<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarter Ended March 31, 1999
or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to .
--------- ---------
Commission File Number 0-11370
CERPROBE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 86-0312814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1150 NORTH FIESTA BOULEVARD, GILBERT, ARIZONA 85233
(Address of principal executive offices) (Zip Code)
(602) 333-1500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of May 4, 1999, there were 8,144,879 shares of the registrant's Common
Stock outstanding.
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CERPROBE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998.......................... 3
Condensed Consolidated Statements of Operations -
Three months Ended March 31, 1999 and 1998.................... 4
Condensed Consolidated Statements of Cash flows -
Three months Ended March 31, 1999 and 1998.................... 5
Notes to Condensed Consolidated Financial Statements.......... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS........................... 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................................. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 14
SIGNATURE .............................................................. 16
</TABLE>
2
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CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
Assets 1999 1998
----------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 6,851,725 $ 4,753,696
Short-term investment securities 13,032,153 14,305,400
Accounts receivable, net of allowance of $337,364
in 1999 and $333,364 in 1998 9,096,054 8,951,680
Inventories, net 5,196,764 5,303,631
Accrued interest receivable 46,399 102,093
Prepaid expenses 1,208,411 869,382
Income taxes receivable 1,144,871 714,811
Deferred tax asset 566,662 446,092
Net assets of discontinued operations 907,978 1,481,903
------------ ------------
Total current assets 38,051,017 36,928,688
Property, plant, and equipment, net 24,003,397 22,698,509
Intangible assets, net 3,188,567 3,050,460
Other assets 1,186,347 1,007,917
------------ ------------
Total assets $ 66,429,328 $ 63,685,574
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,909,187 $ 2,534,997
Accrued expenses 2,805,855 3,075,894
Current portion of notes payable 1,102,157 138,985
Current portion of capital lease obligations 654,970 660,192
------------ ------------
Total current liabilities 7,472,169 6,410,068
Notes payable, less current portion 2,627,059 731,555
Capital lease obligations, less current portion 2,189,607 2,472,563
Other liabilities 4,546 7,073
------------ ------------
Total liabilities 12,293,381 9,621,259
------------ ------------
Minority interest 579,519 590,465
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.05 par value; authorized 10,000,000
shares; issued and outstanding none -- --
Common stock, $.05 par value; authorized 25,000,000
shares; issued 8,144,879 and outstanding 7,658,726 shares at
March 31, 1999 and issued 8,131,279 and outstanding 7,645,126
shares at December 31, 1998 407,244 406,564
Additional paid-in capital 55,415,245 55,271,200
Retained earnings 3,650,767 3,505,734
Accumulated other comprehensive income:
Foreign currency translation (395,311) (188,131)
------------ ------------
59,077,945 58,995,367
Treasury stock, at cost, 486,153 shares at March 31, 1999
and December 31, 1998 (5,521,517) (5,521,517)
------------ ------------
Total stockholders' equity 53,556,428 53,473,850
------------ ------------
Total liabilities and stockholders' equity $ 66,429,328 $ 63,685,574
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 15,605,894 $ 22,952,817
Costs of goods sold 10,045,546 13,074,050
------------ ------------
Gross profit 5,560,348 9,878,767
------------ ------------
Expenses:
Selling, general, and administrative 4,427,431 4,756,010
Engineering and product development 798,264 678,205
------------ ------------
Total expenses 5,225,695 5,434,215
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Operating income 334,653 4,444,552
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Other income (expense):
Interest income 229,410 284,202
Interest expense (90,486) (60,933)
Other, net (39,631) (4,257)
------------ ------------
Total other income 99,293 219,012
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Income from continuing operations before
minority interest and income taxes 433,946 4,663,564
Minority interest (66,302) 17,730
------------ ------------
Income from continuing operations before income taxes 367,644 4,681,294
Income taxes (217,289) (1,933,233)
------------ ------------
Income from continuing operations 150,355 2,748,061
Discontinued operations:
Loss from operations of SVTR, Inc., net of taxes (5,322) (402,631)
------------ ------------
Net income $ 145,033 $ 2,345,430
============ ============
Net income (loss) per common share:
Basic:
From continuing operations $ 0.02 $ 0.34
From discontinued operations (0.00) (0.05)
------------ ------------
Net income per common share $ 0.02 $ 0.29
============ ============
Weighted average number of common
shares outstanding 7,655,304 8,101,001
============ ============
Diluted:
From continuing operations $ 0.02 $ 0.33
From discontinued operations (0.00) (0.05)
------------ ------------
Net income per common share $ 0.02 $ 0.28
============ ============
Weighted average number of common and
common equivalent shares outstanding 8,049,086 8,482,243
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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CERPROBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income from continuing operations $ 150,355 $ 2,748,061
Adjustments to reconcile net income from continuing operations
to net cash provided by continuing operations:
Depreciation and amortization 1,355,681 1,067,059
Loss on sale of equipment -- 107,186
Tax benefit from exercise of nonqualified stock options -- 9,000
Deferred income taxes (250,178) (89,994)
Provision for losses on accounts receivable 4,000 6,000
Provision for obsolete inventory 180,000 40,000
Income (loss) applicable to minority interest 66,302 (17,730)
Changes in working capital of continuing operations, net of
acquisitions:
Accounts receivable (148,374) (2,487,871)
Inventories (73,133) (964,949)
Prepaid expenses and other assets (340,741) (344,261)
Income taxes receivable (430,060) 471,046
Accounts payable and accrued expenses 104,151 482,679
Accrued income taxes -- 466,080
Other liabilities (2,527) (1,857)
----------- -----------
Net cash provided by continuing operations 615,476 1,490,449
----------- -----------
Net cash provided by (used in) discontinued operations 568,603 (208,545)
----------- -----------
Net cash provided by operating activities 1,184,079 1,281,904
----------- -----------
Cash flows from investing activities:
Purchase of property, plant, and equipment (2,798,676) (2,625,400)
Purchase of investment securities 1,273,247 1,659,193
Investment in CRPB Investors, L.L.C. 8,584 35,965
----------- -----------
Net cash used in investing activities (1,516,845) (930,242)
----------- -----------
Cash flows from financing activities:
Issuance of notes payable and capital lease obligations 2,570,498 601,665
Expenses from issuance of common stock -- (176,436)
Net proceeds from exercise of stock options 144,725 46,000
----------- -----------
Net cash provided by financing activities 2,715,223 471,229
----------- -----------
Effect of exchange rates on cash (284,428) (6,139)
----------- -----------
Net increase in cash 2,098,029 816,752
Cash, beginning of period 4,753,696 2,715,490
----------- -----------
Cash, end of period $ 6,851,725 $ 3,532,242
=========== ===========
Supplemental disclosures of cash flow information from continuing operations:
Interest paid $ 90,486 $ 60,933
----------- -----------
Income taxes paid $ 99,000 $ 322,500
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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CERPROBE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PREPARATION
The accompanying condensed consolidated financial statements as of March
31, 1999 and for the three months ended March 31, 1999 and 1998, are
unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of financial position and operating results for
the interim periods. The condensed consolidated balance sheet as of
December 31, 1998 was derived from the audited consolidated financial
statements at such date.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the accompanying
consolidated financial statements and notes do not include all
disclosures required by generally accepted accounting principles for
complete financial statements. Accordingly, these statements should be
read in conjunction with Cerprobe Corporation's (the "Company") annual
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
Results of operations for interim periods are not necessarily indicative
of those to be achieved for full fiscal years.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
Cerprobe Corporation and its subsidiaries: Cerprobe Europe Limited,
Cerprobe Europe S.A.S., Cerprobe Asia Holdings Pte Ltd, Cerprobe
Interconnect Solutions, Inc. ("CIS"), and SVTR, Inc. ("SVTR"). All
significant intercompany transactions have been eliminated in
consolidation.
Cerprobe Asia Holdings Pte Ltd is a 60% owner of Cerprobe Asia Pte Ltd;
the balance is owned by Asian investors. Cerprobe Asia Pte Ltd's wholly
owned subsidiaries, Cerprobe Singapore Pte Ltd and Cerprobe Taiwan Co.,
Ltd., operate full service sales and manufacturing plants.
In the third quarter of 1998, the Company discontinued operations of
SVTR, a company that refurbished, reconfigured, and serviced wafer
probing equipment. See Note 4.
On September 30, 1998, the Company acquired France based Cerprobe Europe
S.A.S. The Company designs, manufactures, and distributes probe cards at
its manufacturing plant near Marseilles.
Presently, the Company is in the process of establishing a full service
facility in Yokohama, Japan.
(2) COMMITMENTS AND CONTINGENCIES
In October 1998, the Company filed an action against the former
President, Director, and shareholders of Silicon Valley Test & Repair,
Inc., which was acquired by the Company, in January 1997. The suit seeks
rescission of the acquisition and/or monetary damages arising from
failure of the defendants to disclose material facts regarding the
origins of certain software
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necessary for SVTR, Inc.'s business. In February 1999, the defendants
filed a counter claim against the Company alleging conversion,
interference with contractual relations, unfair business practices,
breach of contract, and specific performance allegedly arising from the
Company's actions to preclude the defendants from selling the Company
stock received by defendants as part of the purchase price of Silicon
Valley Test & Repair, Inc.; the Company seeks to recover this stock
through its claims for rescission. In March 1999, the Company and SVTR
filed an amended complaint. The defendants have filed a motion to dismiss
the amended complaint for which oral argument is scheduled mid May 1999.
It is not anticipated that this suit will have a material adverse impact
on the Company's financial condition or results of operations.
In April, 1999 the Company received a Notice Letter from the United
States Environmental Protection Agency ("EPA") indicating that the EPA
considered the Company to be potentially responsible for costs associated
with the remediation of the Indian Bend Wash Superfund Site ("Superfund
Site") in Tempe, Arizona. The EPA claims that such liability arose out of
the Company's operations at its former facility located at 600 S.
Rockford Drive, Tempe, Arizona. The Company has been named with four
other potentially responsible parties. The EPA alleges that it has
incurred $11 million in costs to date for investigation and remediation
at the Superfund Site and, pursuant to a Record of Decision issued by the
EPA in September 1998, will require that additional remediation be
undertaken by the potentially responsible parties. The EPA has requested
that the named parties provide an offer to perform the remediation and
pay the EPA's past costs on or before May 31, 1999 and that if no such
offer is made, the EPA shall consider pursuing other remedies, including
litigation. The Company does not believe that it in any way caused or
contributed to the contamination at the Superfund Site and therefore does
not believe there is any basis upon which to hold the Company liable for
costs associated with the Superfund Site. Despite the Company's belief,
given the uncertain nature of litigation, the Company can not guarantee a
favorable outcome. The Company will vigorously pursue a defense of the
matter.
The Company is involved in other legal actions arising in the ordinary
course of business. In the opinion of management, the disposition of
these actions would not have a material adverse effect on the Company.
(3) COMPREHENSIVE INCOME
Comprehensive Income encompasses net income and "other comprehensive
income", which includes all other non-owner transactions and events which
change stockholders' equity. The Company recognized comprehensive income
(loss) for the three months ended March 31, 1999 and 1998 as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1999 1998
--------- -----------
<S> <C> <C>
Net income $ 145,033 $ 2,345,430
Other comprehensive loss, net of tax:
Foreign currency translation
adjustment (345,300) (10,233)
Tax benefit from foreign currency
translation 138,120 4,093
--------- -----------
Net other comprehensive loss (207,180) (6,140)
--------- -----------
Comprehensive income (loss) $ (62,147) $ 2,339,290
========= ===========
</TABLE>
7
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(4) DISCONTINUED OPERATIONS
In the third quarter of 1998, the Company discontinued operations of
SVTR, a wafer prober refurbishing and upgrading subsidiary. The
discontinuance resulted from questions regarding the origins of certain
software necessary for SVTR's business. In March 1999, Cerprobe sold
certain SVTR assets for $500,000. No gain of loss was recognized on the
sale.
SVTR has been accounted for as a discontinued operation and, accordingly,
its results of operations and financial position are segregated for all
periods presented in the accompanying consolidated financial statements.
Net sales, related losses, and income taxes associated with the
discontinued operations are as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
-------- ------------
<S> <C> <C>
Net sales $ -- $ 1,637,520
------- -----------
Loss from operations $(8,869) $ (754,827)
Income tax benefit 3,547 352,196
------- -----------
Loss from operations, net $(5,322) $ (402,631)
======= ===========
</TABLE>
The effective tax rate used in calculating the income tax benefit from
discontinued operations is approximately the same as the Company's
effective tax rate for continuing operations.
The net assets of SVTR, as reclassified in the accompanying consolidated
balance sheets, include the following:
<TABLE>
<CAPTION>
March 31, December 31,
------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Current assets $ 2,756,784 $ 3,445,737
Other assets 63,607 46,865
Current liabilities (1,897,457) (1,990,852)
Long-term debt (14,956) (19,847)
----------- -----------
$ 907,978 $ 1,481,903
=========== ===========
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Selected Consolidated Financial Data and the Consolidated Financial
Statements and related Notes thereto of the Company appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
OVERVIEW
Cerprobe offers comprehensive solutions for semiconductor test
integration and is a leading manufacturer of probe cards, ATE interface
assemblies, and ATE test boards. The Company's products address critical
functions to assure IC quality, reduce manufacturing costs, improve the accuracy
of manufacturing yield data, and identify repairable memory IC's.
The semiconductor industry is characterized as cyclical, with capacity
boom cycles followed by bust cycles that create tremendous pricing pressures.
For the past several years, the IC market has been a high volume, high growth
commodity market characterized by rapid technological change. Cerprobe has
benefited from this and has grown substantially over the last five years as the
Company has increased its market share. Net sales have increased from $14.3
million for 1994 to $76.2 million for 1998, representing an average annualized
growth rate of approximately 52%. Similarly, the Company's net income has
increased from $1.2 million for 1994 to $6.2 million for 1998 (before a one-time
charge for purchased research and development of $1.6 million, resulting in a
tax benefit of $627,000 and the loss from discontinued operations of SVTR of
$5.7 million, net of taxes, which together reduced net income from continuing
operations by $6.7 million). Until 1995, substantially all of the Company's
growth was from the existing probe card product line.
Beginning with the April 1995 acquisition of Fresh Test Technology
Corporation ("Fresh Test"), acquisitions have contributed to the Company's
growth. Fresh Test expanded the Company's product line to include ATE interface
assemblies. The Company acquired Cerprobe Interconnect Solutions ("CIS") in
December 1996, which enabled the Company to offer ATE test boards. In May 1997,
the Company established an international joint development agreement with
Mitsubishi Materials Corporation to develop next generation probe card
technology based upon the Company's proprietary P4(TM) technology. In September
1998, the Company acquired France based Cerprobe Europe S.A.S. which expanded
the Company's presence in the European market. In November 1998, the Company
acquired an exclusive license to design, manufacture, and distribute the
Vertical integrated Probe (ViProbe(R)) products worldwide, except Europe.
The Company believes that it is positioned to continue its growth as a
result of its strength in designing, producing, and delivering, on a timely and
cost-efficient basis, a broad range of custom or customized, high quality test
products and services for semiconductor manufacturers in North America, Europe,
and Asia. Presently the semiconductor industry is in a downturn driven by excess
capacity pricing pressures and the economic crisis in Asia, therefore, there can
be no assurance that the Company can continue the growth exhibited the past five
years. The Company maintains regional full service facilities in Arizona,
California, and Texas as well as sales offices in Colorado, Florida,
Massachusetts, and Oregon to service the U.S. market for its products and
services. The Company continues to expand into international markets, including
Europe and Asia. The Company maintains full service facilities in Scotland and
France and a sales office in Germany to serve the European market. The Company
also maintains full service facilities in Singapore and Taiwan to serve the
Southeast Asian market. Additionally, the company is in the process of
establishing a full service facility in Japan. Each of the Company's facilities
is located in proximity to semiconductor manufacturing centers.
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RESULTS OF OPERATIONS
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net Sales. Net sales for the three months ended March 31, 1999 were $15.6
million, a decrease of 32.0% over net sales of $23.0 million for the three
months ended March 31, 1998. The decrease was primarily a result of the softness
in the worldwide demand for semiconductors.
Gross Profit. The gross profit for the three months ended March 31, 1999
was $5.6 million, a decrease of 43.7% from the gross profit of $9.9 million for
the three months ended March 31, 1998. Gross margin decreased from 43.0% in the
three months ended March 31, 1998, to 35.6% in 1999. The decrease in gross
margin is a result of the Company's production infrastructure capable of higher
production run rates, resulting in over capacity and under-absorption of
overhead and efforts to increase or at least maintain market share resulting in
aggressive pricing, particularly to the Company's largest customers.
Selling, General, and Administrative. Selling, general, and administrative
expenses were $4.4 million, or 28.4% of net sales, for the three months ended
March 31, 1999, compared to $4.8 million, or 20.7% of net sales, for the three
months ended March 31, 1998. This represents a decrease of $328,579, or 6.9%,
primarily as a result of cost containment during the softness in the worldwide
demand for semiconductors as well as the reversal of accrued bonuses from the
Company's incentive compensation program offset by increases in depreciation
related to the Company's Enterprise Resource Planning ("ERP") system and
increases in insurance expense.
Engineering and Product Development. Engineering and product development
expenses were $798,264, or 5.1% of net sales, for the three months ended March
31, 1999, an increase of 17.7% over $678,205, or 3.0% of net sales, for the
three months ended March 31, 1998. The Company has added substantial resources
to its product development team to address emerging and next generation probing
requirements for grid array, multi-chip testing, very high frequency IC's, and
those that have pad pitch architecture of less than 60 microns.
Interest Income. Interest income was $229,410 for the three months ended
March 31, 1999, compared to $284,202 for the three months ended March 31, 1998.
This decrease is attributable to the investment of a lower average cash balance.
Minority Interest. The minority interest share of income of $66,302 for the
three months ended March 31, 1999 and share of loss of $17,730 for the three
months ended March 31, 1998 represented the Company's joint venture partners'
share of income (loss) from the Company's Asian operations (40%) and the Upsys
Joint Venture, which has terminated.
Income Taxes. Income taxes decreased to $217,289, which represented an
effective tax rate of 59.1% for the three months ended March 31, 1999, as
compared to $1.9 million, which represented an effective tax rate of 41.3% for
the three months ended March 31, 1998. The increase in the effective tax rate is
due primarily to a change in the foreign tax rate of Cerprobe Europe, S.A.S.
Discontinued Operations. The Company recorded $5,322 and $402,631 in losses
from discontinued operations from the disposal of its wafer prober refurbishing
and upgrading subsidiary, SVTR, Inc. for the three months ended March 31, 1999,
and 1998, respectively. The Company
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disposed of the operations of SVTR through sale of equipment, inventory, and
technology in March 1999.
Net Income. Net income for the three months ended March 31, 1999 was
$145,033 or .9% of sales, compared to the income of $2.3 million or 10.2% of
sales for the three months ended March 31, 1998. This decrease is primarily a
result of slower sales in the later part of 1998 and beginning of 1999 due to
the softness in the worldwide demand for semiconductors. The Company's
production infrastructure was capable of higher production run rates, resulting
in over capacity and under-absorption of overhead.
LIQUIDITY AND CAPITAL RESOURCES
Cerprobe has financed its operations and capital requirements primarily
through cash flows from operations, equipment lease financing arrangements, and
sales of equity securities. At March 31, 1999, cash and short-term investment
securities were $19.9 million compared to $19.1 million at December 31, 1998.
Cerprobe generated $1.2 million in cash flows from operating activities for
the three months ended March 31, 1999. Accounts receivable increased by $144,374
net of allowance, or 1.6%, to $9.1 million at March 31, 1999. Inventories
decreased $106,867 net of reserve, or 2.0%, over December 31, 1998, to $5.2
million at March 31, 1999. Accounts payable and accrued expenses increased
$104,151, or 1.9%, to $5.7 million at March 31, 1999.
Working capital decreased $60,228, or .2%, to $30.6 million at March 31,
1999. The current ratio decreased from 5.8, at December 31, 1998, to 5.1, at
March 31, 1999. This decrease was due primarily to the increase in current
portion long-term obligations from financing the Company's recently implemented
Oracle based ERP system.
Cerprobe increased its investment in property, plant, and equipment during
the three months ended March 31, 1999, by $1.3 million, or 5.7%, to $24.0
million. This increase was attributable to the build out of the additional
facility located near the Company's worldwide headquarters and additional costs
associated with the Company's recently implemented Oracle based ERP system.
These capital expenditures were funded primarily from capital leases, cash flows
from operations, and net proceeds from the secondary offering.
Cerprobe believes that its working capital, together with the loan and
lease commitments described above and anticipated cash flows from operations,
will provide adequate sources to fund operations for at least the next 12
months. Cerprobe anticipates that any additional cash requirements for
operations or capital expenditures will be financed through cash flows from
operations, by borrowing from Cerprobe's primary lender, by lease financing
arrangements, or by sales of equity securities. There can be no assurance that
any such financing will be available on acceptable terms and that any additional
equity financing, if available, would not result in additional dilution to
existing investors.
YEAR 2000 COSTS
The Company is in the process of performing a comprehensive review of its
Year 2000 issues and has completed its review of internal systems (information
technology ("IT") and non-IT). Most of the Company's application software
programs have been replaced with Oracle applications which are Year 2000
compliant. The Oracle project budget, including software, hardware, and
implementation was
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approximately $3.5 million. The Company estimates the status of progress on
these internal systems as of March 31, 1999 was as follows:
<TABLE>
<S> <C>
IT Systems 100%
Non-It Systems 80%
</TABLE>
The Company presently believes that with modifications and updates to
existing software and the recent implementation of the Oracle applications, the
Year 2000 problem will not pose significant operational problems for the
Company's internal systems. The Company also believes that remediation costs to
become Year 2000 compliant, excluding the costs associated with the replacement
Oracle applications, are not material.
The Company is also continuing to verify the Year 2000 readiness of third
parties (vendors and customers) with whom the Company has material
relationships. The Company is not able to determine the effect on its results of
operations, liquidity, and financial condition in the event the Company's
material vendors and customers are not Year 2000 compliant. The Company will
continue to monitor the progress of its material vendors and customers and
formulate a contingency plan at the point in time when the Company believes a
material vendor or customer will not be compliant.
