Exhibit 10.1


 


Credence Systems Corporation


2008 Executive Incentive Plan


 


I. INTRODUCTION


 


a. The Objective of the 2008 Executive Incentive Plan (the “Plan”) is
to (i) enhance stockholder value by promoting strong linkages between
employee contributions and company performance; (ii) support achievement
of the business objectives of Credence Systems Corporation (the “Company”); and
(iii) promote retention of participating employees of the Company.


 


b. Participants: This plan
applies solely to the President & CEO and the senior executives
reporting directly to the CEO of Credence Systems Corporation.


 


c. Effective Date: This
Plan is effective for the fiscal year 2008, beginning November 4, 2007
through November 1, 2008.  This Plan
is limited in time and expires automatically on November 1, 2008.  All benefits under this Plan are voluntary
benefits.  Participation in this Plan
during fiscal year 2008 does not convey any entitlement to participate in this
or future plans or to the same or similar bonus payment benefits.


 


d. Changes in the Plan: The
Company presently has no plans to change the Plan during the fiscal year.
However, the Plan is a voluntary benefit provided by the Company and by virtue
of the fact that bonuses are not a contractual entitlement and are paid at the
sole discretion of the Company, the Company reserves the right to modify the
Plan, in total or in part, at any time. 
Any such change must be in writing and approved by the Board of
Directors.  The Board of Directors
reserve the right to interpret the Plan document as needed and such
interpretations will be final, conclusive and binding on all persons, and will
be given the maximum deference permitted by law.


 


e. Entire Agreement: This
Plan is the entire agreement between the Company and the employee regarding the
subject matter of this Plan and supersedes all prior bonus or commission
incentive plans, whether with Credence or any subsidiary or affiliate thereof,
or any written or verbal representations regarding the subject matter of this
Plan.


 


 


II. ELIGIBILITY AND INCENTIVE PLAN ELEMENTS


 


a. Eligibility: The
participants are eligible for the incentive payout if they meet the following
requirements:


 


·                  Except
as otherwise explicitly set forth in the Participant’s Incentive Target
Percentage Schedule (as defined in Section II.c below), are not currently
on a sales incentive or commission plan or any other significant form of
variable compensation (such as a services bonus plan)


 


·                  Have
a performance rating of Meets Expectations or above 


 


·                  Do
not have a performance rating of Needs Development or lower at the time of
calculation 


 


·                  Are
not on a performance improvement plan at the time of calculation 


 


·                  Have
not received a written notice of warning or other disciplinary action during
the year that remains in effect at the time of calculation 


 


AND


 


The participant must be employed in an incentive-eligible position on
or before the first working day of the last fiscal quarter of fiscal year 2008
and must be employed by the Company on the day the bonus is paid to be eligible
for a 2008 incentive payment. Participants may expect to receive their 2008
incentive payment on or about the end of January 2009.  In no event will any individual accrue any
right or entitlement to any incentive under this Plan unless that individual is


 


 

















 


employed by the Company on the day the bonus is paid.  Any exception to the above must be approved in
writing by the Company’s Compensation Committee.


 


b. Annual Earnings through
the end of the fiscal year represents the basis for the incentive
calculation.  Nothing in the Plan, or
arising as a result of a Participant’s participation in the Plan, will prevent
the Company from changing a Participant’s annual base salary at any time based
on such factors as the Company in its sole discretion determines appropriate.


 


c. Incentive Target Percentage is
a percentage level of base salary determined by the employee’s position. These
targets will be weighted by company and individual performance, and will be set
forth in an Incentive Target Percentage Schedule for each Participant in
substantially the form attached hereto as Schedule A.


 


d. Individual Performance Factor is
based upon the manager’s evaluation of performance and contribution for the
fiscal year.  As a Factor to the incentive
target for the position, this factor can range from 0 to 150%.


