SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
PPT VISION, INC.
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(Name of Registrant as Specified In Its Charter)
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PPT VISION, INC.
12988 VALLEY VIEW ROAD
EDEN PRAIRIE, MN 55344
(952) 996-9500
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 2001
------------------------
To the Shareholders of PPT VISION, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of PPT
VISION, Inc. will be held on Thursday, March 15, 2001, at 3:30 p.m., Central
Time, at the offices of PPT VISION, Inc. at 12988 Valley View Road, Eden
Prairie, MN, for the following purposes:
1. To elect four (4) directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified.
2. To consider and vote upon a proposal to grant full voting rights to
shares of PPT VISION, Inc. common stock held by Mr. P.R. Peterson, a
director and founder of the Company, pursuant to the Minnesota Control
Share Acquisition Act.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, Form of
Proxy and the Company's Annual Report to Shareholders for the fiscal year ended
October 31, 2000.
The Board of Directors has fixed the close of business on January 31, 2001,
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting.
By Order of the Board of Directors
[/S/ THOMAS G. LOVETT IV]
Thomas G. Lovett IV
SECRETARY
Eden Prairie, Minnesota
Dated: February 15, 2001
PLEASE REMEMBER TO SIGN AND RETURN YOUR PROXY.
PPT VISION, INC.
12988 VALLEY VIEW ROAD
EDEN PRAIRIE, MN 55344
(952) 996-9500
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 15, 2001
------------------------
GENERAL MATTERS
This Proxy Statement is furnished to the shareholders of PPT VISION, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders to be
held on March 15, 2001 or any adjournment or adjournments thereof. The cost of
this solicitation will be borne by the Company.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting. If not so
revoked, the shares represented by such proxy will be voted. The Company's
principal offices are located at 12988 Valley View Road, Eden Prairie, Minnesota
55344, and its telephone number is (952) 996-9500. The mailing of this proxy
statement to shareholders of the Company commenced on or about February 15,
2001.
As of January 31, 2001, the total number of shares outstanding consisted of
5,479,782 shares of common stock, $.10 par value. The total number of shares
entitled to vote at the meeting as of January 31, 2001 consisted of 5,404,280
shares of common stock, $0.10 par value. Each share of common stock is entitled
to one vote. The Company also has an additional 75,502 shares outstanding that
will have voting rights only if approved by the shareholder of the Company at
this meeting. There is no cumulative voting for directors. Only shareholders of
record at the close of business on January 31, 2001 will be entitled to vote at
the meeting. The presence in person or by proxy of the holders of a majority of
the shares entitled to vote at the Annual Meeting of Shareholders constitutes a
quorum for the transaction of business.
QUORUM AND VOTE REQUIRED
Under Minnesota law, each item of business properly presented at a meeting
of shareholders generally must be approved by the greater of (1) the affirmative
vote of the holders of a majority of the voting power of the shares present, in
person or by proxy, and entitled to vote on that item of business or (2) the
affirmative vote of the holders of a majority of the minimum number of shares
entitled to vote that would constitute a quorum for the transaction of business
at the meeting. Votes cast by proxy or in person at the Annual Meeting of
Shareholders will determine whether or not a quorum is present. Abstentions will
be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
the approval of the matter submitted to the shareholders for a vote. Broker
non-votes will be treated as shares not present and entitled to vote. The vote
required for Proposal # 2, the "Proposal to Authorize Voting of Shares under
Minnesota Control Share Acquisition Act" is described under the Proposal.
1
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of January 31, 2001 concerning
the beneficial ownership of the common stock of the Company by (i) the only
shareholders known by the Company to own more than five percent of the common
stock of the Company, (ii) each director of the Company, (iii) each Named
Executive Officer listed in the Summary Compensation Table, and (iv) all
executive officers and directors of the Company as a group.
SHARES
SHARES OF ACQUIRABLE
COMMON WITHIN
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK(1) 60 DAYS TOTAL PERCENTAGE
- ------------------------------------ --------- ---------- --------- ----------
P.R. Peterson(2) .................................. 1,296,757 3,500 1,300,257 23.7%
ESI Investment Co.(2)
6111 Blue Circle Drive
Minnetonka, MN 55343
Dimensional Fund Advisors, Inc.(3) ................ 394,400 0 394,400 7.1%
1229 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1038
Joseph C. Christenson.............................. 52,577 62,500 115,077 2.1%
Robert Heller...................................... 5,000 0 5,000 *
Arye Malek......................................... 28,918 30,166 59,084 1.1%
David Malmberg..................................... 18,450 3,500 21,950 *
Thomas R. Northenscold............................. 1,650 32,500 34,150 *
Larry Paulson...................................... 92,848 5,000 97,848 1.8%
Richard Peterson................................... 0 15,000 15,000 *
All executive officers and directors as a group (8 1,643,366 152,166 1,795,532 31.9%
persons).........................................
- ------------------------
* Indicates ownership of less than one percent.
(1) Except as noted, all shares beneficially owned by each person as of the
record date were owned of record, and each person had sole voting power and
sole investment power for all such shares beneficially held. The table shows
the ownership based upon all 5,479,782 shares of common stock outstanding,
including 75,502 restricted voting shares owned by Mr. P.R. Peterson which
are the subject of Proposal # 2. The table excludes shares purchasable
pursuant to the Company's 2000 Employee Stock Purchase Plan.
(2) ESI Investment Co. is the record owner of 549,084 shares of common stock.
Mr. Peterson is a controlling shareholder of the parent company of ESI.
Mr. Peterson also owns 202,873 shares of common stock individually and
controls 544,800 shares as trustee of the P. R. Peterson Co. Profit Sharing
Trust. Pursuant to Section 302A.671 of the Minnesota Business Corporation
Act, and related definitions (the "Control Share Acquisition Act"),
Mr. Peterson will not be able to vote the 75,502 shares that are the subject
of Proposal # 2. See Proposal # 2 for more information regarding the voting
power of Mr. Peterson and the Control Share Acquisition Act.
(3) Based on Schedule 13F filing reporting shares held as of September 30, 2000.
2
PROPOSAL #1
ELECTION OF DIRECTORS
It is intended that proxies solicited by the Board of Directors will be
voted FOR (unless otherwise directed) the election of the nominees for director
named below. Each of the nominees named below upon election will serve until the
next annual meeting or until his successor has been elected and qualified. If,
for any reason, any of the nominees become unavailable for election, the proxies
solicited by the Board of Directors will be voted for such nominee as is
selected by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees are not available or will not serve if elected.
The Company does not have a nominating committee of the Board of Directors.
The nominees named below have been nominated by the Board of Directors of the
Company. The nominees are listed below with their ages, their present positions
with the Company and their present principal occupations or employment.
Mr. Christenson has devoted and will devote his full working time to the
business of the Company. Messrs. Heller, Malmberg and Peterson have devoted and
will devote such time as is necessary to fulfill their duties as directors.
JOSEPH C. CHRISTENSON, 42, has been President of the Company since
January 1989 and a director since December 1987. Prior to being elected
President of the Company, Mr. Christenson served in a series of positions of
increasing responsibility since joining the Company in May 1985.
Mr. Christenson has a Masters in Business Administration from the University of
Michigan and a Bachelor of Arts degree from St. Olaf College.
ROBERT HELLER, 55, currently serves as President of Heller Capital, Inc., a
management consulting and investment company and serves as a Director of five
other companies. Mr. Heller held various senior management roles at Advance
Circuits, Inc., a manufacturer of printed circuit boards from 1977 to 1996
beginning as Vice President of Manufacturing and serving as Chief Executive
Officer beginning in 1991. Mr. Heller holds a bachelors degree in industrial
engineering from North Dakota State University and masters degree in industrial
administration from Purdue University.
DAVID MALMBERG, 57, has been a director of the Company since May 1994. Since
May 1994, Mr. Malmberg has also been the President of David C. Malmberg, Inc., a
consulting and investment management firm. Prior to that time, he served in
various capacities with National Computer Systems, Inc., a global data
collection services and systems company, most recently serving as President from
1978 through 1993 and serving as Vice Chairman from January 1993 through 1994.
Mr. Malmberg is a director of Three Five Systems, Inc., National City
Bancorporation, and Fieldworks, Inc. Mr. Malmberg also serves as a trustee for
Minnesota State University at Mankato.
P. R. PETERSON, 67, is the Secretary and a director of
Electro-Sensors, Inc., a manufacturer of machine control systems. Mr. Peterson
served as a director from the Company's inception in 1982 to 1985. He was again
elected a director of the Company in December 1988 and continues to serve in
that capacity.
OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS
Non-employee directors receive $1,250 per quarter for services as members of
the Board. In addition, the Company has periodically granted stock options to
its non-employee directors. During fiscal 2000, the Board granted seven-year
options to Mr. Heller to purchase 12,500 shares of common stock and options to
purchase 6,500 shares to the Company's other non-employee directors. All options
were granted at a price of $5.00, which was equal to fair market value on the
date of grant. The Board has a Compensation Committee consisting of Mr. Heller,
Mr. Malmberg (Chair) and Mr. Peterson and an Audit Committee consisting of
Mr. Heller (Chair), Mr. Malmberg and Mr. Peterson. Additional
3
information about these Committees is contained in the "Report on Executive
Compensation" and "Report of Audit Committee" in this Proxy Statement.
During the fiscal year ended October 31, 2000, the Company's Board of
Directors held four meetings. All current directors attended at least
seventy-five percent of the meetings held when they were directors.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth, for the fiscal years ending October 31,
2000, 1999 and 1998, the cash compensation paid by the Company, as well as
certain other compensation paid or earned for those years by Joseph C.
