<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Cognex Corporation
(Name of Registrant as Specified In Its Charter)
Cognex Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
COGNEX CORPORATION
NOTICE OF SPECIAL MEETING IN LIEU OF
THE 1996 ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1996
To the Stockholders:
A Special Meeting of the Stockholders of COGNEX CORPORATION in lieu of the
1996 Annual Meeting will be held on Tuesday, April 23, 1996, at 10:00 a.m. at
the offices of Hutchins, Wheeler & Dittmar, A Professional Corporation, Suite
3100, 101 Federal Street, Boston, Massachusetts, for the following purposes:
1. To elect a Director to serve for a term of three years, as more
fully described in the accompanying Proxy Statement.
2. To consider and act upon a proposal to amend the Articles of
Organization of the Company to increase the number of shares of Common
Stock which the Company has the authority to issue from 60,000,000 shares
to 120,000,000 shares.
3. To consider and act upon a proposal to approve amendments of the
Cognex Corporation 1993 Stock Option Plan adopted by the Board of
Directors, whereby the number of shares reserved for issuance under such
plan was increased from 5,000,000 shares of Common Stock to 8,000,000
shares of Common Stock and 1,000,000 of such shares were made available for
the issuance of stock awards under the plan.
4. To consider and act upon any other business which may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 12, 1996,
as the record date for the meeting. All stockholders of record on that date are
entitled to notice of and to vote at the meeting.
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON.
By order of the Board of Directors
ANTHONY J. MEDAGLIA, JR., Clerk
Natick, Massachusetts
March 30, 1996
<PAGE> 3
COGNEX CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cognex Corporation (the "Corporation") for
use at the Special Meeting of Stockholders in Lieu of the 1996 Annual Meeting to
be held on Tuesday, April 23, 1996, at the time and place set forth in the
notice of the meeting, and at any adjournments thereof. The approximate date on
which this Proxy Statement and form of proxy are first being sent to
stockholders is March 30, 1996.
If the enclosed proxy is properly executed and returned, it will be voted
in the manner directed by the stockholder. If no instructions are specified with
respect to any particular matter to be acted upon, proxies will be voted in
favor thereof. Any person giving the enclosed form of proxy has the power to
revoke it by voting in person at the meeting, or by giving written notice of
revocation to the Clerk of the Corporation at any time before the proxy is
exercised.
The holders of a majority in interest of all Common Stock issued,
outstanding and entitled to vote are required to be present in person or be
represented by proxy at the meeting in order to constitute a quorum for
transaction of business. The election of the nominee for Director will be
decided by plurality vote. The affirmative vote of the holders of at least a
majority of the shares of Common Stock outstanding is required to approve the
increase in the number of shares of Common Stock which the Corporation has the
authority to issue. The affirmative vote of the holders of at least a majority
of the shares of Common Stock voting in person or by proxy at this meeting is
required to approve the amendments of the 1993 Stock Option Plan. Abstentions
and "non-votes" are counted as present in determining whether the quorum
requirement is satisfied. Abstentions and "non-votes" have the same effect as
votes against proposals presented to stockholders other than election of
directors. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but one does not vote on another proposal because
the nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
The Corporation will bear the cost of the solicitation. It is expected that
the solicitation will be made primarily by mail, but regular employees or
representatives of the Corporation (none of whom will receive any extra
compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy materials to their principals
at the expense of the Corporation.
The Corporation's principal executive offices are located at One Vision
Drive, Natick, Massachusetts 01760, telephone number (508) 650-3000.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on March 12, 1996, are
entitled to notice of and to vote at the meeting. On that date the Corporation
had outstanding and entitled to vote 39,113,229 shares of Common Stock, par
value $.002 per share. Each outstanding share of the Corporation's Common Stock
entitles the record holder to one vote.
ELECTION OF DIRECTORS
Pursuant to Massachusetts law, the Board of Directors is divided into three
classes, with each class as nearly equal in number as possible. One class is
elected each year for a term of three years. It is proposed that the nominee
listed below, whose term expires at this meeting, be elected to serve a term of
three years and
<PAGE> 4
until his successor is duly elected and qualified or until he sooner dies,
resigns or is removed. The Corporation presently has a Board of Directors of
five members.
<TABLE>
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominee named below. If such nominee should
become unavailable for election, which is not anticipated, the persons named in
the accompanying proxy will vote for such substitute as the Board of Directors
may recommend. The nominee is not related to any Executive Officer of the
Corporation or its subsidiaries.
<CAPTION>
YEAR FIRST POSITION WITH THE CORPORATION
ELECTED A OR PRINCIPAL OCCUPATION
NAME OF NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
--------------- --- --------- -----------------------------
<S> <C> <C> <C>
NOMINATED FOR A TERM ENDING IN 1999:
Robert J. Shillman.................... 49 1981 Since 1981, President, Chief Executive
Officer and Chairman of the Board of
the Corporation.
SERVING A TERM ENDING IN 1998:
William Krivsky....................... 66 1985 Since 1994, Principal of Kellogg,
Krivsky & Buttler, Inc. From 1986 to
1994, Executive Vice President of Bird
Corporation, a manufacturer and
distributor of building materials and
products and a provider of
environmental services. Mr. Krivsky
also serves as a Director of Hitchiner
Manufacturing Corporation.
Anthony Sun........................... 43 1982 Since 1979, general partner of Venrock
Associates, a venture capital
partnership. Mr. Sun also serves as a
Director of Inference Corp., Komag
Inc., Stratacom, Inc., Gupta Corp.,
Conductus Inc. and Photonics Inc.
SERVING A TERM ENDING IN 1997:
Patrick Sansonetti.................... 51 1986 Since 1987, Senior Vice President of
Advent International Corporation, an
international venture capital firm.
From 1983 to 1987, general partner of
Hambrecht & Quist Venture Partners. Mr.
Sansonetti also serves as a Director of
Interleaf, Inc.
Reuben Wasserman...................... 66 1990 Since 1985, serves as an independent
business consultant serving
corporations and venture capital firms.
Prior to 1985 was Vice President of
Strategic Planning for Gould Inc. Also,
a director of AMR, Inc., Astea
International, Mitech Corp., Fastech
Integration Inc., and Board Advisor to
Andover Controls Corp. and Pacer
Electronics
</TABLE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1995, there were five meetings of the Board of Directors of
the Corporation. All of the Directors attended at least 75% of the aggregate of
(i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings held by committees of the Board of Directors on which they
served. The Board of Directors does not have a nominating committee. Each
non-employee Director received compensa-
2
<PAGE> 5
tion in the amount of $1,850 for each fiscal quarter. Each non-employee Director
who served on a committee of the Board of Directors in 1995 received an annual
fee of $2,000 per committee on which he served. In addition to such fees, the
Corporation paid: $16,685 to Mr. Wasserman for reimbursement of travel expenses
and payment for consulting fees; $7,351 to Mr. Sun as reimbursement for travel
expenses; and $1,325 to Mr. Krivsky as reimbursement for travel expenses.
The Board of Directors has a Compensation/Stock Option Committee whose
members are Patrick Sansonetti, Reuben Wasserman and Anthony Sun, Chairman. The
Compensation/Stock Option Committee determines the compensation to be paid to
key officers of the Corporation and administers the Corporation's Stock Option
Plans. The Compensation/Stock Option Committee met on a total of five occasions
in 1995.
The Corporation also has an Audit Committee whose present members are
Reuben Wasserman and William Krivsky, Chairman. The Audit Committee reviews with
the Corporation's independent auditors the scope of the audit for the year, the
results of the audit when completed and the independent auditor's fee for
services performed. The Audit Committee also recommends independent auditors to
the Board of Directors and reviews with management various matters related to
its internal accounting controls. During fiscal 1995 there were two meetings of
the Audit Committee.
<TABLE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table shows as of February 25, 1996, any person who is known
by the Corporation to be the beneficial owner of more than five percent of any
class of voting securities of the Corporation. For purposes of this Proxy
Statement, beneficial ownership is defined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934 and means generally the power to vote or
dispose of the securities, regardless of any economic interest therein.
