Amended
Change in Control Agreement
This agreement is
entered into as of this 31st day of March 2008 by and between
Photon Dynamics, Inc., a California Corporation (the
“Company”), and Jeffrey A. Hawthorne
(“Executive”).
Executive is
employed by the Company and is a valued officer of the Company. As
an inducement to Executive to remain in the employ of the Company,
the Company wishes to provide for certain rights in favor of
Executive to severance payments and other benefits in the event of
a Change of Control (as defined below) of the Company upon the
terms herein provided.
NOW THEREFORE, in
consideration of the foregoing and the mutual promises herein
contained, the parties agree as follows:
1.1 Definition.
For purposes of this Agreement, “Change in Control”
means occurrence in a single transaction or in a series of related
transactions of any one or more of following events:
(a) any person
(within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the owner, directly or
indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities other than by virtue of
a merger, consolidation or similar transaction;
(b) there is
consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior
thereto do not own, directly or indirectly, outstanding voting
securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving entity in such
merger, consolidation or similar transaction or more than fifty
percent (50%) of the combined outstanding voting power of the
parent of the surviving entity in such merger, consolidation or
similar transaction; or
(c) there is
consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets
of the Company and its subsidiaries to an entity, more than fifty
percent (50%) of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately
prior to such sale, lease, license or other disposition.
1.2 Termination
After a Change in Control. In the event that within twelve (12)
months following a Change in Control, the Company terminates your
employment without Cause (as defined below) or you resign for Good
Reason (as defined below) (a Change in Control Termination),
(a) the Company will provide you with severance in the amount
of one (1) year of your then-existing base salary and on
target bonus, less payroll deductions and all required
withholdings, paid either (at the Company’s discretion) in a
lump sum or in regular payments at equal intervals over a period of
time not longer than one (1) year, and (b) all stock
options and RSU’s (“Equity Awards”) held by you
shall have their vesting accelerated such that all Equity Awards
are fully vested and exercisable as of the date of the Change in
Control Termination (the “Acceleration”). As a
precondition of receiving the Acceleration, you must first sign and
allow to become effective a general release of claims in favor of
the Company in a form acceptable to the Company.
1.3 Definition of
“Cause.” For purposes of this Agreement,
“Cause” shall mean the occurrence of one or more of the
following: (a) your indictment or conviction of any felony or
crime involving moral turpitude or dishonesty; (b) your
participation in any fraud against the Company or its successor;
(c) breach of your duties to the Company or its successor,
including, without limitation, persistent unsatisfactory
performance of job duties; (d) intentional damage to any
property of the Company or its successor; (e) willful conduct that
is demonstrably injurious to the Company or its successor,
monetarily or otherwise; (f) breach of any agreement with the
Company or its successor, including your Proprietary Information
and Inventions A
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