<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] 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)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] 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 1999 ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999
To the Stockholders:
A Special Meeting of the Stockholders of COGNEX CORPORATION in lieu of the
1999 Annual Meeting will be held on Tuesday, April 27, 1999, 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 Jerald Fishman to serve as Director for a term of three
years as more fully described in the accompanying Proxy Statement.
2. To elect William Krivsky to serve as Director for a term of three
years as more fully described in the accompanying Proxy Statement.
3. To approve the Cognex Corporation 2000 Employee Stock Purchase
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 10, 1999,
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, 1999
<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 1999 Annual Meeting to
be held on Tuesday, April 27, 1999, 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, 1999.
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 nominees for Director will be
decided by plurality vote. Both abstentions and broker "non-votes" are counted
as present for the purposes of determining the existence of a quorum for the
transaction of business. However, for purposes of determining the number of
shares voting on a particular proposal, abstentions and broker "non-votes" are
not counted as votes cast or shares voting.
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 10, 1999, are
entitled to notice of and to vote at the meeting. On that date the Corporation
had outstanding and entitled to vote 40,356,120 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 nominees
listed below, whose terms expire at this meeting, be elected to serve a term of
three years and until their successors are duly elected and qualified or until
they sooner die, resign or are removed. The Corporation presently has a Board of
Directors of five members.
The persons named in the accompanying proxy will vote, unless authority is
withheld, for the election of the nominees named below. If such nominees 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
<PAGE> 4
Directors may recommend. The nominees are not related to any Executive Officer
of the Corporation or its subsidiaries.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A POSITION WITH THE CORPORATION OR PRINCIPAL
NAME OF NOMINEE AGE DIRECTOR OCCUPATION DURING THE PAST FIVE YEARS
--------------- --- ---------- ------------------------------------------
<S> <C> <C> <C>
NOMINATED FOR A TERM ENDING IN 2002:
Jerald Fishman...................... 53 1998 Since 1971, held various management positions at, and
since 1997, President and Chief Executive Officer of
Analog Devices. Mr. Fishman also serves as a member
of the Board of Directors of Analog Devices and
Kollmorgen Corp.
William Krivsky..................... 69 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. Previously, he had served as
CEO of Velcro Industries, N.V. Mr. Krivsky also
serves as a Director of Hitchiner Manufacturing.
SERVING A TERM ENDING IN 2001:
Robert J. Shillman.................. 52 1981 Since 1981, President, Chief Executive Officer and
Chairman of the Board of the Corporation.
Anthony Sun......................... 46 1982 Since 1979, general partner of Venrock Associates, a
venture capital partnership. Mr. Sun also serves as a
Director of Komag, Inc., Phoenix Technologies Ltd.,
3Dfx Interactive, Inc., and Worldtalk Communications
Corp., and several private companies.
SERVING A TERM ENDING IN 2000:
Reuben Wasserman.................... 69 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., and FASTech Integration, Inc., and Executive
Advisor to Andover Controls Corp. and Bizfon, Inc.
</TABLE>
2
<PAGE> 5
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1998, there were eight 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 compensation in the amount of $7,000 for the
fiscal year plus an additional $1,500 for each meeting attended. Each non-
employee Director who served on a committee of the Board of Directors in 1998
received an annual fee of $2,000 per committee on which he served.
The Board of Directors has a Compensation/Stock Option Committee whose
members are Jerald Fishman 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 three occasions in 1998.
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 1998 there were two meetings of
the Audit Committee.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table shows as of February 26, 1999, 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.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- - ------------------- ---------- ----------
<S> <C> <C>
Robert J. Shillman.......................................... 6,871,656(1) 17.03%
Cognex Corporation
One Vision Drive
Natick, MA 01760
J & W Seligman & Co., Inc................................... 5,301,125(2) 13.24%
100 Park Avenue
New York, NY
Alex. Brown Investment Management........................... 2,459,650(2) 6.10%
One South Street
Baltimore, MD 21202
</TABLE>
- - ---------------
(1) Includes 3,000,000 shares held by the Robert J. Shillman 1990 Irrevocable
Trust, and 700 shares held by Mr. Shillman's wife. Mr. Shillman disclaims
beneficial ownership of such shares. Includes also 475,000 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 with the Securities and Exchange Commission
(the "Commission") reporting information as of December 31, 1998.
3
<PAGE> 6
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following information is furnished as of February 26, 1999, 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.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS
---- ---------- ----------
<S> <C> <C>
Robert J. Shillman.................................. 6,871,656(1)(2) 17.03%
Anthony Sun......................................... 212,288(1) *
Reuben Wasserman.................................... 25,000(1) *
William Krivsky..................................... 27,425 *
Patrick Alias....................................... 163,929(1) *
John Rogers......................................... 20,425 *
Glenn Wienkoop...................................... 13,000(1) *
Jerald Fishman...................................... 0 *
All Directors and Executive Officers as a group
(8 persons)....................................... 7,333,723(1)(3)
</TABLE>
- - ---------------
* 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, 475,000 shares; Mr. Sun, 70,000 shares; Mr.
Wasserman, 25,000; Mr. Alias, 160,000 shares; and Mr. Wienkoop 12,000
shares.
(2) See Footnote (1) under "Principal Holders of Voting Securities".
(3) Includes 742,000 shares which certain Directors and Executive Officers have
the right to acquire upon the exercise of outstanding options, exercisable
presently or within 60 days.