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------- ---------- ----------
<S> <C> <C>
Robert J. Shillman.................................................... 7,154,052 (1) 18.2%
Cognex Corporation
One Vision Drive
Natick, MA 01760
Pilgrim Baxter & Associates, Ltd...................................... 3,294,000 (2) 8.4%
1255 Drummers Lane
Suite 300
Wayne, PA 19087
Nicholas-Applegate.................................................... 2,416,000 (2) 6.2%
600 W. Broadway, Suite 2900
San Diego, CA 92101
<FN>
- ---------------
(1) Includes 3,000,000 shares held by the Robert J. Shillman 1990 Irrevocable
Trust, and 200 shares held by Mr. Shillman's wife. Mr. Shillman disclaims
beneficial ownership of such shares. Includes also 184,000 shares which Mr.
Shillman has the right to acquire upon the exercise of outstanding options
exercisable currently or within 60 days.
(2) According to Schedule 13G filed for the period ended December 31, 1995.
</TABLE>
3
<PAGE> 6
<TABLE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following information is furnished as of February 25, 1996, with
respect to Common Stock of the Corporation beneficially owned within the meaning
of Rule 13d-3 by all Directors of the Corporation and nominees, and by all
Directors and Executive Officers of the Corporation as a group. Unless otherwise
indicated, the individuals named held sole voting and investment power over the
shares listed below.
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OWNERSHIP CLASS
- ---- --------- ----
<S> <C> <C>
Robert J. Shillman............................................. 7,154,052(1)(2) 18.2%
Anthony Sun.................................................... 182,288(1) *
Patrick Sansonetti............................................. 56,000(1) *
Reuben Wasserman............................................... 17,000(1) *
William Krivsky................................................ 32,522(1) *
Patrick Alias.................................................. 56,000(1) *
Richard Snyder................................................. 56,000(1) *
John J. Rogers, Jr. ........................................... 55,000(1) *
All Directors and Executive Officers as a group (8 persons).... 7,608,862(1)(3) 19.2%
<FN>
- ---------------
* Less than 1%
(1) Includes the following shares which the specified individual has the right
to acquire upon the exercise of outstanding options, exercisable currently
or within 60 days: Mr. Shillman, 184,000 shares; Mr. Sun, 100,000 shares;
Mr. Sansonetti, 56,000 shares; Mr. Rogers, 55,000 shares; Mr. Wasserman,
17,000 shares; Mr. Snyder, 56,000 shares; and Mr. Alias, 56,000 shares.
(2) See Footnote (1) under "Principal Holders of Voting Securities".
(3) Includes 524,000 shares which certain Directors and Executive Officers have
the right to acquire upon the exercise of outstanding options, exercisable
presently or within 60 days.
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph on page 6 shall not be incorporated by
reference into any such filing.
COMPENSATION/STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation/Stock Option Committee (the "Committee"), which determines
executive officer compensation annually. The Committee is composed of
independent directors who are not employees of the Corporation and its
determinations with respect to compensation for a fiscal year are made at the
beginning of the fiscal year.
In its deliberations, the Committee considers (i) the levels of
responsibility associated with each executive's position, (ii) the past
performance of the individual executive, (iii) the extent to which any
individual, departmental or Corporation-wide goals have been met, (iv) the
overall competitive environment and the level of compensation necessary to
attract and retain talented and motivated individuals in key positions, and (v)
the recommendations of appropriate officers of the Corporation.
The Corporation's compensation program utilizes a combination of base
salaries, annual bonuses and stock option awards.
4
<PAGE> 7
In determining the base salaries paid to the Corporation's executive
officers for the year ended December 31, 1995, the Committee considered, in
particular, their levels of responsibility, salary increases awarded in the
past, and the executive's experience and potential.
The Committee views annual bonuses as a vehicle for rewarding executives
for meeting performance objectives. The Committee establishes individual and
corporate performance targets each year. Executive officers are eligible to
receive annual cash bonuses upon achievement of such pre-determined performance
targets. The annual bonuses for the fiscal year ended December 31, 1995 reflect
the achievement of pre-determined targets related to the Corporation's operating
income, other Company metrics, and individual goals.
The Corporation's stock option program is intended to reward the
participating executives for their efforts in building shareholder value and
improving corporate performance over the long term. The stock option program
also promotes the retention of talented executives. In determining the number of
options granted to executive officers, the Committee takes into consideration
options granted to such executives in previous years and the potential value
which may be realized upon exercise of the options as a result of appreciation
of the Corporation's stock during the option term.
In 1993 the Internal Revenue Code was amended to limit the deduction a
public company is permitted for compensation paid in 1994 and thereafter to the
chief executive officer and to the four most highly compensated executive
officers, other than the chief executive officer. Generally, amounts paid in
excess of $1 million to a covered executive, other than performance-based
compensation, cannot be deducted. In order to qualify as performance-based
compensation under the new tax law, certain requirements must be met, including
approval of the performance measures by the stockholders. The Committee intends
to consider ways to maximize deductibility of executive compensation, while
retaining the discretion the Committee considers appropriate to compensate
executive officers at levels commensurate with their responsibilities and
achievements.
COMPENSATION OF ROBERT J. SHILLMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN
The Committee established the compensation of Robert J. Shillman, the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Corporation for the fiscal year ended December 31, 1995, using the same criteria
that were used to determine the compensation of other executive officers as
described above. Mr. Shillman's base compensation was increased approximately 4%
in general recognition of his level of responsibility and his individual efforts
for the benefit of the Corporation. Mr. Shillman's annual bonus of $247,936, for
the fiscal year ended December 31, 1995, was based upon the achievement by the
Corporation of pre-determined targets with respect to operating income and is
intended to reward Mr. Shillman for his role in the achievement of that
objective. It should be noted that the Corporation's operating income for the
year ended December 31, 1995 increased 59% over operating income for the year
ended December 31, 1994.
The foregoing report has been approved by all members of the Committee.
COMPENSATION/STOCK OPTION COMMITTEE
Patrick J. Sansonetti
Anthony Sun, Chairman
Reuben Wasserman
5
<PAGE> 8
<TABLE>
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR COGNEX CORPORATION
[GRAPH]
<CAPTION>
NASDAQ
NASDAQ COMPUTER AND
MEASUREMENT PERIOD COGNEX STOCK MARKET DATA PROCESSING
(FISCAL YEAR COVERED) CORPORATION (US COMPANIES) STOCKS
<S> <C> <C> <C>
12/31/90 100.00 100.00 100.00
12/31/91 169.8 160.5 201.5
12/31/92 136.2 186.9 216.8
12/31/93 203.4 214.5 229.5
12/30/94 355.2 209.7 278.6
12/29/95 958.6 296.5 425.1
<FN>
NOTES
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/90.
</TABLE>
6
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Messrs. Sansonetti, Wasserman and Sun served as members of the
Compensation/Stock Option Committee during fiscal 1995. They were neither
officers nor employees of the Corporation or any of its subsidiaries during
fiscal 1995.
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Corporation's Chief Executive Officer and each of the Corporation's
Executive Officers whose total annual salary and bonus exceeded $100,000 for all
services rendered in all capacities to the Corporation and its subsidiaries for
the Corporation's three fiscal years ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION -------------
NAME AND ---------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) (SHARES) COMPENSATION(2)
------------------ ---- --------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert J. Shillman.............. 1995 $ 188,842 $247,936(3) 0 $ 870
President & CEO 1994 181,539 211,682 0 903
1993 178,096 197,750 640,000 1,079
Patrick Alias................... 1995 $ 183,789 $179,849(3) 0 $ 1,111
Executive Vice 1994 176,635 168,893 0 903
President, Sales and Marketing 1993 173,096 139,670 480,000 1,044
Richard Snyder.................. 1995 $ 183,789 $148,350(3) 0 $ 1,440
Executive Vice 1994 176,635 85,848 0 1,495
President, Operations 1993 173,096 69,460 480,000 1,728
John J. Rogers, Jr.............. 1995 $ 128,077 $ 45,000 100,000 $ 271
Chief Financial Officer, 1994 98,216 55,250 100,000 205
Executive Vice President, 1993 91,790 33,000 200,000 179
Treasurer
<FN>
- ---------------
(1) Salary and bonus amounts are presented in the year earned. The payment of
such amounts may have occurred in other years.
