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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Rudolph Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
RUDOLPH TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 26, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
Rudolph Technologies, Inc. (the "Company"), a Delaware corporation, will be
held on May 26, 2000 at 11:00 a.m., local time, at the Company's Ledgewood
facility, located at 1705 Route 46 West, Ledgewood, New Jersey, for the
following purposes:
1. To elect three Class I directors to serve for three-year terms
expiring upon the 2003 Annual Meeting of Stockholders or until their
successors are elected.
2. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending December
31, 2000.
3. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 28, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
Steven R. Roth
Secretary
Flanders, New Jersey
April 26, 2000
RUDOLPH TECHNOLOGIES, INC.
----------------
PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Rudolph Technologies, Inc. (the "Company") for use at the 2000 Annual Meeting
of Stockholders to be held May 26, 2000 at 11:00 a.m., local time (the "Annual
Meeting"), or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Annual
Meeting will be held at the Company's Ledgewood facility, located at 1705 Route
46 West, Ledgewood, New Jersey, and its telephone number is (973) 691-1300.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended December 31, 1999, including financial
statements, were mailed on or about April 26, 2000 to all stockholders entitled
to vote at the meeting.
Record Date and Voting Securities
Stockholders of record at the close of business on March 28, 2000 are
entitled to notice of and to vote at the meeting. At the record date,
14,684,706 shares of the Company's Common Stock, $0.001 par value, were issued
and outstanding.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company at the Company's principal executive offices a written notice of
revocation or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
Voting and Solicitation
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors.
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by
telephone, telegram, facsimile or personal solicitation by directors, officers
or regular employees of the Company. No additional compensation will be paid to
such persons for such services.
Quorum; Abstentions; Broker Non-votes
The required quorum for the transaction of business at the Annual Meeting is
a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the record date. Shares that are voted "FOR",
"AGAINST" or "WITHHOLD AUTHORITY" with respect to a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast")
with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the
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presence or absence of a quorum for the transaction of business and (ii) the
total number of Votes Cast with respect to a proposal (other than the election
of directors). In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions in this manner. Accordingly, abstentions
will have the same effect as a vote against the proposal.
Under current Delaware case law, while broker non-votes s (i.e. the votes of
shares held of record by brokers as to which the underlying beneficial owners
have given no voting instructions) should be counted for purposes of
determining the presence or absence of a quorum for the transaction of
business, broker non-votes should not be counted for purposes of determining
the number of Votes Cast with respect to the particular proposal on which the
broker has expressly not voted. Accordingly, the Company intends to treat
broker non-votes in this manner.
Deadlines for Submission of Stockholder Proposals for 2001 Annual Meeting
Stockholders of the Company are entitled to present proposals for
consideration at forthcoming stockholder meetings provided that they comply
with the proxy rules promulgated by the Securities and Exchange Commission and
the Bylaws of the Company. Stockholders wishing to present a proposal at the
Company's 2001 Annual Stockholder Meeting must submit such proposal to the
Company by December 27, 2000 if they wish for it to be eligible for inclusion
in the proxy statement and form of proxy relating to that meeting. In addition,
under the Company's Bylaws, a stockholder wishing to make a proposal at the
2001 Annual Stockholder Meeting must submit such a proposal to the Company
prior to March 12, 2001.
PROPOSAL 1--ELECTION OF DIRECTORS
Nominees
The authorized number of directors is currently established at eight. The
Company's Certificate of Incorporation provides that the directors shall be
divided into three classes, with the classes serving for staggered, three-year
terms. Currently there are three directors in each of Class I and Class II and
two directors in Class III. Each of the three Class II directors will hold
office until the 2001 Annual Meeting or until his successor has been duly
elected and qualified and each of the Class III directors will hold office
until the 2002 Annual Meeting or until his successor has been duly elected and
qualified. The three Class I directors are to be elected at this Annual
Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named below, each of whom is
currently a director of the Company. In the event that any nominee of the
Company becomes unable or declines to serve as a director at the time of the
Annual Meeting, the proxy holders will vote the proxies for any substitute
nominee who is designated by the current Board of Directors to fill the
vacancy. It is not expected that any nominee listed below will be unable or
will decline to serve as a director.
The names of the three Class I nominees for director and certain information
about each of them are set forth below. The names of, and certain information
about, the current Class II and Class III directors with unexpired terms are
also set forth below. All information is as of the record date.
Director
Name Age Principal Occupation Since
- ---- --- -------------------- --------
Nominees for Class I
Directors:
Paul Craig................ 43 General Partner of Riverside 1996
Partners, Inc.
Paul F. McLaughlin........ 54 Chairman and Chief Executive Officer 1996
of Rudolph Technologies, Inc.
