Exhibit 10.2
THERMA-WAVE, INC.
PURCHASE AGREEMENT
     This Purchase Agreement (this “Agreement”) is made and entered into as of
November 18, 2005, by and between Therma-Wave, Inc., a Delaware corporation (the
“Company”), and each of the purchasers listed on Exhibit A attached hereto
(collectively, the “Purchasers” and individually, a “Purchaser”).
RECITALS
     WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers
desire to purchase from the Company, an aggregate of ten thousand four hundred
(10,400) units (each, a “Unit” and collectively, the “Units”), with each Unit
being comprised of (i) one share of Series B Preferred Stock, par value $0.01
per share (the “Preferred Stock”) and (ii) one hundred fifty (150) warrants to
purchase common stock of the Company, par value $0.01 per share (“Common
Stock”), (each a “Warrant” and, together with the Preferred Stock, the
“Securities”) of Common Stock, on the terms and conditions set forth in this
Agreement; and
     NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
     1. AGREEMENT TO PURCHASE AND SELL STOCK.
          (a) Authorization. The Company’s Board of Directors has authorized the
issuance, pursuant to the terms and conditions of this Agreement, of up to ten
thousand four hundred (10,400) Units.
          (b) Agreement to Purchase and Sell Securities. Subject to the terms
and conditions of this Agreement, each Purchaser severally agrees to purchase,
and the Company agrees to sell and issue to each Purchaser, at the Closing (as
defined below), that number of Units set forth opposite the appropriate
Purchaser’s name on Exhibit A attached hereto. The purchase price of each Unit
(the “Per Unit Price”) shall be $1,000.
          (c) Use of Proceeds. The Company intends to apply the net proceeds
from the sale of the Units for general corporate purposes.
     2. CLOSING. Subject to the satisfaction of closing conditions, the purchase
and sale of the Units shall take place within two (2) business days after the
satisfaction of closing conditions at the offices of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, at
10:00 a.m. California time, on November 22, 2005, or at such other time and
place as the Company and the Purchasers mutually agree upon (which time and
place are referred to in this Agreement as the “Closing”). At the Closing, the
Company shall authorize its transfer agent

 

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to issue to each Purchaser, against delivery of payment for the Units, one or
more stock certificates (the “Certificates”) registered in the name of each
Purchaser, representing the number of shares of Preferred Stock set forth
opposite such Purchaser’s name on Exhibit A hereto, and bearing the legend set
forth in Section 4(k) herein and one or more warrant certificates representing
the number of Warrants set forth opposite such person’s name on Exhibit A
hereto. Closing documents may be delivered by facsimile with original signature
pages sent by overnight courier. The date of the Closing is referred to herein
as the “Closing Date”.
     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that the statements in this Section 3
are true and correct as of the date hereof and as of the Closing Date, except as
set forth in the disclosure letter delivered to the Purchasers concurrently
herewith (the “Disclosure Letter”):
          (a) Organization Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate power and authority required to
(a) carry on its business as presently conducted and (b) enter into this
Agreement, the Stockholder Agreement dated as of the date hereof (the
“Stockholder Agreement”), the Registration Rights Agreement, dated as of the
date hereof (the “Registration Rights Agreement”) and the Warrants
(collectively, the “Operative Documents”), and to consummate the transactions
contemplated hereby and thereby. The Company is qualified to do business and is
in good standing in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means a material adverse effect on, or a material adverse change in, or
a group of such effects on or changes in, the business, operations, financial
condition, results of operations, assets or liabilities of the applicable party
and its subsidiaries, taken as a whole.
          (b) Capitalization. The capitalization of the Company, without giving
effect to the transactions contemplated by this Agreement, is as follows. The
authorized stock of the Company consists of (i) 75,000,000 shares of Common
Stock; and (ii) 1,000,000 shares of Series A Convertible Preferred Stock, and
(iii) 5,000,000 shares of undesignated Preferred Stock. As of October 28, 2005,
the Company consists of 36,867,751 shares of Common Stock issued and outstanding
and no shares issued and outstanding of Series A Convertible Preferred Stock or
undesignated Preferred Stock. All such shares of Common Stock and Preferred
Stock have been duly authorized, and all such issued and outstanding shares of
Common Stock have been validly issued, are fully paid and nonassessable. No such
outstanding shares of Common Stock were issued in violation of any pre-emptive
rights.
          The Company has also reserved: (i) 3,500,000 shares of Common Stock
for issuance upon exercise of options granted under the Company’s 2000 Employee
Stock Purchase Plan; and (ii) 8,387,429 shares of Common Stock for issuance to
employees of the Company under the Company’s 2000 Equity Incentive Plan. All
shares of Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
Except as provided in this Agreement and set forth in the Disclosure Letter, and
except for the (i) shares of Common Stock subject to outstanding options issued
under any of the Company’s stock plans referenced in this paragraph, and
(ii) 162,006 shares of Common Stock subject to outstanding

