<PAGE> 1
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
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO SEC.240.14a-11(c) OR SEC.240.14a-12
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
KULICKE & SOFFA INDUSTRIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(i)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH
THE FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
5) TOTAL FEE PAID:
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS
PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
3) FILING PARTY:
4) DATE FILED:
<PAGE> 2
[KULICKE & SOFFA LOGO]
2101 Blair Mill Road, Willow Grove, PA 19090
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 13, 2001
THE ANNUAL MEETING OF SHAREHOLDERS OF KULICKE AND SOFFA INDUSTRIES,
INC. (the "Company") will be held on Tuesday, February 13, 2001, at 4:30 p.m. at
the offices of the Company, 2101 Blair Mill Road, Willow Grove, Pennsylvania,
for the following purposes:
1. Election of directors;
2. Approval of the 2001 Employee Stock Option Plan;
3. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent accountants for the year ending
September 30, 2001; and
4. Transaction of such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on December 18,
2000, as the record date for the determination of holders of Common Shares
entitled to notice of and to vote at the Annual Meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING,
BUT WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
FOLLOW THE INSTRUCTIONS ACCOMPANYING THE ENCLOSED PROXY IN ORDER THAT YOUR STOCK
MAY BE VOTED BY ONE OF THE VARIOUS MEANS AVAILABLE. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors
SUSAN WATERS
Secretary
January 8, 2001
<PAGE> 3
[KULICKE & SOFFA LOGO]
2101 Blair Mill Road, Willow Grove, PA 19090
PROXY STATEMENT
January 8, 2001
The enclosed proxy is solicited by the Board of Directors of the Company.
This proxy statement and the enclosed proxy are being mailed on or about January
8, 2001. A copy of the Company's 2000 Annual Report to Shareholders (which
includes the Company's Annual Report on Form 10-K) is also enclosed but is not
to be considered as proxy solicitation material.
VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed the close of business on December 18,
2000, as the record date for determination of the shareholders entitled to vote
at the Annual Meeting. As of the record date, there were 48,774,847 Common
Shares outstanding ("Common Shares" or "Common Stock"). Each such share is
entitled to one vote on all matters to be presented to the meeting.
When proxies are properly dated, executed and returned or otherwise voted
in accordance with the accompanying instructions, the shares they represent will
be voted at the Annual Meeting in accordance with the instructions of the
shareholder. If no specific instructions are given, the shares will be voted FOR
the following Items: (1) the election of the nominees for directors set forth
herein; (2) approval of the 2001 Employee Stock Option Plan and (3) ratification
of the appointment of independent accountants. A proxy is revocable at any time
prior to its use by delivering a subsequently executed proxy or written notice
of revocation to the Secretary of the Company.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum. If a quorum is present, (i) the two nominees for
director receiving the highest number of votes cast at the Annual Meeting will
be elected and (ii) the affirmative vote of a majority of the total votes cast
by all shareholders entitled to vote at the Meeting will be required to approve
Item 2 and ratify Item 3 above. Abstentions, the withholding of authority to
vote or the specific direction not to cast a vote, such as a broker non-vote,
will not constitute the casting of a vote on any matter.
-1-
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company, the only persons or groups of
persons that owned beneficially more than 5% of the outstanding Common Shares of
the Company based on the number of shares outstanding as of December 1, 2000
were as follows:
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS SHARES CLASS
---------------- --------- ----------
<S> <C> <C>
Capital Group International, Inc.(1)
11100 Santa Monica Boulevard
Los Angeles, CA 90025........................... 5,473,100 11.2%
</TABLE>
----------------------
(1) Based on information provided pursuant to Schedule 13G filed with the
Securities and Exchange Commission (the "SEC") on February 11, 2000, Capital
Group International, Inc. is the parent holding company of a group of investment
management companies (including Capital Guardian Trust Company and Capital
International Inc.) that holds investment power and, in some cases, voting power
over these shares. On the Schedule 13G, Capital Group International also
reported that it does not have investment power or voting power over any of
these shares but it may be deemed to "beneficially own" these shares by virtue
of Rule 13d-3 under the Securities and Exchange Act of 1934, as amended. This
share amount includes 5,031,500 shares held by Capital Guardian Trust Company ,
based on information provided pursuant to Form 13F filed with the SEC on
November 14, 2000 by such company.
ITEM 1 - - ELECTION OF DIRECTORS
The Board of Directors currently consists of seven directors, divided into
three classes of two directors and one class of one director. Philip V. Gerdine
was appointed by the Board on May 16, 2000 to fill the vacancy created by the
retirement of Frederick W. Kulicke, Jr. James W. Bagley resigned from the Board
effective September 11, 2000. The Board of Directors intends to cause Allison F.
Page and C. William Zadel whose terms expire at the 2001 Annual Meeting, to be
nominated for re-election at the 2001 Annual Meeting to serve until the 2005
Annual Meeting and until their successors have been duly elected and qualified.
Each shareholder who so chooses may cumulate votes in the election of directors
(i.e. shareholders may multiply the number of votes the shareholder is entitled
to cast by the total number of directors elected (i.e., two) and cast the whole
number of votes for one candidate or distribute them among some or all
candidates). The proxy agents reserve the right to vote the proxies
cumulatively, if necessary, in order that one or both of Messrs. Allison F. Page
and C. William Zadel will be re-elected to the Board of Directors. If either of
the nominees should be unavailable at the time of the election, the persons
named in the proxy may vote the proxies for such other persons as they may
choose, unless the Board of Directors reduces the number of the directors to be
elected.
The following table provides certain information concerning: (i) Allison
F. Page and C. William Zadel, the nominees for re-election, (ii) the persons
whose terms as directors will continue after the Annual Meeting, and (iii) the
executive officers named in the Summary Compensation Table herein, including
their ages, principal occupations and, as of December 1, 2000, beneficial
shareholdings. Unless otherwise specified, such persons have held the positions
indicated (other than directorships) for at least five years. To the best
knowledge of the Company, each of the persons listed below has sole voting and
investment power with respect to the beneficial shareholdings set forth, unless
otherwise indicated. In addition, information is provided concerning the
beneficial shareholdings of James W. Bagley.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 2000
------------------------ -------- ------- ------------------------------
NUMBER PERCENT
------------------ -------
<S> <C> <C> <C> <C>
Philip V. Gerdine (61), 2000 2004 0 (2)
Independent Consultant. From 1989 to September 1998, served as Executive
Director, Siemens AG and the Managing Director of the Plessey Company PLC
Formerly, Vice President-Corporate Development of Siemens Corporation. Has held
senior management positions with General Electric Co., Price Waterhouse and The
Boston Consulting Group. Currently a director of Applied Materials, Inc. and
Solectron Corporation
C. Scott Kulicke (51), 1975 2003 1,332,745(1)(3) 2.7%
Chairman of the Board and Chief Executive Officer of the Company. Also serves on
the Board of Directors of General Semi- conductor, Inc. and Xetel Corporation
John A. O'Steen (56), 1988 2002 20,000(1)(4) (2)
Executive Vice President of Operations (since July 1998) and Executive Vice
President (January to June 1998) of Cornerstone Brands, Inc., a consumer catalog
company. From 1991 to 1998, Chairman and Chief Executive Officer of Cinmar,
L.P., a mail order catalog company acquired by the predecessor of Cornerstone
Brands in September 1995. Formerly, President, Chief Executive Officer and a
director of Cincinnati Microwave, Inc., a manufacturer of electronic products
Currently, a director of Cornerstone Brands, Inc. and Bill's Dollar Stores, Inc.
Allison F. Page (77), 1962 2001 1,040(1) (2)
Retired partner in the Philadelphia law firm of Pepper Hamilton LLP
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 2000
------------------------ -------- ------- ------------------------------
NUMBER PERCENT
------------------ -------
<S> <C> <C> <C> <C>
MacDonell Roehm, Jr. (61), 1984 2002 64,000(1) (2)
Chairman and Chief Executive Officer of Mackenzie-Childs Ltd., since 2000
Chairman of Australian Ventures LLC, a private equity fund focusing on emerging
company investments in Australia and New Zealand, since 1999. Chairman and Chief
Executive Officer of Crooked Creek Capital LLC, a provider of strategic,
operational and financial restructuring services, since 1998. Former Chairman,
President and Chief Executive Officer of Bill's Dollar Stores, Inc., a chain of
retail convenience stores, from 1994 to March 1998. Prior to that time, Managing
Director of AEA Investors, Inc., a private investment firm. Also serves on the
Board of Directors of Tower Technology Pty., Ltd. and JB HiFi Ltd. Pty
Larry D. Striplin, Jr. (71), 1995 2004 0 (2)
Chairman of the Board and Chief Executive Officer of Nelson-Brantley Glass
Contractors, Inc., a glass contractor, and Circle "S" Industries, Inc., a real
estate management company and American Fine Wire Corp. before their acquisition
by the Company in 1995. Currently, a director of HealthSouth Corporation, The
Banc Corporation, the Bank of Birmingham and Vesta Insurance Group, Inc.
