<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NET PERCEPTIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[NET PERCEPTIONS LOGO]
NET PERCEPTIONS, INC.
7901 FLYING CLOUD DRIVE
MINNEAPOLIS, MINNESOTA 55344
April [ ], 2000
Dear Stockholder:
On [Thursday, May 25,] 2000, Net Perceptions, Inc. will hold its first
annual meeting of stockholders as a public company. On behalf of the Board of
Directors, I am pleased to invite you to join us so that we can report to you on
the activities of Net Perceptions during 1999 and discuss the outlook for 2000.
The meeting will be held at the Minneapolis Hilton & Towers, 1001 Marquette
Avenue, Minneapolis, Minnesota 55403, and is scheduled to begin at 10:00 a.m.
At the annual meeting you will be asked to vote on the following proposals:
(1) election of the directors nominated by your Board of Directors, (2) approval
of an amendment to our Amended and Restated Certificate of Incorporation
increasing the number of authorized shares of our common stock and (3)
ratification of the Board of Directors' selection of PricewaterhouseCoopers LLP
as our independent public accountants for 2000. These proposals are described in
the attached proxy statement which you should read carefully. Your Board of
Directors recommends that you vote in favor of each proposal.
Whether or not you plan to attend the annual meeting, it is important that
your shares be represented. Regardless of the number of shares you own, please
complete, sign, date and return the enclosed proxy card promptly.
We appreciate your continued support.
Sincerely,
Steven J. Snyder
President and Chief Executive Officer
<PAGE> 3
NET PERCEPTIONS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Net Perceptions, Inc.:
The 2000 annual meeting of the stockholders of Net Perceptions, Inc. (the
"Company") will be held at the Minneapolis Hilton & Towers, 1001 Marquette
Avenue, Minneapolis, Minnesota 55403 on [Thursday, May 25,] 2000, at 10:00 a.m.,
for the following purposes:
1. To elect five directors of the Company for a one year term expiring at
the 2001 annual meeting;
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the number of authorized shares
of common stock of the Company from 50,000,000 to 100,000,000, so that
the Company's total authorized capital stock will consist of 100,000,000
shares of common stock, par value $.0001 per share, and 5,000,000 shares
of preferred stock, par value $.0001 per share;
3. To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP, certified public accountants, as independent
public accountants for the Company for fiscal year 2000; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof, which could include adjournment of the
annual meeting to solicit additional proxies.
Stockholders of record at the close of business on [Monday, April 17,] 2000
will be entitled to vote at the annual meeting, whether in person or by proxy.
By Order of the Board of Directors
Thomas M. Donnelly
Secretary
7901 Flying Cloud Drive
Minneapolis, Minnesota 55344
April [ ], 2000
-------------------------
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, WE URGE
YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED. THIS WILL ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE
TRANSACTION OF BUSINESS AT THE ANNUAL MEETING. IF YOU DO ATTEND THE ANNUAL
MEETING, YOU MAY VOTE IN PERSON IF YOU DESIRE TO DO SO, EVEN IF YOU HAVE
RETURNED A PROXY CARD.
-------------------------
<PAGE> 4
NET PERCEPTIONS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [MAY 25,] 2000
GENERAL
We are furnishing this proxy statement to stockholders of record of Net
Perceptions, Inc. ("Net Perceptions" or the "Company") in connection with the
solicitation of proxies for use at the annual meeting of stockholders of the
Company to be held on [Thursday, May 25,] 2000, at 10:00 a.m. at the Minneapolis
Hilton & Towers, 1001 Marquette Avenue, Minneapolis, Minnesota 55403, and at any
adjournments or postponements thereof, for the purposes set forth in the
foregoing notice of annual meeting. The notice of annual meeting, this proxy
statement and the enclosed form of proxy are first being mailed to stockholders
on or about April [ ], 2000.
VOTING SECURITIES, QUORUM AND VOTE REQUIRED
Only holders of record of common stock, par value $.0001 per share, of the
Company (the "Common Stock") as of the close of business on [April 17,] 2000
(the "Record Date"), are entitled to receive notice of and to vote at the annual
meeting. On the Record Date, there were [ ] shares of Common Stock
outstanding, constituting all of the outstanding voting securities of the
Company. Stockholders are entitled to one vote for each share of Common Stock
they held as of the Record Date.
A quorum of stockholders is necessary to hold a valid annual meeting. A
quorum will exist at the annual meeting if the holders of record as of the
Record Date of a majority of the number of shares of Common Stock outstanding as
of the Record Date are present in person or represented by proxy at the annual
meeting. Shares held as of the Record Date by holders who are present in person
or represented by proxy at the annual meeting but who have abstained from voting
or not voted with respect to some or all of such shares on any proposal to be
voted on at the annual meeting will be counted as present for purposes of
establishing a quorum. If a quorum is not initially present at the annual
meeting, it is expected that the meeting will be postponed to solicit additional
proxies.
To be elected as a director at the annual meeting (Proposal No. 1), each
candidate for election must receive a plurality of the votes cast by the
stockholders present in person or represented by proxy at the annual meeting.
Under our Amended and Restated Certificate of Incorporation, the affirmative
vote of the holders of seventy-five percent (75%) of the outstanding shares of
Common Stock is required to approve the proposed amendment to our Amended and
Restated Certificate of Incorporation to increase our authorized shares of
Common Stock from fifty million to one hundred million (Proposal No. 2). The
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy at the annual meeting, provided a
quorum is present, is required to ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for fiscal
year 2000 (Proposal No. 3).
