Table of Contents

Delaware		3825		04-2564110
(State of other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

William M. Kelly, Esq. William H. Aaronson, Esq. Davis Polk & Wardwell 1600 El Camino Real Menlo Park, California 94025 (650) 752-2000		William A. Levine, Esq. Howard E. Berkenblit, Esq. Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 (617) 338-2800

Proposed Maximum

Proposed Maximum

Amount of

Title of Each Class of

Amount to be

Offering Price

Aggregate Offering

Registration

Securities to be Registered

Registered(1)

Per Unit

Price(2)

Fee(3)

Common Stock, $0.001 Par Value

9,544,578

N/A

$480,760,394

$51,441

(1)	Represents the maximum number of shares of common stock of the Registrant (“KLA-Tencor”) expected to be issuable in connection with the merger in exchange for shares of ADE common stock, based on the exchange ratio of 0.64 shares of KLA-Tencor common stock for each share of common stock, par value $0.01 per share, of ADE Corporation (based on 14,462,887 shares of ADE common stock outstanding on February 21, 2006 and 461,765 shares expected to be issuable pursuant to the exercise of options prior to the expected closing of the merger).
(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(1) and Rule 457(c) of the Securities Act, based on the market value of the ADE shares to be received by KLA-Tencor in the merger, as established by the average of the high and low sales prices of ADE common stock on the Nasdaq Stock Market Consolidated Tape on March 14, 2006.
(3)	This fee has been calculated under Section 6(b) of the Securities Act by multiplying the proposed maximum aggregate offering amount by 0.000107.

---

Table of Contents

The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Prospectus Of		Proxy Statement Of

Richard P. Wallace		Chris L. Koliopoulos, Ph.D.
Chief Executive Officer		President and Chief Executive Officer
KLA-Tencor Corporation		ADE Corporation

---

Table of Contents

	•	a prospectus of KLA-Tencor under Section 5 of the Securities Act of 1933, as amended, and the rules thereunder, which is referred to in this proxy statement/ prospectus as the Securities Act, with respect to the shares of KLA-Tencor common stock to be issued to the holders of ADE common stock in the merger;
	•	a proxy statement of ADE under Section 14(a) of the Securities Exchange Act of 1934, as amended, and the rules thereunder, which is referred to in this proxy statement/ prospectus as the Exchange Act; and
	•	a notice of special meeting with respect to the ADE special meeting, at which, among other things, the stockholders of ADE will consider and vote upon the merger proposal.

---

Table of Contents

	1. To approve the Agreement and Plan of Merger, dated as of February 22, 2006, among KLA-Tencor Corporation, ADE Corporation and South Acquisition Corporation, a copy of which is attached as Annex A to this proxy statement/prospectus;
	2. To permit ADE’s board of directors or its chairman in its or his discretion, to adjourn or postpone the special meeting if necessary for further solicitation of proxies if there are not sufficient votes at the originally scheduled time of the special meeting to approve the ADE merger proposal; and
	3. To act upon such other matters as may properly come before the special meeting.

	By Order of the Board of Directors
	William A. Levine
	Clerk

---

Table of Contents

			Page
QUESTIONS AND ANSWERS ABOUT THE MERGER				1
WHO CAN HELP ANSWER YOUR QUESTIONS				2
SUMMARY				3
	The Companies			3
	What ADE Stockholders Will Receive in the Merger			3
	Recommendation to ADE’s Stockholders			4
	Reasons For and Factors Considered in Connection With the Merger			4
	ADE Stockholder Vote Required			4
	The Merger			4
	Treatment of ADE Stock Options			4
	Ownership of KLA-Tencor After the Merger			5
	Conditions to the Merger			5
	Termination of Merger Agreement			5
	Regulatory Approvals			7
	Opinion of ADE’s Financial Advisor			7
	Material U.S. Federal Income Tax Consequences			7
	Accounting Treatment of the Merger			7
	Listing of KLA-Tencor Common Stock			8
	Interests of Certain Persons in the Merger			8
	Comparison of Stockholder Rights			8
	Risk Factors			8
SELECTED HISTORICAL FINANCIAL INFORMATION				9
	KLA-Tencor Selected Financial Information			9
	ADE Selected Financial Information			10
	Comparative Per Share Data			10
	Comparative Per Share Market Price and Dividend Information			11
RISK FACTORS				13
FORWARD-LOOKING STATEMENTS				16
THE PROPOSED MERGER				17
	General			17
	Background of the Merger			17
	Reasons For and Factors Considered in Connection With the Merger			22
	Opinion of ADE’s Financial Advisor			26
	Material U.S. Federal Income Tax Consequences			34
	Regulatory Matters Relating to the Merger			36
	Federal Securities Laws Consequences; Stock Transfer Restriction Agreements			37
INTERESTS OF CERTAIN PERSONS IN THE MERGER				38
	Ownership of Common Stock; Stock Options			39
	ADE’s Directors and Executive Officers			41

---

Table of Contents

			Page
	Treatment of ADE Stock Options			41
	Director and Officer Liability			41
THE MERGER AGREEMENT				42
	Consideration to Be Received in the Merger; Treatment of Stock Options			42
	Exchange of Certificates in the Merger			43
	Fractional Shares			43
	Listing of KLA-Tencor Common Stock			44
	Covenants			44
	Representations and Warranties			47
	Conditions to the Merger			48
	Termination			50
	Termination Fee Payable by ADE			51
	Other Expenses			51
	Amendments; Waivers			51
	Voting Agreements			51
ACCOUNTING TREATMENT OF THE MERGER				53
INFORMATION ABOUT THE ADE SPECIAL MEETING AND VOTING				53
	Date, Time and Place of the Special Meeting			53
	Purpose of the Special Meeting			53
	Stockholder Record Date for the Special Meeting			53
	Quorum; Vote Required for Each Proposal			54
	Shares Beneficially Owned by ADE Directors and Executive Officers			54
	Voting Procedures			54
	Revoking Your Proxy			55
	Voting Confidentiality			55
	Adjournment or Postponement			55
	Other Business			55
	Solicitation of Proxies			55
COMPARISON OF STOCKHOLDER RIGHTS				56
DESCRIPTION OF KLA-TENCOR CAPITAL STOCK				60
	Authorized Capital Stock			60
	KLA-Tencor Common Stock			60
	KLA-Tencor Preferred Stock			60
	KLA-Tencor Stockholder Rights Plan			61
LEGAL MATTERS				61
EXPERTS				61
STOCKHOLDER PROPOSALS FOR ADE’S 2006 ANNUAL MEETING				62
WHERE YOU CAN FIND MORE INFORMATION				62
ANNEXES
Annex A           Agreement and Plan of Merger
Annex B           Opinion of RBC Capital Markets Corporation
EXHIBIT 5
EXHIBIT 8.(a)
EXHIBIT 8.(b)
EXHIBIT 23.(a)
EXHIBIT 23.(b)
EXHIBIT 99.(a)
EXHIBIT 99.(b)

ii

---

Table of Contents

Q:		Why am I receiving these materials?
A:		We sent you this proxy statement/ prospectus and the enclosed proxy card because the board of directors of ADE is soliciting your proxy to vote at a special meeting of ADE stockholders. You may submit a proxy if you complete, date, sign and return the enclosed proxy card. You are also invited to attend the special meeting in person, although you do not need to attend the special meeting to have your shares voted at the special meeting. We intend to mail this proxy statement/ prospectus and accompanying proxy card on or about                     , 2006 to all stockholders of record of ADE entitled to vote at the special meeting.
Q:		When and where is the special meeting?
A:		The special meeting will take place on                     , 2006 at ADE’s headquarters at 80 Wilson Way, Westwood, Massachusetts, 02090 at 10:00 a.m., Eastern time.
Q:		Why is my vote important?
A:		Approval of the merger proposal requires the affirmative vote of the holders of at least 662/3% of the outstanding shares of ADE common stock. Accordingly, a failure to return your proxy card or vote in person at the special meeting will have the same effect as a vote against the merger proposal.
Q:		What am I voting on?
A.		There are two matters scheduled for a vote:
		• Approval of the merger proposal, as described in “The Proposed Merger” beginning on page 17.
		• Approval of a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger proposal.
		In addition, you are entitled to vote on any other matters that are properly brought before the special meeting.
Q:		What are the recommendations of the ADE Board of Directors?
A:		The ADE Board of Directors:
		• Recommends a vote “FOR” the approval of the merger proposal.
		• Recommends a vote “FOR” the approval of a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes to approve the merger proposal.
Q:		What do I need to do now?
A:		After you carefully read this document, mail your signed proxy card in the enclosed return envelope as soon as possible, so that your shares may be represented at the special meeting. In order to assure that your vote is obtained, please vote your proxy as instructed on your proxy card even if you currently plan to attend the special meeting in person. If you have received multiple proxy cards, your shares may be registered in more than one account, such as brokerage accounts or employee stock purchase plan accounts. It is important that you complete, sign, date and return each proxy card that you receive.
Q:		If my shares are held in “street name” by my broker, will my broker vote my shares for me?
A:		No. If you do not provide your broker with instructions on how to vote your “street name” shares, your broker will not be permitted to vote them on the approval of the merger proposal by ADE stockholders. You should therefore be sure to provide your broker with instructions on how to vote your shares. Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies.

1

---

Table of Contents

Q:		What if I fail to instruct my broker?
A:		If you fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, the resulting broker “non-vote” will be counted toward a quorum at the special meeting, but it will otherwise have the same effect as a vote against the approval of the merger proposal.
Q:		Can I change my vote after I have mailed my proxy card?
A:		Yes. You can change your vote at any time before your proxy is voted at the special meeting. You can do this in any of three ways:
		• timely delivery of a valid, later-dated proxy;
		• written notice to ADE’s Clerk before the special meeting that you have revoked your proxy; or
		• voting by ballot at the special meeting.
		If you have instructed a broker to vote your shares, you must follow directions from your broker to change those instructions.
Q:		Am I entitled to exercise any dissenters’ or appraisal rights in connection with the merger?
A:		Under Massachusetts law, ADE stockholders are not entitled to exercise dissenters’ or appraisal rights in connection with the merger.
Q:		Should I send in my stock certificates now?
A:		No. After the merger is completed, KLA-Tencor will send ADE stockholders written instructions for exchanging their stock certificates.
Q:		When do you expect the merger to be completed?
A:		KLA-Tencor and ADE are working to complete the merger by early in the third quarter of 2006. However, it is possible that factors outside the control of both companies could result in the merger being completed at a later time. KLA-Tencor and ADE hope to complete the merger as soon as reasonably practicable.

2

---

Table of Contents

3

---

Table of Contents

4

---

Table of Contents

5

---

Table of Contents

6

---

Table of Contents

7

---

Table of Contents

8

---

Table of Contents

9

---

Table of Contents

10

---

Table of Contents

11

---

Table of Contents

12

---

Table of Contents

	•	changes in the business, operations or prospects of KLA-Tencor or ADE;
	•	governmental and/or litigation developments and/or regulatory considerations;
	•	market assessments as to whether and when the merger will be consummated;
	•	governmental action affecting the semiconductor and microelectronic industries generally; and
	•	general market and economic conditions.

13

---

Table of Contents

	•	the necessity of coordinating geographically separated organizations, systems and facilities;
	•	integrating the technologies of two previously independent companies; and
	•	integrating personnel with diverse business backgrounds.

14

---

Table of Contents

15

---

Table of Contents

	•	the ability to manage and maintain key customer relationships;
	•	the ability to maintain supply of key components and manage manufacturing requirements;
	•	the ability to successfully manage regulatory, tax and legal matters (including intellectual property matters);
	•	the ability to manage global economic uncertainty and worldwide political instability;
	•	materially adverse changes in industry conditions generally or in the markets served by KLA-Tencor and ADE;
	•	the ability to successfully implement new systems;
	•	the ability to develop and implement new technologies and introduce new products;
	•	customers’ acceptance and adoption of new products and technologies;
	•	the strength or weakness of the semiconductor, data storage and device markets;
	•	wafer pricing and wafer demand;
	•	the results of product development efforts and the success of product offerings to meet customer needs within the timeframe required by customers;
	•	the ability to integrate the businesses of KLA-Tencor and ADE successfully after the merger;
	•	the challenges inherent in diverting management’s focus and resources from other strategic opportunities and from operational matters during the integration process; and
	•	the process of, or conditions imposed in connection with, obtaining regulatory approvals for the merger.

16

---

Table of Contents

17

---

Table of Contents

	•	a stock-for-stock transaction in which ADE stockholders would receive shares of KLA-Tencor common stock based on a value of $30.00 for each outstanding share of ADE common stock;
	•	the transaction would be structured as a tax-free reorganization; and
	•	voting agreements would be executed by each executive officer, director and principal stockholder of ADE.

