EXHIBIT 10.03

 

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FORMFACTOR, INC.

 

2002 EQUITY INCENTIVE PLAN

 

As Adopted April 18, 2002
As Amended February 9, 2006, May 18, 2006, December 13, 2007 and May 21, 2008

 

1.                                      PURPOSE.  The purpose of this Plan is to
provide incentives to attract, retain and motivate eligible persons whose
present and potential contributions are important to the success of the Company,
its Parent and Subsidiaries, by offering them an opportunity to participate in
the Company’s future performance through awards of Options, Restricted Stock and
Restricted Stock Units.  Capitalized terms not defined in the text are defined
in Section 24.

 

2.                                      SHARES SUBJECT TO THE PLAN.

 

2.1                                 Number of Shares Available.  Subject to
Sections 2.2 and 18, the total number of Shares reserved and available for grant
and issuance pursuant to this Plan will be 500,000 Shares plus Shares that are
subject to: (a) issuance upon exercise of an Option but cease to be subject to
such Option for any reason other than exercise of such Option; (b) an Award
granted hereunder but are forfeited or are repurchased by the Company at the
original issue price; and (c) an Award that otherwise terminates without Shares
being issued.  In addition, any authorized shares not issued or subject to
outstanding grants under the Company’s 1996 Stock Option Plan, Incentive Option
Plan and Management Incentive Option Plan on the Effective Date (as defined
below) and any shares issued under the Company’s 1995 Stock Plan, 1996 Stock
Option Plan, Incentive Option Plan and Management Incentive Option Plan (the
“Prior Plans”) that are forfeited or repurchased by the Company or that are
issuable upon exercise of options granted pursuant to the Prior Plans that
expire or become unexercisable for any reason without having been exercised in
full, will no longer be available for grant and issuance under the Prior Plans,
but will be available for grant and issuance under this Plan.  In addition, on
each January 1, the aggregate number of Shares reserved and available for grant
and issuance pursuant to this Plan will be increased automatically by a number
of Shares equal to 5% of the total outstanding shares of the Company as of the
immediately preceding December 31; provided, that the Board may in its sole
discretion reduce the amount of the increase in any particular year; and,
provided further, provided that no more than 40,000,000 shares shall be issued
as ISOs (as defined in Section 5 below).  At all times the Company shall reserve
and keep available a sufficient number of Shares as shall be required to satisfy
the requirements of all outstanding Options granted under this Plan and all
other outstanding but unvested Awards granted under this Plan.

 

2.2                                 Adjustment of Shares.  In the event that the
number of outstanding shares is changed by a stock dividend, recapitalization,
stock split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
number of Shares that may be granted pursuant to Sections 3 and 9 below, (c) the
Exercise Prices

 

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of and number of Shares subject to outstanding Options, and (d) the number of
Shares subject to other outstanding Awards shall, upon approval of the Board in
its discretion, be proportionately adjusted in compliance with applicable
securities laws; provided, however, that fractions of a Share will not be issued
but will either be replaced by a cash payment equal to the Fair Market Value of
such fraction of a Share or will be rounded up to the nearest whole Share, as
determined by the Committee.

 

3.                                      ELIGIBILITY.  ISOs (as defined in
Section 5 below) may be granted only to employees (including officers and
directors who are also employees) of the Company or of a Parent or Subsidiary of
the Company.  All other Awards may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any Parent
or Subsidiary of the Company; provided such consultants, contractors and
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction.  No person will be eligible to
receive more than 1,000,000 Shares in any calendar year under this Plan pursuant
to the grant of Awards hereunder, other than new employees of the Company or of
a Parent or Subsidiary of the Company (including new employees who are also
officers and directors of the Company or any Parent or Subsidiary of the
Company), who are eligible to receive up to a maximum of 3,000,000 Shares in the
calendar year in which they commence their employment.  A person may be granted
more than one Award under this Plan.

 

4.                                      ADMINISTRATION.

 

4.1                                 Committee Authority.  This Plan will be
administered by the Committee or by the Board acting as the Committee.  Except
for automatic grants to Outside Directors pursuant to Section 9 hereof, and
subject to the general purposes, terms and conditions of this Plan, and to the
direction of the Board, the Committee will have full power to implement and
carry out this Plan.  Except for automatic grants to Outside Directors pursuant
to Section 9 hereof, the Committee will have the authority to:

 

(a)                                  construe and interpret this Plan, any Award
Agreement and any other agreement or document executed pursuant to this Plan;

 

(b)                                 prescribe, amend and rescind rules and
regulations relating to this Plan or any Award;

 

(c)                                  select persons to receive Awards;

 

(d)                                 determine the form and terms of Awards;

 

(e)                                  determine the number of Shares or other
consideration subject to Awards;

 

(f)                                    determine whether Awards will be granted
singly, in combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of the Company;

 

(g)                                 grant waivers of Plan or Award conditions;

 

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(h)                                 determine the vesting, exercisability and
payment of Awards;

 

(i)                                     correct any defect, supply any omission
or reconcile any inconsistency in this Plan, any Award or any Award Agreement;

 

(j)                                     determine whether an Award has been
earned; and

 

(k)                                  make all other determinations necessary or
advisable for the administration of this Plan.

 

4.2                                 Committee Discretion.  Except for automatic
grants to Outside Directors pursuant to Section 9 hereof, any determination made
by the Committee with respect to any Award will be made in its sole discretion
at the time of grant of the Award or, unless in contravention of any express
term of this Plan or Award, at any later time, and such determination will be
final and binding on the Company and on all persons having an interest in any
Award under this Plan.  The Committee may delegate to one or more officers of
the Company the authority to grant an Award under this Plan to Participants who
are not Insiders of the Company.

 

5.                                      OPTIONS.  The Committee may grant
Options to eligible persons and will determine whether such Options will be
Incentive Stock Options within the meaning of the Code (“ISO”) or Nonqualified
Stock Options (“NQSOs”), the number of Shares subject to the Option, the
Exercise Price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the
following:

 

5.1                                 Form of Option Grant.  Each Option granted
under this Plan will be evidenced by an Award Agreement which will expressly
identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and, except
as otherwise required by the terms of Section 9 hereof, will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

 

5.2                                 Date of Grant.  The date of grant of an
Option will be the date on which the Committee makes the determination to grant
such Option, unless otherwise specified by the Committee.  The Stock Option
Agreement will be delivered, and a copy of this Plan will be made available, to
the Participant within a reasonable time after the granting of the Option.

 

5.3                                 Exercise Period.  Options may be exercisable
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement governing such Option; provided, however, that no
Option granted on or before February 9, 2006 will be exercisable after the
expiration of ten (10) years from the date the Option is granted and no Option
granted after February 9, 2006 will be exercisable after the expiration of seven
(7) years from the date the Option is granted; and provided further that no ISO
granted to a person who directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will
be exercisable after the expiration of five (5) years from the date the ISO is
granted.  The Committee also may provide for Options to become exercisable at

 

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one time or from time to time, periodically or otherwise, in such number of
Shares or percentage of Shares as the Committee determines.

 

5.4                                 Exercise Price.  The Exercise Price of an
Option will be determined by the Committee when the Option is granted; provided
that: (i) the Exercise Price of an ISO will be not less than 100% of the Fair
Market Value of the Shares on the date of grant; and (ii) the Exercise Price of
any ISO granted to a Ten Percent Stockholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant.  Payment for the Shares
purchased may be made in accordance with Section 6 of this Plan.

 

5.5                                 Termination.  Notwithstanding the exercise
periods set forth in the Stock Option Agreement, exercise of an Option will
always be subject to the following:

 

(a)                                  If the Participant is Terminated for any
reason except death or Disability, then the Participant may exercise such
Participant’s Options only to the extent that such Options would have been
exercisable upon the Termination Date no later than three (3) months after the
Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any exercise beyond three
(3) months after the Termination Date deemed to be an NQSO), but in any event,
no later than the expiration date of the Options.

 

(b)                                 If the Participant is Terminated because of
Participant’s death or Disability (or the Participant dies within three
(3) months after a Termination other than for Cause or because of Participant’s
Disability), then Participant’s Options may be exercised only to the extent that
such Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant’s legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, with any such exercise beyond (i) three (3) months
after the Termination Date when the Termination is for any reason other than the
Participant’s death or disability, within the meaning of Section 22(e)(3) of the
Code, or (ii) twelve (12) months after the Termination Date when the Termination
is for Participant’s disability, within the meaning of Section 22(e)(3) of the
Code, deemed to be an NQSO), but in any event no later than the expiration date
of the Options.

 

(c)                                  If the Participant is terminated for Cause,
then the Participant may exercise such Participant’s Options only to the extent
that such Options would have been exercisable upon the Termination Date no later
than one month after the Termination Date (or such shorter or longer time period
not exceeding five (5) years as may be determined by the Committee, with any
exercise beyond three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of the Options.

 

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5.6                                 Limitations on Exercise.  The Committee may
specify a reasonable minimum number of Shares that may be purchased on any
exercise of an Option, provided that such minimum number will not prevent
Participant from exercising the Option for the full number of Shares for which
it is then exercisable.

 

5.7                                 Limitations on ISO.  The aggregate Fair
Market Value (determined as of the date of grant) of Shares with respect to
which ISO are exercisable for the first time by a Participant during any
calendar year (under this Plan or under any other incentive stock option plan of
the Company, Parent or Subsidiary of the Company) will not exceed $100,000.  If
the Fair Market Value of Shares on the date of grant with respect to which ISO
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISO and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs.  In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISO, such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.

 

5.8                                 Modification, Extension or Renewal.  The
Committee may modify, extend or renew outstanding Options and authorize the
grant of new Options in substitution therefor, provided that any such action may
not, without the written consent of a Participant, impair any of such
Participant’s rights under any Option previously granted.  Any outstanding ISO
that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code.  The Committee may reduce the
Exercise Price of outstanding Options without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise Price
may not be reduced below the minimum Exercise Price that would be permitted
under Section 5.4 of this Plan for Options granted on the date the action is
taken to reduce the Exercise Price.

 

5.9                                 No Disqualification.  Notwithstanding any
other provision in this Plan, no term of this Plan relating to ISO will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.

 

6.                                      PAYMENT FOR OPTION SHARES.  The entire
Exercise Price of Shares issued upon exercise of Options and automatic grants to
Outside Directors pursuant to Section 9 shall be payable in cash at the time
when such Shares are purchased, except as follows and if so provided for in an
applicable Stock Option Agreement:

 

6.1                                 Surrender of Stock.  Payment for all or any
part of the Exercise Price or Options may be made with shares of the Company’s
common stock which have already been owned by the Participant; provided that the
Committee may, in its sole discretion, require that shares tendered for payment
be previously held by the Participant for a minimum duration. Such shares shall
be valued at their Fair Market Value.

 

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6.2                                 Cashless Exercise.  Payment for all or any
part of the Exercise Price may be made through Cashless Exercise at the
Committee’s sole discretion.

 

6.3                                 Other Forms of Payment.  Payment for all or
any part of the Exercise Price may be made in any other form that is consistent
with applicable laws, regulations and rules and approved by the Committee.

 

In the case of an ISO granted under the Plan, payment shall be made only
pursuant to the express provisions of the applicable Stock Option Agreement. 
The Stock Option Agreement may specify that payment may be made in any
form(s) described in this Section 6.  In the case of an NQSO granted under the
Plan, the Committee may, in its discretion at any time, accept payment in any
form(s) described in this Section 6.

 

7.                                      RESTRICTED STOCK AWARD.

 

7.1                                 Amount and Form of Restricted Stock Award. 
Awards under this Section 7 may be granted in the form of a Restricted Stock
Award.  Restricted Stock Awards made pursuant to this Plan will be evidenced by
an Award Agreement (“Restricted Stock Agreement”) that shall specify the number
of Shares to which the Restricted Stock Award pertains and shall be subject to
adjustment of such number in accordance with Section 2.2.

 

7.2                                 Restricted Stock Agreement.  Each Restricted
Stock Award awarded under the Plan shall be evidenced and governed exclusively
by a Restricted Stock Agreement between the Participant and the Company. Each
Restricted Stock Award shall be subject to all applicable terms and conditions
of the Plan and may be subject to any other terms and conditions that are not
inconsistent with the Plan and that the Committee deems appropriate for
inclusion in the applicable Restricted Stock Agreement (including without
limitation any performance conditions). The provisions of the various Restricted
Stock Agreements entered into under the Plan need not be identical.

 

7.3                                 Payment of Restricted Stock Awards. 
Restricted Stock Awards may be issued with or without cash consideration or any
other form of legally permissible consideration approved by the Committee.

 

7.4                                 Vesting Conditions.  Each Restricted Stock
Award may or may not be subject to vesting. Any such vesting provision may
provide that Shares shall vest based on service with the Company over time or
shall vest, in full or in installments, upon satisfaction of performance goals
specified in the Restricted Stock Agreement.  A Restricted Stock Agreement may
provide for accelerated vesting in the event of the Participant’s death,
Disability, or other events.

 

7.5                                 Assignment or Transfer of Restricted Stock
Awards.  Except as provided in the applicable Restricted Stock Agreement, and
then only to the extent permitted by applicable law, Restricted Stock Awards
shall not be anticipated, assigned, attached, garnished, optioned, transferred
or made subject to any creditor’s process, whether voluntarily, involuntarily or
by operation of law. Any act in violation of this Section 7.5 shall be void.

 

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7.6                                 Voting and Dividend Rights.  The holder of a
Restricted Stock Award under the Plan shall have the same voting, dividend and
other rights as the Company’s other shareholders. A Restricted Stock Agreement,
however, may require that the holder of such Restricted Stock Award invest any
cash dividends received in additional Shares subject to the Restricted Stock
Award.  Such additional Shares subject to the Restricted Stock Award shall be
subject to the same conditions and restrictions as the Restricted Stock Award
with respect to which the dividends were paid.  Such additional Shares subject
to the Restricted Stock Award shall not reduce the number of Shares available
for issuance under Section 2.1.

 

7.7                                 Modification or Assumption of Restricted
Stock Awards.  Within the limitations of the Plan, the Committee may modify or
assume outstanding restricted stock awards or may accept the cancellation of
outstanding restricted stock awards (including stock awards granted by another
issuer) in return for the Award of new Restricted Stock Awards for the same or a
different number of Shares and with the same or different vesting provisions.
Notwithstanding the preceding sentence or anything to the contrary herein, no
modification of a Restricted Stock Award shall, without the consent of the
Participant, impair his or her rights or obligations under such Restricted Stock
Award.

 

8.                                      RESTRICTED STOCK UNITS.

 

8.1                                 Restricted Stock Unit Agreement.  Each Award
of Restricted Stock Units under the Plan shall be evidenced and governed
exclusively by an Award Agreement (“Restricted Stock Unit Agreement”) between
the Participant and the Company. Such Restricted Stock Units shall be subject to
all applicable terms and conditions of the Plan and may be subject to any other
terms and conditions that are not inconsistent with the Plan and that the
Committee deems appropriate for inclusion in the applicable Restricted Stock
Unit Agreement (including without limitation any vesting and performance
conditions). The provisions of the various Restricted Stock Unit Agreements
entered into under the Plan need not be identical. Restricted Stock Units may be
awarded in consideration of a reduction in the Participant’s other compensation.

 

8.2                                 Number of Shares.  Each Restricted Stock
Unit Agreement shall specify the number of Shares to which the Restricted Stock
Unit Award pertains and shall be subject to adjustment of such number in
accordance with Section 2.2.

 

8.3                                 Payment for Restricted Stock Units. 
Restricted Stock Units shall be issued without consideration.

 

8.4                                 Vesting Conditions.  Each Restricted Stock
Unit may or may not be subject to vesting.  Any such vesting provision may
provide that Shares shall vest based on service with the Company over time or
shall vest, in full or in installments, upon satisfaction of performance goals
specified in the Restricted Stock Unit Agreement.  A Restricted Stock Unit
Agreement may provide for accelerated vesting in the event of the Participant’s
death, Disability, or other events.

