOU MAY ALSO REVOKE YOUR PROXY AT ANY
TIME BEFORE THE MEETING BY FOLLOWING THE INSTRUCTIONS IN THE PROXY STATEMENT.
We look forward to seeing you at the meeting.
Sincerely,
L. Ray Christie
Vice President, Chief Financial Officer
and Secretary
<PAGE>
PROXY STATEMENT FOR THE
THERMA-WAVE, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
ABOUT THIS PROXY STATEMENT
You have been sent this Proxy Statement and the enclosed proxy card because
Therma-Wave's board of directors is soliciting your proxy to vote at the 2000
Annual Meeting of Stockholders. This Proxy Statement summarizes the information
that you will need in order to vote at the Annual Meeting. However, you need
not attend the Annual Meeting in order to vote your shares. You may instead
simply complete, sign and return the enclosed proxy card to register your vote.
This Proxy Statement and the enclosed proxy card were sent on June 30, 2000
to all stockholders who owned Therma-Wave common stock at the close of business
on June 15, 2000, who are the only stockholders entitled to vote at the Annual
Meeting. For ten days prior to the Annual Meeting, a list of Therma-Wave's
stockholders will be open for examination at Therma-Wave's headquarters by any
stockholder for any reason relating to the meeting. As of the record date,
there were 23,672,776 shares of Therma-Wave common stock outstanding.
NUMBER OF VOTES
Each share of Therma-Wave common stock entitles you to one vote on each
proposal at the Annual Meeting. The enclosed proxy card indicates the number of
shares of Therma-Wave common stock that you own.
THE QUORUM REQUIREMENT
At the Annual Meeting, inspectors of election will determine whether there
is a quorum present. A quorum is required to conduct any business at the Annual
Meeting. For a quorum to be present, the holders of a majority of the
outstanding shares of common stock must be present in person or by proxy. If you
mark your proxy card "abstain," or if your proxy vote is held in street name by
your broker and it is not voted on all proposals, your proxy vote will
nonetheless be counted as present for purposes of determining a quorum.
VOTING BY PROXY
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy card in the envelope provided.
Returning the proxy card will not affect your right to attend the Annual Meeting
and vote.
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If you fill out your proxy card properly and return it in time to vote,
your shares will be voted as you have directed. If you sign the proxy card but
do not make any specific indications of how you wish to vote, a proxy
representative will vote your shares:
. "FOR" the election of the two nominees for Class I director; and
. "FOR" the approval of an amendment to our 2000 Equity Incentive Plan
to increase the number of shares of common stock that may be issued
under the plan from 300,000 shares (plus any shares returned to the
company as a result of terminated options granted under our 1997 Plans
and plus an annual increase of one percent of the company's
outstanding shares) to a total of 3,300,000 shares (plus any shares
returned to the company as a result of terminated options granted
under our 1997 Plans and plus an annual increase of one percent of the
company's outstanding shares).
If any other matter is presented at the Annual Meeting, your shares will be
voted in accordance with the proxy representative's best judgement. Presently,
the company knows of no matters to be addressed at the Annual Meeting beyond
those described in this Proxy Statement.
REVOKING YOUR PROXY
If you give a proxy, you may revoke it at any time before it is exercised.
You may revoke your proxy in the following ways:
. You may send in another proxy with a later date.
. You may notify Therma-Wave's Secretary in writing before the Annual
Meeting.
. You may attend the meeting and vote in person.
VOTING IN PERSON
If you plan to attend the Annual Meeting and vote in person, you will be
given a ballot when you arrive. However, if your shares are held in the name of
your broker, bank, or other nominee, you must bring an account statement or
letter from the nominee indicating that you are the beneficial owner of the
shares on June 15, 2000, the record date for voting.
APPROVING THE PROPOSALS
At the Annual Meeting, the two nominees for director receiving the greatest
number of votes cast in person or by proxy will be elected. If you are present
and do not vote, or if you send in your proxy marked "withheld," your vote will
have no impact on the election of those directors as to whom you have withheld
votes.
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In order for the amendment to the 2000 Equity Incentive Plan to be
approved, the amendment must receive an affirmative vote from a majority of the
shares present and voting, cast either in person or by proxy. Abstentions will
be counted as if they were votes against the amendment.
THE EFFECT OF BROKER NON-VOTES
Under the rules of the Nasdaq National Market, if your broker holds your
shares in its name, your broker will be entitled to vote your shares on the
proposals even if it does not receive instructions from you. If your broker
does not vote your shares on either of the proposals, these "broker non-votes"
will not be counted as voting either for or against the proposals.
THE COST OF SOLICITING PROXIES
Therma-Wave will pay all of the costs of soliciting these proxies. In
addition to mailing proxy solicitation material, Therma-Wave's directors and
employees may also solicit proxies in person, by telephone or by other
electronic means of communication. Therma-Wave will not compensate these
directors and employees additionally for this solicitation, but Therma-Wave may
reimburse them for any out-of-pocket expenses that they incur in the process of
soliciting the proxies. Therma-Wave will arrange for brokers and other
custodians, nominees and fiduciaries to forward the solicitation materials to
their principals, and Therma-Wave will reimburse them for any out-of-pocket
expenses that they reasonably incur in the process of forwarding the materials.
PROPOSALS
The Therma-Wave board of directors is soliciting your vote with respect to
each of the following proposals. The company does not expect any other matters
to come before the meeting; however, if another matter is voted upon, your
shares will be voted in accordance with your proxy representatives' best
judgment. The board recommends that you vote "FOR" each of the following
proposals:
Proposal I: Electing Directors
The board has nominated G. Leonard Baker, Jr. and Ian K. Loring as Class I
directors to be elected at the Annual Meeting. Certain information regarding
these nominees and each of the other directors is set forth below under the
caption "The Board of Directors." If you elect them, Mr. Baker and Mr. Loring
will hold office until the annual meeting in 2003, or until their successors
have been elected.
The company knows of no reason why either of these nominees may be unable
to serve as a director. If a nominee is unable to serve, your proxy may vote
for another nominee proposed by the board. If any director resigns, dies or is
otherwise unable to serve out a complete term, or the board increases the number
of directors, the board may fill the vacancy through a majority vote of those
serving at that time.
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Proposal II: Amending the 2000 Equity Incentive Plan to increase the
number of shares of common stock that may be issued under
the plan from 300,000 shares (plus any shares returned to
the company as a result of terminated options granted under
our 1997 Plans and plus an annual increase of one percent of
the company's outstanding shares) to a total of 3,300,000
shares (plus any shares returned to the company as a result
of terminated options granted under our 1997 Plans and plus
an annual increase of one percent of the company's
outstanding shares).
The board has approved an amendment to the 2000 Equity Incentive Plan (the
"2000 Plan") to increase the number of shares of our common stock available to
employees. The increase would allow more employees to participate to a greater
degree in the 2000 Plan and receive potentially greater benefits from future
appreciation of the company's stock.
If this amendment is not approved, the company may not be able to recruit
and retain the best possible employees.
PROPOSAL NO. 1:
---------------
ELECTION OF G. LEONARD BAKER, JR.
AND IAN K. LORING
AS CLASS I DIRECTORS
THE BOARD OF DIRECTORS
The board oversees the business and other affairs of Therma-Wave and
monitors the performance of management. In accordance with corporate governance
principles, the board does not involve itself in the day-to-day operations of
Therma-Wave. Board members keep themselves informed through discussions with
the Chairman of the Board, other key executives and the company's principal
external advisors (such as legal counsel, independent public accountants,
investment bankers and other consultants) by reading reports and other materials
that are sent to them and by participating in board meetings.
As of June 15, 2000, five individuals were serving on the board. Board
members are divided into three classes, and the term of service for each class
expires in a different year, with each director serving a term of three years,
or until a successor is elected.
The board held four meetings during fiscal 2000. All incumbent board
members except for Adam Kirsch (who resigned from the board on June 14, 2000)
participated in 75 percent or more of the aggregate of (i) the total number of
board meetings held during their periods of service and (ii) the total number of
meetings held by board committees on which they served during their periods of
service.