INFLATION AND CHANGING PRICES
Cerprobe is impacted by inflationary trends and business trends within the
semiconductor industry and by the general condition of the worldwide
semiconductor markets. Market price pressures are exerted on semiconductor
manufacturers by the global marketplace and global competition. Such pressures
mandate that semiconductor manufacturers closely scrutinize the prices they pay
for goods and services purchased from Cerprobe and other suppliers. Accordingly,
the price structure for Cerprobe's products must be competitive.
Changes in Cerprobe's supplier prices did not have a significant impact on
cost of sales during the first quarter of 1999 or for the same period in 1998.
As a result of Cerprobe's operation of the manufacturing, repair, and sales
facilities in Scotland, France, Singapore, and Taiwan, Cerprobe's foreign
transactions may be denominated in currencies other than the U.S. dollar. Such
transactions may expose Cerprobe to exchange rate fluctuations for the period of
time from inception of the transaction until it is settled. The Company monitors
its foreign currency exposure and from time to time enters hedging transactions
to manage this exposure. There can be no assurance that fluctuations in the
currency exchange rate in the future will not have an adverse impact on
Cerprobe's foreign operations.
In addition, Cerprobe may purchase a substantial portion of its raw
materials and equipment from foreign suppliers and will incur labor costs in a
foreign currency. The foreign manufacture and sale of products and the purchase
of raw material and equipment from foreign suppliers may be adversely affected
by political and economic conditions abroad. Protective trade legislation in
either the United States or foreign countries, such as a change in the current
tariff structures, export compliance laws, or other trade policies, could
adversely affect Cerprobe's ability to manufacture or sell its products in
foreign markets and purchase materials or equipment from foreign suppliers. In
countries in which Cerprobe conducts business in local currency, currency
exchange rate fluctuations could adversely affect Cerprobe's net sales or costs.
12
<PAGE> 13
BUSINESS OUTLOOK
The Company's business depends substantially on both the volume of IC
production by semiconductor manufacturers as well as new IC designs, which in
turn depend on the demand of ICs and products utilizing ICs. The semiconductor
industry is highly cyclical and historically has experienced periods of
oversupply, resulting in reduced demand for IC testing products, including the
products manufactured by the Company. The Company continues to analyze its
current cost structure to bring its production and overhead costs in line with
the anticipated industry demand for its products for the rest of this year.
However, the Company's need to invest in engineering and product development,
marketing, and customer service and support capabilities will limit its ability
to reduce expenses in response to such downturns or slow downs.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this section regarding the Company's prospects for growth and
adequacy of sources of capital are forward-looking statements. Words such as
"believes," "expects," "anticipates," "intends," "may," "estimates," "should,"
"will likely," and similar expressions are intended to identify such
forward-looking statements. Actual results, however, could differ materially
from those anticipated for a number of reasons, including product demand and
development, technological advances, impact of competitive products and pricing,
growth in targeted markets and other factors identified under "Special
Considerations" of the Company's 1998 Form 10-K which has been filed with the
Securities and Exchange Commission. Additional risk factors are identified from
time to time in the Company's financial press releases. The cautionary
statements made in this Report should be read as being applicable to all related
forward-looking statements wherever they appear in this Report.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
In October 1998, the Company filed an action against the
former President, Director, and shareholders of Silicon Valley
Test & Repair, Inc., which was acquired by the Company, in
January 1997. The suit seeks rescission of the acquisition
and/or monetary damages arising from failure of the defendants
to disclose material facts regarding the origins of certain
software necessary for SVTR, Inc.'s business. In February
1999, the defendants filed a counter claim against the Company
alleging conversion, interference with contractual relations,
unfair business practices, breach of contract, and specific
performance allegedly arising from the Company's actions to
preclude the defendants from selling the Company stock
received by defendants as part of the purchase price of
Silicon Valley Test & Repair, Inc.; the Company seeks to
recover this stock through its claims for rescission. In March
1999, the Company and SVTR filed an amended complaint. The
defendants have filed a motion to dismiss the amended
complaint for which oral argument is scheduled mid May 1999.
It is not anticipated that this suit will have a material
adverse impact on the Company's financial condition or results
of operations.
In April 1999, the Company received a Notice Letter from the
United States Environmental Protection Agency ("EPA")
indicating that the EPA considered the Company to be
potentially responsible for costs associated with the
remediation of the Indian Bend Wash Superfund Site ("Superfund
Site") in Tempe, Arizona. The EPA claims that such liability
arose out of the Company's operations at its former facility
located at 600 S. Rockford Drive, Tempe, Arizona. The Company
has been named with four other potentially responsible
parties. The EPA alleges that it has incurred 11 million
dollars in costs to date for investigation and remediation at
the Superfund Site and, pursuant to a Record of Decision
issued by the EPA in September 1998, will require that
additional remediation be undertaken by the potentially
responsible parties. The EPA has requested that the named
parties provide an offer to perform the remediation and pay
the EPA's past costs on or before May 31, 1999 and that if no
such offer is made, the EPA shall consider pursuing other
remedies, including litigation. The Company does not believe
that it in any way caused or contributed to the contamination
at the Superfund Site and therefore does not believe there is
any basis upon which to hold the Company liable for costs
associated with the Superfund Site. Despite the Company's
belief, given the uncertain nature of litigation, the Company
can not guarantee a favorable outcome. The Company will
vigorously pursue a defense of the matter.
Item 6 Exhibits and Reports on Form 8-K
a. Exhibits
10(kkk) Employment Agreement between the Company and
Randal L. Buness effective January 1, 1999.
10(jjj) Employment Agreement between the Company and
Michael K. Bonham effective January 1, 1999.
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<PAGE> 15
10(iii) Employment Agreement between the Company and C.
Zane Close effective January 1, 1999.
10(lll) Change of Control Agreement between the Company
and C. Zane Close dated January 28, 1999.
10(mmm) Change of Control Agreement between the Company
and Michael K. Bonham dated 26, 1999.
10(nnn) Change of Control Agreement between the Company
and Randal L. Buness dated January 26, 1999.
10(ooo) First Amendment to the Cerprobe Corporation 1997
Employee Stock Purchase Plan dated
February 15, 1999.
11 Computation of Net Income Per Share.
27.1 Financial Data Schedule - March 31, 1999
27.2 Financial Data Schedule - March 31, 1998
b. Reports on Form 8-K
No reports on Form 8-K were filed by the Company during
the quarter ended March 31, 1999.
15
<PAGE> 16
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigning
thereunto duly authorized.
CERPROBE CORPORATION
/s/ Randal L. Buness
--------------------------------------
Randal L. Buness
Senior Vice President -
Chief Financial Officer
May 5, 1999
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<PAGE> 17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
a. Exhibits
10(kkk) Employment Agreement between the Company and
Randal L. Buness effective January 1, 1999.
10(jjj) Employment Agreement between the Company and
Michael K. Bonham effective January 1, 1999.
10(iii) Employment Agreement between the Company and C.
Zane Close effective January 1, 1999.
10(lll) Change of Control Agreement between the Company
and C. Zane Close dated January 28, 1999.
10(mmm) Change of Control Agreement between the Company
and Michael K. Bonham dated 26, 1999.
10(nnn) Change of Control Agreement between the Company
and Randal L. Buness dated January 26, 1999.
10(ooo) First Amendment to the Cerprobe Corporation 1997
Employee Stock Purchase Plan dated
February 15, 1999.
11 Computation of Net Income Per Share.
27.1 Financial Data Schedule - March 31, 1999
27.2 Financial Data Schedule - March 31, 1998
<PAGE> 1
Exhibit 10(iii)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day
of January, 1999, by and between C. ZANE CLOSE ("Executive") and CERPROBE
CORPORATION, a Delaware corporation ("Cerprobe"), effective January 1, 1999
("Effective Date").
R E C I T A L S
A. Executive is presently employed by Cerprobe as its President and
Chief Executive Officer.
B. Cerprobe wishes to retain the continuing services of Executive
pursuant to this Employment Agreement, the terms and provisions of which are set
forth below.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. POSITION AND DUTIES.
During the Term (as defined in Section 5) Executive will continue to
be employed by Cerprobe as its President and Chief Executive Officer and shall
perform those duties as from time to time determined by the Board of Directors
of Cerprobe ("Board") in accordance with the policies, practices and bylaws of
Cerprobe.
Executive shall serve Cerprobe faithfully, loyally, honestly and to
the best of Executive's ability. Executive will devote Executive's best efforts
and substantially all of the Executive's business time to the performance of
Executive's duties for, and in the business and affairs of, Cerprobe.
Subject to Section 7, the Board reserves the right, in its sole
discretion, to change or modify Executive's position, title and duties during
the Term of this Agreement.
2. BASE SALARY.
Commencing on the Effective Date and during the first 12 months of
this Agreement, Executive's base salary will be two hundred eighty thousand and
00/100 Dollars ($280,000.00), payable in accordance with Cerprobe's customary
payroll practice. Executive's
<PAGE> 2
base salary will be reviewed annually by the Board in accordance with Cerprobe's
compensation review policies and practices, all as determined by Cerprobe in its
discretion; provided that in no event shall the amount of Executive's base
salary be decreased.
3. INCENTIVE COMPENSATION.
Executive shall be eligible to participate in any and all
performance-based incentive compensation program that the Board has established
or may in the future establish for Executive, as well as any performance-based
incentive compensation program established from time to time for other members
of Cerprobe's senior management.
4. OTHER AGREEMENTS.
Cerprobe and Executive may, from time to time, enter into one or
more agreements relating to specific benefit and/or compensation programs
including without limitation, a change of control agreement, stock option
agreements, stock purchase agreements, and stock grant agreements. Nothing in
this Agreement is intended to alter or modify any of such agreements, which an
referred to below as "Ancillary Agreements."
5. TERM AND TERMINATION.
This Agreement will continue in full force and effect until
terminated by the parties. This Agreement may be terminated in any of the
following ways: (a) it may be negotiated and replaced by a written agreement
signed by both parties; (b) Cerprobe may elect to terminate this Agreement, with
or without "Cause," as defined below; (c) Executive may elect to terminate this
Agreement with or without "Good Reason," as defined below; or (d) either party
may serve notice on the other of its or his desire to terminate this Agreement
at the end of the Term.
The "Term" of this Agreement shall begin on the Effective Date and
shall expire by its terms on December 31, 2000, unless sooner terminated in
accordance with the provisions of this Agreement. Thereafter, the "Term" of this
Agreement shall renew automatically for additional 12-month periods unless
terminated in accordance with the provisions of this Agreement.
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<PAGE> 3
6. TERMINATION BY CERPROBE.
A. Termination For Cause. Cerprobe may terminate this Agreement and
Executive's employment for Cause at any time upon written notice. For purposes
of this Agreement, "Cause" shall be limited to discharge resulting from a
determination by Cerprobe that Executive has: (i) been convicted of a felony
involving dishonesty, fraud, theft or embezzlement; (ii) repeatedly failed or
refused, in a material respect, to follow reasonable policies or directives
established by Cerprobe and after written notice thereof from Cerprobe, and a
reasonable opportunity by Executive to cure such failures or refusals after
having been given reasonable written notice of such failures or refusals; (iii)
willfully and persistently failed to attend to the material duties or
obligations imposed upon Executive under this Agreement after reasonable written
notice from Cerprobe and a reasonable opportunity by Executive to cure such
failure; (iv) performed an act or failed to act, which, if Executive were
prosecuted and convicted, would constitute a felony involving $1,000 or more of
money or property of Cerprobe; or (v) intentionally misrepresented or concealed
a material fact for purposes of securing employment with Cerprobe or this
Agreement.
If this Agreement and Executive's employment are terminated by
Cerprobe for Cause, Executive shall receive no Severance Benefits.
B. Termination Without Cause. Cerprobe also may terminate this
Agreement and Executive's employment at any time or elect to not renew this
Agreement at the end of any Term without Cause by giving at least 60 days prior
written notice to Executive. In the event (i) this Agreement and Executive's
employment are terminated by Cerprobe, or (ii) Cerprobe elects to not renew this
Agreement at the end of any Term, without Cause, Executive shall be entitled to
receive Severance Benefits pursuant to Section 9.
7. TERMINATION BY EXECUTIVE.
Executive may terminate this Agreement and his employment with or
without "Good Reason" in accordance with the provisions of this Section 7.
A. Termination For Good Reason. Executive may terminate this
Agreement and Executive's employment for "Good Reason" by giving written notice
to Cerprobe within 60 days, or such longer period as may be agreed to in writing
by Cerprobe, of Executive's
3
<PAGE> 4
knowledge or receipt of notice of the occurrence of an event constituting "Good
Reason," as described below.
Executive shall have "Good Reason" to terminate his Agreement and
Executive's employment upon the occurrence of any of the following events: (i)
the assignment to Executive of any duties that are inconsistent with, or the
reduction of powers or functions associated with, Executive's position, duties,
or responsibilities with Cerprobe, or an adverse change in Executive's titles,
authority, or reporting responsibilities, or in conditions of Executive's
employment, (ii) the Executive's base salary is reduced or the potential
incentive compensation (or bonus) to which Executive may become entitled to at
any level of performance by the Executive or Cerprobe is reduced, (iii) the
failure of Cerprobe to cause any successor to expressly assume and agree to be
bound by the terms of this Agreement, (iv) any purported termination by Cerprobe
of Executive's employment for grounds other than for "Cause," (v) Cerprobe
relieving the Executive of Executive's duties other than for "Cause," (vi)
Executive is required to relocate to an employment location that is more than
fifty (50) miles from Gilbert, Arizona, or (vii) the failure of Executive to be
elected to the Board or to be nominated for election to the Board.
If Executive terminates this Agreement and his employment for
Good Reason, Executive shall be entitled to receive Severance Benefits pursuant
to Section 9.
B. Termination Without Good Reason. Executive also may terminate
this Agreement and Executive's employment without Good Reason at any time by
giving 60 days notice to Cerprobe. If Executive terminates this Agreement and
Executive's employment without Good Reason, Executive shall not be entitled to
receive Severance Benefits pursuant to Section 9.
8. DEATH OR DISABILITY.
This Agreement will terminate automatically on Executive's death.
Any salary or other amounts due to Executive for services rendered prior to
Executive's death shall be paid to Executive's surviving spouse, or if Executive
does not leave a surviving spouse, to Executive's estate. No other benefits
shall be payable to Executive's estate or heirs pursuant to this
4
<PAGE> 5
Agreement, but amounts may be payable pursuant to any life insurance or other
benefit plans maintained in whole or in part by Cerprobe for the benefit of
Executive, his estate or heirs.
In the Executive becomes "Disabled," Executive's employment
hereunder and Cerprobe's obligation to pay Executive's salary shall continue for
a period of 12 months from the date of such Disability, at which time
Executive's employment hereunder shall automatically cease and terminate.
Executive shall be considered "Disabled" or to be suffering from a "Disability"
for purposes of this Section 8 if, in the reasonable, good faith judgment of a
licensed physician selected by the Board, Executive is unable for a period of 90
consecutive business days to perform the essential functions of Executive
position required under this Agreement, with or without reasonable
accommodations, because of a physical or mental impairment. Any dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by the Board, provided, however, that if Executive
does not accept the opinion of the licensed physician selected by Cerprobe, the
dispute shall be resolved by the opinion of a licensed physician who shall be
selected by Executive; provided further, however, that if Cerprobe does not
accept the opinion of the licensed physician selected by Executive, the dispute
shall be finally resolved by the opinion of a licensed physician selected by the
licensed physicians selected by Cerprobe and Executive, respectively.
9. SEVERANCE BENEFITS.
If this Agreement and Executive's employment are terminated without
Cause pursuant to Section 6(B) hereof or if Executive elects to terminate this
Agreement for Good Reason pursuant to Section 7(A) hereof, Executive shall
receive the "Severance Benefits" as provided by this Section. The Severance
Benefits shall be payable in a single lump sum within 10 days following
termination of employment and shall equal the greater of (i) sum of (a) the
Executive's base salary for the unexpired Term, and (b) the average of incentive
compensation paid to the Executive for the two years prior to the date of
termination multiplied by a fraction, the numerator of which is the number of
months remaining from the date of termination to the end of the Term and the
denominator of which is 12, and (ii) the sum of (x) Executive's base salary in
effect on the date of termination and (y) the average of incentive compensation
paid to the Executive for the two years prior to the date of termination. In
addition, the Executive shall
5
<PAGE> 6
continue to receive life, disability, accident and group health insurance
benefits substantially similar to those which he was receiving immediately prior
to his termination of employment until the earlier of the end of the period of
12 months following his termination of employment or the day on which he becomes
eligible to receive any substantially similar continuing health care benefits
under any Plan or program of any other employer. If a particular insurance
benefit may not be continued for any reason, Cerprobe shall pay Executive the
amount necessary to permit Executive to purchase the same insurance benefits as
were provided by Cerprobe, such payment to be made to Executive in a single lump
sum. The benefits provided pursuant to this Section shall be provided on
substantially the same terms and conditions as they were provided prior to the
termination of employment, except that the full cost of such benefits shall be
paid by the Cerprobe. The Executive's right to receive continued coverage under
the Cerprobe's group health plans pursuant to Section 601 et seq. of the
Employee Retirement Income Security Act of 1974, as it may be amended or
replaced from time to time, shall commence following the expiration of his right
to receive continued benefits under this Agreement.
Executive shall have no duty to mitigate damages in order to
receive the benefits provided by this Section.
If Cerprobe terminates the Agreement and Executive's employment for
Cause, or if Executive voluntarily terminates this Agreement and Executive's
employment without Good Reason prior to the end of the Term, no Severance
Benefits shall be paid to Executive. No Severance Benefits are payable in the
event of Executive's death or disability while in the active employ of Cerprobe.
10. BENEFITS.
Executive will be entitled to participate in all employee benefit
plans, including, but not limited to, retirement plans, stock option plans, life
insurance plans and health and dental plans available to other Cerprobe
employees, subject to restrictions (including waiting periods) specified in the
applicable Plan.
Executive is entitled to four weeks of paid vacation per calendar
year, with such vacation to be scheduled and taken in accordance with Cerprobe's
standard vacation policies.
6
<PAGE> 7
11. CONFIDENTIALLY AND NON-DISCLOSURE.
During the course of Executive's employment, Executive has and will
become exposed to a substantial amount of confidential and proprietary
information, including, but not limited to financial information, annual report,
audited and unaudited financial reports, strategic plans, business plans,
marketing strategies, new business strategies, personnel and compensation
information, and other such reports, documents or information. In the event
Executive's employment is terminated by either party for any, reason, Executive
will return to Cerprobe and Executive will not take, any copies of such
documents, computer print-outs, computer tapes, floppy disks, CD ROMS, etc., in
any form, format or manner whatsoever, nor will Executive disclose the same in
whole or in part to any person or entity, in any manner either directly or
indirectly. Excluded from this Agreement is information that is already
disclosed to third parties and is in the public domain or that Cerprobe consents
to be disclosed, with such consent to be in writing. The provisions of this
Section 11 shall survive the termination of this Agreement.
12. COVENANT-NOT-TO-COMPETE.
A. Interests to be Protected. The parties acknowledge that during
the Term, Executive will perform essential for Cerprobe, its employees and
shareholders, and for customers of Cerprobe. Therefore, Executive will be given
an opportunity to meet, work with and develop close working relationships with
Cerprobe's clients on a first-hand basis and will gain valuable insight as to
the clients' operations, personnel and need for services. In addition, Executive
will be to, have access to, and be required to work with, a considerable amount
of Cerprobe's confidential and proprietary information, including but not
limited to information concerning Cerprobe's methods of operation, financial
information, strategic planning, operational budgets and strategies, payroll
data, management systems programs, computer systems, marketing plans and
strategies, merger and acquisition strategies and customer lists.
The parties also expressly recognize and acknowledge that the
personnel of Cerprobe have been trained by, and are valuable to Cerprobe, and
that if Cerprobe must hire new personnel or retrain existing personnel to fill
vacancies Cerprobe will incur substantial expense in recruiting and training
such personnel. The parties expressly recognize that should
7
<PAGE> 8
Executive compete with Cerprobe in any manner whatsoever, it would seriously
impair the goodwill and diminish the value of Cerprobe's business.
The parties acknowledge that this covenant has an extended
duration; however, they agree that this covenant is reasonable and that it is
necessary for the protection of Cerprobe, its shareholders and employees.
For these and other reasons, and the fact that there are many
other employment opportunities available to Executive if Executive should
terminate, the parties are in full and complete agreement that the following
restrictive covenants (which together are referred to as the
"Covenant-Not-To-Compete") are fair and reasonable and are freely, voluntarily
and knowingly entered into. Further, each party has been given the opportunity
to consult with independent legal counsel before entering into this Agreement.
B. Devotion to Employment. Executive shall devote substantially all
of Executive's business time and best efforts to the performance of Executive's
duties on behalf of Cerprobe. During the term of employment, Executive shall not
at any time or place or to any extent whatsoever, either directly or indirectly,
without the express written consent of Cerprobe, engage in any outside
employment, or in any activity competitive with or adverse to Cerprobe's
business, practice or affairs, whether alone or as partner, officer, director,
employee, shareholder of any corporation or as a trustee, fiduciary, consultant
or other representative. This is not intended to prohibit Executive from
engaging in nonprofessional activities such as personal investments or
conducting to a reasonable extent private business affairs which may include
other boards of directors' activity, as long as they do not conflict with
Cerprobe. Participation to a reasonable extent in civic, social or community
activities is encouraged.
C. Non-Solicitation of Customer or Suppliers. During the term of
Executive's employment with Cerprobe and for a period of 12 months after the
expiration or termination of employment with Cerprobe, regardless of who
initiates the termination, Executive shall not, directly or indirectly, for
Executive, or on behalf of, or in conjunction with, any other person(s),
company, partnership, corporation, or governmental entity, in any manner
whatsoever, call upon, contact encourage, handle or solicit, or cause others to
solicit, any person or other entity that is, or was within the 12-month period
immediately prior to the date of Executive's termination, a customer or supplier
of Cerprobe or any of its subsidiaries or affiliates, for the
8
<PAGE> 9
purpose of soliciting, selling or purchasing from such customer or supplier the
same, similar, or related services or products that are provided by, or
purchased by, Cerprobe or any of its subsidiaries or affiliates. Notwithstanding
the foregoing, the obligations of Executive under this Section 12(C), shall
terminate only if the employment of Executive is terminated by Cerprobe without
Cause or if Executive terminates his employment for Good Reason. If Executive
violates Executive's obligations under this Section 12(C), then the time periods
hereunder shall be extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and ending when the
activities constituting such violation terminated.
