SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Cerprobe Corporation
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)
(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ X ] 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
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<PAGE>
Cerprobe Corporation
_________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
_________________________________________
TO THE STOCKHOLDERS:
You are cordially invited to attend the annual meeting (the "Annual
Meeting") of the stockholders of Cerprobe Corporation, a Delaware corporation
(the "Company"), to be held on July 23, 1996, at 10:00 a.m. local time at Tempe
Mission Palms, located at 60 East 5th Street, Tempe, Arizona 85281, for the
following purposes:
1. To elect directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation to add a provision allowing the Board of Directors to
consider certain factors when evaluating certain matters such as
tender offers.
3. To approve an amendment to the Company's Certificate of
Incorporation subjecting the Company to the provisions of Section
203 of the Delaware General Corporation Law.
4. To approve an amendment to the Company's Certificate of
Incorporation to eliminate actions by written consent of
stockholders.
5. To approve an amendment to the Company's Certificate of
Incorporation to add certain minimum price and procedural
requirements in connection with certain transactions such as
business combinations.
6. To ratify the appointment of KPMG Peat Marwick LLP as the
independent auditors for the Company for the fiscal year ending
December 31, 1996.
7. To act upon such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record at the close of business on June 21, 1996 (the
"Record Date") are entitled to notice of and to vote at the meeting.
The enclosed Proxy Statement contains additional information pertaining to
the matters to be considered at the meeting. A copy of the Annual Report to
Stockholders for the fiscal year ended December 31, 1995 also accompanies this
Notice.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card as promptly as possible
in the enclosed postage-prepaid envelope. Any stockholder attending the meeting
may vote in person even if he or she has previously returned a proxy.
By order of the Board of Directors,
Tempe, Arizona Kenneth W. Miller
Dated: June 28, 1996 Secretary
<PAGE>
Cerprobe Corporation
600 South Rockford Drive
Tempe, Arizona 85281
___________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
July 23, 1996
PROXY STATEMENT
___________________________________________________
VOTING AND OTHER MATTERS
General
This Proxy Statement is submitted in support of a proxy
solicitation by the Board of Directors of Cerprobe Corporation, a Delaware
corporation (the "Company"), in connection with the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on July 23, 1996 at 10:00 a.m.
local time at Tempe Mission Palms located at 60 East 5th Street, Tempe, Arizona
85281.
These proxy solicitation materials were mailed on or about
June 28, 1996 to all stockholders entitled to vote at the Annual Meeting.
Record Date
Stockholders entitled to notice of and to vote at the Annual
Meeting, and at any adjournment or adjournments thereof, are stockholders of
record at the close of business on June 21, 1996 (the "Record Date"). On the
Record Date, there were issued and outstanding 4,411,228 shares of the Company's
common stock, $.05 par value per share (the "Common Stock").
Revocability of Proxies
Any person giving a proxy may revoke the proxy at any time
before its use by delivering to the Secretary of the Company at the Company's
offices at 600 South Rockford Drive, Tempe, Arizona 85281, written notification
of revocation or a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
Voting Solicitation
The presence, in person or by proxy, of the holders of a
majority of the total number of shares of Common Stock outstanding constitutes a
quorum for the transaction of business at the Annual Meeting. Each share is
entitled to one vote on any matter coming before the Annual Meeting, except in
the case of the election of directors as described below.
For the election of directors, each stockholder is entitled to
a number of votes equal to the number of directors to be elected multiplied by
the number of shares held by such stockholder. Each stockholder may distribute
votes among as many candidates for director in such proportions as he or she
sees fit. The five candidates receiving the highest number of votes shall be
elected. The affirmative vote of a majority of the outstanding shares of Common
Stock is required for approval of each of the amendments to the Company's
Certificate of Incorporation and any other matter to be voted upon, other than
the election of directors, shall be resolved by a majority of the votes cast
thereon in person or by proxy at the Annual Meeting.
<PAGE>
The enclosed proxy, when properly signed and returned to the
Company, will be voted by the proxy holders at the Annual Meeting as directed
therein. If a stockholder specifies how the proxy is to be voted on any of the
business to come before the Annual Meeting, the proxy will be voted in
accordance with such specification. If no specification is made, the proxy will
be voted (i) for the election of the nominees for directors as proposed herein
(and the proxy holders may exercise their discretion in distributing cumulative
votes among the nominees); (ii) for approval of an amendment to the Company's
Certificate of Incorporation to add a provision allowing the Board of Directors
to consider certain factors when evaluating certain matters such as tender
offers; (iii) for approval of an amendment to the Company's Certificate of
Incorporation subjecting the Company to the provisions of Section 203 of the
Delaware General Corporation Law; (iv) for approval of an amendment to the
Company's Certificate of Incorporation to eliminate actions by written consent
of stockholders; (v) for approval of an amendment to the Company's Certificate
of Incorporation to add certain minimum price and procedural requirements in
connection with certain transactions such as business combinations; (vi) for the
appointment of KPMG Peat Marwick LLP as independent auditors for the Company for
the current fiscal year; and (vii) in the best judgment of the proxy holders, as
to any other matters which may properly come before the meeting.
The solicitation of proxies is made on behalf of the Company
and all expenses incurred herein will be borne by the Company. Some of the
officers, directors and regular management employees of the Company may also
solicit proxies on behalf of management by telephone, telegraph and personal
interview. No additional compensation will be paid to such persons therefor;
however, any costs thereof will be borne by the Company. The Company will
reimburse brokerage firms, banks and other custodians, nominees and fiduciaries
for their expenses reasonably incurred in forwarding solicitation material to
the beneficial owners of the Company's Common Stock.
Annual Report
The 1995 Annual Report to Stockholders, which is being mailed
to stockholders with this Proxy Statement, contains financial and other
information about the Company but is not incorporated into this Proxy Statement
and is not to be considered a part of the proxy soliciting materials.
Upon request, the Company will provide, without charge to each
stockholder of record as of the Record Date, a copy of the Company's annual
report on Form 10-KSB, as amended by Form 10-KSB/A, for the year ended
December31, 1995 as filed with the Securities and Exchange Commission. Any
exhibits listed in the Form 10-KSB report also will be furnished upon request at
the actual expense incurred by the Company in furnishing such exhibit. Any such
requests should be directed to the Company's secretary at the Company's
executive offices set forth in this Proxy Statement.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of the Record Date by (i)
each director and each nominee for director; (ii) the named executive officers
set forth in the Summary Compensation Table under the section entitled
"Executive Compensation"; (iii) all directors and executive officers of the
Company as a group; and (iv) each person known by the Company to be the
beneficial owner of more than 5% of the Common Stock. The information as to
beneficial ownership is based upon statements furnished to the Company by such
persons.
2
<PAGE>
Name and Address Amount and Nature Percent of
of Beneficial Owner(1) of Beneficial Ownership(2) Class(3)
- ---------------------- -------------------------- --------
Ross J. Mangano 596,834(4) 13.5%
Ross J. Mangano, et al., Trustees 380,200 8.6%
112 W. Jefferson Blvd.
Suite 613
South Bend, IN 46601
William A. Fresh 344,297(5) 7.8%
Judd C. Leighton 260,000(6) 5.6%
112 W. Jefferson Blvd.
Suite 603
South Bend, IN 46601
Mary Morris Leighton 260,000(7) 5.6%
112 W. Jefferson Blvd.
Suite 603
South Bend, IN 46601
Kenneth W. Miller 180,570(8) 4.0%
C. Zane Close 41,600(9) 1.0%
Donald F. Walter 16,334(10) *
Michael K. Bonham 90,034(11) 2.0%
Eswar Subramanian 89,234(12) 2.0%
Henry Wong 65,011(13) 1.5%
All executive officers and directors
as a group (ten persons) 1,456,914(14) 31.4%
____________
*Less than 1%.
(1) Each director, nominee and officer of the Company may be reached
through the Company at 600 South Rockford Drive, Tempe, Arizona 85281.
(2) Unless otherwise indicated, and subject to community property laws
where applicable, all shares are owned of record by the persons named
and the beneficial ownership consists of sole voting power and sole
investment power.
(3) The percentages shown include the shares of Common Stock actually owned
as of the Record Date and the shares of Common Stock that the
identified person or group had the right to acquire within 60 days of
the Record Date pursuant to the exercise of stock options or conversion
of securities. In calculating the percentage of ownership, all shares
of Common Stock that the identified person or group had the right to
acquire within 60 days of the Record Date upon the exercise of stock
options or conversion of securities are deemed to be outstanding for
the purpose of computing the percentage of the shares of Common Stock
owned by such person or group, but are not deemed to be outstanding for
the purpose of computing the percentage of the shares of Common Stock
owned by any other person.
(4) Includes 20,000 shares in the name of Nat & Co. voted pursuant to a
power of attorney, 51,300 shares in the name of Oliver & Company voted
pursuant to a power of attorney, 120,000 shares in the name of Millie
3
<PAGE>
M. Cunningham voted pursuant to a power of attorney, 380,200 shares
held in the name of Troon & Co., Ross J. Mangano, et al., Trustees, for
which Mr. Mangano serves as a trustee, 10,000 shares which Mr. Mangano
has the right to acquire at an exercise price of $1.00 per share
pursuant to the exercise of options granted in September 1992, 13,334
shares which Mr. Mangano has the right to acquire at an exercise price
of $5.75 per share pursuant to the exercise of options granted in
September 1994, and 2,000 shares which Mr. Mangano has the right to
acquire at an exercise price of $8.25 per share pursuant to the
exercise of options granted in June 1995.
(5) Includes 162,700 shares held by WAF Investment Company, a company 100%
owned by Mr. Fresh and his wife, and 78,477 shares held by Orem Tek
Development Corp., a company 100% owned by Mr. Fresh, and reflects
2,000 shares which Mr. Fresh has the right to acquire at an exercise
price of $8.25 per share pursuant to the exercise of options granted in
June 1995.
(6) Includes 200,000 shares with respect to which Judd C. Leighton has the
right to acquire sole voting and investment power pursuant to the
conversion of $200,000 in principal amount of the Company's 12%
Convertible Subordinated Debentures due December 15, 1996, which are
convertible at any time prior to maturity into shares of Common Stock
at the rate of $1.00 per share, and 60,000 shares with respect to which
Mr. Leighton has the right to acquire shared voting and investment
power pursuant to the conversion of $60,000 in principal amount of the
Company's 12% Convertible Subordinated Debentures due December 15,
1996, held by Leighton-Oare Foundation, Inc., a corporation for which
Mr. Leighton and his wife, Mary Morris Leighton, serve as directors.
(7) Includes 200,000 shares with respect to which Mary Morris Leighton has
the right to acquire sole voting and investment power pursuant to the
conversion of $200,000 in principal amount of the Company's 12%
Convertible Subordinated Debentures due December 15, 1996, which are
convertible at any time prior to maturity into shares of Common Stock
at the rate of $1.00 per share, and 60,000 shares with respect to which
Mrs. Leighton has the right to acquire shared voting and investment
power pursuant to the conversion of $60,000 in principal amount of the
Company's 12% Convertible Subordinated Debentures due December 15,
1996 held by Leighton-Oare Foundation, Inc., a corporation for which
Mrs. Leighton and her husband, Judd C. Leighton, serve as directors.
(8) Includes 125,236 shares held by U.S. Trust Company of California, N.A.,
as trustee for the Kenneth W. Miller Charitable Remainder Unitrust. Mr.
Miller may be deemed to have shared voting and investment power with
respect to these shares. Also includes 30,000 shares which Mr. Miller
has the right to acquire at an exercise price of $.50 per share
pursuant to the exercise of options granted in July 1990, 10,000 shares
which Mr. Miller has the right to acquire at an exercise price of $1.00
per share pursuant to the exercise of options granted in September
1992, 13,334 shares which Mr. Miller has the right to acquire at an
exercise price of $5.75 per share pursuant to the exercise of options
granted in September 1994, and 2,000 shares which Mr. Miller has the
right to acquire at an exercise price of $8.25 per share pursuant to
the exercise of options granted in June 1995.
(9) Includes 40,000 shares which Mr. Close has the right to acquire at an
exercise price of $5.75 per share pursuant to the exercise of options
granted in September 1994.
(10) Includes 13,334 shares which Mr. Walter has the right to acquire at an
exercise price of $5.75 per share pursuant to the exercise of options
granted in September 1994 and 2,000 shares which Mr. Walter has the
right to acquire at an exercise price of $8.25 per share pursuant to
the exercise of options granted in June 1995.
(11) Includes 33,334 shares which Mr. Bonham has the right to acquire at an
exercise price of $5.75 per share pursuant to the exercise of options
granted in September 1994.
4
<PAGE>
(12) Includes 23,334 shares which Mr. Subramanian has the right to acquire
at an exercise price of $5.75 per share pursuant to the exercise of
options granted in September 1994.
(13) Includes 5,000 shares which Mr. Wong has the right to acquire at an
exercise price of $10.50 per share pursuant to the exercise of options
granted in August 1995 and 2,000 shares which Mr. Wong's spouse has the
right to acquire at an exercise price of $10.50 per share pursuant to
the exercise of options granted in August 1995.
(14) Includes 223,004 shares of Common Stock that members of the group had
the right to acquire as of the Record Date or within 60 days of the
Record Date pursuant to the exercise of stock options.
ELECTION OF DIRECTORS
Nominees
The Company's certificate of incorporation provides that the
number of directors shall be fixed from time to time by resolution of the Board
of Directors or stockholders. Presently, the number of directors is fixed at
five. Unless otherwise instructed, proxies will be voted in favor of Ross J.
Mangano, C. Zane Close, Kenneth W. Miller, Donald F. Walter and William A.
Fresh, all of whom currently are directors of the Company, and the proxy holders
may exercise their discretion in distributing cumulative votes among the
nominees in any manner. In the event that any nominee is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for such substitute nominees as may be selected by the current Board of
Directors. The Board of Directors has no reason to believe that any of the
nominees will be unable or will decline to serve as a director. As provided in
the Company's certificate of incorporation, directors are to be elected by
cumulative voting. Holders of proxies solicited hereby will have discretionary
authority to cumulate votes. The term of office of each person elected as a
director will continue until a successor has been elected and qualified or until
his earlier resignation or removal.
The following table sets forth certain information regarding
the nominees for directors of the Company.