Shares represented by proxies which are marked "WITHHELD" with regard to
the election of directors (Proposal No. 1) will be excluded entirely from the
vote and will have no effect. Shares represented by proxies which are marked
"ABSTAIN" with regard to either or both of the other proposals presented to be
voted on at the annual meeting (Proposal Nos. 2 and 3) will be considered
present in person or represented by proxy at the annual meeting and will have
the effect of a negative vote because approval of those proposals requires
either the affirmative vote of the holders of seventy five percent (75%) of the
outstanding shares of Common Stock (in the case of Proposal No. 2) or of a
majority of the shares of Common Stock present in person or represented by proxy
at the annual meeting (in the case of Proposal No. 3).
A broker "non-vote" occurs with respect to shares as to a proposal when a
broker who holds shares of record in his name is not permitted to vote on that
proposal without instruction from the beneficial owner of the shares and no
instruction is given. Brokers holding your shares in their name will be
permitted to vote such
<PAGE> 5
shares with respect to all of the proposals to be voted on at the annual meeting
without instruction from you, and, accordingly, broker non-votes will not occur
with respect to such proposals.
PROXIES
Voting Your Proxy
You may vote in person at the annual meeting or by proxy. We recommend you
vote by proxy even if you plan to attend the meeting. You can always change your
vote at the meeting.
Voting instructions are included on your proxy card. If you properly give
your proxy and submit it to us in time to vote, one of the individuals named as
your proxy will vote your shares as you have directed.
If you sign and timely return your proxy card but do not indicate how your
shares are to be voted with respect to one or more of the proposals to be voted
on at the annual meeting, your shares will be voted FOR each of such
proposal(s), and the individuals named in the proxy card will have discretionary
authority to vote upon any adjournment of the annual meeting, including for the
purpose of soliciting additional proxies. However, no proxies voted against
Proposal No. 2 or No. 3 will be voted in favor of adjournment of the annual
meeting for the purpose of soliciting additional proxies with respect to such
respective proposals.
How to Vote by Proxy
You may vote by proxy by completing, signing, dating and returning your
proxy card in the enclosed envelope. If you hold your shares through a broker or
other custodian, you should check the voting form used by that firm to see if it
offers telephone or Internet voting.
Revoking Your Proxy
You may revoke your proxy before it is voted by:
- sending in a new proxy with a later date;
- notifying the Secretary of the Company in writing before the annual
meeting that you have revoked your proxy; or
- voting in person at the annual meeting.
Voting in Person
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the meeting. However, if your shares are held in the
name of your broker, bank or other nominee, you must bring a proxy from your
nominee authorizing you to vote your "street name" shares held as of the Record
Date.
PROXY SOLICITATION
This solicitation is made on behalf of our Board of Directors and we will
bear the costs of the solicitation. We have engaged Georgeson Shareholder
Communications Inc. to assist in soliciting proxies for a fee of approximately
$7,500 plus reasonable out-of-pocket expenses. Proxies may also be solicited by
telephone, telegraph, fax or personal interview by the directors, officers and
employees of the Company and its affiliates, who will not receive additional
compensation for the solicitation. We will also reimburse banks, brokerage firms
and other custodians, nominees and fiduciaries for reasonable expenses incurred
by them in sending proxy materials to stockholders.
2
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
Pursuant to our Amended and Restated Bylaws (the "Bylaws"), all of our
directors are elected at each annual meeting of stockholders. The Bylaws provide
that the number of directors shall be fixed from time to time by a majority of
the Board of Directors. Currently, the number of directors has been fixed at
five directors, and there are no vacancies on the Board of Directors. Each
director will hold office until the next annual meeting of stockholders and
until the director's successor is duly elected and qualified, or until the
director's earlier resignation or removal.
Stockholders may withhold authority from the persons named in the enclosed
proxy card to vote for the entire slate of directors as nominated or, by writing
the name of an individual nominee in the space provided on the proxy card, may
withhold the authority to vote for any individual nominee. Instructions on the
accompanying proxy card to withhold authority to vote for one or more of the
nominees will result in such nominees receiving fewer votes. If any nominee
should become unavailable for election as a result of any unexpected occurrence,
such shares will be voted for the election of such substitute nominee as the
Board of Directors may designate. Each person nominated for election has agreed
to serve if elected, and the Board of Directors has no reason to believe that
any nominee will be unavailable to serve.
The names of the nominees for directors nominated by your Board of
Directors and presented for consideration by the stockholders, all of whom are
incumbent directors, their ages, the year in which they became directors of the
Company, and certain other information about them are set forth below.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
Steven J. Snyder.................. Steven J. Snyder co-founded Net Perceptions in July 1996 and
Age 45 since that time has served as our President and Chief
Executive Officer and as a director. From January 1996 to
July 1996, Dr. Snyder served as an independent consultant.
From July 1993 to December 1995, Dr. Snyder served as Vice
President of Software Development at Personnel Decisions
International, Inc., a human resources consulting firm. Dr.
Snyder pursued his doctorate in psychology from 1988 to
1994. From 1983 to 1988, Dr. Snyder was employed by
Microsoft Corporation, where he held several posts including
IBM Account Manager and General Manager of the Language
Business Unit. Dr. Snyder holds a B.S. in mathematics from
Drexel University, an M.B.A. from Harvard University and an
M.A. and a Ph.D. in psychology from the University of
Minnesota.
