-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vi6dhvualC0W85+b4t8vaWGSdC/DHBK+iMWKpkLBJUIm9CsFPA9e5vROaHSGFYgb /OCNBfC+vsT5A2xtBpLXIA== 0000912057-02-012681.txt : 20020415 0000912057-02-012681.hdr.sgml : 20020415 ACCESSION NUMBER: 0000912057-02-012681 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PPT VISION INC CENTRAL INDEX KEY: 0000704460 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 411413345 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-84148 FILM NUMBER: 02594762 BUSINESS ADDRESS: STREET 1: 12988 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 6129425747 MAIL ADDRESS: STREET 1: 10321 W 70TH ST CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: PATTERN PROCESSING CORP DATE OF NAME CHANGE: 19840318 FORMER COMPANY: FORMER CONFORMED NAME: PATTERN PROCESSING TECHNOLOGIES INC DATE OF NAME CHANGE: 19920703 S-3/A 1 a2074901zs-3a.htm S-3/A
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As filed with the Securities and Exchange Commission on March 29, 2002

Registration No. 333-84148

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Pre-Effective Amendment No. 1 to
FORM S-3 on Form S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

PPT VISION, INC.
(Exact name of registrant as specified in its charter)

Minnesota	41-1413345
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

12988 Valley View Road, Eden Prairie, Minnesota 55344
(952) 996-9500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

JOSEPH C. CHRISTENSON,
President and Chief Executive Officer
PPT Vision, Inc.
12988 Valley View Road, Eden Prairie, Minnesota 55344
(952) 996-9500
(Name, address, including zip code, and telephone number including area code, of agent for service)

Copies to:

THOMAS G. LOVETT, IV

Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South 8th Street, Minneapolis, Minnesota 55402
(612) 371-3211

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ý

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ý

CALCULATION OF REGISTRATION FEE(1)


Title of Each Class of Securities	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee

Rights to Purchase Units Consisting of Common Stock and Warrants	5,513,000	$1.25	$6,891,250	$634.00

Common Stock, $.10 Par Value Underlying Warrants	2,756,500	$2.00	$5,513,000	$507.20

Total Fee:				$1,141.20

Remaining fee being paid				$561.60

(1): A fee of $579.60 was previously paid with the filing of the initial Registration Statement on Form S-3 (File No. 333-84148). Due to the amendments filed here, additional fees are necessary. The difference between the new fee and the fee already paid is shown.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION
DATED MARCH 29, 2002

PROSPECTUS

PPT VISION, INC.

5,513,000 Rights
to Purchase 5,513,000 Units

PPT Vision, Inc. (the "Company" or "PPT") hereby offers to each holder of record of its Common Stock the right ("Right") to purchase, at a price of $ per Unit (the "Rights Exercise Price"), a Unit consisting of one share of Common Stock and a warrant to purchase an additional one-half share of Common Stock.

Each Shareholder will be granted the right to purchase one Unit for every share owned. The Rights are being issued to Shareholders of record as of the close of business on March 22, 2002 (the "Record Date") and are exercisable for a period commencing on the date of this Prospectus (the "Commencement Date") and terminating on May 3, 2002 (the "Termination Date") (the "Offering Period"). The Rights are evidenced by non-transferable certificates. To the extent that the shareholder is an Individual Retirement Account or other qualified plan, those Rights may be exercised by the beneficial owner of such plan in either a representative capacity on behalf of the plan, or personally in the beneficial owner's name.

Shareholders exercising Rights will also have the opportunity to subscribe for additional Units in an amount equal to the number of Rights exercised by such Shareholders subject to availability ("Oversubscription Privilege"). Because a number of the Company's Shareholders own fewer than 1,000 shares, as an alternative to exercising their Rights and their Oversubscription Privilege, each Shareholder will be given the right to purchase up to an aggregate of one thousand (1000) Units ("1000 Unit Right") regardless of the number of shares owned. Should any Units remain at the close of this Offering, Shareholders who fully exercise the Rights offered and indicate an interest to purchase additional shares may be offered the opportunity to do so.

Shareholders will not have the right to revoke subscriptions for Units pursuant to the exercise of Rights, the Oversubscription Privilege, or the 1000 Unit Right, once properly completed subscription forms accompanied by payment have been received by the Company's transfer agent.

There will be no escrow and there is no aggregate minimum in connection with the Rights Offering. Existing Shareholders have advised the Company, however, that they intend to exercise their Rights in connection with this offering. See "Description of Securities and Terms of Offering—Commitment of Existing Shareholders."

On March 26, 2002, the closing price of the Company's Common Stock on the Nasdaq National Market System was $1.19.

These Securities have not been approved or disapproved by the
Securities and Exchange Commission nor has the Commission
passed upon the accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.

An investment in the securities offered hereby
involves substantial risk. See "Risk Factors" beginning on page 4.

The date of this Prospectus is , 2002

SUMMARY OF PROSPECTUS

Rights Offering

PPT Vision, Inc. (the "Company") is hereby offering to holders of its Common Stock, $.10 par value, the right to purchase, at a price of $ per Unit ("Rights Exercise Price"), Units consisting of Common Stock and Warrants, with one Unit being offered for every share of Common Stock currently owned. The Offering Period began on the date of this Prospectus and will continue until the Termination Date, unless extended by the Company. Shareholders exercising Rights will also have the right to subscribe for additional Units in an amount equal to the number of Rights exercised by such Shareholder to the extent Rights are not exercised by other Shareholders ("Oversubscription Privilege"). As an alternative to exercising their Rights and the Oversubscription Privilege, each Shareholder will be given a Right to purchase up to 1000 Units. Should any Units remain at the close of this Offering, Shareholders who fully exercise the Rights offered and indicate an interest to purchase additional shares may be offered the opportunity to do so. See "Description of Securities and Terms of Offering."

The Rights are being offered pursuant to a Registration Statement on Form S-3 to holders of record of the Company's Common Stock on the Record Date. Each Shareholder will receive a Subscription Agreement evidencing the Shareholder's Rights.

Securities Offered		5,513,000 Units of Common Stock offered to the Current holders of the Company's Common Stock. Each Unit consists of a share of Common Stock and a Warrant to purchase an additional one-half share.
Shares of Common Stock Outstanding		5,512,118 shares prior to offering; 11,025,118 shares if all the Units being offered pursuant to this Offering are acquired; 13,781,618 if all Units are purchased and all Warrants exercised.
Rights Exercise Price		$ per Unit.
Warrant		Each Unit includes a Warrant. Warrants may be exercised together to give the holder the right to purchase shares of Common Stock at a price of $ per share until .
Non-transferability of Rights		The Rights may not be assigned or transferred. To the extent that the shareholder is an Individual Retirement Account or other qualified plan, those Rights may be exercised by the beneficial owner of such plan in either a representative capacity on behalf of the plan, or personally in the beneficial owner's name. All Rights not exercised will expire on the Termination Date.
Use of Proceeds		Working Capital.
Symbol		PPTV.
Record Date		March 22, 2002.
Expiration Date		May 3, 2002.
Oversubscription Privilege		The Oversubscription Privilege entitles any Shareholder who exercises all of the Rights issued to such Shareholder the right to purchase additional Units up to one times the number of Rights exercised. For example, a Shareholder who owns 5,000 shares will have the right to purchase 5,000 Units, and pursuant to the exercise of the Oversubscription Privilege, will have the right to purchase up to an additional 5,000 Units. Units will be issued pursuant to the Oversubscription Privilege only if less than all the Rights have been exercised. If there is an insufficient number of Units to fill all Oversubscription, the available Units will be allocated on a pro rata basis.

1000 Unit Right		As an alternative to exercising its Rights and the Oversubscription Privilege, each Shareholder will have the right to purchase up to 1000 Units regardless of the number of shares owned.
Minimum Purchase		Shareholders exercising Rights must purchase a minimum of 100 Units.
Remaining Units		Should any Units remain at the close of this Offering, Shareholders who fully exercise the Rights offered and indicate an interest to purchase additional shares may be offered the opportunity to do so.
Federal Income Tax Consequences		Generally, Shareholders will not recognize any gain or loss upon receipt of the Rights and the related Oversubscription Privilege and 1000 Unit Right and no gain or loss will be recognized by Shareholders upon exercise of the Rights or the Oversubscription Privilege or Round Lot Privilege. See "Federal Income Tax Considerations."

Risk Factors

An investment in the Units offered hereby involves a high degree of risk, including the risks associated with a company that has a history of unprofitable operations. See "Risk Factors."

Method of Subscription

The Company is mailing to each Shareholder of record on the Record Date a Rights Certificate evidencing the Shareholder's Rights to purchase up to the number of Units equal to the Rights offered to the Shareholder. The Rights will expire on the Termination Date, unless the offering is extended, at the sole discretion of the Company. See "Description of Securities and Terms of Offering—Procedure for Exercise of Rights; Withdrawal Rights; Extension of Offering."

The Company

PPT VISION, Inc. designs, manufactures, markets, and integrates 2D and 3D machine vision-based automated inspection systems for manufacturing applications. Machine vision-based inspection systems enable manufacturers to realize significant economic paybacks by increasing the quality of manufactured parts and improving the productivity of manufacturing processes. The Company's 2D machine vision product line is sold on a global basis to end-users, system integrators, and original equipment manufacturers (OEM's) primarily in the electronic and semiconductor component, automotive, medical device, and packaged goods industries. The Company's SpeedScan 3D™ sensor, incorporating the Company's patented high-speed Scanning Moiré Interferometry™ technology, is sold to original equipment manufacturers for specific applications. The Company's PPT861™ 3D scanning system, which uses the Company's SpeedScan 3D sensor, is an application-specific inspection solution targeted at inspection of leaded and bumped components in the semiconductor back-end manufacturing process, inspection of surface-mount electronic connectors, and inspection of components used in hard disk drives.

Purpose of Offering

The Company is conducting the Rights Offering to raise working capital. The Company believes that a Rights Offering to its existing Shareholders will enable it to raise capital without incurring some of the expenses that incur in connection with other types of offerings.

RISK FACTORS

Investors should carefully consider the following matters in connection with an investment in the Units in addition to the other information contained or incorporated by reference in the Prospectus. Information contained or incorporated by reference in this Prospectus contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate" or "continue" or the negative thereof or other variations thereon or comparable terminology. The following matters constitute cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from those in such forward-looking statements.

We have incurred losses in each of the last three years. We have been unprofitable in each of the last three years. In 1999, our net loss was $7,734,000. In 2000, our net loss was $3,598,000. In 2001, our net loss was $4,843,000. We cannot guarantee that we will be profitable in fiscal 2002. Even should we become profitable, we cannot guarantee that we will be able to maintain or increase that profitability.

Our future success is dependent upon sales of our SMI technology. Over the last five years, we have acquired patent rights for Scanning Moire Interfermetry ("SMI") and incurred significant expenditures in developing this technology. Our SMI technology has been incorporated into our PPT861 inspection system. In order to achieve profitability, we need to successfully introduce the PPT861 and achieve continued revenues from this product line. There can be no assurance that we can do this.

We have encountered significantly increased competition from lower priced competitive products. Several of our competitors have introduced lower priced 2D vision inspection systems that present a significant challenge to us. Although these competitors' products do not include all the features of our Passport™ and Scout™ product lines, they may provide vision inspection solutions for some customers at attractive prices. Although we have introduced the Impact™, a lower priced, high - performance 2D inspection system, we cannot guarantee that the Impact will successfully compete in this market.

Our market is characterized by rapidly changing technology and new product development. Our future success depends upon our ability to keep pace with this evolving market. We need to continue enhancing our current products, developing and introducing new products, responding to changes in customer requirements and achieving market acceptance. Our failure to anticipate or respond adequately to technological developments and customer requirements, or any significant delays in product development or introduction, could have a material adverse effect on our business, results of operations, financial condition and liquidity. Even if we do enhance our current products, develop new products, and remain responsive to our customers, we cannot assure that we will achieve market acceptance.

We are dependent upon a limited number of principal customers. In each of the past several years, we have had one or more customers that have accounted for ten percent or more of our net revenues. For instance, during the fiscal year ending October 31, 2001, revenue from Tokyo Weld, Co., Ltd. accounted for 22% of net revenues and revenue from Simac Masic B.V. accounted for 11% of net revenues. We do not have in effect long-term agreements with these customers under which they agree to continue purchasing significant quantities of our products. The loss of, or significant decrease in purchases by, any of our principal customers and subsequent failure to replace those customers could have a material adverse effect on our results of operations.

Our revenues are dependent in part on capital spending in the electronics and semiconductor industry. The electronics and semiconductor industries combined have historically accounted for over 50% of all machine vision industry sales. Capital spending on new manufacturing capacity by these

industries has historically been very cyclical and is currently in the midst of a very pronounced down cycle. We have historically received over 60% of our revenue flow from electronic component inspection applications. As such, our revenue results have been adversely affected over the past three quarters and there can be no assurance as to when capital spending in these industries will begin a cyclical upturn. As a result, we believe that our revenues in the second quarter ending April 30, 2002, will be significantly below those of our second quarter of fiscal year 2001 and will likely be below those of the first quarter of fiscal year 2002.

