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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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CERPROBE CORPORATION
(NAME OF SUBJECT COMPANY)
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CERPROBE CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, $.05 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
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156787 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
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C. ZANE CLOSE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CERPROBE CORPORATION
1150 NORTH FIESTA BOULEVARD
GILBERT, ARIZONA 85233-2237
(480) 333-1500
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF PERSON FILING STATEMENT)
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COPIES TO:
LANCE W. BRIDGES, ESQ.
MATTHEW T. BROWNE, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CALIFORNIA 92121
(858) 550-6000
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[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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ITEM 1. SUBJECT COMPANY INFORMATION
The name of the subject company is Cerprobe Corporation, a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 1150 North Fiesta Boulevard, Gilbert, Arizona 85233-2237. The
telephone number of the Company at its principal executive offices is (480)
333-1500.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (together with the
Exhibits and Annexes hereto, this "Statement") relates is the Common Stock, $.05
par value per share, of the Company (together with the associated rights (the
"Rights") to purchase shares of Series A Junior Participating Preferred Stock
issued pursuant to a Rights Agreement (the "Rights Agreement") dated as of
September 28, 1998 between the Company and Computershare Trust Company, Inc. (as
successor in interest to American Securities Transfer and Trust, Inc.), as
amended by the First Amendment thereto dated October 11, 2000, the "Shares"). As
of October 12, 2000, there were 9,505,160 Shares outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
The filing person is the subject company. The Company's name, business
address and business telephone number are set forth in Item 1 hereof.
This Statement relates to the tender offer by Cardinal Merger Sub., Inc.
("Merger Sub"), a Delaware corporation and wholly owned subsidiary of Kulicke
and Soffa Industries, Inc., a Pennsylvania corporation ("Acquiror"), to purchase
all of the issued and outstanding Shares at a purchase price of $20.00 per Share
(the "Offer Price"), net to the seller in cash, upon the terms and subject to
the conditions set forth in Merger Sub's Offer to Purchase dated October 25,
2000 (the "Offer to Purchase") and in the related Letter of Transmittal
(collectively with the Offer to Purchase and any amendments or supplements to
either document, the "Offer"). The Offer is described in, and the Offer to
Purchase is filed as an exhibit to, a Tender Offer Statement on Schedule TO (as
amended or supplemented from time to time, the "Schedule TO"), filed by Merger
Sub and Acquiror with the Securities and Exchange Commission (the "SEC") on
October 25, 2000. A free copy of the Schedule TO and other documents filed with
the SEC by Acquiror and Merger Sub may be obtained at the SEC's web site at
www.sec.gov.
The Offer is being made pursuant to an Agreement and Plan of Merger dated
as of October 11, 2000 (the "Merger Agreement") among Merger Sub, Acquiror and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the purchase of a majority of the Shares pursuant to the Offer
and the satisfaction or waiver of the other conditions set forth in the Merger
Agreement and in accordance with the relevant provisions of the Delaware General
Corporation Law ("Delaware Law"), Merger Sub will be merged with and into the
Company (the "Merger"), with the Company continuing as the surviving corporation
(the "Surviving Corporation"). As a result, the Company will become a wholly
owned subsidiary of Acquiror. The Offer is conditioned upon, among other things,
there being validly tendered and not withdrawn a number of Shares representing
at least a majority of the outstanding Shares and the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), having expired or having been terminated. At the effective time of
the Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or any subsidiary of the Company, or by Acquiror or any subsidiary of
Acquiror, including Merger Sub (all of which will be cancelled), and other than
Shares held by stockholders who will have demanded and perfected appraisal
rights under the Delaware Law) will be cancelled and converted automatically
into the right to receive the Offer Price, or any higher price that may be paid
per Share in the Offer, without interest (the "Merger Consideration").
Stockholders who demand and properly perfect appraisal rights under the Delaware
Law will be entitled to receive, in connection with the Merger, cash for the
fair value of their Shares as determined pursuant to the procedures prescribed
by the Delaware Law. The Merger Agreement is summarized in Section 11 of the
Offer to Purchase.
Simultaneously with the execution of the Merger Agreement, Acquiror and the
Company entered into a Stock Option Agreement (the "Stock Option Agreement")
pursuant to which the Company granted Acquiror
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an option, exercisable in certain circumstances following termination of the
Merger Agreement, to purchase from time to time up to that number of Shares
equal to 19.9% of the total Shares outstanding as of the date of the Stock
Option Agreement. In addition, Acquiror and eight significant stockholders of
the Company entered into Affiliate Tender Agreements (the "Affiliate Tender
Agreements") pursuant to which, among other things, such stockholders agreed to
tender all of their Shares into the Offer and to otherwise support the Offer.
The Schedule TO states that the address of the principal executive offices
of Acquiror and Merger Sub is 2101 Blair Mill Road, Willow Grove, Pennsylvania
19090.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Certain contracts, agreements, arrangements or understandings between the
Company or its affiliates and certain of its directors and executive officers
are, except as noted below, described in the Information Statement pursuant to
Rule 14f-1 under the Securities Exchange Act of 1934 (the "Information
Statement") that is attached as Annex A to this Statement and is incorporated
herein by reference. Except as described in this Statement (including the
Exhibits and Annexes hereto), to the knowledge of the Company, as of the date
hereof, there are no material contracts, agreements, arrangements or
understandings or actual or potential conflicts of interest between the Company
and its affiliates and (i) the Company or its executive officers, directors or
affiliates or (ii) Acquiror, Merger Sub or their executive officers, directors
or affiliates. In considering the recommendation of the Board of Directors of
the Company (the "Company Board") set forth in Item 4 below, the Company's
stockholders should be aware that certain members of the Company's management
and certain members of the Company Board have interests in the Offer and the
Merger, which are described herein and which may present them with certain
conflicts of interest. The Company Board is aware of these potential conflicts
and considered them along with the other factors described in Item 4 below.
Merger Agreement. The summary of the Merger Agreement and the description
of the conditions of the Offer contained in Sections 11 and 13, respectively, of
the Offer to Purchase, which is being mailed to stockholders together with this
Statement, are incorporated herein by reference. Such summary and description
are qualified in their entirety by reference to the Merger Agreement, which has
been filed as Exhibit 5 hereto and is incorporated herein by reference.
Stock Option Agreement. The summary of the Stock Option Agreement contained
in Section 11 of the Offer to Purchase, which is being mailed to stockholders
together with this Statement, is incorporated herein by reference. Such summary
is qualified in its entirety by reference to the Stock Option Agreement, which
has been filed as Exhibit 6 hereto and is incorporated herein by reference.
Affiliate Tender Agreements. The summary of the Affiliate Tender Agreements
contained in Section 11 of the Offer to Purchase, which is being mailed to
stockholders together with this Statement, is incorporated herein by reference.
Such summary is qualified in its entirety by reference to the Affiliate Tender
Agreements, a form of which has been filed as Exhibit 7 hereto and is
incorporated herein by reference.
C. Zane Close Employment Agreement. It is currently contemplated that
Acquiror will enter into an employment agreement with C. Zane Close, the
President and Chief Executive Officer of the Company. The terms of such
employment agreement are currently expected to be negotiated following the
expiration of the Offer.
Company Stock Options. The Merger Agreement provides that, prior to the
Effective Time, Acquiror and the Company will take all such actions as may be
necessary to cause each unexpired and unexercised option of the Company in
effect on the date thereof which has been granted to current or former
directors, officers, employees or consultants of the Company (each a "Company
Option") to be cancelled and converted solely into the right to receive at the
Effective Time (whether or not then vested or exercisable) an amount in cash
equal to the product of (A) the number of Shares subject to such Company Option
and (B) the excess, if any, of the Merger Consideration over the exercise price
per Share of each such Company Option.
ESPP Options. The Merger Agreement provides that prior to, and conditioned
upon, the purchase of a majority of the Shares pursuant to the Offer, the
Company will take all such actions as may be necessary to provide that the
Company's 1997 Employee Stock Purchase Plan, as amended (the "Company ESPP"),
will
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terminate on December 31, 2000. If the Effective Time occurs on or prior to
December 31, 2000, each option to purchase Shares that is outstanding under the
Company ESPP (each, an "ESPP Option") will automatically be assumed and
converted at the Effective Time into a right to receive $8.10 in cash on
December 31, 2000 for each Share covered by such ESPP Option. If the Effective
Time occurs after December 31, 2000 but a majority of the Shares have been
purchased pursuant to the Offer on or prior to December 31, 2000, each ESPP
Option that is outstanding under the Company ESPP on December 31, 2000 will
entitle its holder to purchase Shares in accordance with the provisions of the
Company ESPP.
401(k) Plans. The Merger Agreement requires the Company to take (on terms
and conditions satisfactory to Acquiror) all such actions as may be necessary to
amend its 401(k) plans prior to the purchase of a majority of the Shares
pursuant to the Offer, in order to exclude Acquiror and its subsidiaries as
participating employers in the Company's 401(k) plans.
Change of Control Agreements. Pursuant to Change of Control Agreements with
the Company, Messrs. C. Zane Close, Randal L. Buness, Michael K. Bonham and
Daniel J. Hill are entitled to certain benefits if terminated following the
Effective Time, subject to the terms and conditions and within the time periods
specified in their respective agreements. During the period in which the Company
was in discussions with Acquiror regarding Acquiror's possible acquisition of
the Company, the Company Board and the Company's management determined that
these Change of Control Agreements, under their original terms, did not reflect
their intent with respect to payments to management in the event of a change of
control. For example, these Change of Control Agreements included ceilings on
payments made under them that exceed prescribed limits under Section 280G of the
Internal Revenue Code (the "Code"), which could have resulted in Messrs. Close,
Buness, Bonham and Hill being unable to receive certain benefits in the event
their Company Options were accelerated upon a change of control. The Company
Board believed that limits like this on benefits to the Company's officers
contained in the Change of Control Agreements reduced the officers' incentive to
remain in the employment of the Company during periods when the Company may be
the subject of a possible change of control, and diminished one of the principal
benefits that the Company expected to receive from having the Change of Control
Agreements in place. As a result, these Change of Control Agreements were
recently amended to eliminate this ceiling on benefits and to require the
Company to make an additional payment to each such individual in the amount of
the excise tax plus any additional income tax liability resulting from payments
made to such individual in excess of the limits under Sections 280G and 4999 of
the Code. Simultaneously with the execution of the Merger Agreement, the Company
and each of Messrs. Close, Buness, Bonham and Hill entered into an Agreement to
Terminate Employment and Change of Control Agreements with Cerprobe Corporation,
pursuant to which upon the closing of the purchase of a majority of the Shares
pursuant to the Offer, the Employment Agreements and Change of Control
Agreements of Messrs. Close, Buness, Bonham and Hill will terminate, and the
Company will pay such individuals $1,394,823, $805,273, $790,971 and $1,387,207,
respectively. The Company anticipates that a substantial portion of the payments
to be made to Messrs. Close, Buness, Bonham and Hill in connection with the
termination of their Employment Agreements and Change of Control Agreements, as
well as a portion of the payment expected to be made to each of them at the
Effective Time on account of Company Options, will be nondeductible by the
Company as "excess parachute payments" under Section 280G of the Code.
Bonuses. In addition to the payments made to Messrs. Close, Buness, Bonham
and Hill in connection with the termination of their Employment Agreements and
Change of Control Agreements, the Merger Agreement provides that, prior to the
purchase of a majority of the Shares pursuant to the Offer, the Company may (i)
pay bonuses to any member of the Company Board or to any executive officer of
the Company in an amount up to $1,000,000 in the aggregate for all directors and
executive officers, and (ii) pay bonuses to any other employee of the Company up
to $25,000 in the aggregate for any individual employee and $500,000 in the
aggregate for all employees, in addition to sales commissions payable in the
ordinary course of business consistent with past practice and other payments
required pursuant to agreements disclosed by the Company to Acquiror that were
in effect on the date of the Merger Agreement.
