<PAGE>
SCHEDULE 14A
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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 [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S).240.14a-11(c) or (S) 240.14a-12
Thermatrix Inc.
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
November 1, 2000
Dear Stockholder:
Enclosed are the proxy materials for the 2000 Annual Meeting of
Stockholders. I hope you will be able to join us on December 1, 2000 and take
the opportunity to meet members of the team who lead the Company.
In the meantime, I would urge you to carefully review the proposals in the
proxy statement and I solicit your support of the Board's recommendations on
these proposals.
Sincerely,
/s/ Frank R. Pope
-----------------
Frank R. Pope
Chairman
<PAGE>
THERMATRIX INC.
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
____________________
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Thermatrix Inc., a Delaware corporation ("the Company"), will be held on
December 1, 2000 at 9:00 a.m. (PST), at the offices of Technology Funding, 2000
Alamada de las Pulgas, San Mateo, California 94403 for the following purposes:
1. To elect one (1) Class I director to serve for a three-year term or
until his or her successor is elected and qualified (Proposal 1);
2. To ratify the appointment of Grant Thornton LLP as independent public
accountants of the Company for the fiscal year ending December 31,
2000 (Proposal 2);
3. To transact such other business as may properly be brought before the
meeting and any adjournment(s) thereof.
Stockholders of record at the close of business on October 3, 2000 shall be
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
/s/ Frank R. Pope
-----------------
Frank R. Pope
Chairman
Knoxville, Tennessee
November 1, 2000
------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested
to complete, sign and date the enclosed proxy card as promptly as possible
and return it in the enclosed envelope.
------------------------------------------------------------------------------
<PAGE>
Thermatrix Inc.
308 North Peters Road, Suite 100
Knoxville, Tennessee 37922
__________
PROXY STATEMENT
==========
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Thermatrix Inc. (the "Company") for use at the Annual Meeting of Stockholders
to be held at 9:00 a.m. (PST) on December 1, 2000 at the offices of Technology
Funding, 2000 Alamada de las Pulgas, San Mateo, California 94403 and at any
adjournment(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Company's principal
office is located at 308 North Peters Road, Suite 100, Knoxville, Tennessee
37922 and its telephone number is (865) 539-9603. These proxy solicitation
materials were mailed on or about November 1, 2000 to all stockholders
entitled to vote at the meeting.
Record Date and Share Ownership
Stockholders of record at the close of business on October 3, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. At the Record Date 7,821,425 shares of the Company's
Common Stock, $.001 par value were issued and outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Edward E. Greene) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting and voting in
person.
Voting and Solicitation
Each share of Common Stock has one vote on all matters and the cost of
this solicitation will be borne by the Company. The Company may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
or regular employees, without additional compensation, personally or by
telephone or facsimile.
Quorum; Abstentions; Broker Non-Votes
The Company's Bylaws provide that stockholders holding a majority of the
outstanding shares of the corporation entitled to vote on the Record Date and
represented in person or by proxy shall constitute a quorum at meetings of
stockholders for the transaction of business. Shares that are voted "FOR,"
"AGAINST" or "WITHHELD" on a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as
"entitled to vote on the subject matter" (the "Votes Cast") at the Annual
Meeting with respect to such matter.
1
<PAGE>
While there is no definitive statutory or case law authority in Delaware
as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the
presence or absence of a quorum for the transaction of business and (ii) the
total number of Votes Cast with respect to a particular matter (other than the
election of directors). In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions in this manner.
Accordingly, with the exception of the proposal for the election of directors,
abstentions will have the same effect as a vote against the proposal. Because
directors are elected by a plurality vote, abstentions in the election of
directors have no impact once a quorum exists. Broker non-votes with respect
to proposals set forth in this Proxy Statement will not be considered Votes
Cast and, accordingly, will not affect the determination as to whether the
requisite majority of Votes Cast has been obtained with respect to a
particular matter.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company that are intended to be
presented at the 2001 Annual Meeting of Stockholders must be received by the
Company (Attention: Edward E. Greene) no later than January 10, 2001 and must
otherwise be in compliance with applicable laws and regulations in order to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC"). Such officers, directors and ten-percent
stockholders are also required by SEC rules to furnish the Company with copies
of all forms that they file pursuant to Section 16(a). Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons that no filings were required for such persons,
the Company believes that all Section 16(a) filing requirements applicable to
its officers, directors and ten-percent stockholders were timely filed.
Stockholder Information
A copy of the Company's Annual Report on Form 10-K, including financial
statements and schedules is enclosed with these proxy solicitation materials.
Also included is a copy of the Form 10Q filed for the second quarter ending
June 30, 2000. In compliance with Rule 14a-3 promulgated under the Securities
Exchange Act of 1934, the Company hereby undertakes to provide without charge
to each person upon written request, a copy of the Company's Annual Report on
Form 10-K, including the financial statements and financial schedules thereto.
Requests for such copies should be directed to Thermatrix Inc., 308 North
Peters Road, Suite 100, Knoxville, Tennessee 37922, Attention: Investor
Relations.