(2) Amounts included are for insurance premiums paid by the Corporation for the
benefit of the named Executive Officer.
(3) The 1995 earned bonuses of Mr. Shillman, Mr. Alias and Mr. Snyder consisted
of cash of $110,000, $76,000 and $76,000, respectively and a restricted
common stock grant of 5,220, 3,930 and 2,738 shares, respectively. The
restricted stock award carries a two year restriction period during which
the shares may not be sold or otherwise transferred.
</TABLE>
7
<PAGE> 10
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1995 to
the named Executive Officers. Pursuant to applicable regulations of the
Securities and Exchange Commission, the following table also sets forth the
hypothetical value which might be realized with respect to such options based on
assumed rates of stock appreciation of 5% and 10% compounded annually from date
of grant to the end of the option terms.
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED ANNUAL
NUMBER OF GRANTED TO EXERCISE RATES OF STOCK PRICE
SECURITIES EMPLOYEES OR BASE APPRECIATION FOR OPTION
UNDERLYING IN PRICE TERM(1)
OPTIONS FISCAL (PER EXPIRATION -------------------------
NAME GRANTED 1995 SHARE) DATE 5% 10%
---- ------- ----- ------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
John J. Rogers, Jr........ 100,000(2) 6.72% $32.438 11/14/05 $2,040,008 $5,169,782
Chief Financial Officer,
Executive Vice President,
Treasurer
<FN>
- ---------------
(1) These values are based on assumed rates of appreciation only. Actual gains,
if any, on shares acquired on option exercises are dependent on the future
performance of the Corporation's Common Stock. There can be no assurance
that the values reflected in this table will be achieved.
(2) Options have a ten year term and vest at the rate of 25% per year over a
four year period commencing on January 5, 1998.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND 12/31/95 OPTION VALUES
The following table provides information on option exercises and on the
value of the named Executive Officers' unexercised options at December 31, 1995.
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT 12/31/95 OPTIONS AT 12/31/95(1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shillman..... 120,000 $ 2,482,440 56,000 684,000 $ 1,610,000 $ 19,208,700
President & CEO
Patrick Alias.......... 232,000 $ 4,212,398 20,000 528,000 $ 633,740 $ 14,814,960
Executive Vice
President,
Sales and Marketing
Richard Snyder......... 232,000 $ 4,136,416 0 548,000 $ 0 $ 15,448,700
Executive Vice
President, Operations
John J. Rogers, Jr..... 20,000 $ 412,490 45,000 410,000 $ 1,262,165 $ 8,550,200
Chief Financial
Officer, Executive
Vice President,
Treasurer
<FN>
- ---------------
(1) Value of unexercised stock options represents difference between the
exercise prices of the stock options and the closing price of the
Corporation's Common Stock on NASDAQ National Market System on December 31,
1995.
(2) Value realized on exercise represents difference between the exercise prices
of the stock options and the trading price of the Corporation's Common Stock
on NASDAQ National Market System on the date of exercise.
</TABLE>
8
<PAGE> 11
PROPOSED AMENDMENT INCREASING THE NUMBER OF SHARES OF COMMON
STOCK WHICH THE COMPANY HAS THE AUTHORITY TO ISSUE FROM 60,000,000 SHARES TO
120,000,000
On February 25, 1996, the Board of Directors adopted the following
resolution:
RESOLVED: That this Board of Directors deems it advisable that the Articles
of Organization of this corporation be amended so as to increase
the total number of shares of Common Stock which this corporation
shall have authority to issue from 60,000,000 shares, with a par
value of $.002 per share, to 120,000,000 shares, with a par value
of $.002 per share.
The Board of Directors also directed that the proposed amendment be
submitted for action at the Special Meeting of Stockholders in Lieu of the 1996
Annual Meeting to be held on April 23, 1996.
Increase in Number of Shares of Common Stock. If approved by the
stockholders, the amendment will authorize the Company to issue an additional
60,000,000 shares of the Company's Common Stock, par value $.002 per share. As
of February 25, 1996, there were 60,000,000 shares of Common Stock authorized,
of which 39,111,725 shares were outstanding, 8,137,932 were available for
issuance pursuant to the Company's stock option plans, and 513,185 shares were
available for issuance pursuant to the Company's Employee Stock Purchase Plan.
The Board of Directors is empowered under the Articles of Organization of the
Company to issue shares of authorized stock without further stockholder
approval. The holders of the Company's Common Stock do not have preemptive
rights.
Appraisal Rights in Respect of the Proposed Amendment. Under the
applicable provisions of the Massachusetts Business Corporation Law, the
Company's stockholders have no appraisal rights with respect to the proposed
amendment.
Recommendations of the Board of Directors. As of February 25, 1996, there
were 12,237,158 shares available for issuance and not otherwise reserved of the
Company's Common Stock. Accordingly, the Board of Directors believes that the
number of authorized shares of Common Stock should be increased by 60,000,000 to
provide sufficient shares for use for such corporate purposes as may be
determined advisable by the Board of Directors, without further action or
authorization by the stockholders. Such corporate purposes might include the
acquisition of capital funds through the sale of stock, the acquisition of other
corporations or properties, or the declaration of stock dividends in the nature
of a stock split. There are no current plans, agreements, arrangements, or
understandings with respect to the issuance of any of the shares of Common Stock
which would be authorized by the amendment; however, the Board of Directors
believes that the availability of shares would afford the Company flexibility in
considering and implementing any of the corporate transactions enumerated above.
Accordingly, the Board of Directors recommends a vote for the proposed
amendment.
9
<PAGE> 12
APPROVAL OF AMENDMENTS OF THE COGNEX CORPORATION
1993 STOCK OPTION PLAN
There will be presented at the meeting a proposal to approve amendments of
the Cognex Corporation 1993 Stock Option Plan (the "Plan") which were adopted by
the Board of Directors of the Corporation on November 14, 1995 and February 25,
1996. The Plan provides for the granting of incentive stock options meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of the Code. The amendments permit the granting of stock awards
under the Plan and increase the number of shares reserved for issuance under the
Plan, from 5,000,000 shares of Common Stock to 8,000,000 shares of Common Stock,
of which 1,000,000 shares are available for stock awards.
The Plan is intended to encourage ownership of the stock of the Corporation
by key employees of, and other key individuals engaged to provide services to,
the Corporation and its subsidiaries, to induce qualified personnel to enter and
remain in the employ of, or otherwise provide services to, the Corporation or
its subsidiaries and provide additional incentive for optionees to promote the
success of its business. The Plan is administered by a Committee (the
"Committee"), consisting of two or more members of the Corporation's Board of
Directors, each of whom is a disinterested person as defined in Rule 16b-3,
promulgated under the Securities Exchange Act of 1934 (the "1934 Act"). The
members of the Committee are appointed by the Board of Directors and the Board
may from time to time appoint a member or members of the Committee in
substitution for or in addition to the member or members then in office, and may
fill vacancies on the Committee, however caused. The present members of the
Committee are Patrick Sansonetti, Reuben Wasserman and Anthony Sun, Chairman,
and their address is c/o Cognex Corporation, One Vision Drive, Natick,
Massachusetts 01760.
Under the Plan as amended, the Committee may grant stock awards to
employees of and other key individuals engaged to provide services to the
Corporation and its subsidiaries. A stock award may be made in stock, or
denominated in stock subject to final settlement in cash or stock. Each stock
award granted shall be subject to such terms and conditions as the Committee, in
its sole discretion, shall determine and establish. These may include, but are
not limited to, establishing a holding period during which stock issued pursuant
to an award may not be transferred, requiring forfeiture of the stock award
because of termination of employment or failure to achieve specific objectives,
such as measures of individual business unit or company performance, including
stock price appreciation. The Committee may provide that the stock award earn
dividends or dividend equivalents, which may be paid currently or may be
deferred in payment, including reinvestment in additional shares covered by the
applicable stock award, all on such terms and conditions as the Committee shall
deem appropriate. The recipient of a stock award must execute an award agreement
in such form as the Committee determines. The award agreement may require that
for any or some of the shares issued, the awardee must pay a minimum
consideration, whether in cash, property or services, as may be required by
applicable law or by the Committee. A stock award may be granted singly or in
combination or in tandem with another stock award or stock option. A stock award
may also be granted as the payment form in settlement of a grant or right under
any other employee benefit plan or compensation plan, including the plan of an
acquired entity. Directors who are not otherwise employees of the Corporation or
a subsidiary shall not be eligible to receive stock awards under the Plan. No
award granted under the Plan is assignable or transferable otherwise than by
will or laws of descent and distribution.
