Document:

Separation Agreement, dated October 13, 2003 between Bruce Delmore & Photon

  
 EXHIBIT 10.32

  
 October 13, 2003 
  
 

 
  
 Bruce Delmore 
 c/o Photon Dynamics, Inc. 
 17 Great Oaks Blvd. 
 San Jose, CA 95119-1202 
  
 Dear Bruce: 
  
 This letter sets forth the
substance of the separation agreement (the “Agreement”) that Photon Dynamics, Inc. (the “Company”) is offering to you to aid in your employment transition. 
  
 1. TRANSITION PERIOD AND SEPARATION. 
  
 (a) Separation Date. Your last day of
employment with the Company will be April 13, 2004, (the “Separation Date”), or any earlier date pursuant to Paragraph 1(f) below. 
  
 (b) Transition Period. You will remain an employee of the Company from October 13, 2003 (the “Transition Date”)
through the Separation Date (the “Transition Period”). During the Transition Period, you should not report to work at the Company, but must remain available to complete certain assignments and assist in the transition of your
responsibilities at the Company’s request. During the Transition Period, you are neither expected nor authorized to perform services for, or to represent the Company in its business matters, except at the Company’s request.

  
 (c) Salary Continuation. As
part of this Agreement, the Company will continue to pay you during the Transition Period your base salary in effect as of the Transition Date. These salary payments will be made on the Company’s regular payroll dates and will be subject to
standard payroll deductions and withholdings. You shall not be eligible to earn any bonus for any services performed for the Company during the Transition Period 
  
 (d) Accrued Salary and Paid Time Off. On the Separation Date, the Company will pay you all
accrued salary earned through the Separation Date and all accrued and unused paid time off accrued through the Transition Date, subject to standard payroll deductions and withholdings. 
  
 (e) Benefits. During the Transition Period,
you will be entitled to continue your participation in the Company’s employee health insurance and other benefit plans in effect on the Transition Date, provided you remain eligible under the terms and conditions of the plans, with the
following exception: after the Transition Date, you will not be eligible to participate in the accrual of paid time off. After the Separation Date, you will not be eligible to continue participating in the Company’s employee health insurance
and other benefit plans. To the extent provided by the federal COBRA law or, if applicable, state insurance laws, and by the Company’s group health insurance policies, you will be eligible to continue your group health insurance benefits after
the Separation Date at your own expense. Later, you may be able to convert to an individual policy through the provider of the Company’s health insurance, if you wish. You will be provided with a separate notice of your COBRA rights.

  

 17 Great Oaks Boulevard, San Jose, CA 95119-1202    PHONE 408 360 3550    FAX 408 360 3551

 Bruce Delmore 
  Page
 2
 
  

 (f) Other Work Activities. The Transition Period will end before April 13,
2004 if you engage in any employment, consulting or work relationship other than your work for the Company (“Other Work Activity”). If and when you engage in any Other Work Activity, the Company’s obligations to you as set forth
herein shall cease immediately and the Transition Period will end immediately. You agree to promptly notify the Company in writing if you engage in any Other Work Activity during the Transition Period. 
  
 2. BONUS. You may earn a
bonus for fiscal year 2003, based on your having met your objectives for the year and the Company’s performance, and in accordance with the Company’s policies and procedures for determining earning of fiscal year bonuses. You will be paid
your bonus, if any, in accordance with the Company’s regular procedures for paying such bonuses. 
  
 3. STOCK OPTIONS. As provided in your stock option agreements, grant notices and the
applicable stock option plan documents (collectively, the “Option Documents”), your Company stock options (“Options”) will cease vesting and all unvested shares will terminate as of the Separation Date. You may exercise your
Options pursuant to the terms of the applicable Option Documents. 
  
 4. OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date. 
  
 5. EXPENSE REIMBURSEMENTS. You agree that within ten (10) days after the Separation Date, you will submit your final documented expense reimbursement statement reflecting all
business expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice. 
  