 

8.5                                 Voting and Dividend Rights.  The holders of
Restricted Stock Units shall have no voting rights. Prior to settlement or
forfeiture, any Restricted Stock Unit awarded under

 

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the Plan may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Restricted Stock Unit is
outstanding. Dividend equivalents may be converted into additional Restricted
Stock Units. Settlement of dividend equivalents may be made in the form of cash,
in the form of Shares, or in a combination of both. Prior to distribution, any
dividend equivalents which are not paid shall be subject to the same conditions
and restrictions as the Restricted Stock Units to which they attach.

 

8.6                                 Form and Time of Settlement of Restricted
Stock Units.  Settlement of vested Restricted Stock Units may be made in the
form of (a) cash, (b) Shares or (c) any combination of both, as determined by
the Committee at the time of the grant of the Restricted Stock Units, in its
sole discretion. Methods of converting Restricted Stock Units into cash may
include (without limitation) a method based on the average Fair Market Value of
Shares over a series of trading days. Vested Restricted Stock Units may be
settled in a lump sum or in installments. The distribution may occur or commence
when the vesting conditions applicable to the Restricted Stock Units have been
satisfied or have lapsed, or it may be deferred, in accordance with applicable
law, to any later date. The amount of a deferred distribution may be increased
by an interest factor or by dividend equivalents. Until an Award of Restricted
Stock Units is settled, the number of such Restricted Stock Units shall be
subject to adjustment pursuant to Section 2.2.  Notwithstanding anything to the
contrary in any Award Agreement or the Plan, any Restricted Stock Units that, by
their terms, are settled on the applicable vesting date(s) shall be settled no
later than the fifteenth (15th) day of the third (3rd) month following the end
of the calendar year containing the applicable vesting date (or, if later, the
fifteenth (15th) day of the third (3rd) month following the end of the Company’s
taxable year).  In addition, notwithstanding anything to the contrary in any
Award Agreement or the Plan, references to “termination of the Participant’s
Service,” “Termination Date” and similar references for Restricted Stock Units
that are subject to Code Section 409A shall mean the date of the Participant’s
“separation from service” within the meaning of Code Section 409A and such
Restricted Stock Units shall be settled no later than the time permitted by
Treasury Regulation Section 1.409A-3(d).

 

8.7                                 Creditor’s Rights.  A holder of Restricted
Stock Units shall have no rights other than those of a general creditor of the
Company. Restricted Stock Units represent an unfunded and unsecured obligation
of the Company, subject to the terms and conditions of the applicable Restricted
Stock Unit Agreement.

 

8.8                                 Modification or Assumption of Restricted
Stock Units.  Within the limitations of the Plan, the Committee may modify or
assume outstanding restricted stock units or may accept the cancellation of
outstanding restricted stock units (including stock units granted by another
issuer) in return for the Award of new Restricted Stock Units for the same or a
different number of Shares and with the same or different vesting provisions.
Notwithstanding the preceding sentence or anything to the contrary herein, no
modification of a Restricted Stock Unit shall, without the consent of the
Participant, impair his or her rights or obligations under such Restricted Stock
Unit.

 

8.9                                 Assignment or Transfer of Restricted Stock
Units.  Except as provided in the applicable Restricted Stock Unit Agreement,
and then only to the extent permitted by

 

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applicable law, Restricted Stock Units shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any creditor’s
process, whether voluntarily, involuntarily or by operation of law. Any act in
violation of this Section 8.9 shall be void.

 

9.                                      AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.

 

9.1                                 Types of Options and Shares.  Awards granted
under this Plan and subject to this Section 9 may be NQSOs, Restricted Stock
Awards or Restricted Stock Units.

 

9.2                                 Eligibility.  Awards subject to this
Section 9 shall be granted only to Outside Directors.

 

9.3                                 Initial Grant.  Each Outside Director who
first becomes a member of the Board after the Effective Date will automatically
be granted an Award for that number of Shares determined by the Board (an
“Initial Grant”) on the date such Outside Director first becomes a member of the
Board.  Each Outside Director who became a member of the Board on or prior to
the Effective Date and who did not receive a prior option grant (under this Plan
or otherwise and from the Company or any of its corporate predecessors) will
receive an Initial Grant on the Effective Date.

 

9.4                                 Succeeding Grants.  Immediately following
each Annual Meeting of stockholders, each Outside Director will automatically be
granted an Award for that number of Shares determined by the Board (a “Full
Succeeding Grant”), provided, that the Outside Director is a member of the Board
on such date and has served continuously as a member of the Board for a period
of at least twelve (12) months since the last Award grant (whether an Initial
Grant or a Succeeding Grant) to such Outside Director.  If less than twelve (12)
months has passed, then the number of shares subject to the Succeeding Grant
will be pro-rated based on the number of days passed since the last option grant
to such Outside Director, divided by 365 days (a “Pro-rated Succeeding Grant”)
Collectively, a Full Succeeding Grant and a Pro-rated Succeeding Grant is
referred to in this Plan as a “Succeeding Grant.”

 

9.5                                 Vesting and Exercisability.  The date an
Outside Director receives an Initial Grant or a Succeeding Grant is referred to
in this Plan as the “Start Date” for such Award.  Unless otherwise determined by
the Board, so long as the Outside Director continuously remains a director or a
consultant of the Company:

 

(a)                                  Each Initial Grant of options will vest as
to 1/12th of the Shares at the end of each full succeeding month from the Start
Date and each Succeeding Grant of options will vest as to 1/12th of the Shares
that would have been subject to a Full Succeeding Grant at the end of each full
succeeding month from the later of (i) the Start Date of such Succeeding Grant
or (ii) the date when all outstanding Awards, and all outstanding shares subject
to such Awards granted by the Company to the Outside Director prior to the grant
of such Succeeding Grant have fully vested.

 

(b)                                 Each Initial Grant of Restricted Stock
Awards will fully vest upon the one (1) year anniversary of the Start Date and
each Succeeding Grant of Restricted Stock Awards will vest upon the one (1) year
anniversary of the

 

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later of (i) the Start Date of such Succeeding Grant or (ii) the date when all
outstanding Awards, and all outstanding shares subject to such Awards granted by
the Company to the Outside Director prior to the grant of such Succeeding Grant
have fully vested.

 

(c)                                  Each Initial Grant of Restricted Stock
Units will vest as to 1/12th of the Shares at the end of each full succeeding
month from the Start Date and each Succeeding Grant of Restricted Stock Units
will vest as to 1/12th of the Shares of a Full Succeeding Grant at the end of
each full succeeding month from the later of (i) the Start Date of such
Succeeding Grant or (ii) the date when all outstanding Awards, and all
outstanding shares subject to such Awards granted by the Company to the Outside
Director prior to the grant of such Succeeding Grant have fully vested.

 

Unless deferred in accordance with the rules established by the Committee,
Restricted Stock Units will be settled in Shares upon the earlier of: (i) the
date on which such Restricted Stock Units are fully vested, or (ii) the Outside
Director’s Termination Date (or the first market trading day during an open
trading window thereafter if either the date on which such Restricted Stock
Units are fully vested or the Outside Director’s Termination Date is not on a
market trading day during an open trading window).

 

Notwithstanding any provision to the contrary, in the event of a Corporate
Transaction described in Section 18.1, the vesting of all Awards granted to
Outside Directors pursuant to this Section 9 will accelerate in full prior to
the consummation of such event at such times and on such conditions as the
Committee determines, and options must be exercised, if at all, within three
(3) months of the consummation of said event.  Any options not exercised within
such three-month period shall expire.

 

9.6                                 Exercise Price.  The exercise price of an
option pursuant to an Initial Grant and Succeeding Grant shall be the Fair
Market Value of the Shares, at the time that the option is granted.

 

9.7                                 Director Fees.  Each Outside Director may
elect to receive a Restricted Stock Award or Restricted Stock Unit under the
Plan in lieu of payment of a portion of his or her regular annual retainer based
on the Fair Market Value of the Shares on the date any regular annual retainer
would otherwise be paid.  For purposes of the Plan, an Outside Director’s
regular annual retainer shall include any additional retainer paid in connection
with service on any committee of the Board or paid for any other reason.  Such
an election may be for any dollar or percentage amount equal to at least 25% of
the Outside Director’s regular annual retainer (up to a limit of 100% of the
Outside Director’s regular annual retainer).  The election must be made prior to
the beginning of the annual board of directors cycle which shall be any twelve
month continuous period designated by the Board.  Any amount of the regular
annual retainer not elected to be received as a Restricted Stock Award or
Restricted Stock Unit shall be payable in cash in accordance with the Company’s
standard payment procedures.

 

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10.                               WITHHOLDING TAXES.

 

10.1                           Withholding Generally.  Whenever Shares are to be
issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements prior to the delivery of
any certificate or certificates for such Shares.  Whenever, under this Plan,
payments in satisfaction of Awards are to be made in cash, such payment will be
net of an amount sufficient to satisfy federal, state, and local withholding tax
requirements.

 

10.2                           Stock Withholding.  When, under applicable tax
laws, a Participant incurs tax liability in connection with the exercise or
vesting of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the Committee
may in its sole discretion allow the Participant to satisfy the minimum
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld, determined on the date that the
amount of tax to be withheld is to be determined.  All elections by a
Participant to have Shares withheld for this purpose will be made in accordance
with the requirements established by the Committee and be in writing in a form
acceptable to the Committee.

 

11.                               TRANSFERABILITY.

 

11.1                           Except as otherwise provided in this Section 11,
Awards granted under this Plan, and any interest therein, will not be
transferable or assignable by Participant, and may not be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as determined by the Committee and set forth in
the Award Agreement with respect to Awards that are not ISOs.

 

11.2                           All Awards other than NQSO’s.  All Awards other
than NQSO’s shall be exercisable:  (i) during the Participant’s lifetime, only
by (A) the Participant, or (B) the Participant’s guardian or legal
representative; and (ii) after Participant’s death, by the legal representative
of the Participant’s heirs or legatees.

 

11.3                           NQSOs.  Unless otherwise restricted by the
Committee, an NQSO shall be exercisable:  (i) during the Participant’s lifetime
only by (A) the Participant, (B) the Participant’s guardian or legal
representative, (C) a Family Member of the Participant who has acquired the NQSO
by “permitted transfer;” and (ii) after Participant’s death, by the legal
representative of the Participant’s heirs or legatees.  “Permitted transfer”
means, as authorized by this Plan and the Committee in an NQSO, any transfer
effected by the Participant during the Participant’s lifetime of an interest in
such NQSO but only such transfers which are by gift or domestic relations
order.  A permitted transfer does not include any transfer for value and neither
of the following are transfers for value:  (a) a transfer of under a domestic
relations order in settlement of marital property rights or (b) a transfer to an
entity in which more than fifty percent of the voting interests are owned by
Family Members or the Participant in exchange for an interest in that entity.

 

11

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12.                               PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON
SHARES.

 

12.1                           Voting and Dividends.  Unless otherwise provided
under Section 7, no Participant will have any of the rights of a stockholder
with respect to any Shares until the Shares are issued to the Participant. 
After Shares are issued to the Participant, the Participant will be a
stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that the
Participant will have no right to retain such stock dividends or stock
distributions with respect to Shares that are repurchased at the Participant’s
Purchase Price or Exercise Price pursuant to Section 12.

 

12.2                           Restrictions on Shares.  At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right to repurchase a portion of or all Unvested Shares held by a
Participant following such Participant’s Termination at any time within ninety
(90) days after the later of Participant’s Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or cancellation of
purchase money indebtedness, at the Participant’s Exercise Price or Purchase
Price, as the case may be.

 

13.                               CERTIFICATES.  All certificates for Shares or
other securities delivered under this Plan will be subject to such stock
transfer orders, legends and other restrictions as the Committee may deem
necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system upon
which the Shares may be listed or quoted.

 

14.                               ESCROW; PLEDGE OF SHARES.  To enforce any
restrictions on a Participant’s Shares, the Committee may require the
Participant to deposit all certificates representing Shares, together with stock
powers or other instruments of transfer approved by the Committee, appropriately
endorsed in blank, with the Company or an agent designated by the Company to
hold in escrow until such restrictions have lapsed or terminated, and the
Committee may cause a legend or legends referencing such restrictions to be
placed on the certificates.  Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares
under this Plan will be required to pledge and deposit with the Company all or
part of the Shares so purchased as collateral to secure the payment of
Participant’s obligation to the Company under the promissory note; provided,
however, that the Committee may require or accept other or additional forms of
collateral to secure the payment of such obligation and, in any event, the
Company will have full recourse against the Participant under the promissory
note notwithstanding any pledge of the Participant’s Shares or other
collateral.  In connection with any pledge of the Shares, Participant will be
required to execute and deliver a written pledge agreement in such form as the
Committee will from time to time approve.  The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.

 

15.                               EXCHANGE AND BUYOUT OF AWARDS.  The Committee
may, at any time or from time to time, authorize the Company, with the consent
of the respective Participants, to issue new Awards in exchange for the
surrender and cancellation of any or all outstanding Awards.  The Committee may
at any time buy from a Participant an Award previously granted

 

12

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with payment in cash, Shares (including Restricted Stock) or other
consideration, based on such terms and conditions as the Committee and the
Participant may agree.

 

16.                              
SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  An Award will not be effective
unless such Award is in compliance with all applicable federal and state
securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. 
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior
to:  (a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable.  The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.

 

17.                               NO OBLIGATION TO EMPLOY.  Nothing in this Plan
or any Award granted under this Plan will confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent or Subsidiary of the Company or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant’s employment or other relationship at any time,
with or without cause.

 

18.                               CORPORATE TRANSACTIONS.

 

18.1                          
Assumption or Replacement of Awards by Successor.  Except for automatic grants
to Outside Directors pursuant to Section 9 hereof, in the event of (a) a
dissolution or liquidation of the Company, (b) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction (each, a “Corporate Transaction”), any or all outstanding
Awards may be assumed, converted or replaced by the successor corporation (if
any), which assumption, conversion or replacement will be binding on all
Participants.  In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to stockholders (after taking into account the existing
provisions of the Awards).  The successor corporation may also issue, in place
of outstanding Shares of the Company held by the Participants, substantially

 

13

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similar shares or other property subject to repurchase restrictions no less
favorable to the Participant.  In the event such successor corporation (if any)
refuses to assume or substitute Awards, as provided above, pursuant to a
transaction described in this SubSection 18.1, such Awards will expire on such
transaction at such time and on such conditions as the Committee will
determine.  Notwithstanding anything in this Plan to the contrary, the Committee
may, in its sole discretion, provide that the vesting of any or all Awards
granted pursuant to this Plan will accelerate upon a transaction described in
this Section 18.  If the Committee exercises such discretion with respect to
Options, such Options will become exercisable in full prior to the consummation
of such event at such time and on such conditions as the Committee determines,
and if such Options are not exercised prior to the consummation of the corporate
transaction, they shall terminate at such time as determined by the Committee.

 

18.2                           Other Treatment of Awards.  Subject to any
greater rights granted to Participants under the foregoing provisions of this
Section 18, in the event of the occurrence of any Corporate Transaction
described in Section 18.1, any outstanding Awards will be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets.

 

18.3                           Assumption of Awards by the Company.  The
Company, from time to time, also may substitute or assume outstanding awards
granted by another company, whether in connection with an acquisition of such
other company or otherwise, by either; (a) granting an Award under this Plan in
substitution of such other company’s award; or (b) assuming such award as if it
had been granted under this Plan if the terms of such assumed award could be
applied to an Award granted under this Plan.  Such substitution or assumption
will be permissible if the holder of the substituted or assumed award would have
been eligible to be granted an Award under this Plan if the other company had
applied the rules of this Plan to such grant.  In the event the Company assumes
an award granted by another company, the terms and conditions of such award will
remain unchanged (except that the exercise price and the number and nature of
Shares issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code).  In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.

