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Exhibit 99.2
QUESTIONS AND ANSWERS
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APPLIED AGREEMENT RELATED
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1. CAN YOU PLEASE DESCRIBE THE AGREEMENT IN MORE DETAIL INCLUDING THERMA-WAVE'S
AND APPLIED MATERIALS' OBLIGATIONS?
THERE ARE ACTUALLY THREE AGREEMENTS; A DEVELOPMENT AGREEMENT, A SUPPLY AGREEMENT
AND A TECHNOLOGY ESCROW AGREEMENT. UNDER THE DEVELOPMENT AGREEMENT, THERMA-WAVE
WILL BE A PREFERRED PARTNER WITH APPLIED MATERIALS FOR METROLOGY TOOLS TO BE
INTEGRATED WITH APPLIED MATERIALS' PROCESS SYSTEMS AND MODULES. THIS MEANS THAT
APPLIED MATERIALS WILL OFFER THERMA-WAVE PRIORITY IN OPPORTUNITIES TO DEVELOP
NEW INTEGRATED METROLOGY TOOLS. THERMA-WAVE WILL SUBMIT DEVELOPMENT PLANS THAT
BOTH COMPANIES MUST AGREE UPON. ASSUMING AGREEMENT, THERMA-WAVE WILL PROCEED TO
WORK WITH APPLIED MATERIALS ON THE DEVELOPMENT OF SUCH NEW INTEGRATED METROLOGY
TOOLS.
AFTER A DEVELOPED TOOL IS ACCEPTED BY APPLIED MATERIALS, PURCHASES BY APPLIED
MATERIALS WILL BE COVERED BY THE SUPPLY AGREEMENT. UNDER THE AGREEMENTS, THERMA-
WAVE WILL BE THE EXCLUSIVE SUPPLIER OF THAT TOOL TO APPLIED MATERIALS AS LONG AS
WE CONTINUE TO MEET APPLIED MATERIALS' QUALITY, DELIVERY, PERFORMANCE, PRICING
AND SUPPORT REQUIREMENTS.
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UNDER THE TECHNOLOGY ESCROW AGREEMENT, THERMA-WAVE WILL PLACE COPIES OF ALL
DEVELOPMENT RELATED DOCUMENTS INTO ESCROW SO THAT UPON THE OCCURRENCE OF
SPECIFIED DEFAULT EVENTS, APPLIED MATERIALS WILL HAVE ACCESS TO THESE MATERIALS
IN ORDER TO MAINTAIN THEIR SOURCE OF SUPPLY. THE AGREEMENTS ALSO CONTAIN OTHER
CUSTOMARY PROVISIONS SUCH AS CHANGE OF CONTROL, INDEMNIFICATION, REPRESENTATIONS
AND WARRANTIES AND ASSIGNABILITY.
2. ARE THERE ANY PURCHASE REQUIREMENTS IN THE AGREEMENTS?
YES. THERE ARE MINIMUM PURCHASE COMMITMENTS FOR THE FIRST 30 MONTHS. I CANNOT
TELL YOU THE SPECIFIC QUANTITIES, BUT WE EXPECT SIGNIFICANT INCREMENTAL BUSINESS
FOR THERMA-WAVE. AFTER THE FIRST 30 MONTHS, THE AMOUNT OF INCREMENTAL BUSINESS
WILL BE BASED ON SALES OF THE APPLIED MATERIALS' PROCESS SYSTEMS AND MODULES
INTO WHICH OUR TOOLS ARE INTEGRATED.
3. CAN THERMA-WAVE DEVELOP AND SELL INTEGRATED METROLOGY TOOLS TO OTHER
COMPANIES?
THE AGREEMENTS ARE EXCLUSIVE FOR INTEGRATED METROLOGY TOOLS IN THE SEMICONDUCTOR
FIELD. DURING THE TERM OF THE AGREEMENTS, THERMA-WAVE WILL DEVELOP AND SUPPLY
THESE PRODUCTS EXCLUSIVELY TO APPLIED
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MATERIALS. IN RETURN, APPLIED MATERIALS WILL GIVE THERMA-WAVE PREFERRED PARTNER
STATUS ON THE DEVELOPMENT OF INTEGRATED METROLOGY TOOLS FOR APPLIED MATERIALS
PROCESS SYSTEMS AND MODULES AS WELL AS MINIMUM PURCHASE COMMITMENTS.
4. WHAT ARE THE TERMS OF THE AGREEMENTS?
THE DEVELOPMENT AGREEMENT GENERALLY CONTINUES UNTIL EITHER APPLIED MATERIALS OR
THERMA-WAVE GIVES NOTICE OF TERMINATION. THE EXCLUSIVITY PROVISIONS OF THE
DEVELOPMENT AGREEMENT HAVE AN INITIAL PERIOD OF 30 MONTHS AND MAY BE EXTENDED AS
LONG AS EACH PARTY IS SATISFYING ITS RESPECTIVE OBLIGATIONS UNDER THE AGREEMENT.
THE INITIAL TERM OF THE SUPPLY AGREEMENT IS 36 MONTHS AND MAY BE EXTENDED
THEREAFTER BY MUTUAL CONSENT.
5. APPLIED MATERIALS IS ALREADY BUYING INTEGRATED METROLOGY TOOLS FROM OTHER
SUPPLIERS. WILL APPLIED MATERIALS BE ABLE TO CONTINUE TO BUY FROM THEM?