Christenson, the Company's President and Chief Executive Officer, and the only
other executive officers whose compensation exceeded $100,000 in fiscal 2000
(the "Named Executive Officers"), for services rendered to the Company in all
capacities during the past three fiscal years.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------------------------- OPTIONS
YEAR ENDED OTHER ANNUAL (NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION OCTOBER 31, SALARY BONUS COMPENSATION(1) SHARES) COMPENSATION
- --------------------------- ----------- -------- -------- --------------- ------------ ------------
Joseph C. Christenson ........ 2000 $156,000 $15,000 $ 2,000 15,000 --
President and Chief 1999 156,000 2,000 20,000 --
Executive Officer 1998 140,833 2,000 -- --
Arye Malek ................... 2000 125,932 10,000 2,000 5,000 --
Vice President and General 1999 110,667 4,336 2,000 10,000 --
Manager, Microelectronics 1998 110,250 2,000 5,000 --
Systems Division
Thomas R. Northenscold ....... 2000 130,000 26,000 2,000 -- --
Vice President and General 1999 115,667 2,000 15,000 --
Manager Vision Systems 1998 100,000 2,000 5,000 --
Division
Larry G. Paulson(2) .......... 2000 101,232 2,000 -- $100,565
Chief Technology Officer 1999 100,565 2,000 10,000 --
1998 95,776 2,000 -- --
Richard Peterson ............. 2000 103,917 5,000 2,000 -- --
Chief Financial Officer 1999 55,273 2,000 30,000 --
- ------------------------
(1) Represents contributions to the Company's Employee Retirement 401(k) Plan
and other fringe benefits.
(2) Mr. Paulson resigned as a director and as the Company's Chief Technology
Officer effective October 31, 2000. Amounts listed under "All Other
Compensation" represent severance payments to Mr. Paulson.
4
STOCK OPTIONS
The following table contains information concerning stock option grants to
the Named Executive Officers during the fiscal year ended October 31, 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR OPTION TERM
OPTIONS IN BASE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ---------- ----------- -------- ---------- --------- ---------
Joseph C. Christenson..................... 15,000 5.7% $5.00 6/16/07 $33,509 $75,275
Arye Malek................................ 5,000 1.9% $3.91 2/01/07 $ 7,952 $18,531
- ------------------------
(1) Potential realizable values shown above represent the potential gains based
upon annual compound price appreciation of 5% and 10% from the date of grant
through the full option term. The actual value realized, if any, on stock
option exercises will be dependent on overall market conditions and the
future performance of the Company and its common stock. There is no
assurance that the actual value realized will approximate the amounts
reflected in this table.
(2) All of the options listed above become exercisable in equal installments
over a period of three years, commencing one year after the date of grant.
The following table contains information concerning exercises of stock
options during the last fiscal year by the Named Executive Officer and the value
of options which were held by the Named Executive Officer at the end of the
fiscal year ended October 31, 2000.
AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND OPTION VALUES AT OCTOBER 31, 2000
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
OCTOBER 31, 2000 OCTOBER 31, 2000(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
Joseph C. Christenson.......... -- -- 62,500 37,500 $5,000 $5,000
Arye Malek..................... -- -- 28,500 15,000 $2,500 $4,842
Thomas R. Northenscold......... 9,900 $21,255 32,500 12,500 $3,750 $3,750
Larry G. Paulson............... -- -- 5,000 5,000 $2,500 $2,500
Richard Peterson............... -- -- 15,000 15,000 $2,500 $2,500
- ------------------------
(1) Value is calculated based on the difference between the option exercise
price and the closing price for the common stock on October 31, 2000, as
reported on the Nasdaq National Market, multiplied by the number of shares
underlying the option.
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with
Messrs. Christenson, Malek, Northenscold and Peterson. Under the terms of their
respective employment contracts, each of the officers is required to devote his
full time and effort to the Company. Each employment agreement is
5
renewable annually, contains a one-year non-compete provision and is terminable
by the Company or the officer on 60-days' notice.
REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are made by the
Compensation Committee ("Compensation Committee") of the Board of Directors. The
following report shall not be deemed incorporated by reference into any filing
under the Securities Exchange Act of 1933 or the Securities Exchange Act of
1934.
The Compensation Committee has the authority to handle management of
compensation matters, including establishment of the compensation of the Chief
Executive Officer and incentive compensation for employees of the Company and
serves as the Committee authorized to grant options under the Company's stock
option plans. The Compensation Committee did not meet separately in fiscal 2000,
but took action on a number of matters through written action.
The Company uses various national and local compensation surveys to develop
its compensation strategy and plans. The Compensation Committee also refers to
such surveys for executive compensation purposes. The Board has not used outside
consultants to prepare specific studies but the Compensation Committee would be
free to do so in the exercise of its independent judgment.
There are four components to the Company's executive compensation program:
(1) base salary, (2) bonus, (3) stock options and (4) retirement. The
compensation philosophy of the Company is to be competitive with comparable and
directly competitive companies to attract and motivate highly qualified
employees. To this end, the Compensation Committee has adjusted the mix of the
compensation components from year to year according to the Company's
performance.
BASE SALARY. Executive base salary is adjusted periodically based on
financial results and performance on developmental objectives the Compensation
Committee believes are critical to the Company's long-term progress. These
objectives include, but are not limited to, progress on the Company's current
business plan's objectives and staff development.
BONUS. The Compensation Committee annually determines whether to pay
bonuses and approves executive bonuses based upon the achievement of earnings
and development objectives the Compensation Committee believes are critical to
the Company's long-term progress. Bonuses are payable to executive officers,
managers and key employees based upon the recommendation of the Chief Executive
Officer. The Compensation Committee approves the Chief Executive Officer's share
of the bonus pool. The Company paid bonuses totaling $55,000 to executive
officers with respect to fiscal 2000.
STOCK OPTIONS. The Company's current stock option plans include executive
officers, managers and key employees. In the past, substantially all of the
Company's employees have been designated as key employees. Stock options are
granted to new employees on their hiring date on the recommendation of Company
officers to the Compensation Committee. In addition, Company officers
periodically recommend to the Compensation Committee, for its approval at
regular Board of Directors' meetings, stock option grants to employees based on
merit. Options outstanding under current plans fully vest in a period from one
and a half to four years and expire in five to seven years.
RETIREMENT. The Company sponsors a 401(k) plan for its employees, including
executive officers, under which the Company partially matches employee
contributions at a proportion set by the Company. The Compensation Committee
approves the corporate matching formula for all employees.
CHIEF EXECUTIVE COMPENSATION. Mr. Christenson's compensation for the fiscal
years 1998 through 2000 is shown in the summary compensation table above. The
Compensation Committee increased Mr. Christenson's base salary to $172,000
effective November 1, 2000. The increase in
6
Mr. Christenson's base salary and the $15,000 bonus paid to Mr. Christenson and
were made in recognition of his accomplishments in (i) leading the Company to
its record revenues of $18.3 million; (ii) successfully resolving the Company's
pending litigation; (iii) overseeing the Company successful introduction of the
new PPT861; and (iv) overseeing the Company's increase in international sales.
The Compensation Committee believes that Mr. Christenson has managed the Company
extremely well and has made progress on the Company's business plan objectives.
ROBERT HELLER DAVID MALMBERG P. R. PETERSON
BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS
REPORT OF AUDIT COMMITTEE
The Board of Directors has established an Audit Committee ("Audit
Committee") comprised of Robert Heller (Chair), David Malmberg and P.R.
Peterson. The Audit Committee operates under an Audit Charter, adopted effective
June 9, 2000, except with respect to certain provisions regarding independent
directors which will be effective as of June 1, 2001. Each of the members of the
Committee is an independent director as defined by the Nasdaq National Market
listing standards. A copy of the Audit Charter is attached to this Proxy
Statement as Appendix A.
The Audit Committee of the Board of Directors is responsible for providing
independent, objective oversight of the Company's financial reporting system by
overseeing and monitoring management's and the independent auditors'
participation in the financial reporting process.
The Committee met twice in fiscal year 2000 and has met once in fiscal year
2001. The meetings were designed to facilitate and encourage private
communication between the Committee and the internal auditors and the Company's
independent accountants, PricewaterhouseCoopers LLP.
During these meetings, the Committee reviewed and discussed the audited
financial statements with management and PricewaterhouseCoopers LLP. The
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The discussions with
PricewaterhouseCoopers LLP also included the matters required by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
PricewaterhouseCoopers LLP provided to the Committee the written disclosures
and the letter regarding its independence as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees). This
information was discussed with PricewaterhouseCoopers LLP.
Based on the discussions with management and PricewaterhouseCoopers LLP, the
Committee's review of the representations of management and the report of
PricewaterhouseCoopers LLP, the Committee recommended to the Board that the
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the year ended October 31, 2000 filed with the
Securities and Exchange Commission.
ROBERT HELLER DAVID MALMBERG P. R. PETERSON
BY THE AUDIT COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS
7
PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line graph comparing cumulative, five-year shareholder
returns on an indexed basis with a broad market index and either a
nationally-recognized industry standard or an index of peer companies selected
by the Company. The Company has chosen the use of the Nasdaq Stock Market (U.S.
Companies) Index as its broad market index and the Nasdaq Non-Financial Stocks
Index as its industry standard index. The table below compares the cumulative
total return as of the end of each of the Company's last five fiscal years on
$100 invested as of October 31, 1995, on the Nasdaq Stock Market (U.S.
Companies) Index and the Nasdaq Non-Financial Stocks Index, assuming the
reinvestment of all dividends.
PPT VISION, INC.
COMPARISION OF FIVE YEAR CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FISCAL YEAR ENDING
10/31/9510/31/9610/31/9710/31/9810/31/9910/31/00
PPT Vision, Inc. $100.00 $108.87 $110.48 $83.06 $41.94 $55.65
Nasdaq Stock Market (U.S. Companies) Index $100.00 $118.04 $155.32 $173.77
$293.74 $332.66
Nasdaq Non-Financial Stocks Index $100.00 $115.79 $148.67 $166.01 $293.57
$337.86
8
PROPOSAL #2
PROPOSAL TO GRANT VOTING RIGHTS UNDER
MINNESOTA CONTROL SHARE ACQUISITION ACT
PROPOSAL
At the Annual Meeting, Shareholders will be asked to consider and vote on
the following proposed resolution of shareholders:
"RESOLVED, that pursuant to Section 302A.671, Subd. 4a of
the Minnesota Business Corporation Act, full voting rights
are hereby granted to all shares of common stock, par
value $.10 per share, of PPT VISION, Inc. that are
beneficially owned by P.R. Peterson or over which P.R.
