**Exhibit10.5**

 

**PPT VISION, INC.**

 

**2000 STOCK OPTION PLAN**

 

 

# 1.             Purpose.  The purpose of the PPT Vision, Inc. 2000Stock Option Plan is to provide a continuing, long-term incentive to selectedeligible 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 outstandingperformance; and to enable the Corporation to maintain a competitive positionto attract and retain key personnel necessary for continued growth andprofitability.

 

# 2.             Definitions.  The following words and phrases as usedherein shall have the meanings set forth below:

 

## a.             “Board” shall mean the Board of Directors of theCorporation as it may be comprised from time to time.

 

## b.             “Change in Control” shall mean the time at which anyentity, person or group (other than the Corporation, any subsidiary of theCorporation or any savings, pension or other benefit plan for the benefit ofany employees of the Corporation or its subsidiaries) which prior to such timebeneficially owned less than twenty percent (20%) of the then outstandingCommon Stock acquires such additional shares of Common Stock in one or moretransactions, or a series of transactions, such that following such transactionor transactions such entity, person or group beneficially owns, directly orindirectly, twenty percent (20%), or more, of the outstanding CommonStock.  Notwithstanding the foregoing, aChange in Control shall not be deemed to occur with respect to the ownership byP. R. Peterson until he beneficially owns, directly or indirectly thirtypercent (30%) or more of the outstanding common stock.

 

## c.             “Code” shall mean the Internal Revenue Code of 1986, asamended from time to time or any successor statute.

 

## d.             “Committee” shall mean a committee of the Board as maybe designated by the Board, from time to time, for the purpose of administeringthis plan as contemplated by Article 4 hereof. If at any time no Committee shall be in office, then the functions ofthe Committee specified in the Plan shall be exercised by the Board.

 

## e.             “Common Stock” shall mean the common stock, $.10 parvalue, of the Corporation.

 

## f.              “Consultant” means any person, including an advisor,engaged by the Corporation or any Parent Corporation or Subsidiary of theCorporation to render 

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

 

## h.             “Non-Employee Directors” shall mean a “Non-EmployeeDirector” within the meaning of Rule 16b-3(b)(3) under the Securities ExchangeAct, as amended, or any successor rule.

 

## i.              “Fair Market Value” of any security on any given dateshall be determined by the Committee as follows:  (a) if the security is listed for trading on one or more nationalsecurities exchanges, or is traded on the Nasdaq National Market System or theNasdaq Small Cap Market, the last reported sales price on the principal suchexchange or Nasdaq System on the date in question, or if such security shallnot have been traded on such principal exchange on such date, the last reportedsales price on such principal exchange or the Nasdaq System on the first dayprior thereto on which such security was so traded; or (b) if the security isnot 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 BulletinBoard System, closing bid price for such security on the date in question, orif there is no such bid price for such security on such date, the closing bidprice on the first day prior thereto on which such price existed; or (c) ifneither (a) nor (b) is applicable, by any means deemed fair and reasonable bythe Committee, which determination shall be final and binding on all parties.

 

## j.              “Incentive Stock Option” shall mean any stock optiongranted pursuant to this Plan as an “incentive stock option” within the meaningof Section 422 of the Code.

 

## k.             “Non-Qualified Stock Option” shall mean any stock optiongranted pursuant to this Plan that is not an Incentive Stock Option.

 

## l.              “Option” shall mean any stock option granted pursuantto this Plan, whether an Incentive Stock Option or a Non-Qualified StockOption.

 

## m.            “Optionee” shall mean any person who is the holder of anOption granted pursuant to this Plan.

 

## n.             “Outside Director” shall mean a director who (a) is nota current employee of the Corporation or any member of an affiliated groupwhich includes the Corporation; (b) is not a former employee of the Corporationwho receives compensation for prior services (other than benefits under atax-qualified retirement plan) during the taxable year; (c) has not been anofficer of the Corporation; (d) does not receive remuneration from theCorporation, either directly or indirectly, in any capacity other than as adirector, except as otherwise permitted under Code Section 162(m) andregulations thereunder.  

