<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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)
RANDAL L. BUNESS
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
CERPROBE LOGO
CERPROBE CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
------------------------
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" or "Cerprobe"), to be held on May 29, 1998, at 10:00 a.m. local
time at the Mesa Hilton, Kachina Room, 1011 West Holmes Avenue, Mesa, Arizona
85210, 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 First Restated Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 10,000,000 to 25,000,000.
3. To approve an amendment to the Company's 1995 Stock Option Plan (the
"1995 Plan") to increase the number of shares of Common Stock that may
be issued pursuant to the 1995 Plan from 800,000 to 1,400,000.
4. To approve an amendment to the 1995 Plan (a) to increase the number of
options granted to non-employee members of the Board of Directors
pursuant to the Annual Automatic Options from options to acquire 2,000
shares to 3,000 shares, (b) to provide that Annual Automatic Options
shall vest at the time of grant, and (c) to eliminate the granting of
Initial Automatic Options to new members of the Board of Directors.
5. To approve the Company's Employee Stock Purchase Plan, (the "Stock
Purchase Plan").
6. To ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors for the Company for the fiscal year ending December 31, 1998.
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 April 22, 1998 (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, 1997 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 Annual
Meeting may vote in person even if he or she has previously returned a proxy.
By order of the Board of Directors,
RANDAL L. BUNESS
Secretary
Gilbert, Arizona
Dated: April 27, 1998
<PAGE> 3
[CERPROBE LOGO]
CERPROBE CORPORATION
1150 NORTH FIESTA BOULEVARD
GILBERT, ARIZONA 85233-2237
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
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" or "Cerprobe"), in connection with the Annual Meeting of Stockholders
(the "Annual Meeting") to be held on May 29, 1998 at 10:00 a.m. local time at
the Mesa Hilton, Kachina Room, 1011 West Holmes Avenue, Mesa, Arizona 85210.
These proxy solicitation materials were mailed on or about April 27, 1998
to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE
Stockholders of record at the close of business on April 22, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
at any adjournment or adjournments thereof. On the Record Date, there were
issued and outstanding 8,107,279 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 1150
North Fiesta Boulevard, Gilbert, Arizona 85233-2237, 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
<PAGE> 4
outstanding shares of Common Stock is required to approve the amendment to the
Company's First Restated Certificate of Incorporation. Assuming that a quorum is
present, the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote is required to approve the amendments to the Company's 1995 Stock Option
Plan (the "1995 Plan"), to approve the Company's Employee Stock Purchase Plan,
and to ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors for the Company for the fiscal year ending December 31, 1998.
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 the amendment to the Company's First Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 10,000,000 to 25,000,000; (iii) for approval of an amendment
to the Company's 1995 Stock Option Plan (the "1995 Plan") to increase the number
of shares of Common Stock that may be issued pursuant to the 1995 Plan from
800,000 to 1,400,000; (iv) for approval of an amendment to the 1995 Plan (a) to
increase the number of options granted to non-employee members of the Board of
Directors pursuant to the Annual Automatic Options from options to acquire 2,000
shares to 3,000 shares, (b) to provide that Annual Automatic Options shall vest
at the time of grant, and (c) to eliminate the granting of Initial Automatic
Options to new members of the Board of Directors; (v) for approval of the
Company's Employee Stock Purchase Plan, (the "Stock Purchase Plan"); (vi) for
the ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the current fiscal year ending December 31, 1998;
and (vii) in the best judgement 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 employees of the Company may also solicit proxies on behalf of
management by telephone, telegraph, and personal interview, without additional
compensation. 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 Common Stock.
ANNUAL REPORT
The 1997 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. The information
contained in the "Compensation Committee Report on Executive Compensation" below
and the "Company Performance Graph" below shall not be deemed "filed" with the
Securities and Exchange Commission (the "SEC") or subject to Regulations 14A or
14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
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-K for the year ended December 31, 1997 as filed with the SEC. Any exhibits
listed in the Form 10-K 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.
2
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's First Restated Certificate of Incorporation provides that the
number of directors shall be fixed from time to time by resolution of the Board
of Directors. 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, WILLIAM A. FRESH, KENNETH W. MILLER, AND DONALD F. WALTER, all of whom
currently are directors of the Company. 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. 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 BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
NAMED HEREIN.
The following table sets forth certain information regarding the nominees
for directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH CERPROBE
- ---- --- -------------------------
<S> <C> <C>
Ross J. Mangano(1)(2)........... 52 Chairman of the Board of Directors
C. Zane Close................... 48 President, Chief Executive Officer, and Director
William A. Fresh(2)............. 69 Director
Kenneth W. Miller(1)............ 66 Director
Donald F. Walter(1)(2).......... 65 Director
</TABLE>
- ---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Ross J. Mangano has served as the Chairman of the Board of Directors of
Cerprobe since February 1993 and as a director of Cerprobe since February 1988.
Mr. Mangano has served as the President of Oliver Estate, Inc., a real estate
and investment management company, since 1996. Prior to that time, Mr. Mangano
served in various management positions with Oliver Estate, Inc., since 1971. Mr.
Mangano also is an investment analyst for Oliver Estate, Inc. From December 1993
to 1996, Mr. Mangano served on the Board of Directors of Cole Taylor Financial
Group, a publicly held bank holding company. Since its spin-off from Cole Taylor
Financial Group in 1996, Mr. Mangano has served on the Board of Directors of
Reliance Acceptance Group, Inc., a publicly held commercial banking and
financial services company. Since August 1997, Mr. Mangano has served on the
Board of Directors of Blue Chip Casino, a privately held casino.
C. Zane Close has served as President and Chief Executive Officer and as a
director of Cerprobe since July 1990. From September 1989 to July 1990, Mr.
Close served as Vice President and General Manager of Probe Technology
Corporation ("Probe Technology"), a manufacturer of probing devices for testing
integrated circuits. Mr. Close served as Vice President of Operations of Probe
Technology from February 1985 to September 1989.
William A. Fresh has served as a director of Cerprobe since April 1995. Mr.
Fresh co-founded Fresh Test Technology Corporation ("Fresh Test"), a designer
and manufacturer of probe and interface test technology for the semiconductor
industry, which was acquired by Cerprobe in April 1995. He served as Chairman of
the Board and Chief Executive Officer of Fresh Test from January 1986 through
March 1995. Mr. Fresh also has served as the Chairman of the Board and Chief
Executive Officer of Magellan Technology, a public holding company; and Orem Tek
Development Corp., a real estate development company, since May 1990 and May
1991, respectively. Mr. Fresh served as Chairman of the Board and Chief
Executive Officer of Satellite Images System Corporation, a medical information
processing company, from February 1992 to August 1996, and since August 1996 has
served on the Board of Directors of the successor company known as Satellite
Images System, L.L.C. Mr. Fresh served as Chairman of the Board of EFI
Electronics, a publicly held power
3
<PAGE> 6
conditioning company; and Fresh Technology Company, a PC-based software company,
from January 1991 to March 1994. Since April 1996, Mr. Fresh has served on the
Board of Directors of Sento Technical Innovation Corporation, a publicly held
software company.
Kenneth W. Miller has served as a director of Cerprobe since 1979. Mr.
Miller served as Treasurer of Cerprobe from June 1994 to June 1996 and as
Secretary of Cerprobe from October 1991 to June 1996. Since January 1992, Mr.
Miller has served as a business consultant to various companies involved in the
microelectronic industry. From April 1991 until October 1991, Mr. Miller served
as Marketing Director of Scrantom Engineering, Inc., a manufacturer of hybrid
circuits and ceramic circuit boards. From September 1988 until April 1991, Mr.
Miller served as 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 President of
Interamics, a manufacturer of ceramic packages for ICs and hybrid substrates.
Donald F. Walter has served as a director of Cerprobe since May 1991. Since
1982, Mr. Walter has been a financial consultant and is the principal of Walter
& Keenan Financial Consulting Co., a financial consulting firm. Since January
1982, Mr. Walter has served as a director of National Standard Co., a publicly
held manufacturer of specialty wire products. Since October 1988, Mr. Walter has
served as a director of Metro BanCorp, a publicly held bank.
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 currently is no classification of the Board of
Directors. There are no family relationships among any of the directors or
officers of Cerprobe.
The employment agreement between Cerprobe and Mr. Close provides that
Cerprobe will cause Mr. Close to be nominated to the Board of Directors so long
as Mr. Close is employed by Cerprobe. The stockholders of Cerprobe, however,
have no obligation to vote for Mr. Close and may withhold or distribute votes in
their discretion. Cerprobe 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.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended December 31, 1997. No director attended fewer than 75% of
the aggregate of (i) the total number of meetings of the Board of Directors, and
(ii) the total number of meetings held by all committees of the Board on which
such director was a member. The Company's bylaws authorize the Board of
Directors to appoint among its members one or more committees composed of one or
more directors. As of April 10, 1998, the Board of Directors had appointed the
following standing committees: an Audit Committee and a Compensation Committee.
Audit Committee. The Audit Committee reviews the annual financial
statements and significant accounting issues and the scope of the audit with the
Company's independent auditors and is available to discuss with the auditors any
other audit related matters that may arise during the year. The Company's Audit
Committee met separately at one formal meeting during the fiscal year ended
December 31, 1997. During the fiscal year ended December 31,1997, the Audit
Committee consisted of Messrs. Mangano, Fresh, and Walter, non-employee
directors of the Company.
The Compensation Committee. The Compensation Committee reviews and acts on
matters relating to compensation levels and benefit plans for key executives of
the Company. The Compensation Committee also serves as the Senior Committee for
purposes of the 1995 Plan and administers the 1995 Plan. The Compensation
Committee held two formal meetings during the fiscal year ended December 31,
1997. During the fiscal year ended December 31, 1997, the Compensation Committee
consisted of Messers. Mangano, Miller, and Walter, non-employee directors of the
Company.
4
<PAGE> 7
DIRECTOR COMPENSATION AND OTHER INFORMATION
Each outside director of Cerprobe receives $5,000 each quarter and a fee of
$1,000 for each meeting of the Board of Directors attended. Outside directors
also are eligible to receive stock options pursuant to Cerprobe's stock option
plans and are reimbursed for expenses incurred in attending meetings. Directors
do not receive additional compensation for committee participation or special
assignments.
PROPOSAL NO. 2
APPROVAL FOR AN AMENDMENT TO THE COMPANY'S
FIRST RESTATED CERTIFICATE OF INCORPORATION
The Company's stockholders are being asked to approve a proposal concerning
an amendment to the Company's First Restated Certificate of Incorporation (the
"Company's Certificate"), which was approved and adopted by the Board of
Directors on February 10, 1998. Approval of the amendment requires the
affirmative vote of a majority of the outstanding shares of Common Stock.
Following the effectiveness of the proposed amendment, the Company intends to
file a Second Restated Certificate of Incorporation substantially in the form
set forth as Appendix A to this Proxy Statement, which reflects the Company's
Certificate substantially in the form it presently exists and assumes that the
proposed amendment has been adopted by the stockholders.
It is proposed to increase the number of authorized shares of Common Stock
from 10,000,000 to 25,000,000.
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock in order to have
additional authorized but unissued shares available for issuance to meet
business needs as they arise. The Board of Directors believes that the
availability of such additional shares will provide the Company with the
flexibility to issue Common Stock for possible future financings, stock
dividends or distributions, acquisitions, stock option plans, or other proper
corporate purposes that may be identified in the future by the Board of
Directors, without the possible expense and delay of a special stockholders'
meeting. The issuance of additional shares of Common Stock may have a dilutive
effect on earnings per share and, for persons who do not purchase additional
shares to maintain their pro rata interest in the Company, on such stockholders'
percentage voting power.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE COMPANY'S FIRST RESTATED CERTIFICATE OF INCORPORATION.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable, without further action by the Company's
stockholders, except as may be required by applicable law or by the rules of any
stock exchange or national securities association trading system on which the
securities may be listed or traded. Upon issuance, such shares will have the
same rights as the outstanding shares of Common Stock. Holders of Common Stock
have no preemptive rights.
The Company has no arrangements, agreements, understandings, or plans at
the present time for the issuance or use of the additional shares of Common
Stock proposed to be authorized. The Board of Directors does not intend to issue
any Common Stock except on terms which the Board of Directors deems to be in the
best interests of the Company and its then existing stockholders. Any future
issuance of Common Stock will be subject to the rights of holders of outstanding
shares of any Preferred Stock that the Company may issue in the future.
5
<PAGE> 8
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE
COMPANY'S 1995 STOCK OPTION PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's 1995 Stock Option Plan (the "1995 Plan") to increase the number of
shares of Common Stock reserved for issuance under the 1995 Plan from 800,000
shares to 1,400,000 shares. Approval of the proposed amendment requires the
affirmative vote of a majority of the shares of Common Stock voting on the
proposal in person or by proxy. The 1995 Plan is more fully described at
"Executive Compensation -- 1995 Stock Option Plan" below.
The Board of Directors believes that the proposed amendment to the 1995
Plan is necessary to achieve the purposes of the 1995 Plan and to promote the
welfare of Cerprobe and its stockholders generally. The Board of Directors
believes that the proposed amendments to the 1995 Plan will aid Cerprobe in
attracting and retaining directors, officers, and key employees and motivating
such persons to exert their best efforts on behalf of Cerprobe. In addition,
Cerprobe expects that the proposed amendments will further strengthen the
identity of interest of the directors, officers, and key employees with that of
the stockholders.
The increase in the number of shares of Common Stock reserved for issuance
under the 1995 Plan recognizes the growth of Cerprobe's operations and the
increase in the number of shares of Common Stock issued upon the exercise of
options and in connection with Cerprobe's public offering of Common Stock in
1997. An increase in the number of shares issuable pursuant to the 1995 Plan
will enable Cerprobe to grant additional options and other awards to current
participants, which will enable such participants to maintain their
proportionate interest in Cerprobe and to attract such additional personnel as
may be necessary in view of Cerprobe's expanding operations.
