Document:

Form of Performance Based Restricted Stock Unit Agreement

 EXHIBIT 10.3 
 PERFORMANCE-BASED 
 RESTRICTED STOCK UNITS AWARD AGREEMENT 
 This Award Agreement (the “Agreement”) is entered into as of _________, 2006 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 July 19, 2006, 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 any of the RSUs do not vest in accordance with Section 1(b)(iii) upon achievement to any extent of the
Performance Goal (as defined below) and except as provided in Section 1(d), the unvested RSUs shall be forfeited to the Company. The extent to which the Performance Goal is achieved, if at all, shall be determined no later than the date that
the Company’s fiscal year 2009 audit is completed. 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. 

 (iii) The “Performance Goal” shall be based on (A) the average
earnings/(loss) per share of the Company for the three-year period comprised of fiscal 2007, 2008 and 2009 (the “Performance Period”) as compared to the average earnings/(loss) per share of the Company for the three-year period comprised
of fiscal 2004, 2005 and 2006 relative to (B) the average earnings/(loss) per share for each member of the peer group companies set forth on Exhibit A for the three-year period comprised of the three most recent fiscal years for which
annual earnings information is available prior to the date of the completion of the Company’s fiscal 2009 audit (the “Comparable Period”) as compared to the average earnings/(loss) per share for such company for the three-year
period comprised of the three fiscal years preceding the Comparable Period. All information with respect to members of the peer group will be based upon publicly available information. The RSUs shall vest as follows: 
  

			
	Company Percentile Rank vs. Peer Group	  	Portion of RSUs subject to this Agreement Vesting
	>90th	  	200%
	75th	  	150%
	50th	  	100%
	25th	  	50%
	<25th	  	0%

 RSUs will vest proportionately between 0% and 200% for Company rankings between the 25th and 90th percentiles. 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 a Company ranking below the 25th percentile. Those RSUs vesting pursuant to this Section 1(b)(iii) shall vest immediately upon the determination of the extent of the achievement
of the Performance Goal. 
 (c) Delivery Date. Except as set forth in Section 1(d)(iv), the delivery date for a
RSU subject to this Agreement shall be the date of completion of the Company’s fiscal 2009 audit. 
 (d)
Proration upon Termination for Certain Reasons Prior to End of Performance Period; Treatment on Change in Control 
 (i) Proration on Death or Total Disability. If Recipient ceases to be an employee of the Company by reason of Recipient’s death or physical disability prior to the end of the Performance Period, the 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”); provided,
however, that the Board of Directors or the Compensation Committee of the Board of Directors, in its discretion, may increase the number 

  

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of RSUs the Recipient would otherwise be entitled to receive under this Section 1(d)(i). 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
Recipient to be unable to perform his or her duties as an employee, director, officer or consultant of the Company 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. 
 (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 prior to the end of the Performance Period, the Base Payout shall be reduced to a number determined by multiplying the Base Payout by the Pro Rata Percentage; provided, however, that 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). 
 (iii) Proration on Termination Other Than for Cause. If the Company terminates Recipient’s employment with the Company other
than for cause prior to the end of the Performance Period, the Base Payout shall be reduced to a number determined by multiplying the Base Payout by the Pro Rata Percentage; provided, however, that 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)(iii). The term “cause” shall mean (i) the willful and continued
failure by Recipient to perform substantially Recipient’s reasonably assigned duties with the Company, other than a failure resulting from Recipient’s incapacity due to physical or mental illness, after a written demand for performance has
been delivered to Recipient by the Company which specifically identifies the manner in which the Company believes that Recipient has not substantially performed Recipient’s duties, (ii) the conviction of guilty or entering of a nolo
contendere plea to a felony which is materially and demonstrably injurious to the Company, or (iii) the commission of an act by Recipient, or the failure of Recipient to act, which constitutes gross negligence or gross misconduct. For purposes
of this Section 1(d)(iii), no act, or failure to act, on Recipient’s part shall be considered “willful” unless done, or omitted to be done, by Recipient in knowing bad faith. Any act, or failure to act based upon authority given
pursuant to a resolution duly adopted by the Board of Directors or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Recipient in good faith. 
 (iv) Treatment following Change in Control. 
 (1) If as a result of a Change in Control, the Company’s Common Stock ceases to be listed for trading on a national securities
exchange (an “Exchange”), any RSUs subject to this award that are unvested on the date of the Change in Control shall continue to vest according to the terms and conditions of this award; provided that such award is replaced with an award
for voting securities of the resulting corporation or the acquiring corporation, as the case may be (including without limitation, the voting securities of any corporation which as a 

