Document:

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                                                                     EXHIBIT 4.2

                                APPLIED EPI, INC.
                                 2000 STOCK PLAN

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                                TABLE OF CONTENTS

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                                                                                                               PAGE
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SECTION           CONTENTS

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1.                General Purpose of Plan: Definitions............................................................1

2.                Administration..................................................................................3

3.                Stock Subject to Plan...........................................................................4

4.                Eligibility.....................................................................................4

5.                Stock Options...................................................................................5

6.                Restricted Stock................................................................................8

7.                Transfer, Leave of Absence, etc.................................................................9

8.                Amendments and Termination.....................................................................10

9.                Unfunded Status of Plan........................................................................10

10.               General Provisions.............................................................................10

11.               Effective Date of Plan.........................................................................12
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                                APPLIED EPI, INC.
                                 2000 STOCK PLAN

         SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

         The name of this plan is the Applied Epi, Inc. 2000 Stock Plan (the
"Plan"). The purpose of the Plan is to enable Applied Epi, Inc. (the "Company")
and its Subsidiaries to retain and attract executives, other key employees,
consultants and directors who contribute to the Company's success by their
ability, ingenuity and industry, and to enable such individuals to participate
in the long-term success and growth of the Company by giving them a proprietary
interest in the Company.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         a.       "BOARD" means the Board of Directors of the Company.

         b.       "CAUSE" means a felony conviction of a participant or the
                  failure of a participant to contest prosecution for a felony,
                  or a participant's willful misconduct or dishonesty, any of
                  which is directly and materially harmful to the business or
                  reputation of the Company.

         c.       "CODE" means the Internal Revenue Code of 1986, as amended.

         d.       "COMMITTEE" means the Committee referred to in Section 2 of
                  the Plan. If at any time no Committee shall be in office, then
                  the functions of the Committee specified in the Plan shall be
                  exercised by the Board.

         e.       "COMPANY" means Applied Epi, Inc., a corporation organized
                  under the laws of the State of Minnesota (or any successor
                  corporation).

         f.       "DISABILITY" means a physical or mental condition resulting
                  from a bodily injury or disease or mental disorder rendering
                  such person incapable of continuing to perform the employment
                  duties of such person at the Company as such duties existed
                  prior to the bodily injury, disease or mental disorder, as
                  determined by the Committee.

         g.       "EARLY RETIREMENT" means retirement, with consent of the
                  Committee at the time of retirement, from active employment
                  with the Company and any Subsidiary or Parent Corporation of
                  the Company.

         h.       "FAIR MARKET VALUE" of the Stock on any given date shall be
                  determined by the Committee as follows: (a) if the Stock is
                  listed for trading on one of more national securities
                  exchanges, or is traded on the Nasdaq Stock Market, the last
                  reported sales price on the principal such exchange or the
                  Nasdaq Stock Market on the date in question, or if such Stock
                  shall not have been traded on such principal

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                  exchange on such date, the last reported sales price on such
                  principal exchange or the Nasdaq Stock Market on the first day
                  prior thereto on which such Stock was so traded; or (b) if the
                  Stock is not listed for trading on a national securities
                  exchange or the Nasdaq Stock Market, but is traded in the
                  over-the-counter market, including the Nasdaq Small Cap
                  Market, the closing bid price for such Stock on the date in
                  question, or if there is no such bid price for such Stock on
                  such date, the closing bid price on the first day prior
                  thereto on which such price existed; or (c) if neither (a) or
                  (b) is applicable, by any means fair and reasonable by the
                  Committee, which determination shall be final and binding on
                  all parties.

         i.       "INCENTIVE STOCK OPTION" means any Stock Option intended to be
                  and designated as an "Incentive Stock Option" within the
                  meaning of Section 422 of the Code.

         j.       "NON-EMPLOYEE DIRECTOR" means a "Non-Employee Director" within
                  the meaning of Rule 16b-3(b)(3) of the Securities Exchange
                  Act, as amended, or any successor rule.

         k.       "NON-QUALIFIED STOCK OPTION" means any Stock Option that is
                  not an Incentive Stock Option, and is intended to be and is
                  designated as a "Non-Qualified Stock Option."

         l.       "'NORMAL RETIREMENT" means retirement from active employment
                  with the Company and any Subsidiary or Parent Corporation of
                  the Company on or after age 65.