C. William Zadel (57), 1989 2001 2,000(1) (2)
Chairman, President and Chief Executive Officer of Millipore Corporation, a
global manufacturer of filtration and purification products and former President
and Chief Executive Officer of Ciba-Corning Diagnostics Corp., a manufacturer
and distributor of medical diagnostic products. Currently, a director of
Matritech, Inc.
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
PRESENT COMMON SHARES
DIRECTOR TERM BENEFICIALLY OWNED
NAME, AGE AND OCCUPATION SINCE EXPIRES ON DECEMBER 1, 2000
------------------------ -------- ------- ------------------------------
NUMBER PERCENT
------------------ -------
<S> <C> <C> <C> <C>
James W. Bagley -- -- 60,000(1)(5) (2)
David A. Leonhardt (42), -- -- 24,059(1)(6) (2)
Senior Vice President of the Company
Morton K. Perchick (63), -- -- 94,953(1) (2)
Executive Vice President of the Company and Office of the President
Clifford G. Sprague (56), -- -- 41,470(1) (2)
Senior Vice President and Chief Financial Officer of the Company
Laurence P. Wagner (40), -- -- 19,672(1) (2)
Senior Vice President of the Company
All directors and executive officers as a group (14 persons) -- -- 1,701,659(7) 3.5%
</TABLE>
----------------------
(1) Includes or consists of shares subject to outstanding options that are
currently exercisable or exercisable within 60 days after December 1,
2000 in the following amounts: Mr. Bagley (40,000), Mr. Kulicke
(453,000), Mr. O'Steen (0), Mr. Page (0), Mr. Roehm (58,000), Mr. Zadel
(0), Mr. Leonhardt (23,480), Mr. Perchick (93,520), Mr. Sprague
(40,348), and Mr. Wagner (18,960).
(2) Less than 1.0%.
(3) Includes 706,058 shares jointly held with Mr. Kulicke's wife.
(4) Includes 2,000 shares jointly held with Mr. O'Steen's wife.
(5) Mr. Bagley resigned as a director effective September 11, 2000.
(6) Includes 3,200 shares subject to outstanding, currently exercisable
options held by Mr. Leonhardt's wife, as to which Mr. Leonhardt
disclaims beneficial ownership.
(7) Includes 762,708 shares subject to options that are currently
exercisable or exercisable within 60 days after December 1, 2000. See
also footnote (1) above.
For further information concerning Directors and Executive Officers see
"Additional Information" herein.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
-5-
<PAGE> 8
ITEM 2 - - APPROVAL OF 2001 EMPLOYEE STOCK OPTION PLAN
At the Annual Meeting, shareholders also will be asked to approve the 2001
Employee Stock Option Plan ("2001 Plan") which was unanimously approved by the
Board of Directors in December 2000. The Board of Directors approved the Plan,
which authorizes the granting of options to purchase up to 4,000,000 shares of
Common Stock, because it believes that having shares available for the granting
of options is an essential element of compensation if the Company is to be able
to hire, retain and motivate the highly qualified officers and other Key
Employees upon which the Company's continued success will, in large part,
depend. Moreover, since the exercise price of options granted under the Plan
must be equal to the fair market value of the Company's Common Shares on the
date of grant, the options will only become of real value if the price of the
option shares rises. Thus, the interests of optionees and other shareholders are
closely aligned in having the Company prosper and share value increase. The
Company intends to use stock options as an integral portion of total
compensation. See "Compensation Committee Report on Executive Compensation -
Equity Incentive."
The Company currently has two option plans available for officers and key
employees: the 1998 Employee Stock Option Plan ("1998 Plan") and the 1994
Employee Stock Option Plan ("1994 Plan"). As of December 1, 2000, a total of
1,466,660 Common Shares remained available for option grants under these Plans.
Those share numbers are clearly insufficient to meet the Company's anticipated
needs for the next several fiscal years. Growth in the Company's business,
including the recent acquisition of two companies, results in a corresponding
increase in the overall number of key employees and the number of option shares
needed to properly compensate and motivate those key employees.
At present, approximately 178 employees of the Company and its corporate
subsidiaries (including approximately 25 officers of the Company) would be
eligible for grants under the 2001 Plan. To date, no options have been granted
under the 2001 Plan, and there are no specific grants presently contemplated.
THE BOARD OF DIRECTORS BELIEVES THAT HAVING SUFFICIENT SHARES
AVAILABLE FOR THE GRANTING OF OPTIONS IS IMPORTANT TO THE SUCCESS
OF THE COMPANY AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE 2001 EMPLOYEE STOCK OPTION PLAN.
SUMMARY OF THE 2001 PLAN
The text of the 2001 Plan is attached as Appendix A to this Proxy
Statement. The following description of the 2001 Plan is intended merely as a
summary of its principal features and is qualified in its entirety by reference
to the Plan.
Under the 2001 Plan, 4,000,000 Common Shares (subject to possible
adjustment to reflect stock dividends, stock splits, share combinations, and
similar changes in the capitalization of the Company) are reserved for the
granting of incentive stock options ("ISOs") and non-qualified stock options
("NQSOs"). (ISOs and NQSOs are collectively referred to as "Options"). Key
employees of the Company and its subsidiaries are eligible to receive Options
under the 2001 Plan. For purposes of the 2001 Plan, "subsidiary" generally means
a subsidiary corporation of the Company. However, with respect to NQSOs,
"subsidiary" may include any trade or business (whether or not incorporated) in
which the Company owns a more than 50% equity interest. Options granted to key
employees of any such non-corporate subsidiary may result in a charge to
earnings in the Company's financial statements. For purposes of the 2001 Plan, a
"Key Employee" is an officer or employee who occupies a responsible executive,
professional, managerial or administrative position and who the Compensation
Committee of the Company's Board of Directors (the "Compensation Committee")
believes has the capacity to contribute to the success of the Company and its
subsidiaries. Directors who are not also officers or employees of the Company
are not eligible to participate
-6-
<PAGE> 9
in the 2001 Plan. No individual may be granted Options for more than 600,000
Common Shares over the life of the 2001 Plan.
The 2001 Plan will be administered by the Compensation Committee, which
is presently comprised of the following outside Directors of the Company:
Messrs. John A. O'Steen, Chairman; Larry D. Striplin, Jr.; and C. William
Zadel. The Committee is authorized, subject to the terms of the 2001 Plan,
to select Key Employees to be granted Options, to grant Options on behalf of
the Company and to set the date of grant and the other terms of such Options,
subject to the terms of the 2001 Plan.
ISOs granted under the 2001 Plan must have an exercise price of not less
than the fair market value of the Common Shares on the date of grant and may not
extend for more than ten years, subject to more stringent limitations in the
case of ISOs granted to an optionee who is a 10% or greater shareholder. Options
are exercisable in such installments as the Compensation Committee may
determine, but not earlier than 12 months from the date of grant except under
specified circumstances. The option price of an outstanding Option may not be
reduced without prior approval of the Company's shareholders, except in the
event of a stock split or similar type of transaction. On December 15, 2000, the
last reported sale price of the Company's Common Shares on the NASDAQ National
Market was $11.25.
Upon the termination of an optionee's employment for any reason other than
death, disability, retirement or cause, Options held by an optionee may be
exercised, to the extent exercisable on the date of termination (or to such
greater extent as may be permitted by the Compensation Committee), until the
earlier of the expiration date in the Option or three months after the date of
termination of employment. If an optionee's employment terminates because of
retirement (defined as retirement at or after age 65 with a minimum of 5 years
service, unless an earlier retirement is expressly agreed to by the Company),
death or disability, all remaining Options accelerate and the three-month period
is extended to twelve months under most circumstances. If the Key Employee is
terminated due to cause (which includes termination by reason of any dishonest
or illegal act, or any willful refusal or failure to perform duties properly
assigned), all Options held by the Key Employee will terminate concurrently upon
receipt by the optionee of his or her notice of termination due to cause.
The exercise price of Options may be paid in cash or its equivalent, or,
in whole or in part by the delivery of other Common Shares owned by the Key
Employee. Under certain circumstances, Key Employees may satisfy minimum
required federal withholding tax relating to an Option by returning to the
Company previously acquired Common Shares. The Compensation Committee, in its
discretion, also may permit a Key Employee to satisfy the minimum required
federal withholding tax relating to an Option through withholding of, Common
Shares which will be valued at their fair market value.
ISOs are also subject to certain additional terms and conditions required
by the Internal Revenue Code of 1986, as amended (the "Code"). To the extent
that the fair market value (determined as of the date of the option grant) with
respect to which ISOs are exercisable for the first time in any one year as to
any optionee exceeds $100,000, such options shall be treated as a NQSO for tax
purposes.