On December 29, 1999, the Company and its operating domestic subsidiaries
filed a voluntary petition under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court, Central District of California.
The case number is SA99-22776-JR and is still being administered.
2
<PAGE>
PROPOSAL ONE
ELECTION OF CLASS I DIRECTOR
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Nominee
The Company has a classified Board of Directors consisting of one Class I
director (Daniel S. Tedone), two Class II directors (Charles R. Kokesh and
John M. Toups) and two Class III directors (Frank R. Pope), who will serve
until the annual meetings of stockholders to be held in 2001, 2002 and 2003,
respectively, or until their respective successors are duly elected and
qualified. At each annual meeting of stockholders, directors are elected for a
full term of three years to succeed those directors whose terms expire at the
annual meeting. At the present time one authorized Class III directorship is
vacant. The Company is seeking a qualified person to fill this vacant
directorship.
The term of the director in Class I will expire on the date of the
upcoming annual meeting. One person is to be elected to Class I at the
meeting. The nominee for election by the stockholders to this position is
Daniel S. Tedone, currently a member of the Board of Directors in Class I. If
elected, the nominee will serve as a director until the Company's annual
meeting of stockholders in 2003, or until his successor is elected and
qualified. If the nominee declines to serve or becomes unavailable for any
reason, or if a vacancy occurs before the election, the Proxies may be voted
for such substitute nominee as management may designate. The proxy holders are
advised that in the event the nominee shall not be available for election, a
circumstance that is not currently expected, they may vote for the election of
substitute nominees in accordance with their judgment.
There are no arrangements or understandings between any director or
executive officer and any other person pursuant to which he is or was to be
selected as a director or officer of the Company.
The name of the nominee and other information about members of the Board
of Directors, is set forth below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- -----
<S> <C> <C> <C>
Daniel S. Tedone 52 President and Chief Executive Officer of Thermatrix Inc. 02/07/00
</TABLE>
Directors of the Company as of the Record Date
Charles R. Kokesh (52). Mr. Kokesh has been a Director of the Company since
March 1998. Mr. Kokesh is the founder and managing general partner of Technology
Funding, a professional venture capital firm headquartered in Silicon Valley,
serving in those roles since 1979. Mr. Kokesh also serves on the board of
directors of Adesso Specialty Services Inc. Mr. Kokesh received an A.B. from
Harvard College, an MBA from Harvard Business School, and a JD from Boalt Hall
School of Law, University of California at Berkeley.
Frank R. Pope (51). Mr. Pope has been a Director of the Company since 1994
and on February 7, 2000 he was elected Chairman of the Board of Directors. On
that same date, he agreed to serve as interim CEO of the Company voluntarily
resigning from that position on May 25, 2000 in favor of the appointment of Mr.
Tedone to the position. Since June 2000, Mr. Pope has been the Executive
Managing Director of GFG, Global Financial Group, a private equity management
firm. Mr. Pope has also been the
3
<PAGE>
Managing Director of Verdigris Capital, an environmental investment banking firm
since October 1996. From 1991 until October 1996, Mr. Pope was a general partner
of Technology Funding, a professional venture capital firm. Mr. Pope currently
serves on the board of directors of GFG, Global, Medstone International, Inc.,
Breadcrumbs.com, and Advanced BioCatalytics Corp. Mr. Pope holds a BA from
Stanford University, an MBA from the University of Santa Clara Graduate School
of Business and a JD from the University of Santa Clara School of Law.
Daniel S. Tedone (52). Mr. Tedone joined the Company in April 1998 as
Executive Vice President with the responsibility for the operation of the
Company's core VOC business. In June 1998, he assumed the additional
responsibility of Chief Financial Officer. On February 7, 2000 he was appointed
President and Director of the Company and on May 25, 2000 he was also appointed
Chief Executive Officer. From 1992 Mr. Tedone was CEO of Pollution Control
Technologies, Inc., which was acquired by TRC Companies, Inc. in 1995 and where
he served as President and CEO of TRC Process Engineering, Inc. until joining
Thermatrix. Previously, Mr. Tedone served as President of Vericon Corporation
and held positions at Connecticut Resources Recovery Authority and Hartford
National Bank & Trust Company. Mr. Tedone holds a BA and an MBA (Finance) from
the University of Connecticut.
John M. Toups (74). Mr. Toups has been a Director of the Company since
November 1994. From January 1978 until his retirement in February 1987, Mr.
Toups was the Chief Executive Officer of Planning Research Corporation (PRC), an
information technology services company. Mr. Toups currently serves on the Board
of Directors of CACI International Inc., NVR, Inc., Halifax Corporation and
Government Technology Services, Inc. Mr. Toups holds a BS in Civil Engineering
from the University of California at Berkeley.
