Exhibit
10.2


 


ELECTRO SCIENTIFIC INDUSTRIES,
INC.


1990 EMPLOYEE STOCK PURCHASE PLAN


As Amended October 29, 2003 and
October 15, 2004


 


1.             Purpose of the Plan. 
Electro Scientific Industries, Inc. (the “Company”) believes that
ownership of shares of its Common Stock by employees of the Company and its
Participating Subsidiaries (hereinafter defined) is desirable as an incentive
to better performance and improvement of profits, and as a means by which
employees may share in the rewards of growth and success.  The purpose of the Company’s 1990 Employee
Stock Purchase Plan (the “Plan”) is to provide a convenient means by which
employees of the Company and Participating Subsidiaries may purchase the
Company’s shares through payroll deductions and a method by which the Company
may assist and encourage such employees to become share owners.


 


2.             Shares Reserved for the Plan.  There are 1,900,000 shares of the Company’s
authorized but unissued or reacquired Common Stock, no par value, reserved for
purposes of the Plan.  The number of
shares reserved for the Plan and other share limits in the Plan are subject to
adjustment in the event of any stock dividend, stock split, combination of
shares, recapitalization or other change in the outstanding Common Stock of the
Company.  The determination of whether an
adjustment shall be made and the manner of any such adjustment shall be made by
the Board of Directors of the Company, which determination shall be conclusive.


 


3.             Administration of the Plan. 
The Plan shall be administered by the Board of Directors.  The Board of Directors may promulgate rules
and regulations for the operation of the Plan, adopt forms for use in
connection with the Plan, and decide any question of interpretation of the Plan
or rights arising thereunder.  The Board
of Directors may consult with counsel for the Company on any matter arising
under the Plan.  All determinations and
decisions of the Board of Directors shall be conclusive.  Notwithstanding the foregoing, the Board of
Directors, if it so desires, may delegate to the Compensation Committee of the
Board the authority for general administration of the Plan.


 


4.             Eligible Employees. 
Except as indicated below, all full-time employees of the Company and
all full-time employees of each of the Company’s subsidiary corporations which
is designated by the Board of Directors of the Company as a participant in the
Plan (such participating subsidiary being hereinafter called a “Participating
Subsidiary”) are eligible to participate in the Plan.  Any employee who would, after a purchase of
shares under the Plan, own or be deemed (under Section 424(d) of the Internal
Revenue Code of 1986, as amended (the “Code”)) to own stock (including stock
subject to any outstanding options held by the employee) possessing 5 percent
or more of the total combined voting power or value of all classes of stock of
the Company or any parent or subsidiary of the Company, shall be ineligible to
participate in the Plan.  A “full-time
employee” is one who is in the active service of the Company or a Participating
Subsidiary excluding, however, any employee whose customary employment is 20
hours or less per week or whose customary employment is for not more than five
months per calendar year.


 


5.             Offerings.


 


(a)           Offerings and Purchase Periods.  The Plan shall be implemented by a series of
overlapping 24-month offerings (the “Offerings”), with a new Offering
commencing on January 15, April 15, July 15 and October 15 of each year
beginning in January 2004.  Accordingly,
up to eight separate Offerings may be in process at any time, but an employee
may only participate in one Offering at a time. 
The first day of each Offering is the “Offering Date” for that Offering
and each Offering shall end on the second anniversary of its OfferingDate.  


 


Each Offering shall be divided into eight three-month
Purchase Periods, one of which shall end on each January 14, April 14, July 14
and October 14 during the term of the Offering. 
The last day of each Purchase Period is a “Purchase Date” for the
applicable Offering. Notwithstanding the foregoing, (1) the Offering that began
on January 8, 2003 and ends on January 7, 2004 shall be governed by the Plan as
amended February 24, 2000, and (2) the Offering that begins in January 2004
shall begin on January 8, 2004 and end on January 14, 2006 and the


 





















 


 


first Purchase Date relating to such Offering shall be April 14, 2004.