18

---

Table of Contents

19

---

Table of Contents

20

---

Table of Contents

21

---

Table of Contents

	Factors Considered by, and Recommendation of, the Board of Directors of ADE

22

---

Table of Contents

	•	information concerning the businesses, operations, financial performance and condition, asset quality, earnings and prospects of each of ADE and KLA-Tencor as separate entities and on a combined basis, including their revenues, their complementary businesses and the potential for revenue enhancement and cost savings;
	•	the limited number of possible acquirors in the semiconductor industry with the perceived resources and interest in combining and, in particular, with the same perceived strengths as a combination of KLA-Tencor and ADE would provide;
	•	the enhanced strategic and market position of the combined company and the combined company’s anticipated future financial performance;
	•	the increased volume, geographical expansion and diversity of operations, product lines, served markets and customers that could be achieved by combining ADE and KLA-Tencor;
	•	the limited overlap of the product lines of ADE and KLA-Tencor and the opportunity for the companies to combine complementary technologies to produce a more extensive set of offerings for their customers;
	•	the opportunity for ADE stockholders to participate in a combined company with increased scale, scope, technology capabilities and diversity of operations, product lines, served markets and customers beyond that achievable by ADE alone, and, as stockholders of the combined company, to benefit from future growth of the combined company;
	•	the belief of ADE’s board that the semiconductor industry is entering a consolidation phase and that the combined company, because of its scale and breadth of operations, would be in a better position to lead this consolidation;
	•	the then-current financial market conditions and historical market prices, volatility and trading information with respect to shares of ADE common stock and KLA-Tencor common stock;
	•	the exchange ratio of ADE shares for KLA-Tencor shares and the implied premium over recent and historical market prices of ADE common stock;
	•	the written opinion and related financial analyses of RBC, that, as of the date of the opinion and based on and subject to the various factors, assumptions, procedures, limitations and qualifications set forth in the opinion, the consideration of 0.64 of a share of KLA-Tencor common stock (together with cash in lieu of fractional shares of KLA-Tencor common stock) for each share of ADE common stock provided for in the merger agreement was fair from a financial point of view to holders of shares of ADE common stock. See the section entitled “The Proposed Merger — Opinion of ADE’s Financial Advisor” beginning on page 26. A copy of RBC’s written opinion, dated as of February 21, 2006, is attached as Annex B to this proxy statement/prospectus and should be carefully read in its entirety;
	•	the structure of the merger, including the fact that the fixed exchange ratio provides certainty as to the number of shares of KLA-Tencor common stock to be issued in the merger;
	•	the increased ability of stockholders to liquidate their equity interests, if so desired, by being part of a much larger, more actively traded public company;
	•	the inclusion of a “fiduciary out” in the merger agreement that permits ADE, subject to payment of a termination fee, to terminate the merger agreement in order to accept a superior merger proposal made by a third party;

23

---

Table of Contents

	•	the ability to consummate the merger, including the conditions to the merger requiring receipt of necessary regulatory approvals, and the likelihood of the merger being approved by the appropriate regulatory authorities; and
	•	the fact that the merger is expected to be tax-free to ADE stockholders for U.S. federal income tax purposes, except to the extent that ADE stockholders recognize gain on cash received for any fractional shares;

	•	the risk factors described under “Risk Factors” beginning on page 13, including the challenges and costs inherent in integrating the two businesses, and the time and effort from both KLA-Tencor and ADE executives that will be required to successfully achieve that integration;
	•	the possibility that the merger may not be completed and the potential adverse consequences if the merger is not completed;
	•	the risk that expected benefits from the merger will not be achieved;
	•	the risks associated with a fixed exchange ratio, which by its nature would not adjust upward to compensate for declines in KLA-Tencor’s stock price prior to the completion of the merger, and the absence of any termination right in the merger agreement that would be triggered by a decrease in KLA-Tencor’s stock price (and the corresponding decrease in the value of the merger consideration to be received by ADE stockholders);
	•	the potential loss of customers and suppliers and the termination of contracts of either company as a result of a customer’s, supplier’s, or other counterparty’s unwillingness to do business with the combined company;
	•	the challenges and costs of integrating the assets, operations, management teams, strategies, cultures and organizations of the companies;
	•	the risk that key management and other personnel might not remain employed by the combined company;
	•	the risk that governmental agencies from which KLA-Tencor and ADE will seek approval might seek to impose conditions on or enjoin or otherwise prevent or delay the merger, including requiring KLA-Tencor or ADE to divest assets in connection with obtaining their approval;
	•	if, once initiated, the merger is not ultimately completed, this fact could have the effect of depressing values offered by others to ADE in a business combination and could erode customer and employee confidence in ADE;
	•	the fact that under Massachusetts law and the ADE charter, approval of the merger proposal requires the affirmative vote of at least 662/3% of the holders of the outstanding shares of ADE common stock; and
	•	the interests of ADE’s executive officers with respect to the merger may be different from, or in addition to, the interests of ADE stockholders, as described in the section entitled “Interests of Certain Persons in the Merger” beginning on page 38.

24

---

Table of Contents

	Factors Considered by the Board of Directors of KLA-Tencor

	•	determined by a unanimous vote of the directors present at the meeting that the merger agreement and the transactions contemplated thereby, including the issuance of KLA-Tencor common stock in the merger, are advisable, fair to and in the best interests of KLA-Tencor and its stockholders; and
	•	approved the merger agreement and the issuance of KLA-Tencor common stock in the merger.

	•	information concerning the businesses, operations, financial performance and condition, asset quality, earnings and prospects of ADE, including its revenues, product lines and the potential for revenue enhancement and cost savings;
	•	the potential benefit of adding ADE’s metrology tools to KLA-Tencor’s current and future product lines to provide more comprehensive yield management solutions to bare wafer manufacturers;
	•	current industry, economic and market conditions and trends;
	•	the potential benefits to be derived from a combination of the two companies, including potential cost savings and efficiencies that could result from the merger;
	•	the likelihood that the merger will be completed on a timely basis;
	•	the ability to consummate the merger, including the conditions to the merger requiring receipt of necessary regulatory approvals, and the likelihood of the merger being approved by the appropriate regulatory authorities;
	•	the structure of the merger, including the fact that the fixed exchange ratio provides certainty as to the number of shares of KLA-Tencor common stock to be issued in the merger; and
	•	the terms and conditions of the merger agreement, including:

	•	restrictions on ADE’s ability to solicit other acquisition proposals; and
	•	ADE’s agreement to pay KLA-Tencor a $15 million termination fee in connection with certain terminations of the merger agreement.

25

---

Table of Contents

	•	the risk factors described under “Risk Factors”’ beginning on page 13;
	•	the challenges and costs of integrating the assets, operations, strategies, cultures and organizations of the companies;
	•	the risk that key management and other personnel might not remain employed by KLA-Tencor;
	•	the potential loss of ADE customers and suppliers and the termination of contracts of ADE as a result of a customer’s, supplier’s, or other counterparty’s unwillingness to do business with KLA-Tencor;
	•	the effort and distraction required of KLA-Tencor personnel, and the expenses to be absorbed by KLA-Tencor, in connection with attempting to complete the merger;
	•	the risk that expected benefits from the merger will not be achieved;
	•	the risk that governmental agencies from which KLA-Tencor and ADE will seek approval might seek to impose conditions on or enjoin or otherwise prevent or delay the merger;
	•	the limitations imposed by the federal securities laws on KLA-Tencor’s ability to repurchase shares of KLA-Tencor common stock prior to the completion of the merger; and
	•	the risk that, because the exchange ratio under the merger agreement would not be adjusted for changes in the market price of KLA-Tencor common stock or ADE common stock, the per share value of the consideration to be paid to ADE stockholders on consummation of the merger could be significantly more than the per share value of the consideration immediately prior to the announcement of the proposed merger;

26

---

Table of Contents

	•	reviewing the financial terms of the draft merger agreement dated February 20, 2006 and received by RBC on February 21, 2006;
	•	reviewing and analyzing certain publicly available financial and other data with respect to ADE and KLA-Tencor and certain other relevant historical operating data relating to ADE and KLA-Tencor

27

---

Table of Contents

		made available to RBC from published sources and from the internal records of ADE and KLA-Tencor;
	•	conducting discussions with members of the senior managements of ADE and KLA-Tencor with respect to the business prospects and financial outlook of ADE and KLA-Tencor;
	•	reviewing historical financial information relating to ADE and KLA-Tencor and First Call and Thomson One Analytics consensus estimates regarding the potential future performance of ADE and KLA-Tencor as a standalone entities;
	•	reviewing the reported prices and trading activity for the common stock of each of ADE and KLA-Tencor including their trading relative to one another;
	•	reviewing the potential impact of the merger on KLA-Tencor’s future financial results; and
	•	performing other studies and analyses as RBC deemed appropriate.

		Spot								Average
		Relative				Implied				Relative				Implied
		Trading Ratio				Premium				Trading Ratio				Premium
1 Day			0.579x				10.6	%			—				—
1 Week			0.590x				8.5	%			0.577	x			11.0	%
1 Month			0.576x				11.2	%			0.596	x			7.4	%
3 Month			0.450x				42.3	%			0.533	x			20.1	%
6 Month			0.466x				37.4	%			0.490	x			30.6	%
9 Month			0.500x				27.9	%			0.506	x			26.5	%
12 Month			0.404x				58.6	%			0.504	x			27.0	%
2 Year			0.362x				76.6	%			0.460	x			39.2	%
3 Year			0.197x				224.2	%			0.396	x			61.6	%

	•	RBC compared selected market valuation metrics of ADE and other comparable publicly-traded companies with the financial metrics implied by the merger consideration;
	•	RBC compared the financial metrics of selected precedent transactions with the financial metrics implied by the merger consideration; and
	•	RBC compared the premiums paid in selected precedent transactions with the premiums implied by the merger consideration.

28

---

Table of Contents

	•	Applied Materials
	•	FEI
	•	ICOS Vision Systems
	•	KLA-Tencor
	•	Nanometrics1
	•	Rudolph Technologies2
	•	Therma-Wave
	•	Veeco Instruments
	•	Zygo

1	Does not reflect pending acquisition of Accent Optical Technologies.
2	Does not reflect acquisition of August Technology.

29

---

Table of Contents

Comparable

Company Analysis

ADE

(As Implied by the

Mean

Median

Merger Consideration)

Enterprise value as a multiple of:

Last twelve months revenue

2.6x

2.3x

3.9x

Projected calendar year 2005 revenue

2.6x

2.3x

4.1x

Projected calendar year 2006 revenue

2.4x

2.2x

3.5x

Enterprise value as a multiple of:

Last twelve months operating profit

22.6x

18.8x

21.4x

Projected calendar year 2005 operating profit

22.6x

18.8x

23.5x

Projected calendar year 2006 operating profit

17.3x

15.5x

14.2x

Share price as a multiple of:

Last twelve months earnings per share

35.9x

30.1x

26.7x

Projected calendar year 2005 earnings per share

35.9x

30.1x

32.3x

Projected calendar year 2006 earnings per share

30.4x

24.8x

26.5x

Equity value as a multiple of:

Tangible book value

3.1x

2.7x

3.7x

30

---

Table of Contents

Acquiror		Target
Nanometrics		Accent Optical Technologies
Brooks Automation		Helix Technology
Entegris		Mykrolis
Rudolph Technologies		August Technology
Toppan Printing		DuPont Photomasks
AIXTRON AG		Genus
Credence Systems		NPTest
Keystone Holdings		Coorstek
Novellus Systems		SpeedFam-IPEC
Brooks Automation		PRI Automation
Novellus Systems		GaSonics International
MKS Instruments		Applied Science and Technology

Precedent

Transaction

ADE

Analysis

(As Implied by the

Merger

Mean

Median

Consideration)

Enterprise value as a multiple of:

Last twelve months revenue

2.0x

2.0x

3.9x

Last twelve months EBITDA

12.9x

9.8x

19.4x

Equity value as a multiple of:

Last twelve months net income

29.9x

21.0x

27.5x

Tangible book value

3.6x

3.0x

3.7x

31

---

Table of Contents

			Spot Premiums Paid Analysis Summary
			Mean																Median
			One				One				One				Three				One				One				One				Three
			Day				Week				Month				Months				Day				Week				Month				Months
Type of Transactions:
	Selected Precedent Transactions			32.7	%			41.1	%			36.0	%			11.3	%			31.3	%			33.9	%			34.4	%			6.0	%
	General Technology Transactions			21.7	%			24.1	%			27.9	%			NA				18.2	%			20.4	%			28.3	%			NA
	ADE (as implied by the merger consideration)			10.6	%			7.7	%			12.7	%			46.8	%			10.6	%			7.7	%			12.7	%			46.8	%