Name Age Position(s) with the Company
- ---- --- ----------------------------
Ross J. Mangano 50 Chairman of the Board of Directors
C. Zane Close 46 President, Chief Executive Officer
and Director
Kenneth W. Miller 64 Secretary, Treasurer and Director
Donald F. Walter 64 Director
William A. Fresh 67 Director
Ross J. Mangano has served as Chairman of the Board of
Directors of the Company since February 1993, and as a director of the Company
since February 1988. Mr. Mangano has been employed by Oliver Estate, Inc., an
Indiana-based management company, since 1971 and has served as vice
president-investments for Oliver Estate, Inc. since 1980. Mr. Mangano also is an
investment analyst for Oliver Estate, Inc. Since December 1993, Mr. Mangano has
been a member of the board of directors of Cole Taylor Financial Group, a
publicly-held bank holding company based in Wheeling, Illinois.
C. Zane Close joined the Company in July 1990 as its President
and Chief Executive Officer and has also served as a director of the Company
since that time. From February 1985 to September 1989, Mr. Close served as vice
president of operations and thereafter, until July 1990, as vice president and
general manager of
5
<PAGE>
Probe Technology Corporation, a California corporation that develops,
manufactures and markets probing devices for use in the testing of integrated
and hybrid circuits.
Kenneth W. Miller has served as the Treasurer of the Company
since June 1994, as the Secretary of the Company since October 1991 and as a
director of the Company since 1979. Since January 1991, Mr. Miller has served as
a business consultant to various companies involved in the high tech industry.
From April 1991 until October 1991, Mr. Miller was the marketing director of
Scrantom Engineering, Inc., a manufacturer of hybrid circuits and ceramic
circuit boards located in Costa Mesa, California. From September 1988 until
April 1991, Mr. Miller served as the marketing director of Advanced Packaging
Systems, a manufacturer of high density ceramic and polymer thin film
interconnect products. From 1981 to September 1988, Mr. Miller served as the
president of Interamics, a San Diego-based company that manufactured ceramic
packages for integrated circuits and hybrid substrates. From January 1977 to the
time he joined Interamics, Mr. Miller was vice president and general manager of
a division of Siltec Corporation, a San Francisco-based manufacturer of silicon
wafers and ceramic packages.
Donald F. Walter has served as a director of the Company since
May 1, 1991. Since 1982, Mr. Walter has been a financial consultant and is the
principal of Walter & Keenan Financial Consulting Co., a financial consulting
firm located in Niles, Michigan. Since 1982, Mr. Walter has served as a director
of National Standard Co., a public company based in Niles, Michigan that
manufactures specialty wire products. Since 1988, Mr. Walter has served as a
director of Metro BanCorp, a publicly-owned bank based in Indianapolis, Indiana.
William A. Fresh has served as a director of the Company since
April 7, 1995. Mr. Fresh co- founded Fresh Test Technology Corporation, a
company acquired by the Company ("Fresh Test"), and Fresh Quest Corporation, a
designer and manufacturer of probe and interface test technology for the
semiconductor industry. He served as chairman of the board and chief executive
officer of Fresh Test from January 1986 through March 1995 and has served as the
chairman of the board and chief executive officer of Fresh Quest Corporation
since January 1992. Mr. Fresh also has served as the chairman of the board and
chief executive officer of Magellan Technology, a public holding company, Orem
Tek Development Corp., a real estate development company, and Satellite Images
System Corporation, a medical information processing company, since May 1990,
May 1991 and February 1992, respectively, and as chairman of the board of EFI
Electronics, a publicly-held power conditioning company, and Fresh Technology
Company, a PC based software company, since February 1991 and May 1991,
respectively.
Upon the resignation of John W. Tarzwell as a director of the
Company on May 1, 1991, the Board of Directors of the Company appointed Donald
F. Walter to fill the vacancy. In connection with the issuance of the Company's
Convertible Subordinated Debentures (see "Certain Relationships and Related
Transactions"), the Company agreed with one of the holders of the Convertible
Subordinated Debentures to appoint Mr. Walter to the Board and thereafter to
nominate Mr. Walter as a director so long as $250,000 in principal amount of the
Convertible Subordinated Debentures held by such holder and his affiliates
remains outstanding. As of the date of this Proxy Statement, such holder and his
affiliates held $485,000 in outstanding principal amount of the Convertible
Subordinated Debentures. In addition, the employment agreement between the
Company and Mr. Close provides that the Company will cause Mr. Close to be
nominated to the Board of Directors so long as Mr. Close is employed by the
Company. The stockholders of the Company, however, have no obligation to vote
for Mr. Walter or Mr. Close and may withhold or distribute votes in their
discretion. The Company knows of no other arrangements or understandings between
any director or executive officer and any other person pursuant to which he has
been selected as a director or executive officer.
Directors hold office until their successors have been elected
and qualified. All officers are elected by the Board of Directors and hold
office until their successors have been duly elected and qualified, or until
resignation or removal. There are no family relationships among any of the
directors or officers of the Company.
6
<PAGE>
Meetings and Committees of the Board of Directors
The Board of Directors held six meetings during 1995. No
incumbent director was absent for any of the meetings of the Board of Directors
or of any committee of the Board on which he served (during the periods that he
served).
Ross J. Mangano, Kenneth W. Miller and Donald F. Walter served
on the Audit Committee for the fiscal year ended December 31, 1995. The Audit
Committee was established by the Board of Directors to serve as a focal point
for communications between non-committee directors, the Company's independent
auditors and the Company's management as their duties relate to financial
accounting, reporting and controls. The Audit Committee is responsible for
assisting the Board of Directors in fulfilling its fiduciary responsibilities
with respect to accounting policies and reporting practices. The Audit Committee
held one meeting in 1995.
Ross J. Mangano, Kenneth W. Miller and Donald F. Walter served
on the Compensation Committee for the fiscal year ended December 31, 1995. The
Compensation Committee is primarily responsible for reviewing officer
compensation and making recommendations to the Board of Directors regarding
officer salaries and incentive compensation. The Compensation Committee also is
responsible for the administration of the Company's Stock Option Plans. See
"Executive Compensation-Employee Benefit Plans." The Compensation Committee held
two meetings in 1995.
Director Compensation and Other Information
As of April 1996, each outside director of the Company will
receive $3,000 each quarter and a fee of $500 for each meeting of the Board of
Directors attended. Outside directors also are reimbursed for expenses incurred
in attending meetings. Directors do not receive additional compensation for
committee participation or special assignments.
In fiscal 1995, the Company granted options to Messrs.
Mangano, Miller, Fresh and Walter to purchase 2,000, 2,000, 2,000 and 2,000
shares of Common Stock, respectively, at an exercise price of $8.25 per share.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Other Compensation
The following table sets forth information concerning the
compensation for the fiscal years ended December 31, 1995, 1994 and 1993 earned
by the Company's Chief Executive Officer and the Company's three other most
highly compensated executive officers whose aggregate cash compensation exceeded
$100,000 for services rendered in all capacities to the Company and its
subsidiaries for the last fiscal year (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------------
Other Restricted All
Annual Stock LTIP Other
Name and Compensation Award(s) Options Payouts Compen-
Principal Position Year Salary($) Bonus($) ($) (4) $ /SARs(#) ($) sation($)
- ------------------ ---- --------- -------- ------- ---- -------- --- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Zane Close 1995(1) 135,000 35,000 -
President and Chief 1994(2) 116,252 13,000 - 60,000
Executive Officer 1993(3) 108,567 29,600 -
Eswar Subramanian 1995(1) 108,000 25,000 -
Senior Vice President and 1994(2) 98,067 12,000 - 35,000
Chief Operating Officer 1993(3) 90,067 23,700 -
Michael K. Bonham 1995(1) 108,000 25,000 -
Senior Vice President - 1994(2) 100,033 12,000 - 50,000
Sales and Marketing 1993(3) 90,067 23,700 -
Henry Wong 1995(1) 100,000 15,750 - 25,000
Vice President/Executive 1994(2) 87,018 5,000 - 20,000
Director of Cerprobe Asia 1993(3) 80,073 5,000 -
</TABLE>
- ---------------
(1) Includes $34,346, $44,863, $32,462, and $15,000 in salary and/or bonus
earned by Messrs. Close, Subramanian, Bonham and Wong, respectively, in
1995 but deferred to a future year.
(2) Includes $26,242, $23,662, $16,223, and $14,567 in salary and/or bonus
earned by Messrs. Close, Subramanian, Bonham and Wong, respectively, in
1994 but deferred to a future year.
(3) Includes $26,324, $21,840, $21,735 and $19,515 in salary and/or bonus
earned by Messrs. Close, Subramanian, Bonham and Wong, respectively, in
1993 but deferred to a future year.
(4) Other annual compensation did not exceed the lesser of $50,000 or 10%
of the total salary and bonus for any of the Named Officers except as
noted.
8
<PAGE>
Option Grants
The following table provides information on stock options granted to
the Company's Named Officers during the fiscal year ended December 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Potential Realizable
Number of Value at Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Exercise Price Appreciation for
Options Granted Price Expiration Option Term(2)
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- ----------- ----------- ------ ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Henry Wong 25,000(1) 12.14% $10.50 2000 $72,524 $160,259
</TABLE>
- ------------
(1) The option agreement provides that the options vest and become
exercisable one-fifth in 1995, one-fifth in 1996, one-fifth in 1997,
one-fifth in 1998 and one-fifth in 1999.
(2) Calculated from a base price equal to the exercise price of each
option, which was the fair market value of the Common Stock on the date
of grant. The amounts represent only certain assumed rates of
appreciation.
Option Exercises and Holdings
The following table provides information on options exercised
in the last fiscal year by the Company's Named Officers and the value of each
such Officer's unexercised options at December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year-End (#) at Fiscal Year-End ($)(2)
Acquired on Value ------------------------------ -------------------------
Name Exercise (#) Realized ($)(1) Exercisable Exercisable Unexercisable
- ---- ------------ --------------------------- ----------- -------------
Unexercisable
-------------
<S> <C> <C> <C> <C> <C> <C>
C. Zane Close 60,000 $175,000 40,000 20,000 $470,000 $235,000
Eswar Subramanian 30,000 $236,250 23,334 11,666 $274,175 $137,076
Michael K. Bonham 30,000 $236,250 23,334 16,666 $391,675 $195,826
Henry Wong -0- -0- 18,334 26,666 $191,675 $218,326
</TABLE>
_____________________
(1) Calculated based on the market price at exercise multiplied by the
number of options exercised less the total exercise price of the
options exercised.
(2) Calculated based on $17.50, which was the closing sale price of the
Common Stock as quoted on the Nasdaq National Market on December 29,
1995, multiplied by the number of applicable shares in-the-money less
the total exercise price.
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Employment Agreements and Other Arrangements
On July 16, 1990, C. Zane Close, President and Chief Executive
Officer, Michael K. Bonham, Vice President-Sales and Marketing, Eswar
Subramanian, Vice President-Engineering and Henry Wong, then a key employee,
entered into two year employment agreements (one year with respect to Mr. Wong)
with the Company (each of which is subject to automatic renewal for succeeding
terms of one year unless either party gives notice at least 90 days prior to the
expiration of any term of its intention not to renew) pursuant to which Messrs.
Close, Bonham, Subramanian and Wong were to receive $95,000, $80,000, $80,000
and $57,000, respectively, in annual base salary during the term of their
employment. Each of the employment agreements provides for additional increases
in the base salary and bonuses as may be determined by the Company's Board of
Directors in its sole discretion. Each of the agreements may be terminated with
or without cause by the Company upon 90 days written notice to the employee and
each employee may terminate his obligations under the agreement by giving the
Company at least 90 days notice of his intent to terminate. In addition, the
employment agreements provided for relocation expenses in the amount of up to
$10,000 and for certain temporary living expenses for each of the above- named
individuals. The employment agreements also provided for the grant of options to
each of the above-named individuals as follows. Pursuant to his option
agreement, Mr. Close was granted the right to purchase 40,000 shares at $.50 per
share commencing July 16, 1990, 40,000 shares at $1.00 per share commencing July
15, 1991, 5,000 shares at $1.50 per share commencing July 15, 1991, 35,000
shares at $1.50 per share commencing July 15, 1992, 10,000 shares at $2.00 per
share commencing July 15, 1992, and 45,000 shares at $2.00 per share commencing
July 15, 1993. Pursuant to their employment agreements, Messrs. Subramanian and
Bonham were each granted the right to purchase 30,000 shares at $.50 per share
commencing July 16, 1990, 30,000 shares at $1.00 per share commencing July 15,
1991, 30,000 shares at $1.50 per share commencing July 15, 1992, and 30,000
shares at $2.00 per share commencing July 15, 1993. Pursuant to his employment
agreement, Mr. Wong was granted the right to purchase 25,000 shares at $.50 per
share commencing July 16, 1990. In addition, Mr. Wong was granted an option to
purchase 25,000 shares at an exercise price of $.9375 per share, one third of
which became exercisable July 12, 1991. All of the options described above
granted to Messrs. Close, Bonham, Subramanian, and Wong provided for expiration
on July 15, 1995.
In connection with its acquisition of Fresh Test, the Company
entered into employment agreements with Robert K. Bench, its former Chief
Financial Officer, Harold D. Higgins and Stephen Fresh. These employment
agreements provided for an annual base salary of $100,000, $67,000 and $60,000
for Messrs. Bench, Higgins and Fresh, respectively, for a one year term that
commenced April 3, 1995. Each of the employment agreements also contained a
covenant not to compete pursuant to which Messrs. Bench, Higgins and Fresh may
not, during the term of the respective agreement and for a period of 12 months,
90 days and 12 months, respectively, following termination, engage or cause
others to engage in the design, manufacture or sale of probe cards and interface
hardware products used by the semi-conductor industry in the United States and
all other countries in which the Company conducts business. The Employment
Agreements for Messrs. Higgins and Fresh expired on April 3, 1996 and have not
been renewed. Mr. Higgins remains with the Company, but is no longer subject to
an employment agreement and Mr. Fresh has announced that he will resign on June
28, 1996. Mr. Bench informed the Company that, following expiration of his
employment agreement with the Company on April 3, 1996, he would not remain with
the Company.
Pursuant to an agreement dated as of May 1, 1991, amended as
of March 8, 1993, between the Company and John W. Tarzwell and his wife, Mr.
Tarzwell agreed to resign as a director, an officer and an employee of the
Company effective May 1, 1991. In connection with Mr. Tarzwell's resignation,
the Company agreed to pay Mr. Tarzwell $3,125 per month beginning May 15, 1991
and ending April 15, 1994. In addition, the Company agreed to provide Mr.