 


(b)           Grants; Limitations.  On each Offering Date, each eligible employee
shall be granted an option under the Plan to purchase shares of Common Stock on
the Purchase Dates for the Offering for the price determined under paragraph 7
of the Plan exclusively through payroll deductions authorized under paragraph 6
of the Plan; provided, however, that (a) no option shall permit the purchase of
more than 500 shares on any Purchase Date, and (b) no option may be granted
under the Plan that would allow an employee’s right to purchase shares under
all stock purchase plans of the Company and its parents and subsidiaries to
which Section 423 of the Code applies to accrue at a rate that exceeds $25,000
of fair market value of shares (determined at the date of grant) for each
calendar year in which such option is outstanding.


 


(c)           Insufficient Shares.  If there is an insufficient number of
reserved shares of Common Stock to permit the full exercise of all existing
rights to purchase shares, or if the legal obligations of the Company prohibit
the issuance of all shares purchasable upon the full exercise of such rights,
the plan administrator shall make a pro rata allocation of the shares remaining
available in as nearly a uniform and equitable manner as possible, based pro
rata on the aggregate amounts then credited to each participant’s account.  In such event, payroll deductions to be made
shall be reduced accordingly and the plan administrator shall give written
notice of such reduction to each participant affected thereby.  Any amount remaining in a participant’s
account immediately after all available shares have been purchased will be
promptly remitted to such participant. 
Determinations made by the plan administrator in this regard shall be
final, binding and conclusive on all persons. 
No deductions shall be permitted under the Plan after the Company
determines that no shares are available.


 


6.             Participation in the Plan.


 


(a)           Initiating Participation.  An eligible employee may participate in an
Offering under the Plan by filing with the Company no later than 4:00 p.m.,
Pacific time on the Offering Date for the Offering in which the employee
desires to participate, forms furnished by the Company, a subscription and
payroll deduction authorization.  Once
filed, a subscription and payroll deduction authorization shall remain in
effect for Offerings unless amended or terminated.  The payroll deduction authorization will
authorize the employing corporation to make payroll deductions from each of the
participant’s paychecks during an Offering other than a paycheck issued on the
Offering Date.  Payroll deductions from
any paycheck may not be less than 1 percent or more than 15 percent of the
gross amount of base pay plus commissions, if any, payable to the participant
for the period covered by the paycheck. 
If payroll deductions are made by a Participating Subsidiary, that
corporation will promptly remit the amount of the deductions to the Company.


 


(b)           Amending or Terminating Participation.  After a participant has begun participating
in the Plan by initiating payroll deductions, the participant may not amend the
payroll deduction authorization except that (a) a participant may amend payroll
deductions once during each calendar quarter and (b) the participant may
terminate participation in the Plan at any time prior to the tenth day before a
Purchase Date by written notice to the Company. 
A permitted change in payroll deductions shall be effective for any pay
period only if written notice is received by the Company at least three
business days prior to the payroll effective date published by the Company for
that pay period.  Participation in the
Plan shall also terminate when a participant ceases to be an eligible employee
for any reason, including death or retirement. 
A participant may not reinstate participation in the Plan with respect
to a particular Offering after once terminating participation in the Plan with
respect to that Offering.  Upon
termination of a participant’s participation in the Plan, all amounts deducted
from the participant’s pay and not previously used to purchase shares under the
Plan shall be returned to the participant.


 


(c)           Suspension of Payroll Deductions When Limitations
on Participation Are Exceeded. 
As a result of the limitations described above under paragraph 5(b), the
amount of a participant’s payroll deductions during any portion of an Offering
may exceed the maximum amount that can be applied to purchase shares on the
next Purchase Date of that Offering.  If
this occurs, then, as soon as practicable following the participant’s written
request (or earlier in the Company’s discretion), payroll deductions from the
participant shall be suspended and any such excess amounts shall be refunded to
the participant.  Such suspension shall
not result either in termination of the participant’s participation in the
Offering or ineligibility of the participant for enrollment in any new
Offering.  Payroll deductions at the rate
set forth in the participant’s then effective payroll deduction authorization
form shall automatically resume for any period under the Plan during which,
after application of the limitations in paragraph 5(b), the participant is
eligible to purchase any Common Stock under the Plan on the next Purchase Date
unless the


 





















 


participant terminates participation in accordance with paragraph 6(b).


