Document:

Exhibit
10.11

 

THE
MANITOWOC COMPANY, INC.

 

AWARD
AGREEMENT

2004
NON-EMPLOYEE DIRECTOR STOCK AND AWARDS PLAN

 

THIS AWARD AGREEMENT is entered
into this           day of                    ,
20           , and
reflects action taken by THE MANITOWOC COMPANY,
INC. (the “Company”) to {INSERT NON-EMPLOYEE
DIRECTOR’S NAME}   (the “Director”) pursuant to the 2004 NON-EMPLOYEE DIRECTOR STOCK AND AWARDS PLAN (the “Plan”).

 

WHEREAS, the Company believes it
to be in the best interests of the Company, its subsidiaries and its
stockholders to provide its non-employee directors with incentives to increase
shareholder value by offering the opportunity to acquire shares of the Company’s
common stock, receive incentives based on the value of such common stock, or
receive other incentives on potentially favorable terms (collectively referred
to and further defined in the Plan as “Awards”); and

 

WHEREAS, the Company has adopted
the Plan to establish certain parameters regarding such Awards; and

 

WHEREAS, the Company, acting by
the authority of the Compensation Committee of the Board of Directors of the
Company (the “Committee”), has decided to enter into this Agreement, subject to
the terms of the Plan.

 

NOW, THEREFORE, in consideration
of the premises set forth herein and of the services to be performed by the
Director, the Company and the Director hereby agree to the terms set forth in
this Agreement.

 

1.             PLAN
AND AGREEMENT.  All parties
acknowledge that this Agreement and any Award granted hereunder is subject to
the terms of the Plan, which shall govern all rights, interests, obligations,
and undertakings of both the Company and the Director.  Any capitalized term not otherwise defined in
this Agreement shall have the meaning set forth in the Plan.  To the extent that there is any conflict
between the terms of this Agreement and the Plan, the terms of the Plan as
determined, interpreted and applied by the Administrator, shall control to
resolve such ambiguity or conflict.

 

2.             STOCK
OPTION.  {ONLY USE
THIS OPTIONAL SECTION 2 IF THE AGREEMENT GRANTS STOCK OPTIONS~~RENUMBER THE
REMAINING SECTIONS ACCORDINGLY}

 

(a)           OPTION
AND EXERCISE PRICE.  Pursuant to
Section 5 of the Plan and subject to the terms of this Agreement, the Company
grants to the Director an Option to purchase             
{INSERT NUMBER OF SHARES SUBJECT TO THE OPTION}
Shares of Common Stock of the Company (the “Option Shares”) at a price of             
{INSERT EXERCISE PRICE—THE EXERCISE PRICE MAY NOT
EXCEED THE FAIR MARKET VALUE OF THE SHARES AS OF THE GRANT DATE}.

 

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(b)           TIME OF
EXERCISE AND LIMITATIONS.  Subject to
the limitations of this Section and to termination provisions of Section {INSERT THE SECTION NUMBER FOR THE SECTION TITLED “TERMINATION
OF AWARD”}, the Director may purchase

 

{OPTION 1—all
or any portion of the Option Shares on or after {INSERT
OPTION DATE}.

 

{OPTION 2—up
to {INSERT NUMBER}  of the Option Shares
on or after {INSERT FIRST OPTION DATE}  and may purchase the remaining Option Shares
on or after {INSERT OPTION DATE}.

 

{OPTION 3—all
or any portion of the “vested” Option Shares, determined according to the
following vesting schedule {INSERT VESTING SCHEDULE
WITH VESTING PERCENTAGES AND VESTING DATE OR SERVICE REQUIREMENTS}.

 

{OPTION 4—COPY THE INTRODUCTORY
LANGUAGE FROM OPTION 1 OR OPTION 2 upon the
satisfaction of the following Performance Goals: {INSERT
PERFORMANCE GOALS—SEE SECTION 12(r) OF THE PLAN}.

 

All Options under this Agreement expire no later than
ten (10) years after the date of the grant. 
No Options under this Agreement will qualify as “incentive stock
options,” as described in Code section 422(b).

 

(c)           EXERCISE
PROCEDURES.  The Director may
exercise any Option under this Agreement, in whole or in part, only with
respect to any Option Share for which the right to exercise shall have accrued
pursuant to sub-section (b) above and only so long as Section {INSERT THE NUMBER OF THE SECTION TITLED “TERMINATION
OF AWARD”} does not prohibit such exercise.

 

(i)            WRITTEN
NOTICE.  Any Option under this
Agreement may be exercised only by delivering a written notice to the Company’s
Human Resources Department at Manitowoc, Wisconsin, accompanied by payment of
the purchase price and such additional amount (if any) determined by the Human
Resources Department as necessary to satisfy the Company’s tax withholding
obligations, and such other documents or representations as the Company may
reasonably request to comply with securities, tax or other laws then applicable
to the exercise of the Option.  Delivery may
be made in person, by nationally-recognized delivery service that guarantees
overnight delivery, or by facsimile.  A
notice of Option exercise that is received by the Human Resources Department
after 11:59 P.M. (Central Time) on the date on which such Option expires or
terminates (as provided in Section {INSERT THE NUMBER OF THE
SECTION TITLED “TERMINATION OF AWARD”}) shall be null and void.

 

(ii)           PURCHASE
PRICE.  No Option Shares shall be
issued until full payment of the purchase price for those Shares has been
received by the Company.  The Director may pay the Option
purchase price described above in one or more of the following forms:  (a)  cash equal to the purchase price
for the Option Shares being purchased; (b) a check payable to the order of the Company
for the purchase price of the Option Shares being purchased; (c) delivery of
Shares of Common Stock (including by attestation) that the Director has owned
for at least six (6) months and have a Fair Market Value (determined on the
date of delivery) equal to the purchase price of the Option Shares being
purchased; (d) delivery (including by facsimile) to 

 

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the Human Resources Department of the Company at Manitowoc, Wisconsin,
of an executed irrevocable option exercise form together with irrevocable
instructions, in a form acceptable to the Company, to a broker-dealer to sell
or margin a sufficient portion of the Shares issuable upon exercise of this
Option and deliver the sale or margin loan proceeds directly to the Company to
pay for the exercise price; or (e) any other form of payment expressly
approved, in advance and in writing, by an authorized Committee
representative.  The Director may satisfy
any tax withholding obligation of the Company arising from the exercise of an
Option under this Agreement, in whole or in part, by paying such tax obligation
in cash or by check made payable to the Company, or by electing to have the
Company withhold Shares having a Fair Market Value on the date of exercise
equal to the amount required to be withheld, subject to such rules as the
Committee may adopt.  In any event, the
Company reserves the right to withhold from any compensation otherwise payable
to the Director such amount as the Company determines is necessary to satisfy
the Company’s tax withholding obligations arising from the exercise of this
Option.