Douglas J. Burgum................. Douglas J. Burgum became a director of Net Perceptions in
Age 43 January 1999. Mr. Burgum has served as President of Great
Plains Software, Inc., a software company, since March 1984,
Chief Executive Officer since September 1991 and Chairman of
the Board since January 1996. Mr. Burgum holds a B.U.S. from
North Dakota State University and an M.B.A. from Stanford
University.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
William Lansing................... William Lansing became a director of Net Perceptions in May
Age 41 1999. On March 27, 2000, Mr. Lansing became Chief Executive
Officer of NBC Internet Inc. Prior to that time and since
May 1999, Mr. Lansing was Chairman of Fingerhut Companies,
Inc. From May 1998 to May 1999, Mr. Lansing was President of
Fingerhut. From November 1996 to May 1998, Mr. Lansing
served as Vice President for Business Development of General
Electric Corp. From January 1996 to October 1996, he served
as Chief Operating Officer of Prodigy. Mr. Lansing also
serves as director of Digital River, Inc., Select Comfort
Corp., FreeShop.com, Inc. and BigStar Entertainment, Inc.
Mr. Lansing holds a B.A. in English from Wesleyan University
and a J.D. from Georgetown University.
John T. Riedl..................... John T. Riedl co-founded Net Perceptions in July 1996 and
Age 38 since that time has served as a director. In November 1998,
Dr. Riedl became our Chief Scientist. Since September 1998,
Dr. Riedl has worked with us on a part-time basis. From July
1996 until November 1998, Dr. Riedl served as our Chief
Technical Officer. Dr. Riedl has been a professor in the
computer science department at the University of Minnesota
since March 1990. Dr. Riedl holds a B.S. in mathematics from
the University of Notre Dame and an M.S. and a Ph.D. in
computer science from Purdue University.
Ann L. Winblad.................... Ann L. Winblad became a director of Net Perceptions in
Age 49 August 1996. Ms. Winblad has been a General Partner of
Hummer Winblad Venture Partners, a venture capital
investment firm, since 1989. Ms. Winblad is also a director
of The Knot, Inc. and Liquid Audio, Inc. Ms. Winblad holds a
B.A. in mathematics and business administration from the
College of Saint Catherine and an M.A. in education with an
economics focus from the University of St. Thomas.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE-NAMED NOMINEES AS DIRECTORS OF THE COMPANY.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
In addition to the directors set forth above who are executive officers of
the Company, set forth below is certain information concerning non-director
employees who also serve as executive officers of the Company:
Nanci Anderson, age 43, joined Net Perceptions in September 1998 as our
General Manager of Customer Solutions, and in March 1999 was promoted to Vice
President of Customer Solutions. From February 1998 to September 1998, Ms.
Anderson was Technology Services Practice Director for Oracle Corporation, a
software company. From December 1996 to February 1998, Ms. Anderson was Chief
Operating Officer for KeyTech, LLC, a software development firm specializing in
object-oriented and Internet application development services. From April 1995
to December 1996, Ms. Anderson was Area Services Director for Lawson Software
Corporation, a software company.
Paul Bieganski, age 36, joined Net Perceptions in August 1997 as our
Director of Algorithm Development, and in November 1998 became our Chief
Technical Officer. From September 1995 to August 1997, Dr. Bieganski was the
Vice President of Research and Development at Signum Systems, a manufacturer of
embedded systems software and hardware development tools. Dr. Bieganski holds a
B.S., an M.S. and a Ph.D. in computer science from the University of Minnesota.
Thomas Donnelly, age 36, joined Net Perceptions in March 1997 as our
Corporate Controller, and in March 1998 became our Chief Financial Officer. In
February 1999, Mr. Donnelly was appointed Secretary. In July 1999, Mr. Donnelly
also became Senior Vice President of Finance and Administration. From March 1995
to March 1997, Mr. Donnelly served as a financial and management consultant in
the capacity of chief financial officer or corporate controller for various
public and private companies and partnerships,
4
<PAGE> 8
including Net Perceptions, from September 1996 to March 1997. Mr. Donnelly holds
a B.A. in economics from St. Olaf College.
P. Stephen Larsen, age 49, joined Net Perceptions in June 1997 as our Vice
President of Marketing and Business Development. In July 1999, Mr. Larsen became
Senior Vice President of Marketing and Business Development. From August 1996 to
June 1997, Mr. Larsen served as Vice President of Business Development for
CitySearch, Inc., a community-based information service. From July 1995 to
August 1996, Mr. Larsen was President and Managing Partner of Digital Dynamics,
a consulting company. Mr. Larsen holds an A.A. from Rochester State College.
Bradley Miller, age 35, co-founded Net Perceptions in July 1996 and now
serves as our General Manager of Network Personalization Solutions. Prior to
that time and since July 1996, Mr. Miller served as our Vice President of
Product Development. From September 1992 to July 1996, Mr. Miller was a Ph.D.
candidate in Computer Science at the University of Minnesota. Mr. Miller holds a
B.A. in physics and computer science from Luther College and an M.S. in computer
science from the University of Minnesota.
George Moser, age 44, joined Net Perceptions in January 1997 as our
Regional Director of Sales, East Region. In September 1997, Mr. Moser was
appointed Vice President of Worldwide Sales and in July 1999, Mr. Moser became
Senior Vice President of Worldwide Sales. From March 1993 to December 1996, Mr.
Moser was the Director, East Region for Autodesk, Inc., a software company. Mr.
Moser holds a B.S. in management and an M.B.A. from the University of Hartford.
BOARD ACTIONS; COMMITTEES OF THE BOARD OF DIRECTORS
During 1999, the Board of Directors of the Company held eight regular
meetings and acted by unanimous written consent three times.
The Board of Directors has designated two principal standing committees,
the audit committee and the compensation committee. The function of these
committees and the number of meetings held in 1999 are described below.
The audit committee consists of Messrs. Burgum and Lansing and Ms. Winblad,
and met four times during 1999. The audit committee makes recommendations to the
Board of Directors regarding the selection of accountants, reviews the results
and scope of audit and other services provided by the Company's independent
accountants and reviews and evaluates the Company's audit and control functions.
