[LOGO] PRINTWARE
April 30, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders of
Printware, Inc. on Friday, June 15, 2001 at 3:30 p.m. local time at the
corporate offices of Printware, Inc. at 1270 Eagan Industrial Road, St. Paul,
Minnesota 55121.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be acted upon at the meeting. The Annual Report for the
year ended December 31, 2000 is also enclosed.
Your vote is important. Please vote your shares using the procedures described
in the Proxy Statement whether or not you plan to attend the meeting.
Sincerely,
STANLEY GOLDBERG
President and Chief Executive Officer
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Printware, Inc. will be held on
Friday, June 15, 2001 at 3:30 p.m. local time at the offices of Printware, Inc.
at 1270 Eagan Industrial Road, St. Paul, Minnesota 55121 to take action on the
following matters:
1. To elect six directors who will serve until the next annual
meeting of shareholders.
2. To consider and vote upon the ratification of the selection of
independent accountants for the fiscal year ending December
31, 2001.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof. The Company knows of
no other business to be brought before the meeting.
Shareholders of record at the close of business on April 27, 2001 are
entitled to receive this notice and to vote their shares at the Annual Meeting.
By Order of the Board of Directors,
MARK G. EISENSCHENK
Secretary
Dated: April 30, 2001
YOU ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY
AND TO RETURN IT IN THE ENCLOSED ENVELOPE
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
GENERAL INFORMATION
The Board of Directors of Printware, Inc. ("Printware" or the
"Company") is soliciting your proxy for use at the Annual Meeting of
Shareholders to be held on June 15, 2001. These proxy materials are being mailed
to shareholders beginning on May 4, 2001.
The Company's principal executive offices are located at 1270 Eagan
Industrial Road, St. Paul, Minnesota 55121. Its main telephone number is
651-456-1400.
WHO CAN VOTE
Holders of record of Printware's Common Stock at the close of business
on April 27, 2001 are eligible to vote at the meeting. As of the close of
business on that date, Printware had 3,302,137 shares of Common Stock
outstanding.
HOW TO VOTE
In addition to voting in person at the meeting, shareholders of record
can vote by proxy by mailing their signed proxy cards. If your shares are held
in the name of a bank, broker or other holder of record, you will receive
instructions from the holder of record that you must follow in order for your
shares to be voted.
REVOCATION OF PROXIES
A shareholder of record may revoke the proxy at any time before the
vote is taken at the meeting by sending written notice of the revocation to the
Secretary of the Company, by submitting another proxy that is properly signed
and bears a later date or by voting in person at the meeting. All properly
executed proxies not revoked will be voted at the meeting in accordance with
their instructions. A proxy that is signed and returned by a Shareholder of
record with no specification marked in the instruction boxes will be voted in
accordance the recommendations of the Board of Directors as outlined in this
Proxy Statement. If any other proposals are brought before the meeting and
submitted to a vote, all proxies will be voted in accordance with the judgment
of the persons voting the proxies.
PROXY SOLICITATION
Directors, officers and employees of Printware may solicit proxies on
behalf of the Company by communicating with shareholders personally or by
telephone, facsimile transmission or mail. All expenses in connection with the
solicitation of proxies will be paid by the Company. Printware will request
banks and brokers to solicit proxies from their customers where appropriate and
will reimburse them for reasonable out of pocket expenses.
QUORUM AND VOTING REQUIREMENTS
Printware's by-laws provide that a majority of the shares entitled to a
vote, whether present in person or represented by proxy, constitutes a quorum at
meetings of shareholders. Abstentions and broker "non-votes" are counted for
purposes of establishing a quorum. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular
matter and has not received instructions from the beneficial owner. Each of the
matters to be voted on at the Annual Meeting shall be determined by the
affirmative vote of the majority of the votes cast on the matter.
PROPOSALS TO BE VOTED UPON
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Board of Directors has set the number of directors to be elected
for the upcoming year at six and recommends the election of Messrs. Bolger,
Goldberg, Kohler, Lucas, Pihl and Redleaf (the "Nominees") to hold office until
the next Annual Meeting of Shareholders and until their successors are elected
and qualified. Each Nominee is presently a director of the Company.
Unless instructed not to vote for the election of directors, the
proxies will vote to elect the Nominees. If any of the Nominees is not a
candidate for election at the meeting, which is not presently anticipated, the
proxy holders may vote for such other person or persons as they so choose. The
term of office of each existing director extends until the next annual meeting
or until their successors are duly elected and qualified.
The following information is given as of December 31, 2000 and has been
furnished to the Company by each of the Nominees listed below.
