EXHIBIT 10.1
PERFORMANCE AND
TIME-BASED
RESTRICTED STOCK
UNITS
AWARD AGREEMENT
This Award Agreement (the
“Agreement”) is entered into as of October 4,
2006, by and between Electro Scientific Industries, Inc., an Oregon
corporation (the “Company”), and Nicholas Konidaris
(“Recipient”), for the grant of restricted stock units
with respect to the Company’s Common Stock (“Common
Stock”).
On October 4, 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”). 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 4,000
restricted stock units (subject to adjustment pursuant to
Section 1(b)), 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
on the applicable delivery date 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. The number of RSUs subject
to this Agreement shall be reduced to a number equal to the sum of
the following:
(1) 1,000 RSUs multiplied by the
percentage achievement of performance measure #1 set forth on
Exhibit A;
(2) 1,000 RSUs multiplied by the
percentage achievement of performance measure #2 set forth on
Exhibit A;
(3) 1,000 RSUs multiplied by the
percentage achievement of performance measure #3 set forth on
Exhibit A; and
(4) 1,000 RSUs multiplied by the
percentage achievement of performance measure #4 set forth on
Exhibit A.
The achievement of the performance
measures shall be determined by the Compensation Committee in its
sole discretion at its first regularly scheduled meeting following
the end of the
Company’s fiscal year 2007. Subject to
this Section 1(b), the RSUs shall vest on the fifth
anniversary of the date of grant. The RSUs shall become vested on
the vesting date only if Recipient continues to be an employee of
the Company at all times from the date of this Agreement to and
including the vesting date. Except as provided in Section (1)(g),
the delivery date for a RSU shall be the date on which such RSU
vests.
(c) Acceleration before Vesting
Dat e.
(1) Acceleration on Death or
Total Disability . If Recipient ceases to be an employee of the
Company by reason of Recipient’s death or disability,
outstanding but unvested RSUs shall become immediately vested in an
amount determined by multiplying the total number of RSUs subject
to this Agreement (after adjustment pursuant to Section 1(b))
by a percentage calculated by dividing the number of whole months
elapsed from the date of this Agreement to the date of termination
of employment 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) and provided further that if termination
occurs on or prior to June 2, 2007, no RSUs shall vest
pursuant to this Section (1)(c)(1). Except as provided in Section
(1)(g), the delivery date for a RSU shall be the date on which such
RSU vests. The term “disability” means that
Recipient is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months. 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 employment with the
Company following normal retirement under the Company’s
retirement policy in place at such time and after Recipient’s
65 th birthday, outstanding but unvested
RSUs shall become immediately vested in an amount determined by
multiplying the total number of RSUs subject to this Agreement
(after adjustment pursuant to Section 1(b)) 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) and provided further that if
termination occurs on or prior to June 2, 2007, no RSUs shall
vest pursuant to this Section (1)(c)(2). Except as provided in
Section (1)(g), the delivery date for a RSU shall be the date on
which such RSU vests.
(3) Acceleration on Termination
Other Than for Cause. If the Company terminates
Recipient’s employment with the Company other than for cause,
outstanding but unvested RSUs shall become immediately vested in an
amount determined by multiplying the total number of RSUs subject
to this Agreement (after adjustment pursuant to Section 1(b))
by the Pro Rata Percentage; provided, however, that the number of
RSUs so vested shall be
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reduced by the number of any RSUs
that previously vested pursuant to Section 1(b) and provided
further that if termination occurs on or prior to June 2,
2007, no RSUs shall vest pursuant to this Section (1)(c)(3). Except
as provided in Section (1)(g), the delivery date for a RSU shall be
the date on which such RSU vests. 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(c)(3), 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.
(4) 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 vesting and any other terms continuing
in the manner as 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 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 (or such later date as provided in Section (1)(g)), 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
3
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 betwee