         m.       "OUTSIDE DIRECTOR" means a director who (a) is not a current
                  employee of the Company or any member of an affiliated group
                  which includes the Company; (b) is not a former employee of
                  the Company who receives compensation for prior services
                  (other than benefits under a tax-qualified retirement plan)
                  during the taxable year; (c) has not been an officer of the
                  Company; (d) does not receive remuneration from the Company,
                  either directly or indirectly, in any capacity other than as a
                  director, except as otherwise permitted under Code Section
                  162(m) and regulations thereunder. For this purpose,
                  remuneration includes any payment in exchange for goods or
                  services. This definition shall be further governed by the
                  provisions of Code Section 162(m) and regulations promulgated
                  thereunder.

         n.       "PARENT CORPORATION" means any corporation (other than the
                  Company) in an unbroken chain of corporations ending with the
                  Company if each of the corporations (other than the Company)
                  owns stock possessing 50% or more of the total combined voting
                  power of all classes of stock in one of the other corporations
                  in the chain.

         o.       "RESTRICTED STOCK" means an award of shares of Stock that are
                  subject to restrictions under Section 6 below.

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         p.       "RETIREMENT" means Normal Retirement or Early Retirement.

         q.       "STOCK" means the Common Stock, $.01 par value per share, of
                  the Company.

         r.       "STOCK OPTION" means any option to purchase shares of Stock
                  granted pursuant to Section 5 below.

         s.       "SUBSIDIARY" means any corporation (other than the Company) in
                  an unbroken chain of corporations beginning with the Company
                  if each of the corporations (other than the last corporation
                  in the unbroken chain) owns stock possessing 50% or more of
                  the total combined voting power of all classes of stock in one
                  of the other corporations in the chain.

         SECTION 2. ADMINISTRATION.

         The Plan shall be administered by the Board of Directors or by a
Committee appointed by the Board consisting of at least two directors, all of
whom shall be Outside Directors and Non- Employee Directors and who shall serve
at the pleasure of the Board. The Committee may be a subcommittee of the
Compensation Committee of the Board.

         The Committee shall have the power and authority to grant to eligible
employees, consultants and directors pursuant to the terms of the Plan: (i)
Stock Options and (ii) Restricted Stock.

         In particular, the Committee shall have the authority:

         (i)      to select the officers, other key employees, consultants and
                  directors of the Company and its Subsidiaries to whom Stock
                  Options and/or Restricted Stock awards may from time to time
                  be granted hereunder;

         (ii)     to determine whether and to what extent Incentive Stock
                  Options, Non-Qualified Stock Options, or Restricted Stock
                  awards, or a combination of the foregoing, are to be granted
                  hereunder;

         (iii)    to determine the number of shares to be covered by each such
                  award granted hereunder;

         (iv)     to determine the terms and conditions, not inconsistent with
                  the terms of the Plan, of any award granted hereunder
                  (including, but not limited to, any restriction on any Stock
                  Option or other award and/or the shares of Stock relating
                  thereto); and

         (v)      to determine whether, to what extent and under what
                  circumstances Stock and other amounts payable with respect to
                  an award under this Plan shall be deferred either
                  automatically or at the election of the participant.

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         The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.

         All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.

         SECTION 3. STOCK SUBJECT TO PLAN.

         The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,500,000. Such shares may consist, in
whole or in part, of authorized and unissued shares.

         If any shares that have been optioned cease to be subject to Stock
Options, or if any shares subject to any Restricted Stock award granted
hereunder are forfeited or such award otherwise terminates without a payment
being made to the participant, such shares shall again be available for
distribution in connection with future awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Stock Options granted under the Plan, and in the number
of shares subject to Restricted Stock awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.

         SECTION 4. ELIGIBILITY.

         Officers, other key employees, consultants and members of the Board of
the Company and Subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
Subsidiaries are eligible to be granted Stock Options or Restricted Stock awards
under the Plan. The optionees and participants under the Plan shall be selected
from time to time by the Committee, in its sole discretion, from among those
eligible, and the Committee shall determine, in its sole discretion, the number
of shares covered by each award.

         Notwithstanding the foregoing, no person shall receive grants of Stock
Options and Restricted Stock awards under this Plan which exceed 250,000 shares
during any fiscal year of the Company.

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         SECTION 5. STOCK OPTIONS.

         Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.

         The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan after July 21, 2010.

         The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.

         Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Stock
Option as an Incentive Stock Option, provided the optionee consents in writing
to the modification or amendment.

         Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

         (a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant. In no
event shall the option price per share of Stock purchasable under an Incentive
Stock Option be less than 100% of the Fair Market Value of the Stock on the date
of the grant of the Stock Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is
granted to such employee, the option price shall be no less than 110% of the
Fair Market Value of the Stock on the date the option is granted.

         (b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.

         (c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in

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installments, the Committee may waive such installment exercise provisions at
any time, provided, however, that unless the Stock Option has been approved
by the Board, the Committee or the shareholders of the Company, a Stock
Option to a director, officer or a 10% shareholder of the Company or its
Subsidiaries shall not be exercisable for a period of six (6) months after
the date of the grant. Notwithstanding the foregoing, unless the Stock Option
Agreement provides otherwise, any Stock Option granted under this Plan shall
be exercisable in full, without regard to any installment exercise or vesting
provisions, for a period specified by the Board, but not to exceed sixty (60)
days nor be less than seven (7) days, prior to the occurrence of any of the
following events: (i) dissolution or liquidation of the Company other than in
conjunction with a bankruptcy of the Company or any similar occurrence, (ii)
any merger, consolidation, acquisition, separation, reorganization, or
similar occurrence, where the Company will not be the surviving entity or
(iii) the transfer of substantially all of the assets of the Company or 75%
or more of the outstanding Stock of the Company.

         (d) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or Restricted Stock subject to
an award hereunder (based on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee); provided, however, that in
the event payment is made in the form of shares of Restricted Stock, the
optionee will receive a portion of the option shares in the form of, and in an
amount equal to, the Restricted Stock award tendered as payment by the optionee.
No shares of Stock shall be issued until full payment therefor has been made. An
optionee generally shall have the rights to dividends and other rights of a
shareholder with respect to shares subject to the option when the optionee has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in paragraph (a) of Section
10.

         (e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title 1 of the Employee Retirement Income Security Act, or the
rules thereunder, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.

         (f) TERMINATION BY DEATH. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of twelve months (or such

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shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.

         (g) TERMINATION BY REASON OF DISABILITY. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after nine months (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is shorter. In the event of termination of employment by reason of Disability,
if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the option will
thereafter be treated as a Non-Qualified Stock Option.

         (h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by
the Committee, if an optionee's employment by the Company and any Subsidiary or
Parent Corporation terminates by reason of Retirement, any Stock Option held by
such optionee may thereafter be exercised to the extent it was exercisable at
the time of such Retirement, but may not be exercised after three months (or
such shorter period as Committee shall specify at grant) from the date of such
termination of employment or the expiration of the stated term of the option,
whichever period is shorter.

         (i) OTHER TERMINATION. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option may be exercised to the extent it was exercisable at such termination for
the lesser of three months or the balance of the option's term.

         (j) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.

         (k) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the optionee may elect at any time before the termination of the
optionee's employment with, or services as a director or consultant of, the
Company or its Subsidiaries, to exercise the Option as to any part or all of the
shares of Common Stock subject to the Option prior to full vesting of the
Option. Any unvested shares so purchased may be subject to a repurchase option
in favor of the Company or to any other restrictions the Board or the Committee
determines to be appropriate.

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         SECTION 6. RESTRICTED STOCK.

         (a) ADMINISTRATION. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.

         In the event that Restricted Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.

         (b) AWARDS AND CERTIFICATES. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.

                  (i) Each participant shall be issued a stock certificate in
         respect of shares of Restricted Stock awarded under the Plan. Such
         certificate shall be registered in the name of the participant, and
         shall bear an appropriate legend referring to the terms, conditions,
         and restrictions applicable to such award, substantially in the
         following form:

                  "The transferability of this certificate and the shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) of the Applied Epi, Inc.
                  2000 Stock Plan and an Agreement entered into between the
                  registered owner and Applied Epi, Inc. Copies of such Plan and
                  Agreement are on file in the executive offices of Applied Epi,
                  Inc.

                  (ii) The Committee shall require that the stock certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed, and that, as a condition of any
         Restricted Stock award, the participant shall have delivered a stock
         power, endorsed in blank, relating to the Stock covered by such award.

         (c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

                  (i) Subject to the provisions of this Plan and the award
         agreement, during a period set by the Committee commencing with the
         date of such award (the "Restriction Period"), the participant shall
         not be permitted to sell, transfer, pledge or assign shares of
         Restricted Stock awarded under the Plan. Within these limits, the
         Committee may provide for the lapse of such restrictions in
         installments where deemed appropriate.

