Document:

Exhibit 10.1

    
      

    

    Exhibit
      10.1

    Key
      Technology, Inc.

    2003
      RESTATED EMPLOYEES’ STOCK INCENTIVE PLAN

    (As
      amended and restated as of December 19, 2005)

    

    1. Purpose.

    

    This
      2003 Restated Employees' Stock Incentive Plan (the "Plan") is designed to
      encourage key employees of Key Technology, Inc. (the "Company") and any
      subsidiary corporations to acquire or increase a proprietary interest in the
      Company, and thus to share in the future success of the Company's business.
      Subsidiary corporation means any corporation in which 50% or more of the
      outstanding shares of capital stock are owned by the Company. The Plan is
      intended to attract and retain outstanding personnel who are in a position
      to
      make important and direct contributions to the success of the Company and to
      promote a closer identity of interests between the Company's key employees
      and
      its shareholders. The Plan was initially adopted in 1996 and was subsequently
      amended and was restated in 2000. The Plan is amended and restated as of
      December 15, 2003 in part to provide for an extended termination date, a
      reauthorized number of shares reserved for issuance hereunder, and the award
      of
      restricted stock grants in addition to the award of stock options.

    

    2. Scope
      and Duration of the Plan.

    

    There
      will be reserved for issuance to eligible participants a total of 1,350,000
      shares of the Company's authorized Common Stock pursuant to the exercise of
      options presently outstanding and previously granted under this Plan prior
      to
      restatement and exercises of new options granted and restricted stock grants
      awarded under the Plan after the date hereof. If an option expires or terminates
      for any reason without having been fully exercised, the unpurchased shares
      will
      be available for other options awarded under the Plan. If a restricted stock
      award is forfeited, in part or in full, the forfeited shares will again be
      available for issuance under the Plan. Unless the Plan is terminated earlier
      pursuant to Section 8, it shall terminate on December 15, 2013 and no option
      or
      restricted stock award shall be granted under the Plan after that date.

    

    3. Administration

    

    The
      Plan is administered by the Compensation Committee of the Board of Directors
      (the "Board"), which shall be comprised solely of "Non-Employee Directors"
      as
      defined in Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934 (the
      "Committee").

    

    The
      Committee has the responsibility to construe and interpret the Plan and to
      establish and amend such rules and regulations as it deems necessary or
      desirable for the proper administration of the Plan. Any decision or action
      taken or to be taken by the Committee, arising out of or in connection with
      the
      construction, interpretation and administration of the Plan, shall, to the
      extent permitted by law, be within its absolute discretion, but subject to
      the
      express provisions of the Plan. Decisions of the Committee shall be conclusive
      and binding upon all recipients of options and restricted stock awards and
      any
      person claiming under or through any recipient of an option or restricted stock
      award.

    

    The
      Committee has the authority, subject to the terms of the Plan, to determine
      which persons are eligible for options and restricted stock awards and those
      to
      whom options or restricted stock awards shall be granted, the type of grant
      to
      be awarded, the number of shares to be covered by each option or restricted
      stock award, the time or times at which options or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    restricted
      stock awards shall be granted, the fair market value of shares under option
      or
      restricted stock award from time to time, and the terms and provisions of the
      instruments evidencing options and restricted stock awards, including any
      conditions to exercise, repurchase rights, or any restrictions which may be
      imposed applicable to the transfer of the shares to be acquired upon exercise
      of
      options or pursuant to restricted stock awards. The Board may take any action
      which the Committee is authorized to take under the terms of the
      Plan.

    

    4. Eligible
      Employees.

    

    4.1 Awards
      Generally.
      Options and restricted stock awards may be granted to employees and to directors
      of the Company and any present or future subsidiary corpora-tions. In
      determining the employees to whom options and restricted stock awards shall
      be
      granted, and the number of shares to be issued on the exercise of an option
      or
      the number of shares of restricted stock to be granted, the Committee shall
      take
      into account the duties of the employees, their present and potential
      contributions to the success of the Company, and such other factors as the
      Committee deems relevant to accomplish the purposes of the Plan.

