Document:

Exhibit 10.11 

SEPARATION AGREEMENT

          This
Separation Agreement (“Agreement”) is entered into by and between Kathleen P.
Iverson (“Ms. Iverson”) and CyberOptics Corporation (“CyberOptics”).

          WHEREAS, Ms. Iverson has served as Chief
Executive Officer of CyberOptics and is hereby retiring and resigning her
position as CEO and terminating her employment with CyberOptics effective as of
January 31, 2014;

          WHEREAS, Ms. Iverson and CyberOptics are
parties to a Severance Pay Agreement dated as of May 19, 2008, as amended by
the Amendment to Severance Agreement dated December 31, 2011 (as amended, the
“Severance Agreement”);

          WHEREAS, CyberOptics is grateful for Ms.
Iverson’s loyal service and dedication, and desires to provide Ms. Iverson fair
and equitable separation compensation; and

          WHEREAS, CyberOptics and Ms. Iverson desire
to fully and finally settle all issues, differences and actual and potential
claims between them, including, but in no way limited to, any claim that might
arise out of Ms. Iverson’s employment with CyberOptics or her separation
therefrom;

          NOW, THEREFORE, in consideration of the
mutual promises contained herein, Ms. Iverson and CyberOptics agree as follows:

          1.          Resignation.
Ms. Iverson hereby acknowledges and agrees that her employment with CyberOptics
shall be terminated on, and that her last day of service to CyberOptics shall
be, January 31, 2014 (the “Termination Date”). Effective as of that date, Ms.
Iverson hereby resigns all positions as an officer or director of CyberOptics
and any of its subsidiaries, or trustee or administrator of benefit plans of
CyberOptics and any of its subsidiaries. 

          2.          Separation
Compensation. As consideration for Ms. Iverson’s promises and obligations under
this Agreement, including but not limited to the release of claims set forth in
Section 7 below, Ms. Iverson will receive the following consideration, provided
that she signs and does not revoke this Agreement: 

	
  

 	
  

 
	
  

 	
               (a)          All
 employment compensation through the Termination Date, including salary and
 benefits, and including the bonus earned with respect to the year ended
 December 31, 2013, which bonus shall be paid contemporaneous with payment of
 bonuses to employees;

 
	
  

 	
  

 
	
  

 	
               (b)          A
 separation payment in a lump sum amount equal to Ms. Iverson’s annual salary
 payable (i) with respect to $256,380 on the Termination Date, and (ii) with
 respect to $34,920 on the seventh business day after the Termination Date and
 only, with respect to this 2(b)(ii), if the release attached as Exhibit A is
 executed;

 
	
  

 	
  

 
	
  

 	
               (c)          Reimbursement
 for reasonable expenses incurred prior to the Termination Date in accordance
 with CyberOptics’ reimbursement policy, and submitted in a format consistent
 with CyberOptics’ expense reporting policy on or before the Termination Date;
 

 

	
  

 	
  

 
	
  

 	
               (d)          Amendment
 and extension through August 31, 2014, of the right to exercise the stock
 options specifically referenced in Section 3(b) that are vested on the
 Termination Date;

 
	
  

 	
  

 
	
  

 	
               (e)          All
 accumulated unused vacation pay through the Termination Date (Ms. Iverson’s
 accumulated vacation pay was 184 hours as of December 13, 2013);

 
	
  

 	
  

 
	
  

 	
               (f)          All
 amounts payable under CyberOptics’s 401(k) plan pursuant to, and at the time
 and in the manner specified in such Plan through the Termination Date
 (including any matching contributions from CyberOptics through such date).

 

          3.           No Other Rights.  

          (a)          Ms.
Iverson acknowledges and agrees that the consideration set forth in Section 2
is in exchange for entering into this Agreement and that the consideration set
forth in Section 2(b)(ii) is in consideration of the release set forth in
Exhibit A. The payments referenced in Section 2 shall be deemed to be income to
Ms. Iverson solely in the year in which such payments are received by Ms.
Iverson and shall not entitle Ms. Iverson to additional compensation or
benefits of any kind, including but not limited to under any company bonus,
stock compensation, incentive, or benefit plan or agreement, nor will it
entitle Ms. Iverson to any increased retirement, 401(k) benefits or matching
benefits, or deferred compensation or any other benefits. Ms. Iverson further acknowledges and agrees
that the benefits to be provided to her by this Agreement shall be in full
payment and satisfaction of any and all financial obligations due to Ms.
Iverson from CyberOptics.

          (b)          Notwithstanding
Section 3(a), CyberOptics acknowledges that Ms. Iverson holds options (the
“Options”) to purchase an aggregate of 166,217 shares of CyberOptics Common
Stock that shall, as described below, survive the Termination Date, including
the following:

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Grant Date

 	
 Total Shares

 	
 Unvested Shares

 	
 Exercise Price

 	
 Expiration Datea

 
	
 12/7/07

 	
 13,350

 	
 -0-

 	
  

 	
 $12.34

 	
  

 	
 5/1/14

 
	
 12/10/10

 	
 16,667

 	
 4,166

 	
  

 	
 8.71

 	
  

 	
 5/1/14

 
	
 12/05/08

 	
 46,200

 	
 -0-

 	
  

 	
 4.99

 	
  

 	
 5/1/14

 
	
 9/11/09

 	
 10,000

 	
 -0-

 	
  

 	
 6.29

 	
  

 	
 8/31/14

 
	
 1/06/12

 	
 46,667

 	
 23,334

 	
  

 	
 7.30

 	
  

 	
 8/31/14

 
	
 12/14/12

 	
 33,333

 	
 25,000

 	
  

 	
 7.48

 	
  

 	
 8/31/14

 

	
  

 	
  

 
	
 a.

 	
 All Options expire by their terms 90 days after the
 Termination Date, but pursuant to Section 2(d) above, the right to exercise
 the last three options in the table above, to the extent vested as of the Termination
 Date, is being extended through August 31, 2014.

 

Ms. Iverson acknowledges that to the extent listed as
unvested, the Options set forth above expire on the Termination Date, and that
all of the 8,750 restricted stock units held by Ms. Iverson that remain
unvested on the Termination Date, shall be forfeited to CyberOptics and
cancelled. CyberOptics and Ms. Iverson agree that the right to exercise the
last three Options listed above, to the extent vested on the Termination Date,
is hereby extended through August 31, 2014.

          4.          Tax Treatment. Ms. Iverson agrees that the amounts
referenced in Section 2 will be treated as income subject to W-2 reporting and
withholding pursuant to state and federal laws. It is understood that CyberOptics
makes no representations or warranties with respect to the tax 

2

consequences of the payments
referenced in Section 2. Ms. Iverson agrees to pay any amount that may be
determined to be due and owing by her and not otherwise withheld as taxes,
interest, penalties, or other government-required payments, arising out of the
payments set forth in Section 2, for which she is solely responsible. 

          5.          409A Compliance. This Agreement is intended to
comply with the requirements of Section 409A (“Section 409A”) of the Internal
Revenue Code of 1986, as amended (“Code”), insofar as it relates to amounts
subject to Section 409A, and this Agreement
will be construed and
administered accordingly. To the extent that any provision hereof is modified in
order to comply with or be exempt from Section 409A, such modification shall be
made in good faith and shall, to the maximum extent reasonably possible,
maintain the original intent and economic benefit to CyberOptics and Ms.
Iverson of the applicable provision without violating the provisions of Section
409A.

          6.          Indemnity. CyberOptics hereby agrees to
indemnify Ms. Iverson to the fullest extent permitted by Minnesota Statutes
Section 302A.521 for any proceeding resulting from Ms. Iverson’s official
capacity while an employee, or director, of CyberOptics. CyberOptics agrees
that such indemnity shall apply to disputes arising out of or resulting from
any matter, fact or thing occurring prior to the Termination Date even though
commenced after such date. 

          7.          Release of Claims. 

          (a)
Ms. Iverson, on behalf of herself, her spouse, successors, heirs, and assigns,
hereby forever releases and discharges CyberOptics (including its parents,
subsidiaries, directors, officers, employees, agents, predecessors, successors,
assigns, shareholders and insurers) (the “Released Parties”) to the fullest extent permitted by law from
any and all claims, debts, liabilities, demands, promises, agreements, costs
and expenses (including but not limited to attorneys’ fees), damages, including
liquidated damages or punitive damages, actions, and causes of action, of
whatever kind or nature, whether known or unknown, suspected or unsuspected,
fixed or contingent, arising out of any act or omission occurring before Ms.
Iverson’s execution of this Agreement (except
any claims arising out of or contemplated by this Agreement, and any claims
under federal and state law that may not be released as a matter of law)
including but not limited to: (a) any claims based on, arising out of, or
related to Ms. Iverson’s employment with, or the termination of her employment
with, CyberOptics, or her membership on CyberOptics’s Board of Directors
or the termination thereof, and
any claims for compensation of any kind, including without limitation, amounts
due under any contract, all regular salary, expenses, distributions, earned but
unused vacation, bonuses and incentive compensation, and stock options; (b) any
claims arising from rights under federal, state and/or local laws, including
but not limited to those related to any form of retaliation, harassment or
discrimination on any basis, or any related cause of action, and any labor code
provisions, including but not limited to, any alleged violation of Title VII of
the Civil Rights Act of 1964; The Civil Rights Act of 1991; Sections 1981
through 1988 of Title 42 of the United States Code, as amended; the Americans
with Disability Act of 1990, as amended; the Occupational Safety and Health
Act, as amended; the Age Discrimination in Employment Act; the Older Worker
Benefits Protection Act; the Family and Medical Leave Act; the Equal Pay Act; the Employee Retirement Income Security Act; the Minnesota Human Rights
Act; Minn. § 181.81; Minn. Stat. § 176.82; Minn. Stat. §§ 181.931, 181.932, 181.935; and/or
Minn. Stat. §§ 181.940–181.944; and any provision of the Minnesota or
federal constitutions; (c) any claims grounded in contract or tort theories,
including but not limited to claims for wrongful discharge, breach of 

3

express or implied contract;
breach of implied covenant of good faith and fair dealing; tortious
interference with contractual relations or prospective economic benefit;
promissory estoppel; breach of promise; breach of manuals or other policies; violation
of public policy; fraud; misrepresentation; defamation, including libel,
slander, and self-publication defamation; negligence; negligent hiring,
supervision or retention; assault; battery; invasion of privacy; false
imprisonment; infliction of emotional distress; harassment; or any other
wrongful or unlawful acts, omissions, statements or practices; and/or (d) any
other claim of any kind whatsoever, including but not limited to any claim for
damages or declaratory or injunctive relief of any kind. 

          (b)
In consideration of and as a condition to the payment pursuant to Section 2(b),
Ms. Iverson shall sign the confirming release attached hereto as Exhibit A on
the Termination Date.

          (c)
Ms. Iverson represents that, as of the date she signs this Agreement, she is
not aware of any violations of federal or state law or regulation or
CyberOptics policy, and that she is not aware of any facts which would
constitute a violation of any federal or state law or regulation or CyberOptics
policy. Ms. Iverson further represents and warrants that she has not violated
any federal or state law, statute, regulation, or ordinance. Based in part
thereon, CyberOptics
hereby releases and discharges Ms. Iverson from any and all liability for
damages or claims of any kind, and agrees not to institute any claim for
damages or otherwise, by charge or otherwise against Ms. Iverson for any
claims, including, but not limited to any statutory, contract, quasi contract,
or tort claims, whether developed or undeveloped, arising from or related to
Ms. Iverson’s employment with CyberOptics, and/or the cessation of Ms.
Iverson’s employment with CyberOptics, except to the extent such claims or
liability arise out of conduct by Ms.
Iverson with respect to which she would not be permitted indemnity under
Minnesota Law. 