We rely heavily on our proprietary technology, much of which is protected as trade secrets. We rely heavily on our image acquisition and image processing hardware designs, along with proprietary software technology. We have been issued patents, or obtained licenses to patents, in the past on certain technology and have patents pending on new technologies. We currently rely most heavily on protecting our proprietary information as trade secrets. We cannot assume that the steps we take will be adequate to prevent misappropriation of our technology by third parties. We also cannot be certain that the steps taken will be adequate under the laws of some foreign countries, which may not protect our proprietary rights to the same extent as do laws of the United States. In addition, the possibility exists that others may "reverse engineer" our products in order to determine their method of operation and then introduce competing products. Further, many high technology markets, including segments of the machine vision industry, are characterized by the existence of a large number of patents and frequent litigation for financial gain based on patents with broad, and often questionable, application. As the number of our products increases, the markets in which our products are sold expands and the functionality of those products grows and overlaps with products offered by competitors. We have been sued for patent infringement in the past and may be subject to patent infringement claims in the future. In addition to being expensive and time consuming for us, protracted litigation to defend or to prosecute intellectual property could result in some customers deferring or limiting their purchase of our product until resolution of the litigation. Although we do not believe that any of our products or proprietary rights infringe upon the valid rights of third parties, we cannot guarantee that infringement claims will not be asserted against us in the future or that any such claims will not require us to enter into royalty arrangements or result in costly litigation.

Our revenue fluctuates from year to year. We have experienced annual fluctuations in operating results and anticipate that these fluctuations will continue. These fluctuations have been caused by various factors, including the order flow of our principal customers, the timing and acceptance of new product introductions and enhancements and the timing of product shipments. Future operating results may fluctuate as a result of these and other factors, including our ability to continue to develop innovative products, the announcement or introduction of new products by our competitors, our product and customer mix, and the level of competition and overall trends in the economy.

We are dependent on a limited number of outside contractors and suppliers for a substantial portion of our components and assembly needs. We currently contract with third party assembly houses for a substantial portion of our components and assembly needs. Although we inspect these components prior to final assembly, reliance on outside contractors reduces our control over quality and delivery schedules. The failure by one or more of these subcontractors to deliver quality components in a timely manner could have a material adverse effect on our results of operations. In addition, a number of the components integral to the functioning of our products are available from only a single supplier or from a limited number of suppliers. Any interruption in or termination of supply of these components, material changes in the purchase terms, or reductions in their quality or reliability, could have a material adverse effect on our business or results of operations.

A significant portion of our revenue arises from international markets. In the years ending October 31, 2001, 2000 and 1999, sales of our products to customers outside of the United States accounted for approximately 55%, 47% and 26%, respectively, of our net revenues. We anticipate that

international revenue will continue to account for a significant portion of our net revenues. Our operating results are subject to the risks inherent in international sales, including various regulatory requirements, political and economic changes and disruptions, transportation delays and difficulties in staffing and managing foreign sales operations and distributor relationships. In addition, fluctuations in exchange rates may render our products less price competitive relative to local product offerings. There can be no assurance that these factors will not have a material adverse effect on our future international sales and, consequently, on our operating results.

The costs to remain competitive may adversely affect our financial performance. We compete with other vendors of machine vision systems, some of which may have greater financial and other resources than we do. We cannot be sure that we will be able to compete successfully in the future. In addition, to remain competitive we may be required to incur significant costs to increase our engineering research, development, marketing and customer service efforts. Competitive pressures may result in price erosion or other factors that adversely affect our financial performance.

We are dependent on key personnel. Our success depends in large part upon the continued services of many of our highly skilled personnel involved in management, research and product development and sales. We must also be able to attract and retain additional highly qualified employees. The loss of services of these key personnel could have a material adverse effect on us. We do not have key-person life insurance on any of our employees.

We may be unable to utilize our net operating loss if we fail to generate sufficient taxable income. The utilization of the net operating loss carryforward is dependent upon our ability to generate sufficient taxable income during the carryforward period. In fiscal 2001, there was no tax provision due to the net loss for the period. At October 31, 2001, we had available net operating loss and tax credit carryforwards for income tax purposes of approximately $17.8 million and $0.9 million, respectively. These carryforwards expire in the years ending October 31, 2002 through October 31, 2021.

Our common stock would be subject to delisting from Nasdaq if it fails to maintain a price of $1.00 per share or if the market for our publicly held shares drops below $5.0 million. Under the rules of the Nasdaq National Market, we are subject to delisting of our common stock if it fails to maintain a bid price of $1.00 per share or the market value of our publicly held shares is less than $5,000,000 for any 30 day period, subject to a 90 day grace period during which we would need to achieve the criteria for10 consecutive trading days. If we fail to meet the Nasdaq criteria in the future, our common stock will be subject to delisting from the Nasdaq National Market.

There can be no assurance that a market will develop for our Warrants. We intend to initially list our Warrants on the OTC Bulletin Board. The OTC Bulletin Board is often characterized by wide spreads between bids and offers and may result in an illiquid, thinly traded market for our Warrants. If the Warrants subsequently become eligible for trading on the Nasdaq SmallCap Market or National Market System, we may apply to have the Warrants listed on one of those markets. There can be no assurance that the Warrants will trade on these markets in the future.

RECENT DEVELOPMENTS

The Company recently completed the first quarter of fiscal 2002 and reported revenues of $1.7 million which represented a 66% decrease from the same quarter of fiscal 2001. This decrease is due to the extremely weak economy in general and more specifically to the lack of capital spending by the manufacturing sector. These difficult economic times have not singled out PPT; in fact, the machine vision industry as a whole has experienced significant weakness over the past year.

The Company has responded, however, by reducing operating costs and focusing resources on key product development initiatives. Over the past year the Company has invested in developing new applications for our patented SMI^TM SpeedScan 3D^TM sensor technology and has improved the full range of our 2D systems. These investments have enhanced the quality and effectiveness of our products to better address the needs of our customers. As a result, we believe we are well-positioned to respond to our customers as the economy strengthens.

Over the past several months, a number of important developments have provided evidence that the investments made by the Company over the past year will provide significant benefits in the months and years ahead. Some of these developments include:

Disk Drive Industry Sales

In December 2001, the Company announced that it had secured a repeat order for a PPT861™ 3D inspection system from one of the world's leading manufacturers of hard disk drives. The PPT861 system is used for profiling and inspection of hard drive suspensions and suspension assemblies, which are critical components used in hard drives. The PPT861 is the only system on the market capable of providing both stand-alone and complete high-speed, in-line, production-level inspection of these hard drive components. The Company shipped this system in its first quarter of fiscal 2002.

This repeat sale is a very significant and positive development for PPT VISION because it further demonstrates the acceptance of our system throughout the hard drive industry. This customer made its repeat purchase decision based on a very successful experience with its first PPT861 system. The fact that this order was received in the midst of a down cycle in capital spending in the electronics sector is a positive sign regarding future PPT861 order prospects in the hard drive industry.

Sale to Semiconductor Manufacturer

In March 2002, the Company received an order for a PPT861-SH™ 2D and 3D inspection system from a major U.S.-based semiconductor manufacturer. The system will be used for high speed scanning and inspection of semiconductor components in strip form, prior to their separation into individual components. Handling components in strips, rather than individually, is an increasingly popular approach used by semiconductor manufacturers in their effort to minimize damage to the fragile components as they go through the various packaging and test operations.

Utilizing PPT's patented Scanning Moiré Interferometry™ (SMI™) 3D technology, the system performs 3D measurement at speeds many times faster than traditional approaches. In addition, the integrated system incorporates high speed 2D inspection capability utilizing PPT's DSL™ vision system. The result is a comprehensive 2D and 3D inspection of the components, while still in a strip form. The system includes a complete handling solution for the strips, as well as a 2D-Matrix code reader for mapping and reporting inspection results for quality control purposes.

This order is particularly noteworthy since it validates the Company's strategy of targeting the back-end of the semiconductor manufacturing process as a strong opportunity for the Company's innovative machine vision inspection solutions. The Company believes that the PPT861-SH system is the only system available to handle, scan and inspect semiconductor components in strips—an emerging and increasingly preferred method of handling components in the back-end of the semiconductor

manufacturing process. The PPT861-SH system is capable of scanning, at very high speeds, both leaded and balled components, and its versatility, speed and inspection accuracy provide a competitive advantage over several competitors for this important market application.

This order is also significant because it involves both a 3D unit and a 2D unit, demonstrating the cross-selling synergies between the Company's core product offerings. As the global economy expands, we believe that this niche market offers substantial potential for the Company's 2D and 3D machine vision systems and services.

Introduction of Impact 2D Inspection System

The Company has also been working to enhance the price / performance capabilities of its core 2D product line. In this regard, the Company has recently made several enhancements to expand the applications for the Passport and Scout products. These include enhancements to the Company's proprietary VPM Software as well as the introduction of new high-resolution, remote head and low-cost digital cameras. In addition, PPT recently introduced Impact, a high performance 2D inspection system with strong, general purpose graphical user interfaces offered at a lower price.

The Company believes that Impact will provide machine vision inspection solutions to customers who have not in the past considered such systems. While the Passport/Scout product line was primarily targeted at end users, the Impact product will enable PPT to target system integrators and OEM's, thereby opening up major new sales opportunities. The Company has demonstrated the system to several "beta" users for inspection of marks and leads on electronic components, the initial targeted OEM market. Mark and lead inspection is one of the largest OEM application niches and the Company expects demand in this area to rebound strongly.

The Company is pursuing a two-part marketing strategy with the Impact. The first involves vertical market OEM opportunities with an application-specific graphical user interface ("GUI"). An example of this is the mark and lead inspection application described above. The second marketing strategy involves targeting system integrators and large end-users by offering Impact with its strong, general-purpose, easy-to-use GUI and powerful programmability for integration into a wide variety of potential manufacturing processes.

Industry Recovery

The Company has recently seen an increase in business activity that the Company believes will translate into improved operating results in the quarters ahead. This belief is supported by manufacturing industry developments, including recent industry indices such as the February 2002 ISM (Institute for Supply Management) Index which indicated positive economic growth.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Units hereby assuming a price of $1.25 per Unit are estimated to be approximately $6.8 million, after deducting the estimated offering expenses if the offering is fully subscribed. If the offering is fully subscribed and the Warrants contained in the Units are exercised, then the Company will receive additional proceeds of over $ million. The Company intends to use the net proceeds for working capital associated with expanded sales and marketing, international distribution, research and product development and other general corporate purposes. Pending such uses, the net proceeds are expected to be invested in short-term, investment grade securities.

There can be no assurance that the maximum will be achieved. There is no underwriter or selling agent for the offering. Some of the existing shareholders of the Company have advised the Company, however, that they intend to exercise their rights. See "Description of Securities and Terms of Offering—Commitment of Current Shareholders".

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Price Range of Common Stock

The Company's Common Stock trades on the Nasdaq Stock Market under the symbol "PPTV." The following table sets forth the high and low closing sale prices of the Company's Common Stock on the Nasdaq Stock Market as reported by Nasdaq.

	High		Low
Fiscal 2002
First Quarter	$	1.64	$	1.27
Second Quarter (through March 26, 2002)	$	1.50	$	.96

	High		Low
Fiscal 2001
First Quarter	$	4.39	$	2.75
Second Quarter		4.63		2.38
Third Quarter		3.50		2.10
Fourth Quarter		2.33		1.35

	High		Low
Fiscal 2000
First Quarter	$	4.63	$	2.94
Second Quarter		7.25		3.56
Third Quarter		5.63		4.25
Fourth Quarter		6.00		4.19

On January 18, 2002, there were approximately 575 holders of record of the Company's Common Stock. This figure does not reflect more than 2,000 beneficial stockholders whose shares are held in nominee names.

Dividend Policy

The Company has never declared or paid any dividends on its Common Stock. The Company currently intends to retain any earnings for use in its operations and expansion of its business and therefore does not anticipate paying any cash dividends in the foreseeable future.

BUSINESS

What Is Machine Vision?

A machine vision system consists of computer software and hardware working together with cameras and lighting to capture images of products as they are being manufactured. This prevents defective products from being shipped to consumers and helps manufacturers improve their processes and reduce costs. Commercial use of machine vision technology for manufacturing quality control began to emerge in the early 1980s. However, machine vision systems at that time were complex to program and maintain, difficult to install, limited in performance and not cost-effective. Through advances in microprocessor and software technologies, these barriers have been removed, enabling machine vision to emerge as a powerful process control technology that allows manufacturers to improve quality and increase productivity.

The Machine Vision Market

The machine vision market is large and highly fragmented with over 200 machine vision suppliers around the world. Many are very small companies focusing on niche applications or niche technologies. A small handful of competitors such as Cognex or Orbotech have emerged as large, global competitors. The Automated Imaging Association ("AIA") estimates that the North American market for machine vision systems in 2000 was approximately $2.1 billion, with worldwide levels estimated at approximately $5.5 billion. The AIA expects this market to grow at approximately 12% per year over the next 5 years. Demand for machine vision systems comes from end-user manufacturers who apply these systems as an integral part of their manufacturing process, original equipment manufacturers ("OEMs") who incorporate machine vision systems into their products, systems integrators and machine builders.