On a change in control of the Company (as defined in Section 8 of the 2001
Plan), all outstanding Options become fully vested and exercisable. In the event
of certain corporate reorganizations which do not constitute such a change in
control, each outstanding Option will be assumed by the surviving or successor
corporation, unless the Compensation Committee, upon advance notice, terminates
all or a portion of the outstanding Options, in which case the Options will
become fully vested and exercisable until termination.
ISOs and, unless otherwise provided by the Committee, NQSOs granted under
the 2001 Plan are not assignable or transferable otherwise than by will or by
the laws of descent and distribution.
-7-
<PAGE> 10
The 2001 Plan became effective (subject to shareholder approval) on
December 18, 2000, and terminates on December 17, 2010. The Board of Directors
of the Company may amend, suspend or discontinue the 2001 Plan, and the
Committee may amend any Options, at any time, provided that without the
affirmative vote of holders of a majority of the Common Shares present, or
represented, and entitled to vote at a duly held meeting of the shareholders of
the Company, no such action may be taken to: (i) with respect to ISOs, change
the class of employees eligible to participate in the 2001 Plan, increase the
maximum number of Common Shares with respect to which ISOs may be granted under
the 2001 Plan (except as permitted under the Plan with respect to capital
adjustments), or extend the duration of the 2001 Plan, or (ii) enact any
material amendment which would require shareholder approval pursuant to Treasury
Regulation Section 1.162-27(e)(4)(vi) (e.g., an amendment TO change the maximum
number of shares for which grants may be made to any employee or the exercise
price of Options granted under the 2001 Plan). Compliance with Treasury
Regulation Section 1.162-27 is desirable so that compensation recognized upon
the exercise of NQSOs granted under the Plan may be excepted from the
compensation deduction limitation of Section 162(m) of the Code. (See "Tax
Treatment" below.)
TAX TREATMENT
Based on the advice of counsel, the Company believes that, under Federal
tax laws and regulations in effect on December 1, 2000, the principal Federal
income tax consequences to the Company and to the optionees receiving ISOs and
NQSOs pursuant to the Plan will be as follows:
If an Option is treated as an ISO, the optionee will recognize no U.S.
federal taxable income upon grant or exercise of the Option unless the
alternative minimum tax rules apply. Upon an optionee's sale of the Common
Shares received upon exercise of an Option (assuming that the sale occurs no
sooner than two years after grant of the option and one year after exercise of
the Option), any gain will be taxed to the optionee as capital gain. If the
optionee disposes of the Common Shares prior to the expiration of the above
holding period, the optionee will recognize ordinary income in an amount
generally measured as the difference between the exercise price and the lower of
the fair market value of the Common Shares at the exercise date or the sale
price of the Common Shares. Any gain or loss recognized on such a disposition of
the Common Shares in excess of the amount treated as ordinary income will be
characterized as capital gain or loss. The Company will be allowed a business
expense deduction to the extent the optionee recognizes ordinary income, subject
to Section 162(m) of the Code.
An optionee will not recognize any U.S. federal taxable income at the time
the optionee is granted an NQSO. However, upon exercise of the Option, the
optionee will recognize ordinary income for federal income tax purposes in an
amount generally measured as the excess of the then fair market value of the
Common Shares over the exercise price, and the Company will be entitled to a
deduction in the same amount at the time of exercise, subject to Section 162(m)
of the Code. Upon an optionee's sale of such shares, any difference between the
sale price and fair market value of such shares on the date of exercise will be
treated as capital gain or loss and will qualify for capital gain or loss
treatment if the Common Shares have been held for more than 12 months.
Section 162(m) of the Code disallows tax deductions to public companies
for compensation in excess of $1 million paid or accrued in taxable years
beginning after January 1, 1994 to certain executive officers (generally
consisting of the chief executive officer and the four other highest paid
executive officers), unless such compensation is of a type that qualifies for
exemption from that limitation. One such exemption is for performance based
compensation, which can include compensation under a stock option plan, provided
that certain requirements, including administration of the plan by "outside
directors" and shareholder approval of the Plan are met. The Board of Directors
intends to try to comply with such requirements with respect to the 2001 Plan to
the extent reasonably practicable, but there can be no assurance that the 2001
Plan will initially or in the future so comply.
-8-
<PAGE> 11
The foregoing does not purport to be a complete summary of the effect of
federal income taxation upon holders of Options or upon the Company. It also
does not reflect provisions of the income tax laws of any municipality, state or
foreign country in which an optionee may reside.
ITEM 3 - - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the recommendation of the Company's Audit Committee, the Board of
Directors has appointed PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending September 30, 2001.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
for a number of years. The election of independent accountants by the
shareholders is not required by law or by the Company's By-laws. Traditionally,
the Company has submitted this matter to the shareholders for ratification and
believes that it is good practice to continue to do so. If a majority of the
votes cast on this matter are not cast in favor of the reappointment of
PricewaterhouseCoopers LLP, the Company will appoint other independent
accountants as soon as is practical and before the close of the 2001 fiscal
year.
A representative of PricewaterhouseCoopers LLP is expected to be present
at the Annual Meeting to make a statement if he or she so desires and will be
available to respond to any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
ADDITIONAL INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of 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 (collectively, the "reporting persons")
to file reports of ownership and changes in ownership with the SEC and to
furnish the Company with copies of these reports.
Based solely on the Company's review of the copies of these reports
received by it and written representations received from reporting persons with
respect to the filing of reports on Forms 3, 4 and 5, the Company believes that
all such filings required to be made by the reporting persons for Fiscal 2000
were made on a timely basis.
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the
compensation received by the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (together with the Chief
Executive Officer, the "named executive officers") for the fiscal year ended
September 30, 2000 ("Fiscal 2000"), as well as the compensation received by each
such individual for the Company's previous two fiscal years ("Fiscal 1999" and
"Fiscal 1998," respectively), if applicable.
-9-
<PAGE> 12
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
------------------------------------------ ---------------------------
ALL
OTHER SECURITIES OTHER
ANNUAL UNDERLYING COMPEN-
NAME AND FISCAL SALARY BONUS COMPEN- OPTIONS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1)(2) SATION($)(3) (#)(4) ($)(5)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke 2000 $426,495 $688,703 $ 6,709 -- $ 15,750
Chairman of the Board and 1999 389,430 348,064 6,709 95,400 15,750
Chief Executive Officer 1998 366,928 112,665 6,084 220,400 17,972
David A. Leonhardt 2000 $190,572 $237,680 $ 6,144 -- $ 13,238
Senior Vice President 1999 175,000 73,617 5,779 27,200 11,228
1998 129,140 24,066 4,459 36,600 11,383
Morton K. Perchick 2000 $268,978 $341,014 $ 7,275 -- $ 18,375
Executive Vice President 1999 234,173 198,137 6,555 44,600 17,500
1998 220,000 211,673 7,275 99,200 18,375
Clifford G. Sprague 2000 $237,646 $202,829 $ 6,303 -- $ 14,713
Senior Vice President and 1999 215,660 109,283 6,303 32,600 10,904
Chief Financial Officer 1998 203,846 54,799 6,303 75,000 11,469
Laurence P. Wagner 2000 $210,191 $237,934 $ 7,116 -- $ 3,228
Senior Vice President 1999 197,308 204,309 2,372 36,200 4,692
1998 35,808 42,869 -- 58,600 1,145
</TABLE>
----------------------
(1) Includes amounts earned but deferred at the election of executive
officers under the Company's Officers' Deferred Compensation Plan.
(2) These amounts represent incentive payments to the named executive
officers as participants in the Company's Executive Incentive
Compensation Plan with respect to the fiscal year indicated. (See
"Compensation Committee Report on Executive Compensation" herein.)
(3) These amounts represent the Company's reimbursement of taxes paid by
the named executive officers on Company-provided automobiles.
(4) These amounts were adjusted to reflect the two-for-one stock split
effective on July 31, 2000.
(5) This column includes, for Fiscal 1998, 1999 and 2000, the Company's
matching contribution to its 401(k) Incentive Savings Plan with respect
to Messrs. Kulicke, Leonhardt, Perchick, Sprague and Wagner. Amounts
indicated for Mr. Kulicke for Fiscal 1998 include $2,222 of forgiveness
of interest and principal on a loan made by the Company pursuant to a
1978 loan program which was established to permit certain officers of
the Company to purchase Common Shares. The loan was deemed repaid in
1998.
Effective January 1, 1996, the Company enhanced the 401(k) Incentive
Savings Plan, including an increase in the Company's matching contribution, to
offset the freezing of benefits under the pension plan. See "Pension Plan"
below.
STOCK OPTION GRANTS DURING FISCAL 2000
Stock options were granted by the Company on October 19, 2000, after
the September 30 end of Fiscal 2000. The stock options to named executive
officers were granted as follows and will be reflected in the Proxy Statement
for the February 2002 Annual Meeting: Mr. Kulicke (110,600); Mr. Leonhardt
(43,200); Mr. Perchick (55,500); Mr. Sprague (45,600); and Mr. Wagner
(43,200).
AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND 2000 FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the aggregate
option exercises by each named executive officer in Fiscal 2000 and the value of
unexercised in-the-money options held by each named executive officer at the end
of Fiscal 2000, respectively.
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<PAGE> 13
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON ----------------------------- -----------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Scott Kulicke ........ 14,000 -- 415,160 271,640 $2,734,996 $ 993,067
David A. Leonhardt ...... 34,460 $ 891,719 12,760 59,680 50,311 201,533
Morton K. Perchick ...... 102,080 3,268,289 69,520 124,480 334,112 450,306
Clifford G. Sprague ..... 82,000 2,238,974 22,468 92,680 69,443 335,977
Laurence P. Wagner ...... 11,720 263,746 18,960 64,120 80,000 242,720
</TABLE>
----------------------
(1) In-the-money options are those where the fair market value of the
underlying shares exceeds the exercise price of the option. The closing
price of the Company's Common Shares on September 29, 2000, the last
trading day during Fiscal 2000, was $13.313 per share.
PENSION PLAN
The Company has maintained a tax-qualified defined benefit pension plan,
which covered U.S. employees who had reached age 21 and completed one year of
service. Effective December 31, 1995, benefit accruals under the Company's
pension plan were frozen. Retirement benefits under this pension plan are
determined under a formula based on length of service and average compensation
in the three consecutive calendar years during the ten year period ended
December 31, 1995, producing the highest average (subject to certain Internal
Revenue Code limits). Assuming normal retirement at age 65 and election of
payment in the form of an annuity, the named executives would receive the
following annual amounts under the pension plan: C. Scott Kulicke - $57,996;
David A. Leonhardt - $11,938; Morton K. Perchick - $29,951; and Clifford G.
Sprague - $15,793.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Company has Termination of Employment Agreements with its executive
officers which provide that in the event of certain changes in control, as
defined in the agreements, the officer who is a party to such agreement and
whose employment terminates, other than voluntarily or for cause, within 18
months after such change in control, will be entitled to termination pay equal
to the lesser of a specified number of months' target total cash compensation
(base salary plus incentives) for the year in which the change in control occurs
or $10 less than the amount which would subject the officer to excise tax with
respect to such payment under Section 4999 of the Internal Revenue Code or would
make payment thereof non-deductible by the Company under Section 280G of the
Code. Such agreements were renewed by the Board of Directors in December 2000
and are all currently scheduled to expire on December 31, 2003, unless extended.
The named executive officers' Termination of Employment Agreements provide for
payment of the following number of months' target total cash compensation:
Messrs. C. Scott Kulicke, 30 months; Leonhardt, 18 months; Perchick, 18 months;
Sprague, 18 months; and Wagner, 18 months.
Under the Company's 1994 Plan and 1998 Plan (and as contemplated by the
2001 Plan), in the event of a change in control of the Company (as defined in
those plans), all outstanding options become fully vested and exercisable. Under
the Company's 1997 Non-Qualified Stock Option Plan for Non-Employee Directors
(the "1997 Director Plan"), if the Company is a party to any merger in which it
is not the surviving entity, or any consolidation or dissolution, all
outstanding options will terminate and the optionee will receive, in cash, from
the Company an amount equal to the fair market value of the shares subject to
his or her outstanding options less the amount which would be required to
exercise such options. Under the Company's 1988
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<PAGE> 14
Employee Stock Option Plan and 1988 Non-Qualified Stock Option Plan for
Non-Officer Directors (the "1988 Director Plan"), if the Company is a party to
any merger in which it is not the surviving entity, or any consolidation or
dissolution, all outstanding options will terminate and the optionee will
receive, in cash, from the Company an amount equal to the fair market value of
the shares subject to then exercisable options less the amount which would be
required to exercise such options. Under the Company's Officers' Deferred
Compensation Plan, on a change in control (as defined in that plan) participants
receive a lump sum payment of the value of their accounts.
BOARD MATTERS
In Fiscal 2000, the Board of Directors met five times. Three of such
meetings were regular meetings and two of such meetings were special meetings.
Directors who are not officers of the Company receive a quarterly retainer of
$3,000, plus $2,000 for each meeting of the Board attended and $1,000 for each
telephone meeting of the Board attended. Committee Chairmen also are paid an
annual retainer of $2,000, and committee members are paid $1,000 for each
committee meeting not held on the date of a Board meeting. All of the incumbent
directors attended at least 75% of the Board and applicable committee meetings
in Fiscal 2000.
Each member of the Board who is not also an officer or employee of the
Company is eligible to participate in the 1988 and 1997 Director Plans. Pursuant
to the 1988 Director Plan (which terminated in 1998), options to purchase 5,000
Common Shares were automatically granted to each eligible director on the last
day of each February on which the Company's shares were publicly traded through
1998. In February 1999, a similar grant was made pursuant to the 1997 Director
Plan, which provides for such grants through 2008. The exercise price of all
such options is equal to 100% of the fair market value of the Company's Common
Shares on the date of grant. Options granted under the 1988 and 1997 Director
Plans become exercisable in 20% annual increments commencing on the first
anniversary of the date they are granted.
See also "Certain Relationships and Related Transactions" below.
The Company has standing Audit and Compensation Committees. There is no
standing Nominating Committee. The Audit Committee, comprised of Messrs.
MacDonell Roehm, Jr., Chairman, Philip V. Gerdine (appointed on May 16, 2000)
and Allison F. Page, met five times during Fiscal 2000. The principal duties of
the Audit Committee are to recommend independent public accountants for
appointment by the Company; review with the independent accountants the planned
scope and results of the annual audit and their reports and recommendations; and
review with independent accountants matters relating to the Company's system of
internal controls.
The Compensation Committee, comprised of Messrs. John A. O'Steen,
Chairman, Larry D. Striplin, Jr. and C. William Zadel, met two times during
Fiscal 2000. The principal duties of the Compensation Committee are to
approve compensation arrangements for the executive officers and senior
managers of the Company and to administer the Company's stock option plans.
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<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 2, 1995, the Company acquired American Fine Wire Corporation
("AFW") through the merger of a subsidiary of the Company into Circle "S"
Industries, Inc., the parent corporation of AFW ("Circle S"). Larry D. Striplin,
Jr., a director of the Company and former director of Circle S, and various
members of his family and related trusts owned slightly more than a majority of
the outstanding common stock of Circle S. In connection with the AFW
acquisition, the Company's Board agreed to elect, and on December 12, 1995 did
elect, Larry D. Striplin, Jr. as a director of the Company. Mr. Striplin
subsequently was reelected a director of the Company at its 1996 Annual Meeting
of Shareholders for a four-year term and at its 2000 Annual Meeting of
shareholders for an additional four-year term. Pursuant to the AFW acquisition,
the Company also assumed a 1990 employment and non-competition agreement between
Circle S and Mr. Striplin providing for payments to him or his estate of
$200,000 per year for five years following the date of the AFW acquisition. Mr.
Striplin's employment by Circle S and AFW terminated at the time of such
acquisition.
On November 28, 2000, Mackenzie-Childs Ltd. filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code. At the time of the
Chapter 11 filing, Director MacDonell Roehm, Jr. was Chairman and Chief
Executive Officer of Mackenzie-Childs Ltd. Mr. Roehm was hired by
Mackenzie-Childs Ltd. in 2000 to implement remedial action plans. By filing
the petition, Mackenzie-Childs Ltd. sought reorganization to provide a
framework under which those remedial action plans could be executed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors, comprised
entirely of outside directors, is responsible for approving compensation
arrangements for the officers and senior managers of the Company.
The Compensation Committee seeks to achieve the following goals with the
Company's executive compensation programs: to attract and retain key executives;
to motivate and reward executives for the attainment of corporate and individual
performance objectives; and to provide executives with an opportunity to acquire
an equity interest in the Company. The Compensation Committee seeks to foster a
performance-oriented environment by tying a significant portion of each
executive's cash compensation to the achievement of objectives that are
important to the Company.
The Company's Executive Incentive Compensation Plan is currently comprised
of three principal components: base salary; cash incentive; and equity incentive
in the form of stock options granted under the Company's stock option plans.
TARGET TOTAL CASH COMPENSATION
Target total cash compensation for each executive is established based on
marketplace data. For this purpose, in Fiscal 2000 the Company utilized
principally the data for companies with sales between $500 million and $1
billion as reported by nationwide participants in the Aon Consulting/Radford
Division 1999 Executive Compensation Report. Participants in that nationwide
survey are not limited to the companies included in the Company's peer group
established to compare shareholder returns in the performance graph included
below because the Compensation Committee believes that the Company's competitors
for executive talent are not limited to that peer group.
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<PAGE> 16
BASE SALARY AND CASH INCENTIVE
Once target total cash compensation has been established for each
executive, the total compensation is divided into a base salary portion and a
cash incentive portion. Generally, the higher the level of responsibility of the
executive within the Company, the greater the portion of that executive's target
total cash compensation that consists of the cash incentive component. At
budgeted performance levels, targeted cash incentive ranges from approximately
37.5% to 56% of targeted total cash compensation (60% to 125% of base salary)
for the named executive officers.