APPLIED MATERIALS CAN CONTINUE TO PURCHASE INTEGRATED METROLOGY TOOLS FROM OTHER
VENDORS WHERE THEY HAVE EXISTING AGREEMENTS. SUBJECT TO APPLIED MATERIALS
EXISTING AGREEMENTS, THERMA-WAVE WILL BE GIVEN THE OPPORTUNITY TO DEVELOP
INTEGRATED METROLOGY TOOLS FOR THESE COMMITTED APPLICATIONS AND IF OUR TOOL IS
QUALIFIED, IT WILL BE
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OFFERED AS AN OPTION TO APPLIED MATERIALS' CUSTOMERS IN ADDITION TO THE TOOLS OF
OTHER VENDORS.
6. WHAT INTEGRATED METROLOGY PRODUCTS ARE YOU WORKING ON WITH APPLIED
MATERIALS?
I CAN'T TELL YOU SPECIFICALLY WHAT WE ARE WORKING ON BECAUSE THIS IS PROPRIETARY
INFORMATION. HOWEVER, CURRENTLY, THERE ARE MULTIPLE PROJECTS WE ARE WORKING ON
TOGETHER AND ADDITIONAL PROJECTS THAT WE HAVE AGREED TO PURSUE.
7. CAN APPLIED MATERIALS WORK WITH ANOTHER COMPANY TO DEVELOP AND SUPPLY
INTEGRATED METROLOGY TOOLS THAT COMPETE WITH THERMA-WAVE'S TOOLS?
ACCORDING TO THE AGREEMENTS, APPLIED MATERIALS CAN DO THIS IF THERMA-WAVE'S
TOOLS DO NOT MEET APPLIED MATERIALS' PERFORMANCE REQUIREMENTS, OR IF THERMA-WAVE
IS IN DEFAULT FOR QUALITY, DELIVERY OR SUPPORT. IN THE CASE THAT OUR TOOL NO
LONGER SATISFIES APPLIED MATERIALS' PERFORMANCE REQUIREMENTS AND WE ARE UNABLE
TO IMPROVE IT, APPLIED MATERIALS AND WE CAN MUTUALLY AGREE THAT THE TOOL NO
LONGER WILL BE EXCLUSIVE TO APPLIED MATERIALS. OBVIOUSLY, IF WE ARE IN DEFAULT
FOR QUALITY, DELIVERY, OR SUPPORT, WE NEED TO RECTIFY THE SITUATION, AND IF WE
ARE UNABLE TO DO SO, APPLIED MATERIALS HAS THE RIGHT TO SEEK OTHER SOURCES OF
SUPPLY.
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8. WHO OWNS THE TECHNOLOGY FOR THE INVENTIONS THAT RESULT FROM THE DEVELOPMENT
AGREEMENT?
THERMA-WAVE OWNS ALL TECHNOLOGY DEVELOPED SOLELY BY THERMA-WAVE EMPLOYEES IN THE
COURSE OF DEVELOPMENT OF A PROTOTYPE TOOL THAT SATISFIES THE DEVELOPMENT PLAN
SPECIFICATIONS. APPLIED MATERIALS OWNS ALL THE TECHNOLOGY DEVELOPED SOLELY BY
APPLIED MATERIALS EMPLOYEES IN THE COURSE OF DEVELOPMENT OF A PROTOTYPE TOOL
THAT SATISFIES THE DEVELOPMENT PLAN SPECIFICATIONS. ANY TECHNOLOGY DEVELOPED
JOINTLY WILL BE OWNED JOINTLY. ALL TECHNOLOGY DEVELOPED BY EITHER PARTY AFTER
THE PROTOTYPE STAGE WILL BE OWNED BY APPLIED MATERIALS.
9. ARE THERE ANY REQUIREMENTS IN THE NUMBER OF INTEGRATED METROLOGY TOOLS
THERMA-WAVE MUST DEVELOP?
THERE IS NO MAXIMUM NUMBER OF INTEGRATED METROLOGY TOOLS THAT THERMA-WAVE MUST
DEVELOP. THERMA-WAVE AND APPLIED MATERIALS HAVE AGREED TO PREPARE DEVELOPMENT
PLANS FOR AN INITIAL LIST OF TOOLS, BUT WE ARE HOPING THAT THIS LIST WILL EXPAND
OVER TIME.
10. UNDER WHAT KINDS OF CIRCUMSTANCES CAN THE PARTIES TERMINATE THE AGREEMENTS
EARLY?
THERE ARE VARIOUS PROVISIONS IN THE AGREEMENTS THAT COULD LEAD TO TERMINATION.
IN GENERAL, THESE PROVISIONS CONCERN NON-PERFORMANCE OR
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DEFAULT ON THE REQUIREMENTS OF THE AGREEMENTS BY EITHER PARTY. ALSO, WE CAN
MUTUALLY AGREE AT ANY TIME TO TERMINATE THE AGREEMENTS.
11. WHAT HAPPENS TO JOINTLY HELD TECHNOLOGY IF THERE IS A BREACH OR DISSOLUTION
OF THE RELATIONSHIP OR WHEN THE AGREEMENTS EXPIRE?
APPLIED MATERIALS AND THERMA-WAVE HAVE AGREED TO A PERPETUAL CROSS LICENSE OF
JOINTLY DEVELOPED TECHNOLOGY. AFTER TERMINATION, AS A JOINT OWNER OF THE
TECHNOLOGY, THERMA-WAVE HAS THE RIGHT TO USE IT, AS DOES APPLIED MATERIALS AS A
JOINT OWNER.
12. DOES THERMA-WAVE HAVE STAFF AND PRODUCTION CAPACITY ALREADY EXISTING TO
FILL THE REQUIREMENTS OF THE AGREEMENTS?
WE CURRENTLY HAVE THE KEY PERSONNEL AND SOME OF THE CAPACITY IN PLACE FOR THE
DEVELOPMENT AGREEMENT. WE ARE ADDING PERSONNEL AND PLANNING ON EXPANDING OUR
MANUFACTURING AREA TO SUPPORT THE AGREEMENTS.
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