EXHIBIT 10.23
KEY EMPLOYEE STOCK AGREEMENT
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This KEY EMPLOYEE STOCK AGREEMENT (the "Agreement") is made as of October
30, 1991 by and among Toray Industries, Inc., a Japanese corporation ("Toray"),
TS Subsidiary Corp., a Delaware corporation ("TS Sub"), Therma-Wave, Inc., a
Delaware corporation (the "Company") and the key-employees of the Company who
are signatories hereto (individually a "Key Employee," and collectively, the
"Key Employees"), with reference to the following:
WHEREAS, Toray, TS Sub, Shimadzu Corporation, a Japanese corporation
("Shimadzu," and together with Toray and TS Sub, the "Purchasers"), and the
Company are entering into an Agreement and Plan of Merger of even date herewith
(the "Merger Agreement");
WHEREAS, the respective Boards of Directors of Toray, Shimadzu and the
Company have each determined that it is in the best interests of their
respective stockholders for Toray and Shimadzu to acquire a controlling interest
in the Company, upon the terms and subject to the conditions set forth in the
Merger Agreement;
WHEREAS, in furtherance thereof, the Purchasers shall make a cash tender
offer (the "Offer") to acquire all of the issued and outstanding shares of
common stock, par value $.001 per share, of the Company (the "Common Stock") and
preferred stock, par value $.001 per share of the Company (the "Preferred
Stock," and together with the Common Stock, the "Shares") for $2.80 per share of
Common Stock and for $8.3976 per share of Series A Preferred Stock, $13.4362 per
share of Series B Preferred Stock, $16.1492 per share of Series C Preferred
Stock, $8.3976 per share of Series D Preferred Stock and $8.3976 per share of
Series F Preferred Stock (as to each class and series, the "Per Share Price"),
net to the seller in cash, in accordance with the terms and subject to the
conditions provided for in the Merger Agreement;
WHEREAS, pursuant to the Merger Agreement, all options (other than Key
Employee Options, as defined below) to purchase Common Stock (the "Employee
Options") granted under the Company's 1986 Stock Option Plan, as amended (the
"Stock Option Plan"), which are outstanding immediately prior to the effective
time of the merger of TS Sub with and into the Company ("Merger No. 1") shall be
canceled at such effective time (the "Merger No. 1 Effective Time") and each
holder thereof shall thereafter be entitled to receive from the Company at times
specified in the Merger Agreement a cash payment equal to the difference between
the Per Share Price and the per share exercise price of each Employee option
(the "Option Per Share Price"), multiplied by the number of Shares subject to
such Employee Option (the "Option Merger Consideration");
WHEREAS, Toray, TS Sub and the Company have great confidence and place
great trust in the Key Employees of the Company, and
WHEREAS, Toray, TS Sub and the Company desire to induce the Key Employees
to maintain certain levels of ownership of Common Stock and Key Employee Options
following the dates that the offer is closed and the Shares validly tendered are
accepted for payment (the "Closing") and each of Merger No. 1 and the subsequent
merger of a newly formed Delaware corporation with and into the Company pursuant
to the Merger Agreement ("Merger No. 2"), are consummated;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agrees follows:
1. Definitions. At used in this Agreement, the following terms shall have
the following respective meanings:
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(a) "Accrual Commencement Date" shall mean for each share of Common
Stock, the later of (i) the date of Closing, or (ii) the date the underlying Key
Employee Option vested (or in the case of unvested Common Stock, would have
vested) in accordance with the applicable stock option agreement.
(b) "Accruals" shall mean a return of 12% per annum, compounded
annually, on: (i) the Per Share Price for periods following the date of issuance
of the share of Common Stock, and (iii) the Option Per Share Price for periods
prior to the exercise and conversion of the Key Employee Option into Common
Stock.
(c) "As Converted Basis" shall mean the number that is the product of
the outstanding shares of Preferred Stock in each series and the following
conversion numbers: (i) as to each share of Series A, 3 shares of Common Stock,
(ii) as to each share of Series B, 4.8 shares of Common Stock (iii) as to each
share of Series C, 5.76923 shares of Common Stock, (iv) as to each share of
Series D, 3 shares of Common Stock and (v) as to each share of Series F, 3
shares of Common Stock.