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Other Employee Benefit Plans. The Merger Agreement provides that to the
extent that any employee of the Company or any of its subsidiaries becomes
eligible to participate in any employee benefit plan of Acquiror after the
Effective Time, Acquiror, the Surviving Corporation and their subsidiaries will
credit such employee's service with the Company or its subsidiaries, to the same
extent as such service was credited under the similar employee benefit plans of
the Company and its subsidiaries immediately prior to the Effective Time, for
purposes of determining eligibility to participate in and vesting under, and for
purposes of calculating the benefits under, such employee benefit plan of
Acquiror. To the extent permitted by such employee benefit plan of Acquiror and
applicable law, Acquiror, the Surviving Corporation and its subsidiaries will
waive any pre-existing condition limitations, waiting periods or similar
limitations under such employee benefit plan of Acquiror and will provide each
such employee with credit for any co-payments previously made and any
deductibles previously satisfied.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that until six years from the Effective Time, Acquiror will
not permit the Certificate of Incorporation and Bylaws of the Surviving
Corporation to be amended to reduce or limit the rights of indemnity afforded in
such Certificate of Incorporation and Bylaws to the present and former directors
and officers (the "Indemnified Persons") of the Company or to reduce or limit
the ability of the Surviving Corporation to indemnify such persons, or to
hinder, delay or make more difficult the exercise of such rights of indemnity or
the ability to indemnify. If, within six years from the Effective Time, the
Surviving Corporation is merged with or into Acquiror or another subsidiary of
Acquiror, the Certificate of Incorporation and Bylaws of Acquiror or such
subsidiary will, for at least the six year period following the Effective Time,
provide rights to indemnification for the Indemnified Persons at least
equivalent to those in the Certificate of Incorporation and Bylaws of the
Surviving Corporation. From and after the Effective Time, Acquiror will cause
the Surviving Corporation (or its successors) (i) to exercise the powers granted
to it by its Certificate of Incorporation, its Bylaws and by applicable law, as
in effect on the date of the Merger Agreement, to indemnify to the fullest
extent possible present and former directors and officers of the Company against
claims made against them arising from their service in such capacities and (ii)
to fulfill and honor in all respects the obligations of the Company pursuant to
each agreement that provides for indemnification and is in effect between the
Company and the Indemnified Persons at the Effective Time that has been
disclosed to Acquiror. Should any claim or claims be made against any present or
former director or officer of the Company, arising from his services as such,
within six years of the Effective Time, the provisions described above
respecting the Certificate of Incorporation and Bylaws of the Surviving
Corporation will continue in effect until the final disposition of all such
claims.
The Merger Agreement also provides that in the event that after the
Effective Time, the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and is not the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person then, and in each such case, proper provision will be made so that
the successors and assigns of the Surviving Corporation assume the
indemnification obligations described in the previous paragraph, including by
providing rights to indemnification in their certificates of incorporation,
bylaws, or other organizational documents at least equivalent to those in the
Certificate of Incorporation and Bylaws of the Surviving Corporation. However,
neither Acquiror nor the Surviving Corporation will be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
In addition, the Merger Agreement provides that until six years from the
Effective Time, the Surviving Corporation will maintain in effect, for the
benefit of the Indemnified Persons with respect to acts or omissions occurring
prior to the Effective Time, directors' and officers' liability insurance which
is substantially similar in coverage to that maintained by the Company as of the
date of the Merger Agreement (the "Existing Policy"); provided, however, that
the Surviving Corporation will not be required to pay or cause to be paid annual
premiums for the Existing Policy (or for any substitute policies) in excess of
150% of the last annual premium paid by the Company prior to the date of the
Merger Agreement. In the event any future annual premiums for the Existing
Policy (or any substitute policies) exceed 150% of the last annual premium paid
by the Company prior to the date of the Merger Agreement, the Surviving
Corporation will be entitled to reduce the amount of coverage of the Existing
Policy (or any substitute policies) to the amount of coverage that can be
obtained for
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a premium equal to 150% of the last annual premium paid by the Company prior to
the date of the Merger Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Background of the Offer; Contacts with Acquiror.
From time to time, the management of the Company, as part of its ongoing
consideration of the Company's various strategic alternatives, has held
exploratory discussions with other companies about possible strategic alliances,
including business combinations. In early March 2000, Mr. C. Zane Close,
President and Chief Executive Officer of the Company, received a telephone call
from Mr. James P. Spooner, Vice President of Corporate Development for Acquiror,
regarding a possible visit by Mr. Spooner to the Company's Gilbert, Arizona
headquarters to discuss industry related issues. On March 16, 2000, Mr. Spooner
met with the senior management of the Company, including Mr. Close, at the
Company's Gilbert, Arizona headquarters and the parties discussed, in connection
with discussing industry related issues, the possibility of a strategic
partnership between Acquiror and the Company, although no understanding was
reached. Mr. Close was also introduced to Mr. C. Scott Kulicke, Chairman of the
Board and Chief Executive Officer of Acquiror, at a meeting that occurred on
March 21, 2000 at an industry conference. In contemplation of continuing
discussions on the subject of a possible strategic partnership or business
combination, the Company and Acquiror executed a confidentiality agreement, and,
at a telephonic meeting held on April 13, 2000, the Company Board authorized
representatives of the Company's management to work with Banc of America
Securities LLC ("BAS") to explore transactions along these lines. On May 9,
2000, the Company engaged BAS to advise the Company in connection with possible
transactions involving third parties, including possible transactions whereby
the Company would be combined with a business partner. During the period
beginning with the execution of the confidentiality agreement and ending in
mid-May 2000, the parties exchanged limited financial and other information and
had periodic telephone conversations regarding a potential strategic partnership
or business combination.
On May 17 and 18, 2000, Acquiror conducted due diligence at the Company's
Gilbert, Arizona headquarters. During this visit, on May 17, 2000, Acquiror
delivered to the Company a preliminary, non-binding letter (the "May Letter of
Interest") indicating its interest, subject to due diligence and the negotiation
of definitive documentation, in acquiring the Company in an all stock merger at
a premium of approximately 30 to 40 percent over the Company's then present
market value. Following delivery of the May Letter of Interest, ongoing
discussions regarding a potential business combination of Acquiror and the
Company continued among their respective representatives while Acquiror
conducted additional due diligence investigations of the Company, including
through visits to the Company's facilities in California, France, Singapore,
Scotland and Taiwan in June 2000. During these continuing discussions and due
diligence investigations, on June 5, 2000, Acquiror forwarded to the Company a
proposed form of Merger Agreement, and on June 16, 2000, the Company provided
Acquiror with its initial comments to the proposed form of Merger Agreement.
On July 12, 2000, at a meeting in Milpitas, California, Mr. Spooner spoke
with Mr. Close and indicated that, subject to its continuing due diligence and
the negotiation of definitive documentation, Acquiror was contemplating a
transaction in which Acquiror would acquire the Company by issuing a maximum of
six million shares of Acquiror's common stock to the Company's stockholders,
with the precise number of shares that would be issued to be determined based on
the price per share for Acquiror's common stock at the time of the closing of
the acquisition. On July 18, 2000, Acquiror delivered a follow-up, non-binding
letter (the "July Letter") and a revised draft of the Merger Agreement, each
reflecting the July 12, 2000 discussion between Mr. Spooner and Mr. Close. On
July 26, 2000, the Company Board held a telephonic meeting to discuss and
consider the July Letter and the status of the Company's negotiations with
Acquiror regarding a possible strategic partnership or business combination. The
Company Board reviewed the terms of the July Letter and the status of these
negotiations with representatives of the Company's management and
representatives from BAS and the Company's outside legal counsel, Cooley Godward
LLP ("Cooley Godward"). In light of fluctuations in the price of shares of
Acquiror's common stock on the Nasdaq Stock
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Market and other factors, including Acquiror's decision to take the same action,
the Company Board determined, after full discussion, to suspend negotiations
between the parties.
In early August 2000, Acquiror reinitiated discussions with the Company
regarding a potential acquisition of the Company on revised terms. To this end,
Acquiror delivered a revised draft of the Merger Agreement to the Company on
August 10, 2000. Following the delivery of the revised draft Merger Agreement,
on August 15 and 16, 2000, senior management of the Company and Cooley Godward
conducted negotiations with Mr. Spooner and Acquiror's legal counsel on
non-price terms contained in the revised draft at the Company's Gilbert, Arizona
headquarters.
On August 17, 2000, the Company Board held a regularly scheduled meeting at
which Mr. Spooner made a presentation regarding Acquiror and the proposed
acquisition of the Company by Acquiror. At this Company Board meeting, Mr.
Spooner indicated that Acquiror intended to present a revised, non-binding
letter to the Company within the next week. Representatives from BAS and Cooley
Godward were also present at this meeting, and, in response to inquiries from
the Company Board, the BAS representatives identified a number of other
companies that potentially could be interested in pursuing a strategic
partnership or other business combination with the Company based on their market
focus or other strategic or competitive factors, and discussed the respective
likelihood that any of those companies would submit a superior proposal to
acquire the Company. On August 22, 2000, Acquiror delivered a revised version of
the Merger Agreement to the Company incorporating the non-price issues
negotiated at the August 15 and 16, 2000 meetings, and on August 24, 2000,
Acquiror delivered a revised, non-binding letter (the "August Letter of
Interest") indicating its interest, subject to its continuing due diligence and
the negotiation of definitive documentation, in acquiring the Company at a price
per Share of $19.00, payable half in cash and half in shares of Acquiror's
common stock, valued as of the date the transaction closed.
On August 25, 2000, the Company Board held a telephonic meeting to discuss
and consider the August Letter of Interest. The Company Board reviewed the terms
of the August Letter of Interest with representatives of the Company's
management and representatives from BAS and Cooley Godward. After full
discussion of the August Letter of Interest, the Company Board authorized
representatives of the Company's management, BAS and Cooley Godward to proceed
with negotiations regarding a possible acquisition of the Company by Acquiror in
which the consideration payable to the Company's stockholders would be half in
cash and half in the Acquiror's common stock, with the principal negotiating
goals being obtaining a higher price per Share and having the value of
Acquiror's common stock for purposes of the consideration to be paid be
determined at the time of execution of the definitive Merger Agreement.
On September 6, 2000, Mr. Close visited Acquiror's facilities in Willow
Grove, Pennsylvania, and met with Mr. Kulicke and Mr. Spooner. No agreement was
reached during this meeting. On September 7, 2000, the Company Board held a
telephonic meeting at which Mr. Close apprised the members of the Company Board
of the results of his meetings with Mr. Kulicke and Mr. Spooner. The Company
Board, along with representatives of the Company's management and
representatives from BAS and Cooley Godward, who were also present during the
telephonic meeting, fully discussed the status of the negotiations for the
acquisition, particularly with respect to the two principal negotiating goals
described above. The BAS representatives again discussed with the Company Board
whether another company was likely to submit a superior proposal to acquire the
Company. At the conclusion of the September 7, 2000 meeting, the Company Board
authorized representatives of the Company's management, BAS and Cooley Godward
to indicate to Acquiror that the Company was seeking an acquisition in which the
Shares would be valued at not less than $20.00 per Share, payable half in cash
and half in shares of Acquiror's common stock valued as of the date the
acquisition closed, and to proceed with negotiations on that basis. On September
8, 2000, the Company contacted Acquiror and indicated that it was seeking an
acquisition with the terms described in the preceding sentence. On September 11,
2000, Acquiror delivered a revised, non-binding letter (the "First September
Letter of Interest") indicating its interest, subject to its continuing due
diligence and the negotiation of definitive documentation, in acquiring the
Company at a price per Share of $20.00, payable half in cash and half in shares
of Acquiror's common stock valued as of the date the acquisition closed, subject
to an upper limit on the number of shares of Acquiror's common stock issuable in
the acquisition. On September 13, 2000, the Company contacted Acquiror and
indicated a willingness to resume negotiations on the basis of the First
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September Letter of Interest. From September 13 to September 27, 2000, the
parties conducted intense negotiations towards finalizing definitive acquisition
documents, and the Company continued to provide due diligence materials to the
Acquiror.
On September 28, 2000, prior to a meeting of the Company Board that had
been called to review and discuss the status of negotiations and drafts of the
definitive documentation for an acquisition based on the First September Letter
of Interest, Acquiror informed the Company that, due to fluctuations in the
price of shares of Acquiror's common stock, it was concerned that the
acquisition as proposed could not be effected, as it would likely require more
shares than Acquiror was willing to issue. On that date, via telephone, Mr.