 


e. Credence Systems Corporation
Performance Factor is based upon the Company achieving an
established worldwide revenue target and a worldwide operating income target
per the 2008 operating plan approved by the Board of Directors of the Company.
The applicable targets for fiscal year 2008 can be amended by the Board of
Directors at any time during the fiscal year. Notwithstanding anything to the
contrary contained herein, the Board of Directors has the discretion to
determine to pay less than the full amount (including to pay zero percent) of
the payout to which any Participant would otherwise be entitled, which
determination will be based upon such factors as the Board of Directors
determines appropriate (including without limitation as a result of the Company’s
or a Participant’s failing to achieve one or more objectives with respect to
the fiscal year).  When the Revenue and Operating
Income percentages fall between the stated percentages on the matrix, the
Performance Factor will be determined using a straight-line interpolation
approach. If the Company exceeds 120% of Revenue and/or Operating Income, the
Board of Directors, at its sole discretion, will determine what, if any,
additional amounts may be paid to Plan participants.  The Company must exceed 80% of both the
revenue and operating income target for any incentive payment.  The Company Performance factor may be
modified at the sole discretion of the Board of Directors in the event of an extraordinary
or exceptional circumstance.


 


 


Company Performance Factor


 




	
  Company

  Revenue

  Target

  	
   

  	
   

  	
   

  	
  Company

  Operating

  Income

  Target

  	
   

  	
   

  
	
  % of Target

  	
   

  	
  Payout

  	
   

  	
  % of Target

  	
   

  	
  Payout

  
	
  120%

  	
   

  	
  100%

  	
   

  	
  120%

  	
   

  	
  100%

  
	
  110%

  	
   

  	
  90%

  	
   

  	
  110%

  	
   

  	
  90%

  
	
  105%

  	
   

  	
  85%

  	
   

  	
  105%

  	
   

  	
  85%

  
	
  100%

  	
   

  	
  80%

  	
   

  	
  100%

  	
   

  	
  80%

  
	
  95%

  	
   

  	
  75%

  	
   

  	
  95%

  	
   

  	
  75%

  
	
  90%

  	
   

  	
  50%

  	
   

  	
  90%

  	
   

  	
  50%

  
	
  85%

  	
   

  	
  25%

  	
   

  	
  85%

  	
   

  	
  25%

  
	
  80%

  	
   

  	
  0%

  	
   

  	
  80%

  	
   

  	
  0%

  






 


 

















 


Example:                                         Credence Systems Corporation
Performance


Actual
Revenue is 110% of Goal


Actual
Operating Income is 120% of Goal


 


Credence Systems Corporation Performance Factor =
..5(90%) + .5(100%) = 95%


 


 


f. Transfers and Terminations: Any
employee who is a participant in the Plan and who transfers to a new position
not governed by this Plan will be eligible on a pro-rata basis for the
applicable period and paid as defined by the Plan. Employees who transfer into
the Plan from another plan will be subject to proration as well, and
consequently will be eligible to receive an incentive payment prorated for the
time they participate in this Plan during fiscal year 2008. Payments from the
Plan are subject to reduction by advances, unearned commission advances, draws
or prorations and appropriate withholdings. Any exceptions to the Plan must be
in writing and approved by the Board of Directors.


 


A participant must be employed as of the day the bonus is paid to be
eligible for any incentive payment. If an employee terminates prior to the date
the bonus is paid, the employee will not be eligible for such incentive
payment.


 


 


III. PRACTICES AND PROCEDURES


 


a. Procedure:


 


·                  A
copy of the Plan will be made available to each participant. 


 


·                  All
incentive payments will be made after all required or elected withholdings have
been deducted. 


 


b. Governing
Law: This Plan is governed by the law of California and the parties
hereby submit to the exclusive jurisdiction of the County of Santa Clara,
California courts.


 


 

















 


SCHEDULE
A


 


INCENTIVE TARGET PERCENTAGE SCHEDULE


 


 


	
  Position

  	
   

  	
  Target

  	
   

  	
  Company 

  Performance

  	
   

  	
  Individual 

  Performance

  	
   

  
	
  SVP, WW Field Operations

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  SVP, R&D

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  VP, Business Operations

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  CFO

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  SVP, Manufacturing Ops

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  President & CEO

  	
   

  	
  1.00

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  SVP & General Counsel

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2

  	
   

  
	
  VP, Human Resources

  	
   

  	
  0.60

  	
   

  	
  0.8

  	
   

  	
  0.2