The compensation committee consists of Messrs. Burgum and Lansing and Ms.
Winblad, and met two times during 1999. The compensation committee makes
recommendations regarding the Company's stock plans and makes decisions
concerning salaries and incentive compensation for officers and compensation
policies for employees.
DIRECTOR COMPENSATION
We do not currently provide our directors with cash compensation for their
services as members of the Board of Directors, although members are reimbursed
for some expenses in connection with attendance at Board and committee meetings.
Directors who are also our employees are eligible to participate in our 1999
Equity Incentive Plan. Non-employee directors are eligible for periodic option
grants under our 1999 Non-Employee Director Option Plan.
In January 1999, Mr. Burgum received an option to purchase 30,000 shares of
Common Stock at an exercise price of $5.50 per share. This option is immediately
exercisable. The shares purchasable thereunder are subject to repurchase by us
at the original exercise price paid per share upon the optionee's cessation of
service prior to vesting in such shares. The repurchase right lapses as to the
option shares in a series of 24 equal monthly installments from the grant date,
but will become fully vested if the Board deems it desirable to avoid adverse
accounting treatment with respect to the option. In May 1999, Mr. Lansing
received an option to purchase 20,000 shares of Common Stock at an exercise
price of $17.00 per share. This option vests in
5
<PAGE> 9
equal installments over a 24 month period from the grant date, but vesting will
accelerate to the extent the Board deems it necessary to avoid adverse
accounting treatment for those options.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 31, 2000 by:
- each person who is known by us to beneficially own more than five percent
of the outstanding shares of our Common Stock;
- each of our directors and each named executive officer (as defined
herein); and
- all of our current directors and executive officers as a group.
This information is based upon information received from or on behalf of
the individuals named herein.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Except as indicated in the footnotes to this
table, we believe that each person or entity named in the table has sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to applicable community property laws. The
percentage of beneficial ownership set forth below is based upon 26,304,695
shares of Common Stock outstanding as of the close of business on March 31,
2000. In computing the number of shares of Common Stock beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock that
are subject to options held by that person that are currently exercisable or
exercisable within 60 days of March 31, 2000, are deemed outstanding. These
shares are not, however, deemed outstanding for the purpose of computing the
percentage ownership of any other person.
6
<PAGE> 10
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SUBJECT TO
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OPTIONS(1) PERCENT
------------------------------------ --------- ---------------- -------
<S> <C> <C> <C>
London Pacific Life & Annuity Company(2)................... 2,605,864 -- 9.9%
3109 Poplarwood Court, Suite 108
Raleigh, North Carolina 27604
Norwest Bank Minnesota, N.A.(3)............................ 2,490,378 -- 9.5
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479
Steven J. Snyder........................................... 1,712,650 -- 6.5
7901 Flying Cloud Drive
Minneapolis, Minnesota 55344
Bradley N. Miller.......................................... 1,251,230 1,666 4.8
7901 Flying Cloud Drive
Minneapolis, Minnesota 55344
John T. Riedl.............................................. 900,804 -- 3.4
P. Stephen Larsen.......................................... 381,509 833 1.5
George E. Moser............................................ 64,103 193,749 *
Thomas M. Donnelly......................................... 91,583 75,414 *
Nanci Anderson............................................. 2,254 62,775 *
Ann L. Winblad(4).......................................... 309,913 -- 1.2
Douglas J. Burgum.......................................... 7,143 30,000 *
William Lansing............................................ 10,000 10,000 *
All directors and executive officers as a group (9
persons)................................................. 4,743,889 506,403 20.0
</TABLE>
- -------------------------
* Indicates less than 1% of the total number of outstanding shares of Common
Stock.
(1) Reflects the number of shares issuable upon the exercise of options
exercisable within 60 days of March 31, 2000.
(2) Consists of 1,954,398 shares held by London Pacific Life & Annuity Company
and 651,466 shares held by its affiliate Berkeley International Capital
Limited.
(3) This information is based upon information reported on Wells Fargo &
Company's Schedule 13G filing made with the Securities and Exchange
Commission as of December 31, 1999.
(4) Includes 31,770 shares held by Hummer Winblad Venture Partners III L.P.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers and stockholders who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Based
solely upon a review of Forms 3, 4 and 5 (and amendments thereto) furnished to
the Company during or in respect of the fiscal year ended December 31, 1999, the
Company is not aware of any director or executive officer who has not timely
filed reports required by Section 16(a) of the Exchange Act during or in respect
of such fiscal year, except Messrs. Bieganski and Moser, each of whom filed one
late Form 4 covering one transaction, and Mr. Miller, who filed one late Form 4
covering two transactions.
7
<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to compensation we
paid in 1998 and 1999 for services to us by our chief executive officer and our
four other highest-paid executive officers whose total salary and bonus for 1999
exceeded $100,000. We refer to these officers as our named executive officers in
other parts of this proxy statement.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------
ANNUAL COMPENSATION NUMBER OF SHARES
--------------------- OF COMMON STOCK ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY ($) BONUS($) UNDERLYING OPTIONS COMPENSATION($)
---------------------------- ---- ---------- -------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Steven J. Snyder....................... 1999 150,000 40,000 -- --
President and Chief Executive Officer 1998 130,000 10,000 -- --
P. Stephen Larsen...................... 1999 175,000 25,000 -- --
Senior Vice President of Marketing 1998 175,000 23,500 140,000 --
Nanci Andersen......................... 1999 130,000 21,850 30,000 --
Vice President of Customer Solutions 1998 36,500 -- 40,000 --
Thomas M. Donnelly..................... 1999 125,000 40,000 40,000 --
Senior Vice President of Finance and 1998 94,833 10,000 96,000 --
Administration and Chief Financial
Officer
George E. Moser........................ 1999 125,000 133,600(1) 10,000 --
Senior Vice President of Worldwide 1998 122,500 82,500(2) 140,000 50,000(3)
Sales
</TABLE>
- -------------------------
(1) Includes commissions of $113,600.
