As filed with the Securities and Exchange Commission on March 17, 2006

Registration No. 333-          

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

KLA-Tencor Corporation

(Exact name of Registrant as specified in its charter)

160 Rio Robles

San Jose, California 95134

(408) 875-3000

(Address, Including Zip Code, and Telephone Number including Area Code, of Registrant’s Principal Executive Offices)

Stuart J. Nichols, Esq.

Vice President and General Counsel

160 Rio Robles

San Jose, California 95134

(408) 875-3000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

copies to:

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement and the effective time of the merger of a wholly-owned subsidiary of Registrant with and into ADE Corporation as described in the Agreement and Plan of Merger dated as of February 22, 2006.

     If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

     If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

     If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

CALCULATION OF REGISTRATION FEE

     The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Subject to Completion, dated March 17, 2006

Preliminary Copy

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

      The boards of directors of KLA-Tencor Corporation and ADE Corporation have approved a merger under which KLA-Tencor will acquire ADE.

      Pursuant to a merger agreement entered into on February 22, 2006, South Acquisition Corporation, a wholly owned subsidiary of KLA-Tencor, will merge with and into ADE. Each share of ADE common stock will be converted into the right to receive 0.64 shares of KLA-Tencor common stock and cash in lieu of fractional shares. The merger will be tax-free, except that ADE stockholders may recognize gain on any cash received in lieu of fractional shares of KLA-Tencor.

      If the merger is completed, ADE will be a wholly owned subsidiary of KLA-Tencor and ADE stockholders will be stockholders of KLA-Tencor. KLA-Tencor common stock is currently traded on The Nasdaq National Market under the symbol “KLAC” and will continue to be traded under this symbol following the merger. On                     , 2006, the closing price of KLA-Tencor common stock was $          per share. Upon completion of the merger, ADE common stock, which is traded on The Nasdaq National Market under the symbol “ADEX,” will be delisted. On                     , 2006, the closing price of ADE common stock was $           per share.

      We are asking stockholders of ADE to, among other things, consider and vote upon the approval of a merger proposal. The special meeting will be held on                     , 2006, at 10:00 a.m., Eastern time, at ADE’s corporate headquarters located at 80 Wilson Way, Westwood, Massachusetts. ADE’s board of directors unanimously recommends that ADE stockholders vote “FOR” the merger proposal. KLA-Tencor and ADE cannot complete the merger unless ADE stockholders approve the merger proposal.

      Whether or not you plan to attend the special meeting in person, we urge you to complete, date, sign and promptly return the enclosed proxy card in the enclosed postage pre-paid envelope to ensure that your shares will be represented at the special meeting. Your proxy is revocable and will not affect your right to vote in person if you decide to attend the special meeting. Since 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, and failure to vote has the same effect as a vote against the proposal, your vote is very important regardless of the number of shares you own.

      This proxy statement/ prospectus provides you with detailed information about the special meeting and the merger proposal to be voted on. We urge you to read this material, including the section entitled “Risk Factors” beginning on page 13, carefully and in its entirety.

      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/ prospectus. Any representation to the contrary is a criminal offense.

      This proxy statement/ prospectus is dated                     , 2006, and is first being mailed to ADE stockholders on                     , 2006.

REFERENCES TO ADDITIONAL INFORMATION

      Except where indicated otherwise, as used in this proxy statement/ prospectus, “KLA-Tencor” refers to KLA-Tencor Corporation and its consolidated subsidiaries, and “ADE” refers to ADE Corporation and its consolidated subsidiaries. This proxy statement/ prospectus incorporates important business and financial information about KLA-Tencor and ADE from documents that each company has filed with the Securities and Exchange Commission, which is referred to in this proxy statement/ prospectus as the SEC, under the Securities and Exchange Act of 1934, as amended, but that have not been included in or delivered with this proxy statement/ prospectus. For a list of documents incorporated by reference into this proxy statement/ prospectus, see the section entitled “Where You Can Find More Information” beginning on page 62.

      This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference into this proxy statement/ prospectus by accessing the website of the SEC maintained at www.sec.gov.

      In addition, KLA-Tencor’s filings with the SEC are available to the public on KLA-Tencor’s website, www.kla-tencor.com, and ADE’s filings with the SEC are available to the public on ADE’s website, www.ade.com. Information contained on KLA-Tencor’s website and ADE’s website is not incorporated by reference into this proxy statement/ prospectus, and you should not consider information contained on those websites as part of this proxy statement/ prospectus.

      ADE will provide you with copies of this information relating to ADE, without charge, if you request it in writing from ADE Corporation, 80 Wilson Way, Westwood, Massachusetts 02090, Attention: Chief Financial Officer, or by telephone by calling (781) 467-3500. To obtain timely delivery, you must request any documents no later than                     business days before the special meeting. Accordingly, please request any documents from ADE by                     , 2006, in order to receive them before the special meeting.

      KLA-Tencor has supplied all information contained in or incorporated by reference in this proxy statement/ prospectus relating to KLA-Tencor, and ADE has supplied all information contained in or incorporated by reference in this proxy statement/ prospectus relating to ADE. KLA-Tencor and ADE have both contributed to the information contained in this proxy statement/ prospectus relating to the merger.

ABOUT THIS DOCUMENT

      This document, which forms part of a registration statement on Form S-4 filed with the SEC by KLA-Tencor, constitutes the following:

NOTICE OF

SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON                         , 2006

                    , 2006

To our Stockholders:

      Notice is hereby given that a Special Meeting of Stockholders of ADE Corporation, a Massachusetts corporation, will be held on                     , 2006 at 10:00 a.m., Eastern time, at ADE’s corporate headquarters located at 80 Wilson Way, Westwood, Massachusetts for the purpose of considering and voting on the following matters:

      The proposals listed above are described in this proxy statement/ prospectus which you are urged to read carefully and in its entirety. As of the date of this notice, ADE’s board of directors knows of no other business to be conducted at the special meeting.

      ADE’s board of directors unanimously recommends that ADE stockholders vote “FOR” each of the foregoing proposals.

      ADE’s board of directors has fixed the close of business on                     , 2006 as the record date for the determination of ADE stockholders entitled to notice of, and to vote at, the special meeting and any continuation, adjournment or postponement of the special meeting. During the period beginning on                     , 2006 through the time of the special meeting, ADE will keep a list of stockholders entitled to vote at the special meeting available for inspection during normal business hours at its offices in Westwood, Massachusetts, for any purpose germane to the special meeting. The list of stockholders will also be provided and kept at the location of the special meeting for the duration of the special meeting, and may be inspected by any stockholder or its representative who is present. All persons wishing to be admitted to the special meeting must present photo identification. Please also note that if you hold your shares in “street name” through a broker or other nominee, you will need to bring a copy of a brokerage statement reflecting your stock ownership on the record date and check in at the registration desk at the special meeting.

THE APPROVAL OF THE MERGER PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF AT LEAST 66²/3% OF THE OUTSTANDING SHARES OF ADE COMMON STOCK. YOUR FAILURE TO VOTE HAS THE SAME EFFECT AS A VOTE AGAINST THE MERGER PROPOSAL. TO VOTE YOUR SHARES, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE OR BY ATTENDING THE SPECIAL MEETING OF ADE STOCKHOLDERS IN PERSON. DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MERGER

WHO CAN HELP ANSWER YOUR QUESTIONS

      If you have additional questions about the merger, you should contact:

ADE Corporation

80 Wilson Way

Westwood, Massachusetts 02090

Attention: Chief Financial Officer

Phone Number: (781) 467-3500

      If you would like additional copies of this document, you should contact:

KLA-Tencor Corporation

160 Rio Robles

San Jose, California 95134

Attention: Investor Relations

Phone Number: (408) 875-3000

      You can find more information about KLA-Tencor and ADE from various sources described in the section entitled “Where You Can Find More Information” beginning on page 62.

	KLA-Tencor Corporation
	160 Rio Robles
	San Jose, California 95134
	(408) 875-3000
	Internet address: www.kla-tencor.com

	ADE Corporation
	80 Wilson Way
	Westwood, Massachusetts 02090
	(781) 467-3500
	Internet address: www.ade.com

	•	Except as set forth under the next bullet point, each ADE stock option outstanding under any stock option or compensation plan, agreement or arrangement of ADE which remains outstanding at the effective time of the merger will be converted into an option to purchase, on substantially the same terms and conditions previously applicable, KLA-Tencor common stock, except that the number of shares subject to the option will be multiplied by the exchange ratio of 0.64 and the exercise price will be divided by the exchange ratio of 0.64. Under pre-existing agreements, the vesting of certain employees’ options will accelerate upon completion of the merger. See “The Proposed Merger — Interests of Certain Persons in the Merger” beginning on page 38; and
	•	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 (1) the excess of (A) 0.64 multiplied by the closing price per share of KLA-Tencor common stock on The Nasdaq National Market on the

		business day immediately prior to the closing date of the merger over (B) the exercise price of such option and (2) the number of shares of ADE common stock that could have been purchased had the such option been exercised immediately prior to the effective time of the merger.

	•	the approval of the merger proposal by ADE’s stockholders;
	•	the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
	•	the absence of any applicable law or proceeding that would prohibit the consummation of the merger;
	•	the receipt of opinions of counsel to each of KLA-Tencor and ADE to the effect that the merger will qualify as a tax-free reorganization;
	•	the absence of any event, change or development that has had or would reasonably be expected to have a material adverse effect on ADE;
	•	the accuracy, as of the closing, of the parties’ representations and warranties, except, in certain cases, for such inaccuracies as have not and would not reasonably be expected to have a material adverse effect;
	•	the performance in all material respects of all of the parties’ covenants under the merger agreement at or prior to the effective time of the merger; and
	•	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.

	•	by mutual written consent of KLA-Tencor and ADE;
	•	by either party if:

	•	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 completion of the merger have been satisfied or waived other than the conditions relating to antitrust approvals, then such date will be automatically extended to November 22, 2006, such date being referred to as the end date;
	•	there exists any permanent legal prohibition against consummation of the merger;
	•	the merger proposal is not approved by ADE’s stockholders at the special meeting; or

	•	the other party has breached its representations, warranties, covenants or agreements under the merger agreement and such breach would cause the conditions to the nonbreaching party’s obligations to complete the merger not to be satisfied and be incapable of being satisfied by the end date.

	•	by KLA-Tencor if:

	•	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 (as described on page 50); or
	•	ADE willfully and materially breaches its obligations not to solicit acquisition proposals or other offers. See “The Merger Agreement — No Solicitation” beginning on page 44.

	•	by ADE if:

	•	prior to receiving the approval of its stockholders, 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 days’ advance written notice of its intent to terminate the merger agreement to enter into an agreement with respect to a superior proposal, 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 (3) ADE pays KLA-Tencor the fee, described in “The Merger Agreement — Termination Fee Payable by ADE” beginning on page 51 at or prior to such termination.

	•	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;
	•	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.

			As of and for the
			Six Months Ended
			December 31,								Year Ended June 30,
			2005(1)				2004				2005				2004				2003				2002				2001(2)
			(Unaudited)				(Unaudited)
			(In millions, except per share data)
Consolidated Statement of Operations Data:
Total revenues			$	972			$	1,052			$	2,085			$	1,497			$	1,323			$	1,637			$	2,104
Total costs and operating expenses(*)				814				739				1,503				1,199				1,184				1,392				1,645
Income from operations(*)				157				312				583				297				139				245				458
Net income(*)			$	153			$	238			$	467			$	244			$	137			$	216			$	67
Net income per common share
	Basic		$	0.78			$	1.22			$	2.38			$	1.25			$	0.72			$	1.15			$	0.36
	Diluted		$	0.76			$	1.19			$	2.32			$	1.21			$	0.70			$	1.10			$	0.34
Dividends per common share			$	0.24			$	—			$	0.12			$	—			$	—			$	—			$	—
(*) includes the following amounts related to equity awards
Total costs and operating expenses				71				1				3				—				—				—				—
Income from operations				71				1				3				—				—				—				—
Net income				50				1				2				—				—				—				—
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities			$	2,227			$	1,925			$	2,195			$	1,876			$	1,488			$	1,334			$	1,144
Total assets				4,165				3,766				3,986				3,539				2,867				2,718				2,745
Long-term obligations				—				—				—				—				—				—				—
Total stockholders’ equity			$	3,296			$	2,838			$	3,045			$	2,628			$	2,216			$	2,030			$	1,760

(1)	KLA-Tencor adopted the provisions of Statement of Financial Accounting Standards No. 123R which requires KLA-Tencor to measure all employee stock-based compensation awards using a fair value method and record such expense in its consolidated financial statements.