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CLASS I DIRECTORS (NOMINATED FOR ELECTION)
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITIONS HELD
------------------------------ --- -------------------------------------------------------------
<S> <C> <C>
G. Leonard Baker, Jr. 57 With Therma-Wave:
Director . Director since 1997
With Others:
. Managing Director of the General Partner of Sutter
Hill Ventures since 1974
. Director of Praecis Pharmaceuticals, Inc. and several
privately-held companies.
Ian K. Loring 33 With Therma-Wave:
Director . Director since May 1999
With Others:
. Principal of Bain Capital, Inc. since 1997
. Associate of Bain Capital, Inc. from 1996 to 1997
. Vice President of Berkshire Partners from 1993 to 1996
</TABLE>
CLASS II DIRECTORS (TERM EXPIRING AT THE 2001 ANNUAL MEETING)
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE POSITIONS HELD
------------------------------ --- -------------------------------------------------------------
<S> <C> <C>
David Dominik 44 With Therma-Wave:
Director . Director since 1997
With Others:
. Special Limited Partner of Bain Capital, Inc. since 2000
. Co-founder and Managing Director of CCG, Inc. since
2000
. Managing Director of Bain Capital, Inc. from 1993 to 2000
. Managing Director of Information Partners, Inc. since
1993
. Director of ChipPAC, Inc., Dynamic Details, Incorporated,
Integrated Circuit Systems, Inc., OneSource Information
Services, Inc. and several privately held companies
Martin M. Schwartz 55 With Therma-Wave:
President, Chief Executive . Chief Executive Officer since July 1999
Officer and Director . President, Chief Operating Officer and Director since 1998
With Others:
. President, Chief Executive Officer and Director of
Southwall Technologies Inc. from 1994 to 1998
</TABLE>
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CLASS III DIRECTORS (TERM EXPIRING AT THE 2002 ANNUAL MEETING)
<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE POSITIONS HELD
------------------------------ --- --------------------------------------------
<S> <C> <C>
Allan Rosencwaig 59 With Therma-Wave:
Chairman of the Board and . Chairman of the Board since 1982
Chief Technology Officer . Chief Technology Officer since July 1999
. Chief Executive Officer from 1982 to 1999
. President from 1982 to 1998
. Co-founder in 1982
</TABLE>
The board of directors recommends a vote FOR G. Leonard Baker, Jr. and Ian
K. Loring as Class I directors as set forth in Proposal No. 1.
PROPOSAL NO. 2:
---------------
APPROVAL OF THE AMENDMENT TO THE
2000 EQUITY INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE
GENERAL DESCRIPTION OF THE 2000 EQUITY INCENTIVE PLAN
Our 2000 Plan was originally adopted by the board of directors and approved
by the stockholders on January 31, 2000 and February 2, 2000, respectively. The
2000 Plan provides for the grant of incentive stock options to our employees
(including officers and employee directors) and for the grant of nonstatutory
stock options and to our employees, directors and consultants. A total of (1)
300,000 shares of common stock, (2) any shares returned to the company's 1997
Plans (1997 Stock Purchase and Option Plan, 1997 Employee Stock Purchase and
Option Plan and 1997 Special Employee Stock Purchase and Option Plan) as a
result of termination of options and (3) annual increases to be added on the
date of each annual meeting of stockholders of Therma-Wave commencing in 2000
equal to one percent of the outstanding shares of common stock, or a lesser
amount as may be determined by the board of directors, have been reserved for
issuance pursuant to the 2000 Plan. As of June 15, 2000, options to purchase
225,086 shares of common stock have been awarded under the 2000 Plan.
In May 2000 the board of directors approved an amendment to the 2000 Plan
to increase the number of shares available under the 2000 Plan to be distributed
to our employees in the form of stock options from 300,000 (plus any shares
returned to the company as a result of terminated options granted under our 1997
Plans and plus an annual increase of one percent of the company's outstanding
shares) to 3,300,000 (plus any shares returned to the company as a result of
terminated options granted under our 1997 Plans and plus an annual increase of
one percent of the company's outstanding shares). Under the terms of the 2000
Plan, in order for the board of directors' amendment to be effective, it must be
approved by our stockholders. The full text of the proposed amendment is
attached to this proxy statement as Annex A. Stockholders are urged to read the
proposed amendment in its entirety.
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The following table shows the participation of the company's Named
Executives (as described on page 13) individually, all executive officers as a
group, all directors as a group, and all employees as a group (excluding
executive officers) in the 2000 Plan during the last fiscal year:
<TABLE>
<CAPTION>
2000 EQUITY INCENTIVE PLAN
-----------------------------
NAME AND POSITION DOLLAR VALUE NUMBER OF UNITS
---------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Allan Rosencwaig, Chairman of the Board and Chief Technology Officer $ - -
Martin M. Schwartz, President and Chief Executive Officer - -
Jon L. Opsal, Vice President, Research and Development - -
W. Lee Smith, Vice President, Marketing and Product Management - -
Raymond Osofsky, Vice President, Engineering - -
Executive Group (9 persons, including the 5 Named Executives) $400,000 20,000
Directors - -
Non-Executive Officer Employee Group $637,453 21,886
</TABLE>
What Is the 2000 Plan?
The 2000 Plan allows the board of directors to grant stock options to
employees and others in order to attract and retain the best possible personnel
for positions of substantial responsibility and to promote the success of
Therma-Wave's business.
Who Is Eligible to Participate in the 2000 Plan?
Employees, officers and directors of the company are eligible to receive
awards of stock options under the 2000 Plan. Also, any advisor engaged by the
company to provide services to the company may receive stock options under the
2000 Plan. The compensation committee of the board determines the people it
wants to give stock option grants to and the number of shares and options it
granted to each person.
What Is the Maximum Compensation that a Participant May Receive Under the 2000
Plan?
No one may be granted options to purchase more than 500,000 shares of common
stock in any fiscal year. However, any employee, officer or director may be
granted options to purchase up to an additional 500,000 shares of common stock
in connection with his or her initial service which would not be counted toward
the 500,000 shares of common stock that can be granted in a fiscal year. This
cap on the number of shares of common stock that can be granted as options will
be adjusted for any stock split reverse stock split, dividend or any other
similar increase or decrease in the issued number of shares of our common stock.
What Is the Price of the Options Granted Under the 2000 Plan?
The exercise price of the options granted under the 2000 Plan will be
determined by the compensation committee of the board of directors at the time
the options are granted. However, the
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exercise price of the options must be at least 100% of the reported closing
value of our common stock as reported on the Nasdaq National Market on the day
before the date the options are granted. Furthermore, if the individual
receiving the stock options under the 2000 Plan owns more than ten percent of
the voting power of the outstanding stock then the options granted to that
individual must be at least equal to 110% of the closing value of our common
stock on the day before the date the options are granted.
How Can Options Granted Under the 2000 Plan Be Exercised?
Options granted under the 2000 Plan are generally not transferable by the
optionee, and each option is exercisable during the lifetime of the optionee and
only by the optionee. Options granted under the 2000 Plan must generally be
exercised within three months after the end of a recipient's status as an
employee, director or consultant of Therma-Wave, or within 12 months after the
individual's termination by death or disability, but in no event later than the
expiration of the option term.
What Is the Term of Options Granted Under the 2000 Plan?
Generally, the term of all options granted under the 2000 Plan is limited to
ten years from the date they were granted. However, incentive stock options
granted to anyone who owns more than ten percent of the voting power of our
outstanding stock are limited to a term of five years from the date they were
granted.
What Happens to the Options Granted Under the 2000 Plan if Therma-Wave Merges
with Another Company?
The 2000 Plan provides that in the event of a merger of Therma-Wave with or
into another corporation, or a sale of substantially all of our assets, each
option will be assumed or an equivalent option will be substituted for the
Therma-Wave option by the successor corporation. If the outstanding options are
not assumed or substituted for by the successor corporation, the compensation
committee will provide for the optionee to have the right to exercise the option
for all the optioned stock, including shares as to which it would not yet
otherwise be exercisable. If the compensation committee makes an option
exercisable in full in the event of a merger or sale of assets, the compensation
committee will notify the optionee that the option will be fully exercisable for
a period of 15 days from the date of the notice, and the option will terminate
upon the expiration of the fifteen-day period.
How Is the 2000 Plan Amended?