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                  (ii) Except as provided in paragraph (c)(i) of this Section 6,
         the participant shall have, with respect to the shares of Restricted
         Stock, all of the rights of a shareholder of the Company, including the
         right to vote the shares and the right to receive any cash dividends.
         The Committee, in its sole discretion, may permit or require the
         payment of cash dividends to be deferred and, if the Committee so
         determines, reinvested in additional shares of Restricted Stock (to the
         extent shares are available under Section 3 and subject to paragraph
         (f) of Section 10). Certificates for shares of Unrestricted Stock shall
         be delivered to the grantee promptly after, and only after, the period
         of forfeiture shall have expired without forfeiture in respect of such
         shares of Restricted Stock.

                  (iii) Subject to the provisions of the award agreement and
         paragraph (c)(iv) of this Section 6, upon termination of employment for
         any reason during the Restriction Period, all shares still subject to
         restriction shall thereupon be forfeited by the participant.

                  (iv) In the event of special hardship circumstances of a
         participant whose employment is terminated (other than for Cause),
         including death, Disability or Retirement, or in the event of an
         unforeseeable emergency of a participant still in service, the
         Committee may, in its sole discretion, when it finds that a waiver
         would be in the best interest of the Company, waive in whole or in part
         any or all remaining restrictions with respect to such participant's
         shares of Restricted Stock.

                  (v) All restrictions with respect to any participant's shares
         of Restricted Stock shall lapse or be deemed to have lapsed or been
         terminated on the tenth (10th) business day prior to the occurrence of
         any of the following events: (i) dissolution or liquidation of the
         Company, other than in conjunction with a bankruptcy of the Company or
         any similar occurrence, (ii) any merger, consolidation, acquisition,
         separation, reorganization or similar occurrence, where the Company
         will not be the surviving entity or (iii) the transfer of substantially
         all of the assets of the Company or 75% or more of the outstanding
         Stock of the Company.

         SECTION 7. TRANSFER, LEAVE OF ABSENCE, ETC.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;

         (b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and

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         (c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.

         SECTION 8. AMENDMENTS AND TERMINATION.

         The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option or Restricted Stock award
theretofore granted, without the optionee's or participant's consent, or (ii)
which without the approval of the shareholders of the Company would cause the
Plan to no longer comply with Rule 16b-3 under the Securities Exchange Act of
1934, Section 422 of the Code or any other regulatory requirements

         The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent. The
Committee may also substitute new Stock Options for previously granted options,
including previously granted options having higher option prices.

         SECTION 9. UNFUNDED STATUS OF PLAN.

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

         SECTION 10. GENERAL PROVISIONS.

         (a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock awards shall be subject to such stock-transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, and any applicable
Federal or state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

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         (b) Subject to paragraph (d) below, recipients of Restricted Stock
awards under the Plan (not including Stock Options) are not required to make any
payment or provide consideration other than the rendering of services.

         (c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.

         (d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includable as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this Section 10(d). Any such election shall be in accordance
with, and subject to, applicable tax and securities laws, regulations and
rulings.

         (e) At the time of grant, the Committee may provide in connection with
any grant or award made under this Plan that the shares of Stock received as a
result of such grant shall be subject to a repurchase right in favor of the
Company, pursuant to which the participant shall be required to offer to the
Company upon termination of employment for any reason any shares that the
participant acquired under the Plan, with the price being the then Fair Market
Value of the Stock or, in the case of a termination for Cause, an amount equal
to the cash consideration paid for the Stock, subject to such other terms and
conditions as the Committee may specify at the time of grant. The Committee may,
at the time of the grant of an award under the Plan, provide the Company with
the right to repurchase, or require the forfeiture of, shares of Stock acquired
pursuant to the Plan by any participant who, at any time within two years after
termination of employment with the Company, directly or indirectly competes
with, or is employed by a competitor of, the Company.

         (f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if the Committee (or the
Company's chief executive or chief financial officer) certifies in writing that
under Section 3 sufficient shares are available

                                       11

<Page>

for such reinvestment (taking into account then outstanding Stock Options and
other Plan awards).

         SECTION 11. EFFECTIVE DATE OF PLAN.

         The Plan was approved by the Board and became effective on July 31,
2000.

                                       12<Page>

                                                                     EXHIBIT 4.3

                 NON-QUALIFIED RESTRICTED STOCK OPTION AGREEMENT

                                Applied Epi, Inc.

