PROPOSAL 2: AMENDMENT TO OUR ARTICLES OF ORGANIZATION TO
INCREASE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Under Massachusetts law, we may only issue shares of common stock to the extent such shares have been authorized for issuance under our
Articles of Organization. Our Articles of Organization currently authorize the issuance of up to 200,000,000 shares of common stock. In order to ensure sufficient shares of common stock will be available for issuance by Cognex, our Board of
Directors has approved, subject to shareholder approval, an amendment to our Articles of Organization to increase the number of shares of such common stock authorized for issuance from 200,000,000 to 300,000,000 shares.
Recommendation
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL TO AMEND OUR ARTICLES OF ORGANIZATION TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK THAT WE HAVE THE AUTHORITY TO ISSUE FROM 200,000,000 TO 300,000,000 SHARES.
Description and
Effect of Proposed Amendment
If approved by shareholders, the amendment will authorize Cognex to issue an additional 100,000,000
shares of our common stock, par value $.002 per share, without further action by shareholders unless required by law or Nasdaq rules or the rules of any other stock exchange on which the stock is then listed. Under the proposed amendment, each of
the newly authorized shares of common stock will have the same rights and privileges as currently authorized common stock. Adoption of the proposed amendment to our Articles of Organization will not affect the rights of the holders of currently
outstanding common stock of Cognex nor will it change the par value of the common stock.
To the extent that additional authorized shares
are issued in the future, however, they may decrease the existing shareholders percentage equity ownership and, depending on the price at which they are issued, could be dilutive to the existing shareholders. The holders of our common stock do
not have preemptive rights. This means that shareholders do not have a prior right to purchase any new issue of common stock in order to maintain their proportionate ownership interest.
The proposed amendment to increase the authorized number of shares of common stock could, under certain circumstances, have an anti-takeover
effect or delay or prevent a change in control of Cognex by providing Cognex with the capability to engage in actions that would be dilutive to a potential acquirer, to pursue alternative transactions, or to otherwise increase the potential cost to
acquire control of Cognex. Although the proposed amendment has been prompted by business and financial considerations, it may have the effect of discouraging unsolicited takeover attempts.
Reasons for the Recommendation
On October 30, 2017, we announced that our Board of Directors approved a two-for-one stock split of the companys common stock, payable in
the form of a stock dividend. The stock dividend was paid on December 1, 2017, significantly reducing the number of authorized and unissued shares of our common stock.
Our Board believes that the authorized number of shares of our common stock should be increased to provide sufficient shares to raise
additional capital through the sale of equity securities, to acquire another company or its assets, to provide equity incentives to employees, officers and directors, for stock splits and dividends, and for other corporate purposes. Our authorized
common stock currently consists of 200,000,000 shares, par value $.002 per share, of which, as of March 2, 2018, 172,858,091 shares were outstanding, 14,313,971 shares were subject to outstanding stock options, and 10,150,002 shares remained
available for grant pursuant to our stock incentive plans. Accordingly, we currently have only approximately 2,677,936 shares of common stock available for future issuance.
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