D. Non-Solicitation of Employees. During the term of Executive's
employment with Cerprobe and for a period of 12 months after the termination of
employment with Cerprobe, regardless of who initiates the termination, Executive
shall not, directly or indirectly, for Executive, or on behalf of, or in
conjunction with, any other person(s), company, partnership, corporation, or
governmental entity, in any manner whatsoever, seek to him, and/or hire any
person who, on the date hereof, or on the date of Executive's termination, is an
employee of Cerprobe or any of its subsidiaries or affiliates, and that receives
annual compensation in excess of $25,000, for employment or as an independent
contractor with any person or entity (other than Cerprobe or any of its
subsidiaries or affiliates), unless first authorized in writing by Cerprobe,
which authorization may be withheld in the sole and absolute discretion of
Cerprobe. If Executive violates Executive's obligations wider this Section
12(D), then the time periods hereunder shall be extended by the period of time
equal to that period beginning when the activities constituting such violation
commenced and ending when the activities constituting such violation terminated.
E. Competing Business. During the term of Executive's employment
and for a period of 12 months after the termination of employment with Cerprobe,
regardless of who initiates the termination, Executive shall not, directly or
indirectly, (including, without limitation, as a partner, director, officer or
employee of, or lender or consultant to, any other personal entity, or
shareholder (other than as the holder of less than five percent of the stock of
a corporation the securities of which are traded on a national securities
exchange or in the over-the-counter market), for Executive, or on behalf of, or
in conjunction with, any other person(s), company, partnership, corporation, or
governmental entity, in any manner whatsoever, or in any other
9
<PAGE> 10
capacity, within, into or from the Restricted Territory (as defined below)
engage or cause others to engage in the same or similar business as Cerprobe and
its subsidiaries, or any aspect thereof, unless first authorized in writing by
Cerprobe, which authorization may be withheld in the sole and absolute
discretion of Cerprobe. For purposes of this Section 12(E), the term "Restricted
Territory" shall mean any geographical service area where Cerprobe or any of its
subsidiaries and affiliates is engaged in business, sells products or performs
services or was considering engaging in business at any time, prior to the
termination or at the time of termination. Notwithstanding the foregoing, the
obligations of Executive under this Section 12(E), shall terminate only if
Executive is terminated by Cerprobe without Cause or if Executive terminates his
employment for Good Reason. If Executive violates Executive's obligations under
this Section 12(E), then the time periods hereunder shall be extended by the
period of time equal to that period beginning when the activities constituting
such violation commenced and ending when the activities constituting such
violation terminated.
F. Judicial Amendment. If the scope of any provision of this
Section 12 is found by a court of competent jurisdiction to be too broad to
permit enforcement to its full extent, then such provision shall be enforced to
the maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, it shall not affect the validity of the
remaining provisions of this Agreement.
G. Injunctive Relief Damages and Forfeiture. Due to the nature of
Executive's position with Cerprobe, and with full realization that a violation
of this Agreement will cause immediate and irreparable injury and damage, which
is not readily measurable, and to protect Cerprobe's interests, Executive
understands and agrees that in addition to instituting legal proceedings to
recover damages resulting from a breach of this Agreement, Cerprobe may seek to
enforce this Agreement with an action for injunctive relief to cease or prevent
any actual or threatened violation of this Agreement on the part of Executive.
H. Survival. The provisions of this Section 12, shall survive the
termination of this Agreement.
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<PAGE> 11
13. DEFERRAL OF AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Any payment due pursuant to this Agreement may be deferred if and
to the extent that the payment does not satisfy the requirements to be
"qualified performance-based compensation" (as such term is defined by the
regulations issued under Section 162(m) of the Internal Revenue Code, of 1986
(the "Code")) and when combined with all other payments received during the year
that are subject to the limitations on deductibility under Section 162(m) of the
Code, the payment exceeds the limitations on deductibility under Section 162(m)
of the Code. The deferral of payments shall be in the discretion of the Board.
Such deferred amounts shall be paid no later than the 60th day after the end of
the next succeeding calendar year, provided that such payment, when combined
with any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under Section
162(m) of the Code. If the payments in such succeeding calendar year exceed the
limitations on deductibility under Section 162(m) of the Code, such payments
shall continue to be deferred to the next succeeding year. The above procedure
shall be repeated until such payments can be and is fully paid without exceeding
the limitation on deductibility under Section 162(m) of the Code.
14. AMENDMENTS.
This Agreement and the Ancillary Agreements constitute the entire
agreement between the parties as to the subject matter hereof. Accordingly,
there are no side agreements or verbal agreements other than those which are
stated in this document or in the Ancillary Agreements. Any amendment,
modification or change in said Agreements must be done so in writing and signed
by both parties.
15. SEVERABILITY.
In the event a court or arbitrator declares that any provision of
this Agreement is invalid or unenforceable, it shall not affect or invalidate
any of the remaining provisions. Further, the court shall have the authority to
re-write that portion of the Agreement it deems unenforceable, to make it
enforceable.
11
<PAGE> 12
16. GOVERNING LAW.
The law of the State of Arizona shall govern the interpretation and
application of all of the provisions of this Agreement.
17. INDEMNITY.
A. General. Cerprobe shall, to the fullest extent authorized by the
Delaware General Corporation Law, as amended, indemnify and hold harmless
Executive in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative against expenses,
liabilities and losses (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by Executive in connection therewith.
B. Expenses. This right to indemnification includes the right to be
paid by Cerprobe the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by Executive shall be made only upon delivery to Executive of
an undertaking, by or on behalf of Executive, to repay all amounts so advanced
if it is ultimately determined by final judicial decision from which there is no
further right to appeal that Executive is not entitled to be indemnified for
such expenses. The rights to indemnification and to the advancement of expenses
shall be contract rights and such rights shall continue as to Executive after
his termination of employment and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators.
C. Claims for Indemnification or Expenses. If a claim under either
A or B above is not paid in full by Cerprobe within 60 days after Cerprobe
receives a written claim, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be 20 days, Executive may at
any time thereafter bring suit against Cerprobe to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, Executive shall
be entitled to be paid also the expense of prosecuting or defending such suit.
In any suit brought by the Executive to enforce a right to indemnification or to
an advancement of expenses hereunder, or brought by Cerprobe to recover an
advancement of expenses pursuant to the terms of an
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undertaking, the burden of proving that Executive is not entitled to be
indemnified, or to such advancement of expenses, shall be on Cerprobe.
18. DISPUTE RESOLUTION.
A. Mediation. Any and all disputes arising under, pertaining to or
touching upon this Agreement (excepting the confidentiality and non-disclosure
provisions of Section 11 hereof, and the Covenant-Not-To-Compete provisions of
Section 12 hereof), or the statutory rights or obligations of either party
hereto, shall, if not settled by negotiation, be subject to non-binding
mediation before an independent mediator selected by the parties pursuant to
Section below writing and served upon the other. Any demand for mediation shall
be made in writing party to the dispute, by certified mail, return receipt
requested, at the business address of or at the last known residence address of
Executive respectively. The demand shall set forth with reasonable specificity
the basis of the dispute and the relief sought. The mediation learning will
occur at a time and place convenient to the parties in Maricopa County, Arizona,
within thirty (30) days of the date of selection or appointment of the mediator
and shall be governed by the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association ("AAA").
B. Arbitration. In the event that the dispute is not settled
through mediation, the parties shall then proceed to binding arbitration before
a single independent arbitrator selected pursuant to Section 18(D). The mediator
shall not serve as arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY,
OR ALLEGED EMPLOYMENT TORT COMMITTED BY CERPROBE OR A REPRESENTATIVE OF CERPROBE
INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR
PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS POLICY AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing shall
occur at a time and place convenient to the parties in Maricopa County, Arizona,
within thirty (30) days of selection or appointment of the arbitrator. If
Cerprobe has adopted a policy that is applicable to arbitrations with
executives, the arbitration shall be conducted in accordance
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with said policy to the extent that the policy is consistent with this Agreement
and the Federal Arbitration Act, 9 U.S.C. Sections 1-16. If no such policy has
been adopted, the arbitration shall be governed by the National Rules for the
Resolution of Employment Disputes of the AAA. The arbitrator shall issue written
findings of fact and conclusions of law, and an award, within fifteen (15) days
of the date of the hearing unless the parties otherwise agree.
C. Damages. In cases of breach of contract or policy, damages shall
be limited to contract damages. In cases of intentional discrimination claims
prohibited by statute, the arbitrator may direct payment consistent with 42
U.S.C. Section 1981(a) and the Civil Rights Act of 1991. In cases of employment
tort, the arbitrator may award punitive damages if proved by clear and
convincing evidence. Any award of punitive damages shall not exceed two times
any compensatory award and in any event, shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000). The arbitrator may award fees to the prevailing
party and assess costs of the arbitration to the non-prevailing party. Issues of
procedure, arbitrability, or confirmation of award shall be governed by the
Federal Arbitration Act, 9 U.S.C. Sections 1-16, except that court review of the
arbitrator's award shall be that of an appellate court reviewing a decision of a
trial judge sitting without a jury.
D. Selection of Mediators or Arbitrators. The parties shall select
the mediator or arbitrator form a panel list made available by the AAA. If the
parties are unable to agree to a mediator or arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five (5) mediators or
arbitrators obtained by Cerprobe from ALA. Executive shall have the first
strike.
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IN WITNESS WHEREOF, Cerprobe and Executive have executed this Agreement
effective on the date set forth above.
CERPROBE CORPORATION "EXECUTIVE"
By:
-------------------------------- ------------------------------------
Ross J. Mangano C. Zane Close
Chairman of the Board
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Exhibit 10(jjj)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day
of January, 1999, by and between MICHAEL K. BONHAM ("Executive") and CERPROBE
CORPORATION, a Delaware corporation ("Cerprobe"), effective January 1, 1999
("Effective Date").
R E C I T A L S
A. Executive is presently employed by Cerprobe as its Senior Vice
President of Sales and Marketing.
B. Cerprobe wishes to retain the continuing services of Executive
pursuant to this Employment Agreement, the terms and provisions of which are set
forth below.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. POSITION AND DUTIES.
During the Term (as defined in Section 5) Executive will
continue to be employed by Cerprobe as its Senior Vice President of Sales and
Marketing and shall perform those duties as from time to time determined by the
Board of Directors of Cerprobe ("Board") in accordance with the policies,
practices and bylaws of Cerprobe.
Executive shall serve Cerprobe faithfully, loyally, honestly
and to the best of Executive's ability. Executive will devote Executive's best
efforts and substantially all of the Executive's business time to the
performance of Executive's duties for, and in the business and affairs of,
Cerprobe.
Subject to Section 7, the Board reserves the right, in its
sole discretion, to change or modify Executive's position, title and duties
during the Term of this Agreement.
2. BASE SALARY.
Commencing on the Effective Date and during the term of this
Agreement, Executive's base salary will be one hundred sixty thousand and 00/100
Dollars ($160,000.00), payable in accordance with Cerprobe's customary payroll
practice. Executive's base salary will
<PAGE> 2
be reviewed annually by the Board in accordance with Cerprobe's compensation
review policies and practices, all as determined by Cerprobe in its discretion;
provided that in no event shall the amount of Executive's base salary be
decreased.
3. INCENTIVE COMPENSATION.
Executive shall be eligible to participate in any and all
performance-based incentive compensation program that the Board has established
or may in the future establish for Executive, as well as any performance-based
incentive compensation program established from time to time for other members
of Cerprobe's senior management.
4. OTHER AGREEMENTS.
Cerprobe and Executive may, from time to time, enter into one
or more agreements relating to specific benefit and/or compensation programs
including without limitation, a change of control agreement, stock option
agreements, stock purchase agreements, and stock grant agreements. Nothing in
this Agreement is intended to alter or modify any of such agreements, which an
referred to below as "Ancillary Agreements."
5. TERM AND TERMINATION.
This Agreement will continue in full force and effect until
terminated by the parties. This Agreement may be terminated in any of the
following ways: (a) it may be negotiated and replaced by a written agreement
signed by both parties; (b) Cerprobe may elect to terminate this Agreement, with
or without "Cause," as defined below; (c) Executive may elect to terminate this
Agreement with or without "Good Reason," as defined below; or (d) either party
may serve notice on the other of its or his desire to terminate this Agreement
at the end of the Term.
The "Term" of this Agreement shall begin on the Effective Date
and shall expire by its terms on December 31, 1999, unless sooner terminated in
accordance with the provisions of this Agreement. Thereafter, the "Term" of this
Agreement shall renew automatically for additional 12-month periods unless
terminated in accordance with the provisions of this Agreement.
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6. TERMINATION BY CERPROBE.
A. Termination For Cause. Cerprobe may terminate this
Agreement and Executive's employment for Cause at any time upon written notice.
For purposes of this Agreement, "Cause" shall be limited to discharge resulting
from a determination by Cerprobe that Executive has: (i) been convicted of a
felony involving dishonesty, fraud, theft or embezzlement; (ii) repeatedly
failed or refused, in a material respect, to follow reasonable policies or
directives established by Cerprobe and after written notice thereof from
Cerprobe, and a reasonable opportunity by Executive to cure such failures or
refusals after having been given reasonable written notice of such failures or
refusals; (iii) willfully and persistently failed to attend to the material
duties or obligations imposed upon Executive under this Agreement after
reasonable written notice from Cerprobe and a reasonable opportunity by
Executive to cure such failure; (iv) performed an act or failed to act, which,
if Executive were prosecuted and convicted, would constitute a felony involving
$1,000 or more of money or property of Cerprobe; or (v) intentionally
misrepresented or concealed a material fact for purposes of securing employment
with Cerprobe or this Agreement.
If this Agreement and Executive's employment are
terminated by Cerprobe for Cause, Executive shall receive no Severance Benefits.
B. Termination Without Cause. Cerprobe also may terminate this
Agreement and Executive's employment at any time or elect to not renew this
Agreement at the end of any Term without Cause by giving at least 60 days prior
written notice to Executive. In the event (i) this Agreement and Executive's
employment are terminated by Cerprobe, or (ii) Cerprobe elects to not renew this
Agreement at the end of any Term, without Cause, Executive shall be entitled to
receive Severance Benefits pursuant to Section 9.
7. TERMINATION BY EXECUTIVE.
Executive may terminate this Agreement and his employment with
or without "Good Reason" in accordance with the provisions of this Section 7.
A. Termination For Good Reason. Executive may terminate this
Agreement and Executive's employment for "Good Reason" by giving written notice
to Cerprobe within 60 days, or such longer period as may be agreed to in writing
by Cerprobe, of Executive's
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knowledge or receipt of notice of the occurrence of an event constituting "Good
Reason," as described below.
Executive shall have "Good Reason" to terminate his Agreement
and Executive's employment upon the occurrence of any of the following events:
(i) the assignment to Executive of any duties that are inconsistent with, or the
reduction of powers or functions associated with, Executive's position, duties,
or responsibilities with Cerprobe, or an adverse change in Executive's titles,
authority, or reporting responsibilities, or in conditions of Executive's
employment, (ii) the Executive's base salary is reduced or the potential
incentive compensation (or bonus) to which Executive may become entitled to at
any level of performance by the Executive or Cerprobe is reduced, (iii) the
failure of Cerprobe to cause any successor to expressly assume and agree to be
bound by the terms of this Agreement, (iv) any purported termination by Cerprobe
of Executive's employment for grounds other than for "Cause," (v) Cerprobe
relieving the Executive of Executive's duties other than for "Cause," or (vi)
Executive is required to relocate to an employment location that is more than
fifty (50) miles from Gilbert, Arizona.
If Executive terminates this Agreement and his
employment for Good Reason, Executive shall be entitled to receive Severance
Benefits pursuant to Section 9.
B. Termination Without Good Reason. Executive also may
terminate this Agreement and Executive's employment without Good Reason at any
time by giving 60 days notice to Cerprobe. If Executive terminates this
Agreement and Executive's employment without Good Reason, Executive shall not be
entitled to receive Severance Benefits pursuant to Section 9.
8. DEATH OR DISABILITY.
This Agreement will terminate automatically on Executive's
death. Any salary or other amounts due to Executive for services rendered prior
to Executive's death shall be paid to Executive's surviving spouse, or if
Executive does not leave a surviving spouse, to Executive's estate. No other
benefits shall be payable to Executive's estate or heirs pursuant to this
Agreement, but amounts may be payable pursuant to any life insurance or other
benefit plans maintained in whole or in part by Cerprobe for the benefit of
Executive, his estate or heirs.
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<PAGE> 5
In the Executive becomes "Disabled," Executive's employment
hereunder and Cerprobe's obligation to pay Executive's salary shall continue for
a period of 12 months from the date of such Disability, at which time
Executive's employment hereunder shall automatically cease and terminate.
Executive shall be considered "Disabled" or to be suffering from a "Disability"
for purposes of this Section 8 if, in the reasonable, good faith judgment of a
licensed physician selected by the Board, Executive is unable for a period of 90
consecutive business days to perform the essential functions of Executive
position required under this Agreement, with or without reasonable
accommodations, because of a physical or mental impairment. Any dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by the Board, provided, however, that if Executive
does not accept the opinion of the licensed physician selected by Cerprobe, the
dispute shall be resolved by the opinion of a licensed physician who shall be
selected by Executive; provided further, however, that if Cerprobe does not
accept the opinion of the licensed physician selected by Executive, the dispute
shall be finally resolved by the opinion of a licensed physician selected by the
licensed physicians selected by Cerprobe and Executive, respectively.
9. SEVERANCE BENEFITS.
If this Agreement and Executive's employment are terminated
without Cause pursuant to Section 6(B) hereof or if Executive elects to
terminate this Agreement for Good Reason pursuant to Section 7(A) hereof,
Executive shall receive the "Severance Benefits" as provided by this Section.
The Severance Benefits shall be payable in a single lump sum within 10 days
following termination of employment and shall equal the the sum of (x)
Executive's base salary in effect on the date of termination and (y) the average
of incentive compensation paid to the Executive for the two years prior to the
date of termination. In addition, the Executive shall continue to receive life,
disability, accident and group health insurance benefits substantially similar
to those which he was receiving immediately prior to his termination of
employment until the earlier of the end of the period of 12 months following his
termination of employment or the day on which he becomes eligible to receive any
substantially similar continuing health care benefits under any Plan or program
of any other employer. If a particular insurance benefit may not be continued
for any reason, Cerprobe shall pay Executive the amount necessary to permit
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<PAGE> 6
Executive to purchase the same insurance benefits as were provided by Cerprobe,
such payment to be made to Executive in a single lump sum. The benefits provided
pursuant to this Section shall be provided on substantially the same terms and
conditions as they were provided prior to the termination of employment, except
that the full cost of such benefits shall be paid by the Cerprobe. The
Executive's right to receive continued coverage under the Cerprobe's group
health plans pursuant to Section 601 et seq. of the Employee Retirement Income
Security Act of 1974, as it may be amended or replaced from time to time, shall
commence following the expiration of his right to receive continued benefits
under this Agreement.
Executive shall have no duty to mitigate damages in order to
receive the benefits provided by this Section.
If Cerprobe terminates the Agreement and Executive's
employment for Cause, or if Executive voluntarily terminates this Agreement and
Executive's employment without Good Reason prior to the end of the Term, no
Severance Benefits shall be paid to Executive. No Severance Benefits are payable
in the event of Executive's death or disability while in the active employ of
Cerprobe.
10. BENEFITS.
Executive will be entitled to participate in all employee
benefit plans, including, but not limited to, retirement plans, stock option
plans, life insurance plans and health and dental plans available to other
Cerprobe employees, subject to restrictions (including waiting periods)
specified in the applicable Plan.
Executive is entitled to four weeks of paid vacation per
calendar year, with such vacation to be scheduled and taken in accordance with
Cerprobe's standard vacation policies.
11. CONFIDENTIALLY AND NON-DISCLOSURE.
During the course of Executive's employment, Executive has and
will become exposed to a substantial amount of confidential and proprietary
information, including, but not limited to financial information, annual report,
audited and unaudited financial reports, strategic plans, business plans,
marketing strategies, new business strategies, personnel and compensation
information, and other such reports, documents or information. In the event
Executive's
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employment is terminated by either party for any, reason, Executive will return
to Cerprobe and Executive will not take, any copies of such documents, computer
print-outs, computer tapes, floppy disks, CD ROMS, etc., in any form, format or
manner whatsoever, nor will Executive disclose the same in whole or in part to
any person or entity, in any manner either directly or indirectly. Excluded from
this Agreement is information that is already disclosed to third parties and is
in the public domain or that Cerprobe consents to be disclosed, with such
consent to be in writing. The provisions of this Section 11 shall survive the
termination of this Agreement.
12. COVENANT-NOT-TO-COMPETE.
A. Interests to be Protected. The parties acknowledge that
during the Term, Executive will perform essential for Cerprobe, its employees
and shareholders, and for customers of Cerprobe. Therefore, Executive will be
given an opportunity to meet, work with and develop close working relationships
with Cerprobe's clients on a first-hand basis and will gain valuable insight as
to the clients' operations, personnel and need for services. In addition,
Executive will be to, have access to, and be required to work with, a
considerable amount of Cerprobe's confidential and proprietary information,
including but not limited to information concerning Cerprobe's methods of
operation, financial information, strategic planning, operational budgets and
strategies, payroll data, management systems programs, computer systems,
marketing plans and strategies, merger and acquisition strategies and customer
lists.