--------------------------------------------------------------------------------

OPTIONEE:                             _______________________

GRANT DATE:                           January 2, 2001

NUMBER OF OPTION SHARES:                    __________ Shares

OPTION PRICE PER SHARE:               $0.05 per Share

EXPIRATION DATE:                      January 2, 2011

--------------------------------------------------------------------------------

                  THIS AGREEMENT is made as of the Grant Date stated above, by
and between Applied Epi, Inc., a Minnesota corporation (the "Company"), and the
Optionee named above (the "Optionee"). The Optionee is a current or prior
employee of the Company and holds performance units in the Company's Employee
Performance Stock Ownership Plan (the "Phantom Stock Plan"). The performance
units permit the Optionee to receive cash at a stated formula value, which is
tied to the Company's earnings over a three-year period. The Company has
terminated the Phantom Stock Plan as of December 31, 2000.

                  In connection with the termination of the Phantom Plan and in
exchange for the Optionee's performance units, the Company is providing the
Optionee with this option to purchase shares of the Company's restricted common
stock, par value $.01 per share (the "Restricted Stock"), on the terms and
conditions set forth in this Agreement. Upon exercise of the option, the
Restricted Stock will not be freely transferable and will be subject to the
restrictions described in Section 5, below.

                  NOW, THEREFORE, the Company and the Optionee agree as follows:

         1. GRANT OF OPTION. In exchange for the Optionee's performance units in
and all rights under the Phantom Stock Plan, including all rights to receive
cash under the Phantom Stock Plan, the Company hereby grants to the Optionee,
and the Optionee hereby accepts in exchange for the performance units and all
rights under the Phantom Stock Plan, the right and option (the "Option") to
purchase all or part of the aggregate number of shares of Restricted Stock
stated above (the "Option Shares"), on the terms and conditions set forth in
this Agreement. The number of Option Shares is subject to adjustment as provided
in Section 14 of this Agreement.

                                        1

<Page>

         2. NATURE OF OPTION. This Option is NOT intended to be an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").

         3. PURCHASE PRICE. The purchase price of the Option Shares shall be the
Option Price per share stated above. The Option Price is subject to adjustment
as provided in Section 14 of this Agreement.

         4. DURATION OF OPTION. This Option shall be in effect for the period
commencing on the Grant Date stated above and ending on the Expiration Date
stated above. All rights of the Optionee under this Option shall terminate and
be forfeited to the extent this Option has not been exercised at the date this
Option expires.

         5. RESTRICTIONS ON OPTION SHARES. Upon exercise of this Option as
described in Section 6 below, Optionee shall receive shares of the Company's
Restricted Stock. The Optionee agrees that the shares of Restricted Stock shall
not be sold, exchanged, transferred, pledged, hypothecated, or otherwise
disposed of, whether voluntarily, involuntarily, or by operation of law, until
the earlier of the following to occur: (1) six months after the consummation of
a firm commitment, underwritten initial public offering of the Company's common
stock; or (2) a Sale (as defined in this Section 5) of the Company. A "Sale" of
the Company shall mean any of the following:

                            (i) the sale, lease, exchange or other transfer,
         directly or indirectly, of substantially all of the assets of the
         Company (in one transaction or in a series of related transactions) to
         a person or entity that is not controlled by the Company;

                           (ii) the entering into an agreement for the sale of
         common stock of the Company (whether outstanding or newly issued
         shares) to a person not a shareholder on the date hereof who thereby
         acquires majority voting control of the Company, subject to such
         transaction actually being consummated;

                           (iii) the approval by the shareholders of the Company
         of any plan or proposal for a merger or consolidation to which the
         Company is a party if the shareholders of the Company immediately prior
         to the effective date of such merger or consolidation own, immediately
         following the effective date of such merger or consolidation,
         securities of the surviving corporation representing 50% or less of the
         combined voting power of the surviving corporation's then outstanding
         securities ordinarily having the right to vote at elections of
         directors, subject to such transaction actually being consummated; or

                           (iv) the approval by the shareholders of the Company
         of any plan or proposal for a merger or consolidation to which the
         Company is a party and pursuant to which the Company does not survive,
         subject to such transaction actually being consummated.

                                        2

<Page>

         6. MANNER OF EXERCISE OF OPTION.

            (a) TIME OF EXERCISE. This Option may be exercised at any time, and
at one or more times before it expires. This Option, when exercised, may be
exercised for some or all of the Option Shares, and any Option Shares that are
not purchased at that time may be purchased at a subsequent date of exercise.
The exercise of this Option at each date of exercise shall be subject to all of
the terms and conditions of this Agreement, including but not limited to the
provisions of Sections 6 and 7 of this Agreement.