The 2000 Plan may be amended, suspended or terminated by the board at any
time. Amendments may also require stockholder approval according to the law. No
amendment or termination of the 2000 Plan will effect the rights of any person
who has received options under the 2000 Plan unless agreed to by the person who
has received the options.
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What are the Federal Tax Consequences of Options Granted under the 2000 Plan?
Under current United States laws, in general, recipients of options to
purchase stock under the 2000 Plan are taxed upon their receipt of common stock
on the exercise of the options at ordinary income tax rates. Subject to Section
162(m) of the of the federal tax code, Therma-Wave will be entitled to an income
tax deduction with respect to the amounts taxable to these recipients.
Where Can I Find a Copy of the Entire 2000 Plan?
The summary we have included about the 2000 Plan is qualified in its
entirety by reference to the 2000 Plan, which is filed as an exhibit to our
Annual Report on Form 10-K for the year ended April 2, 2000 and is incorporated
into this proxy statement by reference.
What Vote Is Required to Approve the Amendment to the 2000 Plan?
Approval of this proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of common stock represented at and entitled
to vote at the meeting.
This Proposal No. 2, if approved, would increase the number of shares of
common stock available for option grants under the 2000 Plan. There are
currently 300,000 shares of our common stock authorized for issuance under the
2000 Plan plus any shares returned to the company as a result of terminated
options and plus an annual increase of one percent of the company's outstanding
shares. Of that number, 224,086 shares have already been granted, leaving only
74,914 shares available for future grant. This amendment would increase the
number of shares of common stock authorized for issuance under the 2000 Plan by
3,000,000 to a total of 3,300,000 plus any shares returned to the company as a
result of terminated options and plus an annual increase of one percent of the
company's outstanding shares.
We believe that the 2000 Plan should be amended to increase the number of
shares authorized for issuance in order to be able to continue to provide
valuable employees the opportunity to purchase our common stock. The continued
ability to allow employees to participate in the 2000 Plan would provide us with
a valuable tool to help attract new employees. In addition, an expanded stock
pool available under the 2000 Plan will enable us to provide additional
incentives to those employees who have been responsible for our development and
financial success and who will help us meet our goals in the future.
Your ratification of the board of directors' amendment to the 2000 Plan will
enable us to continue our strategy of using stock incentives to secure and
retain employees of outstanding ability both now and in the future. The
attraction and retention of these individuals is vital to the success of our
business.
The board of directors recommends a vote FOR approval of the amendment to
the 2000 Equity Incentive Plan to increase the number of shares authorized for
issuance as set forth in Proposal No. 2.
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OTHER MATTERS
We do not know of any matters to be presented at the Annual Meeting other
than those discussed in this proxy statement. If, however, other matters are
properly brought before the Annual Meeting, your proxy representatives will be
able to vote those matters in their discretion.
-------------------------------------------------------------------------------
OTHER INFORMATION
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PRINCIPAL STOCKHOLDERS
The table on the next page sets forth certain information regarding the
equity ownership of the company as of June 15, 2000 by:
. each person or entity who beneficially owns five percent or more of a
class of capital stock;
. each director and each of the Named Executives (as described on page
13); and
. all Named Executives (as described on page 13), directors and all
other executive officers of the company as a group.
Unless otherwise stated, each of the persons named in the table has sole or
shared voting and investment power with respect to the securities beneficially
owned.
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PRINCIPAL STOCKHOLDERS TABLE
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NUMBER OF PERCENTAGE OF
NAME AND ADDRESS SHARES OWNERSHIP
------------------------------------------- --------- --------------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS:
Bain Capital Funds (1).................... 6,952,500 29.4%
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Sutter Hill Ventures (2).................. 2,062,266 8.7%
755 Page Mill Road
Palo Alto, California 94304
DIRECTORS AND NAMED EXECUTIVES:
Allan Rosencwaig (3)...................... 2,590,966 10.9%
Martin M. Schwartz (4).................... 117,900 *
Jon L. Opsal (5).......................... 284,823 1.2%
W. Lee Smith (6).......................... 252,953 1.1%
Raymond Osofsky (7)....................... 43,850 *
G. Leonard Baker, Jr. (8)................. 2,062,266 8.7%
David Dominik (9)......................... 2,046,474 8.6%
Ian K. Loring (10)........................ 2,046,474 8.6%
All directors, Named Executives and
all other executive officers
as a group (12 persons)................... 7,889,707 33.3%
</TABLE>
* Less than one percent.
(1) Includes: 1,361,275 shares of common stock held by Bain Capital Fund V,
L.P. ("Fund V"); 3,544,751 shares of common stock held by Bain Capital Fund
V-B, L.P. ("Fund V-B"); 761,440 shares of common stock held by BCIP
Associates ("BCIP"); and 1,285,034 shares of common stock held by BCIP
Trust Associates L.P. ("BCIP Trust" and Fund V, Fund V-B and BCIP have been
defined herein as the "Bain Capital Funds").
(2) Also includes shares held by affiliates and related parties of Sutter Hill.
(3) The 2,590,966 shares of common stock in the table include: (i) 671,875
shares of common stock which are subject to vesting; and (ii) 671,875
shares of common stock that can be acquired upon the exercise of
outstanding options. The address of Dr. Rosencwaig is c/o Therma-Wave,
Inc., 1250 Reliance Way, Fremont, California 94539.
(4) The 117,900 shares of common stock in the table include 117,500 shares of
common stock that can be acquired upon the exercise of outstanding options.
(5) The 284,823 shares of common stock in the table include: (i) 127,656 shares
of common stock which are subject to vesting; and (ii) 127,656 shares of
common stock that can be acquired upon the exercise of outstanding options.
(6) The 252,953 shares of common stock in the table include: (i) 100,781 shares
of common stock which are subject to vesting; and (ii) 100,781 shares of
common stock that can be acquired upon the exercise of outstanding options.
(7) The 43,850 shares of common stock in the table include (i) 12,883 shares of
common stock which are subject to vesting, and (ii)30,885 shares of common
stock that can be acquired upon the exercise of outstanding options.
(8) Mr. Baker is a Managing Director of the General Partner of Sutter Hill. As
a result, the shares of common stock acquired by Sutter Hill may be deemed
to be beneficially owned by Mr. Baker, who disclaims beneficial ownership
of any of these shares in which he will not have a pecuniary interest. The
address of Mr. Baker is c/o Sutter Hill Ventures, 755 Page Mill Road, Palo
Alto, California 94304.
(9) Mr. Dominik (or affiliated entities) is a special limited partner of the
general partner of BCIP and BCIP Trust and, accordingly, may be deemed to
beneficially own shares owned by these funds. Mr. Dominik disclaims
beneficial ownership of any of these shares in which he does not have a
pecuniary interest. The address of Mr. Dominik is c/o Bain Capital, Inc.,
Two Copley Place, Boston, Massachusetts 02116.
(10) Mr. Loring is a general partner of BCIP and BCIP Trust and, accordingly,
may be deemed to beneficially own shares owned by these funds. Mr. Loring
disclaims beneficial ownership of any of these shares in which he does not
have a pecuniary interest. The address of Mr. Loring is c/o Bain Capital,
Inc., Two Copley Place, Boston, Massachusetts 02116.