In the event that the amendment to the 1995 Plan is not approved by the
stockholders, the 1995 Plan will remain in effect as previously adopted. Any
options outstanding under the 1995 Plan prior to the amendment to the 1995 Plan
shall remain valid and unchanged.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE 1995 PLAN.
PROPOSAL NO. 4
APPROVAL FOR AN AMENDMENT TO THE
COMPANY'S 1995 STOCK OPTION PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's 1995 Plan (a) to increase the Annual Automatic Option from an option
to acquire 2,000 shares of Common Stock to an option to acquire 3,000 shares of
Common Stock, (b) to provide that Annual Automatic Options shall vest at the
time of grant, and (c) to eliminate the Initial Automatic Option grant under the
1995 Plan. The 1995 Plan is more fully described at "Executive
Compensation -- 1995 Stock Option Plan" below.
The Board of Directors believes that increasing the number of shares
issuable to Eligible Directors pursuant to Annual Automatic Options and
eliminating the one-time grant of Initial Automatic Options will increase the
proportionate interest of Eligible Directors in Cerprobe and further strengthen
the identity of interest of the Eligible Directors with that of the
stockholders.
In the event that the amendment to the 1995 Plan is not approved by the
stockholders, the provisions of the 1995 Plan with respect to Automatic Options
will remain in effect as previously adopted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED AMENDMENT TO THE 1995 PLAN.
6
<PAGE> 9
PROPOSAL NO. 5
APPROVAL OF THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN
The Company's stockholders are being asked to approve the Company's
Employee Stock Purchase Plan (the "Stock Purchase Plan"), which was approved and
adopted by the Board of Directors in December 1997. Pursuant to the terms of the
Stock Purchase Plan, the effectiveness of the Stock Purchase Plan is subject to
prior approval by the stockholders. Ratification of the proposal requires the
affirmative vote of a majority of the shares of Common Stock voting on the
proposal in person or by proxy.
It has been proposed that up to 150,000 shares of Common Stock may be
issued under the Stock Purchase Plan.
The purpose of the Stock Purchase Plan is to promote superior levels of
performance from, and to encourage stock ownership by, eligible employees of the
Company by increasing their interest in the success of the Company. The Stock
Purchase Plan is designed to meet this goal by offering financial incentives for
employees to purchase Common Stock, thereby increasing the interest of employees
in pursuing the long-term growth, profitability, and financial success of the
Company. The Stock Purchase Plan is summarized below, but the description is
subject to and is qualified in its entirety by the full text of the Stock
Purchase Plan, which is attached as Appendix B to this Proxy Statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSED STOCK PURCHASE PLAN.
Terms of the Employee Stock Purchase Plan
The Stock Purchase Plan is intended to qualify for favorable income tax
treatment under Section 423 of the Internal Revenue Code and is intended to
offer financial incentives for employees to purchase Common Stock. The proposed
Stock Purchase Plan is to be administered by an appointed committee of the Board
of Directors.
The Stock Purchase Plan will be available to all regular, full-time or
part-time employees of the Company who have completed at least one year of
continuous service to the Company and are employed by the Company on the date
such employees' participation in the Stock Purchase Plan is to become effective.
The Stock Purchase Plan provides for implementation by a series of
successive six-month offerings. The initial offering began on January 1, 1998
and extends through June 30, 1998, with subsequent offerings every six months
thereafter. The purchase price per share, in general, will be the lower of (i)
85% of the closing price of the Common Stock on the offering commencement date,
or (ii) 85% of the closing price of the Common Stock on the offering termination
date. The purchase price is to be paid through periodic payroll deductions not
to exceed 10% of the participant's earnings due each semi-annual period of
participation within the offering period. However, no participant may purchase
more than $25,000 worth of Common Stock annually.
The purchase right of a participant will terminate automatically in the
event the participant ceases to be an employee of the Company, and any payroll
deductions collected from such individual during the semi-annual period in which
such termination occurs will be refunded. However, in the event of the
participant's disability or death, such payroll deduction may be applied to the
purchase of the Common Stock on the next semi-annual purchase date.
The Stock Purchase Plan provides for annual offerings through January 2008.
7
<PAGE> 10
PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick, LLP, independent
auditors, to audit the financial statements of the Company for 1998 and
recommends that the stockholders ratify such selection. In the event that a
majority of the outstanding shares are not voted in favor of ratification, the
Board will reconsider its selection. Unless otherwise instructed, the proxy
holders will vote the proxies they receive for the ratification of KPMG Peat
Marwick LLP as the independent auditors for 1998. KPMG Peat Marwick LLP provided
such services to the Company since fiscal year ended December 31, 1995 and is
serving in such capacity for the current fiscal year. 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 BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
the fiscal years ended December 31, 1997, 1996, and 1995 earned by the Company's
Chief Executive Officer and the Company's three most highly compensated
executive officers whose aggregate cash compensation exceeded $100,000 for
services rendered in all capacities to the Company and its subsidiaries for the
last fiscal year (the "Named Officers").
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------------ -----------------------------------
Awards Payouts
OTHER ---------------------- ----------
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARD(S)($) /SARS(#) PAYOUTS($) SATION($)(2)
------------------ ---- --------- -------- ------------ ----------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. ZANE CLOSE................... 1997 209,276 185,716 -- -- 60,000 -- --
President and Chief Executive 1996(3) 157,662 -- -- -- -- -- --
Officer 1995(4) 135,000 35,000 -- -- -- -- --
ESWAR SUBRAMANIAN............... 1997 164,661 120,097 -- -- 50,000 -- 3,162
Sr. Vice President and Chief 1996(3) 132,155 -- -- -- -- -- --
Operating Officer 1995(4) 108,000 25,000 -- -- -- -- --
MICHAEL K. BONHAM............... 1997 134,950 99,547 -- -- 15,000 -- 13,349
Sr. Vice President of Sales
and 1996(3) 122,386 -- -- -- -- -- --
Marketing 1995(4) 108,000 25,000 -- -- -- -- --
RANDAL L. BUNESS................ 1997 119,981 75,000 -- -- -- -- --
Vice President, Chief
Financial 1996 61,923 -- -- -- 50,000 -- --
Officer, Secretary and
Treasurer(5) -- --
</TABLE>
- ---------------
(1) 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.
(2) All other compensation represents the earnings from the Company's deferred
compensation plan which was liquidated in November 1997.
(3) Includes $14,279, $28,000, and $22,800 in salary and/or bonus earned by
Messrs. Close, Subramanian, and Bonham respectively in 1996 but deferred to
a future year.
(4) Includes $34,346, $44,863, and $32,462 in salary and/or bonus earned by
Messrs. Close, Subramanian, and Bonham, respectively, in 1995 but deferred
to a future year.
(5) Mr. Buness became an officer of the Company in June 1996.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted to the
Company's Named Officers during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OPTION TERM($)(1)
OPTIONS FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5% 10%
---- ---------- ---------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
C. Zane Close.................... 60,000(2) 39% $10.25 5/1/07 $386,770 $980,152
Eswar Subramanian................ 50,000(2) 33% $10.25 5/1/07 322,308 816,793
Michael K. Bonham................ 15,000(2) 10% $10.25 5/1/07 96,693 245,038
</TABLE>
- ---------------
(1) 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.
(2) One-fifth of the options vest and become exercisable on the date of grant,
May 1, 1997; May 1, 1998; May 1, 1999; May 1, 2000; and May 1, 2001. The
vesting schedule will accelerate if the average price per share for the
previous 30 calendar days reaches a specified amount. If the stock reaches
an average price of $15.00 per share, 25% of the options will vest; $20.00
per share, another 25% will vest; $25.00 per share, another 25% will vest;
and $30.00 per share, the remainder of the options will vest.
OPTION HOLDINGS
The following table contains certain information representing the options
held by the Named Officers as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
---- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
C. Zane Close....................... 75,000 45,000 $785,625 $309,375
Eswar Subramanian................... 47,500 37,500 484,063 257,813
Michael K. Bonham................... 53,750 11,250 594,531 77,344
Randal L. Buness.................... 20,000 30,000 105,000 157,500
</TABLE>
- ---------------
(1) Calculated based upon the December 31, 1997 Nasdaq National Market closing
price of 17.125 per share, multiplied by the applicable number of shares
in-the-money, less the aggregate exercise price for such shares.
(2) Not vested as of December 31, 1997.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
Pursuant to employment agreements with Cerprobe, (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) Messrs. Close, Subramanian, Bonham, and Buness receive $270,000,
$185,000, $150,000, and $148,000 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
Cerprobe's Board of Directors in its sole discretion. Each of the agreements may
be terminated with or without cause by Cerprobe upon 90 days written notice to
the employee, and each employee may terminate his obligations under the
agreement by giving Cerprobe at least 90 days notice of his intent to terminate.
9
<PAGE> 12
THE 1995 STOCK OPTION PLAN
The 1995 Plan, as amended, is divided into two programs: the Discretionary
Grant Program and the Automatic Grant Program. The Discretionary Grant Program
provides for the granting of options to acquire Common Stock ("Options"), the
direct granting of Common Stock ("Stock Awards"), the grant of stock
appreciation rights ("SARs"), or the granting 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
executive officers, directors, employees, consultants, and other independent
contractors who provide valuable services to Cerprobe and its subsidiaries
(collectively, "Eligible Persons"). The Options issued may be incentive stock
options or non-qualified stock options. Cerprobe 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 Cerprobe and giving them an additional incentive to use
their best efforts for the long-term success of Cerprobe. The Automatic Option
Program provides for the automatic grant of options to acquire shares of Common
Stock ("Automatic Options"). Automatic Options are granted to non-employee
members of the Board of Directors ("Eligible Directors"). Cerprobe believes that
the Automatic Option Program promotes the interests of Cerprobe by providing
such directors the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in Cerprobe and an increased personal
interest in Cerprobe's continued success and progress.
Shares Subject to the 1995 Plan
Currently, a maximum of 800,000 shares of Common Stock may be issued under
the 1995 Plan. If the proposed amendment to the 1995 Plan is approved by the
stockholders at the Annual Meeting, a maximum of 1,400,000 shares 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 or Awards. As of April 10, 1998, 88,000 shares of Common
Stock have been issued upon exercise of Options granted pursuant to the 1995
Plan, and there were outstanding Options to acquire 712,000 shares of Common
Stock under the 1995 Plan.
Eligibility and Administration
Options and Awards may be granted pursuant to the Discretionary Grant
Program only to persons ("Eligible Persons") who at the time of grant are either
(i) key personnel (including officers and directors) of Cerprobe, or (ii)
consultants or independent contractors who provide valuable services to
Cerprobe. Options that are incentive stock options may be granted only to key
personnel of Cerprobe who are also employees of Cerprobe. 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.
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 Cerprobe and all persons who own 10% or more of
Cerprobe'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 non-employee 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 Senior Committee or a
committee of two or more directors appointed by the Board of Directors
("Employee Committee"). 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. The maximum number of shares of Common Stock with respect
10
<PAGE> 13
to which Options or Awards may be granted to any employee during the term of the
1995 Plan may not exceed 50% of the shares of Common Stock covered by the 1995
Plan.
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 Common Stock pursuant to a tender offer
which the Board of Directors recommends that Cerprobe'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 ceased to comprise a majority of the Board of Directors
by reason of a contested election.
Each Plan Administrator will determine the exercise prices of Options at
the time of grant. However, the exercise price of any Option may not be less
than 100% of the fair market value of the Common Stock at the time of the grant
(110% if the Option is granted to a person who at the time the Option is granted
owns 10% of the total combined voting power of all classes of stock of
Cerprobe). To exercise an Option, the optionholder will be required to deliver
to Cerprobe 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.
Termination of Employment or Services
Except as otherwise allowed by the Plan Administrator with respect to
non-qualified Options, 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. If any optionholder ceases to be employed by Cerprobe
for a reason other than death or permanent disability, such optionholder may,
within 30 days after the termination of such employment, exercise some or all of
the vested incentive stock options held by such employee. In the event of the
death of the participant incentive stock options may be exercised within 90 days
thereafter (but never later than the expiration of the term of the Option). If
an optionholder's employment is terminated by reason of permanent disability,
however, incentive stock 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.
Non-qualified Options that are outstanding at the time an optionholder's
service to Cerprobe terminates will remain exercisable for such period of time
thereafter as determined by the Plan Administrator at the time of grant of such
Options. However, if the optionholder is discharged for cause, all Options held
by such optionholder will terminate.
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 cash
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 determine, consistent with the 1995
Plan, such terms, conditions, restrictions, and/or limitations, if any, on any
SARs.
11
<PAGE> 14
Awards granted in the form of Stock Awards entitle the recipient to receive
shares of 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 Cerprobe. 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 Cerprobe 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,
Cerprobe may issue any other options, warrants, or awards other than pursuant to
the 1995 Plan without stockholder approval.
Terms and Conditions of Automatic Options
Currently, the 1995 Plan provides that each year at the meeting of the
Board of Directors held immediately after the annual meeting of stockholders,
each Eligible Director is granted an Automatic Option to acquire 2,000 shares of
Common Stock ("Annual Automatic Option"). In addition, the 1995 Plan presently
provides for the grant of an Automatic Option to acquire 20,000 shares of Common
Stock ("Initial Automatic Option") to new Eligible Directors on the date of
their first appointment or election to the Board. Each Automatic Option
currently becomes exercisable and vests in a series of three equal and
successive annual installments, with each annual installment to become
exercisable on the day before Cerprobe's annual meeting of stockholders
occurring in the applicable year. An Eligible Director is not eligible to
receive an Annual Automatic Option if the grant date is within 30 days of such
Eligible Director receiving an Initial Automatic Option.
If the proposed amendment to the 1995 Plan is approved by the stockholders
at the Annual Meeting, (i) commencing with the meeting of the Board of Directors
to be held immediately after the Annual Meeting, each Eligible Director will be
granted an Annual Automatic Option to acquire 3,000 shares of Common Stock,
which will vest at the time of such grant; and (ii) new Eligible Directors will
no longer receive an Initial Automatic Option grant.
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. Eligible
Directors 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 Cerprobe. 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 optionholder and, during the lifetime of the
optionholder, are exercisable only by such optionholder.