 

19.                               ADOPTION AND STOCKHOLDER APPROVAL.  This Plan
will become effective on the date on which the registration statement filed by
the Company with the SEC under the Securities Act registering the initial public
offering of the Company’s Common Stock is declared effective by the SEC (the
“Effective Date”).  This Plan shall be approved by the stockholders of the
Company (excluding Shares issued pursuant to this Plan), consistent with
applicable laws, within twelve (12) months before or after the date this Plan is
adopted by the Board.  Upon the Effective Date, the Committee may grant Awards
pursuant to this Plan; provided, however, that:  (a) no Option may be exercised
prior to initial stockholder approval of this Plan; (b) no Option granted
pursuant to an increase in the number of Shares subject to this Plan approved by
the Board will be exercised prior to the time such increase has been approved by
the stockholders of the Company; (c) in the event that initial stockholder
approval is not obtained within the time period provided herein, all Awards
granted hereunder shall be cancelled, any Shares issued pursuant to any Awards
shall be cancelled and any purchase of Shares issued hereunder shall be
rescinded; and (d) in the event that stockholder approval of such

 

14

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increase is not obtained within the time period provided herein, all Awards
granted pursuant to such increase will be cancelled, any Shares issued pursuant
to any Award granted pursuant to such increase will be cancelled, and any
purchase of Shares pursuant to such increase will be rescinded.

 

20.                               TERM OF PLAN/GOVERNING LAW.  Unless earlier
terminated as provided herein, this Plan will terminate ten (10) years from the
date this Plan is adopted by the Board or, if earlier, the date of stockholder
approval.  This Plan and all agreements thereunder shall be governed by and
construed in accordance with the laws of the State of California.

 

21.                               AMENDMENT OR TERMINATION OF PLAN.  The Board
may at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval.

 

22.                               NONEXCLUSIVITY OF THE PLAN.  Neither the
adoption of this Plan by the Board, the submission of this Plan to the
stockholders of the Company for approval, nor any provision of this Plan will be
construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options and bonuses otherwise than
under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

23.                               INSIDER TRADING POLICY.  Each Participant and
Outsider Director who receives an Award shall comply with any policy, adopted by
the Company from time to time covering transactions in the Company’s securities
by employees, officers and/or directors of the Company.

 

24.                               DEFINITIONS.  As used in this Plan, the
following terms will have the following meanings:

 

“Award” means any award under this Plan, including any Option, Restricted Stock
or Restricted Stock Unit.

 

“Award Agreement” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

 

“Board” means the Board of Directors of the Company.

 

“Cashless Exercise”  means, to the extent that a Stock Option Agreement so
provides and as permitted by applicable law, a program approved by the Committee
in which payment may be made all or in part by delivery (on a form prescribed by
the Committee) of an irrevocable direction to a securities broker to sell Shares
and to deliver all or part of the sale proceeds to the Company in payment of the
aggregate Exercise Price and, if applicable, the amount necessary to satisfy the
Company’s withholding obligations at the minimum statutory withholding rates,
including, but not limited to, U.S. federal and state income taxes, payroll
taxes, and foreign taxes, if applicable.

 

15

--------------------------------------------------------------------------------

 

“Cause” means (a) the commission of an act of theft, embezzlement, fraud,
dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company or (c) a failure to materially perform the customary
duties of employee’s employment.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Compensation Committee of the Board.

 

“Company” means FormFactor, Inc. or any successor corporation.

 

“Disability” means a disability, whether temporary or permanent, partial or
total, as determined by the Committee.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exercise Price” means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.

 

“Fair Market Value” means, as of any date, the value of a share of the Company’s
Common Stock determined as follows:

 

(a)                                  if such Common Stock is then quoted on the
Nasdaq Global Market, its closing price on the Nasdaq Global Market on the date
of determination as reported in The Wall Street Journal;

 

(b)                                 if such Common Stock is publicly traded and
is then listed on a national securities exchange, its closing price on the date
of determination on the principal national securities exchange on which the
Common Stock is listed or admitted to trading as reported in The Wall Street
Journal;

 

(c)                                  if such Common Stock is publicly traded but
is not quoted on the Nasdaq Global Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and asked prices on
the date of determination as reported in The Wall Street Journal;

 

(d)                                 in the case of an Award made on the
Effective Date, the price per share at which shares of the Company’s Common
Stock are initially offered for sale to the public by the Company’s underwriters
in the initial public offering of the Company’s Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act;  or

 

(e)                                  if none of the foregoing is applicable, by
the Committee in good faith.

 

“Family Member” includes any of the following:

 

(a)                                  child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law of the Participant,

 

16

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including any such person with such relationship to the Participant by adoption;

 

(b)                                 any person (other than a tenant or employee)
sharing the Participant’s household;

 

(c)                                  a trust in which the persons in (a) and
(b) have more than fifty percent of the beneficial interest;

 

(d)                                 a foundation in which the persons in (a) and
(b) or the Participant control the management of assets; or

 

(e)                                  any other entity in which the persons in
(a) and (b) or the Participant own more than fifty percent of the voting
interest.

 

“Insider” means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.

 

“Option” means an award of an option to purchase Shares pursuant to Section 5.

 

“Outside Director” means a member of the Board who is not an employee of the
Company or any Parent or Subsidiary.

 

“Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

“Participant” means a person who receives an Award under this Plan.

 

“Performance Factors” means the factors selected by the Committee from among the
following measures to determine whether the performance goals established by the
Committee and applicable to Awards have been satisfied:

 

(a)                                  Net revenue and/or net revenue growth;

 

(b)                                 Earnings before income taxes and
amortization and/or earnings before income taxes and amortization growth;

 

(c)                                  Operating income and/or operating income
growth;

 

(d)                                 Net income and/or net income growth;

 

(e)                                  Earnings per share and/or earnings per
share growth;

 

(f)                                    Total stockholder return and/or total
stockholder return growth;

 

(g)                                 Return on equity;

 

17

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(h)                                 Operating cash flow return on income;

 

(i)                                     Adjusted operating cash flow return on
income;

 

(j)                                     Economic value added; and

 

(k)                                  Individual confidential business
objectives.

 

“Performance Period” means the period of service determined by the Committee,
not to exceed five years, during which years of service or performance is to be
measured for Restricted Stock Awards Restricted Stock Units.

 

“Plan” means this FormFactor, Inc. 2002 Equity Incentive Plan, as amended from
time to time.

 

“Restricted Stock Award” means an award of Shares pursuant to Section 7.

 

“Restricted Stock Unit” means a bookkeeping entry representing the equivalent of
one Share, as awarded under the Plan pursuant to Section 8.

 

 “SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shares” means shares of the Company’s Common Stock reserved for issuance under
this Plan, as adjusted pursuant to Sections 2 and 18, and any successor
security.

 

“Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

 

“Termination” or “Terminated” means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services
as an employee, officer, director, consultant, independent contractor, or
advisor to the Company or a Parent or Subsidiary of the Company.  An employee
will not be deemed to have ceased to provide services in the case of (i) sick
leave, (ii) military leave, or (iii) any other leave of absence approved by the
Committee, provided, that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute or unless provided otherwise pursuant to formal policy adopted from
time to time by the Company and issued and promulgated to employees in writing. 
In the case of any employee on an approved leave of absence, the Committee may
make such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Subsidiary as it may deem appropriate,
except that in no event may an Option be exercised after the expiration of the
term set forth in the Option agreement.  The Committee will have sole discretion
to determine whether a Participant has ceased to provide services and the
effective date on which the Participant ceased to provide services (the
“Termination Date”).

 

18

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“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement.

 

“Vested Shares” means “Vested Shares” as defined in the Award Agreement.

 

19

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DIRECTOR INITIAL GRANT

 

NO.          

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “COMPANY”), hereby grants an
option (this “OPTION”) to the Optionee named below (“OPTIONEE”) as of the Date
of Grant set forth below (the “DATE OF GRANT”) pursuant to the Company’s 2002
Equity Incentive Plan (the “PLAN”) and this Stock Option Agreement (this
“AGREEMENT”), which includes the Terms and Conditions (the “TERMS AND
CONDITIONS”) set forth on Exhibit A hereto. Capitalized terms not defined in
this Agreement have the meanings ascribed to them in the Plan.

 

OPTIONEE:

 

 

 

 

 

SOCIAL SECURITY NUMBER:

 

 

 

 

 

OPTIONEE’S ADDRESS:

 

 

 

 

 

TOTAL OPTION SHARES:

 

 

 

 

 

EXERCISE PRICE PER SHARE:

 

 

 

 

 

DATE OF GRANT:

 

 

 

 

 

EXPIRATION DATE:

 

(unless earlier terminated under Section 3 hereof or pursuant to Section 9 of
the Plan)

 

 

 

START DATE:

 

 

 

 

 

VESTING SCHEDULE:

 

1/12 of the Shares will vest on each monthly anniversary of the Start Date until
100% vested.

 

 

 

TYPE OF STOCK OPTION:

 

Nonqualified Stock Option

 

The Company has signed this Agreement effective as the Date of Grant and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

 

 

By:

 

 

 

 

 

 

(Please print name)

 

 

 

 

 

(Please print title)

 

 

Optionee acknowledges receipt of this Agreement (including the Terms and
Conditions), a copy of the Plan, attached hereto as Exhibit C, and the form of
Exercise Agreement, attached hereto as Exhibit B. Optionee has read and
understands these documents and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee has executed this Agreement
in duplicate as of the Date of Grant.

 

OPTIONEE

 

 

 

 

 

(Signature)

 

 

 

 

 

(Please print name)

 

 

--------------------------------------------------------------------------------

 

DIRECTOR INITIAL GRANT

 

EXHIBIT A

 

STOCK OPTION AGREEMENT TERMS AND CONDITIONS

 

This Option is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. This
Agreement, the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the Company and the Optionee with respect to this Option
and supersede all prior understandings and agreements with respect to such
subject matter. If there is any discrepancy, conflict or omission between this
Agreement and the provisions of the Plan as interpreted by the Committee, the
provisions of the Plan shall apply. 1.GRANT OF OPTION.The Company hereby grants
to Optionee this Option to purchase up to the total number of shares of Common
Stock of the Company (the “SHARES”) at the Exercise Price Per Share (the
“EXERCISE PRICE”), each as set forth on the first page of this Agreement,
subject to the terms and conditions of this Agreement and the Plan.

 

2.   EXERCISE PERIOD.

 

2.1  Vesting of Shares.  This Option is immediately exercisable, although the
Shares issued upon exercise of this Option will be subject to the restrictions
on transfer and Repurchase Option set forth in this Agreement. Subject to the
terms and conditions of the Plan and this Agreement, this Option shall vest as
set forth on the first page of this Agreement if Optionee has continuously
served as a director and/or consultant of the Company. Shares that are vested
pursuant to the schedule set forth on the first page of this Agreement are
“VESTED SHARES.” Shares that are not vested pursuant to the schedule set forth
on the first page of this Agreement are “UNVESTED Shares.” Options for Unvested
Shares will not be exercisable on or after an Optionee’s Termination Date. In
the event of a Corporate Transaction (as defined in the Plan) the Shares shall
vest and become exercisable upon the terms and conditions of Section 9.5 of the
Plan.

 

2.2  Expiration.  This Option shall expire on the Expiration Date set forth on
the first page of this Agreement and must be exercised, if at all, on or before
the earlier of the Expiration Date or the date on which this Option is earlier
terminated in accordance with the provisions of Section 3 of this Agreement or
Section 9 of the Plan.

 

3.  TERMINATION.Except as provided below in this Section, this Option shall
terminate and may not be exercised if Optionee ceases to be either a member of
the Board of Directors of the Company or a consultant to the Company (“BOARD
MEMBER”). The date on which Optionee ceases to be a Board Member shall be
referred to as the “TERMINATION DATE.”

 

3.1  Termination for Any Reason Except Death or Disability.  If Optionee ceases
to be a Board Member for any reason except death or Disability (as such term is
defined in the Plan), then this Option, to the extent (and only to the extent)
that it is vested on the Termination Date in accordance with the schedule set
forth on the first page of this Agreement, may be exercised by Optionee during
the three (3) months following the Termination Date, but in any event must be
exercised no later than the Expiration Date.

 

3.2  Termination Because of Death or Disability.  If Optionee ceases to be a
Board Member due to Optionee’s death or Disability (or dies within 3 months
after a termination because of Disability), then this Option, to the extent (and
only to the extent) that it is vested on the Termination Date in accordance with
the schedule set forth on the first page of this Agreement, may be exercised by
Optionee (or Optionee’s legal representative or authorized assignee) no later
than twelve (12) months following the Termination Date, but in any event must be
exercised no later than the Expiration Date.

 

2

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FormFactor, Inc.

Stock Option Agreement

For Non-Employee Directors

2002 Equity Incentive Plan

 

3.3  No Obligation or Right to Continue as Board Member.  Nothing in the Plan or
this Agreement confers on Optionee any right or obligation to continue as a
Board Member or in any other relationship with the Company or any Parent or
Subsidiary of the Company (or any successor-in-interest to the Company).

 

4.   MANNER OF EXERCISE.

 

4.1  Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in
the case of exercise after Optionee’s death or Disability, Optionee’s legal
representative) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit B, or in such other form as may
be approved by the Committee from time to time (the “EXERCISE AGREEMENT”). If
someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise this Option.

 

4.2  Limitations on Exercise.  This Option may not be exercised (a)  unless such
exercise is in compliance with all applicable federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance and (b) as to
fewer than 100 Shares unless it is exercised as to all Shares as to which this
Option is then exercisable. The Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

 

4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, where
permitted by law, by any method set forth in the Exercise Agreement or any
additional method approved by the Committee from time to time.

 

4.4  Tax Withholding.  At the time of exercise, Optionee must pay or provide for
any applicable federal or state withholding obligations of the Company
associated with the exercise of this Option. If the Committee permits at the
time of exercise, Optionee may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, in
which case, the Company shall issue the net number of Shares to Optionee after
deducting the Shares retained from the Shares issuable upon exercise.

 

5.   COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES.In the event Optionee
ceases to be a Board Member for any reason, the Company, or its assignee, shall
have the option to repurchase Optionee’s Unvested Shares (the “REPURCHASE
OPTION”) at any time within ninety (90) days after the later of Optionee’s
Termination Date and the date Optionee purchases the Shares by giving Optionee
written notice of its election to exercise the Repurchase Option. The Company or
its assignee may repurchase from Optionee (or from Optionee’s legal
representative, as the case may be) all or a portion of the Unvested Shares at
Optionee’s Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan, which repurchase price shall be paid, at the option of
the Company or its assignee, by check or by cancellation of all or a portion of
any outstanding indebtedness of Optionee to the Company or such assignee, or by
any combination thereof. The repurchase price shall be paid without interest
within the ninety (90) day time period set forth above.

 

6.   NONTRANSFERABILITY OF OPTION AND SHARES.This Option may not be transferred
in any manner other than under the terms and conditions of the Plan or by will
or by the laws of descent

 

3

--------------------------------------------------------------------------------

 

and distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the legal
representatives and authorized executors and assignees of Optionee. Unvested
Shares may not be sold or otherwise transferred without the Company’s prior
written consent.

 

7.   TAX CONSEQUENCES.Optionee should refer to the prospectus for the Plan for a
description of the federal tax consequences of exercising this Option, including
the effects of filing an election under 83(b) of the Code in connection with the
exercise of this Option for Unvested Shares, and disposing of the Shares. A copy
of the Prospectus is available at the Finance/Stock Administration page of the
Company’s internal website, or upon request from the Company’s Stock
Administrator at (925) 456-7334.

 

8.   PRIVILEGES OF STOCK OWNERSHIP.Optionee shall not have any of the rights of
a stockholder with respect to any Shares until the Shares are issued to
Optionee.

 

9.   NOTICES.Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated on the first page of this Agreement or to such
other address as such party may designate in writing from time to time to the
Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any return receipt express courier (prepaid); or one
(1) business day after transmission by facsimile or email.

 

10.   SUCCESSORS AND ASSIGNS.The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, this Agreement shall be binding upon Optionee and Optionee’s
legal representatives and authorized assignees.

 

11.   GOVERNING LAW.This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflicts of law.

 

4

--------------------------------------------------------------------------------

 

Stock Option Agreement No.           