11
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF OFFICER AGE POSITIONS HELD
----------------------------------- --- ---------------------------------------------------------------
<S> <C> <C>
Allan Rosencwaig 59 With Therma-Wave:
Chairman of the Board and . Chairman of the Board since 1982
Chief Technology Officer . Chief Technology Officer since July 1999
. Chief Executive Officer from 1982 to 1999
. President from1982 to 1998
. Co-founder in 1982
Martin M. Schwartz 55 With Therma-Wave:
President, Chief Executive . Chief Executive Officer since July 1999
Officer and Director . President, Chief Operating Officer and Director since 1998
With Others:
. President, Chief Executive Officer and Director of
Southwall Technologies Inc. from 1994 to 1998
L. Ray Christie 56 With Therma-Wave:
Vice President, Chief Financial . Vice President, Chief Financial Officer and Secretary since
Officer and Secretary 1998
With Others:
. Vice President, Chief Financial Officer and Secretary of
Southwall Technologies Inc. from 1996 to 1998
. Vice President of a subsidiary of California Microwave,
Inc. from 1993 to 1996
. Controller of Southwall Technologies Inc. from 1990 to 1993
David Mak 43 With Therma-Wave:
Vice President, Factory . Vice President, Factory Operations since 1996
Operations . Director of Manufacturing from 1994 to 1996
. Manufacturing Manager from 1993 to 1994
. Production Manager from 1992 to 1993
Jon L. Opsal 59 With Therma-Wave:
Vice President, Research and . Vice President, Research and Development since 1994
Development . Director of Research from 1993 to 1994
. Physics Group Manager from 1982 to 1993
Raymond Osofsky 49 With Therma-Wave:
Vice President, Engineering . Vice President, Engineering since 1998
. Director of Engineering from 1997 to 1998
. Director of Opti-Probe Engineering from 1994 to 1997
. Opti-Probe Program Manager from 1993 to 1994
W. Lee Smith 51 With Therma-Wave:
Vice President, Marketing and . Vice President, Marketing and Product Management since 1998
Product Management . Vice President, Strategic Marketing from 1993 to 1998
. Vice President, Product Development from 1988 to 1993
David Willenborg 50 With Therma-Wave:
Vice President, Software . Vice President, Software Development since 1998
Development . Vice President, Marketing from 1996 to 1998
. Vice President, Technology from 1986 to 1996
William E. Warren 34 With Therma-Wave:
Vice President, Corporate . Vice President, Corporate Technical Services and North
Technical Services and North American Field Operations since 2000
American Field Operations . Director, North American Field Operations from 1998 to 2000
. Various positions from 1982 to 1998
</TABLE>
12
<PAGE>
COMPENSATION
Executive officers of the company are elected by and serve at the
discretion of the board. The following table shows information concerning the
compensation paid or accrued for the fiscal year ended April 2, 2000 for the
Chief Executive Officer and each of the four other most highly compensated
executive officers of the company as of the end of fiscal 2000 (the "Named
Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
--------------------- ------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS ($) COMPENSATION ($) (1) OPTIONS (#) COMPENSATION ($)
-------------------------------- ------ -------- ----------- -------------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Allan Rosencwaig (2) 2000 $490,106 $656,755(3) -- $79,942(4)
Chairman of the Board and 1999 429,236 -- -- -- 63,245(4)
Chief Technology Officer 1998 417,508 318,623(3) -- 671,875 41,285(4)
Martin M. Schwartz (2) 2000 $336,728 $430,332(3) -- 150,000 1,263(5)
President and 1999 161,042 -- -- 200,000 --
Chief Executive Officer 1998
Jon L. Opsal 2000 $205,401 $ 96,000(3) -- -- 1,247(6)
Vice President, 1999 192,532 -- -- -- 1,262(6)
Research and Development 1998 186,482 68,247(3) -- 127,656 792(6)
W. Lee Smith 2000 $179,942 $ 90,000(3) -- 2,169(6)
Vice President, 1999 161,680 -- -- -- 2,914(6)
Marketing and Product 1998 143,422 72,701(7) -- 100,781 1,376(6)
Management
Raymond Osofsky 2000 $180,613 $ 83,000(3) -- 25,000 --
Vice President, Engineering 1999 148,316 -- -- 20,000 --
1998 146,127 35,200(3) -- 19,365 --
</TABLE>
________________
(1) None of the perquisites and other benefits paid to each named executive
officer exceeded the lesser of $50,000 or 10% of the total annual salary and
bonus received by each named executive officer. Does not include amounts
received by the named executive officers during fiscal 1998 from our prior
owner.
(2) Mr. Schwartz joined Therma-Wave in August 1998 as Therma-Wave's President
and Chief Operating Officer. Dr. Rosencwaig served as our Chief Executive
Officer from January 1982 through July 1999. In July 1999, Mr. Schwartz
began serving as Therma-Wave's Chief Executive Officer and Dr. Rosencwaig
began serving as Therma-Wave's Chief Technology Officer.
(3) Reflects bonuses earned by Messrs. Rosencwaig, Schwartz, Opsal, Smith and
Osofsky in fiscal 1998 and 2000 as a result of Therma-Wave achieving
performance targets in fiscal 1998 and 2000, respectively.
(4) Includes insurance premiums paid by us on behalf of Dr. Rosencwaig of
$9,669, $7,671 and $26,978 for fiscal 1998, 1999 and 2000, respectively.
The balance represents imputed interest on outstanding borrowings from
Therma-Wave.
(5) Includes insurance premiums paid by us on behalf of Mr. Schwartz for fiscal
2000.
(6) Reflects imputed interest on outstanding borrowings from Therma-Wave.
(7) Reflects commissions earned by Mr. Smith during fiscal 1998.
13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information regarding stock options granted by the
company to the Named Executives during the company's last fiscal year:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATE OF STOCK
SECURITIES % OF TOTAL EXERCISE MARKET PRICE APPRECIATION FOR
UNDERLYING OPTIONS OR PRICE OPTION TERM
OPTIONS GRANTED IN BASE PRICE ON DATE OF EXPIRATION -----------
NAME GRANTED (A) FISCAL YEAR ($/SHARE) GRANT (B) DATE (C) 5%($) 10%($)
-------------------- ----------- ----------- ----------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Allan Rosencwaig -- -- -- -- -- -- --
Martin M. Schwartz 150,000 10.8% $6.00 $6.00 7/20/09 $566,000 (d) $1,434,000 (d)
Jon L. Opsal -- -- -- -- -- -- --
W. Lee Smith -- -- -- -- -- -- --
Raymond Osofsky 25,000 1.8% $7.00 $7.00 5/5/09 $110,000 (e) $279,000 (e)
</TABLE>
________
(a) All options listed in the table vest in four or five equal installments
beginning on the first anniversary of their grant date.
(b) Market price on the date of grant was determined by our board of directors
based upon a good faith estimate.
(c) Options will expire on the earlier of 90 days after the date of termination
of employment or the date indicated above.
(d) Amounts reflect assumed rates of appreciation set forth in the executive
compensation disclosure rules of the SEC. Actual gains, if any, on stock
option exercises depend on future performance of our stock and overall
market conditions. At an annual rate of appreciation of 5% per year for the
option term, the price of the common stock would be approximately $9.77 per
share. At an annual rate of appreciation of 10% per year for the option
term, the price of the common stock would be approximately $15.56 per share.
(e) Amounts reflect assumed rates of appreciation set forth in the executive
compensation disclosure rules of the SEC. Actual gains, if any, on stock
option exercises depend on future performance of our stock and overall
market conditions. At an annual rate of appreciation of 5% per year for the
option term, the price of the common stock would be approximately $11.40 per
share. At an annual rate of appreciation of 10% per year for the option
term, the price of the common stock would be approximately $18.16 per share.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table shows information for the Named Executives concerning
stock option exercises during the company's last fiscal year and options
outstanding at the end of the last fiscal year:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END($)(A)
--------------------- ---------------------
SHARES ACQUIRED VALUE UNEXERCISABLE/ UNEXERCISABLE/
NAME ON EXERCISE REALIZED ($) EXERCISABLE EXERCISABLE
-------------------- --------------- ------------ --------------------- ---------------------
<S> <C> <C> <C> <C>
Allan Rosencwaig -- -- 0/671,875 0/22,843,750
Martin M. Schwartz -- -- 232,500/117,500 7,905,000/3,995,000
Jon L. Opsal -- -- 0/127,656 0/4,340,304
W. Lee Smith -- -- 0/100,781 0/3,426,554
Raymond Osofsky -- -- 33,748/30,885 1,147,432/1,050,090
</TABLE>
_______________________
(a) Based on the closing price of the common stock at March 31, 2000.
14
<PAGE>
EMPLOYMENT AGREEMENTS OF NAMED EXECUTIVES
Mr. Rosencwaig
In connection with our recapitalization in May 1997, through which Bain
Capital, Inc., Sutter Hill Ventures and our senior management team acquired a
majority of the stock of the company, we entered into an employment agreement
with Dr. Allan Rosencwaig. The employment agreement provides that Dr. Rosencwaig
will serve as the Chairman of the Board, President and Chief Executive Officer
for a period that will end on the fifth anniversary of the consummation of the
recapitalization. In August 1998, however, the board and Dr. Rosencwaig agreed
that Mr. Schwartz would be appointed to the position of President, and in July
1999, the board and Dr. Rosencwaig agreed that Mr. Schwartz would be appointed
to the position of Chief Executive Officer and Dr. Rosencwaig would be appointed
to the position of Chief Technology Officer. The employment period established
under the employment agreement will automatically terminate upon Dr.