The 1995 Plan provides that, in the event of Change in Control, all
unvested Automatic Options will automatically accelerate and immediately vest so
that each outstanding Automatic Option will, immediately prior to the effective
date of such Change in Control, become fully exercisable.
Duration and Modification
The 1995 Plan will remain in force until May 9, 2005. The Board of
Directors of Cerprobe 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 present in person or by proxy
at a meeting of stockholders of Cerprobe convened for such purpose, the Board of
Directors may not (i) increase, except in the case of certain organic changes to
Cerprobe, 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
Cerprobe.
12
<PAGE> 15
Restatement of the 1995 Plan
The restatement of the 1995 Plan, which reflects the 1995 Plan
substantially in the form it presently exists and assumes that the two
amendments to the 1995 Plan have been approved by the stockholders, is set forth
as Appendix C to this Proxy Statement. If either of the proposed amendments to
the 1995 Plan is not approved by the stockholders, the 1995 Plan will be
restated to reflect the amendment approved by the stockholders. If neither of
the amendments to the 1995 Plan is approved by the stockholders, the 1995 Plan
will remain in effect as previously adopted.
Federal Income Tax Consequences
Certain options granted under the 1995 Plan will be intended to qualify as
incentive stock options under Code Section 422. Accordingly, there will be no
taxable income to an employee when an incentive stock option is granted to him
or her when that option is exercised, except to the extent the amount by which
the fair market value of the shares at the time of exercise exceeds the option
price is treated as an item of preference in computing the alternate minimum
taxable income of the optionholder. If an optionholder exercises an incentive
stock option and does not dispose of the shares within either two years after
the date of the grant of the option or one year after the date the shares were
transferred to the optionholder, any gain realized upon disposition will be
taxable to the optionholder as a capital gain. If the optionholder does not
satisfy the applicable holding periods, however, the difference between the
option price and the fair market value of the shares on the date of exercise of
the option will be taxed as ordinary income, and the balance of the gain, if
any, will be taxed as capital gain. If the shares are disposed of before the
expiration of the one-year or two-year periods and the amount realized is less
than the fair market value of the shares at the date of exercise, the employee's
ordinary income is limited to the amount realized less the option exercise price
paid. The Company will be entitled to a tax deduction only to the extent the
optionholder has ordinary income upon the sale or other disposition of the
shares received when the option was exercised.
Certain other options issued under the 1995 Plan, including options issued
automatically to the non-employee members of the Board of Directors, will be
non-qualified options. The income tax consequences of non-qualified options will
be governed by Code Section 83. Under Code Section 83, the excess of the fair
market value of the shares of Common Stock acquired pursuant to the exercise of
any option over the amount paid for such stock (hereinafter referred to as
"Excess Value") must be included in the gross income of the optionholder in the
first taxable year in which the Common Stock acquired by the optionholder is not
subject to a substantial risk of forfeiture. In calculating Excess Value, fair
market value will be determined on the date that the substantial risk of
forfeiture expires, unless a Section 83(b) election is made to include the
Excess Value in income immediately after the acquisition, in which case fair
market value will be determined on the date of the acquisition. Generally, the
Company will be entitled to a federal income tax deduction in the same taxable
year that the optionholder recognizes income. The Company will be required to
withhold income tax with respect to income reportable pursuant to Code Section
83 by an optionholder. The basis of the shares acquired by an optionholder will
be equal to the option price of those shares plus any income recognized pursuant
to Code Section 83. Subsequent sales of the acquired shares will produce capital
gain or loss. Such capital gain or loss will be long term if the stock has been
held for one year from the date of the substantial risk of forfeiture lapsed,
or, if a Section 83(b) election is made, one year from the date the shares were
acquired.
Deductibility of Executive Compensation
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises on non-statutory options granted with exercise prices equal to the
fair market value of the option shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company. Accordingly, all compensation deemed paid
with respect to those options will remain deductible by the Company without
limitation under Code Section 162(m).
13
<PAGE> 16
OTHER 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 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 options previously granted
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 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 other management employees 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 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 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 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
14
<PAGE> 17
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 Cerprobe,
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 Cerprobe 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 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 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 Cerprobe 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 options for Named Officers, see
"Options Grants in Last Fiscal Year" and "Option Holdings".
As of April 10, 1998, 900,100 shares of Common Stock have been issued upon
exercise of options granted pursuant to the Stock Option Plans, and there were
outstanding options to acquire 262,566 shares of Common Stock under the Stock
Option Plans.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and recommending for approval by the Board of
Directors the Company's executive compensation policies and practices and all
elements of compensation for the Company's executive officers. The Committee is
comprised exclusively of independent, non-employee directors. During the fiscal
year ended December 31, 1997, the Committee consisted of Ross J. Mangano, Donald
F. Walter, and Kenneth W. Miller.
Philosophy
The Company's compensation philosophy is that total cash compensation
should vary with the performance of the Company, and that any long-term
compensation should be closely aligned with the interests of the stockholders.
The compensation package for each executive officer is comprised of three
elements: (i) base salary that is designed primarily to be competitive with
salary levels in the Company's industry and that reflects individual
performance; (ii) annual cash bonus that is tied to the Company's
15
<PAGE> 18
achievement of financial performance targets and, in some cases, nonfinancial
objectives; and (iii) long-term stock-based incentive awards that aid in the
retention of the executive officer and align the officer's interests with those
of the stockholders. As an executive officer's level of responsibility
increases, it is the intent of the Company to have a greater portion of the
executive officer's total compensation be dependent upon Company performance and
stock appreciation rather than base salary.
Base Salary
For comparative compensation purposes for the 1997 fiscal year, the
Committee engaged an independent compensation consultant to review and summarize
the compensation practices of similar sized businesses in the high technology
and electronics industries based upon published 1995-1996 data. The Committee
also considered other available executive compensation surveys generally based
upon 1995-1996 data and compensation recommendations provided by the Chief
Executive Officer for all executive officers except himself. The base salary for
each officer is determined on the basis of the above comparative industry
salaries, the experience and personal performance of the officer, and internal
comparability considerations. The weight given to each of these factors differs
from officer to officer, as the Committee deems appropriate. For each executive
officer, the Committee seeks to establish a base salary that is at or close to
the median salary paid to similarly situated industry executives.
Annual Cash Bonus
Annual discretionary bonuses are designed to provide incentive compensation
to executive officers who contribute substantially to the success of the
Company. The bonuses are intended to maintain a strong link between the
Company's financial performance and enhanced stockholder value by rewarding
results that exceed industry averages. Financial performance targets and
non-financial objectives are established for each fiscal year. For fiscal year
1997, bonuses were earned on the basis of the Company's earnings compared to the
prior fiscal year; the achievement of strategic objectives primarily related to
international operations, integration of acquired companies, and the
establishment of strategic alliances; the success of the Company's second public
stock offering; and the personal performance level of the executive officer. A
portion of the Company's pre-tax earnings for the 1997 fiscal year was
accordingly set aside under a bonus pool throughout the year as targets and
objectives were met. Each executive officer was awarded a share of that pool on
the basis of his performance for the year, the responsibilities assigned to him,
and his relative position in the Company.
Long-Term Incentive Compensation
Long-term incentives are provided through stock option grants. The grants
are designed to align the interests of each executive officer with those of the
stockholders and provide each executive officer with significant incentive to
manage the Company from the perspective of an owner with an equity stake in the
business. Each grant allows the officer to acquire shares of the Common Stock at
a fixed price per share (the market price on the grant date) over a specified
period of time (up to 10 years). Each option generally becomes exercisable in
annual installments over a four-year period, contingent upon the executive
officer's continued employment with the Company. Accordingly, the option will
provide a return to the executive officer only if the market price of the
underlying shares appreciates over the option term. The number of shares subject
to each option grant is set at a level intended to create a meaningful
opportunity for stock ownership based upon the officer's current position with
the Company, the base salary associated with that position, the size of
comparable awards made to executives in similar positions within the industry,
the executive's potential for increased responsibility and promotion over the
option term, and the executive officer's personal performance in recent periods.
The Committee also takes into account the number of unvested options held by the
executive officer in order to maintain an appropriate level of equity incentive
for that executive. However, the Committee does not adhere to any specific
guidelines as to the relative option holdings of the Company's executive
officers.
16
<PAGE> 19
Benefits
The Company provides various employee benefit programs to its executive
officers, including medical and life insurance benefits, an employee 401(k)
retirement savings plan, and short- and long-term disability insurance. These
programs are generally available to all employees of the Company.
Chief Executive Officer Compensation
The Committee considered the same factors outlined above for other
executive officers in setting the fiscal year 1997 base salary and other
compensation of C. Zane Close, the Company's President and Chief Executive
Officer. In setting Mr. Close's compensation, the Committee sought to achieve
two objectives: (i) establish a level of base salary competitive with that paid
to other chief executive officers of similar sized companies within the industry
and (ii) make a significant percentage of the total compensation package
contingent upon Company performance and stock appreciation. The base salary
established for Mr. Close is intended to provide him with a level of stability
and certainty each year, and accordingly, it is not affected to any significant
degree by Company performance factors. Mr. Close's base salary for fiscal year
1997 was approximately $200,000 and was generally in the fiftieth (50th)
percentile of the base salary levels in effect for other chief executive
officers of similar sized companies within the industry. The Company paid to Mr.
Close a bonus of $185,716 for the fiscal year 1997. A stock option for an
additional 60,000 shares of Common Stock was granted to Mr. Close at an option
price of $10.25, the closing price on the date of the grant on May 1, 1997. Such
option is exercisable over four years, in five successive equal installments
measured from the date of the grant, with the first installment exercisable on
the date of the grant and each successive installment exercisable annually
thereafter until fully vested. The option also included an acceleration feature
such that if the share price of the Company's Common Stock attained target
levels of $15, $20, $30, and $35 averaged over a 30-day period, vesting would
occur with respect to 25%, 50%, 75%, and 100%, respectively, of the 60,000
shares underlying such option.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid to
each of any publicly held company's chief executive officer and four other most
highly compensated executive officers. The compensation paid to the Company's
executive officers for the 1997 fiscal year did not exceed the $1 million limit
per officer, nor is it expected that the compensation to be paid to the
Company's executive officers for fiscal 1998 will exceed that limit. The
Company's 1995 Plan is structured so that any compensation deemed paid to an
executive officer when he exercises an outstanding option under the 1995 Plan
will qualify as performance-based compensation, which will not be subject to the
$1 million limitation. Because it is very unlikely that the cash compensation
payable to any of the Company's executive officers in the foreseeable future
will approach the $1 million limit, the Compensation Committee has decided at
this time not to take any other action to limit or restructure the elements of
cash compensation payable to the Company's executive officers. The Committee
will reconsider this decision should the individual compensation of any
executive officer ever approach the $1 million level.
Members of the Compensation Committee
Ross J. Mangano
Kenneth W. Miller
Donald F. Walter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the Compensation Committee
consisted of Messrs. Mangano, Miller, and Walter, non-employee directors of the
Company.
17
<PAGE> 20
COMPANY PERFORMANCE GRAPH
The following graph compares cumulative stockholder returns (change in
stock price plus reinvestment of dividends) for the five years ended December
31, 1997 for (i) the Company's Common Stock; (ii) the Hambrecht & Quest
Semiconductor Index; and (iii) the Nasdaq Stock Market (US) Index. The graph
assumes an investment of $100 on December 31, 1992. The performance shown is not
necessarily indicative of future performance.
<TABLE>
<CAPTION>
H & Q Nasdaq Stock
Measurement Period Cerprobe Semiconductor Market (US)
(Fiscal Year Covered) Corporation Index Index
<S> <C> <C> <C>
Dec-92 100 100 100
Dec-93 240 148 115
Dec-94 176 182 112
Dec-95 556 356 159
Dec-96 460 328 195
Dec-97 548 253 240
</TABLE>
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act 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 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, 1997, 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.
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 April 10, 1998 by (i) each
director and each nominee for director; (ii) each Named Officer 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.
18
<PAGE> 21
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2) CLASS(3)
- ---------------------- -------------------------- ----------
<S> <C> <C>
Directors and Named Officers
Ross J. Mangano......................................... 469,201(4) 5.77%
C. Zane Close........................................... 113,600(5) 1.38%
William A. Fresh........................................ 252,698(6) 3.11%
Kenneth W. Miller....................................... 155,901(7) 1.92%
Donald F. Walter........................................ 21,401(8) *
Eswar Subramanian....................................... 143,900(9) 1.76%
Michael K. Bonham....................................... 94,200(10) 1.15%
Randal L. Buness........................................ 30,000(11) *
All directors and executive officers as a group (eight
persons)............................................. 1,280,901(12) 15.17%
Non-management 5% Stockholders
Warburg, Pincus Asset Management, Inc................... 407,300(13) 5.02%
</TABLE>
- ---------------
* Less than 1%.
(1) Each director, nominee and officer of the Company may be reached through
the Company at 1150 North Fiesta Boulevard, Gilbert, Arizona 85233-2237.
(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 April 10, 1998 and the shares of Common Stock that the identified person
or group had the right to acquire within 60 days of April 10, 1998 pursuant
to the exercise of stock options. 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 April 10, 1998 upon the exercise
of stock options 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, 21,300 shares in the name of Oliver & Company voted pursuant to a
power of attorney, 90,000 shares in the name of Millie M. Cunningham voted
pursuant to a power of attorney, 280,200 shares held in the name of Troon &
Co., Ross J. Mangano, et al., Trustees for which Mr. Mangano serves as a
trustee, and 25,401 shares that Mr. Mangano has the right to acquire
pursuant to the exercise of options.
(5) Includes 102,000 shares that Mr. Close has the right to acquire pursuant to
the exercise of options.
(6) Includes 135,200 shares held by WAF Investment Company, a company 100%
owned by Mr. Fresh and his wife, 50,977 shares held by The William A. and
Reva Luana Fresh Charitable Remainder Unitrust, and 5,401 shares that Mr.
Fresh has the right to acquire pursuant to the exercise of options.