			Low																High
			One				One				One				Three				One				One				One				Three
			Day				Week				Month				Months				Day				Week				Month				Months
Type of Transactions:
	Selected Precedent Transactions			5.0	%			2.8	%			1.1	%			(28.1	)%			72.4	%			88.7	%			72.9	%			58.5	%
	General Technology Transactions			(25.4	)%			(14.8	)%			(25.7	)%			NA				83.3	%			84.6	%			81.5	%			NA
	ADE (as implied by the merger consideration)			10.6	%			7.7	%			12.7	%			46.8	%			10.6	%			7.7	%			12.7	%			46.8	%

			Average Premiums Paid Analysis Summary
			Mean												Median
			One				One				Three				One				One				Three
			Week				Month				Months				Week				Month				Months
Type of Transactions:
	Selected Precedent Transactions			35.9	%			37.6	%			23.8	%			35.2	%			36.2	%			19.6	%
	ADE (as implied by the merger consideration)			9.6	%			6.7	%			21.0	%			9.6	%			6.7	%			21.0	%

32

---

Table of Contents

			Low												High
			One				One				Three				One				One				Three
			Week				Month				Months				Week				Month				Months
Type of Transactions:
	Selected Precedent Transactions			3.5	%			2.8	%			5.7	%			65.9	%			66.7	%			63.3	%
	ADE (as implied by the merger consideration)			9.6	%			6.7	%			21.0	%			9.6	%			6.7	%			21.0	%

33

---

Table of Contents

	General

	•	a citizen or resident of the United States;
	•	a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; or
	•	an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

	•	a financial institution or insurance company;
	•	a tax-exempt organization;
	•	a dealer or broker in securities;
	•	a stockholder who holds ADE common stock as part of a hedge, appreciated financial position, straddle, conversion or other integrated transaction; or
	•	a stockholder who acquired ADE common stock pursuant to the exercise of compensatory options or otherwise as compensation.

34

---

Table of Contents

	U.S. Federal Income Tax Consequences of the Transaction

	Tax Opinions

	U.S. Federal Income Tax Consequences to KLA-Tencor, South and ADE

	U.S. Federal Income Tax Consequences to U.S. Holders

35

---

Table of Contents

	Backup Withholding and Information Reporting

	Reporting Requirements

	•	the cost or other basis of the shares of ADE common stock transferred in the exchange; and
	•	the fair market value of the KLA-Tencor common stock and the amount of cash in lieu of a fractional share received in the exchange.

36

---

Table of Contents

37

---

Table of Contents

38

---

Table of Contents

39

---

Table of Contents

		Shares				Percentage
Name		Beneficially Owned(1)				of Total
Directors and Executive Officers:
Harris Clay(2)			885,269				6.1	%
Landon T. Clay(3)			1,754,608				12.1	%
H. Kimball Faulkner(4)			101,217				*
Chris L. Koliopoulos(5)			838,680				5.8	%
Kendall Wright(6)			19,156				*
Brian C. James(7)			160,000				1.1	%
David F. Basila(8)			343,661				2.4	%
All directors and executive officers as a group (7 persons)(9)			4,102,591				27.9	%
Other Five Percent Stockholders:
Mellon Financial Corporation(10)			1,045,986				7.2	%
Private Capital Management, Inc.(11)			2,676,747				18.5	%
Royce & Associates, LLC(12)			1,372,800				9.5	%

	*	Less than one percent.

	(1)	Beneficial ownership of shares for purposes hereof, as determined in accordance with applicable SEC rules, includes shares of common stock as to which a person or entity has or shares voting power and/or investment power. Unless otherwise indicated, each beneficial owner listed above has sole voting and investment power for all of the shares of ADE common stock shown to be beneficially owned by that person or entity. All amounts shown in this column include shares obtainable upon exercise of stock options exercisable within 60 days from the date of this table.
	(2)	Mr. Clay’s address is c/o ADE Corporation, 80 Wilson Way, Westwood, Massachusetts 02090. Includes 1,500 shares of common stock issuable upon exercise of stock options.
	(3)	Includes 240,000 shares held by the Landon T. Clay Charitable Annuity Lead Trust No. 2, 6,500 shares held by the LTC Corp. Pension and Profit Sharing Plan, 180,000 shares held by the Monadnock Charitable Lead Trust, 13,316 shares held by or on behalf of Mr. Clay’s children and 1,000 shares held by the East Hill Hedge Fund. Mr. Clay disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. Mr. Clay’s address is c/o East Hill Management, 200 Clarendon Street, John Hancock Towers, Suite 6000, Boston, Massachusetts 02116. Also includes 1,500 shares of common stock issuable upon exercise of stock options.
	(4)	Includes 1,500 shares of common stock issuable upon exercise of stock options.
	(5)	Dr. Koliopoulos’ address is c/o ADE Corporation, 80 Wilson Way, Westwood, Massachusetts 02090. Includes 70,000 shares of common stock issuable upon exercise of stock options.
	(6)	Includes 1,500 shares of common stock issuable upon exercise of stock options.
	(7)	Includes 158,000 shares of common stock issuable upon exercise of stock options.
	(8)	Includes 248,450 shares of common stock held by SJR Technology L.P., which is beneficially owned by Mr. Basila, his wife and his children.
	(9)	Includes an aggregate of 234,000 shares of common stock issuable upon exercise of stock options.

40

---

Table of Contents

(10)	Based solely on the most recent Schedule 13G filed by Mellon Financial Corporation, or Mellon, with the SEC on February 15, 2006. The address of Mellon is c/o One Mellon Center, Pittsburgh, Pennsylvania 15258.
(11)	Based solely on the most recent Schedule 13G/ A filed by Private Capital Management, L.P., or PCM, with the SEC on February 14, 2006. Includes 2,618,847 shares held by PCM clients and managed by PCM, as to which PCM, its Chief Executive Officer, Bruce S. Sherman, and its President, Gregg J. Powers, have shared dispositive power. Also includes 54,900 shares as to which Mr. Sherman has sole dispositive power. Messrs. Sherman and Powers disclaim beneficial ownership for the shares held by PCM’s clients and disclaim the existence of a group. The address of Private Capital Management, Inc. is 8889 Pelican Bay Blvd., Naples, FL 34108.
(12)	Based solely on the most recent Schedule 13G filed by Royce & Associates, LLC, or Royce, with the SEC on January 10, 2006. The address of Royce is 1412 Avenue of the Americas, New York, NY 10019.

41

---

Table of Contents

	•	each share of ADE common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.64 shares of KLA-Tencor common stock;
	•	except as set forth under the next bullet point, each ADE stock option outstanding under any ADE stock option or compensation plan, agreement or arrangement of ADE at the effective time of the merger will be converted into an option to acquire, on substantially the same terms and conditions previously applicable, shares of KLA-Tencor common stock, except that the number of shares of KLA-Tencor common stock underlying the new KLA-Tencor option will equal the number of shares of ADE common stock for which the corresponding ADE option was exercisable, multiplied by 0.64 (rounded, if necessary, down to the nearest whole share). The per share exercise price of each new KLA-Tencor option will equal the exercise price of the corresponding ADE option divided by 0.64;

42

---

Table of Contents

	•	each ADE stock option held by a non-employee director or former director of ADE outstanding at the effective time of the merger will be canceled, and ADE will pay each holder for each such option an amount of cash equal to: the product of (i) the excess, if any, of (A) 0.64 multiplied by the closing price per share of KLA-Tencor on The Nasdaq National Market on the business day immediately prior to the closing date over (B) the exercise price of such option and (ii) the number of shares of ADE common stock the holder could have purchased had such holder exercised such option immediately prior to the effective time of the merger; and
	•	shares of ADE common stock held as treasury stock or owned by ADE, KLA-Tencor or KLA-Tencor’s subsidiaries will be cancelled. None of KLA-Tencor or its subsidiaries currently owns any shares of ADE common stock.

43

---

Table of Contents

	•	solicit, initiate or take any action that could reasonably be expected to facilitate or encourage the submission of any acquisition proposal;
	•	enter into or participate in any discussions or negotiations with, furnish any nonpublic information relating to ADE or any of its subsidiaries or afford access to the business, properties, assets, books or records of ADE or any of its subsidiaries to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by, any third party that a person acting in good faith would reasonably believe is seeking to make, or has made, an acquisition proposal, except to notify such third party as to the existence of these provisions;
	•	fail to make when required, withdraw or modify in a manner adverse to KLA-Tencor its recommendation of the merger that the ADE stockholders approve the merger proposal (or recommend an acquisition proposal or take any action or make any public statement inconsistent with such recommendation);
	•	grant any third party any waiver or release under any standstill or similar agreement with respect to any class of equity securities of ADE or any of its subsidiaries; or
	•	enter into any agreement in principle, letter of intent, term sheet or other similar instrument relating to an acquisition proposal.

44

---

Table of Contents

	•	engage in negotiations or discussions with any third party or the third party’s representatives that has made a bona fide, unsolicited written acquisition proposal that ADE’s board of directors reasonably believes will lead to a superior proposal;
	•	thereafter furnish to such third party nonpublic information relating to ADE or any of its subsidiaries pursuant to a confidentiality agreement with terms no less favorable to the ADE than those contained in the confidentiality agreement dated as of September 23, 2005 between ADE and KLA-Tencor;
	•	following a determination by ADE’s board of directors that such acquisition proposal is a superior proposal, make an adverse recommendation change; and/or
	•	take any action ordered by a court of competent jurisdiction;

	•	following receipt of a bona fide written acquisition proposal with respect to which its board of directors reasonably believes in good faith by majority vote, after consultation with its outside legal counsel, there is a reasonable likelihood that such acquisition proposal could result in a superior proposal; and
	•	ADE’s board of directors determines in good faith that the failure to effect a change in its recommendation of the merger could be reasonably expected to result in a breach of its fiduciary duties under applicable law.

45

---

Table of Contents

	•	enter into any contract, agreement, lease, license, note, bond, mortgage, indenture, guarantee, other evidence of indebtedness or other instrument, obligation or commitment as specified in the merger agreement;
	•	adopt or propose to adopt any change to ADE’s articles of organization or bylaws;
	•	reclassify, recapitalize, split, combine, exchange or readjust any shares of capital stock of ADE;
	•	declare, set aside or pay any dividend or other distribution with respect to any shares of capital stock of ADE, or repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other securities of, or other ownership interests in, ADE or any of its subsidiaries;
	•	issue, sell, pledge, dispose of, grant, or encumber, except in each case as permitted by the merger for issuances of shares upon the exercise of existing options or under ADE’s employee stock purchase plan or grants of a limited number of stock options:

	•	any shares of its capital stock of any class;
	•	any options, warrants, convertible securities or other rights to acquire any shares of such capital stock; or
	•	any other ownership interest of ADE or any of its subsidiaries;

	•	amend any material term of any outstanding security of ADE or any of its subsidiaries;
	•	grant severance or termination pay or increase employee benefits or compensation above limits set forth in the merger agreement;
	•	enter into any plan or agreement of merger or consolidation involving ADE or any of its subsidiaries, or involving any acquisition by ADE or any of its subsidiaries of a material amount of stock or assets of any other entity;
	•	sell or otherwise dispose of any material subsidiary or sell, lease, license or otherwise dispose of any assets, securities or property in each case material to ADE and its subsidiaries, on a consolidated basis, except either pursuant to existing contracts or commitments or in the ordinary course consistent with past practice;
	•	incur, assume or guarantee any material indebtedness for borrowed money;
	•	create or otherwise incur any lien on any asset of ADE or any of its subsidiaries;
	•	make any loan, advance or capital contribution in excess of $1,000,000 to or investment in any entity;
	•	change any method of accounting or accounting principles or practice by ADE or any of its subsidiaries, except for any such change required by reason of a concurrent change in Generally Accepted Accounting Principles, or GAAP, or Regulation S-X under the Exchange Act; or
	•	authorize, agree or commit to do any of the foregoing.

	•	to prepare and to file as promptly as practicable with any governmental authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents;

46

---

Table of Contents

	•	to obtain and to maintain all required approvals, consents, registrations, permits, authorizations and other confirmations from any governmental authority or other third party that are necessary, proper or advisable to consummate the transactions contemplated by the merger agreement;
	•	to defend any lawsuits or other proceedings challenging the merger agreement; and
	•	to satisfy the conditions to closing.