Name and Age Principal Occupation and Business Experience Director Since
- ------------ -------------------------------------------- --------------
Charles Bolger+ Charles Bolger has served in various 2000
Age 48 capacities at Bolger Publications, Inc., a
Minneapolis-based commercial printing
company, since 1978 and as Chief Executive
Officer since 1992. Bolger Publications,
Inc. utilizes various state-of-the-art
technologies in its printing operations,
including computer-to-plate technology. Mr.
Bolger has more than 20 years experience in
the printing industry. He served on the
Board of Directors of Printing Industry of
Minnesota, a trade association, from 1980 to
1988. Mr. Bolger has also been a director of
the Raptor Center at the University of
Minnesota since 1998, and a director and
Treasurer of the American Indian OIC
(Opportunities and Industrialization
Centers) since 1992. Mr. Bolger has an
M.B.A. degree from the University of
Michigan and a B.A. degree in economics from
Colby College.
Stanley Goldberg Stanley Goldberg has been a managing partner 2000
Age 54 of Goldmark Advisors, LLC, a business
development company providing managerial and
financially related services to businesses,
since 1999. He was Chief Executive Officer
and Chairman of the Board of Directors of
Verdant Brands, Inc., a developer,
manufacturer and supplier of pest control
products, from 1992 to 1999. Prior to that
he was Vice President and General Manager of
Thomson Consumer Electronics, Worldwide
Audio Division, a defense and electronics
company, from 1988 until 1992. Prior to
1988, he held various positions in the
Consumer Products Sector of General Electric
Company, most recently as Manager of Product
Development. Mr. Goldberg has a B.S. degree
from West Virginia University.
Name and Age Principal Occupation and Business Experience Director Since
- ------------ -------------------------------------------- --------------
Gary S. Kohler+* Gary S. Kohler has been a portfolio manager 2000
Age 44 of Pyramid Trading Limited partnership, a
money management company, since 1999. Mr.
Kohler is also a founder of ChoiceTel
Communications, Inc. and has served as the
Chairman of the Board of Directors since its
inception in 1989. He was a managing
director of Second Avenue Capital
Management, a money management company, from
December 1998 to October 1999, and was
President of Kohler Capital Management from
October 1997 through November 1998. Mr.
Kohler was a partner in Tarmachan Holdings,
Inc. from July to October 1997, and was Vice
President and Portfolio Manager at Okabena
Company from 1984 through June 1997. Mr.
Kohler serves on the Boards of Directors of
a number of private companies, including
Emerald First Financial and Health EZ, Inc.
Mr. Kohler has an M.B.A. degree from Cornell
University and a B.A. degree from the
University of Minnesota.
Roger C. Lucas, Ph.D.* Roger C. Lucas has been the Vice Chairman of 2000
Age 57 and Senior Scientific Advisor to the Board
of Directors of Techne Corporation, a
biotechnology company, since 1995. Mr. Lucas
was the Chief Scientific Officer, Executive
Vice President and Secretary of Techne
Corporation from 1985 to 1995. He has also
been the Chairman and Chief Executive
Officer of Visual circuits, a digital video
company, since 1997. Mr. Lucas serves on the
Boards of Directors of Techne Corporation,
ChemoCentryx, a partially-owned subsidiary
of Techne Corporation, Visual Circuits and
St. Croix Medical Corporation. Mr. Lucas has
a Ph.D. degree in physiology and
biochemistry from the Illinois Institute of
Technology.
Douglas M. Pihl+ Douglas M. Pihl has over 30 years of 2000
Age 61 computer industry experience with extensive
responsibility in design, product planning
and management. He has been the President
and Chief Executive Officer of MathStar,
Inc., a digital signal processing company,
since November 1999. Mr. Pihl has been
Chairman of the Board of Directors of Vital
Images, Inc., a medical imaging company,
since 1997, and served as its Chief
Executive Officer, from February 1998 to
December 1999. He was President, Chief
Executive Officer of NetStar, Inc., a
manufacturer of advanced computer network
products, from 1992 to 1996. Mr. Pihl was a
founder of Apertus Technologies, Inc.
(formerly Lee Data Corporation), and held
various positions with that company from
1979 to 1990, most recently as Senior Vice
President, Development. Mr. Pihl also serves
on the Board of Directors of Astrocom
Corporation.
Name and Age Principal Occupation and Business Experience Director Since
- ------------ -------------------------------------------- --------------
Andrew J. Redleaf* Andrew J. Redleaf is a founder and the Chief 2000
Age 43 Executive Officer of Whitebox Advisors, LLC,
a money management company, since 1999.