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, 1998, 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. No annual bonuses were paid for the fiscal year ended December 31,
1998.
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 1998, the market price of the common stock of the Corporation decreased
such that options held by key employees had exercise prices substantially above
the market price. The Compensation Committee concluded that in order for stock
options to continue to be sufficient incentive to the Corporation's key
employees, the replacement of these "underwater" options with newly priced
options was necessary. Accordingly, on December 15, 1998, the Compensation
Committee offered to 254 key employees of the Corporation, including Glenn
Wienkoop, a named executive officer, the opportunity to exchange previously
granted options to purchase 1,296,240 shares, with the original expiration dates
maintained. All optionees holding such previously granted options, including Mr.
Wienkoop, that accepted the offer to exchange the options, held options having
an average price of approximately $23.457 per share which were replaced by
options with an exercise price equal to $16.00 per share. The majority of the
replacement options provided for the same number of shares as the options which
they replaced. In a few instances, existing smaller grants were cancelled in
order to receive the replacement options. The replacement options cannot be
exercised until October 20, 1999. Thereafter, the vesting schedules of the
replacement options are the same as those applicable to the options which they
replaced.
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
In establishing 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, 1998, the Committee
considered his level of responsibility, salary increases awarded in the past,
and the significant role that Mr. Shillman has played in setting the strategic
direction of the Corporation. Based on those factors, Mr. Shillman's base
compensation was increased from $197,977 to $300,404 and he was granted options
for the purchase of 175,000 shares at $15.72 per share and 21,000 shares at
$16.00 per share.
5
<PAGE> 8
The foregoing report has been approved by all members of the Committee.
COMPENSATION/STOCK OPTION COMMITTEE
Anthony Sun, Chairman
Jerald Fishman
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR COGNEX CORPORATION
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET NASDAQ COMPUTER AND DATA
COGNEX CORPORATION (US COMPANIES) PROCESSING STOCKS
------------------ ------------------- ------------------------
<S> <C> <C> <C>
12/1993 $100.00 $100.00 $100.00
12/1994 $174.60 $ 97.80 $121.40
12/1995 $471.20 $138.30 $184.90
12/1996 $250.80 $170.00 $228.20
12/1997 $369.50 $208.30 $280.40
12/1998 $271.20 $293.50 $502.50
</TABLE>
6
<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Messrs. Fishman and Sun served as members of the Compensation/Stock Option
Committee during fiscal 1998. Mr. Sun served as President of Cognex Technology
and Investment Corporation, a subsidiary of the Corporation, during fiscal 1998.
In 1998, the market price of the common stock of the Corporation decreased
such that options held by the Board of Directors had exercise prices
substantially above the market price. On December 15, 1998, the Compensation
Committee offered to the following members of the Board: Messrs. Fishman,
Krivsky, Sun and Wasserman the opportunity to exchange previously granted
"underwater" options for newly priced options, maintaining the original
expiration dates. As a result, options held by the following Directors, each
having an exercise price of $23.75, were exchanged for options to purchase the
same number of shares having an exercise price of $16.00 per share: Fishman,
20,000 shares; Krivsky, 40,000 shares; Sun, 40,000 shares and Wasserman, 40,000
shares. In addition, Mr. Fishman exchanged a previously-granted option for the
purchase of 40,000 shares having an exercise price of $20.19 for an option to
purchase the same number of shares with an exercise price of $16.00 per share.
The replacement options cannot be exercised until October 20, 1999. Thereafter,
the vesting schedules of the replacement options are the same as those
applicable to the options which they replaced.
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 named
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, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL 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................... 1998 $300,404 $ 0 196,000 $ 1,391
President & CEO 1997 197,977 326,570 0 1,440
1996 196,477 0 0 1,265
Patrick Alias........................ 1998 $208,562 $ 0 162,000 $ 1,440
Executive Vice President, 1997 194,142 184,700 0 1,440
Sales and Marketing 1996 191,515 0 0 1,440
John J. Rogers, Jr.(3)............... 1998 $184,398 $ 0 100,000 $33,342
Chief Financial Officer, 1997 163,354 160,499 0 328
Executive Vice President, Treasurer 1996 133,152 0 90,000 287
Glenn Wienkoop....................... 1998 $271,394 $ 0 294,800 $ 1,440
Executive Vice President of 1997 144,615 38,614 290,000(5) 49,403(4)
Subsidiary Operations
</TABLE>
- - ---------------
(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, and in the case of Mr. Rogers,
severance payments.
7
<PAGE> 10
(3) Mr. Rogers left the Corporation effective November 17, 1998.
(4) Includes transition payments of $48,461 in accordance with an employment
agreement with the Corporation.
(5) Includes 260,000 options granted that were later revoked and terminated by
the Board of Directors.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1998 to
the named executive officers. Pursuant to applicable regulations of the
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.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL 1998 (PER SHARE) DATE 5% 10%
---- ---------- ------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shillman............ 175,000(2) 4.91% $15.72 6/3/08 1,730,750 4,383,750
President & CEO 21,000(3) .59% $16.00 12/15/08 211,260 535,500
Patrick Alias................. 150,000(4) 4.21% $15.72 6/3/08 1,483,500 3,757,500
Executive Vice President, 12,000(3) .34% $16.00 12/15/08 120,720 306,000
Sales and Marketing
John J. Rogers, Jr............ 100,000(4) 2.81% $15.72 6/3/08(7) -- --
Chief Financial Officer,
Executive Vice President,
Treasurer
Glenn Wienkoop................ 30,000(5) .84% $18.19 6/29/08 343,200 869,700
Executive Vice President 160,000(5) 4.49% $16.00 4/14/07 1,609,600 4,080,000
of Subsidiary Operations 100,000(6) 2.81% $16.00 4/14/12 1,726,000 5,084,000
4,800(3) .13% $16.00 12/15/08 48,288 122,400
</TABLE>
- - ---------------
(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 20% per year over a
five year period commencing April 21, 1999.
