Exhibit

10.5




 




PPT VISION, INC.




 




2000 STOCK OPTION PLAN




 




 




1.             Purpose.  The purpose of the PPT Vision, Inc. 2000

Stock Option Plan is to provide a continuing, long-term incentive to selected

eligible officers, directors, key employees and consultants of PPT Vision, Inc.

(the “Corporation”) and of any subsidiary corporation of the Corporation (the

“Subsidiary”), as herein defined; to provide a means of rewarding outstanding

performance; and to enable the Corporation to maintain a competitive position

to attract and retain key personnel necessary for continued growth and

profitability.




 




2.             Definitions.  The following words and phrases as used

herein shall have the meanings set forth below:




 




a.             “Board” shall mean the Board of Directors of the

Corporation as it may be comprised from time to time.




 




b.             “Change in Control” shall mean the time at which any

entity, person or group (other than the Corporation, any subsidiary of the

Corporation or any savings, pension or other benefit plan for the benefit of

any employees of the Corporation or its subsidiaries) which prior to such time

beneficially owned less than twenty percent (20%) of the then outstanding

Common Stock acquires such additional shares of Common Stock in one or more

transactions, or a series of transactions, such that following such transaction

or transactions such entity, person or group beneficially owns, directly or

indirectly, twenty percent (20%), or more, of the outstanding Common

Stock.  Notwithstanding the foregoing, a

Change in Control shall not be deemed to occur with respect to the ownership by

P. R. Peterson until he beneficially owns, directly or indirectly thirty

percent (30%) or more of the outstanding common stock.




 




c.             “Code” shall mean the Internal Revenue Code of 1986, as

amended from time to time or any successor statute.




 




d.             “Committee” shall mean a committee of the Board as may

be designated by the Board, from time to time, for the purpose of administering

this plan as contemplated by Article 4 hereof. 

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.             “Common Stock” shall mean the common stock, $.10 par

value, of the Corporation.




 




f.              “Consultant” means any person, including an advisor,

engaged by the Corporation or any Parent Corporation or Subsidiary of the

Corporation to render 




 




 





























 




services, who is not an employee of the Corporation or

any Parent Corporation of Subsidiary of Corporation.




 




g.             “Corporation” shall mean PPT Vision, Inc., a Minnesota

corporation.




 




h.             “Non-Employee Directors” shall mean a “Non-Employee

Director” within the meaning of Rule 16b-3(b)(3) under the Securities Exchange

Act, as amended, or any successor rule.




 




i.              “Fair Market Value” of any security on any given date

shall be determined by the Committee as follows:  (a) if the security is listed for trading on one or more national

securities exchanges, or is traded on the Nasdaq National Market System or the

Nasdaq Small Cap Market, the last reported sales price on the principal such

exchange or Nasdaq System on the date in question, or if such security shall

not have been traded on such principal exchange on such date, the last reported

sales price on such principal exchange or the Nasdaq System on the first day

prior thereto on which such security was so traded; or (b) if the security is

not listed for trading on a national securities exchange or the Nasdaq System,

but is traded in the over-the-counter market, including the Nasdaq OTC Bulletin

Board System, closing bid price for such security on the date in question, or

if there is no such bid price for such security on such date, the closing bid

price on the first day prior thereto on which such price existed; or (c) if

neither (a) nor (b) is applicable, by any means deemed fair and reasonable by

the Committee, which determination shall be final and binding on all parties.




 




j.              “Incentive Stock Option” shall mean any stock option

granted pursuant to this Plan as an “incentive stock option” within the meaning

of Section 422 of the Code.




 




k.             “Non-Qualified Stock Option” shall mean any stock option

granted pursuant to this Plan that is not an Incentive Stock Option.




 




l.              “Option” shall mean any stock option granted pursuant

to this Plan, whether an Incentive Stock Option or a Non-Qualified Stock

Option.




 




m.            “Optionee” shall mean any person who is the holder of an

Option granted pursuant to this Plan.




 




n.             “Outside Director” shall mean a director who (a) is not

a current employee of the Corporation or any member of an affiliated group

which includes the Corporation; (b) is not a former employee of the Corporation

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 Corporation; (d) does not receive remuneration from the

Corporation, either directly or indirectly, in any capacity other than as a

director, except as otherwise permitted under Code Section 162(m) and

regulations thereunder.  




 




 




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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.




 




o.             “Plan” shall mean this 2000 Stock Option Plan of the

Corporation.