          8.          ADEA Compliance. Ms. Iverson has been
informed of her right to review and consider this Agreement for 21 calendar
days, if she so chooses. Ms. Iverson further agrees and acknowledges that (a)
her waiver of rights under this Agreement is knowing and voluntary as required
under the Age Discrimination in Employment Act (“ADEA”);(b) she understands
the terms of this Agreement;(c) CyberOptics advises Ms. Iverson to consult
with an attorney prior to executing this Agreement;and (d) she may rescind
this Agreement insofar as it extends to potential claims under the ADEA by
providing written notice to CyberOptics within seven (7) calendar days after
the date of her signature below. To be effective, the rescission must be in
writing and delivered to CyberOptics either by hand or by mail within the seven
(7)-day period. If delivered by mail, the rescission must be: (i) postmarked
within the seven (7)-day period;properly addressed to Chief Financial
Officer, CyberOptics Corporation, 5900 Golden Hills Drive, Minneapolis, MN
55416;and (iii) sent by
certified mail, return receipt requested. In the event of such a rescission,
(1) all of CyberOptics’ obligations under the Agreement shall be null and void,
but the cessation of Ms. Iverson’s employment will be unaffected, and (2)
any payments made as of that date by CyberOptics pursuant to Section 2, above,
shall be immediately repaid by Ms. Iverson to CyberOptics. 

          9.          MHRA Compliance. Ms. Iverson also has been
informed of her right to rescind this Agreement insofar as it extends to
potential claims under the Minnesota Human Rights Act (“MHRA”), Minn. Stat. §
363A, et
seq., by providing written notice to CyberOptics within fifteen (15)
calendar days after the date of her signature below. To be effective, the
rescission must be in writing and delivered to CyberOptics either by hand or by
mail within the fifteen (15)-day period. 

4

If delivered by mail, the
rescission must be: (i) postmarked within the fifteen (15)-day period;properly
addressed to Chief Financial Officer, CyberOptics Corporation, 5900
Golden Hills Drive, Minneapolis, MN 55416;and (iii) sent by certified mail, return receipt requested. In the
event of such a rescission, (1) all of CyberOptics’s obligations under the
Agreement shall be null and void, but the cessation of Ms. Iverson’s employment
will be unaffected, and (2) any payments made as of that date by
CyberOptics pursuant to paragraph 2, above, shall be immediately repaid by Ms.
Iverson to CyberOptics.

          10.          Severance Agreement. Ms. Iverson hereby
acknowledges that the Severance Agreement shall terminate as of the Termination
Date.

          11.          Confidentiality of this
Agreement. The terms of
this Agreement shall remain strictly confidential between the parties hereto,
and shall not be disclosed to third persons; provided, however, that Ms. Iverson may disclose such terms to her
spouse and immediate family, and that the parties may disclose the terms to
their respective legal counsel, accountants and financial advisors so long as
such counsel, accountants and advisors agree to maintain the confidentiality
thereof and provided further that such terms may be disclosed where compelled
by judicial process, by the rules and regulations of the Securities and
Exchange Commission or by the Internal Revenue Service or other appropriate
agency, or in any proceedings in which one of the parties hereto alleges a
breach of, or seeks the enforcement of, this Agreement. 

          12.          Return of Company Records and Property. By
January 31, 2014, Ms. Iverson shall deliver to CyberOptics all records,
manuals, books, blank forms, documents, letters, memoranda, notes, notebooks,
reports, data, tables, calculations or copies thereof, which are the property
of CyberOptics or which relate in any way to the business, products, practices
or techniques of CyberOptics , and all other property, trade secrets and
confidential information of CyberOptics, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the CyberOptics, which in any of these cases are in her
possession or under her control.

          13.          Agreement to Cooperate. Upon request, Ms. Iverson agrees to give
reasonable assistance and cooperation in any matter relating to her expertise
or experience as CyberOptics may request, including but not limited to (1)
providing information concerning, or assistance with, investigations, claims,
litigations, matters or projects in which Ms. Iverson was involved or as to
which Ms. Iverson potentially has knowledge by virtue of her employment with
CyberOptics, and/or (2) Ms. Iverson’s attendance and truthful testimony where
deemed appropriate by CyberOptics, with respect to any investigation or
CyberOptics’s defense or prosecution of any existing or future claims or
litigations relating to matters in which Ms. Iverson was involved or as to
which Ms. Iverson potentially has knowledge by virtue of her employment with
CyberOptics. To the extent permitted by law, CyberOptics will reimburse Ms.
Iverson’s reasonable expenses incurred in connection with any travel that may
be required to fulfill her obligation under this paragraph. 

          14.          Disparagement. Ms. Iverson agrees she will refrain from
making any comments or statements concerning CyberOptics, either in writing,
electronically, orally, or otherwise that (a) are disparaging or defamatory or
portray CyberOptics in a negative light; (b) in any way impair the reputation,
goodwill, or legitimate business interest of CyberOptics; or (c) disparage the 

5

employees, agents, officers,
directors, pricing, products, policies, or services of CyberOptics. CyberOptics
agrees that its directors and executive officers will refrain from making any
statements, whether in writing,
electronically, orally, or otherwise, that are disparaging or defamatory
of Ms. Iverson. Notwithstanding the
above, nothing herein shall preclude the parties from testifying truthfully in
administrative proceedings, or under oath or under power of a subpoena.

          15.          No Admission. This Agreement shall not in
any way be construed as an admission by CyberOptics that it has acted
wrongfully with respect to Ms. Iverson or any other person, or that Ms. Iverson
has any rights whatsoever against CyberOptics. CyberOptics specifically
disclaims any liability to, or wrongful acts against, Ms. Iverson or any other
person, on the part of itself, its directors, its officers, its employees, its
representatives or its agents.

          16.          Remedies. Any breach by Ms. Iverson of her
covenants under this Agreement will likely cause irreparable harm to
CyberOptics or its affiliates for which money damages could not reasonably or
adequately compensate CyberOptics or its affiliates. Accordingly, CyberOptics
or any of its affiliates shall be entitled to seek all forms of injunctive
relief (whether temporary, emergency, preliminary, prospective, or permanent)
to enforce such covenants, in addition to damages and other available remedies,
and Ms. Iverson consents to the issuance of such an injunction without the
necessity of CyberOptics or any such affiliate posting a bond, or if a court
requires a bond to be posted, with a bond of no greater than $500 in principal
amount. In the event that injunctive relief or damages are awarded to
CyberOptics or any affiliate for any breach by Ms. Iverson of her covenants
under this Agreement, Ms. Iverson further agrees that CyberOptics shall be entitled to recover its costs and attorney’s
fees necessary to obtain such remedies. 

          17.          Waiver of Breach. The waiver by
CyberOptics of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.

          18.          Miscellaneous. 

          (a)          Entire
Agreement. Except for any confidentiality, non-competition or similar
provisions in other agreements between CyberOptics and Ms. Iverson that
continue to be applicable after Ms. Iverson’s employment ends, which are hereby
specifically preserved, this Agreement is the entire agreement between Ms.
Iverson and CyberOptics concerning Ms. Iverson’s employment and the separation
of Ms. Iverson’s employment and it supersedes all other agreements and
arrangements relating to the end of Ms. Iverson’s employment including, without
limitation, the Severance Agreement. It is Ms. Iverson’s intent to be legally
bound by the terms of this Agreement. No amendments, modifications or waivers
of this Agreement shall be binding unless made in writing and signed by both
Ms. Iverson and a representative of CyberOptics so authorized by the Board of
Directors.

          (b)          Nonassignable.
This Agreement is personal to Ms. Iverson and may not be assigned by Ms.
Iverson without the written agreement of CyberOptics.

          (c)          Severability.
Ms. Iverson and CyberOptics agree that if any part, term, or provision of this
Agreement should be held to be unenforceable, invalid, or illegal under any
applicable law or rule, the offending term or provision shall be applied to the
fullest extent enforceable, valid, or 

6

lawful under such law or rule, or, if that is not
possible, the offending term or provision shall be struck and the remaining
provisions of this Agreement shall not be affected or impaired in any way. However, if Ms. Iverson’s release of claims
set forth in this Agreement is held invalid, illegal, or unenforceable,
CyberOptics may void this Agreement.

          (d)          Governing
Law. This Agreement will be governed by the laws of the State of Minnesota,
without giving effect to its conflict of laws rules. Any action brought by Ms.
Iverson or CyberOptics with respect to this Agreement shall be brought and maintained
in a court of competent jurisdiction in the State of Minnesota. 

          (e)          Consultation.
Ms. Iverson hereby affirms and acknowledges that she has read the foregoing
Agreement, that she has hereby been advised to consult with an attorney prior
to signing this Agreement, and that she has done so. Ms. Iverson agrees that
the provisions set forth in this Agreement are written in language
understandable to her and further affirms that she understands the meaning of
the terms of this Agreement and their effect. Ms. Iverson represents that she
enters into this Agreement freely and voluntarily.

          (f)          Construction.
Ms. Iverson acknowledges
and agrees that no promises or representations have been made to induce her to
sign this Agreement other than as expressly set forth herein and that she has
signed this Agreement as a free and voluntary act. Further, this Agreement has
been entered into after review of its terms by Ms. Iverson and her counsel.
Therefore, there shall be no strict construction for or against either party.
No ambiguity or admission shall be construed against CyberOptics on the grounds
that this Agreement or any of its provisions was drafted or prepared by
CyberOptics.

          (g)          Headings.
The headings contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

          (h)          Counterparts.
This Agreement may be executed in separate counterparts, each of which will be
an original and all of which taken together shall constitute one and the same
agreement, and any party hereto may execute this Agreement by signing any such
counterpart.

          By signing below, Ms. Iverson acknowledges and affirms
that she has read this Agreement completely. Ms. Iverson also acknowledges and
affirms that:

	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 She has had a sufficient period of at
 least twenty-one (21) days within which to consider whether or not to accept
 this Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 The provisions of this Agreement are understandable
 to her;

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 She has had an opportunity to consult
 with an attorney of her choice, CyberOptics has encouraged her to do so, and
 she has freely exercised that opportunity to the extent desired; and

 
	
  

 	
  

 	
  

 
	
  

 	
 •

 	
 She has entered into this Agreement freely
 and voluntarily.

 

          IN WITNESS WHEREOF, the parties have
executed this Agreement by their signatures below.

7

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Dated: December 20, 2013

 	
  

 	
 /s/ Kathleen P. Iverson

 	
  

 
	
  

 	
  

 	
 Kathleen P. Iverson

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Dated: December 20, 2013

 	
  

 	
 CYBEROPTICS CORPORATION

 	
  

 
	
  

 
	
  

 	
  

 	
 By

 	
 /s/ Subodh Kulkarni

 	
  

 
	
  

 	
  

 	
  

 	
 Subodh Kulkarni, Chairman

 	
  

 

8

Exhibit
A

          The
undersigned, Kathleen P. Iverson (“Ms. Iverson”) is retiring from her
employment position with CyberOptics Corporation (“CyberOptics”) effective as
of the date of this Exhibit A, resigning all her positions as an officer and
director of CyberOptics, and terminating all other employment positions, all
consistent with a Separation Agreement dated as of December 20, 2013 (the
“Separation Agreement”). Consistent with Section 7(b) of the Separation
Agreement, Ms. Iverson agreed to execute this Exhibit A on her Termination
Date.