2
Director
Name Age Principal Occupation Since
- ---- --- -------------------- --------
Carl E. Ring, Jr.......... 62 Managing Director of Liberty Capital 1996
Partners, Inc.
Continuing Class II
Directors:
Daniel H. Berry........... 54 President and Chief Operating 1998
Officer of Ultratech Stepper, Inc.
Stephen J. Fisher......... 37 Partner of Liberty Partners, L.P. 1996
Richard F. Spanier........ 60 Retired, Chairman Emeritus 1966
Continuing Class III
Directors:
David Belluck............. 37 Vice President and General Partner 1996
of Riverside Partners, Inc.
Aubrey C. Tobey........... 74 President of ACT International 1998
Consulting, Inc.
Except as indicated below, each nominee or incumbent director has been
engaged in the principal occupation set forth above during the past five years.
There are no family relationships between any directors or executive officers
of the Company.
Paul F. McLaughlin has served as the Company's Chairman and Chief Executive
Officer since January 2000 and as President, Chief Executive Officer and as a
director of the Company since June 1996. From 1994 to June 1996, Mr. McLaughlin
served as an associate at Riverside Partners, Inc., a private equity investment
firm. Mr. McLaughlin has over 15 years experience in the semiconductor capital
equipment business including 6 years as Vice President at Perkin-Elmer
Corporation, a pioneer in optical lithography. Mr. McLaughlin holds a B.S. in
Metallurgical Engineering from Rensselaer Polytechnic Institute, an M.S. in
Metallurgy and Materials Science from Lehigh University and an M.B.A. from
Harvard University, Graduate School of Business Administration.
David Belluck has served as one of the Company's directors since June 1996.
Since February 1989, Mr. Belluck has been a general partner of Riverside
Partners, Inc., a private equity investment firm. Mr. Belluck holds a B.A. from
Harvard University and an M.B.A. from Harvard University, Graduate School of
Business Administration. Mr. Belluck is currently a director of Atchison
Casting Corporation, Evergreen Electronics and Riverside Partners, Inc.
Daniel H. Berry has served as one of the Company's directors since October
1998. Since May 1999, Mr. Berry has served as President and Chief Operating
Officer of Ultratech Stepper, Inc., a lithography tool supplier. From August
1998 to May 1999 he served as Executive Vice President and Chief Operating
Officer of Ultratech Stepper and from January 1994 to August 1999, he served as
a Senior Vice President of Sales and Marketing of that company. Mr. Berry holds
a B.S. in Electrical Engineering from the Polytechnic Institute of Brooklyn.
Paul Craig has served as one of the Company's directors since June 1996.
Since February 1989, Mr. Craig has served as a general partner and a director
of Riverside Partners, Inc., a private equity investment firm. Mr. Craig holds
a B.A. from Harvard University. Mr. Craig is currently a director of Evergreen
Electronics.
Stephen J. Fisher has served as one of the Company's directors since June
1996. Since July 1998, Mr. Fisher has served as a partner of Liberty Partners,
L.P., a private equity investment firm. From June 1994 to July 1998, Mr. Fisher
served as a Vice President of Liberty Capital Partners, Inc. Mr. Fisher holds a
B.S. and an M.B.A. from Washington University and a J.D. from Boston University
School of Law. Mr. Fisher is currently a director of Medical Logistics and
Gallaher Paper Company.
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Carl E. Ring, Jr. has served as one of the Company's directors since June
1996. He is a founding partner of Liberty Partners, L.P. Mr. Ring holds a B.A.
in mathematics from George Washington University and an M.B.A. from Harvard
University, Graduate School of Business Administration. Mr. Ring is a director
of Monaco Coach Corporation and Gallaher Paper Company.
Richard F. Spanier has served as Chairman Emeritus since January 2000 and
prior to that the Company's Chairman of the Board of Directors since September
1966. From September 1966 to June 1996, Mr. Spanier served as the Company's
President and Chief Executive Officer. Mr. Spanier holds a B.S. in Physics, an
M.S. in Physical Chemistry and a Ph.D. in Chemical Physics from Stevens
Institute of Technology.
Aubrey C. Tobey has served as one of the Company's directors since October
1998. Since April 1987, Mr. Tobey has served as President of ACT International
Consulting, Inc., a company which provides marketing and management services
for high technology companies. Mr. Tobey holds a B.S. in Mechanical Engineering
from Tufts University and an M.S. in Mechanical Engineering from the University
of Connecticut. Mr. Tobey is a director of Chartered Semiconductor
Manufacturing, Ltd.
