Exhibit 10.1

Executive 2012 PRSU Agreement

PERFORMANCE-BASED

RESTRICTED STOCK UNITS AWARD AGREEMENT

This Award Agreement (the “Agreement”) is entered into as of August
            , 2012 by and between Electro Scientific Industries, Inc., an Oregon
corporation (the “Company”), and                                          
       (“Recipient”), for the grant of restricted stock units with respect to
the Company’s Common Stock (“Common Stock”).

On August 8, 2012, the Compensation Committee of the Company’s Board of
Directors made a restricted stock units award to Recipient pursuant to the
Company’s 2004 Stock Incentive Plan (the “Plan”). The award is intended to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986. 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
under the Plan                  restricted stock units, subject to the
restrictions, terms and conditions set forth in this Agreement.

(a) Rights under Restricted Stock Units. A restricted stock unit (a “RSU”)
represents the unsecured right to require the Company to deliver to Recipient
one share of Common Stock for each RSU. 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. The RSUs issued under this Agreement shall initially be 100%
unvested and subject to forfeiture as set forth below.

(i) Except as set forth in Section 1(d), if Recipient ceases to be employed by
the Company for any reason or for no reason prior to the end of the Performance
Period (as defined below), the unvested RSUs shall be forfeited to the Company.

(ii) To the extent that the number of RSUs first specified above are reduced in
accordance with Section 1(b)(iii) upon achievement to any extent of the
Performance Goals (as defined below) and except as provided in Section 1(d), the
reduction shall be forfeited to the Company. The extent to which any Performance
Goal is achieved, if at all, shall be determined by a date that is no later than
December 31 of the calendar year in which the Performance Period ends (the
“Determination Date”). Nothing contained in this Agreement shall confer upon
Recipient any right to be employed by the Company or to continue to provide
services to the Company or to interfere in any way with the right of the Company
to terminate Recipient’s services at any time for any reason, with or without
cause.

 

Executive 2012 PRSU Agreement    

--------------------------------------------------------------------------------

(iii) The vesting of the RSUs shall be based on two “Performance Goals,” as
follows:

(A)             [insert # equal to 33.3%] of the RSUs shall vest based on the
Company’s fiscal 2014 sales, with 100% vesting on sales of $299.8 million, with
additional vesting in 10% increments for each 10% increment in sales above that
amount, up to a maximum of 200% vesting on sales of $599.6 million. For sales
below $299.8 million, 90% vest on sales of $269.8 million and 95% vest on sales
of $284.8 million. There is no vesting if sales are below $269.8 million.

(B)             [insert # equal to 66.7%] of the RSUs shall vest based on the
Company’s fiscal 2015 sales, with 100% vesting on sales of $374.6 million, with
additional vesting in 10% increments for each 10% increment in sales above that
amount, up to a maximum of 200% vesting on sales of $749.2 million. For sales
below $374.6 million, 90% vest on sales of $337.1 million and 95% vest on sales
of $355.9 million. There is no vesting if sales are below $337.1 million.

(C) For purposes of determining the Company’s sales in each of fiscal 2014 and
2015, (i) sales from any lines of business or product lines acquired by the
Company in fiscal 2013, 2014 or 2015 for which the Company paid more than
$30 million in purchase price (including any assumed debt) in the transaction in
which the line of business or product line was acquired shall be excluded, and
(ii) 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, sales
from lines of business or products which were not offered by the Company or
under development by the Company immediately prior to such transaction shall be
excluded, in either case with the amount of qualifying sales being determined by
the Committee in its sole discretion.

(D) The Compensation Committee of the Board of Directors may, in its discretion,
permit the vesting of any or all of the RSUs subject to this Agreement for sales
below the Performance Goals described above.

(E) The number of RSUs determined pursuant to this Section 1(b)(iii) shall vest
on the last day of the Performance Period, subject to Section 1(b)(i). Any RSUs
not vested at that time shall be forfeited.

