EXHIBIT 10.20

DAYSTAR TECHNOLOGIES, INC.

STOCK OPTION GRANT NOTICE

AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN

DayStar Technologies, Inc. (the “Company”), pursuant to its Amended and Restated
2006 Equity Incentive Plan (the “Plan”), hereby grants to Optionholder an option
to purchase the number of shares of the Company’s Common Stock set forth below.
This option is subject to all of the terms and conditions as set forth herein
and in the Option Agreement, the Plan, and the Notice of Exercise, all of which
are attached hereto and incorporated herein in their entirety.

 

Optionholder:  

 

Date of Grant:  

 

Vesting Commencement Date:  

 

Number of Shares Subject to Option:  

 

Exercise Price (Per Share):  

 

Total Exercise Price:  

 

Expiration Date:  

 

 

Type of Grant:    ¨ Incentive Stock Option1                    ¨ Nonstatutory
Stock Option Exercise Schedule:    ¨ Same as Vesting Schedule    Vesting
Schedule:    [                        , subject to the Optionholder’s Continuous
Service through such time.] Payment:    By one or a combination of the following
items (described in the Option Agreement):   

•     By cash, check bank draft or money order payable to the Company

  

•     Pursuant to a Regulation T Program if the shares are publicly traded

  

•     Subject to the Company’s consent at the time of exercise, by delivery of
already-owned shares

  

•     [Subject to the Company’s consent at the time of exercise, by a “net
exercise” arrangement]2

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the
Option Agreement and the Plan. Optionholder further acknowledges that as of the
Date of Grant, this Stock Option Grant Notice, the Option Agreement, and the
Plan set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior oral
and written agreements on that subject with the exception of (i) options
previously granted and delivered to Optionholder under the Plan or the Company’s
2003 Equity Incentive Plan (except that with respect to such options,
Section 9(f) of the Plan shall control), and (ii) the following agreements only:

 

  OTHER AGREEMENTS:  

 

 

1 If this is an Incentive Stock Option, it (plus other outstanding Incentive
Stock Options) cannot be first exercisable for more than $100,000 in value
(measured by exercise price) in any calendar year. Any excess over $100,000 is a
Nonstatutory Stock Option.

2 Any portion of this option intended to qualify as an Incentive Stock Option
may not be exercised by net exercise.

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DAYSTAR TECHNOLOGIES, INC.   OPTIONHOLDER: By:  

 

   

 

  Signature       Signature Title:  

 

    Date:  

 

Date:  

 

     

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DAYSTAR TECHNOLOGIES, INC.

AMENDED AND RESTATED 2006 EQUITY INCENTIVE PLAN

OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option
Agreement, DayStar Technologies, Inc. (the “Company”) has granted you an option
under its Amended and Restated 2006 Equity Incentive 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 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 for Capitalization Adjustments.

3. EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES. In the event that you are an
Employee eligible for overtime compensation under the Fair Labor Standards Act
of 1938, as amended (i.e., a “Non-Exempt Employee”), except as otherwise
provided in Section 5(l) of the Plan, you may not exercise your option until you
have completed at least six (6) months of Continuous Service measured from the
Date of Grant specified in your Grant Notice, notwithstanding any other
provision of your option.

4. 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 in cash or by check or in any other manner permitted by your Grant Notice,
subject to the following:

(a) Bank draft or money order payable to the Company.

(b) 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.

(c) Subject to the consent of the Company at the time of exercise, by delivery
to the Company (either by actual delivery or attestation) of already-owned
shares of Common

 

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Stock that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of
exercise. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.

(d) If the Option is a Nonstatutory Stock Option, subject to the consent of the
Company at the time of exercise, by a “net exercise” arrangement pursuant to
which the Company will reduce the number of shares of Common Stock issued upon
exercise of your option by the largest whole number of shares with a Fair Market
Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any
remaining balance of the aggregate exercise price not satisfied by such
reduction in the number of whole shares to be issued; provided further, however,
that shares of Common Stock will no longer be outstanding under your option and
will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to
you as a result of such exercise, and (3) shares are withheld to satisfy tax
withholding obligations.