	•	corporate existence, qualification to conduct business and corporate standing and power;
	•	corporate authority to enter into, and carry out the obligations under, the merger agreement and enforceability of the merger agreement;
	•	absence of a breach of the certificate of incorporation or articles of organization, bylaws, law or material agreements as a result of the merger;
	•	filings with the SEC, disclosure controls and procedures, internal control over financial reporting and financial statements;
	•	the absence of outstanding loans or other extensions of credit by ADE or KLA-Tencor or their respective subsidiaries to any executive officer or director of ADE or KLA-Tencor, respectively, and compliance with Section 402 of the Sarbanes-Oxley Act of 2002;
	•	information supplied for use in this proxy statement/ prospectus;
	•	compliance with laws;
	•	payment of fees to finders or brokers in connection with the merger agreement;
	•	certain tax matters;
	•	governmental authorization; and
	•	absence of undisclosed material liabilities.

47

---

Table of Contents

	•	the unanimous approval by its board of directors of the merger agreement and the transactions contemplated by the merger agreement;
	•	its capitalization, including in particular the number of shares of ADE common stock and stock options outstanding;
	•	corporate existence, qualification to conduct business, corporate standing and power and capitalization of its subsidiaries;
	•	the absence of certain changes to ADE or its subsidiaries or events not in the ordinary course consistent with past practices since April 30, 2005 through the date of the merger agreement;
	•	the absence of any violation of any applicable law and court order which could reasonably be expected to have a material adverse effect and to the knowledge of ADE, absence of any investigation or threat or notice of such violation;
	•	the absence of any action, suit or proceeding pending that could reasonably be expected to have a material adverse effect or that challenges or seeks to prevent, enjoin, alter or materially delay the merger or any of the transactions contemplated by the merger agreement;
	•	the significant contractual agreements to which ADE or any of its subsidiaries is a party;
	•	certain tax representations;
	•	employment and labor matters;
	•	the absence of interested party transactions;
	•	opinion of its financial advisor;
	•	its intellectual property;
	•	its properties and assets;
	•	certain environmental matters with respect to ADE; and
	•	actions related to antitakeover statutes.

	Conditions to the Obligations of both KLA-Tencor and ADE

	•	the approval of the merger proposal by the ADE stockholders in accordance with Massachusetts law;
	•	the absence of any applicable law that will prohibit the consummation of the merger;
	•	the expiration or termination of any applicable waiting period under the HSR Act relating to the merger;
	•	the SEC having declared effective the KLA-Tencor registration statement, of which this proxy statement/ prospectus forms a part, and the absence of any stop order or effectiveness of such registration statement and the absence of any pending or threatened proceedings by the SEC; and

48

---

Table of Contents

	•	the approval for listing on The Nasdaq National Market of the shares of KLA-Tencor common stock to be issued in connection with the merger, subject to official notice of issuance.

	Conditions to the Obligations of KLA-Tencor and South

	•	ADE’s performance in all material respects of all covenants that it is required to perform pursuant to the merger agreement;
	•	as of the effective time of the merger (other than representations and warranties that are made as of a specified date, which need only be accurate as of such specified date), the accuracy of (1) ADE’s representations and warranties which are not qualified as to materiality or material adverse effect and (2) ADE’s representations and warranties which are qualified as to materiality or material adverse effect, disregarding such qualifications and exceptions, in each case, except for such inaccuracies as have not and would not reasonably be expected to have over a commercially reasonable period of time (which period of time shall not be less than one year), individually or in the aggregate, a material adverse effect on ADE;
	•	the absence of any instituted or pending action or proceeding by any governmental authority:

	•	challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the merger or seeking to obtain material damages relating to the transactions contemplated by the merger;
	•	seeking to restrain or prohibit KLA-Tencor’s, South’s or any of KLA-Tencor’s other affiliates’ (1) ability effectively to exercise full rights of ownership of ADE common stock, or (2) ownership or operation (or that of its respective subsidiaries or affiliates) of all or any material portion of the business or assets of ADE and its subsidiaries, taken as a whole, or of KLA-Tencor and its subsidiaries, taken as a whole; or
	•	seeking to compel KLA-Tencor and its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of ADE and its subsidiaries, taken as a whole, or of KLA-Tencor and its subsidiaries, taken as a whole;

	•	the receipt by KLA-Tencor of an opinion of Davis Polk & Wardwell to the effect that the merger will qualify as a tax-free reorganization, dated the effective time of the merger; and
	•	ADE having not suffered from any event, change or development which, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect.

	Conditions to the Obligations of ADE

	•	KLA-Tencor’s and South’s performance in all material respects of all covenants that they are required to perform pursuant to the merger agreement;
	•	as of the effective time of the merger (other than representations and warranties that are made as of a specified date, which need only be accurate as of such specified date), the accuracy of (1) KLA-Tencor’s and South’s representations and warranties which are not qualified as to materiality or material adverse effect and (2) KLA-Tencor’s and South’s representations and warranties which are qualified as to materiality or material adverse effect, disregarding such qualifications and exceptions, in each case, except for such inaccuracies as have not and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on KLA-Tencor; and

49

---

Table of Contents

	•	the receipt by ADE of an opinion of Sullivan & Worcester LLP to the effect that the merger will qualify as a tax-free reorganization, dated the effective time of the merger.

	•	the merger has not been completed by the date that is 75 days after the effectiveness of the registration statement, except that if, on such date, all conditions to the merger have been satisfied or waived other than the conditions relating to antitrust approvals, then the date will be automatically extended to November 22, 2006, such date being referred to as the end date;
	•	there is any permanent legal prohibition to consummating the merger; or
	•	the merger proposal is not approved by ADE’s stockholders at the special meeting.

	•	ADE’s board of directors withdraws, modifies or changes its approval of the merger agreement and the transactions contemplated thereby or its recommendation of the merger to its stockholders;
	•	ADE enters into, or publicly announces its intention to enter into, a definitive agreement or an agreement in principle with respect to a superior proposal;
	•	ADE breaches any representation, warranty, covenant or agreement under the merger agreement and such breach causes any condition to KLA-Tencor’s obligations to complete the merger to not be satisfied and to be incapable of being satisfied by the end date; or
	•	ADE willfully and materially breaches its obligations not to solicit acquisition proposals or other offers. See “The Merger Agreement — No Solicitation” above.

	•	KLA-Tencor or South breaches any of their respective representations, warranties, covenants or agreements under the merger agreement and such breach causes any condition to ADE’s obligations to complete the merger to not be satisfied and to be incapable of being satisfied by the end date; or
	•	prior to receiving the approval of its stockholders of the merger agreement and the transactions contemplated thereby, ADE’s board of directors authorizes ADE to terminate the merger agreement to enter into an agreement with respect to a superior proposal, except that ADE cannot terminate the merger agreement for this reason unless (1) ADE provides KLA-Tencor with three business day advance written notice of its intent to terminate the merger agreement, including the material terms and conditions of the superior proposal, (2) KLA-Tencor, within three business days of receiving such notice from ADE, does not make an offer that the board of directors of ADE determines, in good faith after consultation with its financial advisors, is at least as favorable to the ADE stockholders as the transaction as set forth in such written notice (and ADE will not enter into any such binding, definitive agreement during such three business day period) and (3) ADE pays KLA-Tencor the fee described in “The Merger Agreement — Termination Fee Payable by ADE” below at or prior to such termination.

50

---

Table of Contents

	•	by KLA-Tencor if ADE’s board of directors withdraws, modifies or changes its approval of the merger agreement or its recommendation of the merger to its stockholders;
	•	by KLA-Tencor if ADE enters into, or publicly announces its intention to enter into, a definitive agreement or an agreement in principle with respect to a superior proposal;
	•	by KLA-Tencor if ADE has willfully and materially breached its obligations not to solicit acquisition proposals or other offers; and
	•	by ADE if at any time prior to receiving the approval of the merger proposal by ADE’s stockholders, ADE enters into a definitive agreement with respect to a superior proposal by a third party;
	•	by KLA-Tencor or ADE following the failure of the merger to be completed by the end date, provided that prior to the end date, an acquisition proposal was made with respect to ADE and within 12 months following the termination of the merger agreement, ADE consummates an alternative business combination; or
	•	by KLA-Tencor or ADE following the failure by ADE’s stockholders to approve the merger proposal at the special meeting, provided that prior to the special meeting, an acquisition proposal was made with respect to ADE and within 12 months following the termination of the merger agreement, ADE consummates an alternative business combination.

51

---

Table of Contents

52

---

Table of Contents

	1. To approve the Agreement and Plan of Merger, dated as of February 22, 2006, among KLA-Tencor, ADE and South, a copy of which is attached as Annex A to this proxy statement/prospectus. This proposal is referred to in this proxy statement/ prospectus as the merger proposal;
	2. To permit ADE’s board of directors or its chairman in its or his discretion, to adjourn or postpone the special meeting if necessary for further solicitation of proxies if there are not sufficient votes at the originally scheduled time of the special meeting to approve the merger proposal; and
	3. To act upon such other matters as may properly come before the special meeting.

53

---

Table of Contents

54

---

Table of Contents

55

---

Table of Contents

		ADE Stockholder Rights		KLA-Tencor Stockholder Rights
Authorized Capital Stock:		The authorized capital stock of ADE consists of (a) 25,000,000 shares of common stock, par value $0.01 per share, and (b) 1,000,000 shares of preferred stock, par value $1.00 per share.		The authorized capital stock of KLA-Tencor consists of (a) 500,000,000 shares of common stock, par value $0.001 per share, and (b) 1,000,000 shares of preferred stock, par value $0.001 per share.
Classified Board of Directors:		ADE’s entire board of directors is elected annually.		KLA-Tencor’s board of directors is divided into three classes, each as nearly equal in number as possible, with each class being elected every three years to a three-year term.
Size of Board of Directors:		The number of ADE’s directors is currently set at five.		The number of KLA-Tencor directors is currently set at nine.
Removal of Directors:		ADE directors may be removed from office by a stockholder vote at any time, with or without cause, but only by the approval of at least 80% of the outstanding shares of ADE common stock. A director may also be removed for cause by the majority of the directors then in office.		KLA-Tencor directors may be removed from office by a stockholder vote at any time, but only with cause, and only by the approval of at least a majority of the outstanding shares of KLA- Tencor common stock.
Nominations of Directors at Annual Meetings:		An ADE stockholder may nominate an individual for election as a director by sending written notice to ADE no later than 90 days prior to the anniversary date of the immediately preceding annual meeting.		A KLA-Tencor stockholder may nominate an individual for election as a director by sending written notice to KLA-Tencor no later than 120 days prior to the anniversary date of the immediately preceding annual meeting, except in certain cases.
Annual Meeting Proposals:		An ADE stockholder who intends to present a proposal at ADE’s annual meeting and who intends to conduct his or her own proxy solicitation must submit		An KLA-Tencor stockholder who intends to present a proposal at KLA-Tencor’s annual meeting and who intends to conduct his or her own proxy solicitation

56

---

Table of Contents

		ADE Stockholder Rights		KLA-Tencor Stockholder Rights
		the proposal so it is received by ADE no later than 45 calendar days before the first anniversary of the date that ADE first mailed its proxy materials for the previous year’s annual meeting.		must submit the proposal so it is received by KLA-Tencor no later than 120 calendar days before the first anniversary of the date that KLA-Tencor first mailed its proxy materials for the previous year’s annual meeting.
Calling of Special Meeting of Stockholders:		Holders of at least 40% of the outstanding shares of ADE common stock may call a special meeting of stockholders.		KLA-Tencor’s stockholders may not call a special meeting of stockholders.
Amendment of Charter:		An amendment to the ADE articles of organization requires the approval of ADE’s board and the affirmative vote of the holders of at least 662/3% of the outstanding shares of ADE common stock, except in circumstances relating to changes in authorized stock or to ADE’s name, where only the affirmative vote of the holders of a majority of the outstanding shares of ADE common stock is required.		An amendment to the KLA- Tencor certificate of incorporation requires the approval of KLA-Tencor’s board of directors and the affirmative vote of the holders of a majority of the outstanding shares of KLA-Tencor common stock.
Amendment of Bylaws:		ADE’s bylaws may be amended either by the affirmative vote of the holders of a majority of the outstanding shares of ADE common stock, or by the affirmative vote of a majority of ADE’s board of directors. Any action taken by ADE’s board with respect to ADE’s bylaws may be amended, repealed or reinstated by the affirmative vote of the holders of at least a majority of the outstanding shares of ADE common stock, except that the affirmative vote of the holders of at least 80% of the outstanding shares of ADE common stock is required to amend any provision inconsistent with, or repeal any bylaw provisions relating to the number of directors, director terms, nomination of directors, director vacancies, removal of directors and amendments to ADE’s bylaws.		KLA-Tencor’s bylaws may be amended either by the affirmative vote of the holders of a majority of the outstanding shares of KLA- Tencor common stock, or by the affirmative vote of a majority of KLA-Tencor’s board of directors. Any action taken by KLA- Tencor’s board with respect to KLA-Tencor’s bylaws may be amended, repealed or reinstated by the affirmative vote of the holders of at least a majority of the outstanding shares of KLA- Tencor common stock.