In Fiscal 2000, the cash incentive portion of the compensation of
participants in the Executive Incentive Compensation Plan was based upon
achievement of specified operating profit margins, return on assets and
performance goals. Based upon achievement of such goals, an aggregate of
$2,217,542 was earned by and awarded to the Company's seven executive officers
under the Plan.
EQUITY INCENTIVE
The Company grants stock options annually to all participants in the
Executive Incentive Compensation Plan. The purpose of these grants is to give
participants a stake in the success of the Company as measured by the stock
market's assessment of the Company's performance. The number of options granted
to each participant is generally determined on the basis of a percentage of
target total cash compensation that varies depending on the participant's level
of responsibility. The extent of existing options or stock ownership is not
generally considered in granting options, except that the Company sometimes
grants an initial round of options to newly recruited executives to provide them
with some stake in the Company's success from the commencement of their
employment.
The option grants to the seven executive officers on October 19, 2000
amounted to approximately .8% of the Company's Common Shares outstanding on or
about the date of the grants.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee uses the same factors in determining the
compensation of the Chief Executive Officer as it does for the other
participants in the Executive Incentive Compensation Plan. Following an analysis
of marketplace data and a subjective assessment of the Chief Executive Officer's
performance, the Compensation Committee approved increases in the annual base
salary of the Chief Executive Officer from $385,000 to $450,000 in two
increments for Fiscal 2000. As in the case of the other participants in the
Executive Incentive Compensation Plan, the Chief Executive Officer received a
cash incentive payment for Fiscal 2000, which amounted to $688,703 based on the
considerations described in "Base Salary and Cash Incentive" above.
The Compensation Committee is mindful of the potential impact upon the
Company of Section 162(m) of the Internal Revenue Code, which prohibits public
companies from deducting certain executive remuneration in excess of $1,000,000.
While reserving the right of the Company to offer such compensation arrangements
as may be from time-to-time necessary to attract and retain top-quality
management, the Compensation Committee intends generally to structure such
arrangements, where feasible, so as to minimize or eliminate the impact of the
limitations of Section 162(m) of the Code.
THE COMPENSATION COMMITTEE
JOHN A. O'STEEN, CHAIRMAN
LARRY D. STRIPLIN, JR.
C. WILLIAM ZADEL
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<PAGE> 17
PERFORMANCE GRAPH
The graph set forth below compares, for Fiscal Years 1996 through 2000,
the yearly change in the cumulative total returns to holders of Common Shares of
the Company with the cumulative total return of a peer group selected by the
Company and of the NASDAQ Stock Market-US Index. The peer companies are all
among the top 25 semiconductor capital equipment suppliers in the world and were
selected by the Company based principally on nature of business, revenues,
employee base, technology base, market share, customer and customer
relationships. The peer group is composed of Advanced Semiconductor Materials
International N.V., Applied Materials, Inc., BTU International, Inc., Electro
Scientific Industries, Inc., FSI International, Inc., Genus, Inc., KLA - Tencor
Corp., Lam Research Corp., LTX Corp., Novellus Systems, Inc., Silicon Valley
Group, Inc. and Teradyne Inc. The graph assumes that the value of the investment
in the relevant stock or index was $100 at September 30, 1995 and that all
dividends were reinvested. Total returns are calculated based on a fiscal year
ending September 30. For purposes of the peer group index, the peer group
companies have been weighted based upon their relative market capitalization.
The closing market price of the Company's Common Shares as of September 29, 2000
was $13.313. The closing market price of such shares on December 15, 2000 was
$11.25.
[LINE GRAPH]
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<PAGE> 18
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Company is composed of three independent
directors and operates under a written charter approved by the Audit Committee
and adopted by the Board of Directors which is attached to this Proxy Statement
as Appendix B. The members of the committee are MacDonell Roehm, Jr., Chairman,
Philip V. Gerdine and Allison F. Page. The Audit Committee recommends to the
Board of Directors, subject to stockholder ratification, the selection of the
Company's independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited financial
statements for the fiscal year ended September 30, 2000 with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee has discussed with PricewaterhouseCoopers LLP, the
Company's independent accountants, the matters required to be discussed by SAS
61 (Codification of Statements on Accounting Standards), which include, among
other items, matters related to the conduct of the audit of the Company's
financial statements.
The Audit Committee has also received written disclosures and the letter
from PricewaterhouseCoopers LLP required by Independence Standards Board
Standard No.1, which relates to the accountants' independence from the Company
and its related entities and has discussed with PricewaterhouseCoopers LLP their
independence from the Company.
CONCLUSION
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000 filed with the Securities and Exchange
Commission.
AUDIT COMMITTEE
MACDONELL ROEHM, JR., CHAIRMAN
PHILIP V. GERDINE
ALLISON F. PAGE
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<PAGE> 19
SHAREHOLDER PROPOSALS
Proposals which shareholders desire to have included in the Company's
proxy statement for the Annual Meeting in 2001 pursuant to Securities Exchange
Act Regulation 14a-8 must be addressed to the Secretary of the Company and
received by the Company on or before September 4, 2001.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. The Company
has retained Corporate Investor Communications, Inc. to solicit proxies for a
fee of $5,500 plus reimbursement of reasonable expenses. Proxies may also be
solicited by certain officers and regular employees of the Company personally or
by written communication, telephone, facsimile or other means, for which they
will receive no compensation in addition to their normal compensation.
Arrangements may also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may
reimburse them for their reasonable out-of-pocket and clerical expenses.
Although the Company knows of no items of business which will be presented
at the Annual Meeting other than those described herein, proxies in the
accompanying form will confer discretionary authority to the proxy agents with
respect to any other matters which may come before the meeting to the extent
permitted by the applicable rules of the SEC. In this regard, the Company
intends to avail itself, until further notice, of the provisions of Rule
14a-4(c)(1) which grants the proxy agents discretionary authority to vote on any
shareholder proposals presented at the meeting of which the Company has not
received notice at least 45 days before the anniversary of the date on which the
Company first mailed its proxy materials for last year's Annual Meeting. The
Company received no notice of any shareholder proposal by such anniversary date
(i.e. November 18, 2000).
THE COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL HOLDERS
OF ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR FISCAL
2000. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE FURNISHED UPON REQUEST
FOR A PAYMENT OF A FEE OF $.50 PER PAGE. ALL REQUESTS SHOULD BE DIRECTED TO THE
DIRECTOR OF THE INVESTOR RELATIONS DEPARTMENT OF THE COMPANY AT THE OFFICES OF
THE COMPANY SET FORTH ON PAGE 1 OF THIS PROXY STATEMENT.
In addition, electronic copies of the Company's Fiscal 2000 Annual Report,
Form 10-K and proxy statement will be available on the Company's website at:
http://www.kns.com/investors/financials/secreports.asp
after the reports are mailed to shareholders in early January 2001.
By Order of the Board of Directors
SUSAN WATERS
Secretary
January 8, 2001
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<PAGE> 20
APPENDIX A
KULICKE AND SOFFA INDUSTRIES, INC.
2001 EMPLOYEE INCENTIVE STOCK OPTION
AND NON-QUALIFIED STOCK OPTION PLAN
(Effective December 18, 2000)
SECTION 1
PURPOSE
This KULICKE AND SOFFA INDUSTRIES, INC. 2001 EMPLOYEE STOCK OPTION PLAN
("Plan") is intended to provide a means whereby KULICKE AND SOFFA INDUSTRIES,
INC. ("Company") and any Subsidiary (as hereinafter defined) may, through the
grant of incentive stock options and non-qualified stock options (collectively,
"Options") to officers and other Key Employees (as defined in Section 3),
attract and retain such Key Employees and motivate such Key Employees to
exercise their best efforts on behalf of the Company and of any Subsidiary.
As used in the Plan, the term "incentive stock options" ("ISOs") means
Options which qualify as incentive stock options within the meaning of section
422 of the Internal Revenue Code of 1986, as amended ("Code"), at the time they
are granted and which are either designated as ISOs in the Grant Letters (as
hereinafter defined) covering such Options or which are designated as ISOs by
the Committee (as defined in Section 2 hereof) at the time of grant. The term
"non-qualified stock options" ("NQSOs") means all other Options granted under
the Plan. The term "Subsidiary" means any corporation (whether or not in
existence at the time the Plan is adopted) which, at the time an Option is
granted, is a subsidiary of the Company under the definition of "subsidiary
corporation" contained in section 424(f) of the Code. With respect to NQSOs, the
term Subsidiary shall also mean any trade or business (whether or not
incorporated and whether or not in existence at the time the Plan is adopted) in
which, at the time the NQSO is granted, the Company owns a more than 50% equity
interest.
SECTION 2
ADMINISTRATION
The Plan shall be administered by the Company's Compensation Committee
("Committee"), which shall consist solely of not fewer than two (2)
"non-employee directors" (within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934, or any successor thereto) of the Company who
are also "outside directors" (within the meaning of Treas. Reg.