Board Meetings and Committees
The Board of Directors of the Company held a total of five meetings during
fiscal 1999. No director attended fewer than 75% of the meetings of the Board
of Directors and its committees upon which such director served. The Board of
Directors has an Audit Committee and a Compensation Committee. The Board of
Directors has no nominating committee or any committee performing similar
functions.
The Audit Committee of the Board of Directors currently consists of
Directors Berry and Tobey, and held one meeting during the last fiscal year.
The Audit Committee recommends engagement of the Company's independent
accountants, and is primarily responsible for approving the services performed
by the Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently consists of
Directors Craig and Ring, and held one meeting during the last fiscal year. The
Compensation Committee establishes the policies upon which compensation of and
incentives for the Company's executive officers will be based, reviews and
approves the compensation of the Company's executive officers, and administers
the Company's stock option and stock purchase plans.
Compensation of Directors
The Company's directors who are employees of the Company received no
compensation in 1999 for service on the Board of Directors and any committee
thereof. Non-employee directors who are not, and are not employed by,
significant stockholders received cash compensation of $4,000 in 1999 and are
eligible to receive annual stock grants under the Company's 1996 and 1999 Stock
Plans at the discretion of the compensation committee of the Board of
Directors. In 1999, Messrs. Berry and Tobey were granted options to purchase
1,783 shares of Common Stock under the 1996 Stock Plan at an exercise price of
$0.56 per share. Such options vested in connection with the Company's initial
public offering. The exercise price of each option granted prior to the
Company's initial public offering is the fair market value of the Common Stock
as determined by the Board of Directors on the date of grant. No directors
other than Messrs. Berry, Spanier and Tobey were granted options under the 1996
Stock Plan in 1999.
Vote Required
The three nominees receiving the highest number of votes of the shares
entitled to be voted for them shall be elected as directors. Votes withheld
from any director will be counted for purposes of determining the
4
presence or absence of a quorum for the transaction of business at the meeting,
but have no other legal effect upon election of directors under Delaware law.
The Company's Board of Directors unanimously recommends voting "for" the
nominees set forth herein.
PROPOSAL 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2000, and recommends that the stockholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting of Stockholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required to
ratify PricewaterhouseCoopers LLP as the Company's independent auditors.
The Company's Board of Directors unanimously recommends voting "for" the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending December 31, 2000.
Other Matters
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
EXECUTIVE COMPENSATION
Executive Compensation Tables
The table below sets forth information for the two most recently completed
fiscal years concerning the compensation of the Chief Executive Officer of the
Company and the other executive officers of the Company (the "Named Executive
Officers"):
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------------------ ------------------
Name and Principal Other Annual Securities All Other
Position Year Salary Bonus(1) Compensation Underlying Options Compensation(2)
- ------------------ ---- -------- -------- ------------ ------------------ ---------------
Paul F. McLaughlin...... 1999 $258,470 $78,000 -- 143,545 $10,652
Chairman and Chief 1998 $220,014 -- -- 382,098 --
Executive Officer
Robert M. Loiterman..... 1999 $162,064 $41,250 -- 88,909 $11,253
Vice President, 1998 $148,514 -- -- 42,052 --
Engineering
Steven R. Roth ......... 1999 $129,107 $26,600 -- 88,909 $ 6,927
Vice President, Finance 1998 $111,300 -- -- 28,035 --
and Administration and
Chief Financial
Officer
- --------
(1) Includes bonuses earned during the fiscal year and paid in the subsequent
year.
(2) Includes amounts paid in 1999 for health insurance premiums and amounts
contributed by the Company under the Company's 401(k) Saving and Retirement
Plan.
5
Option Grants
The following table sets forth certain information with respect to stock
option grants to the Named Executive Officers during the fiscal year ended
December 31, 1999. In accordance with the rules of the Securities and Exchange
Commission (the "SEC"), also shown below is the potential realizable value over
the term of the option (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation from the option exercise price of
5% and 10%, compounded annually. These amounts are based on certain assumed
rates of appreciation and do not represent the Company's estimate of future
stock price. Actual gains, if any, on stock option exercises will be dependent
on the future performance of the Common Stock:
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Option Grants in 1999(1) for Option Term
---------------------------------------------- ---------------------
% of Total
Number of Options
Securities Granted
Underlying to Employees
Options in Fiscal Exercise Or Expiration
Name Granted Year(2) Base Price Date(3) 5% 10%
- ---- ---------- ------------ ----------- ---------- ---------- ----------
Paul F. McLaughlin...... 18,545 1.9% $00.56 07/22/09 $ 6,531 $ 16,551
125,000 12.8% $16.00 11/11/09 $1,257,789 $3,187,485
Robert M. Loiterman..... 13,909 1.4% $00.56 07/22/09 $ 4,898 $ 12,414
75,000 7.7% $16.00 11/11/09 $ 754,674 $1,912,491
Steven R. Roth.......... 13,909 1.4% $00.56 07/22/09 $ 4,898 $ 12,414
75,000 7.7% $16.00 11/11/09 $ 754,674 $1,912,491
- --------
(1) These options vest over 10 years.