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warrants, there are no other equity securities, options, warrants, calls,
rights, commitments or agreements of any character to which the Company is a
party or by which it is bound obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating the
Company to grant, extend or enter into any such equity security, option,
warrant, call, right, commitment or agreement.
          (c) Due Authorization. All corporate actions on the part of the
Company necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under the Operative Documents and
the authorization, issuance, reservation for issuance and delivery of all of the
Securities being sold under the Operative Documents have been taken, and the
Operative Documents constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(a) as may be limited by (i) applicable bankruptcy, insolvency, reorganization
or others laws of general application relating to or affecting the enforcement
of creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies and (b) as rights to indemnity or
contribution may be limited under federal or state securities laws or by
principles of public policy thereunder.
          (d) Valid Issuance of Stock.
               (i) Valid Issuance. The Securities to be issued pursuant to this
Agreement will be, upon payment therefor by the Purchasers in accordance with
this Agreement, duly authorized, validly issued, fully paid and non-assessable,
free from all taxes, liens and charges with respect to the issue thereof. The
issuance of the shares of Common Stock issued or issuable from time to time upon
the conversion of the Preferred Stock will be, and at all times prior to such
conversion, will have been, duly authorized, duly reserved for issuance upon
such conversion, and will be, upon such conversion, validly issued, fully paid
and non-assessable, free from all taxes, liens and charges with respect to the
issue thereof. The issuance of the shares of Common Stock issued or issuable
from time to time upon the exercise of the Warrants will be, and at all times
prior to such exercise, will have been, duly authorized, duly reserved for
issuance upon such exercise and payment of the exercise price of the Warrants,
and will be, upon such exercise and payment, validly issued, fully paid and
non-assessable, free from all taxes, liens and charges with respect to the issue
thereof.
               (ii) Compliance with Securities Laws. Subject to the accuracy of
the representations made by the Purchasers in Section 4 hereof, the Securities
will be issued to the Purchasers in compliance with applicable exemptions from
(i) the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended (the “Securities Act”) and (ii) the registration and
qualification requirements of all applicable securities laws of the states of
the United States.
          (e) Governmental Consents. Except as set forth in the Disclosure
Letter, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, or notice to, any
federal, state or local governmental authority on the part of the Company is
required in connection with the issuance of the Securities to the Purchasers, or
the consummation of the other transactions contemplated by this Agreement,
except (i) such filings as