 




p.             “Subsidiary” shall mean any corporation (other than the

Corporation) which at the time qualifies as a subsidiary of the Corporation

under Section 425(f) of the Code.




 




q.             “Tax Date” shall mean the date on which the amount of

tax to be withheld is determined under the Code.




 




3.             Shares

Available Under Plan.  The number of

shares which may be issued pursuant to Options granted under this Plan shall

not exceed 1,100,000 shares of the Common Stock of the Corporation; provided,

however, that shares which become available as a result of canceled,

unexercised, lapsed or terminated Options granted under this Plan shall be

available for issuance pursuant to Options subsequently granted under this Plan

under a stock for stock exercise of a stock option or the withholding of stock

for the payment of taxes, only the net number of shares issued to the optionee

shall be used to calculate the number of shares remaining for distribution

under the Plan.  The shares issued upon

exercise of Options granted under this Plan may be authorized and unissued

shares or shares previously acquired or to be acquired by the Corporation.




 




4.             Administration.




 




4.1.          The Plan will be administered by the

Board or a Committee of at least two directors, all of whom shall be Outside

Directors and Non-Employee Directors. 

The Committee may be a subcommittee of the Compensation Committee of the

Board.




 




4.2.          The Committee will have plenary

authority, subject to provisions of the Plan, to determine when and to whom

Options will be granted, the term of each Option, the number of shares covered

by it, the participation by the Optionee in other plans, and any other terms or

conditions of each Option.  The

Committee shall determine with respect to each grant of an Option whether a

participant shall receive an Incentive Stock Option or a Non-Qualified Stock

Option.  The number of shares, the term

and the other terms and conditions of a particular kind of Option need not be the

same, even as to Options granted at the same time.  The Committee’s recommendations regarding Option grants and terms

and conditions thereof will be conclusive.




 




4.3.          The Committee will have the sole

responsibility for construing and interpreting the Plan, for establishing and

amending any rules and regulations as it deems necessary or desirable for the

proper administration of the Plan, and for resolving all 




 




 




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questions arising

under the Plan.  Any decision or action

taken by the Committee arising out of or about the construction,

administration, interpretation and effect of the Plan and of its rules and

regulations will, to the extent permitted by law, be within its absolute

discretion, except as otherwise specifically provided herein, and will be

conclusive and binding on all Optionees, all successors, and any other person,

whether that person is claiming under or through any Optionee or otherwise.




 




4.4.          The Committee will designate one of

its members as chairman.  It will hold

its meetings at the times and places as it may determine.  A majority of its members will constitute a

quorum, and all determinations of the Committee will be made by a majority of

its members.  Any determination reduced

to writing and signed by all members will be fully as effective as if it had

been made by a majority vote at a meeting duly called and held.  The Committee may appoint a secretary, who

need not be a member of the Committee, and may make such rules and regulations

for the conduct of its business as it may deem advisable.




 




4.5.          No member of the Committee will be

liable, in the absence of bad faith, for any act or omission with respect to

his services on the Committee.  Service

on the Committee will constitute service as a member of the Board, so that the

members of the Committee will be entitled to indemnification and reimbursement

as Board members pursuant to its Bylaws.




 




4.6.          The Committee will regularly inform

the Board as to its actions with respect to all Options granted under the Plan

and the terms and conditions and any such Options in a manner, at any times,

and in any form as the Board may reasonably request.




 




4.7.          Any other provision of the Plan to the

contrary notwithstanding, the Committee is authorized to take such action as

it, in its discretion, may deem necessary or advisable and fair and equitable

to Optionees in the event of:  a Change

in Control of the Corporation; a tender, exchange or similar offer for all or

any part of the Common Stock made by any entity, person or group (other than

the Corporation, any Subsidiary of the Corporation or any savings, pension or

other benefit plan for the benefit of employees of the Corporation or its

Subsidiaries); a merger of the Corporation into, a consolidation of the

Corporation with, or an acquisition of the Corporation by another corporation;

or a sale or transfer of all or substantially all of the Corporation’s

assets.  Such action, in the Committee’s

discretion, may include (but shall not be deemed limited to):  establishing, amending or waiving the forms,

terms, conditions or duration of Options so as to provide for earlier, later,

extended or additional terms for exercise of the whole, or any installment,

thereof; alternate forms of payment; or other modifications.  The Committee may take any such actions

pursuant to this Section 4.7 by adopting rules or regulations of general

applicability to all Optionees, or to certain categories of Optionees: by

amending or waiving terms and conditions in stock option agreements; or by

taking action with respect to individual Optionees.  The Committee may take any such actions before or 




 




 




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after the public

announcement of any such Change in Control, tender offer, exchange offer,

merger, consolidation, acquisition or sale or transfer of assets.