Prior to that Mr. Redleaf was a co-founder
and partner in Arbitrade Holdings LLC, a
money management and securities trading
firm, from 1997 to 1999. Mr. Redleaf was the
Director of Portfolio Management at
Tarmachan Capital Management, a predecessor
to Arbitrade Holdings, from 1994 until 1997.
For approximately ten years prior to joining
Tarmachan, Mr. Redleaf was self-employed as
a securities trader. Mr. Redleaf has B.A.
and M.A. degrees in mathematics from Yale
University.
+ Member of Audit Committee
* Member of Compensation Committee
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
Nine Board of Directors meetings were held during the year ended
December 31, 2000. The Company's previous Board of Directors, which was in place
until June 16, 2000, met twice. The current Board of Directors met seven times
during 2000. All Directors attended more than 75% of the aggregate of all
meetings of the Board of Directors and meetings of the committees on which they
served, except for Messrs. Bolger and Pihl who each attended five and four
meetings, respectively, of the seven meetings held by the current Board of
Directors. The Board of Directors and its committees also acted on various
administrative matters by written consent in lieu of meetings during 2000.
The Board of Directors of the Company has standing audit and
compensation committees which have a current membership as indicated in the
foregoing section. In 2001, the Board of Directors established two new
committees, an investment committee, comprised of Messrs. Goldberg, Pihl and
Bolger, which is responsible for establishing investment policy and overseeing
investment activities, and a business development committee, comprised of
Messrs. Kohler, Lucas and Goldberg, which is responsible for reviewing and
evaluating internal and external business development alternatives.
The Audit Committee makes recommendations as to the selection of
auditors and their compensation, and reviews with the auditors the scope of the
annual audit, matters of internal control and procedure and the adequacy
thereof, the audit results and reports and other general matters relating to the
Company's accounts, records, controls and financial reporting. During 2000, the
Audit Committee held one meeting.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation guidelines for executive officers and other key
personnel and the composition and levels of participation in incentive
compensation, fringe benefits and retirement benefits for all employees. In
addition, the committee oversees administration of the Company's 1996 Stock
Plan. During 2000, the Compensation Committee held two meetings.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no compensation
for service on the Company's Board of Directors.
Non-employee Directors receive Printware stock options under the
Company's 1996 Stock Plan, as amended (the "Plan"). Under the Plan, each newly
elected non-employee Director receives an automatic one-time grant of a
nonqualified option to purchase 5,000 shares of Printware Common Stock as of the
date of his or her initial election as a Director. These options have an
exercise price equal to the fair market value of the underlying Common Stock on
the date of grant, are fully exercisable upon the date of grant, and expire on
the fifth anniversary of such grant. Each non-employee Director is also entitled
to receive an automatic grant of a nonqualified option to purchase 5,000 shares
of Common Stock under the Plan at the fair market price on the date of each
Annual Meeting of the Shareholders of the Company, provided that each such
Director continues to serve as a Director immediately following the Annual
Meeting. Under the Plan, additional stock options may be granted to non-employee
Directors at the Board's discretion.
Each incumbent Director received a grant of 5,000 Printware stock
options when they were initially elected to the Company's Board of Directors
effective June 16, 2000. The exercise price of such options was $2.80 per share.
Mr. Goldberg was a non-employee Director when he was elected to the Board of
Directors and was granted 5,000 stock options at that time. He is not eligible
for any additional Director grants if he is reelected to the Board of Directors
at the June 15, 2001 Annual Meeting of Shareholders since he became an employee
of the Company on January 11, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of three non-employee Directors,
none of whom is or has been an officer of the Company. The Company has no
compensation committee interlocks--that is, no officer of the Company serves as
a Director or a compensation committee member of a company that has an officer
or former officer serving on the Company's Board of Directors or the
Compensation Committee.
EXECUTIVE OFFICERS
The Board of Directors appointed the following as executive officers of
the Company upon the termination of Messrs. Baker and Petschauer in January
2001:
Name Age Position
- ---- --- --------
Stanley Goldberg 54 Chief Executive Officer and President
Mark G. Eisenschenk 43 Chief Financial Officer, Treasurer and Secretary
See the biographical information on Mr. Goldberg under "Election of
Directors."
Mark G. Eisenschenk joined the Company in January 2001 as Chief
Financial Officer, Treasurer and Secretary. He was Managing Partner of Goldmark
Advisors, LLC, a business development company providing managerial and
financially related services to emerging and high growth potential businesses,
from 1999 to 2000. Mr. Eisenschenk was Executive Vice President and Chief
Financial Officer of Verdant Brands, Inc., a developer, manufacturer and
supplier of pest control products, from 1993 to 1999. He was Vice President of
Finance and Chief Financial Officer of ECM Publishers, Inc., a privately held
printer and publisher, from 1991 to 1994. Mr. Eisenschenk was Director of
Treasury, Taxation and Accounting at Sinclair and Valentine, LP, a multinational
manufacturer and marketer of printing inks, from 1986 to 1991. Mr. Eisenschenk
is a certified public accountant and served as a financial auditor at Arthur
Andersen, LLP from 1981 to 1986.