 

{USE THE FOLLOWING PARAGRAPH IF THE GRANT DATE IS NOT THE DATE
OF THIS AGREEMENT.

 

(d)           GRANT
DATE.  The “Grant Date” for all Options
under this Agreement shall be:                               }

 

#              RESTRICTED
STOCK.  {ONLY
USE THIS OPTIONAL SECTION IF THE AGREEMENT GRANTS RESTRICTED STOCK~~RENUMBER
THE REMAINING SECTIONS ACCORDINGLY AND IN LIGHT OF WHETHER THE AGREEMENT ALSO
GRANTS STOCK OPTIONS}

 

(a)           NUMBER
OF SHARES.  Pursuant to Section 6 of
the Plan the Company grants to the Director            
{INSERT NUMBER OF SHARES OF RESTRICTED STOCK}
Shares of Restricted Stock.

 

(b)           RESTRICTIONS.   As described in the “Termination of Award”
and the “Non-Transferability” sections below, each Share of Restricted Stock
issued under this Section is subject to significant forfeiture and transfer
limitations.  Each Share of Restricted
Stock is not subject any restrictions or limitations except as set forth in
those sections. Accordingly, there are no restrictions with respect to
dividends or voting rights for any outstanding Shares of Restricted Stock. {NOTE:  IF
THE COMPANY WANTS TO, IT CAN ADD OTHER RESTRICTIONS (e.g., VOTING RESTRICTIONS,
DIVIDEND LIMITATIONS, ETC.)—UNLESS THE COMPANY ADDS SUCH RESTRICTIONS IN THIS
SECTION, THE DIRECTOR WILL HAVE THE RIGHT TO VOTE THE RESTRICTED STOCK
AND TO RECEIVE DIVIDENDS}.

 

(c)           LAPSE OF
RESTRICTIONS.  Subject to the
limitations of this Section and to the termination provisions of Section {INSERT THE SECTION NUMBER FOR THE SECTION TITLED “TERMINATION
OF AWARD”}.

 

{OPTION 1—the
restrictions identified in sub-section (b) shall lapse or expire on {INSERT LAPSE DATE – MUST BE A LEAST THREE YEARS
FROM GRANT DATE}.

 

{OPTION 2—the
restrictions identified in sub-section (b) shall lapse or expire as to {INSERT NUMBER}  Restricted Stock
Shares on {INSERT FIRST LAPSE DATE – MUST

 

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BE A
LEAST THREE YEARS FROM GRANT DATE }  and the restrictions that apply to the
remaining Restricted Stock Shares shall lapse or expire on {INSERT
OPTION DATE}.

 

{OPTION 3—the
restrictions identified in sub-section (b) shall lapse or expire as Restricted
Stock Shares according to the following vesting schedule {INSERT
VESTING SCHEDULE WITH VESTING PERCENTAGES AND VESTING DATE OR SERVICE
REQUIREMENTS – FIRST VESTING MUST BE A LEAST THREE YEARS FROM GRANT DATE}.

 

{OPTION 4—COPY THE INTRODUCTORY
LANGUAGE FROM OPTION 1 OR OPTION 2 upon the
satisfaction of the following Performance Goals: {INSERT
PERFORMANCE GOALS—SEE SECTION 12(r) OF THE PLAN}.

 

While a Share remains subject to any restrictions
pursuant to this Section, the Company may, at the Committee’s discretion, issue
one or more certificates representing such Share of Restricted Stock, with an
appropriate restrictive legend, and/or maintain possession of the certificate
representing the Share of Restricted Stock (with or without a legend) and/or
take any other action that the Committee deems necessary or advisable to enforce
the limitations under this Agreement. 
After (i) the restrictions under this Section have lapsed with respect
to a Share of Restricted Stock, (ii) the receipt by the Company from the
Director of the certificate with legend representing such Share (if such a
certificate had been issued to the Director), and (iii) the receipt by the
Company of the payment of the amount (if any) required to be paid under the
terms of the restrictions set forth in this Section, the Company will deliver
to the Director a certificate representing such Share, free of any legend
pertaining to any restrictions under this Agreement, and such Share shall
thereupon be free of all restrictions other than those imposed by law.  Notwithstanding the foregoing, the Company
shall not be required to deliver any fractional share of Stock but may pay, in
lieu thereof, the Fair Market Value (determined as of the date that the
restrictions lapse) of such fractional Share, to the Director or the Director’s
estate, as the case may be.

 

#              RESTRICTED
STOCK UNITS.  {ONLY USE
THIS OPTIONAL SECTION IF THE AGREEMENT ALSO GRANTS RESTRICTED STOCK
UNITS~~RENUMBER THE REMAINING SECTIONS ACCORDINGLY AND IN LIGHT OF WHETHER THE
AGREEMENT ALSO GRANTS STOCK OPTIONS AND/OR RESTRICTED STOCK}

 

(a)           NUMBER OF
UNITS.  Pursuant to Section 6 of the
Plan the Company grants to the Director                  
{INSERT NUMBER OF RESTRICTED STOCK UNITS}
Restricted Stock Units.

 

(b)           MATURATION
OF UNITS.  Subject to the limitations
of this Section and to the forfeiture and transferability provisions described
in the “Termination of Award” and the “Non-Transferability” sections below,

 

{OPTION 1} the
Restricted Stock Units identified in sub-section (a) shall mature on {INSERT LAPSE DATE – MUST BE A LEAST THREE YEARS
FROM GRANT DATE}.