Section 1.162-27(e)(3), or any successor thereto), who shall be appointed by,
and shall serve at the pleasure of, the Company's Board of Directors ("Board").
Each member of such Committee, while serving as such, shall be deemed to be
acting in his or her capacity as a director of the Company.
The Committee shall have full and final authority in its absolute
discretion, subject to the terms of the Plan, to select the persons to be
granted ISOs and NQSOs under the Plan, to grant Options on behalf of the
Company, and to set the date of grant and the other terms of such Options. The
Committee may correct any defect, supply any omission and reconcile any
inconsistency in the Plan and in any Option granted hereunder in the manner and
to the extent it shall deem desirable. The Committee also shall have the
authority to establish such rules and regulations, not inconsistent with the
provisions of the Plan, for the proper administration of the Plan, and to amend,
modify or rescind any such rules and regulations, and to
A-1
<PAGE> 21
make such determinations and interpretations under, or in connection with, the
Plan, as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Company, its shareholders and all officers and employees and former officers and
employees, and upon their respective legal representatives, beneficiaries,
successors and assigns and upon all other persons claiming under or through any
of them.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
SECTION 3
ELIGIBILITY
The class of employees who shall be eligible to receive Options under the
Plan shall be the Key Employees (including any directors who also are Key
Employees) of the Company and/or of a Subsidiary. Key Employees of the Company
and/or of a Subsidiary which is a "subsidiary corporation" (within the meaning
of section 424(f) of the Code) of the Company shall be eligible to receive ISOs
and/or NQSOs. Key Employees of a Subsidiary which is not a "subsidiary
corporation" (within the meaning of section 424(f) of the Code) shall be
eligible to receive NQSOs only. A "Key Employee" is an officer or other employee
who occupies a responsible executive, professional, managerial or administrative
position and who the Committee believes has the capacity to contribute to the
long-term success of the Company and its Subsidiaries. More than one Option may
be granted to a Key Employee under the Plan.
SECTION 4
STOCK
The number of shares of common stock of the Company, no par value ("Common
Shares"), that may be subject to Options under the Plan shall be 4,000,000
shares, subject to adjustment as hereinafter provided. Shares issuable under the
Plan may be authorized but unissued shares or reacquired shares, as the Company
may determine from time to time. Any Common Shares subject to an Option which
expires or otherwise terminates for any reason whatever (including, without
limitation, the Key Employee's surrender thereof) without having been exercised
shall continue to be available for the granting of Options under the Plan.
Notwithstanding anything in this Plan to the contrary, no Key Employee
shall receive Options for more than 600,000 Common Shares under the Plan. If an
Option is cancelled, the Common Shares covered by the cancelled Option shall be
counted against such maximum number of shares for which Options may be granted
to a single Key Employee.
SECTION 5
ANNUAL LIMIT
(a) ISOs. The aggregate Fair Market Value (determined as of the date the
ISO is granted) of the Common Shares with respect to which ISOs become
exercisable for the first time by a Key Employee during any calendar year (under
this Plan and any other ISO plan of the Company, of any parent corporation
(within the meaning of section 424(e) of the Code ("Parent")), or of any
subsidiary corporation (within the meaning of section 424(f) of the Code) shall
not exceed $100,000. The term "Fair Market Value" shall mean the value of the
Common Shares arrived at by a good faith determination of the Committee and
shall be:
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<PAGE> 22
(1) The quoted closing price, if there is a market for and there are
sales of Common Shares on a registered securities exchange or in an over the
counter market, on the date specified;
(2) The weighted average of the quoted closing prices on the nearest
date before and the nearest date after the specified date, if there are no sales
of Common Shares on the specified date but there are such sales on dates within
a reasonable period both before and after the specified date;
(3) The mean between the bid and asked prices, as reported by the
National Quotation Bureau on the specified date, if actual sales are not
available during a reasonable period beginning before and ending after the
specified date; or
(4) Such other method of determining Fair Market Value as shall be
authorized by the Code, or the rules or regulations thereunder, and adopted by
the Committee.
Where the Fair Market Value of Common Shares is determined under (2)
above, the average of the closing prices on the nearest sales date before and
the nearest date after the specified date shall be weighted inversely by the
respective numbers of trading days between the dates of reported sales and the
specified date (i.e., the valuation date), in accordance with Treasury
Regulation Section 20.2031-2(b)(1), or any successor thereto, under the Code.
(b) OPTIONS OVER ANNUAL LIMIT. If an Option intended as an ISO is granted
to a Key Employee and such Option may not be treated in whole or in part as an
ISO pursuant to the limitation in (a) above, such Option shall be treated as an
ISO to the extent it may be so treated under such limitation and as an NQSO as
to the remainder. For purposes of determining whether an ISO would cause such
limitation to be exceeded, ISOs shall be taken into account in the order
granted.
(c) NQSOs. The annual limit set forth above for ISOs shall not apply to
NQSOs.
SECTION 6
OPTIONS
(a) GRANTING OF OPTIONS. From time to time until the expiration or earlier
suspension or discontinuance of the Plan, the Committee may, on behalf of the
Company, grant to Key Employees under the Plan such Options as it determines are
warranted, subject to the limitations of the Plan; provided, however, that
grants of ISOs and NQSOs shall be separate and not in tandem i.e., a Key
Employee's exercise of an ISO shall not affect his or her right to exercise an
NQSO, and vice versa). The granting of an Option under the Plan shall not be
deemed either to entitle the Key Employee to, or to disqualify the Key Employee
from, any participation in any other grant of Options under the Plan. In making
any determination as to whether a Key Employee shall be granted an Option and as
to the number of shares to be covered by such Option, the Committee shall take
into account the duties of the Key Employee, the Committee's views as to his or
her present and potential contributions to the success of the Company or a
Subsidiary, and such other factors as the Committee shall deem relevant in
accomplishing the purposes of the Plan. Moreover, the Committee may determine
that the Grant Letter (as defined below) shall provide that said Option may be
exercised only if certain conditions, as determined by the Committee, are
fulfilled.
(b) TERMS AND CONDITIONS OF OPTIONS. The Options granted pursuant to the
Plan shall specify whether they are ISOs or NQSOs; however, if the Option is not
designated in the Grant Letter as an ISO or NQSO, the Option shall constitute an
ISO if it complies with the terms of section 422 of the Code, and otherwise, it
shall constitute an NQSO. In addition, the Options granted pursuant to the Plan
shall include
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expressly or by reference the following terms and conditions, as well as such
other provisions not inconsistent with the provisions of this Plan as the
Committee shall deem desirable, and for ISOs granted under this Plan, the
provisions of section 422(b) of the Code:
(1) NUMBER OF SHARES. A statement of the number of Common Shares to which
the Option pertains.
(2) PRICE. A statement of the Option exercise price, which shall be
determined and fixed by the Committee in its discretion at the time of grant,
but shall not be less than 100% (110% in the case of an ISO granted to a more
than 10% shareholder as provided in Subsection (10) below) of the Fair Market
Value of the optioned Common Shares on the date the Option is granted.
(3) TERM.
(A) ISOs. Subject to earlier termination as provided in
Subsections (5) through (8) below, the term of each ISO shall be not more than
10 years (5 years in the case of a more than 10% shareholder as provided in
Subsection (10) below) from the date of grant.
(B) NQSQs. Subject to earlier termination as provided in
Subsections (5) through (8) below, the term of each NQSO shall be not more than
10 years from the date of grant, unless otherwise provided in the applicable
grant letter.
(4) EXERCISE.
(A) GENERAL. Options shall be exercisable in such installments
and on such dates, commencing not less than 12 months from the date of grant, as
the Committee may specify, provided that:
(i) In the case of new Options granted to a Key
Employee in replacement for options (whether granted under this Plan or
otherwise) held by the Key Employee, the new Options may be made exercisable, if
so determined by the Committee, in its discretion, at the earliest date the
replaced options were exercisable; and
(ii) The Committee may accelerate the exercise date
of any outstanding Options in its discretion, if it deems such acceleration
to be desirable.
Any Common Shares the right to the purchase of which has accrued
under an Option may be purchased at any time up to the expiration or termination
of the Option. Exercisable Options may be exercised, in whole or in part, from
time to time by giving written notice of exercise to the Company at its
principal office, specifying the number of Common Shares to be purchased and
accompanied by payment in full of the aggregate Option exercise price for such
shares. Options may not be exercised in installments of less than 25 shares,
unless such Option is exhausted upon its exercise. Only full shares shall be
issued under the Plan, and any fractional share which might otherwise be
issuable upon the exercise of an Option granted hereunder shall be forfeited.
(B) MANNER OF PAYMENT. The Option price shall be payable:
(i) In cash or its equivalent;
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(ii) In Common Shares previously acquired by the Key
Employee; provided that if such Common Shares were acquired through the exercise
of an ISO or NQSO, such shares have been held by the Key Employee for such
period of time as required to be considered "mature" shares for purposes of
accounting treatment; or
(iii) In any combination of (i) and (ii) above.