Peterson has or will obtain the right to vote, regardless
of whether such shares were or are acquired in a control
share acquisition as defined in Section 302A.011, Subd.
38, or otherwise, provided that in no event shall P.R.
Peterson be granted voting rights with respect to shares
beneficially owned by him or over which he has or will
obtain the right to vote which exceed 33 1/3% of the
outstanding common stock of PPT VISION, Inc. without a
separate vote of shareholders."
CONTROL SHARE ACQUISITION ACT
Section 302A.671 of the Minnesota Business Corporation Act, and related
definitions (the "Control Share Acquisition Act") can operate to restrict the
voting power of common stock held by a shareholder if the common stock is
acquired in a "control share acquisition" (as defined) and exceeds a certain
percentage voting threshold. There are three thresholds under the Control Share
Acquisition Act: 20%, 33 1/3% and 50% of the outstanding voting power of a
company.
For example, if an "acquiring person" (as defined) acquires common stock in
a control share acquisition that exceeds the 20% threshold, the acquiring person
may only exercise voting power with respect to the number of shares that do not
exceed 20% of the outstanding voting power of that company. The Control Share
Acquisition Act removes the voting power from the number of shares in excess of
the 20% threshold and the voting power is restored only if approved, by the
required votes, by resolution of that company's shareholders.
The acquiring person must ask the company that a resolution be put before
the shareholders for their consideration and vote. The acquiring person must
also file certain information with the company for inclusion in its proxy
statement materials. Finally, if the shareholders approve voting power for those
shares in excess of the threshold and the acquiring person may exceed the next
threshold, the acquiring person loses the voting power for those shares in
excess of the next threshold. For example, an acquiring person who seeks and
obtains approval of the shareholders to vote all of the acquiring persons's
shares over the 20% threshold, may only exercise voting power with respect to
less than 33 1/3%; if the acquiring person's beneficial ownership through a
control share acquisition exceeds 33 1/3%, those shares in excess of 33 1/3%
will become non-voting, unless voting power is restored by the shareholders.
Pursuant to such statute, P.R. Peterson has requested that the Company seek
shareholder approval of the above resolution in connection with the Annual
Meeting. A copy of the control share acquisition provisions is included as
Appendix B attached to this proxy statement. In compliance with the Control
Share Acquisition Act, Mr. Peterson has filed an information statement, a copy
of which is attached hereto as Appendix C. Shareholders are encouraged to read
the information statement prior to executing their proxy.
9
INFORMATION ON MR. P.R. PETERSON'S OWNERSHIP OF COMMON STOCK OF THE COMPANY
Mr. P. R. Peterson, a director of the Company and one of its founders, has
been a shareholder of the Company since its inception. Mr. Peterson has, from
time to time, acquired additional shares of common stock through open market
purchases, exercise of options granted to him by the Company for his service on
the Board of Directors and direct purchases of shares of common stock from the
Company. Mr. Peterson holds shares individually and as trustee for the P. R.
Peterson Co. Keogh Plan (the "Keogh Plan"). Mr. Peterson is also the controlling
shareholder of the parent company of ESI Investment Co. ("ESI"), which holds
shares of common stock of the Company. As the controlling shareholder of ESI's
parent company, Mr. Peterson beneficially owns shares of common stock of the
Company held by ESI.
On September 15, 1999, Mr. Peterson made purchases in the open market which
resulted in an aggregate beneficial ownership of 19.9% of the outstanding common
stock of the Company. These purchases were reported on a Schedule 13D filed with
the Securities and Exchange Commission on October 18, 1999.
On September 27, 1999, the Board of Directors adopted an amendment to Rights
Agreement dated as of June 2, 1999 between PPT VISION, Inc. and Norwest Bank
Minnesota N.A. (now known as Wells Fargo Bank Minnesota N.A.), as Rights Agent.
That amendment allowed Mr. Peterson to beneficially own up to thirty percent
(30%) of the common stock of the Company with triggering the shareholder rights
plan. The twenty percent (20%) limitation under the shareholder rights plan
remains in effect for all shareholders other than Mr. Peterson. The plan is
intended to protect the interests of the Company's shareholders in the event of
abusive or unfair take-over tactics. By a letter agreement dated September 27,
1999, Mr. Peterson agreed that, without the consent of the Board, he would not
exercise any options if the exercise would result in him beneficially owning in
excess of 20% of the voting power of the Company. During the period from
December 17, 1999 through January 31, 2001, Mr. Peterson bought a total of
75,502 shares of common stock in market transactions.
On June 16, 2000, Mr. Peterson purchased 170,000 shares from the Company at
a price of $6.00 per share. As a result of that purchase, Mr. Peterson
beneficially owed 1,280,657 shares, or 23.4% of the then outstanding shares of
common stock of the Company. Section 302A.011, subd. 38, excludes from the
application of the Control Share Acquisition Act shares purchased directly from
the Company.
By a letter dated June 16, 2000, the Company and Mr. Peterson confirmed that
Mr. Peterson had requested that the Company cause the above resolution to be put
to the shareholders at the 2001 Annual Meeting.
At January 31, 2001, Mr. Peterson beneficially owned 1,300,257 shares of
common stock of the Company or 23.7% of the outstanding shares of the Company's
common stock. Of the total number of shares beneficially owned by Mr. Peterson,
202,873 were held individually, 544,800 were held by the Keogh Plan and 549,084
were held by ESI. Of the total number of shares beneficially owned by
Mr. Peterson, 75,502 shares have no voting rights under the Control Share
Acquisition Act, unless voting rights for these shares are approved by the
shareholders of the Company.
VOTE REQUIRED
Under the Control Share Acquisition Provisions, the proposal being presented
would enable Mr. Peterson to vote all common stock that he currently holds, up
to an aggregate of 33 1/3% of the outstanding shares of common stock of the
Company. The proposal must receive the following affirmative votes to be
approved:
(1) The affirmative vote, whether in person or by proxy, of the holders of a
majority of all the outstanding common stock; and
10
(2) The affirmative vote, whether in person or by proxy, of the holders of a
majority of all the outstanding common stock, excluding "interested
shares" as that term is defined in the Minnesota statutes
Under Minnesota Statutes, "interested shares" consist of shares owned by the
acquiring person (i.e. Mr. Peterson), by officers of the Company and by any
employee of the Company who is also a director. As of the record date:
- 5,404,280 shares of common stock were outstanding and entitled to vote at
the Annual Meeting.
- 1,304,400 shares of common stock were considered "interested shares,
"consisting of 1,221,255 shares beneficially owned by Mr. Peterson and
83,185 shares owned by other officers of the Company.
See "Principal Shareholders and Ownership of Management."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE PROPOSAL TO GRANT VOTING RIGHTS TO SHARES HELD BY P.R. PETERSON.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 16, 2000, Mr. P.R. Peterson, a director of the Company, purchased
170,000 shares of the common stock directly from the Company at a price of $6.00
per share for total consideration of $1,020,000. The closing sales price of the
Company's common stock on June 16, 2000 was $5.00 per share, as reported by The
Nasdaq National Market.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as independent accountants for the
Company for a number of years, including the fiscal year ended October 31, 2000.
The Company has selected PricewaterhouseCoopers to serve as the Company's
independent auditors for the year ended October 31, 2001. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting of
Shareholders, will have an opportunity to make a statement if he or she desires
to do so, and will be available to respond to appropriate questions.
AUDIT FEES
The aggregate fees billed to the Company by PricewaterhouseCoopers for
professional services rendered for the audit of the Company's financial
statements for fiscal 2000 and the reviews of the financial statements included
in the Company Forms 10-Q for that year were $50,000.
ALL OTHER FEES
Other than audit fees, the aggregate fees billed to the Company by
PricewaterhouseCoopers for fiscal 2000, none of which were financial information
systems design and implementation fees, were $20,000. The Audit Committee of the
Board of Directors determined that the services performed by
PricewaterhouseCoopers other than audit services are not incompatible with
PricewaterhouseCoopers maintaining its independence.
ANNUAL REPORT
An Annual Report of the Company setting forth the Company's activities and
containing financial statements of the Company for the fiscal year ended
October 31, 2000 accompanies this Notice of Annual Meeting and proxy
solicitation material.
11
SHAREHOLDER PROPOSALS
Rule 14a-8 of the SEC permits shareholders of a company, after timely notice
to the company, to present proposals for shareholder action in the company's
proxy statement where such proposals are consistent with applicable law, pertain
to matters appropriate for shareholder action and are not properly omitted by
company action in accordance with the proxy rules. The PPT VISION, Inc. 2002
Annual Meeting of Shareholders is expected to be held on or about March 15,
2002. Proxy materials for that meeting are expected to be mailed on or about
February 15, 2002. Under SEC Rule 14a-8, shareholder proposals to be included in
the PPT VISION, Inc. proxy statement for that meeting must be received by PPT
VISION, Inc. on or before October 18, 2001. Additionally, if PPT VISION, Inc.
receives notice of a shareholder proposal after January 1, 2002, the proposal
will be considered untimely pursuant to SEC Rules 14a-4 and 14a-5(e) and the
persons named in proxies solicited by the Board of Directors of PPT
VISION, Inc. for its 2002 Annual Meeting of Shareholders may exercise
discretionary voting power with respect to the proposal.
12
SOLICITATION
The cost of soliciting proxies, including the cost of preparing, assembling,
and mailing the proxies and soliciting material, as well as the cost of
forwarding the material to the beneficial owners of stock, will be borne by the
Company. Directors, officers and regular employees of the Company may, without
compensation other than their regular remuneration, solicit proxies personally
or by telephone.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. These
insiders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file, including
Forms 3, 4 and 5. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended October 31, 2000
all Section 16(a) filing requirements applicable to its insiders were complied
with.
OTHER BUSINESS
The management of the Company does not know of any other business to be
presented at the Annual Meeting of Shareholders. If any matter properly comes
before the meeting, however, it is intended that the persons named in the
enclosed form of proxy will vote said proxy in accordance with their best
judgment.
ALL PROXIES PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
SHAREHOLDERS. IF NO DIRECTION IS MADE, PROXIES WILL BE VOTED IN FAVOR OF THE
DIRECTORS.