 


7.             Option Price.  The
price at which shares shall be purchased on any Purchase Date in an Offering
shall be the lower of (a) 85% of the fair market value of a share of
Common Stock on the Offering Date of the Offering (or the preceding trading day
if the Offering Date is not a trading day) or (b) 85% of the fair market
value of a share of Common Stock on the Purchase Date (or the preceding trading
day if the Purchase Date is not a trading day). 
The fair market value of a share of Common Stock on any date shall be
the closing price of the Common Stock on that trading day as reported by NASDAQ
or, if the Common Stock is not reported on NASDAQ, such other reported value of
the Common Stock as shall be specified by the Board of Directors.


 


8.             Automatic Withdrawal and Re-enrollment.  If the fair market value of a share of Common
Stock on any new Offering Date is less than or equal to the fair market value
of a share of Common Stock on the participant’s current Offering Date, every
participant in that Offering shall automatically (a)be withdrawn from such
Offering after the acquisition of the shares of Common Stock on such Purchase
Date that precedes the new Offering Date and (b) be enrolled in the new
Offering commencing on the day after such Purchase Date.


 


9.             Purchase of Shares. 
All amounts withheld from the pay of a participant shall be credited to
his or her account under the Plan by the Custodian appointed under
paragraph 10.  No interest will be
paid on such accounts, unless otherwise determined by the Board of Directors.
On each Purchase Date, the amount of the account of each participant will be
applied to the purchase of whole shares by such participant from the Company at
the price determined under paragraph 7. 
Any cash balance remaining in a participant’s account after a Purchase
Date because it was less than the amount required to purchase a full share
shall be retained in the participant’s account for the next Purchase
Period.  Any other amounts in a
participant’s account after a Purchase Date as a result of the limitations in
paragraph 5(b) will be repaid to the participant.


 


10.           Delivery and Custody of Shares.  Shares purchased by participants pursuant to
the Plan will be delivered to and held in the custody of such investment or
financial firm (the “Custodian”) as shall be appointed by the Board of
Directors.  The Custodian may hold in
nominee or street name certificates for shares purchased pursuant to the Plan,
and may commingle shares in its custody pursuant to the Plan in a single
account without identification as to individual participants.  By appropriate instructions to the Custodian
on forms to be provided for that purpose, a participant may from time to time
(a) transfer into the participant’s own name of all or part of the shares
held by the Custodian for the participant’s account and delivery of such shares
to the participant; (b) transfer of all or part of the shares held for the
participant’s account by the Custodian to a regular individual brokerage
account in the participant’s own name, either with the firm then acting as
Custodian or with another firm, or (c) sell all or part of the shares held
by the Custodian for the participant’s account at the market price at the time
the order is executed and obtain remittance of the net proceeds of sale to the
participant.  Upon termination of
participation in the Plan, the participant may elect to have the shares held by
the Custodian for the account of the participant transferred and delivered in
accordance with (a) above, transferred to a brokerage account in accordance
with (b), or sold in accordance with (c).


 


11.           Records and Statements. 
The Custodian will maintain the records of the Plan. As soon as
practicable after each Purchase Date each participant will receive a statement
showing the activity of his account since the preceding Purchase Date and the
balance on the Purchase Date as to both cash and shares.  Participants will be furnished such other
reports and statements, and at such intervals, as the Board of Directors shall
determine from time to time.


 


12.           Expense of the Plan. 
The Company will pay all expenses incident to operation of the Plan,
including costs of record keeping, accounting fees, legal fees, commissions and
issue or transfer taxes on purchases pursuant to the Plan and on delivery of
shares to a participant or into his or her brokerage account.  The Company will not pay expenses,
commissions or taxes incurred in connection with sales of shares by the
Custodian at the request of a participant. Expenses to be paid by a participant
will be deducted from the proceeds of sale prior to remittance.