    

    4.2 Incentive
      Stock Options.
      Incentive Stock Options may be granted only to employees of the Company or
      any
      subsidiary corporation. An Incentive Stock Option cannot be granted to an
      employee who, at the time such option is granted, owns directly or beneficially
      more than 10% of the total combined voting power of all classes of stock of
      the
      employer corporation or its parent or any subsidiary. This limitation shall
      not
      apply if, at the time such Incentive Stock Option is granted, the option price
      is at least 110% of the fair market value of the stock subject to the option
      and
      such option by its terms is not exercisable after the expiration of five years
      from the date such option is granted.

    

    5. Stock
      Options.

    

    5.1 Types
      of Grants.
      The Committee may grant either Incentive Stock Options, as defined in Section
      422 of the Internal Revenue Code of 1986, as amended (the "Code") or
      Nonstatutory Stock Options. The Committee has the sole discretion in deciding
      which options, if any, shall constitute Incentive Stock Options. For options
      granted under this Plan, the Committee shall clearly identify each such option
      as an Incentive Stock Option or Nonstatutory Stock Option. Any option not
      clearly identified as an Incentive Stock Option shall be deemed a Nonstatutory
      Stock Option. For purposes of the Plan (i) the term "Nonstatutory Stock Option"
      means an option other than an Incentive Stock Option and (ii) the term
      "employer corporation" means the corporation of which an individual granted
      an
      Incentive Stock Option is an employee.

    

    5.2 Option
      Price.
      The price of the shares of Common Stock to be issued on exercise of an option
      shall be determined by the Committee, and in the case of an Incentive Stock
      Option, shall be not less than the fair market value of the shares on the date
      the option is granted. Fair market value of the shares under option shall be
      determined by the Committee at the time of each grant of stock options under
      the
      Plan.

    

    5.3 Term
      of Options.
      The term of each option shall be determined by the Committee, but shall not
      be
      for more than ten years from the date the option is granted and may be subject
      to earlier expiration as provided in Sections 5.9 and 5.10. Each option shall
      recite the date on which the exercise period expires.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    5.4 Limitation
      on Amount of Incentive Stock Options.
      In no event shall the aggregate fair market value (determined at the time such
      options are granted) of the shares with respect to which the employee's
      Incentive Stock Options first become exercisable during any calendar year under
      the Plan or under any other stock option plan of the employee's employer
      corporation and its parent and subsidiary corporations exceed
      $100,000.

    

    5.5 Exercise
      of Options. Subject
      to Section 8, an option held by an employee may be exercised only after an
      employee has remained in the continuous employment of the Company or a
      subsidiary corporation for one year after the date the option is granted.
      Thereafter, an option may be exercised at any time, or from time to time, in
      whole or in part, except that if an option by its terms is exercisable in
      installments, then the provisions of the option shall control. After becoming
      exercisable, if exercisable in installments, then each installment shall remain
      exercisable until termination or expiration of the option. The price of the
      shares shall be paid in full at the time of exercise in cash or, with the
      consent of the Committee, in whole or in part in shares of Common Stock of
      the
      Company, valued at fair market value. Fair market value shall be determined
      by
      the Committee. Except as provided in Sections 5.9 or 5.10, no option
      granted to an employee may be exercised unless the holder is then an employee
      of
      the Company or a subsidiary corporation. An employee shall not have any of
      the
      rights of a shareholder with respect to the shares to be issued on the exercise
      of an option until the shares are paid for and the stock certificate is
      delivered. Upon any exercise, prior to issuance and as a condition thereof
      the
      person exercising the option may be required to sign any form of subscription
      agreement then authorized by the Board for use in connection with shares
      purchased under this Plan. Such agreement may impose such restrictions and
      repurchase rights as the Board may determine.