Executive Officers of the Company as of the Record Date
Daniel S. Tedone (52). Mr. Tedone joined the Company in April 1998 as
Executive Vice President with the responsibility for the operation of the
Company's core VOC business. In June 1998, he assumed the additional
responsibility of Chief Financial Officer. On February 7, 2000 he was appointed
President and Director of the Company and on May 25, 2000 he was also appointed
Chief Executive Officer. From 1992 Mr. Tedone was CEO of Pollution Control
Technologies, Inc., which was acquired by TRC Companies, Inc. in 1995 and where
he served as President and CEO of TRC Process Engineering, Inc. until joining
Thermatrix. Previously, Mr. Tedone served as President of Vericon Corporation
and held positions at Connecticut Resources Recovery Authority and Hartford
National Bank & Trust Company. Mr. Tedone holds a BA and an MBA (Finance) from
the University of Connecticut.
Edward E. Greene (51). Mr. Greene joined the Company in June 1996 as the
Director of Administrative Services. He was appointed Secretary of the Company
in July 1998 and Vice President, Administration in December 1998. From October
1970 until April 1996 Mr. Greene was a serving Regular Army Officer. Mr. Greene
is a graduate of the Command and General Staff College and the US Army War
College and he holds a BS from Gannon University and an MA (Economics) from the
University of Oklahoma.
James E. Fritz (38) Mr. Fritz joined the Company in February 2000 and on
July 22, 2000 was appointed Vice President and Chief Financial Officer. Previous
to his employment with the Company, Mr. Fritz was President, Chief Executive
Officer and Director of River Valley Bancorp for 4 years. Prior to that he
served as Chief Financial Officer of Central Indiana Bancorp for 8 years. Mr.
Fritz holds a BS in Finance and an MBA from Indiana University.
4
<PAGE>
James M. Clark (50). Mr. Clark joined the Company as Executive Vice
President and General Manager, Wahlco Air Systems, in Santa Ana, CA in April
1999 and has over 25 years experience with environmental firms supplying
software and hardware products and services to the utility and industrial air
pollution control sectors. In 1996, after four years with them, he was appointed
Vice President and General Manager of KVB, a leading worldwide provided of
industrial emissions monitoring and control systems. From 1972 until joining
KVB, Mr. Clark held a variety of management, operational and marketing positions
with Western Precipitation and JOY Manufacturing. Mr. Clark holds BSE from
California State University at Long Beach and an MBA from Loyola Marymount
University.
Required Vote
If a quorum is present and voting, the nominee for Class I director
receiving the highest number of votes will be elected as the Class I director.
Abstentions and shares held by brokers that are present, but not voted because
the brokers were prohibited from exercising discretionary authority, i.e.,
"broker non-votes," will be counted as present in determining if a quorum is
present, but because directors are elected by a plurality vote, will have no
impact once a quorum is present. See "Information Concerning Solicitation and
Voting -- Quorum; Abstentions; Broker Non-Votes."
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE NOMINEE LISTED ABOVE
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5
<PAGE>
Board Meetings and Committees
The Board of Directors of the Company held a total of seven (7) meetings
and took a total of one (1) action by written consent during the fiscal year
ended December 31, 1999. No director serving during such fiscal year attended
fewer than 75% of the aggregate of all meetings of the Board of Directors and
the committees of the Board upon which such director served. The Board of
Directors has two committees, the Audit Committee and the Compensation
Committee.
The Audit Committee of the Board of Directors, which consists of Messrs.
Kokesh, Pope, and Toups, held three (3) meetings during FY 1999. The Audit
Committee reviews and advises the Board of Directors regarding the Company's
accounting matters and is responsible for reviewing and recommending the
engagement of the Company's independent public accountants, the services to be
performed by them, and reviewing and evaluating the accounting principles being
applied to the Company's financial reports. Except for the period February 7,
2000 to May 25, 2000, while Mr. Pope was serving in an unpaid capacity as the
Chief Executive Officer, the Committee is independent as defined in Rule
4200(a).15 of the NASD.
The Compensation Committee of the Board of Directors, which consists of
Messrs. Kokesh and Pope, held one (1) meeting during FY 1999. The Compensation
Committee establishes the overall executive compensation strategies of the
Company and approves compensation elements for the chief executive officer,
other executive officers, and employees earning in excess of $100,000 per year.
Director Compensation
Directors are not paid any cash compensation from the Company for their
services as members of the Board or any committee thereof, although they are
reimbursed for reasonable out-of-pocket expenses incurred by them in attending
such meetings.
The Company's 1996 Director Option Plan (the "Director Plan") was adopted
by the Board of Directors in March 1996 and was approved by the stockholders in
April 1996. The Director Plan provides for the automatic and non-discretionary
grant of nonqualified stock options to purchase 6,667 shares of the Company's
Common Stock to directors who are not employed by the Company ("Outside
Directors") on the date upon which such person first becomes an Outside Director
("Initial Option"). Thereafter, each Outside Director is automatically granted
an option to purchase 1,667 shares of Common Stock on January 1 of each year,
beginning January 1, 1997 ("Subsequent Option"), provided he or she has served
as a director for at least six months as of such date. The exercise price of
options granted under the Director Plan is 100% of the fair market value of the
Company's Common Stock on the date of grant. Initial Options vest and become
exercisable as to 12 1/2% of the shares subject to the option six months after
the date of grant and as to an additional 12 1/2% of the shares at the end of
each six-month period thereafter, provided the optionee continues to serve as a
director on such date. Subsequent Options vest and become exercisable as to 50%
of the shares subject to the Subsequent Option six months after the date of
grant and as to the remaining 50% one year after the date of grant, provided the
optionee continues to serve as a director on such date.
