-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pe2w36rDbNtM4Oo8sRZpK4HzD5uL0bl+2Nqbp+z/w5c43/dm5a50wp5w4LIdSS6K Yqae5xW4y1tmxxvk0C8ssw== 0000950153-99-000610.txt : 19990512 0000950153-99-000610.hdr.sgml : 19990512 ACCESSION NUMBER: 0000950153-99-000610 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERPROBE CORP CENTRAL INDEX KEY: 0000725259 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 860312814 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11370 FILM NUMBER: 99617285 BUSINESS ADDRESS: STREET 1: 1150 NORTH FIESTA BLVD CITY: GILBERT STATE: AZ ZIP: 85233-2237 BUSINESS PHONE: 6029677885 MAIL ADDRESS: STREET 1: 600 S ROCKFORD DR CITY: TEMPE STATE: AZ ZIP: 85281 10-Q 1 10-Q 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. 2 CERPROBE CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999 TABLE OF CONTENTS
Page ---- 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
2 3 CERPROBE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, Assets 1999 1998 ----------- ------------- (unaudited) 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 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 4 CERPROBE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
THREE MONTHS ENDED MARCH 31, ---------------------------- 1999 1998 ------------ ------------ 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 ------------ ------------ Operating income 334,653 4,444,552 ------------ ------------ 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 ------------ ------------ 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 ============ ============
See accompanying notes to condensed consolidated financial statements. 4 5 CERPROBE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------ 1999 1998 ----------- ----------- 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 ----------- -----------
See accompanying notes to condensed consolidated financial statements. 5 6 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 6 7 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:
Three months ended March 31, ---------------------------- 1999 1998 --------- ----------- 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 ========= ===========
7 8 (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:
Three Months Ended March 31, ---------------------------- 1999 1998 -------- ------------ 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) ======= ===========
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:
March 31, December 31, ------------------------------ 1999 1998 ----------- ----------- 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 =========== ===========
8 9 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. 9 10 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 10 11 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 11 12 approximately $3.5 million. The Company estimates the status of progress on these internal systems as of March 31, 1999 was as follows: IT Systems 100% Non-It Systems 80%
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 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 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. 14 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 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 16 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 EX-10.III 2 EMP AGMT C. ZANE CLOSE 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 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. 2 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 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 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 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 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 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 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 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. 10 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 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 12 13 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 13 14 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. 14 15 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 15 EX-10.JJJ 3 EMP. AGMT. MICHAEL BONHAM 1 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 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. 2 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 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," 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. 4 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 5 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 6 7 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 7 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 8 9 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 9 10 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 10 11 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. 11 12 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. 12 13 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 13 14 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. 14 15 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 15 EX-10.KKK 4 EMP. AGRMT RANDAL BUNESS 1 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 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. 2 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 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," 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. 4 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 5 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 6 7 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 7 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 8 9 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 9 10 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 10 11 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. 11 12 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. 12 13 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 13 14 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. 14 15 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 15 EX-10.LLL 5 CHANGE OF CONTROL AGMT. C. ZANE CLOSE 1 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. 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. 2 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. 3 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. 4 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, 5 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 6 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 7 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. 8 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. 9 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. 10 11 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 11 EX-10.MMM 6 CHANGE OF CONTROL AGMT. MICHAEL BONHAM 1 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. 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. 2 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. 3 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. 4 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, 5 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 6 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 7 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. 8 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. 9 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. 10 11 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 11 EX-10.NNN 7 CHANGE OF CONTROL AGMT. RANDAL BUNESS 1 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. 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. 2 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. 3 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. 4 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, 5 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 6 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 7 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. 8 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. 9 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. 10 11 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 11 EX-10.OOO 8 1ST AMEND EMPLY STOCK PURCHASE PLAN 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. 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. 2 3 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 3 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 4 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 5 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 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 EX-11 9 EX-11 1 CERPROBE CORPORATION COMPUTATION OF NET INCOME PER SHARE Exhibit 11 (unaudited)
THREE MONTHS ENDED MARCH 31, --------------------------- 1999 1998 ---------- ---------- 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 ========= =========
EX-27.1 10 EX-27.1
5 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. 3-MOS DEC-31-1999 MAR-31-1999 6,851,725 13,032,153 9,433,418 337,364 5,196,764 38,051,017 35,672,355 11,668,958 66,429,328 7,472,169 4,816,666 0 0 407,244 53,149,184 66,429,328 15,605,894 15,605,894 10,045,546 5,225,695 130,117 4,000 90,486 433,946 (217,289) 150,355 (5,322) 0 0 145,033 0.02 0.02
EX-27.2 11 EX-27.2
5 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. 3-MOS DEC-31-1998 MAR-31-1998 3,532,242 25,341,505 10,933,113 221,064 5,894,753 52,789,265 23,871,999 7,880,702 71,910,739 8,816,500 1,103,492 0 0 405,249 61,156,642 71,910,739 22,952,817 22,952,817 13,074,050 5,434,215 65,190 6,000 60,933 4,663,564 (1,933,233) 2,748,061 (402,631) 0 0 2,345,430 0.29 0.28
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