            (b) EXERCISE ONLY BY OPTIONEE OR OTHER PROPER PARTY. During the
lifetime of the Optionee, the Optionee is the only person who may exercise this
Option, except that, if the Optionee shall be incapacitated, the Optionee's
guardian or other legal representative may exercise this Option on behalf of the
Optionee. If the Optionee shall die, this Option may be exercised only by the
personal representatives, executors or administrators of the Optionee's estate
or by the person or persons to whom the Optionee's rights under this Option
shall pass by the Optionee's will or the laws of descent and distribution.

            (c) NOTICE OF EXERCISE. To exercise this Option, the Optionee (or
other proper party in the event of the Optionee's incapacity or death) shall
deliver a written notice of exercise (the "Notice of Exercise") to the Company
at its principal executive office. The Notice of Exercise shall be in the form
attached to this Agreement as Exhibit A, shall state the number of Option Shares
with respect to which this Option is being exercised and shall be accompanied by
payment in full of the aggregate Option Price for all Option Shares designated
in the Notice of Exercise. If required by the Company, in its sole discretion,
the Notice of Exercise shall also include other representations and agreements
as to the purchaser's investment intent with respect to the Option Shares. The
Notice of Exercise shall be signed by the Optionee (or other proper party in the
event of the Optionee's incapacity or death) and must be delivered to the
Company prior to the termination or expiration of this Option.

            (d) PAYMENT OF OPTION PRICE. The aggregate Option Price for all
Option Shares designated in the Notice of Exercise shall be paid in cash
(including check, bank draft or money order), by tendering shares of the
Company's common stock that are already owned by the Optionee having an
aggregate Fair Market Value (as defined in Section 9) on the date of exercise
which is not less than the aggregate Option Price, or by a combination of such
methods.

            (e) WITHHOLDING REQUIREMENTS. Upon exercise of the Option by the
Optionee and prior to the delivery of shares purchased pursuant to such
exercise, the Company shall have the right to require the Optionee to remit to
the Company cash in an amount sufficient to satisfy applicable federal and state
tax withholding requirements. The Company shall inform the Optionee as to
whether it will require the Optionee to remit cash for withholding taxes in
accordance with the preceding sentence within two (2) business days after
receiving from the Optionee notice that such Optionee intends to exercise, or
has exercised, all or a portion of the Option.

                                        3

<Page>

         7. RESTRICTIONS ON EXERCISE OF OPTION.

            (a) This Option may not be exercised for a fraction of a share.

            (b) This issuance of Option Shares upon the exercise of this Option
shall be subject to all applicable laws, rules, and regulations. If the Company
determines at any date of exercise that the issuance of the Option Shares
requires the listing, registration or qualification of the Option Shares on any
securities exchange or under any federal or state law, or the consent or
approval of any regulatory body, this Option shall not be exercisable and the
Option Shares shall not be issued unless and until such requirements are
fulfilled in a manner satisfactory to the Company.

         8. TAXATION UPON EXERCISE OF OPTION. The Optionee understands that the
exercise of this Option will cause the Optionee to recognize income for tax
purposes. The amount of taxable income will be equal to the amount by which the
Fair Market Value (as defined in Section 9 of this Agreement) of the Option
Shares that are purchased on the date of exercise exceeds the aggregate Option
Price for such Option Shares.

         9. FAIR MARKET VALUE. "Fair Market Value" means, with respect to the
common stock, the following:

            (a) If the common stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or admitted
but transactions in the common stock are reported on the Nasdaq National Market
or on the Nasdaq SmallCap Market, the closing sale price of the common stock on
such exchange or reported by the Nasdaq National Market or the Nasdaq SmallCap
Market as of such date (or, if no shares were traded on such day, as of the next
preceding day on which there was such a trade).

            (b) If the common stock is not so listed or admitted to unlisted
trading privileges or reported on the Nasdaq National Market or the Nasdaq
SmallCap Market, and bid and asked prices therefor in the over-the-counter
market are reported on the OTC Bulletin Board Service (or any comparable
reporting service), the mean of the closing bid and asked prices as of such
date, as so reported by the OTC Bulletin Board Service (or such comparable
reporting service).

