RESTRICTED STOCK UNITS
AWARD AGREEMENT
This Award Agreement (the “Agreement”) is entered into as of [Grant Date] by and
between Electro Scientific Industries, Inc., an Oregon corporation (the
“Company”), and [Recipient Name] (“Recipient”), for the grant of restricted
stock units with respect to the Company’s Common Stock (“Common Stock”). By
accepting this award Recipient agrees to be bound by the terms and conditions of
this Agreement.
The Compensation Committee of the Company’s Board of Directors (the “Committee”)
made a restricted stock units award to Recipient pursuant to the Company’s
2004 Stock Incentive Plan (the “Plan”) and Recipient desires to accept the award
subject to the terms and conditions of this Agreement.
IN CONSIDERATION of the mutual covenants and agreements set forth in this
Agreement, the parties agree to the following.
1.Grant and Terms of Restricted Stock Units. The Company grants to Recipient
[Total Shares Granted] restricted stock units, subject to the adjustments,
restrictions, terms and conditions set forth in this Agreement.
(a)Rights under Restricted Stock Units. A restricted stock unit (an “RSU”)
represents the unsecured right to require the Company to deliver to Recipient
one share of Common Stock for each RSU, subject to Section 1(c). The number of
shares of Common Stock deliverable with respect to each RSU is subject to
adjustment as determined by the Board of Directors of the Company as to the
number and kind of shares of stock deliverable upon any merger, reorganization,
consolidation, recapitalization, stock dividend, spin-off or other change in the
corporate structure affecting the Common Stock generally.
(b)Vesting and Delivery Dates. The RSUs issued under this Agreement shall
initially be 100% unvested and subject to forfeiture. Subject to this Section
1(b) and Section 1(c), the RSUs shall vest according to the below vesting
schedule. The RSUs shall become vested on the vesting date only if Recipient
continues to be an employee of the Company through such vesting date. The
delivery date for a RSU shall be the date on which such RSU vests.
Vest Date
# of Shares
{vest date 1}
{# of Shares 1}
{vest date 2} (if needed)
{# of Shares 2}
{vest date 3} (if needed)
{# of Shares 3}
(and so on if needed. )
 

(c)Payment before Vesting Date.
(1)Payment on Death or Total Disability. If Recipient ceases to be an employee
of the Company by reason of Recipient’s death or physical disability,
outstanding but unvested RSUs shall become immediately vested in an amount
determined by multiplying the total number of RSUs subject to this Agreement by
a percentage calculated by dividing the number of whole months elapsed from the
date of this Agreement to the date of termination of service by the total number
of whole months in the vesting period (the “Pro Rata Percentage”); provided,
however, that the number of RSUs so vested shall be reduced by the number of any
RSUs that previously vested pursuant to Section 1(b). The delivery date shall
also accelerate. 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 approved by the
Company, causes Recipient to be unable to perform his or her duties as an

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employee, director, officer or consultant of the Company and unable to engage in
any substantial gainful activity. Total disability shall be deemed to have
occurred after both of the following have occurred:
(A)The two independent physicians have furnished their written opinion of total
disability to the Company; and
(B)The Company has reached an opinion of total disability.
(2)Acceleration on Normal Retirement. After Recipient attains age 65,
outstanding but unvested RSUs shall become vested each calendar year in an
amount determined by multiplying the total number of RSUs subject to this
Agreement by the Pro Rata Percentage as of the earlier of December 31 of the
year or the date of Recipient’s termination of employment. The delivery date
shall also be accelerated.
(3)Double Trigger Acceleration on Change in Control.
(i)All of the RSUs shall immediately vest if a Change in Control (as defined
below) occurs and at any time after the Change in Control and on or before the
first anniversary of the Change in Control, (i) the Recipient’s employment is
terminated by the Company (or its successor) without Cause (as defined below),
or (ii) the Recipient’s employment is terminated by the Recipient for Good
Reason (as defined below); provided, however, that the RSUs may also immediately
vest in connection with a sale of the Company as provided in Section 1(c)(4)
below.
(ii)For purposes of this Agreement, a “Change in Control” of the Company shall
mean the occurrence of any of the following events:
(A)At any time during a period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(“Incumbent Directors”) shall cease for any reason to constitute at least a
majority thereof; provided, however, that the term “Incumbent Director” shall
also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office;
(B)Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Exchange Act) shall, as a result of a tender or exchange offer, open market
purchases or privately negotiated purchases from anyone other than the Company,
have become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than fifty percent (50%) of the
then outstanding Common Stock of the Company;
(C)A consolidation, merger or plan of exchange involving the Company (“Merger”)
as a result of which the holders of outstanding securities of the Company
ordinarily having the right to vote for the election of directors (“Voting
Securities”) immediately prior to the Merger do not continue to hold at least
50% of the combined voting power of the outstanding Voting Securities of the
surviving corporation or a parent corporation of the surviving corporation
immediately after the Merger, disregarding any Voting Securities issued to or
retained by such holders in respect of securities of any other party to the
Merger; or
(D)A sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company.
(iii)For purposes of this Agreement, “Cause” shall mean (a) the willful and
continued failure to perform substantially the Recipient’s reasonably assigned
duties with the Company (or its successor) (other than any such failure
resulting from incapacity due to physical or mental illness) after a demand for
substantial performance is delivered to the Recipient by the Company (or its
successor) which specifically identifies the manner in which the Company (or its
successor) believes that the Recipient has not substantially performed