(2)	In fiscal 2001, KLA-Tencor recorded a non-cash charge net of tax of $306 million or $1.59 per diluted share to reflect the cumulative effect of the accounting change as of July 1, 2000 related to the adoption of Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements”.

			As of and for the
			Nine Months Ended
			January 31,								Year Ended April 30,
			2006				2005				2005				2004				2003				2002				2001(1)
			(Unaudited)				(Unaudited)
			(In millions, except per share data)
Consolidated Statement of Operations Data:
Total revenue			$	74			$	87			$	117			$	89			$	71			$	82			$	100
Total costs and operating expenses				62				69				93				82				78				95				99
Income (loss) from operations				13				18				24				7				(7	)			(13	)			1
Net income (loss)			$	11			$	18			$	41			$	9			$	(7	)		$	(23	)		$	1
Net earnings (loss) per common share:
	Basic		$	0.73			$	1.27			$	2.91			$	0.63			$	(0.54	)		$	(1.70	)		$	0.04
	Diluted		$	0.72			$	1.25			$	2.86			$	0.62			$	(0.54	)		$	(1.70	)		$	0.04
Consolidated Balance Sheet Data:
Cash, cash equivalents and marketable securities			$	88			$	66			$	74			$	43			$	23			$	29			$	31
Total assets				168				129				153				108				101				115				147
Long-term debt obligations				3				3				3				4				10				11				11
Total stockholders’ equity			$	144			$	105			$	130			$	86			$	75			$	83			$	105

(1)	In fiscal 2001, ADE recorded a non-cash charge net of tax of $2 million, or $0.13 per diluted share, to reflect the cumulative effect of the accounting change as of May 1, 2000 related to the adoption of Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements”.

		As of and for the
		Six Months Ended				Year Ended
		December 31, 2005				June 30, 2005
Net income per common share — basic		$	0.78			$	2.38
Net income per common share — diluted			0.76				2.32
Cash dividends per common share			0.24				0.12
Book value per common share(1)			16.53				15.49

		As of and For the
		Nine Months Ended				Year Ended
		January 31, 2006				April 30, 2005
Net income per common share — basic		$	0.73			$	2.91
Net income per common share — diluted			0.72				2.86
Cash dividends per common share			—				—
Book value per common share(1)			9.97				9.12

(1)	The historical book value per common share is computed by dividing stockholder’s equity at the end of the period by the number of shares outstanding at the end of the period.

			KLA-Tencor												ADE
			Common Stock												Common Stock
			High				Low				Dividends				High				Low				Dividends
2004
	First Quarter		$	62.82			$	48.86			$	—			$	24.00			$	18.18			$	—
	Second Quarter			53.97				40.88				—				23.00				16.25				—
	Third Quarter			49.20				35.02				—				21.81				14.65				—
	Fourth Quarter			49.86				39.43				—				19.10				14.90				—
2005																								—
	First Quarter			51.56				41.70				—				23.60				16.70				—
	Second Quarter			47.61				37.39				0.12				30.40				20.20				—
	Third Quarter			52.08				43.40				0.12				29.12				21.33				—
	Fourth Quarter			55.00				44.03				0.12				26.90				19.96				—
2006
	First Quarter (through March 15, 2006)			55.03				48.62				0.12				34.60				24.02				—

										ADE
										Common Stock
		KLA-Tencor				ADE				per share
Date		Common Stock				Common Stock				Equivalent
February 22, 2006		$	51.86			$	30.95			$	33.19
, 2006

RISK FACTORS

      In addition to the other information included in, incorporated by reference in, and found in the Annexes attached to, this proxy statement/ prospectus, including the matters addressed in the section entitled “Forward-Looking Statements” beginning on page 16, you should carefully consider the following risks before deciding how to cast your vote. Other than risks that could apply to any issuer or any offering, the material risks relating to the transaction are discussed below. In addition, you should read and consider the risks associated with the businesses of KLA-Tencor and ADE. Risks relating to KLA-Tencor can be found in Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Results, Including Risks and Uncertainties in KLA-Tencor’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2005, which has been filed with the SEC. Risks relating to ADE can be found in Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Other Risk Factors and Trends in ADE’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2006, and in Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in ADE’s Annual Report on Form 10-K for the year ended April 30, 2005, which have been incorporated by reference in this proxy statement/ prospectus. You should also read and consider the other information in this proxy statement/ prospectus and in the other documents incorporated by reference in this proxy statement/ prospectus. Please see “Where You Can Find More Information” beginning on page 62. Additional risks and uncertainties not presently known to KLA-Tencor or ADE or that are not currently believed to be important also may adversely affect the transaction and the combined company following the merger.

The Value of KLA-Tencor Shares Received Will Fluctuate; Stockholders of ADE May Receive More or Less Value Depending on Fluctuations in the Price of KLA-Tencor Common Stock

      The number of shares of KLA-Tencor common stock that will be issued in the merger for each share of ADE common stock is fixed. The market prices of KLA-Tencor common stock and ADE common stock when the merger is completed may vary from their respective market prices at the date of this document and at the date of the special meeting. Because the exchange ratio will not be adjusted to reflect any changes in the market value of KLA-Tencor common stock, the value of the shares of common stock that ADE stockholders receive will fluctuate with the price of KLA-Tencor common stock. During the 12-month period ending on March 15, 2006, the most recent practicable date prior to the mailing of this proxy statement/ prospectus, KLA-Tencor common stock traded in a range from a low of $37.39 to a high of $55.03 and ended that period at $50.98, and ADE common stock traded in a range from a low of $19.96 to a high of $34.60 and ended that period at $32.26. See “Summary — Comparative Per Share Market Price and Dividend Information” beginning on page 11 for more detailed share price information.

      The market value of KLA-Tencor common stock may fluctuate based on a number of factors including:

      The merger may not be completed until a significant period of time has passed after the special meeting. As a result, at the time of the special meeting, ADE stockholders will not know the value of the KLA-Tencor common stock that will be issued in connection with the merger.

      Stockholders of ADE are urged to obtain current market quotations for KLA-Tencor and ADE common stock.

The Combined Company May Be Unable to Successfully Integrate Operations and Realize the Full Anticipated Benefits of the Merger

      The merger involves the integration of two companies that have previously operated independently. The difficulties of combining the companies’ operations include:

      The process of integrating the operations of KLA-Tencor and ADE could cause an interruption of, or loss of momentum in, the activities of either or both companies and the loss of key personnel. The diversion of KLA-Tencor management’s attention and any delays or difficulties encountered in connection with the merger and the integration of the two companies’ operations could result in the disruption of KLA-Tencor’s ongoing business. Integrating sales of ADE’s products into KLA-Tencor’s business will involve risks that may jeopardize the success of the combined company. In addition, ADE’s customers, suppliers, employees and others with whom it has business dealings may have a potentially adverse reaction to the merger or resulting changes to the combined company’s product and service offerings, which could in turn harm KLA-Tencor’s operating results.

      Among the factors considered by the KLA-Tencor and ADE boards of directors in connection with their respective approvals of the merger agreement were the opportunities for operating efficiencies that could result from the merger. These savings may not be realized within the time periods contemplated or at all. If KLA-Tencor is not able to successfully achieve these savings, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

The Combined Company Will Incur Significant Transaction and Merger-Related Costs In Connection with the Merger

      KLA-Tencor and ADE expect to incur significant costs associated with completing the merger and combining the operations of the two companies. The exact magnitude of these costs is not yet known, and KLA-Tencor and ADE have just recently begun collecting information in order to formulate detailed integration plans. In addition, there may be unanticipated costs associated with the integration. Although KLA-Tencor and ADE expect that the elimination of duplicative costs and other efficiencies may offset incremental transaction and merger-related costs over time, these benefits may not be achieved in the near term, or at all.

Obtaining Required Approvals and Satisfying Closing Conditions May Delay or Prevent Completion of the Merger or Reduce the Anticipated Benefits of the Merger

      Completion of the merger is conditioned upon the receipt of all material governmental authorizations, consents, orders and approvals, including the expiration or termination of the applicable waiting periods, and any extension of the waiting periods, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and foreign antitrust filings. KLA-Tencor and ADE intend to pursue all required approvals in accordance with the merger agreement. These approvals may not be granted or may be conditioned upon divestitures relating to the divisions, operations or assets of KLA-Tencor or ADE. In addition, KLA-Tencor may elect not to make any divestitures that, individually or in the aggregate, would have an impact that is both material in comparison to, and adverse to, the benefits that would be reasonably expected to accrue to KLA-Tencor from the merger. As a result, any divestitures or other conditions proposed by governmental authorities may jeopardize, delay or preclude completion of the merger or may reduce the anticipated benefits of the merger. See “The Merger Agreement — Conditions to the Merger” beginning on page 48 for a discussion of the conditions to the completion of the merger and “The Proposed Merger — Regulatory Matters Relating to the Merger” beginning on page 36 for a description of the regulatory approvals necessary in connection with the merger.

Certain Directors and Executive Officers of ADE May Have Potential Conflicts of Interests In Recommending That You Vote In Favor of the Merger

      The directors and executive officers of ADE may have interests that differ from yours. These directors and executive officers are party to agreements and arrangements that will be affected by the merger in accordance with their terms and that are described under “Interests of Certain Persons in the Merger” beginning on page 38, including change of control and severance arrangements and agreements under which certain options held by executive officers will receive accelerated vesting. ADE directors and officers will also be entitled to continuation of indemnification and insurance arrangements under the merger agreement. See “Interests of Certain Persons in the Merger” beginning on page 38 for a description of the interests that ADE’s directors and executive officers have in the merger, including the benefits they will be entitled to receive in connection with the merger. You should be aware of these interests when you consider the ADE board of directors’ recommendation that you vote “FOR” the approval of the merger proposal.

Provisions of the Merger Agreement May Deter Alternative Business Combinations and Could Negatively Impact the Value of ADE Common Stock if the Merger Agreement is Terminated in Certain Circumstances

      Restrictions in the merger agreement on solicitation generally prohibit ADE from soliciting any acquisition proposal or offer for a merger or business combination with any other party, including a proposal that might be advantageous to the stockholders of ADE when compared to the terms and conditions of the merger described in this proxy statement/ prospectus. In addition, if the merger is not completed under certain circumstances specified in the merger agreement, ADE may be required to pay KLA-Tencor a termination fee of $15 million. These provisions may deter third parties from proposing or pursuing alternative business combinations that might result in greater value to ADE stockholders than the merger. In the event the merger is terminated by KLA-Tencor and/or ADE in circumstances that obligate ADE to pay the termination fee to KLA-Tencor, including where KLA-Tencor terminates the merger agreement because ADE’s board of directors withdraws its support of the merger or where ADE terminates the merger agreement to accept a superior acquisition proposal made by a third party, the value of ADE common stock may be reduced. See “The Merger Agreement — Termination Fee Payable by ADE” beginning on page 51.