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## For this purpose, remuneration includes any payment inexchange for goods or services.  Thisdefinition 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 theCorporation.

 

## p.             “Subsidiary” shall mean any corporation (other than theCorporation) which at the time qualifies as a subsidiary of the Corporationunder Section 425(f) of the Code.

 

## q.             “Tax Date” shall mean the date on which the amount oftax to be withheld is determined under the Code.

 

# 3.             SharesAvailable Under Plan.  The number ofshares which may be issued pursuant to Options granted under this Plan shallnot 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 beavailable for issuance pursuant to Options subsequently granted under this Planunder a stock for stock exercise of a stock option or the withholding of stockfor the payment of taxes, only the net number of shares issued to the optioneeshall be used to calculate the number of shares remaining for distributionunder the Plan.  The shares issued uponexercise of Options granted under this Plan may be authorized and unissuedshares or shares previously acquired or to be acquired by the Corporation.

 

# 4.             Administration.

 

4.1.          The Plan will be administered by theBoard or a Committee of at least two directors, all of whom shall be OutsideDirectors and Non-Employee Directors. The Committee may be a subcommittee of the Compensation Committee of theBoard.

 

4.2.          The Committee will have plenaryauthority, subject to provisions of the Plan, to determine when and to whomOptions will be granted, the term of each Option, the number of shares coveredby it, the participation by the Optionee in other plans, and any other terms orconditions of each Option.  TheCommittee shall determine with respect to each grant of an Option whether aparticipant shall receive an Incentive Stock Option or a Non-Qualified StockOption.  The number of shares, the termand the other terms and conditions of a particular kind of Option need not be thesame, even as to Options granted at the same time.  The Committee’s recommendations regarding Option grants and termsand conditions thereof will be conclusive.

 

4.3.          The Committee will have the soleresponsibility for construing and interpreting the Plan, for establishing andamending any rules and regulations as it deems necessary or desirable for theproper administration of the Plan, and for resolving all 

 

 

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questions arisingunder the Plan.  Any decision or actiontaken by the Committee arising out of or about the construction,administration, interpretation and effect of the Plan and of its rules andregulations will, to the extent permitted by law, be within its absolutediscretion, except as otherwise specifically provided herein, and will beconclusive 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 ofits members as chairman.  It will holdits meetings at the times and places as it may determine.  A majority of its members will constitute aquorum, and all determinations of the Committee will be made by a majority ofits members.  Any determination reducedto writing and signed by all members will be fully as effective as if it hadbeen made by a majority vote at a meeting duly called and held.  The Committee may appoint a secretary, whoneed not be a member of the Committee, and may make such rules and regulationsfor the conduct of its business as it may deem advisable.

 

4.5.          No member of the Committee will beliable, in the absence of bad faith, for any act or omission with respect tohis services on the Committee.  Serviceon the Committee will constitute service as a member of the Board, so that themembers of the Committee will be entitled to indemnification and reimbursementas Board members pursuant to its Bylaws.

 

4.6.          The Committee will regularly informthe Board as to its actions with respect to all Options granted under the Planand 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 thecontrary notwithstanding, the Committee is authorized to take such action asit, in its discretion, may deem necessary or advisable and fair and equitableto Optionees in the event of:  a Changein Control of the Corporation; a tender, exchange or similar offer for all orany part of the Common Stock made by any entity, person or group (other thanthe Corporation, any Subsidiary of the Corporation or any savings, pension orother benefit plan for the benefit of employees of the Corporation or itsSubsidiaries); a merger of the Corporation into, a consolidation of theCorporation with, or an acquisition of the Corporation by another corporation;or a sale or transfer of all or substantially all of the Corporation’sassets.  Such action, in the Committee’sdiscretion, 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 actionspursuant to this Section 4.7 by adopting rules or regulations of generalapplicability to all Optionees, or to certain categories of Optionees: byamending or waiving terms and conditions in stock option agreements; or bytaking action with respect to individual Optionees.  The Committee may take any such actions before or 

 

 

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after the publicannouncement 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 belimited to officers and regular full-time executive, administrative,professional, production and technical employees of the Corporation or of aSubsidiary, or Consultants of the Corporation or of a Subsidiary and to allDirectors of the Company.