(d) "First Exercise Date" shall mean the later of (i) April 1, 1996,
or (ii) the first date following the fourth anniversary of the Closing that the
following conditions have been satisfied: (x) an Independent Investment Bank
shall have delivered to the Key Employees and Toray its written opinion as to
the Market Value of the Company as of the financial quarter ended December 31,
1995; provided, however, that the parties hereto shall use their best efforts to
cause such written opinion to be delivered no later than March 31, 1996, and (y)
the Company shall have delivered to each Key Employee a letter setting forth the
status and, if applicable, terms of his employment and compensation on and after
April 1, 1996; provided, however, that the Company shall deliver such letter in
any event no later than December 31, 1995.
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(e) "Independent Investment Bank" shall mean a recognized, U.S. based,
national investment banking firm with experience in mergers, acquisitions and
corporate valuations, that has not had any material relationship with the
Company, Toray, Shimadzu or any of the Key Employees during the preceding five
years except as set forth herein.
(f) "Key Employee Shares" shall mean for each Key Employee the
aggregate of Shares not tendered into the Offer by such Key Employee, Key
Employee Options and any Unvested Common Stock held by such Key Employee.
(g) "Market Value" shall mean a dollar amount representing the value
of the entire equity interest in the Company and shall be determined by
employing such valuation methodologies as are customary and appropriate for
mergers and acquisitions in general and for high technology companies in
particular. The Market Value will be calculated assuming the entire equity
interest in the Company were being sold in a manner and pursuant to a process
designed to reflect fully the Company's value as a whole (including any control
premium inherent therein) in a unitary transaction to a willing buyer, but
without regard to any tax liability as a result of such sale. Discount rates and
corporate multiples used in the valuation shall be those prevailing in the
United States. The Market Value shall take into account the Company's global
operations including the operating results of Therma-Wave (Japan) K.K. and any
successor corporation thereto ("TWKK") and any other affiliate of Toray or
Shimadzu to the extent that: (a) such affiliate uses the Company's technology,
and (b) the Company has not been compensated for such use on n arm's length
basis, through license payments or otherwise, after the date of the Closing;
Market Value shall also be adjusted to account for assistance provided to the
Company and TWKK by Toray, Shimadzu or any of their affiliates except to the
extent such party has been compensated for such assistance on an arm's length
basis. The Market Value shall be adjusted to exclude: (i) debt incurred to pay
the
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consideration in the Offer, Merger No. 1 and Merger No. 2 and the related debt
service, (ii) to the extent not included in (i) above, amounts paid by the
Company pursuant to the Merger Agreement in respect of cancellation of Employee
Options (as defined therein), (iii) all goodwill amortization arising out of the
transactions set forth in the Merger Agreement, (iv) the consideration received
by the Company or any of its affiliates for the sale and issuance of any of its
capital stock from and after the effective time of Merger No. 2 (the "Merger No.
2 Effective Time"), (v) any extraordinary corporate charges or actions
undertaken by the Company for the long-term benefit of its business, the results
of which may not fall within the valuation horizon ("Extraordinary Charges"),
(vi) the historical and projected impact of such Extraordinary Charges and (vii)
the historical and projected impact of Extraordinary Charges excluded from any
earlier determination of Market Value, even if the impact thereof falls within
the valuation horizon. The Independent Investment Bank will determine, after
consultation with the Board of Directors and the Key Employees, whether charges
or actions constitute Extraordinary Charges; such determination shall be final
and binding on the parties hereto. The Market Value shall be adjusted to include
any dividends paid by the Company from and after the date hereof. The Key
Employees and Toray shall consult with each other concerning the provision of
valuation information to the Independent Investment Bank and procedures to be
followed by the Independent Investment Bank in conducting its valuation.
(h) "Per Share Market Value" as to any Share shall mean the Market
Value divided by 22,149,540, less any dividends paid with respect to such Share.
(i) "Second Exercise Date" shall mean the later of (i) April 1, 1997,
or (ii) the first date following the fifth anniversary of the Closing that an
Independent Investment Bank shall have delivered to the Key Employees and Toray
its written opinion as to the Market Value of the Company as of the financial
quarter ended December 31, 1996, provided, however, that the
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parties hereto shall use their best efforts to cause such written opinion to be
delivered prior to March 31, 1997.
(j) "Third Exercise Date" shall mean the later of (i) April 1, 1998,
or (ii) the first date following the sixth anniversary of the Closing that an
Independent Investment Bank shall have delivered to the Key Employees and Toray
its written opinion as to the Market Value of the Company as of the financial
quarter ended December 31, 1997; provided, however, that the parties hereto
shall use their best efforts to cause such written opinion to be delivered prior
to March 31, 1998.
(k) "Unvested Common Stock" shall mean outstanding Common Stock that
is subject to repurchase by the Company pursuant to restricted stock purchase
agreements between the Company and certain Key Employees with respect to Common
Stock acquired under the Stock Option Plan.