  

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result of the Change in Control owns the Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) (the “Surviving Company”) which are traded on an Exchange (a “Replacement Award”), which Replacement Award shall consist of RSUs with a value (determined using the Surviving Company’s stock price as of the date
of the Change in Control) equal to the value of the replaced award of RSUs (determined using the Company’s stock price and assuming attainment of target performance or actual performance achieved, if greater, as of the date of the Change in
Control), with any restrictions on such Replacement Award lapsing at the end of the measuring period over which performance for the replaced RSUs was to be measured prior to the granting of the Replacement Award; provided, however, that in the event
of a termination by the Company without Cause or by Recipient for Good Reason during the vesting period of any Replacement Award, the Replacement Award shall immediately vest; and provided further that upon the vesting date of all or a portion of a
Replacement Award, Recipient shall be entitled to receive a lump sum cash payment equal to the decrease, if any, in the value of a share of the Surviving Company’s stock from the date of the Change in Control (as increased on a calendar
quarterly basis using an annual interest rate, as of the last business day of the calendar quarter, for zero-coupon U.S. government securities with a constant maturity closest in length to the time period between the date of the Change in Control
and the date of vesting of the Replacement Award) to the time of vesting multiplied by the total number of RSUs vesting on such date. If any RSUs that are unvested at the time of the Change in Control are not replaced with Replacement Awards, such
RSUs shall immediately vest based upon deemed attainment of target performance or actual performance achieved, if greater. 
 (2) If as a result of a Change in Control, the Company’s Common Stock continues to be listed for trading on an Exchange, any RSUs that are unvested on the date of the Change of Control shall be replaced with RSUs where the number of
such RSUs shall be equal to the number of RSU assuming attainment of target performance or actual performance achieved, if greater, as of the date of the Change in Control with any restrictions on such RSUs lapsing at the end of the measuring period
over which performance for the replaced RSUs was to be measured prior to the granting of the replaced award; provided however, that, in the event of a termination by the Company without Cause or by Recipient for Good Reason during the vesting period
of this award such award shall immediately vest; and provided further that upon the vesting date of all or portion of this award, Recipient shall be entitled to receive a lump sum cash payment equal to the decrease, if any, in the value of a share
of the Company’s stock from the date of the Change in Control (as increased on a calendar quarterly basis using an annual interest rate, as of the last business day of the calendar quarter, for zero-coupon U.S. government securities with a
constant maturity closest in length to the time period 

  

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between the date of the Change in Control and the date of the vesting) to the time of vesting, multiplied by the total number of RSUs vesting on such date.

 (3) For purposes of this Agreement, a “Change in Control” of the Company shall mean the occurrence of any of the
following events: 
 (A) Any consolidation, merger or plan of share exchange involving the Company (a “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 50% of the
combined voting power of the outstanding Voting Securities of the surviving or continuing corporation immediately after the Merger, disregarding any Voting Securities issued or retained by such holders in respect of securities of any other party to
the Merger; 
 (B) Any 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; 
 (C) The adoption of any plan or proposal for the liquidation or
dissolution of the Company; 
 (D) At any time during a period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof, unless each new director elected during such two-year period was nominated or elected by
two-thirds of the Incumbent Directors then in office and voting (with new directors nominated or elected by two-thirds of the Incumbent Directors also being deemed to be Incumbent Directors); or 
 (E) Any Person (as hereinafter defined) 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 Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing fifty percent (50%) or more
of the combined voting power of the then outstanding Voting Securities. 
 Notwithstanding anything in the foregoing to the contrary, unless
otherwise determined by the Board of Directors, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) Recipient acquires (other than on the same basis as all other holders of the 

  

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Company Common Stock) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph (A) or
(B) above, or (2) Recipient is part of group that constitutes a Person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph (E) above.