(7) Includes 70,500 shares held by U.S. Trust Company of California, N.A., as
trustee for the Kenneth W. Miller Charitable Remainder Unitrust. Mr. Miller
disclaims beneficial ownership with respect to these shares. Also includes
25,401 shares that Mr. Miller has the right to acquire pursuant to the
exercise of options.
(8) Includes 20,401 shares that Mr. Walter has the right to acquire pursuant to
the exercise of options.
(9) Includes 68,000 shares that Mr. Subramanian has the right to acquire
pursuant to the exercise of options.
(10) Includes 62,500 shares that Mr. Bonham has the right to acquire pursuant to
the exercise of options.
(11) Includes 28,000 shares that Mr. Buness has the right to acquire pursuant to
the exercise of options.
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<PAGE> 22
(12) Includes 337,104 shares that members of the group had the right to acquire
as of April 10, 1998 or within 60 days of April 10, 1998, pursuant to the
exercise of stock options.
(13) Warburg, Pincus Asset Management, Inc. serves as Investment Advisor to
various fiduciary accounts. Of the 407,300 shares, Warburg Pincus Asset
Management, Inc. has sole power to vote 104,100 shares, shared power to
vote 269,800 shares, and sole power to dispose 407,300 shares. The address
of Warburg, Pincus Asset Management, Inc. is 466 Lexington Avenue, New
York, New York 10017.
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 1999 Annual Meeting must be received by the Company no later than
December 28, 1998 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: April 27, 1998
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<PAGE> 23
APPENDIX A
SECOND 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 Second 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.
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 twenty-five million
(25,000,000) 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).
<PAGE> 24
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;
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
2
<PAGE> 25
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.
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
3
<PAGE> 26
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 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
4
<PAGE> 27
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.
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 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 Second 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.
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<PAGE> 28
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 Second 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 Second 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 Second
restated Certificate of Incorporation, and except as otherwise expressly
provided in paragraph B of this Article XII:
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
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<PAGE> 29
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 only such affirmative vote as is required by
law or any other provision of this Second 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
7
<PAGE> 30
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;
(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
(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
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(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 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
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(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 Second
restated Certificate of Incorporation, for purposes of this Second 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 Second
restated Certificate of Incorporation are entitled to vote generally in the
election of directors of the Corporation, and each reference herein, 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 Second 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.
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IN WITNESS WHEREOF, this Second restated Certificate of Incorporation has
been signed this
day of May 1998.
CERPROBE CORPORATION
By:
--------------------------------------
C. Zane Close,
President
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APPENDIX B
CERPROBE CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
1.1 NAME. This Stock Purchase Plan shall be known as the Cerprobe
Corporation 1997 Employee Stock Purchase Plan (the "Plan").
1.2 PURPOSE. The Plan is intended to provide a method whereby employees of
Cerprobe Corporation, a Delaware corporation, and each Subsidiary Corporation
that has agreed, with Cerprobe's Corporation's consent, to participate in the
Plan (hereinafter referred to, unless the context otherwise requires, as the
"Company") will have an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of the Common Stock of the Company.
1.3 QUALIFICATIONS. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall
be construed in a manner consistent with the requirements of that section of the
Code.
ARTICLE II
DEFINITIONS
2.1 BASE PAY. "Base Pay" shall mean regular straight-time earnings
excluding payments for overtime, shift premium bonuses, "skill-based" pay and
other special payments, commissions (unless such commissions represent the
primary source of compensation, as determined by the Committee) and other
marketing incentive payments.
2.2 COMMITTEE. "Committee" shall mean the individuals described in Article
XI.
2.3 EMPLOYEE. "Employee" shall mean any person who is customarily employed
on a full-time or part-time basis by the Company and is regularly scheduled to
work more than 20 hours per week.
2.4 STOCK. "Stock" shall mean the Common Stock of the Company, par value
five cents ($.05).
2.5 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any
present or future corporation that (i) is a "subsidiary corporation," as that
term is defined in Code section 424(f), of Cerprobe Corporation and (ii) is
designated as a participant in the Plan by the Committee.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY. Any Employee who has completed one year of
continuous employment and is employed by the Company on the date such Employee's
participation in the Plan is to become effective shall be eligible to
participate in Offerings under the Plan which commence on or after such one year
employment period has concluded.
3.2 LEAVE OF ABSENCE. For purposes of participation in the Plan, a person
on leave of absence shall be deemed to be an Employee for the first 90 days of
such leave of absence and, except as otherwise provided by the Committee and
unless such Employee shall have returned to regular full-time or part-time
employment (as the case may be) prior to the close of business on such 90th day,
such Employee's employment shall be deemed to have terminated at the close of
business on the 90th day of such leave of absence. Termination by the Company of
any Employee's leave of absence, other than termination of such leave of absence
on return to
<PAGE> 35
full-time or part-time employment, shall terminate an Employee's employment for
all purposes of the Plan and shall terminate such Employee's participation in
the Plan and right to exercise any option.
3.3 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of the
Plan to the contrary, no Employee shall be granted an option to participate in
the Plan:
(a) if, immediately after the grant, such Employee would own Stock
and/or hold outstanding options to purchase Stock that would cause the
Employee to possess five percent or more of the total combined voting power
or value of all classes of Stock of the Company (for purposes of this
paragraph, the rules of section 424(d) of the Code shall apply in
determining stock ownership of any Employee); or
(b) which permits such Employee's rights to purchase Stock under all
Employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the Stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding.
3.4 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
participant by completing the enrollment forms prescribed by the Committee
(including a purchase agreement and a payroll deduction authorization) and
filing such forms with the designated office of the Company prior to the
Offering Commencement Date for the next scheduled Offering (as such terms are
defined below). Payroll deductions for a participant shall commence on the next
scheduled Offering Commencement Date when such Employee's authorization for a
payroll deduction becomes effective and shall continue in effect for the term of
this Plan, except to the extent such payroll deduction is changed in accordance
with this Section 3.4, or terminated in accordance with Article VIII. The
participant may, at any time, increase or decrease the rate of the participant's
payroll deduction by filing the appropriate form with the designated office of
the Company. The new rate of payroll deduction shall become effective as of the
next applicable Offering Commencement Date.
ARTICLE IV
OFFERINGS
4.1 OFFERINGS. The Plan will be implemented by a series of successive
six-month offerings of the Company's Stock (the "Offerings"), the first Offering
beginning on January 1, 1998 and ending June 30, 1998. As used in the Plan,
"Offering Commencement Date" means, in the case of the first Offering, January
1, 1998, and in the case of subsequent Offerings, the July 1 or January 1, as
the case may be, on which the particular Offering begins. The term "Offering
Termination Date" means the June 30 or December 31, as the case may be, on which
the particular Offering terminates.
ARTICLE V
PAYROLL DEDUCTIONS
5.1 AMOUNT OF DEDUCTION. At the time an Employee files an authorization
for payroll deduction and becomes a participant in the Plan, the Employee shall
elect to have deductions made from the Employee's pay on each payday during the
time the Employee is a participant in an Offering. The deductions shall be at
the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10 percent of such Employee's Base Pay
in effect during such Offering; provided however, that prior to any Offering
Commencement Date, the Committee shall have the discretion to limit deductions
to less than 10 percent (but no less than 5 percent) for any Offering.
5.2 CALCULATION OF BASE PAY. An Employee's Base Pay during the period of
an Offering shall be determined by multiplying such Employee's normal weekly
rate of pay (as in effect on the last day prior to an Offering Commencement
Date) by 26 or the Employee's normal hourly rate of pay by 1,040. In the case of
an Employee designated by the Company as "part-time," such Employee's Base Pay
during the period of an Offering shall be assumed to be 20 hours per week. In
calculating an Employee's normal weekly rate of pay under this Section 5.2,
retroactive adjustments occurring during an Offering which are retroactive to
the last day prior to the Commencement Date of that particular Offering shall be
taken into account. In addition, if a
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<PAGE> 36
participant's Base Pay includes commissions, the Committee may set such
Employee's Base Pay based upon averages and standards as determined in the
discretion of the Committee.
5.3 PARTICIPANT ACCOUNTS. All payroll deductions made for a participant
shall be credited to such Employee's account under the Plan. A participant may
not make any separate cash payment into such account except when on leave of
absence and then only as provided in Section 5.5.
5.4 CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue
participation in the Plan, but no other change can be made during an Offering
and, specifically, a participant may not alter the amount of such participant's
payroll deductions for that Offering. Upon a participant's discontinuance of
contributions, the participant may elect to either withdraw as provided in
Article VIII or retain amounts in the participant's account in the Plan, which
shall be used to purchase Stock at the end of the Offering Period.
5.5 LEAVE OF ABSENCE. If a participant goes on a leave of absence, such
participant shall have the right to elect: (a) to withdraw the balance in such
participant's account pursuant to Section 8.1 hereof; (b) to discontinue
contributions to the Plan but remain a participant in the Plan; or (c) to remain
a participant in the Plan during such leave of absence, to authorize deductions
to be made from payments by the Company to the participant during such leave of
absence and to make cash payments to the Plan at the end of each payroll period
to the extent that amounts payable by the Company to such participant are
insufficient to meet such participant's authorized Plan deductions.
ARTICLE VI
GRANTING OF OPTION
6.1 NUMBER OF OPTION SHARES. On each Offering Commencement Date, a
participating Employee shall be deemed to have been granted an option to
purchase the number of shares of the Company's Stock that may be purchased at
the purchase price specified in Section 6.2 with the aggregate amount
contributed by the Employee during the Offering; provided that the number of
shares of the Company's Stock subject to the Employees' option for any Offering
shall not exceed the number derived by dividing $12,500 by 100% of the closing
price of the Stock on the applicable Offering Commencement Date or the nearest
prior business day on which trading occurred on the NASDAQ National Market
System.
6.2 OPTION PRICE. The option price of Stock purchased with payroll
deductions made during each Offering to a participant therein shall be the
lesser of (i) 85 percent of the closing price of the Stock on the applicable
Offering Commencement Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System, or (ii) 85 percent of the closing
price of the Stock on the applicable Offering Termination Date or the nearest
prior business day on which trading occurred on the NASDAQ National Market
System.
ARTICLE VII
EXERCISE OF OPTION
7.1 AUTOMATIC EXERCISE. Unless participant gives written notice to the
Company as hereinafter provided, such participant's option for the purchase of
Stock granted under Section 6.1 hereof will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering for
the purchase of the number of full shares of stock which the accumulated payroll
deductions in such Employee's account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the Employee pursuant to Section 6.1 hereof), and
any excess in such Employee's account at that time will be returned to the
participant.
7.2 FRACTIONAL SHARES. Fractional shares will not be issued under the Plan
and any accumulated payroll deductions which would have been used to purchase
fractional shares will be held in the Employee's account to be used to purchase
Stock in a subsequent Offering.
3
<PAGE> 37
7.3 EXERCISABILITY OF OPTION. During participant's lifetime, options held
by such participant shall be exercisable only by that participant.
7.4 WITHDRAWALS AND TRANSFERS OF STOCK. Shares of Stock may be withdrawn
from a participant's account, in which case one or more certificates for whole
shares may be issued in the name of, and delivered to, the participant, with
such participant receiving cash in lieu of fractional shares based on the fair
market value of a share of Stock on the date of withdrawal. Alternatively, whole
shares of Stock may be withdrawn from a participant's account by means of a
transfer to a broker-dealer or financial institution that maintains an account
for the participant, together with the transfer of cash in lieu of fractional
shares based on the fair market value of a share of Stock on the date of
withdrawal. Participants may not designate any other person to receive shares of
Stock withdrawn or transferred under the Plan. A participant seeking to withdraw
or transfer shares of Stock must give instructions to the custodian in such
manner and form as may be prescribed by the custodian, which instructions will
be acted upon as promptly as practicable. Withdrawals and transfers will be
subject to any fees imposed by the custodian.
ARTICLE VIII
WITHDRAWAL
8.1 IN GENERAL. Prior to the last five days of an Offering period, a
participant may withdraw payroll deductions credited to such participant's
account under the Plan any time by giving written notice to the designated
office of the Company, which withdrawal notice shall be in form and substance as
decided by the Committee. All of the participant's payroll deductions credited
to the participant's account will be paid to the participant promptly after
receipt of such participant's notice of withdrawal, and no further payroll
deductions will be made form the participant's pay during such Offering or
during any subsequent Offering unless an Employee re-enrolls as provided in
Section 8.2 hereof. The Company may, at its option, treat any attempt to borrow
by a participant on the security of such participant's accumulated payroll
deductions as an election to withdraw such deductions.
8.2 EFFECT ON SUBSEQUENT PARTICIPATION. Participant's withdrawal from any
Offering will not have any effect upon such Employee's eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company. In order to be eligible for a subsequent
Offering, however, a participant which has withdrawn from a current Offering
must satisfy the requirements of Section 3.4 hereof prior to the Offering
Commencement Date of the next succeeding Offering.
8.3 TERMINATION OF EMPLOYMENT. Upon termination of the participant's
employment for any reason, including retirement (but excluding death or
permanent disablement while in the employ of the Company or continuation of a
leave of absence for a period beyond 90 days), the payroll deductions credited
to such Employee's account will be returned to the Employee, or, in the case of
the Employee's death subsequent to the termination of such Employee's
employment, to the person or persons entitled thereto under Section 12.1 hereof.
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH OR PERMANENT DISABLEMENT. Upon
termination of the participant's employment because of death or permanent
disablement, the participant or participant's beneficiary (as defined in Section
12.1 hereof) shall have the right to elect, by written notice given to the
designated office of the Company prior to the earlier of the Offering
Termination Date or the expiration of a period of 60 days commencing with the
termination of the participant's employment, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option on the next Offering
Termination Date and purchase the number of full shares of Stock which the
accumulated payroll deductions in the participant's account at the date of
the participant's cessation of employment will purchase at the applicable
option price, and any excess in such account will be returned to said
beneficiary, without interest.
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In the event that no such written notice of election shall be duly received
by the designated office of the Company, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the participant's
option.