57

---

Table of Contents

		ADE Stockholder Rights		KLA-Tencor Stockholder Rights
Approval of a Merger or Sale of All or Substantially All Assets:		Mergers and consolidations, as well as a sale of all or substantially all assets, must be approved both by the board of directors and holders of at least 662/3% of the outstanding shares of ADE common stock.		Mergers and consolidations, as well as a sale of all or substantially all assets, must be approved both by the board of directors and by holders of a majority of the outstanding shares of KLA-Tencor common stock.
Business Combinations Statute:		ADE is governed by Chapter 110F of the Massachusetts General Laws which generally prohibits ADE from engaging in “business combinations” with “interested stockholders” (defined generally as the owner, together with associates and affiliates, of 5% or more of the outstanding voting stock) for a period of three years after the date on which the person becomes an interested stockholder unless (1) the interested stockholder obtains prior board approval before becoming an interested stockholder, (2) the interested stockholder acquires 90% of ADE’s outstanding voting stock at the time the person becomes an interested stockholder, or (3) the business combination is approved by both the board of directors and holders of at least 662/3% of the outstanding voting stock.		KLA-Tencor is governed by Section 203 of Delaware General Corporation Law which generally prohibits KLA-Tencor from engaging in “business combinations” with “interested stockholders” (defined generally as the owner, together with associates and affiliates, of 15% or more of the outstanding voting stock) for a period of three years after the date in which the person becomes an interested stockholder unless (1) the interested stockholder obtains prior board approval before becoming an interested stockholder, (2) the interested stockholder acquires 85% of KLA- Tencor’s outstanding voting stock at the time the person becomes an interested stockholder, or (3) the business combination is approved by both the board of directors and holders of at least 662/3% of the outstanding voting stock. The KLA-Tencor certificate of incorporation provides that certain “business combinations” with an “interested stockholder” or affiliate of an interested stockholder require, in addition to any vote required by law, the affirmative vote of at least 80% of the holders of the outstanding shares of KLA-Tencor’s common stock, unless such transactions have been approved by a majority of disinterested directors.
Dissenters’ Rights:		Dissenters’ rights are available to dissenting stockholders of ADE with respect to certain (1) sales, leases or exchanges of substantially all of ADE’s property or assets, (2) mergers		Dissenters’ rights are available to dissenting stockholders of KLA- Tencor in connection with a statutory merger or consolidation in certain specified situations.

58

---

Table of Contents

		ADE Stockholder Rights		KLA-Tencor Stockholder Rights
		and consolidations, (3) share exchanges and (4) amendments to ADE’s articles of organization. Dissenters’ rights are not available in connection with a merger in which (1) all stockholders are to receive only (a) cash for their shares in amounts equal to what they would receive upon a dissolution of ADE or (b) marketable securities of the surviving corporation and/or cash and (2) no director, officer or controlling stockholder has a direct or indirect material financial interest in the merger (other than as a stockholder or director).		Dissenters’ rights are not available to KLA-Tencor stockholders (1) with respect to a merger or consolidation if such stockholders receive only shares which are either listed on a national securities exchange or designated as a national market system security on an inter-dealer quotation system by the National Association of Securities Dealers, Inc. or are held of record by more than 2,000 holders, except in certain circumstances, or (2) surviving a merger if no vote of the stockholders of the surviving corporation is required to approve the merger. In addition, dissenters’ rights are not available if KLA-Tencor acquires another business through the issuance of its stock (a) in exchange for the assets of the business to be acquired, (b) in exchange for the outstanding stock of the corporation to be acquired, or (c) in a merger of the corporation to be acquired with a subsidiary of the acquiring corporation.
Stockholder Rights Plan:		ADE does not have a stockholder rights plan.		KLA-Tencor has adopted the Rights Agreement between KLA-Tencor and State Street Bank and Trust Company, as successor-in-interest to First National Bank of Boston, as Rights Agent, as restated and amended on April 25, 1996. See “Description of KLA-Tencor Capital Stock — KLA-Tencor Stockholder Rights Plan” on page 61.
Fiscal Year:		ADE’s fiscal year ends on April 30.		KLA-Tencor’s fiscal year ends on June 30.
Dividends:		ADE has never declared or paid dividends to its stockholders.		KLA-Tencor currently pays a quarterly dividend to its stockholders. See “Summary — Comparative Per Share Market Price and Dividend Information” beginning on page 11.

59

---

Table of Contents

60

---

Table of Contents

	•	10 days following a public announcement that a person or group, or acquiring person, has acquired or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of KLA-Tencor common stock; or
	•	10 days following the commencement or announcement of a tender offer or exchange offer which, if consummated, would result in the beneficial ownership by an acquiring person of 15% or more of the outstanding shares of KLA-Tencor common stock.

	•	the tenth day following a public announcement that an acquiring person has acquired beneficial ownership of 15% or more of the shares of KLA-Tencor common stock then outstanding, or the stock acquisition date, or such later date as may be determined by a majority of the directors of KLA-Tencor not affiliated with the acquiring person or group and publicly announced; or
	•	the expiration date of the rights.

61

---

Table of Contents

62

---

Table of Contents

KLA-Tencor SEC Filings
(File No. 000-9992)		Period
Annual Report on Form 10-K		Fiscal year ended June 30, 2005
Quarterly Reports on Form 10-Q		Quarters ended September 30, 2005 and December 31, 2005
Current Reports on Form 8-K		Filed on July 28, 2005 (Item 5.02 and corresponding Exhibit 99.1 press release only), August 4, 2005, September 27, 2005, September 29, 2005, November 7, 2005, November 8, 2005, November 17, 2005, January 9, 2006, January 24, 2006, February 22, 2006 and February 23, 2006
Description of KLA-Tencor Common Stock from Registration Statement on Form 8-A		Filed on March 29, 1989
Description of KLA-Tencor Common Stock and rights attached thereto from Amended Registration Statement on Form 8-A		Filed on September 25, 1995 and September 24, 1996

ADE SEC Filings
(File No. 000-26714)		Period
Annual Report on Form 10-K		Fiscal year ended April 30, 2005
Quarterly Reports on Form 10-Q		Quarters ended July 31, 2005, October 31, 2005 and January 31, 2006
Current Reports on Form 8-K		Filed on May 23, 2005, September 23, 2005, October 14, 2005 and February 23, 2006

63

---

Table of Contents

64

---

Table of Contents

---

Table of Contents

				Page
ARTICLE 1  Definitions
Section 1.01.		Definitions			A-1
Section 1.02.		Other Definitional and Interpretative Provisions			A-5
ARTICLE 2
The Merger
Section 2.01.		The Merger			A-5
Section 2.02.		Conversion of Shares			A-6
Section 2.03.		Surrender and Payment			A-6
Section 2.04.		Stock Options			A-7
Section 2.05.		Adjustments			A-8
Section 2.06.		Fractional Shares			A-9
Section 2.07.		Withholding Rights			A-9
Section 2.08.		Lost Certificates			A-9
ARTICLE 3  The Surviving Corporation
Section 3.01.		Articles of Organization			A-9
Section 3.02.		Bylaws			A-9
Section 3.03.		Directors and Officers			A-9
ARTICLE 4  Representations and Warranties of the Company
Section 4.01.		Corporate Existence and Power			A-9
Section 4.02.		Corporate Authorization			A-10
Section 4.03.		Governmental Authorization			A-10
Section 4.04.		Non-Contravention			A-10
Section 4.05.		Capitalization			A-10
Section 4.06.		Subsidiaries			A-11
Section 4.07.		SEC Filings and the Sarbanes-Oxley Act			A-11
Section 4.08.		Financial Statements			A-12
Section 4.09.		Disclosure Documents			A-12
Section 4.10.		Absence of Certain Changes			A-13
Section 4.11.		No Undisclosed Material Liabilities			A-14
Section 4.12.		Compliance with Laws and Court Orders			A-14
Section 4.13.		Litigation; Investigations			A-14
Section 4.14.		Agreements, Contracts and Commitments			A-15
Section 4.15.		Finders’ Fees			A-16
Section 4.16.		Opinion of Financial Advisor			A-16
Section 4.17.		Interested Party Transactions			A-16
Section 4.18.		Intellectual Property			A-16
Section 4.19.		Taxes			A-17
Section 4.20.		Tax Treatment			A-18
Section 4.21.		Properties and Assets			A-18
Section 4.22.		Employee Benefit Plans			A-19

A-i

---

Table of Contents

				Page
Section 4.23.		Environmental Matters			A-20
Section 4.24.		Antitakeover Statutes			A-21
ARTICLE 5  Representations and Warranties of Parent and Merger Subsidiary
Section 5.01.		Corporate Existence and Power			A-21
Section 5.02.		Corporate Authorization			A-21
Section 5.03.		Governmental Authorization			A-21
Section 5.04.		Non-Contravention			A-21
Section 5.05.		SEC Filings and the Sarbanes-Oxley Act			A-22
Section 5.06.		Financial Statements			A-23
Section 5.07.		No Undisclosed Material Liabilities			A-23
Section 5.08.		Disclosure Documents			A-23
Section 5.09.		Finders’ Fees			A-23
Section 5.10.		Tax Treatment			A-23
Section 5.11.		Ownership of Merger Subsidiary; No Prior Activities			A-23
Section 5.12.		No Stockholder Vote Required			A-24
ARTICLE 6  Covenants of the Company
Section 6.01.		Conduct of the Company			A-24
Section 6.02.		Stockholder Meeting; Proxy Material			A-25
Section 6.03.		No Solicitation; Other Offers			A-25
Section 6.04.		Access to Information			A-27
Section 6.05.		Tax Matters			A-27
ARTICLE 7
Covenants of Parent
Section 7.01.		Obligations of Merger Subsidiary			A-28
Section 7.02.		Voting of Shares			A-28
Section 7.03.		Director and Officer Liability			A-28
Section 7.04.		Stock Exchange Listing			A-28
Section 7.05.		Blue Sky Laws			A-29
Section 7.06.		Employee Benefits Plans			A-29
ARTICLE 8  Covenants of Parent and the Company
Section 8.01.		Reasonable Best Efforts			A-29
Section 8.02.		Certain Filings			A-30
Section 8.03.		Public Announcements			A-31
Section 8.04.		Further Assurances			A-31
Section 8.05.		Notices of Certain Events			A-31
Section 8.06.		Tax-Free Reorganization			A-31
Section 8.07.		Affiliates			A-32
Section 8.08.		Certain Section 16 Matters			A-32

A-ii

---

Table of Contents

				Page
ARTICLE 9  Conditions to the Merger
Section 9.01.		Conditions to the Obligations of Each Party			A-32
Section 9.02.		Conditions to the Obligations of Parent and Merger Subsidiary			A-32
Section 9.03.		Conditions to the Obligations of the Company			A-33
ARTICLE 10
Termination
Section 10.01.		Termination			A-34
Section 10.02.		Effect of Termination			A-35
ARTICLE 11
Miscellaneous
Section 11.01.		Notices			A-35
Section 11.02.		Survival of Representations and Warranties			A-36
Section 11.03.		Amendments and Waivers			A-36
Section 11.04.		Expenses			A-36
Section 11.05.		Disclosure Schedule References			A-37
Section 11.06.		Binding Effect; Benefit; Assignment			A-37
Section 11.07.		Governing Law			A-37
Section 11.08.		Jurisdiction			A-37
Section 11.09.		WAIVER OF JURY TRIAL			A-37
Section 11.10.		Counterparts; Effectiveness			A-37
Section 11.11.		Entire Agreement			A-38
Section 11.12.		Severability			A-38
Section 11.13.		Specific Performance			A-38

Schedule A		Company Disclosure Schedule
Exhibit A		Form of Voting Agreement
Exhibit B		Form of Rule 145 Letter
Exhibit C		Form of Parent Tax Representations Letter
Exhibit D		Form of Company Tax Representations Letter

A-iii

---

Table of Contents

	“Acquisition Proposal” means, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any Third Party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 20% or more of the consolidated assets of the Company and its Subsidiaries or 20% or more of any class of equity or voting securities of the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute more than 20% of the consolidated assets of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such Third Party beneficially owning 20% or more of any class of equity or voting securities of the Company or (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its Subsidiaries that, if consummated, would result in such Third Party or its stockholders beneficially owning 20% or more of any class of equity or voting securities of the Company or the surviving entity in such transaction.
	“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.
	“Applicable Law” means, with respect to any Person, any Law that is binding upon or applicable to such Person.
	“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.
	“Closing Date” means the date of the Closing.
	“Code” means the Internal Revenue Code of 1986, as amended.
	“Company Balance Sheet” means the consolidated balance sheet of the Company as of April 30, 2005, and the footnotes thereto set forth in the Company 10-K.
	“Company Balance Sheet Date” means April 30, 2005.
	“Company Common Stock” means the common stock, $0.01 par value per share, of the Company.
	“Company Disclosure Schedule” means the Company Disclosure Schedule attached hereto as Schedule A.