Spooner indicated to the Company Board that Acquiror was contemplating revising
its offer as an all-cash offer. The Company Board informed Mr. Spooner that
Acquiror needed to submit a revised offer within 24 hours or all negotiations
between the parties would cease. On September 29, 2000, Acquiror delivered a
revised, non-binding letter (the "Second September Letter of Interest")
indicating its interest, subject to its continuing due diligence and the
negotiation of definitive documentation, in acquiring the Company in an all cash
merger at a price per Share of $20.00.
During the period from September 29, 2000 through October 3, 2000, senior
management of the Company, including Mr. Ross J. Mangano, the Chairman of the
Company Board, and representatives of BAS and Cooley Godward reviewed and
discussed the terms of the Second September Letter of Interest. On October 2 and
3, 2000, the Company Board held telephonic meetings to discuss and consider the
Second September Letter of Interest. The Company Board reviewed the terms of the
Second September Letter of Interest with representatives of the Company's
management and representatives from BAS and Cooley Godward. The BAS
representatives again discussed with the Company Board whether another company
was likely to submit a superior proposal to acquire the Company. After full
discussion of the Second September Letter of Interest, the Company Board
authorized representatives of the Company's management, BAS and Cooley Godward
to proceed with negotiation of an all cash acquisition of the Company by
Acquiror, with the principal negotiating goals being obtaining the highest price
per Share possible, structuring the acquisition as a tender offer followed by a
back-end merger in order to expedite its closing, and minimizing the conditions
to closing that would be contained in the execution form of the Merger
Agreement. On October 3, 2000, following the conclusion of the meeting of the
Company Board, the Company contacted Acquiror regarding the Second September
Letter of Interest. During these discussions, Mr. Mangano and Mr. Kulicke agreed
in principle, subject to the approval of their respective boards of directors
and the negotiation of definitive documentation, to the acquisition of the
Company by Acquiror in a tender offer at a price of $20.00 cash per Share. From
October 3, 2000 through October 11, 2000, members of the management of both
companies, along with both companies' legal advisors, extensively negotiated the
terms of the proposed acquisition and the definitive documentation. The
principal issues discussed among the parties during these negotiations included
the nature and extent of the parties' representations and warranties, the
conditions to the Offer and the Merger, the termination events under the
definitive agreements and the liability of the parties in the event of
termination, the amount of the termination fees payable by Company and Acquiror
and the bases upon which they are payable, the scope of the Company's agreement
not to solicit competing offers and its agreement to support the Offer, the
nature of Acquiror's commitments with respect to various Company officers, the
sources of financing for the Offer and the Merger, the Company's protections
against Acquiror entering into another acquisition transaction with a third
party while the Offer is pending, the terms of the Affiliate Tender Agreements
and the Stock Option Agreement, including under what circumstances Acquiror's
option to purchase shares of the Company's common stock would become
exercisable, and employee benefit matters.
During the period from October 9, 2000 through October 11, 2000, the
Company Board held several telephonic meetings to discuss the status of
negotiations for the acquisition, the related definitive documentation, and
whether any third party other than Acquiror had submitted any proposal to the
Company relating to an alternative acquisition transaction. On October 11, 2000,
representatives of Cooley Godward gave a detailed presentation to the Company
Board regarding the material terms of the Merger Agreement, the Stock Option
Agreement and the Affiliate Tender Agreements, including the structure of the
Offer and Merger, the conditions to the Offer and the Merger, the covenants
applicable to the Company under the Merger Agreement (including restrictions on
the ability to solicit or negotiate alternative transactions), the termina-
8
<PAGE> 9
tion provisions and the circumstances under which the Company and Acquiror would
be required to pay a break-up fee to one another in the event the Merger
Agreement were terminated, the circumstances under which Acquiror's option to
purchase Shares under the Stock Option Agreement would become exercisable, the
Company's protections against Acquiror entering into another acquisition
transaction with a third party while the Offer is pending, and various employee
benefit matters. In addition, representatives of BAS made a presentation
regarding the financial terms of the Offer, explaining to the Company Board in
detail the analyses undertaken by BAS regarding the Offer and the Merger with
respect to its opinion. After extensive questions were asked by the Company
Board, the BAS representatives then rendered the opinion of BAS, which was
subsequently confirmed in writing, that the consideration to be received by the
stockholders of the Company was fair, from a financial point of view, to them as
of that date. After such presentations and discussions, the Company Board
approved the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the Affiliate Tender Agreements and the transactions contemplated
thereby by a unanimous vote.
Following the meeting of the Company Board on October 11, 2000, the
representatives of both Acquiror and the Company concluded negotiations of
mutually acceptable definitive documentation. Thereafter, Acquiror, Merger Sub,
the Company and certain stockholders of the Company executed, where applicable,
each of the Merger Agreement, the Stock Option Agreement and the Affiliate
Tender Agreements, and the transaction was announced before the opening of
business on October 12, 2000 by the issuance of a press release by Acquiror.
Recommendation of the Company Board.
The Company Board, at a meeting held on October 11, 2000, unanimously
determined that the Merger Agreement and the transactions contemplated thereby,
including each of the Offer and the Merger, are fair to, and in the best
interests of, the Company and the stockholders of the Company, authorized and
approved the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the Affiliate Tender Agreements and the transactions contemplated
thereby, and exempted the Offer, the Merger, the Merger Agreement, the Stock
Option Agreement, the Affiliate Tender Agreements and the transactions
contemplated thereby from the provisions of Section 203 of the Delaware Law. THE
COMPANY BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Reasons for the Recommendation of the Company Board.
As set forth above, prior to authorizing and approving the Offer, the
Merger, the Merger Agreement, the Stock Option Agreement, the Affiliate Tender
Agreements and the transactions contemplated thereby, the Company Board received
presentations from representatives of BAS regarding the financial aspects of the
proposed Offer and the Merger, and from representatives of Cooley Godward
regarding the legal aspects of the Offer and the Merger. In reaching its
conclusion that the Offer and the Merger are in the best interests of the
Company and the stockholders of the Company, the Company Board principally
considered the following:
(i) the terms and conditions of the Offer, the Merger and the Merger
Agreement, including the amount of consideration to be received by the
holders of Shares pursuant to the Offer and the Merger;
(ii) the Company's prospects and anticipated competitive position if
it were to retain its current ownership structure, including the risks and
benefits inherent in remaining a stand-alone entity and continuing to
pursue its current strategy in an industry environment marked by increasing
competition and consolidation;
(iii) the recent and historic market prices of the Shares and the fact
that the purchase price of $20.00 in cash per Share represents a premium
over recent and historical market prices for the Shares. On October 11,
2000, the last trading day before the announcement of the Offer and the
execution of the Merger Agreement, the closing price per Share as quoted on
the Nasdaq National Market was $12.50;
(iv) the presentation of the BAS representatives to the Company Board
at the October 11, 2000 Company Board meeting and the opinion of BAS to the
effect that, as of October 11, 2000, the $20.00 in cash per Share to be
received by the stockholders of the Company in the Offer and the Merger was
fair,
9
<PAGE> 10
from a financial point of view, to such stockholders as of that date. A
copy of the BAS opinion that was delivered to the Company Board setting
forth the assumptions made, procedures followed, matters considered and
limits on the review undertaken by BAS in rendering its opinion is set
forth as Annex B to this Statement. STOCKHOLDERS ARE URGED TO READ THE BAS
OPINION CAREFULLY AND IN ITS ENTIRETY;
(v) the Company Board's discussions with the BAS representatives
regarding other companies that could potentially be interested in pursuing
a strategic partnership or other business combination with the Company,
based on their market focus or other strategic or competitive factors, and
the respective likelihood that any of those companies would submit a
superior proposal to acquire the Company;
(vi) the fact that the Offer is not contingent on Acquiror or Merger
Sub obtaining financing and contains no other terms or conditions that, in
the view of the Company Board, could materially impair the consummation of
the Offer or the Merger;
(vii) the fact that, in the event the Company Board receives an
unsolicited bona fide proposal in writing with respect to (A) a merger,
consolidation, share exchange, business combination or similar transaction
whereby the Company's stockholders prior to such transaction would hold
less than 80% of the voting power of the Company immediately following such
transaction, (B) a tender offer or exchange offer that if consummated would
result in the acquisition of more than 20% of the voting securities of the
Company, or (C) an acquisition of a material amount of assets of the
Company, and the Company Board determines in good faith (after consultation
with outside legal counsel) that the failure to approve, recommend or enter
into an agreement with respect to such transaction would be reasonably
likely to constitute a breach of its fiduciary duties to the Company's
stockholders, the Company Board may, in accordance with the provisions of
the Merger Agreement, terminate the Merger Agreement (subject to payment of
a $5,625,000 termination fee to Acquiror and Acquiror's rights under the
Stock Option Agreement) and adopt the proposed transaction;
(viii) the fact that, in the event the Merger Agreement is terminated
by Acquiror due to an inaccuracy of the Company's representations or
warranties in the Merger Agreement, Acquiror is required to pay a
$16,875,000 termination fee to the Company;
(ix) the fact that eight significant stockholders of the Company
beneficially holding in the aggregate approximately 9.89% of the
outstanding Shares were willing to enter into the Affiliate Tender
Agreements, pursuant to which, among other things, such stockholders agreed
to tender all of their Shares into the Offer and to otherwise support the
Offer;
(x) the fact that, in the Company Board's view, conducting an
extensive public auction process prior to selling the Company would be
detrimental to the Company and would cause significant disruption in the
existing operations of the Company; and
(xi) the financial condition, results of operations, business and
prospects of the Company as well as current economic and market conditions
(including current conditions in the industry in which the Company is
engaged).
The Company Board did not find it practical to, and did not, assign
relative weights to the above factors or determine that any factor was of more
importance than any other factor. Rather, the Company Board based its
recommendation on the totality of the information presented to and considered by
it. In addition, it is possible that different members of the Company Board
assigned different weights to the various factors described above.
The Company Board recognized that, while the consummation of the Offer
gives its stockholders the opportunity to realize a premium over the prices at
which the Shares were traded prior to the public announcement of the Offer and
the Merger, consummation of the Offer and the Merger will eliminate such
stockholders' ability to participate in the future growth and possible profits
of the Company.
The Company Board anticipates that if the Shares are not purchased by
Merger Sub in accordance with the terms of the Offer, the Company's current
management, under the general direction of the Company
10
<PAGE> 11
Board, will continue to manage the Company as an ongoing business in accordance
with the Company's current business plan.
Intent to Tender.
After reasonable inquiry and to the best knowledge of the Company, each
executive officer and director of the Company who owns Shares currently intends
to tender into the Offer all Shares that each such person owns of record or
beneficially other than Shares, if any, that they may have the right to purchase
by exercising Company Options.
ITEM 5. PERSON/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED
Except as described herein, neither the Company nor any person acting on
its behalf has employed, retained or compensated, or currently intends to
employ, retain or compensate, any person to make solicitations or
recommendations to the stockholders of the Company on its behalf with respect to
the Offer or the Merger.
Pursuant to an engagement letter dated May 9, 2000, the Company engaged BAS
to provide financial advice and assistance in connection with the Company's
review of business opportunities whereby the Company might be combined with a
business partner. Under the terms of BAS's engagement, the Company expects to
pay BAS a fee of approximately $2.4 million upon the purchase by Merger Sub of a
majority of the Shares under the Offer. The Company also has agreed to reimburse
BAS for its reasonable out-of-pocket expenses, including fees and disbursements
of counsel, and to indemnify BAS against liabilities relating to or arising out
of BAS's engagement as the Company's financial advisor.
