Exhibit 10.1


 


[FormFactor Letterhead]


 


May 19,
2010


 


G.
Carl Everett, Jr.


[ADDRESS]


 


Dear
Carl,


 


By this Letter Agreement, we welcome the opportunity to offer you a
position with FormFactor, Inc. (the “Company”) as the Company’s Chief
Executive Officer.  Your employment shall
begin on May 19, 2010 (the “Start Date”).


 


In your capacity as Chief Executive Officer, you will report to the
Company’s Board of Directors (the “Board”), and you will receive an annual
salary of $480,000, which will be paid bi-weekly in accordance with, and
subject to, the Company’s normal payroll procedures.


 


You shall be eligible to participate in the Company’s Employee
Incentive Plan.  Your target bonus is
100% of base salary with the opportunity to earn 200% of base salary based on
extraordinary achievement of objectives, which percentages may be changed by
the Company from time to time.  You will
be allowed to participate in the establishment of performance objectives under
the Employee Incentive Plan.  However,
the Compensation Committee of the Board shall retain final discretion on such
objectives.  Your bonus for the first
half of fiscal year 2010, if any, will be prorated based upon your start date
through the end of June 2010. 
Payment for each year’s bonus actually earned shall be made to you
within forty-five (45) days following the Company’s fiscal year end, but in any
event no later than the fifteenth day of the third month after the end of the
applicable fiscal year.


 


During your service as the Company’s Chief Executive Officer, you shall
retain your current Board membership and chairperson duties on the Board’s
M&A Committee, but you agree to resign from the Board’s Audit and
Compensation committees effective upon the Start Date.  You shall continue to receive all cash and equity
Board member and active Board Committee compensation.


 


During your service as Chief Executive Officer, the Company shall
reimburse you for all reasonable travel, meals and lodging expenses during your
service as Chief Executive Officer.  The
Company shall promptly reimburse you for such expenses upon presentation of
appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.


 


As long as you remain as the Company’s
Chief Executive Officer, you are eligible to receive certain employee benefits
that are offered to our regular full-time employees, which may from time to
time change at the Company’s discretion. These currently include:


 


·   Medical,
Dental and Vision Insurance Benefits


 


·   Short-Term
and Long-Term Disability Insurance Coverage


 


·   Group
Life Insurance


 


·   Paid
Time-Off


 


·   401k
Plan


 


·   Section 125
Flex Spending Plan


 


·   Employee
Assistance Program


 


·   Employee
Stock Purchase Plan


 


Coverage for the
above-mentioned medical, dental, vision, disability and life insurance benefits
begin on your Start Date, if elected. 
Dependent coverage is also available through these plans.  Employee and dependent contributions to the
plans are outlined in our employee benefits guide.  Further, you and, to the extent applicable,
your dependents, will be allowed to participate in all benefits, plans and
programs, including improvements or modifications thereof, that are now, or may
hereafter be, offered to other executive employees of the Company.  You will be entitled to 15 days of paid
vacation annually.


 


On the Start Date, the Compensation Committee of the Board shall grant
to you, pursuant to the Company’s 2002 Equity Incentive Plan, as amended, (the “2002
Plan”) an equity award equal 50,000 nonqualified stock options (“NSOs”) and 20,000
restricted stock units (“RSUs”).  The per
share exercise price of the NSOs shall be equal to the fair market value of a
share of Company common stock on the date of grant which will be awarded in
compliance with the Company’s standard policy for new hires.  The NSOs shall vest in equal monthly
installments over a two (2) year period subject to your continued service
as Chief Executive Officer or a Board member. 
The RSUs shall vest in equal annual installments over a two (2) year
period subject to your continued service as Chief Executive Officer or a Board
member.  If your service as Chief
Executive Officer is terminated without Cause (as that term is defined in the
2002 Plan) within one (1) year following a Corporate Transaction (as that
term is defined in the 2002 Plan), the vesting of each NSO and RSU shall be
automatically accelerated in full and you shall have one (1) year
following your termination to exercise any vested and unexpired outstanding
NSOs.  The other terms and conditions of
the NSOs and RSUs shall be subject to the Company’s standard forms utilized under
the 2002 Equity Incentive Plan.


 


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You should be aware that your employment with the Company is for no
specified period and constitutes at will employment.  As a result, you are free to resign at any
time, for any reason or for no reason.  Similarly,
the Company is free to conclude its employment relationship with you at any
time and for any reason, subject to the terms of this Letter Agreement.