ADE Stockholders Will Have a Reduced Ownership and Voting Interest After the Merger and Will Exercise Less Influence Over Management

      After the merger’s completion, ADE stockholders will own a significantly smaller percentage of KLA-Tencor than they currently own of ADE. Following completion of the merger, ADE stockholders will own approximately 4.3% of the combined company on a fully-diluted basis. Consequently, ADE stockholders will exercise less influence over the management and policies of KLA-Tencor than they currently exercise over the management and policies of ADE.

FORWARD-LOOKING STATEMENTS

      KLA-Tencor and ADE have made forward-looking statements in this document, and in documents that are incorporated by reference in this document, that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of each company’s management. Generally, forward-looking statements include information concerning possible or assumed future actions, events or results of operations of KLA-Tencor, ADE and the combined company. Forward-looking statements specifically include, without limitation, the information in this document regarding: synergies and efficiencies/cost avoidance; cost savings; revenue and profit; earnings per share; growth; economies of scale; combined operations; the economy; future economic performance; conditions to, and the timetable for, completing the merger; litigation related to, and the legality of, the merger; management’s plans; taxes; and merger and integration-related expense.

      The sections in this document that have forward-looking statements include “Questions and Answers About the Merger,” “Summary,” “Selected Historical Financial Information,” “Risk Factors”, “The Proposed Merger — Background of the Merger,” “The Proposed Merger — Reasons For and Factors Considered in Connection With the Merger,” “The Proposed Merger — Interests of Certain Persons in the Merger,” and “The Proposed Merger — Opinion of ADE’s Financial Advisor”. Forward-looking statements may be preceded by, followed by or include the words “may,” “will,” “could,” “would,” “should,” “expects,” “plans,” “anticipates,” “relies,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. KLA-Tencor and ADE claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements.

      Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed in “Risk Factors” above and elsewhere in this document, and in the documents which are incorporated by reference in this document, could affect the future results of KLA-Tencor and ADE, and of the combined company after the completion of the merger, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements:

THE PROPOSED MERGER

General

      The ADE board of directors is using this document to solicit proxies from the holders of ADE common stock for use at the special meeting.

      At the special meeting, holders of ADE common stock will be asked to vote upon a merger proposal and a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to approve the merger proposal.

Background of the Merger

      ADE continually evaluates strategic opportunities within the semiconductor metrology and inspection equipment industry to strengthen its business and to deliver long-term value to its stockholders. During the past several years, senior management and the board of ADE have regularly reviewed the company’s strategic growth objectives and means of achieving those objectives, including potential strategic initiatives and various business combinations. In particular, ADE’s senior management and board have focused on ADE’s long-term ability to compete successfully in the semiconductor metrology and inspection equipment industry. As part of ADE’s strategic review of opportunities, it has considered, from time to time, possible business combinations consistent with its long-term strategy of (1) increasing the size and diversification of its operations, (2) becoming an increasingly broader provider of metrology and inspection equipment, as well as other equipment, to the bare wafer and semiconductor device industry and (3) leveraging ADE’s history of operational excellence.

      In early July 2005, Mr. John Kispert, currently KLA-Tencor’s President and Chief Operating Officer, contacted Mr. Brian James, ADE’s Chief Financial Officer, to suggest meeting later that month in San Francisco at Semicon West 2005, an annual exposition for semiconductor and related microelectronics manufacturing. ADE’s management was familiar with KLA-Tencor’s products and industry reputation. In addition, patent infringement litigation had arisen between the two companies in 2000 and had been resolved in early 2005.

      At Semicon West 2005, Dr. Chris Koliopoulos, ADE’s President and Chief Executive Officer, Mr. James, Mr. Kispert and Mr. Ken Schroeder, then KLA-Tencor’s Chief Executive Officer and now a Senior Advisor to KLA-Tencor, held a meeting at which KLA-Tencor expressed its interest in a potential business combination with ADE. Mr. James and Dr. Koliopoulos informed members of ADE’s board on an individual basis that KLA-Tencor had approached ADE regarding a potential business combination.

      On July 13, 2005, Mr. Kispert telephoned Mr. James and stated that a member of KLA-Tencor’s senior management would be contacting ADE with a more detailed proposal for KLA-Tencor to acquire ADE.

      On August 9, 2005, Dr. Koliopoulos and Mr. Gary Bultman, KLA-Tencor’s Senior Vice President, Strategic Business Development, met in Tucson, Arizona to discuss further the possibility of a combination of the two companies. No specific terms of such a combination were discussed.

      On September 13, 2005, Dr. Koliopoulos, Mr. James, Mr. Jeffrey Hall, currently KLA-Tencor’s Chief Financial Officer, and Mr. Bultman held a meeting in Boston to discuss KLA-Tencor’s rationale for a proposed business combination with ADE.

      On September 21, 2005, following a regularly scheduled meeting of the ADE board, Mr. Bultman visited ADE’s office in Westwood, Massachusetts and met with Dr. Koliopoulos, Mr. James and the other members of ADE’s board. Mr. Bultman outlined the proposed terms of a possible transaction and presented his views of the general benefits and synergies that would result from a combination of the two companies. In conjunction with this meeting, also on September 21, 2005, Dr. Koliopoulos received by

email a non-binding term sheet from Mr. Bultman for a potential business combination between ADE and KLA-Tencor. The term sheet reflected the following material terms:

      After internal ADE discussion among Mr. James and members of ADE’s board, Mr. James indicated to Mr. Bultman that ADE would be interested in holding negotiations if the transaction would be priced at $31.00 per share of ADE common stock rather than $30.00. After conferring with members of KLA-Tencor’s senior management, Mr. Bultman agreed to raise the offer price to $31.00 and negotiations between the two companies proceeded on this basis. On September 20, 2006, the closing price of ADE common stock was $22.07 per share.

      On September 22, 2005, Mr. Stuart Nichols, KLA-Tencor’s Vice President and General Counsel, presented an initial draft of a Non-Disclosure Agreement to Mr. James concerning commercially sensitive information to be exchanged between ADE and KLA-Tencor in the course of their discussions.

      On September 23, 2005, ADE and KLA-Tencor entered into the Non-Disclosure Agreement. This agreement contained “standstill” provisions under which KLA-Tencor agreed for a period of 12 months not to acquire any voting securities of ADE without prior approval of ADE. Also on September 23, Mr. James and Mr. Nichols began initial discussions regarding the terms of the proposed merger.

      On September 27, 2005, at a meeting of KLA-Tencor’s board of directors, Mr. Bultman updated the board on the status of the negotiations with ADE and the proposed key terms of the transaction.

      On September 29, 2005, KLA-Tencor and KLA-Tencor’s legal counsel, Davis Polk & Wardwell, or DPW, distributed an initial draft of the proposed merger agreement to ADE, and on September 30, 2005, KLA-Tencor distributed an initial due diligence request list to ADE.

      During late September and early October 2005, Mr. James and representatives of ADE’s legal counsel, Sullivan & Worcester LLP, or S&W, and members of KLA-Tencor’s senior management and representatives of DPW, negotiated the provisions of the proposed merger agreement. The parties discussed, among other things, an all-stock transaction in which ADE stockholders would receive shares of KLA-Tencor common stock valued at $31.00 for each of their shares of ADE common stock, subject to a “collar” which would provide that the exchange ratio would be fixed if KLA-Tencor’s average stock price during a pricing period prior to closing was 20% higher or lower than KLA-Tencor’s stock price at the signing of the merger agreement. Under the terms of the transaction then under discussion, if the average price was more than 20% lower than the signing price, ADE would have the option to convert the transaction into an all-cash transaction in which ADE stockholders would receive $31.00 in cash for each of their shares of ADE common stock or to terminate the merger agreement, subject in either case to the right of KLA-Tencor to “top up” the amount of stock issuable in the merger so that ADE stockholders would receive $31.00 in KLA-Tencor common stock per share of ADE common stock notwithstanding the “collar”. ADE also sought to limit the circumstances under which a material adverse change to ADE would give KLA-Tencor the ability to terminate the merger agreement. Although many merger agreement provisions remained unresolved, the most material was KLA-Tencor’s insistence on a package of limitations on ADE’s ability to enter into a merger transaction with a third party, including (1) a “force the vote” provision that would require ADE to submit the merger agreement to a vote of its stockholders even in the event that a third party made a superior merger proposal that the ADE board decided to recommend instead of the KLA-Tencor merger, (2) prohibitions on ADE’s ability to seek other offers to acquire ADE, (3) a requirement for ADE to pay a “break up” fee in the event ADE terminated the merger agreement in the event of a superior proposal and (4) limitations on the ability of the parties to the voting agreements to terminate those agreements. ADE insisted on a “fiduciary out”, or a right to terminate the merger agreement (and, similarly, the voting agreements) to accept a superior proposal made

by a third party without any requirement prior to such termination that ADE hold a meeting of its stockholders to vote on the merger agreement.

      Throughout the remainder of October 2005, members of KLA-Tencor’s senior management and representatives of KLA-Tencor’s financial and legal advisors and members of ADE’s senior management and representatives of S&W held a series of telephonic discussions regarding the issues raised by the merger agreement.

      On October 4, 2005, ADE engaged RBC Capital Markets Corporation, or RBC, to act as its exclusive financial advisor to provide an opinion to ADE’s board with respect to the fairness, from a financial point of view, of the consideration to be received by ADE’s stockholders pursuant to a business combination with KLA-Tencor, if an agreement were reached.

      On October 21, 2005, ADE’s board held a special meeting to discuss KLA-Tencor’s proposal, of which the directors had previously been informally informed. Representatives of S&W and RBC participated in the meeting. At this meeting, Dr. Koliopoulos and Mr. James reported on the status and progress of negotiations with members of KLA-Tencor’s senior management and on due diligence relating to the proposed transaction. Dr. Koliopoulos and Mr. James, together with representatives of S&W, summarized the structure of the proposed transaction and the negotiations with KLA-Tencor to date, and discussed open issues relating to the transaction, and S&W described the ADE board’s fiduciary duties under Massachusetts law. ADE’s board discussed the potential benefits of the transaction to ADE and its stockholders, including the expected synergies between ADE and KLA-Tencor, as well as their belief that there were only a limited number of other potential acquirors with the strengths, resources and potential of KLA-Tencor. Among other things, ADE’s board noted that the proposed transaction (1) provided ADE’s stockholders with a minimum “fixed-value” of $31.00 per share of ADE’s common stock since even if the average KLA-Tencor stock price during the pricing period prior to closing fell below the “collar” ADE could elect an all-cash transaction at $31.00 per share, (2) allowed ADE’s stockholders to continue their investment in the combined corporation, and (3) contained a fairly narrow “material adverse change” clause, as compared to similar mergers and acquisitions transactions, which would limit KLA-Tencor’s ability to terminate the transaction after signing, but which was not as narrow as ADE wanted. The board also noted that KLA-Tencor was still insisting on the full package of restrictions on ADE’s ability to obtain and accept a superior offer. At this meeting, RBC also explained the process of preparing the analysis for, and if appropriate rendering, a fairness opinion. ADE’s board discussed the foregoing topics at length and authorized Dr. Koliopoulos and Mr. James to continue discussions with KLA-Tencor.

      Throughout the weeks of October 24, 2005 and November 1, 2005, representatives of KLA-Tencor, DPW and Credit Suisse, KLA-Tencor’s financial advisor, visited the data room at S&W’s Boston office at various times to conduct their due diligence investigations of ADE. In addition, during this time, members of senior management of ADE and KLA-Tencor and representatives of Credit Suisse, RBC, DPW and S&W held a series of telephonic meetings to discuss and answer questions about ADE’s and KLA-Tencor’s respective businesses.