As part of its investment banking business, BAS regularly engages in the
valuation of businesses and securities in connection with mergers and
acquisitions, equity underwritings and private placements of securities. In the
past, BAS or its affiliates have provided financial advisory and financing
services for the Company and have received fees for rendering those services. In
the ordinary course of their businesses, BAS and its affiliates may actively
trade the debt and equity securities of the Company and Acquiror for their own
account or for the accounts of customers and, accordingly, BAS or its affiliates
may at any time hold long or short positions in such securities. The Company
Board was aware of these facts in connection with its consideration of BAS's
opinion referred to in Item 4 and with its approval of the Offer and the Merger
and its recommendation to holders of Shares set forth herein. The Company Board
relied upon BAS's experience in providing advice in connection with mergers and
acquisitions and did not believe there was a need to retain another advisor in
connection with the transactions contemplated by the Merger Agreement, including
the Offer and the Merger.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
No transactions in Shares have been effected during the last 60 days by the
Company or, to the Company's knowledge, by any executive officer, director,
affiliate or subsidiary of the Company, other than the execution and delivery of
the Merger Agreement, the Stock Option Agreement and the Affiliate Tender
Agreements.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as set forth in this Statement, the Company is not currently
undertaking or engaged in any negotiations in response to the Offer that relate
to (i) a tender offer for or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person, (ii) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Company or any subsidiary of the Company, (iii) a purchase, sale
or transfer of a material amount of assets of the Company or any subsidiary of
the Company, or (iv) any material change in the present dividend rate or policy,
or indebtedness or capitalization of the Company.
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<PAGE> 12
Except as set forth in this Statement, there are no transactions,
resolutions of the Company Board, agreements in principle, or signed contracts
entered into in response to the Offer that relate to one or more of the events
referred to in the preceding paragraph.
ITEM 8. ADDITIONAL INFORMATION
The Information Statement attached as Annex A to this Statement is being
furnished in connection with the possible designation by Merger Sub, pursuant to
the terms of the Merger Agreement, of certain persons to be elected to the
Company Board other than at a meeting of the Company's stockholders.
Antitrust Compliance.
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission (the"FTC"), certain acquisition transactions may
not be consummated unless information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
waiting period requirements have been satisfied. The acquisition of the Shares
by Merger Sub pursuant to the Offer and the Merger is subject to these
requirements.
Under the provisions of the HSR Act applicable to the purchase of the
Shares by Merger Sub under the Offer, such purchases may not be made until the
expiration of a 15-calendar day waiting period following filing under the HSR
Act by Acquiror. Acquiror filed a Notification and Report Form with respect to
the acquisition of the Shares by Merger Sub under the Offer and the Merger with
the Antitrust Division and the FTC on October 18, 2000 and at that time
requested early termination of the 15-calendar day waiting period applicable to
the Offer. There can be no assurances given, however, that the 15-day HSR Act
waiting period will be terminated early. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
Acquiror, the waiting period would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance with such
request unless the waiting period is sooner terminated by the FTC or the
Antitrust Division. Thereafter, the waiting period could be extended only by
agreement or by court order. Only one extension of such waiting period under a
request for additional information is authorized by the rules promulgated under
the HSR Act, except by agreement or by court order. The Company also filed a
Notification and Report Form with respect to the acquisition of the Shares by
Merger Sub under the Offer and the Merger with the Antitrust Division and the
FTC on October 17, 2000 and at that time requested early termination of the
waiting period applicable to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of the
Shares by Merger Sub under the Offer. At any time before or after Merger Sub's
purchase of the Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of the Shares under the
Offer or seeking divestiture of the Shares acquired by Merger Sub or the
divestiture of substantial assets of Acquiror, the Company or any of their
respective subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if a challenge
is made, what the result will be.
State Takeover Laws.
Section 203 of the Delaware Law limits the ability of a Delaware
corporation to engage in business combinations with "interested stockholders"
(defined generally as any beneficial owner of 15% or more of the outstanding
voting stock in the corporation) unless, among other things, the corporation's
board of directors has given its prior approval to either the business
combination or the transaction which resulted in the stockholder becoming an
"interested stockholder." The Company Board has approved the Merger Agreement
and Merger Sub's acquisition of the Shares under the Offer and the Stock Option
Agreement and, therefore, Section 203 of the Delaware Law is inapplicable to the
Offer and the Merger.
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<PAGE> 13
The Rights Agreement.
The Company has amended the Rights Agreement to provide that (i) neither
Acquiror nor Merger Sub, nor any affiliate of Acquiror or Merger Sub, will be
deemed to be an Acquiring Person or entity (as defined in the Rights Agreement)
in connection with the transactions contemplated by the Merger Agreement, (ii)
the Rights will not separate from the Shares as a result of the execution,
delivery or performance of the Merger Agreement, the Stock Option Agreement or
the consummation of the Offer or the Merger or any of the other transactions
contemplated thereby, and (iii) none of the Company, Merger Sub or the Surviving
Corporation, nor any of their respective affiliates, will have any obligations
under the Rights Agreement to any holder (or former holder) of Rights as of or
following the consummation of the Offer or following the Effective Time.
ITEM 9. EXHIBITS
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
Exhibit 1 Information Statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(included as Annex A hereto).
Exhibit 2 Opinion Letter of Banc of America Securities LLC dated
October 11, 2000 (included as Annex B hereto).
Exhibit 3 Offer to Purchase dated October 25, 2000 (incorporated by
reference to Exhibit (a)(1) of the Schedule TO of Kulicke
and Soffa Industries, Inc. and Cardinal Merger Sub., Inc.
filed with the Securities and Exchange Commission on October
25, 2000 (as amended, the "Schedule TO")).
Exhibit 4 Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) of the Schedule TO).
Exhibit 5 Agreement and Plan of Merger dated October 11, 2000 among
Acquiror, Merger Sub and the Company (incorporated by
reference to Exhibit (d)(1) of the Schedule TO).
Exhibit 6 Stock Option Agreement dated October 11, 2000 between
Acquiror and the Company (incorporated by reference to
Exhibit (d)(2) of the Schedule TO).
Exhibit 7 Form of Affiliate Tender Agreement dated October 11, 2000
between Acquiror and certain stockholders of the Company
(incorporated by reference to Exhibit 4 of the Schedule 13D
of Kulicke and Soffa Industries, Inc. and Cardinal Merger
Sub., Inc. filed with the Securities and Exchange Commission
on October 23, 2000).
Exhibit 8 First Amendment to Rights Agreement dated October 11, 2000
between the Company and Computershare Trust Company, Inc.
(as successor in interest to American Securities Transfer
and Trust, Inc.).
Exhibit 9 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and C. Zane Close.
Exhibit 10 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Randal L. Buness.
Exhibit 11 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Michael K. Bonham.
Exhibit 12 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Daniel J. Hill.
Exhibit 13 Press Release issued by Acquiror on October 12, 2000
(incorporated by reference to press release under cover of
Schedule 14D-9C filed by the Company on October 12, 2000).
Exhibit 14 Press Release issued by the Company on October 18, 2000
(incorporated by reference to press release under cover of
Schedule 14D-9C filed by the Company on October 18, 2000).
Exhibit 15 Press Release issued by Acquiror on October 25, 2000.
Exhibit 16 Letter to Stockholders of the Company dated October 25,
2000.
</TABLE>
13
<PAGE> 14
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
CERPROBE CORPORATION
Date: October 25, 2000 /s/ C. ZANE CLOSE
--------------------------------------
By: C. Zane Close,
President and Chief Executive Officer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
Exhibit 1 Information Statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder
(included as Annex A hereto).
Exhibit 2 Opinion Letter of Banc of America Securities LLC dated
October 11, 2000 (included as Annex B hereto).
Exhibit 3 Offer to Purchase dated October 25, 2000 (incorporated by
reference to Exhibit (a)(1) of the Schedule TO of Kulicke
and Soffa Industries, Inc. and Cardinal Merger Sub., Inc.
filed with the Securities and Exchange Commission on October
25, 2000 (as amended, the "Schedule TO")).
Exhibit 4 Letter of Transmittal (incorporated by reference to Exhibit
(a)(2) of the Schedule TO).
Exhibit 5 Agreement and Plan of Merger dated October 11, 2000 among
Acquiror, Merger Sub and the Company (incorporated by
reference to Exhibit (d)(1) of the Schedule TO).
Exhibit 6 Stock Option Agreement dated October 11, 2000 between
Acquiror and the Company (incorporated by reference to
Exhibit (d)(2) of the Schedule TO).
Exhibit 7 Form of Affiliate Tender Agreement dated October 11, 2000
between Acquiror and certain stockholders of the Company
(incorporated by reference to Exhibit 4 of the Schedule 13D
of Kulicke and Soffa Industries, Inc. and Cardinal Merger
Sub., Inc. filed with the Securities and Exchange Commission
on October 23, 2000).
Exhibit 8 First Amendment to Rights Agreement dated October 11, 2000
between the Company and Computershare Trust Company, Inc.
(as successor in interest to American Securities Transfer
and Trust, Inc.).
Exhibit 9 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and C. Zane Close.
Exhibit 10 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Randal L. Buness.
Exhibit 11 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Michael K. Bonham.
Exhibit 12 Agreement to Terminate Employment and Change of Control
Agreements with Cerprobe Corporation dated October 11, 2000
between the Company and Daniel J. Hill.
Exhibit 13 Press Release issued by Acquiror on October 12, 2000
(incorporated by reference to press release under cover of
Schedule 14D-9C filed by the Company on October 12, 2000).
Exhibit 14 Press Release issued by the Company on October 18, 2000
(incorporated by reference to press release under cover of
Schedule 14D-9C filed by the Company on October 18, 2000).
Exhibit 15 Press Release issued by Acquiror on October 25, 2000.
Exhibit 16 Letter to Stockholders of the Company dated October 25,
2000.
</TABLE>
15
<PAGE> 16
ANNEX A
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about October 25, 2000 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Statement") of Cerprobe Corporation (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by Cardinal Merger Sub., Inc. ("Merger Sub"), a Delaware corporation
and wholly owned subsidiary of Kulicke and Soffa Industries, Inc., a
Pennsylvania corporation ("Acquiror"), to a majority of seats on the Board of
Directors of the Company (the "Company Board"), other than at a meeting of the
stockholders of the Company.
On October 11, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Merger Sub and Acquiror, pursuant to which
Merger Sub is required to commence a tender offer to purchase all issued and
outstanding shares of the Common Stock, $.05 par value per share, of the Company
(together with the associated rights to purchase shares of Series A Junior
Participating Preferred Stock issued pursuant to a Rights Agreement dated as of
September 28, 1998 between the Company and Computershare Trust Company, Inc. (as
successor in interest to American Securities Transfer and Trust, Inc.), as
amended by the First Amendment thereto dated October 11, 2000, the "Shares"), at
a price per Share of $20.00 (the "Offer Price"), net to the seller in cash, upon
the terms and subject to the conditions set forth in Merger Sub's Offer to
Purchase dated October 25, 2000, and in the related Letter of Transmittal
(collectively with the Offer to Purchase and any amendments and supplements to
either document, the "Offer"). Copies of the Offer to Purchase and the Letter of
Transmittal have been mailed to holders of Shares and are filed as Exhibits
(a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule TO
(as amended or supplemented from time to time, the "Schedule TO") filed by
Merger Sub and Acquiror with the Securities and Exchange Commission (the "SEC")
on October 25, 2000. The Merger Agreement provides, among other things, that as
soon as practicable after the purchase of a majority of the Shares pursuant to
the Offer and the satisfaction or waiver of the other conditions set forth in
the Merger Agreement and in accordance with the relevant provisions of the
Delaware General Corporation Law ("Delaware Law"), Merger Sub will be merged
with and into the Company (the "Merger"), with the Company continuing as the
surviving corporation (the "Surviving Corporation"). As a result, the Company
will become a wholly owned subsidiary of Acquiror. The Offer is conditioned
upon, among other things, there being validly tendered and not withdrawn a
number of Shares representing at least a majority of the outstanding Shares and
the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, having been expired or having been terminated.
At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company or any subsidiary of the Company, or
by Acquiror or any subsidiary of Acquiror, including Merger Sub (all of which
will be cancelled), and other than Shares held by stockholders who will have
demanded and perfected appraisal rights under the Delaware Law) will be
cancelled and converted automatically into the right to receive the Offer Price,
or any higher price that may be paid per Share in the Offer, without interest
(the "Merger Consideration"). Stockholders who demand and properly perfect
appraisal rights under the Delaware Law will be entitled to receive, in
connection with the Merger, cash for the fair value of their Shares as
determined pursuant to the procedures prescribed by the Delaware Law.