2. Tender of Stock; Treatment of Stock Options. In the Offer, each Key
Employee shall validly tender and not withdraw that number of shares of Common
Stock, if any, specified and the Key Employee's signature page hereto. Each Key
Employee shall execute and deliver a consent agreement in substantially the form
as set forth in Exhibit A hereto (the "Consent Agreement") by which the number
of Employee Options held by each Key Employee specified on his signature page
hereto shall be canceled and converted into the right to receive the Option
Merger Consideration payable in accordance with the Consent Agreement. The
remaining number of options hold by each Key Employee pursuant to the Stock
Option Plan specified on his signature page hereto (the "Key Employee Options")
and shares of Common Stock, if any, specified on his signature page hereto shall
remain outstanding subject to the terms contained herein.
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3. Key Employee Put Options.
(a) Subject to Section 5(a) hereof, for a period of thirty (30) days
following the First Exercise Date, each Key Employee shall have the right to
require Toray to purchase any shares of Common Stock held by him each at a
purchase price equal to the Per Share Price, plus Accruals from the Accrual
Commencement Date to the date of payment.
(b) Subject to Section 5(a) hereof, for a period of thirty (30) days
following each of the Second Exercise Date and the Third Exercise Date, each Key
Employee shall have the right to require Toray to purchase any shares of Common
Stock held by him at a purchase price equal to the Per Share Market Value of the
Company, based on Market Value determined as of the end of the financial quarter
ended December 31 prior to the Second Exercise Date or the Third Exercise Date,
as the case may be (collectively, the Key Employees' rights under subsections
(a) and (b) of this Section 3 are hereinafter referred to as the "Put Options").
(c) Each Key Employee may exercise his Put Option rights hereunder
with respect to some or all of the shares of Common Stock held by him, but the
minimum amount with respect to each exercise shall be the lesser of 30% of the
number of such Key Employee's Key Employee Shares specified on his signature
page hereto or all of his remaining Key Employee Shares.
4. Toray Call Option. For a period of two years following the Third
Exercise Date, Toray shall have the right to require each Key Employee to sell
to Toray all, but not less than all, of his shares of Common Stock, including
shares issuable upon exercise of Key Employee Options, at a purchase price equal
to the Per Share Market Value, determined as of the most recently completed
financial quarter (the "Call Option"). Following notice of exercise and prior
to any such
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purchase and sale, the Key Employee shall be obligated to exercise each Employee
option held by him that is vested as of the date notice is delivered from Toray
pursuant to Section 6(c) hereof.
5. Options Upon Termination of Employment.
(a) If a Key Employee's employment with the Company is terminated for
any reason an or prior to the fourth anniversary of the Closing, he shall not
have any Put Option rights pursuant to Section 3 hereof, but he shall have the
right to require the Company to purchase, and the Company shall have the right
to purchase, in each case, all but not less than all of his shares of Common
Stock, including shares issuable upon exercise of Key Employee Options (other
than those forfeited in accordance with the Key Employee's stock option
agreement(s)), as follows:
(i) if such termination resulted from death, Disability,
termination by the Company without Cause or resignation with Good Reason
(as such terms are defined in such Key Employee's Employment Agreement, a
form of which is set forth in Exhibit B hereto), the respective rights to
cause a purchase shall be exercisable for ninety (90) days following such
termination and each share of Common Stock held by the Key Employee shall
be purchased at the Per Share Price with Accruals from the Accrual
Commencement Date to the date of purchase; and
(ii) if such termination resulted, from resignation without Good
Reason or termination by the Company for Cause, the respective rights to
cause a repurchase shall be exercisable for thirty (30) days following the
fourth anniversary of the Closing and each share of Common Stock shall be
purchased at the Per Share Price with Accruals from the Accrual
Commencement Date to the date of such termination.
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(iii) Promptly after the fourth anniversary of the Closing,
Toray shall contribute to the Company the aggregate amount of any
consideration paid by the Company pursuant to this Section 5(a), and the
Company shall issue in exchange a number of shares of Common Stock equal to
the aggregate number of shares of Common Stock purchased by the Company
pursuant to this Section 5(a).