      On November 8, 2005, at a special meeting of the ADE board, Dr. Koliopoulos and Mr. James updated the ADE directors on the negotiations with KLA-Tencor and on KLA-Tencor’s due diligence investigation of ADE. Following the update, representatives of S&W made a presentation to the board on the legal aspects of the transaction. After the presentation, the board engaged in an extensive discussion of the open issues outlined by ADE management and S&W. The board also discussed the current and future business and prospects of ADE in the event that the proposed transaction was not completed.

      On November 10, 2005, Mr. Richard P. Wallace, currently KLA-Tencor’s Chief Executive Officer, Mr. Bultman and certain members of KLA-Tencor’s senior management met with Dr. Koliopoulos and Mr. James at the Boston office of S&W to discuss ADE’s historical financial information and otherwise conduct due diligence regarding ADE in preparation for a meeting with a subcommittee of the KLA-Tencor board.

      On November 14, 2005, Dr. Koliopoulos and Mr. James met with certain members of KLA-Tencor’s senior management, including Messrs. Schroeder, Hall and Wallace, and Mr. Kenneth Levy, chairman of KLA-Tencor’s board, at KLA-Tencor’s offices in San Jose, California. At this meeting, KLA-Tencor senior management gave a presentation regarding its perspective on ADE’s business that was prepared by members of KLA-Tencor’s project team. Dr. Koliopoulos and Mr. James also made a presentation to KLA-Tencor management regarding ADE’s technologies, its tools, its lines of business and general product roadmaps. No opens items under the merger agreement were discussed at this meeting.

      At a regularly scheduled meeting held on November 16, 2005, ADE’s board discussed the status of the proposed transaction. At this meeting, Dr. Koliopoulos and Mr. James reported on their November 14, 2005 meeting with certain members of KLA-Tencor’s senior management. Dr. Koliopoulos and Mr. James also discussed KLA-Tencor’s business and products, KLA-Tencor’s view of the expected synergies resulting from a combination of ADE and KLA-Tencor and the current and future business of ADE on a stand-alone basis in the event that the transaction was not completed. A representative of RBC reported to the board on the status of RBC’s review and analysis of the fairness to ADE’s stockholders, from a financial point of view, of the consideration to be received in the proposed transaction with KLA-Tencor.

      On November 18, 2005, members of KLA-Tencor’s senior management visited ADE’s offices in Tucson, Arizona to review capabilities of the current optical manufacturing infrastructure available at ADE’s Tucson facility.

      On November 29, 2005, members of KLA-Tencor’s senior management informed Dr. Koliopoulos that the proposed transaction was “on hold” on account of KLA-Tencor’s desire to wait for the release of, and evaluate, the results of ADE’s fiscal quarter ended October 31 prior to agreeing to a transaction and also on account of a transition of KLA-Tencor management. Members of KLA-Tencor’s senior management indicated that KLA-Tencor would continue to consider an acquisition of ADE.

      On January 23, 2006, at a special meeting of KLA-Tencor’s board of directors, Mr. Wallace, Dr. Michael Kirk, a member of KLA-Tencor’s senior management team, and Mr. Hall presented to the board an overview of the proposed transaction with ADE. After extensive discussions, the board approved the acquisition of ADE on the terms as described to the board.

      On January 23, 2006, Mr. Wallace contacted Dr. Koliopoulos to resume discussions of the proposed transaction. Mr. James and Mr. Hall then engaged in a telephonic discussion regarding the open issues with respect to the merger agreement. Throughout the week of January 23, 2006, Mr. James, Mr. Hall, DPW and S&W held various discussions in an attempt to resolve all open issues relating to the merger agreement.

      On January 25, 2006, ADE’s board held a special meeting that was attended by members of ADE’s senior management and S&W. At this meeting, Dr. Koliopoulos and Mr. James reported that they had been informed by KLA-Tencor management that KLA-Tencor desired to proceed with a transaction on the basis of the then current draft merger agreement, which provided for the transaction described above but also still included the full package of restrictions on ADE’s ability to obtain and accept a superior offer. After a presentation from S&W on the board’s fiduciary obligations, the board discussed the recent increase in ADE’s stock price (on January 24, 2006, the closing stock price of ADE’s common stock was $31.28 per share), and expressed concern about the board’s ability to approve KLA-Tencor’s offer of $31.00 per share of ADE common stock and the ability to receive stockholder approval at such a price combined with the lack of a “fiduciary out” in the merger agreement. ADE’s board concluded that it would not approve KLA-Tencor’s offer and that ADE should only resume merger negotiations if KLA-Tencor would agree to include a “fiduciary out” in the merger agreement and to loosen the limitations on ADE’s ability to engage in negotiations and terminate the merger agreement upon acceptance of a superior offer.

      On January 26, 2006, Mr. James and Mr. Hall engaged in telephonic discussions regarding the structure and the consideration for the proposed transaction. Mr. James informed Mr. Hall that ADE’s board was no longer in a position to accept KLA-Tencor’s proposal of $31.00 per share of ADE common stock based on economic and other terms. Mr. James also informed Mr. Hall of ADE’s position on the “fiduciary out”. In response, and following discussions between DPW and S&W, Mr. Hall agreed to

eliminate the “force the vote” provision (but not the prohibition on seeking other offers or the “break up” fee) and to include a “fiduciary out” in the merger agreement, but did not increase or modify KLA-Tencor’s proposal of $31.00 per share of ADE common stock.

      On February 2, 2006, following concerns expressed by Mr. James about obtaining the ADE board’s approval of a transaction priced at $31.00 per share of ADE common stock, Mr. Hall and Mr. James discussed the possibility of an all-stock transaction at a fixed exchange ratio. Mr. Hall contacted Mr. James later that day to make a proposal of a fixed exchange ratio of 0.61 or 0.62 shares of KLA-Tencor common stock for each outstanding share of ADE common stock, with a “collar” on the value of shares of ADE common stock ranging from $31.00 to $36.30 per share of ADE common stock. Mr. James rejected Mr. Hall’s proposal.

      On February 8, 2006, Mr. James contacted Mr. Hall to re-open discussions on Mr. Hall’s February 2, 2006 proposal. Mr. James indicated that ADE could not accept KLA-Tencor’s proposal of a fixed exchange ratio of 0.62 shares of KLA-Tencor common stock for each outstanding share of ADE common stock with the proposed “collar”. Mr. Hall indicated that KLA-Tencor had not changed its position, and KLA-Tencor’s offer remained a fixed exchange ratio with a “collar” as proposed on February 2, 2006.

      On February 14, 2006, Mr. James again contacted Mr. Hall to inquire as to KLA-Tencor’s current position. Mr. Hall again indicated that KLA-Tencor had not changed its position, and KLA-Tencor’s offer remained a fixed exchange ratio with a “collar” as proposed on February 2, 2006.

      At a regularly scheduled meeting held on February 15, 2006, ADE’s board discussed recent developments in the proposed transaction. This meeting was attended by members of ADE’s senior management and representatives of S&W and RBC. At this meeting, Mr. James reported on the status and progress of discussions with KLA-Tencor since the last meeting of ADE’s board. Also at this meeting, Mr. James summarized the most recent discussions with KLA-Tencor over changing from the fixed value structure to a fixed exchange ratio structure with a “collar” whereby the number of shares of KLA-Tencor common stock into which ADE common stock would be converted would be fixed at the time of execution of the merger agreement.

      ADE’s board discussed at length Mr. James’ report and presentations by representatives of S&W and RBC, including a discussion of the impact of alternative pricing structures. The board came to a consensus that a fixed exchange ratio, with or without a “collar”, would be acceptable in principle based on the board’s confidence in KLA-Tencor and its view of industry trends, the respective prices of ADE’s and KLA-Tencor’s stock, the potential transaction benefits, and the belief that the premium relative to ADE’s historical prices outweighed the risk of not having a fixed value or “collar”. However, the board decided that the premium implied by the most recent proposal from KLA-Tencor was inadequate. The board instructed Mr. James to continue negotiations with KLA-Tencor over a higher exchange ratio and to report back to the board.

      Later that day, Mr. James contacted Mr. Hall to propose a fixed exchange ratio of 0.65 shares of KLA-Tencor common stock for each outstanding share of ADE common stock with no “collar”. Mr. Hall declined the proposal.

      On February 16, 2006, Dr. Koliopoulos and Mr. Wallace agreed to present to their respective boards an all-stock transaction at a fixed exchange ratio of 0.64 shares of KLA-Tencor common stock for each outstanding share of ADE common stock with no “collar”.

      On February 17, 2006, at a meeting of KLA-Tencor’s board of directors, the board authorized an acquisition of ADE at a fixed exchange ratio of 0.64 shares of KLA-Tencor common stock for each outstanding share of ADE common stock.

      On February 18 and 19, 2006, members of KLA-Tencor’s senior management and representatives of DPW and Credit Suisse, and members of ADE’s senior management and representatives of S&W and RBC, participated in conference calls to discuss the remaining open issues relating to the merger agreement and the remaining due diligence items.

      On February 21, 2006, the ADE board held a special meeting that was attended by Mr. James and representatives of S&W and RBC. Mr. James, S&W and RBC reviewed with ADE’s board the terms of the most recent draft of the proposed merger agreement and the resolution of open issues relating to the merger agreement. ADE’s board discussed KLA-Tencor’s proposal of a fixed exchange ratio of 0.64 shares of KLA-Tencor common stock for each outstanding share of ADE common stock. Although the stock price of both KLA-Tencor and ADE had increased since November 2005, ADE’s board concluded that the proposed fixed exchange ratio still represented a premium over both current and recent ADE stock prices and a significant increase in the valuation of ADE common stock from November 2005 and even more so compared to longer periods of time.

      Representatives of RBC reviewed their financial analysis and rendered to ADE’s board RBC’s oral opinion, which opinion was subsequently confirmed in writing, that as of February 21, 2006, based upon and subject to the various factors, assumptions, procedures, limitations and qualifications set forth in such 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 outstanding share of ADE common stock to be received by stockholders of ADE pursuant to the merger was fair from a financial point of view to such holders. See “Opinion of ADE’s Financial Advisor” beginning on page 26 for further information regarding this opinion and also see the full text of RBC’s opinion, which is attached as Annex B to this proxy statement/prospectus and should be carefully read in its entirety.

      Following these discussions and presentations, ADE’s board, at the February 21st board meeting, unanimously determined that the merger was advisable, fair to, and in the best interests of ADE and its stockholders, approved the merger agreement and the merger subject to the resolution of some minor issues relating to the merger agreement and the voting agreements, and recommended that ADE stockholders vote “FOR” approval of the KLA-Tencor merger proposal.

      On February 21, 2006, Dr. Koliopoulos and Mr. James engaged in telephonic discussions with members of KLA-Tencor’s senior management regarding the remaining minor issues that involved changes to the voting agreements and the merger agreement.

      On February 22, 2006, Mr. Landon Clay, chairman of ADE’s board, Dr. Koliopoulos, Mr. James and certain representatives of S&W and RBC held a meeting to discuss the trading prices of the shares of ADE and KLA-Tencor common stock since the issuance of RBC’s fairness opinion on February 21, 2006, and the relationship between those trading prices and that opinion. Representatives of RBC indicated that those trading prices had not affected RBC’s willingness to agree to the inclusion of its fairness opinion in this proxy statement/prospectus as one of the factors considered by ADE’s board in approving the merger with KLA-Tencor on the financial terms previously negotiated between the companies and reflected in the merger agreement.

      On the evening of February 22, 2006, ADE and KLA-Tencor executed the merger agreement. Before the opening of trading on The Nasdaq National Market on February 23, 2006, ADE and KLA-Tencor issued a joint press release announcing the proposed merger.