On January 1, 1999, a Subsequent Option to purchase 1,667 shares of Common
Stock was automatically granted to Messrs. Pope, Toups and Kokesh at an exercise
price of $3.625 per share. Since the December 29, 1999 filing for protection
under Chapter 11 of the US Bankruptcy code, no additional
6
<PAGE>
options have been issued under the Director Plan and no options granted under
the Plan have been exercised.
A total of 103,334 shares of Common Stock has been reserved for issuance
under the Director Plan. As of October 3, 2000, no shares of Common Stock had
been issued upon the exercise of options granted under the Director Plan,
options to purchase 31,670 shares of Common Stock at a weighted average exercise
price of $7.48 per share were outstanding, 29,170 options were exercisable and
71,664 shares were available for future issuance.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Kokesh and Pope. Mr. Tedone
also participates in discussions regarding salaries and incentive compensation
for all employees (including officers) and consultants to the Company, except
that Mr. Tedone is excluded from discussions regarding his own salary and
incentive compensation. No director or executive officer of the Company is a
director or executive officer of any other corporation that has a director or
executive officer who is also a director or a board committee member of the
Company.
7
<PAGE>
PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------------------------------
The Board of Directors has selected Grant Thornton LLP to audit the
consolidated financial statements of the Company for the fiscal year ending
December 31, 2000, and recommends that stockholders vote for ratification of
such appointment. If there is a negative vote on such ratification, the Board of
Directors will reconsider its selection.
Required Vote
The ratification of the appointment of Grant Thornton LLP requires the
affirmative vote of a majority of the shares of the Company's Common Stock
present or represented and entitled to vote on this subject matter at the
meeting. An abstention is not an affirmative vote and, therefore, will have the
same effect as a vote against the proposal. A broker non-vote will not be
treated as entitled to vote on this subject matter at the meeting. See
"Information Concerning Solicitation and Voting-Quorum; Abstentions; Broker Non-
Votes."
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
--------------------------------------------------------------------------------
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying notes set forth certain information
regarding the beneficial ownership of the Company's Common Stock as of the
Record Date by (i) each of the Company's executive officers named in the Summary
Compensation Table appearing herein (the "Named Executive Officers"), (ii) each
director, (iii) all of the Company's executive officers and directors as a
group, and (iv) each person (or group of affiliated persons) known to the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock. The Company knows of no agreements among its stockholders that relate to
voting or investment power of its shares of Common Stock.
<TABLE>
<CAPTION>
Named Executive Officers, Directors, and all Directors and Named Beneficial Ownership(1)
Executive Officers as a Group
Number of Shares Percent of Total
---------------------- --------------------
<S> <C> <C>
Alexander G. Baldwin(2)............................................. 11,649 *
James M. Clark(3)................................................... 4,657 *
James E. Fritz(4)................................................... 0 *
Edward E. Greene(5)................................................. 21,950 *
Charles R. Kokesh(6)................................................ 1,212,651 15.42
Frank R. Pope(7).................................................... 98,854 1.26
John T. Schofield(8)................................................ 481,095 5.88
Daniel S. Tedone(9)................................................. 47,834 *
John M. Toups(10)................................................... 52,549 *
Richard J. Goodier(11).............................................. 0 *
All named Executive Officers and Directors as a Group
(10 persons)(12).................................................... 2,408,715 23.20
5% Stockholders:
Charles Rivers Partnerships VI, L.P. & Charles River Partnership
VI-A, L.P. 1000 Winter Street, Suite 3300, Waltham, MA 02154(13) 467,939 5.98
CIBC WMV Inc. 425 Lexington Ave., New York, NY 10017-3903(14) 831,906 10.54
Denise Hale, George T. Cronin & Thomas M. Peterson as Successor
Co-Trustees of the Prentis Cobb Hale Trust c/o Brobeck Phelger &
Harrison LLP, Attn: T. M. Peterson, One Market Plaza, Spear Street
Tower, San Francisco, CA 94105 420,863 5.38
Technology Funding Partners III, LP & Technology Funding Ventures
Partners IV LP, 2000 Alamada de las Pulgas, Suite 250, San Mateo,
CA 94403(15) 1,206,817 15.36
Landmark Secondary Partners L.P.
760 Hopmeadow Street, Simsbury, Connecticut 06070 394,329 5.04
The Venture Capital Fund of New England II, LP & The Venture Capital
Fund of New England III, LP, 70 Walnut Street, Suite 120, Wellesley
Hills, MA 02481-2175 623,410 7.97
Ventana Environmental Partnership LP, 18881 Von Karmen Ave., Tower
17, Suite 350, Irvine, CA 92751 533,429 6.82
Wexford Management LLC, 411 W. Putnam Ave., Greenwich, CT 06830 (16) 450,000 5.44
</TABLE>
_______________
* Less than 1%
9
<PAGE>
Notes to Beneficial Ownership Table:
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities. Options to
purchase shares of Common Stock which are currently exercisable or will
become exercisable within 60 days of the Record Date, are deemed to be
outstanding for purposes of computing the percentage of the shares held by
an individual but are not outstanding for purposes of computing the
percentage of any other person. Except as indicated otherwise in the
footnotes below, and subject to community property laws where applicable,
the persons named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them.