Rosencwaig's resignation, death or disability or termination for good reason, or
upon termination by us, with or without cause. Under the employment agreement,
Dr. Rosencwaig will receive:
. an annual base salary of at least $400,000, subject to annual review
by the board and annual increases beginning in 1998;
. an annual bonus based upon our achievement of operating targets and the
attainment of individual goals by Dr. Rosencwaig, each to be determined
by the board on an annual basis; and
. customary fringe benefits.
In addition, Dr. Rosencwaig is also entitled to receive a deferred payment in
the event we achieve operating targets.
The Board of Directors has approved a six month leave of absence from the
company for Dr. Rosencwaig for personal and health-related reasons. During this
leave, Dr. Rosencwaig will continue to serve as Chairman of the Board and will
continue to receive his current base salary, a bonus of 50% of his base salary
and existing benefits. Dr. Rosencwaig is expected to begin his leave of absence
in August 2000.
If the employment period is terminated by us without cause, by Dr.
Rosencwaig for good reason or as a result of his disability, Dr. Rosencwaig will
be entitled to receive his then current base salary, a bonus equal to 50% of his
base salary and fringe benefits for 30 months following the termination. This
30-month period is referred to herein as the "severance period." If the
employment period is terminated by us for cause or if Dr. Rosencwaig resigns
without good reason, Dr. Rosencwaig will be entitled to receive his then current
base salary through the date of termination. Under the employment agreement, Dr.
Rosencwaig has agreed not to:
. compete with us during the period in which he is employed by us;
15
<PAGE>
. disclose any confidential information during the period in which he is
employed by us and for five years thereafter;
. solicit any customer, supplier, licensee, licensor, franchisee or
other business relation of ours while he is employed by us, during the
severance period and for a period of 30 months thereafter; and
. solicit or hire any of our management employees for a period of 30
months following the date of termination.
In addition, Dr. Rosencwaig has agreed to disclose to us any and all
inventions, as defined in his employment agreement, relating to our business
conceived or learned by him during his employment and acknowledge that these
inventions will be our property.
Messrs. Schwartz, Smith and Opsal
We also entered into substantially similar employment agreements with
Messrs. Smith and Opsal at the time of the recapitalization and with Mr.
Schwartz in August 1998. Each of these employment agreements provides that the
Named Executive will serve with Therma-Wave in his current position for a period
that will end on the fifth anniversary of the consummation of the
recapitalization or, in the case of Mr. Schwartz, August 2003; provided,
however, that each Named Executive's employment period will automatically
terminate upon the Named Executive's resignation, death or disability or
termination for good reason (as defined therein), or upon termination by Therma-
Wave, with or without cause (as defined therein). Under their respective
employment agreements, Messrs. Schwartz, Smith and Opsal will receive:
. an annual base salary of at least the following, subject to review by
the board and our president or chief executive officer:
NAME ANNUAL BASE SALARY
------------------------- ------------------
Martin M. Schwartz....... $265,000
W. Lee Smith............. $143,859
Jon L. Opsal............. $197,077
. an annual bonus based upon our achievement of operating targets and the
attainment of individual goals by each Named Executive, each to be
determined by the board and our president or chief executive officer on
an annual basis; and
. customary fringe benefits.
As a result of his being promoted to Chief Executive Officer of Therma-
Wave, Mr. Schwartz received an increase in his annual base salary to $350,000.
In addition, Messrs. Smith and Opsal are also entitled to receive a
deferred payment in the event we achieve operating results designated in their
employment agreements.
16
<PAGE>
If the executive's employment is terminated by us without cause, by the
Named Executive for good reason or as a result of his disability, the executive
will be entitled to receive his then current base salary, a bonus equal to 30%
to 37.5% of base salary and fringe benefits for 15 months or, in the case of
Mr. Schwartz, 15 months if he is terminated after August 3, 2000 and 12 months
if he is terminated before this time. These 15-month and 12-month periods are
each referred to herein as an "executive severance period." If the Named
Executive's employment is terminated by us for cause or if the Named Executive
resigns without good reason, the Named Executive will be entitled to receive his
then current base salary through the date of termination. Under these employment
agreements, each Named Executive has agreed not to:
. compete with us during the period in which he is employed by us;
. disclose any confidential information during the period in which he is
employed by us and for all times thereafter;
. solicit any customer, supplier, licensee, licensor, franchisee or
other business relation of ours while he is employed by us, during the
applicable executive severance period and for two years thereafter; and
. solicit or hire any of our employees for a period of five years
following the date of termination.
In addition, Messrs. Schwartz, Smith and Opsal have agreed to disclose to
us any and all inventions, as defined in their employment agreements, relating
to our business conceived or learned by him during his employment with us and
acknowledge that these inventions will be our property.
We have no employment agreement with Mr. Osofsky.
LOANS TO EXECUTIVE OFFICERS
In connection with our recapitalization, we made loans in an aggregate
principal amount of $297,931.55 to senior management in connection with their
purchase of shares of capital stock under the stock agreements. These loans are
secured by a pledge of the shares of common stock owned by these executive
officers and bear interest at a rate equal to the applicable federal rate at the
time of the recapitalization. The loans are payable upon a sale of Therma-Wave
or earlier under other similar circumstances.
In addition, we made loans in connection with the recapitalization to
executive officers to pay tax liabilities associated with the distribution they
received from Toray Industries, Inc. as part of that recapitalization. These
loans do not bear interest and mature upon the consummation of an "approved
sale" of Therma-Wave, which is defined in the stock agreements to include a sale
of all or substantially all of our assets determined on a consolidated basis or
a sale of all of our capital stock to an independent third party or group of
independent third parties, which has been approved by the holders of a majority
of the shares of common stock held by the Bain Group, as defined in the stock
agreements to include the Bain Capital Funds and Randolph Street Partners. Each
loan must be
17
<PAGE>
prepaid in the event that the executive officer receives any cash dividends or
distributions on the capital stock purchased under stock agreements in
connection with the recapitalization or any proceeds from the transfer of the
stock covered by these loans. The loans are secured by a pledge of the capital
stock purchased under stock agreements in connection with the recapitalization.
The following table sets forth the amount of each of these loans to the
following Named Executives:
<TABLE>
<CAPTION>
Amount of Loan
--------------------
Name Stock Loan Tax Loan
------------------ ---------- --------
<S> <C> <C>
Allan Rosencwaig.. $151,172 $874,000
Jon L. Opsal...... 28,723 20,583
W. Lee Smith...... 22,676 35,790
Raymond Osofsky... 2,899 -
</TABLE>
All of the foregoing loans were outstanding as of June 15, 2000, except the
loans to Mr. Opsal which were repaid in May 2000.
ADVISORY AGREEMENT
In connection with the recapitalization, we entered into an Advisory
Agreement with Bain Capital, pursuant to which Bain Capital agreed to provide:
. general executive and management services;
. identification, support, negotiation and analysis of acquisitions and
dispositions;
. support, negotiation and analysis of financial alternatives;
. finance, marketing and human resource functions; and
. other services agreed upon by Therma-Wave and Bain Capital.
In exchange for these services, Bain Capital received:
. an annual management fee of $1.0 million, plus reasonable out-of-pocket
expenses (payable quarterly); and
. a transaction fee in connection with the consummation of each additional
acquisition by us of an additional business in an amount equal to 1%
of the aggregate transaction value.
18
<PAGE>
In connection with the recapitalization, Bain Capital received a
transaction fee of $1,800,000. We paid fees to Bain Capital under the Advisory
Agreement of $750,000 in fiscal 1998, $1,000,000 in fiscal 1999 and $750,000 in
fiscal 2000. The Advisory Agreement had an initial term of ten years, subject
to automatic one-year extensions unless we or Bain Capital provided written
notice of termination. We terminated the Advisory Agreement for a one-time fee
of $3,500,000 following our initial public offering.