The parties also expressly recognize and acknowledge that the
personnel of Cerprobe have been trained by, and are valuable to Cerprobe, and
that if Cerprobe must hire new personnel or retrain existing personnel to fill
vacancies Cerprobe will incur substantial expense in recruiting and training
such personnel. The parties expressly recognize that should Executive compete
with Cerprobe in any manner whatsoever, it would seriously impair the goodwill
and diminish the value of Cerprobe's business.
The parties acknowledge that this covenant has an extended
duration; however, they agree that this covenant is reasonable and that it is
necessary for the protection of Cerprobe, its shareholders and employees.
For these and other reasons, and the fact that there are many
other employment opportunities available to Executive if Executive should
terminate, the parties are in
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<PAGE> 8
full and complete agreement that the following restrictive covenants (which
together are referred to as the "Covenant-Not-To-Compete") are fair and
reasonable and are freely, voluntarily and knowingly entered into. Further, each
party has been given the opportunity to consult with independent legal counsel
before entering into this Agreement.
B. Devotion to Employment. Executive shall devote substantially all of
Executive's business time and best efforts to the performance of Executive's
duties on behalf of Cerprobe. During the term of employment, Executive shall not
at any time or place or to any extent whatsoever, either directly or indirectly,
without the express written consent of Cerprobe, engage in any outside
employment, or in any activity competitive with or adverse to Cerprobe's
business, practice or affairs, whether alone or as partner, officer, director,
employee, shareholder of any corporation or as a trustee, fiduciary, consultant
or other representative. This is not intended to prohibit Executive from
engaging in nonprofessional activities such as personal investments or
conducting to a reasonable extent private business affairs which may include
other boards of directors' activity, as long as they do not conflict with
Cerprobe. Participation to a reasonable extent in civic, social or community
activities is encouraged.
C. Non-Solicitation of Customer or Suppliers. During the term of
Executive's employment with Cerprobe and for a period of 12 months after the
expiration or termination of employment with Cerprobe, regardless of who
initiates the termination, Executive shall not, directly or indirectly, for
Executive, or on behalf of, or in conjunction with, any other person(s),
company, partnership, corporation, or governmental entity, in any manner
whatsoever, call upon, contact encourage, handle or solicit, or cause others to
solicit, any person or other entity that is, or was within the 12-month period
immediately prior to the date of Executive's termination, a customer or supplier
of Cerprobe or any of its subsidiaries or affiliates, for the purpose of
soliciting, selling or purchasing from such customer or supplier the same,
similar, or related services or products that are provided by, or purchased by,
Cerprobe or any of its subsidiaries or affiliates. Notwithstanding the
foregoing, the obligations of Executive under this Section 12(C), shall
terminate only if the employment of Executive is terminated by Cerprobe without
Cause or if Executive terminates his employment for Good Reason. If Executive
violates Executive's obligations under this Section 12(C), then the time periods
hereunder shall
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be extended by the period of time equal to that period beginning when the
activities constituting such violation commenced and ending when the activities
constituting such violation terminated.
D. Non-Solicitation of Employees. During the term of Executive's
employment with Cerprobe and for a period of 12 months after the termination of
employment with Cerprobe, regardless of who initiates the termination, Executive
shall not, directly or indirectly, for Executive, or on behalf of, or in
conjunction with, any other person(s), company, partnership, corporation, or
governmental entity, in any manner whatsoever, seek to him, and/or hire any
person who, on the date hereof, or on the date of Executive's termination, is an
employee of Cerprobe or any of its subsidiaries or affiliates, and that receives
annual compensation in excess of $25,000, for employment or as an independent
contractor with any person or entity (other than Cerprobe or any of its
subsidiaries or affiliates), unless first authorized in writing by Cerprobe,
which authorization may be withheld in the sole and absolute discretion of
Cerprobe. If Executive violates Executive's obligations wider this Section
12(D), then the time periods hereunder shall be extended by the period of time
equal to that period beginning when the activities constituting such violation
commenced and ending when the activities constituting such violation terminated.
E. Competing Business. During the term of Executive's employment and
for a period of 12 months after the termination of employment with Cerprobe,
regardless of who initiates the termination, Executive shall not, directly or
indirectly, (including, without limitation, as a partner, director, officer or
employee of, or lender or consultant to, any other personal entity, or
shareholder (other than as the holder of less than five percent of the stock of
a corporation the securities of which are traded on a national securities
exchange or in the over-the-counter market), for Executive, or on behalf of, or
in conjunction with, any other person(s), company, partnership, corporation, or
governmental entity, in any manner whatsoever, or in any other capacity, within,
into or from the Restricted Territory (as defined below) engage or cause others
to engage in the same or similar business as Cerprobe and its subsidiaries, or
any aspect thereof, unless first authorized in writing by Cerprobe, which
authorization may be withheld in the sole and absolute discretion of Cerprobe.
For purposes of this Section 12(E), the term "Restricted Territory" shall mean
any geographical service area where Cerprobe or any of its subsidiaries and
affiliates is engaged in business, sells products or performs services or was
considering engaging
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in business at any time, prior to the termination or at the time of termination.
Notwithstanding the foregoing, the obligations of Executive under this Section
12(E), shall terminate only if Executive is terminated by Cerprobe without Cause
or if Executive terminates his employment for Good Reason. If Executive violates
Executive's obligations under this Section 12(E), then the time periods
hereunder shall be extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and ending when the
activities constituting such violation terminated.
F. Judicial Amendment. If the scope of any provision of this Section 12
is found by a court of competent jurisdiction to be too broad to permit
enforcement to its full extent, then such provision shall be enforced to the
maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, it shall not affect the validity of the
remaining provisions of this Agreement.
G. Injunctive Relief Damages and Forfeiture. Due to the nature of
Executive's position with Cerprobe, and with full realization that a violation
of this Agreement will cause immediate and irreparable injury and damage, which
is not readily measurable, and to protect Cerprobe's interests, Executive
understands and agrees that in addition to instituting legal proceedings to
recover damages resulting from a breach of this Agreement, Cerprobe may seek to
enforce this Agreement with an action for injunctive relief to cease or prevent
any actual or threatened violation of this Agreement on the part of Executive.
H. Survival. The provisions of this Section 12, shall survive the
termination of this Agreement.
13. DEFERRAL OF AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Any payment due pursuant to this Agreement may be deferred if
and to the extent that the payment does not satisfy the requirements to be
"qualified performance-based compensation" (as such term is defined by the
regulations issued under Section 162(m) of the Internal Revenue Code, of 1986
(the "Code")) and when combined with all other payments
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received during the year that are subject to the limitations on deductibility
under Section 162(m) of the Code, the payment exceeds the limitations on
deductibility under Section 162(m) of the Code. The deferral of payments shall
be in the discretion of the Board. Such deferred amounts shall be paid no later
than the 60th day after the end of the next succeeding calendar year, provided
that such payment, when combined with any other payments subject to the Section
162(m) limitations received during the year, does not exceed the limitations on
deductibility under Section 162(m) of the Code. If the payments in such
succeeding calendar year exceed the limitations on deductibility under Section
162(m) of the Code, such payments shall continue to be deferred to the next
succeeding year. The above procedure shall be repeated until such payments can
be and is fully paid without exceeding the limitation on deductibility under
Section 162(m) of the Code.
14. AMENDMENTS.
This Agreement and the Ancillary Agreements constitute the
entire agreement between the parties as to the subject matter hereof.
Accordingly, there are no side agreements or verbal agreements other than those
which are stated in this document or in the Ancillary Agreements. Any amendment,
modification or change in said Agreements must be done so in writing and signed
by both parties.
15. SEVERABILITY.
In the event a court or arbitrator declares that any provision
of this Agreement is invalid or unenforceable, it shall not affect or invalidate
any of the remaining provisions. Further, the court shall have the authority to
re-write that portion of the Agreement it deems unenforceable, to make it
enforceable.
16. GOVERNING LAW.
The law of the State of Arizona shall govern the
interpretation and application of all of the provisions of this Agreement.
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17. INDEMNITY.
A. General. Cerprobe shall, to the fullest extent authorized
by the Delaware General Corporation Law, as amended, indemnify and hold harmless
Executive in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative against expenses,
liabilities and losses (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by Executive in connection therewith.
B. Expenses. This right to indemnification includes the right
to be paid by Cerprobe the expenses (including attorneys' fees) incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by Executive shall be made only upon delivery to Executive
of an undertaking, by or on behalf of Executive, to repay all amounts so
advanced if it is ultimately determined by final judicial decision from which
there is no further right to appeal that Executive is not entitled to be
indemnified for such expenses. The rights to indemnification and to the
advancement of expenses shall be contract rights and such rights shall continue
as to Executive after his termination of employment and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators.
C. Claims for Indemnification or Expenses. If a claim under
either A or B above is not paid in full by Cerprobe within 60 days after
Cerprobe receives a written claim, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be 20 days,
Executive may at any time thereafter bring suit against Cerprobe to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
Executive shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the Executive to enforce a right to
indemnification or to an advancement of expenses hereunder, or brought by
Cerprobe to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that Executive is not entitled to be
indemnified, or to such advancement of expenses, shall be on Cerprobe.
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18. DISPUTE RESOLUTION.
A. Mediation. Any and all disputes arising under, pertaining
to or touching upon this Agreement (excepting the confidentiality and
non-disclosure provisions of Section 11 hereof, and the Covenant-Not-To-Compete
provisions of Section 12 hereof), or the statutory rights or obligations of
either party hereto, shall, if not settled by negotiation, be subject to
non-binding mediation before an independent mediator selected by the parties
pursuant to Section below writing and served upon the other. Any demand for
mediation shall be made in writing party to the dispute, by certified mail,
return receipt requested, at the business address of or at the last known
residence address of Executive respectively. The demand shall set forth with
reasonable specificity the basis of the dispute and the relief sought. The
mediation learning will occur at a time and place convenient to the parties in
Maricopa County, Arizona, within thirty (30) days of the date of selection or
appointment of the mediator and shall be governed by the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA").
B. Arbitration. In the event that the dispute is not settled
through mediation, the parties shall then proceed to binding arbitration before
a single independent arbitrator selected pursuant to Section 18(D). The mediator
shall not serve as arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY,
OR ALLEGED EMPLOYMENT TORT COMMITTED BY CERPROBE OR A REPRESENTATIVE OF CERPROBE
INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR
PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS POLICY AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing shall
occur at a time and place convenient to the parties in Maricopa County, Arizona,
within thirty (30) days of selection or appointment of the arbitrator. If
Cerprobe has adopted a policy that is applicable to arbitrations with
executives, the arbitration shall be conducted in accordance with said policy to
the extent that the policy is consistent with this Agreement and the Federal
Arbitration Act, 9 U.S.C. Sections 1-16. If no such policy has been
adopted, the arbitration shall be governed by the National Rules for the
Resolution of Employment Disputes of the AAA. The
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arbitrator shall issue written findings of fact and conclusions of law, and an
award, within fifteen (15) days of the date of the hearing unless the parties
otherwise agree.
C. Damages. In cases of breach of contract or policy, damages
shall be limited to contract damages. In cases of intentional discrimination
claims prohibited by statute, the arbitrator may direct payment consistent with
42 U.S.C. Section 1981(a) and the Civil Rights Act of 1991. In cases of
employment tort, the arbitrator may award punitive damages if proved by clear
and convincing evidence. Any award of punitive damages shall not exceed two
times any compensatory award and in any event, shall not exceed Two Hundred
Fifty Thousand Dollars ($250,000). The arbitrator may award fees to the
prevailing party and assess costs of the arbitration to the non-prevailing
party. Issues of procedure, arbitrability, or confirmation of award shall be
governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16, except
that court review of the arbitrator's award shall be that of an appellate court
reviewing a decision of a trial judge sitting without a jury.
D. Selection of Mediators or Arbitrators. The parties shall
select the mediator or arbitrator form a panel list made available by the AAA.
If the parties are unable to agree to a mediator or arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five (5) mediators or
arbitrators obtained by Cerprobe from ALA. Executive shall have the first
strike.
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IN WITNESS WHEREOF, Cerprobe and Executive have executed this Agreement
effective on the date set forth above.
CERPROBE CORPORATION "EXECUTIVE"
By:
Ross J. Mangano Michael K. Bonham
Chairman of the Board
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Exhibit 10(kkk)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made this 1st day
of January, 1999, by and between RANDAL L. BUNESS ("Executive") and CERPROBE
CORPORATION, a Delaware corporation ("Cerprobe"), effective January 1, 1999
("Effective Date").
R E C I T A L S
A. Executive is presently employed by Cerprobe as its Vice President,
Chief Financial Officer, Secretary, and Treasurer.
B. Cerprobe wishes to retain the continuing services of Executive
pursuant to this Employment Agreement, the terms and provisions of which are set
forth below.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. POSITION AND DUTIES.
During the Term (as defined in Section 5) Executive will be
employed by Cerprobe as its Senior Vice President, Chief Financial Officer,
Secretary, and Treasurer and shall perform those duties as from time to time
determined by the Board of Directors of Cerprobe ("Board") in accordance with
the policies, practices and bylaws of Cerprobe.
Executive shall serve Cerprobe faithfully, loyally, honestly
and to the best of Executive's ability. Executive will devote Executive's best
efforts and substantially all of the Executive's business time to the
performance of Executive's duties for, and in the business and affairs of,
Cerprobe.
Subject to Section 7, the Board reserves the right, in its
sole discretion, to change or modify Executive's position, title and duties
during the Term of this Agreement.
2. BASE SALARY.
Commencing on the Effective Date and during the term of this
Agreement, Executive's base salary will be one hundred sixty thousand and 00/100
Dollars ($160,000.00), payable in accordance with Cerprobe's customary payroll
practice. Executive's base salary will
<PAGE> 2
be reviewed annually by the Board in accordance with Cerprobe's compensation
review policies and practices, all as determined by Cerprobe in its discretion;
provided that in no event shall the amount of Executive's base salary be
decreased.
3. INCENTIVE COMPENSATION.
Executive shall be eligible to participate in any and all
performance-based incentive compensation program that the Board has established
or may in the future establish for Executive, as well as any performance-based
incentive compensation program established from time to time for other members
of Cerprobe's senior management.
4. OTHER AGREEMENTS.
Cerprobe and Executive may, from time to time, enter into one
or more agreements relating to specific benefit and/or compensation programs
including without limitation, a change of control agreement, stock option
agreements, stock purchase agreements, and stock grant agreements. Nothing in
this Agreement is intended to alter or modify any of such agreements, which an
referred to below as "Ancillary Agreements."
5. TERM AND TERMINATION.
This Agreement will continue in full force and effect until
terminated by the parties. This Agreement may be terminated in any of the
following ways: (a) it may be negotiated and replaced by a written agreement
signed by both parties; (b) Cerprobe may elect to terminate this Agreement, with
or without "Cause," as defined below; (c) Executive may elect to terminate this
Agreement with or without "Good Reason," as defined below; or (d) either party
may serve notice on the other of its or his desire to terminate this Agreement
at the end of the Term.
The "Term" of this Agreement shall begin on the Effective Date
and shall expire by its terms on December 31, 1999, unless sooner terminated in
accordance with the provisions of this Agreement. Thereafter, the "Term" of this
Agreement shall renew automatically for additional 12-month periods unless
terminated in accordance with the provisions of this Agreement.
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6. TERMINATION BY CERPROBE.
A. Termination For Cause. Cerprobe may terminate this
Agreement and Executive's employment for Cause at any time upon written notice.
For purposes of this Agreement, "Cause" shall be limited to discharge resulting
from a determination by Cerprobe that Executive has: (i) been convicted of a
felony involving dishonesty, fraud, theft or embezzlement; (ii) repeatedly
failed or refused, in a material respect, to follow reasonable policies or
directives established by Cerprobe and after written notice thereof from
Cerprobe, and a reasonable opportunity by Executive to cure such failures or
refusals after having been given reasonable written notice of such failures or
refusals; (iii) willfully and persistently failed to attend to the material
duties or obligations imposed upon Executive under this Agreement after
reasonable written notice from Cerprobe and a reasonable opportunity by
Executive to cure such failure; (iv) performed an act or failed to act, which,
if Executive were prosecuted and convicted, would constitute a felony involving
$1,000 or more of money or property of Cerprobe; or (v) intentionally
misrepresented or concealed a material fact for purposes of securing employment
with Cerprobe or this Agreement.
If this Agreement and Executive's employment are
terminated by Cerprobe for Cause, Executive shall receive no Severance Benefits.
B. Termination Without Cause. Cerprobe also may terminate this
Agreement and Executive's employment at any time or elect to not renew this
Agreement at the end of any Term without Cause by giving at least 60 days prior
written notice to Executive. In the event (i) this Agreement and Executive's
employment are terminated by Cerprobe, or (ii) Cerprobe elects to not renew this
Agreement at the end of any Term, without Cause, Executive shall be entitled to
receive Severance Benefits pursuant to Section 9.
7. TERMINATION BY EXECUTIVE.
Executive may terminate this Agreement and his employment with
or without "Good Reason" in accordance with the provisions of this Section 7.
A. Termination For Good Reason. Executive may terminate this
Agreement and Executive's employment for "Good Reason" by giving written notice
to Cerprobe within 60 days, or such longer period as may be agreed to in writing
by Cerprobe, of Executive's
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knowledge or receipt of notice of the occurrence of an event constituting "Good
Reason," as described below.
Executive shall have "Good Reason" to terminate his
Agreement and Executive's employment upon the occurrence of any of the following
events: (i) the assignment to Executive of any duties that are inconsistent
with, or the reduction of powers or functions associated with, Executive's
position, duties, or responsibilities with Cerprobe, or an adverse change in
Executive's titles, authority, or reporting responsibilities, or in conditions
of Executive's employment, (ii) the Executive's base salary is reduced or the
potential incentive compensation (or bonus) to which Executive may become
entitled to at any level of performance by the Executive or Cerprobe is reduced,
(iii) the failure of Cerprobe to cause any successor to expressly assume and
agree to be bound by the terms of this Agreement, (iv) any purported termination
by Cerprobe of Executive's employment for grounds other than for "Cause," (v)
Cerprobe relieving the Executive of Executive's duties other than for "Cause,"
or (vi) Executive is required to relocate to an employment location that is more
than fifty (50) miles from Gilbert, Arizona.
If Executive terminates this Agreement and his
employment for Good Reason, Executive shall be entitled to receive Severance
Benefits pursuant to Section 9.
B. Termination Without Good Reason. Executive also may
terminate this Agreement and Executive's employment without Good Reason at any
time by giving 60 days notice to Cerprobe. If Executive terminates this
Agreement and Executive's employment without Good Reason, Executive shall not be
entitled to receive Severance Benefits pursuant to Section 9.
8. DEATH OR DISABILITY.
This Agreement will terminate automatically on Executive's
death. Any salary or other amounts due to Executive for services rendered prior
to Executive's death shall be paid to Executive's surviving spouse, or if
Executive does not leave a surviving spouse, to Executive's estate. No other
benefits shall be payable to Executive's estate or heirs pursuant to this
Agreement, but amounts may be payable pursuant to any life insurance or other
benefit plans maintained in whole or in part by Cerprobe for the benefit of
Executive, his estate or heirs.
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In the Executive becomes "Disabled," Executive's employment
hereunder and Cerprobe's obligation to pay Executive's salary shall continue for
a period of 12 months from the date of such Disability, at which time
Executive's employment hereunder shall automatically cease and terminate.
Executive shall be considered "Disabled" or to be suffering from a "Disability"
for purposes of this Section 8 if, in the reasonable, good faith judgment of a
licensed physician selected by the Board, Executive is unable for a period of 90
consecutive business days to perform the essential functions of Executive
position required under this Agreement, with or without reasonable
accommodations, because of a physical or mental impairment. Any dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by the Board, provided, however, that if Executive
does not accept the opinion of the licensed physician selected by Cerprobe, the
dispute shall be resolved by the opinion of a licensed physician who shall be
selected by Executive; provided further, however, that if Cerprobe does not
accept the opinion of the licensed physician selected by Executive, the dispute
shall be finally resolved by the opinion of a licensed physician selected by the
licensed physicians selected by Cerprobe and Executive, respectively.
9. SEVERANCE BENEFITS.
If this Agreement and Executive's employment are terminated
without Cause pursuant to Section 6(B) hereof or if Executive elects to
terminate this Agreement for Good Reason pursuant to Section 7(A) hereof,
Executive shall receive the "Severance Benefits" as provided by this Section.
The Severance Benefits shall be payable in a single lump sum within 10 days
following termination of employment and shall equal the the sum of (x)
Executive's base salary in effect on the date of termination and (y) the average
of incentive compensation paid to the Executive for the two years prior to the
date of termination. In addition, the Executive shall continue to receive life,
disability, accident and group health insurance benefits substantially similar
to those which he was receiving immediately prior to his termination of
employment until the earlier of the end of the period of 12 months following his
termination of employment or the day on which he becomes eligible to receive any
substantially similar continuing health care benefits under any Plan or program
of any other employer. If a particular insurance benefit may not be continued
for any reason, Cerprobe shall pay Executive the amount necessary to permit
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<PAGE> 6
Executive to purchase the same insurance benefits as were provided by Cerprobe,
such payment to be made to Executive in a single lump sum. The benefits provided
pursuant to this Section shall be provided on substantially the same terms and
conditions as they were provided prior to the termination of employment, except
that the full cost of such benefits shall be paid by the Cerprobe. The
Executive's right to receive continued coverage under the Cerprobe's group
health plans pursuant to Section 601 et seq. of the Employee Retirement Income
Security Act of 1974, as it may be amended or replaced from time to time, shall
commence following the expiration of his right to receive continued benefits
under this Agreement.
Executive shall have no duty to mitigate damages in order to
receive the benefits provided by this Section.
If Cerprobe terminates the Agreement and Executive's
employment for Cause, or if Executive voluntarily terminates this Agreement and
Executive's employment without Good Reason prior to the end of the Term, no
Severance Benefits shall be paid to Executive. No Severance Benefits are payable
in the event of Executive's death or disability while in the active employ of
Cerprobe.
10. BENEFITS.
Executive will be entitled to participate in all employee
benefit plans, including, but not limited to, retirement plans, stock option
plans, life insurance plans and health and dental plans available to other
Cerprobe employees, subject to restrictions (including waiting periods)
specified in the applicable Plan.