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to or earned by
the Company's Chief Executive Officer and each of the Company's employees who
earned in excess of $100,000 for the years ended December 31, 2000, 1999 and
1998 (the "Named Executives").
Long-Term
Compensation
------------------------------------
Annual Compensation No. of All
---------------------------------------- Securities Other
Name and Other Annual Underlying Compen-
Principal Position Year Salary Bonus Compensation Awards Options sation(2)
- ------------------------- ------- ---------- --------- ---------------- -------- ------------- -----------
Daniel A. Baker 2000 $143,000 $ 0 $ 0 $ 0 0 $ 358,573
President and Chief 1999 143,000 0 0 0 73,000 982
Executive Officer 1998 138,930 73,904 0 0 73,000 2,400
Thomas W. Petschauer 2000 $116,000 $ 0 $ 0 $ 0 0 $ 145,870
Executive Vice Presi- 1999 116,018 0 0 0 30,000 870
dent and CFO 1998 112,769 60,080 0 0 30,000 1,784
Timothy S. Murphy(1) 2000 $109,141 $ 0 $ 0 $ 0 0 $ 800
Vice President 1999 107,630 0 0 0 14,000 759
1998 123,563 13,290 0 0 14,000 1,853
_________________________
(1) Mr. Murphy's salary included sales commission's of $34,141 in 2000,
$32,630 in 1999 and $53,571 in 1998.
(2) Consists of matching contributions made under the Company's 401(k)
Plan, plus accrued severance payments for Messrs. Baker. and
Pettschauer. Mr. Baker's employment was terminated on January 11, 2001
at time he was paid $357,500 in severance. The employment of Mr.
Petschauer terminated on January 30, 2001 at which time he was paid
$145,000 in severance. (See "Change in Control Agreements" below.)
CHANGE IN CONTROL AGREEMENTS
The Company entered into change in control agreements ("Agreements")
with two officers, Daniel A. Baker and Thomas W. Petschauer, in 1996 and 1997,
respectively. These Agreements, as amended on April 13, 2000, provided that, in
the event of a change in control of the Company (which is defined to include an
event that would be reported under Item 1 of Form 8-K under the Securities
Exchange Act of 1934) followed by a termination of the executive within one year
of the change in control, the Company must pay certain severance amounts and
other benefits to such terminated officers. The Company also entered into a
similar Agreement with Timothy S. Murphy, Vice President of Sales and Marketing,
on April 13, 2000.
On June 5, 2000, under direction of the Company's previous Board of
Directors, Printware established a Rabbi trust with Firstar Bank, N.A.
("Trustee") specifically to fund severance payments relating to the Agreements.
Printware immediately transferred $596,500 in cash to the Rabbi trust.
The current Board of Directors was elected by the Company's
Shareholders effective June 16, 2000, replacing all members of the previous
Board. Under direction of the current Board of Directors, Mr. Baker's employment
with Printware was terminated on January 11, 2001 and he was paid $357,500 in
severance by the Trustee. Mr. Petschauer's employment ended on January 30, 2001
and he was paid $145,000 in severance by the Trustee. The Agreements also
provided that all of their unvested stock options would vest in full upon a
change in control followed by termination within one year therefrom. In
addition, the Agreements provided that the terminated executive would be
entitled to exercise all stock purchase plan rights and stock option plan rights
within 90 days following termination. Mr. Baker held 433,338 options as of
January 11, 2001, all of which expired unexercised on April 11, 2001. Mr.
Petschauer held 177,489 options as of January 30, 2001, all of which expired
unexercised on April 30, 2001.
On January 11, 2001 Mr. Murphy agreed to cancel his Change in Control
Agreement and to enter into an employment agreement with the Company (see
"Employment and Other Agreements"). The Trustee subsequently remitted all funds
that remained in the Rabbi trust back to Printware. The remittance totaled
$117,000, including earned interest.
EMPLOYMENT AND OTHER AGREEMENTS
On January 11, 2001, Timothy S. Murphy agreed to cancel his change in
control agreement with the Company (see "Change in Control Agreements") and to
serve as Vice President of Sales and Marketing under terms of an Employment
Agreement. Mr. Murphy's Employment Agreement provides for a $10,000 signing
bonus, an annual base salary of $100,000, an annual performance based bonus of
up to 50% of annual base pay predicated on achieving certain sales and
performance objectives, and potential severance benefits of $0, $50,000 or
$100,000, depending upon the circumstances.