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have been made prior to the date hereof, (ii) the filing of a notification form
with The Nasdaq Stock Market, Inc. (“Nasdaq”) and (iii) the filing of the notice
required by Section 25102(f) or 25102.1 of the California Corporations Code and
(b) the filing of a notice on Form D with the Securities and Exchange
Commission.
          (f) Non-Contravention. Except as set forth in the Disclosure Letter,
the execution, delivery and performance of this Agreement by the Company, and
the consummation by the Company of the transactions contemplated hereby
(including issuance of the Securities), do not (i) contravene or conflict with
the Certificate of Incorporation, as amended, or Bylaws of the Company; (ii)
constitute a violation of any provision of any federal, state, local or foreign
law binding upon or applicable to the Company or its assets, etc.; or
(iii) constitute a default or require any consent under, give rise to any right
of termination, cancellation or acceleration of, or to a loss of any material
benefit to which the Company is entitled under, or result in the creation or
imposition of any lien, claim or encumbrance on any assets of the Company under,
any Material Contract (as defined below) to which the Company is a party or any
material permit, license or similar right relating to the Company or by which
the Company may be bound or affected.
          (g) Litigation. There is no material action, suit, proceeding, claim,
arbitration or investigation (“Action”) pending or, to the Company’s knowledge,
threatened: (a) against the Company, its activities, properties or assets, or
any officer, director or employee of the Company in connection with such
officer’s, director’s or employee’s relationship with, or actions taken on
behalf of, the Company, or (b) that seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement (including issuance of the
Securities). The Company is not a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. The Company does not intend to initiate any Action that is
reasonably likely to have a Material Adverse Effect on the Company.
          (h) Compliance with Law and Charter Documents. The Company is not in
violation or default of any provisions of its Certificate of Incorporation, as
amended, or Bylaws. The Company has complied in all material respects and is in
compliance in all material respects with all applicable statutes, laws, rules,
regulations and orders of the United States of America and all states thereof,
foreign countries and other governmental bodies and agencies having jurisdiction
over the Company’s business or properties.
          (i) SEC Documents.
               (1) Reports. The Company has filed in a timely manner all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and
regulations promulgated thereunder, except for where the failure to do so would
not be reasonably likely to have a Material Adverse Effect. The Company has made
available to the Purchasers prior to the date hereof copies of its Annual Report
on Form 10-K for the fiscal year ended April 3, 2005, its quarterly report on
Form 10-Q for the fiscal quarters ended July 3, 2005 and October 2, 2005, its
current reports on Form 8-K filed on August 23, 2005, October 6, 2005 and
October 27, 2005 and its Proxy Statement for its 2005 Annual Meeting of
Stockholders filed by the Company with the Securities and Exchange Commission
(“SEC”) (the Form 10-K, Form 10-Q and

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Proxy Statement are collectively referred to herein as the “SEC Documents”).
Each of the SEC Documents, as of the respective date thereof (or if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing), did not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
Company has filed all material contracts that are required to be filed as
exhibits to the SEC Documents (the “Material Contracts”).
               (2) Financial Statements. The financial statements of the Company
in the SEC Documents present fairly, in accordance with United States generally
accepted accounting principles (“GAAP”), the financial position of the Company
as of the dates indicated, and the results of its operations and cash flows for
the period therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments.
               (3) Sarbanes-Oxley. The Chief Executive Officer and the acting
Chief Financial Officer of the Company have signed, and the Company has
furnished to the SEC, all certifications required by Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002. Such certifications contain no qualifications or
exceptions to the matters certified therein and have not been modified or
withdrawn; and neither the Company nor any of its officers has received notice
from any governmental entity questioning or challenging the accuracy,
completeness, form or manner of filing or submission of such certifications. The
Company is otherwise in compliance with all applicable effective provisions of
the Sarbanes-Oxley Act of 2002 and the rules and regulations issued thereunder
by the SEC, except where such non-compliance would not be reasonably likely to
have a Material Adverse Effect
          (j) Absence of Certain Changes. Since June 27, 2005, and the date
hereof, and except as set forth in the Disclosure Letter or in the SEC
Documents, the business and operations of the Company have been conducted in the
ordinary course consistent with past practice. Since June 27, 2005, and the date
hereof, and except as set forth in the Disclosure Letter, there has not been (i)
any change, circumstance or event that is reasonably likely to have a Material
Adverse Effect, (ii) any declaration, setting aside or payment of any dividend
or other distribution of the assets of the Company with respect to any shares of
capital stock of the Company or any repurchase, redemption or other acquisition
by the Company of any outstanding shares of the Company’s capital stock,
(iii) any damage, destruction or loss, whether or not covered by insurance,
except for such occurrences, individually and collectively, that have not had,
and would not reasonably be expected to have, a Material Adverse Effect,
(iv) any waiver by the Company of a valuable right or of a material debt owed to
it, except for such waivers, individually and collectively, that have not had,
and would not reasonably be expected to have, a Material Adverse Effect, (v) any
material change by the Company in its accounting principles, methods or
practices or in the manner in which it keeps its accounting books and records,
except any such change required by a change in GAAP or by the SEC, and (vi) any
entry into, amendment of, termination or non-renewal by the Company of any
material contract, license, lease, transaction, commitment or other right or
obligation.
          (k) Registration Rights. Except as provided in Section 5 herein and
the Disclosure Letter, effective upon the Closing, the Company is not currently
subject to any agreement providing any person or entity any rights (including
piggyback registration rights) to have any securities of the Company registered
with the SEC or registered or qualified with any other governmental authority.