(2) Includes 11,649 shares subject to stock options that are exercisable within
60 days of October 3, 2000.
(3) Includes 2,708 shares subject to stock options that are exercisable within
60 days of October 3, 2000.
(4) Mr. Fritz joined the Company on February 28, 2000 and was appointed Vice
President and Chief Financial Officer on July 22, 2000.
(5) Includes 17,625 shares subject to stock options that are exercisable within
60 days of October 3, 2000.
(6) Includes 5,834 shares subject to stock options that are exercisable within
60 days of October 3, 2000. Mr. Kokesh is a managing general partner of
Technology Funding and, therefore, may be deemed to beneficially own the
shares held by Technology Funding Partners. Also includes 62,772 shares
held by Technology Funding Partners, which pursuant to an agreement between
Mr. Pope and Technology Funding Partners, Mr. Pope is entitled to receive
at such time as Technology Funding Partners distributes the assets of the
partnership to its limited partners. Includes 35,000 Warrants to purchase
Common shares but does not include 1,000 shares of Series E Preferred
Stock.
(7) Includes 11,668 shares subject to stock options that are exercisable within
60 days of October 3, 2000 but does not include the 62,772 shares held by
Technology Funding Partners that Mr. Pope is entitled to receive upon
distribution of the assets of the partnership to its limited partners.
(8) Mr. Schofield resigned as an officer and director of the Company on
February 7, 2000 and ceased being an employee on February 28, 2000.
Includes 355,089 shares subject to stock options that are exercisable
within 60 days of October 3, 2000.
(9) Includes 45,834 shares subject to stock options that are exercisable within
60 days of October 3, 2000.
(10) Includes 21,669 shares subject to stock options that are exercisable within
60 days of October 3, 2000.
(11) Mr. Goodier was Executive Director and General Manager of the Wahlco
Metroflex Division in the UK. His employment ceased on December 15, 1999.
(12) Includes 472,076 shares subject to stock options that are exercisable
within 60 days of October 3, 2000.
(13) Included 355,248 shares held by CRP VI, 62,691 shares held by CRP VI-A and
50,000 shares held by Mr. Richard M. Burns, Jr., a general partner of
Charles River Partnership VI GP Limited Partnership.
(14) Includes 70,000 Warrants to purchase common shares but does not include
2,000 shares of Series E Convertible Redeemable Preferred Stock
(15) Includes 62,772 shares held by Technology Funding Partners, which pursuant
to an agreement between Mr. Pope and Technology Funding Partners, Mr. Pope
is entitled to receive at such time as Technology Funding Partners
distributes the assets of the partnership to its limited partners. Also
includes 35,000 Warrants to purchase Common Shares but does not include
1,000 shares of Series E Preferred Stock.
(16) Includes Warrants to purchase 450,000 shares of Common Stock related to the
acquisition of Wahlco Environmental Systems, Inc.
10
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
The following table shows information as of the Record Date concerning
compensation awarded to, earned by or paid for services to the Company by the
Chief Executive Officer and each of the other five most highly compensated
executive officers, in all capacities during the three years ended December 31,
1999.
Summary Compensation Table
<TABLE>
<CAPTION>
------------------------------------------------------------
Annual Long-Term
Compensation (1) Compensation
----------------------------------------------------------------------------------------------------------------------------
All Other # Securities
Name & Position Year Salary (2) Compensation (3) Underlying Options (4)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
Alexander G. Baldwin(5) 1999 122,000 6,375 -
----------------------------------------------------------------------------------------------------------------------------
Executive Vice President & General Manager 1998 121,250 7,394 2,500
----------------------------------------------------------------------------------------------------------------------------
Wahlco Engineered Products, Inc. 1997 125,000 7,410 -
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
James M. Clark (6) 1999 102,968 4,738 10,000
----------------------------------------------------------------------------------------------------------------------------
Executive Vice President & General Manager 1998 - - -
----------------------------------------------------------------------------------------------------------------------------
Wahlco, Inc. 1997 - - -
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Richard J. Goodier (7) 1999 134,400 4,191 -
----------------------------------------------------------------------------------------------------------------------------
Executive Director & General Manager 1998 138,050 3,313 5,000
----------------------------------------------------------------------------------------------------------------------------
Wahlco Metroflex division 1997 120,546 768 5,000
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Edward E. Greene (8) 1999 138,750 6,984 40,000
----------------------------------------------------------------------------------------------------------------------------
Vice President, Administration & Secretary 1998 95,000 5,479 10,000
----------------------------------------------------------------------------------------------------------------------------
1997 - - -
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
John T. Schofield (9) 1999 238,833 10,890 -
----------------------------------------------------------------------------------------------------------------------------
Chairman, President & CEO 1998 220,000 10,374 150,000
----------------------------------------------------------------------------------------------------------------------------
1997 220,000 10,342 -
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Daniel S. Tedone(10) 1999 186,667 9,283 50,000
----------------------------------------------------------------------------------------------------------------------------
President & CEO 1998 137,890 19,711 50,000
----------------------------------------------------------------------------------------------------------------------------
1997 - - -
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No bonuses were awarded in the period 1997 - 1999.