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the Recipient’s duties, (b) the willful engagement in illegal conduct which is
materially and demonstrably injurious to the Company (or its successor), or
(c) the commission of an act by Recipient, or the failure of Recipient to act,
which constitutes gross negligence or gross misconduct. No act, or failure to
act, shall be considered “willful” if the Recipient reasonably believed that the
action or omission was in, or not opposed to, the best interests of the Company
(or its successor).
(iv)For purposes of this Agreement, “Good Reason” shall mean Recipient’s
voluntary termination, within 30 days following the expiration of any Company
cure period (discussed below) following the occurrence of one or more of the
following, without Recipient’s consent:
(A)the assignment of a different title, job or responsibilities that results in
a substantial reduction in the duties of the Recipient after the Change in
Control when compared to the Recipient’s duties with respect to the Company’s
operations prior to the Change in Control; provided that any change made solely
as the result of the Company becoming a subsidiary or business unit of a larger
company in a Change in Control shall not constitute Good Reason unless
Recipient’s new duties are substantially reduced from his or her prior duties;
(B)a reduction in Recipient’s target bonus or base salary as in effect
immediately prior to the Change in Control;
(C)a material reduction in total benefits available to the Recipient under cash
incentive, stock incentive and other employee benefit plans after the Change in
Control compared to the total package of such benefits as in effect prior to the
Change in Control;
(D)the Recipient is required to be based more than 50 miles from where the
Recipient’s office is located immediately prior to the Change in Control except
for required travel on company business to an extent substantially consistent
with the business travel obligations which the Recipient undertook on behalf of
the Company prior to the Change in Control; or
(E)the failure by any successor to the Company to expressly assume this
Agreement or any obligation under this Agreement.
Recipient may not resign for Good Reason without first providing the Company
with written notice within 90 days of the initial existence of the condition
that Recipient believes constitutes Good Reason specifically identifying the
acts or omissions constituting the grounds for Good Reason and a reasonable cure
period of not less than 30 days following the date of such notice.
For purposes of the “Good Reason” definition, the term “Company” will be
interpreted to include any subsidiary, parent, affiliate or successor thereto,
if applicable.
(4)Sale of the Company. If there shall occur a merger, consolidation or plan of
exchange involving the Company pursuant to which the outstanding shares of
Common Stock of the Company are converted into cash or other stock, securities
or property, or a sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, the assets of
the Company, then, as determined by the Committee or the Board of Directors,
either:
(i)the unvested RSUs shall be converted into restricted stock units for stock of
the surviving or acquiring corporation in the applicable transaction, with the
amount and type of shares subject thereto to be conclusively determined by the
Committee, taking into account the relative values of the companies involved in
the applicable transaction and the exchange rate, if any, used in determining
shares of the surviving corporation to be held by the former holders of the
Company’s Common Stock following the applicable transaction,