A-1

---

Table of Contents

	“Company Stock Option Plans” means the Company’s 2000 Employee Stock Option Plan, 1997 Employee Stock Option Plan and 1995 Stock Option Plan, in each case as amended.
	“Company 10-K” means the Company’s annual report on Form 10-K for the fiscal year ended April 30, 2005.
	“Delaware Law” means the General Corporation Law of the State of Delaware.
	“Environmental Laws” means any Applicable Laws or any agreement with any Governmental Authority or other third party, relating to human health and safety, the environment or to Hazardous Substances.
	“Environmental Permits” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental Authorities relating to or required by Environmental Laws and affecting, or relating to, the business of the Company or any Subsidiary as currently conducted.
	“ERISA” means the Employee Retirement Income Security Act of 1974.
	“ERISA Affiliate” of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code.
	“Exchange Ratio” means 0.64.
	“GAAP” means generally accepted accounting principles in the United States.
	“Governmental Authority” means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof.
	“Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including any substance, waste or material regulated under any Environmental Law.
	“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
	“Intellectual Property” shall mean the rights associated with trademarks, service marks, trade names, and internet domain names, together with registrations and applications related to the foregoing; patents and industrial design registrations or applications (including any continuations, divisionals, continuations-in-part, renewals, reissues, re-examinations and applications for any of the foregoing); rights in works of authorship protected by copyright for E.U. design registrations; copyrights (including any registrations and applications for any of the foregoing); rights in mask works and trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models and methodologies.
	“International Plan” means any employment, severance or similar contract or arrangement (whether or not written) or any plan, policy, fund, program or arrangement or contract providing for severance, insurance coverage (including any self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, pension or retirement benefits or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights or other forms of incentive compensation or post-retirement insurance, compensation or benefits that (i) is not an Employee Plan, (ii) is entered into, maintained, administered or contributed to by the Company or any of its Affiliates and (iii) covers any employee or former employee of the Company or any of its Subsidiaries.
	“Knowledge” of the Company means the actual knowledge of the employees of the Company set forth in the Company Disclosure Schedule. The Company employees so listed on the Company Disclosure Schedule are referred to herein as the “Company Senior Employees.”

A-2

---

Table of Contents

	“Law” means any domestic or foreign federal, state, provincial, local, municipal or other law, statute, code, constitution, treaty, convention, ordinance, rule, regulation, administrative, executive or other order (whether temporary, preliminary or permanent) of any Governmental Authority, judgment, writ, stipulation, award, injunction, decree or arbitration award or finding entered or imposed by any Governmental Authority, in any case that are in force as of the date hereof or that come into force during the term of this Agreement, and as amended unless expressly specified otherwise.
	“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset, other than Permitted Liens. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset (unless such interest constitutes a Permitted Lien).
	“Massachusetts Law” means the Massachusetts Business Corporation Act (Massachusetts General Laws Chapter 156D), unless (and solely to the limited extent that) the Business Corporation Law of the Commonwealth of Massachusetts (Massachusetts General Laws Chapter 156B) is otherwise applicable, in which case, it shall mean the Business Corporation Law of the Commonwealth of Massachusetts (Massachusetts General Laws Chapter 156B).
	“Material Adverse Effect” means, with respect to any Person, a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of such Person and its Subsidiaries, taken as a whole; provided, however, that none of the following shall be deemed by itself or by themselves, either alone or in combination, to constitute a Material Adverse Effect on such Person: (i) any change in the market price or trading volume of such Person; (ii) with respect to the Company, any adverse effect resulting from or arising out of the execution, delivery, announcement or performance of its obligations under this Agreement or the announcement, pendency or anticipated consummation of the Merger; (iii) any change arising out of conditions affecting the economy or industry of such Person in general which does not affect such Person in a materially disproportionate manner relative to other participants in the economy or such industry, respectively; or (iv) with respect to the Company, any short-term adverse change in the Company’s revenues, gross margins or earnings (including any short-term delay in, or reduction or cancellation of, orders of the Company’s products), except for such changes as in the aggregate would be reasonably expected to have (in light of all relevant facts and circumstances) a material adverse impact on the Company’s earnings power over a commercially reasonable period of time (which period of time shall not be less than one year).
	“Nasdaq” means the Nasdaq National Market.
	“1933 Act” means the Securities Act of 1933, as amended.
	“1934 Act” means the Securities Exchange Act of 1934, as amended.
	“Parent Balance Sheet” means the consolidated balance sheet of Parent as of June 30, 2005, and the footnotes therein set forth in the Parent 10-K.
	“Parent Balance Sheet Date” means June 30, 2005.
	“Parent Common Stock” means the common stock, $0.001 par value per share, of Parent.
	“Parent 10-K” means Parent’s annual report on Form 10-K for the fiscal year ended June 30, 2005.
	“Permitted Liens” means (i) mechanic’s and other similar statutory liens that are not material in nature or amount, (ii) liens for Taxes or other governmental charges not yet due and payable or due but not delinquent or that are being contested in good faith and reflected in financial statements of the Company contained within a Company SEC Document, (iii) liens for which adequate reserves have been established on the books of the Company; provided that such reserves are reflected in the

A-3

---

Table of Contents

	Company Balance Sheet, (iv) restrictions on transfers of securities under applicable securities Laws, and (v) liens that do not materially impair the use or operation of the property or assets subject thereto.
	“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
	“Registered Intellectual Property” means U.S. and foreign (i) patents and pending patent applications, (ii) trademark registrations (including Internet domain registrations) and pending trademark applications, and (iii) copyright registrations and pending copyright applications.
	“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
	“SEC” means the Securities and Exchange Commission.
	“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.
	“Third Party” means any Person, including as defined in Section 13(d) of the 1934 Act, other than Parent or any of its Affiliates.

Term		Section
Adverse Recommendation Change			6.03
Agreement			Preamble
Certificates			2.03
Closing			2.01
Company			Preamble
Company Board Recommendation			4.02
Company ESPP			7.06
Company Material Contracts			4.14
Company Preferred Stock			4.05
Company Proprietary Product			4.18
Company Real Property Leases			4.21
Company Registered Intellectual Property			4.18
Company SEC Documents			4.07
Company Securities			4.05
Company Stockholder Approval			4.02
Company Stockholder Meeting			6.02
Company Stock Option			2.04
Company Subsidiary Securities			4.06
Confidentiality Agreement			6.03
Continuing Employees			7.06
Effective Time			2.01
Employee Plans			4.22
End Date			10.01
Exchange Agent			2.03
Indemnified Person			7.03
Internal Controls			4.07

A-4

---

Table of Contents

Term		Section
Merger			2.01
Merger Consideration			2.02
Merger Subsidiary			Preamble
Multiemployer Plan			4.22
Parent			Preamble
Parent SEC Documents			5.05
Parent ESPP			7.06
Payment Event			11.04
Registration Statement			4.09
Proxy Statement			4.09
Superior Proposal			6.03
Surviving Corporation			2.01
Tax			4.19
Taxing Authority			4.19
Tax Return			4.19
Tax Sharing Agreements			4.19
368 Reorganization			4.20
Uncertificated Shares			2.03

A-5

---

Table of Contents

	(a) except as otherwise provided in Sections 2.05 and 2.06, each share of Company Common Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive the number of shares of Parent Common Stock represented by the Exchange Ratio (together with the cash in lieu of fractional shares of Parent Stock as specified in Section 2.06, the “Merger Consideration”);
	(b) each share of Company Common Stock held by the Company as treasury stock or owned by Parent or any of its Subsidiaries immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto;
	(c) each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and
	(d) the shares of Parent Common Stock to be issued as part of the Merger Consideration will have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable and the issuance thereof will not be subject to any preemptive or other similar right.

A-6

---

Table of Contents

A-7

---

Table of Contents

A-8

---

Table of Contents

A-9

---

Table of Contents

A-10

---

Table of Contents

A-11

---

Table of Contents

A-12

---

Table of Contents

	(a) any event, change or development that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company;
	(b) any adoption of or proposal to adopt any change to the Company’s articles of organization or bylaws;
	(c) any reclassification, recapitalization, stock split, split-up or combination, exchange or readjustment with respect to any shares of capital stock of the Company;
	(d) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company or any of its non-wholly owned Subsidiaries of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any of its non-wholly owned Subsidiaries;
	(e) any amendment of any material term of any outstanding Company Security or any security of its Subsidiaries;
	(f) any merger or consolidation involving the Company or any of its Subsidiaries, or any acquisition by the Company or any of its Subsidiaries of a material amount of stock or assets of any other Person;
	(g) any sale, lease, license or other disposition of any material Subsidiary or any assets, securities or property material to the Company and its Subsidiaries, on a consolidated basis, by the Company or any of its Subsidiaries, except (i) pursuant to existing contracts or commitments and (ii) in the ordinary course consistent with past practice;
	(h) any incurrence, assumption or guarantee by the Company or any of its Subsidiaries of any material indebtedness for borrowed money;
	(i) any creation or other incurrence by the Company or any of its Subsidiaries of any Lien on any asset;
	(j) any making of any loan, advance or capital contribution in excess of $100,000 to or investment in any Person, other than (i) advances or investments in wholly owned Subsidiaries, and (ii) advances or loans to vendors made in the ordinary course of business consistent with past practice;
	(k) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any of its Subsidiaries that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company;

A-13

---

Table of Contents

	(l) any transaction or commitment made, or any contract or agreement entered into, by the Company or any of its Subsidiaries that would be required to be identified as a material contract in a report by the Company on Form 8-K, Form 10-Q or Form 10-K under the 1934 Act;
	(m) any material recall, field notification or field correction with respect to products manufactured by or on behalf of the Company or any of its Subsidiaries;
	(n) any change in any method of accounting or accounting principles or practice by the Company or any of its Subsidiaries, except for any such change required by reason of a concurrent change in GAAP or Regulation S-X under the 1934 Act;
	(o) any (i) grant of any severance or termination pay to (or amendment to any existing arrangement with) any director, officer of the Company or any of its Subsidiaries or any Company Senior Employee, (ii) increase in benefits payable under any existing severance or termination pay policies or employment agreements, (iii) entering into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director or officer of the Company or any of its Subsidiaries or any Company Senior Employee, (iv) establishment, adoption or amendment (except as required by Applicable Law) of any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any director, officer or employee of the Company or any of its Subsidiaries or (v) increase in compensation, bonus or other benefits payable to any director or officer of the Company or any of its Subsidiaries or any Company Senior Employee;
	(p) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any of its Subsidiaries, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees; or
	(q) any material Tax election made or changed, any annual tax accounting period changed, any method of tax accounting adopted or changed, any material amended Tax Returns or claims for material Tax refunds filed, any closing agreement entered into, any material Tax claim, audit or assessment settled, or any right to claim a material Tax refund, offset or other reduction in Tax liability surrendered.

	(a) liabilities or obligations disclosed and provided for in the Company Balance Sheet or in the notes thereto,
	(b) liabilities or obligations incurred in the ordinary course of business consistent with past practices since the Company Balance Sheet Date that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and
	(c) liabilities or obligations incurred in connection with the execution of this Agreement.

A-14

---

Table of Contents

	(i) has a remaining term of more than one year from the date hereof and (A) cannot be unilaterally terminated by the Company at any time, without material penalty, within thirty (30) days of providing notice of termination, and (B) involves the payment or receipt of money in excess of $100,000 per year;
	(ii) involves the payment or receipt of money in excess of $100,000 in any year, other than purchase orders issued (or received) for the purchase or sale of goods in the ordinary course of business consistent with past practice;
	(iii) contains covenants limiting the freedom of the Company or any of its Subsidiaries to sell any products or services of or to any other Person, engage in any line of business or compete with any Person or operate at any location;
	(iv) was made with any director or officer of the Company or any Company Senior Employee, or any service, operating or management agreement or arrangement with respect to any of the Company’s assets or properties (whether leased or owned), other than those that are terminable by the Company on no more than thirty (30) days’ notice without liability or financial obligation to the Company;
	(v) is a dealer, distributor, joint marketing or development agreement under which the Company has continuing material obligations to jointly market any product, technology or service and which may not be canceled without penalty upon notice of ninety (90) days or less, or any agreement pursuant to which the Company has continuing material obligations to jointly develop any Intellectual Property that will not be owned, in whole or in part, by the Company;
	(vi) includes indemnification, guaranty or warranty provisions other than those contained in contracts entered into in the ordinary course of the Company’s business;
	(vii) is a mortgage, indenture, guarantee, loan or credit agreement, security agreement or other agreement or instrument relating to the borrowing of money or extension of credit;
	(viii) is a settlement agreement under which the Company has ongoing obligations; or
	(ix) is a Company Real Property Lease.

