EXHIBIT 10.01


 


[FORMFACTOR
LOGO]


 


KEY
EMPLOYEE BONUS PLAN


 


As adopted on
April 10, 2006

As amended on February 15, 2007


 


I.              PURPOSE


 


This
Key Employee Bonus Plan (this “Plan”) is
designed to enable FormFactor, Inc. (the “Company”) to be
competitive with the rest of the industry in attracting and retaining key
talent and to provide an incentive, in addition to base salary compensation, to
those key professionals of the Company who have substantial opportunity to
influence achievement of important corporate objectives and subsequent Company
growth. In addition, this Plan (1) more closely aligns personal interests of
such key professionals with Company and stockholder interests, (2) encourages
such key professionals to continue as employees of the Company, and (3)
positions the Company as a company that provides better-than-market rewards for
better-than-market performance.


 


Participants
in this Plan may include the Company’s chief executive officer, president,
senior vice presidents, vice presidents, senior directors and other full-time
employees as determined by the Compensation Committee of the Board of Directors
of the Company (the “Committee”).


 


II.            BONUS
AWARDS


 


Bonus awards under this
Plan are payable in cash, less any applicable withholdings. Actual bonus awards
are based on a combination of specific percentage achievement of corporate
objectives and specific percentage achievement of personal objectives, as
applicable. The Committee shall determine the period during which the corporate
and personal objectives are to be measured, which may be an annual period, a
six month period or such other period approved by the Committee (the “Measurement Period”). Bonus awards are payable during the
next fiscal quarter following the completion of the applicable Measurement
Period. Corporate and personal objectives are designed to reflect both long and
short-term performance targets and goals. The split between corporate
objectives and personal objectives is established for participants based on job
grade, level of responsibility and scope of work in the Company’s organization.
Specific bonus target percentages, expressed as a percentage of annual base
salary (as defined below), and actual bonus awards for the chief executive
officer and participants directly reporting to the chief executive officer (the
“Executive Staff”) will be determined for
each Measurement Period by the Committee. Specific bonus target percentages,
expressed as a percentage of annual base salary, and actual bonus awards for
participants other than those referenced in the prior sentence will be
determined for each Measurement Period by the Committee’s authorized designee,
which shall initially be the chief executive officer. The bonus target
percentages may be different for each participant.


 


III.           CORPORATE
OBJECTIVES


 


The
corporate objectives for this Plan, including, if applicable, threshold, target
and maximum levels for each corporate objective, shall be determined by the
Committee for each Measurement Period. Corporate objectives may include various
financial, operational and other measures of corporate performance, all as
determined and as defined by the Committee.


 


The weight of each
corporate objective shall be determined by the Committee. The Committee may
require that the Company must achieve certain minimum performance in an
applicable Measurement Period in order for bonus awards under this Plan to be
payable in such Measurement Period. Participants may have the potential to
receive increasing bonus amounts if the Company exceeds certain performance
targets as determined by the Committee.


 


The Committee shall
determine as soon as practicable after the end of each Measurement Period
whether the corporate objectives for such period were achieved and, if so, the
level of achievement of such corporate objectives.


 


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IV.           PERSONAL
OBJECTIVES


 


The Committee is
responsible for establishing personal objectives for the Company’s chief
executive officer. The chief executive officer will work with participants who
directly report to the chief executive officer to identify personal objectives
for their participation in this Plan, and such personal objectives shall be
approved by the chief executive officer. In addition, the Committee shall
review the personal objectives of all participants who are members of the
Executive Staff and who are officers within the meaning of Section 16 of the
Securities Exchange Act of 1934. Other participants will work with their
immediate supervisors to identify personal objectives for their participation
in this Plan, and such personal objectives shall be approved by the participant’s
management. Participants may be required to achieve certain minimum performance
in an applicable Measurement Period in order for bonus awards under this Plan
to be payable in such Measurement Period, and each personal objective may have
a maximum payout limit.


 


The level of achievement
of personal objectives for the Company’s chief executive officer, if
established in an applicable Measurement Period, and for the Executive Staff
shall be reviewed and approved by the Committee. The level of achievement of
personal objectives for participants other than those referenced in the prior
sentence shall be reviewed and approved by the chief executive officer.