The amendments also increased the number of shares reserved for issuance
under the Plan from 5,000,000 shares of Common Stock to 8,000,000 shares of
Common Stock, of which a maximum of 1,000,000 shares of Common Stock is
available for stock awards under the Plan. The maximum number of shares of the
Corporation's Common Stock for which options and awards may be granted under the
Plan is subject to adjustments for capital changes. Shares issued under the Plan
may be authorized but unissued shares of
10
<PAGE> 13
Common Stock or shares of Common Stock held in the treasury. At November 15,
1995, options for the purchase of 4,719,914 shares of Common Stock were
outstanding under the Plan.
Set forth below is a summary of other principal provisions of the Plan, a
copy of which may be obtained from the Clerk of the Corporation upon request.
The Board of Directors recommends that the stockholders approve the amendments
of the Plan. The affirmative vote of the holders of at least a majority of the
Common Stock voting in person or by proxy at the meeting will be required for
approval of the amendments of the Plan.
Options. The Plan provides that options designated as incentive stock
options may be granted only to officers and key employees of the Corporation or
any subsidiary. Options designated as non-qualified options may be granted to
officers, key employees and other key individuals engaged to provide services to
the Corporation or any of its subsidiaries. Directors who are not otherwise
employees of the Corporation or a subsidiary are not eligible to be granted an
option under the Plan.
In determining the eligibility of an individual to be granted an option, as
well as in determining the number of shares to be optioned to any individual,
the Committee takes into account the position and responsibilities of the
individual being considered, the nature and value to the Corporation or its
subsidiaries of the individual's service and accomplishments, his or her present
and potential contribution to the success of the Corporation or its subsidiaries
and such other factors as the Committee deems relevant.
The maximum number of shares with respect to which an option or options may
be granted to any employee in any one taxable year of the Corporation shall not
exceed 500,000, taking into account shares granted during such taxable period
under options that have terminated.
Terms and Provisions of Options. Options granted under the Plan are
exercisable at such times and during such period as is set forth in the option
agreement, but no incentive stock option granted under the Plan can have a term
in excess of 10 years from the date of grant, and no non-qualified stock option
granted under the Plan can have a term in excess of 15 years from the date of
grant. The option agreement may contain such provisions and conditions as may be
determined by the Committee. The option exercise price for options designated as
non-qualified stock options granted under the Plan is determined by the
Committee. The option exercise price for incentive stock options granted under
the Plan shall be no less than fair market value of the Common Stock of the
Corporation at the time the option is granted. Options granted under the Plan
may provide for the payment of the exercise price by delivery of cash or shares
of Common Stock of the Corporation owned by the optionee having a fair market
value equal in amount to the exercise price of the options being exercised, or
any combination thereof provided however that the payment of the exercise price
by delivery of shares of Common Stock of the Corporation owned by the optionee
may be made only if the payment does not result in a charge to earnings for
financial accounting purposes, as determined by the Committee.
The right of any optionee to exercise an option granted under the Plan is
not assignable or transferable by such optionee otherwise than by will or the
laws of descent and distribution, and any such option shall be exercisable
during the lifetime of such optionee only by him or her.
An option granted to any employee optionee who ceases to be an employee of
the Corporation or one of its subsidiaries shall terminate on the seventh
business day after the date such optionee ceases to be an employee of the
Corporation or one of its subsidiaries. If such termination of employment is
because of dismissal for cause or because the employee is in breach of any
employment agreement, such an option will terminate immediately on the date the
optionee ceases to be an employee of the Corporation or one of its subsidiaries.
If such termination of employment is because the optionee has become permanently
disabled, the option shall terminate on the last day of the twelfth month from
the date such optionee ceases to be an employee. In the event of the death of
the optionee, the option shall terminate on the last day of the twelfth
11
<PAGE> 14
month from the date of death. In no event shall an option be exercisable after
the date upon which it expires by its terms. The Committee has the authority to
extend the expiration date of any outstanding option in circumstances in which
it deems such action to be appropriate, provided that no such extension shall
extend the term of an option beyond the date on which the option would have
expired if no termination of the optionee's employment had occurred.
An option granted to an employee optionee who ceases to be an employee of
the Corporation or one of its subsidiaries shall be exercisable only to the
extent that the right to purchase shares under such option has accrued and is in
effect on the date such optionee ceases to be an employee of the Corporation or
one of its subsidiaries. In the event of the death of any optionee, the option
granted to such optionee may be exercised by the estate of such optionee, or by
any person or persons who acquired the right to exercise such option by bequest
or inheritance or by reason of the death of such optionee.
Recapitalization; Reorganization; Change and Control. The Plan provides
that the number and kind of shares as to which options or stock awards may be
granted thereunder and as to which outstanding options or awards then
unexercised shall be exercisable shall be adjusted to prevent dilution in the
event of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares or dividends payable in
capital stock. In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any sale or conveyance to another entity of all
or substantially all of the property and assets of the Corporation or a Change
in Control as defined in the Plan, the purchaser of the Corporation's assets or
stock may deliver to the optionee the same kind of consideration that is
delivered to the shareholders of the Corporation as a result of the sale,
conveyance or Change in Control or the Committee may cancel all outstanding
options in exchange for consideration in cash or in kind, which consideration
shall be equal in value to the value of those shares of stock or other
securities the optionee would have received had the option been exercised (to
the extent then exercisable) and no disposition of the shares acquired upon such
exercise has been made prior to such sale, conveyance or Change in Control, less
the option price therefor.
The Committee shall also have the power to accelerate the exercisability of
any options, notwithstanding any limitations in the Plan or in the option
agreement, upon such a sale, conveyance or Change in Control. Upon such a sale,
conveyance or a Change of Control the Committee may, in its sole discretion,
amend any award agreement issued under the Plan in such manner as it deems
appropriate, including without limitation, by amendments that advance the dates
upon which any or all outstanding awards shall become free of restrictions or
shall become issued or payable, or that advance the dates upon which any or all
outstanding awards shall terminate. Change in Control is defined in the Plan as
having occurred if any person, or any two or more persons acting as a group, and
all affiliates of such person or persons, who prior to such time own less than
50% of the then outstanding Common Stock of the Corporation, shall acquire such
additional shares of the Corporation's Common Stock in one or more transactions,
or series of transactions, such that following such transaction or transactions,
such person or group and affiliates beneficially own 50% or more of the
Corporation's Common Stock outstanding.
Upon dissolution or liquidation of the Corporation, all options granted
under the Plan shall terminate, but each optionee shall have the right,
immediately prior to such dissolution or liquidation, to exercise his or her
option to the extent then exercisable. The Committee shall have the right to
accelerate the vesting of any award or take such other action with respect
thereto as the Committee shall in its sole discretion determine in the event of
any contemplated dissolution or liquidation of the Company.
Termination and Amendment. Unless sooner terminated, the Plan shall
terminate ten (10) years from December 14, 1993, the date upon which it was
adopted by the Board of Directors. The Board of Directors may at any time
terminate the Plan or make such modification or amendment as it deems advisable;
provided however that the Board of Directors may not, without stockholder
approval, increase the maximum number of shares for which options or awards may
be granted or change the designation of the class of persons eligible to
12
<PAGE> 15
receive options or awards under the Plan or make any other change in the Plan
which requires stockholder approval under applicable law or regulations,
including any approval requirement which is a prerequisite for exemptive relief
under Section 16 of the 1934 Act. The Committee may terminate, amend or modify
any outstanding option or award without the consent of the option or award
holder, provided, however, that, without the consent of the optionee, the
Committee shall not change the number of shares subject to an option nor the
exercise price thereof, nor extend the term of such option.
TAX EFFECTS OF PLAN PARTICIPATION
Options granted under the 1993 Plan are intended to be either incentive
stock options, as defined in Section 422 of the Code, or nonqualified stock
options.