    

    5.6 Nontransferability
      of Nonstatutory Stock Options.
      Nonstatutory Stock Options granted under the Plan are not transferable, except
      by will or by the laws of descent and distribution, and may be exercised during
      the employee's life only by the employee or, if incapacitated, by his guardian
      or legal representative. This section does not apply to Incentive Stock Options
      granted under the Plan.

    

    5.7 Nontransferability
      of Incentive Stock Options. Incentive
      Stock Options granted under the Plan are not transferable by the optionee
      otherwise than by will or by the laws of descent and distribution, and are
      exercisable during the optionee's lifetime only by the optionee. Each Incentive
      Stock Option shall recite this restriction. This section does not apply to
      Nonstatutory Stock Options granted under the Plan.

    

    5.8 Instruments
      Evidencing Options and Plan Log.
      The Committee, in granting options hereunder, may use such instruments and
      agreements to evidence such options as it may determine. All options to purchase
      shares of the Company which are granted under the Plan must be evidenced by
      an
      agreement signed by the employee to whom the option is awarded, all terms of
      which, to the extent not inconsistent with the terms of the Plan, shall be
      as
      determined by the Committee in awarding any such option. The Secretary of the
      Company shall keep with the Plan an official Plan Log listing the names of
      all
      employees to whom options have been granted, the date of the award, the number
      of shares covered by the option, the purchase price, the vesting schedule,
      if
      applicable, and the number of remaining eligible shares covered by the
      Plan.

    

    5.9 Termination
      of Employment. If
      the employment of an employee to whom an option has been granted terminates
      for
      any reason other than death or physical disability, any option unexercised
      at
      the date of termination of employment shall expire except to the extent
      otherwise expressly authorized by the Committee. Whether an authorized leave
      of
      absence, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    military
      or governmental service, disability or temporary absence from employment for
      any
      other reason constitutes the termination of employment for purposes of the
      Plan
      shall be conclusively determined by the Committee.

    

    5.10 Death
      or Disability of an Employee.
      If an employee to whom an option has been granted dies or becomes physically
      disabled while employed by the Company or by a subsidiary corporation, the
      option may only be exercised (to the extent that the employee was entitled
      to do
      so on the date of his death or disability) by his personal representative or
      beneficiary within 90 days after the date of death or termination of employment
      due to disability, and the option shall expire to the extent unexercised after
      such 90-day period except to the extent otherwise determined by the
      Committee.

    

    
      	6.  	
              Restricted
                Stock Awards.

            

    

    

    6.1 General.
      The Committee may grant restricted stock awards to eligible employees and
      directors under the Plan. Each grant of restricted stock shall be evidenced
      by a
      Restricted Stock Agreement between the recipient and the Company in such form
      as
      may be approved by the Committee from time to time. Shares of restricted stock
      awarded under the Plan shall be subject to all applicable terms of the Plan
      and
      may be subject to any other terms and conditions that are not inconsistent
      with
      the Plan as the Committee may determine and as set forth in the respective
      Restricted Stock Agreements. The provisions of the individual Restricted Stock
      Agreements entered into with recipients of restricted stock awards under the
      Plan need not be identical.

    

    6.2 Payment
      for Awards.
      Shares of restricted stock may be sold or awarded under the Plan for such
      consideration as the Committee may determine at the time of each award including
      without limitation past services, future services or cash.

    

    6.3 Vesting
      Conditions.  Shares
      of restricted stock awarded under the Plan may be subject to vesting. Vesting
      shall occur, in full or in installments, upon satisfaction of the conditions
      specified in the Restricted Stock Agreement. A Restricted Stock Agreement may
      provide for accelerated vesting in event of the employee's death, disability,
      retirement or other events.