8.5 LEAVE OF ABSENCE. A participant on leave of absence shall, subject to
the election made by such participant pursuant to Section 5.5 hereof, continue
to be a participant in the Plan so long as such participant is on continuous
leave of absence. A participant who has been on leave of absence for more than
90 days and who therefore is not an Employee for the purpose of the Plan shall
not be entitled to participate in any Offering commencing after the 90th day of
such leave of absence. Notwithstanding any other provisions of the Plan, unless
a participant on leave of absence returns to regular full-time or part-time
employment with the Company at the earlier of: (a) the termination of such leave
of absence or (b) three months from the 90th day of such leave of absence, such
participant's participation in the Plan shall terminate on whichever of such
dates first occurs.
ARTICLE IX
INTEREST
9.1 PAYMENT OF INTEREST. No interest will be paid or allowed on any money
paid into the Plan or credited to the account of any participant Employee;
including any interest paid on any and all money which is distributed to an
Employee or such Employee's beneficiary pursuant to the provisions of Sections
8.1, 8.3, 8.4, and 10.1 hereof.
ARTICLE X
STOCK
10.1 MAXIMUM SHARES. The maximum number of shares of Stock which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.4 hereof, shall be 150,000 shares. If the
total number of shares for which options are exercised on any Offering
Termination Date in accordance with Article VI exceeds the maximum number of
shares for the applicable Offering, the Company shall make a pro rata allocation
of the shares available for delivery and distribution in as nearly a uniform
manner as shall be practicable and as it shall determine to be equitable, and
the balance of payroll deductions credited to the account of each participant
under the Plan shall be returned to such participant as promptly as possible.
10.2 PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have no
interest in Stock covered by such Employee's option until such option has been
exercised.
10.3 REGISTRATION OF STOCK. Stock to be delivered to participant under the
Plan will be registered in the name of the participant, or, if the participant
so directs by written notice to the designated office of the Company prior to
the Offering Termination Date applicable thereto, in the names of the
participant and one such other person as may be designated by the participant,
in the form and manner permitted by applicable law.
10.4 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Stock reserved for issuance upon the exercise of the option shall have been
duly listed, upon official notice of issuance, upon a stock exchange, and that
either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective; or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is such Employee's
intention to purchase the shares for investment and not for resale or
distribution.
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ARTICLE XI
ADMINISTRATION
11.1 APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a
committee (the "Committee") to administer the Plan, which shall consist of no
fewer than two (2) members of the Board of Directors. No member of the Committee
shall be eligible to purchase Stock under the Plan.
11.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, and to make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's determination
on the foregoing matters shall be conclusive. The Committee may delegate its
authority as it deems necessary.
11.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephone meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The Committee may correct any defect or omission or
reconcile any inconsistency in the Plan, in the manner and to the extent it
shall deem desirable. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
ARTICLE XII
MISCELLANEOUS
12.1 DESIGNATION OF BENEFICIARY. A participant may file a written
designation of a beneficiary who is to receive any Stock and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the designated office of the Company. Upon the death of
participant and upon receipt by the Company of proof of identity and existence
at the participant's death of a beneficiary validly designated by the
participant under the Plan, the Company shall deliver such Stock and/or cash to
such beneficiary. In the event of the death of participant and in the absence of
a beneficiary validly designed under the Plan who is living at the time of such
participant's death, the Company shall deliver such Stock and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Stock and/or cash to the spouse
or to any one or more dependents of the participant as the Company may
designate. No beneficiary shall, prior the death of the participant by whom he
has been designated, acquire any interest in the Stock or cash credited to the
participant under the Plan.
12.2 TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge, or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Article
VIII.
12.3 USE OF FUNDS. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
12.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the outstanding shares of Common
Stock of the Company have increased, decreased, changed into, or been exchanged
to a different number or kind of shares or securities of
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the Company, through reorganization, merger, recapitalization, reclassification,
stock split (whether or not effected in the form of a Stock dividend), reverse
Stock split or similar transaction, appropriate and proportionate adjustments
may be made by the Committee in the number and/or kind of shares which are
subject to purchase under outstanding options and on the option exercise price
or prices applicable to such outstanding options. In addition, in any such
event, the number and/or kind of shares which may be offered in the Offerings
described in Article IV hereof shall also be proportionately adjusted.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or Stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities,
and/or property which a holder of one share of the Stock was entitled to receive
upon and at the time of such transaction. The Board of Directors shall take such
steps in connection with such transactions as the Board shall deem necessary to
assure that the provisions of this Section 12.4 shall thereafter be applicable,
as nearly as reasonably may be determined in relation to the said cash,
securities, and/or property as to which such holder of such option might
thereafter be entitled to receive.
12.5 AMENDMENT AND TERMINATION. The Board of Directors shall have complete
power and authority to terminate or amend the Plan; provided, however, that the
Board of Directors shall not, without the approval of the stockholders of the
Corporation (a) increase the maximum number of shares which may be issued under
any Offering (except pursuant to Section 12.4 hereof) or (b) amend the
requirements as to the class of Employees eligible to purchase Stock under the
Plan or permit the members of the Committee to purchase Stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
an Employee then having an option under the Plan to purchase Stock, adversely
affect the rights of such Employee under such option.
12.6 EFFECTIVE DATE AND TERMINATION DATE. The Plan shall become effective
as of January 1, 1998, subject to the prior approval by the holders of the
majority of the Stock present and represented at the next following annual
meeting of the Company's shareholders. If the Plan is not so approved by that
date, the Plan shall not become effective. The Plan shall terminate upon the
earlier of (a) the tenth anniversary of the effective date of the Plan or (b)
the date on which all shares available for issuance under the Plan shall be sold
pursuant to purchase options exercised under the Plan.
12.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of Employee to
purchase any shares under the Plan, or create in any Employee or class of
Employee any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.8 EFFECT OF PLAN. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
Employee participating in the Plan, including, without limitation, such
Employee's estate and the executors, administrators, or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
12.9 GOVERNING LAW. The law of the State of Arizona will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
CERPROBE CORPORATION, a Delaware
corporation
By:
------------------------------------------
Its:
------------------------------------------
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APPENDIX C
CERPROBE CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED THROUGH APRIL 9, 1998)
ARTICLE I
GENERAL
1.1 PURPOSE OF PLAN; TERM
(A) ADOPTION. On May 9, 1995, the Board of Directors (the "Board") of
Cerprobe Corporation, a Delaware corporation (the "Company"), adopted this stock
option plan to be known as the 1995 Stock Option Plan (the "Original Plan"). The
Original Plan was approved by the stockholders of the Company on June 27, 1995.
On February 18, 1997, the Board adopted a newly Amended and Restated 1995 Stock
Option Plan (as amended through February 18, 1997) (the "Revised 1997 Plan")
whereby additional shares of Stock were authorized to be issued under the Plan
and certain other technical changes were made. The Revised 1997 Plan was
approved by the stockholders of the Company on June 4, 1997. On April 9, 1998,
the Board adopted a newly Amended and Restated 1995 Stock Option Plan (the
"Revised 1998 Plan") whereby additional shares of Stock were authorized to be
issued under the Plan and certain changes were made to the Automatic Grant
Program under the Plan. The Revised 1998 Plan must be approved by the
stockholders of the Company within one year of the date of its adoption by the
Board. If not approved by the stockholders, the Revised 1997 Plan shall continue
in effect. If the Revised 1998 Plan is not timely approved by the stockholders,
any Options or Awards issued after the date of the adoption of the Revised 1998
Plan shall remain valid and unchanged to the extent that such Options or Awards
contain terms such that they could have been issued under the Revised 1997 Plan.
This Amended and Restated Stock Option Plan shall be known as the Cerprobe
Corporation 1995 Stock Option Plan (the "Plan"). Any Options or Awards
outstanding prior to the adoption by the Board of the Revised 1998 Plan shall
remain valid and unchanged. When applicable, the term "Plan" shall include the
Revised 1997 Plan and/or the Revised 1998 Plan.
(B) DEFINED TERMS. All initially capitalized terms used hereby shall have
the meaning set forth in Article V hereto.
(C) GENERAL PURPOSE. The Plan shall be divided into two programs: the
Discretionary Grant Program and the Automatic Grant Program.
(I) DISCRETIONARY GRANT PROGRAM. The purpose of the Discretionary
Grant Program is to further the interests of the Company and its
stockholders by encouraging key persons associated with the Company (or
Parent or Subsidiary Corporations) to acquire shares of the Company's
Stock, thereby acquiring a proprietary interest in its business and an
increased personal interest in its continued success and progress. Such
purpose shall be accomplished by providing for the discretionary granting
of options to acquire the Company's Stock ("Discretionary Options"), the
direct granting of the Company's Stock ("Stock Awards"), the granting of
stock appreciation rights ("SARs"), or the granting of other cash awards
("Cash Awards") (Stock Awards, SARs, and Cash Awards shall be collectively
referred to herein as "Awards").
(II) AUTOMATIC GRANT PROGRAM. The purpose of the Automatic Grant
Program is to promote the interests of the Company by providing
non-employee members of the Company's Board of Directors (the "Board") the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company and to thereby have an increased
personal interest in its continued success and progress. Such purpose shall
be accomplished by providing for the automatic grant of options to acquire
the Company's Stock ("Automatic Options").
(D) CHARACTER OF OPTIONS. Discretionary Options granted under this Plan to
employees of the Company (or Parent or Subsidiary Corporations) that are
intended to qualify as "incentive stock options" as defined in Code sec. 422
("Incentive Stock Options") will be specified in the applicable stock option
agreement. All other Options granted under this Plan will be nonqualified
options.
<PAGE> 42
(E) RULE 16B-3 PLAN. With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934, as amended ("1934 Act"), the Plan is intended
to comply with all applicable conditions of Rule 16b-3 (and all subsequent
revisions thereof) promulgated under the 1934 Act. In such instance, to the
extent any provision of the Plan or action by a Plan Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by such Plan Administrator. In addition, the Board may amend
the Plan from time to time as it deems necessary in order to meet the
requirements of any amendments to Rule 16b-3 without the consent of the
stockholders of the Company.
(F) DURATION OF PLAN. The term of the Original Plan is 10 years commencing
on the date of adoption of the Plan by the Board as specified in Section 1.1(a)
hereof. No Option or Award shall be granted under the Plan unless granted within
10 years of the adoption of the Plan by the Board, but Options or Awards
outstanding on that date shall not be terminated or otherwise affected by virtue
of the Plan's expiration.
1.2 STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
(A) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The stock subject
to the provisions of the Plan and issuable upon the grant of Stock Awards or
upon the exercise of SARs or Options granted under the Plan is shares of the
Company's common stock, $.05 par value per share (the "Stock"), which may be
either unissued or treasury shares, as the Board may from time to time
determine. Subject to adjustment as provided in Section 4.1 hereof, the
aggregate number of shares of Stock covered by the Plan and issuable hereunder
shall be 1,400,000 shares of Stock.
(B) CALCULATION OF AVAILABLE SHARES. For purposes of calculating the
maximum number of shares of Stock which may be issued under the Plan: (i) the
shares issued (including the shares, if any, withheld for tax withholding
requirements) upon exercise of an Option shall be counted, and (ii) the shares
issued (including the shares, if any, withheld for tax withholding requirements)
as a result of a grant of a Stock Award or an exercise of a SAR shall be
counted.
(C) RESTORATION OF UNPURCHASED SHARES. If an Option or SAR expires or
terminates for any reason prior to its exercise in full and before the term of
the Plan expires, the shares of Stock subject to, but not issued under, such
Option or SAR shall, without further action or by or on behalf of the Company,
again be available under the Plan.
1.3 APPROVAL; AMENDMENTS.
(A) APPROVAL BY STOCKHOLDERS. The Revised Plan shall be submitted to the
stockholders of the Company for their approval at a regular or special meeting
to be held within 12 months after the adoption of the Revised Plan by the Board.
Stockholder approval shall be evidenced by the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock present in person or
by proxy and voting at the meeting. The date such stockholder approval has been
obtained shall be referred to herein as the "Effective Date."
(B) COMMENCEMENT OF PROGRAMS. The Automatic Grant Program, as revised
herein, shall commence immediately. The Discretionary Grant Program, as revised
herein, shall commence immediately, subject to the terms set forth in Section
1.1(a).
(C) AMENDMENTS TO PLAN. The Board may, without action on the part of the
Company's stockholders, make such amendments to, changes in and additions to the
Plan as it may, from time to time, deem necessary or appropriate and in the best
interests of the Company; provided, the Board may not, without the consent of
the applicable Optionholder, take any action which disqualifies any
Discretionary Option previously granted under the Plan for treatment as an
Incentive Stock Option or which adversely affects or impairs the rights of the
Optionholder of any Discretionary Option outstanding under the Plan, and further
provided that, except as provided in Article IV hereof, the Board may not,
without the approval of the Company's stockholders, (i) increase the aggregate
number of shares of Stock subject to the Plan, (ii) reduce the exercise price at
which Discretionary Options may be granted or the exercise price at which any
outstanding Discretionary Option may be exercised, (iii) extend the term of the
Plan, (iv) change the class of persons eligible to receive Discretionary Options
or Awards under the Plan, or (v) materially increase the benefits accruing to
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<PAGE> 43
participants under the Plan. Notwithstanding the foregoing, Discretionary
Options or Awards may be granted under this Plan to purchase shares of Stock in
excess of the number of shares then available for issuance under the Plan if (A)
an amendment to increase the maximum number of shares issuable under the Plan is
adopted by the Board prior to the initial grant of any such Option or Award and
within one year thereafter such amendment is approved by the Company's
stockholders and (B) each such Discretionary Option or Award granted is not to
become exercisable or vested, in whole or in part, at any time prior to the
obtaining of such stockholder approval.