          1.
Release of Claims. In exchange for the $34,920 payment set forth in
Section 2(b)(ii) of the Separation Agreement, Ms. Iverson, on behalf of herself, her
spouse, successors, heirs, and assigns, hereby forever releases and discharges
CyberOptics (including its parents, subsidiaries, directors, officers,
employees, agents, predecessors, successors, assigns, shareholders and
insurers) (the “Released Parties”)
to the fullest extent permitted by law from any and all claims, debts,
liabilities, demands, promises, agreements, costs and expenses (including but
not limited to attorneys’ fees), damages, including liquidated damages or
punitive damages, actions, and causes of action, of whatever kind or nature,
whether known or unknown, suspected or unsuspected, fixed or contingent,
arising out of any act or omission occurring before the date Ms. Iverson signs
this Exhibit A. Ms. Iverson agrees that the release of claims in this Exhibit A
includes, but is not limited to, any claims Ms. Iverson may have under: Title
VII of the Civil Rights Act of 1964; The Civil Rights Act of 1991; sections
1981 through 1988 of Title 42 of the United States Code, as amended; the
Americans with Disability Act of 1990, as amended; the Occupational Safety and
Health Act, as amended; the Age Discrimination in Employment Act; the Older
Worker Benefits Protection Act; the Family and Medical Leave Act; the Equal Pay
Act; the Employee Retirement Income Security Act; the Minnesota Human Rights
Act; Minn. § 181.81; Minn. Stat. § 176.82; Minn. Stat. §§ 181.931, 181.932,
181.935; and/or Minn. Stat. §§ 181.940–181.944; and any provision of the
Minnesota or federal constitutions; any claims grounded in contract or tort theories,
including but not limited to claims for wrongful discharge, breach of express
or implied contract; breach of implied covenant of good faith and fair dealing;
tortious interference with contractual relations or prospective economic
benefit; promissory estoppel; breach of promise; breach of manuals or other
policies; violation of public policy; fraud; misrepresentation; defamation,
including libel, slander, and self-publication defamation; negligence;
negligent hiring, supervision or retention; assault; battery; invasion of
privacy; false imprisonment; infliction of emotional distress; harassment; or
any other wrongful or unlawful acts, omissions, statements or practices; and/or
any other claim of any kind whatsoever, including but not limited to any claim
for damages or declaratory or injunctive relief of any kind. 

          2.
Time to accept. Ms. Iverson will have 21 days from the date of the
Separation Agreement to consider whether to sign this Exhibit A. Changes to
this Exhibit A, whether material or immaterial, will not restart the 21-day
consideration period. During this time, CyberOptics advises Ms. Iverson to
consult with an attorney of your choice. To receive the consideration described
in Section 2(b)(ii) of the Separation Agreement, Ms. Iverson must sign this
Exhibit A and return the signed original to the Chief Financial Officer,
CyberOptics Corporation, 5900 Golden Hills Drive, Minneapolis, MN 55416.

          3.
Right to Revoke and Rescind. Ms. Iverson is hereby informed of her right
to revoke her release of claims under this Exhibit A, insofar as it extends to
potential claims under the Age Discrimination in Employment Act, by informing
CyberOptics of her intent to do so within seven (7) calendar days following
your signing of this Exhibit A. Ms. Iverson is also informed of her right to
rescind her release of claims, insofar as it extends to potential claims under
the Minnesota Human Rights Act, by delivering a written rescission to
CyberOptics within fifteen (15) calendar days after your signing of this
Exhibit A. These rescission and revocation periods will run concurrently. Ms.
Iverson understands that any such revocation or rescission must be made in
writing and delivered by hand or by certified mail, return receipt requested,
postmarked on or before the last day within the applicable revocation period to
Chief Financial Officer, CyberOptics Corporation, 5900 Golden Hills
Drive, Minneapolis, MN 55416. If
Ms. Iverson exercises her right to revoke or rescind any portion of this
release of claims, CyberOptics may, at its option, either nullify the
Separation Agreement and this Exhibit A in their entirety, or keep them in
effect in all respects other than as to that portion of your release of claims
that Ms. Iverson has revoked or rescinded (except that your employment ended on
the Termination Date). Ms. Iverson agrees and understands that if CyberOptics
chooses to nullify the Separation Agreement and Exhibit A in its entirety,
CyberOptics will have no obligations under the Separation Agreement and this
Exhibit A.

          3.
Miscellaneous. The signing of this Exhibit A and payment of the
consideration described in the attached Agreement do not represent any
admission of wrongdoing or violation of any statute, agreement, or common law
by CyberOptics. This Exhibit A shall be governed by and interpreted in
accordance with the laws of the State of Minnesota. To the extent any clause or
provision of this Exhibit A shall be determined to be invalid and/or
unenforceable, such a clause or provision shall be deleted and the validity and
enforceability of the remainder of this Exhibit A shall be unaffected. Any
action between Ms. Iverson and CyberOptics relating to her employment or
termination of employment with CyberOptics, including, without limitation,
actions relating to or arising under the Separation Agreement and/or this
Exhibit A, shall be filed and adjudicated exclusively in the state and federal
courts of the State of Minnesota, and Ms. Iverson and CyberOptics hereby
consent to the jurisdiction of such courts for any such action and further
waive any objection to the convenience of the forum or venue.

          4.
Employee Representation. Ms. Iverson agrees and acknowledge that she has
received and read this Exhibit A, that the provisions of this Exhibit A are
understandable to her, and that she fully appreciates and understands the
meaning of the terms of this Exhibit A and their effect. Ms. Iverson agrees
that no promise or inducement has been offered except as set forth in this
Exhibit A, and that Ms. Iverson IS signing this Exhibit A without reliance upon
any statement or representation by CyberOptics or any representative or agent
of CyberOptics except as set forth in this Exhibit A. Ms. Iverson agrees and
acknowledges that she has been provided with a reasonable and sufficient period
of twenty-one (21) days within which to consider whether or not to accept this
Exhibit A, and she has been advised to consult with an attorney for advice in
connection with this Exhibit A prior to signing the Exhibit A, which advice she
has taken. Ms. Iverson acknowledges and agrees that she has entered into this
Exhibit A freely and voluntarily. 

	
  

 	
  

 	
  

 
	
 Dated: January 31, 2014

 	
  

 	
 /s/ Kathleen P. Iverson

 
	
  

 	
  

 	
 Kathleen P. Iverson

 

A-2Exhibit 10.12 

EMPLOYMENT AGREEMENT

          EMPLOYMENT
AGREEMENT (this “Agreement”)
dated as of January 13, 2014 between CyberOptics Corporation (the “Company”), a Minnesota corporation, and
Subodh Kulkarni (the “Executive”),
a resident of Minnesota.

          WHEREAS,
the Executive is employed as Executive Chairman;

          WHEREAS,
the Company wishes to retain the Executive in the position of
Chief Executive Officer and President effective as of February 1, 2014 (the
“Effective Date”), and the Executive wishes to be retained in such position, on
the terms set forth in this Agreement.

          NOW,
THEREFORE, in consideration of the premises, the mutual
agreements set forth below and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:

          1.  Term.
Unless terminated at an earlier date in accordance with Section 8 of this
Agreement, the term of the Executive’s employment hereunder shall be for a
period of one (1) year, commencing on the Effective Date. Thereafter, the term
of this Agreement shall be automatically extended for successive one-year
periods unless either party objects to such extension by written notice to the
other party at least 365 days prior to the expiration of the initial term or
any extension term. 

          2.  Position
and Duties.

                 (a) Service
with the Company. The Executive shall initially serve in the capacity of,
and with the title of Chief Executive Officer and President. Executive also
agrees to serve, for any period for which Executive is elected, as a director
of Company; provided,
however, that Executive shall not be entitled to any additional
compensation for serving as a director. Executive acknowledges and agrees that,
from time to time, Executive will be required to perform duties with respect to
one or more of the Company’s subsidiary or affiliate companies and that
Executive will not be entitled to any additional compensation for performing
those duties.

                 (b) Performance
of Duties. Executive agrees to perform such duties and responsibilities (a)
as are set forth for his position as an officer in the By-laws of the Company;
(b) as the Board shall assign to the Executive from time to time;and (c) that
the Executive undertakes or accepts consistent with his position. The Executive
agrees to serve the Company faithfully and to the best of his ability and to
devote his full time, attention and efforts to the business and affairs of the
Company during his employment by the Company. The Executive hereby confirms
that he is under no contractual commitments inconsistent with his obligations
set forth in this Agreement and that during the term of this Agreement, he will
not render or perform services for any other corporation, firm, entity or
person which are inconsistent with the provisions of this Agreement. While he
remains employed by the Company, the Executive may participate in reasonable
charitable activities and personal investment activities. The Company also
acknowledges that Executive has significant equity interests in two companies.
Although the Company agrees that Executive may provide periodic consultation to
such companies, Executive agrees to limit that consultation to non-work hours,
and to attendance at board meetings for not more than one work day in the
aggregate for both companies per quarter

               3.  Compensation.

	
  

 	
  

 
	
  

 	
             (a) Base
 Salary. As compensation in full for all services to be rendered by the
 Executive under this Agreement, the Company shall pay to the Executive a base
 salary of $25,000 per month, less deductions and withholdings, which salary
 shall be paid in accordance with the Company’s normal payroll procedures and
 policies. The compensation payable to the Executive during each year after the
 first year of the Executive’s employment shall be established by the
 Company’s Board of Directors following an annual performance review, but in
 no event shall the salary for any subsequent year be less than the salary in
 effect for the prior year.

 
	
  

 	
  

 
	
  

 	
             (b) Incentive
 Compensation. The Executive shall be entitled to annual cash incentive
 compensation based upon achievement of such financial milestones or business
 milestones, or both, as shall be established annually by the Company’s
 Compensation Committee, or the Committee of the Board charged with
 establishing executive compensation. For fiscal 2014, the Executive’s cash
 incentive, based upon achievement of business milestones and financial
 milestones, will be equal to 50% of the Executive’s salary at the plan level,
 and 100% of Executive’s salary at the maximum level.

 
	
  

 	
  

 
	
  

 	
             (c) Participation
 in Benefit Plans. While he is employed by the Company, the Executive
 shall be eligible to participate in all employee benefit plans or programs of
 the Company to the extent that the Executive meets the requirements for each
 individual plan. Without limiting the foregoing, Executive shall be eligible
 to participate in any pension plan, or group life, health or accident
 insurance or any such other plan or policy that may presently be in effect or
 that may hereafter be adopted by the Company for the benefit of its employees
 and corporate officers generally. The Company provides no assurance as to the
 adoption or continuance of any particular employee benefit plan or program,
 and the Executive’s participation in any such plan or program shall be
 subject to the provisions, rules and regulations applicable thereto.

 
	
  

 	
  

 
	
  

 	
             (d) Vacation.
 In addition to holidays, Executive shall be entitled to six weeks of paid
 vacation per year, which shall accrue proportionately based on the number of
 months for which Executive’s services have been provided to the Company. At
 the end of each year Executive may carry forward up to six weeks of
 previously accrued and unused vacation days: any unused vacation days in
 excess of six weeks will expire at year end. If Executive desires to take
 vacation prior to its accrual, he must specifically agree in writing to
 offset the value of any vacation taken but not earned against any final
 payments due Executive in the event of termination. 

 
	
  

 	
  

 
	
  

 	
             (e) Expenses.
 The Company will pay or reimburse the Executive for all reasonable and
 necessary out-of-pocket expenses incurred by him in the performance of his
 duties under this Agreement, subject to the Company’s normal policies for
 reimbursement and expense verification. 

 
	
  

 	
  

 
	
  

 	
             (f) Issuance
 of Stock Option. On the first business day (the “Grant Date”) following
 announcement of Executive’s appointment, the Company shall grant to the
 Executive, pursuant to the Company’s 1998 Stock Incentive Plan (as amended,
 the “Plan”)
 an option to purchase 80,000 shares of the Company’s common stock at an
 exercise price equal to the last sale price as quoted on Nasdaq on the Grant
 Date, which option shall vest and become exercisable with respect to 20,000
 shares on the first, second, third and fourth anniversaries of the Grant Date
 (provided Executive remains an employee of the Company as of such dates), and
 which shall expire seven years from the Grant Date. Such option shall be
 subject to the terms and conditions set forth in the Company’s standard form
 of stock option agreement attached as Exhibit A hereto.

