Document:

EXHIBIT 10.25

 

CF INDUSTRIES HOLDINGS, INC.

 

SECOND AMENDMENT TO CREDIT
AGREEMENT

 

This Second Amendment to Credit Agreement, dated as of
July 31, 2007 (this “Amendment”), is by and among CF INDUSTRIES HOLDINGS,
INC., a Delaware corporation (“Parent”), as a Loan Guarantor, the other Loan
Guarantors party hereto, CF INDUSTRIES, INC., a Delaware corporation (the “Borrower”),
the Lenders party hereto and JPMORGAN CHASE BANK, N.A., as Administrative
Agent.  All capitalized terms used but
not defined herein shall have the respective meanings given to such terms in
the Credit Agreement (as defined below), as amended hereby.

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, Parent, the other Loan Guarantors, the
Borrower, the Administrative Agent and the Lenders are parties to that certain
Credit Agreement dated as of August 16, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, the parties wish to amend certain provisions
of the Credit Agreement as provided herein.

 

NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree in its
entirety as follows:

 

1.             Amendments
to Credit Agreement.

 

1.1           The
definition of “Applicable Rate” set forth in Section 1.01 of the
Credit Agreement is hereby amended by amending and restating the pricing table
contained therein in its entirety as follows:

 

	
  Level

  	
   

  	
  Average
  Availability

  	
   

  	
   ABR Spread

  	
   

  	
   Eurodollar 
  Spread

  	
   

  	
  Commitment Fee
  Rate

  
	
  I

  	
   

  	
  3 $100,000,000

  	
   

  	
  0.00%

  	
   

  	
  1.25%

  	
   

  	
  0.25%

  
	
  II

  	
   

  	
  < $100,000,000

  	
   

  	
  0.25%

  	
   

  	
  1.50%

  	
   

  	
  0.25%

  

 

1.2           The
definitions of “Maturity Date” and “Permitted Capital Expenditure Amount” are
hereby amended and restated in their entirety as follows:

 

“Maturity Date”
means July 31, 2012 or any earlier date on which the Commitments are
reduced to zero or otherwise terminated pursuant to the terms hereof.

 

 

“Permitted
Capital Expenditure Amount” means as of any date of determination thereof
with respect to any Capital Expenditure, (a) if the average daily Cash
Availability Amount for the most recent month (or, if earlier, any prior month)
(the “triggering month”) is less than $135,000,000, then until such time as the
average daily Cash Availability Amount for three consecutive months is greater
than or equal to $135,000,000, $120,000,000 during the twelve-month period
commencing on the first day of the month next succeeding such triggering month
and, following the completion of such twelve-month period, during the trailing
twelve-month period ending on the last day of each month thereafter and (b) at
all other times, an unlimited amount.

 

1.3           The
definition of “Permitted Investments” set forth in Section 1.01 of
the Credit Agreement is hereby amended by amending and restating clause (g) thereof
in its entirety as follows:

 

(g)           investments in money market funds
that invest 95% of their assets  in investments
of the type described in the immediately preceding subsections (a), (b), (c),
(d), (e) and (f) above.

 

1.4           The
introductory clause of Section 5.01 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

 

The
Borrower will furnish to the Administrative Agent (for delivery to each Lender,
provided that items delivered pursuant to clauses (j) and (k) below
will be made available solely to the Administrative Agent as specified in such
clauses):

 

1.5           Clauses
(g), (h) and (i) of Section 5.01 of the
Credit Agreement are hereby amended and restated in their entirety as follows:

 