 




5.             Participants.




 




5.1.          Participation in this Plan shall be

limited to officers and regular full-time executive, administrative,

professional, production and technical employees of the Corporation or of a

Subsidiary, or Consultants of the Corporation or of a Subsidiary and to all

Directors of the Company.




 




5.2.          Subject to other provisions of this

Plan, Options may be granted to the same participants on more than one

occasion.




 




5.3.          The Committee’s determination under

the Plan including, without limitation, determination of the persons to receive

Options, the form, amount and type of such Options, and the terms and

provisions of Options need not be uniform and may be made selectively among

otherwise eligible participants, whether or not the participants are similarly

situated.




 




5.4           No person shall receive Options under

this Plan which exceed 100,000 shares during any fiscal year of the

Corporation.




 




6.             Terms

and Conditions.




 




6.1.          Each Option granted under the Plan

shall be evidenced by a written agreement, which shall be subject to the

provisions of this Plan and to such other terms and conditions as the

Corporation may deem appropriate.




 




6.2.          Each Option agreement shall specify

the period for which the Option thereunder is granted (which in no event shall

exceed ten years from the date of the grant for any Option granted pursuant to

Section 6.3(a) hereof, seven years from the date of grant for any Option

granted pursuant to 6.3(b) hereof and ten years and one day from the date of

grant for any Option designated by the Committee as a Non-Qualified Stock

Option) and shall provide that the Option shall expire at the end of such

period; provided, however, the term of each Option shall be subject to the

power of the Committee, among other things, to accelerate or otherwise adjust

the terms for exercise of Options pursuant to Section 4.7 hereof in the event

of the occurrence of any of the events set forth therein.




 




6.3.          The exercise price per share shall be

determined by the Committee at the time any Option is granted; provided,

however, that in no event shall the exercise price per share purchasable under

a Non-Qualified Stock Option be less than 85% of the Fair Market Value of the

Common Stock of the Corporation on the date the Option is granted, and, if the

Option is an Incentive Stock Option, shall be determined as follows:




 




 




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(a)           For employees who do not own stock

possessing more than ten percent (10%) of the total combined voting power of

all classes of stock of the Corporation or of any Subsidiary, the Incentive

Stock Option exercise price per share shall not be less than one hundred

percent (100%) of Fair Market Value of the Common Stock of the Corporation on

the date the Option is granted, as determined by the Committee.




 




(b)           For employees who own stock

possessing more than ten percent (10%) of the total combined voting power of

all classes of stock of the Corporation or of any Subsidiary, the Incentive

Stock Option exercise price per share shall not be less than one hundred ten

percent (110%) of the Fair Market Value of the Common Stock of the Corporation

on the date the Option is granted, as determined by the Committee.




 




6.4.          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 Corporation or its Subsidiaries is exercisable for the first time by an

Optionee during any calendar year shall not exceed $100,000.




 




6.5.          An Option shall be exercisable at such

time or times, and with respect to such minimum number of shares, as may be

determined by the Corporation at the time of the grant.  The Option agreement may require, if so determined

by the Corporation, that no part of the Option may be exercised until the

Optionee shall have remained in the employ of the Corporation or of a

Subsidiary for such period after the date of the Option as the Corporation may

specify.  Notwithstanding the foregoing

and subject to the discretionary acceleration rights of the Committee, an

Option granted to a director, officer or 10% shareholders of the Corporation

shall not be exercisable for a period of six (6) months unless the Option has

been approved by the Board, the Committee or the shareholders of the

Corporation.




 




6.6.          The Corporation may prescribe the form

of legend which shall be affixed to the stock certificate representing shares

to be issued and the shares shall be subject to the provisions of any

repurchase agreement or other agreement restricting the sale or transfer

thereof.  Such agreements or

restrictions shall be noted on the certificate representing the shares to be

issued.




 




7.             Exercise

of Option.