A key factor in the expansion of the machine vision market has been growth in the demand for machine vision systems in the semiconductor and electronics industries. The growth in demand for personal computers, cellular communications and other electronic devices, as well as the increase in electronic components inside other products such as consumer appliances and automobiles, is stimulating demand for electronic and semiconductor components. For example, VLSI Research, Inc., an independent technology research firm, projects that the demand for lead inspection equipment will grow from $185 million in 2000 to $400 million in 2004. In an effort to rapidly improve and increase manufacturing capability, while at the same time introducing innovative new designs and improving quality, manufacturers of these components are increasingly turning to machine vision as a vital part of their manufacturing process.

The growth of the end-user machine vision market is also being driven by global competitive trends, which have led manufacturers worldwide to redesign manufacturing processes in order to reduce

cost and increase productivity and quality. In order to meet today's manufacturing quality requirements, statistical sampling methods are often insufficient and 100% inspection is required. To accomplish these objectives, manufacturers are increasingly adopting machine vision solutions.

Manufacturers are demanding expanded capabilities from machine vision systems, including faster processing capabilities and greater ease of use. Manufacturers are also demanding more comprehensive services from machine vision providers, including application engineering, technical support and training. Furthermore, manufacturers are seeking the ability to monitor trends, to better comprehend the manufacturing process and to identify problems. In addition, manufacturers are being challenged to maintain high production levels that require rapid set up times, flexibility and seamless networking with the host manufacturing control system to provide comprehensive diagnostic and process control feedback.

Business Strategy

The Company's objective is to be a worldwide leader in the design, manufacture, marketing and integration of 2D and 3D machine vision-based automated inspection systems for manufacturing applications. Through the successful integration of the Company's five core competencies, including image acquisition, image processing, application development software, optics and illumination, and vision system integration, the Company believes it will be able to meet its objective and successfully implement its strategy.

Key elements of the Company's strategy include:

•: Providing Complete Solutions: The Company focuses on providing complete machine vision solutions to end-user manufacturers, OEM's, system integrators and machine builders. PPT VISION is pursuing what it believes to be the most fully vertically integrated business model in the industry, including designing, manufacturing, marketing and integrating complete machine vision solutions. The Company believes this provides it with a competitive advantage in delivering cost-effective, complete vision solutions.
•: Extending Technology Leadership in Speed and Ease-of-Use: The Company is continuing to aggressively invest in next generation software and hardware architectures that will expand its lead in speed, ease-of-use and the ability to deliver cost-effective complete solutions to its customers.
•: Targeting Expanding Markets Through Continued Development of Application-Specific Software Tools and Hardware Products: The Company's application-specific software tools are a proven solution for a wide variety of inspection applications. In response to the worldwide expansion of the semiconductor and electronics industries, the Company is developing additional software tools and hardware products for electronic component, electronics and semiconductor applications.
•: Providing a Superior Level of Value-Added Application Engineering Support: The Company delivers a high level of value-added application engineering support to its end-user customers through its own in-house applications engineering resources and through its network of value-added system integrators and international distributors. Manufacturing end-users increasingly want to concentrate their engineering expertise on the products they manufacture, not on engineering machine vision systems. They are seeking complete machine vision solutions with associated application engineering support on an on-going basis.
•: Increasing International Market Presence: The Company is aggressively focusing on increasing its market share in the worldwide machine vision market. The Company believes international markets represent a significant opportunity and intends to capture a significant share of this

market through investment and expansion in its international sales distribution and support infrastructure. In fiscal 2001, 55% of the Company's revenues came from customers based outside of the United States.

Products

The Company designs, manufactures, markets and integrates machine vision-based automated inspection systems for manufacturing applications such as electronic and mechanical assembly verification, verification of printed characters, packaging integrity, surface flaw detection, and gauging and measurement tasks. A machine vision system is a combination of cameras, lighting, and computer hardware and software working together to capture and analyze images of moving parts to determine if the parts match a defined standard. Machine vision-based inspection systems enable manufacturers to realize significant economic paybacks by increasing the quality of manufactured parts and improving the productivity of manufacturing processes. The Company's vision systems are sold throughout the Americas, Europe and Asia to a broad range of industry categories, including automotive, electronic and semiconductor components, consumer goods, medical devices, pharmaceuticals and plastics.

The Company's machine vision systems are primarily targeted at providing manufacturers with 100% inspection in high speed, discrete part manufacturing applications. This typically replaces older off-line, random sampling techniques or human vision inspection techniques as a means of monitoring quality. The Company's machine vision systems enable manufacturers to achieve zero defect production.

The Company's family of machine vision systems, which include its proprietary Vision Program Manager™ (VPM) graphical programming software, provide significant performance advantages that meet manufacturers' critical requirements. These requirements include high speed, flexibility, ease-of-use, networkability and statistical feedback, all without sacrificing performance. All PPT VISION systems are supported by the Company's focus on providing its customers with complete solutions, not just components, and a major commitment to providing its customers with value-added application engineering services.

The Company has developed products that have specific advantages in terms of speed and ease-of-use. Many of the Company's machine vision systems are capable of operating at speeds over 10,000 parts per minute performing 100% inspection. This speed can be critical to successfully employing machine vision in many applications. PPT VISION also pioneered the use of an icon-based visual programming system (i.e. VPM) operating in the Microsoft® Windows™ environment. Users are able to program the Company's systems by creating a flowchart of icons linked together rather than having to write a computer program in a programming language such as "C" or using a complex menu-based system. This results in lower cost and less time for implementation.

Passport DSL™ and Scout DSL™ (Digital Serial Link). The Company introduced its completely digital machine vision systems, the patented Passport DSL and Scout DSL, in fiscal 1998. These products offer an integrated network of cameras, lighting, image processors and hubs, which together form a complete machine vision system.

The Passport DSL and Scout DSL systems are completely digital, which results in much greater accuracy and repeatability than traditional analog systems. These DSL systems feature PPT's Vision Program Manager (VPM) software, a powerful, graphical programming interface that requires no programming expertise and operates in the Microsoft® Windows™ environment. The Passport DSL and Scout DSL both incorporate a fully integrated Pentium-based PC, which can be easily added onto a factory network, allowing for a full range of control and monitoring capabilities and an easy way to import or export process information and images. The DSL systems support a network of up to 16 asynchronously functioning cameras that capture non-interlaced video images at rates up to 4,000 full

frames per minute. To complement the DSL product family, the Company has also developed the DSL5000, DSL5600, DSL6000 and DSL7500 digital cameras.

Passport™ 440, Passport™ 240, and Scout™ Machine Vision Systems. The Passport 440 is designed to operate with up to four asynchronously functioning cameras for multiple inspection views and complex imaging tasks. The Passport 240 has all of the basic capabilities of the Passport 440 in a two-camera model. Both systems are housed in industrially rugged enclosures and are capable of operating at speeds over 10,000 inspections per minute. The Scout is a cost-effective machine vision system designed for industrial applications that do not require rugged enclosures. It is packaged in a non-industrial style enclosure and is capable of running two cameras with speed and power similar to that of the Passport 240.

SpeedScan 3D™ Sensor. The SpeedScan 3D Sensor is based on PPT's patented Scanning Moiré Interferometry™ (SMI™) 3D technology. This Sensor is capable of real-time calculation of 3D topography in a single pass at a very high scan speed. SMI is a patented, unique technology for high speed, high accuracy 3D scanning. It is an area-scanning technology that gathers height data at rates many times faster than conventional laser-based sensors. SMI is especially suitable for applications in the semiconductor and electronics industries, such as IC coplanarity (BGA, µBGA, QFP), connector coplanarity, solder paste volume and hard drive components.

PPT861™ Inspection System. The PPT861 is an application-specific inspection solution utilizing the Company's core 2D and 3D vision technology for three target markets: inspection of leaded and bumped components in the semiconductor back-end manufacturing process, inspection of surface-mount electronic connectors, and inspection of components used in hard disk drives.

The PPT861 is a high-speed, semi-automated, high resolution, 3D scanning station. The PPT861 provides the flexibility to scan a wide range of in-tray semiconductor packages including QFP, BGA, CSP and µBGA, as well as electronic connectors and hard drive components. Using the Company's patented SMI 3D technology, the PPT861 delivers precise measurements at greatly enhanced throughput rates as compared with traditional inspection techniques. With the addition of the optional 2D module, the PPT861 provides a comprehensive solution for critical measurement and inspection requirements. The PPT861 can be configured to operate in either an in-line or stand-alone mode, providing capabilities for both small lot production and high volume applications. All scanning and motion parameters are programmable to allow the inspection of a broad range of component types with varying size and thickness. As of March 31, 2002 the Company has sold 18 PPT861™ systems to 6 customers.

Markets And Customers

The Company sells its products to a broad range of industries, including manufacturers of electronic and semiconductor components, pharmaceuticals, medical devices, automotive components, consumer products and plastics. As of January 31, 2002 the Company had sold more than 4,300 machine vision systems to over 320 customers since inception.

In each of the past several years, the Company has had one or more customers that have accounted for ten percent or more of the Company's net revenues. During fiscal 2001, Tokyo Weld, Co., Ltd. accounted for 22% of net revenues, and revenue from Simac Masic B.V. accounted for 11% of net revenues. During fiscal 2000, revenue from Tokyo Weld, Co., Ltd. accounted for 17% of net revenues and revenue from Tyco International accounted for 12% of net revenues. During fiscal 1999, revenue from Philip Morris Incorporated accounted for 27% and Simac Masic B.V. accounted for 13% of net revenues. The loss of, or significant curtailment of purchases by, any of the Company's principal customers could have a material adverse effect on the Company's results of operations.

Sales, Marketing And Customer Support

The Company sells its products primarily on a direct basis in the United States to end-users, system integrators, machine builders and OEMs. Outside the United States, the Company sells primarily through a network of distributors covering Europe, Asia and South America. The Company markets its products through appearances at industry trade shows, advertising in industry trade journals, articles published in industry and technical journals, its own website and through direct-selling in specific vertical markets. In addition, the Company's strong customer relationships serve as valuable references.

The Company focuses on delivering a high level of value-added applications engineering support to its end-user customers through its own in-house applications engineering resources. The Company also provides extensive training opportunities for its customers, either at the Company's facilities or on-site at the customer's facilities.

The following table sets forth the percentage of the Company's net revenues (including sales delivered through international distributors) by geographic location during the past three years:

	Year Ended October 31,
	2001	2000	1999
United States	45%	52%	74%
Europe and Canada	13%	12%	13%
Asia-Pacific	40%	31%	12%
South America	2%	5%	1%

Substantially all of the Company's export sales are negotiated, invoiced and paid in United States dollars. However, the Company will from time to time enter into export sales negotiated, invoiced and paid in foreign currencies.

Backlog

The Company does not believe backlog is a key indicator of future revenues in the end-user machine vision market. PPT VISION products are typically shipped within 30 days after receipt of an order. The Company believes that maintaining as short a time as practical for delivery is a competitive advantage in the end-user machine vision market. Customers in the end-user machine vision market do not normally place orders for large multiples of units with scheduled deliveries over many months. Rather, end-user machine vision addresses a specific application or problem at a specific manufacturing site.

Research And Product Development

PPT VISION's products are distinguished by the Company's proprietary technology and its significant commitment to research and product development efforts. The Company's research and product development efforts are focused on its five core competencies: image acquisition, imaging processing, application development software, optics and illumination, and vision system integration. The Company believes that the integration of these core competencies is essential to achieving long term success in the machine vision market. The Company's five core competencies can be described as follows:

Image Acquisition. This refers to the means and methods by which an image is captured, stored, and then made available for subsequent processing and display. Image acquisition combines the disciplines of photo-optics and electrical engineering.

Imaging Processing. This refers to the means and methods whereby an image is analyzed or enhanced to produce some desired information, measurements or results. Image processing combines

the disciplines of software engineering, mathematics, algorithm development and electrical engineering to implement efficient solutions to computationally complex problems. Typical image processing tasks include real-time inspection, guidance, gauging and recognition.

Application Development Software. This refers to the means and methods whereby a machine vision system is configured and controlled. The development and support of application development software requires expertise in the disciplines of object-oriented programming, graphical programming environments, man-machine interfaces, device drivers and general software engineering.

Optics and Illumination. This refers to the means and methods by which a scene is illuminated and optically presented to an input device such as a video camera. Special optics and illumination techniques are often used to reveal features in an image which would otherwise go undetected or to optimize an image for subsequent processing. Optics and illumination draw on skills from the disciplines of physics, mechanical engineering and electrical engineering.

Vision System Integration. This refers to the means and methods whereby a machine vision system is interfaced to and combined with other factory automation equipment for purposes of creating a complete solution for the customer. This may include the development of application specific solutions for certain vertical market applications along with mechanical fixturing for mounting camera and lighting components, networking and programmable controllers for process control, and reject mechanisms for ejection of defective parts.