 6. RETURN OF COMPANY
PROPERTY. By the Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including, but not limited to,
Company files, notes, notebooks, drawings, records, plans, forecasts, reports, proposals, studies, financial information, sales and marketing information, research and development information, personnel information, specifications, computer-recorded
information, tangible property and equipment (including your Company-issued laptop computer and “blackberry” electronic communication device), credit cards, entry cards, identification badges and keys; and any materials of any kind which
contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). 
  
 7. PROPRIETARY INFORMATION OBLIGATIONS. You acknowledge your continuing obligations, both during and
after your employment, to refrain from any use or disclosure of the Company’s confidential or proprietary information or materials, unless expressly authorized by the Company. A copy of your Proprietary Information and Inventions Agreement is
attached hereto as Exhibit A. 

 Bruce Delmore 
  Page
 3
 
  

 8. CONFIDENTIALITY. The provisions of this Agreement shall be held in strictest
confidence by you and the Company and shall not be publicized or disclosed in any manner whatsoever; provided, however, that: (a) you may disclose this Agreement to your immediate family; (b) the parties may disclose this Agreement in
confidence to their respective attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the Company may disclose this Agreement as necessary to fulfill standard or legally required corporate reporting or disclosure requirements
(including, without limitation, filing this Agreement or disclosing its terms in public filings with the Securities and Exchange Commission); and (d) the parties may disclose this Agreement insofar as such disclosure may be necessary to enforce its
terms or as otherwise required by law. By way of example and without limitation, you agree not to disclose the terms of this Agreement to any current or former Company employee. 
  
 9. NONDISPARAGEMENT. Both you and the Company’s officers and directors agree not to disparage the
other party, and the other party’s officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided that both you and the Company shall
respond truthfully, accurately and fully to any question, inquiry or request for information when required by legal process, and the Company shall communicate truthfully, accurately and fully with any government agency. 
  
 10. RELEASE. In exchange for the Transition Period and
other consideration under this Agreement to which you would not otherwise be entitled, you completely release the Company, and its affiliated, related, parent and subsidiary corporations, and its and their present and former directors, officers,
employees, attorneys and agents from any and all claims of any kind, known and unknown, which you may now have or have ever had against any of them, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior
to your signing this Agreement (the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to your employment with the Company or the termination of that employment; (2)
all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the
Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, and other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act, the federal Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), and the California Fair Employment and Housing Act (as amended). 
  
 11. RELEASE OF ADEA
CLAIMS. You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you may have under the ADEA and acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which you were already entitled. You further acknowledge that you have been advised by this writing, as required by the ADEA, that: (a) your waiver and 

 Bruce Delmore 
  Page
 4
 
  

 
release do not apply to any rights or claims that may arise after the date you sign this Agreement; (b) you should consult with an attorney prior to signing
this Agreement (although you may choose not to do so); (c) you have twenty-one (21) days to consider this Agreement (although you may voluntarily sign this Agreement earlier); (d) you have seven (7) days following the date you sign this Agreement to
revoke the Agreement; and (e) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is signed by you (the “Effective Date”). 
  
 12. RELEASE OF UNKNOWN
CLAIMS. You acknowledge that you have read and understand Section 1542 of the California Civil Code, which states: 
  
 “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with the debtor.” 
  
 You hereby expressly waive and relinquish all rights and benefits under that section and any law in any jurisdiction of similar effect with respect to your release of any unknown or unsuspected claims you may have
against the Company 
  
 13. SUPPLEMENTAL
RELEASE AGREEMENT. In consideration for, and as a condition to receiving benefits under this Agreement, you agree to sign and return to the Company the Supplemental Release Agreement attached hereto as Exhibit B on
or after the last day of the Transition Period. 
  