STOCK OPTION PLANS
In 1996, the Shareholders of the Company approved, and in 1998 approved
an amendment to, a stock option plan (the "1996 Stock Plan") which provides for
the granting of options and restricted stock to certain officers, employees,
directors and consultants of the Company to purchase up to 1,000,000 shares of
Common Stock. The 1996 Stock Plan also provides for an automatic grant of an
option for 5,000 shares of the Company's Common Stock, exercisable for a period
of five years, to each non-employee director, upon the election and reelection
as a member of the Board of Directors. Such options are issued with an exercise
price equal to the fair market value of the Common Stock on the date the option
is granted.
The following table sets forth certain information concerning grants of
stock options made during the year ended December 31, 2000 to each of the Named
Executives:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
---------------------------------------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to for Option Term
Options Employees Exercise or --------------------------
Granted in Fiscal Base Price Expiration
Name (1) Year (2) Per Share Date 5% (3) 10% (3)
- ------------------------- ------------ -------------- ------------ ------------ ------------ ------------
Daniel A. Baker (4) 73,000 33.8 % $2.563 2/11/2010 $117,666 $298,188
Thomas W. Petschauer (4) 30,000 13.9 2.563 2/11/2010 48,356 122,543
Timothy S. Murphy 54,000 25.0 2.563 2/11/2010 87,040 220,577
_________________________
(1) The options were incentive stock options granted at fair market value
on the date of grant, February 11, 2000. All of these options vest
one-third after one year, another one-third after two years, and the
last one-third after three years.
(2) Excludes options granted on June 16, 2000 to each non-employee
Directors in the amount of 5,000 shares exercisable at $2.80 per share.
(3) Represents the potential net realizable value of each grant of options
assuming that the market price of the underlying Common Stock
appreciates in value from its fair market value on the date of grant to
the end of the option term at the specified annual rates. The stock
price appreciation at 5% and 10% per year is shown for illustrative
purposes only and does not reflect the Company's estimate of future
stock price.
(4) The options granted to Messrs. Baker and Petschauer expired on April
11, 2001 and April 30, 2001, respectively, as a result of termination
of their employment with the Company.
The following table sets forth certain information concerning stock
options held as of December 31, 2000 by each of the Named Executives:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES
Securities Underlying Value of Unexercised
Number of Unexercised In-The-Money
Options at Fiscal Options at Fiscal
Year End Year End (1)
Shares ------------------------------ ------------------------------
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------- --------- ------------- ---------------- ------------- ---------------
Daniel A. Baker 0 $0 287,337 146,001 $0 $0
Thomas W. Petschauer 0 0 117,489 60,000 0 0
Timothy S. Murphy 0 0 20,248 68,002 0 0
_________________________
(1) Value is based on last sales price per share ($2.50) of the Company's
Common Stock on December 29, 2000, less the exercise price.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information as of March 31,
2001, with respect to the beneficial ownership of the Company's Common Stock by
(i) all persons known by the Company to be the beneficial owners of more than 5%
of its outstanding shares, (ii) all directors and nominees for election as
directors, (iii) the executive officers named in the executive compensation
table and (iv) all officers and directors as a group. Unless noted below, the
address of each of the following shareholders is the same as the Company. Such
information is based upon information furnished by each owner, including, where
applicable, information furnished in a Schedule 13G or 13F filed by such owner
with the Securities and Exchange Commission. Percentages are based upon the
number of shares of Printware, Inc. Common Stock outstanding as of March 31,
2001 plus, where applicable, the number of shares that the indicated person and
group had a right to acquire within 60 days of such date.
Amount and Nature of Shares Issuable Upon the
beneficial ownership Exercise of Options that
(including shares under- are Currently or Will Percentage
Name and Address of lying the options de- Become Exercisable Within of Outstanding
Beneficial Owner scribed in next column) the Next 60 Days Shares
- ------------------------------- ---------------------------- ------------------------------ -------------------
Pyramid Trading Ltd. Partnership 343,300 (1) 0 10.4%
440 South LaSalle Street
Chicago, IL 60605
Allen L. Taylor 334,374 (2) 12,000 10.5%
212 Ilwaco Road
River Falls, WI 54022
Donald M. Hall and Dennis Hanish 251,500 (3) 0 7.6%
c/o RJ Steichen & Co.