 

EXHIBIT B

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN (THE “PLAN”)

STOCK OPTION EXERCISE AGREEMENT

 

I (“OPTIONEE”) hereby elect to purchase the number of shares of Common Stock of
FormFactor, Inc. (the “Company”) indicated below:

 

Optionee

 

 

 

 

 

Social Security Number:

 

 

 

 

 

Address:

 

 

 

 

 

Type of Option:

 

o Incentive Stock Option

 

 

o Nonqualified Stock Option

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Purchase Price per Share:

 

 

 

 

 

Aggregate Purchase Price:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Exact Name of Title to Shares:

 

 

 

1.     DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price as follows (check as applicable and complete):

 

o            in cash (by check) in the amount of
$                                           , receipt of which is acknowledged
by the Company;

 

o            [by cancellation of indebtedness of the Company to Optionee in the
amount of $                                           ;]

 

o            [by delivery of                          fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee for at
least six (6) months prior to the date hereof (and which have been paid for
within the meaning of SEC Rule 144), or obtained by Optionee in the open public
market, and owned free and clear of all liens, claims, encumbrances or security
interests, valued at the current Fair Market Value of
$                                            per share;]

 

o            [by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of $                         ;]

 

o            through a “same-day-sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD DEALER”) whereby Optionee irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for the Aggregate
Purchase Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Aggregate Purchase Price (together with any required
tax withholding) directly to the Company; or

 

o            [through a “margin” commitment from Optionee and the NASD Dealer
named therein, whereby Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Aggregate Purchase Price (together with any required tax
withholding) directly to the Company.]

 

2.     UNDERTAKINGS. Optionee acknowledges that any Unvested Shares remain
subject to the Terms and Conditions of the Optionee’s Stock Option Agreement. If
Optionee is married, the Spousal Consent, attached hereto as Exhibit 1, should
be completed by Optionee’s spouse and returned with this Agreement.

 

3      TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE
SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.

 

4.     ENTIRE AGREEMENT. The Plan and the Stock Option Agreement are
incorporated herein by reference. This Stock Option Exercise Agreement, the Plan
and the Stock Option Agreement constitute the entire agreement and understanding
and supersede in their entirety all prior understandings and agreements of the
Company and Optionee with respect to the subject matter hereof, and are governed
by California law except for that body of law pertaining to choice of law or
conflicts of law.

 

Date:

 

 

 

--------------------------------------------------------------------------------

 

 

 

SIGNATURE OF OPTIONEE

 

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

SPOUSAL CONSENT

 

I have read the foregoing Stock Option Exercise Agreement (the “AGREEMENT”) and
I know its contents. I consent to and approve of the Agreement, and agree that
the shares of the Common Stock of FormFactor, Inc. purchased pursuant to the
Agreement (the “SHARES”) including any interest I may have in the Shares, are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder application of the Agreement to the Shares or to any interest I
may have in the Shares.

 

 

 

Date:  

 

SIGNATURE OF OPTIONEE’S SPOUSE

 

 

 

 

 

 

 

 

 

 

 

SPOUSE’S NAME—TYPED OR PRINTED

 

 

 

 

 

 

 

 

 

 

 

OPTIONEE’S NAME—TYPED OR PRINTED

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

FORMFACTOR, INC.

 

2002 EQUITY INCENTIVE PLAN

 

--------------------------------------------------------------------------------

 

DIRECTOR SUCCEEDING GRANT

 

NO.       

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “COMPANY”), hereby grants an
option (this “OPTION”) to the Optionee named below (“OPTIONEE”) as of the Date
of Grant set forth below (the “DATE OF GRANT”) pursuant to the Company’s 2002
Equity Incentive Plan (the “PLAN”) and this Stock Option Agreement (this
“AGREEMENT”), which includes the Terms and Conditions (the “TERMS AND
CONDITIONS”) set forth on Exhibit A hereto. Capitalized terms not defined in
this Agreement have the meanings ascribed to them in the Plan.

 

OPTIONEE:

 

 

 

 

 

SOCIAL SECURITY NUMBER:

 

 

 

 

 

OPTIONEE’S ADDRESS:

 

 

 

 

 

TOTAL OPTION SHARES:

 

 

 

 

 

EXERCISE PRICE PER SHARE:

 

 

 

 

 

DATE OF GRANT:

 

 

 

 

 

EXPIRATION DATE:

 

(unless earlier terminated under Section 3 hereof or pursuant to Section 9 of
the Plan)

 

 

 

START DATE:

 

 

 

 

 

VESTING SCHEDULE:

 

1/12 of the Shares will vest on each monthly anniversary of the later of (a) the
Start Date or (b) the date when all outstanding stock options and all
outstanding shares issued upon exercise of any options granted to Optionee as an
Outside Director prior to the Date of Grant have fully vested, until 100%
vested.

 

 

 

TYPE OF STOCK OPTION:

 

Nonqualified Stock Option

 

The Company has signed this Agreement effective as the Date of Grant and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

By:

 

 

 

 

 

 

 

 

 

(Please print name)

 

 

 

 

 

 

 

 

(Please print title)

 

 

 

Optionee acknowledges receipt of this Agreement (including the Terms and
Conditions), a copy of the Plan, attached hereto as Exhibit C, and the form of
Exercise Agreement, attached hereto as Exhibit B. Optionee has read and
understands these documents and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee has executed this Agreement
in duplicate as of the Date of Grant.

 

OPTIONEE

 

 

 

 

 

(Signature)

 

 

 

 

 

(Please print name)

 

 

--------------------------------------------------------------------------------

 

DIRECTOR SUCCEEDING GRANT

 

EXHIBIT A

 

STOCK OPTION AGREEMENT TERMS AND CONDITIONS

 

This Option is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. This
Agreement, the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the Company and the Optionee with respect to this Option
and supersede all prior understandings and agreements with respect to such
subject matter. If there is any discrepancy, conflict or omission between this
Agreement and the provisions of the Plan as interpreted by the Committee, the
provisions of the Plan shall apply.

 

1.   GRANT OF OPTION.The Company hereby grants to Optionee this Option to
purchase up to the total number of shares of Common Stock of the Company (the
“SHARES”) at the Exercise Price Per Share (the “EXERCISE PRICE”), each as set
forth on the first page of this Agreement, subject to the terms and conditions
of this Agreement and the Plan.

 

2.   EXERCISE PERIOD.

 

2.1  Vesting of Shares.  This Option is immediately exercisable, although the
Shares issued upon exercise of this Option will be subject to the restrictions
on transfer and Repurchase Option set forth in this Agreement. Subject to the
terms and conditions of the Plan and this Agreement, this Option shall vest as
set forth on the first page of this Agreement if Optionee has continuously
served as a director and/or consultant of the Company. Shares that are vested
pursuant to the schedule set forth on the first page of this Agreement are
“VESTED SHARES.” Shares that are not vested pursuant to the schedule set forth
on the first page of this Agreement are “UNVESTED SHARES.” Options for Unvested
Shares will not be exercisable on or after an Optionee’s Termination Date. In
the event of a Corporate Transaction (as defined in the Plan) the Shares shall
vest and become exercisable upon the terms and conditions of Section 9.5 of the
Plan.

 

2.2  Expiration.  This Option shall expire on the Expiration Date set forth on
the first page of this Agreement and must be exercised, if at all, on or before
the earlier of the Expiration Date or the date on which this Option is earlier
terminated in accordance with the provisions of Section 3 of this Agreement or
Section 9 of the Plan.

 

3.   TERMINATION.Except as provided below in this Section, this Option shall
terminate and may not be exercised if Optionee ceases to be either a member of
the Board of Directors of the Company or a consultant to the Company (“BOARD
MEMBER”). The date on which Optionee ceases to be a Board Member shall be
referred to as the “TERMINATION DATE.”

 

3.1  Termination for Any Reason Except Death or Disability.  If Optionee ceases
to be a Board Member for any reason except death or Disability (as such term is
defined in the Plan), then this Option, to the extent (and only to the extent)
that it is vested on the Termination Date in accordance with the schedule set
forth on the first page of this Agreement, may be exercised by Optionee during
the three (3) months following the Termination Date, but in any event must be
exercised no later than the Expiration Date.

 

3.2  Termination Because of Death or Disability.  If Optionee ceases to be a
Board Member due to Optionee’s death or Disability (or dies within 3 months
after a termination because of Disability), then this Option, to the extent (and
only to the extent) that it is vested on the Termination Date in accordance with
the schedule set forth on the first page of this Agreement, may be exercised by
Optionee (or Optionee’s legal representative or authorized assignee) no later
than twelve (12) months following the Termination Date, but in any event must be
exercised no later than the Expiration Date.

 

--------------------------------------------------------------------------------

 

FormFactor, Inc.

Stock Option Agreement

For Non-Employee Directors

2002 Equity Incentive Plan

 

3.3  No Obligation or Right to Continue as Board Member.  Nothing in the Plan or
this Agreement confers on Optionee any right or obligation to continue as a
Board Member or in any other relationship with the Company or any Parent or
Subsidiary of the Company (or any successor-in-interest to the Company).

 

4.   MANNER OF EXERCISE.

 

4.1  Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in
the case of exercise after Optionee’s death or Disability, Optionee’s legal
representative) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit B, or in such other form as may
be approved by the Committee from time to time (the “EXERCISE AGREEMENT”). If
someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise this Option.

 

4.2  Limitations on Exercise.  This Option may not be exercised (a) unless such
exercise is in compliance with all applicable federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance and (b) as to
fewer than 100 Shares unless it is exercised as to all Shares as to which this
Option is then exercisable. The Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

 

4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, where
permitted by law, by any method set forth in the Exercise Agreement or any
additional method approved by the Committee from time to time.

 

4.4  Tax Withholding.  At the time of exercise, Optionee must pay or provide for
any applicable federal or state withholding obligations of the Company
associated with the exercise of this Option. If the Committee permits at the
time of exercise, Optionee may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, in
which case, the Company shall issue the net number of Shares to Optionee after
deducting the Shares retained from the Shares issuable upon exercise.

 

5.   COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES.In the event Optionee
ceases to be a Board Member for any reason, the Company, or its assignee, shall
have the option to repurchase Optionee’s Unvested Shares (the “REPURCHASE
OPTION”) at any time within ninety (90) days after the later of Optionee’s
Termination Date and the date Optionee purchases the Shares by giving Optionee
written notice of its election to exercise the Repurchase Option. The Company or
its assignee may repurchase from Optionee (or from Optionee’s legal
representative, as the case may be) all or a portion of the Unvested Shares at
Optionee’s Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan, which repurchase price shall be paid, at the option of
the Company or its assignee, by check or by cancellation of all or a portion of
any outstanding indebtedness of Optionee to the Company or such assignee, or by
any combination thereof. The repurchase price shall be paid without interest
within the ninety (90) day time period set forth above.

 

6.   NONTRANSFERABILITY OF OPTION AND SHARES.This Option may not be transferred
in any manner other than under the terms and conditions of the Plan or by will
or by the laws of descent and distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of this Option shall be binding
upon the legal representatives and authorized executors and assignees of

 

--------------------------------------------------------------------------------

 

Optionee. Unvested Shares may not be sold or otherwise transferred without the
Company’s prior written consent.

 

7.   TAX CONSEQUENCES.Optionee should refer to the prospectus for the Plan for a
description of the federal tax consequences of exercising this Option, including
the effects of filing an election under 83(b) of the Code in connection with the
exercise of this Option for Unvested Shares, and disposing of the Shares. A copy
of the Prospectus is available at the Finance/Stock Administration page of the
Company’s internal website, or upon request from the Company’s Stock
Administrator at (925) 456-7334.

 

8.   PRIVILEGES OF STOCK OWNERSHIP.Optionee shall not have any of the rights of
a stockholder with respect to any Shares until the Shares are issued to
Optionee.

 

9.   NOTICES.Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated on the first page of this Agreement or to such
other address as such party may designate in writing from time to time to the
Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any return receipt express courier (prepaid); or one
(1) business day after transmission by facsimile or email.

 

10.   SUCCESSORS AND ASSIGNS.The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
successors and

 

assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement shall be binding upon Optionee and Optionee’s legal
representatives and authorized assignees.

 

11.   GOVERNING LAW.This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflicts of law.

 

--------------------------------------------------------------------------------

 

Stock Option Agreement No.         

 

EXHIBIT B

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN (THE “PLAN”)

STOCK OPTION EXERCISE AGREEMENT

 

I (“OPTIONEE”) hereby elect to purchase the number of shares of Common Stock of
FormFactor, Inc. (the “Company”) indicated below:

 

Optionee

 

 

 

 

 

Social Security Number:

 

 

 

 

 

Address:

 

 

 

 

 

Type of Option:

 

o Incentive Stock Option

 

 

o Nonqualified Stock Option

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Purchase Price per Share:

 

 

 

 

 

Aggregate Purchase Price:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Exact Name of Title to Shares:

 

 

 

1.    DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price as follows (check as applicable and complete):

 

o            in cash (by check) in the amount of $           
                               , receipt of which is acknowledged by the
Company;

 

o            [by cancellation of indebtedness of the Company to Optionee in the
amount of $                                           ;]

 

o            [by delivery of                          fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee for at
least six (6) months prior to the date hereof (and which have been paid for
within the meaning of SEC Rule 144), or obtained by Optionee in the open public
market, and owned free and clear of all liens, claims, encumbrances or security
interests, valued at the current Fair Market Value of
$                                            per share;]

 

o            [by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of $                         ;]

 

o            through a “same-day-sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD DEALER”) whereby Optionee irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for the Aggregate
Purchase Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Aggregate Purchase Price (together with any required
tax withholding) directly to the Company; or

 

o            [through a “margin” commitment from Optionee and the NASD Dealer
named therein, whereby Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Aggregate Purchase Price (together with any required tax
withholding) directly to the Company.]

 

2.    UNDERTAKINGS. Optionee acknowledges that any Unvested Shares remain
subject to the Terms and Conditions of the Optionee’s Stock Option Agreement. If
Optionee is married, the Spousal Consent, attached hereto as Exhibit 1, should
be completed by Optionee’s spouse and returned with this Agreement.

 

3.    TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE
SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.

 

4.    ENTIRE AGREEMENT. The Plan and the Stock Option Agreement are incorporated
herein by reference. This Stock Option Exercise Agreement, the Plan and the
Stock Option Agreement constitute the entire agreement and understanding and
supersede in their entirety all prior understandings and agreements of the
Company and Optionee with respect to the subject matter hereof, and are governed
by California law except for that body of law pertaining to choice of law or
conflicts of law.

 

Date:

 

 

 

--------------------------------------------------------------------------------

 

 

 

SIGNATURE OF OPTIONEE

 

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

SPOUSAL CONSENT

 

I have read the foregoing Stock Option Exercise Agreement (the “AGREEMENT”) and
I know its contents. I consent to and approve of the Agreement, and agree that
the shares of the Common Stock of FormFactor, Inc. purchased pursuant to the
Agreement (the “SHARES”) including any interest I may have in the Shares, are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder application of the Agreement to the Shares or to any interest I
may have in the Shares.

 

 

Date:   

 

SIGNATURE OF OPTIONEE’S SPOUSE

 

 

 

 

 

 

 

 

SPOUSE’S NAME—TYPED OR PRINTED

 

 

 

 

 

 

 

 

OPTIONEE’S NAME—TYPED OR PRINTED

 

 

 

--------------------------------------------------------------------------------

 

DIRECTOR SUCCEEDING GRANT

 

EXHIBIT C

 

FORMFACTOR, INC.

 

2002 EQUITY INCENTIVE PLAN

 

--------------------------------------------------------------------------------

 

NON-EXEMPT/EXERCISABLE AFTER 6 MONTHS

 

NO.     

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “COMPANY”), hereby grants an
option (this “OPTION”) to the Optionee named below (“OPTIONEE”) as of the Date
of Grant set forth below (the “DATE OF GRANT”) pursuant to the Company’s 2002
Equity Incentive Plan (the “PLAN”) and this Stock Option Agreement (this
“AGREEMENT”), which includes the Terms and Conditions (the “TERMS AND
CONDITIONS”) set forth on Exhibit A hereto. Capitalized terms not defined in
this Agreement have the meanings ascribed to them in the Plan.

 

OPTIONEE:

 

 

 

 

 

SOCIAL SECURITY NUMBER:

 

 

 

 

 

OPTIONEE’S ADDRESS:

 

 

 

 

 

TOTAL OPTION SHARES:

 

 

 

 

 

EXERCISE PRICE PER SHARE:

 

 

 

 

 

DATE OF GRANT:

 

 

 

 

 

EXPIRATION DATE:

 

(unless earlier terminated under Section 3 hereof or pursuant to Section 18 of
the Plan)

 

 

 

FIRST VESTING DATE:

 

 

 

 

 

VESTING SCHEDULE:

 

     % of the Shares will vest on the First Vesting Date; then      % of the
Shares will vest on each monthly anniversary of the First Vesting Date until
100% vested.

