Exhibit 10.1


 




	
  

  	
  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

  	
   

  



 
















 


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


 
















 


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.