(2) Salaries for Messrs. Clark, Greene, Schofield, and Tedone include pre-
payment of January 2000 salaries in December 1999.
(3) All other Compensation includes life, health, dental, and disability
insurances.
(4) These shares are subject to exercise under the Company's Stock Option
Plans.
(5) Mr. Baldwin is not an officer of the Company but is one of the top 5 most
highly compensated individuals.
(6) Mr. Clark joined the Company on April 14, 1999; his salary for 1999
reflects less than a full year's employment.
(7) Ceased being an executive officer of the Company on December 15, 1999.
Compensation data for 1999 is estimated based on Mr. Goodier's annual rate.
(8) Mr. Greene was appointed Secretary of the Corporation on September 15, 1998
and additionally appointed Vice President, Administration on December 1,
1998. Mr. Greene's salary was increased to $140,000 per year by the Board
of Directors on October 1, 1999. The Bankruptcy Court disallowed the
increase as it was within 90 days of the Chapter 11 petition filing.
Effective December 29, 1999 Mr. Greene's salary has reverted to $120,000
per year.
(9) Resigned as an officer and director of the Company on February 7, 2000 and
left the employment of the Company on February 29, 2000.
(10) Mr. Tedone joined the Company in April 1998. His salary for 1998 reflects
less than a full year's employment. Mr. Tedone was appointed CFO in June
1998, was appointed President and Director on February 7, 2000 and was
additionally appointed Chief Executive Officer on May 25, 2000. Mr.
Tedone's salary was increased to $200,000 per year by the Board on October
1, 1999. In light of Mr. Tedone's increased responsibilities the
11
<PAGE>
Bankruptcy Court allowed the increase. The `All Other Compensation' figure
for 1998 includes a non-qualified relocation payment.
Stock Option Grants and Exercises
The following table shows, as to the Named Executive Officers, information
concerning stock options granted during the fiscal year ended December 31, 1999.
No stock option grants have been made or stock options exercised subsequent to
the Chapter 11 filing on December 29, 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
-------------------------------------------------------
Number of % of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees Price Per Expiration for Option Term($)(1)
-----------------------
Name Granted (#)(2) in Fiscal Year Share($) Date(3) 5% 10%
---------------------- --------------- -------------- --------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Alexander G. Baldwin.. No options granted during FY 1999 -- --
James M. Clark........ 10,000 6% $1.75 10/12/09 $0 $ 8,437
Richard J. Goodier.... No options granted during FY 1999 -- --
Edward E. Greene...... 40,000 24% $1.75 10/12/09 $0 $33,748
John T. Schofield..... No options granted during FY 1999 -- --
Daniel S. Tedone...... 50,000 30% $1.75 10/12/09 $0 $42,187
_____________
</TABLE>
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten-year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission. Actual gains, if any, on option
exercises are dependent on the future performance of the Company's Common
Stock and overall market conditions.
(2) Option grants generally vest over a 48-month period. Initial grants vest and
become exercisable as to 1/48/th/ of the shares subject to the grant twelve
months after the vesting commencement date and as to an additional 1/48/th/
of the shares at the end of each month thereafter provided the optionee
continues to serve as an employee on such date. Subsequent grants vest and
become exercisable as to 1/48/th/ of the shares subject to the subsequent
grant one month after the vesting commencement date and as to an additional
1/48/th/ of the shares at the end of each month thereafter, provided the
optionee continues to serve as an employee on such date.
(3) Options may terminate before their expiration date if the optionee's status
as an employee is terminated.
The following table shows, as to the Named Executive Officers, information
concerning stock options exercised during the fiscal year ended December 31,
1999 and the value of unexercised options at such date.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options/SARs at December 31, 1999
December 31, 1999(#) ($)(1)
---------------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
------------------------ --------------- ----------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Alexander G. Baldwin.... 1,944 $3992.25 10,869/1,770 $ 0
James M. Clark.......... -- -- 0/10,000 $ 0
Richard J. Goodier (2).. -- -- 0/0 $ 0
Edward E. Greene........ -- -- 6,168/43,832 $ 0
John T. Schofield....... -- -- 346,061/77,778 $42,777/$0
Daniel S. Tedone........ -- -- 22,916/77,084 $ 0
</TABLE>
__________________
(1) Based on the fair market value of the Company's Common Stock at December
31, 1999 of $1.00 per share, less the exercise price to be paid for such
shares.
12
<PAGE>
(2) Mr. Goodier's employment ended on December 15, 1999.