(2) Based on a total of 976,202 shares underlying options granted to employees
and directors during 1999.
(3) Options may terminate before their expiration date if the optionee's status
as an employee or consultant is terminated or upon the optionee's death or
disability.
Option Exercises and Values
The following table sets forth information for our executive officers
relating to the number and value of securities underlying exercisable and
unexercisable options they held at December 31, 1999.
Fiscal Year-End Option Exercises and Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares December 31, 1999 December 31, 1999(1)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
Paul F. McLaughlin...... 312,580 $2,927,060 331,126 125,000 $10,873,590 $2,187,500
Robert M. Loiterman..... 34,400 $ 321,028 48,308 75,000 $ 1,587,571 $1,312,500
Steven R. Roth.......... 22,934 $ 214,016 36,841 75,000 $ 1,211,084 $1,312,500
- --------
(1) Value of unexercised options is based on the last reported sale price of
the Company's Common Stock on the Nasdaq National Market of $33.50 per
share on December 31, 1999 minus the exercise price.
6
Compensation Committee Report
The information contained in the following report shall not be deemed to be
"soliciting material" or to be filed with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates it by
reference into such filing.
Introduction
The Compensation Committee of the Board of Directors (the "Committee") was
established in 1996 and is comprised solely of outside directors. In general,
the Committee is responsible for reviewing and recommending for approval by the
Board of Directors the Company's compensation practices, including executive
salary levels and variable compensation programs, both cash-based and equity-
based. With respect to the compensation of the Company's Chief Executive
Officer, the Committee reviews and approves the various elements of the Chief
Executive Officer's compensation. With respect to other executive officers, the
Committee reviews the recommendations for such individuals presented by the
Chief Executive Officer and the bases therefor and approves or modifies the
compensation packages for such individuals. Base salary levels for executive
officers of the Company have been generally established at or near the start of
each fiscal year, and final bonuses for executive officers have been determined
at the end of each fiscal year based upon such individual's performance and the
performance of the Company.
Executive Compensation
The Company's compensation program consists of two principal components:
cash-based compensation, both fixed and variable, and equity-based
compensation. These two principal components are intended to attract, retain,
motivate and reward executives who are expected to manage both the short-term
and long-term success of the Company.
Cash-based Compensation
The Committee believes that the annual cash compensation paid to executives
should be commensurate with both the executive's and the Company's performance.
For this reason, the Company's executive cash compensation consists of base
compensation (salary) and variable incentive compensation (annual bonus).
Base salaries for executive officers are established considering a number of
factors, including the Company's profitability; the executive's individual
performance and measurable contribution to the Company's success; and pay
levels of similar positions with comparable companies in the industry. The
Committee supports the Company's compensation philosophy of moderation for
elements such as base salary and benefits. Base salary decisions are made as
part of the Company's formal annual review process.
An executive's annual performance award generally depends on the financial
performance of the Company relative to profit targets and the executive's
individual performance. These targets are reviewed at least annually to meet
the changing nature of the Company's business. The incentive portion is set at
a higher percentage for more senior officers, with the result that such
officers have a higher percentage of their potential total cash compensation at
risk.
Equity-based Compensation
The Committee administers an option program pursuant to which members of
management, including the Company's executive officers, may receive annual
option grants as of the time of their reviews each year from a pool of shares
set aside by the Committee. The purpose of the option program is to provide
additional incentive to executives and other key employees of the Company to
work to maximize long-term return to the
7
Company's stockholders. The allocation of the option pool, other than the
shares allocated to the Chief Executive Officer and other than shares allocated
in amounts of 10,000 or less per recipient, is recommended by the Chief
Executive Officer for approval by the Committee. The allocation of shares from
the option pool in amounts of 10,000 or less per recipient is made by the Chief
Executive Officer and reviewed by the Board of Directors at the first Board
meeting following such allocation. The allocation of shares from the option
pool to the Chief Executive Officer is determined by the Committee. In granting
stock options to the executive officers, the Chief Executive Officer and the
Committee consider a number of subjective factors, including the executive's
position and responsibilities at the Company, such executive's individual
performance, the number of options held (if any) and other factors that they
may deem relevant. Options generally vest over a five-year period to encourage
optionholders to continue in the employ of the Company. The exercise price of
options is the market price on the date of grant, ensuring that the option will
acquire value only to the extent that the price of the Company's Common Stock
increases relative to the market price at the date of grant. In 1999, the
Committee set aside a pool of 2,000,000 shares for grants to management, of
which options to purchase 275,000 shares were granted to the executive
officers.