Incentive Stock Options. Except as provided below with respect to the
alternative minimum tax, the optionee will not recognize taxable income upon the
grant or exercise of an incentive stock option. The optionee's basis in the
stock will be equal to the exercise price. If the optionee holds the shares
received pursuant to the exercise of the option for at least one year after the
date of exercise and for at least two years after the option is granted, the
optionee will recognize long-term capital gain or loss upon the disposition of
the stock measured by the difference between the option exercise price and the
amount received for such shares upon disposition.
In the event that the optionee disposes of the stock prior to the
expiration of the required holding periods (a "disqualifying disposition"), the
optionee generally will realize ordinary income to the extent the fair market
value of the stock at the time of exercise exceeds the exercise price. The basis
in the stock acquired upon exercise of the option will equal the amount of
income recognized by the optionee plus the option exercise price. Upon eventual
disposition of the stock, the optionee will recognize long-term or short-term
capital gain or loss, depending on the holding period of the stock and the
difference between the amount realized by the optionee upon disposition of the
stock and his basis in the stock.
For alternative minimum tax purposes, the excess of the fair market value
of stock on the date of the exercise of the incentive stock option over the
exercise price of the option is included in alternative minimum taxable income
for alternative minimum tax purposes. If the alternative minimum tax applies to
the optionee, an alternative minimum tax credit may reduce the regular tax upon
eventual disposition of the stock.
The Company will not be allowed an income tax deduction upon the grant or
exercise of an incentive stock option. Upon a disqualifying disposition by the
optionee of shares acquired upon exercise of the incentive stock option, the
Company will be allowed a deduction in an amount equal to the ordinary income
recognized by the optionee.
Under proposed regulations issued by the Internal Revenue Service, the
exercise of an option with previously acquired stock of the Company will be
treated as, in effect, two separate transactions. Pursuant to Section 1036 of
the Code, the first transaction will be a tax-free exchange of the previously
acquired shares for the same number of new shares. The new shares will retain
the basis and, except, as provided below, the holding periods of the previously
acquired shares. The second transaction will be the issuance of additional new
shares having a value equal to the difference between the aggregate fair market
value of all of the new shares being acquired and the aggregate option exercise
price for those shares. Because the exercise of an incentive stock option does
not result in the recognition by the optionee of income, this issuance will also
be tax-free (unless the alternative minimum tax applies, as described above).
The optionee's basis in these additional shares will be zero and the optionee's
holding period for these shares will commence on the date on which the shares
are transferred. For purposes of the one and two-year holding period
requirements which must be met for favorable incentive stock option tax
treatment to apply, the holding periods of previously acquired shares are
disregarded.
13
<PAGE> 16
Nonqualified Stock Options. As in the case of incentive stock options, no
income is recognized by the optionee on the grant of a nonqualified stock
option. On the exercise by an optionee of a nonqualified option, generally the
excess of the fair market value of the stock when the option is exercised over
its cost to the optionee will be (a) taxable to the optionee as ordinary income
and (b) deductible for income tax purposes by the Company.
The Internal Revenue Service will treat the exercise of a nonqualified
stock option with already owned stock of the Company as two transactions. First,
there will be a tax-free exchange of the old shares for a like amount of new
shares under Section 1036 of the Code, with the new shares retaining the basis
and holding periods of the old shares. Second, the issuance of additional new
shares (representing the spread between the fair market value of all the new
shares and the option price) is taxable to the employee as ordinary income under
Section 83 of the Code, as is the case with any nonqualified option. The new
shares will have a basis equal to the spread between the fair market value of
the new shares and the option price.
The optionee's tax basis in his stock will equal his cost for the stock
plus the amount of ordinary income he had to recognize with respect to the
nonqualified stock option. Accordingly, upon a subsequent disposition of stock
acquired upon the exercise of a nonqualified stock option, the optionee will
recognize short-term or long-term capital gain or loss, depending upon the
holding period of the stock equal to the difference between the amount realized
upon disposition of the stock by the optionee and his basis in the stock.
Stock Awards. The grant of stock to an employee pursuant to a stock award
will be taxable to the employee as ordinary income in the year of grant in an
amount equal to the fair market value of the stock. The Company will have a
deduction equal to the amount included by the employee in income. The employee's
basis in the awarded stock will be equal to its fair market value. In the event
that the stock received under the stock award is subject to a substantial risk
of forfeiture, the employee's receipt of the stock will not be a taxable event
to the employee. Rather, upon the lapse of the substantial risk of forfeiture,
the employee will be taxable on the then difference between the fair market
value of the stock and his or her basis in the stock at ordinary income tax
rates. Upon the receipt of stock pursuant to the stock award that is subject to
a substantial risk of forfeiture, the employee may file an election with the
Internal Revenue Service to be taxable immediately as if there were no risk of
forfeiture. The employee's basis in stock subject to a substantial risk of
forfeiture for which the election described above does not apply, will be equal
to the amount, if any, paid for the stock.
14
<PAGE> 17
<TABLE>
NEW PLAN BENEFITS
It is not possible to state the persons who will receive options or awards
under the 1993 Plan in the future, nor the amount of options or awards which
will be granted thereunder. The following table provides information with
respect to options granted since the beginning of fiscal 1995 under the 1993
Plan and anticipated awards thereunder. See "Approval of Amendments of the
Cognex Corporation 1993 Stock Option Plan" for a description of the options and
awards which are provided for under the 1993 Plan.
<CAPTION>
1993 PLAN
-----------------------------------------------
NAME AND POSITION DOLLAR VALUE STOCK OPTIONS STOCK AWARDS
----------------- ------------ ------------- ------------
<S> <C> <C> <C>
Robert Shillman...................................... (1) 0 5,220
President & CEO
Patrick Alias........................................ (1) 0 3,930
Executive Vice President, Sales and Marketing
Richard Snyder....................................... (1) 0 2,738
Executive Vice President, Operations
John J. Rogers, Jr................................... (1) 100,000(2) 0
Chief Financial Officer, Executive Vice President,
Treasurer
All Executive Officers as a Group.................... (1) 100,000(2)
All Non-Executive Officer Directors.................. (1) 0 0
Employees as a Group (excluding Executive
Officers).......................................... (1) 1,525,474(3) 0
<FN>
- ---------------
(1) The dollar value of the options is equal to the difference between the
exercise price of the options granted and the fair market value of the
Company's Common Stock at the date of exercise. The dollar value of stock
awards is equal to the fair market value of the stock awarded.
(2) Granted November 14, 1995, at an exercise price of $32.438 per share, the
average of the high and low stock price of the Common Stock on the business
day immediately preceding the grant date.
(3) Since January 1, 1995, options for the purchase of the aggregate of
1,525,474 shares have been granted at a weighted average exercise price of
$22.00 per share.
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as
independent auditors to examine the consolidated financial statements of the
Corporation and its subsidiaries for the fiscal year ended December 31, 1995.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the meeting and will have the opportunity to make a statement if he or she so
desires and to respond to appropriate questions. The engagement of Coopers &
Lybrand L.L.P. was approved by the Board of Directors at the recommendation of
the Audit Committee of the Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons owning more than 10% of the
outstanding Common Stock of the Corporation to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
Directors and
15
<PAGE> 18
greater than 10% holders of Common Stock are required by SEC regulation to
furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely on copies of such forms furnished as provided above, or
written representations that no Forms 5 were required, the Corporation believes
that during the year ended December 31, 1995, all Section 16(a) filing
requirements applicable to its officers, Directors and owners of greater than
10% of its Common Stock were complied with except that, through inadvertence,
three reports relating in the aggregate to twelve transactions by William
Krivsky were not reported on a timely basis.
DEADLINES FOR SUBMISSION OF
STOCKHOLDER PROPOSALS
Under regulations adopted by the Securities and Exchange Commission, any
proposal submitted for inclusion in the Corporation's Proxy Statement relating
to the Annual Meeting of Stockholders to be held in 1997 must be received at the
Corporation's principal executive offices in Natick, Massachusetts on or before
November 27, 1996. Receipt by the Corporation of any such proposal from a
qualified stockholder in a timely manner will not ensure its inclusion in the
proxy material because there are other requirements in the proxy rules for such
inclusion.