Various configurations of the Company's products include proprietary design work performed by the Company's employees in each of these five areas.

PPT VISION believes that continued and timely development of new products and enhancements to existing product characteristics are essential to maintaining its competitive position. The Company has committed and expects to continue to commit substantial resources to its research and development effort, which plays a significant role in maintaining and advancing its position as a leading provider of complete machine vision systems. The Company's current research and development efforts are directed to increasing performance in image acquisition, image processing and application development software, which could produce systems with greater speed and accuracy while also providing customers with more expanded software tools. These efforts include the Company's traditional two-dimensional (2D) machine vision systems as well as three- and one-dimensional (3D and 1D) sensor products. Key software products under development will enable support for different hardware and user interfaces, as well as increasing the development speed of application specific software tools. The Company also intends to expand its offerings of application-specific software and hardware products for the industries it identifies as being poised to exhibit significant growth in demand for machine vision solutions, which includes electronics and semiconductors.

Research and development expenditures were $5.0 million, $5.3 million, $4.5 million and $2.9 million in the fiscal years ended October 31, 2001, 2000, 1999, and 1998, respectively.

Manufacturing

The Company assembles, configures and tests its products at its suburban Minneapolis facility. The Company's printed circuit boards are custom built by several manufacturers. Although most of the components used in the Company's machine vision systems are available off-the-shelf, some components are available from only a single supplier or from a limited number of suppliers. The Company typically purchases inventory and builds products in response to quarterly sales forecasts, enabling it to ship products within 30 days after receipt of an order.

Much of the Company's product manufacturing, consisting primarily of circuit board manufacturing and assembly and machined parts production, is contracted with outside vendors. Company personnel inspect incoming parts and perform final assembly and testing of finished products. The Company

believes that its outsourcing strategy enables it to focus its resources on the key core competency areas from which it derives its competitive advantages.

Competition

The machine vision industry is highly fragmented. Currently, no competitor holds a significant aggregate market share percentage, although some dominate individual niches within the overall machine vision industry. The Company believes that over the next several years, the industry will experience a continuing trend toward consolidation. However, given the application-specific nature of the industry, the Company also believes that the machine vision industry will continue to have a relatively large number of competitors focusing on specific niches.

The Company believes the major competitive factors in the industry are performance, quality, support and price. Although the Company believes that its products are unique, competitors offer technologies and systems that are capable of certain of the functions performed by the Company's products. The Company faces competition from a number of companies in the machine vision market, some of which have greater manufacturing and marketing capabilities and greater financial, technological and personnel resources.

Although the Company believes that its current products offer several advantages in terms of speed and ease-of-use, and although the Company has attempted to protect the proprietary nature of such products, it is possible that any of the Company's products could be duplicated by other companies in the same general market. There can be no assurances that the Company would be able to compete with similar products produced by a competitor.

Patents And Proprietary Rights

The Company relies on a combination of patent, copyright, trademark and trade secret laws to establish its proprietary rights in its products. The Company owns several issued and pending United States and international patents for various inventions used in machine-vision, automated inspection and illumination systems. The Company believes that the patents it owns may have been useful in protecting the Company's proprietary products and may be useful in protecting potential future products. The Company also believes its ability to efficiently develop and sell high performance, cost-effective vision systems on a timely basis, whether patented or not, is crucial to the Company's future success. The Company requires each of its employees to enter into standard agreements pursuant to which the employee agrees to keep confidential all proprietary information of the Company and to assign to the Company all rights in any proprietary information or technology made or contributed by the employee during his or her employment or made thereafter as a result of any inventions conceived or work done during such employment. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use the Company's products or technology without authorization or to develop similar technology independently. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited in certain foreign countries.

A number of users of machine-vision technology have received notice of alleged patent infringement from, or have been sued by, the Lemelson Medical, Education and Research Foundation Limited Partnership ("Lemelson Foundation") alleging that their use of machine-vision technology in their production processes infringes certain patents issued to Jerome H. Lemelson. Certain of these users have notified the Company that, in the event it is subsequently determined that their use of the Company's products in their production processes infringes any of Mr. Lemelson's patents, they may seek indemnification from the Company for damages or expenses resulting from this matter. The Company believes that it has defenses to such indemnification claims. To date, the Company has received no actual claims for indemnification. The Company cannot predict the outcomes from the

claims of alleged infringement made by the Lemelson Foundation or the effect of such outcomes on the operating results of the Company.

The Company has obtained United States federal registration for its "PPT", "PPT VISION", "Passport", "Scout", "Passport DSL" and "Scout DSL" trademarks. The Company intends to file for federal registration of additional trademarks in the future. Although no assurance can be given as to the strength or scope of the Company's trademarks, the Company believes that its trademarks have been and will be useful in developing and protecting market recognition for its products.

Employees

As of January 15, 2002, the Company had 89 full-time employees, including 39 employees in research and development, 27 in sales, marketing and application engineering, 17 in manufacturing and 6 in finance and administration. To date, the Company has been successful in attracting and retaining qualified technical personnel, although there can be no assurance that this success will continue. None of the Company's employees are covered by collective bargaining agreements or are members of a union. The Company has never experienced a work stoppage and believes that its relations with its employees are excellent.

DESCRIPTION OF SECURITIES AND TERMS OF OFFERING

The Units issuable upon subscription of the Rights are being offered to holders of the Company's Common Stock. Each current Shareholder will have the Right to purchase the Units in the manner described below.

Units

Each Unit consists of one share of Common Stock and a Warrant to purchase an additional one-half share.

Common Stock

The Company is currently authorized to issue 20,000,000 shares of Common Stock, $.10 par value. Holders of the Common Stock do not have pre-emptive rights to purchase additional shares of Common Stock or other subscription rights. All shares of Common Stock are entitled to share equally in dividends from sources legally available therefore, when, as and if declared by the Board of Directors and, upon liquidation or dissolution of the Company, whether voluntary or involuntary, to share equally in the assets of the Company available for distribution to Shareholders. All outstanding shares are, and all the shares to be sold and issued as contemplated hereby in the Units will be fully paid and non-assessable. The Board of Directors is authorized to issue additional shares of Common Stock, not to exceed the amount authorized by the Company's Articles of Incorporation and to issue options and warrants for the purchase of such shares, on such terms and conditions and for such consideration as the Board may deem appropriate without further Shareholder action.

Each share of Common Stock is entitled to one vote per share on all matters on which a shareholder is entitled to vote. The shares of Common Stock do not have cumulative voting rights. The Bylaws of the Company require that only a majority of the issued and outstanding shares of the Company be represented to constitute a quorum and transact business at a shareholders meeting.

Wells Fargo Shareowner Services is the transfer agent for the Common Stock of the Company and will be the transfer agent for the Warrants.

As of the Commencement Date, the Company had outstanding 5,512,118 shares of Common Stock.

Each holder of Common Stock has the right to purchase one Unit for every share of Common Stock owned at the Rights Exercise Price. To the extent that the shareholder is an Individual Retirement Account or other qualified plan, those Rights may be exercised by the beneficial owner of such plan in either a representative capacity on behalf of the plan, or personally in the beneficial owner's name.

Warrants

Each Unit contains a Warrant to purchase a one-half share of Common Stock. The Warrants are exercisable at a price of $ per share and expire on . The Warrants are callable by the Company on 30 days notice at any time after if the Common Stock has a closing price of or greater for any consecutive 10-day trading period within 10 business days of the call date.

Procedure for Exercise of Rights

Each holder of Common Stock is being sent a Rights Certificate with a Subscription Agreement representing the number of Rights to which such Shareholder is entitled.

Shareholders should complete the Subscription Agreement and return it to the transfer agent at

Wells Fargo Bank MN, N.A.
161 N. Concord Exchange
South St. Paul, MN 55075
Attn: Corporate Actions, PPT Vision Rights Offering

together with a check, bank check or money order in the amount of the aggregate Rights Exercise Price.

Withdrawal Rights; Extension of Offering

Shareholders will not have the right to revoke subscriptions for Units pursuant to the exercise of Rights, the Oversubscription Privilege, or the 1000 Unit Right once properly completed subscription forms accompanied by payment have been received by the transfer agent.

If at any time during the Offering Period, the Rights Exercise Price is lowered, all persons exercising Rights will be notified of and receive the benefit of such lower price.

In the event the Offering Period is extended for any reason, the Company will give prompt notice of such extension by a press release or other public announcement.

Oversubscription Privilege

Shareholders who exercise their entire Rights will also have the opportunity to subscribe for additional Units in an amount equal up to the number of Rights exercised by such Shareholders subject to availability. Shareholders that wish to subscribe for such additional Units shall complete the appropriate "Oversubscription Privilege" provision of the Subscription Agreement and enclose payment. To the extent that there are an insufficient number of Units to fill all Oversubscriptions, the available Units will be allocated on a pro rata basis.

1000 Unit Right

The Company believes it has a number of Shareholders that hold fewer than 1000 shares. Because of the fact that a person holding a small number of shares of the Company's Common Stock might pay a disproportionately high level of commissions upon sale of the Company's shares, the Company has granted all Shareholders the rights to purchase up to 1000 Units.

Accordingly, as an alternative to exercising its Rights and Oversubscription Privilege, each Shareholder is given the right to purchase 1000 Units at the Rights Exercise Price. The Company believes that a shareholder holding a limited number of shares may choose to exercise the 1000 Unit Right to increase his or her holdings above 1000 shares whereas otherwise such a shareholder might choose not to participate in this offering.

For example, if a shareholder owns 60 shares, the shareholder could exercise his Rights for 60 Units, and if he chooses to fully elect the Oversubscription Privilege, could require 60 more Units to bring his share total to 180, with Warrants to purchase an additional 60 shares. Under the 1000 Unit Right, the Shareholder could purchase 1000 Units and increase share ownership to 1060 shares and would also own Warrants to purchase an additional 500 shares.

Distribution of Units Not Allocated

Should any Units remain at the close of this Offering, Shareholders who fully exercise the Rights offered and indicate an interest to purchase additional shares may be offered the opportunity to do so.

Minimum Purchase Amount

Because of the processing costs involved in administering this Offering and the Company's belief that few, if any, Shareholders would purchase less than 100 Units, the Company is requiring that any Shareholder that wishes to purchase Units in this offering purchase a minimum of 100 Units.

Determination of Rights Exercise Price

The offering price of the shares of Common Stock to be issued pursuant to the Rights Offering was determined by the Company and its Board of Directors after reviewing the Company's financial position, and its short and long-term business prospects and market conditions.

Commitment of Current Shareholders

The Company's largest Shareholder, P.R. Peterson, and each of the other three non-employee directors of the Company have advised the Company that they intend to exercise in full their Rights to purchase Units in this offering. As of the record date, these directors owned or controlled a total of 1,342,607 shares of Common Stock and they will be granted Rights to purchase 1,342,607 Units. The total includes the right to purchase 549,084 Units held by ESI Investment Co. Mr. Peterson is a controlling shareholder of the parent corporation of ESI Investment Co. The directors have not advised the Company whether or not they will exercise their Oversubscription Privilege Rights, but will have the same ability to exercise Oversubscription Privilege Rights as other shareholders of the Company.

Option Cancellation

In January 2002, the Company cancelled a total of 211,650 stock options that were outstanding, including 112,500 options issuable to three executive officers. All the options that were cancelled had been outstanding for over four years and were exercisable at a price of $5.00 or more. The Company intends to grant new options to these employees in July 2002.

Amendment of Shareholder Rights Plan

On June 2, 1999 the Board of Directors of the Company adopted a shareholder rights plan (the "Rights Plan"). The Rights Plan is designed to deter certain coercive or abusive takeover tactics and to encourage third parties interested in acquiring the Company to negotiate with the Board and otherwise assist the Board in representing the interests of all shareholders. The Rights Plan does not deter negotiated mergers or business combinations that the Board determines to be in the best interests of the Company and its shareholders. The terms of the Rights are set forth in a Rights Agreement dated as of June 2, 1999, as amended (the "Rights Agreement") between the Company and Wells Fargo Shareowner Services, as Rights Agent.

Under the Terms of the Rights Plan, in the event that any person becomes the beneficial owner of 20% or more of the voting power of the Company in a transaction that has not previously been approved by a majority of the independent directors, ten (10) days thereafter (the "Flip-In Event") each holder of a Right will thereafter have the right to receive, in lieu of shares of the Company's Series A Junior Participating Preferred Stock ("Preferred Stock"), upon exercise thereof at the then-current Purchase Price of the Right, Common Stock (or, in certain circumstances, a combination of cash, other property, Common Stock or other securities) that has a value of two times the Purchase Price of the Right (such right being called the Flip-In Right). Upon the occurrence of the Flip-In Event, any Rights that are or were at any time owned by an Acquiring Person shall become null and void insofar as they relate to the Flip-In Right.