ARTICLE II
DISCRETIONARY GRANT PROGRAM
2.1 PARTICIPANTS; ADMINISTRATION.
(A) ELIGIBILITY AND PARTICIPATION. Discretionary Options and Awards may be
granted only to persons ("Eligible Persons") who at the time of grant are (i)
key personnel (including officers and directors) of the Company or Parent or
Subsidiary Corporations, or (ii) consultants or independent contractors who
provide valuable services to the Company or Parent or Subsidiary Corporations;
provided that (A) Incentive Stock Options may only be granted to key personnel
of the Company (or its Parent or Subsidiary Corporations) who are also employees
of the Company (or its Parent or Subsidiary Corporations), and (B) the maximum
number of shares of Stock with respect to which Options, Awards, or any
combination thereof, may be granted to any employee during the term of the Plan
shall not exceed 50 percent of the shares of Stock covered by and issuable under
the Plan. A Plan Administrator shall have full authority to determine which
Eligible Persons in its administered group are to receive Discretionary Option
grants under the Plan, the number of shares to be covered by each such grant,
whether or not the granted Discretionary Option is to be an Incentive Stock
Option, the time or times at which each such Discretionary Option is to become
exercisable, and the maximum term for which the Discretionary Option is to be
outstanding. A Plan Administrator shall also have full authority to determine
which Eligible Persons in such group are to receive Awards under the
Discretionary Grant Program and the conditions relating to such Award.
(B) GENERAL ADMINISTRATION. Unless otherwise expressly provided in this
Plan, the power to administer the Discretionary Grant Program shall be vested
exclusively with a committee (the "Senior Committee"). The membership of the
Senior Committee shall be constituted so as to comply at all times with the
applicable requirements of Rule 16b-3 and Code sec. 162(m); provided, however,
that if, at any time Rule 16b-3 and Code sec. 162(m) and any implementing
regulations (and any successor provisions thereof) so permit without adversely
affecting the ability of the Plan to comply with the conditions for exemption
from Section 16 of the Exchange Act (or any successor provision) provided by
Rule 16b-3 and the exemption from the limitations on deductibility of certain
executive compensation provided by Code sec. 162(m), the Board may delegate the
administration of the Plan, in whole or in part, on such terms and conditions,
and to such other person or persons as it may determine in its discretion;
provided further, however, that the Board may at any time appoint a committee
(the "Employee Committee") of two or more persons who are members of the Board
and delegate to such Employee Committee the power to administer the
Discretionary Grant Program with respect to Eligible Persons that are not
Affiliates. For purposes of this Plan, the term "Affiliates" shall mean all
"officers" (as that term is defined in Rule 16a-1(f) promulgated under the 1934
Act), all "covered persons" (as that term is defined in Code sec. 162(m)),
directors of the Company, and all persons who own 10 percent or more of the
Company's issued and outstanding equity securities.
(C) PLAN ADMINISTRATORS. The Board, the Senior Committee, and/or the
Employee Committee, and/or any other committee allowed hereunder, whichever is
applicable, shall be each referred to herein as a "Plan Administrator." Each
Plan Administrator shall have the authority and discretion, with respect to its
administered group, to select which Eligible Persons shall participate in the
Discretionary Grant Program, to grant Discretionary Options or Awards under the
Discretionary Grant Program, to establish such rules and regulations as they may
deem appropriate with respect to the proper administration of the Discretionary
Grant Program and to make such determinations under, and issue such
interpretations of, the Discretionary Grant Program and any outstanding
Discretionary Option or Award as they may deem necessary or advisable. Unless
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otherwise required by law or specified by the Board with respect to any
committee, decisions among the members of a Plan Administrator shall be by
majority vote. Decisions of a Plan Administrator shall be final and binding on
all parties who have an interest in the Discretionary Grant Program or any
outstanding Discretionary Option or Award. The Senior Committee, the Employee
Committee, and/or any other committee allowed hereunder, in their respective
sole discretion, may make specific grants of Discretionary Options or Awards
conditioned on approval of the Board.
The Board may establish an additional committee or committees of persons
who are members of the Board and delegate to such other committee or committees
the power to administer all or a portion of the Discretionary Grant program with
respect to all or a portion of the Eligible Persons. Members of the Senior
Committee, Employee Committee, or any other committee allowed hereunder shall
serve for such period of time as the Board may determine and shall be subject to
removal by the Board at any time. The Board may at any time terminate all or a
portion of the functions of the Senior Committee, the Employee Committee, or any
other committee allowed hereunder and reassume all or a portion of powers and
authority previously delegated to such committee.
(D) GUIDELINES FOR PARTICIPATION. In designating and selecting Eligible
Persons for participation in the Discretionary Grant Program, a Plan
Administrator shall consult with and give consideration to the recommendations
and criticisms submitted by appropriate managerial and executive officers of the
Company. A Plan Administrator also shall take into account the duties and
responsibilities of the Eligible Persons, their past, present and potential
contributions to the success of the Company and such other factors as a Plan
Administrator shall deem relevant in connection with accomplishing the purpose
of the Plan.
2.2 TERMS AND CONDITIONS OF OPTIONS
(A) ALLOTMENT OF SHARES. A Plan Administrator shall determine the number
of shares of Stock to be optioned from time to time and the number of shares to
be optioned to any Eligible Person (the "Optioned Shares"). The grant of a
Discretionary Option to a person shall neither entitle such person to, nor
disqualify such person from, participation in any other grant of Options or
Stock Awards under this Plan or any other stock option plan of the Company.
(B) EXERCISE PRICE. Upon the grant of any Discretionary Option, a Plan
Administrator shall specify the option price per share, which may not be less
than 100 percent of the fair market value per share of the Stock on the date the
Discretionary Option is granted (110 percent if the Discretionary Option is
intended to qualify as an Incentive Stock Option and is granted to a stockholder
who at the time the Discretionary Option is granted owns or is deemed to own
stock possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary Corporation). The
determination of the fair market value of the Stock shall be made in accordance
with the valuation provisions of Section 4.5 hereof.
(C) INDIVIDUAL STOCK OPTION AGREEMENTS. Discretionary Options granted
under the Plan shall be evidenced by option agreements in such form and content
as a Plan Administrator from time to time approves, which agreements shall
substantially comply with and be subject to the terms of the Plan, including the
terms and conditions of this Section 2.2. As determined by a Plan Administrator,
each option agreement shall state (i) the total number of shares to which it
pertains, (ii) the exercise price for the shares covered by the Option, (iii)
the time at which the Options vest and become exercisable, and (iv) the Option's
scheduled expiration date. The option agreements may contain such other
provisions or conditions as a Plan Administrator deems necessary or appropriate
to effectuate the sense and purpose of the Plan, including covenants by the
Optionholder not to compete and remedies for the Company in the event of the
breach of any such covenant.
(D) OPTION PERIOD. No Discretionary Option granted under the Plan that is
intended to be an Incentive Stock Option shall be exercisable for a period in
excess of 10 years from the date of its grant (five years if the Discretionary
Option is granted to a stockholder who at the time the Discretionary Option is
granted owns or is deemed to own stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary Corporation), subject to earlier termination in the event
of termination of employment, retirement or death of the Optionholder. A
Discretionary Option may be
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exercised in full or in part at any time or from time to time during the term of
the Discretionary Option or provide for its exercise in stated installments at
stated times during the Option's term.
(E) VESTING; LIMITATIONS. The time at which the Optioned Shares vest with
respect to an Optionholder shall be in the discretion of that Optionholder's
Plan Administrator. Notwithstanding the foregoing, to the extent a Discretionary
Option is intended to qualify as an Incentive Stock Option, the aggregate fair
market value (determined as of the respective date or dates of grant) of the
Stock for which one or more Options granted to any person under this Plan (or
any other option plan of the Company or any Parent or Subsidiary Corporation)
may for the first time become exercisable as Incentive Stock Options during any
one calendar year shall not exceed the sum of $100,000 (referred to herein as
the "$100,000 Limitation"). To the extent that any person holds two or more
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability as an Incentive Stock Option
shall be applied on the basis of the order in which such Options are granted.
(F) NO FRACTIONAL SHARES. Options shall be exercisable only for whole
shares; no fractional shares will be issuable upon exercise of any Discretionary
Option granted under the Plan.
(G) METHOD OF EXERCISE. In order to exercise a Discretionary Option with
respect to any vested Optioned Shares, an Optionholder (or in the case of an
exercise after an Optionholder's death, such Optionholder's executor,
administrator, heir or legatee, as the case may be) must take the following
action:
(i) execute and deliver to the Company a written notice of exercise
signed in writing by the person exercising the Discretionary Option
specifying the number of shares of Stock with respect to which the
Discretionary Option is being exercised;
(ii) pay the aggregate Option Price in one of the alternate forms as
set forth in Section 2.2(h) below; and
(iii) furnish appropriate documentation that the person or persons
exercising the Discretionary Option (if other than the Optionholder) has
the right to exercise such Option.
As soon as practicable after the Exercise Date, the Company shall mail or
deliver to or on behalf of the Optionholder (or any other person or persons
exercising this Discretionary Option in accordance herewith) a certificate or
certificates representing the Stock for which the Discretionary Option has been
exercised in accordance with the provisions of this Plan. In no event may any
Discretionary Option be exercised for any fractional shares.
(H) PAYMENT OF OPTION PRICE. The aggregate Option Price shall be payable
in one of the alternative forms specified below:
(i) Full payment in cash or check made payable to the Company's order;
or
(ii) Full payment in shares of Stock held for the requisite period
necessary to avoid a charge to the Company's reported earnings and valued
at fair market value on the Exercise Date (as determined in accordance with
Section 4.5 hereof); or
(iii) If a cashless exercise program has been implemented by the
Board, full payment through a sale and remittance procedure pursuant to
which the Optionholder (A) shall provide irrevocable written instructions
to a designated brokerage firm to effect the immediate sale of the Optioned
Shares to be purchased and remitted to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the Optioned Shares to be purchased,
and (B) shall concurrently provide written directives to the Company to
deliver the certificates for the Optioned Shares to be purchased directly
to such brokerage firm in order to complete the sale transaction.
(I) REPURCHASE RIGHT. The Plan Administrator may, in its sole discretion,
set forth other terms and conditions upon which the Company (or its assigns)
shall have the right to repurchase shares of Stock acquired by an Optionholder
pursuant to a Discretionary Option. Any repurchase right of the Company shall be
exercisable by the Company (or its assignees) upon such terms and conditions as
the Plan Administrator
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may specify in the Stock Repurchase Agreement evidencing such right. The Plan
Administrator may also, in its discretion, establish as a term and condition of
one or more Discretionary Options granted under the Plan that the Company shall
have a right of first refusal with respect to any proposed sale or other
disposition by the Optionholder of any shares of Stock issued upon the exercise
of such Discretionary Options. Any such right of first refusal shall be
exercisable by the Company (or its assigns) in accordance with the terms and
conditions set forth in the Stock Repurchase Agreement.
(J) TERMINATION OF INCENTIVE STOCK OPTIONS
(I) TERMINATION OF SERVICE. If any Optionholder ceases to be in
Service to the Company for a reason other than death, the Optionholder's
vested Incentive Stock Options on the date of termination of such Service
shall remain exercisable only for 30 days after the date of termination of
such Service or until the stated expiration date of the Optionholder's
Option, whichever occurs first; provided, that (i) if Optionholder is
discharged for Cause, or (ii) if after the Service of the Optionholder is
terminated, the Optionholder commits acts detrimental to the Company's
interests, then the Incentive Stock Option shall thereafter be void for all
purposes. "Cause" shall be limited to a termination of Service for (A)
commission of a crime by the Optionholder or for reasons involving moral
turpitude; (B) an act by the Optionholder which tends to bring the Company
into disrepute; or (C) negligent, fraudulent or willful misconduct by the
Optionholder. Notwithstanding the foregoing, if any Optionholder ceases to
be in Service to the Company by reason of permanent disability within the
meaning of section 22(e)(3) of the Code (as determined by the applicable
Plan Administrator), the Optionholder shall have 180 days after the date of
termination of Service, but in no event after the stated expiration date of
the Optionholder's Incentive Stock Options, to exercise Incentive Stock
Options that the Optionholder was entitled to exercise on the date the
Optionholder's Service terminated as a result of such disability.
(II) DEATH OF OPTIONHOLDER. If an Optionholder dies while in the
Company's Service, the Optionholder's vested Incentive Stock Options on the
date of death shall remain exercisable only for 90 days after the date of
death or until the stated expiration date of the Optionholder's Option,
whichever occurs first, and may be exercised only by the person or persons
("successors") to whom the Optionholder's rights pass under a will or by
the laws of descent and distribution. A Discretionary Option may be
exercised and payment of the Option Price made in full by the successors
only after written notice to the Company specifying the number of shares to
be purchased. Such notice shall state that the Option Price is being paid
in full in the manner specified in Section 2.2 hereof. As soon as
practicable after receipt by the Company of such notice and of payment in
full of the Option Price, a certificate or certificates representing the
Optioned Shares shall be registered in the name or names specified by the
successors in the written notice of exercise and shall be delivered to the
successors.
(K) TERMINATION OF NONQUALIFIED OPTIONS. Any Options which are not
Incentive Stock Options and which are outstanding at the time an Optionholder
dies while in Service to the Company or otherwise ceases to be in Service to the
Company shall remain exercisable for such period of time thereafter as
determined by the Plan Administrator at the time of grant and set forth in the
documents evidencing such Options; provided, that no Option shall be exercisable
after the Option's stated expiration date, and provided further, that if the
Optionholder is discharged for Cause or, if after the Optionholder's Service to
the Company is terminated, the Optionholder commits acts detrimental to the
Company's interests, then the Option will thereafter be void for all purposes.
(L) OTHER PLAN PROVISIONS STILL APPLICABLE. If a Discretionary Option is
exercised upon the termination of Service or death of an Optionholder under this
Section 2.2, the other provisions of the Plan shall still be applicable to such
exercise, including the requirement that the Optionholder or its successor may
be required to enter into a Stock Repurchase Agreement.