 

{OPTION 2—{INSERT NUMBER}
of the Restricted Stock Units identified in sub-section (a) shall mature on
{INSERT FIRST LAPSE DATE – MUST BE A LEAST

 

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THREE
YEARS FROM GRANT DATE} and the remaining Restricted Stock
Units identified in sub-section (a) shall mature on {INSERT
OPTION DATE}.

 

{OPTION 3—the
Restricted Stock Units identified in sub-section (a) shall mature according to
the following vesting schedule {INSERT VESTING SCHEDULE
WITH VESTING PERCENTAGES AND VESTING DATE OR SERVICE REQUIREMENTS – FIRST
VESTING MUST BE A LEAST THREE YEARS FROM GRANT DATE}.

 

{OPTION 4—COPY THE INTRODUCTORY
LANGUAGE FROM OPTION 1 OR OPTION 2 upon the
satisfaction of the following Performance Goals: {INSERT
PERFORMANCE GOALS—SEE SECTION 12(r) OF THE PLAN}.

 

(c)           ISSUANCE
OF SHARES.

 

{OPTION 1} When
any Restricted Stock Unit matures under sub-section (b), the Company shall
issue a Share of Common Stock to the Director.

 

{OPTION 2} When
any Restricted Stock Unit matures under this sub-section, the Company shall
issue a Share of Restricted Stock to the Director, subject to such limitations
as established by the Committee at that time {OR “SUBJECT
TO THE FOLLOWING RESTRICTIONS: . . .”}.

 

Until a Restricted Stock Unit matures, the Company may
issue a certificate or document evidencing such Restricted Stock Unit in such
form and with such legend as the Committee determines or keep an internal
record of such Restricted Stock Unit or take any other action that the
Committee deems necessary or advisable to maintain a record or such Restricted
Stock Unit and to enforce the limitations under this Agreement.

 

(d)           RESTRICTIONS.  The Director shall have no right to vote or
earn dividends on any un-matured Restricted Stock Units {MODIFY
THIS SECTION IF THE COMMITTEE GRANTS SUCH RIGHTS TO THE DIRECTOR}.

 

#              TERMINATION
OF AWARD.

 

(a)           Resignation/Removal
From Board.  If a Director ceases to
be a member of the Board for any reason other than the Director’s death or
disability (as determined by the Committee), all nonvested Options, all
Restricted Stock as to which all restrictions have not lapsed, and all
Restricted Stock Units which have not yet matured shall be immediately
forfeited except as the Committee, in its sole discretion, shall otherwise
determine.  {NOTE—THE
COMMITTEE CAN MODIFY THIS FORFEITURE PROVISION AT THE TIME THAT THE DIRECTOR
LEAVES TO BOARD OR AS PART OF THIS AWARD AGREEMENT}.  All vested Options (and any non-vested Option
or other Award that is not immediately forfeited under this Section) must be
exercised, cease to be subject to restrictions or mature on or before the
earliest of:  (1) the             
anniversary {NOTE—CANNOT EXCEED ONE YEAR} of
the date that the Director ceases to be a member of the Board; or (2) that date
that the Award (or limitation) was otherwise set to expire, lapse or
mature.  For purposes of this sub-section
(a), any termination or forfeiture shall be deemed to occur at 11:59 P.M.
(Central Time) on the applicable date described herein.

 

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(b)           Fraud/Misconduct.  Notwithstanding any other provision in the
Plan or in this Agreement, if the Director ceases to be a member of the Board
due to any of the following act(s), then all Awards previously granted
to the Director under this or any other Award Agreement shall immediately be
forfeited as of the date of the first such act: 
(1) fraud or intentional misrepresentation; (2) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or any
Affiliate of the Company; or (3) any other gross or willful misconduct as
determined by the Committee, in its sole and conclusive discretion.

 

#              NON-TRANSFERABILITY.  Except as provided in this Section, Awards granted under this Agreement are not transferable
and they may not be assigned, pledged or mortgaged, including any attempted
transfer by will or by the laws of descent and distribution.  {NOTE—THE COMMITTEE CAN
MODIFY THE PRECEDING LIMITATIONS, BUT ANY SUCH CHANGE MUST BE REFLECTED IN THIS
AGREEMENT}.  During the
lifetime of the Director, such Awards may be exercised only by the Director or
the Director’s legal representative or by the permitted transferee of the
Director as hereinafter provided (or by the legal representative of such
permitted transferee).  The Director may
transfer Awards only to (i) the Director’s spouse, children or grandchildren (“Immediate
Family Members”); (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members; or (iii) a partnership in which such Immediate Family
Members are the only partners.  The
transfer will be effective only if the Director receives no consideration for
such transfer.  Subsequent transfers of
transferred Awards are prohibited except transfers to those persons or entities
to which the Director could have transferred such Awards, or transfers
otherwise in accordance with this Section. 
Any attempted transfer not permitted under this Section shall be null
and void and have no legal effect.  The
transfer restrictions set forth in this Section shall not, however, apply to
any Shares that the Director obtains {NOTE—INCLUDE ANY OR ALL
OF THE FOLLOWING, AS APPROPRIATE}:  (a) after exercising an Option;
(b) after all restrictions lapse on Restricted Stock; or (c) upon
maturation of a Restricted Stock Unit.

 

#              REGISTRATION.  If the Company is advised by its counsel
that Shares deliverable under this Agreement are required to be registered
under the Securities Act of 1933 (“Act”) or any applicable state or foreign
securities laws, or that delivery of the Shares must be accompanied or preceded
by a prospectus meeting the requirements of that Act or such state or foreign
securities laws, then the Company will use its best efforts to effect the
registration or provide the prospectus within a reasonable time, but delivery
of Shares by the Company may be deferred until the registration is effected or
the prospectus is available.  The
Director shall have no interest in Shares covered by this Agreement until
certificates for the Shares are issued.