BY ORDER OF THE BOARD OF DIRECTORS
[/S/ THOMAS G. LOVETT IV]
Thomas G. Lovett IV, SECRETARY
Appendix A Audit Committee Charter
Appendix B Minnesota Control Share Acquisition Act
Appendix C Information Statement of P.R. Peterson
13
APPENDIX A
PPT VISION, INC.
CHARTER OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing and/or
inquiring about:
(a) the financial reports and other financial information provided by
the Corporation to any governmental body or the public;
(b) the Corporation's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established; and
(c) the Corporation'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 Corporation's policies,
procedures and practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
- Serve as an independent and objective party to monitor the
Corporation's financial reporting process.
- Review and appraise the audit efforts of the Corporation's
independent accountants.
- 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.
This Charter is being adopted by the board of directors effective June 9, 2000.
The provisions with respect to independent directors in Section II shall be come
applicable, however, on June 1, 2001 or such earlier date as the Audit Committee
or Board of Directors shall designate.
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 shall not be considered independent if, among other things, he or she
has:
a. been employed by the Corporation or its affiliates in the
current or past three years;
1
b. accepted any compensation from the Corporation or its
affiliates in excess of $60,000 during the previous fiscal
year (except for board service, retirement plan benefits, or
non-discretionary compensation);
c. an immediate family member who is, or has been in the past
three years, employed by the Corporation or its affiliates as
an executive officer;
d. been a partner, controlling shareholder or an executive
officer of any for-profit business to which the Corporation
made, or from which it received, payments (other than those
which arise solely from investments in the Corporation's
securities) that exceed five percent of the Corporation's
consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
e. been employed as an executive of another entity where any of
the company's executives serve on that entity's compensation
committee.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board and shall serve until their
successors are 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 at least four times annually, or more
frequently as circumstances dictate. As part of its 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/or management quarterly to review the Corporation's
financial statements (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 Corporation'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 accountants.
2
3. Review with financial management and/or the independent accountants the
Form 10-Q prior to its filing. The Chair of the Committee may represent the
entire Committee for purposes of this review.
4. Prepare a report to the Board of Directors recommending that the Company's
audited financial statements be included in the Corporation annual Report
on Form 10-k
INDEPENDENT ACCOUNTANTS
1. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness. On an annual
basis, the Committee should review and discuss with the accountants all
significant relationships that the accountants have with the Corporation to
determine the accountants' independence.
2. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
3. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
Corporation's financial statements.
FINANCIAL REPORTING PROCESSES
1. In consultation with the independent accountants, review the integrity of
the Corporation's financial reporting processes, both internal and external
at least annually.
2. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting at least annually.
3. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent accountants or management at least annually.
PROCESS IMPROVEMENT
1. Establish regular and separate systems of reporting to the Audit Committee
by each of management and 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.
2. 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.
3
3. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
4. 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. (This review should be
conducted at an appropriate time subsequent to implementation of changes or
improvements, as decided by the Committee.)
ETHICAL AND LEGAL COMPLIANCE
1. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
2. Review management's monitoring of the Corporation's compliance with the
Corporation's Ethical Code, and ensure that management has the proper
system in place to ensure that Corporation's financial statement, reports
and other financial information disseminated to governmental organizations,
and the public satisfy legal requirements.
3. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading policies.
4. Review, with the Corporation's counsel, any legal matter that could have a
significant impact on the Corporation's financial statements.
5. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee of the Board
deems necessary or appropriate.
4
Appendix B
MINNESOTA STATUTES ANNOTATED
CORPORATIONS
CHAPTER 302A. BUSINESS CORPORATIONS
DEFINITIONS
302A.011. DEFINITIONS
SUBDIVISION 1. SCOPE. For the purposes of this chapter, unless the
language or context clearly indicates that a different meaning is intended, the
words, terms, and phrases defined in this section have the meanings given them.
SUBD. 2. ACQUIRING CORPORATION. "Acquiring corporation" means the
domestic or foreign corporation that acquires the shares of a corporation in an
exchange.
SUBD. 3. ADDRESS. "Address" means mailing address, including a zip
code. In the case of a registered office or principal executive office, the
term means the mailing address and the actual office location which shall not
be a post office box.
SUBD. 4. ARTICLES. "Articles" means, in the case of a corporation
incorporated under or governed by this chapter, articles of incorporation,
articles of amendment, a resolution of election to become governed by this
chapter, a demand retaining the two-thirds majority for shareholder approval of
certain transactions, a statement of change of registered office, registered
agent, or name of registered agent, a statement establishing or fixing the
rights and preferences of a class or series of shares, a statement of
cancellation of authorized shares, articles of merger, articles of abandonment,
and articles of dissolution. In the case of a foreign corporation, the term
includes all documents serving a similar function required to be filed with the
secretary of state or other officer of the corporation's state of incorporation.
SUBD. 5. BOARD. "Board" means the board of directors of a corporation.
SUBD. 6. CLASS. "Class", when used with reference to shares, means a
category of shares that differs in designation or one or more rights or
preferences from another category of shares of the corporation.
SUBD. 6a. CLOSELY HELD CORPORATION. "Closely held corporation" means a
corporation which does not have more than 35 shareholders.
SUBD. 7. CONSTITUENT CORPORATION. "Constituent corporation" means a
corporation or a foreign corporation that:
(1) in a merger is either the surviving corporation or a corporation
that is merged into the surviving organization; or
(2) in an exchange is either the acquiring corporation or a
corporation whose shares are acquired by the acquiring organization.
SUBD. 8. CORPORATION. "Corporation" means a corporation, other than a
foreign corporation, organized for profit and incorporated under or governed by
this chapter.
SUBD. 9. DIRECTOR. "Director" means a member of the board.
SUBD. 10. DISTRIBUTION. "Distribution" means a direct or indirect
transfer of money or other property, other than its own shares, with or without
consideration, or an incurrence or issuance of indebtedness, by a corporation
to any of its shareholders in respect of its shares. A distribution may be in
the form of a dividend or a distribution in liquidation, or as consideration
for the purchase, redemption, or other acquisition of its shares, or otherwise.
1
SUBD. 11. FILED WITH THE SECRETARY OF STATE. "Filed with the secretary
of state" means that a document meeting the applicable requirements of this
chapter, signed and accompanied by a filing fee of $35, has been delivered to
the secretary of state of this state. The secretary of state shall endorse on
the document the word "Filed" and the month, day, and year of filing, record
the document in the office of the secretary of state, and return a document to
the person who delivered it for filing.
SUBD. 12. FOREIGN CORPORATION. "Foreign corporation" means a
corporation organized for profit that is incorporated under laws other than the
laws of this state for a purpose or purposes for which a corporation may be
incorporated under this chapter.
SUBD. 13. GOOD FAITH. "Good faith" means honesty in fact in the
conduct of the act or transaction concerned.
SUBD. 14. INTENTIONALLY. "Intentionally" means that the person
referred to either has a purpose to do or fail to do the act or cause the
result specified or believes that the act or failure to act, if successful,
will cause that result. A person "intentionally" violates a statute if the
person intentionally does the act or causes the result prohibited by the
statute, or if the person intentionally fails to do the act or cause the result
required by the statute, even though the person may not know of the existence
or constitutionality of the statute or the scope or meaning of the terms used
in the statute.
SUBD. 15. KNOW; KNOWLEDGE. A person "knows" or has "knowledge" of a
fact when the person has actual knowledge of it. A person does not "know" or
have "knowledge" of a fact merely because the person has reason to know of the
fact.
SUBD. 16. LEGAL REPRESENTATIVE. "Legal representative" means a person
empowered to act for another person, including, but not limited to, an agent,
officer, partner, or associate of, an organization; a trustee of a trust; a
personal representative; an executor of a will; an administrator of an estate;
a trustee in bankruptcy; and a receiver, guardian, custodian, or conservator of
the person or estate of a person.
SUBD. 17. NOTICE. "Notice" is given by a shareholder of a corporation
to the corporation or an officer of the corporation when in writing and mailed
or delivered to the corporation or the officer at the registered office or
principal executive office of the corporation. In all other cases, "notice" is
given to a person when mailed to the person at an address designated by the
person or at the last known address of the person, or when communicated to the
person orally, or when handed to the person, or when left at the office of the
person with a clerk or other person in charge of the office, or if there is no
one in charge, when left in a conspicuous place in the office, or if the office
is closed or the person to be notified has no office, when left at the dwelling
house or usual place of abode of the person with some person of suitable age
and discretion then residing therein. Notice by mail is given when deposited in
the United States mail with sufficient postage affixed. Notice is deemed
received when it is given.
SUBD. 18. OFFICER. "Officer" means a person elected, appointed, or
otherwise designated as an officer by the board, and any other person deemed
elected as an officer pursuant to section 302A.321.
SUBD. 19. ORGANIZATION. "Organization" means a domestic or foreign
corporation, limited liability company, whether domestic or foreign,
partnership, limited partnership, joint venture, association, business trust,
estate, trust, enterprise, and any other legal or commercial entity.
SUBD. 20. OUTSTANDING SHARES. "Outstanding shares" means all shares
duly issued and not reacquired by a corporation.
SUBD. 21. PARENT. "Parent" of a specified corporation means a
corporation that directly, or indirectly through related corporations, owns
more than 50 percent of the voting power of the shares entitled to vote for
directors of the specified corporation.
SUBD. 22. PERSON. "Person" includes a natural person and an
organization.
2
SUBD. 23. PRINCIPAL EXECUTIVE OFFICE. "Principal executive office"
means an office where the elected or appointed chief executive officer of a
corporation has an office. If the corporation has no elected or appointed chief
executive officer, "principal executive office" means the registered office of
the corporation.
SUBD. 24. REGISTERED OFFICE. "Registered office" means the place in
this state designated in the articles of a corporation as the registered office
of the corporation.