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          (l) Taxes. The Company has filed all necessary federal, state, and
foreign income and franchise tax returns due prior to the date hereof and has
paid or accrued all taxes shown as due thereon, and the Company has no knowledge
of any material tax deficiency which has been or might be asserted or threatened
against it.
          (m) General Solicitation. Neither the Company nor any other person or
entity authorized by the Company to act on its behalf has engaged in a general
solicitation or general advertising (within the meaning of Regulation D of the
Securities Act) of investors with respect to offers or sales of the Securities.
          (n) S-3 Eligibility. The Company meets the eligibility requirements
for use of a Form S-3 Registration Statement.
          (o) Intellectual Property. The Company owns or possesses sufficient
rights to use all inventions, trade secrets, know-how, trademarks, service
marks, trade names, copyrights or other intellectual property and, to its
knowledge, all patent and patent rights (collectively, “Intellectual Property”),
which are necessary to conduct its businesses as currently conducted, except
where the failure to currently own or possess would not reasonably be expected
to result, either individually or in the aggregate, in a Material Adverse
Effect. The Company has not received any written notice of, and has no actual
knowledge of, any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property, and to the Company’s knowledge, none
of the patent rights owned or licensed by the Company are unenforceable or
invalid.
          (p) Internal Accounting Controls. Except as expressly set forth under
Item 9A of the Company’s Annual Report on Form for the fiscal year ended on
April 3, 2005, the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
          (q) No Undisclosed Liabilities. Except as disclosed, reflected or
reserved against in the financial statements and supporting schedules included
in the Company’s Quarterly Report on Form 10-Q for fiscal quarter ended July 3,
2005, to the Company’s knowledge there are no material liabilities of the
Company or any subsidiary, other than liabilities incurred in the ordinary
course of business consistent with past practice since July 3, 2005 or which in
the aggregate would not reasonably be expected to result in a Material Adverse
Effect.
          (r) Related Party Transactions. Except as expressly disclosed in the
SEC Documents, the Company has not entered into any agreements, understandings,
or proposed transactions between the Company or any subsidiary, on the one hand,
and any of its officers, affiliates or directors, or any of their affiliates on
the other hand that would be required to be

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disclosed pursuant to Regulation SK, Item 404, as promulgated by the Securities
and Exchange Commission.
     4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASER.
Each Purchaser hereby represents and warrants to the Company severally and not
jointly, and agrees that:
          (a) Organization Good Standing and Qualification. The Purchaser has
all corporate, membership or partnership power and authority required to enter
into this Agreement and the other Operative Documents, and to consummate the
transactions contemplated hereby and thereby.
          (b) Authorization. The execution of this Agreement has been duly
authorized by all necessary corporate, membership or partnership action on the
part of the Purchaser. This Agreement constitutes the Purchaser’s legal, valid
and binding obligation, enforceable in accordance with its terms, except (a) as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies and (b) as rights to indemnity or
contribution may be limited under federal or state securities laws or by
principles of public policy thereunder.
          (c) Litigation. There is no Action pending against the Purchaser that
seeks to prevent, enjoin, alter or delay the transactions contemplated by this
Agreement.
          (d) Purchase for Own Account. The Securities are being acquired for
investment for the Purchaser’s own account, not as a nominee or agent, and not
with a view to the public resale or distribution thereof within the meaning of
the Securities Act, without prejudice, however, to such Purchaser’s right at all
times to sell or otherwise dispose of all or any part of such securities in
compliance with applicable federal and state securities laws and as otherwise
contemplated by this Agreement. The Purchaser also represents that it has not
been formed for the specific purpose of acquiring the Securities.
          (e) Investment Experience. The Purchaser understands that the purchase
of the Securities involves substantial risk. The Purchaser has experience as an
investor in securities of companies and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of this investment in the Securities
and protecting its own interests in connection with this investment.
          (f) Accredited Purchaser Status. The Purchaser is an “accredited
investor” within the meaning of Regulation D promulgated under the Securities
Act.
          (g) Reliance Upon Purchaser’s Representations. The Purchaser
understands that the issuance and sale of the Securities to it will not be
registered under the Securities Act on the ground that such issuance and sale
will be exempt from registration under the Securities Act