(2) Includes commissions of $72,500.
(3) Represents relocation expenses.
OPTION GRANTS IN LAST YEAR
The following table sets forth each grant of stock options in 1999 to each
of the named executive officers. We did not grant any stock appreciation rights
during 1999. The exercise price of each option is equal to the fair market value
of our Common Stock on the date that the grant was approved by the compensation
committee of our Board of Directors.
The potential realizable values are net of the exercise prices and before
taxes associated with the exercise, and are based on the assumption that our
Common Stock appreciates at the annual rate shown from the date of the grant
until the expiration of the ten-year option term. These numbers are calculated
based on the rules of the Securities and Exchange Commission and do not
represent our estimate or projection of future Common Stock prices. The amounts
reflected in the table may not necessarily be achieved. The actual amount the
executive officer may realize will depend upon the extent to which the stock
price exceeds the exercise price of the options on the date the option is
exercised.
8
<PAGE> 12
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF ANNUAL RATES OF STOCK
UNDERLYING TOTAL OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME (#/SH)(1) 1999(%)(2) SHARE($) DATE 5%($) 10%($)
---- ---------- ------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Snyder............... -- -- -- -- -- --
P. Stephen Larsen.............. -- -- -- -- -- --
Nanci Andersen................. 10,000 0.66 5.50 1/26/09 34,589 87,656
20,000 1.33 14.00 4/21/09 176,091 446,248
Thomas M. Donnelly............. 20,000 1.33 5.50 1/26/09 69,178 175,312
16,306 1.08 15.94 7/30/09 163,435 414,177
3,694 0.25 15.94 7/30/09 37,025 93,829
George E. Moser................ 10,000 0.66 15.94 7/30/09 100,230 254,003
</TABLE>
- -------------------------
(1) Options granted under our 1996 Stock Plan are immediately exercisable for
all the option shares, but any shares purchased under those options will be
subject to repurchase by us at the original exercise price paid per share,
upon the optionee's cessation of service, prior to the vesting in those
shares. Options granted under our 1999 Equity Incentive Plan may be
exercised only when, and to the extent, vested. Each of the options has a 10
year term, subject to earlier termination in the event of the optionee's
cessation of service.
(2) Based on an aggregate of 897,936 options granted to our employees under the
1996 Stock Plan and 607,050 options granted to our employees under the 1999
Equity Incentive Plan during the year ended December 31, 1999.
FISCAL YEAR-END OPTION VALUES
The following table provides information concerning the number and value of
the shares of Common Stock underlying unexercised options held by each of the
named executive officers as of December 31, 1999. None of the named executive
officers exercised any options in 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT DECEMBER 31,
DECEMBER 31, 1999(#)(1) 1999($)(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Steven J. Snyder................................. -- -- -- --
P. Stephen Larsen................................ 50,416 89,584 2,095,389 3,714,611
Nanci Andersen................................... 18,124 51,876 689,758 1,876,242
Thomas M. Donnelly............................... 43,457 92,543 1,747,679 3,481,471
George E. Moser.................................. 81,873 118,127 3,401,711 4,787,664
</TABLE>
- -------------------------
(1) Options granted under our 1996 Stock Plan are immediately exercisable for
all the option shares, but any shares purchased under those options will be
subject to repurchase by us at the original exercise price paid per share,
upon the optionee's cessation of service, prior to the vesting in those
shares. Options granted under our 1999 Equity Incentive Plan may be
exercised only when, and to the extent, vested.
(2) The value of unexercised in-the-money options held at December 31, 1999
represents the total gain which would be realized if all of the in-the-money
options held at December 31, 1999 were exercised, and is determined by
multiplying the number of shares of Common Stock underlying the options by
the difference between $42.00, which was the closing price per share of our
Common Stock on the Nasdaq National Market on December 31, 1999, and the
applicable per share option exercise price. An option is in-the-money if the
fair market value of the underlying shares exceeds the exercise price of the
option.
9
<PAGE> 13
CHANGE OF CONTROL ARRANGEMENTS/EMPLOYMENT AGREEMENTS
The compensation committee of the Board of Directors, as administrator of
the 1999 Equity Incentive Plan, can provide for accelerated vesting of the
shares of Common Stock subject to outstanding options held by any of our
employees or directors in connection with certain changes in control of Net
Perceptions. The accelerated vesting may be conditioned on the termination of
the individual's employment following the change in control event.
Some of our officers and employees, including all of our executive
officers, are eligible to participate in our Change in Control Severance Plan.
Under the Change in Control Severance Plan, if an officer's employment is
involuntarily terminated within 18 months after a change in control or the
officer declines a position with the acquirer in a change in control, we will
pay the officer severance benefits equal to six months of base salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee is currently or has been,
at any time since our formation, one of our officers or employees. No member of
our compensation committee serves as a member of the Board of Directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our Board of Directors or compensation committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee makes recommendations regarding the Company's
stock plans and makes decisions concerning salaries and incentive compensation
for officers and compensation policies for employees. Decisions made by the
compensation committee are reported to the full Board of Directors.
COMPENSATION PHILOSOPHY
The general philosophy of the Company's compensation program is to offer
executive officers competitive compensation based both on the Company's
performance and on the individual's contribution and performance. The Company's
compensation policies are intended to motivate, reward and retain highly
qualified executives for long-term strategic management and the enhancement of
stockholder value, to support a performance-oriented environment that rewards
achievement of specific internal Company goals and to attract and retain
executives whose abilities are critical to the long-term success and
competitiveness of the Company.