SUBD. 25. RELATED ORGANIZATION. "Related organization" of a specified
corporation means:
(1) a parent or subsidiary of the specified corporation;
(2) another subsidiary of a parent of the specified corporation;
(3) a limited liability company owning, directly or indirectly, more
than 50 percent of the voting power of the shares entitled to vote for
directors of the specified corporation;
(4) a limited liability company having more than 50 percent of the
voting power of its membership interests entitled to vote for governors owned
directly or indirectly by the specified corporation;
(5) a limited liability company having more than 50 percent of the
voting power of its membership interests entitled to vote for governors owned
directly or indirectly either (i) by a parent of the specified corporation or
(ii) a limited liability company owning, directly or indirectly, more than 50
percent of the voting power of the shares entitled to vote for directors of the
specified corporation; or
(6) a corporation having more than 50 percent of the voting power of
its shares entitled to vote for director owned directly or indirectly by a
limited liability company owning, directly or indirectly, more than 50 percent
of the voting power of the shares entitled to vote for directors of the
specified corporation.
SUBD. 26. SECURITY. "Security" has the meaning given it in section
80A.14, subdivision 18.
SUBD. 27. SERIES. "Series" means a category of shares, within a class
of shares authorized or issued by a corporation by or pursuant to its articles,
that have some of the same rights and preferences as other shares within the
same class, but that differ in designation or one or more rights and
preferences from another category of shares within that class.
SUBD. 28. SHARE. "Share" means one of the units, however designated,
into which the shareholders' proprietary interests in a corporation are divided.
SUBD. 29. SHAREHOLDER. "Shareholder" means a person registered on the
books or records of a corporation or its transfer agent or registrar as the
owner of whole or fractional shares of the corporation.
SUBD. 30. SIGNED. (a) "Signed" means that the signature of a person
has been written on a document, as provided in section 645.44, subdivision 14,
and, with respect to a document required by this chapter to be filed with the
secretary of state, means that the document has been signed by a person
authorized to do so by this chapter, the articles or bylaws, or a resolution
approved by the directors as required by section 302A.237 or the shareholders
as required by section 302A.437.
(b) A signature on a document may be a facsimile affixed, engraved,
printed, placed, stamped with indelible ink, transmitted by facsimile or
electronically, or in any other manner reproduced on the document.
SUBD. 31. SUBSIDIARY. "Subsidiary" of a specified corporation means a
corporation having more than 50 percent of the voting power of its shares
entitled to vote for directors owned directly, or indirectly through related
corporations, by the specified corporation.
SUBD. 32. SURVIVING CORPORATION. "Surviving corporation" means the
domestic or foreign corporation resulting from a merger.
3
SUBD. 33. Repealed by Laws 1997, c. 10, art. 1, Section 33.
SUBD. 34. VOTE. "Vote" includes authorization by written action.
SUBD. 35. Repealed by Laws 1982, c. 497, Section 73, eff. March 20,
1982.
SUBD. 36. WRITTEN ACTION. "Written action" means a written document
signed by all of the persons required to take the action described. The term
also means the counterparts of a written document signed by any of the persons
taking the action described. Each counterpart constitutes the action of the
persons signing it, and all the counterparts, taken together, constitute one
written action by all of the persons signing them.
SUBD. 37. ACQUIRING PERSON. "Acquiring person" means a person that
makes or proposes to make a control share acquisition. When two or more persons
act as a partnership, limited partnership, syndicate, or other group pursuant
to any written or oral agreement, arrangement, relationship, understanding, or
otherwise for the purposes of acquiring, owning, or voting shares of an issuing
public corporation, all members of the partnership, syndicate, or other group
constitute a "person."
"Acquiring person" does not include (a) a licensed broker/dealer or
licensed underwriter who (1) purchases shares of an issuing public corporation
solely for purposes of resale to the public and (2) is not acting in concert
with an acquiring person, or (b) a person who becomes entitled to exercise or
direct the exercise of a new range of voting power within any of the ranges
specified in section 302A.671, subdivision 2, paragraph (d), solely as a result
of a repurchase of shares by, or recapitalization of, the issuing public
corporation or similar action unless (1) the repurchase, recapitalization, or
similar action was proposed by or on behalf of, or pursuant to any written or
oral agreement, arrangement, relationship, understanding, or otherwise with,
the person or any affiliate or associate of the person or (2) the person
thereafter acquires beneficial ownership, directly or indirectly, of
outstanding shares entitled to vote of the issuing public corporation and,
immediately after the acquisition, is entitled to exercise or direct the
exercise of the same or a higher range of voting power under section 302A.671,
subdivision 2, paragraph (d), as the person became entitled to exercise as a
result of the repurchase, recapitalization, or similar action.
SUBD. 38. CONTROL SHARE ACQUISITION. "Control share acquisition" means
an acquisition, directly or indirectly, by an acquiring person of beneficial
ownership of shares of an issuing public corporation that, except for section
302A.671, would, when added to all other shares of the issuing public
corporation beneficially owned by the acquiring person, entitle the acquiring
person, immediately after the acquisition, to exercise or direct the exercise
of a new range of voting power within any of the ranges specified in section
302A.671, subdivision 2, paragraph (d), but does not include any of the
following:
(a) an acquisition before, or pursuant to an agreement entered into
before, August 1, 1984;
(b) an acquisition by a donee pursuant to an inter vivos gift not made
to avoid section 302A.671 or by a distributee as defined in section 524.1-201,
clause (10);
(c) an acquisition pursuant to a security agreement not created to
avoid section 302A.671;
(d) an acquisition under sections 302A.601 to 302A.661, if the issuing
public corporation is a party to the transaction;
(e) an acquisition from the issuing public corporation;
(f) an acquisition for the benefit of others by a person acting in
good faith and not made to avoid section 302A.671, to the extent that the
person may not exercise or direct the exercise of the voting power or
disposition of the shares except upon the instruction of others;
(g) an acquisition pursuant to a savings, employee stock ownership, or
other employee benefit plan of the issuing public corporation or any of its
subsidiaries, or by a fiduciary of the plan acting in a fiduciary capacity
pursuant to the plan; or
4
(h) an acquisition subsequent to January 1, 1991, pursuant to an offer
to purchase for cash pursuant to a tender offer all shares of the voting stock
of the issuing public corporation:
(i) which has been approved by a majority vote of the members of a
committee comprised of the disinterested members of the board of the issuing
public corporation formed pursuant to section 302A.673, subdivision 1,
paragraph (d), before the commencement of, or the public announcement of the
intent to commence, the tender offer; and
(ii) pursuant to which the acquiring person will become the owner of
over 50 percent of the voting stock of the issuing public corporation
outstanding at the time of the transaction.
For purposes of this subdivision, shares beneficially owned by a plan
described in clause (g), or by a fiduciary of a plan described in clause (g)
pursuant to the plan, are not deemed to be beneficially owned by a person who
is a fiduciary of the plan.
SUBD. 39. ISSUING PUBLIC CORPORATION. "Issuing public corporation"
means either: (1) a publicly held corporation that has at least 50
shareholders; or (2) any other corporation that has at least 100 shareholders,
provided that if, before January 1, 1998, a corporation that has at least 50
shareholders elects to be an issuing public corporation by express amendment
contained in the articles or bylaws, including bylaws approved by the board,
that corporation is an issuing public corporation if it has at least 50
shareholders.
SUBD. 40. PUBLICLY HELD CORPORATION. "Publicly held corporation" means
a corporation that has a class of equity securities registered pursuant to
section 12, or is subject to section 15(d), of the Securities Exchange Act of
1934.
SUBD. 41. BENEFICIAL OWNER; BENEFICIAL OWNERSHIP. (a) "Beneficial
owner," when used with respect to shares or other securities, includes, but is
not limited to, any person who, directly or indirectly through any written or
oral agreement, arrangement, relationship, understanding, or otherwise, has or
shares the power to vote, or direct the voting of, the shares or securities or
has or shares the power to dispose of, or direct the disposition of, the shares
or securities, except that:
(1) a person shall not be deemed the beneficial owner of shares or
securities tendered pursuant to a tender or exchange offer made by the person
or any of the person's affiliates or associates until the tendered shares or
securities are accepted for purchase or exchange; and
(2) a person shall not be deemed the beneficial owner of shares or
securities with respect to which the person has the power to vote or direct the
voting arising solely from a revocable proxy given in response to a proxy
solicitation required to be made and made in accordance with the applicable
rules and regulations under the Securities Exchange Act of 1934 and is not then
reportable under that act on a Schedule 13D or comparable report, or, if the
corporation is not subject to the rules and regulations under the Securities
Exchange Act of 1934, would have been required to be made and would not have
been reportable if the corporation had been subject to the rules and
regulations.
(b) "Beneficial ownership" includes, but is not limited to,
the right to acquire shares or securities through the exercise of options,
warrants, or rights, or the conversion of convertible securities, or otherwise.
The shares or securities subject to the options, warrants, rights, or
conversion privileges held by a person shall be deemed to be outstanding for
the purpose of computing the percentage of outstanding shares or securities of
the class or series owned by the person, but shall not be deemed to be
outstanding for the purpose of computing the percentage of the class or series
owned by any other person. A person shall be deemed the beneficial owner of
shares and securities beneficially owned by any relative or spouse of the
person or any relative of the spouse, residing in the home of the person, any
trust or estate in which the person owns ten percent or more of the total
beneficial interest or serves as trustee or executor or in a similar fiduciary
capacity, any corporation or entity in which the person owns ten percent or
more of the equity, and any affiliate of the person.
5
(c) When two or more persons act or agree to act as a
partnership, limited partnership, syndicate, or other group for the purposes of
acquiring, owning, or voting shares or other securities of a corporation, all
members of the partnership, syndicate, or other group are deemed to constitute
a "person" and to have acquired beneficial ownership, as of the date they first
so act or agree to act together, of all shares or securities of the corporation
beneficially owned by the person.
SUBD. 42. INTERESTED SHARES. "Interested shares" means the shares of
an issuing public corporation beneficially owned by any of the following
persons: (1) the acquiring person, (2) any officer of the issuing public
corporation, or (3) any employee of the issuing public corporation who is also
a director of the issuing public corporation.
SUBD. 43. AFFILIATE. "Affiliate" means a person that directly or
indirectly controls, is controlled by, or is under common control with, a
specified person.