(b) If a Key Employee's employment with the Company is terminated for
any reason after the fourth anniversary of the Closing and on or before the
sixth anniversary of the Closing, he shall not have any Put Option rights
pursuant to Section 3 hereof, but he shall have the right to require Toray to
purchase, and Toray shall have the right to require the Key Employee to sell
all, but not less than all, of his shares of Common Stock, including shares
issuable upon exercise of Key Employee Options (other than those forfeited in
accordance with the Key Employee's stock option agreements). The Key Employee's
right to cause a purchase shall be exercisable for thirty (30) days following
the Second or Third Exercise Date, whichever first follows the date of
termination. Toray's right to purchase shall be exercisable for ninety (90)
days following each of the Second Exercise Date (if applicable) and the Third
Exercise Date. Each such share of Common Stock shall be purchased at a price
equal to the Per Share Market Value, determined as of the financial quarter
ended December 31 prior to the Second Exercise Date or the Third Exercise Date,
as the case may be.
(c) Prior to any purchase of Common Stock pursuant to this Section 5,
the Key Employee shall be obligated to exercise each Key Employee Option held by
him that is vested as of the date such Key Employee's employment with the
Company is terminated.
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6. Purchase Mechanics.
(a) Selection of Independent Investment Bank. The Independent
Investment Bank shall be mutually selected by Toray and all the Key Employees
holding Shares eligible for sale at the next Exercise Date. In the event Toray
and such Key Employees cannot agree on a selection within thirty (30) days
following the fourth, fifth, or sixth anniversary of the Closing or within
thirty (30) days of delivery of notice to require the purchase or sale of Shares
thereafter, each of Toray on the one hand and the relevant Key Employees on the
other shall select one Independent Investment Bank who shall be retained for the
sole purpose of jointly selecting the Independent Investment Bank that shall
conduct that valuation of Market Value. If the relevant Key Employees cannot
agree among themselves on a selection, the most senior corporate officer of the
Company among them shall select on their behalf. Notwithstanding any of the
above, the Independent Investment Bank that performs the valuation in connection
with the First Exercise Date shall, if willing, also perform the valuations in
connection with the Second Exercise Date and the Third Exercise Date.
(b) Expenses. All fees and expenses of the Independent Investment
Bank shall be the responsibility of the Company and shall be treated for the
purpose of the valuation as a liability thereof.
(c) Written Notice.
(i) The Key Employees shall exercise their Put Options and any
options pursuant to termination of a Key Employee's employment provided in
Section 5 hereof by delivery of written notice to Toray or the Company, as
the case may be, specifying the name of the Key Employee and the number of
Shares to be sold.
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(ii) Toray shall exercise its Call Option and any options
pursuant to termination of a Key Employee's employment provided in Section
5 hereof by delivery of written notice to such Key Employee.
(iii) The Company shall exercise any options pursuant to the
termination of a Key Employee's employment provided in Section 5 hereof by
delivery of written notice to such Key Employee.
(d) Payment for and Delivery of Common Stock. The closings for the
purchases and sales of Key Employee Shares pursuant to Sections 3 and 5 of this
Agreement shall occur within ninety (90) days of delivery of written notice to
require the purchase or sale of Key Employee Shares and the closings of the
purchases and sales of Key Employee Shares pursuant to Section 4 of this
Agreement shall occur within the later of: (i) ninety (90) days following
delivery of such written notice, or (ii) thirty (30) days following the date
that the Market Value of the Company shall have been delivered to the Key
Employees and Toray. Each closing shall be at a place and time mutually agreed
to by the relevant parties. Payment shall be made in cash or by certified,
cashier's or other check acceptable to the relevant Key Employee upon delivery
to Toray or the Company, as the case may be, of a stock certificate or
certificates representing the total number of shares of Common Stock being
purchased and sold, free and clear of all liens, claims or encumbrances, duly
endorsed in blank by the Key Employee or having attached thereto stock powers
duly executed by the Key Employee in proper form for transfer.
7. Restriction on Transfer.
(a) Except upon certain specified conditions provided in this Section
7 and Section 9 hereof, Key Employees may not sell, transfer, assign, pledge,
hypothecate or otherwise dispose of any Key Employee Shares, or any right or
interest therein. Any purported sale,
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transfer (including without limitation involuntary transfers initiated by
operation of legal process), hypothecation or disposition of any of the Key
Employee Shares or any right or interest therein, except in strict compliance
with the terms and conditions of this Agreement, shall be null and void and the
Company shall not be required to give effect to, any such transfer on its stock
transfer books and records.