(g)           as soon as available but in any event
within fifteen (15) Business Days after the end of each calendar quarter (or, (i) if
either (x) the outstanding Borrowings exceed zero during any calendar
month or (y) the LC Exposure exceeds $5,000,000 during any calendar month,
within fifteen (15) Business Days after the end of such month and (ii) if
the Cash Availability Amount is less than $50,000,000, within five (5) Business
Days after the end of each calendar week), and at such other times as may be
reasonably requested by the Administrative Agent following the occurrence and
during the continuance of an Event of Default, as of the period then ended, a
Borrowing Base Certificate and supporting information in connection therewith,
together with any additional reports with respect to the Borrowing Base as the
Administrative Agent may reasonably request; provided, that the Borrower
shall only be required to use commercially reasonable efforts to provide
updated information with respect to Eligible Inventory more frequently than
monthly; provided, further, that the PP&E Component of the
Borrowing Base shall be updated (i) from time to time upon receipt of
periodic valuation updates received from the Administrative Agent’s asset
valuation experts, (ii) concurrent with the sale of any assets
constituting part of the PP&E Component, or (iii) upon notice from the
Administrative Agent, in the event that the value 

 

2

 

of such assets is
materially impaired, as determined in the Administrative Agent’s Permitted
Discretion;

 

(h)           as soon as available but in any event
within fifteen (15) Business Days after the end of each calendar quarter (or,
if the Revolving Credit Exposure of the Lenders exceeds zero during any
calendar month, within fifteen (15) Business Days after the end of such month)
and at such other times as may be reasonably requested by the Administrative
Agent, as of the period then ended, all delivered electronically in a text
formatted file (not in an Adobe *.pdf file):

 

(i)            a summary aging of the Borrower’s
Accounts, reconciled to the Borrowing Base Certificate delivered as of such
date prepared in a manner reasonably acceptable to the Administrative Agent,
together with a summary specifying the name, account number, and balance due
for each Account Debtor;

 

(ii)           a schedule detailing the Borrower’s
Inventory, in form satisfactory to the Administrative Agent, (1) by
location (showing Inventory in transit, any Inventory located with a third
party under any consignment, bailee arrangement, or warehouse agreement), by
product type, and by volume on hand, which Inventory shall be valued at the
lower of cost (determined on a first-in, first-out basis) or market and
adjusted for Reserves as the Administrative Agent has previously indicated to
the Borrower are deemed by the Administrative Agent to be appropriate, (2) including
a report of any Inventory adjustments in excess of $5,000,000 since the last
Inventory schedule, and (3) reconciled to the Borrowing Base Certificate
delivered as of such date;

 

(iii)          a worksheet of calculations prepared
by the Borrower to determine Eligible Accounts and Eligible Inventory, such
worksheets detailing the Accounts and Inventory excluded from Eligible Accounts
and Eligible Inventory and the ineligibility criteria serving as the basis for
such exclusion;

 

(iv)          a reconciliation of the Borrower’s
Accounts and Inventory between the amounts shown in the Borrower’s general
ledger and financial statements and the reports delivered pursuant to clauses (i) and
(ii) above; and

 

(v)           a reconciliation of the loan balance
per the Borrower’s general ledger to the loan balance under this Agreement;

 

(i)            as soon as available but in any
event within fifteen (15) Business Days after the end of each calendar quarter
(or, if the Revolving Credit Exposure of the Lenders exceeds zero during any
calendar month, within fifteen (15) Business Days after the end of such month)
and at such other times as may be reasonably requested by the Administrative
Agent, 

 

3

 

as of the period then
ended, a schedule and aging of the Borrower’s accounts payable, delivered
electronically in a text formatted file (not in an Adobe *.pdf file);

 

1.6           Clause
(o) of Section 6.01 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

(o)           Indebtedness of the Borrower and/or
the Parent in an aggregate principal amount not exceeding $500,000,000,
determined without duplication, and having terms satisfactory to the Administrative
Agent in its sole discretion, and extensions, renewals, refinancings and
replacements of such Indebtedness in accordance with clause (l) hereof;
which Indebtedness shall be unsecured except as permitted under Section 6.02(t);

 

1.7           Clause
(t) of Section 6.02 of the Credit Agreement is hereby
amended and restated in its entirety as follows:

 