    

    6.4 Voting
      and Dividend Rights.
      The holders of shares of restricted stock awarded under the Plan shall have
      the
      same voting, dividend and other rights as the Company's other shareholders.
      A
      Restricted Stock Agreement, however, may require that the holders of the shares
      of restricted stock invest any cash dividends received with respect to such
      shares in the purchase of additional shares of restricted stock. Such additional
      shares of any restricted stock so purchased shall be subject to the same
      conditions and restrictions as the award with respect to which the dividends
      were paid.

    

    7. Adjustments
      for Changes in Capitalization.

    

    Notwithstanding
      any other provision of the Plan, in the event of changes in the outstanding
      shares of Common Stock of the Company by reason of stock dividends, split-ups,
      recapitalizations, mergers, consolidations, reorganizations or liquidations,
      each instrument evidencing an option and each Restricted Stock Agreement may
      contain such provisions as the Committee determines to be appropriate for the
      adjustment of the number and class of shares covered by such option or
      restricted stock award, and as applicable the option exercise price. In

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    the
      event of any such change in the outstanding shares of Common Stock of the
      Company, the aggregate number of shares available under the Plan shall be
      appropriately adjusted.

    8. Events
      Accelerating Exercise of Options or Vesting of Restricted
      Stock.

    

    If
      the shares of Common Stock of the Company are changed into or exchanged for
      shares of stock of another corporation or are converted to cash pursuant to
      a
      plan of merger, partial or complete liquidation, or dissolution, the Board
      may
      in its discretion determine to make each option then outstanding be exercisable
      with respect to all or any portion of the shares of Common Stock covered thereby
      and without regard to the time the option has been outstanding, beginning with
      the date the Board approves or authorizes such change or conversion and ending
      two days prior to the effective date of such change or conversion. The Board
      may
      also, in its discretion, determine to make each share of restricted stock then
      subject to forfeiture be fully vested without regard to the satisfaction of
      the
      conditions specified in the Restricted Stock Agreement. If, after December
      15,
      2003, any of the shares of Common Stock of the Company becomes the subject
      of an
      acquisition requiring reporting under Sections 13(d)(1) or 14(d) of the
      Securities Act of 1934, the Board may at its discretion determine to make each
      option then outstanding be exercisable with respect to all or any portion of
      the
      shares of Common Stock covered thereby and without regard to the time the option
      has been outstanding, at any time thereafter, and may determine to make each
      share of restricted stock then subject to forfeiture be fully vested without
      regard to the satisfaction of the conditions specified in the Restricted Stock
      Agreement.

    

    9. Employment
      Rights.

    

    Nothing
      in the Plan or any instrument evidencing an option or restricted stock award
      shall confer upon any employee any right to continue in the employment of the
      Company or any subsidiary corporation or shall be construed to interfere in
      any
      way with the right of the Company or any subsidiary corporation to terminate
      his
      employment at any time for any reason.

    

    10. Withholding
      Taxes.

    

    To
      the extent required by applicable federal, state or local law, an employee
      or
      his or her successor shall make arrangements satisfactory to the Company for
      the
      satisfaction of any withholding tax obligations that arise in connection with
      the Plan. The Company shall not be required to issue any shares of Common Stock
      under the Plan until such obligations are satisfied. To the extent that
      applicable law subjects an employee to tax withholding obligations, the
      Committee may permit such employee to satisfy all or part of such obligations
      by
      having the Company withhold all or a portion of any shares of Common Stock
      that
      otherwise would be issued to him or her or by surrendering all or a portion
      of
      any shares of Common Stock that he or she previously acquired. Such shares
      of
      Common Stock shall be valued at their fair market value on the date when they
      are withheld or surrendered.