In addition, in the event that the Company is acquired in a merger or other business combination transaction where the Company is not the surviving corporation or in the event that 50% or more of its

assets or earning power is sold, proper provision shall be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current Purchase Price of the Right, common stock of the acquiring entity that has a value of two times the Purchase Price of the Right (the "Flip-Over Right"). The Flip-Over Right is in addition to the Flip-In Rights and will survive any exercise of a Flip-In Right.

On October 13, 1999, PPT Vision, Inc. announced that its Board of Directors had amended the terms of the Rights Agreement to enable Mr. Peter R. Peterson, a member of the Board of Directors of the Company to purchase up to thirty percent (30%) of the Common Stock of the Company without being deemed an "Acquiring Person" within the meaning of the Rights Agreement.

On March 11, 2002, the Board of Directors amended the terms of its Rights Agreement, to exclude Mr. Peterson and entities controlled by Mr. Peterson completely from the definition of an "Acquiring Person" within the meaning of the Rights Agreement. The twenty percent (20%) standard for Acquiring Person under the Rights Agreement remains in effect for all other shareholders of PPT Vision, Inc.

In amending the Rights Agreement to exempt Mr. Peterson, the Board noted that Mr. Peterson was a founder of the Company and had been a director of the Company for substantially all the Company's existence. The Board therefore found that there were important reasons to distinguish Mr. Peterson from other people that might acquire increasing percentages of the Company's stock. Mr. Peterson, together with other directors of the Company, has agreed to participate in the Rights Offering. Depending on the level of participation by Mr. Peterson and other shareholders in the offering, in the absence of the amendment of the Rights Agreement, the participation of Mr. Peterson might result in a determination that Mr. Peterson was an "Acquiring Person" within the meaning of the Rights Plan, which would be inconsistent with the intent of the Rights Plan. For these reasons, the Board determined that it was appropriate for Mr. Peterson to be exempt from the ownership limitations contained in the Rights Plan.

FEDERAL INCOME TAX CONSIDERATION

The following discussion summarizes all material federal income tax consequences to Shareholders relating to the distribution of the Rights and the acquisition of shares pursuant to the exercise of the Rights and the acquisition of shares pursuant to the exercise of the Rights and the Oversubscription Privilege. The discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury Regulations (the "Regulations" and judicial and administrative interpretations of the Code and Regulations, all as in effect on the date of this Prospectus. Each Shareholder should be aware that the Code, the Regulations and any interpretation thereof are subject to change and that any change could be applied retroactively. This summary does not discuss all aspects of federal income taxation that may be relevant to a particular Shareholder in light of his or her personal investment circumstances or to certain types of Shareholders subject to special treatment under the federal income tax laws (for example, banks, insurance companies, tax-exempt entities and foreign taxpayers) and does not discuss any aspects of state, local or foreign tax laws. Each Shareholder is urged to consult his or her own tax advisor to determine the particular tax consequences to such Shareholder (including the applicability and effect of the constructive ownership rules and state, local, foreign and other tax laws) of the distribution of the Rights and the acquisition of shares.

Receipt of the Rights

No gain or loss will be recognized by the Shareholder upon receipt of the Rights, the related Oversubscription Privilege or the 1000 Unit Rights.

Exercise of the Rights and the Oversubscription Privilege

No gain or loss will be recognized by Shareholders upon exercise of the Rights, the Oversubscription Privilege or the 1000 Unit Right. The holding period of the shares will commence at the time the Rights, Oversubscription Privilege or 1000 Unit Right with respect to such shares are exercised.

Basis of the Rights and the Shares

Except as described below, upon exercise of the Rights, the tax basis of the Rights will be determined by allocating the tax basis of the Common Stock with respect to which the distribution was made (the "Old Shares") between the Old Shares and the Rights in proportion to their relative fair market values on the date of distribution. If the fair market value on the date of distribution is less than 15% of the fair market value of the Old Shares on such date, however, the tax basis of the Rights will be zero unless the Stockholder makes an irrevocable election to allocate part of the basis of the Old Securities to the Rights as described in the preceding sentence. The election is to be made by attaching a statement to the Shareholders federal income tax return filed for the taxable year in which the Rights are received. The tax basis of Units will be equal to the sum of the basis of the Rights, if any, and the exercise price paid for the Units.

Expiration of Unexercised Rights

If the Rights received by the Shareholder are not exercised and are allowed to expire, no adjustment will be made to the basis of the Old Security held by such Shareholder and no income or loss will be recognized by such Shareholder on the expiration of such Rights.

Sales of Shares

A Shareholder selling or disposing of shares will recognize gain or loss equal to the difference between the amount received upon the sale and the basis of such shares. Such gain or loss will be capital gain or loss if the shares are a capital asset in the hands of the Shareholder and will be long-term capital gain or loss if the Shareholder holds the shares for more than one year prior to the sale.

LEGAL MATTERS

The validity of the shares issuable upon exercise of the Rights will be passed upon by Lindquist & Vennum, PLLP, 4200 IDS Center, Minneapolis, Minnesota 55402.

EXPERTS

The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of PPT Vision, Inc. for the year ended October 31, 2001 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN GET MORE INFORMATION

This prospectus is a part of a Registration Statement on Form S-3 filed by PPT Vision, Inc. with the Securities and Exchange Commission under the Securities Act of 1933, with respect to the Units. This prospectus does not contain all the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the Securities and Exchange Commission. For further information with respect to PPT Vision and the securities offered by this prospectus, reference is made to the registration statement. Statements contained in this prospectus

concerning the provisions of such documents are necessarily summaries of such documents and each such statement is qualified in its entirety by reference to the copy of the applicable document filed with the Securities and Exchange Commission.

PPT Vision files periodic reports, proxy statements and other information with the Securities and Exchange Commission. PPT Vision filings are available to the public over the Internet at the Securities and Exchange Commission's website at http://www.sec.gov. You may also inspect and copy these materials at the public reference facilities of the Securities and Exchange Commission at 450 Fifth Street, NW, Room 1024, Washington, D.C. 20549. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Securities and Exchange Commission at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information.

PPT Vision incorporates by reference the documents listed below and any filings PPT Vision makes with the Securities and Exchange Commission under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, after the initial filing of the registration statement that contains this prospectus and prior to the time that PPT Vision sells all the securities offered by this prospectus:

Annual Report on Form 10-K for the year ended October 31, 2001;
Proxy Statement for the 2002 Annual Meeting of Shareholders to be held on March 19, 2002;
Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.

You may request a copy of these filings (other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing) at no cost, by writing to or telephoning PPT Vision at the following address:

PPT Vision, Inc.
12988 Valley View Road
Eden Prairie, Minnesota
55344
(952) 996-9500

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

Securities and Exchange Commission registration fee	$	1,141.20
Nasdaq fees		82,700.00
Legal fees and expenses		35,000.00
Blue Sky fees and expenses		5,000.00
Accounting fees and expenses		5,000.00
Printing expenses		25,000.00
Miscellaneous expenses

Total	$	153,841.20

All of the above items except the SEC registration fee are estimated.

Item 15. Indemnification of Directors and Officers

Section 302A.521 of Minnesota Statutes requires the Registrant to indemnify a person made or threatened to be made a party to a proceeding by reason of the former or present official capacity of the person with respect to the Registrant, against judgments, penalties, fines, including reasonable expenses, if such person (1) has not been indemnified by another organization or employee benefit plan for the same judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorneys' fees and disbursements, incurred by the person in connection with the proceeding with respect to the same acts or omissions; (2) acted in good faith; (3) received no improper personal benefit, and statutory procedure has been followed in the case of any conflict of interest by a director; (4) in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and (5) in the case of acts or omissions occurring in the person's performance in the official capacity of director or, for a person not a director, in the official capacity of officer, committee member or employee, reasonably believed that the conduct was in the best interests of the Registrant, or, in the case of performance by a director, officer or employee of the Registrant as a director, officer, partner, trustee, employee or agent of another organization or employee benefit plan, reasonably believed that the conduct was not opposed to the best interests of the Registrant. In addition, Section 302A.521, subbed. 3, requires payment by the Registrant, upon written request, of reasonable expenses in advance of final disposition in certain instances. A decision as to required indemnification is made by a disinterested majority of the Board of Directors present at a meeting at which a disinterested quorum is present, or by a designated committee of the Board, by special legal counsel, by the shareholders or by a court. The Registrant's Bylaws provide for indemnification of officers, directors and employees to the fullest extent permitted by Minnesota law as it may be amended from time to time.

As permitted by Section 302A.251 of the Minnesota Business Corporation Act, the Restated Articles of Incorporation of the Registrant eliminate the liability of the directors of the Registrant for monetary damages arising from any breach of fiduciary duties as a member of the Registrant's Board of Directors (except as expressly prohibited by Minnesota Statutes, Section 302A.251, subbed. 4).

II-1

Item 16. Exhibits

		Description
3.1		Amendment to Articles of Incorporation
5.1		Opinion of Lindquist & Vennum, PLLP
10.1		Form of Rights Certificate for Common Stock
10.2		Form of Warrant Agreement(1)
10.3		Form of Warrant Certificate(1)
10.4		Form of Letter to Shareholders
23.1		Consent of PricewaterhouseCoopers LLP
23.2		Consent of Lindquist & Vennum, PLLP is contained in Exhibit 5.1.

(1): Previously filed

Item 17. Undertakings

(a)

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions of the Minnesota Business Corporations Act, the Restated Articles of Incorporation or Bylaws of the Registrant or otherwise, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(b)

The undersigned Registrant hereby undertakes that:

(1): For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2): For the purpose of determining any liability under the Securities Act of, each post-effective amendment that contains a form of Prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Eden Prairie, State of Minnesota, on the 28th day of March, 2002.

/s/ JOSEPH C. CHRISTENSON

Joseph C. Christenson,
President, Chief Executive Officer and Director (Principal Executive Officer and Principal
Accounting Officer)

II-3

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated.

Name	Title	Date

/S/ JOSEPH C. CHRISTENSON Joseph C. Christenson	President, Chief Executive Officer and Director (Principal Executive Officer and Principal Accounting Officer)	Dated: March 28, 2002
/S/ ROBERT W. HELLER* Robert W. Heller	Director	Dated: March 28, 2002
/S/ DAVID C. MALMBERG* David C. Malmberg	Director	Dated: March 28, 2002
/S/ PETER R. PETERSON* Peter R. Peterson	Director	Dated: March 28, 2002
/S/ BENNO G. SAND* Benno G. Sand	Director	Dated: March 28, 2002

*by:		/s/ JOSEPH C. CHRISTENSON
		Joseph C. Christenson Attorney-In-Fact

II-4

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An investment in the securities offered hereby involves substantial risk. See "Risk Factors" beginning on page 4.
SUMMARY OF PROSPECTUS
RISK FACTORS
RECENT DEVELOPMENTS
USE OF PROCEEDS
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
BUSINESS
DESCRIPTION OF SECURITIES AND TERMS OF OFFERING
FEDERAL INCOME TAX CONSIDERATION
LEGAL MATTERS
EXPERTS
WHERE YOU CAN GET MORE INFORMATION
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
EX-3.1 3 a2074901zex-3_1.htm EX-3.1
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Exhibit 3.1

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PPT VISION, INC.

I, the undersigned, Joseph C. Christenson, the President of PPT Vision, Inc. (the "Company"), a corporation subject to the provisions of Chapter 302A of the Minnesota Statutes, known as the Minnesota Business Corporation Act, do hereby certify that the resolution hereinafter set forth was duly adopted by the affirmative vote of a majority of the shareholders present and entitled to vote on such matter at the Annual Meeting of the Shareholders of the Company held on March 19, 2002:

RESOLVED, that Section 4.1 of the Company's Articles of Incorporation be and hereby is amended and replaced in its entirety with the following:

"4.1) Authorized Capital Stock. The authorized capital stock of this corporation shall be Twenty Million (20,000,000) shares of Common Stock with $.10 par value per share and Ten Million (10,000,000) shares of Preferred Stock with no par value per share. In accordance with the Statutes of the State of Minnesota, the Board of Directors may subdivide the Common Stock and Preferred Stock into one or more series and may designate the relative rights and preferences of the different classes and series to the extent the relative rights and preferences of the different classes and series are not otherwise fixed in the Articles, including with respect to the Preferred Stock, the right to create voting, dividend and liquidation preferences greater than those of the Common Stock. All shares are to be held, sold and paid for at such times and in such manner as the Board of Directors may from time to time determine, in accordance with the statutes of Minnesota."

IN WITNESS WHEREOF, I have subscribed my name this 19^th day of March, 2002.


		Joseph C. Christenson, President

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ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF PPT VISION, INC.
EX-10.1 4 a2073050zex-10_1.htm EX-10.1
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Exhibit 10.1

PPT VISION, INC.

RIGHTS CERTIFICATE FOR UNITS
Issued to Holders of Common Stock
(See Instructions on Reverse Side)

Rights are not Transferable and will Become Void Unless this Subscription Form is Properly Completed and Received by Wells Fargo Bank MN, N.A. as Agent No Later than 5:00 P.M., Minneapolis Time, on May 3, 2002.