            (c) If the common stock is not so listed or admitted to unlisted
trading privileges, or reported on the Nasdaq National Market or the Nasdaq
SmallCap Market, and such bid and asked prices are not so reported, such price
as the Board of Directors of the Company or the appropriate committee thereof
determines in good faith in the exercise of its reasonable discretion. The Board
of Director's or committee's determination as to the current value of the common
stock shall be final, conclusive and binding for all purposes and on all
persons, including, without limitation, the Company, the shareholders of the
Company, the Optionee and their respective successors-in-interest. No member of
the Board of Directors or any committee shall be liable for any determination
regarding current value of the common stock that is made in good faith.

                                        4

<Page>

         10. NONTRANSFERABILITY OF OPTION. This Option shall not be transferable
by the Optionee, other than by will or the laws of descent and distribution, and
this Option may be exercised, during the lifetime of the Optionee, only by the
Optionee. This deposit, if required, shall remain in effect with respect to any
portion of the Option Shares until the occurrence of any of the events described
in Section 5 of this Agreement.

         11. RIGHTS AS SHAREHOLDER. The Optionee (or any other party claiming
rights through the Optionee) shall not be, or be deemed to be, a holder of any
Option Shares for any purpose unless and until certificates for such shares are
issued to the Optionee (or other proper party in the event of the Optionee's
incapacity or death).

         12. DEPOSIT OF CERTIFICATES. The Optionee agrees that, at any time upon
the request of the Company, the Optionee shall deposit with the Company the
certificate or certificates representing the Option Shares (to the extent the
certificate or certificates are not, at the time of such request, already
deposited with the Company), together with the stock powers or other instruments
of transfer appropriately endorse in blank by the Optionee. This deposit, if
requested, shall remain in effect with respect to any portion of the Option
Shares until the occurrence of any of the events described in Section 5 of this
Agreement.

         13. NO PROMISE OF CONTINUED EMPLOYMENT. This Option does not constitute
an express or implied promise that the Company will hire or continue to employ
the Optionee, and if the Optionee is or becomes an employee of the Company, this
Option shall not interfere in any way with the Company's right to terminate the
Optionee's employment at any time.

         14. ADJUSTMENTS. In the event of any change in the outstanding shares
of the Company's common stock by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or rights offering to purchase the Company's common stock at a price
substantially below fair market value, or other similar change affecting the
common stock, while any portion of this Option is outstanding and unexercised,
the Board of Directors of the Company or the appropriate committee thereof shall
make such adjustments in the number of Option Shares and in the Option Price as
shall be equitable and appropriate in order to prevent substantial dilution or
enlargement of the rights granted to, or available for, the Optionee. No
adjustments shall be made in connection with the issuance by the Company of any
warrants, rights, or options to acquire additional shares of common stock or of
securities converted into common stock at a price that is not substantially
below the Fair Market Value (as defined in Section 9) of the common stock at the
date such warrants, rights or options are issued.

         15. INTERPRETATION. The interpretation and construction of any
provision of this Option shall be made by the Board of Directors of the Company
or an appropriate committee thereof and shall be final, conclusive and binding
on the Optionee and all other persons.

                                        5

<Page>

         16. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes in their entirety all prior
contracts, agreements, arrangements, communications, discussions,
representations and warranties, whether oral or written, among the parties with
respect to the subject matter hereof. Without limiting the foregoing, the
parties acknowledge that this Agreement was not entered into pursuant to, and is
not governed by the terms of, any stock option plan or similar plan, including
the Phantom Stock Plan.

         17. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Minnesota.

             IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by its duly authorized officer, and the Optionee
has executed this Agreement as of the Grant Date state above.

                  COMPANY:          APPLIED EPI, INC.

                                    By:
                                           -------------------------------------
                                           Title:

                  OPTIONEE:
                                    --------------------------------------------

                                    By:
                                           -------------------------------------
                                             Title:

                                        6

<Page>

                                                                       EXHIBIT A

                               NOTICE OF EXERCISE
            (To be completed and signed when the Option is exercised)

TO:      Applied Epi, Inc.

DATE:    ---------------------------------

RE:      Non-Qualified Restricted Stock Option Agreement dated January 2, 2001

         A. EXERCISE OF OPTION. I hereby elect to exercise the stock option
identified above with respect to the following number of shares of Restricted
Stock (the "Option Shares"), effective as of the date stated above:

            No. of Option Shares to be purchased:                 shares
                                                      -----------

            Option Price per Share:                   $0.05 per share

            Total Purchase Price:                     $
                                                       ------------------

            Payment of the Total Purchase Price for the Option Shares in the
amount stated above is enclosed with this Notice of Exercise.