Simultaneously with the execution of the Merger Agreement, Acquiror and the
Company entered into a Stock Option Agreement (the "Stock Option Agreement")
pursuant to which the Company granted Acquiror an option, exercisable in certain
circumstances following termination of the Merger Agreement, to purchase from
time to time up to that number of Shares equal to 19.9% of the total Shares
outstanding as of the date of the Stock Option Agreement. In addition, Acquiror
and eight significant stockholders of the Company entered into Affiliate Tender
Agreements (the "Affiliate Tender Agreements") pursuant to which, among other
things, such stockholders agreed to tender all of their Shares into the Offer
and otherwise to support the Offer.
A-1
<PAGE> 17
The Offer, the Merger, the Merger Agreement, the Stock Option Agreement and
the Affiliate Tender Agreements are more fully described in the Statement to
which this Information Statement forms Annex A, which was filed by the Company
with the SEC on October 25, 2000 and which is being mailed to holders of Shares
along with this Information Statement.
This Information Statement is being mailed to you in accordance with
Section 14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Rule 14f-1 promulgated thereunder. The information set forth herein supplements
certain information set forth in the Statement. Information set forth herein
related to Acquiror or Merger Sub has been provided by Acquiror and Merger Sub.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action in connection with the matters set forth
herein.
Pursuant to the Merger Agreement, Merger Sub commenced the Offer on October
25, 2000. The Offer is currently scheduled to expire at 12:00 midnight, New York
City time, on November 21, 2000, unless Merger Sub extends it.
RIGHT TO DESIGNATE DIRECTORS AND MERGER SUB DESIGNEES
The Merger Agreement provides that immediately upon the acceptance for
payment of and payment for Shares by Merger Sub or any of its affiliates
pursuant to the Offer, Merger Sub will be entitled to designate such number of
directors, rounded up to the next whole number ("Merger Sub Designees"), on the
Company Board as will give Merger Sub, subject to compliance with Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder, representation on the
Company Board equal to the product of (i) the total number of directors on the
Company Board (giving effect to any increase in the size of the Company Board
pursuant to the Merger Agreement) and (ii) the percentage that the number of
Shares beneficially owned by Merger Sub and its affiliates (including Shares so
accepted for payment and purchased) bears to the number of Shares then
outstanding; provided that, so long as the total number of directors on the
Company Board does not exceed nine, the number of Merger Sub Designees will not
exceed seven.
The Merger Agreement also provides that concurrently with such acceptance
for payment and payment for Shares, the Company will, upon request of Acquiror
or Merger Sub and in compliance with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, use its reasonable best efforts promptly either to
increase the size of the Company Board or to secure the resignations of such
number of its incumbent directors, or both, as is necessary to enable the Merger
Sub Designees to be so elected or appointed to the Company Board, and, subject
to applicable law, the Company will take all reasonable actions available to the
Company to cause the Merger Sub Designees to be so elected or appointed. At such
time, the Company will, if requested by Acquiror or Merger Sub and subject to
applicable law, also take all reasonable action necessary to cause the Merger
Sub Designees to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company Board of (i) each committee of the Company
Board, (ii) each board of directors (or similar body) of each subsidiary of the
Company and (iii) each committee (or similar body) of each such board.
However, the Merger Agreement provides that notwithstanding the foregoing,
after the time that the Merger Sub Designees are elected to the Company Board,
the Company Board will have, at all times prior to the Effective Time, at least
two directors who are directors on the date of the Merger Agreement and who are
not officers or affiliates of the Company, Acquiror or any of their affiliates
(it being understood that for purposes of this sentence, a director (including,
without limitation, the Chairman of the Company Board) of the Company will not
be deemed an affiliate of the Company solely as a result of his status as a
director of the Company) (the "Current Directors"); and provided further, that,
(i) if the number of Current Directors serving on the Company Board is reduced
below two for any reason whatsoever (including, without limitation, by a
director's refusing or failing to serve), the remaining Current Director may
designate another Current Director to fill such vacancy, (ii) if no Current
Directors then remain on the Company Board, the other directors shall designate
two other Current Directors to fill such vacancies, and (iii) if notwithstanding
the foregoing, no Current Directors are on the Company Board, the other
directors may designate two other
A-2
<PAGE> 18
persons to fill such vacancies who are not officers or affiliates of the
Company, Acquiror or any of their respective affiliates (each an "Independent
Director").
The Merger Agreement provides that prior to the Effective Time and from and
after the time that the Merger Sub Designees constitute a majority of the
Company Board, if applicable, any amendment or any termination of the Merger
Agreement by the Company, any extension of time for performance of any of the
obligations of Acquiror or Merger Sub under the Merger Agreement, and any waiver
of any condition or of any of the Company's rights under the Merger Agreement
may be effected only with the affirmative vote of a majority of the Current
Directors and Independent Directors. However, if there are no Current Directors
or Independent Directors, such actions may be effected by majority vote of the
entire Board.
As of the date of this Information Statement, Merger Sub has not determined
who will be the Merger Sub Designees. However, such Merger Sub Designees will be
selected from the following list of directors and officers of Acquiror or its
affiliates. Each of the persons listed below has consented to serve as a
director of the Company if appointed or elected. The information contained
herein concerning Acquiror and its directors and officers and those of its
affiliates has been furnished by Acquiror and Merger Sub. The Company assumes no
responsibility for the accuracy or completeness of such information.
The name, present principal occupation or employment and five-year
employment history of each of the directors and officers of Acquiror and its
affiliates who may be selected as one of the Merger Sub Designees is set forth
below. None of the persons listed below owns any Shares or has engaged in any
transactions with respect to Shares during the past 60 days. During the last
five years, none of the persons listed has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor was such
person a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction, and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws. None of the persons listed below (i) is currently a director of,
or holds any position with, the Company, (ii) has a familial relationship with
any of the directors or executive officers of the Company, or (iii) based on
information provided to the Company by Acquiror or Merger Sub (which is to the
best of Acquiror's and Merger Sub's knowledge), beneficially owns any securities
(or rights to acquire any securities) of the Company. The Company has been
advised by Acquiror and Merger Sub that, to the best of Acquiror's and Merger
Sub's knowledge, none of the persons listed below has been involved in any
transaction with the Company or any of its directors, executive officers or
affiliates that is required to be disclosed pursuant to the rules and
regulations of the SEC other than with respect to transactions among Acquiror,
Merger Sub and the Company that have been described in the Statement.
A-3
<PAGE> 19
Unless otherwise indicated, each of the persons listed below is a citizen
of the United States. Unless otherwise indicated, each such person has held his
or her present occupation as set forth below, or has been an officer of
Acquiror, for the past five years and the business address of each such person
is care of Kulicke and Soffa Industries, Inc., 2101 Blair Mill Road, Willow
Grove, Pennsylvania 19090.
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
---------------- --- ------------------------------------------
<S> <C> <C>
C. Scott Kulicke............... 51 Chairman of the Board and Chief Executive Officer of
Acquiror. Also serves on the Board of Directors of General
Semiconductor, Inc. and Xetel Corporation.
Jack G. Belani................. 47 Vice President of Acquiror, President, X-LAM Technologies.
Joined X-LAM Technologies as President upon its formation in
February 1999. Previously was Vice President of Packaging
and Assembly with Cypress Semiconductor, where he was
responsible for assembly/packaging manufacturing and
technical functions. Prior to joining Cypress, worked for
many years at National Semiconductor. He held a number of
progressively responsible positions at National, rising from
senior engineer to Director of Package Technology.
Morton K. Perchick............. 63 Executive Vice President, Office of the President of
Acquiror. Appointed to Acquiror's newly created Office of
the President in May 2000. Named Executive Vice President of
Acquiror in July 1995. Joined Acquiror in September 1980 as
Director, Quality and Reliability. He became Vice President
of Acquiror in 1982 and moved to general management in 1986,
when he assumed responsibility for operations. In 1990, he
was appointed Senior Vice President/General Manager of
Acquiror.
Alexander A. Oscilowski........ 41 Senior Vice President and Office of the President of
Acquiror. Joined Acquiror in June 1999 as Vice President,
Strategic Marketing. In May 2000 he was appointed to the
newly created Office of the President of Acquiror. Joined
SEMATECH in 1993 as director of Assembly & Packaging and was
director of Advanced Technology until 1999. Previously
served as semiconductor packaging manager in the
semiconductor operations unit for Digital Equipment and was
an assembly manager, packaging supervisor and process
engineer at Texas Instruments.
Clifford G. Sprague............ 56 Senior Vice President and Chief Financial Officer of
Acquiror. Joined Acquiror as Vice President and Chief
Financial Officer in March 1989. In May 1990 he was promoted
to Senior Vice President of Acquiror. Prior to joining
Acquiror, he served for more than five years as Vice
President and Controller of the Oilfield Equipment Group of
NL Industries, Inc.
David A. Leonhardt............. 42 Senior Vice President and Co-President, Advanced Bonding
Systems Group of Acquiror. Promoted to Senior Vice President
and Co-President of Acquiror's Advanced Bonding Systems
Group in November 1999. In March 1998, became Vice President
and General Manager of Acquiror's Equipment Group, after
serving as Vice President of Strategic Marketing of Acquiror
since December 1996. Prior to that, he spent four years as
Director of Acquiror's Ball Bonder Division and a year as
Product Manager for Acquiror's Wedge Bonder Products
Division.
</TABLE>
A-4
<PAGE> 20
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
---------------- --- ------------------------------------------
<S> <C> <C>
Laurence P. Wagner............. 40 Senior Vice President and Co-President of Acquiror's
Advanced Bonding Systems Group. Joined Acquiror in 1998 as
Senior Vice President and President, K&S Packaging
Materials. In November 1999, he was promoted to Senior Vice
President and Co-President of Acquiror's Advanced Bonding
Systems Group. Previously was with Emcore Corporation, where
he was vice president of Emcore Electronic Materials. Prior
to 1996, Mr. Wagner worked for the Shipley Company LLC, a
Division of Rohm and Haas Company in a number of
progressively responsible positions.
Charles J. Salmons............. 45 Senior Vice President, Customer Operations of Acquiror,
appointed in 1999. Joined Acquiror in 1978, and has held
positions of increasing responsibility throughout the
accounting, engineering, and manufacturing organizations. In
1994 he became Vice President of Operations and was named
General Manager of Acquiror's Wire Bonder Operations in
1998.
James P. Spooner............... 53 Vice President, Corporate Development of Acquiror. Joined
Acquiror as Vice President, Mergers & Acquisitions in 1997.
During the 17 years prior to joining Acquiror, Mr. Spooner
held increasingly responsible positions with Rhone-Poulenc,
Inc., Princeton, New Jersey, most recently as director of
corporate development.
Robert F. Amweg................ 47 Vice President, Treasurer of Acquiror. Joined Acquiror in
February 1997 as its Treasurer and was promoted to Vice
President, Treasurer in 2000. Prior to joining Acquiror, was
Vice President Finance and Chief Financial Officer of XYAN,
Inc., a printing and related services company.
</TABLE>
CERTAIN INFORMATION CONCERNING THE COMPANY
The Shares are the only class of outstanding voting securities of the
Company. As of October 12, 2000, there were 9,505,160 Shares outstanding. Each
Share that is outstanding on the close of business on any applicable record date
for any matter to be acted upon by stockholders is entitled to one vote on such
matter.
CURRENT MEMBERS OF THE COMPANY BOARD
The Company Board currently consists of five members. To the extent that
the Company Board will consist of persons who are not among the Merger Sub
Designees, the Company Board is expected to consist of persons who are currently
directors of the Company who have not resigned.