(3) Options have a ten year term and vest at the rate of 20% per year over a
five year period commencing one year from date of grant.
(4) Options have a ten year term and vest at the rate of 20% per year over a
five year period commencing April 21, 2000.
(5) Options have a ten year term and vest at the rate of 20% per year over a
five year period commencing April 14, 1998.
(6) Options have a fifteen year term and vest at the rate of 20% per year over a
five year period commencing April 14, 2003.
(7) Mr. Rogers left the Corporation on November 17, 1998, and these options were
cancelled on November 27, 1998.
8
<PAGE> 11
TEN YEAR OPTION REPRICING
The following table provides information on the repricing of stock options
to the executive officers listed below during the last ten years.
<TABLE>
<CAPTION>
MARKET LENGTH OF
PRICE OF EXERCISE ORIGINAL OPTION
NUMBER OF STOCK AT PRICE AT NEW TERM AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
- - ---- -------- --------- --------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Glenn Wienkoop........... 12/15/98 160,000 $ 16.00 $ 20.25 $16.00 8 years 4 months
(approx.)
Glenn Wienkoop........... 12/15/98 100,000 $ 16.00 $ 20.25 $16.00 13 years 4 months
(approx.)
John J. Rogers, Jr....... 7/30/96 90,000 $14.375 $32.438 $14.50 9 years 4 months
(approx.)
Robert J. Shillman....... 10/30/92 400,000 $ 3.063 $ 6.625 $3.063 9 years 4 months
(approx.)
Patrick Alias............ 10/30/92 400,000 $ 3.063 $ 5.656 $3.063 9 years 1 month
(approx.)
John Rogers, Jr.......... 10/30/92 40,000 $ 3.063 $ 5.578 $3.063 8 years 8 months
(approx.)
John Rogers, Jr.......... 10/30/92 40,000 $ 3.063 $ 6.625 $3.063 9 years 4 months
(approx.)
Richard Snyder........... 10/30/92 400,000 $ 3.063 $ 5.656 $3.063 9 years 1 month
(approx.)
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND 12/31/98 OPTION VALUES
The following table provides information on option exercises and on the
value of the named executive officers' unexercised options at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT 12/31/98 OPTIONS AT 12/31/98(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Shillman......... 0 $ 0 340,000 496,000 $4,460,000 $4,583,175
President & CEO
Patrick Alias.............. 20,000 $354,370 184,000 402,000 $2,336,000 $3,690,150
Executive Vice President,
Sales and Marketing
John J. Rogers, Jr......... 145,500 $897,810 0 0 $ 0 $ 0
Chief Financial Officer,
Executive Vice President,
Treasurer
Glenn Wienkoop............. 0 $ 0 6,000 318,800 $ 10,872 $1,095,188
Executive Vice President of
Subsidiary Operations
</TABLE>
- - ---------------
(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,
1998.
9
<PAGE> 12
(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.
APPROVAL OF 2000 EMPLOYEE STOCK PURCHASE PLAN
There will be presented at the meeting a proposal to approve the
Corporation's 2000 Employee Stock Purchase Plan (the "Employee Plan") which was
adopted by the Board of Directors on February 26, 1999. The Employee Plan is
intended to provide a means whereby eligible employees may purchase Common Stock
of the Corporation through payroll deductions, thereby providing an incentive
for employees to promote the best interests of the Corporation and to encourage
stock ownership by employees in order that they may participate in the
Corporation's economic growth. Set forth below is a summary of the principal
provisions of the Employee Plan, copies of which are available upon request from
the Clerk of the Corporation.
The affirmative vote of the holders of at least a majority of the
Corporation's Common Stock voting in person or by proxy at the meeting will be
required for such approval.
Number of Shares. The Employee Plan provides that 250,000 shares of the
Corporation's Common Stock (subject to adjustment for capital changes) shall
initially be reserved for purchase by participants thereunder and that the
number of shares of the Corporation's Common Stock reserved for purchase under
the Employee Plan be increased to 250,000 on each January 1, during the term of
the Employee Plan, not withstanding shares previously purchased thereunder.
Shares issued under the Employee Plan shall be either shares of authorized but
unissued Common Stock or shares of Common Stock re-acquired by the Corporation.
Shares of Common Stock not purchased under an option terminated pursuant to the
provisions of the Employee Plan may again be subject to options granted
thereunder.
Eligibility. All persons employed by the Corporation or a participating
subsidiary are eligible to participate in the Employee Plan, except (i) persons
whose customary employment is less than 20 hours per week or five (5) months or
less per year; and (ii) persons who have been employed by the Corporation or a
subsidiary for less than six (6) months on the first day of the applicable
purchase period. Persons who are deemed for purposes of Section 423(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code") to own stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Corporation or a subsidiary are ineligible to
participate in the Employee Plan.