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pursuant to Section 4(2) thereof, and that the Company’s reliance on such
exemption is based on each Purchaser’s representations set forth herein.
          (h) Receipt of Information. The Purchaser has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the issuance and sale of the Securities and the business,
properties, prospects and financial condition of the Company and to obtain any
additional information requested and has received and considered all information
it deems relevant to make an informed decision to purchase the Securities.
          (i) Restricted Securities. The Purchaser will not sell, offer to sell,
assign, pledge, hypothecate or otherwise transfer any of the Securities unless
(i) pursuant to an effective registration statement under the Securities Act,
(ii) such holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that a public sale, assignment or transfer of the
Securities may be made without registration under the Securities Act, or
(iii) such holder provides the Company with reasonable assurances that the
Securities can be sold pursuant to Rule 144 under the Securities Act without any
restriction as to the number of securities acquired as of a particular date that
can be immediately sold. Notwithstanding anything to the contrary contained in
the Agreement, the Purchaser may transfer (without restriction and without the
need for an opinion of counsel) the Securities to its affiliates provided that
such affiliate is an “accredited investor” under Regulation D and such affiliate
agrees to be bound by the terms and conditions of the Agreement.
          (j) No Affiliation. The Purchaser represents and warrants that it is
not affiliated with any other Purchaser, that it has not been identified as a
party to any group with any other Investor in any filing with the Securities and
Exchange Commission, and that it not otherwise a member of an identified group
that includes any other Investor.
          (k) Legends. The Purchaser agrees that the certificates for the
Preferred Stock and the Common Stock issuable upon exercise of the Warrants
shall bear the following legend:
“The securities represented by this certificate have not been registered under
the Securities Act of 1933 or with any state securities commission, and may not
be transferred or disposed of by the holder in the absence of a registration
statement which is effective under the Securities Act of 1933 and applicable
state laws and rules, or, unless, immediately prior to the time set for
transfer, such transfer may be effected without violation of the Securities Act
of 1933 and other applicable state laws and rules.”
     In addition, the Purchaser agrees that the Company may place stop transfer
orders with its transfer agents with respect to such certificates. The legend
set forth above shall be removed from the certificates for the Preferred Stock
and the Common Stock issuable upon exercise of the Warrants, (i) following any
sale of such Preferred Stock or Common Stock pursuant to Rule 144 or any
effective registration statement, or (ii) if such Preferred Stock or Common
Stock is eligible for sale under Rule 144(k) (and the holder of such Preferred
Stock or Common Stock has submitted a written request for removal of the legend
indicating that the holder has complied with the applicable provisions of
Rule 144), or (iii) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and pronouncements
issued by the Staff of the SEC)

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(and the holder of such Preferred Stock or Common Stock has submitted a written
request for removal of the legend indicating that the holder has complied with
such judicial interpretation or pronouncement). Subject to receipt of
appropriate certifications, the Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent promptly upon the occurrence of any of
the events in clauses (i), (ii) or (iii) above to effect the removal of the
legend on certificates for the Preferred Stock or Common Stock. The Company
agrees that at such time as such legend is no longer required under this
Section 4(k), it will, no later than three (3) business days following the
delivery by a Purchaser to the Company (attention: Chief Financial Officer) or
the Company’s transfer agent (with a copy to the Company or the transfer agent,
as applicable) of a certificate representing the Preferred Stock or Common Stock
issued with a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such Preferred Stock or Common Stock that
is free from all restrictive and other legends; provided that in the case of
removal of the legend for reasons set forth in clause (ii) above, the holder of
such Preferred Stock or Common Stock has submitted a written request for removal
of the legend indicating that the holder has complied with the applicable
provisions of Rule 144. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section 4(k).
          (l) HSR Compliance.
               (i) Each Purchaser is its own “ultimate parent entity” as defined
in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended or the
rules and regulations promulgated thereto (together, the “HSR Act”).
               (ii) Each Investor will hold less than $50,000,000 in voting
securities of the Company following execution of this Agreement, as valued under
the HSR Act.
     5. COMPANY COVENANTS.
          (a) Reporting for Income Tax. The Preferred Stock is intended to be
Common Stock for tax purposes, and the Company intends to report the Preferred
Stock for purposes of Section 305 of the Internal Revenue Code of 1986, as
amended (the “Code”).
          (b) Covenant Regarding Dividends. Until the third anniversary of the
date on which no Preferred Stock is outstanding, the Company shall not make any
payment or declaration of any dividend or making of any other distribution on
any share of capital stock or other security or interest in the Corporation
other than the Preferred Stock if the effect of such dividend or distribution
could reasonably be expected to (i) cause the right to receive the Liquidation
Value (as defined in the Certificate of Designation) to result in, (ii) cause an
increase in the Liquidation Value to be, (iii) cause the conversion of the
Preferred Stock into Common Stock to be or (iv) make an adjustment of the
Conversion Rate (as defined in the Certificate of Designation) a taxable event
to the holders of the Preferred Stock.
          (c) Covenant Regarding Stock Issuance. Until the Closing Date, Company
shall not issue any shares of Common Stock, Series A Convertible Preferred
Stock, undesignated Preferred Stock or securities convertible into or
exchangeable or exercisable for equity securities of the