Tarzwell and his wife medical insurance coverage similar to the coverage
provided by the Company to employees of the Company, life insurance or
comparable coverage providing death benefits of up to $47,500, the use of a
Company-leased automobile until March 30, 1992 and reimbursement for all accrued
and unpaid vacation pay due Mr. Tarzwell as of April 30, 1991. Mr. Tarzwell
agreed to keep confidential all information with respect to the Company, its
businesses and affairs and to refrain from disclosing
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or using such information for his benefit or the benefit of any other person for
a period of four years. Further, Mr. Tarzwell agreed to vote all of the
Company's stock owned by Mr. Tarzwell in favor of all issues that receive the
recommendation of the Company's Board of Directors. In January 1994, the
Company's Board of Directors agreed to extend the agreement with Mr. Tarzwell on
a month-to-month basis, subject to a 30-day notice of termination.
Employee Benefit Plans
In 1983, the Board of Directors and the Company's stockholders
adopted an incentive stock option plan in order to provide for the grant of
options to employees to purchase shares of Common Stock that qualified as
"incentive stock options" under Section 422A of the Internal Revenue Code of
1954, as amended. The incentive stock option plan originally provided for the
issuance of options to purchase a total of 100,000 shares of the Company's
Common Stock. On January 7, 1984, the Board of Directors approved, and on May 5,
1984, the stockholders ratified, the reservation of an additional 120,000 shares
of Common Stock for issuance upon the exercise of options under the incentive
stock option plan.
On February 2, 1987, the Board of Directors approved, and on
May 2, 1987, the stockholders ratified, a Plan of Modification to the incentive
stock option plan in order to allow the Company certain tax deductions which
were not allowed under the incentive stock option plan. The Plan of Modification
converted the incentive stock option plan to a non-qualified stock option plan
(the "Non-Qualified Plan") and effected a re-grant of all previously issued
options under the incentive stock option plan. The original vesting schedules
for previously granted options were not affected by the re-grant. On April 22,
1988, the Board of Directors approved the reservation of an additional 150,000
shares of Common Stock for issuance upon the exercise of options under the
Non-Qualified Plan, thereby increasing the total number of shares subject to the
Non-Qualified Plan to 370,000.
On April 3, 1989, the Board of Directors approved, and on May
6, 1989, the stockholders ratified, the adoption of an incentive stock option
plan (the "ISO Plan") to provide for the grant of options to key executive,
managerial or supervisory employees or other employees who are deemed by the
Board of Directors to have performed extraordinary services to the Company,
which options will qualify for the tax benefits accorded "incentive stock
options" as defined in Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"). The Board of Directors also approved an amendment to the
Company's Non-Qualified Plan on April 3, 1989 to provide that the Company's
directors who are not employees of the Company, and thus not eligible to receive
incentive stock options under the ISO Plan ("Unaffiliated Directors"), would be
eligible to receive options under the Non-Qualified Plan.
In connection with the adoption of the ISO Plan, all existing
options under the Non-Qualified Plan granted prior to April 3, 1989 were
permitted to be exchanged for incentive stock options under the ISO Plan at the
option of the holder. Subsequent to the adoption of the ISO Plan, the number of
shares reserved for issuance under the Non-Qualified Plan was reduced from
370,000 to 150,000. In July 1990, however, the number of shares reserved for
issuance under the Non-Qualified Plan was increased to 565,000 in order to grant
options to Messrs. Close, Subramanian, Bonham and Wong in connection with their
employment by the Company and in May 1991, the number of shares reserved for
issuance under the Non-Qualified Plan was again increased to 685,000. A maximum
of 500,000 shares of the Company's Common Stock was reserved for issuance upon
exercise of options granted under the ISO Plan.
The Non-Qualified Plan and the ISO Plan together are referred
to herein as the "Stock Option Plans."
The purpose of the Stock Option Plans is to aid the Company in
attracting and retaining directors and employees and to provide such persons
with an incentive to purchase a proprietary interest in the Company in order to
create an increased personal interest in the Company's continued success and
progress, thereby motivating them to exert their best efforts on behalf of the
Company. The Stock Option Plans are administered by the Board
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of Directors, which has the sole authority and discretion to select employees to
participate in the Stock Option Plans, to grant options under the Stock Option
Plans, to specify the terms and conditions of the options (within the
limitations of the Stock Option Plans), and otherwise to interpret and construe
the terms and provisions of the Stock Option Plans and any agreements governing
options granted under the Stock Option Plans. The Stock Option Plans authorize
the Board of Directors to delegate its administrative authority and discretion
under the Stock Option Plans to the Compensation Committee of the Board of
Directors.
The exercise price of any options granted under the ISO Plan
may not be less than 100% of the fair market value of shares of the Company's
Common Stock at the time the option is granted (or, for incentive stock options
granted to a person who, at the time of the grant, is the beneficial owner of
more than 10% of the combined voting power of all classes of voting stock then
outstanding of the Company or any parent or subsidiary of the Company (a "10%
Beneficial Owner"), not less than 110% of the fair market value of the Common
Stock at the date of grant). All options granted under the ISO Plan expire ten
years from the date of grant (five years in the case of a 10% Beneficial Owner),
unless an earlier expiration date is provided in the option agreement. The term
of each option granted under the Non-Qualified Plan is fixed by the Board of
Directors or the Compensation Committee at the date of grant. Options granted
under the Stock Option Plans are non-transferable by the optionholder, otherwise
than by will or the laws of descent and distribution, and are exercisable during
the optionholder's lifetime only by the optionholder, or in the event of the
death of the optionholder, by a person who acquires the right to exercise the
option by the laws of descent and distribution.
Only key executive, managerial or supervisory employees of the
Company, including directors who also are full time employees, and other
employees who are deemed by the Board of Directors to have performed
extraordinary services to the Company, are eligible to receive options granted
under the ISO Plan. Although all employees of the Company are eligible to
receive options under the Non-Qualified Plan, the Board of Directors intends to
grant options under the Non-Qualified Plan primarily to the Company's
Unaffiliated Directors.
The Stock Option Plans authorize the Board of Directors to
amend the Stock Option Plans without stockholder approval whenever the Board of
Directors deems an amendment proper and in the best interests of the Company.
However, the Board of Directors may not amend the ISO Plan or otherwise take any
action with respect to the ISO Plan which would prevent any option granted under
the ISO Plan from qualifying as an "incentive stock option" within the meaning
of Section 422A of the Code. Moreover, the Board of Directors may not, without
stockholder approval, increase the aggregate number of shares of the Company's
Common Stock which are subject to the ISO Plan, reduce the exercise price at
which options may be granted under the ISO Plan or at which any outstanding
option may be exercised, or extend the term of the ISO Plan. Unless previously
terminated by the Board of Directors, the ISO Plan will terminate on April 3,
1999.
As a result of the adoption of the ISO Plan on April 3, 1989,
all options granted under the Non- Qualified Plan prior to April 3, 1989 (which
had not previously been canceled) were permitted to be exchanged for options
under the ISO Plan at the option of the holder; provided, however, that no
options granted under the ISO Plan in exchange for options previously granted
under the Non-Qualified Plan were permitted to be issued at a price that was
less than 100% of the fair market value of the Company's Common Stock at the
time of the exchange and re-grant (or, for incentive stock options granted to a
10% Beneficial Owner, not less than 110% of the fair market value of the Common
Stock at the date of the exchange and re-grant). Such options generally are
exercisable over a three year period, with one-third exercisable on the date of
grant and an additional one-third to become exercisable on each anniversary of
the date of grant. For certain information regarding the exercise of options by
Named Officers, see the table entitled "Aggregated Option Exercises In Last
Fiscal Year And Option Value As Of December 31, 1995."
As of the Record Date, there were outstanding options to
acquire 372,131 shares of the Company's Common Stock under the Stock Option
Plans.
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1995 Stock Option Plan
On May 9, 1995, the Board of Directors adopted the 1995 Stock
Option Plan (the "1995 Plan") and on June 27, 1995, the Company's stockholders
approved the 1995 Plan, which is divided into two programs: the Discretionary
Grant Program and the Automatic Grant Program. The Discretionary Grant Program
provides for the grant of options to acquire Common Stock of the Company
("Options"), the direct grant of Common Stock ("Stock Awards"), the grant of
stock appreciation rights ("SARs"), or the grant of other cash awards ("Cash
Awards") (Stock Awards, SARs, and Cash Awards are collectively referred to
herein as "Awards"). Options and Awards under the 1995 Plan may be issued to key
personnel, directors, consultants, and other independent contractors who provide
valuable services to the Company and its subsidiaries (collectively, "Eligible
Persons"). The Options issued may be incentive stock options or nonqualified
stock options. The Company believes that the Discretionary Grant Program
represents an important factor in attracting and retaining executive officers
and other key employees and constitutes a significant part of its compensation
program, providing them with an opportunity to acquire a proprietary interest in
the Company and giving them an additional incentive to use their best efforts
for the long-term success of the Company. The Automatic Option Program provides
for the automatic grant of options to acquire the Common Stock of the Company
("Automatic Options"). Automatic Options are granted to non- employee members of
the Company's Board of Directors. The Company believes that the Automatic Option
Program promotes the interests of the Company by providing such directors the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company and an increased personal interest in the
Company's continued success and progress.
Shares Subject to the 1995 Plan
A maximum of 500,000 shares of Common Stock of the Company may
be issued under the 1995 Plan. If any Option or SAR terminates or expires
without having been exercised in full, stock not issued under such Option or SAR
will again be available for the purposes of the 1995 Plan. If any change is made
in the stock subject to the 1995 Plan, or subject to any Option or SAR granted
under the 1995 Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, split-up, combination of shares, exchange of
shares, change in corporate structure, or otherwise), the 1995 Plan provides
that appropriate adjustments will be made as to the maximum number of shares
subject to the 1995 Plan, and the number of shares and exercise price per share
of stock subject to outstanding Options. There were outstanding Options to
acquire 163,000 shares of the Company's Common Stock under the 1995 Plan as of
the Record Date.
Eligibility and Administration
Options and Awards may be granted only to persons ("Eligible
Persons") who at the time of grant are either (i) key personnel (including
officers and directors) of the Company, or (ii) consultants and independent
contractors who provide valuable services to the Company. Options that are
incentive stock options may be granted only to key personnel of the Company who
are also employees of the Company.
The Eligible Persons under the Discretionary Grant Program are
divided into two groups, and there is a separate administrator (each a "Plan
Administrator") for each group. One group consists of Eligible Persons who are
executive officers and directors of the Company and all persons who own 10% or
more of the Company's issued and outstanding stock. The power to administer the
1995 Plan with respect to those persons rests exclusively with a committee
("Senior Committee") comprised of two or more disinterested directors who are
appointed by the Board of Directors. The power to administer the 1995 Plan with
respect to the remaining Eligible Persons is vested with the Board of Directors
of the Company or with a committee of two or more directors appointed by the
Board of Directors. Each Plan Administrator determines (i) which of the Eligible
Persons in its group will be granted Options and Awards; (ii) the amount and
timing of the grant of such Options and Awards; and (iii) such other terms and
conditions as may be imposed by the Plan Administrator consistent with the 1995
Plan.
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To the extent that granted Options are incentive stock
options, the terms and conditions of those Options must be consistent with the
qualification requirements set forth in the Internal Revenue Code.
Exercise of Options
The expiration date, maximum number of shares purchasable, and
the other provisions of the Options are established at the time of grant,
provided that no options may be granted for terms of more than 10 years. Options
vest and thereby become exercisable in whole or in one or more installments at
such time as may be determined by the Plan Administrator upon the grant of the
Options. However, a Plan Administrator has the discretion to provide for the
automatic acceleration of the vesting of any Options or Awards granted under the
Discretionary Grant Program in the event of a "Change in Control." The
definition of "Change in Control" includes the following events: (i) the
acquisition of beneficial ownership by certain persons, acting alone or in
concert with others, of 40% or more of the Company's outstanding Common Stock
pursuant to a tender offer which the Board of Directors recommends that the
Company's stockholders not accept, or (ii) a change in the composition of the
Board of Directors occurs such that those individuals who were elected to the
Board of Directors at the last stockholders' meeting at which there was not a
contested election for Board membership subsequently cease to comprise a
majority of the Board of Directors by reason of a contested election.
The exercise prices of Options will be determined by the Plan
Administrator, but if an Option is intended to be an incentive stock option, may
not be less than 100% (110% if the Option is granted to a stockholder who at the
time the Option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company) of the fair market
value of the Common Stock at the time of the grant. To exercise an Option, the
optionholder will be required to deliver to the Company full payment of the
exercise price for the shares as to which the Option is being exercised.
Generally, Options can be exercised by delivery of cash, bank cashier's check,
or shares of Common Stock of the Company.
Termination of Employment or Services
Options granted under the 1995 Plan are nontransferable other
than by will or by the laws of descent and distribution upon the death of the
optionholder and, during the lifetime of the optionholder, are exercisable only
by such optionholder. In the event of the death or termination of the employment
or services of the participant (but never later than the expiration of the term
of the Option), Options may be exercised within 90 days thereafter. If
termination is by reason of permanent disability, however, Options may be
exercised by the optionholder or the optionholder's estate or successor by
bequest or inheritance during the period ending 180 days after the
optionholder's retirement (but not later than the expiration of the term of the
Option). Termination of employment at any time for cause immediately terminates
all Options held by the terminated employee.
Awards
A Plan Administrator also may grant Awards to Eligible Persons
under the 1995 Plan. Awards may be granted in the form of SARs, Stock Awards, or
Cash Awards.
Awards granted in the form of SARs entitle the recipient to
receive a payment equal to the appreciation in market value of a stated number
of shares of Common Stock from the price on the date the SAR was granted or
became effective to the market value of the Common Stock on the date first
exercised or surrendered. The Plan Administrators may, consistent with the 1995
Plan, determine such terms, conditions, restrictions and/or limitations, if any,
on any SARs.
Awards granted in the form of Stock Awards entitle the
recipient to receive shares of the Company's Common Stock directly. Awards
granted in the form of cash entitle the recipient to receive direct payments of
cash depending on the market value or the appreciation of the Common Stock or
other securities of
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the Company. The Plan Administrators may determine such other terms, conditions,
or limitations, if any, on any Awards.
The 1995 Plan states that it is not intended to be the
exclusive means by which the Company may issue options or warrants to acquire
its Common Stock, stock awards, or any other type of award. To the extent
permitted by applicable law, the Company may issue any other options, warrants,
or awards other than pursuant to the 1995 Plan without stockholder approval.