Administration. The Employee Plan is administered by the
Compensation/Stock Option Committee of the Board of Directors consisting of not
less than two (2) members appointed from time to time by the Board of Directors.
Committee members are ineligible to participate under the Employee Plan. The
present members of the Compensation/Stock Option Committee are Anthony Sun and
Jerald Fishman and their address is c/o Cognex Corporation, One Vision Drive,
Natick, Massachusetts 01760.
Effectiveness and Termination of the Plan. The Employee Plan will become
effective on January 1, 2000, provided that it is approved by the stockholders
within twelve (12) months before or after that date. The Employee Plan shall
continue in effect to the end of the Corporation's 2009 fiscal year; however,
the Board of Directors has the right to terminate the Employee Plan at any time.
In the event of the expiration of the Employee Plan or its termination, all
options then outstanding under the Employee Plan shall automatically be
cancelled and the entire amount credited to the account of each participant in
the Employee Plan shall be refunded to each such participant without interest.
In addition, the Board of Directors may amend the Employee Plan at any time
without the consent of the participants therein, but no such amendment shall
(except as otherwise provided in the Employee Plan) adversely affect options
previously granted.
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<PAGE> 13
Operation of the Plan. There shall be two "Purchase Periods" within each
of the Corporation's fiscal years, the first commencing on the first day of the
Corporation's fiscal year and ending on the last day of the first fiscal half
year, and the second Purchase Period commencing on the first day of the
Corporation's second fiscal half year and continuing through the end of the
Corporation's fiscal year. Eligible employees may elect to become participants
in the Employee Plan for a Purchase Period by completing a stock purchase
agreement prior to the first day of the Purchase Period for which the election
is made. The election to participate is effective for the Purchase Period for
which it is made and there is no limit on the number of Purchase Periods for
which an eligible employee may elect to become a participant in the Employee
Plan. In his or her stock purchase agreement, the participating employee
authorizes regular payroll deductions amounting to such full percentage of the
participant's compensation as the participant shall designate. Such payroll
deductions cannot amount to less than two percent (2%) nor more than eight
percent (8%) of the participant's basic compensation.
The purchase price of shares of the Corporation's stock under the Employee
Plan is the lower of (i) 85% of the fair market value of a share of Common Stock
for the business day immediately preceding the first day of the relevant
Purchase Period, or (ii) 85% of such value for the business day immediately
preceding the last day of the applicable Purchase Period; provided, however,
that if such day is not a business day, the immediately preceding business day
shall be used. The fair market value on a given day is the closing price of a
share of Common Stock of the Corporation on the NASDAQ National Market System as
reported in The Wall Street Journal or such other source as the Board of
Directors deem reliable. Each participating employee receives an option,
effective on the first day of the Purchase Period, to purchase shares of Common
Stock on the last business day of the Purchase Period. The number of shares
which a participant may purchase under the option is the quotient of the
aggregate payroll deductions in the Purchase Period authorized by the
participant, divided by the purchase price. No employee can be granted an option
under the Employee Plan to purchase shares of the Corporation's Common Stock
having a fair market value in excess of $25,000 in any one calendar year
(determined as of the beginning of the Purchase Period). In addition, no
employee is permitted to purchase more than 3,000 shares (subject to adjustment
for capital changes) in any Purchase Period. Shares purchased under the Employee
Plan cannot be sold, pledged or transferred for one year from the date of
purchase.
All sums deducted from the basic compensation of participants will be
credited to a stock purchase account established for each participant on the
books of the Corporation, but prior to use of such funds for the purchase of
shares of the Corporation's Common Stock in accordance with the Employee Plan,
the Corporation may use such funds for any valid corporate purpose. The
Corporation is under no obligation to pay interest on funds credited to a
participant's stock purchase account in any event.
Each participating employee automatically will be deemed to have exercised
his option on the exercise date of the Purchase Period in which he is
participating to the extent that the balance in the participant's account under
the Employee Plan is sufficient to purchase, at the purchase price in effect for
the Purchase Period, whole shares of the Corporation's Common Stock subject to
his option. Any balance remaining in the participant's account shall be carried
forward and credited for use in the next Purchase Period, but if the participant
chooses not to participate in the next Purchase Period, such balance will be
refunded to him in cash.
Termination of Participation. A participant has the right to cancel his
participation in the Employee Plan for a Purchase Period by delivering a notice
of cancellation to the Corporation not later than ten (10) days before the
exercise date for such Purchase Period. In the event of such cancellation, the
participant will receive in cash the amount credited to his account. Any
participant who so withdraws from the Employee Plan may again be a participant
at the start of the next Purchase Period.
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<PAGE> 14
Upon dissolution or liquidation of the Corporation or a merger or
consolidation in which the Corporation is not the surviving entity, every option
outstanding under the Employee Plan shall terminate, and each participant shall
be refunded the sums then in his or her account.
Upon the participant's death or other termination of employment, his or her
participation in the Employee Plan shall cease and the entire balance credited
to his or her account under the Employee Plan shall be automatically refunded to
him or her, or, in the event of death, to the participant's designated
beneficiary, if any, under a group insurance plan of the Corporation covering
the participant, or otherwise to his or her estate.