 

2

	
  

 	
  

 
	
  

 	
             (h) Restricted Stock Units. On the Grant Date, the Company
 shall grant to the Executive restricted stock units with respect to 20,000
 shares of the Company’s common stock in accordance with the terms of the Plan
 that shall vest with respect to 5,000 shares on each of the first, second,
 third and fourth anniversaries of the Grant Date (provided Executive remains
 an employee of the Company as of such dates). Such RSU shall be subject to
 the terms and conditions set forth in the Company’s standard form of award
 agreement attached as Exhibit B hereto

 

          4.  Confidential
Information. Except as permitted or directed by the Company’s Board of
Directors, during the term of his employment or at any time thereafter, the
Executive shall not divulge, furnish or make accessible to anyone or use in any
way (other than in the ordinary course of the business of the Company) any
confidential or secret knowledge or information of the Company that the
Executive has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the period of his employment by the
Company, whether developed by himself or by others, concerning any trade
secrets, confidential or secret designs, processes, formulae, plans, devices or
material (whether or not patented or patentable) directly or indirectly useful in
any aspect of the business of the Company, any customer or supplier lists of
the Company, any confidential or secret development or research work of the
Company, or any other confidential information or secret aspects of the
business of the Company. The Executive acknowledges that the above-described
knowledge or information constitutes a unique and valuable asset of the Company
and represents a substantial investment of time and expense by the Company, and
that any disclosure or other use of such knowledge or information other than
for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. Both during and after the term of his
employment, the Executive will refrain from any acts or omissions that would
reduce the value of such knowledge or information to the Company. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
that is now published or which subsequently becomes generally publicly known in
the form in which it was obtained from the Company, other than as a direct or
indirect result of the breach of this Agreement by the Executive.

          5.  Ventures.
If, during the term of his employment the Executive is engaged in or associated
with the planning or implementing of any project, program or venture involving
the Company and a third party or parties, all rights in such project, program
or venture shall belong to the Company. Except as approved by the Company’s
Board of Directors, the Executive shall not be entitled to any interest in such
project, program or venture or to any commission, finder’s fee or other
compensation in connection therewith other than the compensation to be paid to
the Executive as provided in this Agreement. Except as contemplated in Section
6(c) hereof, the Executive shall have no interest, direct or indirect, in any
vendor or customer of the Company.

          6.  Noncompetition
Covenant.

                 (a) Agreement
Not to Compete. During the term of his employment with the Company and for
a period of one year after the termination of such employment (whether such
termination is with or without cause, or whether such termination is occasioned
by the Executive or the Company), Executive shall not, directly or indirectly,
engage in competition with the Company in any manner or capacity (e.g., as an advisor, principal, agent,
partner, officer, director, stockholder, employee, member of any association or
otherwise) in any phase of the business which the Company is conducting during
the term of this Agreement, including the design, development, manufacture,
distribution, marketing, leasing or selling of accessories, devices or systems
related to the products or services being sold by the Company, or hire any
current or former employee of the Company.

                 (b) Geographic
Extent of Covenant. The obligations of the Executive under Section 6(a)
shall apply to any geographic area in which the Company (i) has engaged in
business during the term of 

3

this Agreement through production, promotional, sales
or marketing activity, or otherwise, or (ii) has otherwise established its
goodwill, business reputation or any customer or supplier relations.

                 (c) Limitation
of Covenant. Ownership by the Executive, as a passive investment, of less than
five percent of the outstanding shares of capital stock of any corporation
listed on a national securities exchange shall not constitute a breach of
Section 5 or this Section 6.

                 (d) Indirect
Competition. The Executive will not, directly or indirectly, assist or
encourage any other person in carrying out, directly or indirectly, any
activity that would be prohibited by the above provisions of this Section 6 if
such activity were carried out by the Executive, either directly or indirectly.
In particular the Executive agrees that he will not, directly or indirectly,
induce any employee of the Company to carry out, directly or indirectly, any
such activity.

                 (e) Acknowledgment.
The Executive agrees that the restrictions and agreements contained in this
Section 6 are reasonable and necessary to protect the legitimate interests of
the Company and that any violation of this Section 6 will cause substantial and
irreparable harm to the Company that would not be quantifiable and for which no
adequate remedy would exist at law and accordingly injunctive relief shall be
available for any violation of this Section 6.

                 (f) Blue
Pencil Doctrine. If the duration or geographical extent of, or business
activities covered by, this Section 6 are in excess of what is valid and
enforceable under applicable law, then such provision shall be construed to
cover only that duration, geographical extent or activities that are valid and
enforceable. The Executive acknowledges the uncertainty of the law in this
respect and expressly stipulates that this Agreement be given the construction
which renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.

          7.  Patent
and Related Matters.

                 (a) Disclosure
and Assignment. The Executive will promptly disclose in writing to the
Company complete information concerning each and every invention, discovery,
improvement, device, design, apparatus, practice, process, method or product,
whether patentable or not, made, developed, perfected, devised, conceived or
first reduced to practice by the Executive, either solely or in collaboration
with others, during the term of this Agreement, or within six months thereafter,
whether or not during regular working hours, relating either directly or
indirectly to the business, products, practices or techniques of the Company (“Developments”). The Executive, to the
extent that he has the legal right to do so, hereby acknowledges that any and
all of the Developments are the property of the Company and hereby assigns and
agrees to assign to the Company any and all of the Executive’s right, title and
interest in and to any and all of the Developments. At the request of the
Company, the Executive will confer with the Company and its representatives for
the purpose of disclosing all Developments to the Company as the Company shall
reasonably request during the period ending one year after termination of the
Executive’s employment with the Company.

                 (b) Future
Developments. As to any future Developments made by the Executive that
relate to the business, products or practices of the Company and that are first
conceived or reduced to practice during the term of this Agreement, or within
six months thereafter, but which are claimed for any reason to belong to an
entity or person other than the Company, the Executive will promptly disclose
the same in writing to the Company and shall not disclose the same to others if
the Company, within 20 days thereafter, shall claim ownership of such
Developments under the terms of this Agreement. 

                 (c) Limitation
on Sections 7(a) and 7(b). The provisions of Section 7(a) and 7(b) shall
not apply to any Development meeting the following conditions:

4

	
  

 	
  

 
	
  

 	
           (i)       such
 Development was developed entirely on the Executive’s own time;

 
	
  

 	
  

 
	
  

 	
           (ii)      such
 Development was made without the use of any Company equipment, supplies,
 facility or trade secret information;

 
	
  

 	
  

 
	
  

 	
           (iii)     such
 Development does not relate (A) directly to the business of the Company or
 (B) to the Company’s actual or demonstrably anticipated research or
 development;and

 
	
  

 	
  

 
	
  

 	
           (iv)     such
 Development does not result from any work performed by the Executive for the
 Company.

 

                 (d) Assistance
of the Executive. Upon request and without further compensation therefor,
but at no expense to the Executive, the Executive will do all lawful acts,
including but not limited to, the execution of papers and lawful oaths and the
giving of testimony, that in the opinion of the Company, may be necessary or
desirable in obtaining, sustaining, reissuing, extending and enforcing United
States and foreign copyrights and Letters Patent, including but not limited to,
design patents, on the Developments, and for perfecting, affirming and
recording the Company’s complete ownership and title thereto, and to cooperate
otherwise in all proceedings and matters relating thereto. Executive hereby
irrevocably designates and appoints the Company and its duly authorized
officers and agents, as Executive’s agents and attorneys-in-fact to act for and
on Executive’s behalf, and to execute and file any documents and to do all
other lawfully permitted acts to further the purposes of this Section 7(d) with
the same legal force and effect as if executed by Executive.

                 (e) Records.
The Executive will keep complete, accurate and authentic accounts, notes, data
and records of the Developments in the manner and form requested by the
Company. Such accounts, notes, data and records shall be the property of the
Company, and, upon its request, the Executive will promptly surrender same to
it or, if not previously surrendered upon its request or otherwise, the Executive
will surrender the same, and all copies thereof, to the Company upon the
conclusion of his employment.

                 (f) Obligations,
Restrictions and Limitations. The Executive understands that the Company
may enter into agreements or arrangements with agencies of the United States
Government, and that the Company may be subject to laws and regulations which
impose obligations, restrictions and limitations on it with respect to
inventions and patents which may be acquired by it or which may be conceived or
developed by employees, consultants or other agents rendering services to it.
The Executive shall be bound by all such obligations, restrictions and
limitations applicable to any such invention conceived or developed by him
while he is employed by the Company and shall take any and all further action
which may be required to discharge such obligations and to comply with such
restrictions and limitations.

                 (g) Copyrightable
Material. All right, title and interest in all copyrightable material that
the Executive shall conceive or originate, either individually or jointly with
others, and which arise out of the performance of this Agreement, will be the
property of the Company and are by this Agreement assigned to the Company along
with ownership of any and all copyrights in the copyrightable material. Upon
request and without further compensation therefor, but at no expense to the
Executive, the Executive shall execute all papers and perform all other acts
necessary to assist the Company to obtain and register copyrights on such
materials in any and all countries. Where applicable, works of authorship
created by the Executive for the Company in performing his responsibilities
under this Agreement shall be considered “works
made for hire,” as defined in the U.S. Copyright Act.

5

                 (h) Know-How
and Trade Secrets. All know-how and trade secret information conceived or
originated by the Executive that arises out of the performance of his
obligations or responsibilities under this Agreement or any related material or
information shall be the property of the Company, and all rights therein are by
this Agreement assigned to the Company.

          8.  Termination
of Employment.

                 (a) Grounds
for Termination. The Executive’s employment shall terminate prior to the
expiration of the initial term set forth in Section 1 or any extension thereof
in the event that at any time:

	
  

 	
  

 
	
  

 	
           (i)       The
 Executive dies,

 
	
  

 	
  

 
	
  

 	
           (ii)      The
 Executive becomes “Disabled,” so that he cannot perform the essential
 functions of his position with or without reasonable accommodation,

 
	
  

 	
  

 
	
  

 	
           (iii)     The
 Board of Directors of the Company elects to terminate this Agreement for
 “Cause” and notifies the Executive in writing of such election,

 
	
  

 	
  

 
	
  

 	
           (iv)     The
 Board of Directors of the Company elects to terminate this Agreement without
 “Cause” and notifies the Executive in writing of such election, 

 
	
  

 	
  

 
	
  

 	
           (v)      The
 Executive elects to terminate this Agreement without Good Reason and notifies
 the Company of such election, or

 
	
  

 	
  

 
	
  

 	
           (vi)     The
 Executive elects to terminate this Agreement for Good Reason and notifies the
 Company in writing of such election.

 

          If
this Agreement is terminated pursuant to clause (i), (ii) or (iii) of this
Section 8(a), such termination shall be effective immediately. If this
Agreement is terminated pursuant to clause (iv), (v) or (vi) of this Section
8(a), such termination shall be effective 30 days after delivery of the notice
of termination.

                 (b) Certain
Definitions. For purposes of this Section 8:

	
  

 	
  

 
	
  

 	
           (i)       “Cause”
means:

 

	
  

 	
  

 
	
  

 	
           (A)     The
 Executive has breached the provisions of Section 4, 6 or 7 of this Agreement
 in any material respect;

 
	
  

 	
  

 
	
  

 	
           (B)     The
 Executive has engaged in willful and material misconduct (including willful
 and material failure to perform the Executive’s duties as an officer or
 employee of the Company or a subsidiary where Executive has failed to cure
 such failure to perform within 30 days after receipt of written notice from
 the Company);

 
	
  

 	
  

 
	
  

 	
           (C)     The
 Executive has committed fraud, misappropriation or embezzlement in connection
 with the Company’s business;

 
	
  

 	
  

 
	
  

 	
           (D)     The
 Executive has been convicted or has pleaded nolo
 contendere to a felony; or

 
	
  

 	
  

 
	
  

 	
           (E)     The
 Executive has been convicted or has pleaded nolo
 contendere to a crime involving fraud or dishonesty, or any other
 crime of moral turpitude that reflects 

 

6

	
  

 	
  

 
	
  

 	
 upon the Executive’s fitness to perform duties as an
 officer or employee or that casts the Company in a negative light by
 association.

 
	
  

 	
  

 
	
  

 	
 In the event that the Company terminates the
 Executive’s employment for “Cause” pursuant to clause (B) of this Section
 8(b)(i) and the Executive objects in writing to the Board’s determination
 that there was proper “Cause” for such termination within 20 days after the
 Executive is notified of such termination, the matter shall be resolved by
 arbitration in accordance with the provisions of Section 9(a). If the
 Executive fails to object to any such determination of “Cause” in writing
 within such 20-day period, he shall be deemed to have waived his right to
 object to that determination. If such arbitration determines that there was
 not proper “Cause” for termination, such termination shall be deemed to be a
 termination pursuant to clause (iv) of Section 8(a).

