Applied Signal Technology, Inc.
Exhibit 10.31

APPLIED SIGNAL TECHNOLOGY, INC.
NOTICE OF GRANT OF STOCK OPTION

________________________ (the “Optionee”) has been granted an option (the
“Option”) to purchase certain shares of Stock of Applied Signal Technology, Inc.
pursuant to the Applied Signal Technology, Inc. 2000 Stock Option Plan (the
“Plan”), as follows:   Grant Number: ____________   Date of Option Grant:
____________  

Number of Option Shares:

____________   Exercise Price: $____________ per share   Initial Vesting Date:
The date one (1) year after ____________   Option Expiration Date: The date ten
(10) years from the Date of Option Grant.   Tax Status of Option: Nonstatutory
Stock Option.   Vested Shares: Except as provided in the Stock Option Agreement,
the number of Vested Shares (disregarding any resulting fractional share) as of
any date is determined by multiplying the Number of Option Shares by the “Vested
Ratio” determined as of such date as follows:        
Vested Ratio
    Prior to Initial Vesting Date
0
    On Initial Vesting Date, provided the Optionee’s Service has not terminated
prior to such date

1/5
    Plus:

    For each full year of the Optionee’s continuous Service from Initial Vesting
Date until the Vested Ratio equals 1/1, an additional

1/5
By their signatures below, the Company and the Optionee agree that the Option is
governed by this Notice and by the provisions of the Stock Option Agreement,
which is attached to and made a part of this document. The Optionee acknowledges
receipt of a copy of the Stock Option Agreement, represents that the Optionee
has read and is familiar with its provisions, and hereby accepts the Option
subject to all of its terms and conditions.

APPLIED SIGNAL TECHNOLOGY, INC.   OPTIONEE By: ______________________________  
______________________________
Signature Its: ______________________________   ______________________________
Date ______________________________
Address
______________________________   ______________________________
Address
______________________________ ATTACHMENT: Stock Option Agreement and Exercise
Notice