In addition to the Securities and Exchange Commission requirements
regarding stockholder proposals, the Corporation's By-Laws contain provisions
regarding matters to be brought before stockholder meetings. If stockholder
proposals, including proposals regarding the election of Directors, are to be
considered at the 1997 Annual Meeting, notice of them whether or not they are
included in the Corporation's proxy statement and form of proxy, must be given
by personal delivery or by United States mail, postage prepaid, to the Clerk of
the Corporation on or before February 7, 1997.
OTHER MATTERS
Management knows of no matters which may properly be and are likely to be
brought before the meeting other than the matters discussed herein. However, if
any other matters properly come before the meeting, the persons named in the
enclosed proxy will vote in accordance with their best judgment.
The cost of this solicitation will be borne by the Corporation. It is
expected that the solicitation will be made primarily by mail, but regular
employees or representatives of the Corporation (none of whom will receive any
extra compensation for their activities) may also solicit proxies by telephone,
telegraph and in person and arrange for brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to their principals
at the expense of the Corporation.
10-K REPORT
THE CORPORATION WILL PROVIDE EACH BENEFICIAL OWNER OF ITS SECURITIES WITH A
COPY OF AN ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE CORPORATION'S MOST RECENT FISCAL YEAR, WITHOUT CHARGE, UPON
RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. SUCH REQUEST SHOULD BE SENT TO
JOHN J. ROGERS, JR., COGNEX CORPORATION, ONE VISION DRIVE, NATICK, MASSACHUSETTS
01760.
16
<PAGE> 19
VOTING PROXIES
The Board of Directors recommends an affirmative vote on all proposals
specified. Proxies will be voted as specified. If signed proxies are returned
without specifying an affirmative or negative vote on any proposal, the shares
represented by such proxies will be voted in favor of the Board of Directors'
recommendations.
By order of the Board of Directors
ANTHONY J. MEDAGLIA, JR., Clerk
Natick, Massachusetts
March 30, 1996
17
<PAGE> 20
COGNEX CORPORATION
P SPECIAL MEETING IN LIEU OF
R 1996 ANNUAL MEETING OF STOCKHOLDERS
O April 23, 1996
X
Y The undersigned hereby appoints Robert J. Shillman and Anthony J.
Medaglia, Jr., and each of them, with full power of substitution, proxies to
represent the undersigned at a Special Meeting in Lieu of the 1996 Annual
Meeting of Stockholders of COGNEX CORPORATION to be held April 23, 1996 at
10:00 a.m. at the offices of Hutchins, Wheeler & Dittmar. A Professional
Corporation, 101 Federal Street, Suite 3100, Boston, Massachusetts, and at
any adjournment or adjournments thereof, to vote in the name and place of
the undersigned, with all powers which the undersigned would possess if
personally present, all of the shares of COGNEX CORPORATION standing in the
name of the undersigned upon such business as may properly come before the
meeting, including the following as set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 21
DETACH HERE
Please mark
[ X ] votes as in
this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON ALL PROPOSALS SPECIFIED. SHARES WILL BE VOTED
AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND FOR
PROPOSALS 2 AND 3.
1. Election of Director
NOMINEE: Robert J. Shillman
FOR WITHHELD
[ ] [ ] MARK HERE
IF YOU PLAN [ ]
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE BELOW
2. Proposal to approve an amendment FOR AGAINST ABSTAIN
of the Articles of Organization of [ ] [ ] [ ]
Cognex Corporation to increase the
number of authorized shares of common
stock from 60,000,000 shares to
120,000,000 shares.
3. Proposal to approve amendments of FOR AGAINST ABSTAIN
the Cognex Corporation 1993 Stock [ ] [ ] [ ]
Option Plan adopted by the Board of
Directors, whereby the number of shares
reserved for issuance under such plan
increased from 5,000,000 shares of
Common Stock to 8,000,000 shares of
Common Stock and 1,000,000 of such
shares were made available for the
issuance of stock awards under the plan.
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON.
Please sign exactly as your name(s) appear(s) on the Proxy. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature: __________________________________________ Date: ____________________
Signature: __________________________________________ Date: ____________________
<PAGE> 22
COGNEX CORPORATION
1993 STOCK OPTION PLAN
As Amended November 14, 1995
and February 25, 1996
1. Purpose of the Plan.
This stock option and stock award plan (the "Plan") is intended to
encourage ownership of the stock of Cognex Corporation (the "Company") by key
employees of, and other key individuals engaged to provide services to, the
Company and its subsidiaries, to induce qualified personnel to enter and remain
in the employ of, or otherwise provide services to, the Company or its
subsidiaries and to provide additional incentive for optionees to promote the
success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or
Treasury shares of the common stock, $.002 par value, of the Company ("Common
Stock") for which options may be granted under the Plan shall not exceed
8,000,000 shares, subject to adjustment as provided in Section 12 hereof. In
addition, a maximum of 1,000,000 shares of authorized but unissued or Treasury
shares of Common Stock, subject to adjustment as provided in Section 12 hereof,
shall be available for stock awards under the Plan. The payment of stock
dividends and dividend equivalents settled in Common Stock in connection with
outstanding awards shall not be counted against the shares available for
issuance under the Plan.
(b) If an option granted hereunder shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares subject
thereto shall again be available for subsequent option grants under the Plan. To
the extent that any stock award shall lapse, terminate, expire or otherwise be
cancelled without the issuance of shares of Common Stock, or
<PAGE> 23
to the extent any stock award is settled in cash, the shares of Common Stock
covered by such grant shall again be available for the granting of stock awards
under the Plan. The provisions of this Section 2(b) shall apply only to the
extent permitted under rules promulgated by the Securities and Exchange
Commission pursuant to Section 16 of the Securities Exchange Act of 1934, and in
the event of any conflict with such rules, the requirements imposed by the
Securities and Exchange Commission including those requirements which are a
prerequisite for exemptive relief under Section 16 shall control.
(c) Stock issuable upon exercise of an option granted under the Plan or
issuable as a stock award under the Plan may be subject to such restrictions on
transfer, repurchase rights or other restrictions as shall be determined by the
Committee (as defined below).
3. Administration of the Plan. The Plan shall be administered by a
committee consisting of two or more members of the Company's Board of Directors,
each of whom is a disinterested person as defined from time to time in Rule
16b-3 promulgated under the Securities Exchange Act of 1934 (the "1934 Act").
Such committee shall be known as the "Stock Option/Award Committee" (the
"Committee"). The Board of Directors may from time to time appoint a member or
members of the Committee in substitution for or in addition to the member or
members then in office and may fill vacancies on the Committee however caused.
The Committee shall choose one of its members as Chairman and shall hold
meetings at such times and places as it shall deem advisable. A majority of the
members of the Committee shall constitute a quorum and any action may be taken
by a majority of those present and voting at any meeting. Any action may also be
taken without the necessity of a meeting by a written instrument signed by a
majority of the Committee. The decision of the Committee as to all
- 2 -
<PAGE> 24
questions of interpretation and application of the Plan shall be final, binding
and conclusive on all persons. The Committee shall have the authority to adopt,
amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement or award granted hereunder in the manner and to the extent
it shall deem expedient to carry the Plan into effect and shall be the sole and
final judge of such expediency. No Committee member shall be liable for any
action or determination made in good faith.
4. Type of Options.
Options granted pursuant to the Plan shall be authorized by action of
the Committee and may be designated as either incentive stock options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or non-qualified options which are not intended to meet the
requirements of such Section 422 of the Code, the designation to be in the sole
discretion of the Committee.
4A. Stock Awards.
(a) The Committee may grant, subject to the limitation on the number of
shares of Common Stock available under Section 2 hereof, stock awards to
employees of and other key individuals engaged to provide services to the
Company and its subsidiaries. A stock award may be made in stock or denominated
in stock subject to final settlement in cash or stock. Each stock award granted
shall be subject to such terms and conditions as the Committee, in its sole
discretion, shall determine and establish. These may include, but are not
limited to establishing a holding period during which stock issued pursuant to
an award may not be transferred,
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requiring forfeiture of the stock award because of termination of employment or
failure to achieve specific objectives such as measures of individual, business
unit or Company performance, including stock price appreciation. In determining
a person's eligibility to be granted an award, as well as in determining the
number of shares to be awarded to any person, the Committee shall take into
account the person's position and responsibilities, the nature and value to the
Company or its subsidiaries of such person's service and accomplishments, such
person's present and potential contribution to the success of the Company or its
subsidiaries, and such other factors as the Committee may deem relevant.