7900 Xerxes Ave. S.
Bloomington, MN 55435
Daniel A. Baker 456,818 433,338 12.2%
Thomas W. Petschauer 266,949 177,489 7.7%
Timothy S. Murphy 107,485 51,082 3.2%
Gary S. Kohler 12,500 5,000 *
Andrew J. Redleaf 108,300 5,000 3.4%
Stanley Goldberg 100,000 (4) 65,000 3.0%
Roger C. Lucas 5,000 5,000 *
Charles Bolger 5,000 5,000 *
Douglas M. Pihl 5,000 5,000 *
All Directors and
executive officers
as a group (9 persons) 836,077 751,909 26.4%
_________________________
*Less than one percent
(1) Based on a Form 4 filed with the SEC on July 7, 2000. Messrs. Kohler
and Redleaf are also limited partners of Pyramid Trading Ltd.
Partnership.
(2) Based on a Schedule 13G/A filed February 10, 2000 with the SEC.
(3) Based on a Schedule 13D filed February 10, 2000 with the SEC.
(4) Includes 25,000 warrants held by Goldmark Advisors, LLC, a firm in
which Mr. Goldberg has investment and voting power.
CERTAIN TRANSACTIONS
Effective June 16, 2000 Printware's shareholders elected the current
Board of Directors, replacing all directors previously serving on the Company's
Board. To assist the current Board of Directors in performing various strategic
and operational assessments of the Company, on July 27, 2000 the Board of
Directors engaged the services of Goldmark Advisors LLC (Goldmark), a
Minneapolis, MN based business consulting firm. At that time, Stanley Goldberg,
a Director of the Company and currently a Nominee, was a non-employee Director
and held a financial interest in the firm. Mark G. Eisenschenk, who was
appointed Chief Financial Officer of the Company on January 30, 2001, also held
a financial intersest in Goldmark. Goldmark staff performed extensive reviews of
Printware's day-to-day operations, its management, the industry, competition and
various key financial aspects of the Company. For its services in 2000, on July
28, 2000 Printware issued Goldmark warrants to acquire 25,000 shares of Common
Stock at $2.375 per share exercisable over a five year period and paid Goldmark
$90,000. Goldmark's services were completed and its engagement was terminated in
January 2001.
The Company and Stanley Goldberg also entered into an Employment
Agreement on January 11, 2001 under which Mr. Goldberg agreed to serve as the
President and Chief Executive Officer of Printware. The agreement provides for
annual base compensation of $150,000 and provides that Mr. Goldberg may be
entitled to severance pay in the event his employment with the Company is
terminated under certain circumstances. Such severance pay could range from
$12,500 to $75,000, depending upon the circumstances. The agreement further
provides that, under certain limited circumstances, if a third party acquires
all or substantially all of the Company's assets or stock, Mr. Goldberg could
potentially receive remuneration ranging from 1% to 2% of the transaction
proceeds. On January 11, 2001 Mr. Goldberg was also granted 70,000 Printware
incentive stock options, exercisable at $2.375 per share vesting at the rate of
15,000 immediately and 5,000 each month thereafter until December 11, 2001, at
which time all options issued under this grant will be fully vested.
The Company and Mark Eisenschenk entered into an Employment Agreement
on January 30, 2001 under which Mr. Eisenschenk agreed to serve as the Chief
Financial Officer of Printware. The agreement provides for annual base
compensation payable to Mr. Eisenschenk of $125,000. The agreement also provides
that Mr. Eisenschenk may be entitled to severance pay in the event his
employment with the Company is terminated under certain circumstances. Such
severance pay could range from $10,417 to $67,500, depending upon the
circumstances. The agreement further provides that, under certain limited
circumstances, if applicable, if a third party acquires all or substantially all
of the Company's assets or stock, Mr. Eisenschenk could potentially receive
remuneration ranging from 1% to 2% of the transaction proceeds. On January 30,
2001 Mr. Eisenschenk was also granted 70,000 Printware incentive stock options,
exercisable at $2.68 per share vesting at the rate of 15,000 immediately and
5,000 each month thereafter until December 30, 2001, at which time all options
issued by this grant will be fully vested.
On March 2, 2001, the Company invested $2 million of its excess cash
resources in the Whitebox Statistical Arbitrage Fund, an investment fund managed
by Whitebox Advisors, LLC, of which Andrew Redleaf is Chief Executive Officer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than ten percent (10%)
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, Directors and greater than ten percent (10%) beneficial
owners are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers, Directors and
persons beneficially owning more than 10% of the Company's Common Stock, the
Company believes that all Section 16(a) filing requirements applicable to such
persons were complied with.