(t)            to the extent approved by the
Administrative Agent in its sole discretion, Liens securing Indebtedness
permitted under Section 6.01(o) in an aggregate principal amount not
to exceed $250,000,000 at any time outstanding, which Liens, (i) to the
extent attaching to any Collateral, shall be subordinate to any Liens securing
the Obligations on terms acceptable to the Administrative Agent in its sole
discretion and (ii) to the extent attaching to any operating facility of
the Loan Parties in which any Collateral is from time to time located (and if
required by the Administrative Agent), shall be subject to an access agreement
with the Administrative Agent on terms reasonably acceptable to the
Administrative Agent;

 

1.8           The
first sentence of clause (d) of Section 9.02 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

 

The
Lenders hereby irrevocably authorize the Administrative Agent, at its option
and in its sole discretion, to release any Liens granted to the Administrative
Agent by the Loan Parties on any Collateral or any Loan Guarantee executed by
any Subsidiary Guarantor (i) upon the termination of the Aggregate
Commitment, payment and satisfaction in full in cash of all Obligations (other
than Unliquidated Obligations), the cash collateralization of all LC Exposure
in a manner reasonably satisfactory to each affected Issuing Bank and the cash
collateralization of all Swap Obligations constituting Unliquidated Obligations
in a manner reasonably satisfactory to each affected holder of Swap
Obligations, (ii) constituting a Subsidiary Guarantor or property being
sold, transferred or disposed of if the Loan Party disposing of such Subsidiary
Guarantor or property certifies to the Administrative Agent that the sale or
disposition is made in compliance with the terms of this Agreement (and the
Administrative Agent may rely conclusively on any such certificate, without
further inquiry), (iii) constituting property in which no Loan Party has
at any time during the term of this Agreement owned any interest, (iv) constituting
property leased to a Loan Party under a lease which has expired or been
terminated, (v) owned by or leased to any Loan Party which is subject to a
purchase money security interest or which is a Capital Lease Obligation, in
either case, permitted by Section 6.01, (vi) as required to
effect any 

 

4

 

sale or other disposition
of such Subsidiary Guarantor or Collateral in connection with any exercise of
remedies of the Administrative Agent and the Lenders pursuant to Article VII
or (vii) constituting the Donaldsonville Real Estate and/or any equipment
or fixtures located thereon.

 

1.9           Schedule
6.03 (Permitted Dispositions) to the Credit Agreement is hereby amended and
restated in its entirety by Schedule 6.03 attached hereto.

 

2.             No
Other Amendments or Waivers.

 

This Amendment, and the terms and provisions hereof,
constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes any and all prior or contemporaneous
amendments relating to the subject matter hereof.  Except for the amendments to the Credit
Agreement expressly set forth in Section 1 hereof, the Credit Agreement
shall remain unchanged and in full force and effect.  Except as expressly set forth herein, the
execution, delivery, and performance of this Amendment shall not operate as a
waiver of or as an amendment of, any right, power, or remedy of the
Administrative Agent or the Lenders under the Credit Agreement or any of the
other Loan Documents as in effect prior to the date hereof, nor constitute a
waiver of any provision of the Credit Agreement or any of the other Loan
Documents.  The agreements set forth
herein are limited to the specifics hereof, shall not apply with respect to any
facts or occurrences other than those on which the same are based, shall not
excuse future non-compliance under the Credit Agreement or other Loan Documents,
and shall not operate as a consent to any further or other matter under the
Loan Documents.

 

3.             Conditions
Precedent.  The effectiveness of this
Amendment is subject to the satisfaction of the following conditions precedent:

 

3.1           Execution
of Amendment.  Each Loan Party, the
Administrative Agent and each Lender shall have duly executed and delivered
this Amendment.

 

3.2           Secretary’s
Certificate.  The Loan Parties shall
have delivered to the Administrative Agent a certificate of the secretary or
assistant secretary of each Loan Party dated as of the Closing Date and
certifying that attached thereto are true and complete copies of resolutions
duly adopted by its board of directors (of equivalent body) authorizing the
execution, delivery and performance of this Amendment.

 

3.3           No
Existing Defaults.  After giving
effect to this Amendment, no Default or Event of Default shall exist as of the
date hereof.