 (4) For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation,
partnership, group, association or other “person”, as such term is used in Section 14 (d) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company, a wholly owned subsidiary of the Company or
any employee benefit plan(s) sponsored by the Company. 
 (5) For purposes of this Agreement, termination by Recipient of his
or her employment for “Good Reason” shall mean termination based on: 
 (A) a diminution of Recipient’s
status, title, position(s) or responsibilities from Recipient’s status, title, position(s) and responsibilities as in effect immediately prior to the Change in Control or the assignment to Recipient of any duties or responsibilities which are
inconsistent with such status, title, position(s) or responsibilities (in either case other than is isolated, insubstantial or inadvertent actions which are remedied after notice), or any removal of Recipient from such position(s), except in
connection with the termination of Recipient’s employment for Cause, total disability (as defined in Section 1(d)(i)) or as a result of Recipient’s death or voluntarily by Recipient other than for Good Reason; 
 (B) a reduction by the Company or Surviving Company in Recipient’s rate of base salary, bonus or incentive opportunity or a
substantial reduction in benefits (other than reductions that do not impact Recipient’s compensation opportunity, taken as a whole, or a reduction in benefits applicable to substantially all employees); or 
 (C) the Company’s or Surviving Company’s requiring Recipient to be based more than fifty miles from the principal office at in
which Recipient is based immediately prior to the Change in Control, except for reasonably required travel on the Company’s business. 
 (e) 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 

  

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Exhibit B, which is incorporated into and made a part of this agreement. If Recipient fails to designate beneficiaries on Exhibit B, the
shares will be delivered to Recipient’s estate. 
 (f) Reinvestment of Dividend Equivalents. On each date on which
the Company pays a dividend on shares of Common Stock underlying a RSU, Recipient shall receive additional whole or fractional RSUs in an amount 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. 
 (g) Delivery on
Delivery Date. As soon as practicable following the delivery date for a RSU, the Company shall deliver a certificate for the number of shares represented by all vested 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. 
 (h) 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. 
 (i) Tax Withholding.
Recipient acknowledges that, at the delivery date, the value of such vested RSUs 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(g), Recipient shall pay to the
Company the required withholding amount in cash or, at the election of the Recipient, by surrendering to the Company for cancellation shares of the Company’s Common Stock to be issued 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 last trading day preceding the date of Recipient’s election to surrender such shares. If the Recipient pays the withholding amount in
shares of Common Stock, the Company shall pay to the Recipient in cash the amount of any resulting over payment. 
 (j)
Section 409A. The award made pursuant to this Agreement is intended not to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A the Internal Revenue Code of 1986, as amended, and
instead is intended to be exempt from the application of Section 409A. To the extent that the award is nevertheless deemed to be subject to Section 409A, the award 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. Notwithstanding any provision of the award to the contrary, in the event that the
Company determines that the award is or may be subject to Section 409A, 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 (i) 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
(ii) comply with the requirements of Section 409A. 
  

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 2. Miscellaneous. 
 (a) Entire Agreement; Amendment. This Agreement constitutes 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. 
  

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	 ELECTRO SCIENTIFIC INDUSTRIES, INC.