Reasons For and Factors Considered in Connection With the Merger

      ADE’s board believes that the merger is advisable for, fair to, and in the best interests of ADE and its stockholders. Accordingly, ADE’s board has unanimously approved the merger agreement and the merger and unanimously recommends that ADE stockholders vote “FOR” approval of the merger proposal. When ADE’s stockholders consider their board’s recommendation, ADE’s stockholders should be aware that ADE’s directors may have interests in the merger that may be different from, or in addition to, their interests. These interests are described in “— Interests of Certain Persons in the Merger” beginning on page 38.

      In reaching its conclusion to approve the merger, ADE’s board consulted with ADE’s management team, as well as ADE’s financial advisor and legal counsel, reviewed a significant amount of information and considered a variety of factors, including the following material factors:

      ADE’s board also identified and considered certain potentially adverse consequences to ADE, ADE stockholders and the combined company that could arise from the merger, including:

      After consideration of these material factors, ADE’s board determined that these risks are of a nature that are customary in business combinations similar to the merger, could be mitigated or managed by ADE or KLA-Tencor following the merger, were reasonably acceptable under the circumstances, or, in light of the anticipated benefits, the risks were unlikely to have a material impact on the merger or on KLA-Tencor following the merger, and that, overall, these risks were significantly outweighed by the potential benefits of the merger.

      The foregoing discussion of the information and factors considered by ADE’s board is not intended to be exhaustive but includes the material factors considered by ADE’s board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, ADE’s board did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to these factors. In addition, ADE’s board did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather ADE’s board conducted an overall analysis of the factors described above, including discussions with ADE’s management, outside consultants, legal counsel and financial advisor. In considering the factors described above, individual members of ADE’s board may have given different weight to different factors. It should be noted that this explanation of the reasoning of ADE’s board and information presented in this section is forward-looking in nature and, therefore should be read in light of the factors discussed in the sections entitled “Risk Factors” beginning on page 13 and “Forward-Looking Statements” beginning on page 16.

      At a special meeting held on January 23, 2006, the KLA-Tencor board of directors:

      In the course of reaching its decision to approve the merger agreement, KLA-Tencor’s board of directors consulted with KLA-Tencor’s management, as well as its legal counsel and financial advisor and considered the following material factors as generally supporting its decision:

      The KLA-Tencor board of directors also considered a number of potentially negative factors in its deliberations concerning the merger proposal, including:

      In view of the variety of factors and the amount of information considered, KLA-Tencor’s board of directors did not find it practicable to and did not quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision. The determination was made after consideration of all of the factors, both negative and positive, taken as a whole. In addition, individual members of KLA-Tencor’s board of directors may have given different weights to different factors. KLA-Tencor’s board of directors believed the anticipated synergies which it considered in reaching its decision to approve the merger agreement to be reasonably prepared and reflected the best currently available estimates and judgments of management at the time they were prepared.

      KLA-Tencor’s board of directors considered all these factors in reaching the conclusions and recommendations described above. It should be noted that this explanation of the KLA-Tencor board’s reasoning and certain information presented in this section is forward-looking in nature and, therefore, such information should be read in light of the factors discussed under the heading “Forward-Looking Statements”’ beginning on page 16.

      The KLA-Tencor board of directors has unanimously approved the merger agreement, the merger, the issuance of KLA-Tencor common stock in the merger and the other transactions contemplated thereby and believes that the terms of the merger are fair to, and in the best interests of, KLA-Tencor and its stockholders.

Opinion of ADE’s Financial Advisor

      On February 21, 2006, RBC rendered its written opinion to ADE’s board of directors that, as of that date and subject to the assumptions, qualifications and limitations set forth in its opinion, the merger consideration, as defined below, was fair, from a financial point of view, to the ADE stockholders. The full text of the opinion of RBC is attached to this proxy statement/prospectus as Annex B. This summary of the opinion is qualified in its entirety by reference to the full text of the RBC opinion. ADE stockholders are urged to read the RBC opinion carefully and in its entirety.

      RBC’s opinion was provided for the information and assistance of the ADE board of directors in connection with its consideration of the merger. RBC’s opinion did not address ADE’s underlying business decision to engage in the merger or the relative merits of the merger compared to any alternative business strategy or transaction in which ADE might engage. RBC’s opinion and presentation to the ADE board of directors were only two of many factors taken into consideration by the ADE board of directors in making its determination to approve the merger. RBC’s opinion does not constitute a recommendation to ADE stockholders as to how they should vote on the merger proposal.

      RBC’s opinion addressed solely the fairness of the merger consideration, from a financial point of view, to the ADE stockholders and did not address other merger terms or arrangements, including, without limitation, the financial or other terms of any voting or employment agreement, nor did RBC express any opinion as to the prices at which KLA-Tencor’s common stock had traded or may trade following the announcement or consummation of the merger. As used in this section and the opinion of RBC, the term “merger consideration” refers to 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) per share of ADE common stock specified in the merger agreement. For the purposes of its analyses summarized below, RBC calculated an implied value for the merger consideration of $33.62 per share of ADE common stock based on the closing price for KLA-Tencor common stock on February 17, 2006, the last trading day preceding the finalization of RBC’s analysis.

      In rendering its opinion, RBC assumed and relied upon the accuracy and completeness of the financial, legal, tax, operating, and other information provided to it by ADE and KLA-Tencor, including, without limitation, the financial statements and related notes thereto of ADE and KLA-Tencor. RBC did not assume responsibility for independently verifying, and did not independently verify, this information. RBC assumed, after discussions with the managements of ADE and KLA-Tencor, that the First Call and Thomson One Analytics consensus estimates it reviewed regarding the potential future performance of ADE and KLA-Tencor as stand-alone entities corresponded to the best currently available estimates and judgments of the respective managements of ADE and KLA-Tencor. RBC expressed no opinion as to those financial forecasts or the assumptions on which they were based. RBC did not assume any responsibility to perform, and did not perform, an independent evaluation or appraisal of any of the respective assets or liabilities of ADE or KLA-Tencor, and RBC was not furnished with any valuations or appraisals of these types. In addition, RBC did not assume any obligation to conduct, and did not conduct, any physical inspection of the property or facilities of ADE or KLA-Tencor. Additionally, RBC was not asked to, and did not consider, the possible effects of any litigation or other claims.

      In rendering its opinion, RBC assumed that all conditions to the consummation of the merger would be satisfied without waiver and that the executed version of the merger agreement would not differ, in any respect material to its opinion, from the latest draft RBC reviewed.

      The opinion of RBC spoke only as of the date it was rendered, was based on the conditions as they existed and information with which RBC was supplied as of such date, and was without regard to any market, economic, financial, legal or other circumstances or event of any kind or nature which may exist or occur after such date. RBC has not undertaken to reaffirm or revise its opinion or otherwise comment on events occurring after the date of its opinion and does not have an obligation to update, revise or reaffirm its opinion. Unless otherwise noted, all analyses were performed based on market information available as of February 17, 2006, the last trading day preceding the finalization of RBC’s analysis.

      In connection with its review of the merger and the preparation of its opinion, RBC undertook the review and inquiries it deemed necessary and appropriate under the circumstances, including:

      Among such other studies and analysis, RBC reviewed the ratios of the reported closing prices of shares of ADE common stock divided by the corresponding reported closing prices of shares of KLA-Tencor common stock over various periods ending February 17, 2006, the last trading day preceding the finalization of RBC’s analysis. RBC compared the merger consideration with the spot price one day (February 17, 2006) relative trading ratio for ADE and KLA-Tencor and with the spot price and average price one week (February 10, 2006), one month (January 17, 2006), three month (November 17, 2005), six month (August 17, 2005), nine month (May 17, 2005), twelve month (February 17, 2005), two year (February 17, 2004) and three year (February 18, 2003) relative trading ratios for ADE and KLA-Tencor. The following table summarizes this data:

      RBC noted that: (1) there was a premium implied by the merger consideration compared with the relative trading ratios for ADE and KLA-Tencor for every period analyzed; and (2) due to a recent increase in the trading prices of ADE common stock, the spot and average premiums implied by the merger consideration compared with the relative trading ratios for ADE and KLA-Tencor were lower for the one day, one week and one month periods than for every other period analyzed.

      In arriving at its opinion, in addition to reviewing the matters listed above, RBC performed the following analyses:

      In connection with the rendering of its opinion to the ADE board of directors, RBC prepared and delivered to the ADE board of directors written materials containing the analyses listed above and other information material to the opinion. In presenting its opinion to the ADE board of directors, RBC noted that it did not perform (1) a discounted cash flow analysis due to a lack of long-term financial projections for ADE or (2) a contribution analysis due to the relative sizes of ADE and KLA-Tencor. Set forth below is a summary of the analyses used by RBC, including information presented in tabular format. To fully understand the summary of the analyses used by RBC, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analysis.

      Comparable Company Analysis. RBC prepared a comparable company analysis to analyze ADE’s implied transaction multiples relative to a group of publicly-traded companies that RBC deemed for purposes of its analysis to be comparable to ADE. In this analysis, RBC compared the enterprise value of ADE implied by the merger consideration, expressed as a multiple of actual last twelve months revenue and operating profit and projected calendar year 2005 and calendar year 2006 revenue and operating profit, to the respective mean and median enterprise value to revenue and enterprise value to operating profit multiples of the comparable companies implied by the public trading price of their common stock. RBC also compared the per share value of ADE common stock implied by the merger consideration, expressed as a multiple of actual last twelve months earnings per share and projected calendar year 2005 and calendar year 2006 earnings per share, to the respective mean and median price to earnings per share multiples of the comparable companies implied by the public trading price of their common stock. In addition, RBC compared the equity value of ADE implied by the merger consideration, expressed as a multiple of tangible book value, to the respective mean and median equity value to tangible book value multiples of the comparable companies implied by the public trading price of their common stock. Projected revenue, operating profit and earnings per share for ADE and the comparable companies used in the analysis were based on First Call and Thomson One Analytics consensus estimates. For the purposes of its analysis, RBC assumed that ADE’s calendar year end was the twelve month period ending January of the following year. RBC defined enterprise value as equity value plus total debt, preferred stock and minority interest less cash and cash equivalents and defined tangible book value as actual stockholders’ equity less goodwill and other intangible assets.

      RBC compared enterprise value to revenue, enterprise value to operating profit, price to earnings per share and equity value to tangible book value multiples of ADE’s implied transaction valuation with those of the following publicly-traded companies:

      The following table presents, as of February 17, 2006, ADE’s implied enterprise value to revenue, enterprise value to operating profit, price to earnings per share and equity value to tangible book value multiples and the mean and median enterprise value to revenue, enterprise value to operating profit, price to earnings per share and equity value to tangible book value multiples for the listed comparable companies:

      RBC noted that: (1) ADE’s multiples implied by the merger consideration for the last twelve months and projected calendar year 2005 and calendar year 2006 revenue were above the mean and median multiples of the comparable companies analyzed; (2) ADE’s multiple implied by the merger consideration for the last twelve months operating profit was below the mean multiple and above the median multiple of the comparable companies analyzed, for projected calendar year 2005 operating profit was above the mean and median multiples of the comparable companies analyzed, and for projected calendar year 2006 operating profit was below the mean and median multiples of the comparable companies analyzed; (3) ADE’s multiple implied by the merger consideration for the last twelve months earnings per share was below the mean and median multiples of the comparable companies analyzed, and for projected calendar year 2005 and calendar year 2006 earnings per share was below the mean multiple and above the median multiple of the comparable companies analyzed; (4) earnings per share for both ADE and the comparable companies may not reflect statutory tax rates; and (5) ADE’s multiple implied by the merger consideration for tangible book value was above the mean and median multiples of the comparable companies analyzed.