 14.
ARBITRATION. You and the Company agree that any and all claims, causes of action, disputes or controversies, of any nature whatsoever, arising out of the terms, interpretation, application, or alleged breach of this Agreement,
shall be resolved by confidential, final and binding arbitration conducted by JAMS (formerly Judicial Arbitration and Mediation Services, Inc.) in San Jose, California, under the then-existing JAMS rules. You and the Company hereby waive the right
to a jury trial, court trial, or administrative proceeding to resolve any of the above-described claims or controversies. Notwithstanding the foregoing, nothing in this Agreement is intended to prevent either you or the Company from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration, or from bringing an action in court to compel arbitration under this Agreement or to enforce an arbitration award. The costs of the arbitrator
shall be shared equally between the parties. The arbitrator, and not a court, shall be authorized to determine whether the provisions of this paragraph apply to a dispute, controversy or claim sought to be resolved in accordance with these
arbitration procedures. Notwithstanding the foregoing, you and the Company each have the right to resolve any issue or dispute involving Company trade secrets, proprietary information or intellectual property rights by court action instead of
arbitration 
  
 15. MISCELLANEOUS. This
Agreement, including Exhibits A and B, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to this subject matter. It is entered into without reliance on any promise or
representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. This Agreement may not be modified or amended except in a writing signed by both you and a duly
authorized officer of the Company. 

 Bruce Delmore 
  Page
 5
 
  

 
This Agreement shall ___ the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and
the Company, and your and its heirs, successors and assigns. If any provision or this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the
provision in question shall be modified by the court so as to be rendered enforceable in a manner which is consistent with the intent of the parties insofar as possible. This Agreement shall be deemed to have been entered into and shall be construed
and enforced in accordance with the laws or the State or California as applied to contracts made and to be performed entirely within California. 
  
 If this Agreement is acceptable to you, please sign below and return the original to me. 
  
 We wish you all the best in your future endeavors. 
  

Sincerely, 
  

			
	PHOTON DYNAMICS, INC.
		
	By:	 	 /s/ Richard Okumoto, CFO, on behalf of

	 	 	

	 	 	 Elwood Spedden, Chief Executive Officer

  
 Exhibit A – Proprietary
Information and Inventions Agreement 
 Exhibit B – Supplemental Release Agreement 
  

	
	UNDERSTOOD AND AGREED:
	
	 /s/ Bruce Delmore

	

	 Bruce Delmore

  
 Dated: 10. 30. 03 

 EXHIBIT A 
  
 PHOTON DYNAMICS, INC. 
 6325 San Ignacio Avenue 
 San Jose, CA 95119 
  
 The following is a complete and current list of all inventions or improvements relevant to the subject matter of my employment by PHOTON DYNAMICS, INC. (the “Company) that have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my employment with the Company. I desire to remove the inventions and improvements listed, if any, from the operation of the Company’s Proprietary Information and Inventions
Agreement. 
  
  ̈ No inventions or improvements. 
  
  ̈ The following inventions and improvements  ̈ (check here if additional sheets are attached). 
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
 I propose to bring to my employment the following materials and documents of a former employer that are not generally available to the public, which materials and documents may be used in my employment. 
  
  ̈ No materials and documents. 
  
  ̈ The following materials and documents  ̈ (check
here if additional sheets are attached). 
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
                                       
                                        
                                        
                                        
                                        
                                        
               
  
 My signature below confirms that my continued use and possession of these materials and documents, if any, are authorized. 
  
 Dated                                     
       
By                                       
                  
  

 6 

 EXHIBIT B 
  
 SUPPLEMENTAL RELEASE AGREEMENT 
  
 (To be signed and returned to the Company on or after the last day of the
Transition Period) 
  
 I agree to the terms in the foregoing Agreement.

  
 In consideration for the Transition Period and other consideration provided to
me in the Agreement to which I would not otherwise be entitled, I completely release the Company, and its affiliated, related, parent and subsidiary corporations, and its and their present and former directors, officers, employees, attorneys and
agents from any and all claims of any kind, known and unknown, which I may now have or have ever had against any of them, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my signing this Agreement
(the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (3) all claims for breach
of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, and other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act, the
federal Age Discrimination in Employment Act of 1967, as amended (the “ADEA”) and the California Fair Employment and Housing Act (as amended). 
  