Chief Executive Officer Compensation
The Committee generally uses the same factors and criteria described above
for compensation decisions regarding the Chief Executive Officer. During 1999,
Mr. McLaughlin received a base salary of $258,470 for serving as the Chief
Executive Officer of the Company. Mr. McLaughlin received a bonus for 1999 of
$78,000. In 1999, the Committee also granted Mr. McLaughlin an option to
purchase 143,545 shares of the Company's Common Stock pursuant to the Company's
stock option plan.
Tax Deductibility of Executive Compensation
The Internal Revenue Code limits the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. For this purpose,
compensation can include, in addition to cash compensation, the difference
between the exercise price of stock options and the value of the underlying
stock on the date of exercise. Under this legislation, the Company may deduct
such compensation with respect to any of these individuals only to the extent
that during any fiscal year such compensation does not exceed $1 million or
meets certain other conditions (such as stockholder approval). The Company's
policy is to qualify, to the extent reasonable, its executive officers'
compensation for deductibility under applicable tax laws. However, the
Committee believes that its primary responsibility is to provide a compensation
program that will attract, retain and reward the executive talent necessary to
the Company's success. Consequently, the Committee recognizes that the loss of
a tax deduction may be necessary in some circumstances.
Summary
The Committee believes that its compensation program to date has been fair
and motivating, and has been successful in attracting and retaining qualified
employees and in linking compensation directly to the Company's success. The
Committee intends to review this program on an ongoing basis to evaluate its
continued effectiveness.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Directors Craig and Ring, none of
whom has interlocking relationships as defined by the Securities and Exchange
Commission.
THE COMPENSATION COMMITTEE
Paul Craig
Carl E. Ring, Jr.
8
COMPANY'S STOCK PERFORMANCE
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with
the cumulative return of the Nasdaq composite index and a peer group index for
the period commencing on the first day the Company's Common Stock was traded on
the Nasdaq Stock Market, November 12, 1999, and ending on December 31, 1999.
The information contained in the performance graph shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates it by reference into such filing.
The graph assumes that $100 was invested on November 12, 1999 in the
Company's Common Stock and in each index (based on prices from the close of
trading on November 12, 1999), and that all dividends were reinvested. No cash
dividends have been declared or paid on the Company's Common Stock. Stockholder
returns over the indicated period should not be considered indicative of future
stockholder returns. The Company operates on a 52 week fiscal year which ended
on Friday, December 31, 1999. Under the assumptions stated above, over the
period from November 12, 1999 to December 31, 1999 the total return on an
investment in the Company would have been 109.38%, as compared to 26.08% for
the Nasdaq Stock Market index and 14.78% for the Chase H & Q Semiconductor
index shown below.
PERFORMANCE GRAPH FOR
RUDOLPH TECHNOLOGIES, INC.
9
SECURITY OWNERSHIP
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of February 1, 2000
(except as otherwise indicated), by: (i) each person who is known by the
Company to own beneficially more than five percent of the Common Stock, (ii)
each of the Named Executive Officers, (iii) each of the Company's directors,
and (iv) all directors and executive officers as a group. Except as indicated
in the footnotes to this table, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable.
Number of
Beneficial Owner Shares Percentage
- ---------------- --------- ----------
Liberty Partners Holdings, 11, L.L.C..................... 6,847,972 46.7%
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Riverside Rudolph, L.L.C................................. 1,089,964 7.8
One Exeter Plaza
Boston, MA 02116
Paul F. McLaughlin(1).................................... 725,461 5.1
Robert M. Loiterman(1)................................... 111,155 *
Steven R. Roth(1)........................................ 66,869 *
David Belluck............................................ -- *
c/o Riverside Rudolph, L.L.C.
One Exeter Plaza
Boston, MA 02116
Daniel H. Berry(1)....................................... 1,783 *
Paul Craig(2)............................................ 1,089,964 7.8
c/o Riverside Rudolph, L.L.C.
One Exeter Plaza
Boston, MA 02116
Stephen J. Fisher(3)..................................... 6,847,972 46.7
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Carl E. Ring, Jr.(3)..................................... 6,847,972 46.7
c/o Liberty Capital Partners, Inc.
1177 Avenue of the Americas
New York, NY 10036
Richard F. Spanier....................................... 616,160 4.4
Aubrey C. Tobey(1)....................................... 3,783 *
All directors and executive officers as a group (ten 9,463,218 65.8
persons)(4).............................................
10
- --------
* Less than 1%.