Executive is entitled to four weeks of paid vacation per
calendar year, with such vacation to be scheduled and taken in accordance with
Cerprobe's standard vacation policies.
11. CONFIDENTIALLY AND NON-DISCLOSURE.
During the course of Executive's employment, Executive has and
will become exposed to a substantial amount of confidential and proprietary
information, including, but not limited to financial information, annual report,
audited and unaudited financial reports, strategic plans, business plans,
marketing strategies, new business strategies, personnel and compensation
information, and other such reports, documents or information. In the event
Executive's
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employment is terminated by either party for any, reason, Executive will return
to Cerprobe and Executive will not take, any copies of such documents, computer
print-outs, computer tapes, floppy disks, CD ROMS, etc., in any form, format or
manner whatsoever, nor will Executive disclose the same in whole or in part to
any person or entity, in any manner either directly or indirectly. Excluded from
this Agreement is information that is already disclosed to third parties and is
in the public domain or that Cerprobe consents to be disclosed, with such
consent to be in writing. The provisions of this Section 11 shall survive the
termination of this Agreement.
12. COVENANT-NOT-TO-COMPETE.
A. Interests to be Protected. The parties acknowledge that
during the Term, Executive will perform essential for Cerprobe, its employees
and shareholders, and for customers of Cerprobe. Therefore, Executive will be
given an opportunity to meet, work with and develop close working relationships
with Cerprobe's clients on a first-hand basis and will gain valuable insight as
to the clients' operations, personnel and need for services. In addition,
Executive will be to, have access to, and be required to work with, a
considerable amount of Cerprobe's confidential and proprietary information,
including but not limited to information concerning Cerprobe's methods of
operation, financial information, strategic planning, operational budgets and
strategies, payroll data, management systems programs, computer systems,
marketing plans and strategies, merger and acquisition strategies and customer
lists.
The parties also expressly recognize and
acknowledge that the personnel of Cerprobe have been trained by, and are
valuable to Cerprobe, and that if Cerprobe must hire new personnel or retrain
existing personnel to fill vacancies Cerprobe will incur substantial expense in
recruiting and training such personnel. The parties expressly recognize that
should Executive compete with Cerprobe in any manner whatsoever, it would
seriously impair the goodwill and diminish the value of Cerprobe's business.
The parties acknowledge that this covenant has an
extended duration; however, they agree that this covenant is reasonable and that
it is necessary for the protection of Cerprobe, its shareholders and employees.
For these and other reasons, and the fact that there
are many other employment opportunities available to Executive if Executive
should terminate, the parties are in
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full and complete agreement that the following restrictive covenants (which
together are referred to as the "Covenant-Not-To-Compete") are fair and
reasonable and are freely, voluntarily and knowingly entered into. Further, each
party has been given the opportunity to consult with independent legal counsel
before entering into this Agreement.
B. Devotion to Employment. Executive shall devote
substantially all of Executive's business time and best efforts to the
performance of Executive's duties on behalf of Cerprobe. During the term of
employment, Executive shall not at any time or place or to any extent
whatsoever, either directly or indirectly, without the express written consent
of Cerprobe, engage in any outside employment, or in any activity competitive
with or adverse to Cerprobe's business, practice or affairs, whether alone or as
partner, officer, director, employee, shareholder of any corporation or as a
trustee, fiduciary, consultant or other representative. This is not intended to
prohibit Executive from engaging in nonprofessional activities such as personal
investments or conducting to a reasonable extent private business affairs which
may include other boards of directors' activity, as long as they do not conflict
with Cerprobe. Participation to a reasonable extent in civic, social or
community activities is encouraged.
C. Non-Solicitation of Customer or Suppliers. During the term
of Executive's employment with Cerprobe and for a period of 12 months after the
expiration or termination of employment with Cerprobe, regardless of who
initiates the termination, Executive shall not, directly or indirectly, for
Executive, or on behalf of, or in conjunction with, any other person(s),
company, partnership, corporation, or governmental entity, in any manner
whatsoever, call upon, contact encourage, handle or solicit, or cause others to
solicit, any person or other entity that is, or was within the 12-month period
immediately prior to the date of Executive's termination, a customer or supplier
of Cerprobe or any of its subsidiaries or affiliates, for the purpose of
soliciting, selling or purchasing from such customer or supplier the same,
similar, or related services or products that are provided by, or purchased by,
Cerprobe or any of its subsidiaries or affiliates. Notwithstanding the
foregoing, the obligations of Executive under this Section 12(C), shall
terminate only if the employment of Executive is terminated by Cerprobe without
Cause or if Executive terminates his employment for Good Reason. If Executive
violates Executive's obligations under this Section 12(C), then the time periods
hereunder shall
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be extended by the period of time equal to that period beginning when the
activities constituting such violation commenced and ending when the activities
constituting such violation terminated.
D. Non-Solicitation of Employees. During the term of
Executive's employment with Cerprobe and for a period of 12 months after the
termination of employment with Cerprobe, regardless of who initiates the
termination, Executive shall not, directly or indirectly, for Executive, or on
behalf of, or in conjunction with, any other person(s), company, partnership,
corporation, or governmental entity, in any manner whatsoever, seek to him,
and/or hire any person who, on the date hereof, or on the date of Executive's
termination, is an employee of Cerprobe or any of its subsidiaries or
affiliates, and that receives annual compensation in excess of $25,000, for
employment or as an independent contractor with any person or entity (other than
Cerprobe or any of its subsidiaries or affiliates), unless first authorized in
writing by Cerprobe, which authorization may be withheld in the sole and
absolute discretion of Cerprobe. If Executive violates Executive's obligations
wider this Section 12(D), then the time periods hereunder shall be extended by
the period of time equal to that period beginning when the activities
constituting such violation commenced and ending when the activities
constituting such violation terminated.
E. Competing Business. During the term of Executive's
employment and for a period of 12 months after the termination of employment
with Cerprobe, regardless of who initiates the termination, Executive shall not,
directly or indirectly, (including, without limitation, as a partner, director,
officer or employee of, or lender or consultant to, any other personal entity,
or shareholder (other than as the holder of less than five percent of the stock
of a corporation the securities of which are traded on a national securities
exchange or in the over-the-counter market), for Executive, or on behalf of, or
in conjunction with, any other person(s), company, partnership, corporation, or
governmental entity, in any manner whatsoever, or in any other capacity, within,
into or from the Restricted Territory (as defined below) engage or cause others
to engage in the same or similar business as Cerprobe and its subsidiaries, or
any aspect thereof, unless first authorized in writing by Cerprobe, which
authorization may be withheld in the sole and absolute discretion of Cerprobe.
For purposes of this Section 12(E), the term "Restricted Territory" shall mean
any geographical service area where Cerprobe or any of its subsidiaries and
affiliates is engaged in business, sells products or performs services or was
considering engaging
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in business at any time, prior to the termination or at the time of termination.
Notwithstanding the foregoing, the obligations of Executive under this Section
12(E), shall terminate only if Executive is terminated by Cerprobe without Cause
or if Executive terminates his employment for Good Reason. If Executive violates
Executive's obligations under this Section 12(E), then the time periods
hereunder shall be extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and ending when the
activities constituting such violation terminated.
F. Judicial Amendment. If the scope of any provision of this
Section 12 is found by a court of competent jurisdiction to be too broad to
permit enforcement to its full extent, then such provision shall be enforced to
the maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, it shall not affect the validity of the
remaining provisions of this Agreement.
G. Injunctive Relief Damages and Forfeiture. Due to the nature
of Executive's position with Cerprobe, and with full realization that a
violation of this Agreement will cause immediate and irreparable injury and
damage, which is not readily measurable, and to protect Cerprobe's interests,
Executive understands and agrees that in addition to instituting legal
proceedings to recover damages resulting from a breach of this Agreement,
Cerprobe may seek to enforce this Agreement with an action for injunctive relief
to cease or prevent any actual or threatened violation of this Agreement on the
part of Executive.
H. Survival. The provisions of this Section 12, shall survive
the termination of this Agreement.
13. DEFERRAL OF AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Any payment due pursuant to this Agreement may be deferred if
and to the extent that the payment does not satisfy the requirements to be
"qualified performance-based compensation" (as such term is defined by the
regulations issued under Section 162(m) of the Internal Revenue Code, of 1986
(the "Code")) and when combined with all other payments
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received during the year that are subject to the limitations on deductibility
under Section 162(m) of the Code, the payment exceeds the limitations on
deductibility under Section 162(m) of the Code. The deferral of payments shall
be in the discretion of the Board. Such deferred amounts shall be paid no later
than the 60th day after the end of the next succeeding calendar year, provided
that such payment, when combined with any other payments subject to the Section
162(m) limitations received during the year, does not exceed the limitations on
deductibility under Section 162(m) of the Code. If the payments in such
succeeding calendar year exceed the limitations on deductibility under Section
162(m) of the Code, such payments shall continue to be deferred to the next
succeeding year. The above procedure shall be repeated until such payments can
be and is fully paid without exceeding the limitation on deductibility under
Section 162(m) of the Code.
14. AMENDMENTS.
This Agreement and the Ancillary Agreements constitute the
entire agreement between the parties as to the subject matter hereof.
Accordingly, there are no side agreements or verbal agreements other than those
which are stated in this document or in the Ancillary Agreements. Any amendment,
modification or change in said Agreements must be done so in writing and signed
by both parties.
15. SEVERABILITY.
In the event a court or arbitrator declares that any provision
of this Agreement is invalid or unenforceable, it shall not affect or invalidate
any of the remaining provisions. Further, the court shall have the authority to
re-write that portion of the Agreement it deems unenforceable, to make it
enforceable.
16. GOVERNING LAW.
The law of the State of Arizona shall govern the
interpretation and application of all of the provisions of this Agreement.
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17. INDEMNITY.
A. General. Cerprobe shall, to the fullest extent authorized
by the Delaware General Corporation Law, as amended, indemnify and hold harmless
Executive in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative against expenses,
liabilities and losses (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by Executive in connection therewith.
B. Expenses. This right to indemnification includes the right
to be paid by Cerprobe the expenses (including attorneys' fees) incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by Executive shall be made only upon delivery to Executive
of an undertaking, by or on behalf of Executive, to repay all amounts so
advanced if it is ultimately determined by final judicial decision from which
there is no further right to appeal that Executive is not entitled to be
indemnified for such expenses. The rights to indemnification and to the
advancement of expenses shall be contract rights and such rights shall continue
as to Executive after his termination of employment and shall inure to the
benefit of the Indemnitee's heirs, executors and administrators.
C. Claims for Indemnification or Expenses. If a claim under
either A or B above is not paid in full by Cerprobe within 60 days after
Cerprobe receives a written claim, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be 20 days,
Executive may at any time thereafter bring suit against Cerprobe to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
Executive shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by the Executive to enforce a right to
indemnification or to an advancement of expenses hereunder, or brought by
Cerprobe to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that Executive is not entitled to be
indemnified, or to such advancement of expenses, shall be on Cerprobe.
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18. DISPUTE RESOLUTION.
A. Mediation. Any and all disputes arising under, pertaining
to or touching upon this Agreement (excepting the confidentiality and
non-disclosure provisions of Section 11 hereof, and the Covenant-Not-To-Compete
provisions of Section 12 hereof), or the statutory rights or obligations of
either party hereto, shall, if not settled by negotiation, be subject to
non-binding mediation before an independent mediator selected by the parties
pursuant to Section below writing and served upon the other. Any demand for
mediation shall be made in writing party to the dispute, by certified mail,
return receipt requested, at the business address of or at the last known
residence address of Executive respectively. The demand shall set forth with
reasonable specificity the basis of the dispute and the relief sought. The
mediation learning will occur at a time and place convenient to the parties in
Maricopa County, Arizona, within thirty (30) days of the date of selection or
appointment of the mediator and shall be governed by the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA").
B. Arbitration. In the event that the dispute is not settled
through mediation, the parties shall then proceed to binding arbitration before
a single independent arbitrator selected pursuant to Section 18(D). The mediator
shall not serve as arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY,
OR ALLEGED EMPLOYMENT TORT COMMITTED BY CERPROBE OR A REPRESENTATIVE OF CERPROBE
INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR
PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS POLICY AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing shall
occur at a time and place convenient to the parties in Maricopa County, Arizona,
within thirty (30) days of selection or appointment of the arbitrator. If
Cerprobe has adopted a policy that is applicable to arbitrations with
executives, the arbitration shall be conducted in accordance with said policy to
the extent that the policy is consistent with this Agreement and the Federal
Arbitration Act, 9 U.S.C. SectionSection 1-16. If no such policy has been
adopted, the arbitration shall be governed by the National Rules for the
Resolution of Employment Disputes of the AAA. The
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arbitrator shall issue written findings of fact and conclusions of law, and an
award, within fifteen (15) days of the date of the hearing unless the parties
otherwise agree.
C. Damages. In cases of breach of contract or policy, damages
shall be limited to contract damages. In cases of intentional discrimination
claims prohibited by statute, the arbitrator may direct payment consistent with
42 U.S.C. Section 1981(a) and the Civil Rights Act of 1991. In cases of
employment tort, the arbitrator may award punitive damages if proved by clear
and convincing evidence. Any award of punitive damages shall not exceed two
times any compensatory award and in any event, shall not exceed Two Hundred
Fifty Thousand Dollars ($250,000). The arbitrator may award fees to the
prevailing party and assess costs of the arbitration to the non-prevailing
party. Issues of procedure, arbitrability, or confirmation of award shall be
governed by the Federal Arbitration Act, 9 U.S.C. SectionSection 1-16, except
that court review of the arbitrator's award shall be that of an appellate court
reviewing a decision of a trial judge sitting without a jury.
D. Selection of Mediators or Arbitrators. The parties shall
select the mediator or arbitrator form a panel list made available by the AAA.
If the parties are unable to agree to a mediator or arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five (5) mediators or
arbitrators obtained by Cerprobe from ALA. Executive shall have the first
strike.
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IN WITNESS WHEREOF, Cerprobe and Executive have executed this Agreement
effective on the date set forth above.
CERPROBE CORPORATION "EXECUTIVE"
By:
Ross J. Mangano Randal L. Buness
Chairman of the Board
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Exhibit 10(lll)
January 4, 1999
Mr. C. Zane Close
c/o Cerprobe Corporation
1150 N. Fiesta Blvd.
Gilbert, AZ 85233
CHANGE OF CONTROL AGREEMENT
Dear Zane:
The Board of Directors believes that it is in the best interests of
Cerprobe Corporation, a Delaware corporation ("Cerprobe"), and its shareholders
to take appropriate steps to allay any concerns you may have about your future
employment opportunities with Cerprobe and its subsidiaries (Cerprobe and its
subsidiaries are collectively referred to as the "Company"). As a result, the
Board has decided to offer to you the benefits described below.
Please bear in mind that these benefits are being offered only to a
few, selected employees and we accordingly ask that you refrain from discussing
this program with others. Also, please note that the benefits described below
will only be effective if you sign the extra copy of this Change of Control
Agreement (the "Agreement") which is enclosed and return it to me on or before
January 15, 1999.
1. TERM OF AGREEMENT.
This Agreement is effective immediately and will continue in effect as
long as you are actively employed by Cerprobe, unless you and Cerprobe agree in
writing to its termination.
2. SEVERANCE PAYMENT.
If your employment with the Company is terminated without "Cause" (as
defined in Section 7) at any time within two years following a "Change of
Control" (as defined in Section 5), you will receive the "Severance Payment"
described below. You will also receive the Severance Payment if you terminate
your employment for "Good Reason" (as defined in Section 6) at any time within
two years following a Change of Control.
<PAGE> 2
The Severance Payment equals the sum of (i) two times your base salary
on the date of your termination of employment, (ii) two times the average of
your incentive compensation for the two years prior to your termination of
employment, and (iii) the amount of any lump-sum severance benefit paid to you
under your Employment Agreement.
The Severance Payment will be paid in one lump sum as soon as
administratively feasible following your termination of employment, but in no
event more than 90 days following your termination of employment.
You are not entitled to receive the Severance Payment if your
employment is terminated for Cause, if you terminate your employment without
Good Reason, or if your employment is terminated by reason of your "Disability"
(as defined in Section 9(d)) or your death. In addition, you are not entitled to
receive the Severance Payment if your employment is terminated by you or the
Company for any or no reason before a Change of Control occurs or more than two
years after a Change of Control has occurred.
In order to receive the Severance Payment, you must execute any release
reasonably requested by the Company of claims that you may have pursuant to this
Agreement (but not any other claims).
The Severance Payment will be paid to you without regard to whether you
look for or obtain alternative employment following your termination of
employment with the Company.
3. BENEFITS CONTINUATION.
If your employment is terminated by the Company without Cause, or if
you terminate your employment for Good Reason, at any time within two years
following a Change of Control, you will continue to receive life, disability,
accident and group health insurance benefits substantially similar to those
which you were receiving immediately prior to your termination of employment for
a period of 24 months following your termination of employment. Such benefits
shall be provided on substantially the same terms and conditions as they were
provided prior to the Change of Control.
The Company does not intend to provide duplicative benefits. As a
result, benefits otherwise receivable pursuant to this Section shall be reduced
or eliminated if and to the extent that you receive such benefits pursuant to
your Employment Agreement.
Benefits otherwise receivable pursuant to this Section also shall be
reduced or eliminated if and to the extent that you receive comparable benefits
from any other source (for example, another employer); provided, however, you
shall have no obligation to seek, solicit or accept employment from another
employer in order to receive such benefits.
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<PAGE> 3
4. INCENTIVE COMPENSATION.
If you are employed by the Company on the day on which a Change of
Control occurs, the incentive compensation to which you will be entitled
(pursuant to any performance-based incentive compensation program established by
the Company) for the calendar year in which the Change of Control occurs will
equal at least the "Minimum Incentive Compensation Amount." The "Minimum
Incentive Compensation Amount" will equal the incentive compensation to which
you would have been entitled if the year were to end on the day on which the
Change of Control occurs, based upon performance up to that date. In measuring
financial performance, financial results through the date of the Change of
Control will be annualized.
5. CHANGE OF CONTROL DEFINED.
For purposes of this Agreement, the term Change of Control shall mean
and include the following transactions or situations:
(a) A sale, transfer, or other disposition by Cerprobe through
a single transaction or a series of transactions of securities of Cerprobe
representing 30% or more of the combined voting power of Cerprobe's then
outstanding securities to any "Unrelated Person" or "Unrelated Persons" acting
in concert with one another. For purposes of this Section, the term "Person"
shall mean and include any individual, partnership, joint venture, association,
trust, corporation, or other entity (including a "group" as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Act")). For
purposes of this Section, the term "Unrelated Person" shall mean and include any
Person other than the Company, or an employee benefit Plan of the Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of Cerprobe to an Unrelated Person or Unrelated Persons acting in concert
with one another,
(c) A change in the ownership of Cerprobe through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of Cerprobe representing at least
30% of the combined voting power of Cerprobe's then outstanding securities. For
purposes of this Section, the term "Beneficial Owner" shall have the same
meaning as given to that term in Rule 13d-3 promulgated under the Act, provided
that any pledgee of voting securities shall not be deemed to be the Beneficial
Owner thereof prior to its acquisition of voting rights with respect to such
securities.
(d) Any consolidation or merger of Cerprobe with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of Cerprobe immediately prior to the consolidation
or merger are the Beneficial Owners of securities of the surviving corporation
representing at least 50% of the combined voting power of the surviving
corporation's then outstanding securities.
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<PAGE> 4
(e) During any period of two (2) years, individuals who, at
the beginning of such period, constituted the Board of Directors of Cerprobe
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period.
(f) A change in control of Cerprobe of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Act, or any successor regulation of similar import,
regardless of whether Cerprobe is subject to such reporting requirement.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of Cerprobe under Chapter 11 of the Federal
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purpose of this Agreement.
6. GOOD REASON DEFINED.
For purposes of this Agreement, the term "Good Reason" shall be given
the meaning ascribed to such term in your Employment Agreement, as it may be
amended from time to time.
7. CAUSE DEFINED.
For purposes of this Agreement, the term "Cause" shall be given the
meaning ascribed to such term in your Employment Agreement, as it may be amended
from time to time.
8. CEILING ON BENEFITS.
The Internal Revenue Code (the "Code") places significant tax burdens
on you and the Company if the total payments made to you due to a Change of
Control exceed prescribed limits. For example, if your limit is $299,000
(because your "Base Period Income" (as defined below) is $100,000) and the
"Total Payments" (as defined below) exceed the limit by even $1.00, you are
subject to an excise tax under Section 4999 of the Code of 20% of all amounts
paid to you in excess of $100,000. If your limit is $299,000, you will not be
subject to an excise tax if you receive exactly $299,000. If you receive
$299,001, you will be subject to an excise tax of $39,800 (20% of $199,001).
In order to avoid this excise tax and the related adverse tax
consequences for the Company, by signing this Agreement, you agree that the
present value of your Total Payments will not exceed an amount equal to 2.99
times your Base Period Income. This is the maximum amount which you may receive
without becoming subject to the excise tax imposed by Section 4999 of the Code
or which the Company may pay without loss of deduction under Section 280G of the
Code.
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<PAGE> 5
"Base Period Income" is an amount equal to your "annualized includible
compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of
the Code and the regulations adopted thereunder. Generally, your "annualized
includible compensation" is the average of your annual taxable income from the
Company for the "base period," which is the five calendar years prior to the
year in which the Change of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the applicable regulations apply for
purposes of this Agreement.
Your "Total Payments" include the sum of the Severance Payment and any
other "payments in the nature of compensation" (as defined in Section 280G of
the Code and the regulations adopted thereunder).
If Cerprobe believes that these rules will result in a reduction of the
payments to which you are entitled under this Agreement, it will so notify you
within 60 days following delivery of the "Notice of Termination" described in
Section 9. You and Cerprobe will then, at Cerprobe's expense, retain legal
counsel, certified public accountants, and/or a firm of recognized executive
compensation consultants to provide an opinion or opinions concerning whether
your Total Payments exceed the limit discussed above.