Disability of Participant. Except as otherwise provided by applicable law,
payroll deductions will cease during any period of absence from work due to a
participant's temporary layoff, authorized leave of absence without pay,
disability for which benefits are not payable from the Corporation or co-op
programs. If the participant does not return to active employment with the
Corporation prior to the exercise date for the then current Purchase Period, and
the participant was absent for more than fifty percent (50%) of the weeks in the
Purchase Period, his or her participation in the Employee Plan for that Purchase
Period will be terminated and the balance in his or her account refunded to the
participant. In the event that the participant returns to active service during
the Purchase Period and the provisions of the preceding sentence are not
applicable, payroll deductions will resume with respect to the participant for
that Purchase Period, but the participant will not be entitled to make up any
deficiency caused by his or her absence and accordingly the number of shares to
be purchased by the participant will be reduced.
Federal Income Tax Consequences. The Employee Plan is intended to satisfy
the requirements of Section 423 of the Code. Accordingly, an employee incurs no
tax liability on the grant of an option to purchase shares under the Employee
Plan nor on the acquisition of the shares upon automatic exercise of the option.
An employee will obtain favorable tax treatment on the disposition of shares
acquired under the Employee Plan if the shares are held by the employee for at
least two (2) years from the first day of the period in which the shares are
purchased (the "Purchase Period"). Disposition of the shares after the
expiration of the two-year period are called "qualifying dispositions." Upon a
qualifying disposition, if the amount realized is greater than the purchase
price of the shares, there shall be included in the employee's gross income
compensation taxable at ordinary income rates (and not as capital gain) the
lesser of (i) 15% of the fair market value of shares on the first day of the
Purchase Period or (ii) the amount by which the fair market value of the shares
at the time of disposition exceeded the purchase price. The basis of the
employee's shares, which is initially equal to the actual purchase price, is
increased by the amount equal to the amount includable as compensation in his or
her gross income. The excess of the amount realized over the employee's
increased basis is long-term capital gain. Upon a qualifying disposition, if the
amount realized is less than the purchase price, the employee recognizes no
ordinary income and will have long-term capital loss equal to the difference
between the amount realized and the purchase price.
If an employee sells the shares before the expiration of the required
holding period, which is a disqualifying disposition, he or she realizes
ordinary income (compensation) in the year of the disposition to the extent of
the difference between the purchase price and the fair market value of the
shares on the last day of the Purchase Period. The basis of the employee's
shares, which is initially equal to the actual purchase price, is increased by
an amount equal to the amount includable as compensation in his or her gross
income. Any amount realized upon such disqualifying disposition in excess of the
employee's increased basis in the shares will be treated as long-term or
short-term capital gain, depending upon the holding period of the shares. If the
amount realized upon such disqualifying disposition is less than the employee's
increased basis in the shares, the loss will be treated as long-term or
short-term capital loss, depending upon the holding period of the shares.
12
<PAGE> 15
No deduction will be allowed to the Corporation for federal income tax
purposes at the time of the grant or exercise of an option under the Employee
Plan. At the time of disqualifying disposition by an employee, the Corporation
will be entitled to a deduction for the amount taxable to the employee as
ordinary income. The Corporation is not entitled to a deduction for the ordinary
income realized by an employee upon a qualifying disposition.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent auditors to examine the consolidated financial statements of the
Corporation and its subsidiaries for the fiscal year ended December 31, 1999.
A representative of PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP 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 Commission. Officers, Directors and greater than
10% holders of Common Stock are required by the Commission's 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, the
Corporation believes that during the year ended December 31, 1998, all Section
16(a) filing requirements applicable to its officers, Directors and owners of
greater than 10% of its Common Stock were complied with.
DEADLINES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Under regulations adopted by the Commission, any proposal submitted for
inclusion in the Corporation's Proxy Statement relating to the Annual Meeting of
Stockholders to be held in 2000 must be received at the Corporation's principal
executive offices in Natick, Massachusetts on or before November 26, 1999.
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 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 2000 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 11, 2000.
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.
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<PAGE> 16
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
MANAGER OF INVESTOR RELATIONS, COGNEX CORPORATION, ONE VISION DRIVE, NATICK,
MASSACHUSETTS 01760.
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, 1999
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<PAGE> 17
SKU# 1012-PS-99
<PAGE> 18
COGNEX CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
It is the purpose of this Employee Stock Purchase Plan to provide a
means whereby eligible employees may purchase Common Stock of Cognex Corporation
(the "Company") through after-tax payroll deductions. It is intended to provide
a further incentive for employees to promote the best interests of the Company
and to encourage stock ownership by employees in order that they may participate
in the Company's economic growth. It is the intention, but not the obligation,
of the Company that the Plan qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code, and that the provisions
of this Plan be construed in a manner consistent with the Code. 2. DEFINITIONS
The following words or terms, when used herein, shall have the
following respective meanings:
(a) "Account" means the Employee Stock Purchase Account established
for a Participant under Section 7 hereunder.
(b) "Compensation" shall mean the sum of the types and amounts of
compensation determined from time to time by the Board of
Directors or Committee in its sole discretion to be eligible to
be taken into account under the Plan, provided that no such
determination shall include or exclude any type or amount of
compensation contrary to the requirements of Section 423 of the
Code.
<PAGE> 19
(c) "Board of Directors" shall mean the Board of Directors of Cognex
Corporation.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
(e) "Committee" shall mean the committee described in Section 5.
(f) "Common Stock" shall mean shares of the Company's common stock
with a par value of $.002 per share.
(g) "Company" shall mean Cognex Corporation, a Massachusetts
corporation.
(h) "Effective Date" shall mean January 1, 2000.