Subscription Price:

$ per Unit (One Share of Common Stock and a Warrant to Purchase an Additional One-Half Share of Common Stock)

CHECK AND COMPLETE EITHER PART 1 OR PART 2

PART 1A—TO EXERCISE RIGHTS: The undersigned hereby irrevocably subscribes for the number of Units indicated below upon the terms and conditions specified in the Prospectus, receipt of which is hereby acknowledged.

Number of Units subscribed for , at $. per Unit = $

PART 1B—TO EXERCISE OVERSUBSCRIPTION PRIVILEGE: The undersigned hereby irrevocably oversubscribes for the number of Units indicated below, upon the terms and conditions provided in the Prospectus (not to exceed one times the number of Units purchasable by exercise of the Shareholder's Rights in Part 1A).

Number of Units oversubscribed for at $. per Unit = $

Total Amount Enclosed (#1A and 1B): $

PART 2—TO EXERCISE 1,000 Unit Right: The undersigned hereby irrevocably subscribes for as few as 100 or as many as 1,000 Units, upon the terms and conditions provided in the Prospectus.

Number of Units subscribed for , at $. per Unit = $

Personal check, bank draft or money order payable to "Wells Fargo Bank MN, N.A." for the number of Units to be purchased must be enclosed

READ INSTRUCTIONS BEFORE SIGNING

		Subscriber's Signature
		Additional Signature (if jointly held)
		o		If you would be interested in purchasing any Units that remain after the Rights Offering is complete, please check here and provide your contact information on the reverse.

INSTRUCTIONS FOR EXERCISE OF RIGHTS CERTIFICATE

Exercise of Rights and Oversubscription Privilege

1. Determine the number of Rights you are entitled to purchase, indicated by the share total on the mailing label. For example, if your share total is 5,000 shares, you have Rights to purchase 5,000 Units.

2. Fill out Part 1A listing the number of Rights you wish to exercise. The number must be an even number.

3. If you exercise all your Rights, you have an Oversubscription Privilege to purchase additional Units up to one times the number of Rights you exercise, depending upon the availability of shares. For instance, if you own 5,000 shares and exercise your Rights in Part 1A by subscribing to 5,000 Units, you may subscribe to up to 5,000 additional Units in Part 1B, subject to availability. If you wish to exercise this Oversubscription Privilege, complete Part 1B. Again, the number of Units must be an even number.

4. To determine the total of payment to enclose, add the totals in Parts 1A and 1B.

Exercise of 1,000 Unit Right

1. As an alternative to exercising the Rights described above, the Company is giving each shareholder the right to purchase as few as 100 or as many as 1,000 units regardless to the number of shares held. To exercise your 1,000 Unit Right, complete Part 2 by choosing an even number of units you would like to purchase, between 100 and 1,000. If you exercise your 1,000 Unit Right, you cannot also exercise your Rights or Oversubscription Privilege.

Purchase of Remaining Units

1. If you have exercised all of your Rights authorized by this Offering, and would like to purchase additional Units should any be available at the close of this Offering, please provide the following contact information by which the Company may contact you if Units remain available OR e-mail the Company directly at ir@pptvision.com.

Name:			Phone Number:


Address:

	(street)	(city)	(state)	(zip code)

General

1. All shares and warrants will be issued only in the name of the person to whom the Rights are issued. To the extent that the shareholder is an Individual Retirement Account or other qualified plan, those Rights may be exercised by the beneficial owner of such plan in either a representative capacity on behalf of the plan, or personally in the beneficial owner's name. In all other instances, if you wish the shares or warrants to be issued in another name, you must first exercise your Rights by completing this Rights Certificate. After you receive your shares and warrants, you may request reissuance of the shares and warrants from the Company's Transfer Agent. If you are the beneficial owner of an IRA or other qualified plan and wish to exercise the Rights personally, please print your name here as you wish it to appear on the Stock and Warrant Certificates:

Name:

2. Completed Rights Certificates should be sent to:

Wells Fargo Bank MN, N.A.
161 North Concord Exchange
South St. Paul, MN 55075
Attn: Corporate Actions, PPT Vision Rights Offering

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PPT VISION, INC. RIGHTS CERTIFICATE FOR UNITS Issued to Holders of Common Stock (See Instructions on Reverse Side)
INSTRUCTIONS FOR EXERCISE OF RIGHTS CERTIFICATE
EX-10.2 5 a2073050zex-10_2.htm EX-10.2
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EXHIBIT 10.2

WARRANT AGREEMENT

WARRANT AGREEMENT dated as of , 2002 by and between PPT Vision, Inc., a Minnesota corporation (the "Company"), and Wells Fargo Bank MN, N.A., as Warrant Agent (the "Warrant Agent").

A. The Company proposes to issue up to Redeemable Warrants (the "Warrants") evidencing the right to purchase an aggregate of up to authorized but previously unissued shares of Common Stock of the Company (the "Common Stock"). The Warrants would be issued in connection with a Rights Offering by which existing shareholders of the Company are issued the right to purchase units comprised of one share of Common Stock and a warrant to purchase an additional one-half share of Common Stock. The rights by which shareholders would be issued warrants shall occur during the term of the offering as defined by the Company's Registration Statement on Form S-3 (File No. 333-84148), filed with the Securities and Exchange Commission on March 12, 2002 and as subsequently amended.

B. The Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent desires so to act, in connection with the issuance, registration, transfer, exchange and exercise of the Warrants.

NOW THEREFORE, it is agreed as follows:

ARTICLE 1.
APPOINTMENT OF WARRANT AGENT; ISSUANCE,
FORM AND EXECUTION OF WARRANT CERTIFICATES

Section 1.1 Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as Agent for the Company, and the Warrant Agent hereby accepts the agency established herein and agrees to perform its agency duties in accordance with the terms and conditions of this Warrant Agreement.

Section 1.2 Warrant Certificates. The Company shall execute and deliver to the Warrant Agent certificates which the Company has authorized to represent the Warrants ("Warrant Certificates"). The Warrant Certificates shall be substantially as set forth in Exhibit A hereto and may have such legends, summaries or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Warrant Agreement, or as may be required to comply with any law or with any rule or regulation relating to listing of the Warrants on any stock exchange or to conform to usage. The Warrant Certificates shall be dated with the date of their issuance.

Section 1.3 Execution of Warrant Certificates. The Warrant Certificates shall be executed on behalf of the Company by a duly authorized officer of the Company, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. Any Warrant Certificate may be signed on behalf of the Company by the person who at the actual date of the signing of such Warrant Certificate shall have been the proper officer of the Company, although at the date of issuance of such Warrant Certificate any such person has ceased to be such officer of the Company.

ARTICLE II.
EXERCISE OF WARRANTS

Section 2.1 Exercise. Any or all of the Warrants represented by each Warrant Certificate may be exercised by the holder thereof on or before 5:00 p.m., Minneapolis time, on , unless extended by the Company, by surrender of the Warrant Certificate with the Purchase Form, which is printed on the reverse thereof (or a reasonable facsimile thereof) duly executed by such holder, to the

Warrant Agent at its principal office in South St. Paul, Minnesota, accompanied by payment, in cash or by certified or official bank check payable to the order of the Warrant Agent, in an amount equal to the number of shares of Common Stock issuable upon exercise of the Warrant represented by such Warrant Certificate, as adjusted pursuant to the provisions of Article III hereof, multiplied by the exercise price of $ per share, as adjusted pursuant to the provisions of Article III hereof (such price as so adjusted from time to time being herein called the "Exercise Price"), and such holder shall be entitled to receive such number of fully paid and nonassessable shares of Common Stock, as so adjusted, at the time of such exercise. Warrants, represented by a properly assigned Warrant Certificate, may be exercised by a new holder without first having a new Warrant Certificate issued.

Section 2.2 Time of Exercise. Each exercise of Warrants shall be deemed to have been effective immediately prior to the close of business on the business day on which the Warrant Certificate relating to such Warrants shall have been surrendered to the Warrant Agent as provided in Section 2.1, and at such time the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such exercise as provided in Section 2.3, shall be deemed to have become the holder or holders of record thereof.

Section 2.3 Issuance of Shares of Common Stock; No Fractional Shares. As soon as practicable after the exercise of any Warrant, and in any event within ten (10) days after receipt by the Warrant Agent of the notice of exercise under Section 2.1, the Warrant Agent, at the direction of the Company, will cause to be issued in the name of and delivered to the holder thereof or as such holder (upon payment by such holder of any applicable transfer taxes) may direct,

(a) certificate or certificates for the number of fully paid and nonassessable shares of Common Stock to which such holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such holder would otherwise be entitled, an amount in cash equal to such fraction multiplied by the then current value of a share of Common Stock, determined as follows:

(i) if the Common Stock is listed or admitted to unlisted trading privileges on any single stock exchange, then such current value shall be computed on the basis of the last reported sale price of the Common Stock on such exchange on the last business day prior to the date of the exercise of such Warrant upon which a sale shall have been effected; or

(ii) if the Common Stock is not so listed or admitted to unlisted trading privileges and bid and ask prices are reported by Nasdaq, including the National Market system (or, if not so quoted on Nasdaq, by the National Quotation Bureau, Inc.), then the current value shall be the last reported sale on the last business day prior to the date of the exercise of such Warrant, or, in the event the last reported sale is unavailable, the average of the closing bid and ask prices on the last business day prior to the date of the exercise of such Warrant as so reported; or

(iii) if the Common Stock is listed or admitted to unlisted trading privileges on more than one stock exchange or one or more stock exchanges and quoted on Nasdaq, then the current value shall, if different as a result of calculation under the applicable method(s) described above in this Section, be deemed to be the higher number calculated in connection therewith; or

(iv) if the Common Stock is not so listed or admitted to unlisted trading privileges and bid and ask prices are not so reported, then the current value shall be computed on the basis of the book value of Common Stock as of the close of business on the last day of the month immediately preceding the date upon which such Warrant was exercised, as determined by the Company,

and

(b) in case such exercise includes only part of the Warrants represented by any Warrant Certificate, a new Warrant Certificate or Warrant Certificates of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of such Warrant Certificate minus the number of such shares designated by the holder for such exercise as provided in Section 2.1.

Section 2.4 Extension of Exercise Period; Change of Exercise Price. The Company may, upon notice given to the Warrant Agent, and without the consent of the holders of the Warrant Certificates, (i) reduce the Exercise Price during all or any portion of the originally stated exercise period, or (ii) extend the period over which the Warrants are exercisable beyond and increase the Exercise Price for any period during which the Warrant exercise period is extended. In the case of the extension of the exercise period or a change in the Exercise Price, the Company must provide the Warrant Agent and the Warrant holders of record notice of such extension of the exercise period, specifying, as the case may be, the time to which such exercise period is extended, or specifying the new Exercise Price and the periods for which such new Exercise Price is in effect, at least twenty (20) days prior to the date such extension or new Exercise Price is to take effect.

ARTICLE III.
ANTIDILUTION PROVISIONS

Section 3.1 Adjustment of Exercise Price.

(a) The Exercise Price shall be subject to the following adjustments. In the event that:

(i) any dividends on any class of stock of the Company payable in Common Stock or securities convertible into Common Stock shall be paid by the Company; or

(ii) the Company shall subdivide its then outstanding shares of Common Stock into a greater number of shares; or

(iii) the Company shall combine outstanding shares of Common Stock, by reclassification or otherwise;

then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (A) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Exercise Price, by (B) the total number of shares of Common Stock outstanding immediately after such event (including the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Exercise Price per share.

(b) No adjustment of the Exercise Price shall be made if the amount of such adjustments shall be less than one cent per share, but in such case any adjustment that would otherwise be required to be made shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one cent per share.

Section 3.2 Adjustment of Number of Shares Purchasable on Exercise of Warrants. Upon each adjustment of the Exercise Price pursuant to Section 3.1, the registered holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Exercise Price in effect prior

to such adjustment) by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.

Section 3.3 Notice as to Adjustment. Upon any adjustment of the Exercise Price and an increase or decrease in the number of shares of Common Stock purchasable upon the exercise of the Warrants, then, and in each such case, the Company shall within ten (10) days after the effective date of such adjustment give written notice thereof, by first class mail, postage prepaid, addressed to each registered Warrant holder at the address of such Warrant holder as shown on the books of the Company, which notice shall state the adjusted Exercise Price and the increased or decreased number of shares purchasable upon the exercise of the Warrants, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

Section 3.4 Effect of Reorganization, Reclassification, Merger, Etc. If at any time while any Warrant is outstanding there should be any capital reorganization or reclassification of the capital stock of the Company (other than the issue of any shares of Common Stock in subdivision of outstanding shares of Common Stock by reclassification or otherwise and other than a combination of shares provided for in Section 3.1 hereof) or any consolidation or merger of the Company with another corporation or any sale, conveyance, lease or other transfer by the Company of all or substantially all of its assets to any other corporation, the holder of any Warrant shall, during the remainder of the period such Warrant is exercisable, be entitled to receive, upon payment of the Exercise Price, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such consolidation or merger, or of the corporation to which the assets of the Company has been sold, conveyed, leased or otherwise transferred, as the case may be, to which the Common Stock (and any other securities and property) of the Company, deliverable upon the exercise of such Warrant, would have been entitled upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer if such Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation merger, sale, conveyance, lease or other transfer; and, in any such case, appropriate adjustment (as determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth in this Warrant Agreement with respect to the rights and interests thereafter of the Warrant holders to the end that the provisions set forth in this Warrant Agreement (including the adjustment of the Exercise Price and the number of shares issuable upon the exercise of the Warrants) shall thereafter be applicable, as near as may be reasonably practicable, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrants as if the Warrants had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Warrant holders had carried out the terms of the exchange as provided for by such capital reorganization, reclassification, consolidation or merger. The Company shall not effect any such capital reorganization, consolidation, merger or transfer unless, upon or prior to the consummation thereof, the successor corporation or the corporation to which the property of the Company has been sold, conveyed, leased or otherwise transferred shall assume by written instrument the obligation to deliver to the holder of each Warrant such shares of stock, securities, cash or property as in accordance with the foregoing provisions such holder shall be entitled to purchase.