SUBD. 44. ANNOUNCEMENT DATE. "Announcement date," when used in
reference to any business combination, means the date of the first public
announcement of the final, definitive proposal for the business combination.
SUBD. 45. ASSOCIATE. "Associate," when used to indicate a relationship
with any person, means any of the following:
(1) any corporation or organization of which the person is an officer
or partner or is, directly or indirectly, the beneficial owner of ten percent
or more of any class or series of shares entitled to vote or other equity
interest;
(2) any trust or estate in which the person has a substantial
beneficial interest or as to which the person serves as trustee or executor or
in a similar fiduciary capacity;
(3) any relative or spouse of the person, or any relative of the
spouse, residing in the home of the person.
SUBD. 46. BUSINESS COMBINATION. "Business combination," when used in
reference to any issuing public corporation and any interested shareholder of
the issuing public corporation, means any of the following:
(a) any merger of the issuing public corporation or any subsidiary of
the issuing public corporation with (1) the interested shareholder or (2) any
other domestic or foreign corporation (whether or not itself an interested
shareholder of the issuing public corporation) that is, or after the merger
would be, an affiliate or associate of the interested shareholder, but
excluding (1) the merger of a wholly-owned subsidiary of the issuing public
corporation into the issuing public corporation, (2) the merger of two or more
wholly-owned subsidiaries of the issuing public corporation, or (3) the merger
of a corporation, other than an interested shareholder or an affiliate or
associate of an interested shareholder, with a wholly-owned subsidiary of the
issuing public corporation pursuant to which the surviving corporation,
immediately after the merger, becomes a wholly-owned subsidiary of the issuing
public corporation;
(b) any exchange, pursuant to a plan of exchange under section
302A.601, subdivision 2, or a comparable statute of any other state or
jurisdiction, of shares or other securities of the issuing public corporation
or any subsidiary of the issuing corporation or money, or other property for
shares, other securities, money, or property of (1) the interested shareholder
or (2) any other domestic or foreign corporation (whether or not itself an
interested shareholder of the issuing public corporation) that is, or after the
exchange would be, an affiliate or associate of the interested shareholder, but
excluding the exchange of shares of a corporation, other than an interested
shareholder or an affiliate or associate of an interested shareholder, pursuant
to which the corporation, immediately after the exchange, becomes a
wholly-owned subsidiary of the issuing public corporation;
(c) any sale, lease, exchange, mortgage, pledge, transfer, or other
disposition (in a single transaction or a series of transactions), other than
sales of goods or services in the ordinary course of business or redemptions
pursuant to section 302A.671, subdivision 6, to or with the interested
shareholder or any affiliate or associate of the interested shareholder, other
than to or with the issuing public corporation or a wholly-owned subsidiary of
the issuing public corporation, of assets of the issuing public corporation or
any subsidiary of the issuing public
6
corporation (1) having an aggregate market value equal to ten percent or more
of the aggregate market value of all the assets, determined on a consolidated
basis, of the issuing public corporation, (2) having an aggregate market value
equal to ten percent or more of the aggregate market value of all the
outstanding shares of the issuing public corporation, or (3) representing ten
percent or more of the earning power or net income, determined on a
consolidated basis, of the issuing public corporation except a cash dividend or
distribution paid or made pro rata to all shareholders of the issuing public
corporation;
(d) the issuance or transfer by the issuing public corporation or any
subsidiary of the issuing public corporation (in a single transaction or a
series of transactions) of any shares of the issuing public corporation or any
subsidiary of the issuing public corporation that have an aggregate market
value equal to five percent or more of the aggregate market value of all the
outstanding shares of the issuing public corporation to the interested
shareholder or any affiliate or associate of the interested shareholder, except
pursuant to the exercise of warrants or rights to purchase shares offered, or a
dividend or distribution paid or made, pro rata to all shareholders of the
issuing public corporation other than for the purpose, directly or indirectly,
of facilitating or effecting a subsequent transaction that would have been a
business combination if the dividend or distribution had not been made;
(e) the adoption of any plan or proposal for the liquidation or
dissolution of the issuing public corporation, or any reincorporation of the
issuing public corporation in another state or jurisdiction, proposed by or on
behalf of, or pursuant to any written or oral agreement, arrangement,
relationship, understanding, or otherwise with, the interested shareholder or
any affiliate or associate of the interested shareholder;
(f) any reclassification of securities (including without limitation
any share dividend or split, reverse share split, or other distribution of
shares in respect of shares), recapitalization of the issuing public
corporation, merger of the issuing public corporation with any subsidiary of
the issuing public corporation, exchange of shares of the issuing public
corporation with any subsidiary of the issuing public corporation, or other
transaction (whether or not with or into or otherwise involving the interested
shareholder), proposed by or on behalf of, or pursuant to any written or oral
agreement, arrangement, relationship, understanding, or otherwise with, the
interested shareholder or any affiliate or associate of the interested
shareholder, that has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class or series of shares
entitled to vote, or securities that are exchangeable for, convertible into, or
carry a right to acquire shares entitled to vote, of the issuing public
corporation or any subsidiary of the issuing public corporation that is,
directly or indirectly, owned by the interested shareholder or any affiliate or
associate of the interested shareholder, except as a result of immaterial
changes due to fractional share adjustments;
(g) any receipt by the interested shareholder or any affiliate or
associate of the interested shareholder of the benefit, directly or indirectly
(except proportionately as a shareholder of the issuing public corporation), of
any loans, advances, guarantees, pledges, or other financial assistance, or any
tax credits or other tax advantages provided by or through the issuing public
corporation or any subsidiary of the issuing public corporation.
SUBD. 47. CONSUMMATION DATE. "Consummation date," with respect to any
business combination, means the date of consummation of the business
combination or, in the case of a business combination as to which a shareholder
vote is taken, the later of (1) the business day before the vote or (2) 20 days
before the date of consummation of the business combination.
SUBD. 48. CONTROL. "Control," including the terms "controlling,"
"controlled by," and "under common control with," means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise. A person's beneficial ownership of ten
percent or more of the voting power of a corporation's outstanding shares
entitled to vote in the election of directors creates a presumption that the
person has control of the corporation. Notwithstanding the foregoing, a person
is not considered to have control of a corporation if the person holds voting
power, in good faith and not for the purpose of avoiding section 302A.673, as
an agent, bank, broker, nominee, custodian, or trustee for one or more
beneficial owners who do not individually or as a group have control of the
corporation.
SUBD. 49. INTERESTED SHAREHOLDER. (a) "Interested shareholder," when
used in reference to any issuing public corporation, means any person that is
(1) the beneficial owner, directly or indirectly, of ten percent or more of
7
the voting power of the outstanding shares entitled to vote of the issuing
public corporation or (2) an affiliate or associate of the issuing public
corporation and at any time within the four-year period immediately before the
date in question was the beneficial owner, directly or indirectly, of ten
percent or more of the voting power of the then outstanding shares entitled to
vote of the issuing public corporation. Notwithstanding anything stated in this
subdivision, if a person who has not been a beneficial owner of ten percent or
more of the voting power of the outstanding shares entitled to vote of the
issuing public corporation immediately prior to a repurchase of shares by, or
recapitalization of, the issuing public corporation or similar action shall
become a beneficial owner of ten percent or more of the voting power solely as
a result of the share repurchase, recapitalization, or similar action, the
person shall not be deemed to be the beneficial owner of ten percent or more of
the voting power for purposes of clause (1) or (2) unless:
(i) the repurchase, recapitalization, conversion, or similar action
was proposed by or on behalf of, or pursuant to any agreement, arrangement,
relationship, understanding, or otherwise (whether or not in writing) with, the
person or any affiliate or associate of the person; or
(ii) the person thereafter acquires beneficial ownership, directly or
indirectly, of outstanding shares entitled to vote of the issuing public
corporation and, immediately after the acquisition, is the beneficial owner,
directly or indirectly, of ten percent or more of the voting power of the
outstanding shares entitled to vote of the issuing public corporation.
(b) Interested shareholder does not include:
(1) the issuing public corporation or any of its subsidiaries; or
(2) a savings, employee stock ownership, or other employee benefit
plan of the issuing public corporation or its subsidiary, or a fiduciary of the
plan when acting in a fiduciary capacity pursuant to the plan.
For purposes of this subdivision, shares beneficially owned by a plan
described in clause (2), or by a fiduciary of a plan described in clause (2)
pursuant to the plan, are not deemed to be beneficially owned by a person who
is a fiduciary of the plan.
SUBD. 50. MARKET VALUE. "Market value," when used in reference to
shares or other property of any corporation, means the following:
(1) in the case of shares, the average closing sale price of a share
on the composite tape for New York Stock Exchange listed shares during the 30
trading days immediately preceding the date in question or, with respect to the
references in section 302A.553, subdivision 3, if a person or persons selling
the shares have commenced a tender offer or have announced an intention to seek
control of the corporation, during the 30 trading days preceding the earlier of
the commencement of the tender offer or the making of the announcement, or, if
the shares are not quoted on the composite tape or not listed on the New York
Stock Exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which the shares are listed, or,
if the shares are not listed on any such exchange, on the NASDAQ National
Market, or, if the shares are not quoted on the NASDAQ National Market, on the
NASDAQ Small Cap Market, or any system then in use, or, with respect to the
reference in section 302A.553, subdivision 3, if the person or persons selling
the shares shall have commenced a tender offer or have announced an intention
to seek control of the corporation, during the 30 trading days preceding the
earlier of the commencement of the tender offer or the making of the
announcement, provided that if no quotation is available, the market value is
the fair market value on the date in question of the shares as determined in
good faith by the board of the corporation;
(2) in the case of property other than cash or shares, the fair market
value of the property on the date in question as determined in good faith by
the board of the corporation.
SUBD. 51. SHARE ACQUISITION DATE. "Share acquisition date," with
respect to any person and any issuing public corporation, means the date that
the person first becomes an interested shareholder of the issuing public
corporation; provided, however, that in the event a person becomes, on one or
more dates, an interested shareholder of the issuing public corporation, but
thereafter ceases to be an interested shareholder of the issuing public
8
corporation, and subsequently again becomes an interested shareholder, "share
acquisition date," with respect to that person means the date on which the
person most recently became an interested shareholder of the issuing public
corporation.