Employment Agreements
Prior to entering Chapter 11, the Company had entered into an Employment
Contract with Mr. Tedone, however the Company has not and does not intend to
assume the Contract. The Company has no other employment contracts with any of
its officers and has no compensatory plan or arrangement which is activated upon
resignation, termination or retirement of any such officer or upon a change in
control of the Company other than required by law. Under certain circumstances
both the 1996 Stock Plan and the Director Plan provide for the accelerated
vesting of all outstanding options upon a change in control.
Other Employee Benefit Plans
1987 Incentive Stock Plan
The Company's 1987 Incentive Stock Plan, as amended (the "1987 Stock Plan")
was adopted by the Board of Directors in August 1987 and approved by the
stockholders in February 1988. The 1987 Stock Plan provided for grants of
incentive stock options to employees (including officers and employee directors)
and non-statutory stock options to non-employees (including non-employee
directors) and consultants of the Company. A total of 907,651 shares of Common
Stock were reserved for issuance under the 1987 Stock Plan. As of October 3,
2000, 375,982 shares of Common Stock had been issued upon the exercise of
options granted under the 1987 Stock Plan and options to purchase 359,204 shares
of Common Stock at a weighted average exercise price of $1.58 per share were
outstanding. The Plan terminated in 1997 and no further options will be granted
under the 1987 Stock Plan. Options under the 1987 Stock Plan become exercisable
at varying rates over vesting periods determined by the Board of Directors
(generally one to ten years), and as of October 3, 2000 a total of 343,093
options were exercisable.
1996 Stock Plan
The Company's 1996 Stock Plan (the "1996 Plan") was adopted by the Board of
Directors in March 1996 and approved by the stockholders in April 1996. The
Board of Directors adopted a sub-plan of the 1996 Plan for the purpose of
qualifying for preferred tax treatment under UK tax laws. The UK Inland Revenue
approved the sub-plan effective January 30, 1998. A total of 633,334 shares of
Common Stock have been reserved for issuance under the 1996 Plan. As of October
3, 2000 15,250 shares of Common Stock had been issued upon the exercise of
options granted under the 1996 Plan, options to purchase 265,029 shares of
Common Stock at a weighted average exercise price of $2.27 per share were
outstanding, 144,548 options were exercisable and 353,085 shares were available
for issuance.
Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan (ESPP) was approved by the Board of
Directors in March 1996 and approved by the stockholders in April 1996. It
permits eligible employees of the Company to purchase Common Stock through
payroll deductions of up to 15% of their eligible compensation, provided that no
employee may purchase more than $25,000 worth of stock under all of the employee
purchase plans of the Company in any calendar year. The price of Common Stock
purchased under the ESPP is 85% of the lower of the fair market value of the
Common Stock on the first or last day of each six-month offering period. The
ESPP will expire in the year 2006. A total of 276,667 shares have been reserved
for issue, 126,728 shares of Common Stock have been issued and 149,939 remain
available for sale under the ESPP as of the Record Date. Since the filing of
the
13
<PAGE>
Chapter 11 petition on December 29, 2000 the Plan has been administratively
suspended.
401(k) Savings Plan
The Company maintains the Thermatrix Inc. 401(k) Plan, a defined contribution
retirement plan with a cash or deferred arrangement as described in Section
401(k) of the Internal Revenue Code (the "401(k) Plan"). The 401(k) Plan is
intended to be qualified under Section 401(a) of the Code. All employees of the
Company are eligible to participate in the 401(k) Plan. The 401(k) Plan
provides that each participant make elective contributions of a percentage of
his or her compensation, subject to statutory limits.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Exchange Act of 1933, as amended, or the
Securities Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 17 shall not be incorporated by reference into any
such filings.
General
The Compensation Committee (the "Committee") of the Board of Directors
establishes the overall executive compensation strategies of the Company and
approves compensation elements for the chief executive officer, other executive
officers, and employees earning in excess of $100,000 per year. The Committee
also recommends stock option awards for employees to the Board. The Committee
is comprised of three of the independent, non-employee members of the Board of
Directors, none of whom have interlocking relationships as defined by the
Securities and Exchange Commission. As of the Record date there was one vacancy
on the Committee. The Committee has available to it such external compensation
advice and data as the Committee deems appropriate to obtain.
The compensation philosophy of the Committee is to provide a comprehensive
compensation package for each executive officer that is tailored to the
Company's accomplishment of business strategies, objectives and initiatives.
Accordingly, the Committee follows a compensation strategy which utilizes
vesting terms as an incentive and reward for executives as the Company addresses
the challenges it faces. As the Committee applies this compensation philosophy
in determining appropriate executive compensation levels and other compensation
factors, the Committee reaches its decisions with a view towards the Company's
overall financial performance. The Committee strives to structure each
officer's overall compensation package to enable the Company to attract, retain
and reward personnel who contribute to the success of the Company.