The Company's executive compensation consists of three key components:
- base salary,
- annual cash bonuses, and
- stock incentives.
Each of these components is intended to complement the others and, taken
together, to satisfy the Company's compensation objectives. The compensation
committee's policies with respect to each of the three components, including the
basis for the compensation awarded to Steven J. Snyder, the Company's chief
executive officer, are discussed below.
BASE SALARY
At the end of each year, the compensation committee reviews the base salary
of the Company's chief executive officer and the recommendation of the chief
executive officer with regard to the base salaries of the other executive
officers of the Company. As part of this review, the compensation committee
considers available national and industry survey data regarding salaries for
comparable positions at comparably sized software and Internet companies to
establish base salary ranges. The compensation committee then approves,
10
<PAGE> 14
with any modifications it deems appropriate, annual base salaries for each of
the executive officers. Annual compensation changes, based on merit and market
factors, take effect on March 1 of each year.
In evaluating Dr. Snyder's performance and setting his salary, the
compensation committee primarily considered the Company's achievement of its
annual financial goals, including revenue growth and return on investment.
ANNUAL CASH BONUS COMPENSATION
Annual cash bonuses for executive officers are intended to reflect the
compensation committee's belief that a portion of the annual compensation of
each executive officer should be contingent upon the performance of the Company,
including revenue and earnings per share annual targets, as well as the
individual contribution of each officer.
STOCK INCENTIVES
The compensation committee meets with the chief executive officer at the
beginning of each year to discuss the incentive compensation programs to be in
effect for the year and the performance targets triggering awards under these
programs. At the end of each year, the compensation committee meets to review
performance and to make awards under these programs.
The Company's executive officers are eligible to participate in the 1999
Equity Incentive Plan, which replaced the Company's 1996 Stock Plan upon the
closing of our initial public offering in April 1999. The types of awards that
may be made under the 1999 Equity Incentive Plan are options to purchase shares
of Common Stock, stock appreciation rights, restricted shares and stock units.
Both incentive stock options and non-qualified options may be granted under the
1999 Equity Incentive Plan. The exercise price for incentive stock options must
be the fair market value of the Common Stock on the option grant date. The
exercise price for non-qualified options must be at least 85% of the fair market
value of the Common Stock on the option grant date.
Options granted at the time of a new employee's hiring generally vest as to
25% of the shares in the first year and thereafter in equal monthly installments
over the next three years. All other options granted under the 1999 Plan vest in
equal monthly installments over a four year period.
The options awarded to the various executive officers are shown in the
table on page 9.
The foregoing report is furnished by the compensation committee of the
Board of Directors.
Douglas J. Burgum
William Lansing
Ann L. Winblad
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have granted options to some of our directors and executive officers.
Please refer to the information under the headings "Option Grants in Last Year"
and "Stock Ownership of Certain Beneficial Owners and Management."
In addition, during 1999, William Lansing, one of our directors, was the
President and Chairman of Fingerhut Companies, Inc, which is one of our
customers. Revenues attributable to sales to Fingerhut for the year ended
December 31, 1999 totaled approximately $1.4 million. We believe these sales
were on terms no less favorable to us than could have been obtained from
unaffiliated third parties.
We have also entered into an indemnification agreement with each of our
officers and directors.
It is our intention to ensure that all future transactions, including
loans, between us and our officers, directors, principal stockholders and their
affiliates, are approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors on the Board of
Directors, and are on terms no less favorable to us than those that we could
obtain from unaffiliated third parties.
11
<PAGE> 15
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares on a cumulative basis the percentage change,
during the period from April 23, 1999 to December 31,1999, in the total
stockholder return on (i) our Common Stock, (ii) the CRSP Total Return Index and
(iii) the Chase H&Q Index. The graph assumes that the value of an investment in
our Common Stock and in each index was $100 on April 23, 1999 and that all
dividends were reinvested.
[EDGAR PRESENTATION OF DATA POINTS USED IN GRAPHIC]
<TABLE>
<CAPTION>
NETP CHASE H&Q INDEX CRSP TOTAL RETURN INDEX
---- --------------- -----------------------
<S> <C> <C> <C>
Jan 99
Feb 99
Mar 99
Apr 99 188.39 97.44 95.77
May 99 121.43 82.02 93.58
Jun 99 155.80 88.67 105.00
Jul 99 113.84 78.21 99.04
Aug 99 117.86 82.33 103.80
Sep 99 122.32 91.14 108.67
Oct 99 114.29 100.77 115.93
Nov 99 269.64 127.01 134.61
Dec 99 300.00 176.43 183.76
</TABLE>
12
<PAGE> 16
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE COMPANY'S AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
GENERAL
The Company's Amended and Restated Certificate of Incorporation currently
authorizes the issuance of 55,000,000 shares of capital stock, consisting of
50,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. At
the annual meeting, stockholders will be asked to consider and vote upon
Proposal No. 2 to approve an amendment to the Amended and Restated Certificate
of Incorporation to increase the number of authorized shares of Common Stock to
100,000,000, so that the Company's total authorized capital stock will consist
of 100,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock.
CURRENT USE OF SHARES
As of March 31, 2000, the Company had 26,304,695 shares of Common Stock
outstanding, 6,035,952 shares of Common Stock reserved for future issuance under
the Company's stock plans, of which 3,127,766 shares are covered by outstanding
options and 2,908,186 shares are available for future grant or purchase. Based
upon the foregoing number of outstanding and reserved shares of Common Stock,
the Company currently has approximately 17,659,353 shares of Common Stock
authorized under its Amended and Restated Certificate of Incorporation available
for other purposes. As of March 31, 2000, there were no shares of Preferred
Stock outstanding.