     

    11. Amendment.

    

    The
      Board has the right at any time to amend, modify or discontinue the Plan. An
      amendment of the Plan shall be subject to the approval of the Company's
      shareholders only to the extent required by applicable laws, regulations, rules
      or requirements of any applicable governmental authority or listing organization
      governing the trading of the Company's Stock. No amendment, modification or
      discontinuance adopted by the Board shall revoke or alter the terms of any
      valid
      option or restricted stock award previously granted in accordance with the
      Plan
      without the consent of the recipient of such award. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      Plan may also be amended or modified in any respect or discontinued with the
      approval of a majority of the shares present and entitled to vote at a
      shareholder meeting duly called for such purpose. However, no amendment,
      modification or discontinuance of the Plan may, without the consent of the
      employee to whom a valid option or restricted stock award has previously been
      granted, affect the rights of such employee under any outstanding option or
      restricted stock award.

    

    The
      Plan, the grant and exercise of options, and the grant of restricted stock
      awards shall be subject to all applicable laws, regulations, rules and
      requirements of applicable authorities and organizations. Notwithstanding any
      provision of the Plan to the contrary, the Board may in its discretion make
      such
      changes in the Plan as may be required to conform the Plan to such laws,
      regulations, rules and requirements of applicable authorities and organizations,
      subject to the provisions of the first paragraph of this Section
      11.

    

    12. Effectiveness
      of the Plan. 

    

    The
      Plan shall become effective only after it has been approved by the Board of
      Directors and subsequently approved, within one year from the date of adoption
      by the Board, at a shareholders meeting duly called for such purpose.

    

    

    This
      2003 Restated Employees' Stock Incentive Plan, as amended, was adopted by the
      Board of Directors of Key Technology, Inc. on December 19, 2005, and approved
      by
      the shareholders on February 8, 2006.

    

    
      	
               

            	
               /s/
                Gordon Wicher

            
	
               

            	
              Gordon
                Wicher

            
	
               

            	
              Corporate
                SecretaryExhibit 10.2

    
      

    

    Exhibit
      10.2

    KEY
      TECHNOLOGY, INC.

    

    RESTRICTED
      STOCK AGREEMENT

    

    (Continued
      Service Vesting)

     

              This
      Restricted Stock Agreement ("Agreement") is made between Key
      Technology, Inc.,
      an Oregon corporation (the "Company"),
      and  ________________ 
      (the "Participant") under the Company's 2003 Restated Employees' Stock Incentive
      Plan (the "Plan"), as amended, effective as approved on
      ______________
      by the Compensation Committee of the Company's Board of Directors. Capitalized
      Terms not otherwise defined shall have the meanings ascribed in the Definitions
      section of this Agreement. 

     

    SECTION
      1.  ACQUISITION
      OF SHARES

     

    (a)  Transfer.
      On the terms and conditions set forth in this Agreement, the Company agrees
      to
      issue to the Participant ________ shares
      of common stock of the Company (the "Shares"). The fair market value per Share
      at the date of the award is $_______,
      as determined in accordance with the Plan. The issuance will occur following
      the
      date of execution of this Agreement in coordination with the Company's Registrar
      and Transfer Agent. 

     

    (b)  Stock
      Plan and Defined Terms.
      Ownership of the Shares is subject to the Plan, a copy of which the Participant
      acknowledges having received. The provisions of the Plan are incorporated into
      this Agreement by this reference. Capitalized terms not elsewhere defined are
      defined in Section 10 of this Agreement.

     

    (c)  Withholding
      Taxes.
      In the event that the Company determines that it is required to withhold any
      tax
      as a result of the issuance of Shares pursuant to this Agreement, the
      Participant, as a condition to the receipt of such Shares, shall make
      arrangements satisfactory to the Company to enable it to satisfy all withholding
      requirements. 