SUBD. 52. OFFEROR. "Offeror" means a person who makes or in any way
participates in making a takeover offer. Offeror does not include a bank or
broker-dealer loaning funds to an offeror in the ordinary course of its
business or a bank, broker-dealer, attorney, accountant, consultant, employee,
or other person furnishing information or advice to or performing ministerial
duties for an offeror and not otherwise participating in the takeover offer.
When two or more persons act as a partnership, limited partnership, syndicate,
or other group pursuant to any agreement, arrangement, relationship,
understanding, or otherwise, whether or not in writing, for the purpose of
acquiring, owning, or voting shares of a target company, all members of the
partnership, syndicate, or other group constitute "a person."
SUBD. 53. TAKEOVER OFFER. (a) "Takeover offer" means an offer to
acquire shares of an issuing public corporation from a shareholder pursuant to
a tender offer or request or invitation for tenders, if, after the acquisition
of all shares acquired pursuant to the offer:
(1) the offeror would be directly or indirectly a beneficial owner of
more than ten percent of any class or series of the outstanding shares of the
issuing public corporation and was directly or indirectly the beneficial owner
of ten percent or less of that class or series of the outstanding shares of the
issuing public corporation before commencement of the offer; or
(2) the beneficial ownership by the offeror of any class or series of
the outstanding shares of the issuing public corporation would be increased by
more than ten percent of that class or series and the offeror was directly or
indirectly the beneficial owner of ten percent or more of any class or series
of the outstanding shares of the issuing public corporation before commencement
of the offer.
(b) Takeover offer does not include:
(1) an offer in connection with the acquisition of a share which,
together with all other acquisitions by the offeror of shares of the same class
or series of shares of the issuer, would not result in the offeror having
acquired more than two percent of that class or series during the preceding
12-month period;
(2) an offer by the issuer to acquire its own shares unless the offer
is made during the pendency of a takeover offer by a person who is not an
associate or affiliate of the issuer;
(3) an offer in which the issuing public corporation is an insurance
company subject to regulation by the commissioner of commerce, a financial
institution regulated by the commissioner, or a public service utility subject
to regulation by the public utilities commission.
SUBD. 54. DIVISION OR COMBINATION. "Division" or "combination" means
dividing or combining shares of a class or series, whether issued or unissued,
into a greater or lesser number of shares of the same class or series.
SUBD. 55. ACQUIRING ORGANIZATION. "Acquiring organization" means a
corporation, foreign corporation, or domestic or foreign limited liability
company that acquires in an exchange the shares of a corporation or foreign
corporation or the membership interests of a domestic or foreign limited
liability company.
SUBD. 56. CONSTITUENT ORGANIZATION. "Constituent organization" means a
corporation, foreign corporation, limited liability company or foreign limited
liability company that:
(1) in a merger is either the surviving organization or an
organization that is merged into the surviving organization; or
(2) in an exchange is either the acquiring organization or an
organization whose securities are acquired by the acquiring organization.
9
SUBD. 57. OWNERS. "Owners" means shareholders in the case of a
corporation or foreign corporation and members in the case of a limited
liability company.
SUBD. 58. OWNERSHIP INTERESTS. "Ownership interests" means shares in
the case of a corporation or foreign corporation and membership interests in
the case of a domestic or foreign limited liability company.
SUBD. 59. SURVIVING ORGANIZATION. "Surviving organization" means the
corporation or foreign corporation or domestic or foreign limited liability
company resulting from a merger.
10
MINNESOTA STATUTES ANNOTATED
CORPORATIONS
CHAPTER 302A. BUSINESS CORPORATIONS
MERGER, EXCHANGE, TRANSFER
302A.671. CONTROL SHARE ACQUISITIONS
SUBDIVISION 1. APPLICATION. (a) Unless otherwise expressly provided in
the articles or in bylaws approved by the shareholders of an issuing public
corporation, this section applies to a control share acquisition. A
shareholder's proposal to amend the corporation's articles or bylaws to cause
this section to be inapplicable to the corporation requires the vote set forth
in subdivision 4a, paragraph (b), in order for it to be effective, unless it is
approved by a committee of the board comprised solely of directors who:
(1) are neither officers nor employees of, nor were during the five
years preceding the formation of the committee officers or employees of, the
corporation or a related organization;
(2) are neither acquiring persons nor affiliates or associates of an
acquiring person;
(3) were not nominated for election as directors by an acquiring
person or an affiliate or associate of an acquiring person; and
(4) were directors at the time an acquiring person became an acquiring
person or were nominated, elected, or recommended for election as directors by
a majority of those directors.
(b) The shares of an issuing public corporation acquired by an
acquiring person in a control share acquisition that exceed the threshold of
voting power of any of the ranges specified in subdivision 2, paragraph (d),
shall have only the voting rights as shall be accorded to them pursuant to
subdivision 4a.
SUBD. 2. INFORMATION STATEMENT. An acquiring person shall deliver to
the issuing public corporation at its principal executive office an information
statement containing all of the following:
(a) the identity and background of the acquiring person, including the
identity and background of each member of any partnership, limited partnership,
syndicate, or other group constituting the acquiring person, and the identity
and background of each affiliate and associate of the acquiring person,
including the identity and background of each affiliate and associate of each
member of such partnership, syndicate, or other group; provided, however, that
with respect to a limited partnership, the information need only be given with
respect to a partner who is denominated or functions as a general partner and
each affiliate and associate of the general partner;
(b) a reference that the information statement is made under this
section;
(c) the number and class or series of shares of the issuing public
corporation beneficially owned, directly or indirectly, before the control
share acquisition by each of the persons identified pursuant to paragraph (a);
(d) the number and class or series of shares of the issuing public
corporation acquired or proposed to be acquired pursuant to the control share
acquisition by each of the persons identified pursuant to paragraph (a) and
specification of which of the following ranges of voting power in the election
of directors that, except for this section, resulted or would result from
consummation of the control share acquisition:
(1) at least 20 percent but less than 33-1/3 percent;
(2) at least 33-1/3 percent but less than or equal to 50 percent;
1
(3) over 50 percent; and
(e) the terms of the control share acquisition or proposed control
share acquisition, including, but not limited to, the source of funds or other
consideration and the material terms of the financial arrangements for the
control share acquisition; plans or proposals of the acquiring person
(including plans or proposals under consideration) to (1) liquidate or dissolve
the issuing public corporation, (2) sell all or a substantial part of its
assets, or merge it or exchange its shares with any other person, (3) change
the location of its principal place of business or its principal executive
office or of a material portion of its business activities, (4) change
materially its management or policies of employment, (5) change materially its
charitable or community contributions or its policies, programs, or practices
relating thereto, (6) change materially its relationship with suppliers or
customers or the communities in which it operates, or (7) make any other
material change in its business, corporate structure, management or personnel;
and other objective facts as would be substantially likely to affect the
decision of a shareholder with respect to voting on the control share
acquisition.
If any material change occurs in the facts set forth in the
information statement, including but not limited to any material increase or
decrease in the number of shares of the issuing public corporation acquired or
proposed to be acquired by the persons identified pursuant to paragraph (a),
the acquiring person shall promptly deliver to the issuing public corporation
at its principal executive office an amendment to the information statement
containing information relating to the material change. An increase or decrease
or proposed increase or decrease equal, in the aggregate for all persons
identified pursuant to paragraph (a), to one percent or more of the total
number of outstanding shares of any class or series of the issuing public
corporation shall be deemed "material" for purposes of this paragraph; an
increase or decrease or proposed increase or decrease of less than this amount
may be material, depending upon the facts and circumstances.
SUBD. 3. MEETING OF SHAREHOLDERS. If the acquiring person so requests
in writing at the time of delivery of an information statement pursuant to
subdivision 2, and has made, or has made a bona fide written offer to make, a
control share acquisition and gives a written undertaking to pay or reimburse
the issuing public corporation's expenses of a special meeting, except the
expenses of the issuing public corporation in opposing according voting rights
with respect to shares acquired or to be acquired in the control share
acquisition, within ten days after receipt by the issuing public corporation of
the information statement, a special meeting of the shareholders of the issuing
public corporation shall be called pursuant to section 302A.433, subdivision 1,
for the sole purpose of considering the voting rights to be accorded to shares
referred to in subdivision 1, paragraph (b), acquired or to be acquired
pursuant to the control share acquisition. The special meeting shall be held no
later than 55 days after receipt of the information statement and written
undertaking to pay or reimburse the issuing public corporation's expenses of
the special meeting, unless the acquiring person agrees to a later date. If the
acquiring person so requests in writing at the time of delivery of the
information statement, (1) the special meeting shall not be held sooner than 30
days after receipt by the issuing public corporation of the information
statement and (2) the record date for the meeting must be at least 30 days
prior to the date of the meeting. If no request for a special meeting is made,
consideration of the voting rights to be accorded to shares referred to in
subdivision 1, paragraph (b), acquired or to be acquired pursuant to the
control share acquisition shall be presented at the next special or annual
meeting of the shareholders of which notice has not been given, unless prior
thereto the matter of the voting rights becomes moot. The issuing public
corporation is not required to have the voting rights to be accorded to shares
acquired or to be acquired according to a control share acquisition considered
at the next special or annual meeting of the shareholders unless it has
received the information statement and documents required by subdivision 4 at
least 55 days before the meeting. The notice of the meeting shall at a minimum
be accompanied by a copy of the information statement (and a copy of any
amendment to the information statement previously delivered to the issuing
public corporation) and a statement disclosing that the board of the issuing
public corporation recommends approval of, expresses no opinion and is
remaining neutral toward, recommends rejection of, or is unable to take a
position with respect to according voting rights to shares referred to in
subdivision 1, paragraph (b), acquired or to be acquired in the control share
acquisition. The notice of meeting shall be given at least ten days prior to
the meeting. Any amendments to the information statement received after mailing
of the notice of the meeting must be mailed promptly to the shareholders by the
issuing public corporation.