 




7.1.          Each exercise of an Option granted

hereunder, whether in whole or in part, shall be by written notice thereof,

delivered to the Secretary of the Corporation (or such other person as he may

designate).  The notice shall state the

number of shares with respect to which the Options are being exercised and

shall be accompanied by payment in 




 




 




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full for the

number of shares so designated.  Shares

shall be registered in the name of the Optionee unless the Optionee otherwise

directs in his or her notice of election.




 




7.2.          Payment shall be made to the

Corporation either (i) in cash, including certified check, bank draft or money

order, (ii) at the discretion of the Corporation, by delivering Common Stock of

the Corporation already owned by the participant, (iii) at the discretion of

the Corporation, by delivering a promissory note, containing such terms

and conditions acceptable to the Corporation, for all or a portion of the

purchase price of the shares so purchased, or a combination of (i), (ii) and

(iii).  With respect to (ii) the Fair

Market Value of stock so delivered shall be determined as of the date

immediately preceding the date of exercise.




 




7.3.          Upon notification of the amount due

and prior to, or concurrently with, the delivery to the Optionee of a certificate

representing any shares purchased pursuant to the exercise of an Option, the

Optionee shall promptly pay to the Corporation any amount necessary to satisfy

applicable federal, state or local withholding tax requirements.




 




7.4.          If the terms of an Option so permit,

an Optionee, other than a member of the Committee, may elect by written notice

to the Secretary of the Corporation (or such other person as he may designate),

to satisfy the withholding tax requirements associated with the exercise of an

Option by authorizing the Corporation to retain from the number of shares of

Common Stock that would otherwise be deliverable to the Optionee that number of

shares having an aggregate Fair Market Value on the Tax Date equal to the tax

payable by the Optionee under Section 7.3. 

Any such election shall be in accordance with, and subject to,

applicable tax and securities laws, and regulations and rulings and in the

event shares are withheld, the amount withheld may not exceed the minimum

required federal, state and FICA withholding amounts.  Where shares are transferred to an Optionee prior to the Tax

Date, the Optionee shall agree in any such election to surrender that number of

shares having an aggregate Fair Market Value on the Tax Date equal to the tax

payable by the Optionee under Section 7.3. 

In addition, any election to have shares withheld pursuant to this

Section 7.4 will be irrevocable by the Optionee and will in any event be

subject to the disapproval of the Committee.




 




8.             Adjustments

of Option Stock.  In case the shares

issuable upon exercise of any Option granted under the Plan at any time

outstanding shall be subdivided into a greater or combined into a lesser number

of shares (whether with or without par value), the number of shares purchasable

upon exercise of such Option immediately prior thereto shall be adjusted so

that the Optionee shall be entitled to receive a number of shares which he or

she would have owned or have been entitled to receive after the happening of

such event had such Option been exercised immediately prior to the happening of

such subdivision or combination or any record date with respect thereto.  An adjustment made pursuant to this

paragraph shall become effective immediately after the effective date of such

subdivision or combination retroactive to the record date, if any, for such

subdivision or combination.  The Option

price (as such amount may have 




 




 




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theretofore been adjusted pursuant to the provisions

hereof) shall be adjusted by multiplying the Option price immediately prior to

the adjustment of the number of shares purchasable under the Option by a

fraction, of which the numerator shall be the number of shares purchasable upon

the exercise of the Option immediately prior to such adjustment, and of which

the denominator shall be the number of shares so purchasable immediately

thereafter.  Substituted shares of stock

shall be deemed shares under Section 3 of the Plan.




 




9.             Assignments.  Any Option granted under this Plan shall be

exercisable only by the Optionee to whom granted during his or her lifetime and

shall not be assignable or transferable otherwise than by will or by the laws

of descent and distribution.   

Notwithstanding the foregoing, the Board or the Committee may, in its

discretion, determine that an Option may be exercised by a person other than

the Optionee and that an Option may be transferable based on he tax and federal

securities law considerations then in effect for such Options.




 




10.           Severance;

Death; Disability.  An Option shall

terminate, and no rights thereunder may be exercised, if the person to whom it

is granted ceases to be employed by the Corporation or by a Subsidiary except

that:




 




10.1.        If the employment of the Optionee is

terminated by any reason other than his or her death or disability, the

Optionee may at any time within not more than three months after termination of

his or her employment, exercise his or her Option rights but only to the extent

they were exercisable by the Optionee on the date of termination of his or her

employment; provided, however, that if the employment is terminated by

deliberate, willful or gross misconduct as determined by the Committee, all

rights under the Option shall terminate and expire upon such termination.




