Exhibit 10.1


 


	
  

  	
  Electro Scientific
  Industries, Inc.

  13900 NW Science Park Dr.

  Portland OR 97229

  



 


Notice of Grant of Stock Options

and Option Agreement


 


	
  Robert DeBakker

  	
  Option
  Number:

  	
  00009595

  
	
  16250 S. Pacific Hwy #57

  	
   

  	
   

  
	
  Lake Oswego, OR United States 97034

  	
   

  	
   

  



 


Effective 9/27/2004 (the Grant Date), you
(Optionee) have been granted a Non-Qualified Stock Option to buy 50,000 shares
of Common Stock of Electro Scientific Industries, Inc. (the Company) at
$17.3200 per share.


 


The total option price of this
option is $866,000.00.


 


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


 




	
  Shares

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  	
   

  	
  Expiration

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12,500

  	
   

  	
  On Vest Date

  	
   

  	
  9/27/2005

  	
   

  	
  9/26/2014

  	
   

  
	
  12,500

  	
   

  	
  On Vest Date

  	
   

  	
  9/27/2006

  	
   

  	
  9/26/2014

  	
   

  
	
  12,500

  	
   

  	
  On Vest Date

  	
   

  	
  9/27/2007

  	
   

  	
  9/26/2014

  	
   

  
	
  12,500

  	
   

  	
  On Vest Date

  	
   

  	
  9/27/2008

  	
   

  	
  9/26/2014

  	
   

  






 


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 29, 2004

  
	
  Nicholas Konidaris

  	
   

  	
  Date

  	
   

  
	
  President and Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Robert DeBakker

  	
   

  	
   

  	
  September 29, 2004

  
	
  Robert DeBakker

  	
   

  	
  Date

  	
   

  



 

















 


OPTION TERMS
AND CONDITIONS


Robert
DeBakker


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


 

















 


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.


 

















 


(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.