     

    SECTION
      2.  VESTING
      AND FORFEITURE

     

    (a)  Restriction
      on Transfer of Restricted Shares.
      All of the Shares initially shall be subject to forfeiture in the event
      Participant's service as a member of Key Technology, Inc.'s Board of Directors
      terminates prior to the specified Vesting Period as defined below. During the
      period of forfeiture, the shares are referred to herein as Restricted Shares.
      The Participant shall not transfer, assign, encumber or otherwise dispose of
      any
      Restricted Shares, except as provided in the following sentence. The Participant
      may transfer Restricted Shares (i) by beneficiary designation, will or
      intestate succession or (ii) to the Participant's spouse, children or
      grandchildren or to a trust established by the Participant for the benefit
      of
      the Participant or the Participant's spouse, children or grandchildren, provided
      in either case that the Transferee agrees in writing on a form prescribed by
      the
      Company to be bound by all provisions of this Agreement. If the Participant
      transfers any Restricted Share, then this Section 2 shall 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    apply
      to the Transferee to the same extent as to the Participant. A purported transfer
      of any Restricted Shares not in compliance with this Section 2(a) shall be
      void
      and of no effect.

     

    (b)  Vesting.
      The Restricted Shares shall become vested based upon the Participant's continued
      service as a member of the Key Technology, Inc. Board of Directors through
      the
      period ended _______________(the
      "Vesting Period"). If the Participant's service as a member of the Key
      Technology, Inc. Board of Directors terminates prior to
      __________________,
      the Restricted Shares will be forfeited except in the event of death, in which
      event the Restricted Shares will become fully vested. Once vested, Shares shall
      no longer be Restricted Shares or subject to forfeiture, and the transfer
      restrictions in Section 2(a) shall no longer apply. Notwith-standing any other
      provision of this Agreement to the contrary, the Compensation Committee of
      the
      Board of Directors may in its discretion determine to provide for accelerated
      vesting with respect to some or all of the Restricted Shares in the event that
      during the period that the shares are restricted a Change of Control event
      occurs with respect to the Company, on such terms or subject to such conditions
      as the Committee may determine.

     

    (c)  Additional
      Shares or Substituted Securities.
      In the event of the declaration of a stock dividend, a spin-off, a stock split,
      an adjustment in conversion ratio, a recapitalization or a similar transaction
      affecting the Company's outstanding securities without receipt of consideration,
      any new, substituted or additional securities or other property which are by
      reason of such transaction distributed with respect to any Restricted Shares
      or
      into which such Restricted Shares thereby become convertible shall immediately
      be subject to this Agreement. Appropriate adjustments to reflect the
      distribution of such securities or property shall be made to the number and/or
      class of the Restricted Shares.

     

    (d)  Termination
      of Rights as Stockholder.
      If any Restricted Shares are forfeited in accordance with this Section 2, then
      after the date of forfeiture the Participant shall no longer have any rights
      as
      a holder of such Restricted Shares. Such Restricted Shares shall be deemed
      to
      have been forfeited in accordance with the applicable provisions hereof, whether
      or not the certificate(s) therefor have been delivered as required by this
      Agreement.

     

    (e)  Certificate
      Retention.
      Upon issuance, the certificates for all Restricted Shares shall be retained
      by
      the Company to be held in accordance with the provisions of this Agreement.
      Any
      new, substituted or additional securities or other property described in
      subsection 2(c) above shall immediately be delivered to the Company to be
      similarly retained, but only to the extent the Shares are at the time Restricted
      Shares. Any cash dividends on Restricted Shares (or other securities at the
      time
      held in escrow) shall be paid directly to the Participant and shall not be
      retained by the Company. Restricted Shares, together with any other assets
      or
      securities retained by the Company hereunder, shall be (i) surrendered for
      cancellation upon forfeiture or (ii) released to the Participant following
      the Vesting Period to the extent the Shares are no longer Restricted
      Shares.

     

    SECTION
      3.  OTHER
      RESTRICTIONS ON TRANSFER

     

    (a)  Participant
      Representations.
      In connection with the issuance and acquisition of Shares under this Agreement,
      the Participant hereby represents and warrants to the Company as
      follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                        (i)  The
      Participant is acquiring and will hold the Shares for investment for his account
      only and not with a view to, or for resale in connection with, any
      "distribution" thereof within the meaning of the Securities Act.