(1) Includes the number of shares subject to options which are exercisable
within 60 days of February 1, 2000 by the following persons: Mr.
McLaughlin, (331,125 shares), Mr. Loiterman (48,309 shares), Mr. Roth
(36,842 shares), Mr. Berry (1,783) and Mr. Tobey (1,783).
(2) The number of shares of common stock beneficially owned by Mr. Craig
consists of 1,089,964 shares of our common stock held by Riverside Rudolph,
L.L.C. Mr. Craig is the managing member of Riverside Rudolph, L.L.C.
Riverside Rudolph, L.L.C. was formed by the officers of Riverside Partners,
Inc. to hold their investments in us. Mr. Craig disclaims beneficial
ownership of all shares except to the extent of his pecuniary interest in
Riverside Rudolph, L.L.C.
(3) The number of shares of common stock beneficially owned by Messrs. Fisher
and Ring consists of 6,847,972 shares of our common stock held by Liberty
Partners Holdings II, L.L.C. Mr. Fisher and Mr. Ring are limited partners
of Liberty Partners, L.P., which acts as the managing member of Liberty
Partners Holdings 11, L.L.C., and are partners of Liberty Investment
Partnership 11, which is a member of Liberty Partners Holding 11, L.L.C.
Mr. Fisher and Mr. Ring disclaim beneficial ownership of all shares except
to the extent of their pecuniary interest in Liberty Partners Holdings 11,
L.L.C.
(4) The number of shares of common stock beneficially owned by our directors
and executive officers as a group includes 6,847,972 and 1,089,964 shares
of our common stock held by Liberty Partners Holdings 11, L.L.C. and
Riverside Rudolph, L.L.C.
11
CERTAIN TRANSACTIONS
The Acquisition and Related Financing
The Company was incorporated on June 13, 1996 to acquire all of the stock of
its predecessor company (the "Predecessor Company"). On June 14, 1996, the
Company, through its wholly-owned subsidiary, agreed to purchase all of the
outstanding stock of the Predecessor Company from its stockholders.
The Company paid approximately $36.3 million in cash for this stock, and
incurred approximately $1.6 million in fees and expenses in connection with the
acquisition. The purchase price was determined based on arms'-length
negotiations between the Predecessor Company and the investors who purchased
the Predecessor Company through the Company. The Company acquired the
Predecessor Company using a combination of equity and debt financing provided
by the State Board of Administration of Florida; Liberty Partners Holdings 11,
L.L.C., an affiliate of Liberty Partners; Riverside Rudolph, L.L.C., an
affiliate of Riverside Partners; Richard F. Spanier, a former stockholder of
the Predecessor Company and the chairman of our board of directors; Paul F.
McLaughlin, our President and Chief Executive Officer; Robert M. Loiterman, our
Vice President, Engineering; and others. The State Board is a significant
equity owner of Liberty Partners Holdings 11, L.L.C., and under an investment
management agreement, Liberty Partners has voting and dispositive power over
the shares of our preferred stock held by the State Board.
The following table sets forth the sources and uses of funds in connection
with the acquisition (in thousands):
Sources:
Senior Revolving Loan from the State Board........................... $ 4,500
Senior Term Loan from the State Board................................ 16,000
Senior Subordinated Loan from the State Board........................ 11,000
Loan from Richard Spanier............................................ 600
Sale of Preferred Stock to the State Board, Spanier and Others....... 5,400
Sale of Common Stock and Warrants to Liberty Partners, Riverside
Partners, Spanier and Others........................................ 1,500
-------
Total.............................................................. $39,000
=======
Uses:
Purchase Price....................................................... $36,285
Fees and Expenses.................................................... 1,574
Cash for Working Capital............................................. 1,141
-------
Total.............................................................. $39,000
=======
To finance the acquisition, the Company borrowed from the State Board (1)
$4.5 million under a senior revolving loan, which bears interest at a rate of
prime plus 1.5% and matures on December 31, 2002; (2) $16.0 million under a
senior term loan which bears interest at a rate of prime plus 1.75% and matures
on December 31, 2002; and (3) $11.0 million under a senior subordinated loan
which bears interest at a rate of prime plus 4.0% and matures on December 31,
2003. In addition, the Company, through its subsidiary, borrowed $600,000 from
Richard Spanier under a junior subordinated loan which bore interest at a rate
of 14% and had a maturity date of March 31, 2004. Approximately $28.3 million
of these amounts were paid directly to the stockholders of the Predecessor
Company and $8.0 million was placed in escrow to cover liabilities of the
Predecessor Company. $6.3 million of the escrow amount was subsequently
released to the stockholders of the Predecessor Company, $661,000 was paid to
the Company and $1.0 million remains in escrow. The Company repaid the junior
subordinated loan from Mr. Spanier in full in 1997.