(5) TERMINATION OF EMPLOYMENT. If a Key Employee's employment by the
Company (and Subsidiaries) is terminated by either party prior to the expiration
date fixed for his or her Option for any reason other than death, disability,
Retirement or Cause (as hereinafter defined), such Option may be exercised, to
the extent of the number of shares with respect to which the Key Employee could
have exercised it on the date of such termination, or to any greater extent
permitted by the Committee, by the Key Employee at any time prior to the earlier
of:
(A) The expiration date specified in such Option; or
(B) Three months after the date of such termination of
employment.
If a Key Employee's employment by the Company (and Subsidiaries) is
terminated for Cause, all Options held by the Key Employee shall terminate
concurrently with receipt by the Optionee of oral or written notice that his or
her employment has been terminated. For purposes of this Plan, termination for
Cause shall include termination by reason of any dishonest or illegal act, or
any willful refusal or failure to perform duties properly assigned.
For purposes of this Plan, if a Key Employee's relationship is with
a Subsidiary, and not the Company (i.e., he or she is a Key Employee of a
Subsidiary and not the Company), the Key Employee shall incur a termination of
employment when such entity ceases to be a Subsidiary, unless the Committee
determines otherwise.
(6) EXERCISE UPON RETIREMENT OF KEY EMPLOYEE. If a Key Employee' s
employment is terminated prior to the expiration date fixed for his or her
Option by reason of Retirement (as hereinafter defined), such Option shall
accelerate and may be exercised, to the extent it remains unexercised on the
date of such Retirement, by the Key Employee at any time prior to the earlier
of:
(A) The expiration date specified in such Option; or
(B) One year after the date of such Retirement.
For purposes of this Plan, Retirement shall mean a Key Employee's
retirement from the Company and its Subsidiaries at or after attaining age 65
and completing at least five years of employment with the Company and its
Subsidiaries, or before such time if expressly agreed to by the Company.
(7) EXERCISE UPON DISABILITY OF KEY EMPLOYEE. If a Key Employee shall
become disabled (within the meaning of section 22(e)(3) of the Code) during his
or her employment and, prior to the expiration date fixed for his or her Option,
his or her employment is terminated as a consequence of such disability, such
Option shall accelerate and may be exercised, to the extent it remains
unexercised on the date of such termination, by the Key Employee at any time
prior to the earlier of:
(A) The expiration date specified in such Option; or
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(B) One year after the date of such termination of employment.
In the event of the Key Employee's legal disability, such Option may
be so exercised by the Key Employee's legal representative.
(8) EXERCISE UPON DEATH OF KEY EMPLOYEE. If a Key Employee shall die
during his or her employment and prior to the expiration date fixed for his or
her Option, or if a Key Employee whose employment is terminated for any reason
shall die following his or her termination of employment but prior to the
earliest of:
(A) The expiration date fixed for his or her Option;
(B) The expiration of the period determined under Subsections
(5), (6) (if applicable), and (7) above; or
(C) In the case of an ISO which is to remain an ISO, three
months following termination of employment;
his or her Option shall accelerate and may be exercised, to the extent it
remains unexercised on the date of his or her death, by the Key Employee's
estate, personal representative or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of the
Key Employee, at any time prior to the earlier of:
(i) The expiration date specified in such Option; or
(ii) One year after the date of death.
(9) RIGHTS AS A SHAREHOLDER. A Key Employee shall have no rights as a
shareholder with respect to any shares covered by his or her Option until the
issuance of a stock certificate to him or her for such shares.
(10) TEN PERCENT SHAREHOLDER. If the Key Employee owns more than 10% of
the total combined voting power of all shares of stock of the Company or of a
Subsidiary or Parent at the time an ISO is granted to such Key Employee, the
Option exercise price for the ISO shall be not less than 110% of the Fair Market
Value of the optioned Common Shares on the date the ISO is granted, and such
ISO, by its terms, shall not be exercisable after the expiration of five years
after the date the ISO is granted. The conditions set forth in this Subsection
(10) shall not apply to NQSOs.
(c) GRANT LETTERS. Options granted under the Plan shall be evidenced by
written documents ("Grant Letters") in such form as the Committee shall, from
time to time, approve, which Grant Letters shall contain such provisions, not
inconsistent with the provisions of the Plan, for NQSOs granted pursuant to the
Plan, and such conditions, not inconsistent with section 422(b) of the Code or
the provisions of the Plan, for ISOs granted pursuant to the Plan, as the
Committee shall deem advisable, and which Grant Letters shall specify whether
the Option is an ISO or NQSO; provided, however, if the Option is not designated
in the Grant Letter as an ISO or NQSO, the Option shall constitute an ISO if it
complies with the terms of section 422 of the Code, and otherwise, it shall
constitute an NQSO. Each Key Employee shall be bound by the terms of the Grant
Letter.
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SECTION 7
CAPITAL ADJUSTMENTS
The number of shares which may be issued under the Plan, the maximum
number of shares with respect to which Options may be granted to any Key
Employee under the Plan, both as stated in Section 4 hereof, and the number of
shares issuable upon exercise of outstanding Options under the Plan (as well as
the Option exercise price per share under such outstanding Options) shall,
subject to the provisions of section 424(a) of the Code, be adjusted, as may be
deemed appropriate by the Committee, to reflect any stock dividend, stock split,
share combination, or similar change in the capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation; provided, however, that in
the event of a proposed corporate transaction, the Committee may terminate all
or a portion of the outstanding Options if it determines that such termination
is in the best interests of the Company. If the Committee decides to terminate
outstanding Options, the Committee shall give each Key Employee holding an
Option to be terminated not less than ten days' notice prior to any such
termination by reason of such a corporate transaction, and any such Option which
is to be so terminated shall become fully exercisable and may be exercised up
to, and including the date immediately preceding such termination.
The Committee also may, in its discretion, change the terms of any
outstanding Option to reflect any such corporate transaction, provided that, in
the case of ISOs which are to remain ISOs, such change is excluded from the
definition of a "modification" under section 424(h) of the Code unless the
Option holder consents to such change.
SECTION 8
CHANGE IN CONTROL
All Options shall become fully vested and exercisable upon a Change in
Control of the Company. "Change in Control" shall mean any of the following
events:
(a) An acquisition (other than directly from the Company) of any voting
securities of the Company ("Voting Securities") by any "Person" (as such term is
used for purposes of section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 50% or more of the combined voting power of all then outstanding
Voting Securities, provided, however, that any such acquisition approved by
two-thirds of the Incumbent Board (as hereinafter defined) shall not be deemed
to be a Change in Control;
(b) The individuals who, as of December 18, 2000, are members of the
Company's Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board of Directors; provided, however,
that if the election, or nomination for election by the shareholders, of any new
director was approved by a vote of at least two-thirds of the members of the
Board of Directors who constitute Incumbent Board members, such new directors
shall for all purposes be considered as members of the Incumbent Board as of
December 18, 2000; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the
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Board of Directors (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest;
(c) Approval by shareholders of the Company of (1) a merger or
consolidation involving the Company if the shareholders of the Company
immediately before such merger or consolidation do not own, directly or
indirectly, immediately following such merger or consolidation more than 50% of
the combined voting power of the outstanding Voting Securities of the
corporation resulting from such merger or consolidation in substantially the
same proportion as their ownership of the Voting Securities immediately before
such merger or consolidation or (2) a complete liquidation or dissolution of the
Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; or
(d) Acceptance of shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such share
exchange do not own, directly or indirectly, immediately following such share
exchange more than 50% of the combined voting power of the outstanding Voting
Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.
SECTION 9
AMENDMENT OR DISCONTINUANCE OF THE PLAN
At any time and from time to time, the Board may suspend or terminate the
Plan or amend it, and the Committee may amend any outstanding Options, in any
respect whatsoever, except that the following amendments shall require the
approval by the affirmative votes of holders of at least a majority of the
shares present, or represented, and entitled to vote at a duly held meeting of
shareholders of the Company:
(a) With respect to ISOs, any amendment which would:
(1) Change the class of employees eligible to participate in the
Plan;
(2) Except as permitted under Section 7 hereof, increase the maximum
number of Common Shares with respect to which ISOs may be granted under
the Plan; or
(3) Extend the duration of the Plan under Section 10 hereof with
respect to any ISOs granted hereunder; and
(b) Any amendment which would require shareholder approval pursuant to
Treasury Regulation Section 1.162-27(e)(4)(vi), or any successor thereto.
Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an outstanding
Option without the consent of such holder.
SECTION 10
TERMINATION OF PLAN
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
December 17, 2010, which date is within ten years after the date
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the Plan was adopted by the Board, and no Options hereunder shall be granted
thereafter. Nothing contained in this Section 10, however, shall terminate or
affect the continued existence of rights created under Options issued hereunder
and outstanding on December 17, 2010 which by their terms extend beyond such
date.