STOCK PLANS
1997 STOCK PURCHASE AND OPTION PLAN
In connection with Therma-Wave's recapitalization in 1997, our board of
directors adopted the Therma-Wave, Inc. 1997 Stock Purchase and Option Plan, or
the "1997 Stock Plan," which authorizes the granting of stock options and the
sale of common stock to employees, directors, consultants or advisors of Therma-
Wave or our subsidiaries. Under the 1997 Stock Plan, the board is authorized to
sell or otherwise issue any class or classes of common stock at any time prior
to the termination of the 1997 Stock Plan in the quantity, at the price, on the
terms and subject to the conditions as established by the board up to an
aggregate of 5,311,212 shares of common stock, including shares of common stock
with respect to which options may be granted, subject to adjustment upon the
occurrence of specified events to prevent any dilution or expansion of the
rights of participants that might otherwise result from the occurrence of these
events. As of June 15, 2000, an aggregate of 1,118,092 shares of common stock
were outstanding, and options to purchase an aggregate of 1,354,831 shares of
common stock were outstanding, with exercise prices ranging from $4.00 to $15.89
per share, under the 1997 Stock Plan. No future options to purchase stock will
be granted under the 1997 Stock Plan.
1997 EMPLOYEE STOCK PURCHASE AND OPTION PLAN
On October 31, 1997, the board of directors approved the 1997 Employee
Stock Purchase and Option Plan, or the "1997 Employee Stock Plan," which
authorizes the granting of stock options and the sale of common stock to current
employees, directors, consultants or advisors of Therma-Wave or our
subsidiaries. The 1997 Employee Stock Plan authorizes the granting of stock
options up to an aggregate of 2,067,538 shares of common stock, subject to
adjustment upon the occurrence of specified events to prevent any dilution or
expansion of the rights of participants that might otherwise result from the
occurrence of these events.
Options to purchase an aggregate of 1,583,333 shares of common stock were
outstanding as of June 15, 2000 under the 1997 Employee Stock Plan. These
options will vest and become exercisable in four equal installments beginning on
the first anniversary of the grant date and continuing thereafter on an annual
basis. Unvested options will terminate in the event that the optionee ceases to
be employed with Therma-Wave and vested but unexercised options will terminate
immediately if the optionee is terminated for cause or after 30 days, or another
period as may be specified in any particular option agreement, if the optionee
ceases to be employed by Therma-Wave for any other reason. As of the date of
this prospectus, most of our option agreements provide that options will
immediately terminate after 90 days if the optionee ceases to be employed by
Therma-Wave
19
<PAGE>
for any reason other than cause. All of the options granted have an exercise
price equal to the fair market value of the common stock on the date of grant.
No future options to purchase stock will be granted under the 1997 Employee
Stock Plan.
1997 SPECIAL EMPLOYEE STOCK PURCHASE AND OPTION PLAN
On October 31, 1997, our board of directors approved the 1997 Special
Employee Stock Purchase and Option Plan, or the "1997 Special Employee Stock
Plan," which authorizes the granting of stock options and the sale of common
stock to employees, directors, consultants or advisors of Therma-Wave or our
subsidiaries. The 1997 Special Employee Stock Plan authorizes the granting of
stock options up to an aggregate of 106,250 shares of common stock, subject to
adjustment upon the occurrence of specified events to prevent any dilution or
expansion of the rights of participants that might otherwise result from the
occurrence of these events. Options to purchase an aggregate of 42,875 shares
of common stock were outstanding as of June 15, 2000 under the 1997 Special
Employee Stock Plan. These options will vest and become exercisable in four
equal installments beginning on the first anniversary of the grant date and
continuing thereafter on an annual basis. Unvested options will terminate in the
event that the optionee ceases to be employed by Therma-Wave and vested but
unexercised options will terminate immediately if the optionee is terminated for
cause or after 30 days, or another period as may be specified in any particular
option agreement, if the optionee ceases to be employed by Therma-Wave for any
other reason. As of the date of this prospectus, most of our option agreements
provide that options will immediately terminate after 90 days if the optionee
ceases to be employed by Therma-Wave for any reason other than cause. All of
the options granted have an exercise price equal to the fair market value of the
common stock on the date of grant. No future options to purchase stock will be
granted under the 1997 Special Employee Stock Plan. The 1997 Special Employee
Stock Plan and the 1997 Employee Stock Plan are referred to herein as the "1997
Plans."
EMPLOYEE STOCK PURCHASE PLAN
The 2000 Employee Stock Purchase Plan, or the "ESPP," was adopted by our
board of directors and our stockholders on January 31, 2000 and February 2,
2000, respectively. The ESPP was established to give employees desiring to do
so a convenient means of purchasing shares of common stock through payroll
deductions or lump sum cash payments. The ESPP provides an incentive to
participate by permitting purchases at a discounted price. We believe that
ownership of stock by employees will foster greater employee interest in the
success, growth and development of Therma-Wave. A total of 500,000 shares of
our common stock was reserved for issuance under the ESPP, which is intended to
qualify under Section 423 of the Internal Revenue Code. The ESPP is implemented
through a series of overlapping offering periods of 24 months in duration, with
new offering periods (other than the first offering period) commencing on April
1, July 1, October 1 and January 1 of each year. Each offering period will
consist of eight consecutive purchase periods of three months duration. The
initial offering period, however, is expected to commence on the date of this
offering and end on March 31, 2002, and the initial purchase period ended on
March 31, 2000. The ESPP is administered by our board of directors or at the
option of the board may be administered by a committee appointed by the board.
Our employees, including officers and employee directors, and the employees of
any majority-owned subsidiary designated by our board of directors, are eligible
to participate in the ESPP if they are employed by us or any majority-owned
subsidiary for
20
<PAGE>
at least 20 hours per week and more than five months per year. The ESPP permits
eligible employees to purchase shares of our common stock through payroll
deductions or lump sum cash payments, which may not exceed 15% of an employee's
compensation, at a price equal to the lower of 85% of the fair market value of
our common stock at the beginning of each offering period or at the end of the
applicable purchase period. In circumstances described in the ESPP, the purchase
price may be adjusted during an offering period to avoid our having to incur
adverse accounting charges. Employees may end their participation in the
offering at any time during the offering period, and participation in the ESPP
ends automatically upon termination of employment with us. Unless terminated
earlier by our board of directors, the ESPP will have a term of ten years.
401(k) PLAN
The company has a retirement plan under Section 401(k) of the Internal
Revenue Code covering substantially all employees. Discretionary company
contributions accrued, which are based on achieving operating profit goals, were
$566,000, $0 and $400,000 in fiscal 1998, 1999 and 2000, respectively.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, who have been our independent public
accountants for the past two fiscal years, have again been selected by the audit
committee to be Therma-Wave's independent public accountants for fiscal year
2001. Members of PricewaterhouseCoopers LLP will be present at the Annual
Meeting to make a statement if they so desire and to answer any appropriate
questions.
BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The board has three standing committees: the compensation committee, the
audit committee and the nominating committee.
The duties of the compensation committee include providing a general review
of our compensation and benefit plans to ensure that they meet corporate
objectives. In addition, the compensation committee reviews the chief executive
officer's recommendations on (1) compensation of all of our officers and (2)
adopting and changing major compensation policies and practices, and reports its
recommendations to the whole board of directors for approval and authorization.
The compensation committee also administers our stock plans. The board may
establish other committees to assist in the discharge of the responsibilities of
the compensation committee. Present members of the compensation committee are
Messrs. Baker and Dominik (neither of whom is an employee of the company). The
compensation committee did not meet during fiscal 2000.
The audit committee makes recommendations to the board of directors
regarding the independent auditors to be nominated for election by the
stockholders and reviews the independence of the auditors, approves the scope of
the annual audit activities of the independent auditors, approves the audit fee
payable to the independent auditors and reviews the audit results with the
independent auditors. The audit committee is currently comprised of Messrs.
Dominik and Baker. Mr. Baker is
21
<PAGE>
considered independent from the company. Mr. Dominik has recently left his
position as Managing Director of Bain Capital, Inc. and the board believes he is
able to exercise independent judgment in the exercise of his duties on the audit
committee. PricewaterhouseCoopers LLP presently serves as our independent
auditors. The audit committee had three meetings during fiscal 2000. The audit
committee Charter is included as Annex B to this proxy statement.