 

 

 

TYPE OF STOCK OPTION:

 

o INCENTIVE STOCK OPTION

 

 

 

(CHECK ONE):

 

o NONQUALIFIED STOCK OPTION

 

The Company has signed this Agreement effective as the Date of Grant and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

 

 

By:

 

 

 

 

 

 

(Please print name)

 

 

 

 

 

(Please print title)

 

 

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FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

No.       

 

Optionee acknowledges receipt of this Agreement (including the Terms and
Conditions), a copy of the Plan, attached hereto as Exhibit C, and the form of
Exercise Agreement, attached hereto as Exhibit B. Optionee has read and
understands these documents and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee has executed this Agreement
in duplicate as of the Date of Grant.

 

OPTIONEE

 

 

 

 

 

(Signature)

 

 

 

 

 

(Please print name)

 

 

2

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FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

Terms & Conditions

 

EXHIBIT A

 

STOCK OPTION AGREEMENT TERMS AND CONDITIONS

 

This Option is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. This
Agreement, the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the Company and the Optionee with respect to this Option
and supersede all prior understandings and agreements with respect to such
subject matter. If there is any discrepancy, conflict or omission between this
Agreement and the provisions of the Plan as interpreted by the Committee, the
provisions of the Plan shall apply.

 

1.   GRANT OF OPTION.The Company hereby grants to Optionee this Option to
purchase up to the total number of shares of Common Stock of the Company (the
“SHARES”) at the Exercise Price Per Share (the “EXERCISE PRICE”), each as set
forth on the first page of this Agreement, subject to the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option, this
Option is intended to qualify to the extent permitted as an “incentive stock
option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “CODE”).

 

2.   EXERCISE PERIOD.

 

2.1  Vesting of Shares.  This Option is exercisable beginning six (6) months
from the Date of Grant, although the Shares issued upon exercise of this Option
will be subject to the restrictions on transfer and Repurchase Option set forth
in this Agreement. Subject to the terms and conditions of the Plan and this
Agreement, this Option shall vest as set forth on the first page of this
Agreement if Optionee has continuously provided services to the Company, or any
Parent or Subsidiary of the Company. Shares that are vested pursuant to the
schedule set forth on the first page of this Agreement are “VESTED SHARES.”
Shares that are not vested pursuant to the schedule set forth on the first
page of this Agreement are “UNVESTED SHARES.” Notwithstanding any provision in
the Plan or this Agreement to the contrary, Options for Unvested Shares will not
be exercisable on or after an Optionee’s Termination Date.

 

2.2  Acceleration of Vesting in Certain Circumstances Following a Corporate
Transaction.  In addition to the vesting provided herein, the Option and Shares
subject to this Option shall become vested immediately prior to the occurrence
of a Non-Justifiable Termination (as defined below) occurring during the period
beginning on the date of consummation of a Corporate Transaction (as defined in
the Plan) and ending twelve (12) months thereafter, as to an additional number
of Shares equal to the number of Shares that would have vested during the twelve
(12) months following the date of such Non-Justifiable Termination (which
accelerated vesting is referred to herein as the “CORPORATE TRANSACTION
VESTING”). “NON-JUSTIFIABLE TERMINATION” means any Termination by the Company,
or any Parent or Subsidiary of the Company or the successor-in-interest to the
Company following a Corporate Transaction, other

 

3

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than for Cause (as defined below). “CAUSE” (for purposes of this paragraph only)
means (i) any willful participation by Optionee in acts of either material fraud
or material dishonesty against the Company or any Subsidiary or Parent of the
Company or the successor-in-interest to the Company following a Corporate
Transaction; (ii) any indictment or conviction of Optionee of any felony
(excluding drunk driving); (iii) any willful act of gross misconduct by Optionee
which is materially and demonstrably injurious to the Company or any Subsidiary
or Parent of the Company or the successor-in-interest to the Company following a
Corporate Transaction; or (iv) the death or Disability of Optionee.
Notwithstanding anything to the contrary set forth in this Agreement, if a
Corporate Transaction Vesting occurs by reason of a Non-Justifiable Termination,
then this Option may be exercised by Optionee up to, but no later than, three
(3) months after the date of such Non-Justifiable Termination, but in any event
no later than the Expiration Date.]

 

[2.3  Acceleration of Vesting on Death or Disability.  In the event of
Termination of Optionee as a result of his or her death or “permanent and total
disability,” as such term is defined in Section 22(e)(3) of the Code, then, in
addition to the vesting provided herein, the Option and Shares subject to the
Option shall become vested as to an additional number of Shares equal to the
number of Shares that would have vested during the twelve (12) months following
the Termination Date of Optionee; provided, however, such vested Option may be
exercised no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date.]

 

2.[4]  Expiration.  This Option expires on the Expiration Date set forth on the
first page of this Agreement and must be exercised, if at all, on or before the
earlier of the Expiration Date or the date on which this Option is terminated in
accordance with the provisions of this Section 2, Section 3 of this Agreement or
Section 18 of the Plan.

 

3.   TERMINATION.

 

3.1  Termination for Any Reason Except Death, Disability or Cause.  If Optionee
is Terminated for any reason except Optionee’s death, Disability or Cause (as
such terms are defined in the Plan), then this Option, to the extent (and only
to the extent) that it is vested on the Termination Date in accordance with the
schedule set forth on the first page of this Agreement, may be exercised by
Optionee during the three (3) months following the Termination Date, but in any
event must be exercised no later than the Expiration Date.

 

3.2  Termination Because of Death or Disability.  If Optionee is Terminated
because of Optionee’s death or Disability (or Optionee dies within three
(3) months after Termination for any reason except Cause or Disability), then
this Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee (or Optionee’s legal representative
or authorized assignee) during the twelve (12) months following the Termination
Date, but in any event must be exercised no later than the Expiration Date. Any
exercise occurring more than

 

4

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three months following the Termination Date (when the Termination is for any
reason other than Optionee’s death or disability (as defined in the Code)),
shall be deemed to be the exercise of a nonqualified stock option.

 

3.3  Termination for Cause.  If Optionee is Terminated for Cause, then this
Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee no later than one (1) month after
the Termination Date, but in any event must be exercised no later than the
Expiration Date.

 

3.4  No Obligation to Employ.  Nothing in the Plan or this Agreement confers on
Optionee any right to continue in the employ of, or other relationship with, the
Company or any Parent or Subsidiary of the Company (or any successor-in-interest
to the Company), or limits in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Optionee’s employment or other
relationship at any time, with or without Cause.

 

4.   MANNER OF EXERCISE.

 

4.1  Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in
the case of exercise after Optionee’s death or Disability, Optionee’s legal
representative) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit B, or in such other form as may
be approved by the Committee from time to time (the “EXERCISE AGREEMENT”). If
someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise this Option.

 

4.2  Limitations on Exercise.  This Option may not be exercised (a) unless such
exercise is in compliance with all applicable federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance and (b) as to
fewer than 100 Shares unless it is exercised as to all Shares as to which this
Option is then exercisable. The Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

 

4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, where
permitted by law, by any method set forth in the Exercise Agreement or any
additional method approved by the Committee from time to time.

 

4.4  Tax Withholding.  At the time of exercise, Optionee must pay or provide for
any applicable federal or state withholding obligations of the Company
associated with the exercise of this Option. If the Committee permits at the
time of exercise, Optionee may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld,

 

5

--------------------------------------------------------------------------------

 

in which case, the Company shall issue the net number of Shares to Optionee
after deducting the Shares retained from the Shares issuable upon exercise.

 

5.   COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES.In the event Optionee is
Terminated for any reason, the Company, or its assignee, shall have the option
to repurchase Optionee’s Unvested Shares (the “REPURCHASE OPTION”) at any time
within ninety (90) days after the later of Optionee’s Termination Date and the
date Optionee purchases the Shares by giving Optionee written notice of its
election to exercise the Repurchase Option. The Company or its assignee may
repurchase from Optionee (or from Optionee’s legal representative, as the case
may be) all or a portion of the Unvested Shares at Optionee’s Exercise Price,
proportionately adjusted for any stock split or similar change in the capital
structure of the Company as set forth in Section 2.2 of the Plan, which
repurchase price shall be paid, at the option of the Company or its assignee, by
check or by cancellation of all or a portion of any outstanding indebtedness of
Optionee to the Company or such assignee, or by any combination thereof. The
repurchase price shall be paid without interest within the ninety (90) day time
period set forth above.

 

6.   NONTRANSFERABILITY OF OPTION AND SHARES.This Option may not be transferred
in any manner other than under the terms and conditions of the Plan or by will
or by the laws of descent and distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of this Option shall be binding
upon the legal representatives and authorized executors and assignees of
Optionee. Unvested Shares may not be sold or otherwise transferred without the
Company’s prior written consent.

 

7.   TAX CONSEQUENCES.Optionee should refer to the prospectus for the Plan for a
description of the federal tax consequences of exercising this Option, including
the effects of filing an election under 83(b) of the Code in connection with the
exercise of this Option for Unvested Shares, and disposing of the Shares. A copy
of the Prospectus is available at the Finance/Stock Administration page of the
Company’s internal website, or upon request from the Company’s Stock
Administrator at (925) 456-7334.

 

8.   PRIVILEGES OF STOCK OWNERSHIP.Optionee shall not have any of the rights of
a stockholder with respect to any Shares until the Shares are issued to
Optionee.

 

9.   NOTICES.Any notice required to be given or delivered to the Company under
the terms of this Agreement shall be in writing and addressed to the Corporate
Secretary of the Company at its principal corporate offices. Any notice required
to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated on the first page of this Agreement or to such
other address as such party may designate in writing from time to time to the
Company. All notices shall be deemed to have been given or delivered upon:
personal delivery; three (3) days after deposit in the United States mail by
certified or registered mail (return receipt requested); one (1) business day
after deposit with any return receipt express courier (prepaid); or one
(1) business day after transmission by facsimile or email.

 

6

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10.  SUCCESSORS AND ASSIGNS.The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer
set forth herein, this Agreement shall be binding upon Optionee and Optionee’s
legal representatives and authorized assignees.

 

11.  GOVERNING LAW.This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflicts of law.

 

7

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Stock Option Agreement No.      

 

EXHIBIT B

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN (THE “PLAN”)

STOCK OPTION EXERCISE AGREEMENT

 

I (“OPTIONEE”) hereby elect to purchase the number of shares of Common Stock of
FormFactor, Inc. (the “Company”) indicated below:

 

Optionee

 

 

 

 

 

Social Security Number:

 

 

 

 

 

Address:

 

 

 

 

 

Type of Option:

 

o Incentive Stock Option

 

 

o Nonqualified Stock Option

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Purchase Price per Share:

 

 

 

 

 

Aggregate Purchase Price:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Exact Name of Title to Shares:

 

 

 

1.    DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price as follows (check as applicable and complete):

 

o            in cash (by check) in the amount of $              
                            , receipt of which is acknowledged by the Company;

 

o            [by cancellation of indebtedness of the Company to Optionee in the
amount of $                                           ;]

 

o            [by delivery of                          fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee for at
least six (6) months prior to the date hereof (and which have been paid for
within the meaning of SEC Rule 144), or obtained by Optionee in the open public
market, and owned free and clear of all liens, claims, encumbrances or security
interests, valued at the current Fair Market Value of
$                                            per share;]

 

o            [by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of $                         ;]

 

o            through a “same-day-sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD DEALER”) whereby Optionee irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for the Aggregate
Purchase Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Aggregate Purchase Price (along with any required tax
withholding) directly to the Company; or

 

o            [through a “margin” commitment from Optionee and the NASD Dealer
named therein, whereby Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Aggregate Purchase Price (along with any required tax withholding)
directly to the Company.]

 

2.    UNDERTAKINGS. Optionee acknowledges that any Unvested Shares remain
subject to the Terms and Conditions of the Optionee’s Stock Option Agreement. To
the extent this Option is an ISO, if Optionee sells or otherwise disposes of any
of the Shares acquired pursuant to the ISO on or before the later of (a) the
date two (2) years after the Date of Grant, and (b) the date one (1) year after
transfer of such Shares to Optionee upon exercise of this Option, then Optionee
shall immediately notify the Company in writing of such disposition. If Optionee
is married, the Spousal Consent, attached hereto as Exhibit 1, should be
completed by Optionee’s spouse and returned with this Agreement.

 

3.    TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE
SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.

 

4.    ENTIRE AGREEMENT. The Plan and the Stock Option Agreement are incorporated
herein by reference. This Stock Option Exercise Agreement, the Plan and the
Stock Option Agreement constitute the entire agreement and understanding and
supersede in their entirety all prior understandings and agreements of the
Company and Optionee with respect to the subject matter hereof, and are governed
by California law except for that body of law pertaining to choice of law or
conflicts of law.

 

--------------------------------------------------------------------------------

 

Date:

 

 

 

 

 

 

SIGNATURE OF OPTIONEE

 

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

SPOUSAL CONSENT

 

I have read the foregoing Stock Option Exercise Agreement (the “AGREEMENT”) and
I know its contents. I consent to and approve of the Agreement, and agree that
the shares of the Common Stock of FormFactor, Inc. purchased pursuant to the
Agreement (the “SHARES”) including any interest I may have in the Shares, are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder application of the Agreement to the Shares or to any interest I
may have in the Shares.

 

 

Date:  

 

SIGNATURE OF OPTIONEE’S SPOUSE

 

 

 

 

 

 

 

 

SPOUSE’S NAME—TYPED OR PRINTED

 

 

 

 

 

 

 

 

OPTIONEE’S NAME—TYPED OR PRINTED

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

FORMFACTOR, INC.

 

2002 EQUITY INCENTIVE PLAN

 

--------------------------------------------------------------------------------

 

EXEMPT/IMMEDIATELY EXERCISABLE

 

NO.       

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “COMPANY”), hereby grants an
option (this “OPTION”) to the Optionee named below (“OPTIONEE”) as of the Date
of Grant set forth below (the “DATE OF GRANT”) pursuant to the Company’s 2002
Equity Incentive Plan (the “PLAN”) and this Stock Option Agreement (this
“AGREEMENT”), which includes the Terms and Conditions (the “TERMS AND
CONDITIONS”) set forth on Exhibit A hereto. Capitalized terms not defined in
this Agreement have the meanings ascribed to them in the Plan.

 

OPTIONEE:

 

 

 

 

 

SOCIAL SECURITY NUMBER:

 

 

 

 

 

OPTIONEE’S ADDRESS:

 

 

 

 

 

TOTAL OPTION SHARES:

 

 

 

 

 

EXERCISE PRICE PER SHARE:

 

 

 

 

 

DATE OF GRANT:

 

 

 

 

 

EXPIRATION DATE:

 

(unless earlier terminated under Section 3 hereof or pursuant to Section 18 of
the Plan)

 

 

 

FIRST VESTING DATE:

 

 

 

 

 

VESTING SCHEDULE:

 

     % of the Shares will vest on the First Vesting Date; then     % of the
Shares will vest on each monthly anniversary of the First Vesting Date until
100% vested.

 

 

 

TYPE OF STOCK OPTION:

 

o INCENTIVE STOCK OPTION

 

 

 

(CHECK ONE):

 

o NONQUALIFIED STOCK OPTION

 

The Company has signed this Agreement effective as the Date of Grant and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

 

 

By:

 

 

 

 

 

 

(Please print name)

 

 

 

 

 

(Please print title)

 

 

--------------------------------------------------------------------------------

 

FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

No.       

 

Optionee acknowledges receipt of this Agreement (including the Terms and
Conditions), a copy of the Plan, attached hereto as Exhibit C, and the form of
Exercise Agreement, attached hereto as Exhibit B. Optionee has read and
understands these documents and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee has executed this Agreement
in duplicate as of the Date of Grant.