(b) Notwithstanding any other provision of this Agreement or the Stock
Option Agreement, Key Employees may transfer any or all of the Key Employee
Shares (i) upon a Key Employee's death, to any person in accordance with the
laws of descent or testamentary distribution, (ii) to a revocable living trust
of which such Key Employee and his spouse are the only trustees, or (iii) with
respect to not more than 25%, in the aggregate, of the Key Employee's Key
Employee Shares specified on his signature page hereto, to one or more trusts
for the benefit of his children, the trustee of which is reasonably acceptable
to Toray ("Permitted Transferees"); provided, however, that such Key Employee
Shares shall not be transferred until any Permitted Transferee who is not a
party to this Agreement executes a valid and legally binding undertaking to
Toray to the effect that the Key Employee Shares so transferred shall thereafter
remain subject to all of the provisions of this Agreement as though the
Permitted Transferee were a Key Employee under this Agreement, bound in every
respect in the same way as each Key Employee hereby so agrees to be bound as a
Key Employee hereunder (except that the options set forth in Section 5 hereof
shall continue to apply to any Key Employee Shares held by a Permitted
Transferee, determined in respect to the termination of employment of the
transferor Key Employee); provided, further, that any Permitted Transferee who
is not a party to this Agreement shall be deemed upon acquiring Key Employee
Shares that have the legend affixed thereto, pursuant to Section 8 hereof, to
have agreed
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to the undertaking described above regardless of whether the Permitted
Transferee has executed such undertaking.
(c) Each Key Employee may pledge not more than 50% of his Key Employee
Shares to secure loans under a credit facility to be established by the Company
for the benefit of the Key Employees with a financial institution. The credit
facility shall set forth restrictions and conditions on the pledge of Key
Employee Shares as Toray, Shimadzu and the Key Employees shall agree.
(d) (i) In the event any Key Employee Shares shall become the
separate property of a former spouse (a "Former Spouse") of a Key Employee
as a result of or in connection with a divorce proceeding, the Former
Spouse shall not have any Put Option rights pursuant to this Agreement
except as provided for in this Section 7(d).
(ii) The Former Spouse shall have the right to require Toray to
purchase all, but not less than all, of such Former Spouse's shares of
Common Stock, including shares issuable upon exercise of Key Employee
Options, for a period of thirty (30) days following the First, Second or
Third Exercise Date, whichever first follows the date such shares become
the separate property of the Former Spouse (the "Special Put Option"). For
the First Exercise Date, the per share purchase price for the Special Put
option shall be equal to the Per Share Price, plus Accruals from the
Accrual Commencement Date to the date of payment. For the Second and Third
Exercise Date, the per share purchase price shall be equal to the same Per
Share Market Value determined as of the financial quarter ended
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December 31, 1996 or December 31, 1997, respectively, pursuant to Section 3
hereof.
(iii) Toray shall have the right at any time to require such
Former Spouse to sell to Toray all, but not less than all of such Former
Spouse's shares of Common Stock, including shares issuable upon exercise of
Key Employee Options (the "Special Call Option"). Prior to the First
Exercise Date, the per share purchase price for the Special Call Option
shall be equal to the Per Share Price, plus Accruals from the Accrual
Commencement Date to the date of payment. From and after the First Exercise
Date the per share purchase price for the Special Call Option shall be
equal to the Per Share Market Value determined as of: (i) December 31,
1995, if the Special Call Option is exercised prior to the Second Exercise
Date, (ii) December 31, 1996, if the Special Call Option is exercised prior
to the Third Exercise Date, or (iii) December 31, 1997 if the Special Call
is exercised on or at any time after the Third Exercise Date.
8. Legends on Certificates. Any and all certificates now or
hereafter issued evidencing Key Employee Shares shall have endorsed upon them a
legend substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND NEITHER THE SHARES NOR ANY
INTEREST THEREIN MAY BE SOLD TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER PRIOR TO THE PROPOSED TRANSACTION
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A KEY EMPLOYEE STOCK
AGREEMENT DATED AS OF OCTOBER 30, 1991 (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER) WHICH PROVIDES, AMONG OTHER THINGS, FOR CERTAIN
RIGHTS OF PURCHASE OF SUCH SHARES BY THE ISSUER AND OTHERS AND CERTAIN
RESTRICTIONS ON
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TRANSFER THEREOF. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
DISPOSITION COMPLIES. WITH THE TERMS OF SAID KEY EMPLOYEE STOCK AGREEMENT,
INCLUDING WITHOUT LIMITATION THE REQUIREMENT THAT PERMITTED TRANSFEREES
EXECUTE AN AGREEMENT PROVIDING THAT THE TRANSFEREE AGREES TO BE BOUND BY
THE TERMS OF SAID KEY EMPLOYEE STOCK AGREEMENT. ANY SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR DISPOSITION OF THE SHARES REPRESENTED
BY THIS CERTIFICATE IN VIOLATION OF SUCH KEY EMPLOYEE STOCK AGREEMENT SHALL
BE VOID."