Therma-Wave's nominating committee recommends individuals to serve on the
board of directors when a vacancy occurs. The nominating committee met [twice]
during fiscal 2000. Messrs. Rosencwaig and Baker serve on the nominating
committee. While the nominating committee is responsible for recommending
candidates for election as directors at the Annual Meeting, stockholders also
have an opportunity to nominates candidates for election to the board. In
general, any stockholder wishing to do so must send notice of the intent to make
a nomination to the secretary of Therma-Wave at least 60 but not more than 90
days prior to the first anniversary of the date of the previous year's Annual
Meeting. The notice must contain biographical information about the nominee as
required by the securities laws and regulations of the United States and also
information identifying the stockholder making the nomination and any beneficial
owners on whose behalf the nomination is made. Further details about how a
stockholder may nominate a person to serve on the board of directors can be
found in the company's bylaws.
DIRECTOR COMPENSATION
Directors serving on the board of directors are currently not entitled to
receive any compensation for serving on the board. Directors are reimbursed for
their out-of-pocket expenses incurred in connection with their services. In
the future, directors who are not employees of Therma-Wave or who are not
otherwise affiliated with us or our principal stockholders may receive
compensation that is commensurate with arrangements offered to directors of
companies that are similar to Therma-Wave. Compensation arrangements for
independent directors established by our board could be in the form of cash
payments and/or option grants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation arrangements for each of our executive officers was
established pursuant to the terms of the respective employment agreements
between us and each executive officer. The terms of the employment agreements
were established pursuant to arms-length negotiations between representatives of
Bain Capital, Inc. and each executive officer, except the agreement relating to
Mr. Schwartz, which was negotiated with Therma-Wave and approved by the board.
In the future, any changes in the compensation arrangements of our executive
officers will be determined by the compensation committee.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Therma-Wave has agreed to provide indemnification for our board members and
executive officers beyond the indemnification provided for in the Delaware
General Corporation Law as provided for in Therma-Wave's Amended and Restated
Certificate of Incorporation and bylaws.
22
<PAGE>
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS IN
1999
Section 16(a) of the Securities Exchange Act of 1934 requires Therma-Wave's
directors, executive officers and greater-than-ten-percent stockholders to file
reports with the SEC regarding changes in beneficial ownership of Therma-Wave
common stock and to provide Therma-Wave with copies of the reports. Based on
the company's review of these reports and of certifications furnished to us, the
company believes that all of these reporting persons complied with the filing
requirements for 2000, except that the Form 4s for Messrs. Rosencwaig, Schwartz,
Christie and Smith pertaining to purchases of 500 shares of stock by each in the
month of February which were filed one business day late.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Under the rules of the SEC, this compensation committee report is not
deemed to be incorporated by reference by any general statement incorporating
this proxy statement by reference into any filings with the SEC.
The following report has been submitted by the compensation committee of
the board:
The compensation committee was established in January 2000 in connection
with Therma-Wave's initial public offering. The compensation committee is
currently comprised of Messrs. Dominik and Baker.
The compensation committee is responsible for:
. reviewing the recommendations of the company's chief executive
officer on compensation levels of all other officers of the
company;
. adopting and changing compensation policies and practices of the
company and reporting its recommendations to the full board; and
. administering the company's stock plans.
In reviewing the company's compensation programs, the compensation
committee intends to adhere to a compensation philosophy that focuses management
on achieving financial and operating objectives which provide long-term
stockholder value. The company's executive compensation programs are designed
to align the interest of senior management with those of the company's
stockholders. There are three key components to executive compensation:
. base salary,
. annual bonus and
. long-term equity incentives.
23
<PAGE>
The Committee has set forth below a discussion as to how the executive
officers' compensation was determined. In making its recommendations to the
full board concerning adjustments to compensation levels, the compensation
committee intends to consider the financial condition and operational
performance of the company during the prior year.
Base Salary. In fiscal 2000, the base salary for each executive officer of
the Company was determined based on the expected level of responsibility of the
executive officer and competitive market conditions in accordance with the
officer's employment agreement.
Annual Bonus. Each executive officer of the company is eligible to earn a
bonus based upon individual performance during the fiscal year and the company's
performance generally. The compensation committee considers the achievement of
the net income goals to gauge the company's performance generally and the
attainment of individual goals and objectives related to the officer's area of
oversight to determine individual achievement.
Long-term Equity Incentives. Therma-Wave has a number of long-term equity
incentive plans under which officers and employees may hold grants of stock or
options to purchase stock of the company. Officers currently hold grants of
stock and options to purchase stock under the 1997 Stock Purchase and Option
Plan, the 1997 Employee Stock Purchase and Option Plan and the 2000 Equity
Incentive Plan and may be granted options in the future to purchase stock under
the 2000 Equity Incentive Plan. No additional stock purchase rights or options
to purchase stock will be granted to officers under the 1997 Stock Purchase and
Option Plan or the 1997 Employee Stock Purchase and Option Plan. The
compensation committee has broad authority to award equity-based compensation
arrangements to any eligible employee, consultant or advisor of the Company.
Since the ultimate value of stock options bears a direct relationship to the
market price of the common stock, the compensation committee believes that
awards under the 2000 Equity Incentive Plan are an effective incentive for the
company's management to create value for the company's stockholders.
The foregoing report has been approved by all members of the compensation
committee.
G. Leonard Baker, Jr.
David Dominik
AUDIT COMMITTEE REPORT
The following report has been submitted by the audit committee of the
board:
The audit committee was established by the board in January 2000 in
connection with the Company's initial public offering. The audit committee is
currently comprised of Messrs. Dominik and Baker.
The primary function of the audit committee is to assist the board in
fulfilling its oversight responsibilities by reviewing
. the financial information that will be provided to the
stockholders and others;
24
<PAGE>
. the systems of internal controls that management and the board
have established; and
. all audit processes.
The general responsibilities of the audit committee include
. providing open avenues of communication between the independent
accountants and the board,
. reporting significant audit committee actions to the full board
and making appropriate recommendations to the board and
. conducting or authorizing investigations into matters within the
audit committee's scope of responsibility including retaining
independent counsel, accountants or others as necessary to assist
in an investigation. The audit committee has adopted a charter that
outlines these responsibilities and is set forth as Annex B to this
proxy statement.
During fiscal year 2000, the audit committee has received disclosure from
PricewaterhouseCoopers LLP, our independent accountants regarding its
relationships with the company. The audit committee has discussed the audited
financial statements for fiscal year 2000 with the independent accountants,
disclosed these audited financial statements to the company's management and
discussed these financial statements with management.
It is the recommendation of the audit committee that the company's audited
financial statements for the fiscal year ended April 2, 2000 be included in the
company's annual report on Form 10-K.
The foregoing has been approved by all members of the audit committee.
David Dominik
G. Leonard Baker, Jr.
25
<PAGE>
PERFORMANCE GRAPH
The following graph shows the company's cumulative total stockholder return
since the common stock became publicly traded on February 4, 2000. The graph
assumes that the value of the investment in the company's common stock at its
initial public offering price of $20.00 per share and each index was $100.00 on
February 4, 2000.
COMPARISON OF THE CUMULATIVE TOTAL RETURN AMONG NEUTRACEUTICAL INTERNATIONAL
CORPORATION, THE CHASE H&Q SEMICONDUCTOR INDEX AND
THE NASDAQ NATIONAL MARKET (U.S.) INDEX
[LINE CHART GRAPHIC APPEARS HERE]
<TABLE>
<CAPTION>
Chase H&Q NASDAQ National
Therma-Wave, Inc. Semiconductor Index Market (U.S.) Index
------------------ ------------------- -------------------
<S> <C> <C> <C>
Feb. 4, 2000 $100 $ 100 $ 100
Apr. 2, 2000 $170 $125.24 $107.04
</TABLE>
SUBMISSION OF STOCKHOLDERS' PROPOSALS
AND ADDITIONAL INFORMATION
Proposals of stockholders intended to be eligible for inclusion in the
company's proxy statement and proxy card relating to the 2001 annual meeting of
stockholders of the company must be received by the company on or before the
close of business March 3, 2001. Any proposals should be submitted by certified
mail, return receipt requested.