A-15

---

Table of Contents

A-16

---

Table of Contents

A-17

---

Table of Contents

A-18

---

Table of Contents

A-19

---

Table of Contents

	(i) no notice, notification, demand, request for information, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed, and no action, claim, suit, or proceeding is pending (nor is there any investigation of which the Company is aware) or, to the Knowledge of the Company, is threatened by any Governmental Authority or other Person relating to the Company or any Subsidiary and relating to or arising out of any Environmental Law;
	(ii) the Company and its Subsidiaries are and have been in compliance with all Environmental Laws and all Environmental Permits; and
	(iii) there are no liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise arising under or relating to any Environmental Law or any Hazardous Substance.

A-20

---

Table of Contents

A-21

---

Table of Contents

	(b) As of its filing date, each Parent SEC Document complied as to form in all material respects with the applicable requirements of the 1933 Act and 1934 Act, as the case may be.
	(c) As of its filing date, each Parent SEC Document filed pursuant to the 1934 Act did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
	(d) Each Parent SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The representations and warranties contained in this Section 5.05(d) will not apply to statements or omissions in the Registration Statement or any amendment or supplement thereto based upon information furnished to Parent or Merger Subsidiary by the Company in writing specifically for use therein.
	(e) Parent has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act). Such disclosure controls and procedures are designed to ensure that material information relating to Parent, including its consolidated Subsidiaries, is made known to Parent’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the 1934 Act are being prepared. Such disclosure controls and procedures are effective in timely alerting Parent’s principal executive officer and principal financial officer to material information required to be included in Parent’s periodic reports required under the 1934 Act.
	(f) Parent and its Subsidiaries have established and maintained a system of Internal Controls. Such Internal Controls are sufficient to provide reasonable assurance regarding the reliability of Parent’s financial reporting and the preparation of Parent financial statements for external purposes in accordance with GAAP. Parent has disclosed, based on its most recent evaluation of Internal Controls prior to the date hereof, to Parent’s auditors and audit committee (x) any significant deficiencies and material weaknesses in the design or operation of Internal Controls which are reasonably likely to adversely affect Parent’s ability to record, process, summarize and report financial information and

A-22

---

Table of Contents

	(y) any fraud, whether or not material, that involves management or other employees who have a significant role in Internal Controls.
	(g) There are no outstanding loans or other extensions of credit made by Parent or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the 1934 Act) or director of Parent. Parent has not, since the enactment of the Sarbanes-Oxley Act, taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

	(a) liabilities or obligations disclosed and provided for in the Parent Balance Sheet or in the notes thereto,
	(b) liabilities or obligations incurred in the ordinary course of business consistent with past practices since the Parent Balance Sheet Date that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent, and
	(c) liabilities or obligations incurred in connection with the execution of this Agreement.

A-23

---

Table of Contents

	(a) enter into any contract, agreement, lease, license, note, bond, mortgage, indenture, guarantee, other evidence of indebtedness or other instrument, obligation or commitment of the type referred to in Section 4.14(a), Section 4.18(j) or Section 4.18(l);
	(b) adopt or propose to adopt any change to the Company’s articles of organization or bylaws;
	(c) reclassify, recapitalize, split, combine, exchange or readjust any shares of capital stock of the Company;
	(d) declare, set aside or pay any dividend or other distribution with respect to any shares of capital stock of the Company, or repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any of its Subsidiaries;
	(e) issue, sell, transfer, pledge, redeem, accelerate rights under, dispose of or encumber, or authorize the issuance, sale, transfer, pledge, redemption, acceleration of rights under, disposition or encumbrance of, any shares of its capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its capital stock, or any other ownership interest in the Company or any of its Subsidiaries, except in each case (i) for the issuance of shares of Company Common Stock upon the exercise of the Company Stock Options outstanding as of the date of this Agreement in accordance with their terms, (ii) for the issuance of shares of Company Common Stock or rights to purchase Company Common Stock under the Company ESPP and (iii) the grant of Company Stock Options to employees and directors of the Company or its Subsidiaries in the ordinary course of business consistent with past practice in an amount not to exceed (x) an aggregate of 30,000 shares of Company Common Stock prior to June 1, 2006, and (y) an aggregate of 55,000 shares of Company Common Stock thereafter (inclusive of the 30,000 shares of Company Common Stock referred to in clause (x)); provided that (A) such Company Stock Options shall have an exercise price per share not less than the fair market value of Company Common Stock on the date of grant and (B) such Company Stock Options shall not be subject to accelerated vesting under any agreement or plan as a result of the consummation of the transactions contemplated by this Agreement or as a result of termination of employment;
	(f) amend any material term of any outstanding security of the Company or any of its Subsidiaries;
	(g) (i) grant any severance or termination pay to (or amend any existing arrangement with) any director, executive officer or employee of the Company or any of its Subsidiaries, except in the ordinary course of business consistent with past practice in connection with actual termination of any such individual in accordance with plans or policies listed on Schedule 4.22 or as otherwise disclosed

A-24

---

Table of Contents

	on Schedule 4.22, (ii) increase the benefits payable under any existing severance or termination pay policies or employment agreements, (iii) enter into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, executive officer or employee of the Company or any of its Subsidiaries (other than at-will offer letters with no severance or change of control provisions), (iv) establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any director, executive officer or employee of the Company or any of its Subsidiaries, (v) increase the compensation, bonus or other benefits payable to any director or executive officer of the Company or any of its Subsidiaries except for annual bonuses of up to $1,000,000 in the aggregate payable to executive officers of the Company or (vi) increase the compensation, bonus or other benefits payable to employees of the Company or any of its Subsidiaries that in an aggregate amount for all such employees that if annualized would exceed $2,000,000 (including, for this purpose, the annual bonus payments described in clause (v)), except that, if the Closing has not occurred by June 1, 2006, the Company may increase the compensation and other benefits (and otherwise grant ordinary course raises) to non-executive employees in the ordinary course consistent with past practice;
	(h) enter into any plan or agreement of merger or consolidation involving the Company or any of its Subsidiaries, or involving any acquisition by the Company or any of its Subsidiaries of a material amount of stock or assets of any other Person;
	(i) sell or otherwise dispose of any material subsidiary or sell, lease, license or otherwise dispose of any assets, securities or property in each case material to the Company and its Subsidiaries, on a consolidated basis, except (i) pursuant to existing contracts or commitments and (ii) in the ordinary course consistent with past practice;
	(j) incur, assume or guarantee any material indebtedness for borrowed money;
	(k) create or otherwise incur any Lien on any asset of the Company or any of its Subsidiaries;
	(l) make any loan, advance or capital contribution in excess of $1,000,000 to or investment in any Person;
	(m) change any method of accounting or accounting principles or practice by the Company or any of its Subsidiaries, except for any such change required by reason of a concurrent change in GAAP or Regulation S-X under the 1934 Act; or
	(n) authorize, agree or commit to do any of the foregoing.

A-25

---

Table of Contents

A-26

---

Table of Contents

A-27

---

Table of Contents

	(a) For six years after the Effective Time, the Surviving Corporation shall indemnify and hold harmless the present and former officers and directors of the Company (each an “Indemnified Person”) in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by Massachusetts Law or any other Applicable Law or provided under the Company’s articles of organization and bylaws in effect on the date hereof; provided that such indemnification shall be subject to any limitation imposed from time to time under Applicable Law.
	(b) For six years after the Effective Time, the Surviving Corporation shall provide officers’ and directors’ liability insurance in respect of acts or omissions occurring prior to the Effective Time covering each such Indemnified Person currently covered by the Company’s officers’ and directors’ liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof; provided that, in satisfying its obligation under this Section 7.03(b), the Surviving Corporation shall not be obligated to pay an aggregate premium in excess of 250% of the amount per annum the Company paid in its last full fiscal year, which amount Company has disclosed to Parent prior to the date hereof.
	(c) If Parent, the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be 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, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 7.03.
	(d) The rights of each Indemnified Person under this Section 7.03 shall be in addition to any rights such Person may have under the articles of organization or bylaws of the Company or any of its Subsidiaries, or under Massachusetts Law or any other Applicable Law or under any agreement of any Indemnified Person with the Company or any of its Subsidiaries. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person.
	(e) The Surviving Corporation shall pay all reasonable costs and expenses, including attorneys’ fees, that may be incurred by any indemnified party in enforcing the indemnity and other obligations provided for in this Section 7.03, so long as such indemnified party undertakes in writing to reimburse the Surviving Corporation for such costs and expenses if it is finally determined by a court of competent jurisdiction that such indemnified party was not entitled to be indemnified hereunder.
	(f) Parent guarantees as primary obligor, and not as surety, the full and punctual performance of the Surviving Corporation’s indemnification obligations under this Section 7.03.

A-28

---

Table of Contents

A-29

---

Table of Contents

A-30

---

Table of Contents

	(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;
	(b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;
	(c) any actions, suits, claims or proceedings commenced with a Governmental Authority or arbitrator (or investigations commenced of which the Company is aware) or, to the Knowledge of the Company, threatened against or otherwise affecting the Company or any of its Subsidiaries or Parent and any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Sections 4.12, 4.13, 4.19, 4.22, 4.23 or 4.20, as the case may be, or that relate to the consummation of the transactions contemplated by this Agreement;
	(d) any inaccuracy of any representation or warranty contained in this Agreement at any time during the term hereof that would reasonably be expected to cause the condition set forth in Section 9.02(a) not to be satisfied; and
	(e) any failure of that party to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder;

	provided, however, that the delivery of any notice pursuant to this Section 8.05 shall not limit or otherwise affect the remedies available hereunder to the party receiving that notice.

A-31

---

Table of Contents

	(a) the Company Stockholder Approval shall have been obtained in accordance with Massachusetts Law;
	(b) no Applicable Law shall prohibit the consummation of the Merger;
	(c) any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated;
	(d) the Registration Statement shall have been declared effective and no stop order suspending the effectiveness of the Registration Statement or shall be in effect and no proceedings for such purpose shall be pending before or threatened by the SEC; and
	(e) the shares of Parent Common Stock to be issued in connection with the Merger (including any shares of Parent Common Stock underlying Company Stock Options assumed by Parent under Section 2.04) shall have been approved for listing on the Nasdaq, subject to official notice of issuance.

(a)(i) the Company shall have performed in all material respects all of its covenants hereunder required to be performed by it at or prior to the Effective Time, (ii) the representations and warranties of the Company contained in this Agreement (A) that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects (other than representations and warranties made as of a specified date or for a specified period, which shall be true and correct as of such specified date or for such specified period) and (B) that are qualified by materiality or Material Adverse Effect shall, disregarding all such qualifications and exceptions, be true and correct at and as of the Effective Time as if made at and as of such time (other than representations and warranties made as of a specified date or for a specified period, which shall be true and correct as of such specified date or for such specified period), with only such exceptions as have not had and would not reasonably be expected to have over a commercially reasonable period of time (which period of time shall not be less than one year), individually or in the aggregate, a Material Adverse

A-32

---

Table of Contents

	Effect on the Company and (iii) Parent shall have received a certificate signed by the Chief Executive Officer of the Company to the foregoing effect;
	(b) there shall not have been instituted and be pending any action or proceeding by any Governmental Authority (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the Merger or seeking to obtain material damages relating to the transactions contemplated by the Merger, (ii) seeking to restrain or prohibit Parent’s, Merger Subsidiary’s or any of Parent’s other Affiliates’ (A) ability effectively to exercise full rights of ownership of the Company Common Stock, including the right to vote any shares of Company Common Stock acquired or owned by Parent, Merger Subsidiary or any of Parent’s other Affiliates following the Effective Time on all matters properly presented to the Company’s stockholders, or (B) ownership or operation (or that of its respective Subsidiaries or Affiliates) of all or any material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken as a whole, or (iii) seeking to compel Parent or any of its Subsidiaries or Affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken as a whole;
	(c) Parent shall have received an opinion of Davis Polk & Wardwell in form and substance reasonably satisfactory to Parent, on the basis of certain facts, representations and assumptions set forth in such opinion, dated the Effective Time, to the effect that the Merger will be treated for federal income tax purposes as a reorganization qualifying under the provision of Section 368(a) of the Code and that each of Parent, Merger Subsidiary and the Company will be a party to the reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of officers of Parent and the Company substantially in the form of Exhibits C and D hereto; and
	(d) there shall not have occurred or otherwise arisen before and be continuing as of the Effective Time any event, change or development which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company.