     

                        (ii)  The
      Participant understands that the Shares have not been registered under the
      Securities Act by reason of a specific exemption therefrom and that the Shares
      must be held indefinitely, unless they are subsequently registered under the
      Securities Act or the Participant obtains an opinion of counsel, in form and
      substance satisfactory to the Company and its counsel, that such registration
      is
      not required. The Participant further acknowledges and understands that the
      Company is under no obligation to register the Shares.

     

                        (iii)  The
      Participant is aware of the adoption of Rule 144 by the Securities and
      Exchange Commission under the Securities Act, which permits limited public
      resales of securities acquired in a non-public offering, subject to the
      satisfaction of certain conditions, including (without limitation) the
      availability of certain current public information about the issuer, the resale
      occurring only after the holding period required by Rule 144 has been
      satisfied, the sale occurring through an unsolicited "broker's transaction,"
      and
      the amount of securities being sold during any three-month period not exceeding
      specified limitations. 

     

                        (iv)  The
      Participant will not sell, transfer or otherwise dispose of the Shares in
      violation of the Securities Act, the Securities Exchange Act of 1934, or the
      rules promulgated thereunder, including Rule 144 under the Securities Act.
      The Participant agrees that the Participant will not dispose of the Shares
      unless and until the Participant has complied with all requirements of this
      Agreement applicable to the disposition of Shares and the Participant has
      provided the Company with written assurances, in substance and form satisfactory
      to the Company, that the proposed disposition does not require registration
      of
      the Shares under the Securities Act or that all appropriate action necessary
      for
      compliance with the registration requirements of the Securities Act or with
      any
      exemption from registration available under the Securities Act (including
      Rule 144) has been taken.

     

                        (v)  The
      Participant has been furnished with, and has had access to, such information
      as
      the Participant considers necessary or appropriate for deciding whether to
      invest in the Shares, and the Participant has had an opportunity to ask
      questions and receive answers from the Company regarding the terms and
      conditions of the issuance of the Shares.

     

    (b)  Securities
      Law Restrictions.
      Depending upon Participant's status with the Company at the time, the Company
      at
      its discretion may impose restrictions upon the sale, pledge or other transfer
      of the Shares (including the placement of appropriate legends on stock
      certificates or the imposition of stop-transfer instructions) if, in the
      judgment of the Company, such restrictions are necessary or desirable in order
      to achieve compliance with the Securities Act, the securities laws of any state
      or any other law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Market
      Stand-Off.
      In connection with any underwritten public offering by the Company of its equity
      securities pursuant to an effective registration statement filed under the
      Securities Act, the Participant shall enter into such agreements as the Company
      may request with respect to temporary restrictions on transfer of any Shares
      acquired hereunder. Such restrictions (the "Market Stand-Off") shall be in
      effect for such period of time as may be directed by the Company or its
      underwriters. In order to enforce the Market Stand-Off, the Company may impose
      stop-transfer instructions with respect to the Shares until the end of the
      applicable stand-off period. The Company's underwriters shall be beneficiaries
      of the agreement set forth in this subsection (c). 

     

    (d)  Rights
      of the Company.
      The Company shall not be required to (i) transfer on its books any Shares
      that have been sold or transferred in contravention of this Agreement or
      (ii) treat as the owner of Shares, or otherwise to accord voting, dividend
      or liquidation rights to, any transferee to whom Shares have been transferred
      in
      contravention of this Agreement.

     

    SECTION
      4.  SUCCESSORS
      AND ASSIGNS

     

    Except
      as otherwise expressly provided to the contrary, the provisions of this
      Agreement shall inure to the benefit of, and be binding upon, the Company and
      its successors and assigns and be binding upon the Participant and the
      Participant's legal representatives, heirs, legatees, distributees, assigns
      and
      transferees by operation of law, whether or not any such person has become
      a
      party to this Agreement or has agreed in writing to join herein and to be bound
      by the terms, conditions and restrictions hereof.

