**EXHIBIT10.3**

 

**RESTRICTEDSTOCK AGREEMENT**

 

**AUGUST TECHNOLOGYCORPORATION**

**1997 STOCKINCENTIVE PLAN**

**(AsAmended and Restated Through February 4, 2004)**

 

THIS AGREEMENT, made effective as of this ______day of_____________________, 20______, by and between August TechnologyCorporation, a Minnesota corporation (the “Company”), and _________________________________________(“Participant”).

 

W I T N E S S E T H:

 

WHEREAS, the Participant on the date hereofis a consultant to, or a director or an employee of the Company or one of itsSubsidiaries; and

 

WHEREAS, the Company wishes to grant arestricted stock award to Participant for shares of the Company’s Common Stockpursuant to the Company’s 1997 Stock Incentive Plan (the “Plan”); and

 

WHEREAS, the Committee has authorized thegrant of a restricted stock award to the Participant;

 

NOW, THEREFORE, in consideration of thepremises and of the mutual covenants herein contained, the parties hereto agreeas follows:

 

1.             **Grant of Restricted Stock Award**.  The Company hereby grants to Participant onthe date set forth above a restricted stock award (the “Award”) for ____________________________________________________(__________) shares of Common Stock on the terms and conditions set forthherein and subject to adjustment pursuant to Section 4.3 of the Plan.  The Company shall cause to be issued a stockcertificate representing such shares of Common Stock in the Participant’s nameand shall deliver such certificate to the Participant; provided, however, thatthe Company shall place a legend on such certificate describing the risks offorfeiture and other transfer restrictions set forth in this Agreement andproviding for the cancellation and return of such certificate if such shares ofCommon Stock are forfeited as provided in Section 2 below.  Until such risks of forfeiture have lapsed orthe shares subject to this Award have been forfeited pursuant to Section 2below, the Participant shall be entitled to vote the shares represented by suchstock certificates and shall receive all dividends attributable to such shares,but the Participant shall not have any other rights as a shareholder withrespect to such shares.

 

2.             **Vesting of Restricted Stock**.  The shares of Stock subject to this Awardshall remain forfeitable until the risks of forfeiture lapse according to thefollowing vesting schedule:

 

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| **Vesting  Date** |       | **Cumulative Percentage  of Shares Vested** |
|-------------------|------------|---------------------------------------------|
|              | ** ** |                                        |
| ** **        | ** ** | ** **                                  |
| ** **        | ** ** | ** **                                  |
| ** **        | ** ** | ** **                                  |

 

If the Participant’s employment or other relationship with the Companyor any Subsidiary ceases at any time prior to a Vesting Date for any reason,including the Participant’s voluntary resignation or retirement but excludingtermination by the Company without “cause,” the Participant shall immediatelyforfeit all shares of Stock subject to this Award which have not yet vested andfor which the risks of forfeiture have not lapsed.  If the Participant’s employment or otherrelationship is terminated by the Company or any Subsidiary without “cause”prior to the vesting date for this Award, all risks of forfeiture on the sharesof Stock subject to this Award shall immediately lapse.

 

b.             Solelyfor purposes of this Paragraph 2(b), “cause” shall mean (i) Participant chargedwith a felony or convicted of any criminal misdemeanoror more serious act; (ii) any intentional and/or willful act of fraud ordishonesty by Participant related to or connected with Participant’s employmentby or other relationship with the Company or any of its Subsidiaries; (iii) thewillful and/or continued failure, neglect or refusal by Participant to performhis or her employment duties with the Company or any of its Subsidiaries, (iv)a material violation of the Company’s or a Subsidiary’s policies or codes ofconduct; or (v) the willful and/or material breach by Participant of anyagreement between Participant and the Company or any of its Subsidiaries,including but not limited to an employment agreement or a noncompetitionagreement.

 

3.             **Miscellaneous**.

 

a.             **Employment-at-Will**.  This Agreement shall not confer onParticipant any right with respect to continuance of employment by or other relationship with the Company or any of its Subsidiaries, nor will it interfere inany way with the right of the Company or any of itsSubsidiaries to terminate such employment orother relationship.  Participant’semployment or other relationship with the Company and its Subsidiaries shall be employment-at-will, and nothingin this Agreement shall be construed as creating an employment contract for anyspecified term between Participant and the Company or anyof its Subsidiaries.

 

b.             **Securities Law Compliance**.  Participant shall not transfer or otherwisedispose of the shares of Stock received pursuant to this Agreement until suchtime as counsel to the Company shall have determined that such transfer orother disposition will not violate any state or federal securities laws.  The Participant may be required by theCompany, as a condition of the effectiveness of this restricted stock award, toagree in writing that all Stock subject to this Agreement shall be held, untilsuch time that such Stock is registered and freely tradable under applicablestate and federal securities laws, for Participant’s own account without a viewto any further distribution thereof, that the certificates for such sharesshall bear an appropriate legend 

 

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to that effect and that such shares will be not transferred or disposedof except in compliance with applicable state and federal securities laws.