26
<PAGE>
Therma-Wave's bylaws provide that a stockholder wishing to present a
nomination for election of a director or to bring any other matter before an
annual meeting of stockholders must give written notice to the Company's
Secretary not less than 60 days nor more than 90 days prior to the meeting and
that the notice must meet other requirements as specified in the bylaws. Any
stockholder interested in making such a nomination or proposal should request a
copy of the provisions of Therma-Wave's bylaws from the Secretary of the
Company.
WHERE CAN I GET MORE INFORMATION?
Therma-Wave files annual, quarterly and special reports, proxy statements
and other information with the SEC. Therma-Wave's SEC filings are available to
the public over the Internet at the SEC's web site at http://www.sec.gov. You
may also read and copy any document Therma-Wave files with the SEC at its public
reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain
copies of any document Therma-Wave files at prescribed rates by writing to the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference facilities.
Enclosed with this Proxy is a copy of Therma-Wave's Annual Report on Form
10-K for the fiscal year ended April 2, 2000, along with the accompanying
financial statements and schedules. If you would like copies of any other
recently filed documents, please direct your request to Investor Relations,
Therma-Wave, Inc. 1250 Reliance Way, Fremont, California 94539, (510) 668-2200.
27
<PAGE>
ANNEX A
AMENDMENT TO THE 2000 EQUITY INCENTIVE PLAN
It is proposed that Section 3 of the 2000 Equity Incentive Plan shall be
restated in its entirety as follows:
3. Shares Subject to the Plan. Subject to the provisions of Section
12 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is (a) 3,300,000 Shares, plus (b) any
Shares returned to the Company's 1997 Stock Purchase and Option Plan, 1997
Employee Stock Purchase and Option Plan and 1997 Special Employee Stock
Purchase and Option Plan (collectively, the "Existing Plans") as a result
of termination of options under the Existing Plans, plus (c) an annual
increase to be added on the date of each annual meeting of the stockholders
of the Company, beginning with the 2000 annual meeting of the stockholders,
equal to one percent (1.0%) of the outstanding Shares on such date or such
lesser amount determined by the Board. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option shall not be returned to
the Plan and shall not become available for future distribution under the
Plan.
Capitalized terms not defined herein have the meaning set forth in the 2000
Equity Incentive Plan.
A-1
<PAGE>
ANNEX B
THERMA-WAVE, INC.
AUDIT COMMITTEE CHARTER
The audit committee will be appointed by the board of directors. Only
independent directors will serve on the audit committee. An independent
director is free of any relationship that could influence his or her judgment as
a committee member. Independence of the director will be determined by applying
the rules established for companies listed on the Nasdaq National Market and as
approved by the Securities Exchange Commission. When there is some doubt about
independence, as, for example, when a member of the committee has a short-term
consulting contract with a major customer or supplier, the director should
excuse himself from any decisions that might be influenced by that relationship.
The primary function of the audit committee is to assist the board in fulfilling
its oversight responsibilities by reviewing the financial information that will
be provided to the stockholders and others, the systems of internal controls
management and the board of directors have established and all audit processes.
GENERAL RESPONSIBILITIES
. The audit committee provides open avenues of communication between the
independent accountants and the board of directors.
. The audit committee must report significant committee actions to the
full board of directors and may make appropriate recommendations.
. The audit committee has the power to conduct or authorize
investigations into matters within the committee's scope of
responsibilities. The committee is authorized to retain independent
counsel, accountants or others it needs to assist in an investigation.
. The committee will meet a least four times each year, more frequently
if circumstances make that preferable. The audit committee chairman
has the power to call a committee meeting whenever he or she thinks
there is a need. An audit committee member should not vote on any
matter in which he or she is not independent. The committee may ask
members of management or others to attend the meeting and is
authorized to receive all pertinent information from management.
. The committee will do whatever else is the law, the company's charter
or bylaws or the board of directors require.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS
. The audit committee will select the independent accountants for
company audits. The committee's selection is subject to approval by
the full board of directors. The audit
B-1
<PAGE>
committee also will review and set any fees paid to the independent
accountants and review and approve dismissal of the independent
accountants.
. The audit committee will confirm and assure the independence of the
independent accountants, including a review of management consulting
services provided by the independent accountants and the fees paid for
them. Each year the audit committee will review a formal written
statement from the independent accountants delineating all
relationships between the independent accountants and the company.
. The audit committee will consider, in consultation with the
independent accountants, the audit scope and procedural plans made by
the independent accountants.
RESPONSIBILITIES FOR REVIEWING ANNUAL AUDITS AND QUARTERLY AND ANNUAL FINANCIAL
STATEMENTS
. The audit committee will ascertain that the independent accountants
views the board of directors as its client, that it will be available
to the full board of directors at least annually and that it will
provide the committee with a timely analysis of significant financial
reporting issues.
. The audit committee will ask management and the independent
accountants about significant risks and exposures and will assess
management's steps to minimize them.
. The audit committee will review the following with the independent
accountants:
. The adequacy of the company's internal controls, including
computerized information system controls and security.
. Any significant findings and recommendations made by the independent
accountants, together with management's responses to them.
. Shortly after the annual examination is completed, the audit committee
will review the following with management and the independent
accountants:
. The company's annual financial statements and related footnotes.
. The independent accountant's audit of and report on the financial
statements.
. The auditor's qualitative judgments about the appropriateness, not
just the acceptability, of accounting principles and financial
disclosures and how aggressive (or conservative) the accounting
principles and underlying estimates are.
. Any serious difficulties or disputes with management encountered
during the course of the audit.
B-2
<PAGE>
. Anything else about the audit procedures or findings that GAAS
requires the auditors to discuss with the committee.
. The Audit committee will consider and review with management:
. Any significant findings during the year and management's responses
to them.
. Any difficulties the auditor encountered while conducting audits,
including any restrictions on the scope of their work or access to
required information.
. Any changes to the planned scope of the audit plan that the
committee thinks advisable.
. The audit committee will review annual filings with the SEC and other
published documents containing the company's financial statements and
will consider whether the information in the filings is consistent
with the information in the financial statements.
. The audit committee will review the interim financial reports with
management and the independent accountants before those interim
reports are released to the public or filed with the SEC or other
regulators.
. The audit committee will prepare a letter for inclusion in the annual
report that describes the committee's composition and responsibilities
and how the responsibilities were fulfilled.
PERIODIC RESPONSIBILITIES
. Review and update the committee's charter annually.
. Review policies and procedures covering executive officers' expense
accounts and perquisites, including their use of corporate assets, and
consider the results of any review of those areas by the independent
accountants.
. Review, with the independent accountants, the results of their
examination of compliance with the company's code of conduct.
. Review legal and regulatory matters that may have a material effect on
the organization's financial statements, compliance policies and
programs and reports from regulators.
. Meet with the independent accountants and management in separate
executive sessions to discuss any matters the committee or these
groups believe should be discussed privately with the audit committee.
B-3
<PAGE>
THERMA-WAVE, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 31, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Allan Rosencwaig, Martin M.
Schwartz, and L. Ray Christie, and each or any of them, proxies of the
undersigned ("Proxy Representatives"), with full power of substitution, to vote
all of the shares of Therma-Wave Inc., a Delaware corporation (the "Company")
which the undersigned may be entitled to vote at the Annual Meeting to be held
at the Fremont Marriott, 46100 Landing Parkway, Fremont, California 94538 on
Monday, July 31, 2000 at 11:00 a.m. (Pacific time) or at any adjournment or
postponement thereof, as shown on the voting side of this card.
SEE REVERSE SIDE
<PAGE>
[X] Please mark your votes as in this example
This proxy will be voted as specified. If a choice is not specified, this proxy
will be voted FOR the nominees for Class I directors and FOR Proposal 2.
1. Election of all nominees for Class I directors listed hereon.
Nominees: G. Leonard Baker, Jr.
Ian K. Loring
[ ] FOR [ ] WITHHELD
For all nominees listed hereon, except vote withheld from the following
nominee(s):
_______________________________________________________________________
2. Approval of the amendment to the 2000 Equity Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxy Representatives are authorized to vote upon
such other business as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
This Proxy should be dated, signed by the stockholder exactly as the
stockholder's name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate.
Please sign exactly as name(s) appear hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
_____________________________
_____________________________
Signature(s) Date