(i) "Eligible Employees" shall mean all persons employed by the
Company or a Subsidiary and classified by the Company or the
Subsidiary as an employee for federal income tax withholding
purposes, but excluding:
(1) Persons who have been employed by the Company or a
Subsidiary for less than six months on the first day of the
Purchase Period ;
(2) Persons whose customary employment is less than twenty hours
per week or five months or less per year; and
(3) Persons who are deemed for purposes of Section 423(b)(3) of
the Code to own stock possessing 5% or more of the total
combined voting power or value of all classes of stock of
the Company or a Subsidiary.
Except as otherwise provided in Section 12, for purposes of the
Plan the employment relationship shall be treated as continuing
intact while an individual is on a sick leave or other leave of
absence approved by the Company or a Subsidiary. Where the period
of leave exceeds 90 days and the individual's right
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<PAGE> 20
to re-employment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have
terminated on the 91st day of such leave.
(j) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business
day.
(k) "Holding Period" shall mean the one-year period after the
Exercise Date during which a Participant may not sell, pledge, or
transfer shares of Common Stock purchased under this Plan as
described in Section 13.
(l) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan under Section 6 hereunder.
(m) "Plan" shall mean the Cognex Corporation 2000 Employee Stock
Purchase Plan.
(n) There shall be two "Purchase Periods" within each of the
Company's fiscal years, one commencing on the first day of the
Company's fiscal year and continuing through the last day of the
first fiscal half year, and the second commencing on the first
day of the Company's second fiscal half year and continuing
through the end of the Company's fiscal year.
(o) "Purchase Price" shall mean the lower of (i) 85% of the fair
market value of a share of Common Stock for the business day
immediately preceding the first day of the relevant Purchase
Period, or (ii) 85% of such value for the business day
immediately preceding the relevant Exercise Date. If the shares
of Common Stock are listed on any national securities exchange,
or traded on the National
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<PAGE> 21
Association of Securities Dealers Automated Quotation System
("NASDAQ") National Market System, the fair market value per
share of Common Stock on a particular day shall be the closing
price, if any, on the largest such exchange, or if not traded on
an exchange, on the NASDAQ National Market System, on such day,
as reported in The Wall Street Journal or such other source as
the Board of Directors deems reliable and, if there are no sales
of the shares of Common Stock on such particular day, the fair
market value of a share of Common Stock shall be determined by
taking a weighted average of the closing price on the nearest
date before and the nearest date after the particular day in
accordance with Treasury Regulation Section 25.2512-2. If the
shares of Common Stock are not then listed on any such exchange
or the NASDAQ National Market System, the fair market value per
share of Common Stock on a particular day shall be the mean
between the closing "Bid" and the closing "Asked" prices, if any,
as reported in the National Daily Quotation Service for such day.
If the fair market value cannot be determined under the
proceeding sentences, it shall be determined in good faith by the
Board of Directors.
(p) "Subsidiary" shall mean any present or future corporation which
(i) would be a subsidiary corporation as defined in Section
424(f) of the Code, and (ii) is designated by the Board of
Directors as a participating employer for purposes of this Plan.
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<PAGE> 22
3. GRANT OF OPTION TO PURCHASE SHARES.
Each Eligible Employee shall be granted an option effective on the
first day of each Purchase Period to purchase shares of Common Stock. The term
of the option shall be the length of the Purchase Period. The number of shares
subject to each option shall be the quotient of the aggregate payroll deductions
in the Purchase Period authorized by each Participant in accordance with Section
6 divided by the Purchase Price, but in no event shall the number of shares
subject to each option be in excess of 3,000 shares per Purchase Period (subject
to adjustment in accordance with Section 4), or such other number of shares as
determined from time to time by the Board of Directors or the Committee.
Notwithstanding the foregoing, no employee shall be granted an option which
permits his right to purchase shares under the Plan to accrue at a rate which
exceeds in any one calendar year $25,000 (or such other amount as may be
prescribed from time to time under Section 423 of the Code) of the fair market
the value of the Common Stock as of the date the option to purchase is granted.
4. SHARES.
Subject to adjustment upon changes in capitalization of the Company as
provided this Section 4, the maximum number of shares of Common Stock which
shall be made available for issuance to and purchase by Participants under this
Plan shall be 250,000 shares, plus an annual increase in the number of shares to
be added to such pool of shares effective as of the first day of each January
occurring after the Effective Date such that 250,000 outstanding shares of
Common Stock on each such January first will always be available for sale under
this Plan. The shares of Common Stock subject to the Plan shall be either shares
of authorized but unissued Common Stock or shares of Common Stock reacquired by
the Company. Shares of Common Stock not
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<PAGE> 23
purchased under an option terminated pursuant to the provisions of the Plan may
again be subject to options granted under the Plan. The aggregate number of
shares of Common Stock which may be purchased pursuant to options granted
hereunder, the number of shares of Common Stock covered by each outstanding
option, and the purchase price for each such option shall be appropriately
adjusted for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock split or other subdivision or consolidation
of shares of Common Stock or for other capital adjustments or payments of stock
dividends or distributions or other increases or decreases in the outstanding
shares of Common Stock effected without receipt of consideration by the Company
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board of Directors whose determination in
that respect shall be binding and conclusive.