 

c.**             Recapitalizations,Stock Splits, Etc. **Pursuant andsubject to Section 4.3 of the Plan, certain changes in the number orcharacter of the Common Stock of the Company (through consolidation, exchange,reorganization, recapitalization, stock split, stock dividend or otherwise)shall result in an adjustment, reduction or enlargement, as appropriate, inParticipant’s rights with respect to any shares of Common Stock for which therisks of forfeiture have not lapsed  (*i.e.*, Participant shall have such “anti-dilution”rights under the Award with respect to such events, but shall not have “preemptive”rights).

 

d.             **Shares Reserved**.  The Company shall at all times during theterm of this Agreement reserve and keep available such number of shares as willbe sufficient to satisfy the requirements of this Agreement.

 

e.             **Withholding Taxes**.  In order to permit the Company to comply withall applicable federal or state income tax laws or regulations, the Company maytake such action as it deems appropriate to insure that, if necessary, allapplicable federal or state payroll, income or other taxes are withheld fromany amounts payable by the Company to the Participant.  If the Company is unable to withhold suchfederal and state taxes, for whatever reason, the Participant hereby agrees topay to the Company an amount equal to the amount the Company would otherwise berequired to withhold under federal or state law.

 

f.              **1997 Stock Incentive Plan**.  The Award evidenced by this Agreement isgranted pursuant to the Plan, a copy of which Plan has been made available toParticipant and is hereby incorporated into this Agreement.  This Agreement is subject to and in allrespects limited and conditioned as provided in the Plan.  All defined terms of the Plan shall have thesame meaning when used in this Agreement. The Plan governs this Agreement and, in the event of any questions as tothe construction of this Agreement or in the event of a conflict between thePlan and this Agreement, the Plan shall govern, except as the Plan otherwiseprovides.

 

g.             **Lockup Period Limitation**.  Participant agrees that in the event theCompany advises Participant that it plans an underwritten public offering ofits Common Stock in compliance with the Securities Act of 1933, as amended, andthat the underwriter(s) seek to impose restrictions under which certainshareholders may not sell or contract to sell or grant any option to buy orotherwise dispose of part or all of their stock purchase rights of theunderlying Common Stock, Participant hereby agrees that for a period not toexceed 180 days from the prospectus, Participant will not sell or contract tosell or grant an option to buy or otherwise dispose of this Agreement or any ofthe underlying shares of Common Stock without the prior written consent of theunderwriter(s) or its representative(s).

 

h.             **Accounting Compliance**.  Participant agrees that, if a merger,reorganization, liquidation or other “transaction” as defined in Section 4.3of the Plan occurs, and Participant is an “affiliate” of the Company or any Subsidiary (as defined in applicable legal andaccounting principles) at the time of such transaction, Participant will complywith all requirements of Rule 145 of the Securities Act of 1933, as amended,and the requirements of such other legal or accounting principles, and will executeany documents necessary to ensure such compliance.

 

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i.              **Stock Legend**.  The Administrator may require that thecertificates for any shares of Common Stock purchased by Participant (or, inthe case of death, Participant’s successors) shall bear an appropriate legendto reflect the restrictions of Paragraph 3(b) and Paragraphs 3(g) and 3(h) ofthis Agreement.

 

j.              **Scope of Agreement**.  This Agreement shall bind and inure to thebenefit of the Company, its Subsidiaries and itssuccessors and assigns and Participant and any successor or successors ofParticipant permitted by this Agreement.

 

k.             **Arbitration**.  Any dispute arising out of or relating tothis Agreement or the alleged breach of it, or the making of this Agreement,including claims of fraud in the inducement, shall be discussed between thedisputing parties in a good faith effort to arrive at a mutual settlement ofany such controversy.  If,notwithstanding, such dispute cannot be resolved, such dispute shall be settledby binding arbitration.  Judgment uponthe award rendered by the arbitrator may be entered in any court havingjurisdiction thereof.  The arbitratorshall be a retired state or federal judge or an attorney who has practicedsecurities or business litigation for at least 10 years.  If the parties cannot agree on an arbitratorwithin 20 days, any party may request that the chief judge of the DistrictCourt of Hennepin County, Minnesota, select an arbitrator.  Arbitration will be conducted pursuant to theprovisions of this Agreement, and the commercial arbitration rules of theAmerican Arbitration Association, unless such rules are inconsistent with theprovisions of this Agreement.  Limitedcivil discovery shall be permitted for the production of documents and takingof depositions.  Unresolved discoverydisputes may be brought to the attention of the arbitrator who may dispose ofsuch dispute. The arbitrator shall have the authority to award any remedy orrelief that a court of this state could order or grant; provided, however, thatpunitive or exemplary damages shall not be awarded.  The arbitrator may award to the prevailingparty, 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, theplace of any arbitration proceedings shall be Hennepin County, Minnesota.

 

IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be executed on the day and year first above written.

 
|   | AUGUST TECHNOLOGY CORPORATION |
|--------|------------------------------------|
|   |                               |
|   |                               |
|   | By:                                |   |
|   |                               | Its: |   |
|   | COMPANY                            |
|   |                               |
|   |                               |
|   |                               |
|   | PARTICIPANT                        |
|        |                                    |  |  |  |

 

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