Such certificates may also bear such other legends and shall be
subject to such restrictions on transfer as may be necessary to comply with any
stock option or restricted stock agreement and all applicable Federal and state
securities laws and regulations.
9. Right of First Refusal.
(a) Sales; Notice. After the 90th day following the eighth
anniversary of the Closing, each Key Employee may sell any or all of his Key
Employee Shares to any third party, subject to the provisions of this Section 9.
Prior to any such sale, the selling Key Employee shall first give written notice
(the "Notice") to Toray specifying (i) his bona fide intention to sell or
otherwise transfer such Key Employee Shares, (ii) the name and address of the
proposed purchasers, (iii) the number of Key Employee Shares the Key Employee
proposes to sell (the "Offered Shares"), (iv) the price for which he proposes to
sell the Offered Shares, and (v) all other material terms and conditions of the
proposed sale, and a letter from the proposed purchaser confirming his bona fide
intention to consummate the purchase on such terms.
(b) Election by Toray. Within thirty (30) days after receipt of the
Notice, Toray or its designee(s) may elect to purchase all, but not less than
all, of the Offered Shares at the price and on the terms and conditions set
forth in the Notice by delivery of written notice of such
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election to the Key Employee. Within thirty (30) days after delivery of such
notice to the Key Employee, Toray or its designees shall deliver payment to the
Key Employee in the amount of the purchase price of the Offered Shares, against
delivery of the stock certificate representing such shares, duly endorsed for
transfer, together with any other documents or certificates reasonably necessary
to convey good and marketable title to such shares. If Toray or its designees do
not elect to purchase the Offered Shares, the Key Employee shall be entitled to
sell all of the Offered Shares to the purchaser(s) named in the Notice, at the
price specified in the Notice or at a higher price and on the terms and
conditions set forth in the Notice, and such purchaser (i) shall take the
offered shares free and clear of any restrictions and rights to purchase
provided for herein; provided, however, that such sale or other transfer must be
consummated within ninety (90) days from the date of the Notice and any proposed
sale after such 90-day period may be made only by again complying with the
procedures set forth in this Section 9.
10. Conditions to this Agreement. The provision of Sections 3, 4 and 5 of
this Agreement shall become effective only upon, and the parties performance
thereunder is expressly conditioned on the Closing.
11. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram or telex, or by
registered or certified mail (postage prepaid, return receipt requested) or
confirmed facsimile transmissions to the respective parties as follows:
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If to Toray or TS Sub:
Toray Industries, Inc.
2nd Head Office Building
8-1 Mihama 1-chome
Urayasu, Chiba 000 Xxxxx
Facsimile Number: (000-00) 000-00-0000
Attention: Mr. Takashi Obzeki, Director
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Company:
Therma-Wave, Inc.
00000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xx. Xxxxx Xxxxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
and
Xxxxxx & Xxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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and if to a Key Employee:
to such Key Employee at his address and facsimile number set
forth on the signature page hereof
with a copy to
Xxxxxx & Xxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
or to such other address or facsimile number as the person to whom notice it
given may have previously furnished to the others in writing in the manner set
forth above.
12. Amendments. This Agreement may be amended only by a written agreement
executed by each of the parties hereto.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the law that
might otherwise govern under applicable principles of conflicts of laws thereof.
14. Arbitration; Fees and Expenses. Any dispute or claim arising hereunder,
or any breach hereof, shall be settled by arbitration in accordance with the
rules of the American Arbitration Association, and judgment upon such award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The arbitration shall be held in San Francisco or such other place as
may be agreed upon at the time by the parties to the arbitration. In the event
of any dispute among the parties arising out of this Agreement, the prevailing
party shall be entitled to recover from the nonprevailing party the reasonable
expenses of the prevailing party, including, without limitation, reasonable
attorneys' fees and costs.
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15. Entire Agreement. This Agreement (including the agreements referred to
herein and any schedules, exhibits or annexes hereto) constitutes the entire
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any and all prior agreements and understandings, whether
written or oral, between the parties with respect to the subject matter hereof.
Notwithstanding the foregoing, this Agreement shall not be deemed to modify the
provisions of the Stock Option Plan, and the Key Employee Options shall continue
to be subject to its provisions.