		
	By:	 	  
		 	 Authorized Officer

	 ___________________________________________

	 __________________________________, Recipient

  

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 EXHIBIT A 
 PEER GROUP COMPANIES 
 Applied Materials 
 Asyst Technologies 
 Axcelis Technologies 
 Brooks Automation 
 Coherent 
 Cohu 
 Credence Systems 
 Cymer 
 FEI 
 FSI International 
 GSI Lumonics 
 Helix Technology 
 KLA-Tencor 
 Kulicke & Soffa Industries 
 Lam Research 
 LTX 
 Mattson Technology 
 Newport 
 Novellus Systems 
 Photronics 
 Teradyne 
 Ultratech 
 Varian Semiconductor 
 Veeco Instruments 
 Zygo 
  

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 EXHIBIT B 
 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.: 
  

	C.	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. 
  

	D.	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
	 		 		 		 		 	

  

 11Form of Restricted Stock Unit Agreement (Directors)

 EXHIBIT 10.4 
 RESTRICTED STOCK UNITS 
 AWARD AGREEMENT 
 This Award Agreement (the “Agreement”) is entered into as of _________, 2006 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 July 20, 2006, the Company’s Board of Directors made a restricted stock units award to Recipient pursuant to Section 9 of the
Company’s 2004 Stock Incentive Plan (the “Plan”) and 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 Company’s 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 and Delivery Dates. The RSUs issued under this Agreement shall initially be 100% unvested and subject to forfeiture.
Subject to this Section 1(b), the RSUs shall vest on with respect to one-third of the RSUs on each of the first three anniversaries of the date of grant. The RSUs shall become vested on the vesting date only if Recipient continues to be a
director of the Company immediately after such vesting date. The delivery date for a RSU shall be the date on which such RSU vests. 
 (c) Acceleration before Vesting Date. 
 (1) Acceleration on Death or Total Disability. If Recipient
ceases to be a director of the Company by reason of Recipient’s death or physical disability, outstanding but unvested RSUs shall become immediately vested in an amount determined by multiplying the total number of RSUs subject to this
Agreement by a percentage calculated by dividing the number of whole months elapsed from the date of this Agreement to the date of termination of service by 60 (the “Pro Rata Percentage”); provided, however, that the number of RSUs so
vested shall be reduced by the number of any RSUs that previously vested pursuant to Section 1(b). The delivery date shall also accelerate. 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 Recipient to be unable to perform his or her duties as a director of the Company 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. 
 (2) Acceleration on Normal Retirement. If Recipient terminates his service with the Company following normal retirement under the
retirement policy of the Board of Directors in place at such time, outstanding but unvested RSUs shall become immediately vested in an amount determined by multiplying the total number of RSUs subject to this Agreement by the Pro Rata Percentage;
provided, however, that the number of RSUs so vested shall be reduced by the number of any RSUs that previously vested pursuant to Section 1(b). The delivery date shall also be accelerated. 
 (3) Treatment on Change in Control. 
 (i) If as a result of a Change in Control, the Company’s Common Stock ceases to be listed for trading on a national securities exchange (an “Exchange”), any RSUs subject to this award that are unvested
on the date of the Change in Control shall continue to vest according to the terms and conditions of this award; provided that such award is replaced with an award for voting securities of the resulting corporation or the acquiring corporation, as
the case may be (including without limitation, the voting securities of any corporation which as a result of the Change in Control owns the Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) (the “Surviving Company”) which are traded on an Exchange (a “Replacement Award”), which Replacement Award shall consist of RSUs with a value (determined using the Surviving Company’s stock price as of the date
of the Change in Control) equal to the value of the replaced award of RSUs (determined using the Company’s stock price as of the date of the Change in Control), with any restrictions on such Replacement Award lapsing at the same time and manner
as the replaced award; provided, however, that in the event Recipient ceases to serve as a director of the Company during the vesting period of any Replacement Award, the Replacement Award shall immediately vest; and provided further that upon the
vesting date of all or a portion of a Replacement Award, Recipient shall be entitled to receive a lump sum cash payment equal to the decrease, if any, in the value of a share of the Surviving Company’s stock from the date of the Change in
Control (as increased on a calendar quarterly basis using an annual interest rate, as of the last business day of the calendar quarter, for zero-coupon U.S. government securities with a constant maturity closest in length to the time period 

  

