Registrant's 2005 Equity Incentive Plan form of Stock Option Agreement



 Exhibit 10.6 
 NANOMETRICS INCORPORATED 
 2005 EQUITY INCENTIVE PLAN 
 STOCK OPTION AGREEMENT 
 NOTICE OF GRANT OF STOCK
OPTION 
 Unless otherwise defined herein, the terms defined in the 2005 Equity Incentive Plan (the “Plan”) will have the same
defined meanings in this Notice of Grant of Stock Option (the “Notice of Grant”) and Terms and Conditions of Stock Option Grant, attached hereto as Exhibit A (together, the “Option Agreement”). 
  

					
			
	Participant:	  		  	 
			
	Address:	  		  	 
			
		  		  	 

 Participant has been granted an Option to purchase Common Stock of the Company, subject to the
terms and conditions of the Plan and this Option Agreement, as follows: 
  

					
			
	Grant Number	  		 	 
			
	 Date of Grant
	  		 	 
			
	Vesting Commencement Date	  		 	 
			
	Number of Shares Granted	  		 	 
			
	Exercise Price per Share	  		 	$
			
	Total Exercise Price	  		 	$
			
	Type of Option	  		 	        Incentive Stock Option
			
		  		 	        Nonstatutory Stock Option
			
	Term/Expiration Date	  		 	 

 Vesting Schedule: 
 This Option will be exercisable, in whole or in part, in accordance with the following vesting schedule: 
 [One third (1/3) of the Shares subject to the Option shall vest on the one (1)-year anniversary of the Vesting Commencement Date, and one-third (1/3) of
the Shares subject to the Option shall vest on 

  

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each one year anniversary of the Vesting Commencement Date thereafter, subject to Participant continuing to be a Service Provider through each such date.]

 Termination Period: 
 This Option will be exercisable (to the extent vested) for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death or Disability, in which case this Option will be
exercisable (to the extent vested) for twelve (12) months after Participant ceases to be a Service Provider. Notwithstanding the foregoing sentence, in no event may this Option be exercised after the Term/Expiration Date as provided above and
may be subject to earlier termination as provided in Section 17(c) of the Plan. 
 By Participant’s signature and the signature of
the Company’s representative below, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Option Agreement. Participant has reviewed the Plan and this Option Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Plan and Option Agreement. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions relating to the Plan and Option Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated above. 
  

									
	 PARTICIPANT
	 		 	 NANOMETRICS INCORPORATED

					
		 	 	 		 		 	 
		 	Signature	 		 		 	By
					
		 	 	 		 		 	 
		 	Print Name	 		 		 	Title

  

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 EXHIBIT A 
 TERMS AND CONDITIONS OF STOCK OPTION GRANT 
 1.    Grant of Option. The
Administrator hereby grants to the Participant named in the Notice of Grant (the “Participant”) an option (the “Option”) to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth
in the Notice of Grant (the “Exercise Price”), subject to all of the terms and conditions of this Option Agreement and the Plan, which is incorporated herein by reference. Subject to Section 19(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan will prevail. 
 If
designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Further, if for any reason this Option (or portion thereof)
shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event shall the Administrator, the Company or any Parent or Subsidiary or any of
their respective employees or directors have any liability to Participant (or any other person) due to the failure of the Option to qualify for any reason as an ISO. 
 2.    Exercise of Option. 
 (a)    Right to Exercise.
This Option will be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. 
 (b)    Administrator Discretion to Accelerate. The Administrator, in its discretion, may accelerate the vesting of the
balance, or some lesser portion of the balance, of the unvested Shares subject to the Option at any time, subject to the terms of the Plan. If so accelerated, such Shares subject to the Option will be considered as having vested as of the date
specified by the Administrator. 
 (c)    Method of Exercise. This Option will be exercisable by delivery of an
exercise notice, in the form attached as Exhibit B (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which will state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company. The Exercise Notice will be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares (as such Exercise Price may be adjusted in accordance with the terms of Section 17 of the Plan), together with any applicable tax withholding. This Option will be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding. 
 No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the 

  

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Shares will be considered transferred to the Participant on the date on which the Option is exercised with respect to such Shares. 
 3.    Method of Payment. Payment of the aggregate Exercise Price will be by any of the following, or a combination thereof, at
the election of Participant: 
 (a)    cash; 
 (b)    check; 
 (c)    consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or 
 (d)    surrender of other Shares which (i) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares, and (ii) must be owned free and
clear of any liens, claims, encumbrances or security interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company. 
 4.    Grant is Not Transferable. This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant only by Participant. The terms of the Plan and this Option Agreement will be binding upon the executors, administrators, heirs, successors and assigns of Participant.