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has adopted resolutions setting forth the proposed
amendment to the first paragraph of Article IV of the Company's Amended and
Restated Certificate of Incorporation (the "Amendment"), declaring the
advisability of the Amendment and directing that the Amendment be submitted for
consideration by the Company's stockholders at the annual meeting. The following
is the text of the first paragraph of Article IV of the Company's Amended and
Restated Certificate of Incorporation, as proposed to be amended:
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated common stock ("Common Stock") and preferred stock ("Preferred
Stock"). The number of shares of Common Stock authorized to be issued is
One Hundred Million (100,000,000), par value $.0001 per share, and the
number of shares of Preferred Stock authorized to be issued is Five Million
(5,000,000), par value $.0001 per share.
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT
The Board of Directors believes that it is in the Company's best interest
to increase the number of shares of Common Stock that the Company is authorized
to issue. The Board of Directors believes that the availability of additional
authorized but unissued shares of Common Stock will provide the Company with the
flexibility to issue Common Stock for proper corporate purposes which may be
identified in the future, such as to raise capital, to make acquisitions through
the use of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock, to establish strategic relationships with other
companies, to adopt additional employee benefit plans, or reserve additional
shares for issuance under such plans, and to effect stock splits, where the
Board of Directors determines it advisable to do so.
The Board of Directors believes that the proposed increase in the
authorized number of shares of Common Stock will provide a sufficient number of
shares to be used for one or more of the previously mentioned purposes. No
additional action or authorization by the Company's stockholders would be
necessary
13
<PAGE> 17
prior to the issuance of such additional shares, unless required by applicable
law or the rules of any stock exchange or national securities association
trading system on which the Common Stock is then listed or quoted. The Company
reserves the right to seek a further increase in authorized shares of Common
Stock from time to time in the future, as considered appropriate by the Board of
Directors.
Under the Company's Amended and Restated Certificate of Incorporation, the
Company's stockholders do not have preemptive rights with respect to Common
Stock. Therefore, should the Board of Directors decide to issue additional
shares of Common Stock, existing stockholders would not have any preferential
rights to purchase such shares. In addition, if the Board of Directors elects to
issue additional shares of Common Stock, such issuance could have a dilutive
effect on earnings per share, voting power and share holdings of current
stockholders.
The proposed Amendment could, under certain circumstances, have an
anti-takeover effect. For example, in the event of an attempt to take control of
the Company, it may be possible for the Company to endeavor to impede the
attempt by issuing stock, thereby diluting the voting power of the other
outstanding shares, creating possible voting impediments and increasing the cost
to acquire control of the Company. The Amendment therefore may have the effect
of discouraging unsolicited takeover attempts. By potentially discouraging
initiation of any such unsolicited takeover attempt, the proposed Amendment may
limit the opportunity for the Company's stockholders to dispose of their shares
at the higher price generally available in takeover attempts or that may be
available under a merger proposal. The proposed Amendment may have the effect of
permitting the Company's current management, including the current Board of
Directors, to retain its position, and place it in a better position to resist
changes that stockholders may wish to make if they are dissatisfied with the
conduct of the Company's business. However, the Board of Directors is not
currently aware of any attempt to take control of the Company and the Board of
Directors has not presented this proposal in response to any such attempt.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2 TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK FROM FIFTY MILLION TO ONE HUNDRED MILLION.
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The audit committee has selected, and the Board of Directors has approved,
PricewaterhouseCoopers LLP as the Company's independent public accountants for
fiscal year 2000. The Board of Directors has directed that the selection of
independent public accountants be submitted for ratification by the stockholders
at the annual meeting. Stockholder ratification of the selection of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
fiscal year 2000 is not required by the Company's Amended and Restated Bylaws or
otherwise, but is being pursued as a matter of good corporate practice. If
stockholders do not ratify the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
fiscal year 2000, the Board of Directors will consider the matter at its next
meeting.
PricewaterhouseCoopers has audited the Company's consolidated financial
statements since the Company's inception in 1996. It is anticipated that one or
more representatives of PricewaterhouseCoopers will be present at the annual
meeting with an opportunity to make a statement, if desired, and will be
available to answer appropriate questions from stockholders who are present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 3 TO RATIFY THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR FISCAL YEAR 2000.
OTHER MATTERS; ADJOURNMENTS
The Board of Directors knows of no other items of business to be brought
before the annual meeting other than as set forth above. If any other items of
business should properly come before the annual meeting, it is the intention of
the persons named in the enclosed proxy card to vote such proxies in accordance
with their
14
<PAGE> 18
best judgment with regard to any such items. Discretionary authority for them to
do so is contained in the enclosed proxy card.
Adjournments of the annual meeting may be made for the purpose of, among
other things, soliciting additional proxies. An adjournment may be made from
time to time by the chairman of the annual meeting or by approval of the holders
of shares representing a majority of the votes present in person or by proxy at
the annual meeting, whether or not a quorum exists. In their discretion, the
proxies named in the proxy card are authorized to vote upon any adjournment of
the annual meeting, including for the purpose of soliciting additional proxies.
However, no proxies voted against Proposal No. 2 or Proposal No. 3 will be voted
in favor of adjournment of the annual meeting for the purpose of soliciting
additional proxies with respect to such respective proposals.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange Commission,
stockholder proposals intended to be presented in the Company's proxy statement
for the 2001 annual meeting of stockholders must be received at the principal
executive offices of the Company no later than [December 26, 2000] in order to
be considered for inclusion in the Company's proxy statement for that meeting.