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between the date of the Change in Control and the date of vesting of the Replacement Award) to the time of vesting multiplied by the total number of RSUs
vesting on such date. If any RSUs that are unvested at the time of the Change in Control are not replaced with Replacement Awards, such RSUs shall immediately vest. 
 (ii) If as a result of a Change in Control, the Company’s Common Stock continues to be listed for trading on an Exchange, any RSUs
that are unvested on the date of the Change of Control shall continue to vest according to the terms and conditions of this award; provided however, that, in the event Recipient ceases to serve as a director of the Company during the vesting period
of this award such award shall immediately vest; and provided further that upon the vesting date of all or portion of this award, Recipient shall be entitled to receive a lump sum cash payment equal to the decrease, if any, in the value of a share
of the Company’s stock from the date of the Change in Control (as increased on a calendar quarterly basis using an annual interest rate, as of the last business day of the calendar quarter, for zero-coupon U.S. government securities with a
constant maturity closest in length to the time period between the date of the Change in Control and the date of the vesting) to the time of vesting, multiplied by the total number of RSUs vesting on such date. 
 (iii) For purposes of this Agreement, a “Change in Control” of the Company shall mean the occurrence of any of the following
events: 
 (A) Any consolidation, merger or plan of share exchange involving the Company (a “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 50% of the combined
voting power of the outstanding Voting Securities of the surviving or continuing corporation immediately after the Merger, disregarding any Voting Securities issued or retained by such holders in respect of securities of any other party to the
Merger; 
 (B) Any 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; 
 (C) The adoption of any plan or proposal for the liquidation or
dissolution of the Company; 
 (D) At any time during a period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (“Incumbent Directors”) shall cease for any 

  

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reason to constitute at least a majority thereof, unless each new director elected during such two-year period was nominated or elected by two-thirds of the
Incumbent Directors then in office and voting (with new directors nominated or elected by two-thirds of the Incumbent Directors also being deemed to be Incumbent Directors); or 
 (E) Any Person (as hereinafter defined) 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 Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing fifty percent (50%) or more
of the combined voting power of the then outstanding Voting Securities. 
 Notwithstanding anything in the foregoing to the contrary, unless
otherwise determined by the Board of Directors, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) Recipient acquires (other than on the same basis as all other holders of the Company Common Stock) an
equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph (A) or (B) above, or (2) Recipient is part of group that constitutes a Person which becomes a beneficial owner of
Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph (E) above. 
 (ix) For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person”, as such term is used in Section 14 (d) of the
Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company, a wholly owned subsidiary of the Company or any employee benefit plan(s) sponsored by the Company. 
 (d) Forfeiture of RSUs on Other Terminations of Service. If Recipient ceases to be a director of the Company for any reason that
does not result in acceleration of vesting pursuant to Section 1(c), 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.

 (e) 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. 
  

 4 

 (f) Reinvestment of Dividend Equivalents. On each date on which the Company pays a
dividend on shares of Common Stock underlying a RSU, Recipient shall receive additional whole or fractional RSUs in an amount 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. 
 (g) Delivery on Delivery Date.
As soon as practicable following the delivery date for a RSU, the Company shall deliver a certificate for the number of shares represented by all vested 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. 
 (h) 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. 
 (i) Section 409A. The
award made pursuant to this Agreement is intended not to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A the Internal Revenue Code of 1986, as amended, and instead is intended to be exempt
from the application of Section 409A. To the extent that the award is nevertheless deemed to be subject to Section 409A, the award 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. Notwithstanding any provision of the award to the contrary, in the event that the Company determines that the award
is or may be subject to Section 409A, 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 (i) 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 (ii) comply with the requirements of
Section 409A. 
 2. Miscellaneous. 
 (a) Entire Agreement; Amendment. This Agreement constitutes the entire agreement of the parties with regard to the subjects hereof and may be amended only by written agreement between the Company and 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 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. 
  

 5 

 (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 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

  

 6 

 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
Restricted Stock Units Award Agreement with Electro Scientific Industries, Inc.: 
  

	E.	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. 
  

	F.	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 Restricted Stock Units
Award Agreement. 
  

													
						
	  	 		 	 Date signed:
	 	  	 	, 20	 	  
	 Signature
	 		 		 		 		 	

  

 7

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