 


Notwithstanding anything contained in this Letter Agreement to the
contrary, to the extent that the payments and benefits provided under this
Letter Agreement and benefits provided to, or for the benefit of, you under any
other employer plan or agreement (such payments or benefits are collectively
referred to as the “Benefits”) would be subject to the excise tax (the “Excise
Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), the Benefits shall be reduced (but not below zero) if and
to the extent that a reduction in the Benefits would result in you retaining a
larger amount, on an after-tax basis (taking into account federal, state and
local income taxes and the Excise Tax), than if you received all of the
Benefits (such reduced amount is hereinafter referred to as the “Limited
Benefit Amount”).  Unless you shall have
given prior written notice specifying a different order to the Company to
effectuate the Limited Benefit Amount, the Company shall reduce or eliminate
the Benefits, by first reducing or eliminating those payments or benefits which
are not payable in cash and then by reducing or eliminating cash payments, in
each case in reverse order beginning with payments or benefits which are to be
paid the farthest in time from the “Determination” (as hereinafter defined).  Any notice given by the Employee pursuant to
the preceding sentence shall take precedence over the provisions of any other
plan, arrangement or agreement governing your’s rights and entitlements to any
benefits or compensation.


 


A determination as to whether the Benefits shall be reduced to the
Limited Benefit Amount pursuant to this Letter Agreement and the amount of such
Limited Benefit Amount shall be made by the Company’s independent public
accountants or another certified public accounting firm of national reputation
designated by the Company (the “Accounting Firm”) at the Company’s expense.  The Accounting Firm shall provide its
determination (the “Determination”), together with detailed supporting
calculations and documentation to the Company and Employee within five (5) days
of the date of termination of Employee’s employment, if applicable, or such
other time as requested by the Company or by you (provided you reasonably
believe that any of the Benefits may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by you with respect to
any Benefits, it shall furnish you with an opinion reasonably acceptable to you
that no Excise Tax will be imposed with respect to any such Benefits.  Within ten (10) days of the delivery of
the Determination to the you, you shall have the right to dispute the
Determination (the “Dispute”). If there is no Dispute, the Determination shall
be binding, final and conclusive upon the Company and you.


 


I have enclosed our standard Agreement Regarding Employment,
Confidential Information, Invention Assignment, and Arbitration as a condition
of your employment. If you accept this offer, please return a signed copy to me
prior to your Start Date.  That Agreement
requires, among other things, that in the event of any dispute or claim
relating


 


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to
or arising out of our employment relationship, you and the Company agree that
all such disputes shall be fully and finally resolved by final and binding
arbitration conducted by the American Arbitration Association in Alameda
County, California.  However, the Company
and you shall continue to have the right to seek judicial relief in the form of
injunctive and/or equitable relief, including but not limited to relief for
threatened or actual misappropriation of trade secrets or other unfair
competition.


 


Additionally, you will be required to comply at all times with the
Company’s various rules, policies and procedures, including those set forth in
our Employee Handbook, our Statement of Corporate Code of Business Conduct (“Corporate
Code”), and our Statement of Policy regarding Insider Trading (“Insider Trading
Policy”).  Copies of these three
documents, and all our policies and procedures will be available in hard copy
and on inForm - our internal intranet site.  Within thirty (30) days of the Start Date, you
will be required to provide the Company with signed acknowledgements relating
to the Employee Handbook, the Corporate Code and the Insider Trading Policy.  You should understand that, while referenced
in this Letter Agreement, the Company rules, policies and procedures are not
incorporated by reference into this Letter Agreement, and they can be changed,
replaced or withdrawn at any time at the discretion of the Company upon notice
to you.


 


To indicate your acceptance of the Company’s offer, please sign and
date this Letter Agreement in the space provided below and return it to me.  A duplicate original is enclosed for your
records.  This Letter Agreement, along
with the agreement relating to proprietary rights between you and the Company,
set forth the terms of your employment with the Company and supersede any prior
representations or agreements, whether written or oral.  This Letter Agreement may not be modified or
amended except by a written agreement, signed by an officer of the Company and
by you.


 


Carl, we look forward to your favorable reply and to a productive and
exciting working relationship.


 


 


Sincerely,


FormFactor, Inc.


 


	
  /s/
  James A Prestridge

  	
   

  
	
  James
  A. Prestridge

  	
   

  
	
  Chairman
  of the Board of Directors

  	
   

  



 


 


ACCEPTED AND AGREED TO this
19th day of May, 2010


 


 


	
  /s/ G. Carl Everett, Jr.

  	
   

  
	
  G. Carl Everett, Jr.

  	
   

  



 


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