5. WHOLE SHARES. You may exercise your option only for whole shares of Common
Stock.

6. 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 or, if
such shares of Common Stock are not then so registered, the Company 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.

7. 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
and expires upon the earliest of the following:

(a) immediately upon the termination of your Continuous Service for Cause;

(b) three (3) months after the termination of your Continuous Service for any
reason other than Cause, Disability or death, provided that if during any part
of such three (3)-month period you may not exercise your option solely because
of the condition set forth in the preceding paragraph relating to “Securities
Law Compliance,” your option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period
of three (3) months after the termination of your Continuous Service;

(c) twelve (12) months after the termination of your Continuous Service due to
your Disability;

 

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(d) eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service
terminates for any reason other than Cause;

(e) the Expiration Date indicated in your Grant Notice; or

(f) 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 terminates.

8. EXERCISE.

(a) You may exercise the vested portion of your option 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.

(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.

9. TRANSFERABILITY.

(i) Restrictions on Transfer. Your option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during
your lifetime only by you; provided, however, that the Board may, in its sole
discretion, permit transfer of your options in a manner that is not prohibited
by applicable tax and securities laws upon your request.

 

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(ii) Domestic Relations Orders. Notwithstanding the foregoing, your option may
be transferred pursuant to a domestic relations order; provided, however, that
if your option is an Incentive Stock Option, your option shall be deemed to be a
Nonstatutory Stock Option as a result of such transfer.

(iii) Beneficiary Designation. Notwithstanding the foregoing, you may, by
delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company and any broker designated by the Company to effect
option exercises, designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your option. In the absence of such a
designation, the executor or administrator of your estate shall be entitled to
exercise your option.

10. 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 stockholders, 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.

11. 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 “cashless 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.

(b) 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
classification of your option as a liability for financial accounting purposes).
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 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.

 

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(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.

12. TAX CONSEQUENCES. You hereby agree that the Company does not have a duty to
design or administer the Plan or its other compensation programs in a manner
that minimizes your tax liabilities. You shall not make any claim against the
Company, or any of its Officers, Directors, Employees or Affiliates related to
tax liabilities arising from your option or your other compensation. In
particular, you acknowledge that this option is exempt from Section 409A of the
Code only if the exercise price per share specified in the Grant Notice is at
least equal to the “fair market value” per share of the Common Stock on the Date
of Grant and there is no other impermissible deferral of compensation associated
with the option.

13. 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.

14. 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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NOTICE OF EXERCISE

DAYSTAR TECHNOLOGIES, INC.

2972 STENDER WAY

SANTA CLARA, CA 95054

Date of Exercise:                             

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

 

Type of option (check one):    Incentive ¨   Nonstatutory ¨ Stock option dated:
                                   Number of shares as to which option is
exercised:                                    Certificates to be issued in name
of:                                    Total exercise price:   
$                             Cash or check delivered herewith:   
$                             Regulation T Program (cashless exercise)   
$                             Value of                  shares of DayStar
Technologies, Inc. common stock delivered herewith1:   
$                             Value of                  shares of DayStar
Technologies, Inc. common stock pursuant to net exercise2:   
$                            

 

1 Subject to the consent of DayStar Technologies, Inc. at the time of exercise.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.

2 DayStar Technologies, Inc. must have established net exercise procedures at
the time of exercise in order to utilize this payment method and must expressly
consent to your use of net exercise at the time of exercise. An Incentive Stock
Option may not be exercised by a net exercise arrangement.

 

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By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the Amended and Restated 2006 Equity Incentive
Plan, (ii) to provide for the payment by me to you (in the manner designated by
you) of your withholding obligation, if any, relating to the exercise of this
option, and (iii) if this exercise relates to an incentive stock option, to
notify you in writing within fifteen (15) days after the date of any disposition
of any of the shares of Common Stock issued upon exercise of this option that
occurs within two (2) years after the date of grant of this option or within one
(1) year after such shares of Common Stock are issued upon exercise of this
option.

 

Very truly yours,

 

 

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