 

	
  

 	
  

 
	
  

 	
           (ii)     “Disabled”
 means any mental or physical condition that renders the Executive unable to
 perform the essential functions of his position, with or without reasonable
 accommodation, for a period in excess of three months, as determined by an
 independent physician.

 
	
  

 	
  

 
	
  

 	
           (iii)    “Good
 Reason” means the Executive’s voluntary termination of employment
 for one or more of the following reasons:

 

	
  

 	
  

 
	
  

 	
           (A)     the
 assignment to Executive of employment responsibilities which are materially and
 adversely diminished from the responsibility and status held by Executive
 immediately prior to a Change in Control (provided that, Executive shall not be
 considered to have been assigned employment of lesser responsibility if
 Executive manages, has control over, or serves in the same position with a
 subsidiary, division or operating unit of an acquiring entity that generates
 revenues of comparable amounts to the revenues generated by the Company, and
 has operations of a similar scope to the operations conducted by the Company
 immediately before such Change in Control);

 
	
  

 	
  

 
	
  

 	
           (B)     a
 material reduction by the Company in Executive’s compensation as in effect
 immediately prior to a Change in Control;

 
	
  

 	
  

 
	
  

 	
           (C)     the
 Company’s requiring Executive to be based anywhere other than within fifty
 (50) miles of Executive’s office location immediately prior to a Change in
 Control, except for requirements of temporary travel on the Company’s
 business to an extent substantially consistent with Executive’s business
 travel obligations immediately prior to a Change in Control; or

 
	
  

 	
  

 
	
  

 	
 Notwithstanding the foregoing, prior to the
 Executive’s voluntary termination for Good Reason after a Change in Control,
 the Executive must give the Company written notice of the existence of any
 condition set forth in clause (A) – (C) above within 90 days of such initial
 existence and the Company shall have 30 days from the date of such notice in
 which to cure the condition giving rise to Good Reason, if curable. If,
 during such 30-day period, the Company cures the condition giving rise to
 Good Reason, no benefits shall be due under Section 8(d)(3) of this Agreement
 with respect to such occurrence. If, during such 30-day period, the Company
 fails or refuses to cure the condition giving rise to Good Reason, the
 Executive shall be entitled to benefits under Section 8(d)(3) of this
 Agreement upon such Termination;provided such Termination occurs within 12
 months of such initial existence of the applicable condition.

 
	
  

 	
  

 
	
                     (iv)     “Change in
 Control” means:

 

7

	
  

 	
  

 
	
  

 	
           (A)     the
 consummation
 of the acquisition by any person (as such term is defined in Section 13(d) or
 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”))
 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
 the 1934 Act) of more than fifty percent (50%) of the combined voting power
 of the then outstanding voting securities of the Company;

 
	
  

 	
  

 
	
  

 	
           (B)     the
 individuals who, as of the date hereof, are members of the Board of Directors of
 the Company cease for any reason to constitute a majority of the Board,
 unless the election, or nomination for election by the stockholders, of any
 new director was approved by a vote of a majority of the Board, and such new
 director shall, for purposes of this Agreement, be considered as a member of
 the Board; or

 
	
  

 	
  

 
	
  

 	
           (C)     the
 consummation by the Company of: (1) a merger or consolidation if the stockholders,
 immediately before such merger or consolidation, do not, as a result of such
 merger or consolidation, own, directly or indirectly, more than fifty percent
 (50%) of the combined voting power of the then outstanding Voting Securities
 of the entity resulting from such merger or consolidation in substantially
 the same proportion as their ownership of the combined voting power of the
 Voting Securities of the Company outstanding immediately before such merger
 or consolidation; or (2) a complete liquidation or dissolution or an
 agreement for the sale or other disposition of all or substantially all of
 the assets of the Company.

 

               (c) Effect
of Termination. Notwithstanding any termination of this Agreement, the
Executive, in consideration of his employment hereunder to the date of such
termination, shall remain bound by the provisions of this Agreement which
specifically relate to periods, activities or obligations upon or subsequent to
the termination of the Executive’s employment.

               (d) Payments
after Termination. 

	
  

 	
  

 
	
  

 	
           (i)     Regardless
 of Timing. The Executive’s right to base salary, incentive compensation and
 benefits shall immediately terminate upon a termination of this Agreement
 under Section 8(a)(i),(ii),(iii) and (v), and except as provided in Section
 8(d)(ii) and 8(d)(iii) upon termination under Section 8(a)(iv) and Section
 8(a)(vi).

 
	
  

 	
  

 
	
  

 	
           (ii)    Termination
 Without Cause. If the Executive’s employment is terminated by the Company
 pursuant to Section 8(a)(iv) at any time other than within one (1) year after
 a Change in Control, and provided Executive has executed a written release to
 Company in substantially the form attached as Exhibit C and the revocation or
 rescission periods specified therein have expired, the Company shall continue
 to pay to the Executive, as severance compensation, his base salary through
 the date that is twelve (12) months from the date of termination of
 Executive’s employment.

 
	
  

 	
  

 
	
  

 	
           (iii)   Termination
 Without Cause or for Good Reason within one (1) year after a Change in
 Control. If the Executive’s employment is terminated by the Company
 pursuant to Section 8(a)(iv), or by the Executive pursuant to Section
 8(a)(vi), within one (1) year after a Change in Control, and provided
 Executive has executed a written release to Company in substantially the form
 attached as Exhibit C and the revocation or rescission periods specified
 therein have expired, the Company shall pay to the Executive, as severance
 compensation, an amount equal to twice his annual base salary as of the date
 of such termination; subject, however, to the restriction that the Executive shall not be
 entitled to receive any amount pursuant to this Agreement which constitutes
 an “excess parachute payment” within the meaning of Section 280G of the
 Internal Revenue Code of 1986, as amended (the “Code”), or any successor
 provision or 

 

8

	
  

 	
  

 
	
  

 	
 regulations
 promulgated thereunder. In case of uncertainty as to whether some portion of
 a payment might constitute an excess parachute payment, the Company shall
 initially make the payment to the Executive and Executive agrees to refund to
 the Company any amounts ultimately determined to be excess parachute
 payments. The payments under this Section 8(d)(iii) shall be due and payable
 in a single lump sum cash payment on the first day of the seventh month
 following termination of employment. 

 
	
  

 	
  

 
	
  

 	
           (iv)     
 Notwithstanding anything to the contrary in this Section 8(d), if the
 Executive’s termination of employment is not a “Separation from Service”
 within the meaning of Section 409A of Code and the regulations and other
 published guidance thereunder (including §1.409A-1(h)), then, if required in
 order to comply with the provisions of Section 409A of the Code, payment of
 the benefits and related other payments which may be due under this Section
 8(d) shall be delayed until such a Separation from Service occurs. 

 

               (e)
Surrender of Records and Property. Upon termination of his employment
with the Company, the Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof that relate in
any way to the business, products, practices or techniques of the Company, and
all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain
any trade secrets or confidential information of the Company, which in any of
these cases are in his possession or under his control. 

          9.
Settlement of Disputes; Arbitration. Except as provided in Section 9(b),
any claims or disputes of any nature between the Company and the Executive
arising from or related to the performance, breach, termination, expiration,
application or meaning of this Agreement or any matter relating to the
Executive’s employment and the termination of that employment by the Company
shall be resolved exclusively by arbitration in Minneapolis, Minnesota, in
accordance with the applicable rules of the American Arbitration Association.
In the event of submission of any dispute to arbitration, each party shall
select an arbitrator, which arbitrators shall then appoint a single arbitrator
to hear the case. Not later than 30 days prior to the date set for hearing,
each party shall provide to the other party and to the arbitrator a copy of all
exhibits upon which the party intends to rely at the hearing and a list of all
persons each party intends to call at the hearing. The fees of the arbitrator
and other costs incurred by the Executive and the Company in connection with
such arbitration shall be paid by the party that is unsuccessful in such
arbitration. The decision of the arbitrator shall be final and binding upon
both parties. Judgment of the award rendered by the arbitrator may be entered
in any court of competent jurisdiction. 

               (b)
Resolution of Certain Claims—Injunctive Relief. Section 9(a) shall have
no application to claims by the Company asserting a violation of Section 4, 6,
7 or 8(e) or seeking to enforce, by injunction or otherwise, the terms of
Section 4, 6, 7 or 8(e). Such claims may be maintained by the Company in a
lawsuit subject to the terms of Section 9(c). The Executive acknowledges that
it would be difficult to fully compensate the Company for damages resulting
from any breach by him of the provisions of this Agreement. Accordingly, the
Executive agrees that, in addition to, but not to the exclusion of any other
available remedy, the Company shall have the right to enforce the provisions of
Sections 4, 6, 7 or 8(e) by applying for and obtaining temporary and permanent
restraining orders or injunctions from a court of competent jurisdiction
without the necessity of filing a bond therefor, and without the necessity of
proving actual damages, and the substantially prevailing party shall be
entitled to recover from the non-prevailing party its reasonable outside
counsel fees in enforcing the provisions of Sections 4, 6, 7 or 8(e). 

9

               (c)
Venue. Any action at law, suit in equity or judicial proceeding arising
directly, indirectly, or otherwise in connection with, out of, related to or
from Sections 4, 6, 7 or 8(e) of this Agreement, shall be litigated only in the
courts of the State of Minnesota, County of Hennepin. The Executive and the
Company consent to the jurisdiction of such courts over the subject matter set
forth in Section 9(b). The Executive waives any right the Executive may have to
transfer or change the venue of any litigation brought against the Executive by
the Company. 

          10.
Code Section 409A. 

               (a)
In General. This Agreement is intended to meet the requirements of
Section 409A of the Code, and shall be interpreted and construed consistent
with that intent. 

               (b)
Payments subject to Section 409A.
Notwithstanding any other provision of this Agreement, to the extent that the
right to any payment (including the provision of benefits) hereunder provides
for the “deferral of compensation” within the meaning of Section 409A(d)(1) of
the Code, the payment shall be paid (or provided) in accordance with the
following: 

	
  

 	
  

 
	
  

 	
 (a)     If
the Executive is a “Specified Employee” within the meaning of Section
409A(a)(2)(B)(i) of the Code on the date of the Executive’s Separation from
Service (the “Separation Date”), and if an exemption from the six (6) month
delay requirement of Code Section 409A(a)(2)(B)(i) is not available, then no
such payment shall be made or commence during the period beginning on the
Separation Date and ending on the date that is six months following the
Separation Date or, if earlier, on the date of the Executive’s death. The
amount of any payment that would otherwise be paid to the Executive during
this period shall instead be paid to the Executive on the first day of the
first calendar month following the end of the period. Each payment hereunder
is intended to constitute a separate payment from each other payment for
purposes of Treasury Regulation Section 1.409A-2(b)(2).  

 
	
  

 	
  

 
	
  

 	
 (b)     Payments
 with respect to reimbursements of expenses or benefits or provision of fringe
 or other in-kind benefits shall be made on or before the last day of the
 calendar year following the calendar year in which the relevant expense or
 benefit is incurred. The amount of expenses or benefits eligible for
 reimbursement, payment or provision during a calendar year shall not affect
 the expenses or benefits eligible for reimbursement, payment or provision in
 any other calendar year. 

 

          11.
Miscellaneous. 

               (a)
Entire Agreement. This Agreement (including the exhibits, schedules and
other documents referred to herein) contains the entire understanding between
the parties hereto with respect to the subject matter hereof and supersedes any
prior understandings, agreements or representations, written or oral, relating
to the subject matter hereof. 

               (b)
Counterparts. This Agreement may be executed in separate counterparts,
each of which will be an original and all of which taken together shall
constitute one and the same agreement, and any party hereto may execute this
Agreement by signing any such counterpart. 