 I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA and acknowledge that the consideration given for the waiver
and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (a) my waiver and release do not apply
to any rights or claims that may arise after the execution date of this Agreement; (b) I should consult with an attorney prior to executing this Agreement (although I may choose not to do so); (c) I have twenty-one (21) days to consider this
Agreement (although I may voluntarily execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement to revoke the Agreement; and (e) this Agreement shall not be effective until the date upon which the
revocation period has expired, which shall be the eighth day after this Agreement is executed by me (the “Effective Date”). 
  

 7Separation Agreement dated December 4, 2003 between Elwood Spedden & Photon

  
 EXHIBIT 10.33

  
 

 
  
 December 4, 2003 
  
 Elwood Spedden 
 c/o Photon Dynamic, Inc. 
 17 Great Oaks Blvd, 
 San Jose, California 95121 
  
 Dear Woody:

  
 This letter sets forth the substance of the separation agreement (the
“Agreement”) that Photon Dynamics, Inc. (the “Company”) is offering to you to aid in your employment transition. 
  
 1. TRANSITION PERIOD AND SEPARATION. 
  
 (a) Separation Date. Your last day of
employment with the Company will be January 12, 2004 (the “Separation Date”). 
  
 (b) Transition Period. On October 27, 2003 (the “Transition Date”), you ceased to be the President and Chief
Executive Officer of the Company, but your status as an employee of the Company remained unaltered. You will remain an employee of the Company from the Transition Date through the Separation Date (the “Transition Period”). During the
Transition Period, you should not report to work at the Company, but must remain available to complete certain assignments and assist in the transition of your responsibilities at the Company’s request. During the Transition Period, you are
neither expected nor authorized to perform services for the Company, or to represent the Company in its business matters, except at the Company’s request. 
  
 (c) Salary Continuation. As part of this Agreement, the Company will continue to pay you
during the Transition Period your base salary in effect as of the Transition Date. These salary payments will be made on the Company’s regular payroll dates and will be subject to standard payroll deductions and withholdings. You will not be
eligible to earn any bonus for any services performed for the Company during the Transition Period. 
  
 (d) Accrued Salary and Paid Time Off. On the Separation Date, the Company will pay you all accrued salary and all accrued
and unused paid time off earned through the Separation Date, subject to standard payroll deductions and withholdings. 
  
 (e) Benefits. During the Transition Period, you will be entitled to continue your participation in the Company’s
employee benefit plans in effect on the Transition Date, provided you remain eligible under the terms and conditions of the plans, with the following exception: you are not eligible to participate in the accrual of paid time off. After the
Separation Date, you will not be eligible to continue participating in any Company employee benefit plans. You are no longer eligible to continue coverage under the Company’s group health insurance plan, but you are eligible to continue your
group health insurance benefits to the extent permitted 

  

 17 Great Oaks Boulevard, San Jose, CA 95119-1202    PHONE 408 360 3550    FAX 408 360 3551

 Elwood Spedden 
  Page
 2
 
  

 
by the federal COBRA law or if applicable, state insurance laws, and by the Company’s group health insurance policies. Later, you may be able to convert
to an individual policy through the provider of the Company’s health insurance, if you wish. You will be provided with a separate notice of your COBRA rights. If you elect continued coverage under COBRA, as part of this Agreement, the Company
will pay the COBRA premiums necessary to continue your current coverage through the Separation Date. 
  
 2. FISCAL YEAR 2003 BONUS. You have earned a bonus for fiscal year
2003 in the amount of $180,000. You will paid your bonus in accordance with the Company’s regular procedures for paying annual incentive bonuses. 
  
 3. STOCK OPTIONS. By grant dated April 15, 2002, you received an option in your capacity as a non-employee
director of the Company to purchase 20,000 shares of the common stock of the Company (the “Director Option”). By grants dated February 5, 2003, you received in your capacity as an employee three options to purchase a total of 200,000
shares of common stock of the Company (the “Employee Options”). Your Director Option and Employee Options will continue vesting during the Transition Period. You hereby agree that your Employee Options will cease vesting on the Separation
Date and that all unvested shares subject to your Employee Options will terminate as of the Separation Date. You further agree that you may exercise your Employee Options only before the end of the 90-day period following the Separation Date and you
agree that the Employee Options, if not exercised, will terminate at the end of such period. In all other respects, your Employee Options will continue to be governed by the terms of the applicable grant notices and stock option plan documents. Your
Director Option will continue to vest after the Separation Date pursuant to the terms and conditions of the applicable grant notice, stock option agreement and stock option plan document. 
  