(c) Delivery Date. Except as set forth in Section 1(d)(iii) or (iv), the
delivery date for a RSU subject to this Agreement shall be as soon as
practicable on or after the Determination Date, but in no event later than
December 31 of the calendar year in which the Performance Period ends.

(d) Proration upon Termination for Certain Reasons Prior to End of Performance
Period; Treatment on Change in Control.

 

Executive 2012 PRSU Agreement     2

--------------------------------------------------------------------------------

(i) Proration on Death or Total Disability. If Recipient ceases to be an
employee of the Company by reason of Recipient’s death or total disability prior
to the end of the Performance Period, the RSUs shall not be forfeited under
Section 1(b)(i) and the following shall apply:

(1) The number of RSUs Recipient would otherwise be entitled to receive pursuant
to Section 1(b)(iii) if Recipient were employed through the end of the
Performance Period (the “Base Payout”) shall be reduced to a number determined
by multiplying the Base Payout by a percentage calculated by dividing the number
of months elapsed from the beginning of the Performance Period to the date of
termination of employment (rounded down to the whole month) by 36 (the “Pro Rata
Percentage”). RSUs that exceed the reduced number shall be forfeited to the
Company.

(2) The Board of Directors or the Compensation Committee of the Board of
Directors, in its discretion, may increase the number of RSUs the Recipient
would otherwise be entitled to receive under this Section 1(d)(i); the Recipient
shall have no right to any increase.

(3) The amount of RSUs determined under (1) and (2) shall be delivered as soon
as practicable on or after the Determination Date, but in no event later than
December 31 of the calendar year in which the Performance Period ends.

(4) The term “total disability” means a medically determinable mental or
physical impairment 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 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.

(ii) Proration on Normal Retirement. If Recipient terminates his employment with
the Company following normal retirement under the Company’s retirement policy in
place at such time but prior to the end of the Performance Period, the RSUs
shall not be forfeited under Section 1(b)(i) and the following shall apply:

(1) The Base Payout shall be reduced to a number determined by multiplying the
Base Payout by the Pro Rata Percentage. RSUs that exceed the reduced number
shall be forfeited to the Company.

(2) The Board of Directors or the Compensation Committee of the Board of
Directors, in its discretion, may increase the number of RSUs the Recipient
would otherwise be entitled to receive under this Section 1(d)(ii); the
Recipient shall have no right to any increase.

 

Executive 2012 PRSU Agreement     3

--------------------------------------------------------------------------------

(3) The amount of RSUs determined under (1) and (2) shall be delivered as soon
as practicable on or after the Determination Date, but in no event later than
December 31 of the calendar year in which the Performance Period ends.

(iii) Double Trigger Acceleration on Change in Control.

(1) All of the RSUs shall immediately vest based on deemed attainment or actual
performance achieved, if greater, 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 or service
is terminated by the Company (or its successor) without Cause (as defined
below), or (ii) the Recipient’s employment or service is terminated by the
Recipient for Good Reason (as defined below); provided, however, that the RSUs
may also immediately vest in connection with a Change in Control as provided in
Section 1(c)(iv) below.

(2) 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
fifty percent 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.

(3) 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

 

Executive 2012 PRSU Agreement     4

--------------------------------------------------------------------------------

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 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).

(4) For purposes of this Agreement, “Good Reason” shall mean:

(A) the assignment of a different title, job or responsibilities that results in
a decrease in the level of responsibility of the Recipient after the Change in
Control when compared to the Recipient’s level of responsibility for the
Company’s operations prior to the Change in Control; provided that Good Reason
shall not exist if the Recipient continues to have the same or a greater general
level of responsibility for Company operations after the Change in Control as
the Recipient had prior to the Change in Control even if the Company operations
are a subsidiary or division of the surviving company,

(B) a reduction in the Recipient’s base pay 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, or

(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.