               (c)
Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable under any applicable law or rule, the validity, legality and
enforceability of the other provision of this Agreement will not be affected or
impaired thereby. In 

10

furtherance
and not in limitation of the foregoing, should the duration or geographical
extent of, or business activities covered by, any provision of this Agreement
be in excess of that which is valid and enforceable under applicable law, then
such provision shall be construed to cover only that duration, extent or
activities which may validly and enforceably be covered. The Executive
acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement be given the construction which renders its
provision valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law. 

               (d)
Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives and, to the extent permitted by subsection (e), successors and
assigns. 

               (e)
Assignability. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall be assignable
(including by operation of law) by either party without the prior written
consent of the other party to this Agreement, except that the Company may,
without the consent of the Executive, assign its rights and obligations under
this Agreement to any corporation, firm or other business entity with or into
which the Company may merge or consolidate, or to which the Company may sell or
transfer all or substantially all of its assets, or of which 50% or more of the
equity investment and of the voting control is owned, directly or indirectly,
by, or is under common ownership with, the Company. After any such assignment
by the Company, the Company shall be discharged from all further liability
hereunder and such assignee shall thereafter be deemed to be the Company for
the purposes of all provisions of this Agreement including this Section 11. 

               (f)
Modification, Amendment, Waiver or Termination. No provision of this
Agreement may be modified, amended, waived or terminated except by an
instrument in writing signed by the parties to this Agreement. No course of
dealing between the parties will modify, amend, waive or terminate any
provision of this Agreement or any rights or obligations of any party under or
by reason of this Agreement. No delay on the part of the Company in exercising
any right hereunder shall operate as a waiver of such right. No waiver, express
or implied, by the Company of any right or any breach by the Executive shall
constitute a waiver of any other right or breach by the Executive. 

               (g)
Notices. All notices, consents, requests, instructions, approvals or
other communications provided for herein shall be in writing and delivered by
personal delivery, overnight courier, mail, electronic facsimile or e-mail
addressed to the receiving party at the address set forth herein. All such
communications shall be effective when received. 

	
  

 	
  

 
	
  

 	
 CyberOptics
 Corporation 

 
	
  

 	
 5900 Golden
 Hills Drive 

 
	
  

 	
 Golden
 Valley, MN 55416 

 
	
  

 	
 Attention:
 Chief Financial Officer 

 
	
  

 	
 (763)
 542-5737 

 
	
  

 	
  

 
	
  

 	
 Subodh Kulkarni

 
	
  

 	
 8766
 Inverness Road

 
	
  

 	
 Woodbury, MN
 55125

 
	
  

 	
 651-739-8443

 

Any party may
change the address set forth above by notice to each other party given as
provided herein. 

               (h)
Headings. The headings and any table of contents contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. 

11

               (i)
Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION,
VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW
PROVISIONS THEREOF. 

               (j)
Third-Party Benefit. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever. 

               (k)
Withholding Taxes. The Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling. 

          IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth below. 

	
  

 	
  

 	
  

 
	
  

 	
 CYBEROPTICS CORPORATION

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Jeffrey Bertelsen

 
	
  

 	
  

 	
 Jeffrey
 Bertelsen, Chief Financial Officer

 
	
  

 	
  

 	
  

 
	
  

 	
 /s/ Subodh Kulkarni

 
	
  

 	
 Subodh
 Kulkarni

 

12

EXHIBIT A

CYBEROPTICS CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT

          THIS
AGREEMENT, made as of the «Day» of «Month», 20 by and
between CyberOptics Corporation, a Minnesota corporation (“the Company”), and
«Name» (“Employee”). 

          WHEREAS,
the Company wishes to grant this stock option to Employee under its 1998 Stock
Incentive Plan. 

          NOW,
THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto hereby agree as follows: 

          1.
Definitions

     For
all purposes of this Option, the following terms shall have the meanings
ascribed to them below: 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 An “Adverse
 Change” in Employee’s employment shall mean the occurrence of any of the
 following events: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 the
 assignment to Employee of employment responsibilities which are not of
 comparable responsibility and status as the employment responsibilities held
 by Employee immediately prior to a Change in Control; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 a reduction
 by the Company in Employee’s compensation (including targeted bonus
 compensation) as in effect immediately prior to a Change in Control; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 the Company’s requiring Employee to be based anywhere after a Change of
 Control other than within fifty (50) miles of Employee’s office location
 immediately prior to a Change in Control, except for requirements of
 temporary travel on the Company’s business to an extent substantially
 consistent with Employee’s business travel obligations immediately prior to a
 Change in Control; or 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 “Change in
 Control” shall mean: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 a change in
 control of a nature that would be required to be reported in response to Item
 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
 Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the
 Company is then subject to such reporting requirement; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 the public
 announcement (which, for purposes of this definition, shall include, without
 limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by
 the Company or any “person” (as such term is used in Sections 13(d) and 14(d)
 of the Exchange Act) that such person has become the “beneficial owner” (as
 defined in Rule 13d-3 promulgated under the Exchange Act), directly or
 indirectly, of securities of the Company representing 40% or more of the
 combined voting power of the Company’s then outstanding securities; 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 the
 Continuing Directors cease to constitute a majority of the Company’s Board of
 Directors; 

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 the
 shareholders of the Company approve (x) any consolidation or merger of the
 Company in which the Company is not the continuing or surviving corporation
 or pursuant to which shares of Company stock would be converted into cash,
 securities or other property, other than a merger of the Company in which
 shareholders immediately prior to the merger have the same proportionate
 ownership of stock of the surviving corporation immediately after the merger;
 (y) any sale, lease, exchange or other transfer (in one transaction or a
 series of related transactions) of all or substantially all of the assets of
 the Company; or (z) any plan of liquidation or dissolution of the Company; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iv)

 	
 the majority
 of the Continuing Directors determine in their sole and absolute discretion
 that there has been a change in control of the Company.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

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

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 “Company”
 shall mean CyberOptics Corporation, a Minnesota corporation, and with respect
 to any reference to Employee’s employer, any subsidiary of CyberOptics
 Corporation. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 “Common
 Stock” shall mean the common stock, no par value, of the Company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 “Continuing
 Director” shall mean any person who is a member of the Board of Directors of
 the Company, while such person is a member of the Board of Directors, who is
 not an Acquiring Person (as defined below) or an Affiliate or Associate (as
 defined below) of an Acquiring Person, or a representative of an Acquiring
 Person or of any such Affiliate or Associate, and who (x) was a member of the
 Board of Directors on the effective date of this Option or (y) subsequently
 becomes a member of the Board of Directors, if such person’s initial
 nomination for election or initial election to the Board of Directors is
 recommended or approved by a majority of the Continuing Directors. For
 purposes of this subparagraph (ii), “Acquiring Person” shall mean any
 “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
 Act) who beneficially owns (as defined in Rule 13d-3 of the Exchange Act),
 directly or indirectly, securities of the Company representing 40% or more of
 the combined voting power of the Company’s then outstanding securities, but
 shall not include the Company, any subsidiary of the Company or any employee
 benefit plan of the Company or of any subsidiary of the Company or any entity
 holding shares of Common Stock organized, appointed or established for, or
 pursuant to the terms of, any such plan; and “Affiliate” and “Associate”
 shall have the respective meanings ascribed to such terms in Rule 12b-2
 promulgated under the Exchange Act. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 “Disabled”
 or “Disability” shall have the meaning attributed to it by Section 105(d)(4)
 of the Code or any successor section. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 “Option”
 shall mean the right to purchase Common Stock of the Company represented by
 this Agreement. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 “Retirement”
 or “Retire” shall mean the cooperative Resignation of Employee pursuant to
 its retirement policies after age 58and
 after the Employee has been employed by the Company or a subsidiary for more
 than ten years. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 “Resign” or
 “Resignation” shall mean the voluntary termination by Employee of employment
 with the Company, unless the Company agrees, through its Board of Directors,
 that such voluntary termination shall not constitute a resignation for
 purposes of this Option. 

 
	
  

 	
  

 	
  

 
	
  

 	
 2. Grant of
 Option

 

2

The Company
hereby grants to Employee, on the date set forth above and at the times and
subject to the conditions set forth below, the right and option to purchase all
or any part of an aggregate of «Shares» of Common Stock at the price of «Price»
per share on the terms and conditions set forth herein. This Option is not
intended to be an incentive stock option within the meaning of Section 422 of
the Code. 

	
  

 	
  

 	
  

 
	
  

 	
 3. Duration
 and Exercisability

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 Except as
 provided in paragraph 3(b) or 4(b) below, this Option may not be exercised by
 Employee until the expiration of one (1) year from the date hereof and shall
 become exercisable on the first anniversary of the date hereof with respect
 to 25% of the shares subject hereto and with respect to an additional
 cumulative 25% of the shares subject to this Option on the anniversary of the
 date hereof in each year thereafter until the fourth anniversary of the date
 hereof when this Option shall be exercisable in full. This Option shall
 terminate in all events seven (7) years after the date of grant. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Notwithstanding
 Section 3(a), the exercisability of this Option shall be accelerated, and
 this Option shall become exercisable with respect to all of the shares
 subject to this Option on the date of, and in the event of, an Adverse Change
 in Employee’s employment after a Change In Control. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 During the
 lifetime of Employee, the Option shall be exercisable only by Employee and
 shall not be assignable or transferable by Employee, other than by will or
 the laws of descent and distribution. 

 
	
  

 	
  

 	
  

 
	
  

 	
 4. Effect of
Termination of Employment 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 In the event
 that Employee (i) shall cease to be employed by the Company prior to a Change
 of Control for any reason other than Employee’s gross and willful misconduct,
 Employee’s Retirement or Employee’s death or Disability, or (ii) shall Resign
 after a Change of Control and prior to an Adverse Change, then Employee shall
 have the right to exercise the Option at any time within three months after
 such termination of employment or Resignation to the extent of the full
 number of shares Employee was entitled to purchase under the Option on the
 date of termination or resignation, subject to the condition that no Option
 shall be exercisable after the expiration of the term of the option.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 In the event
 that Employee’s employment with the Company is terminated by the Company within
 two years after a Change of Control, Employee shall have the right to
 exercise the Option at any time within three months after such termination of
 employment with respect to the full number of shares subject to this Option.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 In the event
 that Employee shall cease to be employed by the Company by reason of
 Employee’s gross and willful misconduct during the course of employment,
 including but not limited to wrongful appropriation of the Company funds or
 the commission of a gross misdemeanor or felony, the option shall be
 terminated as of the date of the misconduct.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 If Employee
 shall die while in the employ of the Company or within three months after
 termination of employment for any reason other than gross and willful
 misconduct or become Disabled while in the employ of the Company and Employee
 shall not have fully exercised the option, such option may be exercised at
 any time within twelve months after Employee’s death or Disability by the
 personal representatives or administrators, or if applicable guardian, of
 Employee or by any person or persons to whom the option is transferred by
 will or the applicable laws of descent and distribution, to the extent of the

 

3

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 full number
 of shares Employee was entitled to purchase under the option on the date of
 death, Disability or termination of employment, if earlier, and subject to
 the condition that no option shall be exercisable after the expiration of the
 term of the option.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 In the event
 Employee Retires, then Employee shall have the right to exercise the Option
 at any time after such Retirement and until the term of this Option expires
 to the extent of the full number of shares Employee was entitled to purchase
 under the Option on the date of Retirement.

 
	
  

 	
  

 	
  

 
	
  

 	
 5. Manner of
 Exercise

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 The option
 can be exercised only by Employee or other proper party by delivering within
 the option period written notice to the Company at its principal office. The
 notice shall state the number of shares as to which the option is being exercised
 and be accompanied by payment in full of the option price for all shares
 designated in the notice.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Employee may
 pay the option price by check (bank check, certified check or personal check)
 or with the approval of the Company by delivering to the Company for
 cancellation Common Stock of the Company with a fair market value equal to
 the option price; provided, however, that Employee shall not be entitled to
 tender shares of the Common Stock pursuant to successive, substantially
 simultaneous exercises of this Option or any other stock option of the
 Company. For these purposes, the fair market value of the Common Stock shall
 be as reasonably determined by the Company but shall not be less than, if
 applicable, (i) the closing price of the stock as reported for composite
 transactions, if the Common Stock is then traded on a national securities
 exchange, (ii) the last sale price if the Common Stock is then quoted on the
 NASDAQ National Market System or (iii) the average of the closing representative
 bid and asked prices of the Common Stock as reported on NASDAQ on the date as
 of which fair market value is being determined.