PROPOSAL TWO:
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche, LLP (Deloitte &
Touche) as the Company's independent accountants for the year ending December
31, 2001 and recommends that the shareholders ratify that appointment. Deloitte
& Touche has served as the Company's independent accountants since 1991.
Deloitte & Touche has no relationship with the Company other than that arising
from its employment as independent auditors. Representatives of Deloitte &
Touche will be present at the Annual Meeting. They will have an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions from shareholders.
AUDIT FEES
Deloitte & Touche billed Printware an aggregate of $32,500 for the annual audit
for fiscal 2000 and for review of Printware's financial statements included in
Printware's quarterly reports on Form 10-QSB for fiscal 2000. The above amount
includes out-of-pocket expenses incurred by Deloitte & Touche in connection with
providing such services.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Deloitte & Touche did not render any professional services to Printware
in fiscal year 2000 with respect to financial information systems design and
implementation.
ALL OTHER FEES
Deloitte & Touche also billed Printware $3,825 for reviewing matters
relating to proxy costs, $3,825 for review of an income tax matter and $4,500 to
review a draft of a lease contract. The $4,500 lease contract billing is
currently under review by Company management
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR PROPOSAL TWO.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee consists of three independent Directors and
operates under a written charter. The written charter for the Audit Committee,
which was approved and adopted by the Board of Directors, is included in this
Proxy Statement as Appendix A.
The Audit Committee oversees Printware's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. We reviewed with Deloitte & Touche, the Company's independent
accountants responsible for expressing an opinion on the conformity of our
audited financial statements with generally accepted accounting principles,
their judgments as to the quality and acceptability of our accounting principles
and any other matters that we are required to discuss under generally accepted
auditing standards. We have reviewed and discussed the audited financial
statements with management. In addition, we have discussed with Deloitte &
Touche's their independence from management and Printware, including matters set
forth in the written disclosures received from them as required by Independence
Standards Board Standard No. 1 and matters required to be discussed by Statement
on Auditing Standards No. 61 pertaining to communications with Audit Committees.
We discussed with Deloitte & Touche the overall scope and plans of
their audits. We met with Deloitte & Touche, with and without management
present, to discuss results of their examinations, their evaluations of our
internal controls, and the overall quality of our financial reporting.
Relying on the reviews and discussions referred to above, we
recommended to the Board that the audited financial statements be included in
the Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000,
for filing with the SEC.
Respectfully submitted,
Gary S. Kohler
Charles Bolger
Douglas Pihl
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next annual
meeting must be received at the Company's principal executive offices, 1270
Eagan Industrial Road, St. Paul, Minnesota 55121, not later than January 2, 2002
in order for such proposal to be included in the Company's proxy materials
relating to the year ending December 31, 2001. Also, if Printware receives
notice of a shareholder proposal after March 20, 2002, such proposal will be
considered untimely and the persons named in the proxies solicited by the Board
of Directors of Printware for its 2002 Annual Meeting of Shareholders may
exercise discretionary voting power with respect to such proposal.
Management of Printware knows of no matter other than the foregoing to
be brought before the meeting. However, the enclosed proxy gives authority in
the event any additional matters should be presented.
Printware's 2000 Annual Report to the Shareholders accompanies these
materials. The Company will provide without charge to any shareholder solicited
hereby, upon written request of such shareholder, a copy of its 2000 Annual
Report on Form 10-KSB filed with the Securities and Exchange Commission.
Requests should be directed to Chief Financial Officer, Printware, Inc., 1270
Eagan Industrial Road, St. Paul, Minnesota 55121.
By Order of the Board of Directors,
Mark G. Eisenschenk
Secretary
Dated: April 30, 2001
APPENDIX A
PRINTWARE, INC.
CHARTER OF THE AUDIT COMMITTEE
I. Purpose
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company to any
governmental body or the public; the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company's auditing, accounting and financial
reporting processes generally. Consistent with this function, the Audit
Committee should encourage continuous improvement of, and should foster
adherence to, the Company's policies, procedures and practices at all levels.
The Audit Committee's primary duties and responsibilities are to:
1. Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control systems.
2. Review and appraise the audit efforts of the Company's independent
accountants.
3. Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this charter.
II. Composition
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee.