 

3.4           Payment
of Fees, Costs and Expenses.  The
Borrower shall have paid to the Administrative Agent all accrued and unpaid
fees, costs and expenses to the extent then due and payable pursuant to Section 9.03
of the Credit Agreement and as otherwise separately agreed upon between the
Borrower and the Administrative Agent.

 

4.             Representations
and Warranties.  To induce the
Administrative Agent and the Lenders to enter into this Amendment, each Loan
Party represents and warrants to the Administrative Agent and the Lenders that,
as of the date hereof, both immediately before and after giving effect to this
Amendment:

 

5

 

4.1           The
execution, delivery and performance by each Loan Party of this Amendment (a) are
within its corporate, company or other organizational power and have been duly
authorized by all necessary corporate, company or other organizational action, (b) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect or waived and those the failure of
which to make or obtain could not reasonably be expected to have a Material
Adverse Effect, (c) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of any Loan Party or any
of its Subsidiaries or any order of any Governmental Authority, except as could
not reasonably be expected to have a Material Adverse Effect, (d) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its
assets, or give rise to a right thereunder to require any payment to be made by
any Loan Party or any of its Subsidiaries, except as could not reasonably be
expected to have a Material Adverse Effect, and (e) will not result in the
creation or imposition of any Lien on any asset of any Loan Party (other than
any Lien created under the Loan Documents) or any of its Subsidiaries.

 

4.2           Each
of the Credit Agreement as amended by this Amendment, and the other Loan Documents
when delivered under the Credit Agreement, are the legal, valid and binding
obligations of each Loan party, enforceable against each Loan Party in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity;

 

4.3           This
Amendment has been duly executed and delivered by such Loan Party;

 

4.4           After
giving effect to this Amendment, the representations and warranties contained
in the Credit Agreement and the other Loan Documents are true, complete and
accurate in all material respects as of the date hereof (except, in each case,
to the extent that such representatives and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be true
and correct in all material respects of such earlier date); and

 

4.5           After
giving effect to this Amendment, no Default or Event of Default exists; and

 

5.             Affirmation
of Guarantee.

 

By executing this Amendment, each Loan Guarantor
hereby acknowledges, consents and agrees that all of its obligations and
liabilities under the provisions of each Loan Document to which it is a party
remain in full force and effect, and that the execution and delivery of this
Amendment and any and all documents executed in connection therewith shall not
alter, amend, reduce or modify its obligations and liabilities under Article X
of the Credit Agreement or any of the other Loan Documents to which it is a
party.

 

6.             Miscellaneous.

 

6.1           Loan
Document.  This Amendment shall be a
Loan Document for all purposes.

 

6

 

6.2           Captions.  Section captions used in this Amendment
are for convenience only, and shall not affect the construction of this
Amendment.

 

6.3           GOVERNING
LAW.  THIS AMENDMENT SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.  WHENEVER POSSIBLE EACH PROVISION OF THIS
AMENDMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID
UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AMENDMENT SHALL BE
PROHIBITED BY OR INVALID UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO
THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER
OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS AMENDMENT.

 

6.4           Counterparts.  This Amendment may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Amendment.  Counterparts delivered by facsimile or other
electronic transmission shall be deemed originals for all purposes.

 

6.5           Successors
and Assigns.  This Amendment shall be
binding upon the Loan Parties, the Administrative Agent, the Lenders and their
respective successors and assigns, and shall inure to the sole benefit of the
Loan Parties, the Administrative Agent, the Lenders and the successors and
assigns of such parties.

 

6.6           References.  Upon the effectiveness of this Amendment,
each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”,
“hereof” or words of like import referring to the Credit Agreement shall mean
and refer to the Credit Agreement as amended by this Amendment.  Upon the effectiveness of this Amendment,
each reference in the Loan Documents to the “Credit Agreement”, “thereunder”, “therein”,
“thereof” or words of like import referring to the Credit Agreement shall mean
and refer to the Credit Agreement as amended by this Amendment.