The name, age, year first elected as a director and business experience for
the past five years of each current member of the Company Board is set forth
below. The information set forth below was provided to the Company by the
respective directors listed below.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
---- --- ------------------------
<S> <C> <C>
Ross J. Mangano(1)(2)....................... 55 Chairman of the Company Board
C. Zane Close............................... 51 President, Chief Executive Officer, and Director
William A. Fresh(2)......................... 72 Director
Kenneth W. Miller(1)........................ 68 Director
Donald F. Walter(1)(2)...................... 68 Director
</TABLE>
---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Ross J. Mangano has served as the Chairman of the Company Board since
February 1993 and as a director of the Company since February 1988. Mr. Mangano
has served as the President of Oliver Estate, Inc.,
A-5
<PAGE> 21
an investment management company, since 1996. Prior to that time, Mr. Mangano
served in various management positions with Oliver Estate, Inc., beginning in
1971. Mr. Mangano is also an investment analyst for Oliver Estate, Inc. Since
July 1998, Mr. Mangano has served on the Board of Directors of U.S. RealTel,
Inc., a public corporation owning access rights on properties around the world
and has also served as director of U.S. RealTel Argentina since 1999. Mr.
Mangano has served on the Board of Directors of BioSante Pharmaceuticals, Inc.,
a public company, since July 1999 and Orchard Software Corporation, a privately
held company, which develops software for the medical industry, since August
1998. From August 1997 to 1999, Mr. Mangano served on the Board of Directors of
Blue Chip Casino, a privately held casino. From December 1993 to 1996, Mr.
Mangano served on the Board of Directors of Cole Taylor Financial Group, a
publicly held bank holding company.
C. Zane Close has served as President and Chief Executive Officer and as a
director of the Company since July 1990. From September 1989 to July 1990, Mr.
Close served as Vice President and General Manager of Probe Technology
Corporation, 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. Prior to joining Probe Technology, Mr. Close
held various financial and management positions at California Devices, NKB
Corporation, and National Semiconductor Corporation.
William A. Fresh has served as a director of the Company 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 the Company 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 has served as Chairman of
the Board and as senior consultant to Brow Z.com since August 1998. From April
1996 to July 1998, Mr. Fresh served on the Board of Directors of Sento Technical
Innovation Corporation, a publicly held software company. 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 from August 1996 to May 1998 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
conditioning company, and Fresh Technology Company, a PC-based software company,
from January 1991 to March 1994.
Kenneth W. Miller has served as a director of the Company since 1979. Mr.
Miller served as Treasurer of the Company from June 1994 to June 1996 and as
Secretary of the Company 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 integrated circuits and
hybrid substrates.
Donald F. Walter has served as a director of the Company 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 Company Board and hold office until
their successors have been duly elected and qualified, or until resignation or
removal. There currently is no classification of the Company Board. There are no
family relationships among any of the directors or officers of the Company.
The current employment agreement between the Company and Mr. Close provides
that the Company will cause Mr. Close to be nominated to the Company Board so
long as Mr. Close is employed by the
A-6
<PAGE> 22
Company. The stockholders of the Company, however, have no obligation to vote
for Mr. Close and may withhold or distribute votes in their discretion. Upon the
purchase by Merger Sub of a majority of the Shares pursuant to the Offer, Mr.
Close's current employment agreement with the Company will terminate. The
Company knows of no other arrangements or understandings between any director or
executive officer and any other person pursuant to which such director or
executive officer is nominated to the Company Board or appointed as one of the
Company's executive officers.
MEETINGS AND COMMITTEES OF THE COMPANY BOARD
The Company Board held a total of 10 meetings during the fiscal year ended
December 31, 1999. No director attended fewer than 75% of the aggregate of:
- the total number of meetings of the Company Board; and
- the total number of meetings held by all committees of the Company Board
on which such director was a member.
The Company Board has 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, 1999. During the fiscal year ended December 31, 1999, the Audit
Committee consisted of Messrs. Mangano, Fresh, and Walter, all of whom are
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 Stock Option Plan as amended, (the "1995 Plan") and
administers the 1995 Plan. The Compensation Committee held one formal meeting
during the fiscal year ended December 31, 1999. During the fiscal year ended
December 31, 1999, the Compensation Committee consisted of Messrs. Mangano,
Miller, and Walter, all of whom are non-employee directors of the Company.
DIRECTOR COMPENSATION AND OTHER INFORMATION
Each outside director of the Company receives $5,000 each quarter and a fee
of $1,000 for each meeting of the Company Board attended. Outside directors also
are eligible to receive options to purchase Shares ("Options") pursuant to the
Company'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. During 1999, each director
received automatic Options to acquire 3,000 Shares pursuant to the 1995 Plan.
EXECUTIVE OFFICERS
In addition to Mr. Close, who is a director, the names, ages and business
experience of the executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
<S> <C> <C>
Daniel J. Hill........... 52 Executive Vice President and Chief Operating Officer
Michael K. Bonham........ 62 Senior Vice President, Sales and Marketing
Randal L. Buness......... 43 Senior Vice President, Chief Financial Officer, Secretary and Treasurer
Kevin M. Kurtz........... 39 Vice President, Operations
Henry P. Scutoski........ 55 Vice President, Quality & Process Management
</TABLE>
Daniel J. Hill has served as Executive Vice President and Chief Operating
Officer of the Company since December 1999. From December 1998 to November 1999,
Mr. Hill served as Executive Director, Semicon-
A-7
<PAGE> 23
ductor Industry sector of PricewaterhouseCoopers, a professional services
organization and consulting firm. Mr. Hill served as Chief Executive Officer of
D.J. Hill & Associates, Inc., a consulting business from August 1997 to November
1998. From January 1995 to July 1997, Mr. Hill served as founder and Chief
Executive Officer of Interconnect Technology, a start-up silicon wafer foundry
in Malaysia. Mr. Hill served as President and Chief Executive Officer of Micro
Component Technology, Inc., a publicly held semiconductor test handling
equipment company, from December 1991 to January 1995. From May 1980 to December
1991, Mr. Hill served in various management positions for National Semiconductor
Corporation.
Michael K. Bonham has served as Senior Vice President, Sales and Marketing
of the Company since June 1996. Mr. Bonham served as Vice President of Sales and
Marketing of the Company from July 1990 to June 1996. From October 1988 to June
1990, Mr. Bonham served as Marketing Manager of the IC Probe and Curve Tracer
Group of Tektronix, Incorporated, a manufacturer of electronic test measurement
equipment.
Randal L. Buness has served as Senior Vice President of the Company since
January 1999, and served as Vice President of the Company from June 1996 to
January 1999. He has also served as Chief Financial Officer, Secretary, and
Treasurer of the Company since June 1996. From September 1994 to June 1996, Mr.
Buness served as Vice President, Finance and Administration, Chief Financial
Officer, Secretary and Treasurer of Three-Five Systems, Inc., a publicly held
manufacturer of liquid crystal displays. Mr. Buness served as Chief Financial
Officer, Secretary, and Treasurer of United Medical Network, a developer of
video conferencing networks for healthcare providers, from January 1993 to
September 1994. From January 1989 to January 1993, Mr. Buness worked as an
independent financial consultant. Mr. Buness served as principal and manager of
Arthur Young from January 1986 to January 1989 and served as a manager, senior,
and staff accountant with Price Waterhouse from July 1979 to January 1986. Mr.
Buness is a Certified Public Accountant.
Kevin M. Kurtz has served as Vice President, Operations of the Company
since February 1999. From May 1997, Mr. Kurtz served as President of SVTR, Inc.,
a wholly owned wafer probe refurbishing subsidiary of the Company. From January
1996 to April 1997, Mr. Kurtz served as Vice President of Manufacturing of the
Company. Mr. Kurtz served as Regional Sales Manager, then as General Manager of
the Company's San Jose facility from December 1990 to December 1995. From
September 1985 to November 1990, Mr. Kurtz held various sales and sales
management positions with Probe Technology, a manufacturer of probing devices
for testing of integrated circuits.
Henry P. Scutoski has served as Vice President, Quality & Process
Management since August 1999. Mr. Scutoski served as Vice President of Quality
from April 1995 to August 1999 and Director of Quality from March 1994 to April
1995. From February 1991 to March 1994, Mr. Scutoski was an independent quality
management consultant. From January 1985 to February 1991, Mr. Scutoski was
Quality Assurance Manager for Motorola's Government Electronics Group.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
the fiscal years ended December 31, 1999, 1998, and 1997 earned by the Company's
Chief Executive Officer and each of the Company's four most highly compensated
executive officers whose aggregate cash compensation exceeded
A-8
<PAGE> 24
$100,000 for services rendered in all capacities to the Company and its
subsidiaries for the last fiscal year (the "Named Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------- -------------------------------------
AWARDS PAYOUTS
OTHER ----------------------- ----------
ANNUAL RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARD(S)($) /SARS(#) PAYOUTS($) SATION($)
------------------ ---- --------- -------- ------------ ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. Zane Close.............. 1999 280,000 -- -- -- -- -- 1,000(3)
President and Chief 1998 270,000 -- -- -- 140,000(2) -- 1,500(4)
Executive Officer 1997 209,276 185,716 -- -- 60,000 -- --
Michael K. Bonham.......... 1999 160,000 -- -- -- -- --
Sr. Vice President, Sales 1998 150,000 -- -- -- 65,000(2) -- 1,000(3)
and Marketing 1997 134,950 112,896(5) -- -- 15,000 -- 1,500(4)
Randal L. Buness........... 1999 160,000 -- -- -- -- -- 1,000(3)
Senior Vice President, 1998 148,000 -- -- -- 90,000(2) -- 1,500(4)
Chief Financial Officer, 1997 119,981 75,000 -- -- -- -- --
Secretary and Treasurer
Kevin M. Kurtz............. 1999 150,000 -- -- -- -- -- 8,200(3)
Vice President,
Operations 1998 150,000 -- -- -- -- -- 8,700(4)
1997 133,000 20,000 -- -- 20,000 -- 1,800(6)
Henry P. Scutoski.......... 1999 125,000 -- -- -- 5,000 -- 1,000(3)
Vice President, Quality 1998 115,000 -- -- -- -- -- 1,500(4)
and Process Management 1997 105,000 11,626 -- -- -- -- --
</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.
(2) Reflects the effect of the reissuance in August 1998 of Options to acquire
60,000, 25,000, and 40,000 shares granted to Messrs. Close, Bonham, and
Buness, respectively, originally granted in January 1998 and cancelled.
(3) Represents matching contributions to the Company's 401(k) plan of $1,000 to
Messrs. Close, Bonham, Buness, Kurtz, and Scutoski. In addition, includes
$7,200 as an auto allowance to Mr. Kurtz.
(4) Represents matching contributions to the Company's 401(k) plan of $1,500 to
Messrs. Close, Bonham, Buness, Kurtz, and Scutoski. In addition, includes
$7,200 as an auto allowance to Mr. Kurtz.
(5) Includes $13,349 of bonus earned by Mr. Bonham in 1996 for which payment was
deferred to 1997.
(6) Represents an auto allowance of $1,800 to Mr. Kurtz.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on Options granted to the
Company's Named Officers during the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OPTION TERM($)(1)
OPTIONS GRANTED PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ----------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Henry P. Scutoski.......... 5,000(2) 1.2% 15.125 2/16/09 $47,560 $120,527
</TABLE>
---------------
(1) Calculated from a base price equal to the exercise price of each option,
which was the fair market value of the Common Stock of the Company on the
date of grant. The amounts represent only certain assumed rates of
appreciation.
(2) One-fifth of the Options vest and become exercisable on the date of grant,
February 16, 1999; and one-fifth on each of February 16, 2000; February 16,
2001; February 16, 2002; and February 16, 2003.