 




10.2.        If the Optionee dies while in the employ

of the Corporation or a Subsidiary, or within not more than three months after

termination of his or her employment, the Optionee’s rights under the Option

may be exercised at any time within one year following such death by his or her

personal representative or by the person or persons to whom such rights under

the Option shall pass by will or by the laws of descent and distribution, but

only to the extent they were exercisable by the Optionee on the date of death.




 




10.3.        If the employment of the Optionee is

terminated because of permanent disability, the Optionee, or his or her legal

representative, may at any time within not more than one year after termination

of his or her employment, exercise his or her Option rights but only to the

extent they were exercisable by the Optionee on the date of termination of his

or her employment.




 




10.4.        Notwithstanding anything contained in

Sections 10.1, 10.2 and 10.3 to the contrary, no Option rights shall be

exercisable by anyone after the expiration of the term of the Option.




 




 




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10.5.        Transfers of employment between the

Corporation and a Subsidiary, or between Subsidiaries, will not constitute

termination of employment for purposes of any Option granted under this

Plan.  The Committee may specify in the

terms and conditions of an Option whether any authorized leave of absence or

absence for military or government service or for any other reasons will

constitute a termination of employment for purposes of the Option and the Plan.




 




11.           Rights

of Participants.  Neither the

participant nor the personal representatives, heirs, or legatees of such

participant shall be or have any of the rights or privileges of a shareholder

of the Corporation in respect of any of the shares issuable upon the exercise

of an Option granted under this Plan unless and until certificates representing

such shares shall have been issued and delivered to the participant or to such

personal representatives, heirs or legatees.




 




12.           Securities

Registration.  If any law or

regulation of the Securities and Exchange Commission or of any other body

having jurisdiction shall require the Corporation or the participant to take

any action in connection with the exercise of an Option, then notwithstanding

any contrary provision of an Option agreement or this Plan, the date for

exercise of such Option and the delivery of the shares purchased thereunder

shall be deferred until the completion of the necessary action.  In the event that the Corporation shall deem

it necessary, the Corporation may condition the grant or exercise of an Option

granted under this Plan upon the receipt of a satisfactory certificate that the

Optionee is acquiring the Option or the shares obtained by exercise of the

Option for investment purposes and not with the view or intent to resell or

otherwise distribute such Option or shares. 

In such event, the stock certificate evidencing such shares shall bear a

legend referring to applicable laws restricting transfer of such shares.  In the event that the Corporation shall deem

it necessary to register under the Securities Act of 1933, as amended, or any

other applicable statute, any Options or any shares with respect to which an

Option shall have been granted or exercised, then the participant shall

cooperate with the Corporation and take such action as is necessary to permit

registration or qualification of such Options or shares.




 




13.           Duration

and Amendment.




 




13.1.        There is no express limitation upon the

duration of the Plan, except for the requirement of the Code that all Incentive

Stock Options must be granted within ten years from the date the Plan is

approved by the shareholders.




 




13.2.        The Board may terminate or may amend the

Plan at any time, provided, however, that the Board may not, without approval

of the shareholders of the Corporation, (i) increase the maximum number of

shares as to which options may be granted under the Plan, (ii) permit the

granting of Incentive Stock Options at less than 100% of Fair Market Value at

time of grant, or (iii) permit any change which results in any repricing of any

award or option heretofore granted hereunder.




 




 




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14.           Approval

of Shareholders.  This Plan

expressly is subject to approval of holders of a majority of the outstanding

shares of Common Stock of the Corporation, and if it is not so approved on or

before one year after the date of adoption of this Plan by the Board, the Plan

shall not come into effect, and any Options granted pursuant to this Plan shall

be deemed canceled.




 




15.           Conditions

of Employment.  The granting of an

Option to a participant under this Plan who is an employee shall impose no

obligation on the Corporation to continue the employment of any participant and

shall not lessen or affect the right of the Corporation to terminate the

employment of the participant.




 




16.           Other

Options.  Nothing in the Plan will

be construed to limit the authority of the Corporation to exercise its

corporate rights and powers, including, by way of illustration and not by way

of limitation, the right to grant options for proper corporate purposes

otherwise than under the Plan to any employee or any other person, firm,

corporation, association, or other entity, or to grant Options to, or assume

Options of, any person for the acquisition by purchase, lease, merger,

consolidation, or otherwise, of all or any part of the business and assets of

any person, firm, corporation, association, or other entity.




 




 




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