16. No Rights as an Employee. Nothing in this Agreement shall affect in any
manner whatsoever the rights of the Company to terminate any Key Employee's
employment for any reason, with or without cause, subject to any employment
agreement to which a Key Employee may be a party.
17. Headings. The descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
-19-
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement as of the day and year first above written.
THERMA-WAVE, INC. TORAY INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxxxxxxxxx Xxxxx
---------------------------- ------------------------
Name: Xxxxx Xxxxxxxxxx Name: Xxxxxxxxxxx Xxxxx
Title: Chief Executive Officer Title: President
TS SUBSIDIARY CORP.
By: /s/ Xxxxxxx Xxxxxx
------------------------
Name: Xxxxxxx Xxxxxx
Title: President
____________________________
Name:
Address:
-20-
AMENDMENT NO. 1 TO KEY EMPLOYEE STOCK AGREEMENT
THIS AMENDMENT NO. 1 TO THE KEY EMPLOYEE STOCK AGREEMENT (this "Amendment") is
made and entered into as of December 16, 1994 by and among:
(a) TORAY INDUSTRIES, INC., a Japanese corporation ("Toray");
(b) THERMA-WAVE, INC., a Delaware corporation (the "Company"); and
(c) XX. XXXXX XXXXXXXXXX, XXXXX X. XXXXXXXXXX, XXX XXXXX, XXXXXX X.
XXX, XXXX XXXXXXX, and XXXX XXXXX (individually a "Key Employee," and
collectively, the "Key Employees"),
with reference to the following:
RECITALS
The following provisions form the basis for, and are hereby made a part of, this
Amendment:
19. The parties hereto are parties to the Key Employee Stock Agreement dated as
of October 30, 1991 (the "Key Employee Stock Agreement") pursuant to which the
Key Employees have certain rights to cause the Company to purchase all of their
shares of Common Stock, par value $.001 (collectively, "Employee Shares"), and
Employee Shares which the Key Employees may acquire upon the exercise of
outstanding options exercisable therefor (collectively, the "Key Employee
Options"), subject to certain terms and conditions set forth in the Purchase
Agreement.
20. The parties hereto are entering into a Stock Purchase Agreement dated of
even date herewith (the "Purchase Agreement"), pursuant to which Toray agrees to
purchase on April 1, 1996 (the "Purchase Date") the Employee Shares of Key
Employees who desire to sell to Toray their Employee Shares on such date.
21. In accordance with Sections 5.1 and 9.2 of the Purchase Agreement, the Key
Employees have agreed to amend the Key Employee Stock Agreement as set forth
herein and deliver this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises set forth in the Stock
Purchase Agreement and herein, the parties hereto agree as follows:
-21-
SECTION I.. AMENDED TERMS
A. Amendment of Section 1. Section 1 is hereby amended to add the following
definitions:
"(l) "Employee Shares" shall mean, collectively, the Shares which a
Key Employee owns, beneficially and of record, and may acquire upon the exercise
of his Key Employee Options;
(m) "Escrow Agreement" shall mean that certain Escrow Agreement by
and among the Key Employees, other than Xxxxxxx X. Xxxxxxx, the Company,
Toray and the Escrow Agent named therein, dated as of December 16, 1994;
(n) "Purchase Agreement" shall mean that certain Stock Purchase
Agreement by and among the Key Employees, other than Xxxxxxx X. Xxxxxxx,
Toray and the Company, dated as of December 16, 1994; and
(o) "Purchase Date" shall mean April 1, 1996."
B. Amendment of Section 3(a). Section 3(a) of the Key Employee Stock Agreement
is hereby deleted in its entirety and replaced with the following provision:
"Subject to Section 5(a) hereof, a Key Employee whose employment with
the Company has not been terminated on or prior to the Purchase Date
shall have the right to require Toray to purchase on the Purchase Date
all but not less than all of his Employee Shares in accordance with
the terms, and subject to the conditions, set forth in the Purchase
Agreement and Escrow Agreement."
C. Amendment of Section 5(a). Section 5(a) of the Key Employee Stock Agreement
is hereby deleted in its entirety and replaced with the following provision:
"If a Key Employee's employment with the Company is terminated for any
reason on or prior to the Purchase Date, he shall not have any Put
Option Rights pursuant to Section 3 hereof, but he shall have the
right to require Toray to purchase on the Purchase Date all but not
less than all of his Employee Shares in accordance with the terms, and
subject to the conditions, set forth in the Purchase Agreement and
Escrow Agreement. In the event that a Key Employee whose employment
with the Company is terminated for any reason prior to the Purchase
Date does not or cannot exercise his right to require Toray to
purchase on the Purchase Date his Employee Shares pursuant to the
Purchase Agreement and Escrow Agreement: (i) such Key Employee's Key
Employee Options shall expire; and (ii) such Key Employee shall no
longer have any rights to cause Toray or the Company to purchase any
of his Employee Shares."