Under the Company's Bylaws, proposals of stockholders intended to be
submitted for a formal vote (other than proposals to be included in the
Company's proxy statement) at the 2001 annual meeting of stockholders may be
made only by a stockholder of record who has given notice of the proposal to the
Secretary of the Company at its principal executive offices no later than [March
21, 2001]. The notice must contain certain information as specified in the
Bylaws.
ANNUAL REPORT AND FORM 10-K
The Company is sending, prior to or concurrently with this proxy statement,
to all of its stockholders of record as of [April 17,] 2000, a copy of its
Annual Report for the fiscal year ended December 31, 1999. The Annual Report
contains the Company's certified consolidated financial statements for the
fiscal year ended December 31, 1999.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO NET PERCEPTIONS, INC., 7901
FLYING CLOUD DRIVE, MINNEAPOLIS, MINNESOTA 55344, ATTENTION: INVESTOR RELATIONS.
By Order of the Board of Directors
Thomas M. Donnelly
Secretary
April [ ], 2000
15
<PAGE> 19
NET PERCEPTIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
[MAY 25], 2000
The undersigned, having read the Notice of Annual Meeting of Stockholders and
Proxy Statement dated April [], 2000, receipt of which is hereby acknowledged,
dues hereby appoint and constitute John Roberts and Thomas M. Donnelly, and each
or either of them, the attorneys and proxies of the undersigned, with full power
of substitution to each, for and in the name of the undersigned to vote and act
at the 2000 annual meeting of stockholders of Net Perceptions, Inc. (the
"Company") to be held at the Minneapolis Hilton & Towers, 1001 Marquette Avenue,
Minneapolis, Minnesota 55403, on [Thursday, May 25,] 2000, at 10:00 a.m. and at
any postponement(s) or adjournment(s) thereof, with respect to all shares of
common stock of the Company standing in the name of the undersigned or with
respect to which the undersigned is entitled to vote or act, with all the powers
that the undersigned would possess if personally present and acting, as directed
on the reverse side of this card. In their discretion, the aforesaid proxies,
and each or either or them, or their duly appointed substitute(s) as aforesaid,
are authorized to vote upon any adjournment(s) of the annual meeting, subject to
the limitations set forth on the reverse side of this card, for the election as
a director of such substitute nominee(s) as the Company's Board of Directors may
designate if any of the persons nominated for election as a director and named
on the reverse side of this card is unable to serve or will not serve, and upon
such other business as may properly come before the annual meeting or any
postponement(s) or adjournment(s) thereof and matters incident to the conduct of
the annual meeting or any postponements(s) or adjournment(s) thereof. This proxy
revokes all prior proxies given by the undersigned.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)
7901 Flying Cloud Drive Minneapolis, Minnesota 55344 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE NET
PERCEPTIONS, INC. 2000 ANNUAL MEETING ON [MAY 25], 2000 OR ANY
POSTPONEMENT(S) OR ADJOURNMENT(S) THEREOF.
See reverse for voting instructions
<PAGE> 20
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to [insert Transfer Agent address].
\/ Please detach here \/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. To elect Steven J. Snyder, Douglas J. Burgum, William Lansing, John T.
Riedl and Ann L. Winblad as directors to serve until the 2001 annual
meeting of stockholders and until such director's successor is duly
elected and qualified. If any of such nominees should be unavailable,
the proxies or any of them may, in their discretion vote for such
substitute nominee(s) as the Company's Board of Directors may
designate.
<TABLE>
<S><C>
FOR all nominees listed above WITHHOLD AUTHORITY
(except as marked to the contrary) [ ] to vote for all nominees listed above [ ]
</TABLE>
INSTRUCTION: To withhold authority to vote for one or more individual nominees,
write the nominees name in the space provided below.
--------------------------------------------------------
2. To amend the Company's Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of Common
Stock of the Company from 50,000,000 to 100,000,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent public
accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the named proxies are authorized to vote upon any
adjournment(s) of the annual meeting, provided that if you vote against Proposal
No. 2 or 3 your proxy will not be voted in favor of adjourning the annual
meeting for the purpose of soliciting additional proxies with respect to such
respective proposals.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ABOVE.
IF NO DIRECTION IS MADE WITH RESPECT TO A PROPOSAL, THIS PROXY WILL BE VOTED
WITH RESPECT TO SUCH PROPOSAL AS THE BOARD OF DIRECTORS RECOMMENDS, AND IN THE
DISCRETION OF THE AFORESAID PROXIES, OR THEIR DULY APPOINTED SUBSTITUTE(S) AS
AFORESAID, UPON ANY ADJOURNMENT(S) OF THE ANNUAL MEETING, SUBJECT TO THE
LIMITATIONS SPECIFIED ABOVE, FOR THE ELECTION AS A DIRECTOR OF SUCH SUBSTITUTE
NOMINEE(S) AS THE COMPANY'S BOARD OF DIRECTORS MAY DESIGNATE IF ANY OF THE
PERSONS NOMINATED FOR ELECTION AS A DIRECTOR AND NAMED ABOVE IS UNABLE TO SERVE
OR WILL NOT SERVE, AND UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF AND MATTERS
INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING AND ANY ADJOURNMENT(S) OR
POSTPONEMENT(S) THEREOF.
Address Change? Mark Box [ ]
Indicate changes below: Dated: , 2000
Signature(s) in Box
(if there are co-owners both must sign)
IMPORTANT: Please sign exactly as your
name appears hereon. when signing as
attorney, executor, administrator,
trustee, guardian, etc., give title as
such. If joint account, each joint
owner should sign. Please return your
card in the postage-paid envelope
provided.
See reverse for voting instructions