(b) The Committee may provide that a stock award earn dividends or
dividend equivalents, which may be paid currently or may be deferred in payment,
including reinvestment in additional shares covered by the applicable stock
award, all on such terms and conditions as the Committee shall deem appropriate.
(c) The Committee shall require that for any stock award to be
effective, the recipient of the award shall execute an Award Agreement at such
time and in such form as the Committee shall determine. Any Award Agreement may
require that for any or some of the shares issued, the awardee must pay a
minimum consideration, whether in cash, property or services, as may be required
by applicable law or the Committee, as the Committee shall determine.
(d) A stock award may be granted singly or in combination or in tandem
with another stock award or stock option. A stock award may also be granted as
the payment form in settlement of a grant or right under any other Company
employee benefit or compensation plan, including the plan of an acquired entity.
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(e) Directors who are not otherwise employees of the Company or a
subsidiary shall not be eligible to receive stock awards pursuant to the Plan.
(f) No award granted to any person under the Plan shall be assignable
or transferable otherwise than by will or the laws of descent and distribution.
Any award granted under the Plan shall be null and void and without effect upon
any attempted assignment or transfer, except as herein provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition, attachment, trustee process
or similar process, whether legal or equitable, upon such award.
5. Eligibility for the Grant of Options.
Options designated as incentive stock options may be granted only to
officers and key employees of the Company or of any subsidiary corporation
(herein called "subsidiary" or "subsidiaries"), as defined in Section 424 of the
Code and the Treasury Regulations promulgated thereunder (the "Regulations").
Options designated as non-qualified options may be granted to officers, key
employees and other key individuals engaged to provide services to the Company
or any of its subsidiaries.
Directors who are not otherwise employees of the Company or a
subsidiary shall not be eligible to be granted an option pursuant to the Plan.
In determining the eligibility of an individual to be granted an
option, as well as in determining the number of shares to be optioned to any
individual, the Committee shall take into account the position and
responsibilities of the individual being considered, the nature and value to the
Company or its subsidiaries of his or her service and accomplishments, his or
her present and potential contribution to the success of the Company or its
subsidiaries, and such
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other factors as the Committee may deem relevant.
No option designated as an incentive stock option shall be granted to
any employee of the Company or any subsidiary if such employee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10% of the value of all classes of stock of the Company or a
parent or a subsidiary, unless the purchase price for the stock under such
option shall be at least 110% of its fair market value at the time such option
is granted and the option, by its terms, shall not be exercisable more than five
years from the date it is granted. In determining the stock ownership under this
paragraph, the provisions of Section 424(d) of the Code shall be controlling. In
determining the fair market value under this paragraph, the provisions of
Section 7 hereof shall apply.
The maximum number of shares with respect to which an option or options
may be granted to any employee in any one taxable year of the Company shall not
exceed 250,000, taking into account shares granted during such taxable period
under options that have terminated.
6. Option Agreement.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as incentive stock options shall
meet all of the conditions for incentive stock options as defined in Section 422
of the Code. The date of grant of an option shall be as determined by the
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Committee. More than one option may be granted to an individual.
7. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be determined by the
Committee, but in no event shall the option price of a non-qualified stock
option be less than the par value of such Common Stock at the time the option is
granted. The option price or prices of shares of the Company's Common Stock for
incentive stock options shall be no less than the fair market value of such
Common Stock at the time the option is granted as determined by the Committee in
accordance with Section 422 of the Code and the Regulations promulgated
thereunder.
8. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, or (iii)
any combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only if such payment does not result in a charge to
earnings for financial accounting purposes as determined by the Committee. The
fair market value of any shares of the Company's Common Stock which may be
delivered upon exercise of an option shall be determined by the Committee in
accordance with Section 7 hereof. With the consent of the Committee, payment may
also be made by delivery of a properly executed exercise notice to the Company,
together with a copy of irrevocable instruments to a broker to deliver promptly
to the
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<PAGE> 29
Company the amount of sale or loan proceeds to pay the exercise price. To
facilitate the foregoing, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after fifteen (15) but not more
than thirty (30) days from the date of receipt of the notice by the Company, as
shall be designated in such notice, or at such time, place and manner as may be
agreed upon by the Company and the person or persons exercising the option.
9. Exercise of Options.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no incentive
stock option granted under the Plan shall have a term in excess of ten (10)
years from the date of grant, and no non-qualified stock option granted under
the Plan shall have a term in excess of fifteen (15) years from the date of
grant.
To the extent that an option to purchase shares is not exercised by an
optionee when it becomes initially exercisable, it shall not expire but shall be
carried forward and shall be
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<PAGE> 30
exercisable, on a cumulative basis, until the expiration of the exercise period.
No partial exercise may be made for less than two hundred fifty (250) full
shares of Common Stock.
10. Term of Options; Exercisability.
(a) Term.
(1) Each incentive stock option shall expire not more than ten
(10) years from the date of the granting thereof, but shall be subject to
earlier termination as herein provided. Each non-qualified stock option shall
expire not more than fifteen (15) years from the date of the granting thereof,
but shall be subject to earlier termination as herein provided.
(2) Except as otherwise provided in this Section 10, an option
granted to any employee optionee who ceases to be an employee of the Company or
one of its subsidiaries shall terminate on the seventh business day after the
date such optionee ceases to be an employee of the Company or one of its
subsidiaries, or on the date on which the option expires by its terms, whichever
occurs first.
(3) If such termination of employment is because of dismissal
for cause or because the employee is in breach of any employment agreement, such
option will terminate immediately on the date the optionee ceases to be an
employee of the Company or one of its subsidiaries.
(4) If such termination of employment is because the optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), such option shall terminate on the last day of the twelfth month from the
date such optionee ceases to be an employee, or on the date on which the option
expires by its terms, whichever occurs first.
(5) In the event of the death of any optionee, any option
granted to such
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<PAGE> 31
optionee shall terminate on the last day of the twelfth month from the date of
death, or on the date on which the option expires by its terms, whichever occurs
first.
(6) Notwithstanding subparagraphs (2), (3), (4) and (5) above,
the Committee shall have the authority to extend the expiration date of any
outstanding option in circumstances in which it deems such action to be
appropriate, provided that no such extension shall extend the term of an option
beyond the date on which the option would have expired if no termination of the
optionee's employment had occurred.
(b) Exercisability.
(1) An option granted to an employee optionee who ceases to be
an employee of the Company or one of its subsidiaries shall be exercisable only
to the extent that the right to purchase shares under such option has accrued
and is in effect on the date such optionee ceases to be an employee of the
Company or one of its subsidiaries.
(2) In the event of the death of any optionee, the option
granted to such optionee may be exercised by the estate of such optionee, or by
any person or persons who acquired the right to exercise such option by bequest
or inheritance or by reason of the death of such optionee.
11. Options Not Transferable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him or her. Any option
granted under the Plan shall be null and void and without effect upon the
bankruptcy of the optionee to whom the option is granted, or upon any attempted
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<PAGE> 32
assignment or transfer, except as herein provided, including without limitation
any purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, divorce, except as provided
above with respect to non-qualified stock options, trustee process or similar
process, whether legal or equitable, upon such option.
12. Recapitalizations, Reorganizations and the Like.
(a) In the event that the outstanding shares of the Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options and stock awards may be granted under the Plan and as to which
outstanding options or awards or portions thereof then unexercised shall be
exercisable, to the end that the proportionate interest of the optionee or award
recipient shall be maintained as before the occurrence of such event; such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Committee in its
sole discretion, in the case of any (i) sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii)
Change in Control (as hereinafter defined) of the Company, the purchaser(s) of
the Company's assets or stock may, in his, her or its discretion, deliver to the
optionee the same kind of consideration that is delivered to the shareholders of
the Company as a result of such sale, conveyance or Change in Control, or the
Committee may
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<PAGE> 33
cancel all outstanding options in exchange for consideration in cash or in kind,
which consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had the
option been exercised (to the extent then exercisable) and no disposition of the
shares acquired upon such exercise been made prior to such sale, conveyance or
Change in Control, less the option price therefor. Upon receipt of such
consideration by the optionee, his or her option shall immediately terminate and
be of no further force and effect. The value of the stock or other securities
the optionee would have received if the option had been exercised shall be
determined in good faith by the Committee of the Company, and in the case of
shares of the Common Stock of the Company, in accordance with the provisions of
Section 7 hereof. The Committee shall also have the power and right to
accelerate the exercisability of any options, notwithstanding any limitations in
this Plan or in the Agreement upon such a sale, conveyance or Change in Control.
