exv10w4



 






EXHIBIT 10.4




RESTRICTED STOCK AGREEMENT




WINLAND ELECTRONICS, INC.

2005 EQUITY INCENTIVE PLAN




     THIS AGREEMENT is made effective as of this                      day of                                         , 20                    , by and
between Winland Electronics, Inc., a Minnesota corporation (the “Company”), and
                                                             (the “Participant”).



W I T N E S S E T H:




     WHEREAS, the Participant is, on the date hereof, a key employee, officer, director of or a
consultant or advisor to of the Company or of a subsidiary of the Company; and



     WHEREAS, the Company wishes to grant a restricted stock award to the Participant for shares of
the Company’s Common Stock pursuant to the Company’s 2005 Equity Incentive Plan (the “Plan”); and



     WHEREAS, the Administrator of the Plan has authorized the grant of a restricted stock award to
the Participant;



     NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained,
the parties hereto agree as follows:



     1. Grant of Restricted Stock Award. The Company hereby grants to the Participant on
the date set forth above a restricted stock award (the “Award”) for                                                             
(                                        ) shares of Common Stock on the terms and conditions set forth herein, which shares are
subject to adjustment pursuant to Section 15 of the Plan. The Company shall cause to be issued one
or more stock certificates representing such shares of Common Stock in the Participant’s name and
shall hold each such certificate until such time as the risk of forfeiture and other transfer
restrictions set forth in this Agreement have lapsed with respect to the shares represented by the
certificate. The Company may also place a legend on such certificates describing the risks of
forfeiture and other transfer restrictions set forth in this Agreement providing for the
cancellation of such certificates if the shares of Common Stock are forfeited as provided in
Section 2 below. Until such risks of forfeiture have lapsed or the shares subject to this Award
have been forfeited pursuant to Section 2 below, the Participant shall be entitled to vote the
shares represented by such stock certificates and shall receive all dividends attributable to such
shares, but the Participant shall not have any other rights as a shareholder with respect to such
shares.



     2. Vesting of Restricted Stock. The shares of Stock subject to this Award shall
remain forfeitable until the risks of forfeiture lapse according to the following vesting schedule:



	 	 	 
	Vesting Date



	 	Cumulative Shares/Percent Vested









 









 





If the Participant’s [employment/directorship/relationship] with the Company (or a subsidiary of
the Company) ceases at any time prior to a Vesting Date for any reason, including the Participant’s
voluntary resignation or retirement, the Participant shall immediately forfeit all shares of Stock
subject to this Award which have not yet vested and for which the risks of forfeiture have not
lapsed.




     3. General Provisions.



          a. Relationship. This Agreement shall not confer on the Participant any right with
respect to continuance of employment or other relationship by the Company, nor will it interfere in
any way with the right of the Company to terminate such employment or relationship.




          b. Securities Law Compliance. The Participant shall not transfer or otherwise dispose
of the shares of Stock received pursuant to this Award until such time as counsel to the Company
shall have determined that such transfer or other disposition will not violate any state or federal
securities or other laws. The Participant may be required by the Company, as a condition of the
effectiveness of this Award, to agree in writing that all Stock subject to this Award shall be
held, until such time that such Stock is registered and freely tradable under applicable state and
federal securities laws, for the Participant’s own account without a view to any further
distribution thereof, that the certificates for such shares shall bear an appropriate legend to
that effect, and that such shares will be not transferred or disposed of except in compliance with
applicable state and federal securities laws.




          c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to Section 15
of the Plan, certain changes in the number or character of the shares of Stock of the Company
(through sale, merger, consolidation, exchange, reorganization, divestiture (including a spin-off),
liquidation, recapitalization, stock split, stock dividend, or otherwise) shall result in an
adjustment, reduction, or enlargement, as appropriate, in the number of shares subject to this
Award. Any additional shares that are credited pursuant to such adjustment shall be subject to the
same restrictions as are applicable to the shares with respect to which the adjustment relates.




          d. Shares Reserved. The Company shall at all times during the term of this Award
reserve and keep available such number of shares as will be sufficient to satisfy the requirements
of this Agreement.




          e. Withholding Taxes. In order to permit the Company to comply with all applicable
federal or state income tax laws or regulations, the Company may take such action as it deems
appropriate to insure that, if necessary, all applicable federal or state payroll, income or other
taxes are withheld from any amounts payable by the Company to the Participant. If the Company is
unable to withhold such federal and state taxes, for whatever reason, the Participant hereby agrees
to pay to the Company an amount equal to the amount the Company would otherwise be required to
withhold under federal or state law prior to the transfer of any certificates for the shares of
Stock subject to this Award. The Participant may, subject to the approval and discretion of the
Administrator, or such other administrative rules it may deem




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advisable, elect to have all or a portion of such tax withholding obligations satisfied by
delivering shares of the Company’s Common Stock having a fair market value, as of the date the
amount of tax to be withheld is determined under applicable tax law, equal to such obligations.




          f. Scope of Agreement. This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and of the Participant and any successor or successors of
the Participant.




          g. Arbitration. Any dispute arising out of or relating to this Agreement or the
alleged breach of it, or the making of this Agreement, including claims of fraud in the inducement,
shall be discussed between the disputing parties in a good faith effort to arrive at a mutual
settlement of any such controversy. If, notwithstanding, such dispute cannot be resolved, such
dispute shall be settled by binding arbitration. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The arbitrator shall be a
retired state or federal judge or an attorney who has practiced securities or business litigation
for at least 10 years. If the parties cannot agree on an arbitrator within 20 days, any party may
request that the chief judge of the District Court for Hennepin County, Minnesota, select an
arbitrator. Arbitration will be conducted pursuant to the provisions of this Agreement, and the
commercial arbitration rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement. Limited civil discovery shall be permitted for
the production of documents and taking of depositions. Unresolved discovery disputes may be
brought to the attention of the arbitrator who may dispose of such dispute. The arbitrator shall
have the authority to award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive or exemplary damages shall not be awarded. The arbitrator may
award to the prevailing party, if any, as determined by the arbitrator, all of its costs and fees,
including the arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses and
reasonable attorneys’ fees. Unless otherwise agreed by the parties, the place of any arbitration
proceedings shall be Hennepin County, Minnesota.




          h. 2005 Equity Incentive Plan. The Award evidenced by this Agreement is granted
pursuant to the Plan, a copy of which Plan has been made available to the Participant and is hereby
incorporated into this Agreement. This Agreement is subject to and in all respects limited and
conditioned as provided in the Plan. All defined terms of the Plan shall have the same meaning
when used in this Agreement. The Plan governs this Award and, in the event of any questions as to
the construction of this Agreement or in the event of a conflict between the Plan and this
Agreement, the Plan shall govern, except as the Plan otherwise provides.




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     ACCORDINGLY, the parties hereto have caused this Agreement to be executed on the day and year
first above written.



	 	 	 	 	 	 	 
	 	 	WINLAND ELECTRONICS, INC.
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	 
	

	 	 	 	Its:	 	 
	

	 	 	 	 	 	 
	

	 	 	 	 	 	COMPANY
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	PARTICIPANT







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