	(a)(i) each of Parent and Merger Subsidiary shall have performed in all material respects all of its covenants hereunder required to be performed by it at or prior to the Effective Time, (ii) the representations and warranties of Parent and Merger Subsidiary contained in this Agreement (A) that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects (other than representations and warranties made as of a specified date, which shall be true and correct as of such specified date) and (B) that are qualified by materiality or Material Adverse Effect shall, disregarding all such qualifications and exceptions, be true and correct at and as of the Effective Time as if made at and as of such time (other than representations and warranties made as of a specified date, which shall be true and correct as of such specified date), with only such exceptions as have not had and would not reasonably be expected to have over a commercially reasonable period of time (which period of time shall not be less than one year), individually or in the aggregate, a Material Adverse Effect on Parent and (iii) the Company shall have received a certificate signed by an executive officer of Parent to the foregoing effect; and
	(b) the Company shall have received an opinion of Sullivan & Worcester LLP in form and substance reasonably satisfactory to the Company, on the basis of certain facts, representations and assumptions set forth in such opinion, dated the Effective Time, to the effect that the Merger will be treated for federal income tax purposes as a reorganization qualifying under the provisions of Section 368(a) of the Code and that each of Parent, Merger Subsidiary and the Company will be a party to the reorganization within the meaning of Section 368(b) of the Code. In rendering such opinion, such counsel shall be entitled to rely upon representations of officers of Parent and the Company substantially in the form of Exhibit C and D hereto.

A-33

---

Table of Contents

	(a) by mutual written agreement of the Company and Parent;
	(b) by either the Company or Parent, if:

	(i) the Merger has not been consummated on or before the date that is 75 days after the date on which the SEC declares the Registration Statement effective under the 1933 Act (as such date may be extended pursuant to clause (A) of this Section 10.01(b)(i), the “End Date”); provided that (A) if on the End Date any of the conditions set forth in Section 9.01(b) (by virtue of any Applicable Law relating to antitrust or competition matters), Section 9.01(c) or Section 9.02(b) (by virtue of an action or proceeding relating to antitrust or competition matters) has not been satisfied or waived but in each case all other conditions to the Closing have been satisfied or waived or could be satisfied on the date of such termination, then the End Date shall be automatically extended to November 22, 2006, if such date is later than the End Date prior to such extension, and (B) the right to terminate this Agreement pursuant to this Section 10.01(b)(i) shall not be available to any party whose breach of any provision of this Agreement applicable to it has been the cause of, or resulted in, the failure of the Merger to be consummated by such time;
	(ii) there shall be any Applicable Law that (A) makes consummation of the Merger illegal or otherwise prohibited or (B) enjoins the Company or Parent from consummating the Merger and such enjoinment shall have become final and nonappealable; or
	(iii) at the Company Stockholder Meeting (including any adjournment or postponement thereof), the Company Stockholder Approval shall not have been obtained;

	(c) by Parent, if:

	(i) as permitted by Section 6.03, an Adverse Recommendation Change shall have occurred;
	(ii) the Company shall have entered into, or publicly announced its intention to enter into, a definitive agreement or an agreement in principle with respect to a Superior Proposal;
	(iii) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company set forth in this Agreement shall have occurred that would cause the condition set forth in Section 9.02(a) not to be satisfied, and such condition is incapable of being satisfied by the End Date; or
	(iv) the Company shall have willfully and materially breached its obligations under Sections 6.02 and 6.03; or

	(d) by the Company, if:

(i) at any time prior to receiving the Company Stockholder Approval, the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to terminate this Agreement in order to enter into a binding, definitive agreement with respect to a Superior Proposal; provided that the Company shall have paid any amounts due pursuant to Section 11.04(b) in accordance with the terms, and at the times, specified therein; and provided further that (A) the Company shall have provided Parent with written notice of its intent to terminate this Agreement pursuant to this Section 10.01(d)(i) at least three Business Days in advance of such termination, which written notice shall include the most current version of such agreement and a reasonably detailed summary of any other material terms and conditions relating thereto and (B) Parent does not make, within three Business Days of receipt of such

A-34

---

Table of Contents

	written notice, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors (which may be RBC Capital Markets Corporation) and taking into account all the terms and conditions of such offer (including any break-up fees, expense reimbursement provisions and conditions to consummation), would, if consummated, result in a transaction at least as favorable to the Company’s stockholders as the transaction set forth in the Company’s written notice delivered pursuant to clause (A) above, it being understood that the Company shall not enter into any such binding, definitive agreement during such three Business Day period. The Company agrees to notify Parent promptly if its intention to enter into any such agreement referred to in Section 10.01(d)(i)(A) shall change at any time after giving such notification; or
	(ii) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Parent or Merger Subsidiary set forth in this Agreement shall have occurred that would cause the condition set forth in Section 9.03(a) not to be satisfied, and such condition is incapable of being satisfied by the End Date.

	if to Parent or Merger Subsidiary, to:
	KLA-Tencor Corporation
	160 Rio Robles
	San Jose, California 95134
	Attention: General Counsel
	Facsimile No.: (408) 875-2002
	with a copy to:
	Davis Polk & Wardwell
	1600 El Camino Real
	Menlo Park, California 94025

	Attention:	William M. Kelly, Esq.

	William H. Aaronson, Esq.
	Facsimile No.: (650) 752-2111

A-35

---

Table of Contents

	if to the Company, to:
	ADE Corporation
	80 Wilson Way
	Westwood, Massachusetts 02090
	Attention: Chief Financial Officer
	Facsimile No.: (781) 467-0500
	with a copy to:
	Sullivan & Worcester LLP
	One Post Office Square
	Boston, Massachusetts 02109
	Attention: William A. Levine, Esq.
	Facsimile No.: (617) 338-2880
	or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

A-36

---

Table of Contents

A-37

---

Table of Contents

A-38

---

Table of Contents

	KLA-TENCOR CORPORATION

	By:	/s/ Stuart J. Nichols

	Name:        Stuart J. Nichols

	Title:	Vice President and General Counsel

	ADE CORPORATION

	By:	/s/ Brian C. James

	Name:        Brian C. James

	Title:	Executive Vice President, Treasurer and Chief Financial Officer

	SOUTH ACQUISITION CORPORATION

	By:	/s/ Jeffrey L. Hall

	Name:        Jeffrey L. Hall

	Title:	President

A-39

---

Table of Contents

B-1

---

Table of Contents

B-2

---

Table of Contents

B-3

---

Table of Contents

Item 20.	Indemnification of Directors and Officers.

II-1

---

Table of Contents

Item 21.	Exhibits and Financial Statement Schedules.

Exhibit
Number				Description
	2	(a)		Agreement and Plan of Merger dated as of February 22, 2006 among KLA-Tencor Corporation, ADE Corporation and South Acquisition Corporation (included as Annex A to the Proxy Statement/ Prospectus contained in this Registration Statement).
	2	(b)		Form of Voting Agreement dated as of February 22, 2006 (incorporated by reference to KLA-Tencor’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 23, 2006).
	3	(a)		Amended and Restated Certificate of Incorporation of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 14, 1997).
	3	(b)		Certificate of Amendment of Amended and Restated Certificate of Incorporation of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 14, 2001).
	3	(c)		Bylaws, as amended November 17, 1998, of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on December 4, 1998).
	4	(a)		Amended and Restated Rights Agreement dated as of August 25, 1996 between KLA-Tencor Corporation and State Street Bank and Trust Company, as successor to First National Bank of Boston, as Rights Agent (incorporated by reference to KLA-Tencor’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on September 24, 1996).
	5			Form of Opinion of Davis Polk & Wardwell regarding the validity of the securities being registered.
	8	(a)		Form of Opinion of Davis Polk & Wardwell regarding certain federal income tax consequences relating to the merger.
	8	(b)		Form of Opinion of Sullivan & Worcester LLP regarding certain federal income tax consequences relating to the merger.
	21			Subsidiaries of KLA-Tencor Corporation (incorporated by reference to the Registrant’s Annual Report on 10-K filed with the Securities and Exchange Commission on September 2, 2005).
	23	(a)		Consent of PricewaterhouseCoopers LLP.
	23	(b)		Consent of PricewaterhouseCoopers LLP.
	23	(c)		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 5 to this Registration Statement).
	23	(d)		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 8(a) to this Registration Statement).
	23	(e)		Consent of Sullivan & Worcester LLP (included in the opinion filed as Exhibit 8(b) to this Registration Statement).
	24			Power of Attorney (included in the signature page hereto).
	99	(a)		Form of ADE Proxy Card.
	99	(b)		Consent of RBC Capital Markets Corporation.

II-2

---

Table of Contents

Item 22.	Undertakings.

	(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

	(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
	(4) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
	(5) That every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933, as amended, and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(6) That, for purposes of determining any liability under the Securities Act of 1933, as amended, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
	(7) To respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of

II-3

---

Table of Contents

	receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
	(8) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
	(9) That, for purposes of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of this registration statement shall be deemed to be part of and included in this registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in this registration statement or prospectus that is part of this registration statement or made in a document incorporated or deemed incorporated by reference into this registration statement or prospectus that is part of this registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in this registration statement or prospectus that was part of this registration statement or made in any such document immediately prior to such date of first use.
	(10) That, for purposes of determining liability of the undersigned registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

	(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
	(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
	(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
	(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

II-4

---

Table of Contents

	KLA-TENCOR CORPORATION

	By:	/s/ Jeffrey L. Hall

	Name: Jeffrey L. Hall

	Title:	Senior Vice President and Chief

	Financial Officer

Signature				Title		Date
/s/ Kenneth Levy Kenneth Levy				Chairman of the Board and Director		March 17, 2006
/s/ Richard P. Wallace Richard P. Wallace				Chief Executive Officer and Director (Principal Executive Officer)		March 17, 2006
/s/ Jeffrey L. Hall Jeffrey L. Hall				Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)		March 17, 2006
/s/ Edward W. Barnholt Edward W. Barnholt				Director		March 17, 2006
H. Raymond Bingham				Director		March   , 2006
/s/ Robert T. Bond Robert T. Bond				Director		March 17, 2006

II-5

---

Table of Contents

Signature				Title		Date
/s/ Stephen P. Kaufman Stephen P. Kaufman				Director		March 17, 2006
Michael E. Marks				Director		March   , 2006
/s/ Jon D. Tompkins Jon D. Tompkins				Director		March 17, 2006
/s/ Lida Urbanek Lida Urbanek				Director		March 17, 2006

II-6

---

Table of Contents

Exhibit
Number				Description
	2	(a)		Agreement and Plan of Merger dated as of February 22, 2006 among KLA-Tencor Corporation, ADE Corporation and South Acquisition Corporation (included as Annex A to the Proxy Statement/ Prospectus contained in this Registration Statement).
	2	(b)		Form of Voting Agreement dated as of February 22, 2006 (incorporated by reference to KLA-Tencor’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 23, 2006).
	3	(a)		Amended and Restated Certificate of Incorporation of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 14, 1997).
	3	(b)		Certificate of Amendment of Amended and Restated Certificate of Incorporation of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 14, 2001).
	3	(c)		Bylaws, as amended November 17, 1998, of KLA-Tencor Corporation (incorporated by reference to KLA-Tencor’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on December 4, 1998).
	4	(a)		Amended and Restated Rights Agreement dated as of August 25, 1996 between KLA-Tencor Corporation and State Street Bank and Trust Company, as successor-in-interest to First National Bank of Boston, as Rights Agent (incorporated by reference to KLA-Tencor’s Registration Statement on Form 8-A filed with the Securities and Exchange Commission on September 24, 1996).
	5			Form of Opinion of Davis Polk & Wardwell regarding the validity of the securities being registered.
	8	(a)		Form of Opinion of Davis Polk & Wardwell regarding certain federal income tax consequences relating to the merger.
	8	(b)		Form of Opinion of Sullivan & Worcester LLP regarding certain federal income tax consequences relating to the merger.
	21			Subsidiaries of KLA-Tencor Corporation (incorporated by reference to the Registrant’s Annual Report on 10-K filed with the Securities and Exchange Commission on September 2, 2005).
	23	(a)		Consent of PricewaterhouseCoopers LLP.
	23	(b)		Consent of PricewaterhouseCoopers LLP.
	23	(c)		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 5 to this Registration Statement).
	23	(d)		Consent of Davis Polk & Wardwell (included in the opinion filed as Exhibit 8(a) to this Registration Statement).
	23	(e)		Consent of Sullivan & Worcester LLP (included in the opinion filed as Exhibit 8(b) to this Registration Statement).
	24			Power of Attorney (included in the signature page hereto).
	99	(a)		Form of ADE Proxy Card.
	99	(b)		Consent of RBC Capital Markets Corporation.