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and disregarding fractional shares, with the dates for vesting of RSUs and
delivery of shares of Common Stock unchanged;
(ii)the unvested RSUs shall be converted into a cash payment obligation of the
surviving or acquiring corporation in an amount equal to the proceeds a holder
of the underlying shares would have received in proceeds from such transaction
with respect to those shares; or
(iii)all of the unvested RSUs shall immediately vest and all underlying shares
shall be delivered simultaneously with the closing of the applicable transaction
such that the Recipient will participate as a shareholder in receiving proceeds
from such transaction with respect to those shares.
(d)Forfeiture of RSUs on Other Terminations of Employment. If Recipient ceases
to be an employee of the Company for any reason that does not result in
acceleration or payment pursuant to Section 1(c), Recipient shall immediately
forfeit all outstanding but unvested RSUs granted pursuant to this Agreement and
Recipient shall have no right to receive the related Common Stock.
(e)Restrictions on Transfer and Delivery on Death. Recipient may not sell,
transfer, assign, pledge or otherwise encumber or dispose of the RSUs. If
Recipient dies before the delivery date, the shares will be released with the
Company’s brokerage, or Recipient’s brokerage if separately designated.
Recipient should maintain proper beneficiary designations with the brokerage
and/or ensure Recipient’s estate is aware of the share’s location for proper
delivery.
(f)Reinvestment of Dividend Equivalents. On each date on which the Company pays
a dividend on a share of Common Stock with respect to an RSU, the number of RSUs
subject to this Agreement shall be increased by a number equal to the number of
whole or fractional shares of Common Stock with a value equal to the value of
the dividends that would have been paid on the stock deliverable pursuant to the
RSUs (if such shares were outstanding), divided by the closing stock price on
the dividend payment date. If the vesting date for any RSUs subject to this
Agreement occurs within seven business days of the payment date for a dividend,
the Company, at its option, may elect to pay to Recipient cash, net of
withholding, equal to the cash dividend payable on the RSUs which so vest in
lieu of increasing the number of RSUs subject to this Agreement.
(g)Delivery on Delivery Date. As soon as practicable following the delivery
date, the Company shall deliver to Recipient a certificate for the number of
shares of Common Stock represented by all RSUs having a delivery date on the
same date, rounded down to the whole share. No fractional shares of Common Stock
shall be issued. The Company shall pay to Recipient in cash an amount equal to
the value of any fractional shares that would otherwise have been issued, valued
as of the delivery date. If shares or cash are to be delivered on a particular
date, the shares or cash shall be deemed delivered on that date for purposes of
compliance with the terms of this Agreement if the cash or shares are actually
delivered within 45 days after the specified date as determined in the Company’s
discretion with the Recipient having no right to determine the delivery date.
Recipient shall not have any right to determine or direct the date of actual
delivery.
(h)Recipient’s Rights as Shareholder. Recipient shall have no rights as a
shareholder with respect to the RSUs or the shares underlying them until the
Company delivers the shares to Recipient on the delivery date.
(i)Tax Withholding. Recipient acknowledges that, not later than the actual
delivery date, the value of delivered shares of Common Stock will be treated as
ordinary compensation income for federal and state income and FICA tax purposes,
and that the Company will be required to withhold taxes on this income amount.
The Company will notify Recipient of the required withholding amount.
Concurrently with or prior to the delivery of the certificate referred to in
Section 1(g), Recipient shall pay to the Company the required withholding amount
in cash or, at the election of Recipient (which election must be made on or
before the vesting date), by surrendering to the Company for cancellation shares
of the Company’s Common Stock to be delivered with respect to the RSUs or other
shares of the Company’s Common Stock valued at

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the closing market price for the Company’s Common Stock on the vesting date. If
Recipient pays the withholding amount in shares of Common Stock, the Company
shall pay to Recipient in cash the amount of any resulting over payment.
(j)Section 409A. The award made pursuant to this Agreement shall be interpreted
in accordance with Section 409A and Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations or
other guidance issued after the grant of the award. For example, notwithstanding
anything to the contrary in this Agreement, (i) a termination of employment
shall be determined with respect to standards for “separation from service”
within the meaning of applicable regulations; (ii) the provisions described in
Sections 1(c)(4)(ii) and 1(c)(4)(iii) shall apply only if such events qualify as
a “termination or liquidation of the plan” within the meaning of Treas. Reg. §
1.409A 3(j)(4)(ix); and (iii) the provision described in Section 1(c)(4)(i)
shall apply only if such events qualify as a “change of control event” within
the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(1)Notwithstanding any provision of the award to the contrary, the Company may
adopt such amendments to the award or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions, that the Company determines are necessary or appropriate to
(1) exempt the award from the application of Section 409A or preserve the
intended tax treatment of the benefits provided with respect to the award, or
(2) comply with the requirements of Section 409A.
(2)If an amount is determined to be subject to applicable provisions of Section
409A of the Code, payment in connection with termination of employment for a
reason other than death may not start or be made to Recipient if the Company
determines Recipient is a “key employee” as defined in Section 416(i) of the
Code, without regard to Section 416(i)(5) of the Code, before the date which is
six months after the date of termination, notwithstanding any other provisions
for time of payment in this Agreement, if such delay in payment is necessary to
comply with Section 409A of the Code. The Company may determine that Recipient
is a key employee in the event of doubt or to avoid impractical efforts or
expense to make an exact determination of key employees. Recipient shall have no
claim, rights or remedy if the determination is not correct.
2.Miscellaneous.
(a)Entire Agreement; Amendment. This Agreement and the Plan (including without
limitation Section 17 thereof) constitutes the entire agreement of the parties
with regard to the subjects hereof and may be amended only by written agreement
between the Company and Recipient.
(b)Notices. Any notice required or permitted under this Agreement shall be in
writing and shall be deemed sufficient when delivered personally to the party to
whom it is addressed or when deposited into the United States mail as registered
or certified mail, return receipt requested, postage prepaid, addressed to
Electro Scientific Industries, Inc., Attention: Corporate Secretary, at its
principal executive offices or to Recipient at the address of Recipient in the
Company’s records, or at such other address as such party may designate by ten
(10) days’ advance written notice to the other party.
(c)Rights and Benefits. The rights and benefits of this Agreement shall inure to
the benefit of and be enforceable by the Company’s successors and assigns and,
subject to the restrictions on transfer of this Agreement, be binding upon
Recipient’s heirs, executors, administrators, successors and assigns.
(d)Further Action. The parties agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.
(e)Applicable Law; Attorneys’ Fees. The terms and conditions of this Agreement
shall be governed by the laws of the State of Oregon. In the event either party
institutes litigation hereunder, the prevailing party shall be entitled to
reasonable attorneys’ fees to be set by the trial court and, upon any appeal,
the appellate court.