Vice President Marketing Employment Agreement - David L. Willenborg

Exhibit 10.2





EMPLOYMENT AGREEMENT

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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into

---------- as of May 16, 1997, between Therma-Wave, Inc., a Delaware corporation (the "Company"), and David L. Willenborg ("Executive").

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The Company and Executive are parties to an Executive Stock Agreement dated May 16, 1997 (the "Stock Agreement") pursuant to which (i) the Company

--------------- will sell shares of capital stock to Executive and (ii) the Company will grant Executive options to acquire shares of the Company's capital stock.



Company and Executive intend that this Agreement supersede in its entirety the Employment Agreement dated as of October 30, 1991, between Executive and the Company (the "Prior Agreement").

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In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:



1. Employment. The Company shall employ Executive, and Executive

---------- hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the date hereof and ending as provided in Section 5 hereof (the "Employment Period").

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2. Position and Duties.

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(a) During the Employment Period, Executive shall serve as the Vice President, Marketing, of the Company and shall have the normal duties, responsibilities and authority of the Vice President, Marketing, subject to the overall direction and authority of the Company's board of directors (the "Board") and the Company's President and/or Chief Executive Officer.

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(b) Executive shall report to the Company's President and/or Chief Executive Officer, and Executive shall devote his best efforts and his full business time and attention to the business and affairs of the Company and its Subsidiaries.



(c) For purposes of this Agreement, "Subsidiaries" shall mean any

------------ corporation of which the securities having a majority of the voting power in electing directors are, at the time of determination, owned by the Company, directly or through one or more Subsidiaries.



3. Base Salary and Benefits.

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(a) During the Employment Period, Executive's base salary shall be at least $168,480 per annum, subject to review by the Board and the President and/or Chief Executive Officer (who shall consider the Radford Survey in such review) on an annual basis (the "Base Salary"), which salary shall be payable in regular installments

----------- in accordance with the Company's general payroll practices and shall be subject to customary withholding. In addition, during the Employment Period, Executive shall be entitled to participate in all of the Company's employee benefit programs for which senior executive employees of the Company and its Subsidiaries are generally eligible (collectively, the "Benefits").

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(b) Executive shall be entitled to personal time off ("PTO") on

--- substantially the same terms and conditions as Executive is entitled to pursuant to the Therma-Wave, Inc. Employee Handbook.



(c) The Company shall reimburse Executive for all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Company's policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company's requirements with respect to reporting and documentation of such expenses.



(d) In addition to the Base Salary, for each of the Company's fiscal years beginning with the 1998 fiscal year, Executive will be eligible to earn a bonus (the "Bonus") based on the Company achieving certain corporate

----- performance goals and Executive achieving certain individual goals. The target amount of the Bonus, the corporate performance goals and the individual goals each shall be set annually by the Board and the Company's President and/or Chief Executive Officer. The amount of the Bonus shall be determined in accordance with the procedures set forth on Exhibit A attached hereto.

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4. Deferred Signing Bonus.

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(a) If, as of May 16, 2002 (the "Fifth Anniversary"), Executive

----------------- continues to be employed by the Company, the Company shall pay to the Executive a deferred signing bonus (the "Deferred Bonus") to the extent that the

-------------- cumulative earnings before interest, taxes, depreciation and amortization of the Company ("EBITDA") from May 16, 1997 through the Fifth Anniversary (the "Actual

------ ------ EBITDA") exceeds $133.275 million (the "Floor Amount"). If Actual EBITDA is (i) - ------ ------------ less than or equal to the Floor Amount, no Deferred Bonus will be paid, (ii) equal to or greater than $177 million (the "Planned EBITDA"), then a Deferred

-------------- Bonus equal to $1,251,904.69 (the "Maximum Bonus") will be paid, and (iii)

------------- between the Floor Amount and the Planned EBITDA, a Deferred Bonus equal to the result of (x) the Maximum Bonus multiplied by (y) a fraction, the numerator of which is the amount by which the Actual EBITDA exceeds the Floor amount and the denominator of which is $43.725 million will be paid. Actual EBITDA shall be determined as promptly as practicable after the Fifth Anniversary by reference to the Company's annual audited financial statements (for all completed fiscal years) and quarterly or other interim financial statements provided to the Company's lenders (for interim periods). The Deferred Bonus shall be paid within five days after the determination of Actual EBITDA (the date of such payment, the "Bonus Payment Date"); provided that if (i) Executive has exercised

------------------ any Management Options (as defined in the Stock Agreement) prior to such date and issued to the Company a promissory note or notes as payment of the exercise price therefor and (ii) any of such promissory notes are outstanding on the Fifth Anniversary, then the "Bonus Payment Date" shall be the date all of such

------------------ notes are paid in full



(it being understood that Executive at any time after the Fifth Anniversary may request payment of the Deferred Bonus payable to him and use the proceeds to repay any such promissory notes), but in any event no later than the tenth anniversary of the date hereof.



(b) Notwithstanding the foregoing, if, prior to the Fifth Anniversary, a Sale of the Company occurs (as defined in the Stock Agreement), then Actual EBITDA shall mean the sum of (i) cumulative actual EBITDA of the Company for the period from May 16, 1997 through the end of the last completed calendar month prior to such sale (determined as set forth in Section 4(a) above) and (ii) projected EBITDA utilized to sell the Company for the remaining portion of the period through the Fifth Anniversary (which will not be greater than the EBITDA planned for such period as reflected in a performance plan for the Company attached hereto as Exhibit B).

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5. Term.

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(a) The Employment Period (i) shall terminate upon Executive's resignation (other than for Good Reason) or death, (ii) shall terminate upon Executive's Disability, (iii) may be terminated by the Company at any time for Cause (as defined below) or without Cause and (iv) may be terminated by Executive for Good Reason.



(b) If the Employment Period is terminated by the Company without Cause, by Executive for Good Reason or as a result of Executive's Disability, Executive shall be entitled to receive the Base Salary, the Bonus (which during the Severance Period will be equal to 30% of the Base Salary in effect immediately prior to the termination) and the Benefits (the "Severance

--------- Payment"), in each case until the date which is fifteen months after the date of - ------- such termination (the "Severance Period"); provided that the portion of the

---------------- Bonus that Executive would have been entitled to receive for the fiscal year in which the Severance Period terminates shall be reduced proportionately by the ratio of the number of days of such fiscal year not included in the Severance Period to the total number of days in such fiscal year. The Severance Payment will be payable at such times as such payments would have been payable had Executive not been terminated. Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation to pay any part or all of the Severance Payment if at any time during the Severance Period Executive is in breach of Section 6 hereof or Section 11 of the Stock Agreement. The Severance Payment shall be reduced by fifty percent (50%) of the amount of any compensation Executive receives in respect of any other employment during the Severance Period. Upon request from time to time, Executive shall furnish the Company with a true and complete certificate specifying any such compensation due to or received by him. As a condition to the Company's obligations (if any) to make the Severance Payment pursuant to this Section 5(b), Executive will execute and deliver a general release in form and substance satisfactory to the Company.



(c) If the Employment Period is terminated by the Company for Cause or is terminated pursuant to subsection 5(a)(i) above, Executive shall be entitled to receive the Base Salary through the date of termination.



(d) Except as specifically provided herein, all of Executive's rights to Benefits and bonuses which accrue or become payable after the termination of the Employment Period shall cease upon such termination.





(e) For purposes of this Agreement, "Disability" shall mean any

---------- physical or mental illness or incapacity of Executive if, as determined by the Board, such illness or incapacity result ...