A-9
<PAGE> 25
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table contains certain information regarding the Options
exercised by the Named Officers during the fiscal year ended December 31, 1999
and the Options held by the Named Officers as of that date. For a discussion of
the treatment of Options under the Merger Agreement, see Item 3 of the Statement
to which this Information Statement forms Annex A.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END(#) YEAR-END($)(1)
SHARES ACQUIRED VALUE ------------------------------ ------------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
---- --------------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
C. Zane Close........ 60,000 37,500 98,000 102,000 $-- $--
Michael K. Bonham.... 50,000 31,250 36,500 43,500 -- --
Randal L. Buness..... -- -- 76,000 64,000 -- --
Kevin M. Kurtz....... -- -- 38,000 12,000 -- --
Henry P. Scutoski.... 6,700 20,938 5,000 5,000 -- --
</TABLE>
---------------
(1) Calculated based upon The Nasdaq National Market(R) closing price for the
Common Stock of the Company on December 31, 1999 of $7.375 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, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company believes that it is important for its directors and officers to
be significant stakeholders in the Company. With this in mind, in August 1999,
the Company Board approved a director and executive officer loan program to
provide financial assistance to directors and executive officers, by way of
loans, to assist with the exercise price and tax consequences of stock option
exercises (the "Loan Program"). Under the Loan Program, the Company provides
loans up to the amount of the exercise price to be paid plus presumed Federal
and state taxes on the exercise of a stock option. Each member of the Company
Board, each of the Company's executive officers, and any other individual
designated by the Company Board is eligible for a loan. The Loan Program
provides for unsecured, recourse loans that bear interest at the applicable
short-term Federal rate (for loans with terms less than three years), or the
applicable mid-term Federal rate (for loans with terms of three years or
greater). Generally, the term of the loans will be no longer than five years,
although the Company Board may provide for a longer term on a case-by-case
basis. Payments are due in installments of principal and interest throughout the
term of the loans. If the employment/services of a Loan Program participant is
terminated for "cause" or if the participant resigns without "good reason," any
loans to that participant will be immediately due and payable. If the
participant's employment/services is terminated without cause or if the
participant resigns with good reason, then any loan remains payable pursuant to
the original term of the loan. The terms "cause" and "good reason" are generally
defined in the Company's standard executive employment agreements as modified
for non-employee members of the Board.
In 1999, the Loan Program provided loans totaling $841,465 in connection
with the exercises of Options to purchase 145,000 Shares and pay income tax
liabilities associated with those exercises. As of October 12, 2000, the
aggregate indebtedness owed to the Company pursuant to the Loan Program was
$836,945, including accrued interest thereon.
A-10
<PAGE> 26
The following table sets forth certain information regarding loans made by
the Company to its directors and executive officers:
<TABLE>
<CAPTION>
NUMBER OF
LARGEST AMOUNT SHARES
OUTSTANDING PURCHASED
DURING PERIOD AMOUNT TRANSACTION IN THROUGH
NAME AND DATE DEBT RATE OF FROM 1/1/99 - OUTSTANDING AS WHICH DEBT WAS EXERCISE
PRINCIPAL POSITION INCURRED INTEREST 10/12/00(1) OF 10/12/00(1) INCURRED OF OPTIONS
------------------ --------- -------- -------------- -------------- ------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Exercise of
C. Zane Close........ 8/5/99 6.00% $389,174 $389,174 Options 60,000
President, Chief
Executive Officer,
and Director
Exercise of
Michael K. Bonham.... 8/5/99 6.00% $324,874 $324,874 Options 50,000
Sr. Vice President
of Sales and
Marketing
Exercise of
Kenneth W. Miller.... 8/16/99 6.00% $122,897 $122,897 Options 20,000
Director
Daniel J. Hill....... 2/3/00 6.00% $348,352 $ 3,352 Relocation Expense(2) N/A
Executive Vice 6/8/00 6.00% $ 46,234 $ 46,234 Relocation Expense(3) N/A
President and
Chief Operating
Officer
Exercise of
Donald F. Walter..... 8/24/99 6.00% $ 88,176 $ 0 Options 15,000
Director
</TABLE>
---------------
(1) Includes accrued interest.
(2) The Company loaned Mr. Hill a portion of the expenses, including the down
payment, he incurred in the process of purchasing a new home in conjunction
with his relocation to commence employment with the Company.
(3) The Company loaned Mr. Hill a portion of the costs associated with the sale
of his old residence, which was sold in conjunction with his relocation to
commence employment with the Company.
EMPLOYMENT AGREEMENTS
The Company has entered into Employment Agreements with C. Zane Close,
Daniel J. Hill, Michael K. Bonham, and Randal L. Buness that provide a base
salary of $280,000 for Mr. Close, $250,000 for Mr. Hill, and $160,000 for each
of Messrs. Bonham and Buness and entitles each to participate in incentive
compensation programs, stock option plans, and other generally available benefit
programs. The initial terms of the agreements are two years for Messrs. Close
and Hill and one year for Messrs. Bonham and Buness, and each provides for
automatic successive one-year renewal terms to continue until one party provides
the other with written notice of non-renewal.
Under each of the agreements, if the executive's employment is terminated
by the Company without "cause" (as defined in the agreements) or by the
executive for "good reason" (as defined in the agreements), the executive will
be entitled to severance benefits. Under the agreements, severance benefits are
defined as the greater of:
- the sum of (a) the executive's base salary for the unexpired term of the
agreement, and (b) the average of incentive compensation paid to the
executive for the two years prior to the date of termination multiplied
by a fraction, the numerator of which is the number of months remaining
from the date of termination to the end of the term of the agreement and
the denominator of which is 12; or
- the sum of (x) the executive's base salary in effect on the date of
termination and (y) the average of incentive compensation paid to the
executive for the two years prior to the date of termination.
In addition, under the agreements each executive will continue to receive
life, disability, accident and group health insurance benefits substantially
similar to those which he was receiving immediately prior to his
A-11
<PAGE> 27
termination of employment until the earlier of the end of the period of 12
months following his termination of employment or the day on which he becomes
eligible to receive any substantially similar continuing health care benefits
under any plan or program of any other employer.
Each of the agreements provides for the Company to indemnify the executive
for certain liabilities arising from actions taken within the scope of
employment. Each agreement contains restrictive covenants pursuant to which the
executive has agreed not to compete with the Company or to solicit any clients
or employees for a period of one year after the executive's employment ceases.
These restrictions do not apply if the executive is terminated without cause or
by the executive for good reason.
CHANGE OF CONTROL AGREEMENTS
The Company has also entered into Change of Control Agreements with Messrs.
Close, Hill, Bonham, and Buness. These Change of Control Agreements provide that
these individuals are entitled to certain benefits if terminated following the
Effective Time, subject to the terms and conditions and within the time periods
specified in their respective agreements. During the period in which the Company
was in discussions with Acquiror regarding Acquiror's possible acquisition of
the Company, the Company Board and the Company's management determined that
these Change of Control Agreements, under their original terms, did not reflect
their intent with respect to payments to management in the event of a change of
control. For example, these Change of Control Agreements included ceilings on
payments made under them that exceed prescribed limits under Section 280G of the
Internal Revenue Code (the "Code"), which could have resulted in Messrs. Close,
Hill, Bonham and Buness being unable to receive certain benefits in the event
their Options were accelerated upon a change of control. The Company Board
believed that limits like this on benefits to the Company's officers contained
in the Change of Control Agreements reduced the officers' incentive to remain in
the employment of the Company during periods when the Company may be the subject
of a possible change of control, and diminished one of the principal benefits
that the Company expected to receive from having the Change of Control
Agreements in place. As a result, these Change of Control Agreements were
recently amended to eliminate this ceiling on benefits and to require the
Company to make an additional payment to each such individual in the amount of
the excise tax plus any additional income tax liability resulting from payments
made to such individual in excess of the limits under Sections 280G and 4999 of
the Code.
AGREEMENTS TO TERMINATE EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
Simultaneously with the execution of the Merger Agreement, the Company and
each of Messrs. Close, Hill, Bonham and Buness entered into an Agreement to
Terminate Employment and Change of Control Agreements with Cerprobe Corporation,
pursuant to which upon the closing of the purchase of a majority of the Shares
pursuant to the Offer, the Employment Agreements and Change of Control
Agreements of Messrs. Close, Hill, Bonham and Buness will terminate, and the
Company will pay such individuals $1,394,823, $1,387,207, $790,971, and
$805,273, respectively. The Company anticipates that a substantial portion of
the payments to be made to Messrs. Close, Buness, Bonham and Hill in connection
with the termination of their Employment Agreements and Change of Control
Agreements, as well as a portion of the payment expected to be made to each of
them at the Effective Time on account of Options, will be nondeductible by the
Company as "excess parachute payments" under Section 280G of the Code. The
Company also anticipates that, so long as a majority of the Shares are purchased
under the Offer during calendar year 2000, it will not be subject to further
nondeductibility with respect to these payments as a result of Section 162(m) of
the Code.
401(K) PLAN
In 1993, the Company established the Cerprobe Corporation 401(k) Plan.
Employees who have reached 18 years of age and who have completed 90 days of
service for the Company are eligible to participate. Under the 401(k) Plan,
participating employees, including employee directors and executive officers,
may defer up to 15% of their pre-tax compensation, subject to the maximum
allowed under the Code. Any contribution by the
A-12
<PAGE> 28
Company is at its discretion and only for those participants who have completed
one year of service with the Company.
THE 1995 PLAN
The 1995 Plan is divided into two programs: the Discretionary Grant Program
and the Automatic Grant Program. The Discretionary Grant Program provides for
the granting of Options, the direct granting of Shares ("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 the Company and its
subsidiaries (collectively, "Eligible Persons"). The Options issued may be
incentive stock options or non-qualified stock options. The Company believes
that the Discretionary Grant Program represents an important factor in
attracting and retaining executive officers and other key employees and
constitutes a significant part of its compensation program, providing them with
an opportunity to acquire a proprietary interest in the Company and giving them
an additional incentive to use their best efforts for the long-term success of
the Company. The Automatic Option Program provides for the automatic grant of
Options ("Automatic Options"). Automatic Options are granted to non-employee
members of the Company Board ("Eligible Directors"). The Company believes that
the Automatic Option Program promotes the interests of the Company by providing
such directors the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Company and an increased personal
interest in the Company's continued success and progress.
SHARES SUBJECT TO THE 1995 PLAN
Currently, a maximum of 2,000,000 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 October 12, 2000, 117,400 Shares had been issued upon
exercise of Options granted pursuant to the 1995 Plan, and there were
outstanding Options to acquire 1,248,000 Shares under the 1995 Plan.
The Merger Agreement provides that, prior to the Effective Time, Acquiror
and the Company will take all such actions as may be necessary to cause each
unexpired and unexercised Option in effect on the date thereof which has been
granted to current or former directors, officers, employees or consultants of
the Company to be cancelled and converted solely into the right to receive at
the Effective Time (whether or not then vested or exercisable) an amount in cash
equal to the product of (A) the number of Shares subject to such Option and (B)
the excess, if any, of the Merger Consideration over the exercise price per
Share of each such Option.
Eligibility
Options and Awards may be granted pursuant to the Discretionary Grant
Program only to persons who at the time of grant are either:
- key personnel (including officers and directors) of the Company; or
- consultants or independent contractors who provide valuable services to
the Company.
Options that are incentive stock options may be granted only to key
personnel of the Company who are also employees of the Company. 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 Code.
A-13
<PAGE> 29
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." For the
purposes of the 1995 Plan, the transactions contemplated in the Merger Agreement
do not constitute a "Change in Control." The definition of "Change in Control"
includes the following events:
- the acquisition of beneficial ownership by certain persons, acting alone
or in concert with others, of 40% or more of the Company's Common Stock
pursuant to a tender offer which the Company Board recommends that the
Company's stockholders not accept; or
- a change in the composition of the Company Board occurs such that those
individuals who were elected to the Company Board at the last
stockholders' meeting at which there was not a contested election for
Company Board membership subsequently cease to comprise a majority of the
Company Board by reason of a contested election.
The 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 of the Company 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 the Company). Generally, Options can be exercised by delivery of cash, bank
cashier's check, or Shares.
Termination of Employment or Services
Options granted under the 1995 Plan are generally 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 the Company
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. Termination of employment at any time for cause immediately
terminates all Options held by the terminated employee.
Non-qualified Options will remain exercisable for such period of time after
termination 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 from the price on the date the SAR was granted or became effective to the
market value of the Common Stock of the Company on the date first exercised or
surrendered. Awards granted in the form of Stock Awards entitle the recipient to
receive Shares 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 of the Company or other securities of the
Company. To the extent permitted by applicable law, the Company may issue any
other Options, warrants, or awards other than pursuant to the 1995 Plan without
stockholder approval.
A-14
<PAGE> 30
Terms and Conditions of Automatic Options
The 1995 Plan provides that each year at the meeting of the Company Board
held immediately after the annual meeting of stockholders, each Eligible
Director is granted an Automatic Option to acquire 3,000 Shares, which vest at
the time of such grant.
The exercise price per Share 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 the Company.