 

6.7           Continued
Effectiveness.  Notwithstanding
anything contained herein, the terms of this Amendment are not intended to and
do not serve to effect a novation as to the Credit Agreement.  The Credit Agreement and each of the Loan
Documents, as amended hereby, shall remain in full force and effect.

 

[Signature pages follow]

 

7

 

CF INDUSTRIES
HOLDINGS, INC.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed
by their respective authorized officers as of the date first written above.

 

	
   

  	
  CF
  INDUSTRIES, INC., as the Borrower

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  RANDALL W. SELGRAD

  
	
   

  	
  Name:

  	
   

  	
  Randall
  W. Selgrad

  
	
   

  	
  Title:

  	
   

  	
  Treasurer

  
							

 

 

	
   

  	
  CF
  INDUSTRIES HOLDINGS, INC., as a Loan

  Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  RANDALL W. SELGRAD

  
	
   

  	
  Name:

  	
   

  	
  Randall
  W. Selgrad

  
	
   

  	
  Title:

  	
   

  	
  Treasurer

  
						

 

 

	
   

  	
  MATLOK
  FERTILIZER COMPANY, INC., as a 

  Loan Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  RANDALL W. SELGRAD

  
	
   

  	
  Name:

  	
   

  	
  Randall
  W. Selgrad

  
	
   

  	
  Title:

  	
   

  	
  Treasurer

  
						

 

 

	
   

  	
  PHOSACID
  SERVICE & SUPPLY, INC., as a 

  Loan Guarantor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  RANDALL W. SELGRAD

  
	
   

  	
  Name:

  	
   

  	
  Randall
  Selgrad

  
	
   

  	
  Title:

  	
   

  	
  Treasurer

  
						

 

 

	
   

  	
  JPMORGAN CHASE BANK,
  N.A., individually, 

  as Administrative Agent, Issuing Bank, Lender and 

  Swingline Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  PATRICK J. FRAVEL

  
	
   

  	
  Name:

  	
   

  	
  Patrick
  J. Fravel

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
						

 

	
   

  	
  AgStar Financial
  Services, PCA, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  TROY MOSTAERT

  
	
   

  	
  Name:

  	
   

  	
  Troy
  Mostaert

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
						

 

	
   

  	
  BANK OF AMERICA, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  DANIEL R. PETRIK

  
	
   

  	
  Name:

  	
   

  	
  Daniel
  R. Petrik

  
	
   

  	
  Title:

  	
   

  	
  Senior
  Vice President

  
						

 

	
   

  	
  CITICORP USA, INC., as
  a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  JAMES N. SIMPSON

  
	
   

  	
  Name:

  	
   

  	
  James
  N. Simpson

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
						

 

	
   

  	
  CoBank, ACB, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  S. RICHARD DILL

  
	
   

  	
  Name:

  	
   

  	
  S.
  Richard Dill

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
						

 

	
   

  	
  GENERAL ELECTRIC
  CAPITAL

  CORPORATION, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  ALISON P. TRAPP

  
	
   

  	
  Name:

  	
   

  	
  Alison
  P. Trapp

  
	
   

  	
  Title:

  	
   

  	
  Duly
  Authorized Signatory

  
						

 

	
   

  	
  Harris, N.A., as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  JOHN STICHNOTH

  
	
   

  	
  Name:

  	
   

  	
  John
  Stichnoth

  
	
   

  	
  Title:

  	
   

  	
  Vice
  President

  
						

 

 

	
   

  	
  LaSalle Bank, N.A., as
  a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  CHRISTOPHER L. COLLINS

  
	
   

  	
  Name:

  	
   

  	
  Christopher L. Collins

  
	
   

  	
  Title:

  	
   

  	
  First
  Vice President

  
						

 

	
   

  	
  NATIXIS, formerly known
  as Natexis Banques 

  Populaires, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  STEPHEN A. JENDRAS

  
	
   

  	
  Name:

  	
   

  	
  Stephen A. Jendras

  
	
   

  	
  Title:

  	
   

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  ALISA TRANI

  
	
   

  	
  Name:

  	
   

  	
  Alisa Trani

  
	
   

  	
  Title:

  	
   

  	
  Associate
  Director

  
							

 

	
   

  	
  RZB Finance LLC, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  CHRISTOPH HOEDL

  
	
   

  	
  Name:

  	
   

  	
  Christoph Hoedl

  
	
   

  	
  Title:

  	
   

  	
  Group
  Vice President

  
						

 

	
   

  	
  By:

  	
   

  	
  /s/
  SHIRLEY RITCH

  
	
   

  	
  Name:

  	
   

  	
  Shirley Ritch

  
	
   

  	
  Title:

  	
   

  	
  Assistant
  Vice President

  
						

 

	
   

  	
  Wells Fargo Bank, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  EDWARD L. COOPER III

  
	
   

  	
  Name:

  	
   

  	
  Edward L. Cooper III

  
	
   

  	
  Title:

  	
   

  	
  Senior
  Vice President

  
						

 

 

Schedule
6.03

 

Permitted
Dispositions

 

1.             Sale or other disposition of the Borrower’s former
terminal located in Hayes, Illinois, and related assets to any Person approved
by the Borrower’s board of directors.

 

2.             Transfer or other disposition of all or a portion of
the real property subject to that certain Option to Purchase Agreement, dated
as of August 28, 2002, by and between the Borrower and the Industrial
Development Board of the City of Donaldsonville, Louisiana, Inc., as
amended, supplemented or otherwise modified from time to time, to any Person
approved by the Borrower’s board of directors.

 

3.             Sale, transfer
or other disposition of real or personal property subject to the Pooling
Agreement in accordance with the terms thereof.

 

4.             Sale
or disposition of Borrower’s former terminal located at Port Huron, Michigan

 

5.             Sale
or disposition of Borrower’s former terminal at Joliet, Illinois

 

6.             Sale
or disposition of Borrower’s real property located in Long Grove, Illinois,
together with the buildings and other personal property located thereon

 

7.             Sale
or disposition of Borrower’s excess land at the Hardee Phosphate Complex

 

8.             Sale
or disposition of Borrower’s Bartow OperationsQuickLinks
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EXHIBIT 10.06    
    

 
 

FORMFACTOR, INC.    
    
    2002 EQUITY INCENTIVE PLAN    
    
    As Adopted April 18, 2002
  As Amended February 9, 2006, May 18, 2006 and December 13,
2007    

        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 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;

	(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 

2

 

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 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 

3

 

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. 

        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 

4

 

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. 

        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. 

5

 

        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 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 

6

 

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. 

        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 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.    Options granted under this Plan and subject to this Section 9 shall be
NQSOs. 

        9.2    Eligibility.    Options 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 option for 15,000 Shares (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 Grant.    Immediately following each Annual Meeting of stockholders, each Outside Director will
automatically be granted an option for 15,000 Shares (a "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 option 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. 

        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 option. 

7

 

	(a)
	Initial Grant. So long as the Outside Director continuously remains a director or a consultant of the Company, each Initial Grant will
vest as to 1/12th of the Shares at the end of each full succeeding month from Start Date. Each Initial Grant will be immediately exercisable subject to the Company's right to repurchase unvested
shares in the event the Outside Director does not remain a member of the Board or a consultant of the Company.

	(b)
	Succeeding Grant. So long as the Outside Director continuously remains a director or a consultant of the Company, each Succeeding Grant
will vest as to 1/12th of the Shares 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 stock
options, and all outstanding shares issued upon exercise of any stock options granted by the Company to the Outside Director prior to the grant of such Succeeding Grant have fully vested. Each
Succeeding Grant will be immediately exercisable subject to the Company's right to repurchase unvested shares in the event the Outside Director does not remain a member of the Board or a consultant of
the Company.