 
	
  

 	
  

 	
  

 
	
  

 	
 6.
 Miscellaneous

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 This option
 is issued pursuant to the Company’s 1998 Stock Incentive Plan and is subject
 to its terms. The terms of the Plan are available for inspection during
 business hours at the principal offices of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 This
 Agreement shall not confer on Employee any right with respect to employment
 or continuance of employment by the Company, nor will it interfere in any way
 with the right of the Company to terminate such employment at any time.
 Employee shall have none of the rights of a shareholder with respect to
 shares subject to this Option until such shares shall have been issued to Employee
 upon exercise of this Option.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 The exercise
 of all or any parts of this Option shall only be effective at such time that
 the sale of Common Stock pursuant to such exercise will not violate any state
 or federal securities or other laws.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Notwithstanding
 any other provision of this Option, if there shall be any change in the
 common stock subject to the Option through merger, consolidation,
 reorganization, recapitalization, dividend or other distribution, stock split
 or other similar corporate transaction or event of the Company, or the
 Company shall enter into a written agreement to undergo such a transaction or
 event, the Company, in its absolute discretion, may either: (i) make
 appropriate adjustment in the number of shares and the price per share of the
 shares subject to the Option in order to prevent dilution or enlargement of
 the Option rights granted hereunder (provided that the number of shares
 subject to the Option shall

 

4

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 always be a
 whole number) or (ii) cancel any or all of this Option and pay to Employee in
 cash the value of such cancelled Option or portion thereof based on the price
 per share received, or to be received, by a shareholder of the Company in
 such transaction.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 The Company
 shall at all times during the term of the Option reserve and keep available
 such number of shares as will be sufficient to satisfy the requirements of
 this Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 In order to
 provide the Company with the opportunity to claim the benefit of any income
 tax deduction which may be available to it upon the exercise of the Option,
 and in order to comply with all applicable federal or state income tax laws
 or regulations, the Company may take such action as it deems appropriate to
 insure that, if necessary, all applicable federal or state payroll,
 withholding, income or other taxes are withheld or collected from Employee.
 Employee may elect to satisfy his federal and state income tax withholding
 obligations upon exercise of the Option by (i) having the Company withhold a
 portion of its common shares otherwise to be delivered upon exercise of the
 Option having a fair market value equal to the amount of federal and state
 income tax required to be withheld upon such exercise, or (ii) delivering to
 the Company shares of Common Stock other than the shares issuable upon
 exercise of the Option with a fair market value equal to such taxes.

 

          IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the day and year first above written. 

	
  

 	
  

 	
  

 
	
 CYBEROPTICS CORPORATION

 	
  

 	
 EMPLOYEE

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 «Name»

 

5

EXHIBIT B

STOCK AWARD AGREEMENT

          This
Stock Award Agreement (this “Agreement”),
dated as of __________ _____, _____ (the “Effective
Date”), is between CyberOptics Corporation, a Minnesota corporation
(the “Company”) and
_______________, an individual resident of _______________ (“Participant”). This Stock Award is granted
under the CyberOptics Corporation 1998 Stock Incentive Plan (the “Plan”) and is subject to the terms of that
Plan. Capitalized terms used in this Agreement and not defined in this
Agreement have the meanings assigned to them in the Plan. This Agreement
represents the Company’s unfunded and unsecured promise to issue Common Stock
at a future date, subject to the terms of this Agreement and the Plan.

          1.
Award. The Company hereby grants Participant, subject to the terms and
conditions of this Agreement and the Plan, a stock award (the “Stock Award”)
with respect to _____ shares of the Common Stock, $.01 par value (the “Shares”), of the Company . The Stock Award
represents the right to receive the Shares only when, and with respect to the
number of Shares to which, the Stock Award has vested (the “Vested Shares”). The Stock Award is
subject to the terms and conditions set forth in this Agreement and in the
Plan. A copy of the Plan will be furnished upon request of Participant.

          2.
Vesting. 

          (a) Subject
to subsections (b) and (c) below, to termination in accordance with Section 3
below, and to the terms and conditions of this Agreement and the Plan, the
Stock Award shall vest and be converted into an equivalent number of shares
that will be distributed to the Participant as follows:

	
  

 	
  

 	
  

 
	
 On or after Each of the
 Following Dates

 	
  

 	
 Percentage of Shares
 that Vest

 
	
  

 	
  

 	
  

 
	
 First Anniversary of the Effective Date

 	
  

 	
 25%

 
	
 Second Anniversary of the Effective Date

 	
  

 	
 25%

 
	
 Third Anniversary of the Effective Date

 	
  

 	
 25%

 
	
 Fourth Anniversary of the Effective Date

 	
  

 	
 25%

 

          (b)
In the event that, within two years after a Change of Control, either (x)
Participant’s employment with the Company is terminated by the Company, or (y)
there is an Adverse Change in the Participant’s employment, then the Stock
Award shall vest with respect to all Shares that were not previously Vested
Shares. For such purposes: 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)     a “Change of Control” shall mean:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i) a change in control
 of a nature that would be required to be reported in response to Item 6(e) of
 Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
 of 1934, as amended (the “Exchange Act”), whether or not the Company is then
 subject to such reporting requirement;

 

	
  

 	
  

 
	
  

 	
 (ii) the public
 announcement (which, for purposes of this definition, shall include, without
 limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by
 the Company or any “person” (as such term is used in Sections 13(d) and 14(d)
 of the Exchange Act) that such person has become the “beneficial owner” (as
 defined in Rule 13d-3 promulgated under the Exchange Act), directly or
 indirectly, of securities of the Company representing 40% or more of the
 combined voting power of the Company’s then outstanding securities;

 
	
  

 	
  

 
	
  

 	
 (iii) the Continuing
 Directors cease to constitute a majority of the Company’s Board of Directors;

 
	
  

 	
  

 
	
  

 	
 (iv) the shareholders
 of the Company approve (x) any consolidation or merger of the Company in
 which the Company is not the continuing or surviving corporation or pursuant
 to which shares of Company stock would be converted into cash, securities or
 other property, other than a merger of the Company in which shareholders
 immediately prior to the merger have the same proportionate ownership of
 stock of the surviving corporation immediately after the merger; (y) any
 sale, lease, exchange or other transfer (in one transaction or a series of
 related transactions) of all or substantially all of the assets of the
 Company; or (z) any plan of liquidation or dissolution of the Company; or

 
	
  

 	
  

 
	
  

 	
 (v) the majority of the
 Continuing Directors determine in their sole and absolute discretion that
 there has been a change in control of the Company.

 

	
  

 	
  

 
	
  

 	
           (b)          “Continuing
Director” shall mean any person who is a member of the Board of Directors of
the Company, while such person is a member of the Board of Directors, who is
not an Acquiring Person (as defined below) or an Affiliate or Associate (as
defined below) of an Acquiring Person, or a representative of an Acquiring
Person or of any such Affiliate or Associate, and who (x) was a member of the
Board of Directors on the effective date of this Option or (y) subsequently
becomes a member of the Board of Directors, if such person’s initial nomination
for election or initial election to the Board of Directors is recommended or
approved by a majority of the Continuing Directors. For purposes of this subparagraph
(ii), “Acquiring Person” shall mean any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) who beneficially owns (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, securities of the
Company representing 40% or more of the combined voting power of the Company’s
then outstanding securities, but shall not include the Company, any subsidiary
of the Company or any employee benefit plan of the Company or of any subsidiary
of the Company or any entity holding shares of Common Stock organized,
appointed or established for, or pursuant to the terms of, any such plan; and
“Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 promulgated under the Exchange Act.

 
	
  

 
	
  

 	
           (c)          An
“Adverse Change” in Participant’s employment shall mean the occurrence of any
of the following events:

 

2

	
  

 	
  

 
	
  

 	
 (i) the assignment to
 Participant to employment responsibilities which are not of comparable
 responsibility and status as the employment responsibilities held by
 Participant immediately prior to a Change in Control;

 
	
  

 	
  

 
	
  

 	
 (ii) a reduction by the
 Company in Participant’s compensation (including targeted bonus compensation)
 as in effect immediately prior to a Change in Control;

 
	
  

 	
  

 
	
  

 	
 (iii) the Company’s
 requiring Participant to be based anywhere after a Change of Control other
 than within fifty (50) miles of Participant’s office location immediately
 prior to a Change in Control, except for requirements of temporary travel on
 the Company’s business to an extent substantially consistent with
 Participant’s business travel obligations immediately prior to a Change in
 Control.

 

          3.
Termination of Stock Award.

          (a)
Except as provided in subsection (b) below and Section 2 above, a Participant’s
rights under this Agreement with respect to the Stock Award shall terminate at
the earlier of (i) the time the Shares are converted into Vested Shares, or
(ii) the termination of Participant’s employment with the Company. Upon
termination of this Agreement in accordance with clause (ii) above, the
Participant’s rights to all of the Shares subject to the Stock Award not vested
on the date that Participant ceases to be an employee shall be immediately and
irrevocably forfeited and the Participant will retain no rights with respect to
the forfeited Shares.

          (b)
Notwithstanding the provisions of Section 3(a)(ii) above, in the event of
termination of Participant’s employment with the Company as a result of Participant’s
death or disability (within the meaning of Code Section 22(e)(3)) while in the
employ of the Company, the next vesting date for the Stock Award, as set out in
Section 2(a) above, shall accelerate by twelve (12) months as of such date of
termination. The Participant’s rights in any unvested shares subject to this
Stock shall terminate at the time Participant ceases to an employee. 

          4.
Additional Restrictions on Transfer of Stock Award. During the lifetime
of Participant, this Stock Award cannot be sold, assigned, transferred, gifted,
pledged, hypothecated or in any manner encumbered or disposed of at any time
prior to delivery of the Vested Shares, other than by will or the laws of
descent and distribution.

          5.
Conversion of Stock Award to Shares;Responsibility for Taxes.

          (a)          Provided
Participant has satisfied the requirements of Section 5(b) below, after the
vesting of the Stock Award with respect to Vested Shares, the Vested Shares
will be distributed to Participant or, in the event of Participant’s death, to
Participant’s legal representative, as soon as practicable. The distribution to
the Participant, or in the case of the Participant’s death, to the
Participant’s legal representative, of Vested Shares shall be evidenced by a
stock certificate, appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company, or other appropriate means as
determined by the Company. In the event ownership or issuance of Vested Shares
is not feasible due to applicable exchange controls, securities regulations,
tax laws or other provisions of applicable law, as determined by

3

the Company in its sole discretion, Participant, or in
the event of Participant’s death, the Participant’s legal representative, shall
receive cash proceeds in an amount equal to the value of the Vested Shares
otherwise distributable to Participant, net of the satisfaction of the
requirements of Section 5(b) below.

          (b)          By
signing this Agreement, Participant agrees that the Company may withhold from
the Participant’s wages or other cash compensation, or at the sole election of
the Company from Vested Shares to be distributed to Participant in accordance
with Section 5(a), all income tax (including federal, state and local taxes),
social insurance, payroll tax or other tax-related withholding (“Tax Related
Items”) due from the Company or the subsidiary that is the Participant’s actual
employer. In this regard, Participant authorizes the Company or the Participant’s
actual employer to withhold all applicable Tax Related Items legally payable by
Participant from Participant’s wages or other cash compensation payable to
Participant by the Company or the Participant’s actual employer. To the extent
that the Company determines that it is not feasible to withhold from wages, or
not permissible under applicable law to withhold in Shares, then prior to the
issuance of Vested Shares Participant shall pay, or make adequate arrangements
satisfactory to the Company or to the Participant’s actual employer (in their
sole discretion) to satisfy all withholding obligations of the Company and/or
the Participant’s actual employer. Participant shall pay to the Company or to
the Participant’s actual employer any amount of Tax Related Items that the
Company or the Participant’s actual employer may be required to withhold as a
result of Participant’s receipt of the Stock Award and the vesting of the
Vested Shares that cannot be satisfied by the means previously described. The
Company may refuse to deliver Vested Shares to Participant if Participant fails
to comply with Participant’s obligation in connection with the Tax Related
Items as described herein.