      Precedent Transaction Analysis. RBC compared enterprise value to revenue, enterprise value to earnings before interest, taxes, depreciation and amortization, or EBITDA, equity value to net income and equity value to tangible book value multiples relating to the proposed merger of ADE and KLA-Tencor with like multiples in selected precedent merger and acquisition transactions. In selecting precedent transactions, RBC considered comparable semiconductor capital equipment company transactions

announced after January 1, 2000, in which the transaction values were greater than $75 million and less than $1 billion. Based on these criteria, the following twelve transactions were analyzed:

      For the purpose of calculating the multiples, revenue, EBITDA and net income were derived from the actual revenue, adjusted EBITDA (adjusted to exclude non-cash and one-time charges) and adjusted net income (adjusted to exclude non-cash and one-time charges) of the target companies in the last twelve months prior to the announcement of the transaction. For the purpose of calculating the multiples, tangible book value was derived from the latest actual tangible book value of the target companies prior to the announcement of the transaction. Financial data regarding the precedent transactions was taken from filings with the SEC, press releases, Bloomberg and Dealogic.

      The following table compares the implied transaction multiples for the merger with the corresponding mean and median multiples for the selected precedent transactions:

      RBC noted that: (1) ADE’s multiples for last twelve months revenue, last twelve months EBITDA and tangible book value implied by the merger consideration were above both the mean and median multiples found in the selected precedent transactions analyzed; and (2) ADE’s multiple for last twelve months net income implied by the merger consideration was below the mean multiple and above the median multiple found in the selected precedent transactions analyzed.

      Premiums Paid Analysis (Premiums to Price). RBC compared the premiums implied by the merger consideration to the premiums of the “selected precedent transactions” included in the Precedent Transaction Analysis (see above). RBC also compared the premiums implied by the merger consideration to the premiums in “general technology transactions,” consisting of public to public technology transactions announced since January 1, 2005 in which the transaction values were greater than $100 million and less than $1 billion. RBC compared the premiums implied by dividing the value of the per share merger consideration by ADE’s spot price one day (February 17, 2006), one week (February 10, 2006), one month (January 17, 2006) and three months (November 17, 2005) prior to February 17, 2006, the last trading day preceding the finalization of RBC’s analysis, to the spot price premiums for the same periods for the targets in the selected transactions. The following table summarizes this analysis:

NA=not available

      RBC noted that: (1) due to a recent increase in the trading prices of ADE common stock, the spot one day, one week and one month premiums implied by the merger consideration were below both the mean and median selected precedent transactions and general technology transactions premiums analyzed; (2) the spot three months premium implied by the merger consideration was higher than both the mean and median selected precedent transactions and general technology transactions premiums analyzed; and (3) the spot one day, one week, one month and three months premiums implied by the merger consideration were within the range of the low and high selected precedent transactions and general technology transactions premiums analyzed.

      RBC also compared the premiums implied by dividing the value of the per share merger consideration by ADE’s average price one week (February 10, 2006), one month (January 17, 2006) and three months (November 17, 2005) prior to February 17, 2006, the last trading day preceding the finalization of RBC’s analysis, to the average price premiums for the same periods for the targets in the “selected precedent transactions” included in Precedent Transactions Analysis above. The following table summarizes this analysis:

      RBC noted that: (1) due to a recent increase in the trading prices of ADE common stock, the average one week and one month premiums implied by the merger consideration were below both the mean and median selected precedent transactions analyzed; (2) the average three months premium implied by the merger consideration was below the mean and above the median selected precedent transactions premiums analyzed; and (3) the average one week, one month and three months premiums implied by the merger consideration were within the range of the low and high selected precedent transactions premiums analyzed.

      In reaching its opinion, RBC did not assign any particular weight to any one analysis or the results yielded by that analysis. Rather, having reviewed these results in the aggregate, RBC exercised its professional judgment in determining that, based on the aggregate of the analyses used and the results they yielded, the merger consideration was fair, from a financial point of view, to ADE stockholders. RBC believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the analyses and, accordingly, also made qualitative judgments concerning differences between the characteristics of ADE and the merger and the data selected for use in its analyses, as further discussed below.

      No single company or transaction used in the above analyses as a comparison is identical to ADE or KLA-Tencor or the proposed merger, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, businesses, or transactions analyzed. The analyses were prepared solely for purposes of RBC providing an opinion as to the fairness of the merger consideration, from a financial point of view, to ADE’s stockholders and do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold, which are inherently subject to uncertainty.

      The opinion of RBC as to the fairness, from a financial point of view, of the merger consideration, was necessarily based upon market, economic, and other conditions that existed as of the date of its opinion and on information available to RBC as of that date.

      The preparation of a fairness opinion is a complex process that involves the application of subjective business judgment in determining the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Several analytical methodologies were used by RBC and no one method of analysis should be regarded as critical to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. The overall conclusions of RBC were based on all the analyses and factors presented herein taken as a whole and also on application of RBC’s own experience and judgment. Such conclusions may involve significant elements of subjective judgment and qualitative analysis. RBC therefore believes that its analyses must be considered as a whole and that selecting portions of the analyses and of the factors considered, without considering all factors and analyses, could create an incomplete or misleading view of the processes underlying its opinion.

      In connection with its analyses, RBC made, and was provided by ADE’s and KLA-Tencor’s managements with, numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond ADE’s or KLA-Tencor’s control. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of ADE,

KLA-Tencor or their advisors, none of ADE, KLA-Tencor, RBC or any other person assumes responsibility if future results or actual values are materially different from these forecasts or assumptions.

      ADE selected RBC to render its opinion based on RBC’s experience in mergers and acquisitions and in securities valuation generally. RBC is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, corporate restructurings, underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. In the ordinary course of business, RBC may act as a market maker and broker in the publicly-traded securities of ADE and KLA-Tencor and receive customary compensation, and may also actively trade securities of ADE and/or KLA-Tencor for its own account and the accounts of its customers, and, accordingly, RBC and its affiliates, may hold a long or short position in such securities.

      RBC’s engagement letter provides for ADE to pay RBC a customary fee in connection with RBC’s opinion, a portion of which was paid upon delivery of the opinion and a portion of which is payable upon the closing of the merger. Whether or not the merger closes, ADE has also agreed to reimburse RBC for its reasonable out-of-pocket expenses and to indemnify it against liability that may arise out of services performed by RBC in connection with the merger, including without limitation, liabilities arising under the federal securities laws. The terms of the engagement letter were negotiated at arm’s-length between ADE and RBC and the ADE board of directors was aware of this fee arrangement at the time of its adoption and approval of the merger agreement and approval of the merger.

Material U.S. Federal Income Tax Consequences

      In the opinion of Davis Polk & Wardwell, counsel to KLA-Tencor, and Sullivan & Worcester LLP, counsel to ADE (together with KLA-Tencor’s counsel, referred to as tax counsel), the following are the material U.S. federal income tax consequences of the merger to U.S. Holders (as defined below) of ADE common stock. This discussion is based on the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, applicable Treasury regulations, administrative interpretations and court decisions as in effect as of the date of this proxy statement/ prospectus, all of which may change, possibly with retroactive effect. For purposes of this discussion, a “U.S. Holder” is a beneficial owner of ADE common stock that is for U.S. federal income tax purposes:

      This discussion addresses only the consequences of the exchange of shares of ADE common stock held as capital assets. It does not address all aspects of U.S. federal income taxation that may be important to a U.S. Holder in light of that stockholder’s particular circumstances or to a U.S. Holder subject to special rules, such as:

      If a partnership holds ADE common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding ADE common stock should consult its tax advisors.

      This discussion of material U.S. federal income tax consequences is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger. This discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any non-income tax or any foreign, state or local tax consequences of the merger. Accordingly, we strongly urge each ADE stockholder to consult his or her own tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences to him or her of the merger.

      Based on certain representations, covenants and assumptions described below, all of which must continue to be true and accurate in all material respects as of the effective time of the merger, it is the opinion of tax counsel that the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that KLA-Tencor, South and ADE will each be a party to that reorganization within the meaning of Section 368(b) of the Internal Revenue Code. It is a condition to the obligation of each of KLA-Tencor and ADE to complete the merger that the relevant tax counsel confirm its opinion as of the closing date of the merger. Neither KLA-Tencor nor ADE intends to waive this condition.

      The opinions of tax counsel regarding the merger have relied, and the confirmation opinions regarding the merger as of the closing date of the merger, or the closing date opinions, will each rely, on (1) representations and covenants made by KLA-Tencor, South and ADE, including those contained in certificates of officers of KLA-Tencor, South and ADE, and (2) specified assumptions, including an assumption regarding the completion of the merger in the manner contemplated by the merger agreement. In addition, the opinions of tax counsel have assumed, and tax counsel’s ability to provide the closing date opinions will depend on, the absence of changes in existing facts or in law between the date of this proxy statement/ prospectus and the closing date of the merger. If any of those representations, covenants or assumptions is inaccurate, tax counsel may not be able to provide the required closing date opinions or the tax consequences of the merger could differ from those described in the opinions that tax counsel have delivered. An opinion of tax counsel neither binds the Internal Revenue Service, or IRS, nor precludes the IRS or the courts from adopting a contrary position. Neither KLA-Tencor nor ADE intends to obtain a ruling from the IRS on the tax consequences of the merger.

      None of KLA-Tencor, South and ADE will recognize any gain or loss for U.S. federal income tax purposes as a result of the merger.

      A U.S. Holder who receives shares of KLA-Tencor common stock in the merger will not recognize any gain or loss except for any gain or loss recognized with respect to cash received in lieu of a fractional share of KLA-Tencor common stock. U.S. Holders will recognize gain or loss on any cash received in lieu of a fractional share of KLA-Tencor common stock equal to the difference between the amount of cash received in lieu of the fractional share and the portion of the holder’s tax basis of the shares of ADE common stock surrendered that is allocable to the fractional share. Such gain or loss generally will be long-term capital gain or loss if the holding period in ADE common stock is more than one year as of the closing date of the merger. Such U.S. Holder will have a tax basis in the KLA-Tencor common stock received in the merger, including any fractional share for which cash is received, equal to the tax basis of the ADE common stock surrendered by that holder in the merger. The holding period for KLA-Tencor

common stock received in the merger will include the holding period for the ADE common stock surrendered therefor.

      Information returns may be filed with the IRS in connection with cash received in lieu of a fractional share of KLA-Tencor common stock pursuant to the merger. Backup withholding at a rate of 28% may apply to a U.S. Holder’s receipt of such cash, unless the U.S. Holder furnishes a correct taxpayer identification number and certifies that he or she is not subject to backup withholding. Any amount withheld under the backup withholding rules will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

      A U.S. Holder will be required to retain records pertaining to the merger and will be required to file with such holder’s U.S. federal income tax return for the year in which the merger takes place a statement setting forth facts relating to the merger, including:

Regulatory Matters Relating to the Merger

      U.S. Antitrust. Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, or the HSR Act, as amended, and the rules that have been promulgated thereunder by the FTC, the merger may not be consummated unless KLA-Tencor and ADE provide certain information to the Antitrust Division and the FTC, and specified waiting period requirements have been satisfied. Pursuant to the requirements of the HSR Act, KLA-Tencor and ADE each filed a Notification and Report Forms with respect to the merger with the Antitrust Division and the FTC by March 8, 2006. As a result, the waiting period applicable to the merger is scheduled to expire on April 7, 2006. However, before such time, the Antitrust Division or the FTC may extend the waiting period by requesting additional information and documentary material relevant to the merger from KLA-Tencor and ADE. If such a request is made, the waiting period generally will be extended until 11:59 P.M., New York City time, 30 days after substantial compliance with such request. Thereafter, such waiting period can be extended only by court order or the agreement of the parties.

      The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the merger. At any time before or after consummation of the merger, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger or seeking the divestiture of substantial assets of KLA-Tencor or ADE. Private parties (including individual states) may also bring legal actions under the antitrust laws. We do not believe that the consummation of the merger will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if this challenge is made, what the result will be. See “The Merger Agreement — Conditions to the Merger” beginning on page 48 for certain conditions to the merger, including conditions with respect to litigation and certain governmental actions and “The Merger Agreement — Termination” beginning on page 50 for certain termination rights pursuant to the Merger Agreement in connection with legal prohibitions to completing the merger.