 

5.2.          Subject to other provisions of thisPlan, Options may be granted to the same participants on more than oneoccasion.

 

5.3.          The Committee’s determination underthe Plan including, without limitation, determination of the persons to receiveOptions, the form, amount and type of such Options, and the terms andprovisions of Options need not be uniform and may be made selectively amongotherwise eligible participants, whether or not the participants are similarlysituated.

 

5.4           No person shall receive Options underthis Plan which exceed 100,000 shares during any fiscal year of theCorporation.

 

# 6.             Termsand Conditions.

 

6.1.          Each Option granted under the Planshall be evidenced by a written agreement, which shall be subject to theprovisions of this Plan and to such other terms and conditions as theCorporation may deem appropriate.

 

6.2.          Each Option agreement shall specifythe period for which the Option thereunder is granted (which in no event shallexceed ten years from the date of the grant for any Option granted pursuant toSection 6.3(a) hereof, seven years from the date of grant for any Optiongranted pursuant to 6.3(b) hereof and ten years and one day from the date ofgrant for any Option designated by the Committee as a Non-Qualified StockOption) and shall provide that the Option shall expire at the end of suchperiod; provided, however, the term of each Option shall be subject to thepower of the Committee, among other things, to accelerate or otherwise adjustthe terms for exercise of Options pursuant to Section 4.7 hereof in the eventof the occurrence of any of the events set forth therein.

 

6.3.          The exercise price per share shall bedetermined by the Committee at the time any Option is granted; provided,however, that in no event shall the exercise price per share purchasable undera Non-Qualified Stock Option be less than 85% of the Fair Market Value of theCommon Stock of the Corporation on the date the Option is granted, and, if theOption is an Incentive Stock Option, shall be determined as follows:

 

 

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(a)           For employees who do not own stockpossessing more than ten percent (10%) of the total combined voting power ofall classes of stock of the Corporation or of any Subsidiary, the IncentiveStock Option exercise price per share shall not be less than one hundredpercent (100%) of Fair Market Value of the Common Stock of the Corporation onthe date the Option is granted, as determined by the Committee.

 

(b)           For employees who own stockpossessing more than ten percent (10%) of the total combined voting power ofall classes of stock of the Corporation or of any Subsidiary, the IncentiveStock Option exercise price per share shall not be less than one hundred tenpercent (110%) of the Fair Market Value of the Common Stock of the Corporationon 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 withrespect to which an Incentive Stock Option under this Plan or any other plan ofthe Corporation or its Subsidiaries is exercisable for the first time by anOptionee during any calendar year shall not exceed $100,000.

 

6.5.          An Option shall be exercisable at suchtime or times, and with respect to such minimum number of shares, as may bedetermined by the Corporation at the time of the grant.  The Option agreement may require, if so determinedby the Corporation, that no part of the Option may be exercised until theOptionee shall have remained in the employ of the Corporation or of aSubsidiary for such period after the date of the Option as the Corporation mayspecify.  Notwithstanding the foregoingand subject to the discretionary acceleration rights of the Committee, anOption granted to a director, officer or 10% shareholders of the Corporationshall not be exercisable for a period of six (6) months unless the Option hasbeen approved by the Board, the Committee or the shareholders of theCorporation.

 

6.6.          The Corporation may prescribe the formof legend which shall be affixed to the stock certificate representing sharesto be issued and the shares shall be subject to the provisions of anyrepurchase agreement or other agreement restricting the sale or transferthereof.  Such agreements orrestrictions shall be noted on the certificate representing the shares to beissued.

 

# 7.             Exerciseof Option.

 

7.1.          Each exercise of an Option grantedhereunder, 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 maydesignate).  The notice shall state thenumber of shares with respect to which the Options are being exercised andshall be accompanied by payment in 

 

 

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full for thenumber of shares so designated.  Sharesshall be registered in the name of the Optionee unless the Optionee otherwisedirects in his or her notice of election.