          Regardless
of any action the Company or the subsidiary of the Company that is
Participant’s actual employer takes with respect to any or all Tax Related
Items, Participant acknowledges that the ultimate liability for all Tax Related
Items legally due by Participant is and remains Participant’s responsibility
and that the Company and/or the Participant’s actual employer (i) make no
representations or undertakings regarding the treatment of any Tax Related
Items in connection with any aspect of the Stock Award, including the grant of
the Stock Award, the vesting of Stock Award with respect to Shares, the
conversion of the Stock Award into Shares or the receipt of an equivalent cash
payment, the subsequent sale of any Shares acquired at vesting and the receipt
of any dividends;and (ii) do not commit to structure the terms of the grant or
any aspect of the Stock Award to reduce or eliminate the Participant’s
liability for Tax Related Items. 

          6.
Miscellaneous. 

          (a)
Plan Provisions Control. In the event that any provision of this
Agreement conflicts with or is inconsistent in any respect with the terms of
the Plan, the terms of the Plan shall control.

          (b)
Rights of Stockholders. Prior to the vesting of a Stock Award with
respect to Shares, and prior to the receipt by Participant, Participant’s legal
representative or a permissible assignee of the Vested Shares pursuant to
Section 5, neither Participant, Participant’s legal representative nor a
permissible assignee of the Stock Award shall be or have any of the rights and
privileges of

4

a stockholder of the Company with respect to the
Shares issuable to Participant pursuant to the terms of this Agreement.
Participant shall not be entitled to receive dividend equivalents on the Stock
Award.

          (c) Distribution
and Adjustment. This Stock Award is subject to adjustment in the event that
any distribution, recapitalization, reorganization, merger or other event
covered by Section 4(c) of the Plan shall occur; provided, however, that
in the event of any such event, the Company may, in its absolute discretion,
either (1) effect adjustments in accordance with Section 4(c) of the Plan, or
(2) cancel any or all of unvested Stock Award and pay to Participant in cash
the value of such cancelled Stock Award, based on the price per share received,
or to be received, by a shareholder of the Company in such transaction event..

          (d) No
Right to Employment. The grant of this Stock Award shall not be construed
as giving Participant the right to be retained in the employ of the Company or
any Affiliate, or as giving a director of the Company or an Affiliate the right
to continue as a director of the Company or an Affiliate with, the Company or
an Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment or position at any time, with or without
cause. In addition, the Company or an Affiliate may at any time dismiss
Participant from employment, or terminate the term of a director of the Company
or an Affiliate, free from any liability or any claim under the Plan or this
Agreement._Nothing in this Agreement shall confer on any person any legal or
equitable right against the Company or any Affiliate, directly or indirectly,
or give rise to any cause of action at law or in equity against the Company or
an Affiliate. This Stock Award shall not form any part of the wages or salary
of Participant for purposes of severance pay or termination indemnities,
irrespective of the reason for termination of employment. Under no
circumstances shall any person ceasing to be an employee of the Company or any
Affiliate be entitled to any compensation for any loss of any right or benefit
under this Agreement or the Plan which such employee might otherwise have
enjoyed but for termination of employment, whether such compensation is claimed
by way of damages for wrongful or unfair dismissal, breach of contract or
otherwise. By participating in the Plan, Participant shall be deemed to have
accepted all the terms and conditions of the Plan and this Agreement and the
terms and conditions of any rules and regulations adopted by the Committee and
shall be fully bound thereby.

          (e) Governing
Law. The validity, construction and effect of the Plan and this Agreement,
and any rules and regulations relating to the Plan and this Agreement, shall be
determined in accordance with the internal laws, and not the law of conflicts,
of the State of Minnesota.

          (f) Severability.
If any provision of this Agreement is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the purpose or intent of the Plan or the Award,
such provision shall be stricken as to such jurisdiction or Award, and the
remainder of this Agreement shall remain in full force and effect.

          (g) No
Trust or Fund Created. Neither the Plan nor this Agreement shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the 

5

Company or any Affiliate and Participant or any other
person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to a Stock Award, such right shall be no
greater than the right of any unsecured creditor of the Company or any
Affiliate.

          (h) Other
Benefits. No compensation or benefit awarded to or realized by Participant
under the Plan or this Agreement shall be included for the purpose of computing
Participant’s compensation under any compensation-based retirement, disability
or similar plan of the Company unless required by law or otherwise provided by
such other plan.

          (i) Headings.
Headings are given to the Sections and subsections of this Agreement solely as
a convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of this
Agreement or any provision thereof.

          (j) Confidentiality.
Participant shall not disclose either the contents or any of the terms and
conditions of this Agreement to any other person and agrees that such
disclosure may result in both immediate termination of the Stock Award without
the right to exercise any part thereof and termination of employment with the
Company.

          (k) Notices.
All notices, claims, certificates, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
delivered if personally delivered or if sent by nationally recognized overnight
courier, by facsimile or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (a)

 	
 If to the Company, to it at:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 CyberOptics Corporation

 
	
  

 	
  

 	
  

 	
 5900 Golden Hills Drive

 
	
  

 	
  

 	
  

 	
 Golden Valley, MN 55416

 
	
  

 	
  

 	
  

 	
 Attn: Director – Human Resources

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           (b)        If
 to Participant, to such address as most recently supplied to the Company by
 Participant and set forth in the Company’s records; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
           (c)        to
 such other address as the party to whom notice is to be given may have
 furnished to the other party in writing in accordance with this
 Section 6(k).

 

          Any
such notice or communication shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery (or if such date is
not a business day, on the next business day), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of facsimile transmission, when received (or
if not sent on a business day, on the next business day after the date sent)
and (iv) in the case of mailing, on the third business day following the
date on which the piece of mail containing such communication is posted.

6

          (l)  Waiver
of Breach. The waiver by either party of a breach of any provision of this Agreement
must be in writing and shall not operate or be construed as a waiver of any
other or subsequent breach.

          (m) Undertaking.
Both parties hereby agree to take whatever additional actions and execute
whatever additional documents either party may in their reasonable judgment
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the other party under the provisions of
this Agreement.

          (n) Counterparts.
This Agreement may be executed in one or more counterparts, and each such
counterpart shall be deemed to be an original, but all such counterparts
together shall constitute but one agreement.

          (o) Entire
Agreement. This Agreement (and the other writings incorporated by reference
herein, including the Plan) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous written or oral negotiations, commitments, representations and
agreements with respect thereto.

          IN
WITNESS WHEREOF, the Company and Participant have executed
this Agreement on the date set forth in the first paragraph.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 CYBEROPTICS CORPORATION

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 PARTICIPANT

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
 Name:

 	
  

 

7

EXHIBIT C

GENERAL
RELEASE

          This
General Release is made and entered into as of the _day of _______, _______, by
Subodh Kulkarni (“Executive”).

          WHEREAS,
CyberOptics Corporation (the “Company”)
and Executive are parties to an Employment Agreement dated January __, 2014
(the “Employment
Agreement”);

          WHEREAS,
Executive intends to settle any and all claims that Executive has or may have
against Company as a result of Executive’s employment with Company and the
cessation of Executive’s employment with Company; and

          WHEREAS,
Under the terms of the Employment Agreement, which Executive agrees are fair
and reasonable, Executive agreed to enter into this General Release as a
condition precedent to the severance arrangements described in Section 9(e)(ii)
of the Employment Agreement.

          NOW,
THEREFORE, in consideration of the provisions and the mutual
covenants herein contained, the parties agree as follows:

          1.          Release.
For the consideration expressed in the Employment Agreement, Executive does
hereby fully and completely release and waive any and all claims, complaints,
causes of action, demands, suits and damages, of any kind or character, which
Executive has or may have against the Released Parties, as hereinafter defined,
arising out of any acts, omissions, conduct, decisions, behavior or events
occurring up through the date of Executive’s signature on this General Release,
including Executive’s employment with Company and the cessation of that
employment. For purposes of this General Release, “Released Parties” means
collectively Company, its predecessors, successors, assigns, parents,
affiliates, subsidiaries, related companies, officers, directors, shareholders,
agents, servants, employees and insurers, and each and all thereof.

          Executive
understands and accepts that Executive’s release of claims includes any and all
possible discrimination claims, including, but not limited to, claims based
upon: Title VII of the Federal Civil Rights Act of 1964, as amended; the
Age Discrimination in Employment Act; the Americans with Disabilities Act; the
Equal Pay Act; the Fair Labor Standards Act; the Executive Retirement Income
Security Act; the Minnesota Human Rights Act; Minn. Stat. §181.81; the
Minneapolis Code of Ordinances; or any other federal, state or local statute,
ordinance or law. Executive also understands that Executive is giving up all
other claims, including those grounded in contract or tort theories, including,
but not limited to: wrongful discharge; violation of Minn. Stat. §176.82;
breach of contract; tortious interference with contractual relations;
promissory estoppel; breach of the implied covenant of good faith and fair
dealing; breach of express or implied promise; breach of manuals or other
policies; assault; battery; fraud; false imprisonment; invasion of privacy;
intentional or negligent misrepresentation; defamation, including libel, 

slander, discharge defamation and self-publication
defamation; discharge in violation of public policy; whistleblower; intentional
or negligent infliction of emotional distress; or any other theory, whether
legal or equitable.

          Executive
further understands that Executive is releasing, and does hereby release, any
claims for damages, by charge or otherwise, whether brought by Executive or on
Executive’s behalf by any other party, governmental or otherwise, and agrees
not to institute any claims for damages via administrative or legal proceedings
against any of the Released Parties. Executive also waives and releases any and
all rights to money damages or other legal relief awarded by any governmental
agency related to any charge or other claim against any of the Released
Parties.

          This
General Release does not apply to any post-termination claim that Executive may
have for benefits under the provisions of any employee benefit plan maintained
by Company.

          Executive’s
release of claims shall not apply to any claims Executive might have to
indemnification under Minnesota Statute §302A.521, any other applicable statute
or regulation or Company’s by-laws.

          2.          Rescission. Executive has been
informed of Executive’s right to rescind this General Release by written notice
to Company within fifteen (15) calendar days after the execution of this
General Release. Executive has been informed and understands that any such
rescission must be in writing and delivered to Company by hand or sent by mail
within the 15-day time period. If delivered by mail, the rescission must be:
(1) postmarked within the applicable period and (2) sent by certified mail,
return receipt requested.

          Executive
understands that Company will have no obligations under the Employment
Agreement in the event a notice of rescission by Executive is timely delivered,
and, in the event Executive rescinds this General Release, Executive agrees to
repay to Company any payments made to Executive or benefits conferred upon him
pursuant to Section 8(d) of the Employment Agreement prior to the date of
rescission.

          3.          Acceptance
Period; Advice of Counsel. The terms of this General Release will be
open for acceptance by Executive for a period of 21 days during which time
Executive may consider whether or not to accept this General Release. Executive
agrees that changes to this General Release, whether material or immaterial,
will not restart this acceptance period. Executive is hereby advised to seek
the advice of an attorney regarding this General Release.

          4.          Binding
Agreement. This General Release shall be binding upon, and inure to
the benefit of, Executive and Company and their respective successors and
permitted assigns.

          5.          Representation.
Executive hereby acknowledges and states that Executive has read this
General Release. Executive further represents that this General Release is
written in language that is understandable to Executive, that Executive fully
appreciates the meaning of its terms, and that Executive enters into this General
Release freely and voluntarily.

2

          IN
WITNESS WHEREOF, Executive, after due
consideration, has authorized, executed and delivered this General Release all
as of the date first written.

	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 Subodh Kulkarni

 	
  

 

3

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