 

#              ADJUSTMENTS
AND CHANGE OF CONTROL.  The number
and type of Shares subject to this Agreement and any Option exercise price may
be adjusted, or this Award may be completely or partially assumed, cancelled or
otherwise changed, in the event of certain transactions, as provided in the
Plan, including, without limitation, Sections 2(b) and 10 of the Plan.  Upon a Change of Control, the rules set forth
in Section 10 of the Plan shall govern this Agreement.  The grant of any Award under this Agreement
shall not affect in any way the right or power of the Company or any of its
subsidiaries to make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in the Company’s or any subsidiary’s capital
structure or its business, or any merger, consolidation or business combination
of the Company or any subsidiary, or any issuance or modification of any term,
condition, or covenant of any bond, debenture, debt, preferred stock or other
instrument ahead of or affecting the Common Stock or the rights of the holders
of Common Stock, or the dissolution or liquidation of the

 

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Company or any
subsidiary, or any sale or transfer of all or any part of its assets or
business or any other Company or subsidiary act or proceeding, whether of a
similar character or otherwise.

 

#              AMENDMENT
OR MODIFICATION.  Except as expressly
provided in the Plan, no term or provision of this Agreement may be amended,
modified or supplemented orally, but only by an instrument in writing signed by
the party against which or whom the enforcement of the amendment, modification
or supplement is sought.

 

#              LIMITED
INTEREST.  The Director shall have no
rights as a stockholder as a result of the grant of any Award under this
Agreement until the Director receives unrestricted Shares issued (via
certificate, electronically or by any other permissible means) {NOTE—INCLUDE ANY OR ALL OF THE FOLLOWING, AS
APPROPRIATE}: 
(a) after exercising an Option; (b) after all restrictions lapse
on Restricted Stock; or (c) upon maturation of a Restricted Stock
Unit.  The grant of any Award and the
execution of this Agreement shall not confer on the Director any right to
continue as a member of the Board, nor interfere in any way with the right of
the Company to remove the Director from the Board at any time.

 

#              GOVERNING
LAW.  The granting of Awards under
this Agreement and the issuance of Shares in connection with any such Award are
subject to all applicable laws, rules and regulations and to such approvals by
any governmental agencies or national securities exchanges as may be
required.  Notwithstanding any other
provision of this Agreement or Plan, the Company has no liability to deliver
any Shares under the Plan or make any payment unless such delivery or payment
would comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity. 
This Agreement and the Plan will be construed in accordance with and
governed by the laws of the State of Wisconsin, without reference to any
conflict of law principles.  Any legal
action or proceeding with respect to this Agreement, to the Plan, to any Award
or for recognition and enforcement of any judgment in respect to this Agreement,
to the Plan or any Award may be brought and determined only in a court sitting
in the County of Manitowoc, or the Federal District Court for the Eastern
District of Wisconsin sitting in the County of Milwaukee, in the State of
Wisconsin.

 

#              SEVERABILITY.  If any provision of this Agreement, of
the Plan or any Award (a) is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person or Award, or
(b) would disqualify this Agreement, the Plan or any Award under any law
the Committee deems applicable, then such provision should be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of this Agreement, the Plan or Award, then such provision
should be stricken as to such jurisdiction, person or Award, and the remainder
of this Agreement, the Plan and such Award will remain in full force and
effect.

 

#              COUNTERPARTS.  This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an original but
all of which together will constitute one and the same instrument.

 

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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Director has executed this Agreement all as of
the day and date first above written.

 

	
   

  	
   

  	
  THE
  MANITOWOC COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  {DIRECTOR’S
  NAME}

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security Number

  
							

 

8EXHIBIT
10.2

 

INCENTIVE
STOCK OPTION AGREEMENT

 

This AGREEMENT, entered
into and effective as of _________________________ (the “Date of Grant”), by
and between August_Technology Corporation (the “Company”) and ______________________
(the “Optionee”).

 

RECITALS

 

A.            The
Company has adopted the 1997 Stock Incentive Plan (the “Plan”) authorizing the
Board of Directors of the Company, or a committee as provided for in the Plan
(the Board or such a committee to be referred to as the “Committee”), to grant
incentive stock options to eligible employees of the Company, which options
will qualify as “incentive stock options” within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the “Code”).

 

B.            The
Company desires to give the Optionee an inducement to acquire a proprietary
interest in the Company and an added incentive to advance the interests of the
Company by granting to the Optionee an option to purchase shares of common
stock of the Company.

 

AGREEMENT

 

Accordingly, the parties
hereto agree as follows:

 

ARTICLE I.  GRANT OF OPTION

 

The Company hereby grants
to the Optionee the right, privilege, and option (the “Option”) to purchase _________________
(________) shares (the “Option Shares”) of the Company’s common stock, $.01 par
value (the “Common Stock”), according to the terms and subject to the
conditions hereinafter set forth and as set forth in the Plan.  The Option is intended to be an “incentive
stock option,” as that term is used in Section 422 of the Code.

 

ARTICLE II.  OPTION EXERCISE PRICE

 

The per share price to be
paid by Optionee in the event of an exercise of the Option shall be _____________________
1/1000ths dollars ($___________ ).

 

ARTICLE III.  DURATION OF OPTION AND TIME
OF EXERCISE

 

A.            Initial
Period of Exercisability.  The Option
shall become exercisable with respect to the Option Shares in ________________________
equal installments. The following table sets forth the initial dates of
exercisability of each installment and the cumulative number of Option Shares
as to which this Option shall become exercisable on such dates, provided that
this Option shall become so exercisable on such dates only if the Optionee has
continuously served as an employee of the Company since the Date of Grant.

 

	
  Initial
  Date of

  Exercisability

  	
   

  	
  Number of Option Shares

  Available for Exercise

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

The foregoing rights to
exercise this Option shall be cumulative with respect to the Option Shares
becoming exercisable on each such date but in no event shall this Option be
exercisable after, and this Option shall become void and expire as to all
unexercised Option Shares at 5:00P.M. (CST) on ___________________ (the “Time
of Termination”), date which in no case shall exceed ten (10) years after DATE
of grant.

 

 

B.            Termination
of Employment Due to Death, Disability or Retirement.  In the event the Optionee’s employment is
terminated with the Company and all of its Subsidiaries (within the meaning of Section 424(f)
of the Code) by reason of death, an event that constitutes permanent and total
disability within the meaning of Section 22(e)(3) of the Code (“Disability”),
or retirement pursuant to and in accordance with the regular retirement plan or
practice of the Company or the Subsidiary employing the Optionee (“Retirement”),
the Option may be exercised in whole or in part before (a) the expiration of
three months, in the case of Retirement, and one year, in the case of death or
Disability, after such date of termination, or (b) the Time of Termination,
whichever shall first occur.