A director will not be considered independent if, among other things, he or
she:
1. Has been employed by the Company or its affiliates in the current or
past three years;
2. Is an immediate family member who is, or has been in the past three
years, employed by the Company or its affiliates as an executive
officer;
3. Has accepted any compensation from the Company or its affiliates in
excess of $60,000 during the previous fiscal year, except for board
service, retirement plan benefits, or nondiscretionary compensation;
4. Has been a partner, controlling shareholder, or an executive officer of
any for-profit business to which the Company made, or from which it
received, payments (other than those which arise solely from
investments in the Company's securities) that exceed five percent of
the organization's consolidated gross revenue for that year, or
$200,000, whichever is more, in any of the past three years; or
5. Has been employed as an executive of another entity where any of the
Company's executives serve on that entity's compensation committee.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have past employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background,
including a current or past position as a chief executive or financial officer
or other senior officer with financial oversight responsibilities. Committee
members may enhance their familiarity with financial and accounting by
participating in educational programs conducted by the Company or an outside
consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. Meetings
The Committee shall meet as circumstances dictate. As part of this job to
foster open communication, the Committee should meet at least annually with
management and the independent accountants in separate executive sessions to
discuss any matters that the Committee or each of these groups believe should be
discussed privately. In addition, the Committee or at least its Chair should
meet with the independent accountants and management quarterly to review the
Company financials consistent with IV.4. below.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accounts.
3. Review the regular internal reports to management and management's
comments.
4. Review with management and the independent accountants the quarterly
financial results prior to the release, and the 10-QSB prior to its
filing. The Chair of the Committee may represent the entire Committee
for purposes of this review.
Independent Accountants
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Company to determine the accountant's independence.
6. Review the independent accountant's written notification concerning
independence.
7. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
8. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
Financial Reporting Processes
9. In consultation with the independent accountants and management, review
the integrity of the organization's financial reporting processes, both
internal and external.
10. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
11. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants or management.
Process Improvement
12. Establish regular and separate systems of reporting to the Audit
Committee by each of management and the independent accountants
regarding any significant judgments made in management's preparation of
the financial statements and the view of each as to appropriateness of
such judgments.
13. Following completion of the annual audit, review separately with each
of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
14. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
15. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented.
Ethical and Legal Compliance
16. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
17. Review management's monitoring of the Company's compliance with the
organization's Ethical Code, and ensure that the management has the
proper review system in place to ensure that Company's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public safety legal requirements.
18. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
19. Review with the organization's counsel, new compliance requirements
concerning proxy and information requirements beginning December 15,
2000, which require the Company to:
a. Include reports of the Audit Committee in its proxy statements
stating whether the Audit Committee has:
- Reviewed and discussed the audited financial statements with
management,
- Discussed with the independent auditors the matters required to
be discussed by Statement of Auditing Standards No. 61, as
amended,
- Received written disclosure from the auditors regarding the
auditors' independence required by Independence Standards Board
Standard No. 1 and has discussed with the auditors the
auditors' independence, and
- Recommended to the Board of Directors that based on the review
and discussions above, the audited financial statements should
be included in the Company's Annual Report on Form 10-KSB for
the last fiscal year for filing with the SEC;
b. Disclose in its proxy statement whether the Board of Directors
has adopted a written charter for the Audit Committee, and if so,
include a copy of the charter as an appendix to the Company's
proxy statement at least once every three years;
c. Disclose in its proxy statement whether the Audit Committee
members are independent as defined, and disclose certain
information regarding any Director on the Audit Committee who is
not independent.
20. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
21. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
[LOGO] PRINTWARE THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 15, 2001
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
The undersigned hereby appoints Stanley Goldberg or Mark G. Eisenschenk, or
either of them, as proxies with full powers of substitution, to vote all shares
of common stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Shareholders (the "Meeting") to be held Friday, June 15, 2001,
at 3:30 p.m. Central Daylight Time, at the corporate offices of Printware, Inc.,
at 1270 Eagan Industrial Road, St. Paul, MN 55121, and at any and all
adjournments thereof.
1. The election of directors to serve until the 2002 annual meeting:
[ ] FOR all nominees listed below (except as indicated below)
[ ] WITHHOLD authority
Charles Bolger, Stanley Goldberg, Gary S. Kohler, Roger C. Lucas, Ph. D.,
Douglas M. Pihl and Andrew J. Redleaf
INSTRUCTIONS: To withhold your vote for any individual nominee, strike a line
through the nominee's name.
2. The ratification of Deloitte & Touche, LLP to serve as independent
auditors of the Company's December 31, 2001 financial statements.
[ ] FOR [ ] AGAINST
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE, AND "FOR" SUCH ITEM IF THERE IS NO SPECIFICATION.
(CONTINUED FROM OTHER SIDE)
Please date and sign exactly as your name appears on this form of proxy. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each shareholder should sign.
Dated: __________________________, 2001
[ ] Please check here if you plan to attend the Meeting.
- ------------------------------------------
SIGNATURE OF SHAREHOLDER
- ------------------------------------------
SIGNATURE OF SHAREHOLDER (if held jointly)
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.