 

7.2.          Payment shall be made to theCorporation either (i) in cash, including certified check, bank draft or moneyorder, (ii) at the discretion of the Corporation, by delivering Common Stock ofthe Corporation already owned by the participant, (iii) at the discretion ofthe Corporation, by delivering a promissory note, containing such termsand conditions acceptable to the Corporation, for all or a portion of thepurchase price of the shares so purchased, or a combination of (i), (ii) and(iii).  With respect to (ii) the FairMarket Value of stock so delivered shall be determined as of the dateimmediately preceding the date of exercise.

 

7.3.          Upon notification of the amount dueand prior to, or concurrently with, the delivery to the Optionee of a certificaterepresenting any shares purchased pursuant to the exercise of an Option, theOptionee shall promptly pay to the Corporation any amount necessary to satisfyapplicable 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 noticeto the Secretary of the Corporation (or such other person as he may designate),to satisfy the withholding tax requirements associated with the exercise of anOption by authorizing the Corporation to retain from the number of shares ofCommon Stock that would otherwise be deliverable to the Optionee that number ofshares having an aggregate Fair Market Value on the Tax Date equal to the taxpayable 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 theevent shares are withheld, the amount withheld may not exceed the minimumrequired federal, state and FICA withholding amounts.  Where shares are transferred to an Optionee prior to the TaxDate, the Optionee shall agree in any such election to surrender that number ofshares having an aggregate Fair Market Value on the Tax Date equal to the taxpayable by the Optionee under Section 7.3. In addition, any election to have shares withheld pursuant to thisSection 7.4 will be irrevocable by the Optionee and will in any event besubject to the disapproval of the Committee.

 

# 8.             Adjustmentsof Option Stock.  In case the sharesissuable upon exercise of any Option granted under the Plan at any timeoutstanding shall be subdivided into a greater or combined into a lesser numberof shares (whether with or without par value), the number of shares purchasableupon exercise of such Option immediately prior thereto shall be adjusted sothat the Optionee shall be entitled to receive a number of shares which he orshe would have owned or have been entitled to receive after the happening ofsuch event had such Option been exercised immediately prior to the happening ofsuch subdivision or combination or any record date with respect thereto.  An adjustment made pursuant to thisparagraph shall become effective immediately after the effective date of suchsubdivision or combination retroactive to the record date, if any, for suchsubdivision or combination.  The Optionprice (as such amount may have 

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# theretofore been adjusted pursuant to the provisionshereof) shall be adjusted by multiplying the Option price immediately prior tothe adjustment of the number of shares purchasable under the Option by afraction, of which the numerator shall be the number of shares purchasable uponthe exercise of the Option immediately prior to such adjustment, and of whichthe denominator shall be the number of shares so purchasable immediatelythereafter.  Substituted shares of stockshall be deemed shares under Section 3 of the Plan.

 

# 9.             Assignments.  Any Option granted under this Plan shall beexercisable only by the Optionee to whom granted during his or her lifetime andshall not be assignable or transferable otherwise than by will or by the lawsof descent and distribution.   Notwithstanding the foregoing, the Board or the Committee may, in itsdiscretion, determine that an Option may be exercised by a person other thanthe Optionee and that an Option may be transferable based on he tax and federalsecurities law considerations then in effect for such Options.

 

# 10.           Severance;Death; Disability.  An Option shallterminate, and no rights thereunder may be exercised, if the person to whom itis granted ceases to be employed by the Corporation or by a Subsidiary exceptthat:

 

10.1.        If the employment of the Optionee isterminated by any reason other than his or her death or disability, theOptionee may at any time within not more than three months after termination ofhis or her employment, exercise his or her Option rights but only to the extentthey were exercisable by the Optionee on the date of termination of his or heremployment; provided, however, that if the employment is terminated bydeliberate, willful or gross misconduct as determined by the Committee, allrights under the Option shall terminate and expire upon such termination.

 

10.2.        If the Optionee dies while in the employof the Corporation or a Subsidiary, or within not more than three months aftertermination of his or her employment, the Optionee’s rights under the Optionmay be exercised at any time within one year following such death by his or herpersonal representative or by the person or persons to whom such rights underthe Option shall pass by will or by the laws of descent and distribution, butonly to the extent they were exercisable by the Optionee on the date of death.