      Other Laws. KLA-Tencor and ADE conduct operations in a number of foreign countries. In connection with completion of the merger, the laws of certain of these foreign countries may require the filing of information with, or the obtaining of approval of, governmental authorities therein. KLA-Tencor and ADE are currently seeking further information regarding the applicability of any such laws and intend to take such action as they may require. Some of these filings may not be completed before the closing,

and some of these approvals, which are not as a matter of practice required to be obtained prior to effectiveness of a merger, may also not be obtained before the closing.

      General. It is possible that governmental authorities having jurisdiction over KLA-Tencor and ADE may seek regulatory concessions as conditions for granting approval of the merger. A regulatory body’s approval may require changes in or limitations on, the operation or ownership of any asset or business of KLA-Tencor, ADE or any of their respective subsidiaries, or KLA-Tencor’s ownership of ADE, or requiring asset divestitures, which conditional approval could reasonably be expected to result in a substantial detriment to KLA-Tencor, ADE and their respective subsidiaries, taken as a whole, after the closing. If this kind of approval occurs, KLA-Tencor can decline to close under the merger agreement. We can give no assurance that the required regulatory approvals will be obtained on terms that satisfy the conditions to closing of the merger or are within the time frame contemplated by KLA-Tencor and ADE. See “The Merger Agreement — Conditions to the Merger” beginning on page 48.

Federal Securities Laws Consequences; Stock Transfer Restriction Agreements

      This proxy statement/prospectus does not cover any resales of the shares of KLA-Tencor common stock to be received by ADE’s stockholders upon completion of the merger, and no person is authorized to make any use of this document in connection with this resale.

      All shares of KLA-Tencor common stock that ADE stockholders receive in the merger will be freely transferable, with the exception of the shares of KLA-Tencor common stock received by persons who are deemed to be “affiliates” of ADE under the Securities Act, and the related SEC rules and regulations, at the time of the special meeting. These “affiliates” may resell their shares of KLA-Tencor common stock only in transactions permitted by Rule 145 under the Securities Act or as otherwise allowed under that Act. Persons who may be deemed to be affiliates of ADE for these purposes generally include individuals or entities that control, are controlled by, or are under common control with ADE and may include some officers, directors and principal stockholders of ADE. The merger agreement requires ADE to use reasonable best efforts to deliver or cause to be delivered to KLA-Tencor on or prior to the effective time of the merger from each of those affiliates an executed letter agreement to the effect that those persons will not offer or sell or otherwise dispose of any shares of KLA-Tencor common stock issued to them in the merger in violation of the Securities Act or the related SEC rules and regulations.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

      When considering the recommendation of ADE’s board to vote “FOR” the approval of the ADE merger proposal, ADE stockholders should be aware that some directors and executive officers of ADE have agreements or arrangements that provide them with interests in the merger that are different from, or in addition to, the interests of ADE stockholders. The board of ADE was aware of these interests and considered them, among other matters, during its deliberations with respect to the merger and in deciding to recommend that ADE stockholders vote “FOR” the approval of the ADE merger proposal.

      Agreement with Dr. Koliopoulos. Dr. Koliopoulos’ agreement with ADE, or the Koliopoulos Agreement, provides that in the event that a “change of control transaction” (as defined in the Koliopoulos Agreement, which definition covers the merger) occurs or is pending, or Dr. Koliopoulos’ employment with ADE terminates on account of his death or disability, all of his unvested options to acquire shares of ADE’s common stock will, on the date of and immediately prior to the consummation of the “change of control transaction” or the termination of Dr. Koliopoulos’ employment, accelerate and become immediately exercisable in full for a period of up to two years following the occurrence of such event, regardless of any stock option plan of ADE or any stock option agreement between ADE and Dr. Koliopoulos. As of the date of this proxy statement/prospectus, of the options to purchase 100,000 shares of ADE common stock held by Dr. Koliopoulos, options with respect to 70,000 shares are currently vested, while options to purchase 30,000 shares will become fully vested upon the closing of the merger under the terms of the Koliopoulos Agreement, with an exercise price of $6.125 per share.

      Under the terms of the Koliopoulos Agreement, Dr. Koliopoulos is also entitled to receive severance payments under certain circumstances. If Dr. Koliopoulos’ employment terminates (1) for a reason other than “cause”, his death or disability, or (2) because ADE does not offer to extend the term of the Koliopoulos Agreement for at least one additional year upon expiration of the term of the agreement (ending June 20, 2008), or if Dr. Koliopoulos terminates his employment due to “job restructuring” which includes a change in his position as the Chief Executive Officer of ADE or a material diminishment of his duties and responsibilities so that they are no longer consistent with the duties and responsibilities of the Chief Executive Officer of ADE (regardless of whether such change in title, duties or responsibilities results from a merger, change of control of ADE, action by ADE’s board or otherwise), then all of his compensation and benefits shall terminate on the date of his employment, and ADE (or its successor) will be required, under certain circumstances, to pay to Dr. Koliopoulos severance compensation for 24 months following the termination of this employment at a yearly rate equal to his annualized base salary as of the date of termination. Dr. Koliopoulos’ current annual salary is $407,000. “Cause” is defined in the Koliopoulos Agreement as (1) a material breach by Dr. Koliopoulos of his obligations under the Koliopoulos Agreement or any other agreement between him and ADE, (2) the willful or knowingly reckless engaging by Dr. Koliopoulos in conduct which is or may be materially financially injurious to ADE, (3) the commission by Dr. Koliopoulos of fraud, embezzlement or theft against ADE or (4) conviction of, or Dr. Koliopoulos’ written admission to, a felony.

      Agreements with Other Executive Officers. Each of Mr. James, ADE’s Executive Vice President, and Mr. David Basila, ADE’s Vice President, is a party to an agreement with ADE. Mr. James’ agreement, or the James Agreement, provides that in the event that a “change of control transaction” (as defined in the James Agreement, which definition covers the merger) occurs or is pending, or if Mr. James’ employment with ADE terminates on account of his death or disability, his unvested options to acquire shares of ADE’s common stock will, on or prior to the consummation of the “change of control transaction” or the termination of Mr. James’ employment, accelerate and become immediately exercisable in full, regardless of any stock option plan of ADE or any stock option agreement between ADE and Mr. James. As of the date of this proxy statement/prospectus, of the options to purchase 170,000 shares of ADE common stock held by Mr. James, options with respect to 158,000 shares are currently vested, while options to purchase 12,000 shares will become fully vested upon the closing of the merger under the terms of the James Agreement, with exercise prices ranging from $9.795 to $21.17 per share.

      Under the terms of the James Agreement, Mr. James is also entitled to receive his base salary and remain eligible to participate in ADE’s medical and dental plans (to the extent permitted under such plans) for a period of 12 months following the termination of his employment with ADE if (1) his employment is involuntarily terminated by ADE and ADE does not have “cause” for such termination, or (2) his employment with ADE is “constructively terminated”. Mr. James’ current annual salary is $319,000. “Constructive termination” is defined as an involuntary relocation beyond a reasonable commuting distance or a substantial, sustained and material reduction in Mr. James’ compensation, title, status, authority or responsibility at ADE, without his consent. “Cause” is defined in the James Agreement as (1) Mr. James’ continued material failure to perform the reasonable and customary duties and responsibilities assigned to him following a 30 day cure period, (2) conduct that is materially detrimental to the business, goodwill or reputation of ADE, (3) conduct that constitutes dishonesty, fraud or other malfeasance, (4) felonious conduct, (5) immoral and/or reprehensible conduct, (6) violation of any provision of the James Agreement or (7) any other action constituting “cause” under the laws of Massachusetts. Under the James Agreement, ADE is not obligated to make any payments to Mr. James if he resigns (except due to “constructive termination”) or if he is terminated for “cause”.

      Mr. Basila’s agreement provides for the same severance arrangement (12 months of base salary and medical benefits upon a termination with cause or a constructive termination) as set forth in the James Agreement. Mr. Basila’s current annual salary is $231,000. Mr. Basila’s agreement does not contain any provision relating to stock options.

Ownership of Common Stock; Stock Options

      Security Ownership by ADE Executive Officers and Directors. As of March 15, 2006, directors and executive officers of ADE beneficially owned an aggregate of 4,102,591 shares of ADE common stock, including options to purchase 234,000 shares of ADE common stock exercisable within 60 days of the date of this proxy statement/prospectus. ADE’s directors and executive officers have agreed to vote the shares of ADE common stock that they beneficially own in favor of the merger.

      The voting agreements to which the ADE directors and executive officers are parties permit gifts of up to 12,000 shares of ADE common stock by each such person prior to the closing of the merger. The voting agreement between Dr. Koliopoulos and KLA entered into in connection with the merger agreement further permits Dr. Koliopoulos to enter into hedging arrangements with respect to the shares of ADE common stock that he beneficially owns, so long as any counterparty to any such hedging arrangement agrees in writing to be bound by the terms of the voting agreement with respect to Dr. Koliopoulos’ shares of ADE common stock. See “The Merger Agreement — Voting Agreements” beginning on page 51.

      Stock Options. Dr. Koliopoulos and Mr. James hold options to purchase 100,000 shares and 170,000 shares, respectively, of ADE common stock. Mr. Basila does not hold any options to purchase shares of ADE common stock. As described in the section entitled “— Treatment of ADE Stock Options,” below, KLA-Tencor will assume all of Dr. Koliopoulos’ and Mr. James’ outstanding options to purchase ADE common stock in the merger.

      Each non-employee director of ADE holds options to purchase (1) 10,000 shares of ADE common stock with an exercise price of $20.74 per share and (2) 5,000 shares of ADE common stock with an exercise price of $21.97 per share. Under the terms of the merger agreement, the outstanding stock options held by ADE’s non-employee directors (or former directors), whether or not exercisable or vested, will be canceled, and ADE will pay to each director at or promptly after the effective time of the merger for each such stock option an amount in cash determined by multiplying (1) the excess, if any, of (a) 0.64 multiplied by the closing price per share of KLA-Tencor common stock on The Nasdaq National Market on the business day immediately prior to the date of closing of the merger over (b) the applicable exercise price of such stock option by (2) the number of shares of ADE common stock the director could have purchased (assuming full vesting of all options) had such director exercised such stock option in full immediately prior to the effective time of the merger. For example, based on the options held by non-employee directors, as described above, and based on the closing price of $50.98 per share of KLA-Tencor

common stock on March 15, 2006, each ADE non-employee director would receive a lump sum payment of $172,158 for their options upon the closing of the merger.

      The following table sets forth information regarding beneficial ownership of ADE’s common stock as of March 15, 2006, by (1) each ADE director, (2) ADE’s chief executive officer and each other executive officer, (3) all ADE directors and executive officers as a group and (4) each other person known to ADE to be the beneficial owner of more than five percent of ADE’s common stock on that date.

ADE’s Directors and Executive Officers

      For biographical information regarding ADE’s directors and executive officers, information concerning the compensation paid to the chief executive officer and the most highly compensated executive officers of ADE other than the chief executive officer for the 2005 fiscal year, as well as any information regarding certain relationships and related transactions involving ADE’s directors and executive officers for the 2005 fiscal year, see ADE’s proxy statement used in connection with its 2005 annual meeting of stockholders.