Terms and Conditions of Automatic Options
Each year at the meeting of the Board of Directors held
immediately after the annual meeting of stockholders, each non-employee Board
member will be granted an Automatic Option to acquire 2,000 shares of Common
Stock ("Annual Automatic Option"). Each non-employee Board member serving on the
date the 1995 Plan was approved by the Company's stockholders received an
automatic grant of options to acquire 2,000 shares of Common Stock on that date
(the "Initial Existing Director Grant"). New non-employee members of the Board
of Directors will receive an Automatic Option to acquire 20,000 shares of Common
Stock ("Initial Automatic Option") on the date of their first appointment or
election to the Board. Each Automatic Option shall become exercisable and vest
in a series of three equal and successive annual installments, with each annual
installment to become exercisable on the day before the Company's annual meeting
of stockholders occurring in the applicable year. A non-employee member of the
Board is not eligible to receive an Annual Automatic Option if the grant date is
within 30 days of such non-employee member receiving an Initial Automatic
Option.
The exercise price per share of Common Stock subject to each
Automatic Option is equal to 100% of the fair market value per share on the date
of the grant of the Automatic Option. Each Automatic Option expires on the tenth
anniversary of the date on which an Automatic Option grant was made.
Non-employee Board members also may be eligible to receive Options or Awards
under the Discretionary Grant Program or option grants or direct stock issuances
under any other plans of the Company. Cessation of service on the Board
terminates any Automatic Options for shares that were not vested at the time of
such cessation. Automatic Options are nontransferable other than by will or the
laws of descent and distribution on the death of the optionholder and, during
the lifetime of the optionholder, are exercisable only by such optionholder.
Duration and Modification
The 1995 Plan will remain in force until May 9, 2005. The
Board of Directors of the Company may at any time suspend, amend, or terminate
the 1995 Plan, except that without approval by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of the Company
present in person or by proxy at a meeting of stockholders of the Company
convened for such purpose, the Board of Directors may not (i) increase, except
in the case of certain organic changes to the Company, the maximum number of
shares of Common Stock subject to the 1995 Plan, (ii) reduce the exercise price
at which Options may be granted or the exercise price for which any outstanding
Options may be exercised, (iii) extend the term of the 1995 Plan, (iv) change
the class of persons eligible to receive Options or Awards under the 1995 Plan,
or (v) materially increase the benefits accruing to participants under the 1995
Plan. Notwithstanding the foregoing, the Board of Directors may amend the 1995
Plan from time to time as it deems necessary in order to meet the requirements
of any amendments to Rule 16b-3 under the Securities Exchange Act of 1934
without the consent of the stockholders of the Company.
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COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than 10% stockholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
filed with the SEC.
Based solely on the Company's review of the copies of such
forms received by it during the fiscal year ended December 31, 1995, and written
representations that no other reports were required, the Company believes that
each person who, at any time during such fiscal year, was a director, officer or
beneficial owner of more than 10% of the Company's Common Stock complied with
all Section 16(a) filing requirements during such fiscal year or prior fiscal
years, except as described below. A Form 4 required to be filed by Robert K.
Bench, formerly the Company's Chief Financial Officer, with respect to the sale
of 30,000 shares and the grant of employee stock options to acquire 25,000
shares, respectively, in August 1995, was not filed until March 6, 1996. A Form
4 required to be filed by Henry Wong, Vice President-Production, with respect to
the sale of 5,823 shares and the grant of employee stock options to acquire
25,000 shares, respectively, in August 1995 was not filed until March 6, 1996. A
Form 4 required to be filed by Roseann L. Tavarozzi, Vice President-Finance,
with respect to the grant of employee stock options to acquire 15,000 shares in
August 1995 was not filed until March 6, 1996. A Form 4 required to be filed by
William Fresh, a director, in August 1995 with respect to the transfer of 30,000
shares was not filed until on or about March 28, 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March and April of 1991, the Company issued $1,000,000 in
principal amount of Convertible Subordinated Debentures, $600,000 of which was
issued with a maturity date of December 15, 1996 bearing interest at 12% per
annum, payable semi-annually on the 15th day of each June and December, and
$400,000 of which was issued with a maturity date of March 29, 1996 bearing
interest at the rate of 11% per annum, payable quarterly on the first day of
each January, April, July and October. All of the Debentures provided for
conversion at the option of the holder into shares of Common Stock at the rate
of $1.00 per share, subject to certain adjustments. In addition, the holders of
the Debentures were granted certain rights of first refusal with respect to the
issuance of additional debt, Common Stock or other securities convertible into
Common Stock of the Company. The Debentures also provided for certain demand and
piggyback registration rights with respect to the shares of Common Stock
acquired upon conversion of the Debentures, pursuant to which the Company will
incur the cost of registration of the Common Stock acquired by the holders of
Debentures upon conversion.
Kenneth W. Miller and Donald F. Walter, directors of the
Company, Henry Wong, a Vice President of the Company, and James F. Keenan, a
member of the group that nominated Mr. Walter, purchased $20,000, $10,000,
$80,000 and $10,000, respectively, in principal amount of the 12% Convertible
Subordinated Debentures due December 15, 1996. Troon & Co., a nominee of Ross J.
Mangano, et al., Trustees, purchased $400,000 of the 11% Convertible
Subordinated Debentures due March 29, 1996. As the result of the possible
affiliation between Ross J. Mangano, Chairman of the Company's Board of
Directors, and Ross J. Mangano, et al., Trustees, the issuance of Debentures to
Troon & Co. may have constituted a "business combination" with an "interested
stockholder" under Section 203 of the Delaware General Corporation Law.
Accordingly, the Debenture issued to Troon & Co. was issued in accordance with
the terms of the proposal to permit the Company to issue Debentures to
interested stockholders approved by the stockholders of the Company at the 1990
Annual Meeting of Stockholders.
To assist the Company in meeting the minimum stockholders'
equity requirement for listing on the National Association of Securities Dealers
Automated Quotation System ("Nasdaq"), Mr. Miller converted $10,000 in principal
amount of the Debentures into 10,000 shares of Common Stock, Mr. Walter
converted $5,000
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in principal amount of the Debentures into 5,000 shares of Common Stock, Mr.
Wong converted $40,000 in principal amount of the Debentures into 40,000 shares
of Common Stock, Mr. Keenan converted $5,000 in principal amount of the
Debentures into 5,000 shares of Common Stock and Troon & Co. converted $300,000
in principal amount of the Debentures into 300,000 shares of Common Stock. The
principal amounts of the Debentures described above were converted into shares
of Common Stock at the rate of $1.00 per share. On the date the Debentures were
converted, the bid price for the Company's Common Stock was $1 3/8 and the asked
price was $1 3/4. To compensate such Debenture holders for the loss of interest
on that portion of the Debentures converted into shares of Common Stock, the
Company agreed to increase the interest rate payable on the principal amount of
the Debentures outstanding after such conversion held by such Debenture holders
to 25% per annum. In addition, in September 1993, Mr. Walter converted an
additional $5,000 in principal amount of the Debentures into 5,000 shares of
Common Stock at the rate of $1.00 per share. On the date these Debentures were
converted, the bid price for the Company's Common Stock was $5 and the asked
price was $6. On September 12, 1994, Mr. Wong converted an additional $40,000
in principal amount of Debentures into 40,000 shares of Common Stock at the rate
of $1.00 per share. On that date, the bid price for the Company's Common Stock
was $5.75 and the asked price was $6.50. On February 23, 1996, Mr. Miller
converted an additional $10,000 in principal amount of Debentures into 10,000
shares of Common Stock at the rate of $1.00 per share. On that date, the last
sale price for the Company's Common Stock was $14 3/8. On March 29, 1996, Troon
& Co. converted an additional $100,000 in principal amount of Debentures into
100,000 shares of Common Stock at the rate of $1.00 per share. On that day, the
last sale price for the Company's Common Stock was $15. As a result of the
conversions described above, $5,000 in principal amount of the Debentures
currently bears interest at the rate of 25% per annum. The Company anticipates
that the entire outstanding principal amount of the Debentures will be converted
into shares of Common Stock by December 15, 1996.
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PROPOSALS TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION
Introduction
At the Annual Meeting, the stockholders will be asked to
approve four separate proposals concerning amendments to the Company's
Certificate of Incorporation (the "Company's Certificate"), each of which was
approved and adopted by the Board of Directors on March 5, 1996. At that time,
the Board of Directors also approved the restatement of the Company's
Certificate to incorporate those proposals approved by the stockholders at the
Annual Meeting. If the four proposals are approved by the stockholders at the
Annual Meeting, the Company intends to file a Restated Certificate of
Incorporation substantially in the form set forth as Appendix A to this Proxy
Statement, which reflects the operative provisions of the Company's Certificate
as they presently exist and assumes that all four proposed amendments have been
adopted by the stockholders. If fewer than all four proposed amendments are
approved by the stockholders, the Company intends to file a Restated Certificate
of Incorporation reflecting those amendments that have been approved by the
stockholders and have become effective. The Board of Directors recommends a vote
"for" each proposed amendment to the Company's Certificate.
A description of each of the four proposals is set forth
below. The descriptions are summaries only and are qualified in their entirety
by reference to the text of such amendments as set forth in the proposed
Restated Certificate of Incorporation, which will be substantially as set forth
in Appendix A to this Proxy Statement. Stockholders should review carefully
sections of the Proxy Statement describing these proposed amendments and the
text of the proposed Restated Certificate of Incorporation before voting on
these proposals. The text of the proposed Restated Certificate of Incorporation
in Appendix A is subject to revision if any of the four proposals as set forth
below is not approved by the stockholders.
Although these proposals individually and together with other
provisions already present in the Company's Certificate and bylaws may have the
effect of discouraging a holder of a large block of the Company's securities
from attempting a merger, tender offer, proxy contest or other assumption of
control with or for the Company or the removal of incumbent management, the
Company is not aware of any proposed attempt to take over the Company or of any
attempt to acquire a large block of the Company's Common Stock, and the proposed
amendments to the Company's Certificate are not in response to any specific
effort to do so.
Proposal Concerning Board Discretion to Consider Various Factors When
Determining to Take Corporation Action
Description of Provision. The Board of Directors has approved
and recommended for stockholder approval an amendment to the Company's
Certificate to add a new Article IX granting discretion to the Board to consider
various factors when determining to take certain corporate actions (the
"Corporate Action Discretion Provision"). This proposed provision states that in
addition to any other considerations that the Board of Directors lawfully shall
take into account in determining whether to take or refrain from taking
corporate action on any matter, the Board of Directors may consider all factors
it deems relevant. These factors include, without limitation, the potential
impact on employees, customers, suppliers, partners, joint venturers and other
constituencies of the Company and the effect upon communities in which the
Company does business.
Any alteration, amendment or repeal of Article IX will require
the affirmative vote of the holders of at least 66 2/3% of the combined voting
power of all issued and outstanding shares of voting stock, voting together as a
single class. Absent this requirement, Delaware law would allow an amendment by
the affirmative vote of the holders of a majority of the voting power of all
outstanding shares of voting stock present in person or by proxy.
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As stated above, the Company's Certificate and bylaws
presently contain a number of other provisions that may have the effect of
discouraging, delaying or preventing hostile takeovers, including those that
might result in a premium over the market price, or discouraging, delaying or
preventing changes in control or management of the Company. These provisions
include (a) the authority of the Board of Directors to fill vacancies on the
Board of Directors; (b) the authority of the Board of Directors to issue series
of preferred stock with such voting rights and other powers as the Board of
Directors may determine; and (c) notice requirements relating to nominations to
the Board of Directors and to the raising of business matters at stockholder
meetings. In addition, the other proposals discussed below could have the same
effect if approved by the stockholders.
Purposes and Effects. The Corporate Action Discretion
Provision is designed to give consideration to nonstockholder constituencies
such as employees of the Company and the communities in which the Company
operates. The Corporate Action Discretion Provision also is intended to provide
the Board of Directors greater bargaining power to negotiate on behalf of
stockholders in the event of a proposed takeover. If an offer is made to
purchase all or part of the outstanding shares of the Company at a premium above
the then-market price of those securities, the Board of Directors might feel
constrained to support the offer even if the Board did not believe that the
offer is in the stockholders' overall best interests. This belief may be based
on a number of factors, including, for example, the belief that the Company has
significant additional value, not reflected in the then-current market price,
that will be realized in the longer term. While the Board of Directors believes
that it currently has the right and obligation to make these determinations, the
Board believes that the Corporate Action Discretion Provision will reinforce the
Board's rights and put potential acquirors on notice of the factors to be
considered by the Board. This provision may, however, discourage or make more
difficult a takeover or acquisition of control. Therefore, this provision could
deprive stockholders of possible opportunities to realize a premium for their
shares and reduce the risk to management that it might be displaced by a
takeover.
Proposal Concerning Section 203 of the Delaware General Corporation Law
Description of Provision. The Board of Directors has approved
and recommended for stockholder approval an amendment to the Company's
Certificate to add a new Article X providing that the Company will be governed
by Section 203 of the General Corporation Law of the State of Delaware. Section
203 of the Delaware General Corporation Law was added by the Delaware
legislature by the 1988 amendments to the Delaware General Corporation Law. In
general, Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for the three years
following the date that a person becomes an interested stockholder unless: (i)
prior to such date the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by persons
who are directors and also officers and (b) employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer;
or (iii) on or subsequent to such date the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
Section 203 of the Delaware General Corporation Law applies to
all Delaware corporations which have a class of voting stock that is listed on a
national securities exchange, authorized for quotation on Nasdaq or held of
record by more than 2,000 stockholders. Because the Company's Common Stock is
authorized for quotation on Nasdaq, the Company would be subject to Section 203
except that the Company's stockholders elected to opt out of Section 203 on June
11, 1990.
An "interested stockholder," as defined in Section 203(c)(5)
of the statute, is a person (or an affiliate or associate of such person) who
either owns 15% or more of the outstanding voting stock of the
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corporation, or is an affiliate or associate of the corporation, and owned 15%
or more of its outstanding voting stock in the previous three years.
"Affiliates" include persons that directly, or indirectly through one or more
intermediaries, control, or are controlled by, or are under common control with,
another person. Under a separate definition of "control" in the statute,
ownership of 20% of a corporation's voting stock gives rise to a rebuttable
presumption of control of a corporation, unless the person holds the shares in
good faith as an agent, bank, broker, nominee, custodian or trustee for a person
or persons who do not have control. "Associates" of a person include other
organizations for which a person serves as an officer, director or partner or in
which a person holds 20% or more of any class of voting stock; a trust or estate
in which a person has a 20% beneficial interest or serves as trustee or in a
fiduciary capacity; and any relative or spouse of a person who lives with that
person. A person "owns" stock when the person individually or with or through
its affiliates or associates directly or indirectly beneficially owns such stock
or has the right to acquire such stock pursuant to any agreement, arrangement or
understanding or upon exercise of rights, warrants or options; or has the right
to vote such stock; or has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of such stock with any other
person who beneficially owns such stock.