 


V.            ANNUAL
BASE SALARY


 


The annual base salary
(exclusive of overtime, shift premiums, housing or car allowances, bonuses,
equity compensation, benefits, etc.) earned by a participant in the applicable
Measurement Period will be used for calculating the bonus award payment in such
Measurement Period. Participants who enter this Plan during a Measurement
Period will, therefore, receive a pro-rated payout based on the date they
become eligible to participate in this Plan.


 


VI.           MISCELLANEOUS
PROVISIONS


 


A.            Administration


 


The
Committee has full power and authority to administer and interpret this Plan
and to adopt such rules and regulations consistent with the terms of this Plan
as such committee may deem necessary or advisable to carry out the provisions
of this Plan. All determinations and interpretations of the Committee or its
authorized designees with respect to the exercise of their respective
responsibilities shall be binding on the participants.


 


B.            Eligibility;
Termination of Employment


 


In
order to be eligible for a bonus award under this Plan, an employee must be a
full-time employee, in good performance standing at the end of the applicable
Measurement Period and employed with the Company on the last day of the
applicable Measurement Period. Bonus awards for any participant on a paid or
unpaid leave of absence will be adjusted to reflect time on leave. If prior to
the end of the applicable Measurement Period a participant’s employment
terminates by way of retirement, normal retirement date, death, or total and
permanent disability (as determined under the Company’s Long-Term Disability
Plan), and the participant would have been entitled to the payment of the award
if his/her employment had not so terminated, payment of the award shall be
pro-rated based on the number of completed weeks of the award period during
which the participant was an employee. If a participant’s employment terminates
by reason of death, payment of the award shall be made to the participant’s
beneficiary under the Company’s 401(k) Retirement Plan, and if there is none,
to the participant’s estate.


 


C.            Change in Control
of Company


 


In
the event of (1) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary or a reincorporation of the Company in a different jurisdiction),
(2) 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, (3) the sale of substantially all of the assets
of the Company, or (4) the acquisition, sale, or transfer of more than 50% of
the outstanding shares of the Company by tender offer or similar transaction,
all bonus awards will be deemed to have been earned at 100% of the target value
for the Measurement Period (and for the next consecutive Measurement Period if
it falls within the same fiscal year) in which such change of control of the
Company is consummated and will be paid to the applicable participant
immediately prior to the change of control.


 


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D.            Transfer of Rights


 


The rights and interests
of a participant under this Plan may not be assigned or transferred, except for
bonus awards that are payable to a participant under this Plan, which may be
assigned or transferred by will and the laws of descent or distribution.


 


E.             Right to
Employment


 


Employment at the Company
is at-will. Participation in this Plan shall not confer on any employee the
right to continued employment in the same or any other capacity, nor shall this
Plan interfere with the right of the Company to discharge any participant at
any time for any reason.


 


F.             Rights to Plan


 


No employee or other
person shall have any claim or right to be granted a bonus award under this
Plan, nor shall participation in this Plan in one Measurement Period grant any
right to participate in this Plan in any subsequent Measurement Period. Notwithstanding
anything in this Plan to the contrary, the Committee shall have the power, in
its sole discretion, to terminate any individual’s participation in this Plan
or to reduce the bonus award payable to any participant (or to determine that
no bonus award shall be payable to such participant) prior to the time the
amount otherwise would have become payable under this Plan.


 


G.            Withholding


 


The Company shall have
the right to deduct from each bonus award paid under this Plan any taxes or
other withholdings required by law, or any 401(k), employee stock purchase plan
or other benefit elections previously approved in writing by a participant to
be withheld with respect to such awards.


 


H.            Unallocated Funds


 


Monies that are
unallocated due to the corporate objectives, or the personal objectives not
being satisfactorily achieved by one or more participants, as determined by the
Committee, will remain part of the Company’s operating funds.


 


I.              Duration,
Amendment, Suspension and Termination


 


This Plan is applicable
for plan years beginning on and after January 1, 2006. Each plan year shall be
the Company’s fiscal year. The Committee may amend or suspend this Plan, in
whole or in part, or terminate this Plan at any time with respect to the
current or any subsequent Measurement Period.


 


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