 

OPTIONEE

 

 

 

 

 

(Signature)

 

 

 

 

 

(Please print name)

 

 

2

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FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

 

EXHIBIT A

 

STOCK OPTION AGREEMENT TERMS AND CONDITIONS

 

This Option is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. This
Agreement, the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the Company and the Optionee with respect to this Option
and supersede all prior understandings and agreements with respect to such
subject matter. If there is any discrepancy, conflict or omission between this
Agreement and the provisions of the Plan as interpreted by the Committee, the
provisions of the Plan shall apply.

 

1.   GRANT OF OPTION.The Company hereby grants to Optionee this Option to
purchase up to the total number of shares of Common Stock of the Company (the
“SHARES”) at the Exercise Price Per Share (the “EXERCISE PRICE”), each as set
forth on the first page of this Agreement, subject to the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option, this
Option is intended to qualify to the extent permitted as an “incentive stock
option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “CODE”).

 

2.   EXERCISE PERIOD.

 

2.1  Vesting of Shares.  This Option is immediately exercisable, although the
Shares issued upon exercise of this Option will be subject to the restrictions
on transfer and Repurchase Option set forth in this Agreement. Subject to the
terms and conditions of the Plan and this Agreement, this Option shall vest as
set forth on the first page of this Agreement if Optionee has continuously
provided services to the Company, or any Parent or Subsidiary of the Company.
Shares that are vested pursuant to the schedule set forth on the first page of
this Agreement are “VESTED SHARES.” Shares that are not vested pursuant to the
schedule set forth on the first page of this Agreement are “UNVESTED SHARES.”
Notwithstanding any provision in the Plan or this Agreement to the contrary,
Options for Unvested Shares will not be exercisable on or after an Optionee’s
Termination Date.

 

[2.2  Acceleration of Vesting in Certain Circumstances Following a Corporate
Transaction.  In addition to the vesting provided herein, the Option and Shares
subject to this Option shall become vested immediately prior to the occurrence
of a Non-Justifiable Termination (as defined below) occurring during the period
beginning on the date of consummation of a Corporate Transaction (as defined in
the Plan) and ending twelve (12) months thereafter, as to an additional number
of Shares equal to the number of Shares that would have vested during the twelve
(12) months following the date of such Non-Justifiable Termination (which
accelerated vesting is referred to herein as the “CORPORATE TRANSACTION
VESTING”). “NON-JUSTIFIABLE

 

3

--------------------------------------------------------------------------------

 

TERMINATION” means any Termination by the Company, or any Parent or Subsidiary
of the Company or the successor-in-interest to the Company following a Corporate
Transaction, other than for Cause (as defined below). “CAUSE” (for purposes of
this paragraph only) means (i) any willful participation by Optionee in acts of
either material fraud or material dishonesty against the Company or any
Subsidiary or Parent of the Company or the successor-in-interest to the Company
following a Corporate Transaction; (ii) any indictment or conviction of Optionee
of any felony (excluding drunk driving); (iii) any willful act of gross
misconduct by Optionee which is materially and demonstrably injurious to the
Company or any Subsidiary or Parent of the Company or the successor-in-interest
to the Company following a Corporate Transaction; or (iv) the death or
Disability of Optionee. Notwithstanding anything to the contrary set forth in
this Agreement, if a Corporate Transaction Vesting occurs by reason of a
Non-Justifiable Termination, then this Option may be exercised by Optionee up
to, but no later than, three (3) months after the date of such Non-Justifiable
Termination, but in any event no later than the Expiration Date.]

 

[2.3  Acceleration of Vesting on Death or Disability.  In the event of
Termination of Optionee as a result of his or her death or “permanent and total
disability,” as such term is defined in Section 22(e)(3) of the Code, then, in
addition to the vesting provided herein, the Option and Shares subject to the
Option shall become vested as to an additional number of Shares equal to the
number of Shares that would have vested during the twelve (12) months following
the Termination Date of Optionee; provided, however, such vested Option may be
exercised no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date.]

 

2.[4]  Expiration.  This Option expires on the Expiration Date set forth on the
first page of this Agreement and must be exercised, if at all, on or before the
earlier of the Expiration Date or the date on which this Option is terminated in
accordance with the provisions of this Section 2, Section 3 of this Agreement or
Section 18 of the Plan.

 

3.   TERMINATION.

 

3.1  Termination for Any Reason Except Death, Disability or Cause.  If Optionee
is Terminated for any reason except Optionee’s death, Disability or Cause (as
such terms are defined in the Plan), then this Option, to the extent (and only
to the extent) that it is vested on the Termination Date in accordance with the
schedule set forth on the first page of this Agreement, may be exercised by
Optionee during the three (3) months following the Termination Date, but in any
event must be exercised no later than the Expiration Date.

 

3.2  Termination Because of Death or Disability.  If Optionee is Terminated
because of Optionee’s death or Disability (or Optionee dies within three
(3) months after Termination for any reason except Cause or Disability), then
this Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee (or Optionee’s legal representative
or authorized assignee) during the twelve (12) months following the Termination
Date, but in any

 

4

--------------------------------------------------------------------------------

 

event must be exercised no later than the Expiration Date. Any exercise
occurring more than three months following the Termination Date (when the
Termination is for any reason other than Optionee’s death or disability (as
defined in the Code)), shall be deemed to be the exercise of a nonqualified
stock option.

 

3.3  Termination for Cause.  If Optionee is Terminated for Cause, then this
Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee no later than one (1) month after
the Termination Date, but in any event must be exercised no later than the
Expiration Date.

 

3.4  No Obligation to Employ.  Nothing in the Plan or this Agreement confers on
Optionee any right to continue in the employ of, or other relationship with, the
Company or any Parent or Subsidiary of the Company (or any successor-in-interest
to the Company), or limits in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Optionee’s employment or other
relationship at any time, with or without Cause.

 

4.   MANNER OF EXERCISE.

 

4.1  Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in
the case of exercise after Optionee’s death or Disability, Optionee’s legal
representative) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit B, or in such other form as may
be approved by the Committee from time to time (the “EXERCISE AGREEMENT”). If
someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise this Option.

 

4.2  Limitations on Exercise.  This Option may not be exercised (a) unless such
exercise is in compliance with all applicable federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance and (b) as to
fewer than 100 Shares unless it is exercised as to all Shares as to which this
Option is then exercisable. The Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

 

4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, where
permitted by law, by any method set forth in the Exercise Agreement or any
additional method approved by the Committee from time to time.

 

4.4  Tax Withholding.  At the time of exercise, Optionee must pay or provide for
any applicable federal or state withholding obligations of the Company
associated with the exercise of this Option. If the Committee permits at the
time of exercise, Optionee may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld,

 

5

--------------------------------------------------------------------------------

 

in which case, the Company shall issue the net number of Shares to Optionee
after deducting the Shares retained from the Shares issuable upon exercise.

 

5.   COMPANY’S REPURCHASE OPTION FOR UNVESTED SHARES.

 

In the event Optionee is Terminated for any reason, the Company, or its
assignee, shall have the option to repurchase Optionee’s Unvested Shares (the
“REPURCHASE OPTION”) at any time within ninety (90) days after the later of
Optionee’s Termination Date and the date Optionee purchases the Shares by giving
Optionee written notice of its election to exercise the Repurchase Option. The
Company or its assignee may repurchase from Optionee (or from Optionee’s legal
representative, as the case may be) all or a portion of the Unvested Shares at
Optionee’s Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in
Section 2.2 of the Plan, which repurchase price shall be paid, at the option of
the Company or its assignee, by check or by cancellation of all or a portion of
any outstanding indebtedness of Optionee to the Company or such assignee, or by
any combination thereof. The repurchase price shall be paid without interest
within the ninety (90) day time period set forth above.

 

6.   NONTRANSFERABILITY OF OPTION AND SHARES.

 

This Option may not be transferred in any manner other than under the terms and
conditions of the Plan or by will or by the laws of descent and distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the legal representatives and authorized
executors and assignees of Optionee. Unvested Shares may not be sold or
otherwise transferred without the Company’s prior written consent.

 

7.   TAX CONSEQUENCES.

 

Optionee should refer to the prospectus for the Plan for a description of the
federal tax consequences of exercising this Option, including the effects of
filing an election under 83(b) of the Code in connection with the exercise of
this Option for Unvested Shares, and disposing of the Shares. A copy of the
Prospectus is available at the Finance/Stock Administration page of the
Company’s internal website, or upon request from the Company’s Stock
Administrator at (925) 456-7334.

 

8.   PRIVILEGES OF STOCK OWNERSHIP.

 

Optionee shall not have any of the rights of a stockholder with respect to any
Shares until the Shares are issued to Optionee.

 

9.   NOTICES.

 

Any notice required to be given or delivered to the Company under the terms of
this Agreement shall be in writing and addressed to the Corporate Secretary of
the Company at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in

 

6

--------------------------------------------------------------------------------

 

writing and addressed to Optionee at the address indicated on the first page of
this Agreement or to such other address as such party may designate in writing
from time to time to the Company. All notices shall be deemed to have been given
or delivered upon: personal delivery; three (3) days after deposit in the United
States mail by certified or registered mail (return receipt requested); one
(1) business day after deposit with any return receipt express courier
(prepaid); or one (1) business day after transmission by facsimile or email.

 

10.   SUCCESSORS AND ASSIGNS.

 

The Company may assign any of its rights under this Agreement. This Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Optionee and Optionee’s legal representatives
and authorized assignees.

 

11.   GOVERNING LAW.

 

This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, without regard to that body of law
pertaining to choice of law or conflicts of law.

 

7

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Stock Option Agreement No.          

 

EXHIBIT B

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN (THE “PLAN”)

STOCK OPTION EXERCISE AGREEMENT

 

I (“OPTIONEE”) hereby elect to purchase the number of shares of Common Stock of
FormFactor, Inc. (the “Company”) indicated below:

 

Optionee

 

 

 

 

 

Social Security Number:

 

 

 

 

 

Address:

 

 

 

 

 

Type of Option:

 

o Incentive Stock Option

 

 

o Nonqualified Stock Option

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Purchase Price per Share:

 

 

 

 

 

Aggregate Purchase Price:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Exact Name of Title to Shares:

 

 

 

1.    DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price as follows (check as applicable and complete):

 

o            in cash (by check) in the amount of
$                                           , receipt of which is acknowledged
by the Company;

 

o            [by cancellation of indebtedness of the Company to Optionee in the
amount of $                                           ;]

 

o            [by delivery of                          fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee for at
least six (6) months prior to the date hereof (and which have been paid for
within the meaning of SEC Rule 144), or obtained by Optionee in the open public
market, and owned free and clear of all liens, claims, encumbrances or security
interests, valued at the current Fair Market Value of
$                                            per share;]

 

o            [by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of $                         ;]

 

o            through a “same-day-sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD DEALER”) whereby Optionee irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for the Aggregate
Purchase Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Aggregate Purchase Price (along with any required tax
withholding) directly to the Company; or

 

o            [through a “margin” commitment from Optionee and the NASD Dealer
named therein, whereby Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Aggregate Purchase Price (along with any required tax withholding)
directly to the Company.]

 

2.    UNDERTAKINGS. Optionee acknowledges that any Unvested Shares remain
subject to the Terms and Conditions of the Optionee’s Stock Option Agreement. To
the extent this Option is an ISO, if Optionee sells or otherwise disposes of any
of the Shares acquired pursuant to the ISO on or before the later of (a) the
date two (2) years after the Date of Grant, and (b) the date one (1) year after
transfer of such Shares to Optionee upon exercise of this Option, then Optionee
shall immediately notify the Company in writing of such disposition. If Optionee
is married, the Spousal Consent, attached hereto as Exhibit 1, should be
completed by Optionee’s spouse and returned with this Agreement.

 

3.    TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE
SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.

 

4.    ENTIRE AGREEMENT. The Plan and the Stock Option Agreement are incorporated
herein by reference. This Stock Option Exercise Agreement, the Plan and the
Stock Option Agreement constitute the entire agreement and understanding and
supersede in their entirety all prior understandings and agreements of the
Company and Optionee with respect to the subject matter hereof, and are governed
by California law except for that body of law pertaining to choice of law or
conflicts of law.

 

--------------------------------------------------------------------------------

 

Date:

 

 

 

 

 

 

SIGNATURE OF OPTIONEE

 

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

SPOUSAL CONSENT

 

I have read the foregoing Stock Option Exercise Agreement (the “AGREEMENT”) and
I know its contents. I consent to and approve of the Agreement, and agree that
the shares of the Common Stock of FormFactor, Inc. purchased pursuant to the
Agreement (the “SHARES”) including any interest I may have in the Shares, are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder application of the Agreement to the Shares or to any interest I
may have in the Shares.

 

 

Date:  

 

SIGNATURE OF OPTIONEE’S SPOUSE

 

 

 

 

 

 

 

 

SPOUSE’S NAME—TYPED OR PRINTED

 

 

 

 

 

 

 

 

OPTIONEE’S NAME—TYPED OR PRINTED

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

FORMFACTOR, INC.

 

2002 EQUITY INCENTIVE PLAN

 

--------------------------------------------------------------------------------

 

EXEMPT AND NON-EXEMPT/EXERCISABLE AS VESTS

 

NO.     

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “COMPANY”), hereby grants an
option (this “OPTION”) to the Optionee named below (“OPTIONEE”) as of the Date
of Grant set forth below (the “DATE OF GRANT”) pursuant to the Company’s 2002
Equity Incentive Plan (the “PLAN”) and this Stock Option Agreement (this
“AGREEMENT”), which includes the Terms and Conditions (the “TERMS AND
CONDITIONS”) set forth on Exhibit A hereto. Capitalized terms not defined in
this Agreement have the meanings ascribed to them in the Plan.

 

OPTIONEE:

 

 

 

 

 

SOCIAL SECURITY NUMBER:

 

 

 

 

 

OPTIONEE’S ADDRESS:

 

 

 

 

 

TOTAL OPTION SHARES:

 

 

 

 

 

EXERCISE PRICE PER SHARE:

 

 

 

 

 

DATE OF GRANT:

 

 

 

 

 

EXPIRATION DATE:

 

(unless earlier terminated under Section 3 hereof or pursuant to Section 18 of
the Plan)

 

 

 

FIRST VESTING DATE:

 

 

 

 

 

VESTING SCHEDULE:

 

    % of the Shares will vest on the First Vesting Date; then      % of the
Shares will vest on each monthly anniversary of the First Vesting Date until
100% vested.

 

 

 

TYPE OF STOCK OPTION:

 

o INCENTIVE STOCK OPTION

 

 

 

(CHECK ONE):

 

o NONQUALIFIED STOCK OPTION

 

The Company has signed this Agreement effective as the Date of Grant and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

 

 

By:

 

 

 

 

 

 

 

(Please print name)

 

 

 

 

 

(Please print title)

 

 

--------------------------------------------------------------------------------

 

FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

No.         

 

Optionee acknowledges receipt of this Agreement (including the Terms and
Conditions), a copy of the Plan, attached hereto as Exhibit C, and the form of
Exercise Agreement, attached hereto as Exhibit B. Optionee has read and
understands these documents and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. Optionee has executed this Agreement
in duplicate as of the Date of Grant.

 

OPTIONEE

 

 

 

 

 

(Signature)

 

 

 

 

 

(Please print name)

 

 

2

--------------------------------------------------------------------------------

 

FormFactor, Inc.

Stock Option Agreement

2002 Equity Incentive Plan

Terms & Conditions

 

EXHIBIT A

 

STOCK OPTION AGREEMENT TERMS AND CONDITIONS

 

This Option is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. This
Agreement, the Plan and the Exercise Agreement constitute the entire agreement
and understanding of the Company and the Optionee with respect to this Option
and supersede all prior understandings and agreements with respect to such
subject matter. If there is any discrepancy, conflict or omission between this
Agreement and the provisions of the Plan as interpreted by the Committee, the
provisions of the Plan shall apply.

 

1.   GRANT OF OPTION.The Company hereby grants to Optionee this Option to
purchase up to the total number of shares of Common Stock of the Company (the
“SHARES”) at the Exercise Price Per Share (the “EXERCISE PRICE”), each as set
forth on the first page of this Agreement, subject to the terms and conditions
of this Agreement and the Plan. If designated as an Incentive Stock Option, this
Option is intended to qualify to the extent permitted as an “incentive stock
option” (“ISO”) within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the “CODE”).