In connection with the acquisition, the State Board, Liberty Partners,
Riverside Partners, Messrs. Spanier, McLaughlin and Loiterman and others
purchased equity interests in the Company. The State Board
12
purchased 44,195 shares of Series A preferred stock for a purchase price of
$4,419,529. Others, including Messrs. McLaughlin and Loiterman, purchased in
the aggregate 1,680 shares of Series A preferred stock for an aggregate
purchase price of $168,000. Mr. Spanier purchased 8,125 shares of Series B
preferred stock, which constitutes all of the issued and outstanding Series B
preferred stock, for a purchase price of $812,471. Liberty Partners purchased
1,571,294 shares of Class A common stock for a purchase price of $900,498. The
Company also granted a warrant to Liberty Partners to purchase shares of Class
A common stock equal to 15% of the Company's outstanding common stock on a
fully diluted basis, then 534,951 shares, at an exercise price of $.0003 per
share. Riverside Partners, Messrs. Spanier, McLaughlin and Loiterman and others
purchased a total of 1,046,079 shares of the Company's Class B common stock for
an aggregate purchase price of $599,503. Messrs. Spanier, McLaughlin and
Loiterman purchased their stock at the same price paid by other investors. No
other stock was issued in connection with the acquisition.
The preferred stock accrues cumulative dividends at a rate of 8% per annum
and is entitled to a liquidation preference over the common stock. The
preferred stock may be redeemed by the Company or by a vote of the majority of
the preferred stock upon the occurrence of a change in ownership, merger or
sale of assets. The preferred stock is not convertible into common stock.
Holders of the Series A preferred stock are entitled to vote on all matters
together with the holders of the common stock, except as provided by law and in
connection with the election of the Class A directors, as discussed below. The
Series B preferred stock is identical to the Series A preferred stock except
that it does not have any voting rights. From the time of the acquisition until
the initial public offering of the Company's common stock, holders of the Class
A common stock, voting separately as a class, were entitled to elect two of the
eight directors on our board of directors. These directors were each entitled
to four votes each on any matter on which they voted, while each other director
was entitled to one vote. The Class B common stock is identical to the Class A
common stock except that it does not entitle the holders to vote as a class for
the election of any directors.
In January 1997, Messrs. McLaughlin and Loiterman and Steven R. Roth, the
Company's Vice President, Finance and Chief Financial Officer, each purchased
from one of the Company's prior stockholders 53 shares of Series A preferred
stock for $5,333 and 2,318 shares of Class B common stock for $1,333.
On July 20, 1998, some of the Company's stockholders, including Liberty
Partners, Riverside Partners and Messrs. McLaughlin, Loiterman, and Roth,
purchased additional shares of the Company's Class A common stock and Class B
common stock. Liberty Partners purchased an additional 3,230,997 shares of
Class A common stock for a purchase price of $2,355,508. Riverside Partners
purchased 733,310 shares of Class B common stock for a purchase price of
$534,626. Messrs. McLaughlin, Loiterman and Roth and others purchased an
aggregate of 150,714 shares of the Company's Class B common stock for an
aggregate purchase price of $109,866. Messrs. McLaughlin, Loiterman and Roth
purchased their stock at the same price paid by other investors. These
transactions caused an antidilution adjustment to the warrant the Company
granted to Liberty Partners in 1996, which resulted in an additional 945,740
shares of Class A common stock becoming subject to this warrant.
In a series of transactions occurring on or around November 1, 1998, the
Company issued to the State Board a junior subordinated note with a maximum
principal amount of $7.0 million, which bears interest at a rate of 14.0% and
matures on July 31, 2001. As of September 30, 1999 the Company had been
advanced a total of $6.4 million under the junior subordinated note. The
Company also increased the maximum amount of its senior revolving loan from $8
million to $12 million. On November 1, 1998, the Company also granted a warrant
to Liberty Partners to purchase 592,012 shares of its Class A common stock at
an exercise price of $0.73 per share.