Upon such acceleration, any options or portion thereof originally designated as
incentive stock options that no longer qualify as incentive stock options under
Section 422 of the Code as a result of such acceleration shall be redesignated
as non-qualified stock options. To the extent permitted by law, upon such a
sale, conveyance or a Change of Control the Committee may, in its sole
discretion, amend any Award Agreement issued under the Plan in such manner as it
deems appropriate, including without limitation, by amendmentsthat advance the
dates upon which any or all outstanding awards shall become free of restrictions
or shall become issued or payable, or that advance the dates upon which any or
all outstanding awards shall terminate. A "Change in Control" shall be deemed to
have occurred if any person, or any two or more persons acting as a group, and
all affiliates of such person or persons, who prior to such time owned less than
fifty percent (50%)
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<PAGE> 34
of the then outstanding Common Stock of the Company, shall acquire such
additional shares of the Company's Common Stock in one or more transactions, or
series of transactions, such that following such transaction or transactions,
such person or group and affiliates beneficially own fifty percent (50%) or more
of the Company's Common Stock outstanding.
(c) Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or otherwise associated with the Company or any of its subsidiaries)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable. The Committee shall
have the right to accelerate the vesting of any award or take such other action
with respect thereto as the Committee shall in its sole discretion determine in
the event of any contemplated dissolution or liquidation of the Company.
(d) No fraction of a share shall be purchasable or deliverable upon the
exercise of any option or stock award, but in the event any adjustment hereunder
of the number of shares covered by the option or award shall cause such number
to include a fraction of a share, such fraction shall be adjusted to the nearest
smaller whole number of shares.
13. No Special Employment Rights.
Nothing contained in the Plan or in any option or award granted under
the Plan shall confer upon any option holder or award holder any right with
respect to the continuation of his or her employment by the Company (or any
subsidiary) or interfere in any way with the right of the Company (or any
subsidiary), subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of the option or award holder from the rate in existence at the
time of the grant of
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<PAGE> 35
an option. Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee at the time.
14. Withholding.
The Company's obligation to deliver shares upon settlement of an award
or upon the exercise of any option granted under the Plan, or to make any cash
payment in connection with an award, shall be subject to the option or award
holder's satisfaction of all applicable Federal, state and local governmental
tax withholding requirements. Whenever cash is to be paid pursuant to an award
under the Plan, the Company shall be entitled to deduct therefrom an amount
sufficient in its opinion to satisfy all federal, state and local tax
withholding requirements related to such payment. Whenever shares of Common
Stock are to be delivered pursuant to an award or the exercise of an option
under the Plan, the Company shall be entitled to require as a condition of
delivery that the option or award holder remit to the Company an amount
sufficient in the opinion of the Company to satisfy all federal, state and local
governmental tax withholding requirements related thereto. With the approval of
the Committee, which it shall have sole discretion to grant, and on such terms
and conditions as the Committee may impose, the option or award holder may
satisfy the foregoing condition by electing to have the Company withhold from
delivery shares having a value equal to the amount of tax to be withheld. The
Committee shall also have the right to require that shares be withheld from
delivery to satisfy such condition.
15. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Sections 8 and 14 hereof, the
Company may
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<PAGE> 36
delay the issuance of shares covered by an award or by the exercise of an option
and the delivery of a certificate for such shares until one of the following
conditions shall be satisfied:
(i) The shares with respect to which such option has been
exercised or as to which an award has been made are at the time of the issue of
such shares effectively registered or qualified under applicable Federal and
state securities acts now in force or as hereafter amended; or
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options and issuances of awards
shall be effective, and the Company shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that the
Company shall be under no obligation to qualify shares or to cause a
registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issue of shares in
respect of which any option may be exercised or award granted, except as
otherwise agreed to by the Company in writing.
16. Purchase for Investment; Rights of Holder on Subsequent
Registration.
Unless the shares to be issued pursuant to an award or upon exercise of
an option granted under the Plan have been effectively registered under the
Securities Act of 1933 (the "1933 Act"), as now in force or hereafter amended,
the Company shall be under no obligation to issue
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<PAGE> 37
any shares covered by any option or award unless the person who receives such
award or exercises such option, in whole or in part, shall give a written
representation and undertaking to the Company which is satisfactory in form and
scope to counsel for the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that he or she is acquiring the shares issued
pursuant thereto for his or her own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such shares, and
that he or she will make no transfer of the same except in compliance with any
rules and regulations in force at the time of such transfer under the 1933 Act,
or any other applicable law, and that if shares are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued. In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any such
shares, or to qualify any such shares for exemption from the 1933 Act or other
applicable statutes, then the Company may take such action and may require from
each optionee or award recipient such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made.
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<PAGE> 38
17. Loans.
The Company may not make loans to optionees to permit them to exercise
options.
18. Modification of Outstanding Options or Awards.
The Committee may authorize the amendment of any outstanding option or
award with the consent of the optionee or award recipient when and subject to
such conditions as are deemed to be in the best interests of the Company and in
accordance with the purposes of this Plan.
19. Approval of Stockholders.
The Plan shall be subject to approval by the vote of stockholders
holding at least a majority of the voting stock of the Company present, or
represented, and entitled to vote at a duly held stockholders' meeting within
twelve (12) months after the adoption of the Plan by the Board of Directors and
shall take effect as of the date of adoption by the Board of Directors upon such
approval. The Committee may grant options under the Plan prior to such approval,
but any such option shall become effective as of the date of grant only upon
such approval and, accordingly, no such option may be exercisable prior to such
approval.
20. Termination and Amendment.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 20, the Board of
Directors may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 19 hereof, increase the maximum number
of shares for which options or awards may be granted or change the designation
of the class of persons eligible to
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<PAGE> 39
receive options or awards under the Plan, or make any other change in the Plan
which requires stockholder approval under applicable law or regulations,
including any approval requirement which is a prerequisite for exemptive relief
under Section 16 of the 1934 Act. The Committee may grant options or awards to
persons subject to Section 16(b) of the 1934 Act after an amendment to the Plan
by the Board of Directors requiring stockholder approval under this Section 20,
but any such option or award shall become effective as of the date of grant only
upon such approval and, accordingly, no such option may be exercisable prior to
such approval and no award shall be settled prior to such approval. The
Committee may terminate, amend or modify any outstanding option or award without
the consent of the option or award holder, provided, however, that, except as
provided in Section 12 hereof, without the consent of the optionee, the
Committee shall not change the number of shares subject to an option, nor the
exercise price thereof, nor extend the term of such option.
21. Compliance with Rule 16b-3.
It is intended that the provisions of the Plan and any option or award
granted thereunder to a person subject to the reporting requirements of Section
16(a) of the 1934 Act shall comply in all respects with the terms and conditions
of Rule 16b-3 under the 1934 Act, or any successor provisions. Any agreement
granting options or awards shall contain such provisions as are necessary or
appropriate to assure such compliance. To the extent that any provision hereof
is found not to be in compliance with such Rule, such provision shall be deemed
to be modified so as to be in compliance with such Rule, or if such modification
is not possible, shall be deemed to be null and void, as it relates to a
recipient subject to Section 16(a) of the 1934 Act.
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<PAGE> 40
22. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
23. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
24. Notices.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee or award holder, to the address as
appearing on the records of the Company.
Originally approved by the Board of Directors: December 14, 1993
Amended by the Board of Directors: November 14, 1995 and February 25, 1996
Originally approved by the Stockholders: April 26, 1994
Amendment approved by the Stockholders:
49171-1
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