 

C.            Termination
of Employment for Reasons Other Than Death, Disability or Retirement.  Except as provided in Section III. D.
below, in the event the Optionee’s employment is terminated with the Company
and all of its Subsidiaries for any reason other than death, Disability or
Retirement, all rights of the Optionee hereunder shall terminate at the close
of business on the _____________________ day after the date of termination of
Optionee’s employment, except under no circumstances shall this option be
exercisable after the Time of Termination.

 

D.            Change
in Control.

 

(i)            For purposes of this Section III.
D., the term “Change in Control” shall have the meaning set forth in Section 11
of the Plan.

 

(ii)           If any events
constituting a Change in Control of the Company shall occur, the terms of the
Plan govern any acceleration of the right to exercise this Option prior to the
anticipated effective date of any Change in Control, provided that should
acceleration not occur under the terms of the Plan, Optionee shall be entitled
to receive option rights covering shares of the surviving or acquiring entity
in the same proportion, at an equivalent price, and subject to the same
conditions as this Option; and provided, however, that if, with respect to the
Optionee, acceleration of the vesting of this Option as provided herein (which
acceleration could be deemed a payment within the meaning of Section 280G(b)(2)
of the Code) together with any other payments which the Optionee has the right
to receive from the Company or any corporation which is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b)
of the Code) of which the Company is a member, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), the payments to
the Optionee as set forth herein shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise tax imposed
by Section 4999 of the Code.

 

ARTICLE IV.  MANNER OF OPTION EXERCISE

 

A.            Notice.  This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained in
the Plan and herein, by delivery, in person, by registered mail, or by such
other means directed by the Company, including electronic delivery, to the
Company at its principal executive office (Attention: Chief Financial Officer),
of a written notice of exercise.  Such
notice shall be in a form satisfactory to the Committee, shall identify the
Option, shall specify the number of Option Shares with respect to which the
Option is being exercised, and if such notice is in written form, shall be
signed by the person or persons so exercising the Option.  Such notice shall be accompanied by payment
in full of the total purchase price of the Option Shares purchased, as provided
by Section IV. B. below.  In the
event that the Option is being exercised, as provided by the Plan and Section III.
B. above, by any person or persons other than the Optionee, the notice shall be
accompanied by appropriate proof of right of such person or persons to exercise
the Option.  As soon as practicable after
the effective exercise of the Option, the Optionee shall be recorded on the
stock transfer books of the Company as the owner of the Option Shares purchased,
and the Company shall deliver the Option Shares to the Optionee by electronic
means or by delivering one or more duly issued stock certificates evidencing
such ownership.

 

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B.            Payment.  At the time of exercise of this Option, the
Optionee may determine whether to pay the total purchase price of the Option
Shares to be purchased solely in cash (including a personal check, wire
transfer or a certified or bank cashier’s check, payable to the order of the
Company or a payee designated by the Company), or by transfer from the Optionee
to the Company of previously acquired shares of Common Stock of the Company
with a then current aggregate Fair Market Value equal to such total purchase
price, or by a combination of cash and such previously acquired shares of
Common Stock, or with the proceeds of a same day sale or sell to cover
transaction through the Optionee’s E*Trade OptionsLink account.  The Committee may reject the Optionee’s
election to pay all or part of the purchase price under this Option with
previously acquired shares of Common Stock and may require such purchase price
to be paid entirely in cash if, in the sole discretion of the Committee,
payment in previously acquired shares would cause the Company to be required to
recognize a charge to earnings in connection therewith.  For purposes of this Agreement, (a) “previously
acquired shares” shall include only those shares of Common Stock which the
Optionee has owned for at least six (6) months prior to the exercise of the
stock option, or for such other period of time as may be required by generally
accepted accounting principles, and (b) “Fair Market Value” will be determined
as set forth in the Plan.

 

C.            Investment
Purpose; Stock Transfer Restrictions. 
The Company shall not be required to issue or deliver any shares of
Common Stock under this Option unless (a)(1) such shares are covered by an
effective and current registration statement under the Securities Act of 1933
and applicable state securities laws or (2) if the Committee has determined not
to so register such shares, exemptions from registration under the Securities
Act of 1933 and applicable state securities laws are available for such
issuance (as determined by counsel to the Company) and the Company has received
from the Optionee (or, in the event of death or disability, the Optionee’s
heir(s) or legal representative(s)) any representations or agreements requested
by the Company in order to permit such issuance to be made pursuant to such exemptions,
and (b) the Company has obtained any other consent, approval or permit from any
state or federal governmental agency which the Committee shall, in its sole
discretion upon the advice of counsel, deem necessary or advisable.  Unless a registration statement under the
Securities Act of 1933 is in effect with respect to the issuance or transfer of
Option Shares, each certificate representing any such shares shall be endorsed
with a legend in substantially the following form, unless counsel for the Company
is of the opinion as to any such certificate that such legend is unnecessary:

 

THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE
ACT”), OR UNDER APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH
IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

 

ARTICLE V.  NONTRANSFERABILITY

 

This Option shall not be
transferable by the Optionee, either voluntarily or involuntarily, or subject
to any lien, directly or indirectly, by operation of law or otherwise, except
as provided in Section 8.2 of the Plan. 
Any attempt to transfer or encumber this Option other than in accordance
with Section 8.2 of the Plan shall void this Option.

 

ARTICLE VI.  LIMITATION OF LIABILITY

 

Nothing in this Agreement
shall be construed to (a) limit in any way the right of the Company or any of
its Subsidiaries to terminate the status of the Optionee as an employee of the
Company at any time, or (b) be evidence of any agreement or understanding,
express or implied, that the Company or any of its Subsidiaries will employ the
Optionee in any particular position, at any particular rate of compensation or
for any particular period of time.