13
The following table summarizes the ownership of the Company's preferred and
common stock following the transactions described above:
Number of Percentage of
Shares of Preferred Series of Aggregate
Preferred Stock Preferred Purchase
Purchaser Stock Ownership Stock Price
- --------- --------- ------------- --------- ----------
State Board........................ 44,195 81.8% Series A $4,419,529
Richard F. Spanier................. 8,125 15.0 Series B 812,471
Paul F. McLaughlin................. 614 1.1 Series A 61,334
Robert M. Loiterman................ 213 0.4 Series A 21,333
Steven R. Roth..................... 53 0.1 Series A 5,333
Others............................. 800 1.6 Series A 80,000
--------- ----- ----------
Total............................ 54,000 100.0% $5,400,000
========= ===== ==========
Number of
Shares of Percentage of Class of Aggregate
Common Common Stock Common Purchase
Purchaser Stock Ownership Stock Price
- --------- --------- ------------- --------- ----------
Liberty Partners................... 4,802,270 67.6% Class A $3,256,006
Riverside Partners................. 1,089,964 15.3 Class B 739,011
Richard F. Spanier................. 616,160 8.7 Class B 353,118
Paul F. McLaughlin................. 394,336 5.6 Class B 264,404
Robert M. Loiterman................ 62,846 0.9 Class B 42,281
Steven R. Roth..................... 30,027 0.4 Class B 20,137
Other.............................. 107,762 1.5 Class B 73,120
--------- ----- ----------
Total............................ 7,103,365 100.0% $4,748,077
========= ===== ==========
Management and Director Fee Arrangements
In connection with the acquisition, Liberty Partners and Riverside Partners
agreed to provide management services to the Company for an aggregate
management fee of $200,000 per year. The Company's obligation to pay management
fees to Liberty Partners and Riverside Partners ceased upon the closing of the
initial public offering of the Company's common stock. The Company accrued
approximately $350,000 in management fees since January 1998 and paid them in
arrears from the proceeds of the initial public offering. Liberty Partners and
Riverside Partners advise the Company on the operations of its business and
appoint designees to serve as members of the Company's board of directors.
Since the initial public offering, the Company is no longer obligated to pay
the management fees. However, the Company will pay a yearly director's fee of
$20,000 to each director who is appointed by the Shareholders of the Company.
Registration Rights Agreement
Liberty Partners, Riverside Partners, Messrs. Spanier and McLaughlin and
some of the Company's other stockholders have the right to require the Company
to register their shares under the Securities Act for public resale. The
Company is also required to pay the expenses incurred in connection with such
registration.
The Reorganization and the Initial Public Offering
Immediately prior to the initial public offering of the Company's common
stock, the Company effected a 35.66-for-one split of the Company's outstanding
common stock and each share of Class A common stock and Class B common stock
was exchanged for one share of a new single class of common stock.
Liberty Partners exercised its warrants immediately prior to and contingent
upon the initial public offering by surrendering a portion of the warrants as
payment of the exercise price, as permitted by the terms of
14
the warrants, in which case it received 2,045,702 shares of common stock upon
such exercise. The Company used a substantial portion of the net proceeds of
the initial public offering to repay all of the indebtedness incurred in
connection with the acquisition of the Company's predecessor company and the
financing the Company conducted in November 1998, including all of the senior
term loan, the senior revolving loan, the senior subordinated loan and the
junior subordinated loan from the State Board. The Company also used a portion
of the proceeds to redeem all of the Company's outstanding Series A preferred
stock and Series B preferred stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors and persons who own
more than ten percent of a registered class of the Company's equity securities
to file an initial report of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC") and
the National Association of Securities Dealers, Inc. Such persons are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons, the
Company believes that, during the fiscal year ended December 31, 1999, all
officers, directors and greater than ten percent beneficial owners complied
with all Section 16(a) filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual Meeting.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed Proxy to vote the shares they
represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Steven R. Roth
Secretary
Dated: April 26, 2000
15
RUDOLPH TECHNOLOGIES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF RUDOLPH TECHNOLOGIES, INC.
The undersigned hereby constitutes and appoints David Belluck and Daniel H.
Berry or either of them, as and for his proxies, each with the power to appoint
such proxy's substitute, and hereby authorizes them, or either of them, to vote
all of the shares of Common Stock of Rudolph Technologies, Inc. held of record
by the undersigned on March 28, 2000, at the Annual Meeting of Stockholders of
Rudolph Technologies, Inc. to be held Friday, May 26, 2000 and at any and all
adjournments thereof as follows:
(Continued and to be signed on reverse side.)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
RUDOLPH TECHNOLOGIES, INC.
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark
your votes as
WITHHOLD
FOR all nominees AUTHORITY
listed at right to vote for all nomi-
(except as marked nees listed at right.
[_] [_]
1. ELECTION
OF
DIRECTORS
To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.
- --------------------------------------------------------------------------------
Nominees: Paul Craig
Paul F. McLaughlin
Carl E. Ring, Jr.
2. TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS.
FOR ABSTAIN
[_] [_] [_]
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
This proxy, when properly executed, will be voted in the manner described
herein by the undersigned. If no direction is made, this proxy will be voted FOR
all nominees listed and FOR proposal 2.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
_________________________________________________ Dated: _________, 2000