Section 3.5 Prior Notice as to Certain Events. In case at any time:

(a) The Company shall pay any dividend upon its Common Stock payable in stock or make any distribution (other than cash dividends) to the holders of its Common Stock; or

(b) The Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or any other rights; or

(c) There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale, conveyance, lease or other transfer of all or substantially all of its assets to, another corporation; or

(d) There shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then in any one or more of such cases, the Company shall give prior written notice, by first class mail, postage prepaid, addressed to each registered Warrant holder at the address of such Warrant holder as shown on the books of the Company, of the date on which (i) the books of the Company shall close or a record shall be taken for such stock dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in such dividend, distribution or subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding up, as the case may be. Such written notice shall be given at least twenty (20) days prior to the action in question and not less than twenty (20) days prior to the record date or the date on which the Company's transfer books are closed in respect thereto.

Section 3.6 Certain Obligations of the Company. The Company will not, by amendment of its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant Agreement or the Warrant Certificate, but will at all times in good faith assist in the carrying out of all such terms. Without limiting the generality of the foregoing, the Company (a) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of such stock upon the exercise of all Warrants from time to time outstanding, and (b) will not (i) transfer all or substantially all of its properties and assets to any other person or entity, or (ii) consolidate with or merge into any other entity where the Company is not the continuing or surviving entity, or (iii) permit any other entity to consolidate with or merge into the Company where the Company is the continuing or surviving entity but, in connection with such consolidation or merger, the Common Stock then issuable upon the exercise of the Warrants shall be changed into or exchanged for shares or other securities or property of any other entity unless, in any such case, the other entity acquiring such properties and assets, continuing or surviving after such consolidation or merger or issuing or distributing such shares or other securities or property, as the case may be, shall expressly assume in writing and be bound by all the terms of this Warrant Agreement and the Warrant Certificates.

Section 3.7 Reservation and Listing of Common Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of the Warrants, all shares of Common Stock from time to time issuable upon such exercise. All such shares shall be duly and validly issued, fully paid and nonassessable with no liability on the part of the holder thereof. The Company, at its expense, will list on The Nasdaq National Market (subject to official notice of issuance) and will maintain such listing of, the shares of Common Stock from time to time issuable upon the exercise of the Warrants.

Section 3.8 Registration or Exemption of Common Stock. The Company will use its best efforts (a) at all times the Warrants are exercisable to maintain an effective registration statement under the Securities Act of 1933, as amended (the "Act"), covering Common Stock issuable upon exercise of the Warrants, (b) from time to time to amend or supplement the prospectus contained in such registration statement to the extent necessary in order to comply with applicable law, (c) to qualify for exemption from the registration requirements of the Act the Common Stock issuable upon exercise of the Warrants, and (d) to maintain exemptions or qualifications, in those jurisdictions in which the original registration statement relating to the Warrants was initially qualified, to permit the exercise of the Warrants and the issuance of the Common Stock pursuant to such exercise. The Warrant Agent shall have no responsibility for the maintenance of such exemptions or qualifications or for liabilities arising from the exercise or attempted exercise of Warrants in jurisdictions where exemptions or qualifications have not been maintained or are otherwise unavailable.

ARTICLE IV.
REDEMPTION OF WARRANT

Section 4.1 Redemption Price. The Warrants may be redeemed at the option of the Company, anytime following a period of consecutive trading days where the per share closing bid price of the Common Stock exceeds $ , on notice as set forth in Section 4.2, and at a redemption price equal to $ per Warrant. For purposes of this Section, the closing bid price of the Common Stock shall be determined by the closing bid price as reported by The Nasdaq National Market so long as the Common Stock is quoted on The Nasdaq National Market and, if the Common Stock is listed on a stock exchange, shall be determined by the last reported sale price on the primary exchange on which the Common Stock is traded.

Section 4.2 Notice of Redemption. In the case of any redemption of Warrants, the Company or, at its request, the Warrant Agent in the name of and at the expense of the Company shall give notice of such redemption to the holders of the Warrants to be redeemed as hereinafter provided in this Section 4.2. Notice of redemption to the holders of Warrants shall be given by mailing by first-class mail a notice of such redemption at any time following the ten-day consecutive trading period referenced in Section 4.1 and not less than 30 days prior to the date fixed for redemption. Any notice which is given in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives the notice. In any case, failure duly to give such notice, or any defect in such notice, to the holder of any Warrant Certificate shall not affect the validity of the proceedings for the redemption of Warrants represented by any other Warrant Certificate. Each such notice shall specify the date fixed for redemption, the place of redemption and the redemption price of $ at which each Warrant is to be redeemed, and shall state that payment of the redemption price of the Warrants will be made on surrender of the Warrants at such place of redemption, and that if not exercised by the close of business on the date fixed for redemption the exercise rights of the Warrants identified for redemption shall expire unless extended by the Company. Such notice shall also state the current Exercise Price and the date on which the right to exercise the Warrants will expire unless extended by the Company.

Section 4.3 Payment of Warrants on Redemption; Deposit of Redemption Price. If notice of redemption shall have been given as provided in Section 4.2, the redemption price of $ per Warrant

shall, unless the Warrant is theretofore exercised pursuant to the terms hereof, become due and payable on the date and at the place stated in such notice. On and after such date of redemption, provided that cash sufficient for the redemption thereof shall then be deposited by the Company with the Warrant Agent for that purpose, the exercise rights of the Warrants identified for redemption shall expire. On presentation and surrender of Warrant Certificates at such place of payment in such notice specified, the Warrants identified for redemption shall be paid and redeemed at the redemption price of $ per Warrant. Prior to the date fixed for redemption, the Company shall deposit with the Warrant Agent an amount of money sufficient to pay the redemption price of all the Warrants identified for redemption. Any monies which shall have been deposited with the Warrant Agent for redemption of Warrants and which are not required for that purpose by reason of exercise of Warrants shall be repaid to the Company upon delivery to the Warrant Agent of a written request for the repayment together with such evidence necessary to support the request.

ARTICLE V.
CERTAIN OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES

Section 5.1 No Rights of Shareholders. The Warrant Certificates shall be issued in registered form only. No Warrant Certificate shall entitle the holder thereof to any of the rights of a holder of shares of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of holders of Common Stock or any other proceedings of the Company.

Section 5.2 Loss, Theft, Destruction or Mutilation of Warrant Certificates. Upon receipt by the Warrant Agent of evidence reasonably satisfactory to the Warrant Agent of the loss, theft, destruction or mutilation of any Warrant Certificate, and (a) in the case of any such loss, theft, or destruction, upon delivery to the Warrant Agent of an indemnity bond in form and amount, and issued by a bonding company, reasonably satisfactory to the Company, or (b) in the case of any such mutilation upon surrender to and cancellation by the Warrant Agent of such Warrant Certificate, the Company at its expense will execute and cause the Warrant Agent to countersign and deliver, in lieu thereof, a new Warrant Certificate of like tenor.

Section 5.3 Transfer Agent; Cancellation of Warrant Certificates; Unexercised Warrants. Wells Fargo Bank MN, N.A. (and any successor), as transfer agent (the "Transfer Agent"), is hereby irrevocably authorized and directed at all times to reserve such number of authorized and unissued shares of Common Stock as shall be sufficient to permit the exercise in full of all Warrants from time to time outstanding. The Company will keep a copy of this Agreement on file with the Transfer Agent. The Warrant Agent, and any successor thereto, is hereby irrevocably authorized to requisition from time to time from the Transfer Agent certificates for shares of Common Stock required for exercise of Warrants. The Company will supply the Transfer Agent with duly executed certificates for shares of Common Stock for such purpose and will make available any cash required in settlement of fractional share interests. All Warrant Certificates surrendered upon the exercise or redemption of Warrants shall be canceled by the Warrant Agent and shall thereafter be delivered to the Company; such canceled Warrant Certificates, with the Purchase Form on the reverse thereof duly filled in and signed, shall constitute conclusive evidence as between the parties hereto of the numbers of shares of Common Stock which shall have been issued upon exercises of Warrants. Promptly after the last day on which the Warrants are exercisable (set forth in Section 2.1 above), the Warrant Agent shall certify to the Company the aggregate number of Warrants then outstanding and unexercised. No shares of Common Stock shall be subject to reservation with respect to Warrants not exercised prior to the time and date identified in Section 2.1 above as the last time and date at which Warrants may be exercised.

ARTICLE VI.
TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES

Section 6.1 Warrant Register; Transfer or Exchange of Warrant Certificates. The Warrant Agent shall cause to be kept at the principal office of the Warrant Agent a register (the "Warrant Register") in which, subject to such reasonable regulations as the Company may prescribe, provisions shall be made for the registration of transfers and exchanges of Warrant Certificates. Upon surrender for transfer or exchange of any Warrant Certificates, properly endorsed, to the Warrant Agent, the Warrant Agent at the Company's expense will issue and deliver to or upon the order of the holder thereof a new Warrant Certificate or Warrant Certificates of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face of the Warrant Certificate so surrendered. Any Warrant Certificate surrendered for transfer or exchange shall be canceled by the Warrant Agent and shall thereafter be delivered to the Company.

Section 6.2 Identity of Warrant holders. Until a Warrant Certificate is transferred in the Warrant Register, the Company and the Warrant Agent may treat the person in whose name the Warrant Certificate is registered as the absolute owner thereof and of the Warrants represented thereby for all purposes, notwithstanding any notice to the contrary, except that, if and when any Warrant Certificate is properly assigned in blank, the Company and the Warrant Agent may (but shall not be obligated to) treat the bearer thereof as the absolute owner of the Warrant Certificate and of the Warrants represented thereby for all purposes, notwithstanding any notice to the contrary.

ARTICLE VII.
CONCERNING THE WARRANT AGENT

Section 7.1 Taxes. The Company will, from time to time, promptly pay to the Warrant Agent, or make provision satisfactory to the Warrant Agent for the payment of, all taxes and charges that may be imposed by the United States or any State upon the Company or the Warrant Agent upon the transfer or delivery of shares of Common Stock upon the exercise of Warrants, but the Company shall not be obligated to pay any tax imposed in connection with any transfer involved in the delivery of a certificate for shares of Common Stock in any name other than that of the registered holder of the Warrant Certificate surrendered in connection with the purchase thereof.

Section 7.2 Replacement of Warrant Agent in Certain Circumstances.

(a) The Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder after giving thirty (30) days' notice in writing to the Company, except that such shorter notice may be given as the Company shall, in writing, accept as sufficient. The Company may discharge the Warrant Agent at any time with or without reason, effective upon thirty (30) days written notice to the Warrant Agent or such shorter period as the Warrant Agent shall, in writing, accept as sufficient. If the office of Warrant Agent becomes vacant by resignation, discharge, incapacity to act or otherwise, the Company shall appoint in writing a new Warrant Agent, the principal office of which shall be in Minnesota. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by the holder of a Warrant Certificate, then the holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States and of the State of Minnesota, of good standing, and having its principal office in Minnesota, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal or State authority. Any new Warrant Agent appointed hereunder shall execute, acknowledge and deliver to the Company an

instrument accepting such appointment hereunder and thereupon such new Warrant Agent without any further act or deed shall become vested with all the rights, powers, duties and responsibilities of the Warrant Agent hereunder with like effect as if it had been named as the Warrant Agent; but if for any reason it becomes necessary or expedient to have the former Warrant Agent execute and deliver any further assurance, conveyance, act or deed, the same shall be done and shall be legally and validly executed and delivered by the former Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the former Warrant Agent. The Company shall promptly give notice of any such appointment to the holders of the Warrant Certificates by mail to their addresses as shown in the Warrant Register. Failure to file or give such notice, or any defect therein, shall not affect the legality or validity of the appointment of the successor Warrant Agent.