5. ADMINISTRATION.
The Plan shall be administered by the Board of Directors or a Committee
(which may be the same committee as the Company's compensation committee) as may
be appointed from time to time by the Board of Directors. Committee members
shall be ineligible to participate under the Plan. All members of the Committee
shall serve at the discretion of the Board. The Board of Directors or the
Committee, if one has been appointed, is vested with full authority to interpret
the terms of the Plan, to remedy any ambiguity, inconsistency, or omission, and
to make, administer and interpret such equitable rules and regulations regarding
the Plan as it may deem advisable. The Board of Directors', or the Committee's,
if one has been appointed, determinations as to the interpretation and operation
of the Plan shall be final and conclusive. No
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<PAGE> 24
member of the Board of Directors or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted under the Plan.
6. ELECTION TO PARTICIPATE.
An Eligible Employee may elect to become a Participant in the Plan for
a Purchase Period by completing a "Stock Purchase Agreement" form prior to the
first day of the Purchase Period for which the election is made. Such Stock
Purchase Agreement shall be in such form as shall be determined from time to
time by the Board of Directors or the Committee. The election to participate
shall be effective for the Purchase Period for which it is made. There is no
limit on the number of Purchase Periods for which an Eligible Employee may elect
to become a Participant in the Plan. In the Stock Purchase Agreement, the
Eligible Employee shall authorize regular payroll deductions of any full
percentage of his Compensation, but in no event less than two percent (2%) nor
more than eight percent (8%) of his Compensation. Except as otherwise provided
in Section 9, an Eligible Employee may not change his authorization during a
Purchase Period to which the election applies. Options granted to Eligible
Employees who have failed to execute a Stock Purchase Agreement within the time
periods prescribed by the Plan will automatically lapse. By electing to
participate in this Plan, each Participant agrees not to sell, pledge, or
transfer shares of Common Stock acquired under this Plan until the expiration of
the Holding Period.
7. EMPLOYEE STOCK PURCHASE ACCOUNT.
An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes, and payroll deductions made
under Section 6 will be credited to such Accounts. However, prior to the
purchase of shares in accordance with Section 8 or withdrawal from or
termination of the Plan in accordance with the provisions hereof, the Company
may use
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<PAGE> 25
for any valid corporate purpose all amounts deducted from a Participant's
compensation under the Plan and credited for bookkeeping purposes to his
account. The Company shall be under no obligation to pay interest on funds
credited to a Participant's account, whether upon purchase of shares in
accordance with Section 8 or upon distribution in the event of withdrawal from
or termination of the Plan as herein provided.
8. PURCHASE OF SHARES.
Each Eligible Employee who is a Participant in the Plan automatically
and without any act on his part will be deemed to have exercised his option on
each Exercise Date to the extent that the balance then in his Account under the
Plan is sufficient to purchase at the Purchase Price whole shares of the
Company's stock subject to his option and the limitations described in Section
3. Any balance remaining in the Participant's Account shall be carried forward
and credited for use in the next Purchase Period. If the Employee chooses not to
participate in the next Purchase Period, any balance will be refunded to him in
cash.
9. WITHDRAWAL.
A Participant who has elected to authorize payroll deductions for the
purchase of shares of Common Stock may cancel his election by written notice of
cancellation ("Cancellation") delivered to the office or person designated by
the Company to receive Stock Purchase Agreements, but any such Cancellation must
be so delivered not later than ten (10) days before the relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after delivery of the
Cancellation, the amount credited to his Account. Any Participant who so
withdraws from the Plan may again become a Participant at the start of the next
Purchase Period in accordance with Section 6.
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<PAGE> 26
Upon dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving entity every option
outstanding hereunder shall terminate, in which event each Participant shall be
refunded the amount of cash then in his Account.
10. ISSUANCE OF STOCK CERTIFICATES.
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on the
Exercise Date. Prior to that date none of the rights or privileges of a
stockholder of the Company, including the right to vote or receive dividends,
shall exist with respect to such shares.
Within a reasonable time after the Exercise Date, the Company shall
issue and deliver a certificate for the number of shares of Common Stock
purchased by a Participant for the Purchase Period, which certificate shall be
registered either in the Participant's name, or jointly in the names of the
Participant and his spouse, as the Participant shall designate in his Stock
Purchase Agreement. Such designation may be changed at any time by filing notice
thereof with the person designated by the Company to receive such notices. Each
stock certificate issued shall bear the restrictive legend providing that the
shares represented by the certificate may not be sold, pledged, or transferred
until the expiration of the Holding Period as described in Section 13.
11. TERMINATION OF EMPLOYMENT.
Upon a Participant's termination of employment for any reason, other
than death, no payroll deduction may be made from any compensation due him and
the entire balance credited to his Account shall be automatically refunded, and
his rights under the Plan shall terminate. Upon the death of a Participant, no
payroll deduction shall be made from any compensation due him at time of death,
and the entire balance in the deceased Participant's Account shall be paid in
cash to
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<PAGE> 27
the Participant's designated beneficiary, if any, under a group insurance plan
of the Company covering such employee, or otherwise to his estate, and his
rights under the Plan shall terminate.