The statute exempts from the definition of an "interested
stockholder" stockholders who (i) owned shares in excess of 15% of a
corporation's voting stock prior to December 23, 1987, (ii) acquired such shares
from a person described in the previous clause by gift, inheritance or any
transaction in which no consideration was exchanged, or (iii) any person whose
ownership of shares in excess of 15% of a corporation's voting stock is the
result of action taken solely by the corporation; provided that such persons
shall be interested stockholders if thereafter they acquire additional shares of
voting stock of the corporation, except as a result of further corporate action
not caused, directly or indirectly, by such persons.
The statute's definition of "business combination" includes
mergers by the corporation or a directly or indirectly majority-owned subsidiary
of the corporation with or caused by an interested stockholder, and the sale,
lease, exchange, mortgage, pledge, transfer or other disposition of assets of
the corporation or of a subsidiary equal to 10% or more of the market value of
the corporation's consolidated assets or its outstanding stock to the interested
stockholder, except for proportionate dispositions to stockholders. Also defined
as "business combinations" are issuances or transfers of stock of the
corporation or of a subsidiary to the interested stockholder, except for
conversions or exchanges of pre-existing shares or the exercise of pre-existing
rights or, after the interested stockholder achieved that status, the conversion
or exercise of shares or rights distributed pro rata or the payment of dividends
pro rata or exchange offers, so long as any of the foregoing do not increase the
interested stockholder's proportionate ownership of a class of stock. The
definition of "business combination" also includes any receipt by the interested
stockholder (except proportionately as a stockholder) of the benefit of any
loans, advances, guarantees, pledges or other financial benefits. Finally, the
definition includes any transaction which increases the interested stockholder's
proportionate share of the stock of any class or series of the corporation
unless the increase is due to a purchase or redemption not caused by the
interested stockholder.
The three-year moratorium imposed on business combinations by
Section 203 can be avoided in one of three ways. First, if prior to a person's
becoming an interested stockholder the board of directors approves the business
combination or the transaction which results in the person becoming an
interested stockholder, the moratorium does not apply. Note that board approval
must be obtained before the acquiror obtains a 15% stake. An interested
stockholder also can avoid the moratorium imposed by Section 203 by acquiring
85% of the corporation's voting stock in the same transaction that makes him an
interested stockholder (excluding from the 85% calculation shares owned by
directors who are also officers and shares held by employee stock plans which do
not permit employees to decide confidentially whether to accept the tender
offer). Finally, if, on or after the date a person becomes an interested
stockholder, the board approves the business combination and such business
combination also is approved at an annual or special meeting of stockholders,
and not by written consent, by two-thirds of the voting stock not owned by the
interested stockholder, the moratorium does not apply to such business
combination.
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Section 203(b) provides that a corporation may opt out of
Section 203 by an amendment to its certificate of incorporation or bylaws
adopted by a majority of the corporation's stockholders entitled to vote. Under
section 203(b)(3), an amendment to the certificate of incorporation or bylaws
electing not to be governed by the statute must be approved by the affirmative
vote of a majority of the outstanding voting stock and does not become effective
until 12 months after the effectiveness of the amendment. Furthermore, such an
amendment does not apply to any business combination between a corporation and a
person who becomes an interested stockholder before the adoption of such
amendment, although after three years from the date such person became an
interested stockholder of the Company, Section 203 no longer restricts business
combinations with such person. Bylaw provisions opting out of the statute may
not subsequently be changed by action of the board of directors.
Any amendment, alteration or repeal of Article X will require
the affirmative vote of the holders of at least 66 2/3% of the combined voting
power of all issued and outstanding shares of voting stock, voting together as a
single class. Absent this requirement, Delaware law would allow an amendment by
the affirmative vote of the holders of a majority of the voting power of all
outstanding shares of voting stock present in person or by proxy.
Purposes and Effects. The provisions of Section 203 are
designed to discourage or make more difficult a takeover or acquisition of
control by interested stockholders without obtaining the consent of the
Company's Board of Directors and its stockholders. This provision, however, also
could deprive stockholders of possible opportunities to realize a premium for
their shares and reduce the risk to management that it might be displaced by a
takeover.
Upon approval of the proposal to amend the Company's
Certificate of Incorporation in accordance with Section 203(b) of the Delaware
General Corporation Law, "business combinations" with "interested stockholders"
after the amendment becomes effective will be conditioned upon satisfaction of
the provisions of Section 203 of the Delaware General Corporation Law. "Business
combinations" between the Company and any person who became an "interested
stockholder" of the Company on or prior to the date of the effectiveness of the
amendment to the Certificate of Incorporation, however, will not be conditioned
upon satisfaction of the provisions of Section 203 of the Delaware General
Corporation Law.
On June 11, 1990, the Company's stockholders voted to opt out
of Section 203 of the Delaware General Corporation Law by an amendment to its
bylaws. That action enabled the Company to borrow funds on terms and from
sources that were otherwise restricted due to Section 203. The Board of
Directors now believes that, due to the Company's strengthened financial
condition, the benefits of the anti-takeover protections provided by Section 203
outweigh the decreased ability to obtain financing from interested stockholders.
If stockholders approve the proposal electing to be governed by Section 203, the
Company's Restated Certificate of Incorporation will supersede any contrary
provision in the Company's Bylaws.
Proposal to Eliminate Actions by Written Consent of Stockholders
Description of Provision. The Board of Directors has approved
and recommended for stockholder approval an amendment to the Company's
Certificate to add a new Article XI providing for the elimination of actions by
written consent of stockholders. Pursuant to Delaware law, unless otherwise
provided in the certificate of incorporation, any action required or permitted
to be taken by stockholders of a corporation may be taken without a meeting and
without a stockholder vote, provided a written consent setting forth the action
to be taken is signed by the holders of shares of outstanding stock having a
requisite number of votes that would be necessary to authorize such action at a
meeting of stockholders. The Company's certificate currently does not provide
for any alteration from this provision. The proposed amendment would require
that action by holders of Common Stock be taken at an annual or special meeting,
and would prohibit action by holders of Common Stock by written consent other
than at such a meeting.
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Any amendment, alteration or repeal of Article XI will require
the affirmative vote of the holders of at least 66 2/3% of the combined voting
power of all issued and outstanding shares of voting stock, voting together as a
single class. Absent this requirement, Delaware law would allow an amendment by
the affirmative vote of the holders of a majority of the voting power of all
outstanding shares of voting stock present in person or by proxy.
Purposes and Effects. The provisions limiting action by
holders of Common Stock by written consent give all holders of Common Stock the
opportunity to participate in the discussion of any proposed action and would
prevent the holders of a majority of Common Stock from using the written consent
procedure to take action other than at a meeting of holders of Common Stock.
Proposal to Add Certain Minimum Price and Procedural Requirements in Connection
with Certain Transactions such as Business Combinations.
Description of Provision. The Board of Directors has approved
and recommended for stockholder approval an amendment to the Company's
Certificate to add a new Article XII requiring that certain minimum price and
procedural requirements, intended for the protection of the Company and its
stockholders as a whole, be observed by any party which acquires 15% or more of
the Company's Common Stock and then seeks to accomplish a merger or other
business combination or transaction which would eliminate or could significantly
change the interests of the remaining stockholders, unless approved by a
majority of Continuing Directors (as defined below) (the "Fair Price
Amendment"). If the specified requirements of the Fair Price Amendment are not
observed by such an acquiring party, an increased stockholder vote would be
required as a condition for a subsequent business combination. Adoption of the
Fair Price Amendment may significantly affect a third party's interest in
acquiring a substantial or controlling position in shares of Common Stock of the
Company, as well as enhance the ability of the Board to take action in light of
such an acquisition by a third party.
In connection with the developments discussed above, the Board
has observed that it has become relatively common in corporate takeover practice
for a third party to pay cash to acquire a substantial or controlling equity
interest in a corporation and then to acquire the remaining equity interest by
paying the balance of the stockholders a price for their shares that is lower
than the price paid to acquire control and/or is in a less desirable form of
consideration, such as securities of the acquiring party that do not have an
established trading market at the time of issue.
In two-tier acquisitions, arbitrageurs and professional
investors may be in a better position to take advantage of a more lucrative
first-step acquisition than many long-term stockholders, who may have to accept
a lower price in the second step. Changes in the federal securities laws have
reduced, but not eliminated, advantages enjoyed by such arbitrageurs and
professional investors. Moreover, in two-tier transactions, even stockholders
who tender their shares in response to a higher first-step cash tender offer may
not be assured that all of their shares will be accepted, as there are often
proration provisions limiting the number of shares which the acquiring party is
obliged to accept at the higher price. As a result, many stockholders may
receive only the average price offered by the acquiring party for all of the
shares of the corporation. In many cases this average price might not be high
enough to have caused a majority of a corporation's stockholders to tender their
shares if the acquiring party's offer had been to purchase all of the
corporation's shares for that average price per share.
In addition, while federal securities laws and regulations
applicable to business combinations govern the disclosure required to be made to
stockholders in order to consummate such a transaction, they do not assure
stockholders that the terms of the business combination will be fair from a
financial standpoint or that minority stockholders effectively can prevent the
consummation of a business combination that is opposed by its board of
directors. Although Securities and Exchange Commission (the "Commission") rules
require the pro rata acceptance of all shares tendered prior to the expiration
of a tender offer, the Commission has recognized that this rule is not intended
to deal with two-tier pricing.
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The Board considers that such two-tier pricing tactics may be
unfair to a corporation's stockholders. By their very nature, such tactics tend
(and are often designed) to cause concern on the part of stockholders that, if
they do not act promptly, they risk either being relegated to the status of
minority stockholders in a controlled corporation or being forced to accept a
lower price for all of their shares. Thus, such tactics may pressure
stockholders into selling as many of their shares as possible either to the
acquiring party or in the open market without having the opportunity to make a
considered investment choice between remaining a stockholder of the corporation
or disposing of their shares. Moreover, their very actions in selling their
shares might facilitate an acquiring party's acquisition of a controlling
interest, at which point an acquiring party may be able to force the exchange of
the remaining shares in a business combination for a lower price.
The Fair Price Amendment is designed to deter an acquiring
party from utilizing two-tier pricing and similar inequitable tactics in an
attempt to take over the Company. However, the amendment is not designed to
prevent or deter all tender offers for shares of the Company. It does not affect
an offer for all shares at the same price or preclude offers at different
prices. Nor does the amendment preclude an acquiring party from making a tender
offer for some of the shares of the Company without proposing a Business
Combination (as defined below). Except for the restrictions on Business
Combinations, the amendment will not prevent a holder of a controlling interest
in the Company's Common Stock from exercising control over or increasing its
interest in the Company. Moreover, the holder of a controlling interest could
increase its ownership to 66 2/3% by any one or more purchases of shares and
meet the 66 2/3% voting requirement of the amendment.
It should be noted that while the Fair Price Amendment is
designed to help assure fair treatment of all stockholders in the event of a
takeover attempt, it is not its purpose to provide assurance that stockholders
will receive a premium price for their shares in a takeover attempt.
Accordingly, the Board is of the view that the adoption of the Fair Price
Amendment would not preclude the Board from opposing any future takeover
proposal that it believes not to be in the best interests of the Company and its
stockholders, whether or not such a proposal satisfies the minimum price
criteria and procedural requirements of the amendment.
66 2/3% Vote Required for Certain Business Combinations. At
present, mergers, consolidations, sales of substantially all of the assets of
the Company, the adoption of a plan of liquidation or dissolution of the
Company, and reclassification of securities and recapitalizations of the Company
involving amendments to its Certificate of Incorporation must be approved by the
vote of the holders of a majority of shares of Common Stock. Certain other
transactions, such as sales of less than substantially all of the assets of the
Company, certain mergers involving wholly-owned subsidiaries of the Company, and
recapitalizations and reclassifications not involving any amendments to the
Certificate of Incorporation do not require stockholder approval. If adopted,
the Fair Price Amendment would require the affirmative vote of the holders of 66
2/3% of Common Stock to approve a Business Combination involving an Interested
Stockholder (as defined below), except in cases in which either certain price
criteria and procedural requirements are satisfied or the transaction is
approved by a majority of the Disinterested Directors. In the event the price
criteria and procedural requirements were to be met or the requisite approval of
the Board were to be given with respect to a particular Business Combination,
the normal requirements of Delaware law would apply, and, accordingly, the
affirmative vote of the holders of only a majority of outstanding shares of
Common Stock would be required, or, for certain transactions, as noted above, no
stockholder vote would be necessary. Thus, depending upon the circumstances, the
Fair Price Amendment would require the affirmative vote of the holders of 66
2/3% of Common Stock for a Business Combination in cases in which either a
majority vote or no vote is presently required under state law and the
Certificate of Incorporation.
An "Interested Stockholder" is defined in the Fair Price
Amendment as any person (other than the Company or any Subsidiary), which for
purposes of the definition of "Interested Stockholder" means a corporation of
which a majority of each class of equity security is owned, directly or
indirectly, by the Company)) who is (i) the beneficial owner, directly or
indirectly, of more than 15% of the voting power of the then outstanding Common
Stock; or (ii) an Affiliate of the Company (as defined by the federal securities
laws) and who, at any time within the two-year period immediately prior to the
date in question, was the beneficial owner, directly or indirectly, of
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more than 15% of the voting power of the then outstanding Common Stock; or (iii)
an assignee of or other successor to any shares of Common Stock in a transaction
or series of transactions not involving a public offering that were at any time
within the two-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder. A person shall be deemed a
"beneficial owner" of any Common Stock if such person or any of its Affiliates
beneficially owns, directly or indirectly, or has the right to acquire or to
vote such stock.