(b) Any company into which the Warrant Agent or any new Warrant Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Warrant Agreement without any further act; provided that if such company would not be eligible for appointment as a successor Warrant Agent under the provisions of paragraph (a) of this Section 7.2, the Company shall forthwith appoint a new Warrant Agent in accordance with such provisions. Any such successor Warrant Agent may adopt the prior countersignature of any predecessor Warrant Agent and deliver Warrant Certificates countersigned and not delivered by such predecessor Warrant Agent or may countersign Warrant Certificates either in the name of any predecessor Warrant Agent or the name of the successor Warrant Agent.

Section 7.3 Remuneration of Warrant Agent. The Company will pay the Warrant Agent reasonable remuneration for its services as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

Section 7.4 Further Assurances. The Company will perform, exercise, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Warrant Agreement.

Section 7.5 Limitations on Liabilities of the Warrant Agent.

(a) The Warrant Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection of the Warrant Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

(b) Whenever, in the performance of its duties under this Warrant Agreement, the Warrant Agent shall deem it necessary or desirable that any matter be proved or established, or that any instructions with respect to the performance of its duties hereunder be given, by the Company prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established, or such instructions may be given, by a certificate or instrument signed by an officer of the Company and delivered to the Warrant Agent; and such certificate or instrument shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Warrant Agreement in reliance upon such certificate or instrument; but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such matter or may require such further or additional evidence as it may deem reasonable.

(c) The Warrant Agent shall be liable hereunder only for its own negligence or willful misconduct. The Warrant Agent shall act hereunder solely as agent, and its duties shall be

determined solely by the provisions hereof. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Warrant Agreement except as a result of the Warrant Agent's negligence or willful misconduct.

(d) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Warrant Agreement or in the Warrant Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

(e) The Warrant Agent shall not be under any responsibility in respect to the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Warrant Agreement or in any Warrant Certificate; nor shall it be responsible for the making of any adjustment in the Exercise Price, or number of shares issuable upon exercise of the Warrant Certificates or responsible for the manner, method or amount of any such adjustment or the facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Warrant Agreement or any Warrant Certificate or as to whether any shares of Common Stock or other securities are or will be validly authorized and issued and fully paid and nonassessable.

Section 7.6 Amendment and Modification. The Warrant Agent may, without the consent or concurrence of the holders of the Warrant Certificates, by supplemental agreement or otherwise, join with the Company in making any changes or corrections in this Warrant Agreement that they shall have been advised by counsel (a) are required to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained, (b) add to the obligations of the Company in this Warrant Agreement further obligations thereafter to be observed by it, or surrender any right or power reserved to or conferred upon the Company in this Warrant Agreement, or (c) do not or will not adversely affect, alter or change the rights, privileges or immunities of the holders of Warrant Certificates not provided for under this Warrant Agreement; provided, however, that any term of this Warrant Agreement or any Warrant Certificate may be changed, waived, discharged or terminated by an instrument in writing signed by each party against which enforcement of such change, waiver, discharge or termination is sought, or by which the same is to be performed or observed.

ARTICLE VIII.
OTHER MATTERS

Section 8.1 Successors and Assigns. All the covenants and provisions of this Warrant Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.

Section 8.2 Notices. Any notice or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by the holder of any Warrant Certificate to or on the Company shall be sufficiently given or made if sent by first class or registered mail, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows:

Attn: President
PPT Vision, Inc.
12988 Valley View Road
Eden Prairie, MN 55344

With a copy to:

Thomas Lovett IV, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, MN 55402-2205

Any notice or demand authorized by this Warrant Agreement to be given or made by the holder of any Warrant Certificate or by the Company to or on the Warrant Agent shall be sufficiently given or made if sent by first class or registered mail, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company) as follows:

Wells Fargo Bank MN, N.A.
161 North Concord Exchange
South St. Paul, MN 55075
Attn: Corbin B. Connell, Wells Fargo Shareowner Services

Section 8.3 Governing Law. This Warrant Agreement and the Warrant Certificates are being delivered in the State of Minnesota and shall be construed and enforced in accordance with and governed by the laws of such state.

Section 8.4 No Benefits Conferred. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company, the Warrant Agent, and the holders of the Warrant Certificates, any right, remedy or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise or agreement herein; and all covenants, conditions, stipulations, promises and agreements in this Warrant Agreement contained shall be for the sole and exclusive benefit of the Company, the Warrant Agent, their respective successors and the holders of the Warrant Certificates.

Section 8.5 Headings. The descriptive headings used in this Warrant Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties hereto as of the day and year first above written.

	PPT VISION, INC.
	By
		Its President
	WELLS FARGO BANK MN, N.A.
	By

		Its

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WARRANT AGREEMENT
EX-10.3 6 a2073050zex-10_3.htm EX-10.3
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EXHIBIT 10.3

THIS WARRANT CERTIFICATE IS EXERCISABLE ON OR BEFORE,
AND VOID AFTER 5:00 P.M. MINNEAPOLIS TIME,
WARRANTS TO PURCHASE COMMON STOCK OF

PPT VISION, INC.

INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA

NO. W-

CERTIFICATE FOR WARRANTS


		CUSIP		693519 11 8

THIS CERTIFIES THAT

or assigns, is the owner of the number of Warrants set forth above, each of which represents the right to purchase from PPT Vision, Inc., a Minnesota corporation (the "Company"), at any time on or before 5:00 P.M. Minneapolis time, upon compliance with and subject to the conditions set forth herein and in the Warrant Agreement hereinafter referred to, shares (subject to adjustments referred to below) of the Common Stock of the Company (such shares or other securities or property purchasable upon exercise of the Warrants being herein called the "Shares"), by surrendering this Warrant Certificate, with the Purchase Form on the reverse side duly executed, at the principal office of Wells Fargo Bank MN, N.A. in South St. Paul, or its successor, as warrant agent (the "Warrant Agent"), and by paying in full, in cash or by certified or official bank check payable to the order of the Warrant Agent, the exercise price of $ per share.

Upon any exercise of less than all the Warrants evidenced by this Warrant Certificate, there shall be issued to the holder a new Warrant Certificate in respect of the Warrants as to which this Warrant Certificate was not exercised.

Upon the surrender for transfer or exchange of any Warrant Certificates, properly endorsed, to the Warrant Agent, the Warrant Agent at the Company's expense will issue and deliver to the order of the holder hereof, a new Warrant Certificate or Warrant Certificates of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face hereof.

The Warrant Certificates are issued only as registered Warrant Certificates. Until this Warrant Certificate is transferred in the Warrant Register, the Company and the Warrant Agent may treat the person in whose name this Warrant Certificate is registered as the absolute owner hereof and of the Warrants represented hereby for all purposes, notwithstanding any notice to the contrary.

This Warrant Certificate is issued under the Warrant Agreement dated as of , 2002 between the Company and the Warrant Agent. The Warrant Agreement is hereby incorporated by reference into this Warrant Certificate and this Warrant Certificate is subject to the terms and provisions contained in said Warrant Agreement, to all of which terms and provisions the registered holder of this Warrant Certificate consents by acceptance hereof. Copies of said Warrant Agreement are on file at the office of the Warrant Agent in South St. Paul, Minnesota, and may be obtained by writing to the Warrant Agent.

The number of Shares receivable upon the exercise of the Warrants represented by this Warrant Certificate and the exercise price per share are subject to adjustment upon the happening of certain events specified in the Warrant Agreement.

No fractional Shares of the Company's Common Stock will be issued upon the exercise of the Warrants. As to any final fraction of a share which a holder of Warrants exercised in the same transaction would otherwise be entitled to purchase on such exercise, the Company shall pay a cash adjustment in lieu of any fractional Share determined as provided in the Warrant Agreement.

The Warrants may be redeemed at the option of the Company, at any time commencing after , 2002, and following a period of consecutive trading days where the per share closing bid price of the Common Stock exceeds $ , on notice as set forth in the Warrant Agreement, and at a redemption price equal to $.01 per Warrant. If notice of redemption shall have been given as provided in the Warrant Agreement and cash sufficient for the redemption be deposited by the Company for that purpose, the exercise rights of the Warrants identified for redemption shall expire at the close of business on such date of redemption unless extended by the Company.

This Warrant Certificate shall not entitle the holder hereof to any of the rights of a holder of Common Stock of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, to exercise any preemptive right, or to receive any notice of, or to attend meetings of holders of Common Stock or any other proceedings of the Company.

This Warrant Certificate shall be void and the Warrants and any rights represented hereby shall cease unless exercised on or before 5:00 P.M. Minneapolis time on , unless extended by the Company.

This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent.

WITNESS the facsimile signatures of the Company's duly authorized officers.

		PPT VISION, INC.
Dated:
COUNTERSIGNED AND REGISTERED:
WELLS FARGO BANK MN, N.A. ( , Minnesota)		By	/s/ JOSEPH C. CHRISTENSON President
	as Warrant Agent
By		Attest	/s/
	Authorized Officer		Secretary

THE CORPORATION WILL FURNISH ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE, A COPY OF THE ARTICLES OF INCORPORATION AND A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR SERIES.

To:	PPT Vision, Inc. c/o Wells Fargo Bank MN, N.A. Warrant Agent

PURCHASE FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE
WARRANT CERTIFICATES)

The undersigned hereby irrevocably elects to exercise the Warrants represented by the Warrant Certificate and to purchase for cash Shares issuable upon the exercise of said Warrants and requests that certificates for such Shares shall be issued in the name of

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF REGISTERED HOLDER OF CERTIFICATE





				(Print Name)

				(Address)

				(Address)

Dated:				Signature:

ASSIGNMENT FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO TRANSFER WARRANT
CERTIFICATES)

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE				FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers of the Warrants to purchase shares of Common Stock represented by this Warrant Certificate unto




(Please print or typewrite name and address, including postal zip code, of assignee)




and does hereby irrevocably constitute and appoint Attorney to transfer this Warrant Certificate on the records of the Company with full power of substitution in the premises.
Dated:				Signature(s)

SIGNATURE(S) GUARANTEED:

NOTICE:

THE SIGNATURE(S) TO THE PURCHASE FORM OR THE ASSIGNMENT FORM MUST CORRESPOND TO THE NAME(S) AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.

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EXHIBIT 10.3

EX-10.4 7 a2073050zex-10_4.htm EXHIBIT 10.4

EXHIBIT 10.4

Dear Shareholder:

PPT Vision, Inc. has commenced an Offering under which the Company is offering its existing Shareholders the opportunity to purchase Units. I have enclosed a Prospectus that explains the terms and conditions of the Offering, and a Rights Certificate that may be used to participate in the Rights Offering.

To participate in the Rights Offering, please send your completed Rights Certificate and proper payment to Wells Fargo at the address provided on the Rights Certificate. Certificates and payment must be received by Wells Fargo by 5:00 P.M. (CST) on May 3, 2002 to be accepted.

Units are offered at a price of $ per Unit. Each Unit contains one share of Common Stock and a Redeemable Warrant to purchase an additional one-half share. The Warrants are transferable, exercisable at $ per share, and expire on .

There are two ways to participate in this Offering:

1.

Standard:

A.: One Share/One Unit: Each Shareholder has the right to purchase up to one Unit for every share owned on March 22, 2002 (as indicated on the Rights Certificate).
B.: Oversubscription Privilege: Shareholders who purchase all the Units possible under 1A may select an Oversubscription Privilege. The Oversubscription Privilege allows a Shareholder to purchase additional Units up to the number of shares owned, subject to availability.

The maximum number of Units that may be purchased under the Standard Option "B" is two times the number of shares owned. For instance, a Shareholder who owns 2,000 shares may purchase 2,000 Units by the "One Share/One Unit" option, and may, subject to availability, purchase an additional 2,000 Units by the "Oversubscription Privilege" for a total of 4,000 Units.

2.: Alternative: Because a number of the Company's Shareholders own a limited number of shares, a Shareholder may, as an alternative to the Standard Option, purchase up to 1,000 Units (the "1,000 Unit Right") regardless of the number of shares owned.

If you are interested in purchasing additional Units, the Company may offer any Units that remain at the close of the Rights Offering to Shareholders who have either provided the Contact Information as requested on the Rights Certificate or contacted the Company via e-mail at ir@pptvision.com.

Please contact Wells Fargo, PPT Vision's transfer agent, by phone with any questions. You may also contact Joseph C. Christenson, President of PPT Vision, by fax or mail with questions.

	Wells Fargo Shareowner Services 1-800-468-9716	PPT Vision, Inc. 12988 Valley View Road Eden Prairie, MN 55344 Fax: 952-996-9501

Very truly yours,

Joseph C. Christenson President
April 2, 2002

This Rights Offering expires on May 3, 2002 at 5:00 P.M. (CST).
Only Rights Certificates received by Wells Fargo by 5:00 P.M. (CST), May 3, 2002 will be accepted.

EX-23.1 8 a2073050zex-23_1.htm EX-23.1
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Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated December 14, 2001 relating to the financial statements and financial statement schedule, which appears in PPT Vision, Inc's Annual Report on Form 10-K for the year ended October 31, 2001. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PRICEWATERHOUSECOOPERS
PRICEWATERHOUSECOOPERS
March 27, 2002

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CONSENT OF INDEPENDENT ACCOUNTANTS
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