Cessation of service on the Board terminates any Automatic Options for shares
that were not vested at the time of such cessation.
The 1995 Plan provides that, in the event of a 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 Company Board 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 present in person or by proxy at a meeting of stockholders of the
Company, the Company Board may not:
- increase, except in the case of certain organic changes to the Company,
the maximum number of Shares subject to the 1995 Plan;
- reduce the exercise price at which Options may be granted or the exercise
price for which any outstanding Options may be exercised;
- extend the term of the 1995 Plan;
- change the class of persons eligible to receive Options or Awards under
the 1995 Plan; or
- materially increase the benefits accruing to participants under the 1995
Plan.
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).
The Company anticipates that a substantial portion of the payments to be
made to Messrs. Close, Buness, Bonham and Hill in connection with the
termination of their Employment Agreements and Change of Control Agreements, as
well as a portion of the payment expected to be made to each of them at the
Effective Time on account of Options, will be nondeductible by the Company as
"excess parachute payments" under Section 280G of the Code. The Company also
anticipates that, so long as a majority of the Shares are purchased under the
Offer during calendar year 2000, it will not be subject to further
nondeductibility with respect to these payments as a result of Section 162(m) of
the Code.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company Board (the "Committee") is
responsible for reviewing and recommending for approval by the Company Board the
Company's executive compensation policies and
A-15
<PAGE> 31
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, 1999, the Committee consisted of Ross
J. Mangano, Kenneth W. Miller, and Donald F. Walter.
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:
- a base salary that is designed primarily to be competitive with salary
levels in the Company's industry and that reflects individual
performance;
- an annual cash bonus that is tied to the Company's achievement of
financial performance targets and, in some cases, non-financial
objectives; and
- 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 1999 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 1997 - 1998 data. The Committee
also considered other available executive compensation surveys generally based
upon 1997 - 1998 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 that 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. Bonuses are
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, the establishment of strategic
alliances and the personal performance level of the executive officer. The
evaluation of these factors is subjective, with no particular weight being
assigned to any one factor. For 1999, the Committee determined that the
Company's performance did not warrant the payment of discretionary bonuses.
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 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
A-16
<PAGE> 32
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.
Benefits
The Company provides various employee benefit programs to its executive
officers, including medical, dental, vision, and life insurance benefits, an
employee 401(k) retirement savings plan, an employee stock purchase 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 1999 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:
- establish a level of base salary competitive with that paid to other
chief executive officers of similar sized companies within the industry;
and
- 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 1999 was $280,000 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. No discretionary bonus
was paid and no Options were granted to Mr. Close during 1999.
Compliance with Code Section 162(m)
Section 162(m) of the 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 1999 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 2000 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. The
Company anticipates that, as long as a majority of the Shares are purchased
under the Offer during calendar year 2000, payments to be made to Messrs. Close,
Buness, Bonham and Hill in connection with the termination of their Employment
Agreements and Change of Control Agreements, as well as a portion of the payment
made to each of them at the Effective Time on account of Options, will remain
deductible by the Company without limitation under Code Section 162(m).
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 1999, the Compensation Committee
consisted of Messrs. Mangano, Miller, and Walter, each of whom is a non-employee
director of the Company. Mr. Miller served as Treasurer of the Company from
October 1991 to June 1996 and Secretary of the Company from October 1991 to June
1996.
A-17
<PAGE> 33
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, 1999 for:
- The Company's Common Stock;
- The H & Q Semiconductor Sector Index; and
- The Nasdaq Stock Market(R) (US) Index. The graph assumes an investment of
$100 on December 31, 1994. The performance shown is not necessarily
indicative of future performance.
[COMPANY PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cerprobe
Corporation $100 $316 $261 $311 $244 $134
H & Q Semiconductor
Sector Index $100 $140 $180 $190 $267 $666
Nasdaq Stock Market
(US) Index $100 $141 $174 $213 $300 $542
--------------------------------------------------------------------------------
</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, 1999, 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.
A-18
<PAGE> 34
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 October 12, 2000 by:
- each director and each nominee for director (excluding the Merger Sub
Designees);
- each Named Officer set forth in the Summary Compensation Table under the
section entitled "Executive Compensation";
- all directors and executive officers of the Company as a group; and
- each person known by the Company to be the beneficial owner of more than
5% of the Common Stock of the Company. The information as to beneficial
ownership is based upon statements furnished to the Company by such
persons.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS(3)
---------------------- ------------ ----------
<S> <C> <C>
DIRECTORS AND NAMED OFFICERS
Ross J. Mangano............................................. 549,500(4) 5.76%
C. Zane Close............................................... 192,100(5) 1.99%
William A. Fresh............................................ 186,536(6) 1.96%
Kenneth W. Miller........................................... 155,500(7) 1.63%
Donald F. Walter............................................ 46,000(8) *
Michael K. Bonham........................................... 110,914(9) 1.16%
Randal L. Buness............................................ 102,000(10) 1.06%
Daniel J. Hill.............................................. 80,000(11) *
Kevin M. Kurtz.............................................. 56,541(12) *
Henry P. Scutoski........................................... 17,820(13) *
All directors and executive officers as a group (ten
persons).................................................. 1,496,911(14) 14.88%
</TABLE>
---------------
* Less than 1%.
(1) Each director 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 actually owned as of October 12,
2000 and the Shares that the identified person or group had the right to
acquire within 60 days of October 12, 2000 pursuant to the exercise of
Options. In calculating the percentage of ownership, all Shares that the
identified person or group had the right to acquire within 60 days of
October 12, 2000 upon the exercise of Options are deemed to be outstanding
for the purpose of computing the percentage of the Shares owned by such
person or group, but are not deemed to be outstanding for the purpose of
computing the percentage of the Shares owned by any other person.
(4) Includes 25,000 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, 350,200 Shares held in the name of
Troon & Co., Ross J. Mangano, et al., Trustees for which Mr. Mangano serves
as a trustee, and 33,000 Shares that Mr. Mangano has the right to acquire
pursuant to the exercise of Options.
(5) Includes 132,000 Shares that Mr. Close has the right to acquire pursuant to
the exercise of Options.
(6) Includes 104,916 Shares held by WAF Investment Company, a company 100%
owned by Mr. Fresh and his wife, and 33,000 Shares that Mr. Fresh has the
right to acquire pursuant to the exercise of Options.
A-19
<PAGE> 35
(7) Includes 45,000 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
33,000 Shares that Mr. Miller has the right to acquire pursuant to the
exercise of Options.
(8) Includes 33,000 Shares that Mr. Walter has the right to acquire pursuant to
the exercise of Options.
(9) Includes 49,500 Shares that Mr. Bonham has the right to acquire pursuant to
the exercise of Options.
(10) Includes 99,000 Shares that Mr. Buness has the right to acquire pursuant to
the exercise of Options.
(11) Includes 80,000 Shares that Mr. Hill has the right to acquire pursuant to
the exercise of Options.
(12) Includes 54,000 Shares that Mr. Kurtz has the right to acquire pursuant to
the exercise of Options.
(13) Includes 10,000 Shares that Mr. Scutoski has the right to acquire pursuant
to the exercise of Options.
(14) Includes 476,500 Shares that members of the group had the right to acquire
as of October 12, 2000 or within 60 days of October 12, 2000, pursuant to
the exercise of Options.
A-20
<PAGE> 36
ANNEX B
FAIRNESS OPINION LETTER
October 11, 2000
Board of Directors
Cerprobe Corporation
1150 North Fiesta Boulevard
Gilbert, Arizona 85233
Members of the Board of Directors:
You have requested our opinion as to the fairness from a financial point of
view to the stockholders of Cerprobe Corporation (the "Company"), of the
consideration proposed to be received by the stockholders of the Company
provided for in connection with the proposed tender offer (the "Offer") by a
wholly owned subsidiary of Kulicke & Soffa Industries Inc. (the "Purchaser").
Pursuant to the terms of the October 11, 2000 draft of an Agreement and Plan of
Merger (the "Agreement"), to be entered into among the Company, the Purchaser
and Cardinal Merger Sub, Inc. ("Acquisition Sub"), and upon consummation of the
Offer, Acquisition Sub will merge with and into the Company (the "Merger"), and
stockholders of the Company will receive for each share of Common Stock, par
value $0.05 per share, of the Company (the "Company Common Stock"), together
with associated preferred stock purchase rights held by them, other than shares
held in treasury or held by the Purchaser or any affiliate of the Purchaser or
as to which appraisal rights have been perfected, consideration equal to $20.00
per share in cash. The terms and conditions of the Offer and the Merger are more
fully set out in the Agreement.
For purposes of the opinion set forth herein, we have:
(i) reviewed publicly available financial statements and other
business and financial information of the Company;
(ii) analyzed financial forecasts prepared by Wall Street research
analysts relating to the Company, and reviewed and discussed the forecasts
with the management of the Company;
(iii) discussed the past and current operations, financial condition
and prospects of the Company with senior executives of the Company;
(iv) reviewed the reported prices and trading activity for the Company
Common Stock;
(v) compared the financial performance of the Company and the prices
and trading activity of the Company Common Stock with that of other
publicly traded companies we deemed relevant;
(vi) compared financial terms to financial terms, to the extent
publicly available, of other business combination transactions we deemed
relevant;
(vii) participated in discussions and negotiations among
representatives of the Company and the Purchaser and their financial and
legal advisors;
(viii) reviewed the October 11, 2000 draft of the Agreement; and
(ix) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the financial and other information reviewed by us
for the purposes of this opinion. We have not been provided with financial
forecasts by the Company, and as a result, have relied upon financial forecasts
prepared by Wall Street research analysts relating to the Company, none of which
extend beyond 2001. The management of the Company has consented to our use of
such financial forecasts. With respect to such financial forecasts, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and good faith judgments of the future financial
performance of the Company. We have not made
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any independent valuation or appraisal of the assets or liabilities of the
Company, nor have we been furnished with any such appraisals.
We have assumed that in connection with the receipt of all the necessary
regulatory approvals for the proposed Offer and Merger, no restrictions will be
imposed that would have a material adverse effect on the contemplated benefits
expected to be derived in the proposed Offer and Merger.
We have acted as sole financial advisor to the Board of Directors of the
Company in connection with this transaction and will receive a fee for our
services, including a fee which is contingent upon the consummation of the
Merger. In the past, Banc of America Securities LLC or its affiliates have
provided financial advisory and financing services for the Company and have
received fees for the rendering of these services. In the ordinary course of our
businesses, we and our affiliates may actively trade the debt and equity
securities of the Company and the Purchaser for our own account or for the
accounts of customers and, accordingly, we or our affiliates may at any time
hold long or short positions in such securities.
It is understood that this letter is for the benefit and use of the Board
of Directors of the Company in connection with and for purposes of its
evaluation of the Offer and the Merger and is not on behalf of, and shall not
confer rights or remedies upon, any person other than the Board of Directors.
This opinion may not be disclosed, referred to, or communicated (in whole or in
part) to any third party for any purpose whatsoever except with our prior
written consent in each instance. However, this opinion may be included in its
entirety in any filing made by the Company in respect of the Offer and the
Merger with the Securities and Exchange Commission, so long as this opinion is
reproduced in such filing in full and any description of or reference to us or
summary of this opinion and the related analysis in such filing is in a form
acceptable to us and our counsel. In furnishing this opinion, we do not admit
that we are experts within the meaning of the term "experts" as used in the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, nor do we admit that this opinion
constitutes a report or valuation within the meaning of Section 11 of the
Securities Act. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. It should be understood that subsequent developments may affect
this opinion and we do not have any obligation to update, revise, or reaffirm
this opinion. We express no opinion as to either the Offer or the Merger alone.
In addition, BAS expresses no opinion or recommendation as to how the
stockholders of the Company should vote at any stockholders' meeting held in
connection with the Merger.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, we are of the opinion on the date hereof that
the consideration to be received by the stockholders of the Company in the
proposed Offer and the proposed Merger is fair from a financial point of view to
the stockholders of the Company.
Very truly yours,
BANC OF AMERICA SECURITIES LLC
By: /S/ LAURA PROVENZALE
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Name: Laura Provenzale
Title: Managing Director
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