(M) DEFINITION OF "SERVICE." For purposes of this Plan, unless it is
evidenced otherwise in the option agreement with the Optionholder, the
Optionholder shall be deemed to be in "Service" to the Company so long as such
individual renders continuous services on a periodic basis to the Company (or to
any Parent or Subsidiary Corporation) in the capacity of an employee, director,
or an independent consultant or advisor. In the discretion of a Plan
Administrator, an Optionholder shall be considered to be rendering continuous
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services to the Company even if the type of services change, e.g., from employee
to independent consultant. The Optionholder shall be considered to be an
employee for so long as such individual remains in the employ of the Company or
one or more of its Parent or Subsidiary Corporations.
2.3 TERMS AND CONDITIONS OF STOCK AWARDS
(A) ELIGIBILITY. All Eligible Persons shall be eligible to receive Stock
Awards. The Plan Administrator of each administered group shall determine the
number of shares of Stock to be awarded from time to time to any Eligible Person
in such group. The grant of a Stock Award to a person shall neither entitle such
person to, nor disqualify such person from participation in, any other grant of
options or awards by the Company, whether under this Plan or under any other
stock option or award plan of the Company.
(B) AWARD FOR SERVICES RENDERED. Stock Awards shall be granted in
recognition of an Eligible Person's past services to the Company. The grantee of
any such Stock Award shall not be required to pay any consideration to the
Company upon receipt of such Stock Award, except as may be required to satisfy
any applicable Delaware corporate law, employment tax, and/or income tax
withholding or other legal requirements.
(C) CONDITIONS TO AWARD. All Stock Awards shall be subject to such terms,
conditions, restrictions, or limitations as the applicable Plan Administrator
deems appropriate, including, by way of illustration but not by way of
limitation, restrictions on transferability, requirements of continued
employment, individual performance or the financial performance of the Company,
or payment by the recipient of any applicable employment or withholding taxes.
Such Plan Administrator may modify or accelerate the termination of the
restrictions applicable to any Stock Award under circumstances that it deems
appropriate.
(D) AWARD AGREEMENTS. A Plan Administrator may require as a condition to a
Stock Award that the recipient of such Stock Award enter into an award agreement
in such form and content as that Plan Administrator from time to time approves.
2.4 TERMS AND CONDITIONS OF SARS
(A) ELIGIBILITY. All Eligible Persons shall be eligible to receive SARs.
The Plan Administrator of each administered group shall determine the SARs to be
awarded from time to time to any Eligible Person in such group. The grant of a
SAR to a person shall neither entitle such person to, nor disqualify such person
from participation in, any other grant of options or awards by the Company,
whether under this Plan or under any other stock option or award plan of the
Company.
(B) AWARD OF SARS. Concurrently with or subsequent to the grant of any
Discretionary Option to purchase one or more shares of Stock, a Plan
Administrator may award to the Optionholder with respect to each share of Stock
underlying the Option, a related SAR permitting the Optionholder to be paid the
appreciation on the Stock underlying the Discretionary Option in lieu of
exercising the Option. In addition, a Plan Administrator may award to any
Eligible Person a SAR permitting the Eligible Person to be paid the appreciation
on a designated number of shares of the Stock, whether or not such Shares are
actually issued.
(C) CONDITIONS TO SAR. All SARs shall be subject to such terms,
conditions, restrictions or limitations as the applicable Plan Administrator
deems appropriate, including, by way of illustration but not by way of
limitation, restrictions on transferability, requirements of continued
employment, individual performance, financial performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under circumstances that it deems appropriate.
(D) SAR AGREEMENTS. A Plan Administrator may require as a condition to the
grant of a SAR that the recipient of such SAR enter into a SAR agreement in such
form and content as that Plan Administrator from time to time approves.
(E) EXERCISE. An Eligible Person who has been granted a SAR may exercise
such SAR subject to the conditions specified by the Plan Administrator in the
SAR agreement.
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(F) AMOUNT OF PAYMENT. The amount of payment to which the grantee of a SAR
shall be entitled upon the exercise of each SAR shall be equal to the amount, if
any, by which the fair market value of the specified shares of Stock on the
exercise date exceeds the fair market value of the specified shares of Stock on
the date the Discretionary Option related to the SAR was granted or became
effective, or, if the SAR is not related to any Option, on the date the SAR was
granted or became effective.
(G) FORM OF PAYMENT. The SAR may be paid in either cash or Stock, as
determined in the discretion of the applicable Plan Administrator and set forth
in the SAR agreement. If the payment is in Stock, the number of shares to be
delivered to the participant shall be determined by dividing the amount of the
payment determined pursuant to Section 2.4(f) by the fair market value of a
share of Stock on the exercise date of such SAR. As soon as practicable after
exercise, the Company shall deliver to the SAR grantee a certificate or
certificates for such shares of Stock.
(H) TERMINATION OF EMPLOYMENT; DEATH. Section 2.2(j), applicable to
Incentive Stock Options, and Section 2.2(k), applicable to nonqualified options,
shall apply equally to SARs issued in tandem with such Options.
2.5 TERMS AND CONDITIONS OF CASH AWARDS
(A) IN GENERAL. The Plan Administrator of each administered group shall
have the discretion to make other awards of cash to Eligible Persons in such
group ("Cash Awards"). Such Cash Awards may relate to existing Options or to the
appreciation in the value of the Stock or other Company securities.
(B) CONDITIONS TO AWARD. All Cash Awards shall be subject to such terms,
conditions, restrictions, and limitations as the applicable Plan Administrator
deems appropriate, and such Plan Administrator may require as a condition to
such Cash Award that the recipient of such Cash Award enter into an award
agreement in such form and content as the Plan Administrator from time to time
approves.
ARTICLE III
AUTOMATIC GRANT PROGRAM
3.1 ELIGIBLE PERSONS UNDER THE AUTOMATIC GRANT PROGRAM. The persons
eligible to participate in the Automatic Grant Program shall be limited to Board
members who are not employed by the Company, whether or not such persons qualify
as Non-Employee directors as defined herein ("Eligible Directors"). Persons who
are eligible under the Automatic Grant Program may also be eligible to receive
Discretionary Options or Awards under the Discretionary Grant Program or option
grants or direct stock issuances under other plans of the Company.
3.2 TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
(A) AMOUNT AND DATE OF GRANT. Each year during the term of this Plan on
the Annual Grant Date, an Automatic Option to acquire 3,000 shares of Stock
shall be granted to each Eligible Director ("Optionholder") for so long as there
are shares of Stock available under Section 1.2 hereof. The "Annual Grant Date"
shall be the date of the Company's annual stockholders meeting commencing as of
the next annual meeting occurring after the annual meeting held on the Effective
Date.
(B) EXERCISE PRICE. The exercise price per share of Stock subject to each
Automatic Option Grant shall be equal to 100 percent of the fair market value
per share of the Stock on the date the Automatic Option was granted as
determined in accordance with the valuation provisions of Section 4.5 hereof
(the "Option Price").
(C) VESTING. Each Automatic Option Grant shall become exercisable and vest
at the time of grant.
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(D) METHOD OF EXERCISE. In order to exercise an Automatic Option with
respect to any vested Optioned Shares, an Optionholder (or in the case of an
exercise after an Optionholder's death, such Optionholder's executor,
administrator, heir or legatee, as the case may be) must take the following
action:
(i) execute and deliver to the Company a written notice of exercise
signed in writing by the person exercising the Automatic Option specifying
the number of shares of Stock with respect to which the Automatic Option is
being exercised;
(ii) pay the aggregate Option Price in one of the alternate forms as
set forth in Section 3.2(e) below; and
(iii) furnish appropriate documentation that the person or persons
exercising the Automatic Option (if other than the Optionholder) has the
right to exercise such Option.
As soon as practicable after the Exercise Date, the Company shall mail or
deliver to or on behalf of the Optionholder (or any other person or persons
exercising the Automatic Option in accordance herewith) a certificate or
certificates representing the Stock for which the Automatic Option has been
exercised in accordance with the provisions of this Plan. In no event may any
Automatic Option be exercised for any fractional shares.
(E) PAYMENT OF OPTION PRICE. The aggregate Option Price shall be payable
in one of the alternative forms specified below:
(i) full payment in cash or check made payable to the Company's order;
or
(ii) full payment in shares of Stock held for the requisite period
necessary to avoid a charge to the Company's reported earnings and valued
at fair market value on the Exercise Date (as determined in accordance with
Section 4.5 hereof); or
(iii) if a cashless exercise program has been implemented by the
Board, full payment through a sale and remittance procedure pursuant to
which the Optionholder (A) shall provide irrevocable written instructions
to a designated brokerage firm to effect the immediate sale of the Optioned
Shares to be purchased and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the Optioned Shares to be purchased and (B)
shall concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such
brokerage firm in order to complete the sale transaction.
(F) TERM OF OPTION. Each Automatic Option shall expire on the tenth
anniversary of the date on which an Automatic Option Grant was made ("Expiration
Date"). Except as provided in Section 4.4 hereof, should an Optionholder's
service as a Board member cease prior to the Expiration Date for any reason
while an Automatic Option remains outstanding and unexercised, then the
Automatic Option term shall immediately terminate and the Automatic Option shall
cease to be outstanding in accordance with the following provisions:
(i) The Automatic Option shall immediately terminate and cease to be
outstanding for any shares of Stock which were not vested at the time of
Optionholder's cessation of Board service.
(ii) Should an Optionholder cease, for any reason other than death, to
serve as a member of the Board, then the Optionholder shall have 30 days
measured from the date of such cessation of Board service in which to
exercise the Automatic Options which vested prior to the time of such
cessation of Board service. In no event, however, may any Automatic Option
be exercised after the Expiration Date of such Automatic Option.
(iii) Should an Optionholder die while serving as a Board member or
within 30 days after cessation of Board service, then the personal
representative of the Optionholder's estate (or the person or persons to
whom the Automatic Option is transferred pursuant to the Optionholder's
will or in accordance with the laws of descent and distribution) shall have
a 90 day period measured from the date of the Optionholder's cessation of
Board service in which to exercise the Automatic Options which vested prior
to the time of
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such cessation of Board service. In no event, however, may any Automatic
Option be exercised after the Expiration Date of such Automatic Option.
ARTICLE IV
MISCELLANEOUS
4.1 CAPITAL ADJUSTMENTS. The aggregate number of shares of Stock subject
to the Plan, the number of shares covered by outstanding Options and Awards, and
the price per share stated in such Options and Awards shall be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Stock of the Company resulting from a subdivision or consolidation of shares or
any other capital adjustment or the payment of a stock dividend or any other
increase or decrease in the number of such shares effected without the Company's
receipt of consideration therefor in money, services or property.
4.2 MERGERS, ETC. If the Company is the surviving corporation in any
merger or consolidation (not including a Corporate Transaction), any Option or
Award granted under the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to the Option or Award
would have been entitled prior to the merger or consolidation. Except as
provided in Section 4.3 hereof, a dissolution or liquidation of the Company
shall cause every Option or Award outstanding hereunder to terminate.
4.3 CORPORATE TRANSACTION. In the event of stockholder approval of a
Corporate Transaction, (a) all unvested Automatic Options shall automatically
accelerate and immediately vest so that each outstanding Automatic Option shall,
one week prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the Optioned Shares, and (b) the Plan
Administrator shall have the discretion and authority, exercisable at any time,
to provide for the automatic acceleration of one or more of the outstanding
Discretionary Options or Awards granted by it under the Plan. Upon the
consummation of the Corporate Transaction, all Options shall, to the extent not
previously exercised, terminate and cease to be outstanding.
4.4 CHANGE IN CONTROL
(A) AUTOMATIC GRANT PROGRAM. In the event of a Change in Control, all
unvested Automatic Options shall automatically accelerate and immediately
vest so that each outstanding Automatic Option shall, immediately prior to
the effective date of such Change in Control, become fully exercisable for
all of the Optioned Shares. Thereafter, each Automatic Option shall remain
exercisable until the Expiration Date of such Automatic Option.
(B) DISCRETIONARY GRANT PROGRAM. In the event of a Change in Control,
a Plan Administrator shall have the discretion and authority, exercisable
at any time, whether before or after the Change in Control, to provide for
the automatic acceleration of one or more outstanding Discretionary Options
or Awards granted by it under the Plan upon the occurrence of such Change
in Control. A Plan Administrator may also impose limitations upon the
automatic acceleration of such Options or Awards to the extent it deems
appropriate. Any Options or Awards accelerated upon a Change in Control
will remain fully exercisable until the expiration or sooner termination of
the Option term.
4.5 CALCULATION OF FAIR MARKET VALUE OF STOCK. The fair market value of a
share of Stock on any relevant date shall be determined in accordance with the
following provisions:
(i) If the Stock is not at the time listed or admitted to trading on
any stock exchange but is traded in the over-the-counter market, the fair
market value shall be the mean between the highest bid and lowest asked
prices (or, if such information is available, the closing selling price)
per share of Stock on the date in question in the over-the-counter market,
as such prices are reported by the National Association of Securities
Dealers through its Nasdaq system or any successor system. If there are no
reported bid and asked prices (or closing selling price) for the Stock on
the date in question, then the mean between the highest bid price and
lowest asked price (or the closing selling price) on the last preceding
date for which such quotations exist shall be determinative of fair market
value.
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(ii) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the fair market value shall be the closing selling
price per share of Stock on the date in question on the stock exchange
determined by the Board to be the primary market for the Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Stock on such exchange on the
date in question, then the fair market value shall be the closing selling
price on the exchange on the last preceding date for which such quotation
exists.
(iii) If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market,
then the fair market value shall be determined by the Board after taking
into account such factors as the Board shall deem appropriate, including
one or more independent professional appraisals.
4.6 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options or Awards hereunder, if any, shall be
used for general corporate purposes.
4.7 CANCELLATION OF OPTIONS. Each Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionholders, the cancellation of any or all outstanding Discretionary
Options granted under the Plan by that Plan Administrator and to grant in
substitution therefore new Discretionary Options under the Plan covering the
same or different numbers of shares of Stock as long as such new Discretionary
Options have an exercise price per share of Stock no less than the minimum
exercise price as set forth in Section 2.2(b) hereof on the new grant date.