 

3

 

ARTICLE VII.  DISPOSITION OF STOCK

 

Prior to making a
disposition (as defined in Section 424(c) of the Code) of any shares of
Common Stock acquired pursuant to the exercise of this Option before the
expiration of two years after the Date of Grant or before the expiration of one
year after the date on which such shares of Common Stock were transferred to
the Optionee pursuant to exercise of this Option, the Optionee shall send
written notice to the Company of the proposed date of such disposition, the
number of shares to be disposed of, the amount of proceeds to be received from
such disposition and any other information relating to such disposition that
the Company may reasonably request.  The
right of the Optionee to make such a disposition shall be conditioned on the
receipt by the Company of all amounts necessary to satisfy any federal, state
or local withholding tax requirements. 
The Committee shall have the right, in its sole discretion, to endorse
the certificates representing the Option Shares with a legend restricting
transfer and to cause a stop transfer order to be entered with the Company’s
transfer agent until such time as the Company receives the amounts necessary to
satisfy such withholding requirements or until the later of the expiration of
two years from the Date of Grant or one year from the date on which such shares
were transferred to the Optionee pursuant to the exercise of this Option.

 

ARTICLE VIII.  WITHHOLDING TAXES

 

A.            General
Obligation.  The Company is entitled
to (a) withhold and deduct from future payment to the Optionee, or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any federal, state or local withholding tax requirements attributable to
the Optionee’s exercise of this Option, including, without limitation, a
disposition of shares of Common Stock described in Article VII above, that
causes this Option to cease to qualify as an “incentive stock option” within
the meaning of Section 422 of the Code, or (b) require the Optionee
promptly to remit the amount of such withholding to the Company before acting
on any such disposition of shares of Common Stock.  In the event that the Company is unable to
withhold such amounts, for whatever reason, the Optionee hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal, state or local law.

 

B.            Use
of Shares.  The Committee may, in its
sole discretion and subject to such rules as the Committee may adopt, permit
the Optionee to satisfy, in whole or in part, any withholding tax obligation
which may arise in connection with the exercise of this Option either by
electing to have the Company withhold from the shares of Common Stock to be
issued upon the exercise of this Option that number of shares of Common Stock,
or by electing to deliver to the Company already-owned shares of Common Stock,
in either case having a Fair Market Value (determined as set forth in the Plan)
on the date such tax is determined under the Code (the “Tax Date”) equal to the
amount necessary to satisfy the statutory minimum withholding amount due.  The Optionee’s election to have the Company
withhold shares of Common Stock or to deliver already-owned shares of Common
Stock upon exercise is irrevocable and is subject to the consent or disapproval
of the Committee.  If the Optionee is an
officer, director or beneficial owner of more than 10% of the outstanding
Common Stock of the Company and at the time of exercise of this Option the
Company has a class of equity securities registered under Section 12 of
the Securities Exchange Act of 1934, such election may not be made within six
months of the Date of Grant (unless the death or Disability of the Optionee
occurs prior to the expiration of such six-month period), and must be made
either six months prior to the Tax Date or between the third and twelfth
business days following public release of any of the Company’s quarterly or
annual summary earnings statements.  To
the extent that shares of Common Stock may be issued prior to the Tax Date to
the Optionee making such an election, the Optionee hereby agrees to surrender
that number of shares on the Tax Date having an aggregate Fair Market Value
(determined as set forth in the Plan) equal to the amount of withholding tax
due.  In no event may the Company
withhold or accept shares having a Fair Market Value in excess of the statutory
minimum required tax withholding.

 

4

 

ARTICLE IX.  CAPITAL ADJUSTMENTS

 

If the number of
outstanding shares of Common Stock is increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, combination of shares, rights offering or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation), in order to prevent
dilution or enlargement of the rights of the Optionee, shall make appropriate
adjustment as to the number and kind of securities subject to this Option.  Any such adjustment affecting this Option
shall be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option but with an appropriate adjustment in the
price for each share or other unit of any security subject to the Option.  Without the consent of the Optionee, however,
no such change shall be made in the terms of the Option if such change would
disqualify the Option from treatment as an “incentive stock option” within the
meaning of Section 422 of the Code or would be considered a modification,
extension or renewal of an option under Section 425(h) of the Code.

 

ARTICLE X.  BINDING EFFECT

 

This Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties
hereto.

 

ARTICLE XI.  SUBJECT TO PLAN

 

The Option represented by
this Agreement has been granted under, and is subject to the terms of, the
Plan.  The terms of the Plan are hereby
incorporated by reference herein in their entirety and the Optionee, by
execution hereof, acknowledges having received a copy of the Plan.  The provisions of this Agreement shall be
interpreted as to be consistent with the Plan and any ambiguities herein shall
be interpreted by reference to the Plan. 
In the event that any provision hereof is inconsistent with the terms of
the Plan, the Plan shall prevail.

 

ARTICLE XII.  GOVERNING LAW

 

This Agreement and all
rights and obligations hereunder shall be construed in accordance with the Plan
and governed by the laws of the State of Minnesota.

 

The parties hereto have
executed this Agreement effective the day and year first above written.

 

	
   

  	
  AUGUST TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By execution hereof,
  the

  	
  OPTIONEE

  
	
  Optionee acknowledges
  having

  	
   

  
	
  received a copy of the
  Plan.

  	
   

  	
   

  
						

 

5

 

 

NON-STATUTORY
STOCK OPTION AGREEMENT

 

This AGREEMENT, entered
into and effective as of ___________________ (the “Date of Grant”), by and
between August Technology Corporation (the “Company”) and ___________________________________
(the “Optionee”).

 

RECITALS:

 

A.            The
Company has adopted the 1997 Stock Incentive Plan (the “Plan”) authorizing the
Board of Directors of the Company, or a committee as provided for in the Plan
(the Board or such a committee to be referred to as the “Committee”), to grant
non-statutory stock options to eligible employees, non-employee directors and
consultants of the Company.

 

B.            The
Company desires to give the Optionee an inducement to acquire a proprietary
interest in the Company and an added incentive to advance the interests of the
Company by granting to the Optionee an option to purchase shares of common
stock of the Company.

 

AGREEMENT:

 

Accordingly, the parties
hereto agree as follows:

 

ARTICLE I.  GRANT OF OPTION.

 

The Company hereby grants
to the Optionee the right, privilege, and option (the “Option”) to purchase _________________
(____________) shares (the “Option Shares”) of the Company’s common stock, $.01
par value (the “Common Stock”), according to the terms and subject to the
conditions hereinafter set forth and as set forth in the Plan.  The Option is not intended to be an “incentive
stock option,” as that term is used in Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

 

ARTICLE II.  OPTION EXERCISE PRICE.