            Please prepare the stock certificate in the following name(s):

         B. PURCHASER'S REPRESENTATIONS. I hereby represent, warrant and agree
as follows:

            1. ACCESS TO INFORMATION. In connection with the exercise of the
Option and the purchase of the Option Shares, I have had access to information
about the business and financial condition of the Company and have had the
opportunity to ask questions of, and receive answers from, the management of the
Company as to the business and financial condition of the Company.

            2. PURCHASE FOR OWN ACCOUNT. I am acquiring the Option Shares for
investment and solely for my own account and without the intention of reselling
or redistributing the Option Shares. I agree that I will not sell or otherwise
dispose of the Option Shares in a manner inconsistent with such representations.

            3. SHARES NOT REGISTERED. I understand that the Option Shares are
not being registered under the Securities Act of 1933 or any state securities
laws; that I cannot sell the Option Shares unless they are subsequently
registered or unless an exemption from such registration is available with

                                        7

<Page>

respect to any such sale; and accordingly, that I must bear the economic risk
of the investment for an indefinite period of time.

            4. RESTRICTIONS ON OPTION SHARES. I agree not to sell, exchange,
transfer, pledge, hypothecate, or otherwise dispose of, whether voluntarily,
involuntarily, or by operation of law, any of the Option Shares until the
earlier of the following to occur: (1) six months after the consummation of a
firm commitment, underwritten initial public offering of the Company's common
stock; or (2) a Sale of the Company. A "Sale" of the Company shall mean any of
the following:

                            (i) the sale, lease, exchange or other transfer,
         directly or indirectly, of substantially all of the assets of the
         Company (in one transaction or in a series of related transactions) to
         a person or entity that is not controlled by the Company;

                           (ii) the entering into an agreement for the sale of
         common stock of the Company (whether outstanding or newly issued
         shares) to a person not a shareholder on the date hereof who thereby
         acquires majority voting control of the Company, subject to such
         transaction actually being consummated;

                           (iii) the approval by the shareholders of the Company
         of any plan or proposal for a merger or consolidation to which the
         Company is a party if the shareholders of the Company immediately prior
         to the effective date of such merger or consolidation own, immediately
         following the effective date of such merger or consolidation,
         securities of the surviving corporation representing 50% or less of the
         combined voting power of the surviving corporation's then outstanding
         securities ordinarily having the right to vote at elections of
         directors, subject to such transaction actually being consummated; or

                           (iv) the approval by the shareholders of the Company
         of any plan or proposal for a merger or consolidation to which the
         Company is a party and pursuant to which the Company does not survive,
         subject to such transaction actually being consummated.

            5. RESTRICTIVE LEGENDS. I agree that the Company will place the
following restrictive legend on the certificates representing the Option Shares
to reflect the restrictions described above and may place stop-transfer
restrictions on the Option Shares represented by such certificates. Such legend
shall be substantially in the following form:

            "The securities represented by this certificate have not been
            registered under the Securities Act of 1933 or applicable
            state securities laws and may not be sold, transferred or
            otherwise disposed of except pursuant to registration,
            exemption from registration or operation of law. Furthermore,
            the transfer of the shares represented by this certificate is
            subject to the terms and conditions of a Non-Qualified
            Restricted Stock Option Agreement dated January 2, 2001

                                        8

<Page>

            between Applied Epi, Inc. and the registered owner. Any attempt
            to transfer such shares in violation of the Non-Qualified Restricted
            Stock Option Agreement is void. A copy of such Non-Qualified Stock
            Option Agreement is on file in the offices of Applied Epi, Inc."

            6. DEPOSIT OF CERTIFICATES. I agree that, at any time upon the
request of the Company, I shall deposit with the Company the certificate or
certificates representing the Option Shares (to the extent the certificate or
certificates are not, at the time of such request, already deposited with the
Company), together with stock powers or other instruments of transfer
appropriately endorsed in blank by me. This deposit, if requested, shall remain
in effect with respect to any portion of the Option Shares until the occurrence
of any of the events described in Section 4 above.

            7. TAXATION UPON EXERCISE OF OPTION. I understand that the exercise
of this Option will cause me to recognize income for tax purposes. The amount of
taxable income will be equal to the amount by which the Fair Market Value of the
Option Shares that I am purchasing exceeds the Total Purchase Price for the
Option Shares.

                                    --------------------------------------
                                    [NAME OF OPTIONEE]

                                    --------------------------------------
                                    Street Address

                                    --------------------------------------
                                    City, State and ZIP

                                    --------------------------------------
                                    Social Security Number

                                        9

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