4.8 REGULATORY APPROVALS. The implementation of the Plan, the granting of
any Option or Award hereunder, and the issuance of Stock upon the exercise of
any such Option or Award shall be subject to the procurement by the Company of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Options or Awards granted under it and the Stock issued
pursuant thereto.
4.9 INDEMNIFICATION. Each and every member of a Plan Administrator, in
addition to such other available rights of indemnification as they may have, the
members of a Plan Administrator shall be indemnified and held harmless by the
Company, to the extent permitted under applicable law, for, from and against all
costs and expenses reasonably incurred by them in connection with any action,
suit, legal proceeding to which any member thereof may be a party by reason of
any action taken, failure to act under or in connection with the Plan or any
rights granted thereunder and against all amounts paid by them in settlement
thereof or paid by them in satisfaction of a judgment of any such action, suit
or proceeding, except a judgment based upon a finding of bad faith.
4.10 PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
means by which the Company may issue options or warrants to acquire its Stock,
stock awards or any other type of award. To the extent permitted by applicable
law, any such other option, warrants or awards may be issued by the Company
other than pursuant to this Plan without stockholder approval.
4.11 COMPANY RIGHTS. The grants of Options shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
4.12 PRIVILEGE OF STOCK OWNERSHIP. An Optionholder shall not have any of
the rights of a stockholder with respect to Optioned Shares until such
individual shall have exercised the Option and paid the Option Price for the
Optioned Shares. No adjustment will be made for dividends or other rights for
which the record date is prior to the date of such exercise and full payment for
such Optioned Shares.
4.13 ASSIGNMENT. The right to acquire Stock or other assets under the Plan
may not be assigned, encumbered, or otherwise transferred by any Optionholder
except as specifically provided herein. Except as may be specifically allowed by
the Plan Administrator at the time of grant and set forth in the documents
evidencing a Discretionary Option or Award, no Option or Award granted under the
Plan or any of the rights and privileges conferred thereby shall be assignable
or transferable by an Optionholder or grantee other than by will or the laws of
descent and distribution, and such Option or Award shall be exercisable during
the Optionholder's or grantee's lifetime only by the Optionholder or grantee.
Notwithstanding the foregoing, no
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Incentive Stock Option granted under the Plan or any of the rights and
privileges conferred thereby shall be assignable or transferable by an
Optionholder or grantee other than by will or the laws of descent and
distribution, and such Incentive Stock Option shall be exercisable during the
Optionholder's or grantee's lifetime only by the Optionholder or grantee. The
provisions of the Plan shall inure to the benefit of, and be binding upon, the
Company and its successors or assigns, and the Optionholders, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.
4.14 SECURITIES RESTRICTIONS
(A) LEGEND ON CERTIFICATES. All certificates representing shares of
Stock issued upon exercise of Options or Awards granted under the Plan
shall be endorsed with a legend reading as follows:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ISSUED TO THE REGISTERED OWNER IN RELIANCE UPON WRITTEN REPRESENTATIONS
THAT THESE SHARES HAVE BEEN PURCHASED SOLELY FOR INVESTMENT. THESE
SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS IN THE OPINION OF
THE COMPANY AND ITS LEGAL COUNSEL SUCH SALE, TRANSFER OR ASSIGNMENT WILL
NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS THEREUNDER.
(B) PRIVATE OFFERING FOR INVESTMENT ONLY. The Options and Awards are
and shall be made available only to a limited number of present and future
key personnel who have knowledge of the Company's financial condition,
management and its affairs. The Plan is not intended to provide additional
capital for the Company, but to encourage ownership of Stock among the
Company's key personnel. By the act of accepting an Option or Award, each
grantee agrees (i) that, any shares of Stock acquired pursuant to any
Option or Award will be solely for investment and not with any intention to
resell or redistribute those shares and, (ii) such intention will be
confirmed by an appropriate certificate at the time the Stock is acquired
if requested by the Company. The neglect or failure to execute such a
certificate, however, shall not limit or negate the foregoing agreement.
(C) REGISTRATION STATEMENT. If a Registration Statement covering the
shares of Stock issuable upon exercise of Options granted under the Plan is
filed under the Securities Act of 1933, as amended, and is declared
effective by the Securities Exchange Commission, the provisions of Sections
4.14(a) and (b) shall terminate during the period of time that such
Registration Statement, as periodically amended, remains effective.
4.15 TAX WITHHOLDING
(A) GENERAL. The Company's obligation to deliver Stock upon the
exercise of Options under the Plan shall be subject to the satisfaction of
all applicable federal, state and local income tax withholding
requirements.
(B) SHARES TO PAY FOR WITHHOLDING. The Board may, in its discretion
and in accordance with the provisions of this Section 4.15(b) and such
supplemental rules as it may from time to time adopt, provide any or all
Optionholders with the right to use shares of Stock in satisfaction of all
or part of the federal, state and local income tax liabilities ("Taxes")
incurred by such Optionholders in connection with the exercise of their
Options. Such right may be provided to any such Optionholder in either or
both of the following formats:
(I) STOCK WITHHOLDING. The Plan Administrator may, in its discretion,
provide the Optionholder with the election to have the Company withhold,
from the Stock otherwise issuable upon the exercise of an Option, a portion
of those shares of Stock with an aggregate fair market value equal to the
percentage (not to exceed 100 percent) of the applicable Taxes designated
by the Optionholder.
(II) STOCK DELIVERY. The Plan Administrator may, in its discretion,
provide the Optionholder with the election to deliver to the Company, at
the time the Option is exercised, one or more shares of Stock previously
acquired by such individual (other than pursuant to the transaction
triggering the Taxes) with
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an aggregate fair market value equal to the percentage (not to exceed 100
percent) of the Taxes incurred in connection with such Option exercise as
designated by the Optionholder.
4.16 GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Arizona, without regard to conflicts of laws principles.
ARTICLE V
DEFINITIONS
The following capitalized terms used in this Plan shall have the meaning
described below:
"AFFILIATES" shall mean all "executive officers" (as that term is defined
in Rule 16a-1(f) promulgated under the 1934 Act) and directors of the Company
and all persons who own ten percent or more of the Company's issued and
outstanding Stock.
"ANNUAL GRANT DATE" shall mean the date of the Company's annual stockholder
meeting.
"AUTOMATIC GRANT PROGRAM" shall mean that program set forth in Article III
of this Agreement pursuant to which Eligible Directors, as defined herein, are
automatically granted Options upon certain events.
"AUTOMATIC OPTION GRANT" shall mean those automatic option grants made on
the Annual Grant Date.
"AUTOMATIC OPTIONS" shall mean those Options granted pursuant to the
Automatic Grant Program.
"AWARD" shall mean a Stock Award, SAR or Cash Award.
"BOARD" shall mean the Board of Directors of the Company.
"CASH AWARD" shall mean an award to be paid in cash and granted under
Section 2.5 hereunder.
"CHANGE IN CONTROL" shall mean and include the following transactions or
situations (i) a person or related group of persons, other than the Company or a
person that directly or indirectly controls, is controlled by, or under common
control with the Company, acquires ownership of 40 percent or more of the
Company's outstanding common stock pursuant to a tender or exchange offer which
the Board of Directors recommends that the Company's stockholders not accept, or
(ii) the change in the composition of the Board occurs such that those
individuals who were elected to the Board at the last stockholders' meeting at
which there was not a contested election for Board membership subsequently
ceased to comprise a majority of the Board by reason of a contested election.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall mean Cerprobe Corporation, a Delaware corporation.
"CORPORATE TRANSACTION" shall mean (a) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the principal
purposes of which is to change the state in which the Company is incorporated;
(b) the sale, transfer of or other disposition of all or substantially all of
the assets of the Company and complete liquidation or dissolution of the
Company, or (c) any reverse merger in which the Company is the surviving entity
but in which the securities possessing more than 50 percent of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger.
"DISCRETIONARY GRANT PROGRAM" shall mean the program described in Article
II of this Plan pursuant to which certain Eligible Directors are granted Options
or Awards in the discretion of the Plan Administrator.
"DISCRETIONARY OPTIONS" shall mean Options granted under the Discretionary
Grant Program.
"EFFECTIVE DATE" shall mean the date that the Plan has been approved by the
stockholders as set forth in Section 1.3(a) hereof.
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"ELIGIBLE DIRECTOR" shall mean, with respect to the Automatic Grant
Program, those Board members who are not employed by the Company, whether or not
such members are Non-Employee Directors as defined herein.
"ELIGIBLE PERSONS" shall mean (a) with respect to the Discretionary Grant
Program, those persons who, at the time that the Discretionary Option or Award
is granted, are (i) key personnel (including officers and directors) of the
Company or Parent or Subsidiary Corporations, or (ii) consultants or independent
contractors who provide valuable services to the Company or Parent or Subsidiary
Corporations; and (b) with respect to the Automatic Grant Program, the Eligible
Directors.
"EMPLOYEE COMMITTEE" shall mean that committee appointed by the Board to
administer the Plan with respect to the Non-Affiliates and comprised of two or
more persons who are members of the Board.
"EXERCISE DATE" shall be the date on which written notice of the exercise
of an Option is delivered to the Company in accordance with the requirements of
the Plan.
"EXPIRATION DATE" shall be the 10-year anniversary of the date on which an
Automatic Option Grant was made.
"INCENTIVE STOCK OPTION" shall mean a Discretionary Option that is intended
to qualify as an "incentive stock option" under Code sec. 422.
"NON-AFFILIATES" shall mean all persons who are not Affiliates.
"NON-EMPLOYEE DIRECTORS" shall mean those Directors who satisfy the
definition of "Non-Employee Director" under Rule 16b-3(b)(3)(i) promulgated
under the 1934 Act.
"$100,000 LIMITATION" shall mean the limitation pursuant to which the
aggregate fair market value (determined as of the respective date or dates of
grant) of the Stock for which one or more Options granted to any person under
this Plan (or any other option plan of the Company or any Parent or Subsidiary
Corporation) may for the first time be exercisable as Incentive Stock Options
during any one calendar year shall not exceed the sum of $100,000.
"OPTIONHOLDER" shall mean an Eligible Person or Eligible Director to whom
Options have been granted.
"OPTIONED SHARES" shall be those shares of Stock to be optioned from time
to time to any Eligible Director.
"OPTION PRICE" shall mean (i) with respect to Discretionary Options, the
exercise price per share as specified by the Plan Administrator pursuant to
Section 2.2(b) hereof, and (ii) with respect to Automatic Options, the exercise
price per share as specified by Section 3.2(b) hereof.
"OPTIONS" shall mean options to acquire Stock granted under the Plan.
"PARENT CORPORATION" shall mean any corporation in the unbroken chain of
corporations ending with the employer corporation, where, at each link of the
chain, the corporation and the link above owns at least 50 percent of the
combined total voting power of all classes of the stock in the corporation in
the link below.
"PLAN" shall mean this stock option plan for Cerprobe Corporation.
"PLAN ADMINISTRATOR" shall mean (a) either the Board, the Senior Committee,
or any other committee, whichever is applicable, with respect to the
administration of the Discretionary Grant Program as it relates to Affiliates,
and (b) either the Board, the Employee Committee, or any other committee,
whichever is applicable, with respect to the administration of the Discretionary
Grant Program as it relates to Non-Affiliates and with respect to the Automatic
Grant Program.
"SAR" shall mean stock appreciation rights granted pursuant to Section 2.4
hereunder.
"SENIOR COMMITTEE" shall mean that committee appointed by the Board to
administer the Discretionary Grant Program with respect to the Affiliates and
comprised of two or more Disinterested Directors.
"SERVICE" shall have the meaning set forth in Section 2.2(m) hereof.
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<PAGE> 55
"STOCK" shall mean shares of the Company's common stock, $.05 par value per
share, which may be unissued or treasury shares, as the Board may from time to
time determine.
"STOCK AWARDS" shall mean Stock directly granted under the Discretionary
Grant Program.
"SUBSIDIARY CORPORATION" shall mean any corporation in the unbroken chain
of corporations starting with the employer corporation, where, at each link of
the chain, the corporation and the link above owns at least 50 percent of the
combined voting power of all classes of stock in the corporation below.
EXECUTED as of the th day of , 1998.
CERPROBE CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
ATTESTED BY: Its:
--------------------------------------
- ---------------------------------------------------
Secretary
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<PAGE> 56
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CERPROBE CORPORATION
1998 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 April 27, 1998, and hereby appoints C. Zane Close
and Randal L. Buness, 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 1998 Annual Meeting of Stockholders of CERPROBE
CORPORATION, to be held on May 29, 1998 at 10:00 a.m., local time, at the Mesa
Hilton, Kachina Room, 1011 West Holmes Avenue, Mesa, Arizona 85210, 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 _______ William A. Fresh
______ C. Zane Close _______ Donald F. Walter
(c) [ ] WITHHOLD AUTHORITY to vote for all nominees
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S FIRST RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 10,000,000 TO 25,000,000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN
(THE "1995 PLAN") TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY
BE ISSUED PURSUANT TO THE 1995 PLAN FROM 800,000 TO 1,400,000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO APPROVE AN AMENDMENT TO THE 1995 PLAN (A) TO INCREASE THE
NUMBER OF OPTIONS GRANTED TO NON-EMPLOYEE MEMBERS OF THE BOARD OF DIRECTORS
PURSUANT TO ANNUAL AUTOMATIC OPTIONS FROM OPTIONS TO ACQUIRE 2,000 SHARES
TO 3,000 SHARES, (B) TO PROVIDE THAT ANNUAL AUTOMATIC OPTIONS SHALL VEST AT
THE TIME OF GRANT, AND (C) TO ELIMINATE THE GRANTING OF INITIAL AUTOMATIC
OPTIONS TO NEW MEMBERS OF THE BOARD OF DIRECTORS;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. PROPOSAL TO APPROVE THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN (THE "STOCK
PURCHASE PLAN");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. 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.
<PAGE> 57
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: , 1998
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.)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S FIRST RESTATED CERTIFICATE OF INCORPORATION; FOR THE AMENDMENTS
TO THE COMPANY'S 1995 PLAN; FOR THE APPROVAL OF THE STOCK PURCHASE PLAN; 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.