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Company, except those shares of Common Stock issued pursuant to the Company’s
employee stock purchase plan and equity incentive plan and shares of Common
Stock issued upon the exercise or conversion of options or convertible
securities outstanding as of the date hereof.
     6. PURCHASER COVENANT REGARDING SHORT SALE.
          (a) Short Sale Restrictions. Prior to the earlier of (i) the second
anniversary of the issuance of the Preferred Stock and (ii) the time at which
all shares of Preferred Stock have converted into shares of Common Stock, each
Purchaser, severally and not jointly, agrees it will not engage in any short
sale transactions (or transactions, including transactions in derivative
securities, having the effect of a short sale) of the Common Stock, as defined
in Rule 200(a) of Regulation SHO under the Exchange Act. For the avoidance of
doubt, the parties agree that nothing herein shall be interpreted to (i) prevent
a sale by a Purchaser of the Common Stock now owned or herein after acquired
that does not involve a short sale (including a short sale “against the box”) or
(ii) limit the ability to receive the transaction consideration paid by another
person or entity in connection with an acquisition of the Company by means of
any transaction or series of transactions (including any reorganization, merger,
consolidation or share transfer), where the shareholders of the Company
immediately preceding such transaction own, following such transaction, less
than 50% of the voting securities of the Company (a “Change of Control”).
     7. CONDITIONS TO THE PURCHASERS’ OBLIGATIONS AT CLOSING. The obligations of
the Purchasers under Section 2(a) of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
          (a) Representations and Warranties True. Each of the representations
and warranties of the Company contained in Section 3 shall be true and correct
in all material respects on and as of the date of the date hereof and on and as
of the date of the Closing, with the same effect as though such representations
and warranties had been made as of the Closing.
          (b) Performance. The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchase and sale described herein.
          (c) Compliance Certificate. The Company will have delivered to the
Purchasers at the Closing a certificate signed on its behalf by its Chief
Executive Officer or Chief Financial Officer certifying that the conditions
specified in Sections 7(a) and 7(b) hereof have been fulfilled.
          (d) Securities Exemptions. The offer and sale of the Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
          (e) Opinion of Company Counsel. The Purchasers will have received an
opinion on behalf of the Company, dated as of the date of the Closing, from
Wilson, Sonsini, Goodrich & Rosati, PC, counsel to the Company, in the form
attached as Exhibit B.