2
SUBD. 4. FINANCING. Notwithstanding anything to the contrary contained
in this chapter, no call of a special meeting of the shareholders of the
issuing public corporation shall be made pursuant to subdivision 3 and no
consideration of the voting rights to be accorded to shares referred to in
subdivision 1, paragraph (b), acquired or to be acquired pursuant to a control
share acquisition shall be presented at any special or annual meeting of the
shareholders of the issuing public corporation unless at the time of delivery
of the information statement pursuant to subdivision 2, the acquiring person
shall have entered into, and shall deliver to the issuing public corporation a
copy or copies of, a definitive financing agreement or definitive financing
agreements, with one or more responsible financial institutions or other
entities having the necessary financial capacity, for any financing of the
control share acquisition not to be provided by funds of the acquiring person.
A financing agreement is not deemed not definitive for purposes of this
subdivision solely because it contains conditions or contingencies customarily
contained in term loan agreements with financial institutions.
SUBD. 4a. VOTING RIGHTS. (a) Shares referred to in subdivision 1,
paragraph (b), acquired in a control share acquisition shall have the same
voting rights as other shares of the same class or series only if approved by
resolution of shareholders of the issuing public corporation at a special or
annual meeting of shareholders pursuant to subdivision 3.
(b) The resolution of shareholders must be approved by (1) the
affirmative vote of the holders of a majority of the voting power of all shares
entitled to vote including all shares held by the acquiring person, and (2) the
affirmative vote of the holders of a majority of the voting power of all shares
entitled to vote excluding all interested shares. A class or series of shares
of the issuing public corporation is entitled to vote separately as a class or
series if any provision of the control share acquisition would, if contained in
a proposed amendment to the articles, entitle the class or series to vote
separately as a class or series.
(c) To have the voting rights accorded by approval of a resolution of
shareholders, any proposed control share acquisition not consummated prior to
the time of the shareholder approval must be consummated within 180 days after
the shareholder approval.
(d) Any shares referred to in subdivision 1, paragraph (b), acquired
in a control share acquisition that do not have voting rights accorded to them
by approval of a resolution of shareholders shall regain their voting rights
upon transfer to a person other than the acquiring person or any affiliate or
associate of the acquiring person unless the acquisition of the shares by the
other person constitutes a control share acquisition, in which case the voting
rights of the shares are subject to the provisions of this section.
SUBD. 5. RIGHTS OF ACTION. An acquiring person, an issuing public
corporation, and shareholders of an issuing public corporation may sue at law
or in equity to enforce the provisions of this section and section 302A.449,
subdivision 7.
SUBD. 6. REDEMPTION. Unless otherwise expressly provided in the
articles or in bylaws approved by the shareholders of an issuing public
corporation, the issuing public corporation shall have the option to call for
redemption all but not less than all shares referred to in subdivision 1,
paragraph (b), acquired in a control share acquisition, at a redemption price
equal to the market value of the shares at the time the call for redemption is
given, in the event (1) an information statement has not been delivered to the
issuing public corporation by the acquiring person by the tenth day after the
control share acquisition, or (2) an information statement has been delivered
but the shareholders have voted not to accord voting rights to such shares
pursuant to subdivision 4a, paragraph (b). The call for redemption shall be
given by the issuing public corporation within 30 days after the event giving
the issuing public corporation the option to call the shares for redemption and
the shares shall be redeemed within 60 days after the call is given.
3
APPENDIX C
Peter R. (P.R.) Peterson
6111 Blue Circle Drive
Minnetonka, MN 55343
Dated January 16, 2001
Board of Directors
PPT Vision, Inc.
12988 Valley View Road
Eden Prairie, Minnesota 55344
Re: Information Statement under Control Share Acquisition Act,
Minn. Stat. Section 302A.671, Subd. 2
Ladies and Gentlemen:
In June 2000, PPT Vision, Inc. (the "Company") and Mr. Peterson discussed
the application of Minnesota Statutes Section 302A.671 and related definitions
(the "Control Share Acquisition Act" or "Act") to the shares of common stock,
$.10 par value ("Common Stock") of the Company beneficially owned by
Mr. Peterson. Mr. Peterson agreed to provide the information contained herein in
January of 2001 in connection with the Company's annual meeting of shareholders
and the consideration by shareholders of the Company of a resolution to approve
voting rights with respect to certain shares of Common Stock held by
Mr. Peterson.
Pursuant to the Control Share Acquisition Act, the following information
relating to the ownership of the common stock, $.10 par value (the "Common
Stock") of the Company is furnished to the Company as an "information statement"
under Section 302A.671, Subd. 2.
Mr. P.R. Peterson is an "acquiring person" as defined by the Control Share
Acquisition Act. Mr. Peterson is a controlling shareholder of Electro-Sensors,
Inc., the parent company of ESI Investment Co., a Minnesota corporation ("ESI").
ESI also holds shares of the Company's Common Stock. Mr. Peterson is the trustee
of the P.R. Peterson Co. Keogh Plan (the "Plan"), which holds shares of the
Company's Common Stock. For the purposes of the Act, Mr. Peterson is deemed to
beneficially own the Common Stock of the Company held by ESI and the Plan.
Mr. Peterson is a director of the Company and has served in that capacity
from the Company's inception in 1982 to 1995 and again from December 1988 to the
present.
As of October 18, 1999, Mr. Peterson held 19.9% of the Common Stock of the
Company. Mr. Peterson made a series of purchases in the open market and as of
June 16, 2000, Mr. Peterson held 59,402 shares of Common Stock which became
subject to the voting restriction of the Act. Since that time, Mr. Peterson has
continued to purchase shares of the Company's Common Stock in the open market in
control share acquisitions and acquired 170,000 shares of Common Stock from the
Company at a price of $6.00 per share of Common Stock in a transaction which is
not a control share acquisition and was undertaken to provide the Company with
working capital.
As of January 16, 2001, Mr. Peterson has acquired 75,502 shares of the
Company's Common Stock in a "control share acquisition," as defined under the
Control Share Acquisition Act. As a result of the control share acquisition,
Mr. Peterson holds voting power in the election of directors of 23.7%, i.e., in
the range of at least 20 percent but less than 33 1/3 percent.
The following table indicates the total number of shares beneficially owned
by Mr. Peterson as of January 16, 2001, as well as which shares are subject to
restricted voting rights as a result of the Control Share Acquisition Act.
OPTIONS TO
PURCHASE
SHARES OF COMMON STOCK PERCENTAGE OF
COMPANY OF THE COMPANY TOTAL TOTAL SHARES OF TOTAL
COMMON EXERCISABLE BENEFICIALLY COMMON STOCK CONTROL SHARES
NAME OF HOLDER STOCK HELD WITHIN 60 DAYS OWNED OUTSTANDING ACQUIRED
- -------------- ---------- -------------- ------------ --------------- --------------
P.R. Peterson,
individual................... 202,873 3,500 206,373 3.8% 0
--------- ----- --------- ---- ------
P.R. Peterson Co.
Keogh Plan................... 544,800 0 544,800 9.9% 75,502
--------- ----- --------- ---- ------
ESI Investment Co.............. 549,084 0 549,084 10.0% 0
--------- ----- --------- ---- ------
TOTAL.......................... 1,296,757 3,500 1,300,257 23.7%
--------- ----- --------- ---- ------
The shares of the Company's Common Stock involved in the control share
acquisition were purchased on the open market and with available Plan funds.
Mr. Peterson currently has no plans or proposals, including no plans or
proposals under consideration, to (1) liquidate or dissolve the Company, (2)
sell all or a substantial part of its assets, or merge it or exchange its shares
with any other person, (3) change the location of its principal place of
business or its principal executive office or of a material portion of its
business activities, (4) change materially its management or policies of
employment, (5) change materially its charitable or community contributions or
its policies, programs, or practices relating thereto, (6) change materially its
relationship with suppliers or customers or the communities in which it
operates, or (7) make any other material change in its business, corporate
structure, management or personnel.
If any material change occurs in the facts set forth in this information
statement, Mr. Peterson shall promptly deliver to the Company at its principal
executive office an amendment to this information statement containing
information relating to the material change.
/s/ P.R. PETERSON
----------------------------------------------------------------------
P.R. Peterson
PLEASE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
v PLEASE DETACH HERE v
1. Election of directors: 01 Joseph C. Christenson 03 P.R. Peterson / / Vote FOR / / Vote WITHHELD
02 Robert Heller 04 David Malmberg all nominees from all nominees
(except as marked)
-----------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) -----------------------------------------------
/ / For / / Against / / Abstain
2. RESOLVED, that pursuant to Section 302A.671, Subd. 4a of the Minnesota
Business Corporation Act, full voting rights are hereby granted to all
shares of common stock, par value $.10 per share, of PPT VISION, Inc.
that are, or become, beneficially owned by P.R. Peterson or over which
P.R. Peterson has or will obtain the right to vote, regardless of whether
such shares were or are acquired in a control share acquisition as
defined in Section 302A.011, Subd. 38, or otherwise, provided that in
no event shall P.R. Peterson be granted voting rights with respect to
shares beneficially owned by him or over which he has or will obtain the
right to vote which exceed 33 1/3% of the outstanding common stock of
PPT VISION, Inc.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE AND IN FAVOR OF THE DIRECTORS NOMINATED BY MANAGEMENT
IF THERE IS NO SPECIFICATION.
I plan to attend the meeting / /
Date _______________________, 2001
---------------------------------------
---------------------------------------
Signature(s) in Box
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
PPT VISION, INC.
ANNUAL MEETING OF SHAREHOLDERS
MARCH 15, 2001
3:30 p.m.
EDEN PRAIRIE, MN
PPT VISION, INC. PROXY
- --------------------------------------------------------------------------------
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MARCH 15, 2001
The undersigned hereby constitutes and appoints Joseph C. Christenson and
Thomas R. Northenscold, and each of them, with power of substitution, as
attorneys and proxies to appear and vote all of the shares standing in
the name of the undersigned at the Annual Meeting of Shareholders of
PPT VISION, Inc., to be held on March 15, 2001 at 3:30 p.m. local time, in
Eden Prairie, Minnesota and at any adjournment or adjournments thereof:
See reverse for voting instructions.