 

10.3.        If the employment of the Optionee isterminated because of permanent disability, the Optionee, or his or her legalrepresentative, may at any time within not more than one year after terminationof his or her employment, exercise his or her Option rights but only to theextent they were exercisable by the Optionee on the date of termination of hisor her employment.

 

10.4.        Notwithstanding anything contained inSections 10.1, 10.2 and 10.3 to the contrary, no Option rights shall beexercisable by anyone after the expiration of the term of the Option.

 

 

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10.5.        Transfers of employment between theCorporation and a Subsidiary, or between Subsidiaries, will not constitutetermination of employment for purposes of any Option granted under thisPlan.  The Committee may specify in theterms and conditions of an Option whether any authorized leave of absence orabsence for military or government service or for any other reasons willconstitute a termination of employment for purposes of the Option and the Plan.

 

# 11.           Rightsof Participants.  Neither theparticipant nor the personal representatives, heirs, or legatees of suchparticipant shall be or have any of the rights or privileges of a shareholderof the Corporation in respect of any of the shares issuable upon the exerciseof an Option granted under this Plan unless and until certificates representingsuch shares shall have been issued and delivered to the participant or to suchpersonal representatives, heirs or legatees.

 

# 12.           SecuritiesRegistration.  If any law orregulation of the Securities and Exchange Commission or of any other bodyhaving jurisdiction shall require the Corporation or the participant to takeany action in connection with the exercise of an Option, then notwithstandingany contrary provision of an Option agreement or this Plan, the date forexercise of such Option and the delivery of the shares purchased thereundershall be deferred until the completion of the necessary action.  In the event that the Corporation shall deemit necessary, the Corporation may condition the grant or exercise of an Optiongranted under this Plan upon the receipt of a satisfactory certificate that theOptionee is acquiring the Option or the shares obtained by exercise of theOption for investment purposes and not with the view or intent to resell orotherwise distribute such Option or shares. In such event, the stock certificate evidencing such shares shall bear alegend referring to applicable laws restricting transfer of such shares.  In the event that the Corporation shall deemit necessary to register under the Securities Act of 1933, as amended, or anyother applicable statute, any Options or any shares with respect to which anOption shall have been granted or exercised, then the participant shallcooperate with the Corporation and take such action as is necessary to permitregistration or qualification of such Options or shares.

 

# 13.           Durationand Amendment.

 

13.1.        There is no express limitation upon theduration of the Plan, except for the requirement of the Code that all IncentiveStock Options must be granted within ten years from the date the Plan isapproved by the shareholders.

 

13.2.        The Board may terminate or may amend thePlan at any time, provided, however, that the Board may not, without approvalof the shareholders of the Corporation, (i) increase the maximum number ofshares as to which options may be granted under the Plan, (ii) permit thegranting of Incentive Stock Options at less than 100% of Fair Market Value attime of grant, or (iii) permit any change which results in any repricing of anyaward or option heretofore granted hereunder.

 

 

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# 14.           Approvalof Shareholders.  This Planexpressly is subject to approval of holders of a majority of the outstandingshares of Common Stock of the Corporation, and if it is not so approved on orbefore one year after the date of adoption of this Plan by the Board, the Planshall not come into effect, and any Options granted pursuant to this Plan shallbe deemed canceled.

 

# 15.           Conditionsof Employment.  The granting of anOption to a participant under this Plan who is an employee shall impose noobligation on the Corporation to continue the employment of any participant andshall not lessen or affect the right of the Corporation to terminate theemployment of the participant.

 

# 16.           OtherOptions.  Nothing in the Plan willbe construed to limit the authority of the Corporation to exercise itscorporate rights and powers, including, by way of illustration and not by wayof limitation, the right to grant options for proper corporate purposesotherwise than under the Plan to any employee or any other person, firm,corporation, association, or other entity, or to grant Options to, or assumeOptions of, any person for the acquisition by purchase, lease, merger,consolidation, or otherwise, of all or any part of the business and assets ofany person, firm, corporation, association, or other entity.

 

 

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