 

The per share price to be
paid by Optionee in the event of an exercise of the Option shall be__________________
1/1000ths dollars ($____________).

 

ARTICLE III.  DURATION OF OPTION

AND TIME
OF EXERCISE.

 

A.            Initial
Period of Exercisability.  The Option
shall become exercisable with respect to the Option Shares in __________ equal
installments.  The following table sets
forth the initial dates of exercisability of each installment and the
cumulative number of Option Shares as to which this Option shall become
exercisable on such dates, provided that this Option shall become so
exercisable on such dates only if the Optionee has continuously served as an
employee, non-employee director or consultant of the Company since the Date of
Grant.

 

	
  Initial
  Date of

  Exercisability

  	
   

  	
  Number of Option Shares

  Available for Exercise

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

The foregoing rights to
exercise this Option shall be cumulative with respect to the Option Shares
becoming exercisable on each such date but in no event shall this Option be
exercisable after, and this Option shall become void and expire as to all
unexercised Option Shares at, 5:00P.M. (CST) on ________________ (the “Time of
Termination”), date which in no case shall exceed ten (10) years after DATE of
grant.

 

6

 

B.            Termination
of Employment or Consulting Relationship Due to Death, Disability or Retirement.  In the event the Optionee’s employment or
consulting relationship is terminated with the Company and all of its
Subsidiaries (within the meaning of Section 424(f) of the Code) by reason
of death, an event that constitutes permanent and total disability within the
meaning of Section 22(e)(3) of the Code (“Disability”), or retirement
pursuant to and in accordance with the regular retirement plan or practice of
the Company or the Subsidiary employing the Optionee (“Retirement”), the Option
may be exercised in whole or in part before (a) the expiration of three months,
in the case of Retirement, and one year, in the case of death or Disability,
after such date of termination, or (b) the Time of Termination, whichever shall
first occur.

 

C.            Termination
of Employment or Consulting Relationship for Reasons Other Than Death, Disability
or Retirement.  Except as provided in
Section III. D. below, in the event the Optionee’s employment or
consulting relationship is terminated with the Company and all of its
Subsidiaries for any reason other than death, Disability or Retirement, all
rights of the Optionee hereunder shall terminate at the close of business ______________________
day after the date of termination of Optionee’s employment or consulting
relationship, except under no circumstances shall this option be exercisable
after the Time of Termination.

 

D.            Change
in Control.

 

(i)            For purposes of this Section III.D.,
the term “Change in Control” shall have the meaning set forth in Section 11
of the Plan.

 

(ii)           If any events
constituting a Change in Control of the Company shall occur, the terms of the
Plan govern any acceleration of the right to exercise this Option prior to the
anticipated effective date of any Change in Control, provided that should
acceleration not occur under the terms of the Plan, Optionee shall be entitled
to receive option rights covering shares of the surviving or acquiring entity
in the same proportion, at an equivalent price, and subject to the same
conditions as this Option; and provided, however, that if, with respect to the
Optionee, acceleration of the vesting of this Option as provided herein (which
acceleration could be deemed a payment within the meaning of Section 280G(b)(2)
of the Code) together with any other payments which the Optionee has the right
to receive from the Company or any corporation which is a member of an “affiliated
group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b)
of the Code) of which the Company is a member, would constitute a “parachute
payment” (as defined in Section 280G(b)(2) of the Code), the payments to
the Optionee as set forth herein shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise tax imposed
by Section 4999 of the Code.

 

ARTICLE IV.  MANNER OF OPTION EXERCISE.

 

A.            Notice.  This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained in
the Plan and herein, by delivery, in person, by registered mail, or by such
other means directed by the Company, including electronic delivery, to the
Company at its principal executive office (Attention: Chief Financial Officer),
of a written notice of exercise.  Such
notice shall be in a form satisfactory to the Committee, shall identify the
Option, shall specify the number of Option Shares with respect to which the
Option is being exercised, and if such notice is in written form, shall be
signed by the person or persons so exercising the Option.  Such notice shall be accompanied by payment
in full of the total purchase price of the Option Shares purchased, as provided
by Section IV. B. below.  In the
event that the Option is being exercised, as provided by the Plan and Section III.
B. above, by any person or persons other than the Optionee, the notice shall be
accompanied by appropriate proof of right of such person or persons to exercise
the Option.  As soon as practicable after
the effective exercise of the Option, the Optionee shall be recorded on the
stock transfer books of the Company as the owner of the Option Shares
purchased, and the Company shall deliver the Option Shares to the Optionee by
electronic means or by delivering one or more duly issued stock certificates
evidencing such ownership.

 

7

 

B.            Payment.  At the time of exercise of this Option, the
Optionee may determine whether to pay the total purchase price of the Option
Shares to be purchased solely in cash (including a personal check, wire
transfer or a certified or bank cashier’s check, payable to the order of the
Company or a payee designated by the Company), or by transfer from the Optionee
to the Company of previously acquired shares of Common Stock of the Company
with a then current aggregate Fair Market Value equal to such total purchase
price, or by a combination of cash and such previously acquired shares of
Common Stock, or with the proceeds of a same day sale or sell to cover
transaction through the Optionee’s E*Trade OptionsLink account.  The Committee may reject the Optionee’s
election to pay all or part of the purchase price under this Option with
previously acquired shares of Common Stock and may require such purchase price
to be paid entirely in cash if, in the sole discretion of the Committee,
payment in previously acquired shares would cause the Company to be required to
recognize a charge to earnings in connection therewith.  For purposes of this Agreement, (a) “previously
acquired shares” shall include only those shares of Common Stock which the
Optionee has owned for at least six (6) months prior to the exercise of the
stock option, or for such other period of time as may be required by generally
accepted accounting principles, and (b) “Fair Market Value” will be determined
as set forth in the Plan.

