Document:

Exhibit 10.1

 

Annual Executive Bonus Plan Summary Sheet for
fiscal 2006

 

	
  Parameter

  	
   

  	
  Payout (linear)

  	
   

  	
  Weight

  	
   

  
	
  Revenue Target

  	
   

  	
  Payout Parameters ranging from 40% to 200% depending on results
  achieved

  	
   

  	
  33

  	
  %

  
	
  Operating Profit Target

  	
   

  	
  Payout Parameters ranging from 40% to 200% depending on results
  achieved

  	
   

  	
  33

  	
  %

  
	
  Individual
  Management Objectives

  	
   

  	
  Actual Achievement

  	
   

  	
  34

  	
  %

  

 

1Exhibit 10.2

 

	
  

  	
  Electro Scientific Industries, Inc.
13900 NW Science Park Dr.

  Portland, OR 97229

  

 

Notice
of Grant of Stock Options

and Option Agreement

 

	
  [Name]

  	
  Option Number:

  	
              

  
	
  [Address]

  	
  Plan:

  	
  2004

  

 

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

 

The total
option price of this option is
$                        .

 

	
  Vesting:

  	
   

  	
  100% on

  
	
  Sale Restriction Lapses:

  	
   

  	
  100% on

  

 

Shares will
become 100% vested and available for cash exercise on                 .  Shares will be available for

Cashless
exercise on the third anniversary of the Grant Date – i.e., on                  .

 

As noted above, the shares will be restricted upon exercise, with the
restriction to lapse on the third anniversary of the Grant Date.  This means that, until the third anniversary
of the Grant Date, you may not sell, assign, pledge or transfer the shares in
any manner, including transferring any right or interest in the shares, whether
voluntarily or by operation of law, or by gift, bequest or otherwise.

 

This option will be visible to you in your ETRADE OptionsLink
account.  Once the option is vested, you
may exercise shares.  However, you must
exercise the vested shares through ESI’s Stock Administrator if exercising
prior to (Sale Restriction Lapse Date). 
As of (Sale Restriction Lapse Date), the shares may be exercised and/or
sold directly through your ETRADE OptionsLink account.

 

By your signature and the Company’s signature below, you and the
Company agree that this option is granted under and governed by the terms and
conditions of the Company’s 2004 Stock Incentive Plan and the attached Option
Terms and Conditions which are incorporated into and made a part of this
agreement.

 

 

	
  Nicholas Konidaris

  	
   

  	
  Date

  	
   

  
	
  President and Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Name]

  	
   

  	
  Date

  	
   

  

 

1

 

OPTION
TERMS AND CONDITIONS

2004 Stock
Option Incentive Plan

Non-Qualified
Stock Option

 

Pursuant to the Company’s 2004 Stock Option
Incentive Plan (the “2004 Plan”), 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: 100% on or
after                     
..

 

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

 

2

 

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 (including
cash which may at the election of the Company be the proceeds of a loan from
the Company), 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 as defined in the 2004 Plan, 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.

 

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 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 the
2004 Plan or 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.

 

3

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