A "Business Combination" includes the following transactions:
(a) any merger or consolidation of the Company or any Subsidiary (which for
purposes of the definition of "Business Combination" means a corporation of
which a majority of any class of equity securities is owned, directly or
indirectly, by the Company) with an Interested Stockholder or with any other
corporation which is, or after such merger or consolidation would be, an
Affiliate of an Interested Stockholder; (b) any sale, lease, license, exchange,
mortgage, pledge, transfer or other disposition to or with any Interested
Stockholder or any Affiliate of any Interested Stockholder of any assets of the
Company or any Subsidiary having an aggregate fair market value (calculated as
provided in the Fair Price Amendment) of $10,000,000 or more; (c) the issuance
or transfer by the Company or any Subsidiary of any securities of the Company or
any Subsidiary to any Interested Stockholder or any Affiliate of any Interested
Stockholder having an aggregate fair market value (so calculated) of $10,000,000
or more; (d) the adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of an Interested Stockholder
or any Affiliate of any Interested Stockholder; or (e) any reclassification of
securities (including any reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding shares of
any class of equity or convertible securities of the Company or any Subsidiary
which is directly or indirectly owned by an Interested Stockholder or any
Affiliate of any Interested Stockholder.
A "Continuing Director" is any member of the Board who is
unaffiliated with an Interested Stockholder and who was a member of the Board
prior to the date on which the Interested Stockholder became an Interested
Stockholder (the "Determination Date"), and any successor of a Continuing
Director who is unaffiliated with an Interested Stockholder and is recommended
to succeed a Continuing Director by a majority of the total number of Continuing
Directors then on the Board.
Exceptions to High Vote Requirements. The affirmative vote of
the holders of at least 66 2/3% of Common Stock would not be required if (1) the
transaction has been approved by a majority of the Continuing Directors or (2)
all of the minimum price criteria and procedural requirements described in
paragraphs (a) and (b) below are satisfied.
(a) Minimum Price Criteria. In general, in a Business
Combination involving cash or other consideration being paid to holders of a
particular class of outstanding Common Stock, the consideration would be
required to be either in cash or in the same form as the Interested Stockholder
has previously paid for shares of such class. In addition, the fair market value
of such consideration (calculated as provided in the Fair Price Amendment) as of
the date of the consummation of the Business Combination (the "Consummation
Date") would be required to meet certain minimum price criteria described below.
In the case of payments to holders of the Company's Common
Stock of the class currently outstanding, the aggregate amount of the cash and
the fair market value (calculated as provided in the Fair Price Amendment) as of
the Consummation Date of consideration other than cash per share to be received
by such holders would have to be at least equal to the higher of (i) the highest
per share price paid by the Interested Stockholder for any shares of such Common
Stock acquired by it within the two years immediately prior to the first public
announcement of the proposed Business Combination (the "Announcement Date") or
in the transaction in which it became an Interested Stockholder, whichever is
higher, (ii) the fair market value (so calculated) per share of such Common
Stock on the Announcement Date or on the Determination Date, whichever is
higher, and (iii) the price per share equal to the fair market value (determined
pursuant to (ii) above) multiplied by the ratio of (A) the highest
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per share price paid by the Interested Stockholder for any shares of Common
Stock acquired by it within the two- year period immediately prior to the
Announcement Date to (B) the fair market value (so calculated) per share of
Common Stock on the first day in such two-year period upon which the Interested
Stockholder acquired any shares of Common Stock. In general, for the purposes of
the Fair Price Amendment, fair market value of such Common Stock on the
Announcement Date or Determination Date would be the highest closing sale price
during the 30-day period immediately preceding the date in question.
In case of payments to holders of shares of any other class of
Common Stock, the fair market value per share of such payments would have to be
at least equal to the higher of (i) the highest per share price determined with
respect to such class in the same manner as described in clauses (i), (ii) or
(iii) of the preceding paragraphs or, (ii) the highest preferential amount per
share to which the holders of shares of such class are entitled in the event of
a voluntary or involuntary liquidation, dissolution or winding up of the
Company.
Under the minimum price criteria, the fair market value
(calculated as provided in the Fair Price Amendment) of non-cash consideration
to be received by holders of shares of any class of Common Stock in a Business
Combination is to be determined as of the Consummation Date. Where the
definitive terms of such non- cash consideration are established in advance of
the Consummation Date, intervening adverse developments, either in the economy
or the market generally or in the financial condition or business of the
Interested Stockholder, could result in a decline in the originally anticipated
fair market value of such consideration. As a result, a Business Combination
which had theretofore been considered as not requiring either a 66 2/3%
stockholder vote or approval by a majority of Continuing Directors (because it
was expected to satisfy the minimum price criteria and it satisfied the
procedural requirements) could not be consummated because it would not have
received such vote or approval (even if it had received the vote required by
Delaware law (without giving effect to the increase provided for in the Fair
Price Amendment) and any separate class vote required by the terms of any class
of then outstanding Common Stock) under circumstances in which the minimum price
criteria are applicable. Thus, an Interested Stockholder who wishes to use
non-cash consideration in a Business Combination may not know with certainty at
the time the Business Combination is submitted to stockholders whether such
consideration will meet the minimum price criteria. However, an Interested
Stockholder could avoid such a situation by establishing, in advance, terms for
the Business Combination whereby the non-cash consideration was to be finalized
by reference to its fair market value on the Consummation Date. Such an
approach, which has been used in connection with mergers and similar second-step
transactions in the past, would help to assure that the Interested Stockholder
would bear the risk of a decline in the actual market value of the offered
consideration prior to the consummation of the Business Combination.
Under the Fair Price Amendment, the Interested Stockholder
would be required to meet the minimum price criteria with respect to each class
of Common Stock, whether or not the Interested Stockholder owned shares of that
class prior to proposing a Business Combination. If the minimum price criteria
and the procedural requirements discussed below were not met with respect to
each class of Common Stock, then a 66 2/3% vote of stockholders would be
required to approve the Business Combination unless the transaction were
approved by a majority of the Continuing Directors. It should also be noted that
if the transaction does not involve any cash or other property being received by
any of the other stockholders, such as a sale of assets or an issuance of the
Company's securities to an Interested Stockholder, then the price criteria
discussed above would not apply and a 66 2/3% vote of stockholders would be
required unless the transaction were approved by a majority of Continuing
Directors.
(b) Procedural Requirements. Under the Fair Price Amendment,
in order to avoid the 662/3% stockholder vote requirement, after an Interested
Stockholder becomes an Interested Stockholder it would have to comply with the
procedural requirements, as well as the minimum price criteria, unless the
Business Combination is approved by a majority of Continuing Directors.
Under the Fair Price Amendment, a 66 2/3% stockholder vote
would be required (unless a majority of the Continuing Directors approves the
Business Combination) if the Company, after the Interested Stockholder
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has proposed a Business Combination and prior to the consummation of such
Business Combination, fails to pay full quarterly dividends on its Preferred
Stock, fails to increase the quarterly rate of dividends on shares of Common
Stock of the class currently outstanding as necessary to reflect any
recapitalization, reorganization or similar transaction which has the effect of
reducing the number of outstanding shares of such Common Stock, or reduces the
quarterly rate of dividends paid on such Common Stock (except as necessary to
reflect any subdivision of such Common Stock), unless such failures or reduction
are approved by a majority of the Continuing Directors. This provision is
designed to prevent an Interested Stockholder who controls the necessary voting
power or a majority of the Board of Directors (other than Continuing Directors)
from attempting to depress the market price of the Company's shares prior to
consummating a Business Combination by reducing dividends thereon and thereby
reducing the consideration required to be paid pursuant to the minimum price
provisions of the Fair Price Amendment.
The Fair Price Amendment would also require a 66 2/3%
stockholder vote on a proposed Business Combination (unless a majority of the
Continuing Directors approved the Business Combination) if the Interested
Stockholder acquired any additional shares of Common Stock, directly from the
Company or otherwise, in any transaction subsequent to the time it proposes a
Business Combination. This provision is intended to prevent an Interested
Stockholder from purchasing additional shares of Common Stock at prices that are
lower than those set by the minimum price criteria after it proposes a Business
Combination.
Additionally, under the Fair Price Amendment, a 66 2/3%
stockholder vote is required (unless a majority of the Continuing Directors
approves the Business Combination) if the Interested Stockholder receives at any
time after it became an Interested Stockholder, whether in connection with the
proposed Business Combination or otherwise, the benefit of any loans or other
financial assistance or tax advantages provided by the Company (other than
proportionately as a stockholder). This provision is intended to deter an
Interested Stockholder from self-dealing or otherwise taking advantage of its
equity position in the Company by using the Company's resources to finance the
proposed Business Combination or otherwise for its own purposes in a manner not
proportionately available to all stockholders.
Under the Fair Price Amendment, in order to avoid the 66 2/3%
stockholder vote requirement, a proxy or information statement disclosing the
terms and conditions of a proposed Business Combination and complying with the
requirements of the proxy rules promulgated under the Securities Exchange Act of
1934 would have to be mailed to all stockholders of the Company entitled to vote
thereon at least 30 days prior to the consummation of a Business Combination,
unless the Business Combination were approved by a majority of the Continuing
Directors. This provision (taken together with the provisions of the proposed
amendment that would prohibit the taking of action by written consent by holders
of Common Stock other than at a meeting) is intended to assure that the
Company's stockholders would be fully informed of the terms and conditions of
the proposed Business Combination even if the Interested Stockholder were not
otherwise legally required to disclose such information to stockholders.
It should be noted that none of the minimum price criteria and
procedural requirements described above would apply in the case of a Business
Combination approved by a majority of the Continuing Directors and that, in the
absence of such approval, all of such requirements would have to be satisfied to
avoid the 66 2/3% stockholder vote requirement.
Any amendment, alteration or repeal of Article XII will
require the affirmative vote of the holders of at least 66 2/3% of the combined
voting power of all issued and outstanding shares of voting stock, voting
together as a single class. Absent this requirement, Delaware law would allow an
amendment by the affirmative vote of the holders of a majority of the voting
power of all outstanding shares of voting stock present in person or by proxy.
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Purposes and Effects. As previously discussed, a number of
publicly held corporations have been the subject of tender offers for, or other
acquisitions of, substantial positions in their shares. In many cases, such
transactions have been followed by proposed business combinations in which the
tender offeror or other purchaser has paid or proposed to pay a lower price or
less desirable form of consideration for the remaining outstanding shares than
the price it paid in acquiring its original interest. Federal securities laws
and regulations govern the disclosure required to be made to minority
stockholders in such transactions but do not assure fairness to stockholders of
the terms of a business combination. Moreover, the statutory right of the
remaining stockholders of a corporation to dissent in connection with certain
business combinations and receive the "fair value" of their shares in cash may
not in all cases be available or may involve significant expense, delay or
uncertainty to dissenting stockholders. While the Delaware Supreme Court has
expanded the factors that may be taken into consideration in determining "fair
value" for appraisal purposes, stockholders have no assurance that "fair value"
as determined under this standard would be equivalent to the minimum price as
determined pursuant to the Fair Price Amendment. In the case of many business
combinations, including reclassifications or recapitalizations of the
outstanding shares of any class of a corporation's stock, the statutory right to
dissent may not be available at all.
The Fair Price Amendment is intended, in part, to meet these
gaps in federal and Delaware law and to prevent certain of the potential
inequities of Business Combinations that involve two or more steps by requiring
that in order to complete a Business Combination that is not approved by a
majority of the Continuing Directors, an Interested Stockholder must either
acquire (or assure itself of obtaining the affirmative votes of) at least 66
2/3% of the Common Stock prior to the stockholder vote on the Business
Combination, or be prepared to meet the minimum price criteria and procedural
requirements. The Fair Price Amendment is also designed to protect those
stockholders who have not tendered or otherwise sold their shares to a third
party who is attempting to acquire control by helping to assure that at least
the same price and form of consideration are paid to such stockholders in a
Business Combination as were paid to stockholders in the initial step of the
acquisition. In the absence of these changes, an Interested Stockholder who
acquires control of the Company could subsequently, by virtue of such control,
force minority stockholders to sell or exchange their shares at a price that may
not reflect any premium the Interested Stockholder may have paid in order to
acquire its interest. Such a price could be lower than the price paid by the
Interested Stockholder in acquiring control and could also be in a less
desirable form of consideration (e.g., equity or debt securities of the
Interested Stockholder instead of cash).
In many situations, the minimum price criteria and procedural
requirements would require that an Interested Stockholder pay stockholders a
higher price for their shares and/or structure the transaction differently from
what would be the case without the amendment. Accordingly, the Board believes
that, to the extent a Business Combination were involved as part of a plan to
acquire control of the Company, adoption of the Fair Price Amendment would
increase the likelihood that an Interested Stockholder would negotiate directly
with the Board. The Board believes that it is in a better position than
individual stockholders of the Company to negotiate effectively on behalf of all
stockholders in that the Board is likely to be more knowledgeable than most
individual stockholders in assessing the business and prospects of the Company.
Therefore, the Board is of the view that negotiations between the Board and an
Interested Stockholder would increase the likelihood that stockholders in
general would receive a higher price for their shares than otherwise might be
obtained.
Although some substantial acquisitions of a corporation's
shares are made without the objective of effecting a subsequent business
combination, in many cases a purchaser acquiring control desires to have the
option to consummate such a business combination. Assuming that to be the case,
the Fair Price Provision would tend to deter a potential purchaser whose
objective is to seek control of the Company at a relatively cheap price, because
acquiring the remaining equity interest would not be assured unless the minimum
price criteria and procedural requirements were satisfied or a majority of
Continuing Directors were to approve the transaction. Adoption of the Fair Price
Amendment should also help to deter the accumulation of large blocks of the
Company's shares, which the Board believes to be potentially disruptive to the
stability of the Company's and it subsidiaries' vitally important relationships
with its customers and employees and which could precipitate a change of control
of the Company on terms unfavorable to the Company's other stockholders.
27
<PAGE>
Tender offers or other non-open market acquisitions of stock
are usually made at prices above the prevailing market price of a corporation's
stock. In addition, acquisitions of stock by persons attempting to acquire
control through market purchases may cause the market price of the stock to
reach levels that are higher than might otherwise be the case. The presence of a
fair price provision may deter such purchases, particularly those of less than
all of a corporation's shares, and may therefore deprive holders of a
corporation's shares of an opportunity to sell their stock at a temporarily
higher market price. Because of the higher percentage requirements for
stockholder approval of any subsequent business combination and the possibility
of having to pay a higher price to other stockholders in such a business
combination, a fair price provision may make it more costly for a third party to
acquire control of a corporation. Thus, the Fair Price Amendment may decrease
the likelihood that a tender offer will be made for less than 66 2/3% of the
Company's Common Stock and, as a result, may adversely affect those stockholders
who would desire to participate in such a tender offer. It should be noted that
the provisions of the Fair Price Amendment would not necessarily deter a person
who might be willing to seek control by acquiring a substantial portion of the
Company's Common Stock when they have no intention of acquiring the remaining
shares.