SECTION 11
EFFECTIVE DATE
This Plan became effective on December 18, 2000 (the date the Plan was
adopted by the Board); provided, however, that if the Plan is not approved by
the shareholders in the manner described in Section 9 within 12 months after
such date, the Plan and all Options granted hereunder shall be null and void.
SECTION 12
MISCELLANEOUS
(a) GOVERNING LAW. The Plan and the Grant Letters entered into, and the
Options granted thereunder, shall be governed by the applicable Code provisions
to the maximum extent possible. Otherwise, the operation of, and the rights of
Key Employees under, the Plan, the Grant Letters, and the Options shall be
governed by applicable federal law and otherwise by the laws of the Commonwealth
of Pennsylvania.
(b) RIGHTS. Neither the adoption of the Plan nor any action of the Board
or the Committee shall be deemed to give any individual any right to be granted
an Option, or any other right hereunder, unless and until the Committee shall
have granted such individual an Option, and then his or her rights shall be only
such as are provided by this Plan and the Grant Letter.
Any Option under the Plan shall not entitle the holder thereof to any
rights as a shareholder of the Company prior to the exercise of such Option and
the issuance of the shares pursuant thereto. Further, notwithstanding any
provisions of the Plan or any Grant Letter with a Key Employee, the Company
shall have the right, in its discretion, to retire a Key Employee at any time
pursuant to its retirement rules or otherwise to terminate his or her employment
at any time for any reason whatsoever.
(c) NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall
impose no obligation upon a Key Employee to exercise such Option.
(d) NON-TRANSFERABILITY. No Option which is to remain an ISO and, except
as otherwise provided by the Committee, no other Option shall be assignable or
transferable by the Key Employee otherwise than by will or by the laws of
descent and distribution, and subject to the preceding clause, during the
lifetime of the Key Employee, any Options shall be exercisable only by him or
her or by his or her guardian or legal representative. If a Key Employee is
married at the time of exercise of an Option and if the Key Employee so requests
at the time of exercise, the certificate or certificates issued shall be
registered in the name of the Key Employee and the Key Employee's spouse,
jointly, with right of survivorship.
(e) WITHHOLDING AND USE OF SHARES TO SATISFY TAX OBLIGATIONS. The
obligation of the Company to deliver Common Shares to a Key Employee pursuant to
any Option under the Plan shall be subject to applicable federal, state and
local tax withholding requirements.
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With respect to Options granted under the Plan, in order to satisfy the
withholding requirements of applicable federal tax laws, Key Employees may
satisfy the minimum required federal withholding tax, in whole or in part, by
returning to the Company Common Shares, which shares shall be valued, for this
purpose, at their Fair Market Value on the date of exercise of the Option (or if
later, the date on which the Key Employee recognizes ordinary income with
respect to such exercise) ("Determination Date"). Alternatively, the Committee,
in its discretion, may permit the Key Employee to satisfy the minimum required
federal withholding tax, in whole or in part, by electing to have the Company
withhold Common Shares. An election to use Common Shares to satisfy tax
withholding requirements must be made in compliance with and subject to any
withholding rules adopted by the Committee. The Committee may limit the number
of shares withheld to satisfy the tax withholding requirements to the extent
necessary to avoid adverse accounting consequences. In the event Common Shares
acquired under the exercise of an Option, granted under this Plan or any other
plan of the Company, are used to satisfy such withholding requirement, such
Common Shares must have been held by the Key Employee for such period of time as
required to be considered "mature" shares for purposes of accounting treatment.
(f) LISTING AND REGISTRATION OF SHARES. Each Option shall be subject to
the requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option
or the purchase or vesting of shares thereunder, or that action by the Company
or by the Key Employee should be taken in order to obtain an exemption from any
such requirement, no such Option may be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent, approval, or
action shall have been effected, obtained, or taken under conditions acceptable
to the Committee. Without limiting the generality of the foregoing, each Key
Employee or his or her legal representative or beneficiary may also be required
to give satisfactory assurance that shares purchased upon exercise of an Option
are being purchased for investment and not with a view to distribution, and
certificates representing such shares may be legended accordingly.
(g) MODIFICATION OF OPTION. Notwithstanding any provision of this Plan to
the contrary (other than Section 7), the option price of an outstanding Option
shall not, without the prior approval of the Company's stockholders, be reduced
whether through amendment, cancellation, replacement grants, or other similar
means; provided, however, that this shall not preclude the grant, in accordance
with the provisions of this Plan, of additional Options: (1) not in replacement,
in whole or in part, of cancelled Options, or (2) following expiration of
Options.
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APPENDIX B
KULICKE & SOFFA INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. MISSION STATEMENT
The Audit Committee is to serve as a focal point for communication between the
Board of Directors, the Independent Accountant and the Company's Management, as
their duties relate to financial accounting, reporting and controls. The
Independent Accountant is ultimately accountable to the Board of Directors and
the Committee. The Committee will assist the Board of Directors in fulfilling
its oversight responsibilities by reviewing: the financial reports provided by
the Corporation; the Corporation's systems of internal controls regarding
finance, accounting, legal compliance and ethics that management and the Board
have established; and the Corporation's auditing, accounting and financial
reporting processes generally.
The Committee is the Board of Directors' principal agent in monitoring the
independence of the Company's Independent Accountant. However, the opportunity
for the Independent Accountant to meet with the entire Board of Directors as
needed is not to be restricted. While the Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of Management and the Independent
Accountant.
II. ORGANIZATION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgement as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
financial management expertise. Such qualifications will be determined by the
Board of Directors in its sole judgement.
The Chairman of the Board shall submit his recommendation for the appointment of
members of the Committee and the Chairman of the Committee. The Board shall
elect the members and Chairman of the Committee annually, to serve until the
next annual organizational meeting or until their successors shall be duly
elected and qualified.
III. MEETINGS
The Committee shall meet not less than four times annually, or more frequently
as circumstances dictate. The Committee will discuss with management any
questions which it may have regarding matters within the scope of its
responsibilities. As part of its job to foster open communication, the Committee
shall be empowered to request private conversations with the independent
accountants in separate executive sessions to discuss any matters that the
Committee believes should be discussed. The Chairman of the Committee
<PAGE> 31
or a member of the Committee designated by the Chairman, shall meet with
management and the independent accountants quarterly to review the financial and
legal matters of the Corporation.
IV. RESPONSIBILITIES AND DUTIES
The Audit Committee shall report Committee actions to the full Board of
Directors and may make appropriate recommendations. To fulfill its
responsibilities and duties, the Audit Committee shall:
1. Review and update this Charter annually, or as conditions dictate.
2. Review the annual financial statements with financial management and the
independent accountants prior to their filing with the Securities and
Exchange Commission.
3. Review the interim quarterly financial statements with management before
they are filed with the Securities and Exchange Commission. The Chairman
of the Committee or a member of the Committee designated by the Chairman
may represent the entire Committee for purposes of this review.
4. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
Review the independent accountant's written statement delineating its
relationship with the Corporation.
5. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
6. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
organization's financial statements.
7. In consultation with the independent accountants review the integrity of
the organization's financial reporting processes, both internal and
external.
8. Consider the independent accountants' judgements about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
9. Following completion of the annual audit, review with management and the
independent accountants any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of work
or access to required information.
10. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
11. Evaluate whether management is setting the appropriate tone at the top by
communicating the importance of the Internal Control Framework and
ensuring that all individuals possess an understanding of their roles and
responsibilities.
12. Report Committee actions to the Board of Directors with such
recommendations, as the Committee may deem appropriate.
13. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
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<PAGE> 32
14. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
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<PAGE> 33
A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
WITHHOLD
FOR AUTHORITY
NOMINEES TO VOTE FOR
LISTED NOMINEES LISTED
1. ELECTION
OF
DIRECTORS [ ] [ ] Nominees: Allison F. Page
C. William Zadel
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
--------------------------------------------------------------
BY SIGNING THIS PROXY, AUTHORITY IS GIVEN TO CUMULATE VOTES IN
THE DISCRETION OF PROXIES FOR LESS THAN ALL NOMINEES LISTED.
FOR AGAINST ABSTAIN
2. Approval of the 2001 Employee Stock Option Plan. [ ] [ ] [ ]
3. Appointment of PricewaterhouseCoopers LLP as FOR AGAINST ABSTAIN
independent accountants for the Company for [ ] [ ] [ ]
the fiscal year ending September 30, 2001.
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
You are urged to follow the voting instructions so that you may be sure that
your shares will be voted.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
YOUR VOTE IS IMPORTANT TO US. PLEASE FOLLOW THE INSTRUCTIONS ACCOMPANYING THIS
CARD TO BE SURE YOUR SHARES WILL BE VOTED.
------------------------------------
Signature of Shareholder
------------------------------------ Dated , 2001
Signature of Shareholder ---------------
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREIN. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP NAME
BY AUTHORIZED PERSON.