Cerprobe will select the legal counsel, certified public accountants
and executive compensation consultants. If you do not accept one or more of the
parties selected by Cerprobe you may provide Cerprobe with the names of legal
counsel, certified public accountants and/or executive compensation consultants
acceptable to you. If Cerprobe does not accept the party or parties selected by
you, the legal counsel, certified public accountants and/or executive
compensation consultants selected by you and Cerprobe, respectively, will select
the legal counsel, certified public accountants and/or executive compensation
consultants to provide the opinions required.
At a minimum, the opinions required by this Section must set forth (a)
the amount of your Base Period Income, (b) the present value of the Total
Payments and (c) the amount and present value of any excess parachute payments.
If the opinions state that there would be an excess parachute payment,
your payments under this Agreement will be reduced to the extent necessary to
eliminate the excess.
You will be allowed to choose which payment should be reduced or
eliminated, but the payment you choose to reduce or eliminate must be a payment
determined by such legal counsel, certified public accountants, and/or executive
compensation consultants to be includible in Total Payments. You will make your
decision in writing and deliver it to Cerprobe within 30 days of your receipt of
such opinions. If you fail to so notify Cerprobe, it will decide which payments
to reduce or eliminate.
If the legal counsel, certified public accountants, and/or executive
compensation consultants selected to provide the opinions referred to above so
requests in connection with the opinion required by this Section, a firm of
recognized executive compensation consultants,
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<PAGE> 6
selected by you and Cerprobe pursuant to the procedures set forth above, shall
provide an opinion, upon which such legal counsel, certified public accountants,
and/or executive compensation consultants may rely, as to the reasonableness of
any item of compensation as reasonable compensation for services rendered before
or after the Change of Control.
If Cerprobe believes that your Total Payments will exceed the
limitations of this Section, it will nonetheless make payments to you, at the
times stated above, in the maximum amount that it believes may be paid without
exceeding such limitations. The balance, if any, will then be paid after the
opinions called for above have been received.
If the amount paid to you by Cerprobe is ultimately determined,
pursuant to the opinion referred to above or by the Internal Revenue Service, to
have exceeded the limitation of this Section, the excess will be treated as a
loan to you by Cerprobe and shall be repayable on the 90th day following demand
by Cerprobe, together with interest at the "applicable federal rate" provided in
Section 1274(d) of the Code.
In the event that the provisions of Sections 280G and 4999 of the Code
are repealed without succession, this Section shall be of no further force or
effect.
9. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or you of your employment shall be
communicated by written Notice of Termination to you if such Notice of
Termination is delivered by the Company and to the Company if such Notice of
Termination is delivered by you, all in accordance with the following
procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances alleged to provide a basis for
termination.
(b) Any Notice of Termination by the Company shall be in
writing signed by the Chairman of the Board of Cerprobe specifying in detail the
basis for such termination.
(c) If the Company shall furnish a Notice of Termination for
Cause and you in good faith notify the Company that a dispute exists concerning
such termination within the 15-day period following your receipt of such notice,
you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Cause did exist, your "Termination Date" shall be
the earlier of (A) the date on which the dispute is finally determined, either
by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, or (B) the date of your death; or
(ii) Cause did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Company shall furnish a Notice of Termination by
reason of Disability and you in good faith notify the Company that a dispute
exists concerning such
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<PAGE> 7
termination within the 15-day period following your receipt of such notice, you
may elect to continue your employment during such dispute. The dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by Cerprobe, provided, however, that if you do not
accept the opinion of the licensed physician selected by Cerprobe, the dispute
shall be resolved by the opinion of a licensed physician who shall be selected
by you; provided further, however, that if Cerprobe does not accept the opinion
of the licensed physician selected by you, the dispute shall be finally resolved
by the opinion of a licensed physician selected by the licensed physicians
selected by Cerprobe and you, respectively. If it is thereafter determined that
(i) a Disability did exist, your Termination Date shall be the earlier of (A)
the date on which the dispute is resolved, or (B) the date of your death, or
(ii) a Disability did not exist, your employment shall continue as if the
Company had not delivered its Notice of Termination and there shall be no
Termination Date arising out of such notice. For purposes of this Agreement,
"Disability" shall be given the meaning ascribed to such term in your Employment
Agreement at the time the Disability determination is being made.
(e) If you in good faith furnish a Notice of Termination for
Good Reason and the Company notifies you that a dispute exists concerning the
termination within the 15-day period following the Company's receipt of such
notice, you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Good Reason did exist, your Termination Date
shall be the earlier of (A) the date on which the dispute is finally determined,
either by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, (B) the date of your death, or (C)
one day prior to the second anniversary of a Change of Control, and your
payments hereunder shall reflect events occurring after you delivered Notice of
Termination; or (ii) Good Reason did not exist, your employment shall continue
after such determination as if you had not delivered the Notice of Termination
asserting Good Reason.
(f) If you do not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination, and it is finally
determined that the reason for termination set forth in such Notice of
Termination did not exist, if such notice was delivered by you, you shall be
deemed to have voluntarily terminated your employment other than for Good Reason
and if delivered by the Company, the Company will be deemed to have terminated
you other than by reason of Disability or Cause.
(g) For purposes of this Agreement, a transfer from Cerprobe
to one of its subsidiaries or a transfer from a subsidiary to Cerprobe or
another subsidiary shall not be treated as a termination of employment.
10. SUCCESSORS.
Cerprobe will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Cerprobe or any of its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Cerprobe or any subsidiary would be required to perform it if no
such succession had taken place. Failure of Cerprobe to obtain such assumption
and
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<PAGE> 8
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
agreement "Company" shall mean Company, as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
11. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
12. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to Cerprobe shall be directed to the attention of the Chairman
of the Board of Cerprobe with a copy to the Secretary of Cerprobe, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
13. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and the Chairman of the Board of Cerprobe. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its conflicts of law principles. All references to sections of the Act or the
Code shall be deemed also to refer to any successor provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of
Cerprobe that arise prior to the expiration of this Agreement shall survive the
expiration of the term of this Agreement.
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<PAGE> 9
14. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
15. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall he deemed to be an original but all of which together will constitute one
and the same instrument.
16. ALTERNATIVE DISPUTE RESOLUTION.
All claims, disputes and other matters in question between the parties
arising under this Agreement shall, unless otherwise provided herein (such as in
Sections 8 and 9(d)), be resolved in accordance with the arbitration or
alternative dispute resolution provisions included in your Employment Agreement.
17. EXPENSES AND INTEREST.
If a good faith dispute shall arise with respect to the enforcement of
your rights under this Agreement or if any arbitration or legal proceeding shall
be brought in good faith to enforce or interpret any provision contained herein,
or to recover damages for breach hereof, and you are the prevailing party, you
shall recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by you
calculated at the rate of interest announced by Bank of America, Arizona from
time to time as its prime rate from the date that payments to you should have
been made under this Agreement. It is expressly provided that the Company shall
in no event recover from you any attorneys' fees, costs, disbursements or
interest as a result of any dispute or legal proceeding involving the Company
and you.
18. PAYMENT OBLIGATIONS ABSOLUTE.
Cerprobe's obligation to pay you the compensation and to make the
arrangements in accordance with the provisions herein shall be absolute and
unconditional and shall not be affected by any circumstances; provided, however,
that Cerprobe may apply amounts payable under this Agreement to any debts owed
to the Company by you on your Termination Date. All amounts payable by Cerprobe
in accordance with this Agreement shall be paid without notice or demand. If
Cerprobe has paid you more than the amount to which you are entitled under this
Agreement, Cerprobe shall have the right to recover all or any part of such
overpayment from you or from whomsoever has received such amount.
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<PAGE> 10
19. EFFECT ON EMPLOYMENT AGREEMENT.
This Agreement supplements, and does not replace, your Employment
Agreement, as it may be amended or replaced from time to time (the "Employment
Agreement"). You will be entitled to receive all amounts due to you pursuant to
your Employment Agreement; but some payments under your Employment Agreement may
reduce your Severance Payments as provided in Section 2 and benefits due
pursuant to your Employment Agreement may reduce the benefits due pursuant to
Section 3. In addition, payments under your Employment Agreement may, in some
limited circumstances, be considered as part of your Total Payment and result in
a reduction in payments as provided in Section 8. If there is any conflict
between the provisions of this Agreement and your Employment Agreement, the
provisions of this Agreement shall control.
20. ENTIRE AGREEMENT.
This Agreement and your Employment Agreement set forth the entire
agreement between you and the Company concerning the subject matter discussed in
this Agreement and supersede all prior agreements, promises, covenants,
arrangements, communications, representations, or warranties, whether written or
oral, by any officer, employee or representative of the Company. Any prior
agreements or understandings with respect to the subject matter set forth in
this Agreement are hereby terminated and canceled.
21. DEFERRAL OF PAYMENTS.
To the extent that any payment under this Agreement, when combined with
all other payments received during the year that are subject to the limitations
on deductibility under Section 162(m) of the Code, exceeds the limitations on
deductibility under Section 162(m) of the Code, such payment shall, in the
discretion of Cerprobe, be deferred to the next succeeding calendar year. Such
deferred amounts shall be paid no later than the 60th day after the end of such
next succeeding calendar year, provided that such payment, when combined with
any other payments subject to the Section 162(m) limitations received during the
year, does not exceed the limitations on deductibility under Section 162(m) of
the Code.
22. PARTIES.
This Agreement is an agreement between you and Cerprobe. In certain
cases, though, obligations imposed upon Cerprobe may be satisfied by a
subsidiary of Cerprobe. Any payment made or action taken by a subsidiary of
Cerprobe shall be considered to be a payment made or action taken by Cerprobe
for purposes of determining whether Cerprobe has satisfied its obligations under
this Agreement.
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If you would like to participate in this special benefits program,
please sign and return the extra copy of this letter which is enclosed.
Sincerely,
CERPROBE CORPORATION
Ross J. Mangano
Chairman of the Board
Enclosure
ACCEPTANCE
I hereby accept the offer to participate in this special benefits
program and I agree to be bound by all of the provisions noted above.
C. Zane Close
Dated: January __, 1999
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Exhibit 10(mmm)
January 4, 1999
Mr. Michael K. Bonham
c/o Cerprobe Corporation
1150 N. Fiesta Blvd.
Gilbert, AZ 85233
CHANGE OF CONTROL AGREEMENT
Dear Mike:
The Board of Directors believes that it is in the best interests of
Cerprobe Corporation, a Delaware corporation ("Cerprobe"), and its shareholders
to take appropriate steps to allay any concerns you may have about your future
employment opportunities with Cerprobe and its subsidiaries (Cerprobe and its
subsidiaries are collectively referred to as the "Company"). As a result, the
Board has decided to offer to you the benefits described below.
Please bear in mind that these benefits are being offered only to a
few, selected employees and we accordingly ask that you refrain from discussing
this program with others. Also, please note that the benefits described below
will only be effective if you sign the extra copy of this Change of Control
Agreement (the "Agreement") which is enclosed and return it to me on or before
January 15, 1999.
1. TERM OF AGREEMENT.
This Agreement is effective immediately and will continue in effect as
long as you are actively employed by Cerprobe, unless you and Cerprobe agree in
writing to its termination.
2. SEVERANCE PAYMENT.
If your employment with the Company is terminated without "Cause" (as
defined in Section 7) at any time within two years following a "Change of
Control" (as defined in Section 5), you will receive the "Severance Payment"
described below. You will also receive the Severance Payment if you terminate
your employment for "Good Reason" (as defined in Section 6) at any time within
two years following a Change of Control.
<PAGE> 2
The Severance Payment equals the sum of (i) two times your base salary
on the date of your termination of employment, (ii) two times the average of
your incentive compensation for the two years prior to your termination of
employment, and (iii) the amount of any lump-sum severance benefit paid to you
under your Employment Agreement.
The Severance Payment will be paid in one lump sum as soon as
administratively feasible following your termination of employment, but in no
event more than 90 days following your termination of employment.
You are not entitled to receive the Severance Payment if your
employment is terminated for Cause, if you terminate your employment without
Good Reason, or if your employment is terminated by reason of your "Disability"
(as defined in Section 9(d)) or your death. In addition, you are not entitled to
receive the Severance Payment if your employment is terminated by you or the
Company for any or no reason before a Change of Control occurs or more than two
years after a Change of Control has occurred.
In order to receive the Severance Payment, you must execute any release
reasonably requested by the Company of claims that you may have pursuant to this
Agreement (but not any other claims).
The Severance Payment will be paid to you without regard to whether you
look for or obtain alternative employment following your termination of
employment with the Company.
3. BENEFITS CONTINUATION.
If your employment is terminated by the Company without Cause, or if
you terminate your employment for Good Reason, at any time within two years
following a Change of Control, you will continue to receive life, disability,
accident and group health insurance benefits substantially similar to those
which you were receiving immediately prior to your termination of employment for
a period of 24 months following your termination of employment. Such benefits
shall be provided on substantially the same terms and conditions as they were
provided prior to the Change of Control.
The Company does not intend to provide duplicative benefits. As a
result, benefits otherwise receivable pursuant to this Section shall be reduced
or eliminated if and to the extent that you receive such benefits pursuant to
your Employment Agreement.
Benefits otherwise receivable pursuant to this Section also shall be
reduced or eliminated if and to the extent that you receive comparable benefits
from any other source (for example, another employer); provided, however, you
shall have no obligation to seek, solicit or accept employment from another
employer in order to receive such benefits.
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4. INCENTIVE COMPENSATION.
If you are employed by the Company on the day on which a Change of
Control occurs, the incentive compensation to which you will be entitled
(pursuant to any performance-based incentive compensation program established by
the Company) for the calendar year in which the Change of Control occurs will
equal at least the "Minimum Incentive Compensation Amount." The "Minimum
Incentive Compensation Amount" will equal the incentive compensation to which
you would have been entitled if the year were to end on the day on which the
Change of Control occurs, based upon performance up to that date. In measuring
financial performance, financial results through the date of the Change of
Control will be annualized.
5. CHANGE OF CONTROL DEFINED.
For purposes of this Agreement, the term Change of Control shall mean
and include the following transactions or situations:
(a) A sale, transfer, or other disposition by Cerprobe through
a single transaction or a series of transactions of securities of Cerprobe
representing 30% or more of the combined voting power of Cerprobe's then
outstanding securities to any "Unrelated Person" or "Unrelated Persons" acting
in concert with one another. For purposes of this Section, the term "Person"
shall mean and include any individual, partnership, joint venture, association,
trust, corporation, or other entity (including a "group" as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Act")). For
purposes of this Section, the term "Unrelated Person" shall mean and include any
Person other than the Company, or an employee benefit Plan of the Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of Cerprobe to an Unrelated Person or Unrelated Persons acting in concert
with one another,
(c) A change in the ownership of Cerprobe through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of Cerprobe representing at least
30% of the combined voting power of Cerprobe's then outstanding securities. For
purposes of this Section, the term "Beneficial Owner" shall have the same
meaning as given to that term in Rule 13d-3 promulgated under the Act, provided
that any pledgee of voting securities shall not be deemed to be the Beneficial
Owner thereof prior to its acquisition of voting rights with respect to such
securities.
(d) Any consolidation or merger of Cerprobe with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of Cerprobe immediately prior to the consolidation
or merger are the Beneficial Owners of securities of the surviving corporation
representing at least 50% of the combined voting power of the surviving
corporation's then outstanding securities.
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(e) During any period of two (2) years, individuals who, at
the beginning of such period, constituted the Board of Directors of Cerprobe
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period.
(f) A change in control of Cerprobe of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Act, or any successor regulation of similar import,
regardless of whether Cerprobe is subject to such reporting requirement.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of Cerprobe under Chapter 11 of the Federal
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purpose of this Agreement.
6. GOOD REASON DEFINED.
For purposes of this Agreement, the term "Good Reason" shall be given
the meaning ascribed to such term in your Employment Agreement, as it may be
amended from time to time.
7. CAUSE DEFINED.
For purposes of this Agreement, the term "Cause" shall be given the
meaning ascribed to such term in your Employment Agreement, as it may be amended
from time to time.
8. CEILING ON BENEFITS.
The Internal Revenue Code (the "Code") places significant tax burdens
on you and the Company if the total payments made to you due to a Change of
Control exceed prescribed limits. For example, if your limit is $299,000
(because your "Base Period Income" (as defined below) is $100,000) and the
"Total Payments" (as defined below) exceed the limit by even $1.00, you are
subject to an excise tax under Section 4999 of the Code of 20% of all amounts
paid to you in excess of $100,000. If your limit is $299,000, you will not be
subject to an excise tax if you receive exactly $299,000. If you receive
$299,001, you will be subject to an excise tax of $39,800 (20% of $199,001).
In order to avoid this excise tax and the related adverse tax
consequences for the Company, by signing this Agreement, you agree that the
present value of your Total Payments will not exceed an amount equal to 2.99
times your Base Period Income. This is the maximum amount which you may receive
without becoming subject to the excise tax imposed by Section 4999 of the Code
or which the Company may pay without loss of deduction under Section 280G of the
Code.
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"Base Period Income" is an amount equal to your "annualized includible
compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of
the Code and the regulations adopted thereunder. Generally, your "annualized
includible compensation" is the average of your annual taxable income from the
Company for the "base period," which is the five calendar years prior to the
year in which the Change of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the applicable regulations apply for
purposes of this Agreement.
Your "Total Payments" include the sum of the Severance Payment and any
other "payments in the nature of compensation" (as defined in Section 280G of
the Code and the regulations adopted thereunder).
If Cerprobe believes that these rules will result in a reduction of the
payments to which you are entitled under this Agreement, it will so notify you
within 60 days following delivery of the "Notice of Termination" described in
Section 9. You and Cerprobe will then, at Cerprobe's expense, retain legal
counsel, certified public accountants, and/or a firm of recognized executive
compensation consultants to provide an opinion or opinions concerning whether
your Total Payments exceed the limit discussed above.
Cerprobe will select the legal counsel, certified public accountants
and executive compensation consultants. If you do not accept one or more of the
parties selected by Cerprobe you may provide Cerprobe with the names of legal
counsel, certified public accountants and/or executive compensation consultants
acceptable to you. If Cerprobe does not accept the party or parties selected by
you, the legal counsel, certified public accountants and/or executive
compensation consultants selected by you and Cerprobe, respectively, will select
the legal counsel, certified public accountants and/or executive compensation
consultants to provide the opinions required.
At a minimum, the opinions required by this Section must set forth (a)
the amount of your Base Period Income, (b) the present value of the Total
Payments and (c) the amount and present value of any excess parachute payments.
If the opinions state that there would be an excess parachute payment,
your payments under this Agreement will be reduced to the extent necessary to
eliminate the excess.
You will be allowed to choose which payment should be reduced or
eliminated, but the payment you choose to reduce or eliminate must be a payment
determined by such legal counsel, certified public accountants, and/or executive
compensation consultants to be includible in Total Payments. You will make your
decision in writing and deliver it to Cerprobe within 30 days of your receipt of
such opinions. If you fail to so notify Cerprobe, it will decide which payments
to reduce or eliminate.
If the legal counsel, certified public accountants, and/or executive
compensation consultants selected to provide the opinions referred to above so
requests in connection with the opinion required by this Section, a firm of
recognized executive compensation consultants,
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selected by you and Cerprobe pursuant to the procedures set forth above, shall
provide an opinion, upon which such legal counsel, certified public accountants,
and/or executive compensation consultants may rely, as to the reasonableness of
any item of compensation as reasonable compensation for services rendered before
or after the Change of Control.
If Cerprobe believes that your Total Payments will exceed the
limitations of this Section, it will nonetheless make payments to you, at the
times stated above, in the maximum amount that it believes may be paid without
exceeding such limitations. The balance, if any, will then be paid after the
opinions called for above have been received.
If the amount paid to you by Cerprobe is ultimately determined,
pursuant to the opinion referred to above or by the Internal Revenue Service, to
have exceeded the limitation of this Section, the excess will be treated as a
loan to you by Cerprobe and shall be repayable on the 90th day following demand
by Cerprobe, together with interest at the "applicable federal rate" provided in
Section 1274(d) of the Code.
In the event that the provisions of Sections 280G and 4999 of the Code
are repealed without succession, this Section shall be of no further force or
effect.
9. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or you of your employment shall be
communicated by written Notice of Termination to you if such Notice of
Termination is delivered by the Company and to the Company if such Notice of
Termination is delivered by you, all in accordance with the following
procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances alleged to provide a basis for
termination.
(b) Any Notice of Termination by the Company shall be in
writing signed by the Chairman of the Board of Cerprobe specifying in detail the
basis for such termination.
(c) If the Company shall furnish a Notice of Termination for
Cause and you in good faith notify the Company that a dispute exists concerning
such termination within the 15-day period following your receipt of such notice,
you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Cause did exist, your "Termination Date" shall be
the earlier of (A) the date on which the dispute is finally determined, either
by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, or (B) the date of your death; or
(ii) Cause did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Company shall furnish a Notice of Termination by
reason of Disability and you in good faith notify the Company that a dispute
exists concerning such
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<PAGE> 7
termination within the 15-day period following your receipt of such notice, you
may elect to continue your employment during such dispute. The dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by Cerprobe, provided, however, that if you do not
accept the opinion of the licensed physician selected by Cerprobe, the dispute
shall be resolved by the opinion of a licensed physician who shall be selected
by you; provided further, however, that if Cerprobe does not accept the opinion
of the licensed physician selected by you, the dispute shall be finally resolved
by the opinion of a licensed physician selected by the licensed physicians
selected by Cerprobe and you, respectively. If it is thereafter determined that
(i) a Disability did exist, your Termination Date shall be the earlier of (A)
the date on which the dispute is resolved, or (B) the date of your death, or
(ii) a Disability did not exist, your employment shall continue as if the
Company had not delivered its Notice of Termination and there shall be no
Termination Date arising out of such notice. For purposes of this Agreement,
"Disability" shall be given the meaning ascribed to such term in your Employment
Agreement at the time the Disability determination is being made.
(e) If you in good faith furnish a Notice of Termination for
Good Reason and the Company notifies you that a dispute exists concerning the
termination within the 15-day period following the Company's receipt of such
notice, you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Good Reason did exist, your Termination Date
shall be the earlier of (A) the date on which the dispute is finally determined,
either by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, (B) the date of your death, or (C)
one day prior to the second anniversary of a Change of Control, and your
payments hereunder shall reflect events occurring after you delivered Notice of
Termination; or (ii) Good Reason did not exist, your employment shall continue
after such determination as if you had not delivered the Notice of Termination
asserting Good Reason.
(f) If you do not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination, and it is finally
determined that the reason for termination set forth in such Notice of
Termination did not exist, if such notice was delivered by you, you shall be
deemed to have voluntarily terminated your employment other than for Good Reason
and if delivered by the Company, the Company will be deemed to have terminated
you other than by reason of Disability or Cause.
(g) For purposes of this Agreement, a transfer from Cerprobe
to one of its subsidiaries or a transfer from a subsidiary to Cerprobe or
another subsidiary shall not be treated as a termination of employment.
10. SUCCESSORS.
Cerprobe will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Cerprobe or any of its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Cerprobe or any subsidiary would be required to perform it if no
such succession had taken place. Failure of Cerprobe to obtain such assumption
and
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<PAGE> 8
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
agreement "Company" shall mean Company, as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
11. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
12. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to Cerprobe shall be directed to the attention of the Chairman
of the Board of Cerprobe with a copy to the Secretary of Cerprobe, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
13. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and the Chairman of the Board of Cerprobe. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its conflicts of law principles. All references to sections of the Act or the
Code shall be deemed also to refer to any successor provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of
Cerprobe that arise prior to the expiration of this Agreement shall survive the
expiration of the term of this Agreement.
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14. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
15. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall he deemed to be an original but all of which together will constitute one
and the same instrument.
16. ALTERNATIVE DISPUTE RESOLUTION.
All claims, disputes and other matters in question between the parties
arising under this Agreement shall, unless otherwise provided herein (such as in
Sections 8 and 9(d)), be resolved in accordance with the arbitration or
alternative dispute resolution provisions included in your Employment Agreement.
17. EXPENSES AND INTEREST.
If a good faith dispute shall arise with respect to the enforcement of
your rights under this Agreement or if any arbitration or legal proceeding shall
be brought in good faith to enforce or interpret any provision contained herein,
or to recover damages for breach hereof, and you are the prevailing party, you
shall recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by you
calculated at the rate of interest announced by Bank of America, Arizona from
time to time as its prime rate from the date that payments to you should have
been made under this Agreement. It is expressly provided that the Company shall
in no event recover from you any attorneys' fees, costs, disbursements or
interest as a result of any dispute or legal proceeding involving the Company
and you.
18. PAYMENT OBLIGATIONS ABSOLUTE.
Cerprobe's obligation to pay you the compensation and to make the
arrangements in accordance with the provisions herein shall be absolute and
unconditional and shall not be affected by any circumstances; provided, however,
that Cerprobe may apply amounts payable under this Agreement to any debts owed
to the Company by you on your Termination Date. All amounts payable by Cerprobe
in accordance with this Agreement shall be paid without notice or demand. If
Cerprobe has paid you more than the amount to which you are entitled under this
Agreement, Cerprobe shall have the right to recover all or any part of such
overpayment from you or from whomsoever has received such amount.
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<PAGE> 10
19. EFFECT ON EMPLOYMENT AGREEMENT.
This Agreement supplements, and does not replace, your Employment
Agreement, as it may be amended or replaced from time to time (the "Employment
Agreement"). You will be entitled to receive all amounts due to you pursuant to
your Employment Agreement; but some payments under your Employment Agreement may
reduce your Severance Payments as provided in Section 2 and benefits due
pursuant to your Employment Agreement may reduce the benefits due pursuant to
Section 3. In addition, payments under your Employment Agreement may, in some
limited circumstances, be considered as part of your Total Payment and result in
a reduction in payments as provided in Section 8. If there is any conflict
between the provisions of this Agreement and your Employment Agreement, the
provisions of this Agreement shall control.
20. ENTIRE AGREEMENT.
This Agreement and your Employment Agreement set forth the entire
agreement between you and the Company concerning the subject matter discussed in
this Agreement and supersede all prior agreements, promises, covenants,
arrangements, communications, representations, or warranties, whether written or
oral, by any officer, employee or representative of the Company. Any prior
agreements or understandings with respect to the subject matter set forth in
this Agreement are hereby terminated and canceled.
21. DEFERRAL OF PAYMENTS.
To the extent that any payment under this Agreement, when combined with
all other payments received during the year that are subject to the limitations
on deductibility under Section 162(m) of the Code, exceeds the limitations on
deductibility under Section 162(m) of the Code, such payment shall, in the
discretion of Cerprobe, be deferred to the next succeeding calendar year. Such
deferred amounts shall be paid no later than the 60th day after the end of such
next succeeding calendar year, provided that such payment, when combined with
any other payments subject to the Section 162(m) limitations received during the
year, does not exceed the limitations on deductibility under Section 162(m) of
the Code.
22. PARTIES.
This Agreement is an agreement between you and Cerprobe. In certain
cases, though, obligations imposed upon Cerprobe may be satisfied by a
subsidiary of Cerprobe. Any payment made or action taken by a subsidiary of
Cerprobe shall be considered to be a payment made or action taken by Cerprobe
for purposes of determining whether Cerprobe has satisfied its obligations under
this Agreement.
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If you would like to participate in this special benefits program,
please sign and return the extra copy of this letter which is enclosed.
Sincerely,
CERPROBE CORPORATION
Ross J. Mangano
Chairman of the Board
Enclosure
ACCEPTANCE
I hereby accept the offer to participate in this special benefits
program and I agree to be bound by all of the provisions noted above.
Michael K. Bonham
Dated: January __, 1999
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Exhibit 10(nnn)
January 4, 1999
Mr. Randal L. Buness
c/o Cerprobe Corporation
1150 N. Fiesta Blvd.
Gilbert, AZ 85233
CHANGE OF CONTROL AGREEMENT
Dear Randy:
The Board of Directors believes that it is in the best interests of
Cerprobe Corporation, a Delaware corporation ("Cerprobe"), and its shareholders
to take appropriate steps to allay any concerns you may have about your future
employment opportunities with Cerprobe and its subsidiaries (Cerprobe and its
subsidiaries are collectively referred to as the "Company"). As a result, the
Board has decided to offer to you the benefits described below.
Please bear in mind that these benefits are being offered only to a
few, selected employees and we accordingly ask that you refrain from discussing
this program with others. Also, please note that the benefits described below
will only be effective if you sign the extra copy of this Change of Control
Agreement (the "Agreement") which is enclosed and return it to me on or before
January 15, 1999.
1. TERM OF AGREEMENT.
This Agreement is effective immediately and will continue in effect as
long as you are actively employed by Cerprobe, unless you and Cerprobe agree in
writing to its termination.
2. SEVERANCE PAYMENT.
If your employment with the Company is terminated without "Cause" (as
defined in Section 7) at any time within two years following a "Change of
Control" (as defined in Section 5), you will receive the "Severance Payment"
described below. You will also receive the Severance Payment if you terminate
your employment for "Good Reason" (as defined in Section 6) at any time within
two years following a Change of Control.
<PAGE> 2
The Severance Payment equals the sum of (i) two times your base salary
on the date of your termination of employment, (ii) two times the average of
your incentive compensation for the two years prior to your termination of
employment, and (iii) the amount of any lump-sum severance benefit paid to you
under your Employment Agreement.
The Severance Payment will be paid in one lump sum as soon as
administratively feasible following your termination of employment, but in no
event more than 90 days following your termination of employment.
You are not entitled to receive the Severance Payment if your
employment is terminated for Cause, if you terminate your employment without
Good Reason, or if your employment is terminated by reason of your "Disability"
(as defined in Section 9(d)) or your death. In addition, you are not entitled to
receive the Severance Payment if your employment is terminated by you or the
Company for any or no reason before a Change of Control occurs or more than two
years after a Change of Control has occurred.
In order to receive the Severance Payment, you must execute any release
reasonably requested by the Company of claims that you may have pursuant to this
Agreement (but not any other claims).
The Severance Payment will be paid to you without regard to whether you
look for or obtain alternative employment following your termination of
employment with the Company.
3. BENEFITS CONTINUATION.
If your employment is terminated by the Company without Cause, or if
you terminate your employment for Good Reason, at any time within two years
following a Change of Control, you will continue to receive life, disability,
accident and group health insurance benefits substantially similar to those
which you were receiving immediately prior to your termination of employment for
a period of 24 months following your termination of employment. Such benefits
shall be provided on substantially the same terms and conditions as they were
provided prior to the Change of Control.
The Company does not intend to provide duplicative benefits. As a
result, benefits otherwise receivable pursuant to this Section shall be reduced
or eliminated if and to the extent that you receive such benefits pursuant to
your Employment Agreement.
Benefits otherwise receivable pursuant to this Section also shall be
reduced or eliminated if and to the extent that you receive comparable benefits
from any other source (for example, another employer); provided, however, you
shall have no obligation to seek, solicit or accept employment from another
employer in order to receive such benefits.
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<PAGE> 3
4. INCENTIVE COMPENSATION.
If you are employed by the Company on the day on which a Change of
Control occurs, the incentive compensation to which you will be entitled
(pursuant to any performance-based incentive compensation program established by
the Company) for the calendar year in which the Change of Control occurs will
equal at least the "Minimum Incentive Compensation Amount." The "Minimum
Incentive Compensation Amount" will equal the incentive compensation to which
you would have been entitled if the year were to end on the day on which the
Change of Control occurs, based upon performance up to that date. In measuring
financial performance, financial results through the date of the Change of
Control will be annualized.
5. CHANGE OF CONTROL DEFINED.
For purposes of this Agreement, the term Change of Control shall mean
and include the following transactions or situations:
(a) A sale, transfer, or other disposition by Cerprobe through
a single transaction or a series of transactions of securities of Cerprobe
representing 30% or more of the combined voting power of Cerprobe's then
outstanding securities to any "Unrelated Person" or "Unrelated Persons" acting
in concert with one another. For purposes of this Section, the term "Person"
shall mean and include any individual, partnership, joint venture, association,
trust, corporation, or other entity (including a "group" as referred to in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Act")). For
purposes of this Section, the term "Unrelated Person" shall mean and include any
Person other than the Company, or an employee benefit Plan of the Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of Cerprobe to an Unrelated Person or Unrelated Persons acting in concert
with one another,
(c) A change in the ownership of Cerprobe through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of Cerprobe representing at least
30% of the combined voting power of Cerprobe's then outstanding securities. For
purposes of this Section, the term "Beneficial Owner" shall have the same
meaning as given to that term in Rule 13d-3 promulgated under the Act, provided
that any pledgee of voting securities shall not be deemed to be the Beneficial
Owner thereof prior to its acquisition of voting rights with respect to such
securities.
(d) Any consolidation or merger of Cerprobe with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of Cerprobe immediately prior to the consolidation
or merger are the Beneficial Owners of securities of the surviving corporation
representing at least 50% of the combined voting power of the surviving
corporation's then outstanding securities.
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<PAGE> 4
(e) During any period of two (2) years, individuals who, at
the beginning of such period, constituted the Board of Directors of Cerprobe
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period.
(f) A change in control of Cerprobe of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Act, or any successor regulation of similar import,
regardless of whether Cerprobe is subject to such reporting requirement.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of Cerprobe under Chapter 11 of the Federal
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purpose of this Agreement.
6. GOOD REASON DEFINED.
For purposes of this Agreement, the term "Good Reason" shall be given
the meaning ascribed to such term in your Employment Agreement, as it may be
amended from time to time.
7. CAUSE DEFINED.
For purposes of this Agreement, the term "Cause" shall be given the
meaning ascribed to such term in your Employment Agreement, as it may be amended
from time to time.
8. CEILING ON BENEFITS.
The Internal Revenue Code (the "Code") places significant tax burdens
on you and the Company if the total payments made to you due to a Change of
Control exceed prescribed limits. For example, if your limit is $299,000
(because your "Base Period Income" (as defined below) is $100,000) and the
"Total Payments" (as defined below) exceed the limit by even $1.00, you are
subject to an excise tax under Section 4999 of the Code of 20% of all amounts
paid to you in excess of $100,000. If your limit is $299,000, you will not be
subject to an excise tax if you receive exactly $299,000. If you receive
$299,001, you will be subject to an excise tax of $39,800 (20% of $199,001).
In order to avoid this excise tax and the related adverse tax
consequences for the Company, by signing this Agreement, you agree that the
present value of your Total Payments will not exceed an amount equal to 2.99
times your Base Period Income. This is the maximum amount which you may receive
without becoming subject to the excise tax imposed by Section 4999 of the Code
or which the Company may pay without loss of deduction under Section 280G of the
Code.
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<PAGE> 5
"Base Period Income" is an amount equal to your "annualized includible
compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of
the Code and the regulations adopted thereunder. Generally, your "annualized
includible compensation" is the average of your annual taxable income from the
Company for the "base period," which is the five calendar years prior to the
year in which the Change of Control occurs. These concepts are complicated and
technical and all of the rules set forth in the applicable regulations apply for
purposes of this Agreement.
Your "Total Payments" include the sum of the Severance Payment and any
other "payments in the nature of compensation" (as defined in Section 280G of
the Code and the regulations adopted thereunder).
If Cerprobe believes that these rules will result in a reduction of the
payments to which you are entitled under this Agreement, it will so notify you
within 60 days following delivery of the "Notice of Termination" described in
Section 9. You and Cerprobe will then, at Cerprobe's expense, retain legal
counsel, certified public accountants, and/or a firm of recognized executive
compensation consultants to provide an opinion or opinions concerning whether
your Total Payments exceed the limit discussed above.
Cerprobe will select the legal counsel, certified public accountants
and executive compensation consultants. If you do not accept one or more of the
parties selected by Cerprobe you may provide Cerprobe with the names of legal
counsel, certified public accountants and/or executive compensation consultants
acceptable to you. If Cerprobe does not accept the party or parties selected by
you, the legal counsel, certified public accountants and/or executive
compensation consultants selected by you and Cerprobe, respectively, will select
the legal counsel, certified public accountants and/or executive compensation
consultants to provide the opinions required.
At a minimum, the opinions required by this Section must set forth (a)
the amount of your Base Period Income, (b) the present value of the Total
Payments and (c) the amount and present value of any excess parachute payments.
If the opinions state that there would be an excess parachute payment,
your payments under this Agreement will be reduced to the extent necessary to
eliminate the excess.
You will be allowed to choose which payment should be reduced or
eliminated, but the payment you choose to reduce or eliminate must be a payment
determined by such legal counsel, certified public accountants, and/or executive
compensation consultants to be includible in Total Payments. You will make your
decision in writing and deliver it to Cerprobe within 30 days of your receipt of
such opinions. If you fail to so notify Cerprobe, it will decide which payments
to reduce or eliminate.
If the legal counsel, certified public accountants, and/or executive
compensation consultants selected to provide the opinions referred to above so
requests in connection with the opinion required by this Section, a firm of
recognized executive compensation consultants,
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<PAGE> 6
selected by you and Cerprobe pursuant to the procedures set forth above, shall
provide an opinion, upon which such legal counsel, certified public accountants,
and/or executive compensation consultants may rely, as to the reasonableness of
any item of compensation as reasonable compensation for services rendered before
or after the Change of Control.
If Cerprobe believes that your Total Payments will exceed the
limitations of this Section, it will nonetheless make payments to you, at the
times stated above, in the maximum amount that it believes may be paid without
exceeding such limitations. The balance, if any, will then be paid after the
opinions called for above have been received.
If the amount paid to you by Cerprobe is ultimately determined,
pursuant to the opinion referred to above or by the Internal Revenue Service, to
have exceeded the limitation of this Section, the excess will be treated as a
loan to you by Cerprobe and shall be repayable on the 90th day following demand
by Cerprobe, together with interest at the "applicable federal rate" provided in
Section 1274(d) of the Code.
In the event that the provisions of Sections 280G and 4999 of the Code
are repealed without succession, this Section shall be of no further force or
effect.
9. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or you of your employment shall be
communicated by written Notice of Termination to you if such Notice of
Termination is delivered by the Company and to the Company if such Notice of
Termination is delivered by you, all in accordance with the following
procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances alleged to provide a basis for
termination.
(b) Any Notice of Termination by the Company shall be in
writing signed by the Chairman of the Board of Cerprobe specifying in detail the
basis for such termination.
(c) If the Company shall furnish a Notice of Termination for
Cause and you in good faith notify the Company that a dispute exists concerning
such termination within the 15-day period following your receipt of such notice,
you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Cause did exist, your "Termination Date" shall be
the earlier of (A) the date on which the dispute is finally determined, either
by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, or (B) the date of your death; or
(ii) Cause did not exist, your employment shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Company shall furnish a Notice of Termination by
reason of Disability and you in good faith notify the Company that a dispute
exists concerning such
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termination within the 15-day period following your receipt of such notice, you
may elect to continue your employment during such dispute. The dispute relating
to the existence of a Disability shall be resolved by the opinion of the
licensed physician selected by Cerprobe, provided, however, that if you do not
accept the opinion of the licensed physician selected by Cerprobe, the dispute
shall be resolved by the opinion of a licensed physician who shall be selected
by you; provided further, however, that if Cerprobe does not accept the opinion
of the licensed physician selected by you, the dispute shall be finally resolved
by the opinion of a licensed physician selected by the licensed physicians
selected by Cerprobe and you, respectively. If it is thereafter determined that
(i) a Disability did exist, your Termination Date shall be the earlier of (A)
the date on which the dispute is resolved, or (B) the date of your death, or
(ii) a Disability did not exist, your employment shall continue as if the
Company had not delivered its Notice of Termination and there shall be no
Termination Date arising out of such notice. For purposes of this Agreement,
"Disability" shall be given the meaning ascribed to such term in your Employment
Agreement at the time the Disability determination is being made.
(e) If you in good faith furnish a Notice of Termination for
Good Reason and the Company notifies you that a dispute exists concerning the
termination within the 15-day period following the Company's receipt of such
notice, you may elect to continue your employment during such dispute. If it is
thereafter determined that (i) Good Reason did exist, your Termination Date
shall be the earlier of (A) the date on which the dispute is finally determined,
either by mutual written agreement of the parties or pursuant to the alternative
dispute resolution provisions of Section 16, (B) the date of your death, or (C)
one day prior to the second anniversary of a Change of Control, and your
payments hereunder shall reflect events occurring after you delivered Notice of
Termination; or (ii) Good Reason did not exist, your employment shall continue
after such determination as if you had not delivered the Notice of Termination
asserting Good Reason.
(f) If you do not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination, and it is finally
determined that the reason for termination set forth in such Notice of
Termination did not exist, if such notice was delivered by you, you shall be
deemed to have voluntarily terminated your employment other than for Good Reason
and if delivered by the Company, the Company will be deemed to have terminated
you other than by reason of Disability or Cause.
(g) For purposes of this Agreement, a transfer from Cerprobe
to one of its subsidiaries or a transfer from a subsidiary to Cerprobe or
another subsidiary shall not be treated as a termination of employment.
10. SUCCESSORS.
Cerprobe will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Cerprobe or any of its subsidiaries to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Cerprobe or any subsidiary would be required to perform it if no
such succession had taken place. Failure of Cerprobe to obtain such assumption
and
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<PAGE> 8
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation in the same amount and on
the same terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Termination Date. As used in this
agreement "Company" shall mean Company, as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
11. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be enforceable by you
and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
12. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to Cerprobe shall be directed to the attention of the Chairman
of the Board of Cerprobe with a copy to the Secretary of Cerprobe, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
13. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and the Chairman of the Board of Cerprobe. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without regard
to its conflicts of law principles. All references to sections of the Act or the
Code shall be deemed also to refer to any successor provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of
Cerprobe that arise prior to the expiration of this Agreement shall survive the
expiration of the term of this Agreement.
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14. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
15. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall he deemed to be an original but all of which together will constitute one
and the same instrument.
16. ALTERNATIVE DISPUTE RESOLUTION.
All claims, disputes and other matters in question between the parties
arising under this Agreement shall, unless otherwise provided herein (such as in
Sections 8 and 9(d)), be resolved in accordance with the arbitration or
alternative dispute resolution provisions included in your Employment Agreement.
17. EXPENSES AND INTEREST.
If a good faith dispute shall arise with respect to the enforcement of
your rights under this Agreement or if any arbitration or legal proceeding shall
be brought in good faith to enforce or interpret any provision contained herein,
or to recover damages for breach hereof, and you are the prevailing party, you
shall recover from the Company any reasonable attorneys' fees and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by you
calculated at the rate of interest announced by Bank of America, Arizona from
time to time as its prime rate from the date that payments to you should have
been made under this Agreement. It is expressly provided that the Company shall
in no event recover from you any attorneys' fees, costs, disbursements or
interest as a result of any dispute or legal proceeding involving the Company
and you.
18. PAYMENT OBLIGATIONS ABSOLUTE.
Cerprobe's obligation to pay you the compensation and to make the
arrangements in accordance with the provisions herein shall be absolute and
unconditional and shall not be affected by any circumstances; provided, however,
that Cerprobe may apply amounts payable under this Agreement to any debts owed
to the Company by you on your Termination Date. All amounts payable by Cerprobe
in accordance with this Agreement shall be paid without notice or demand. If
Cerprobe has paid you more than the amount to which you are entitled under this
Agreement, Cerprobe shall have the right to recover all or any part of such
overpayment from you or from whomsoever has received such amount.
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<PAGE> 10
19. EFFECT ON EMPLOYMENT AGREEMENT.
This Agreement supplements, and does not replace, your Employment
Agreement, as it may be amended or replaced from time to time (the "Employment
Agreement"). You will be entitled to receive all amounts due to you pursuant to
your Employment Agreement; but some payments under your Employment Agreement may
reduce your Severance Payments as provided in Section 2 and benefits due
pursuant to your Employment Agreement may reduce the benefits due pursuant to
Section 3. In addition, payments under your Employment Agreement may, in some
limited circumstances, be considered as part of your Total Payment and result in
a reduction in payments as provided in Section 8. If there is any conflict
between the provisions of this Agreement and your Employment Agreement, the
provisions of this Agreement shall control.
20. ENTIRE AGREEMENT.
This Agreement and your Employment Agreement set forth the entire
agreement between you and the Company concerning the subject matter discussed in
this Agreement and supersede all prior agreements, promises, covenants,
arrangements, communications, representations, or warranties, whether written or
oral, by any officer, employee or representative of the Company. Any prior
agreements or understandings with respect to the subject matter set forth in
this Agreement are hereby terminated and canceled.
21. DEFERRAL OF PAYMENTS.
To the extent that any payment under this Agreement, when combined with
all other payments received during the year that are subject to the limitations
on deductibility under Section 162(m) of the Code, exceeds the limitations on
deductibility under Section 162(m) of the Code, such payment shall, in the
discretion of Cerprobe, be deferred to the next succeeding calendar year. Such
deferred amounts shall be paid no later than the 60th day after the end of such
next succeeding calendar year, provided that such payment, when combined with
any other payments subject to the Section 162(m) limitations received during the
year, does not exceed the limitations on deductibility under Section 162(m) of
the Code.
22. PARTIES.
This Agreement is an agreement between you and Cerprobe. In certain
cases, though, obligations imposed upon Cerprobe may be satisfied by a
subsidiary of Cerprobe. Any payment made or action taken by a subsidiary of
Cerprobe shall be considered to be a payment made or action taken by Cerprobe
for purposes of determining whether Cerprobe has satisfied its obligations under
this Agreement.
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If you would like to participate in this special benefits program,
please sign and return the extra copy of this letter which is enclosed.
Sincerely,
CERPROBE CORPORATION
Ross J. Mangano
Chairman of the Board
Enclosure
ACCEPTANCE
I hereby accept the offer to participate in this special benefits
program and I agree to be bound by all of the provisions noted above.
Randal L. Buness
Dated: January __, 1999
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<PAGE> 1
CERPROBE CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED THROUGH FEBRUARY 15, 1999)
ARTICLE I
PURPOSE
1.1 Name. This Stock Purchase Plan shall be known as the Cerprobe
Corporation 1997 Employee Stock Purchase Plan (the "Plan").
1.2 Purpose. The Plan is intended to provide a method whereby employees
of Cerprobe Corporation, a Delaware corporation, and each Subsidiary Corporation
that has agreed, with Cerprobe's Corporation's consent, to participate in the
Plan (hereinafter referred to, unless the context otherwise requires, as the
"Company") will have an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of the Common Stock of the Company.
1.3 Qualifications. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall
be construed in a manner consistent with the requirements of that section of the
Code.
ARTICLE II
DEFINITIONS
2.1 Base Pay. "Base Pay" shall mean regular straight-time earnings
excluding payments for overtime, shift premium bonuses, "skill-based" pay and
other special payments, commissions (unless such commissions represent the
primary source of compensation, as determined by the Committee) and other
marketing incentive payments.
2.2 Committee. "Committee" shall mean the individuals described in
Article XI.
2.3 Employee. "Employee" shall mean any person who is customarily
employed on a full-time or part-time basis by the Company and is regularly
scheduled to work more than 20 hours per week.
2.4 Stock. "Stock" shall mean the Common Stock of the Company, par value
five cents ($.05).
2.5 Subsidiary Corporation. "Subsidiary Corporation" shall mean any
present or future corporation that (i) is a "subsidiary corporation," as that
term is defined in Code section 424(f), of Cerprobe Corporation and (ii) is
designated as a participant in the Plan by the Committee.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Initial Eligibility. Any Employee who has completed 90 days of
continuous employment and is employed by the Company on the date such Employee's
participation in the Plan is to become effective shall be eligible to
participate in Offerings under the Plan which commence on or after such 90 day
employment period has concluded.
3.2 Leave of Absence. For purposes of participation in the Plan, a person
on leave of absence shall be deemed to be an Employee for the first 90 days of
such leave of absence and, except as otherwise provided by the Committee and
unless such Employee shall have returned to regular full-time or part-time
employment (as the case may be) prior to the close of business on such 90th day,
such Employee's employment shall be deemed to have terminated at the close of
business on the 90th day of such leave of absence. Termination by the Company of
any Employee's leave of absence, other than termination of such leave of absence
on return to full-time or part-time employment, shall terminate an Employee's
employment for all purposes of the Plan and shall terminate such Employee's
participation in the Plan and right to exercise any option.
<PAGE> 2
3.3 Restrictions on Participation. Notwithstanding any provision of the
Plan to the contrary, no Employee shall be granted an option to participate in
the Plan:
(a) if, immediately after the grant, such Employee would own Stock
and/or hold outstanding options to purchase Stock that would cause the Employee
to possess five percent or more of the total combined voting power or value of
all classes of Stock of the Company (for purposes of this paragraph, the rules
of section 424(d) of the Code shall apply in determining stock ownership of any
Employee); or
(b) which permits such Employee's rights to purchase Stock under all
Employee stock purchase plans of the Company to accrue at a rate which exceeds
$25,000 in fair market value of the Stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding.
3.4 Commencement of Participation. An eligible Employee may become a
participant by completing the enrollment forms prescribed by the Committee
(including a purchase agreement and a payroll deduction authorization) and
filing such forms with the designated office of the Company prior to the
Offering Commencement Date for the next scheduled Offering (as such terms are
defined below). Payroll deductions for a participant shall commence on the next
scheduled Offering Commencement Date when such Employee's authorization for a
payroll deduction becomes effective and shall continue in effect for the term of
this Plan, except to the extent such payroll deduction is changed in accordance
with this Section 3.4, or terminated in accordance with Article VIII. The
participant may, at any time, increase or decrease the rate of the participant's
payroll deduction by filing the appropriate form with the designated office of
the Company. The new rate of payroll deduction shall become effective as of the
next applicable Offering Commencement Date.
ARTICLE IV
OFFERINGS
4.1 Offerings. The Plan will be implemented by a series of successive
six-month offerings of the Company's Stock (the "Offerings"), the first Offering
beginning on January 1, 1998 and ending June 30, 1998. As used in the Plan,
"Offering Commencement Date" means, in the case of the first Offering, January
1, 1998, and in the case of subsequent Offerings, the July 1 or January 1, as
the case may be, on which the particular Offering begins. The term "Offering
Termination Date" means the June 30 or December 31, as the case may be, on which
the particular Offering terminates.
ARTICLE V
PAYROLL DEDUCTIONS
5.1 Amount of Deduction. At the time an Employee files an authorization
for payroll deduction and becomes a participant in the Plan, the Employee shall
elect to have deductions made from the Employee's pay on each payday during the
time the Employee is a participant in an Offering. The deductions shall be at
the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10 percent of such Employee's Base Pay
in effect during such Offering; provided however, that prior to any Offering
Commencement Date, the Committee shall have the discretion to limit deductions
to less than 10 percent (but no less than 5 percent) for any Offering.
5.2 Calculation of Base Pay. An Employee's Base Pay during the period of
an Offering shall be determined by multiplying such Employee's normal weekly
rate of pay (as in effect on the last day prior to an Offering Commencement
Date) by 26 or the Employee's normal hourly rate of pay by 1,040. In the case of
an Employee designated by the Company as "part-time," such Employee's Base Pay
during the period of an Offering shall be assumed to be 20 hours per week. In
calculating an Employee's normal weekly rate of pay under this Section 5.2,
retroactive adjustments occurring during an Offering which are retroactive to
the last day prior to the Commencement Date of that particular Offering shall be
taken into account. In addition, if a participant's Base Pay includes
commissions, the Committee may set such Employee's Base Pay based upon averages
and standards as determined in the discretion of the Committee.
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5.3 Participant Accounts. All payroll deductions made for a participant
shall be credited to such Employee's account under the Plan. A participant may
not make any separate cash payment into such account except when on leave of
absence and then only as provided in Section 5.5.
5.4 Changes in Payroll Deductions. A participant may discontinue
participation in the Plan, but no other change can be made during an Offering
and, specifically, a participant may not alter the amount of such participant's
payroll deductions for that Offering. Upon a participant's discontinuance of
contributions, the participant may elect to either withdraw as provided in
Article VIII or retain amounts in the participant's account in the Plan, which
shall be used to purchase Stock at the end of the Offering Period.
5.5 Leave of Absence. If a participant goes on a leave of absence, such
participant shall have the right to elect: (a) to withdraw the balance in such
participant's account pursuant to Section 8.1 hereof; (b) to discontinue
contributions to the Plan but remain a participant in the Plan; or (c) to remain
a participant in the Plan during such leave of absence, to authorize deductions
to be made from payments by the Company to the participant during such leave of
absence and to make cash payments to the Plan at the end of each payroll period
to the extent that amounts payable by the Company to such participant are
insufficient to meet such participant's authorized Plan deductions.
ARTICLE VI
GRANTING OF OPTION
6.1 Number of Option Shares. On each Offering Commencement Date, a
participating Employee shall be deemed to have been granted an option to
purchase the number of shares of the Company's Stock that may be purchased at
the purchase price specified in Section 6.2 with the aggregate amount
contributed by the Employee during the Offering; provided that the number of
shares of the Company's Stock subject to the Employees' option for any Offering
shall not exceed the number derived by dividing $12,500 by 100% of the closing
price of the Stock on the applicable Offering Commencement Date or the nearest
prior business day on which trading occurred on the NASDAQ National Market
System.
6.2 Option Price. The option price of Stock purchased with payroll
deductions made during each Offering to a participant therein shall be the
lesser of (i) 85 percent of the closing price of the Stock on the applicable
Offering Commencement Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System, or (ii) 85 percent of the closing
price of the Stock on the applicable Offering Termination Date or the nearest
prior business day on which trading occurred on the NASDAQ National Market
System.
ARTICLE VII
EXERCISE OF OPTION
7.1 Automatic Exercise. Unless participant gives written notice to the
Company as hereinafter provided, such participant's option for the purchase of
Stock granted under Section 6.1 hereof will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering for
the purchase of the number of full shares of stock which the accumulated payroll
deductions in such Employee's account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the Employee pursuant to Section 6.1 hereof), and
any excess in such Employee's account at that time will be returned to the
participant.
7.2 Fractional Shares. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be held in the Employee's account to be used to
purchase Stock in a subsequent Offering.
7.3 Exercisability of Option. During participant's lifetime, options held
by such participant shall be exercisable only by that participant.
7.4 Withdrawals and Transfers of Stock. Shares of Stock may be withdrawn
from a participant's account, in which case one or more certificates for whole
shares may be issued in the name of, and delivered to, the
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<PAGE> 4
participant, with such participant receiving cash in lieu of fractional shares
based on the fair market value of a share of Stock on the date of withdrawal.
Alternatively, whole shares of Stock may be withdrawn from a participant's
account by means of a transfer to a broker-dealer or financial institution that
maintains an account for the participant, together with the transfer of cash in
lieu of fractional shares based on the fair market value of a share of Stock on
the date of withdrawal. Participants may not designate any other person to
receive shares of Stock withdrawn or transferred under the Plan. A participant
seeking to withdraw or transfer shares of Stock must give instructions to the
custodian in such manner and form as may be prescribed by the custodian, which
instructions will be acted upon as promptly as practicable. Withdrawals and
transfers will be subject to any fees imposed by the custodian.
ARTICLE VIII
WITHDRAWAL
8.1 In General. Prior to the last five days of an Offering period, a
participant may withdraw payroll deductions credited to such participant's
account under the Plan any time by giving written notice to the designated
office of the Company, which withdrawal notice shall be in form and substance as
decided by the Committee. All of the participant's payroll deductions credited
to the participant's account will be paid to the participant promptly after
receipt of such participant's notice of withdrawal, and no further payroll
deductions will be made form the participant's pay during such Offering or
during any subsequent Offering unless an Employee re-enrolls as provided in
Section 8.2 hereof. The Company may, at its option, treat any attempt to borrow
by a participant on the security of such participant's accumulated payroll
deductions as an election to withdraw such deductions.
8.2 Effect on Subsequent Participation. Participant's withdrawal from any
Offering will not have any effect upon such Employee's eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company. In order to be eligible for a subsequent
Offering, however, a participant which has withdrawn from a current Offering
must satisfy the requirements of Section 3.4 hereof prior to the Offering
Commencement Date of the next succeeding Offering.
8.3 Termination of Employment. Upon termination of the participant's
employment for any reason, including retirement (but excluding death or
permanent disablement while in the employ of the Company or continuation of a
leave of absence for a period beyond 90 days), the payroll deductions credited
to such Employee's account will be returned to the Employee, or, in the case of
the Employee's death subsequent to the termination of such Employee's
employment, to the person or persons entitled thereto under Section 12.1 hereof.
8.4 Termination of Employment Due to Death or Permanent Disablement. Upon
termination of the participant's employment because of death or permanent
disablement, the participant or participant's beneficiary (as defined in Section
12.1 hereof) shall have the right to elect, by written notice given to the
designated office of the Company prior to the earlier of the Offering
Termination Date or the expiration of a period of 60 days commencing with the
termination of the participant's employment, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option on the next Offering
Termination Date and purchase the number of full shares of Stock which the
accumulated payroll deductions in the participant's account at the date of the
participant's cessation of employment will purchase at the applicable option
price, and any excess in such account will be returned to said beneficiary,
without interest.
In the event that no such written notice of election shall be duly received
by the designated office of the Company, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the participant's
option.
8.5 Leave of Absence. A participant on leave of absence shall, subject to
the election made by such participant pursuant to Section 5.5 hereof, continue
to be a participant in the Plan so long as such participant is on continuous
leave of absence. A participant who has been on leave of absence for more than
90 days and who
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<PAGE> 5
therefore is not an Employee for the purpose of the Plan shall not be entitled
to participate in any Offering commencing after the 90th day of such leave of
absence. Notwithstanding any other provisions of the Plan, unless a participant
on leave of absence returns to regular full-time or part-time employment with
the Company at the earlier of: (a) the termination of such leave of absence or
(b) three months from the 90th day of such leave of absence, such participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
ARTICLE IX
INTEREST
9.1 Payment of Interest. No interest will be paid or allowed on any money
paid into the Plan or credited to the account of any participant Employee;
including any interest paid on any and all money which is distributed to an
Employee or such Employee's beneficiary pursuant to the provisions of Sections
8.1, 8.3, 8.4, and 10.1 hereof.
ARTICLE X
STOCK
10.1 Maximum Shares. The maximum number of shares of Stock which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.4 hereof, shall be 150,000 shares. If the
total number of shares for which options are exercised on any Offering
Termination Date in accordance with Article VI exceeds the maximum number of
shares for the applicable Offering, the Company shall make a pro rata allocation
of the shares available for delivery and distribution in as nearly a uniform
manner as shall be practicable and as it shall determine to be equitable, and
the balance of payroll deductions credited to the account of each participant
under the Plan shall be returned to such participant as promptly as possible.
10.2 Participant's Interest in Option Stock. The participant will have no
interest in Stock covered by such Employee's option until such option has been
exercised.
10.3 Registration of Stock. Stock to be delivered to participant under the
Plan will be registered in the name of the participant, or, if the participant
so directs by written notice to the designated office of the Company prior to
the Offering Termination Date applicable thereto, in the names of the
participant and one such other person as may be designated by the participant,
in the form and manner permitted by applicable law.
10.4 Restrictions on Exercise. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Stock reserved for issuance upon the exercise of the option shall have been
duly listed, upon official notice of issuance, upon a stock exchange, and that
either:
(a) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective; or
(b) the participant shall have represented at the time of purchase,
in form and substance satisfactory to the Company, that it is such Employee's
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE XI
ADMINISTRATION
11.1 Appointment of Committee. The Board of Directors shall appoint a
committee (the "Committee") to administer the Plan, which shall consist of no
fewer than two (2) members of the Board of Directors. No member of the Committee
shall be eligible to purchase Stock under the Plan.
11.2 Authority of Committee. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, and to make all other determinations deemed
necessary or advisable for
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<PAGE> 6
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive. The Committee may delegate its authority as it deems
necessary.
11.3 Rules Governing the Administration of the Committee. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephone meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The Committee may correct any defect or omission or
reconcile any inconsistency in the Plan, in the manner and to the extent it
shall deem desirable. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
ARTICLE XII
MISCELLANEOUS
12.1 Designation of Beneficiary. A participant may file a written
designation of a beneficiary who is to receive any Stock and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the designated office of the Company. Upon the death of
participant and upon receipt by the Company of proof of identity and existence
at the participant's death of a beneficiary validly designated by the
participant under the Plan, the Company shall deliver such Stock and/or cash to
such beneficiary. In the event of the death of participant and in the absence of
a beneficiary validly designed under the Plan who is living at the time of such
participant's death, the Company shall deliver such Stock and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Stock and/or cash to the spouse
or to any one or more dependents of the participant as the Company may
designate. No beneficiary shall, prior the death of the participant by whom he
has been designated, acquire any interest in the Stock or cash credited to the
participant under the Plan.
12.2 Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge, or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Article
VIII.
12.3 Use of Funds. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
12.4 Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged to a different number or kind of shares or securities of the Company,
through reorganization, merger, recapitalization, reclassification, stock split
(whether or not effected in the form of a Stock dividend), reverse Stock split
or similar transaction, appropriate and proportionate adjustments may be made by
the Committee in the number and/or kind of shares which are subject to purchase
under outstanding options and on the option exercise price or prices applicable
to such outstanding options. In addition, in any such event, the number and/or
kind of shares which may be offered in the Offerings described in Article IV
hereof shall also be proportionately adjusted.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or Stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities,
and/or property which a holder of one share of the
6
<PAGE> 7
Stock was entitled to receive upon and at the time of such transaction. The
Board of Directors shall take such steps in connection with such transactions as
the Board shall deem necessary to assure that the provisions of this Section
12.4 shall thereafter be applicable, as nearly as reasonably may be determined
in relation to the said cash, securities, and/or property as to which such
holder of such option might thereafter be entitled to receive.
12.5 Amendment and Termination. The Board of Directors shall have complete
power and authority to terminate or amend the Plan; provided, however, that the
Board of Directors shall not, without the approval of the stockholders of the
Corporation (a) increase the maximum number of shares which may be issued under
any Offering (except pursuant to Section 12.4 hereof) or (b) amend the
requirements as to the class of Employees eligible to purchase Stock under the
Plan or permit the members of the Committee to purchase Stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
an Employee then having an option under the Plan to purchase Stock, adversely
affect the rights of such Employee under such option.
12.6 Effective Date and Termination Date. The Plan shall become effective
as of January 1, 1998, subject to the prior approval by the holders of the
majority of the Stock present and represented at the next following annual
meeting of the Company's shareholders. If the Plan is not so approved by that
date, the Plan shall not become effective. The Plan shall terminate upon the
earlier of (a) the tenth anniversary of the effective date of the Plan or (b)
the date on which all shares available for issuance under the Plan shall be sold
pursuant to purchase options exercised under the Plan.
12.7 No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of Employee to
purchase any shares under the Plan, or create in any Employee or class of
Employee any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.8 Effect of Plan. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
Employee participating in the Plan, including, without limitation, such
Employee's estate and the executors, administrators, or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
12.9 Governing Law. The law of the State of Arizona will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
CERPROBE CORPORATION, a Delaware corporation
By: /s/C. Zane Close
-------------------------------------------
Its: President and Chief Executive Officer
------------------------------------------
7
<PAGE> 1
CERPROBE CORPORATION
COMPUTATION OF NET INCOME PER SHARE
Exhibit 11
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net income $ 145,033 $2,345,430
========== ==========
Weighted average number of
common shares outstanding 7,655,304 8,101,001
Common equivalent shares representing shares
issuable upon exercise of stock options 393,782 381,242
Convertible preferred stock -- --
Subtraction of common equivalent shares due to
antidilutive nature -- --
---------- ----------
Dilutive adjusted weighted average shares
and assumed conversions 8,049,086 8,482,243
========= =========
Basic net income per share $ 0.02 $ 0.29
========= =========
Diluted net income per share $ 0.02 $ 0.28
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at March 31, 1999 and the Condensed
Consolidated Statements of Operations for the three months ended March 31, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,851,725
<SECURITIES> 13,032,153
<RECEIVABLES> 9,433,418
<ALLOWANCES> 337,364
<INVENTORY> 5,196,764
<CURRENT-ASSETS> 38,051,017
<PP&E> 35,672,355
<DEPRECIATION> 11,668,958
<TOTAL-ASSETS> 66,429,328
<CURRENT-LIABILITIES> 7,472,169
<BONDS> 4,816,666
0
0
<COMMON> 407,244
<OTHER-SE> 53,149,184
<TOTAL-LIABILITY-AND-EQUITY> 66,429,328
<SALES> 15,605,894
<TOTAL-REVENUES> 15,605,894
<CGS> 10,045,546
<TOTAL-COSTS> 5,225,695
<OTHER-EXPENSES> 130,117
<LOSS-PROVISION> 4,000
<INTEREST-EXPENSE> 90,486
<INCOME-PRETAX> 433,946
<INCOME-TAX> (217,289)
<INCOME-CONTINUING> 150,355
<DISCONTINUED> (5,322)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,033
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at March 31, 1998 and the Condensed
Consolidated Statements of Operations for the year ended March 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,532,242
<SECURITIES> 25,341,505
<RECEIVABLES> 10,933,113
<ALLOWANCES> 221,064
<INVENTORY> 5,894,753
<CURRENT-ASSETS> 52,789,265
<PP&E> 23,871,999
<DEPRECIATION> 7,880,702
<TOTAL-ASSETS> 71,910,739
<CURRENT-LIABILITIES> 8,816,500
<BONDS> 1,103,492
0
0
<COMMON> 405,249
<OTHER-SE> 61,156,642
<TOTAL-LIABILITY-AND-EQUITY> 71,910,739
<SALES> 22,952,817
<TOTAL-REVENUES> 22,952,817
<CGS> 13,074,050
<TOTAL-COSTS> 5,434,215
<OTHER-EXPENSES> 65,190
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 60,933
<INCOME-PRETAX> 4,663,564
<INCOME-TAX> (1,933,233)
<INCOME-CONTINUING> 2,748,061
<DISCONTINUED> (402,631)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,345,430
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
</TABLE>