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          (f) No Suspension of Trading or Listing of Common Stock. The Common
Stock of the Company (i) shall be designated for quotation or listed on Nasdaq
and (ii) shall not have been suspended from trading on Nasdaq.
          (g) Good Standing Certificates. The Company shall have delivered to
the Purchasers a certificate of the Secretary of State of the State of Delaware,
dated as of a date within five days of the date of the Closing, with respect to
the good standing of the Company.
          (h) Secretary’s Certificate. The Company shall have delivered to the
Purchasers a certificate of the Company executed by the Company’s Secretary
attaching and certifying to the truth and correctness of (1) the Certificate of
Incorporation, (2) the Bylaws and (3) the resolutions adopted by the Company’s
Board of Directors in connection with the transactions contemplated by the
Operative Documents.
          (i) No Statute or Rule Challenging Transaction. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation by a court, regulatory body, self-regulatory organization or
governmental authority of competent jurisdiction shall have been enacted,
entered, promulgated, or adopted by any court, regulatory body, self-regulatory
organization or governmental authority of competent jurisdiction or the staff of
any of the foregoing, having authority over the matters contemplated hereby
which questions the validity of, or challenges or prohibits the consummation of,
any of the transactions contemplated by this Agreement.
          (j) Closing. The Closing shall occur by no later than November 30,
2005.
          (k) Other Actions. The Company shall have executed such certificates,
agreements, instruments and other documents, and taken such other actions as
shall be customary or reasonably requested by the Purchasers in connection with
the transactions contemplated hereby.
     8. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of
the Company to the Purchasers under this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions:
          (a) Representations and Warranties True. The representations and
warranties of the Purchasers contained in Section 4 shall be true and correct in
all material respects on and as of the date hereof and on and as of the date of
the Closing with the same effect as though such representations and warranties
had been made as of the Closing.
          (b) Performance. The Purchasers shall have performed and complied in
all material respects with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing.
          (c) Securities Exemptions. The offer and sale of the Securities to the
Purchasers pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
          (d) Payment of Purchase Price. The Purchasers shall have delivered to
the Company same day funds in full payment of the purchase price as specified in
Section 1(b).

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          (e) Other Actions. The Purchasers shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Company in
connection with the transactions contemplated hereby.
     9. MISCELLANEOUS.
          (a) Successors and Assigns. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. The Company may not assign this Agreement or
any rights or obligations hereunder without the prior written consent of each
Purchaser; provided, however, that upon any Change of Control, this Agreement
and all rights or obligations hereunder may be assigned by the Company only to
the surviving entity without the prior written consent of the other party or
parties. Each Purchaser may assign or transfer any or all of its rights under
this Agreement to an affiliate or an entity advised by the same management
company that advises such Purchaser, provided that such assignee or transferee
agrees in writing to be bound, with respect to the transferred Securities, by
Section 6 hereof; whereupon such assignee or transferee shall be deemed to be a
“Purchaser” for all purposes of this Agreement
          (b) Governing Law. This Agreement will be governed by and construed
under the internal laws of the State of Delaware, without reference to
principles of conflict of laws or choice of laws.
          (c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
          (d) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
          (e) Notices. Any notice required or permitted under this Agreement
shall be given in writing, shall be effective when received, and shall in any
event be deemed received and effectively given upon personal delivery to the
party to be notified or three (3) business days after deposit with the United
States Post Office, by registered or certified mail, postage prepaid, or one
(1) business day after deposit with a nationally recognized courier service such
as Federal Express for next business day delivery under circumstances in which
such service guarantees next business day delivery, or one (1) business day
after facsimile with copy delivered by registered or certified mail, in any
case, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof or at such other address
as the Purchaser or the Company may designate by giving at least ten (10) days
advance written notice pursuant to this Section 10(e).
          (f) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the

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holders of Preferred Stock representing at least a majority of the total
aggregate number of Preferred Stock then outstanding. Any amendment or waiver
effected in accordance with this Section 10(f) will be binding upon the
Purchasers, the Company and their respective successors and assigns.
          (g) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
          (h) Entire Agreement. This Agreement, together with all exhibits and
schedules hereto and thereto constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties with respect to the subject matter hereof.
          (i) Further Assurances. From and after the date of this Agreement upon
the request of the Company or the Purchasers, the Company and the Purchasers
will execute and deliver such instruments, documents or other writings, and take
such other actions, as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.
          (j) Meaning of Include and Including. Whenever in this Agreement the
word “include” or “including” is used, it shall be deemed to mean “include,
without limitation” or “including, without limitation,” as the case may be, and
the language following “include” or “including” shall not be deemed to set forth
an exhaustive list.
          (k) Fees, Costs and Expenses. The Company and each Purchaser shall
each pay their own expenses in connection with the transactions contemplated by
this Agreement; provided, however, that if the Closing is effected, the Company
shall pay Purchasers’ reasonable and out-of-pocket expenses, including fees of
counsel, consultants and accountants, incurred in connection with the purchase
of the Securities and the negotiation, execution and delivery under the
Operative Documents, such expenses not to exceed two hundred thousand dollars
($200,000) in the aggregate.
          (l) Survival. The representations and warranties of the Company and
the Purchasers contained in Sections 3 and 4 of this Agreement shall survive
until eighteen (18) months after the Closing Date.
          (m) No Third Party Rights. This Agreement is intended solely for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not intended to confer any benefits upon, or create any rights in
favor of, any person (including, without limitation, any stockholder or debt
holder of the Company) other than the parties hereto.
          (o) Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each Purchaser
and the Company will be entitled to specific performance under this Agreement.
The parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the

