EXHIBIT 10.20.01
Photon Dynamics, Inc.
Amended and Restated 1995 Stock Option Plan
Stock Option Agreement
(Incentive Stock Option or Nonstatutory Stock Option)
     Pursuant to your Notice of Grant of Stock Options (“Grant Notice”) and this
Stock Option Agreement, Photon Dynamics, Inc. (the “Company”) has granted you an
option under its Amended and Restated 1995 Stock Option Plan (the “Plan”) to
purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan
shall have the same definitions as in the Plan.
     The details of your option are as follows:
     1.     Vesting.     Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your continuous service.
     2.     Number of Shares and Exercise Price.     The number of shares of
Common Stock subject to your option and your exercise price per share referenced
in your Grant Notice may be adjusted from time to time as provided for in
Section 3(b) of the Plan.
     3.     Method Of Payment.     Payment of the exercise price is due in full
upon exercise of all or any part of your option. You may elect to make payment
of the exercise price either:
          (a)     In cash, personal cheek, certified cheek, bank draft, or
postal or express money order payable to the order of the Company; or
          (b)     In the Company’s sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds; provided,
however, that in no event will the Company participate in any Regulation T
program if such participation would violate Section 13(k) of the Securities
Exchange Act of 1934 (prohibiting employer loans to officers and directors).
     4.     Whole Shares.     You may exercise your option only for whole shares
of Common Stock.
     5.     Securities Law Compliance.     Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the shares of
Common Stock issuable upon such exercise are then registered under the
Securities Act of 1933, as amended (the “Securities Act”) or, if such shares of
Common Stock are not then so registered, the Company

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has determined that such exercise and issuance would be exempt from the
registration requirements of the Securities Act. The exercise of your option
also must comply with other applicable laws and regulations governing your
option, and you may not exercise your option if the Company determines that such
exercise would not be in material compliance with such laws and regulations.
     6.     Term.     You may not exercise your option before the commencement
of its term or after its term expires. The term of your option commences on the
“Date of Grant” indicated in your Grant Notice and expires upon the earliest of
the following:
          (a)     ninety (90) days after the termination of your continuous
service for any reason other than your disability or death, provided that if
during any part of such ninety (90) day period your option is not exercisable
solely because of the condition set forth in Section 5, your option shall not
expire until the earlier of the “Expiration Date” indicated in your Grant Notice
or until it shall have been exercisable for an aggregate period of ninety (90)
days after the termination of your continuous service;
          (b)     three hundred sixty-five (365) days after the termination of
your continuous service due to your disability;
          (c)     three hundred sixty-five (365) days after your death if you
die either during your continuous service or within ninety (90) days after your
continuous service terminates;
          (d)     the Expiration Date indicated in your Grant Notice; or
          (e)     the day before the tenth (10th) anniversary of the Date of
Grant
     If your option is an incentive stock option, note that to obtain the
federal income tax advantages associated with an incentive stock option, the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option’s
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an incentive
stock option if you continue to provide services to the Company or an Affiliate
as a consultant or director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
with the Company or an Affiliate terminates.
     7.     Exercise
          (a)     You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

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          (b)     By exercising your option you agree that, as a condition to
any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
          (c)     If your option is an incentive stock option, by exercising
your option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
     8.     Transferability.     Your option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
     9.     Option not a Service Contract.     Your option is not an employment
or service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective shareholders, boards of directors, officers or
employees to continue any relationship that you might have as a director or
consultant for the Company or an Affiliate.
     10.     Withholding Obligations.
          (a)     At the time you exercise your option, in whole or in part, or
at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a “broker-assisted
exercise” pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate; if any, which arise in connection
with the exercise of your option.
          (h)     Upon your request and subject to approval by the Company, in
its sole discretion, and compliance with any applicable legal conditions or
restrictions, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the exercise of your option a number of whole
shares of Common Stock having a fair market value, determined by the Company as
of the date of exercise, not in excess of the minimum amount of tax required to
be withheld by law (or such lower amount as may be necessary to avoid variable
award accounting). If the date of determination of any tax withholding
obligation is deferred to a date later than the date of exercise of your option,
share withholding pursuant to the preceding sentence shall not be permitted
unless you make a proper and timely election under Section 83(b) of the Code,
covering the aggregate number of shares of Common Stock acquired upon such

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exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.
          (c)     You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.
     11.     Notices.     Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon receipt or;
in the case of notices delivered by mail by the Company to you, five (5) days
after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company.
     12.     Governing Plan Document.     Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations, which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

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