 4. OTHER COMPENSATION OR BENEFITS. You acknowledge
that, except as expressly provided in this Agreement, you will not receive any additional compensation, severance or benefits after the Separation Date. 
  
 5. EXPENSE REIMBURSEMENTS. You agree that within ten (10) days after the Separation Date, you will submit your final
documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if any, for which you seek reimbursement. The Company will reimburse you for your reasonable business expenses pursuant to its
regular business practice. 
  
 6. RETURN
OF COMPANY PROPERTY. By the Separation Date, you will return to the Company all Company documents (and all copies thereof) and other Company property in your possession or control, including, but not
limited to, Company files, notes, notebooks, drawings, records, plans, forecasts, reports, proposals, studies, financial information, sales and marketing information, research and development information, personnel information, specifications,
computer-recorded information, tangible property and equipment (including your Company-issued laptop computer and “blackberry” electronic communication device), credit cards, entry cards, identification badges and keys; and any materials
of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). 

 Elwood Spedden 
  Page
 3
 
  

 7. PROPRIETARY INFORMATION OBLIGATIONS. You
acknowledge your continuing obligations, both during and after your employment, to retrain from any use of disclosure of the Company’s confidential or proprietary information or materials, unless expressly authorized by the Company, pursuant to
your Proprietary Information and Inventions Agreement with the Company dated as of February 6, 2003. 
  
 8. RELEASE. In exchange for the Transition Period and other consideration under this Agreement to which you would not otherwise be
entitled, you hereby completely release the Company, and its affiliated, related, parent and subsidiary corporations, and its and their present and former directors, officers, employees, attorneys and agents (collectively, the “Released
Parties”) from any and all claims of any kind, known and unknown, which you may now have or have ever had against any of them, that arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to your signing
this Agreement (the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to your employment with the Company or the termination of that employment; (2) all claims
related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company; (3) all
claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and
(5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, and other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act, the federal Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), and the California Fair Employment and Housing Act (as amended). 
  
 9. RELEASE OF ADEA CLAIMS. You acknowledge that you are knowingly
and voluntarily waiving and releasing any rights you may have under the ADEA and acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which you were already
entitled. You further acknowledge that you have been advised by this writing, as required by the ADEA, that: (a) your waiver and release do not apply to any rights or claims that may arise after the date you sign this Agreement; (b) you should
consult with an attorney prior to signing this Agreement (although you may choose not to do so); (c) you have twenty-one (21) days to consider this Agreement (although you may voluntarily sign this Agreement earlier); (d) you have seven (7) days
following the date you sign this Agreement to revoke the Agreement; and (e) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is signed by you (the
“Effective Date”). 
  
 10.
RELEASE OF UNKNOWN CLAIMS. You acknowledge that you have read and understand Section 1542 of the California Civil Code, which states: 
  
 “A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” 

 Elwood Spedden 
  Page
 4
 
  

 You hereby expressly waive and relinquish all rights and benefits under that section and any law in any jurisdiction
of similar _____ with respect to your release of any unknown or unsuspected claims you may have against the Released Parties. 
  
 11. SUPPLEMENTAL RELEASE AGREEMENT. In consideration for, and as a condition to receiving benefits
under this Agreement, you agree to sign and return to the Company the Supplemental Release Agreement attached hereto as Exhibit A on or after the Separation Date. 
  