 

2.   EXERCISE PERIOD.

 

2.1  Vesting of Shares.  This Option is exercisable as it vests. Subject to the
terms and conditions of the Plan and this Agreement, this Option shall vest and
become exercisable as set forth on the first page of this Agreement if Optionee
has continuously provided services to the Company, or any Parent or Subsidiary
of the Company.

 

[2.2  Acceleration of Vesting in Certain Circumstances Following a Corporate
Transaction.  In addition to the vesting provided herein, the Option and Shares
subject to this Option shall become vested and exercisable immediately prior to
the occurrence of a Non-Justifiable Termination (as defined below) occurring
during the period beginning on the date of consummation of a Corporate
Transaction (as defined in the Plan) and ending twelve (12) months thereafter,
as to an additional number of Shares equal to the number of Shares that would
have vested and become exercisable during the twelve (12) months following the
date of such Non-Justifiable Termination (which accelerated vesting and
exercisability is referred to herein as the “CORPORATE TRANSACTION VESTING”).
“NON-JUSTIFIABLE TERMINATION” means any Termination by the Company, or any
Parent or Subsidiary of the Company or the successor-in-interest to the Company
following a Corporate Transaction, other than for Cause (as defined below).
“CAUSE” (for purposes of this paragraph only) means (i) any willful
participation by Optionee in acts of either material fraud or material
dishonesty against the Company or any Subsidiary or Parent of

 

3

--------------------------------------------------------------------------------

 

the Company or the successor-in-interest to the Company following a Corporate
Transaction; (ii) any indictment or conviction of Optionee of any felony
(excluding drunk driving); (iii) any willful act of gross misconduct by Optionee
which is materially and demonstrably injurious to the Company or any Subsidiary
or Parent of the Company or the successor-in-interest to the Company following a
Corporate Transaction; or (iv) the death or Disability of Optionee.
Notwithstanding anything to the contrary set forth in this Agreement, if a
Corporate Transaction Vesting occurs by reason of a Non-Justifiable Termination,
then this Option may be exercised by Optionee up to, but no later than, three
(3) months after the date of such Non-Justifiable Termination, but in any event
no later than the Expiration Date.]

 

[2.3  Acceleration of Vesting on Death or Disability.  In the event of
Termination of Optionee as a result of his or her death or “permanent and total
disability,” as such term is defined in Section 22(e)(3) of the Code, then, in
addition to the vesting provided herein, the Option and Shares subject to the
Option shall become vested and exercisable as to an additional number of Shares
equal to the number of Shares that would have vested and become exercisable
during the twelve (12) months following the Termination Date of Optionee;
provided, however, such vested Option may be exercised no later than twelve
(12) months after the Termination Date, but in any event no later than the
Expiration Date.]

 

2.[4]  Expiration.  This Option expires on the Expiration Date set forth on the
first page of this Agreement and must be exercised, if at all, on or before the
earlier of the Expiration Date or the date on which this Option is terminated in
accordance with the provisions of this Section 2, Section 3 of this Agreement or
Section 18 of the Plan.

 

3.   TERMINATION.

 

3.1  Termination for Any Reason Except Death, Disability or Cause.  If Optionee
is Terminated for any reason except Optionee’s death, Disability or Cause (as
such terms are defined in the Plan), then this Option, to the extent (and only
to the extent) that it is vested on the Termination Date in accordance with the
schedule set forth on the first page of this Agreement, may be exercised by
Optionee during the three (3) months following the Termination Date, but in any
event must be exercised no later than the Expiration Date.

 

3.2  Termination Because of Death or Disability.  If Optionee is Terminated
because of Optionee’s death or Disability (or Optionee dies within three
(3) months after Termination for any reason except Cause or Disability), then
this Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee (or Optionee’s legal representative
or authorized assignee) during the twelve (12) months following the Termination
Date, but in any event must be exercised no later than the Expiration Date. Any
exercise occurring more than three months following the Termination Date (when
the Termination is for any reason other than Optionee’s death or disability (as
defined in the Code)), shall be deemed to be the exercise of a nonqualified
stock option.

 

4

--------------------------------------------------------------------------------

 

3.3  Termination for Cause.  If Optionee is Terminated for Cause, then this
Option, to the extent (and only to the extent) that it is vested on the
Termination Date in accordance with the schedule set forth on the first page of
this Agreement, may be exercised by Optionee no later than one (1) month after
the Termination Date, but in any event must be exercised no later than the
Expiration Date.

 

3.4  No Obligation to Employ.  Nothing in the Plan or this Agreement confers on
Optionee any right to continue in the employ of, or other relationship with, the
Company or any Parent or Subsidiary of the Company (or any successor-in-interest
to the Company), or limits in any way the right of the Company or any Parent or
Subsidiary of the Company to terminate Optionee’s employment or other
relationship at any time, with or without Cause.

 

4.   MANNER OF EXERCISE.

 

4.1  Stock Option Exercise Agreement.  To exercise this Option, Optionee (or in
the case of exercise after Optionee’s death or Disability, Optionee’s legal
representative) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit B, or in such other form as may
be approved by the Committee from time to time (the “EXERCISE AGREEMENT”). If
someone other than Optionee exercises this Option, then such person must submit
documentation reasonably acceptable to the Company that such person has the
right to exercise this Option.

 

4.2  Limitations on Exercise.  This Option may not be exercised (a) unless such
exercise is in compliance with all applicable federal and state securities laws
and with all applicable requirements of any stock exchange on which the
Company’s Common Stock may be listed at the time of such issuance and (b) as to
fewer than 100 Shares unless it is exercised as to all Shares as to which this
Option is then exercisable. The Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

 

4.3  Payment.  The Exercise Agreement shall be accompanied by full payment of
the Exercise Price for the Shares being purchased in cash (by check), or, where
permitted by law, by any method set forth in the Exercise Agreement or any
additional method approved by the Committee from time to time.

 

4.4  Tax Withholding.  At the time of exercise, Optionee must pay or provide for
any applicable federal or state withholding obligations of the Company
associated with the exercise of this Option. If the Committee permits at the
time of exercise, Optionee may provide for payment of withholding taxes upon
exercise of this Option by requesting that the Company retain Shares with a Fair
Market Value equal to the minimum amount of taxes required to be withheld, in
which case, the Company shall issue the net number of Shares to Optionee after
deducting the Shares retained from the Shares issuable upon exercise.

 

5

--------------------------------------------------------------------------------

 

5.   NONTRANSFERABILITY OF OPTION AND SHARES.

 

This Option may not be transferred in any manner other than under the terms and
conditions of the Plan or by will or by the laws of descent and distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the legal representatives and authorized
executors and assignees of Optionee.

 

6.   TAX CONSEQUENCES.

 

Optionee should refer to the prospectus for the Plan for a description of the
federal tax consequences of exercising this Option and disposing of the Shares.
A copy of the Prospectus is available at the Finance/Stock Administration
page of the Company’s internal website, or upon request from the Company’s Stock
Administrator at (925) 456-7334.

 

7.   PRIVILEGES OF STOCK OWNERSHIP.

 

Optionee shall not have any of the rights of a stockholder with respect to any
Shares until the Shares are issued to Optionee.

 

8.   NOTICES.

 

Any notice required to be given or delivered to the Company under the terms of
this Agreement shall be in writing and addressed to the Corporate Secretary of
the Company at its principal corporate offices. Any notice required to be given
or delivered to Optionee shall be in writing and addressed to Optionee at the
address indicated on the first page of this Agreement or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile or email.

 

9.   SUCCESSORS AND ASSIGNS.

 

The Company may assign any of its rights under this Agreement. This Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
the Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Optionee and Optionee’s legal representatives
and authorized assignees.

 

10.  GOVERNING LAW.

 

This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California, without regard to that body of law
pertaining to choice of law or conflicts of law.

 

6

--------------------------------------------------------------------------------

 

Stock Option Agreement No.        

 

EXHIBIT B

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN (THE “PLAN”)

STOCK OPTION EXERCISE AGREEMENT

 

I (“OPTIONEE”) hereby elect to purchase the number of shares of Common Stock of
FormFactor, Inc. (the “Company”) indicated below:

 

Optionee

 

 

 

 

 

Social Security Number:

 

 

 

 

 

Address:

 

 

 

 

 

Type of Option:

 

o Incentive Stock Option

 

 

o Nonqualified Stock Option

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Purchase Price per Share:

 

 

 

 

 

Aggregate Purchase Price:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Exact Name of Title to Shares:

 

 

 

1.    DELIVERY OF PURCHASE PRICE. Optionee hereby delivers to the Company the
Aggregate Purchase Price as follows (check as applicable and complete):

 

o            in cash (by check) in the amount of
$                                           , receipt of which is acknowledged
by the Company;

 

o            [by cancellation of indebtedness of the Company to Optionee in the
amount of $                                           ;]

 

o            [by delivery of                          fully-paid, nonassessable
and vested shares of the Common Stock of the Company owned by Optionee for at
least six (6) months prior to the date hereof (and which have been paid for
within the meaning of SEC Rule 144), or obtained by Optionee in the open public
market, and owned free and clear of all liens, claims, encumbrances or security
interests, valuedat the current Fair Market Value of
$                                            per share;]

 

o            [by the waiver hereby of compensation due or accrued to Optionee
for services rendered in the amount of $                         ;]

 

o            through a “same-day-sale” commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD DEALER”) whereby Optionee irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for the Aggregate
Purchase Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Aggregate Purchase Price (along with any required tax
withholding) directly to the Company; or

 

o            [through a “margin” commitment from Optionee and the NASD Dealer
named therein, whereby Optionee irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the Aggregate Purchase Price (along with any required tax withholding)
directly to the Company.]

 

2.    UNDERTAKINGS. To the extent this Option is an ISO, if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or
before the later of (a) the date two (2) years after the Date of Grant, and
(b) the date one (1) year after transfer of such Shares to Optionee upon
exercise of this Option, then Optionee shall immediately notify the Company in
writing of such disposition. If Optionee is married, the Spousal Consent,
attached hereto as Exhibit 1, should be completed by Optionee’s spouse and
returned with this Agreement.

 

3.    TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE
TAX CONSEQUENCES AS A RESULT OF OPTIONEE’S PURCHASE OR DISPOSITION OF THE
SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX
CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE.

 

4.    ENTIRE AGREEMENT. The Plan and the Stock Option Agreement are incorporated
herein by reference. This Stock Option Exercise Agreement, the Plan and the
Stock Option Agreement constitute the entire agreement and understanding and
supersede in their entirety all prior understandings and agreements of the
Company and Optionee with respect to the subject matter hereof, and are governed
by California law except for that body of law pertaining to choice of law or
conflicts of law.

 

--------------------------------------------------------------------------------

 

Date:

 

 

 

 

 

 

SIGNATURE OF OPTIONEE

 

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

 

SPOUSAL CONSENT

 

I have read the foregoing Stock Option Exercise Agreement (the “AGREEMENT”) and
I know its contents. I consent to and approve of the Agreement, and agree that
the shares of the Common Stock of FormFactor, Inc. purchased pursuant to the
Agreement (the “SHARES”) including any interest I may have in the Shares, are
subject to all the provisions of the Agreement. I will take no action at any
time to hinder application of the Agreement to the Shares or to any interest I
may have in the Shares.

 

 

Date:  

 

SIGNATURE OF OPTIONEE’S SPOUSE

 

 

 

 

 

 

 

 

SPOUSE’S NAME—TYPED OR PRINTED

 

 

 

 

 

 

 

 

OPTIONEE’S NAME—TYPED OR PRINTED

 

 

 

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[FORMFACTOR LOGO]

 

2002 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

FormFactor, Inc., a Delaware corporation (the “Company”), hereby awards
Restricted Stock Units (“RSUs”) to the Participant named below as of the Date of
Award set forth below pursuant to the Company’s 2002 Equity Incentive Plan, as
amended (the “Plan”). The terms and conditions of the Award are set forth in
this cover sheet, in the attached Restricted Stock Unit Agreement (the
“Agreement”) and in the Plan. Capitalized terms not defined in this Agreement
have the meaning ascribed to them in the Plan.

 

Name of Participant:

 

 

Participant’s Social Security or Global ID Number:

 

 

Participant’s Address:

 

 

 

 

 

 

Award Number:

 

 

Date of Award:

 

 

Number of Restricted Stock Units Awarded:

 

 

Amount Paid by Participant for the RSUs Awarded:

 

 

Vesting Schedule:

Provided the Participant renders continuous service to the Company, the RSUs
will become incrementally vested as to             % of the total number of RSUs
awarded (rounded to nearest whole number), on each of the following dates:

 

 

 

The Company has signed this Agreement effective as of the Date of Award and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

[Name]

 

[Title]

 

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[g191801kg13i001.gif]

 

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

TERMS AND CONDITIONS

 

This Award is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. The
Participant and the Company agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.

 

This Agreement, the Plan and the preceding cover sheet constitute the entire
agreement and understanding of the Company and the Participant with respect to
this Award and supersede all prior understandings and agreements with respect to
such subject matter. If there is any discrepancy, conflict or omission between
this Agreement and the provisions of the Plan as interpreted by the Committee,
the provisions of the Plan shall apply.

 

1.                                       EFFECT OF TERMINATION OF EMPLOYMENT. If
the Participant’s employment is terminated by the Participant or by the Company
before an applicable vesting date for any reason, all of the RSUs which have not
yet vested shall be forfeited without consideration.

 

2.                                       SETTLEMENT. To the extent an RSU
becomes vested, and subject to the Participant’s satisfaction of any tax
withholding obligations as discussed below, each vested RSU will be settled in
Shares on the applicable vesting date(s) (or the first market trading day during
an open trading window thereafter if the vesting date is not on a market trading
day during an open trading window) in exchange for such RSU. Issuance of Shares
shall be in complete satisfaction of such vested RSUs. Such settled RSUs shall
be immediately cancelled and no longer outstanding and you shall have no further
rights or entitlements related to those settled RSUs.

 

3.                                       RESTRICTIONS ON ISSUANCE. The Company
will not issue any Shares if the issuance of such Shares at that time would
violate any law or regulation.

 

4.                                       TAX WITHHOLDING OBLIGATIONS. The
Participant shall satisfy his or her withholding tax obligations, but no more
than the minimum statutory withholding amounts, by having the Company withhold
all or a portion of any Shares that otherwise would be issued to the
Participant. The withholding tax obligations and the Shares to be withheld for
such obligations shall be valued based on the Fair Market Value of the Shares as
of the last market trading day immediately preceding the Vesting Date. Any
payment of taxes by assigning Shares to the Company may be subject to
restrictions, including, but not limited to, any restrictions required by
rules of the Security Exchange Commission or the Financial Accounting Standards
Board.

 

5.                                       TAX ADVICE. The Participant represents,
warrants and acknowledges that the Company has made no warranties or
representations to the Participant with respect to the income tax consequences
of the transactions contemplated by this Agreement, and the Participant is in no
manner relying on the Company or the Company’s representatives for an assessment
of such tax consequences. THE PARTICIPANT UNDERSTANDS THAT THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS

 

1

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INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING
TAXPAYER PENALTIES.

 

6.                                       NON-TRANSFERABILITY. The RSUs may not
be anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor’s process, whether voluntarily or involuntarily or by
operation of law other than under the terms and conditions of the Plan. The
terms of the RSUs shall be binding upon the legal representatives and authorized
executors and assignees of Participant.

 

7.                                       RESTRICTION OF TRANSFER. Regardless of
whether the transfer or issuance of the Shares to be issued pursuant to the
vesting of RSUs has been registered under the Securities Act or has been
registered or qualified under the securities laws of any state, the Company may
impose additional restrictions upon the sale, pledge, or other transfer of the
Shares (including the placement of appropriate legends on stock certificates and
the issuance of stop-transfer instructions to the Company’s transfer agent) if,
in the judgment of the Company and the Company’s counsel, such restrictions are
necessary in order to achieve compliance with the provisions of the Securities
Act, the securities laws of any state, or any other law.