Treatment of ADE Stock Options

      At the effective time of the merger, each outstanding option to purchase shares of ADE common stock (other than options held by non-employee directors), whether or not vested or exercisable, will cease to represent a right to acquire shares of ADE common stock and will be converted automatically into an option to purchase shares of KLA-Tencor common stock on substantially the same terms and conditions (including vesting schedule, subject to the Koliopoulos and James Agreements described above) as were applicable to such stock option immediately prior to the effective time of the merger, except that (1) the number of shares of KLA-Tencor common stock subject to each assumed ADE stock option shall be determined by multiplying the number of shares of ADE common stock subject to the stock option by 0.64 (rounded down to the nearest whole share) and (2) the per share exercise price for shares of KLA-Tencor common stock issuable upon exercise of such assumed ADE stock option will be determined by dividing the per share exercise price for the shares of ADE common stock in respect of which the ADE stock option was exercisable immediately prior to the effective time of the merger by 0.64.

Director and Officer Liability

      KLA-Tencor is obligated, for six years after the effective time of the merger, to cause the surviving corporation in the merger to indemnify and hold harmless the present and former officers and directors of ADE in respect of acts or omissions occurring at or prior to the effective time of the merger to the fullest extent permitted by Massachusetts law or any other law, or as provided under ADE’s articles of organization and bylaws in effect on the date of the merger agreement.

      KLA-Tencor is also obligated, for six years after the effective time of the merger, to cause the surviving corporation in the merger to provide officers’ and directors’ liability insurance in respect of acts or omissions occurring prior to the effective time of the merger covering each present and former officer and director of ADE currently covered by ADE’s officers’ and directors’ liability insurance policy on terms with respect to coverage and amount that are not less favorable than those of the policy that is currently in effect. KLA-Tencor is not obligated to pay an aggregate premium for insurance coverage in excess of 250% of the amount per year that ADE paid in its last full fiscal year.

THE MERGER AGREEMENT

      The following is a summary of the material terms of the merger agreement. This summary does not purport to describe all the terms of the merger agreement and is qualified by reference to the complete merger agreement which is attached as Annex A to this proxy statement/ prospectus and incorporated herein by reference. We urge you to read carefully the full text of the merger agreement.

Explanatory Note Regarding Summary of Merger Agreement and Representations and Warranties in the Merger Agreement

      The summary of the terms of the merger agreement is intended to provide information about the terms of the merger. The terms and information in the merger agreement should not be relied on as disclosures about KLA-Tencor or ADE without consideration to the entirety of public disclosure by KLA-Tencor and ADE as set forth in all of their respective public reports with the SEC. The terms of the merger agreement (such as the representations and warranties) govern the contractual rights and relationships, and allocate risks, between the parties in relation to the merger. In particular, the representations and warranties made by the parties to each other in the merger agreement have been negotiated between the parties with the principal purpose of setting forth their respective rights with respect to their obligation to close the merger should events or circumstances change or be different from those stated in the representations and warranties. Matters may change from the state of affairs contemplated by the representations and warranties. KLA-Tencor and ADE will provide additional disclosure in their public reports to the extent that they are aware of the existence of any material facts that are required to be disclosed under federal securities law and that might otherwise contradict the terms and information contained in the merger agreement and will update such disclosure as required by federal securities laws.

      General. Under the merger agreement, South, a wholly owned subsidiary of KLA-Tencor will merge with and into ADE, with ADE continuing as the surviving corporation. As a result of the merger, ADE will become a wholly owned subsidiary of KLA-Tencor. The merger agreement also provides that the directors of South at the effective time of the merger will be the directors of the surviving corporation, and the officers of ADE will be the officers of the surviving corporation, until, in each case, their respective successors are duly elected or appointed and qualified in accordance with applicable law.

      Effective Time of the Merger. As soon as practicable (and no later than on the second business day) after the satisfaction or waiver of the conditions to the merger, South and ADE will file a certificate of merger and articles of merger with the Delaware Secretary of State and the Massachusetts Secretary of the Commonwealth, respectively. The merger will become effective when the certificate of merger and the articles of merger are filed.

Consideration to Be Received in the Merger; Treatment of Stock Options

      The merger agreement provides that, at the effective time of the merger:

      For a further discussion of the treatment of ADE stock options and other employee benefit plans under the merger agreement, see “Interests of Certain Persons in the Merger” beginning on page 38.

Exchange of Certificates in the Merger

      Prior to the effective time of the merger, KLA-Tencor will appoint an exchange agent to handle the exchange of ADE stock certificates or uncertificated shares of ADE common stock for shares of KLA-Tencor common stock (which shares will be in uncertificated book-entry form unless a physical certificate is requested by such holder) and the payment of cash for fractional shares. Promptly (and in any event within five business days) after the effective time of the merger, the exchange agent will send a letter of transmittal, which is to be used to exchange ADE stock certificates or uncertificated shares of ADE common stock for shares of KLA-Tencor common stock, to each former ADE stockholder. The letter of transmittal will contain instructions explaining the procedure for surrendering ADE stock certificates or transferring uncertificated ADE common stock.

      ADE stockholders who surrender their stock certificates, together with a properly completed letter of transmittal, or transfer their uncertificated shares of ADE common stock, will receive shares of KLA-Tencor common stock (which shares will be in uncertificated book-entry form unless a physical certificate is requested by such holder) into which the shares of ADE common stock were converted in the merger. After the effective date of the merger, each certificate or uncertificated share that previously represented shares of ADE common stock will only represent the right to receive the shares of KLA-Tencor common stock (and cash in lieu of fractions thereof) into which those shares of ADE common stock have been converted.

      After the completion of the merger, KLA-Tencor will not (1) make any cash payment in lieu of fractional shares or (2) pay any dividends or other distributions with a record date after the effective time of the merger to any holder of any ADE stock certificates or uncertificated shares of ADE common stock until the holder surrenders the ADE stock certificates or transfers the uncertificated shares of ADE common stock. However, once those certificates are surrendered or those uncertificated shares are transferred, KLA-Tencor will pay to the holder, without interest, (1) the amount of cash payable in lieu of fractional shares to which such holder is entitled and any dividends or other distributions with a record date after the effective date of the merger previously paid or payable on the date of such surrender with respect to such securities, and (2) at the appropriate payment date, the amount of dividends or other distributions with a record date after the effective time of the merger and prior to surrender or transfer and with a payment date subsequent to surrender or transfer payable with respect to such securities.

      KLA-Tencor stockholders do not need to exchange their stock certificates.

Fractional Shares

      No fractional shares of KLA-Tencor common stock will be issued in the merger. Instead, the exchange agent will pay each of those stockholders who would have otherwise been entitled to a fractional share of KLA-Tencor common stock an amount in cash determined by multiplying the fractional share

interest by the closing price for a share of KLA-Tencor common stock on The Nasdaq National Market on the business day immediately prior to the date of the effective time of the merger.

Listing of KLA-Tencor Common Stock

      KLA-Tencor has agreed to use its best efforts to cause the shares of KLA-Tencor common stock to be issued in the merger and the shares of KLA-Tencor common stock to be reserved for issuance upon exercise of the ADE stock options to be approved for listing on The Nasdaq National Market, subject to official notice of issuance, prior to the effective time of the merger. KLA-Tencor’s symbol “KLAC” will be used for such shares, assuming the listing application is approved. Approval for listing on The Nasdaq National Market of the shares of KLA-Tencor common stock issuable to the ADE stockholders in the merger, subject only to official notice of issuance, is a condition to the obligations of KLA-Tencor and ADE to complete the merger.

Covenants

      KLA-Tencor and ADE have each undertaken certain covenants in the merger agreement concerning the conduct of their respective businesses between the date the merger agreement was signed and the completion of the merger. The following summarizes the more significant of these covenants:

      No Solicitation. ADE has agreed that it and its subsidiaries, officers, directors, employees, investment bankers, attorneys, accountants, consultants or other agents or advisors will not, directly or indirectly:

      The merger agreement provides that the term “acquisition proposal” means, other than the transactions contemplated by the merger agreement, any offer, proposal or inquiry relating to, or any third party indication of interest in, (1) any acquisition or purchase, direct or indirect, of 20% or more of the consolidated assets of ADE and its subsidiaries or 20% or more of any class of equity or voting securities of ADE or any of its subsidiaries whose assets, individually or in the aggregate, constitute more than 20% of the consolidated assets of ADE, (2) 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 ADE or (3) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving ADE 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 ADE or the surviving entity in such transaction.

      The merger agreement also provides that, notwithstanding the foregoing, prior to receiving the approval of the ADE stockholders in connection with the merger, ADE’s board of directors, directly or indirectly through advisors, agents or other intermediaries, may:

provided, that in each case above ADE must provide KLA-Tencor with prior written notice of its decision to take such action and in each of the first three cases above ADE’s board of directors must determine in good faith after consultation with its outside legal counsel that the failure to take such action would be inconsistent with its fiduciary duties under applicable law.

      Under the terms of the merger agreement, a “superior proposal” means any bona fide, unsolicited written acquisition proposal (with the references to “20% or more” contained therein being replaced with “75% or more”) on terms that ADE’s board of directors determines in good faith by a majority vote, after considering the advice of ADE’s financial advisor and taking into account all the terms and conditions of the acquisition proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation, are more favorable and provide greater value to ADE’s stockholders than as provided under the merger agreement and the transactions contemplated thereby and for which financing, if a cash transaction, is then fully committed or reasonably determined to be available by ADE’s board of directors.

      ADE is permitted to take any actions in order to comply with Rule 14e-2(a) or Rule 14d-9 under the Exchange Act with regard to an acquisition proposal, except that ADE’s board of directors may not recommend that ADE’s stockholders tender shares of capital stock in connection with any tender or exchange offer unless ADE’s board of directors determines in good faith by a majority vote, after considering advice from its outside legal counsel that the failure to take such action would be inconsistent with its fiduciary duties under applicable law.

      Covenant to Recommend. ADE has agreed that its board of directors will recommend approval of the merger proposal to the ADE stockholders.

      However, ADE’s board is permitted to withdraw or to modify or to qualify in a manner adverse to KLA-Tencor such recommendation of the merger, before receipt of the approval of ADE’s stockholders if:

      Operations of ADE Pending Closing. ADE has undertaken a covenant that places restrictions on it and its subsidiaries until either the effective time of the merger or the termination of the merger agreement. In general, ADE and its subsidiaries are required to conduct their business in the ordinary course consistent with past practice and to use reasonable best efforts to preserve intact their business

organizations and relationships with third parties and to keep available the services of their present officers and employees.

      ADE has agreed that, except as required by law, it will not do any of the following:

      Reasonable Best Efforts Covenant. KLA-Tencor and ADE have agreed to use their reasonable best efforts to take all actions and do all things necessary, proper or advisable under applicable laws to complete the merger and the other transactions contemplated thereby, including:

      ADE and KLA-Tencor will cooperate with each other in connection with the making of all such filings, including providing copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, to accept all reasonable additions, deletions or changes suggested in connection therewith. ADE and KLA-Tencor will use their respective reasonable efforts to furnish to each other all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable law in connection with the transactions contemplated by the merger agreement.

      Other Covenants. The merger agreement contains certain other covenants, including covenants relating to access to information and cooperation between KLA-Tencor and ADE in the preparation of this proxy statement/ prospectus and other governmental filings, public announcements and certain tax matters.

      KLA-Tencor has also agreed to indemnify present and former directors and officers of ADE to the fullest extent permitted by applicable law for a period of six years after the effective time of the merger and to provide officers’ and directors’ liability insurance covering such persons for acts and omissions occurring prior to the effective time of the merger (subject to limitations on increases in the premium). In addition, for a period of one year, KLA-Tencor has agreed to provide benefits to ADE employees who continue their employment with ADE after the merger that are similar to the benefits such employees received prior to the merger.

Representations and Warranties

      The merger agreement contains a number of representations and warranties with respect to KLA-Tencor and ADE. The representations and warranties are subject, in some cases, to specified exceptions and qualifications.

      Reciprocal representations and warranties relate to, among other things:

      Additional representations and warranties made by ADE relate to, among other things: