Exhibit 10.1

 

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Electro Scientific Industries, Inc.

13900 NW Science Park Dr.

Portland OR  97229

 

Notice of Grant of Stock Options
and Option Agreement

 

John A Corr

 

Option Number:

 

00009594

17585 S.W. 111th Ave.

 

 

 

 

Tualatin, OR United States 97062

 

 

 

 

 

Effective 8/16/2004 (the Grant Date), you (Optionee) have been granted a
Non-Qualified Stock Option to buy 25,000 shares of Common Stock of Electro
Scientific Industries, Inc. (the Company) at $20.2500 per share.

 

The total option price of this option is $506,250.00.

 

Shares in each period will become fully vested on the date shown.

 

Shares

 

Vest Type

 

Full Vest

 

Expiration

 

 

 

 

 

 

 

 

 

6,250

 

On Vest Date

 

8/16/2005

 

8/15/2014

 

6,250

 

On Vest Date

 

8/16/2006

 

8/15/2014

 

6,250

 

On Vest Date

 

8/16/2007

 

8/15/2014

 

6,250

 

On Vest Date

 

8/16/2008

 

8/15/2014

 

 

By your signature and the Company’s signature below, you and the Company agree
that this option is governed by the terms and conditions of the attached Option
Terms and Conditions which are incorporated into and made a part of this
agreement.

 

/s/ Nicholas Konidaris

 

September 14, 2004

Nicholas Konidaris

Date

 

President and Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ John A Corr

 

September 29, 2004

John A Corr

Date

 

 

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OPTION TERMS AND CONDITIONS

John A Corr

Non-Qualified Stock Option

 

The Compensation Committee of the Board of Directors has voted in favor of
granting to the Optionee an option to purchase Common Stock of the Company (the
“Option”) in the amount indicated on the attached notice.

 

1.                                       The Option is granted upon the
following terms:

 

1.1                                 Duration of Options.  Subject to reductions
in the Option period as hereinafter provided in the event of termination of
employment or death of the Optionee, the Option shall continue in effect for a
period of 10 years from the Grant Date.

 

1.2                                 Time of Exercise.  Except as provided in
paragraph 1.5, the Option may be exercised from time to time in the following
amounts: (a) none during the first year following the Grant Date (b) thereafter
not to exceed in any one year 25 percent of the total number of shares covered
by the Option, but if the Optionee does not exercise the Option in any one year
for the full number of shares to which the Optionee is entitled, the rights
shall be cumulative and the Optionee may exercise the Option for such shares in
any subsequent year during the term of the Option.

 

1.3                                 Limitations on Rights to Exercise.  Except
as provided in paragraph 1.5, the Option may not be exercised unless at the time
of such exercise the Optionee is employed by the Company or any parent or
subsidiary of the Company and shall have been so employed continuously since the
date such option was granted.

 

1.4                                 Nonassignability.  The Option is
nonassignable and nontransferable by the Optionee except by will or by the laws
of descent and distribution of the state or country of the Optionee’s domicile
at the time of death, and is exercisable during the Optionee’s lifetime only by
the Optionee.

 

1.5                                 Termination of Employment.

 

(a) Unless otherwise determined by the Board of Directors, if an optionee’s
employment or service with the Company terminates for any reason other than in
the circumstances specified in subsection (b),  (c) or (d) below, his or her
option may be exercised at any time before the expiration date of the option or
the expiration of three months after the date of termination, whichever is the
shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of termination.

 

(b) Unless otherwise determined by the Board of Directors, if an optionee’s
employment or service with the Company terminates because of total disability,
his or her option may be exercised at any time before the expiration date of the
option or before the date 12 months after the date of termination, whichever is
the shorter period, but only if and to the extent the optionee was entitled to
exercise the option at the date of termination.  The term “total disability”
means a medically determinable mental or physical impairment that is expected to
result in death or has lasted or is expected to last for a continuous period of
12 months or more and that, in the opinion of the Company and two independent
physicians, causes the optionee to be unable to perform his or her duties as an
employee, director, officer or consultant of the Employer and unable to be
engaged in any substantial gainful activity.  Total disability shall be deemed
to have occurred on the first day after the two independent physicians have
furnished their written opinion of total disability to the Company and the
Company has reached an opinion of total disability.

 

(c) Unless otherwise determined by the Board of Directors, if an optionee dies
while employed by or providing service to the Company, his or her option may be
exercised at any time before the expiration date of the option or before the
date 12 months after the date of death, whichever is the shorter period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of death and only by the person or persons to whom the optionee’s
rights under the option shall pass by the optionee’s will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.

 

(d) In the event an optionee’s employment by the Company or by any parent or
subsidiary of the Company terminates within one year after a change in control
of the Company for any reason other than Portlnd2 -4486137.1 0026860-00001

 

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retirement, death, or physical disability (as defined in Section 1.5(b)), any
option held by such optionee may be exercised with respect to all remaining
shares subject thereto, free of any limitation on the number of shares with
respect to which the option may be exercised in any one year, at any time prior
to its expiration date or the expiration of three months after the date of such
termination of employment, whichever is the shorter period.  A “change in
control of the Company” shall mean a change in control 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 Securities Exchange Act of 1934, as amended (“Exchange
Act”); provided that, without limitation, such a change in control shall be
deemed to have occurred if (1) any “person” (as such term is used in Sections
13(d) or 14(d)(2) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20 percent or
more of the combined voting power of the Company’s then outstanding securities;
or (2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company cease
for any reason to constitute at least a majority thereof unless the election, or
the nomination for election by the Company’s shareholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.  A change in control
of the Company shall not include any change in control pursuant to a written
agreement between the Company and another person, which agreement is approved
and adopted by the Board of Directors of the Company or pursuant to any tender
offer or exchange offer which the Board of Directors has in any manner
recommended acceptance of to the shareholders of the Company.

 

(e) To the extent the Option held by any deceased Optionee or by the Optionee
whose employment is terminated shall not have been exercised within the limited
periods provided above, all further rights to purchase shares pursuant to the
Option shall cease and terminate at the expiration of such periods.

 

(f) Absence on leave approved by the Employer or on account of illness or
disability shall not be deemed a termination or interruption of employment or
service.  Unless otherwise determined by the Board of Directors, vesting of
options shall continue during a medical, family, military or other leave of
absence, whether paid or unpaid.

 

1.6                                 Purchase of Shares.  Shares may be purchased
or acquired pursuant to the Option only upon receipt by the Company of notice in
writing from the Optionee of the Optionee’s intention to exercise, specifying
the number of shares as to which the Optionee desires to exercise the Option and
the date on which the Optionee desires to complete the transaction, which shall
not be more than 30 days after receipt of the notice, and, unless in the opinion
of counsel for the Company such a representation is not required in order to
comply with the Securities Act of 1933, as amended, containing a representation
that it is the Optionee’s present intention to acquire the shares for investment
and not with a view to distribution.  On or before the date specified for
completion of the purchase of shares pursuant to the Option, the Optionee must
have paid the Company the full purchase price of such shares in cash, or in
shares of Common Stock of the Company previously acquired and held by the
optionee for at least six months and valued at fair market value of the Common
Stock of the Company on the date of exercise, or in any combination of cash and
shares of Common Stock of the Company.  No shares shall be issued until full
payment therefor has been made, and the Optionee shall have none of the rights
of a shareholder until a certificate for shares is issued to the Optionee.  The
Optionee shall, upon notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the shares with
respect to which the Option was exercised, pay to the Company amounts necessary
to satisfy any applicable federal, state and local withholding tax
requirements.  If additional withholding becomes required beyond any amount
deposited before delivery of the certificates, the Optionee shall pay such
amount to the Company on demand.

 

1.7                                 Changes in Capital Structure.  In the event
that the outstanding shares of Common Stock of the Company are hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividend payable in
shares, appropriate adjustment shall be made by the Board of Directors in the
number and kind of shares for purchase pursuant to the Option and the
corresponding Option price.  Any such adjustment made by the Board of Directors
shall be conclusive.

 

1.8                                 Mergers, Reorganizations, Etc.  In the event
of a merger, consolidation, plan of exchange, acquisition of property or stock,
split-up, split-off, spin-off, reorganization or liquidation to which the
Company is a party or a sale of all or substantially all of the Company’s assets
(each, a “Transaction”), the Board of Directors shall, in its sole discretion
and to the extent possible under the structure of the Transaction, select one of
the following alternatives for treating the Option:

 

(a) The Option shall remain in effect in accordance with its terms.

 

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(b) The Option shall be converted into an option to purchase stock in one or
more of the corporations, including the Company, that are the surviving or
acquiring corporations in the Transaction.  The amount, type of securities
subject thereto and exercise price of the converted option shall be determined
by the Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange rate, if
any, used in determining shares of the surviving corporation(s) to be held by
holders of shares of the Company following the Transaction.  Unless otherwise
determined by the Board of Directors, the converted option shall be vested only
to the extent that the vesting requirements relating to the Option granted
hereunder have been satisfied.

 

(c) The Board of Directors shall provide a period of 30 days or less before the
completion of the Transaction during which the Option may be exercised to the
extent then exercisable, and upon the expiration of that period the unexercised
portion of the Option shall immediately terminate.  The Board of Directors may,
in its sole discretion, accelerate the exercisability of the Option so that it
is exercisable in full during that period.

 

1.9                                 Dissolution of the Company.  In the event of
dissolution of the Company, the Option shall be treated in accordance with
Section 1.8.

 

2.                                       The obligations of the Company under
this Agreement are subject to the approval of such state or federal authorities
or agencies, if any, as may have jurisdiction in the matter.  The Company will
use its reasonable best efforts to take such steps as may be required by state
or federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission and any stock exchange on which the Company’s
shares may then be listed, in connection with the issuance or sale of any shares
purchased upon the exercise of the Option.

 

3.                                       Nothing in this Agreement shall confer
upon the Optionee any right to be continued in the employment of the Company or
any subsidiary of the Company, or to interfere in any way with the right of the
Company or any subsidiary by whom the Optionee is employed to terminate the
Optionee’s employment at any time, with or without cause.

 

4.                                       This Agreement shall be binding upon
and shall inure to the benefit of any successor or successors of the Company but
except as hereinabove provided the Option herein granted shall not be assigned
or otherwise disposed of by the Optionee.

 

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