In certain cases, the Fair Price Amendment's minimum price
provisions, while providing objective pricing criteria, could be arbitrary and
not indicative of value. In addition, an Interested Stockholder may be unable,
as a practical matter, to comply with all of the procedural requirements. In
these circumstances, unless an Interested Stockholder were willing to purchase
66 2/3% of the Company's shares in advance of the stockholder vote on a proposed
Business Combination, it would be forced either to negotiate with the Board and
offer terms acceptable to the Board or to abandon such proposed Business
Combination.
Another effect of the Fair Price Amendment would be to give
veto power to the holders of a minority of the Common Stock with respect to a
proposed Business Combination that is opposed by a majority of the Continuing
Directors but that a majority of stockholders may believe to be desirable and
beneficial. In addition, because only the Continuing Directors will have the
authority to reduce to a simple majority or eliminate the 66 2/3% stockholder
vote required for a particular Business Combination, the Fair Price Amendment
may tend to insulate incumbent Directors against the possibility of removal in
the event of a takeover attempt. Conversely, if an Interested Stockholder has
replaced all of the Directors who were in office on the date it became an
Interested Stockholder with nominees of its choice, there would be no Continuing
Directors and, consequently, such 66 2/3% stockholder vote requirement would
apply to any Business Combination consummated subsequent to such replacement
that did not satisfy all of the minimum price criteria and procedural
requirements of the Fair Price Amendment.
Required Vote
The Board of Directors has unanimously approved all of the
proposed amendments to the Company's Certificate of Incorporation. The
affirmative vote of a majority of the outstanding shares of the Company's Common
Stock is required for approval of each of the amendments to the Company's
Certificate of Incorporation. The Board of Directors recommends a vote "FOR"
each of the four proposed amendments to the Company's Certificate of
Incorporation described above.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that the stockholders ratify
the appointment of KPMG Peat Marwick LLP, as independent auditors for the
Company for the fiscal year ending December 31, 1996. KPMG Peat Marwick LLP
provided services to the Company in connection with the audit of the accounts of
the Company, the examination of the financial statements of the Company for the
fiscal year ended December 31, 1995, preparation of tax returns and consultation
on matters relating to accounting and financial reporting.
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<PAGE>
Representatives of KPMG Peat Marwick LLP are expected to be
present at the Annual Meeting and will be given an opportunity to make a
statement if so desired and to respond to appropriate questions.
The Audit Committee of the Board of Directors, following a
review of the Company's audit requirements, approved and recommended to the
Board and the Board has approved the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year 1996. The appointment of KPMG
Peat Marwick LLP as the Company's independent accountants for the fiscal year
1995 was effective upon the dismissal of Deloitte & Touche LLP ("Deloitte &
Touche") in April 1994. The Audit Committee's decision was based on the
Company's increasing need for expertise in connection with its overseas
operations and its dependence on the semiconductor industry. The Audit Committee
determined that KPMG Peat Marwick LLP was the best qualified firm with expertise
in both those areas.
For the fiscal years ending December 31, 1993 and 1994,
Deloitte & Touche issued unqualified opinions in connection with their audits of
the Company's financial statements.
During the fiscal years ended December 31, 1993 and 1994 and
during the interim period through the date of this report, there have been no
"reportable events" as listed under Regulation S-K, Item 304(a)(1)(v)(A) through
(D).
The Company believes that there were no disagreements with
Deloitte & Touche within the meaning of Instruction 4 of Item 304 of Regulation
S-K on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure in connection with the audits of the
Company's financial statements for the fiscal year ended December 31, 1993 or in
the interim period subsequent to December 31, 1994, which disagreements, if not
resolved to the satisfaction of Deloitte & Touche, would have caused Deloitte &
Touche to make reference to the subject matter of the disagreement in connection
with its reports. During the fiscal year ended December 31, 1994, the Company
disagreed with Deloitte & Touche regarding the reporting of grant monies
received by the Company from the Scottish government in connection with the
establishment by the Company of a manufacturing and distribution facility in
East Kilbride, Scotland. Specifically, the Company believed that all of the
grant money should be recognized in the quarter in which all of the conditions
to the grant were satisfied. Deloitte & Touche believed that recognition of the
grant money should be amortized over a three year period. This disagreement was
discussed with the Audit Committee of the Board and was resolved to the
satisfaction of Deloitte & Touche.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission (the
"Commission"), any proposal that a stockholder intends to have presented at the
Company's annual meeting for the fiscal year ending December 31, 1996 must be
received by the Company no later than February 28, 1997 in order to be included
in the proxy statement and form of proxy relating to such meeting. Any proposal
that is submitted should be addressed to the attention of the Secretary of the
Company and must be accompanied by the notice required by the rules of the
Commission and must otherwise comply with such rules.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is intended that the shares represented by proxies will be voted in accordance
with the judgment of the proxy holders.
Dated: June 28, 1996
29
<PAGE>
This Proxy is Solicited on Behalf of the Board of Directors
CERPROBE CORPORATION
1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CERPROBE CORPORATION, a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated June 28, 1996, and hereby appoints C. Zane Close and
Kenneth W. Miller, and each of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 1996 Annual Meeting of Stockholders of CERPROBE
CORPORATION, to be held on July 23, 1996, at 10:00 a.m., local time, at Tempe
Mission Palms, 60 East 5th Street, Tempe, Arizona, 85281, and at any adjournment
or adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
1. ELECTION OF DIRECTORS:
(Mark only one)
(a) [ ] FOR all nominees listed below (except as indicated)
If you wish to withhold authority to vote for any individual nominee, strike a
line through that nominee's name in the list below: Ross J. Mangano; C. Zane
Close; Kenneth W. Miller; Donald F. Walter; William A. Fresh.
(b) [ ] CUMULATIVE VOTING OPTION (indicate number of votes for each
nominee)
_____________ Ross J. Mangano _____________ Kenneth W. Miller
_____________ C. Zane Close _____________ Donald F. Walter
_____________ William A. Fresh
(c) [ ] WITHHOLD AUTHORITY to vote for all nominees
2. PROPOSALS TO APPROVE AMENDMENTS TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
(a) Proposal to amend the Company's Certificate of Incorporation to add a
provision allowing the Board of Directors to consider certain factors
when evaluating certain matters such as tender offers.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) Proposal to amend the Company's Certificate of Incorporation so that
the Company will be subject to the provisions of Section 203 of the
Delaware General Corporation Law.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) Proposal to amend the Company's Certificate of Incorporation to
eliminate actions by written consent of stockholders.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) Proposal to amend the Company's Certificate of Incorporation to add
certain minimum price and procedural requirements in connection with
certain transactions such as business combinations.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such matter or matters which may properly come before the meeting
or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR APPROVAL OF EACH OF THE
PROPOSED AMENDMENTS TO THE COMPANY'S CERTIFICATE OF INCORPORATION; FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY; AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
A majority of such attorneys or substitutes as shall be present and shall act at
said meeting or any adjournment or adjournments thereof (or if only one shall be
present and act, then that one) shall have and may exercise all of the powers of
said attorneys-in-fact hereunder.
Dated: , 1996
__________________________________________________
Signature
__________________________________________________
Signature
(This Proxy should be dated, signed by the
stockholder(s) exactly as his or her name appears
hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity
should so indicate. If shares are held by joint
tenants or as community property, both
stockholders should sign.)
<PAGE>
APPENDIX A
FIRST RESTATED CERTIFICATE OF INCORPORATION
OF
CERPROBE CORPORATION
1. The name of the corporation is CERPROBE CORPORATION (which
is hereinafter referred to as the "Corporation").
2. The original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on March 23, 1987, under the
name CERPROBE CORPORATION.
3. This First Restated Certificate of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board of
Directors of the Corporation, duly adopted by the stockholders of the
Corporation at a meeting duly called, and duly executed and acknowledged by the
officers of the Corporation in accordance with the provisions of Sections 103
and 245 of the General Corporation Law of the State of Delaware, and restates
and integrates the provisions of the Certificate of Incorporation of the
Corporation and, upon filing with the Secretary of State in accordance with
Section 103, shall thenceforth supersede the Certificate of Incorporation and
all amendments thereto, and shall, as it may thereafter be amended in accordance
with its terms and applicable law, be the Certificate of Incorporation of the
Corporation.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE I
Name
----
The name of the Corporation shall be Cerprobe Corporation.
ARTICLE II
Address
-------
The registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name and address of the Corporation's registered agent is The Corporation
Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
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ARTICLE III
Purpose
-------
The purpose for which this Corporation is organized is the
transaction of any or all lawful business for which corporations may be
incorporated under the laws of the State of Delaware, as may be amended from
time to time.
ARTICLE IV
Stock
-----
The Corporation shall have the authority to issue ten million
(10,000,000) shares of Common Stock. The par value of each share of Common Stock
shall be 5/100 Dollar ($0.05). The Corporation shall have the authority to issue
ten million (10,000,000) shares of Preferred Stock. The par value of each share
of Preferred Stock shall be 5/100 Dollar ($0.05).
Section 1.
Common Stock. The Board of Directors of the Corporation may,
from time to time, distribute on a pro rata basis to its Common Stock
shareholders, out of the capital surplus of the Corporation, a portion of its
assets, in cash or property.
The Board of Directors of the Corporation may, from time to
time, cause the Corporation to purchase its own Common Stock shares to the
extent of the unreserved and unrestricted earned and capital surplus of the
Corporation.
The Corporation may issue rights and options to purchase
shares of Common Stock of the Corporation to Directors, Officers or employees of
the Corporation or any affiliate thereof, and no shareholder approval or
ratification of any such issuance of rights and options shall be required.
Section 2.
Preferred Stock. The Corporation shall have authority to issue
its Preferred Stock in series. The Board of Directors is vested with authority
to establish and designate series and to fix the number of shares to be included
in each such series and the relative rights, preferences and limitations of each
such series, subject to the provisions set forth below. If the stated dividends
and amounts payable on liquidation are not paid in full, the shares of all
series of the same class shall share ratably in the payment of dividends
including accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in full, and in
any distribution of assets other than by way of dividends in accordance with the
sums which would be payable in such distribution if all sums payable were
discharged in full. The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to, determination of
the following:
a. The number of shares constituting that series and
the distinctive designation of that series;
b. The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates;
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c. Whether that series shall participate in unlimited
dividend rights, and, if so, the extent of such participation;
d. Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights, including whether it shall vote as a separate series, or with
other series of Preferred Stock, or as one class with the holders of Common
Stock, with or without other series of Preferred Stock, and whether differently
as to different matters, or any combination of the foregoing;
e. Whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
f. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
g. The amounts payable on the shares of that series
in the event of voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
h. Any other relative rights, preferences and
limitations of that series.
Dividends on outstanding Preferred Stock of each series shall
be declared and paid, or set apart for payment, before any dividends shall be
declared and paid, or set apart for payment, on the Common Stock with respect to
the same dividend period.
Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Preferred
Stock shall be entitled to receive out of the assets of the Corporation, before
any distribution shall be made to the holders of the Common Stock, the amounts
determined to be payable on the Preferred Stock of each series in the event of
voluntary or involuntary liquidation.
No holder of Preferred Stock shall be entitled to any
preemptive rights.
The Corporation may issue rights and options to purchase
shares of Preferred Stock of the Corporation to Directors, Officers or employees
of the Corporation or any affiliate thereof, and no shareholder approval or
ratification of any such issuance of rights and options shall be required.
Section 3.
Cumulative Voting. At all elections of directors of the
Corporation, or at elections held under specified circumstances, each holder of
stock or of any class or classes or of a series or series thereof shall be
entitled to as many votes as shall equal the number of votes which he would be
entitled to cast for the election of directors with respect to his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them as he may see fit.
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ARTICLE V
Board of Directors
------------------
The number of persons to serve on the Board of Directors shall
be fixed by the Bylaws.
ARTICLE VI
Indemnification
---------------
Section 1.
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholder of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Section 2.
a. Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is otherwise involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that he or she
is or was a director, officer or employee of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans
(hereinafter an "Indemnitee"), whether the basis of such Proceeding is an
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such Indemnitee in
connection therewith and such indemnification shall continue as to an Indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the Indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in paragraph (b) hereof with respect to
Proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such Indemnitee in connection with a Proceeding (or part thereof)
initiated by such Indemnitee only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid
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by the Corporation the expenses incurred in defending any such Proceeding in
advance of its final disposition (hereinafter an "Advancement of Expenses");
provided, however, that, if the Delaware General Corporation Law requires, an
Advancement of Expenses incurred by an Indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such Indemnitee, including without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal that such Indemnitee is not entitled
to be indemnified for such expenses under this Section or otherwise (hereinafter
and "Undertaking").
b. Right of Indemnitee to Bring Suit. If a claim
under paragraph (a) of this Section is not paid in full by the Corporation
within sixty days after a written claim has been received by the Corporation,
except in the case of a claim for an Advancement of Expenses, in which case the
applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the Indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right to an Advancement of Expenses) it
shall be a defense that, and (ii) any suit by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking the Corporation
shall be entitled to recover such expenses upon final adjudication that, the
Indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right hereunder, or by the Corporation to recover an Advancement of
Expenses pursuant to the terms of an undertaking, the burden of proving that the
Indemnitee is not entitled to be indemnified or to such Advancement of Expenses
under this Section or otherwise shall be on the Corporation.
c. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in this Section
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, this Certificate of Incorporation, Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise.
d. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another Corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
e. Indemnification of Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses,
to any agent of the Corporation to the fullest extent of the provisions of this
Section with respect to the indemnification and advancement of expenses of
directors, officers and employees of the Corporation.
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ARTICLE VII
Election of Directors
---------------------
All elections of Directors will be by ballot vote where a
ballot vote is demanded by any person entitled to vote prior to the time the
voting begins; otherwise, a voice vote will suffice.
ARTICLE VIII
Amendment of Bylaws
-------------------
The Bylaws may be altered, amended, repealed or temporarily or
permanently suspended, in whole or in part, or new bylaws adopted by the action
of the Board of Directors or the Stockholders, in accordance with the provisions
set forth below:
Section 1.
By Action of the Board of Directors. The Bylaws may be
altered, amended, repealed or temporarily or permanently suspended, in whole or
in part, or new bylaws adopted by the action of the Board of Directors only upon
the affirmative vote of a majority of the entire Board of Directors. Such vote
may be taken at any annual, regular or special meeting of the Board of Directors
if notice of such alteration, amendment, repeal or adoption of the new bylaws
shall be contained in the notice of such annual, regular or special meeting.
Section 2.