 


13.           Rights Not Transferable. 
The right to purchase shares under this Plan is not transferable by a
participant, and such right is exercisable during the participant’s lifetime
only by the participant.  Upon the death
of a participant, any shares held by the Custodian for the participant’s
account shall be transferred to the persons entitled thereto under the laws of
the state of domicile of the participant upon a proper showing of authority.


 





















 


14.           Dividends and Other Distributions.  Cash dividends and other cash distributions,
if any, on shares held by the Custodian will be paid currently to the
participants entitled thereto unless the Company subsequently adopts a dividend
reinvestment plan and the participant directs that his or her cash dividends be
invested in accordance with such plan. 
Stock dividends and other distributions in shares of the Company on
shares held by the Custodian shall be issued to the Custodian and held by it
for the account of the respective participants entitled thereto.


 


15.           Voting and Shareholder Communications.  In connection with voting on any matter
submitted to the shareholders of the Company, the Custodian will cause the
shares held by the Custodian for each participant’s account to be voted in
accordance with instructions from the participant or, if requested by a
participant, will furnish to the participant a proxy authorizing the
participant to vote the shares held by the Custodian for the participant’s
account.  Copies of all general
communications to shareholders of the Company will be sent to participants
participating in the Plan.


 


16.           Tax Withholding. 
Each participant who has purchased shares under the Plan shall
immediately upon notification of the amount due, if any, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local tax
withholding determined by the Company to be required.  If the Company determines that
additional withholding is required beyond any amount deposited at the time of
purchase, the participant shall pay such amount to the Company on demand.  If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable by
the Company to the participant, including salary, subject to applicable law.


 


17.           Responsibility and Indemnity.  Neither the Company, its Board of Directors,
the Custodian, any Participating Subsidiary, nor any member, officer, agent, or
employee of any of them, shall be liable to any participant under the Plan for
any mistake of judgment or for any omission or wrongful act unless resulting
from gross negligence, willful misconduct or intentional misfeasance.  The Company will indemnify and save harmless
its Board of Directors, the Custodian and any such member, officer, agent or employee
against any claim, loss, liability or expense arising out of the Plan, except
such as may result from the gross negligence, willful misconduct or intentional
misfeasance of such entity or person.


 


18.           Conditions and Approvals. 
The obligations of the Company under the Plan shall be subject to
compliance with all applicable state and federal laws and regulations,
compliance with the rules of any stock 


 





















 


exchange on which the Company’s securities may be listed, and approval
of such federal and state authorities or agencies as may have jurisdiction over
the Plan or the Company.  The Company
will use its best effort to comply with such laws, regulations and rules and to
obtain such approvals.


 


19.           Amendment of the Plan. 
The Board of Directors of the Company may from time to time amend the Plan
in any and all respects, except that without the approval of the shareholders
of the Company, the Board of Directors may not increase the number of shares
reserved for the Plan or decrease the purchase price of shares offered pursuant
to the Plan.


 


20.           Termination of the Plan. 
The Plan shall terminate when all of the shares reserved for purposes of
the Plan have been purchased, provided that the Board of Directors in its sole
discretion may (a) elect to continue the Plan in connection with the reservation
of additional shares for purposes of the Plan or (b) at any time terminate the
Plan without any obligation on account of such termination, except as
hereinafter in this paragraph provided. 
Upon termination of the Plan, the cash and shares, if any, held in the
account of each participant shall forthwith be distributed to the participant
or to the participant’s order, provided that if prior to the termination of the
Plan, the Board of Directors and shareholders of the Company shall have adopted
and approved a substantially similar plan, the Board of Directors may in its
discretion determine that the account of each participant under this Plan shall
be carried forward and continued as the account of such participant under such
other plan, subject to the right of any participant to request distribution of
the cash and shares, if any, held for his account.