12. TEMPORARY LAYOFF AND AUTHORIZED LEAVE OF ABSENCE; LONG TERM DISABILITY.
Except as otherwise provided by applicable law, payroll deductions
shall cease during a period of absence from work due to a Participant's
temporary layoff, authorized leave of absence without pay, disability for which
benefits are not payable from the Company or Co-op Programs. If such Participant
shall return to active service prior to the Exercise Date for the current
Purchase Period, payroll deductions shall be resumed. He shall not be entitled
to make up the deficiency in his Account caused by his absence and, accordingly,
the number of shares to be purchased shall be reduced. If the Participant shall
not return to active service prior to the Exercise Date for the current Purchase
Period, and the Participant was absent for more than fifty percent (50%) of the
weeks in the Purchase Period, his Stock Purchase Agreement shall be terminated
and the balance in his Account shall be refunded. All other Participants will
have an option to cancel their election in accordance with Section 9.
13. RIGHTS NOT TRANSFERABLE; RESTRICTIONS ON TRANSFER.
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not transferable
by him. If a Participant attempts to transfer his right to purchase shares under
the Plan, he shall be deemed to have requested withdrawal from the Plan and the
provisions of Section 9 hereof shall apply with respect to such Participant.
The shares of Common Stock purchased by a Participant at the close of
business on an Exercise Date may not be sold, pledged, or transferred for a
period of one year after the Exercise Date upon which such shares of Common
Stock were purchased. The stock certificates delivered
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<PAGE> 28
to the Participant for the number of shares of Common Stock purchased by a
participant shall contain the following restrictive legend:
"The shares of common stock represented by this certificate may not be
sold, pledged, or transferred for a period of one year from their date
of issuance in accordance with Section 13 of the Corporation's 2000
Employee Stock Purchase Plan."
14. NO GUARANTEE OF CONTINUED EMPLOYMENT.
Granting of an option under this Plan shall imply no right of continued
employment with the Company for any Eligible Employee.
15. NOTICE.
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to the Company's Treasurer, c/o Cognex Corporation, One Vision Drive,
Natick, Massachusetts 01760. Any notice to a Participant or an Eligible Employee
shall be conspicuously posted in the Company's principal office or shall be
mailed addressed to the Participant or Eligible Employee at the address
designated in the Stock Purchase Agreement or in a subsequent writing.
16. APPLICATION OF FUNDS.
All funds deducted from a Participant's compensation in payment for
shares purchased or to be purchased under this Plan may be used for any valid
corporate purpose provided that the Participant's Account shall be credited with
the amount of all payroll deductions as provided in Section 7.
17. GOVERNMENT APPROVALS OR CONSENTS.
This Plan and any offering and sales to Eligible Employees under it are
subject to any governmental approvals or consents that may be or become
applicable in connection therewith.
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<PAGE> 29
Subject to the provisions of Section 18, the Board of Directors may make such
changes in the Plan and include such terms in any offering under this Plan as
may be necessary or desirable, in the opinion of counsel, to comply with the
rules or regulations of any governmental authority, or to be eligible for tax
benefits under the Code or the laws of any state, or in the opinion of the
Company's auditors, to eliminate or reduce any unfavorable financial accounting
consequences.
18. AMENDMENT OF THE PLAN.
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that, except as otherwise provided in this
Plan, no such action shall adversely affect options theretofore granted
hereunder. To the extent necessary to comply with Section 423 of the Code (or
any other applicable law, regulation, or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as so
required. For purposes of this Section 18, termination of the Plan by the Board
of Directors pursuant to Section 19 shall not be deemed to be an action which
adversely affects options theretofore granted hereunder.
19. TERM OF THE PLAN.
The Plan shall become effective on the Effective Date, provided that it
is approved within twelve months after adoption by the Board of Directors at a
duly-held stockholder's meeting. The Plan shall continue in effect through the
end of the Company's fiscal year 2009, provided, however, that the Board of
Directors shall have the right to terminate the Plan at any time. In the event
of the expiration of the Plan or its termination, all options then outstanding
under the Plan shall automatically be canceled and the entire amount credited to
the Account of each Participant hereunder shall be refunded to each such
Participant without interest.
20. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITIONS.
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<PAGE> 30
By electing to participate in the Plan, each Participant agrees to
notify the Company in writing immediately after the Participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Purchase Period in which such Common Stock was
acquired. Each Participant further agrees to provide any information about such
a transfer as may be requested by the Company or any Subsidiary in order to
assist it in complying with any applicable tax laws. The Participant
acknowledges that the Company may send a W-2, or substitute therefor, as
appropriate, to the Participant with respect to any income recognized by the
Participant upon a disqualifying disposition of Common Stock.
21. WITHHOLDING OF TAXES.
Each Participant must make adequate provision for the Company's
federal, state or other tax withholding obligations, if any, which may arise
upon the exercise of the option or the disposition of the Common Stock. At any
time, the Company may, but shall not be obligated to, withhold from the
Participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to make
available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Participant.
22. GENERAL.
Whenever the context of this Plan permits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
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<PAGE> 31
DETACH HERE
PROXY
COGNEX CORPORATION
SPECIAL MEETING IN LIEU OF
1999 ANNUAL MEETING OF STOCKHOLDERS
April 27, 1999
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 1999 Annual Meeting of
Stockholders of COGNEX CORPORATION to be held April 27, 1999 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.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE> 32
DETACH HERE
[x]PLEASE MARK
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
PROPOSAL 3.
FOR WITHHELD
1. Election of Director, [ ] [ ]
Nominee:
Jerald Fishman
FOR WITHHELD
2. Election of Director, [ ] [ ]
Nominee:
William Krivsky
FOR AGAINST ABSTAIN
3. Approval of Cognex Corporation 2000 [ ] [ ] [ ]
Employee Stock Purchase Plan
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
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:________________