By Action of the Stockholders. The Bylaws may be altered,
amended or repealed or new bylaws may be adopted by the stockholders only (i)
upon the affirmative vote as to all the stock held by the holders of not less
than eighty percent (80%) of the Outstanding Voting Shares and (ii) by a
Majority of Stockholders. Such vote may be taken at any annual or special
meeting of the stockholders if notice of such alteration, amendment, repeal or
adoption of the new bylaws shall be contained in the notice of such annual or
special meeting.
ARTICLE IX
Board Considerations Upon Significant Events
--------------------------------------------
The Board, when evaluating any (A) tender offer or invitation
for tenders, or proposal to make a tender offer or request or invitation for
tenders, by another party, for any equity security of the Corporation, or (B)
proposal or offer by another party to (1) merge or consolidate the Corporation
or any subsidiary with another corporation or other entity, (2) purchase or
otherwise acquire all or a substantial portion of the properties or assets of
the Corporation or any subsidiary, or sell or otherwise dispose of to the
Corporation or any subsidiary all or a substantial portion of the properties or
assets of such other party, or (3) liquidate, dissolve, reclassify the
securities of, declare an extraordinary dividend of, recapitalize or reorganize
the Corporation, shall take into account all factors that the Board deems
relevant, including, without limitation, to the extent so deemed relevant, the
potential impact on
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employees, customers, suppliers, partners, joint venturers and other
constituents of the Corporation and the communities in which the Corporation
operates.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this First
Restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article IX must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock (as defined in
Article XII), voting together as a single class.
ARTICLE X
Notwithstanding anything to the contrary contained in the
Corporation's Bylaws, the Corporation elects to be governed by Section 203 of
the Delaware General Corporation Law.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this First
Restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article X must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock (as defined in
Article XII), voting together as a single class.
ARTICLE XI
Stockholder Consent
-------------------
No action that is required or permitted to be taken by the
stockholders of the Corporation at any annual or special meeting of stockholders
may be effected by written consent of stockholders in lieu of a meeting of
stockholders, unless the action to be effected by written consent of
stockholders and the taking of such action by such written consent have
expressly been approved in advance by the Board.
In addition to any affirmative vote required by applicable law
and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this First
Restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article XI must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock (as defined in
Article XII), voting together as a single class.
ARTICLE XII
Business Combinations; Fair Price
---------------------------------
A. In addition to any affirmative vote required by law or this
First Restated Certificate of Incorporation, and except as otherwise expressly
provided in paragraph B of this Article XII:
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1. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder (as hereinafter defined), or (b) any
other corporation, partnership or other entity (whether or not
itself an Interested Stockholder) which is, or after such
merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder other than a merger
enacted in accordance with Section 253 of the Delaware General
Corporation Law or any successor thereof; or
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder,
including all Affiliates of the Interested Stockholder, of any
assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value (as hereinafter defined) of ten
million dollars ($10,000,000) or more; or
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to any
Interested Stockholder, including all Affiliates of the
Interested Stockholder, in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
Fair Market Value of ten million dollars ($10,000,000) or more
(other than on a pro rata basis to all holders of Voting Stock
of the same class held by the Interested Stockholder pursuant
to a stock split, stock dividend or distribution of warrants
or rights and other than in connection with the exercise or
conversion of securities exercisable for or convertible into
securities of the Corporation of any of its subsidiaries which
securities have been distributed pro rata to all holders of
Voting Stock); or
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Stockholder or any Affiliates of an
Interested Stockholder; or
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not an
Interested Stockholder is a party thereto) which has the
effect, directly or indirectly, of increasing the
proportionate share by more than one percent (1%) of the
issued and outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which are directly or indirectly owned by any Interested
Stockholder or one or more Affiliates of the Interested
Stockholder;
shall require the affirmative vote of the holders of at least sixty six and
two-thirds percent (66 2/3%) of the voting power of the then issued and
outstanding Voting Stock, as hereinafter defined, voting together as a single
class, including the affirmative vote of the holders of at least sixty six and
two-thirds percent (66 2/3%) of the voting power of the then issued and
outstanding Voting Stock not Beneficially Owned directly or indirectly by an
Interested Stockholder or any Affiliate of any Interested Stockholder. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be permitted, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Article XII shall not
be applicable to any particular Business Combination (as hereinafter defined),
and such Business Combination shall require
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only such affirmative vote as is required by law or any other provision of this
First Restated Certificate of Incorporation, if the conditions specified in
either of the following paragraph 1 or 2 are met:
1. the Business Combination shall have been approved
by a majority of the Continuing Directors (as hereinafter defined); or
2. all of the following price and procedural
conditions shall have been met:
(a) the aggregate amount of the cash and the
Fair Market Value (as hereinafter defined) as of the date of
the consummation of the Business Combination of consideration
other than cash, to be received per share by the holders of
Common Stock in such Business Combination, shall be at least
equal to the highest of the following:
(i) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common
Stock acquired by it (A) within the two (2) year
period immediately prior to the first public
announcement of the proposal of such Business
Combination (the "Announcement Date"), or (B) in the
transaction in which it became an Interested
Stockholder, whichever is higher;
(ii) the Fair Market Value per share
of Common Stock on the Announcement Date or on the
date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"),
whichever is higher; and
(iii) (if applicable) the price per
share equal to the Fair Market Value per share of
Common Stock determined pursuant to paragraph
2(a)(ii) above, multiplied by the ratio of (A) the
highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any
shares of Common Stock acquired by it within the two
(2) year period immediately prior to the Announcement
Date to (B) the Fair Market Value per share of Common
Stock on the first day in such two (2) year period
upon which the Interested Stockholder acquired any
shares of Common Stock; and
(b) the aggregate amount of the cash and the
Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of shares of any other class,
other than Common Stock or Excluded Preferred Stock, of issued
and outstanding Voting Stock shall be at least equal to the
highest of the following (it being intended that the
requirements of this paragraph 2(b) shall be required to be
met with respect to every such class of issued and outstanding
Voting Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class of Voting
Stock):
(i) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of such
class of Voting Stock acquired by it (A) within the
two (2) year period immediately prior to the
Announcement Date, or (B) in the transaction in which
it became an Interested Stockholder, whichever is
higher;
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(ii) (if applicable) the highest
preferential amount per share to which the holders of
shares of such class of Voting Stock are entitled in
the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
(iii) the Fair Market Value per
share of such class of Voting Stock on the
Announcement Date or on the Determination Date,
whichever is higher; and
(iv) (if applicable) the price per
share equal to the Fair Market Value per share of
such class of Voting Stock determined pursuant to
paragraph 2(b)(iii) above, multiplied by the ratio of
(A) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for
any shares of such class of Voting Stock acquired by
it within the two (2) year period immediately prior
to the Announcement Date to (B) the Fair Market Value
per share of such class of Voting Stock on the first
day in such two (2) year period upon which the
Interested Stockholder acquired any shares of such
class of Voting Stock; and
(c) the consideration to be received by
holders of a particular class of issued and outstanding Voting
Stock (including Common Stock and other than Excluded
Preferred Stock) shall be in cash or in the same form as the
Interested Stockholder has previously paid for shares of such
class of Voting Stock (if the Interested Stockholder has paid
for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of
Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock
previously acquired by it); and
(d) after such Interested Stockholder has
become an Interested Stockholder and prior to the consummation
of such Business Combination: (i) there shall have been no
failure to declare and pay at the regular date therefor any
full quarterly dividends (whether or not cumulative) on any
issued and outstanding preferred stock, except as approved by
a majority of the Continuing Directors; (ii) there shall have
been no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision
of the Common Stock), except as approved by a majority of the
Continuing Directors; (iii) there shall have been an increase
in the annual rate of dividends as necessary fully to reflect
any recapitalization (including any reverse stock split),
reorganization or any similar reorganization which has the
effect of reducing the number of issued and outstanding shares
of the Common Stock, unless the failure so to increase such
annual rate is approved by a majority of the Continuing
Directors; and (iv) such Interested Stockholder shall not have
become the Beneficial Owner of any additional Voting Stock
except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder; and
(e) after such Interested Stockholder has
become an Interested Stockholder, such Interested Stockholder
shall not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or
any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection with
such Business Combination or otherwise; and
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(f) a proxy or information statement
describing the proposed Business Combination and complying
with the requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be
mailed to stockholders of the Corporation at least thirty (30)
days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is
required to be marked pursuant to such Act or subsequent
provisions).
C. For purposes of this Article XII the following terms shall
have the following meanings:
1. "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on June
21, 1996.
2. "Beneficial Owner" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations of the
Securities Exchange Act of 1934, as in effect on June 21, 1996. In addition, a
Person shall be the "Beneficial Owner" of any Voting Stock which such Person or
any of its Affiliates or Associates has: (a) the right to acquire (whether such
right is exercisable immediately or only after the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; or (b) the right to
vote pursuant to any agreement, arrangement or understanding (but neither such
Person nor any such Affiliate or Associate shall be deemed to be the Beneficial
Owner of any shares of Voting Stock solely by reason of a revocable proxy
granted for a particular meeting of the stockholders, pursuant to a public
solicitation of proxies for such meeting, and with respect to which shares
neither such Person nor any such Affiliate of Associate is otherwise deemed the
Beneficial Owner).
3. "Business Combination" shall mean any transaction
described in any one or more of clauses (1) through (5) of Section A of this
Article XII.
4. "Continuing Director" shall mean any member of the
Board who is unaffiliated with and is not the Interested Stockholder and was a
member of the Board prior to the time that the Interested Stockholder became an
Interested Stockholder, and any director who is thereafter chosen to fill any
vacancy on the Board or who is elected and who, in either event, is unaffiliated
with the Interested Stockholder and in connection with his or her initial
assumption of office is recommended for appointment or election by a majority of
Continuing Directors then on the Board.
5. "Excluded Preferred Stock" means any series of
Preferred Stock with respect to which a majority of the Continuing Directors
have approved a Preferred Stock Designation creating such series that expressly
provides that the provisions of this Article XII shall not apply.
6. "Fair Market Value" shall mean: (a) in the case of
stock, the highest closing sale price during the thirty (30) day period
immediately preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange listed stocks, or, if such stock is
not quoted on the composite tape, on the New York Stock Exchange, or, if such
stock is not listed on such exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing bid quotation with respect to a share of such stock during the
thirty (30) day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotation System or any system
then in use in its stead, or if no such quotations are available, the fair
market value on the
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date in question of a share of such stock as determined by the Board in
accordance with Section D of this Article XII; and (b) in the case of property
other than cash or stock, the fair market value of such property on the date in
question as determined by the Board in accordance with Section D of this Article
XII.
7. "Interested Stockholder" shall mean any Person to
or which:
(a) itself, or along with its Affiliates, is
the Beneficial Owner, directly or indirectly, of more than
fifteen percent (15%) of the then issued and outstanding
Voting Stock; or
(b) is an Affiliate of the Corporation and
at any time within the two (2) year period immediately prior
to the date in question was itself, or along with its
Affiliates, the Beneficial Owner, directly or indirectly, of
fifteen percent (15%) or more of the then issued and
outstanding Voting Stock; or
(c) is an assignee of or has otherwise
succeeded to any Voting Stock which was at any time within the
two (2) year period immediately prior to the date in question
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
For the purpose of determining whether a Person is an
Interested Stockholder pursuant to paragraph 7 of this Section C, the number of
shares of Voting Stock deemed to be issued and outstanding shall include shares
deemed owned through application of paragraph 2 of this Section C but shall not
include any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options or otherwise.
Notwithstanding anything to the contrary contained in this
First Restated Certificate of Incorporation, for purposes of this First Restated
Certificate of Incorporation, the term "Interested Stockholder" shall not, for
any purpose, include, and the provisions of Article XII(A) hereof shall not
apply to: (a) the Corporation or any Subsidiary; or (b) any employee stock
ownership plan of the Corporation or any Subsidiary.
8. In the event of any Business Combination in which
the Corporation survives, the phrase "other consideration to be received" as
used in paragraphs 2(a) and (b) and paragraph B of this Article XII shall
include the shares of Common Stock and/or the shares of any other class of
issued and outstanding Voting Stock retained by the holders of such shares.
9. "Person" shall mean any individual, firm,
corporation, partnership or other entity.
10. "Subsidiary" shall mean any corporation or other
entity of which the Corporation owns, directly or indirectly, securities that
enable the Corporation to elect a majority of the board of directors or other
persons performing similar functions of such corporation or entity or that
otherwise give to the Corporation the power to control such corporation or
entity.
11. "Voting Stock" means all issued and outstanding
shares of capital stock of the Corporation that pursuant to or in accordance
with this First Restated Certificate of Incorporation are entitled to vote
generally in the election of directors of the Corporation, and each reference
herein,
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where appropriate, to a percentage or portion of shares of Voting Stock shall
refer to such percentage or portion of the voting power of such shares entitled
to vote. The issued and outstanding shares of Voting Stock shall not include any
shares of Voting Stock that may be issuable pursuant to any agreement, or upon
the exercise or conversion of any rights, warrants or options or otherwise.
D. The Continuing Directors of the Corporation shall have the
power and duty to determine for the purposes of this Article XII, on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine compliance with this Article XII, including, without limitation: (i)
whether a Person is an Interested Stockholder; (ii) the number of shares of
Voting Stock beneficially owned by any Person; (iii) whether a Person is an
Affiliate or Associate of another; (iv) whether the applicable conditions set
forth in paragraph 2 of paragraph B of this Article XII have been met with
respect to any Business Combination; (v) the Fair Market Value of stock or other
property in accordance with paragraph 6 of paragraph C of this Article XII; and
(vi) whether the assets which are the subject of any Business Combination have,
or the consideration to be received for the issuance or transfer of securities
by the Corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of ten million dollars ($10,000,000) or more.
E. Nothing contained in this Article XII shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
F. In addition to any affirmative vote required by applicable
law and in addition to any vote of the holders of any series of Preferred Stock
provided for or fixed pursuant to the provisions of Article IV of this First
Restated Certificate of Incorporation, any alteration, amendment or repeal
relating to this Article XII must be approved by the affirmative vote of the
holders of at least sixty six and two-thirds percent (66 2/3%) of the combined
voting power of the issued and outstanding shares of Voting Stock, voting
together as a single class.
IN WITNESS WHEREOF, this First Amended Certificate of
Incorporation has been signed this day of July, 1996.
----
CERPROBE CORPORATION
By:
--------------------------------------
C. Zane Close, President
[SEAL]
Attest:
- ----------------------------
Kenneth W. Miller, Secretary
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