Executive Officer Compensation
The Committee's executive compensation policies are designed to enhance the
financial performance of the Company and thus stockholder value by aligning the
financial interests of the key executives with those of the stockholders. The
executive compensation program is viewed in total considering all of its
component parts: an annual compensation component, which consists of base
salaries that are generally competitive with those offered by other companies in
the industry at similar phases of growth, and a long-term incentive component,
which consists of stock options and stock ownership. In determining individual
salaries, the Committee considers the individual experience, performance and
breadth of responsibilities of each executive officer within the Company in
light of the accomplishment of business strategies, objectives and initiatives
set forth by the Board periodically. These factors are reviewed for each
executive officer annually.
The Company's 1996 Stock Plan and the ESPP are long-term incentive plans for
all employees. These plans are intended to align stockholder and employee
interest by creating a direct link between long-term rewards and the value of
the Company's shares. The Committee believes that long-term stock ownership by
executive officers and all employees is an important factor in achieving both
above average growth in share value and retaining valued employees. Since the
value of an option bears a direct relationship to the Company's stock price, the
Committee believes that options motivate executive officers to manage the
Company in a manner that will benefit all stockholders.
The Option Plans authorize the Committee to award available stock options to
employees at any time.
15
<PAGE>
Options for executive officers are generally granted at the time of initial
employment with the Company, and at later dates at the discretion of the
Committee. The size of the initial and later grants are determined by a number
of factors including comparable grants to executive officers and employees by
other companies which compete in the Company's industry. The exercise price per
share of the stock options is normally equal to the prevailing market value of a
share of the Company's Common Stock on the date the options are granted.
The Company has adopted certain broad-based employee benefit plans in which
all employees, including the executive officers, are permitted to participate on
the same terms and conditions relating to eligibility and generally subject to
the same limitations on the amounts that may be contributed or the benefits
payable under those plans. See "Other Employee Benefit Plans--401(k) Savings
Plan."
CEO Compensation
Compensation for the Chief Executive Officer aligns with the philosophies and
practices described above for executive officers in general. Mr.Tedone's salary
was increased to $200,000 from $160,000 effective October 1, 1999. Mr. Tedone
received option grants totaling 50,000 shares on October 12, 1999. The Company
currently does not have a bonus plan for its Chief Executive Officer or any of
its other executive officers.
COMPENSATION COMMITTEE
Frank R. Pope
Charles R. Kokesh
16
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph demonstrates a comparison of cumulative total stockholder
returns, calculated on a dividend reinvestment basis and based upon an initial
investment of $100 in the Company's Common Stock as compared with the Russell
2000 Index and the Dow Jones Industrial Technology Index. No dividends have
been declared or paid on the Company's Common Stock during such period. The
stock price performance shown on the graph below is not necessarily indicative
of future price performance. The Company's Common Stock began trading on the
NASDAQ National Market on June 20, 1996 and currently trades on the OTC Bulletin
Board under the Symbol TMXIQ. The graph reflects the Company's stock price
performance from the initial public offering through the end of fiscal 1999.
COMPARISON OF 42 MONTH CUMULATIVE TOTAL RETURN*
AMONG THERMATRIX INC., THE RUSSELL 2000 INDEX
AND THE DOW JONES INDUSTRIAL TECHNOLOGY INDEX
[GRAPH APPEARS HERE]
* $100 INVESTED ON 6/20/96 IN STOCK OR ON 5/31/96
IN INDEX - INCLUDING REININVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
17
<PAGE>
Cumulative Total Returns Data
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Stock
Or Index 6/20/96 6/96 12/96 6/97 12/97 6/98 12/98 6/99 9/99 12/99
--------------------------------------------------------------------------------------------------------------------
Thermatrix 100.00 102.00 72.00 24.00 13.00 32.00 29.00 35.00 19.50 7.00
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Russell 2000 100.00 98.82 110.38 126.73 145.47 151.92 136.08 143.23 132.03 134.06
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Dow
Industrial 100.00 92.42 93.39 99.29 98.51 87.19 90.30 110.56 119.13 243.63
Technology
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Other Matters
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
The Board of Directors
Dated November 1, 2000
18
<PAGE>
1535-PS-00
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THERMATRIX INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 1, 2000
The undersigned stockholder of Thermatrix Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated November 1, 2000, and hereby appoints Daniel S. Tedone and
Edward E. Greene, or either of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2000 Annual meeting of Stockholders of
Thermatrix, to be held on Friday, December 1, 2000 at 9:00 a.m. (PST) at the
offices of Technology Funding, 2000 Alamada de las Pulgas, San Mateo, California
94403, and any adjournment(s) thereof and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the, matters set forth below:
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR THE ELECTION OF THE DIRECTOR AND FOR THE RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY
ADJOURNMENT(S) THEREOF.
SEE REVERSE CONTINUE AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
DETACH HERE
--------------------------------------------------------------------------------
Please mark
[X] Votes as in
this example
1. Election of Class I Director:
Nominee: Daniel S. Tedone For the Nominee___ Withheld from the
Nominee___
2. Proposal to ratify the appointment of Grant Thornton
LLP as Independent Public Accountants. For ____ Against ____ Abstain ____
(This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should
sign.)
Signature _____________ Date ___________
Signature _____________ Date ___________