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foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
[The balance of this page is intentionally left blank.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.

              THERMA-WAVE, INC.
 
            By: /s/ Boris Lipkin
 
            Name: Boris Lipkin     Title: Chief Executive Officer
 
            By: /s/ Joseph Passarello
 
            Name: Joseph Passarello     Title: Chief Financial Officer and
Secretary

[PURCHASER SIGNATURE PAGES TO FOLLOW]
[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]

 

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SIGNATURE PAGE TO
PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 2005
BY AND AMONG
THERMA-WAVE, INC.
AND EACH PURCHASER NAMED THEREIN
     The undersigned hereby executes and delivers to Therma-Wave, Inc. the
Purchase Agreement (the “Agreement”) to which this Signature Page is attached
effective as of the date of the Agreement, which Agreement and Signature Page,
together with all counterparts of such Agreement and signature pages of the
other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.

                  Number of Units:    
 
           
 
                North Run Master Fund, LP
 
                By: North Run GP, LP, its General Partner     By: North Run
Advisors, LLC, its General Partner
 
           
 
  By:                           Thomas B. Ellis, Member
 
           
 
  By:                           Todd B. Hammer, Member
 
                Address: One International Place, Suite 2401        
       Boston, MA 02110

[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]

 

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SIGNATURE PAGE TO
PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 2005
BY AND AMONG
THERMA-WAVE, INC.
AND EACH PURCHASER NAMED THEREIN
     The undersigned hereby executes and delivers to Therma-Wave, Inc. the
Purchase Agreement (the “Agreement”) to which this Signature Page is attached
effective as of the date of the Agreement, which Agreement and Signature Page,
together with all counterparts of such Agreement and signature pages of the
other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.

                      Number of Units: 4,200
 
               
 
                    Deephaven Relative Value Equity Trading Ltd.
 
                    By: /s/ Colin Smith        
 
                    Name:  Colin Smith
 
                    Title:  CEO
 
                    Address: 130 Cheshire Parkway, Suite 102         Minnetonka,
MN 55305

[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]

 

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SIGNATURE PAGE TO
PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 2005
BY AND AMONG
THERMA-WAVE, INC.
AND EACH PURCHASER NAMED THEREIN
     The undersigned hereby executes and delivers to Therma-Wave, Inc. the
Purchase Agreement (the “Agreement”) to which this Signature Page is attached
effective as of the date of the Agreement, which Agreement and Signature Page,
together with all counterparts of such Agreement and signature pages of the
other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.

                      Number of Units: 1,000
 
               
 
                    Deephaven Long Short Equity Trading Ltd.
 
                    By: /s/ Colin Smith        
 
                    Name: Colin Smith
 
                    Title: CEO
 
                    Address:  130 Cheshire Parkway, Suite 102        
  Minnetonka, MN 55305

[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]

 

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Exhibit A
Schedule of Purchasers

                                      Shares of                 Series B        
Number   Convertible   Number of Name of Purchaser   of Units   Preferred Stock
  Warrants
North Run Master Fund, LP
One International Place, Suite 2401
Boston, MA 02110
    5,200       5,200       780,000  
 
                       
Deephaven Relative Value Equity Trading Ltd.
130 Cheshire Parkway, Suite 102
Minnetonka, MN 55305
    4,200       4,200       630,000  
 
                       
Deephaven Long Short Equity Trading Ltd.
130 Cheshire Parkway, Suite 102
Minnetonka, MN 55305
    1,000       1,000       150,000  
 
                       
TOTAL
    10,400       10,400       1,560,000  

 

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Exhibit B
Form of Legal Opinion