 5.    Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may
be exercised during such term only in accordance with the Plan and the terms of this Option Agreement. 
 6.    Tax
Obligations. 
 (a)    Withholding of Taxes. The Company will assess its requirements regarding tax, social
insurance and any other payroll tax withholding and reporting in connection with this Option, including the grant, vesting or exercise of this Option or sale of Shares acquired pursuant to the exercise of this option (“tax-related items”).
These requirements may change from time to time as laws or interpretations change. 
 In the event the Company determines that it and/or a
Parent or Subsidiary must withhold any tax-related items as a result of Participant’s participation in the Plan, the Participant agrees as a condition of the grant of this Option to make arrangements satisfactory to the Company to enable it to
satisfy all withholding requirements. The Company and/or a Parent or Subsidiary may, in its discretion, withhold all applicable tax-related items from any wages or cash compensation due to Participant. The Company (or the employing Parent or
Subsidiary) may instead, in its discretion, withhold a portion of the Shares that have an aggregate market value sufficient to pay the minimum tax-related items required to be withheld by the Company or the employing Parent or Subsidiary with
respect to the Shares. No fractional Shares will be withheld or 

  

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issued pursuant to the issuance of Shares; any additional withholding necessary for this reason will be done by the Company through Participant’s
paycheck. 
 In the event the withholding requirements are not satisfied through the withholding of Shares or, through Participant’s
paycheck, as indicated above), no Shares will be issued to Participant (or his or her estate) unless and until satisfactory arrangements (as determined by the Administrator) have been made by Participant with respect to the payment of any income and
other tax-related items which the Company determines must be withheld or collected with respect to the exercise of the option. Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if
such withholding amounts are not delivered at the time of exercise. All income and other tax-related items related to the Option and any Shares delivered in connection with the exercise of the Option are the sole responsibility of the Participant.

 (b)    Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Participant herein is an
ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of
exercise, Participant will immediately notify the Company in writing of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant. 

(c)    Code Section 409A. Under Code Section 409A, an Option that vests after December 31, 2004 that was
granted with a per Share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “Discount Option”) may be considered “deferred
compensation.” A Discount Option may result in (i) income recognition by Participant prior to the exercise of the Option, (ii) an additional twenty percent (20%) tax, and (iii) potential penalty and interest charges.
Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of this Option equals or exceeds the Fair Market Value of a Share on the Date of Grant in a later examination.
Participant agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the date of grant, Participant will be solely responsible for Participant’s costs
related to such a determination. 
 7.    Death of Participant. Any distribution or delivery to be made to
Participant under this Option Agreement will, if Participant is then deceased, be made to the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the
Administrator or, if no such beneficiary has been designated or survives Participant, the administrator or executor of Participant’s estate. Any such beneficiary, administrator or executor must furnish the Company with (a) written notice
of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer. 
 8.    Severability. In the event that any provision of this Option Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Option Agreement will continue in full force and effect. 
  

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 9.    Administrator Authority. The Administrator will have the power to
interpret the Plan and this Option Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Shares have vested). All actions taken and all interpretations and determinations made by the Administrator in good faith will be final and binding upon the Participant, the Company and all other interested
persons. No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Option Agreement. 
 10.    Additional Conditions to Issuance of Stock. The Company shall not be required to issue any certificate or certificates
for Shares hereunder prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such class of stock is then listed; (b) the completion of any registration or other
qualification of such Shares under any U.S. state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem
necessary or advisable; (c) the obtaining of any approval or other clearance from any U.S. state or federal governmental agency, which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and (d) the
lapse of such reasonable period of time following the date of exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience. 
 11.    Address for Notices. Any notice to be given to the Company under the terms of this Option Agreement will be addressed
to the Company, in care of its Secretary, at 1550 Buckeye Drive, Milpitas, CA 95035 USA, or at such other address as the Company may hereafter designate in writing. 
 12.    Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by
means of a writing signed by the Company and Participant. This Option Agreement is governed by the internal substantive laws but not the choice of law rules of California. For purposes of litigating any dispute that arises under this Option or this
Option Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation shall be conducted in the courts of Santa Clara County, California, or the federal courts for the
United States for the Northern District of California, and no other courts, where this Option Award is made and/or to be performed. 
 13.    No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF
THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER 

  

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ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR
RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 
  

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 EXHIBIT B 
 NANOMETRICS INCORPORATED 
 2005 EQUITY INCENTIVE PLAN 
 EXERCISE NOTICE 
 Nanometrics Incorporated 

1550 Buckeye Drive 
 Milpitas, CA 95035 
 Attention:
                             
 1.    Exercise of Option. Effective as of today,
            ,             , the undersigned (“Participant”) hereby elects to exercise Participant’s
option (the “Option”) to purchase              shares of the Common Stock (the “Shares”) of Nanometrics Incorporated (the “Company”) under and pursuant
to the 2005 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated              (the “Option Agreement”). 
 2.    Delivery of Payment. Participant herewith delivers to the Company the full purchase price of the Shares, as set forth in
the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option. 
 3.    Representations of Participant. Participant acknowledges that Participant has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and
conditions. 
 4.    Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Shares will be issued to the Participant as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment will be made for a dividend or other right for which the record date is prior to the
date of issuance except as provided in Section 17 of the Plan. 
 5.    Tax Consultation. Participant
understands that Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice. 
 6.    Governing Law; Severability. This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of California. In the event that any provision hereof 

  

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becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and
effect. 
 7.    Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This
Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with
respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant. 
  

					
	 Submitted by:
	  		  	Accepted by:
			
	PARTICIPANT	  		  	NANOMETRICS INCORPORATED
			
	 	  		  	 
	Signature	  		  	By
			
	 	  		  	 
	Print Name	  		  	Its
			
	Address:	  		  	Address:
			
	 	  		  	 
			
	 	  		  	 
			
	 	  		  	 
		  		  	Date Received

  

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