 

C.            Investment
Purpose; Stock Transfer Restrictions. 
The Company shall not be required to issue or deliver any shares of
Common Stock under this Option unless (a)(1) such shares are covered by an
effective and current registration statement under the Securities Act of 1933
and applicable state securities laws or (2) if the Committee has determined not
to so register such shares, exemptions from registration under the Securities
Act of 1933 and applicable state securities laws are available for such
issuance (as determined by counsel to the Company) and the Company has received
from the Optionee (or, in the event of death or disability, the Optionee’s
heir(s) or legal representative(s)) any representations or agreements requested
by the Company in order to permit such issuance to be made pursuant to such
exemptions, and (b) the Company has obtained any other consent, approval or
permit from any state or federal governmental agency which the Committee shall,
in its sole discretion upon the advice of counsel, deem necessary or
advisable.  Unless a registration
statement under the Securities Act of 1933 is in effect with respect to the
issuance or transfer of Option Shares, each certificate representing any such
shares shall be endorsed with a legend in substantially the following form,
unless counsel for the Company is of the opinion as to any such certificate
that such legend is unnecessary:

 

THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE
ACT”), OR UNDER APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE LAWS, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

 

8

 

ARTICLE V.  NONTRANSFERABILITY.

 

This Option shall not be
transferable by the Optionee, either voluntarily or involuntarily, or subject
to any lien, directly or indirectly, by operation of law or otherwise, except
as provided in Section 8.2 of the Plan. 
Any attempt to transfer or encumber this Option other than in accordance
with Section 8.2 of the Plan shall void this Option.

 

ARTICLE VI.  LIMITATION OF LIABILITY.

 

Nothing in this Agreement
shall be construed to (a) limit in any way the right of the Company or any of
its Subsidiaries to terminate the status of the Optionee as an employee, non
employee director or consultant of the Company at any time, or (b) be evidence
of any agreement or understanding, express or implied, that the Company or any
of its Subsidiaries will employ the Optionee in any particular position, at any
particular rate of compensation or for any particular period of time.

 

ARTICLE VII.  WITHHOLDING TAXES.

 

A.            General
Obligation.  The Company is entitled
to (a) withhold and deduct from future payment to the Optionee, or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any federal, state or local withholding tax requirements attributable
to the Optionee’s exercise of this Option or otherwise incurred with respect to
this Option, or (b) require the Optionee promptly to remit the amount of such
withholding to the Company before acting on any such disposition of shares of
Common Stock.  In the event that the
Company is unable to withhold such amounts, for whatever reason, the Optionee
hereby agrees to pay to the Company an amount equal to the amount the Company
would otherwise be required to withhold under federal, state or local law.

 

B.            Use
of Shares.  The Committee may, in its
sole discretion and subject to such rules as the Committee may adopt, permit
the Optionee to satisfy, in whole or in part, any withholding tax obligation
which may arise in connection with the exercise of this Option either by
electing to have the Company withhold from the shares of Common Stock to be
issued upon the exercise of this Option that number of shares of Common Stock,
or by electing to deliver to the Company already-owned shares of Common Stock,
in either case having a Fair Market Value (determined as set forth in the Plan)
on the date such tax is determined under the Code (the “Tax Date”) equal to the
amount necessary to satisfy the statutory minimum withholding amount due.  The Optionee’s election to have the Company
withhold shares of Common Stock or to deliver already-owned shares of Common
Stock upon exercise is irrevocable and is subject to the consent or disapproval
of the Committee.  If the Optionee is an
officer, director or beneficial owner of more than 10% of the outstanding
Common Stock of the Company and at the time of exercise of this Option the
Company has a class of equity securities registered under Section 12 of
the Securities Exchange Act of 1934, such election may not be made within six
months of the Date of Grant (unless the death or Disability of the Optionee
occurs prior to the expiration of such six-month period), and must be made
either six months prior to the Tax Date or between the third and twelfth
business days following public release of any of the Company’s quarterly or
annual summary earnings statements.  To
the extent that shares of Common Stock may be issued prior to the Tax Date to
the Optionee making such an election, the Optionee hereby agrees to surrender
that number of shares on the Tax Date having an aggregate Fair Market Value
(determined as set forth in the Plan) equal to the amount of withholding tax due.  In no event may the Company withhold or
accept shares having a Fair Market Value in excess of the statutory minimum
required tax withholding.

 

ARTICLE VIII.  CAPITAL ADJUSTMENTS.

 

If the number of outstanding shares of Common Stock is
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company or of another
corporation by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, combination of shares, rights offering or any other change in the
corporate structure or shares of the Company, the Committee (or, if the Company
is not the surviving corporation in any such transaction, the board of directors
of the surviving corporation), in order to prevent dilution or enlargement of
the rights of the Optionee, shall make appropriate adjustment as to the number
and kind of securities subject to this Option. 
Any such adjustment affecting this Option shall be made without change
in the aggregate purchase price applicable to the unexercised portion of the
Option but with an appropriate adjustment in the price for each share or other
unit of any security subject to the Option. Without the consent of the Optionee,
however, no such change shall be made in the terms of the Option if such change
would disqualify the 

 

9

 

Option from treatment as an “incentive stock option”
within the meaning of Section 422 of the Code or would be considered a
modification, extension or renewal of an option under Section 425(h) of
the Code.

 

ARTICLE IX.  BINDING EFFECT.

 

This Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties
hereto.

 

ARTICLE X.  SUBJECT TO PLAN.

 

The Option represented by
this Agreement has been granted under, and is subject to the terms of, the
Plan.  The terms of the Plan are hereby
incorporated by reference herein in their entirety and the Optionee, by execution
hereof, acknowledges having received a copy of the Plan.  The provisions of this Agreement shall be
interpreted as to be consistent with the Plan and any ambiguities herein shall
be interpreted by reference to the Plan. 
In the event that any provision hereof is inconsistent with the terms of
the Plan, the Plan shall prevail.

 

ARTICLE XI.  GOVERNING LAW.

 

This Agreement and all
rights and obligations hereunder shall be construed in accordance with the Plan
and governed by the laws of the State of Minnesota.

 

The parties hereto have
executed this Agreement effective the day and year first above written.

 

	
   

  	
  AUGUST TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By execution hereof,
  the

  	
  OPTIONEE

  
	
  Optionee acknowledges
  having

  	
   

  
	
  received a copy of the
  Plan.

  	
   

  	
   

  
						

 

10

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