(iv) 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:

(1) 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

 

Executive 2012 PRSU Agreement     5

--------------------------------------------------------------------------------

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, and disregarding fractional
shares;

(2) 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

(3) 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.

(e) Forfeiture of RSUs on Other Terminations of Service. 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(d), 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.

(f) Restrictions on Transfer and Delivery on Death. Recipient may not sell,
transfer, assign, pledge or otherwise encumber or dispose of the RSUs. Recipient
may designate beneficiaries to receive stock if Recipient dies before the
delivery date by so indicating on Exhibit A, which is incorporated into and made
a part of this agreement. If Recipient fails to designate beneficiaries on
Exhibit A, the shares will be delivered to Recipient’s estate.

(g) 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 between the record date and 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.

(h) Delivery on Delivery Date. As soon as practicable following the delivery
date for a share of Common Stock, the Company shall deliver a certificate for
the number of shares 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.

 

Executive 2012 PRSU Agreement     6

--------------------------------------------------------------------------------

(i) 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.

(j) Tax Withholding. Recipient acknowledges that, at 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. Promptly
following the delivery date, 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(h), 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
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.

(k) 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, a termination
of employment shall be determined with respect to standards for “separation from
service” within the meaning of applicable regulations.

(i) 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.

(ii) 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 or total disability 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.

 

Executive 2012 PRSU Agreement     7

--------------------------------------------------------------------------------

2. Miscellaneous.

(a) Entire Agreement; Amendment. This Agreement and the Plan (including without
limitation Section 17 thereof) constitute the entire agreement of the parties
with regard to the subjects hereof and may be amended only by written agreement
between the Company and the 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 the 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
the 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.

(f) Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original.

 

ELECTRO SCIENTIFIC INDUSTRIES, INC. By:  

 

  Authorized Officer

 

                                                                  ,Recipient

 

 

 

Executive 2012 PRSU Agreement     8

--------------------------------------------------------------------------------

EXHIBIT A

DESIGNATION OF BENEFICIARY

 

Name                                                                
                           

  Social Security Number                 -                -                 

I designate the following person(s) to receive any restricted stock units
outstanding upon my death under the Performance-Based Restricted Stock Units
Award Agreement with Electro Scientific Industries, Inc.:

Primary Beneficiary(ies)

 

Name                                                                
               

     Social Security Number               -            -            

Birth Date                                          
                             

     Relationship                           
                                       

Address                                                                 
              

     City                   State                  
Zip                          

Name                                                                
               

    

Social Security Number             -            -            

Birth Date                                        
                              

     Relationship                                          
                     

Address                                                                 
          

     City                   State                   Zip                      
Name                                                                      
              

Social Security Number             -            -            

Birth Date                                        
                                  

     Relationship                           
                                       

Address                                                                 
          

     City                   State                  
Zip                          

If more than one primary beneficiary is named, the units will be divided equally
among those primary beneficiaries who survive the undersigned.

Secondary Beneficiary(ies)

In the event no Primary Beneficiary is living at the time of my death, I
designate the following the person(s) as my beneficiary(ies):

 

Name                                                                
               

     Social Security Number               -            -            

Birth Date                                          
                             

     Relationship                           
                                       

Address                                                                 
              

     City                   State                  
Zip                          

Name                                                                
               

    

Social Security Number             -            -            

Birth Date                                        
                              

     Relationship                                          
                     

Address                                                                 
          

     City                   State                   Zip                      
Name                                                                      
              

Social Security Number             -            -            

Birth Date                                        
                                  

     Relationship                           
                                       

Address                                                                 
          

     City                   State                  
Zip                          

If more than one Secondary Beneficiary is named, the units will be divided
equally among those Secondary beneficiaries who survive the undersigned.

This designation revokes and replaces all prior designations of beneficiaries
under the Performance-Based Restricted Stock Units Award Agreement.

 

 

      Date signed:                          
                            , 20        

Signature

     

 

Executive 2012 PRSU Agreement     A-1