     

    SECTION
      5.  NO
      RETENTION RIGHTS

     

    Nothing
      in this Agreement or in the Plan shall confer upon the Participant any right
      to
      continue employment with the Company for any period of specific duration or
      interfere with or otherwise restrict in any way the rights of the Company (or
      any Parent or Subsidiary employing or retaining the Participant) or of the
      Participant, which rights are hereby expressly reserved by each, to terminate
      employment at any time and for any reason, with or without cause.

     

    SECTION
      6.  LEGENDS

     

    All
      certificates evidencing Restricted Shares shall bear the following
      legends:

    

    THE
      SHARES REPRESENTED HEREBY ARE RESTRICTED AND MAY NOT BE SOLD, ASSIGNED,
      TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE
      WITH
      THE TERMS OF A WRITTEN AGREEMENT ON FILE WITH THE SECRETARY OF THE
      COMPANY.

    

    THE
      SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    AMENDED,
      AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANS-FERRED WITHOUT AN EFFECTIVE
      REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY
      TO
      THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRA-TION IS NOT
      REQUIRED.

     

    SECTION
      7.  NOTICE

     

    Any
      notice required by the terms of this Agreement shall be given in writing and
      shall be deemed effective upon personal delivery or upon deposit with the United
      States Postal Service, by registered or certified mail, with postage and fees
      prepaid. Notice shall be addressed to the Company at its principal executive
      office and to the Participant at the address that he or she most recently
      provided to the Company.

     

    SECTION
      8.  ENTIRE
      AGREEMENT

     

    This
      Agreement and the Plan constitute the entire contract between the parties hereto
      with regard to the subject matter hereof. They supersede any other agreements,
      representations or understandings (whether oral or written and whether express
      or implied) which relate to the subject matter hereof.

     

    SECTION
      9.  DEFINITIONS

     

    Capitalized
      terms not otherwise defined or below herein shall have the meanings as defined
      in the Plan.

     

    (a)  "Change
      of Control"
      shall mean the occurrence of any of the following:

     

    (i)    The
      acquisition by any individual, entity or group (within the meaning of section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
      Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the stock
      of
      any class or classes having by the terms thereof ordinary voting power to elect
      a majority of the directors of the Company (irrespective of whether at the
      time
      stock of any class or classes of the Company shall have or might have voting
      power by reason of the happening of any contingency); provided, however, that
      the following acquisitions will not constitute a Change of Control: (1) any
      acquisition of voting stock directly from the Company; (2) any acquisition
      of voting stock by the Company or a subsidiary of the Company; or (3) any
      acquisition of voting stock by any employee benefit plan (or related trust)
      sponsored or maintained by the Company or any corporation controlled by the
      Company.

    

    (ii)    The
      consummation of a merger or consolidation involving the Company if the
      stockholders owning the voting shares of the Company

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    immediately
      before such merger or consolidation do not, as a result of such merger or
      consoli-dation, own, directly or indirectly, more than 50% of the combined
      voting power of the Company, or the entity resulting from such merger or
      consolidation, in sub-stantially the same proportion as immediately before
      such
      merger or consolidation.

    

    (iii)    The
      sale or other disposition of all or substantially all of the assets of the
      Company.

     

    (b)  "Securities
      Act"
      shall mean the Securities Act of 1933, as amended.

     

    (c)  "Transferee"
      shall
      mean the individual to whom Restricted Shares have been transferred in
      accordance with Section 2(a).

     

    IN
      WITNESS WHEREOF, the
      parties have executed this Agreement this _____ day
      of __________ ,
      _____ .

     

    COMPANY:  KEY
      TECHNOLOGY, INC.

    

     

    By
      _____________________

     

     

    PARTICIPANT: ________________________

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