 12. ARBITRATION. You and the Company agree that any and all claims, causes of action, disputes or
controversies, of any nature whatsoever, arising out of the terms, interpretation, application, or alleged breach of this Agreement, shall be resolved by confidential, final and binding arbitration conducted by JAMS (formerly Judicial Arbitration
and Mediation Services, Inc.) in San Jose, California, under the then-existing JAMS rules. You and the Company hereby waive the right to a jury trial, court trial, or administrative proceeding to resolve any of the above-described claims or
controversies. Notwithstanding the foregoing, nothing in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration, or from
bringing an action in court to compel arbitration under this Agreement or to enforce an arbitration award. The costs of the arbitrator shall be shared equally between the parties. The arbitrator, and not a court, shall be authorized to determine
whether the provisions of this paragraph apply to a dispute, controversy or claim sought to be resolved in accordance with these arbitration procedures. Notwithstanding the foregoing, you and the Company each have the right to resolve any issue or
dispute involving Company trade secrets, proprietary information or intellectual property rights by court action instead of arbitration 
  
 13. MISCELLANEOUS. This Agreement, including Exhibit A, constitutes the complete, final and exclusive embodiment of the entire
agreement between you and the Company with regard to this subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises,
warranties or representations. This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company. This Agreement shall bind the heirs, personal representatives, successors and assigns
of both you and the Company, and inure to the benefit of both you and the Company, and your and its heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement and the provision in question shall be modified by the court so as to be rendered enforceable in a manner which is consistent with the intent of the parties insofar as possible.
This Agreement shall be deemed to have been entered into and shall be construed and enforced in accordance with the laws of the State of California as applied to contracts made and to be performed entirely within California. 

 Elwood Spedden 
  Page
 5
 
  

 If this Agreement is acceptable to you please sign below and return the original to me. 
  
 We wish you all the best in your future endeavors. 
  
 Sincerely, 
  

			
	 PHOTON DYNAMICS, INC.

		
	By:	 	 /s/ Jeffrey Hawthorne

	 	 	

	 	 	 Jeffrey Hawthorne
 Chief Executive Officer and President

  
 Exhibit A –Supplemental Release
Agreement  
  

									
	 UNDERSTOOD AND AGREED:
	 	 	 	 
				
	 /s/ Elwood Spedden
	 	 	 	 Dated:
	 	 December 4 2003

	
	 	 	 	 	 	 
	 Elwood Spedden
	 	 	 	 	 	 

 EXHIBIT A 
  
 SUPPLEMENTAL RELEASE AGREEMENT 
  
 (To be signed and returned to the Company on or after the Separation Date)

  
 I agree to the terms in the foregoing Agreement. 
  
 In consideration for the Transition Period and other consideration provided to me in the
Agreement to which I would not otherwise be entitled, I completely release the Company, and its affiliated, related, parent and subsidiary corporations, and its and their present and former directors, officers, employees, attorneys and agents
(collectively, the “Released Parties”) from any and all claims of any kind, known and unknown, which I may now have or have ever had against any of them, that arise out of or are in any way related to events, acts, conduct, or omissions
occurring prior to my signing this Agreement (the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims arising out of or in any way related to my employment with the Company or the termination of that
employment; (2) all claims related to my compensation or benefits from the Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests
in the Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, and other claims arising under the federal Civil Rights Act of 1964 (as amended),
the federal Americans with Disabilities Act, the federal Age Discrimination in Employment Act of 1967, as amended (the “ADEA”) and the California Fair Employment and Housing Act (as amended). 
  
 I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA and acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this
writing, as required by the ADEA, that: (a) my waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) I should consult with an attorney prior to executing this Agreement (although I may
choose not to do so); (c) I have twenty-one (21) days to consider this Agreement (although I may voluntarily execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement to revoke the Agreement; and (e) this
Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by me. 
  

 6. 

 I UNDERSTAND THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. In giving this release, which includes
claims which may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and
any law of any other jurisdiction of similar effect with respect to my release of any unknown or unsuspected claims I may have against the Released Parties. 
  

									
					
	By:	 	 /s/ Elwood Spedden
	 	 	 	 Date:
	 	 December 04 2003

	 	 	
	 	 	 	 	 	 
	 	 	 Elwood Spedden
	 	 	 	 	 	 

  

 7.

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