-22-
D. Amendment of Section 6. Section 6 of the Key Employee Stock Agreement is
hereby amended to add the following new subparagraph:
"(e) Notwithstanding the foregoing provisions of this Section 6, the
purchase and sale of the Key Employees' Employee Shares pursuant to
the Purchase Agreement and Escrow Agreement shall be consummated in
accordance with the provisions of the Purchase Agreement and Escrow
Agreement."
E. Amendment to Section 7. Section 7 of the Key Employee Agreement is hereby
amended as follows:
(a) a new sentence shall be added at the end of subparagraph (a) which
shall read as follows: "Notwithstanding the foregoing, the
transactions contemplated by the Purchase Agreement and Escrow
Agreement shall not be deemed to violate this Section 7"; and
(b) A new sentence shall be added at the end of subparagraph (c) which
shall read as follows: "Each Key Employee and his Permitted
Transferees may pledge such Key Employee's rights to receive delivery
of the Purchase Price for his Employee Shares under the Purchase
Agreement and Escrow Agreement to secure loans from financial
institutions."
(c) subparagraph (d) is hereby amended to add the following new clause:
"(iv) Notwithstanding the foregoing, prior to the Purchase Date, the
Former Spouse shall not have any rights under this subparagraph (d);
instead, the Key Employee shall be entitled to sell to Toray pursuant
to the Purchase Agreement the Employee Shares which have become the
separate property of his Former Spouse."
F. Amendment of Section 12. Section 12 of the Key Employee Stock Agreement is
hereby deleted in its entirety and replaced with the following provision:
"This Agreement may not be amended or modified, and no provisions
hereof may be waived, without the written consent of Toray, the
Company, and each Key Employee whose rights hereunder will be
prejudicially affected by such amendment, modification or waiver. A
Key Employee shall cease to be a party hereto on and as of the first
date on which such Key Employee no longer owns any Shares or Key
Employee Options."
-23-
SECTION II.. OTHER TERMS OF KEY EMPLOYEE STOCK AGREEMENT
A. Related Terms of Key Employee Stock Agreement. Wherever the term "this
Agreement" is used in Sections 3, 5(c), 6, 7, 8, 11, 12 through 15 and 17
through 18 of the Key Employee Stock Agreement, such term shall mean the
Employee Stock Agreement as amended by this Amendment.
B. Termination of Agreement as to TS Subsidiary Corp. and Xxxxxxx. The parties
hereto hereby acknowledge and agree that TS Subsidiary Corp. and Xxxxxxx X.
Xxxxxxx are no longer parties to the Key Employee Stock Agreement, such term
shall mean the Key Employee Stock Agreement as amended by this Amendment.
C. No Other Amendments. Except as expressly amended by Sections 1 and 2 of
this Agreement, all of the provisions of the Key Employee Stock Agreement shall
remain unchanged without modification or amendment.
SECTION III.. MISCELLANEOUS
A. Facsimile Signatures. A facsimile copy of a signature hereto shall be
deemed an original signature for purposes hereof.
B. Presumptions. In construing the terms of this Amendment, no presumption
shall operate in favor of or against any party as a result of its counsel's role
in drafting the terms and provisions hereof.
IN WITNESS WHEREOF, each of the Key Employees and the authorized representatives
of Toray and the Company have duly executed this Amendment as of the day and
year first above written.
"Therma-Wave" "Toray"
THERMA-WAVE, INC., TORAY INDUSTRIES, INC.,
a Delaware corporation a Japanese corporation
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Sataru Masujaki
------------------------ -------------------
Name: Xxxxx Xxxxxxxxxx Name: Sataru Masujaki
Title: President and Chief Executive Officer Title: Director and
General Manager
[signatures continued on next page]
-24-
"Key Employees"
/s/ Xxxxx Xxxxxxxxxx
---------------------------------------------
Xx. Xxxxx Xxxxxxxxxx
/s/ Xxx Xxxxx
---------------------------------------------------
Xxx Xxxxx
/s/ Xxxx Xxxxxxx
--------------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxxxx X. Xxx
----------------------------------------------
Xxxxxxx X. Xxx
/s/ Xxx Xxxxx
---------------------------------------------------
Xxx Xxxxx
-25-