	(c)
	Pro-Rated Succeeding Grant. Any Succeeding Grant that has been pro-rated is referred to in this Plan as a
"Pro-Rated Succeeding Grant". Notwithstanding anything in this Plan to the contrary, so long as the Outside Director continuously remains a
director or a consultant of the Company, each Pro-Rated Succeeding Grant will vest as to 1/12th of the Shares that would have been subject to a full Succeeding Grant (i.e.,
15,000 shares) at the end of each full succeeding month from the later of:

	(i)
	the
Start Date of such Pro-Rated Succeeding Grant, or

	(ii)
	the
date when all outstanding stock options, and all outstanding shares issued upon exercise of any stock options granted by the Company to the Outside Director prior
to the grant of such Pro-Rated Succeeding Grant have fully vested to the end of the full calendar month in which the twelve month anniversary of the Company's annual meeting of
stockholders, immediately after which such Outside Director obtained such Pro-Rated Succeeding Grant, provided, that in the last month of
the Pro-Rated Succeeding Grant's vesting term, any shares remaining shall vest. Each Succeeding Grant will be immediately exercisable subject to the Company's right to repurchase unvested
shares in the event the Outside Director does not remain a member of the Board or a consultant of the Company. 

Notwithstanding
any provision to the contrary, in the event of a Corporate Transaction described in Section 18.1, the vesting of all options granted to Outside Directors pursuant to this
Section 9 will accelerate and such options will become exercisable in full prior to the consummation of such event at such times and on such conditions as the Committee determines, and 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 

8

 

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. 

        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. 

9

 

        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 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 

10

 

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 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. 

11

 

        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 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. 

12

 

        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. 

        "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 

13

 

	(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, 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;

	(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. 

14

 

        "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 or 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"). 

        "Unvested Shares" means "Unvested Shares" as defined in the Award Agreement. 

        "Vested Shares" means "Vested Shares" as defined in the Award Agreement. 

15

  
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

 
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. 

	 
 SIGNATURE OF OPTIONEE'S SPOUSE	 	Date:	 

	

 
 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. 

	 
 SIGNATURE OF OPTIONEE'S SPOUSE	 	Date:	 

	

 
 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)	
 	

 

 
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 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

 

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

 

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

 

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

  
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. 

	 
 SIGNATURE OF OPTIONEE'S SPOUSE	 	Date:	 

	

 
 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

 

 

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

  
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. 

	 
 SIGNATURE OF OPTIONEE'S SPOUSE	 	Date:	 

	

 
 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. 

	 
 SIGNATURE OF OPTIONEE'S SPOUSE	 	Date:	 

	

 
 SPOUSE'S NAME—TYPED OR PRINTED	
 	

 	

 
	

 
 OPTIONEE'S NAME—TYPED OR PRINTED	
 	

 	

 

 

 

[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]

1

 
 
 

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 thereafter if the vesting date is not a
market trading day) 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 Securities and 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 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. 

2

 

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. 

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 

3

 

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. 

4

QuickLinks

EXHIBIT 10.06

FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN As Adopted April 18, 2002 As Amended February 9, 2006, May 18, 2006 and December 13, 2007

EXHIBIT A STOCK OPTION AGREEMENT TERMS AND CONDITIONS

EXHIBIT 1 SPOUSAL CONSENT

EXHIBIT C FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN

EXHIBIT A STOCK OPTION AGREEMENT TERMS AND CONDITIONS

EXHIBIT 1 SPOUSAL CONSENT

EXHIBIT C FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN

EXHIBIT A STOCK OPTION AGREEMENT TERMS AND CONDITIONS

EXHIBIT 1 SPOUSAL CONSENT

EXHIBIT C FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN

EXHIBIT A STOCK OPTION AGREEMENT TERMS AND CONDITIONS

EXHIBIT C FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN

EXHIBIT A STOCK OPTION AGREEMENT TERMS AND CONDITIONS

EXHIBIT 1 SPOUSAL CONSENT

2002 EQUITY INCENTIVE PLAN RESTRICTED STOCK UNIT AGREEMENT

FORMFACTOR, INC. 2002 EQUITY INCENTIVE PLAN RESTRICTED STOCK UNIT AGREEMENT TERMS AND CONDITIONS

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