 

8.                                       RIGHTS AS SHAREHOLDER. The Participant
holding RSUs shall have no rights other than those of a general creditor of the
Company. Subject to the terms of this Agreement, the Participant holding
outstanding RSUs has none of the rights and privileges of a shareholder of the
Company, including no right to vote or to receive dividends (if any). Subject to
the terms and conditions of this Agreement, RSUs create no fiduciary duty of the
Company to the Participant and only represent an unfunded and unsecured
contractual obligation of the Company. The RSUs shall not be treated as property
or as a trust fund of any kind.

 

9.                                       ADMINISTRATION. The Committee shall
have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participant, the Company, and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
this Agreement.

 

10.                                 EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. The
value of the RSUs awarded pursuant to this Agreement shall not be included as
compensation, earnings, salaries, or other similar terms used when calculating
the Participant’s benefits under any employee benefit plan sponsored by the
Company except as such plan otherwise expressly provides. The Company expressly
reserves its rights to amend, modify, or terminate any of the Company’s employee
benefit plans.

 

2

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11.                                 NO EMPLOYMENT RIGHTS. The award of the RSUs
pursuant to this Agreement shall not give the Participant any right to remain
employed by the Company or a Subsidiary. The Participant agrees that the
Participants rights hereunder shall be subject to set-off by the Company for any
valid debts the Participant owes the Company.

 

12.                                 NOTICES. Any notice to be given under the
terms of this Agreement to the Company shall be addressed to the Company in care
of its Secretary. Any notice to be given to the Participant shall be addressed
to the Participant at the address listed in the employer’s records. By a notice
given pursuant to this Section, either party may designate a different address
for notices. Any notice shall have been deemed given when actually delivered.

 

13.                                 SEVERABILITY. If all or any part of this
Agreement or the Plan is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

 

14.                                 CONSTRUCTION. The RSUs are being issued
pursuant to the Plan and are subject to the terms of the Plan. A copy of the
Plan has been made available to the Participant, and additional copies of the
Plan are available upon request during normal business hours at the principal
executive offices of the Company. To the extent that any provision of this
Agreement violates or is inconsistent with an express provision of the Plan, the
Plan provision shall govern and any inconsistent provision in this Agreement
shall be of no force or effect.

 

15.                                 ADJUSTMENTS. In the event of a stock split,
a stock dividend or a similar change in the Company stock, the number of
outstanding RSUs covered under this Agreement may be adjusted pursuant to the
Plan.

 

16.                                 LIABILITY. The Company (or members of the
Board or Committee) shall not be liable to the Participant or other persons as
to: (i) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; and (ii) any unexpected or adverse tax consequence
realized by the Participant or other person due to the award, receipt, or
settlement of RSUs or Shares under this Agreement.

 

17.                                 MISCELLANEOUS.

 

17.1                           This Agreement shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.

 

17.2                           The Company may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon the Participant
and Participant’s legal representatives and authorized assignees.

 

17.3                           To the extent not preempted by federal law, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.

 

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[g191801kg13i002.jpg]

 

2002 EQUITY INCENTIVE PLAN

OUTSIDE DIRECTOR RESTRICED STOCK UNIT AGREEMENT

(OUTSIDE DIRECTOR FULL ANNUAL EQUITY AWARD)

 

FormFactor, Inc., a Delaware corporation (the “Company”), hereby awards
Restricted Stock Units (“RSUs”) to the Participant named below as of the Date of
Award set forth below pursuant to the Company’s 2002 Equity Incentive Plan, as
amended (the “Plan”). The terms and conditions of the Award are set forth in
this cover sheet, in the attached Restricted Stock Unit Agreement (the
“Agreement”) and in the Plan. Capitalized terms not defined in this Agreement
have the meaning ascribed to them in the Plan.

 

Name of Participant:

 

 

 

 

 

 

 

Participant’s Social Security:

 

XXX-XX-       

 

 

 

 

 

Participant’s Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Award Number:

 

 

 

 

 

 

 

 

 

Date of Award:

 

 

 

 

 

 

 

 

Number of Restricted Stock Units Awarded:

 

6,000

 

 

 

 

 

Amount Paid by Participant for the RSUs Awarded:

 

$0.001

 

 

 

 

 

Vesting Schedule:

 

Provided the Participant renders continuous service to the Company as a Director
or a Consultant (“Service”), the RSUs will vest in twelve (12) equal monthly
installments beginning                                and ending
                              .

 

The Company has signed this Agreement effective as of the Date of Award and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

[NAME]

[TITLE]

 

1

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[g191801kg13i002.jpg]

 

FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

OUTSIDE DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

TERMS AND CONDITIONS

 

This Award is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. The
Participant and the Company agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.

 

This Agreement, the Plan and the preceding cover sheet constitute the entire
agreement and understanding of the Company and the Participant with respect to
this Award and supersede all prior understandings and agreements with respect to
such subject matter. If there is any discrepancy, conflict or omission between
this Agreement and the provisions of the Plan as interpreted by the Committee,
the provisions of the Plan shall apply.

 

1.                                       EFFECT OF TERMINATION OF SERVICE. If
the Participant’s Service is terminated by the Participant or by the Company
before an applicable vesting date for any reason, all of the RSUs which have not
yet vested shall be forfeited without consideration.

 

2.                                       SETTLEMENT. To the extent an RSU
becomes vested and the Participant has not elected to defer settlement of the
RSU, each vested RSU will be settled in Shares in exchange for such RSU on the
earlier of: (i) the date on which the RSUs subject to this Agreement are fully
vested, or (ii) the termination of the Participant’s Service (or the first
market trading day during an open trading window thereafter if either the date
on which the RSUs subject to this Agreement are fully vested or the termination
of the Participant’s Service is not on a market trading day during an open
trading window).  To the extent an RSU becomes vested and the Participant has
elected to defer settlement of the RSU, each vested RSU will be settled in
Shares upon the Participant’s separation from service within the meaning of Code
Section 409A (“Separation from Service”) (or the first market trading day during
an open trading window thereafter if the Separation from Service is not on a
market trading day during an open trading window) in exchange for such RSU. 
Issuance of Shares shall be in complete satisfaction of such vested RSUs. Such
settled RSUs shall be immediately cancelled and no longer outstanding and you
shall have no further rights or entitlements related to those settled RSUs.

 

3.                                       RESTRICTIONS ON ISSUANCE. The Company
will not issue any Shares if the issuance of such Shares at that time would
violate any law or regulation.

 

4.                                       TAX ADVICE. The Participant represents,
warrants and acknowledges that the Company has made no warranties or
representations to the Participant with respect to the income tax consequences
of the transactions contemplated by this Agreement, and the Participant is in no
manner relying on the Company or the Company’s representatives for an assessment
of such tax consequences. THE PARTICIPANT UNDERSTANDS THAT THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS
INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING
TAXPAYER PENALTIES.

 

1

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5.                                       NON-TRANSFERABILITY. The RSUs may not
be anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor’s process, whether voluntarily or involuntarily or by
operation of law other than under the terms and conditions of the Plan. The
terms of the RSUs shall be binding upon the legal representatives and authorized
executors and assignees of Participant.

 

6.                                       RESTRICTION OF TRANSFER. Regardless of
whether the transfer or issuance of the Shares to be issued pursuant to the
vesting of RSUs has been registered under the Securities Act or has been
registered or qualified under the securities laws of any state, the Company may
impose additional restrictions upon the sale, pledge, or other transfer of the
Shares (including the placement of appropriate legends on stock certificates and
the issuance of stop-transfer instructions to the Company’s transfer agent) if,
in the judgment of the Company and the Company’s counsel, such restrictions are
necessary in order to achieve compliance with the provisions of the Securities
Act, the securities laws of any state, or any other law.

 

7.                                       RIGHTS AS SHAREHOLDER. The Participant
holding RSUs shall have no rights other than those of a general creditor of the
Company. Subject to the terms of this Agreement, the Participant holding
outstanding RSUs has none of the rights and privileges of a shareholder of the
Company, including no right to vote or to receive dividends (if any). Subject to
the terms and conditions of this Agreement, RSUs create no fiduciary duty of the
Company to the Participant and only represent an unfunded and unsecured
contractual obligation of the Company. The RSUs shall not be treated as property
or as a trust fund of any kind.

 

8.                                       ADMINISTRATION. The Committee shall
have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participant, the Company, and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
this Agreement.

 

9.                                       NOTICES. Any notice to be given under
the terms of this Agreement to the Company shall be addressed to the Company in
care of its Secretary. Any notice to be given to the Participant shall be
addressed to the Participant at the address listed in the Company’s records. By
a notice given pursuant to this Section, either party may designate a different
address for notices. Any notice shall have been deemed given when actually
delivered.

 

10.                                 SEVERABILITY. If all or any part of this
Agreement or the Plan is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

 

11.                                 CONSTRUCTION. The RSUs are being issued
pursuant to the Plan and are subject to the terms of the Plan. A copy of the
Plan has been made available to the Participant, and additional copies of the
Plan are available upon request during normal business hours at the principal
executive offices of the Company. To the extent that any provision of this
Agreement violates or is inconsistent with an express provision of the Plan, the
Plan provision shall govern and any inconsistent provision in this Agreement
shall be of no force or effect.

 

12.                                 ADJUSTMENTS. In the event of a stock split,
a stock dividend or a similar change in the Company stock, the number of
outstanding RSUs covered under this Agreement may be adjusted pursuant to the
Plan.

 

2

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13.                                 LIABILITY. The Company (or members of the
Board or Committee) shall not be liable to the Participant or other persons as
to: (i) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; and (ii) any unexpected or adverse tax consequence
realized by the Participant or other person due to the award, receipt, or
settlement of RSUs or Shares under this Agreement.

 

14.                                 MISCELLANEOUS.

 

14.1                           This Agreement shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.

 

14.2                           The Company may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon the Participant
and Participant’s legal representatives and authorized assignees.

 

14.3                           To the extent not preempted by federal law, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.

 

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[g191801kg13i002.jpg]

 

2002 EQUITY INCENTIVE PLAN
OUTSIDE DIRECTOR RESTRICTED STOCK UNIT AGREEMENT
(ANNUAL RETAINER DEFERRAL)

 

FormFactor, Inc., a Delaware corporation (the “Company”), hereby awards
Restricted Stock Units (“RSUs”) to the Participant named below as of the Date of
Award set forth below pursuant to the Company’s 2002 Equity Incentive Plan, as
amended (the “Plan”). The terms and conditions of the Award are set forth in
this cover sheet, in the attached Restricted Stock Unit Agreement (the
“Agreement”) and in the Plan. Capitalized terms not defined in this Agreement
have the meaning ascribed to them in the Plan.

 

Name of Participant:

 

 

 

Participant’s Social Security or Global ID Number:

 

 

 

Participant’s Address:

 

 

 

 

 

 

 

Award Number:

 

 

 

Date of Award:

 

 

 

Number of Restricted Stock Units Awarded:

 

 

 

Amount Paid by Participant for the RSUs Awarded:

$0.00

 

Vesting Schedule:                        One-hundred percent (100%) of the total
number of RSUs granted pursuant to this Agreement shall vest on the Date of
Award.

 

The Company has signed this Agreement effective as of the Date of Award and has
caused it to be executed in duplicate by its duly authorized representative.

 

FORMFACTOR, INC.

 

 

[NAME]

 

[TITLE]

 

1

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FORMFACTOR, INC.

2002 EQUITY INCENTIVE PLAN

OUTSIDE DIRECTOR RESTRICTED STOCK UNIT AGREEMENT

TERMS AND CONDITIONS

 

This Award is subject to the following Terms and Conditions and the terms and
conditions of the Plan, which are incorporated herein by reference. The
Participant and the Company agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.

 

This Agreement, the Plan and the preceding cover sheet constitute the entire
agreement and understanding of the Company and the Participant with respect to
this Award and supersede all prior understandings and agreements with respect to
such subject matter. If there is any discrepancy, conflict or omission between
this Agreement and the provisions of the Plan as interpreted by the Committee,
the provisions of the Plan shall apply.

 

1.                                       SETTLEMENT. Each RSU will be settled in
Shares upon the Participant’s separation from service within the meaning of Code
Section 409A (“Separation from Service”) (or the first market trading day during
an open trading window thereafter if the Separation from Service is not on a
market trading day during an open trading window) in exchange for such RSU. 
Issuance of Shares shall be in complete satisfaction of such vested RSUs. Such
settled RSUs shall be immediately cancelled and no longer outstanding and you
shall have no further rights or entitlements related to those settled RSUs.

 

2.                                       RESTRICTIONS ON ISSUANCE. The Company
will not issue any Shares if the issuance of such Shares at that time would
violate any law or regulation.

 

3.                                       TAX ADVICE. The Participant represents,
warrants and acknowledges that the Company has made no warranties or
representations to the Participant with respect to the income tax consequences
of the transactions contemplated by this Agreement, and the Participant is in no
manner relying on the Company or the Company’s representatives for an assessment
of such tax consequences. THE PARTICIPANT UNDERSTANDS THAT THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT HIS OR HER OWN
TAX ADVISOR REGARDING ANY RESTRICTED STOCK UNITS. NOTHING STATED HEREIN IS
INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING
TAXPAYER PENALTIES.

 

4.                                       NON-TRANSFERABILITY. The RSUs may not
be anticipated, assigned, attached, garnished, optioned, transferred or made
subject to any creditor’s process, whether voluntarily or involuntarily or by
operation of law other than under the terms and conditions of the Plan. The
terms of the RSUs shall be binding upon the legal representatives and authorized
executors and assignees of Participant.

 

5.                                       RESTRICTION OF TRANSFER. Regardless of
whether the transfer or issuance of the Shares to be issued pursuant to the RSUs
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose additional
restrictions upon the sale, pledge, or other transfer of the Shares (including
the placement of appropriate legends on stock certificates and the issuance of
stop-transfer instructions to the Company’s transfer agent) if, in the judgment

 

2

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of the Company and the Company’s counsel, such restrictions are necessary in
order to achieve compliance with the provisions of the Securities Act, the
securities laws of any state, or any other law.

 

6.                                       RIGHTS AS SHAREHOLDER. The Participant
holding RSUs shall have no rights other than those of a general creditor of the
Company. Subject to the terms of this Agreement, the Participant holding
outstanding RSUs has none of the rights and privileges of a shareholder of the
Company, including no right to vote or to receive dividends (if any). Subject to
the terms and conditions of this Agreement, RSUs create no fiduciary duty of the
Company to the Participant and only represent an unfunded and unsecured
contractual obligation of the Company. The RSUs shall not be treated as property
or as a trust fund of any kind.

 

7.                                       ADMINISTRATION. The Committee shall
have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participant, the Company, and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
this Agreement.

 

8.                                       NOTICES. Any notice to be given under
the terms of this Agreement to the Company shall be addressed to the Company in
care of its Secretary. Any notice to be given to the Participant shall be
addressed to the Participant at the address listed in the Company’s records. By
a notice given pursuant to this Section, either party may designate a different
address for notices. Any notice shall have been deemed given when actually
delivered.

 

9.                                       SEVERABILITY. If all or any part of
this Agreement or the Plan is declared by any court or governmental authority to
be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

 

10.                                 CONSTRUCTION. The RSUs are being issued
pursuant to the Plan and are subject to the terms of the Plan. A copy of the
Plan has been made available to the Participant, and additional copies of the
Plan are available upon request during normal business hours at the principal
executive offices of the Company. To the extent that any provision of this
Agreement violates or is inconsistent with an express provision of the Plan, the
Plan provision shall govern and any inconsistent provision in this Agreement
shall be of no force or effect.

 

11.                                 ADJUSTMENTS. In the event of a stock split,
a stock dividend or a similar change in the Company stock, the number of
outstanding RSUs covered under this Agreement may be adjusted pursuant to the
Plan.

 

12.                                 LIABILITY. The Company (or members of the
Board or Committee) shall not be liable to the Participant or other persons as
to: (i) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder; and (ii) any unexpected or

 

3

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adverse tax consequence realized by the Participant or other person due to the
award, receipt, or settlement of RSUs or Shares under this Agreement.

 

13.                                 MISCELLANEOUS.

 

13.1                           This Agreement shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.

 

13.2                           The Company may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon the Participant
and Participant’s legal representatives and authorized assignees.

 

13.3                           To the extent not preempted by federal law, this
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California.

 

4

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