<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
TANNING TECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
<PAGE>
[LOGO]
TANNING TECHNOLOGY CORPORATION
April 27, 2000
Dear Stockholder:
It is our pleasure to invite you to the Annual Meeting of Stockholders of
Tanning Technology Corporation, a Delaware corporation, to be held on May 22,
2000 at 3:00 p.m. local time, at the Hilton Hotel, 7801 East Orchard Road,
Englewood, Colorado.
Details of the business to be conducted and the matters to be considered at
the Annual Meeting are given in the attached Notice of Annual Meeting and
Proxy Statement.
It is important that your shares be represented at the meeting, whether or
not you are able to attend personally. You are therefore urged to complete,
sign, date and return the enclosed proxy card promptly in the accompanying
envelope, which requires no postage if mailed in the United States.
You are, of course, welcome to attend the meeting and vote in person, even
if you have previously returned your proxy card or voted by other means.
Sincerely,
/s/ Larry G. Tanning
Larry G. Tanning
Chairman of the Board and
Chief Executive Officer
<PAGE>
TANNING TECHNOLOGY CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders (the "Annual Meeting") of Tanning
Technology Corporation (the "Company") will be held on May 22, 2000 at 3:00
p.m. local time, at the Hilton Hotel, 7801 East Orchard Road, Englewood,
Colorado.
The Annual Meeting will be conducted:
1. To consider and act on the following proposals, which are described in
the accompanying Proxy Statement:
Proposal One: To elect three Class I directors for terms ending at the
2003 Annual Meeting of Stockholders; and
Proposal Two: To ratify the appointment by the Board of Directors of
Ernst & Young LLP as the Company's independent auditor for
the 2000 fiscal year.
2. To transact such other business as may properly come before the Annual
Meeting.
Stockholders of record at the close of business on April 18, 2000 will be
entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Mark W. Reinhardt
Mark W. Reinhardt
Secretary
April 27, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE
ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES, OR IF INSTRUCTIONS THEREFOR ARE INCLUDED IN THIS PACKAGE, BY
TELEPHONE OR ON THE INTERNET.
<PAGE>
TANNING TECHNOLOGY CORPORATION
4600 South Syracuse Street, Suite 1200
Denver, Colorado 80237
----------------
PROXY STATEMENT
This Proxy Statement (the "Proxy Statement") is being furnished to the
stockholders of Tanning Technology Corporation, a Delaware corporation ("We",
"Tanning" or the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders (the "Annual Meeting") of the Company to be held on May 22, 2000
at 3:00 p.m. local time, at the Hilton Hotel, 7801 East Orchard Road,
Englewood, Colorado, and any adjournment or postponement thereof.
At the Annual Meeting, stockholders will be asked to consider and vote upon
the following proposals:
Proposal One: To elect three Class I directors for terms ending at the 2003
Annual Meeting of Stockholders.
Proposal Two: To ratify the appointment by the Board of Directors of Ernst
& Young LLP as the Company's independent auditor for the 2000
fiscal year.
The Board of Directors of the Company recommends a vote FOR approval of
each of the proposals.
The Board of Directors of the Company has fixed the close of business on
April 18, 2000 (the "Annual Meeting Record Date") as the record date for
determining the holders of outstanding shares of common stock, par value $0.01
per share (the "Common Stock"), entitled to receive notice of, and to vote at,
the Annual Meeting or any adjournment thereof. On that date, there were
20,684,282 shares of Common Stock issued and outstanding and entitled to vote
at the Annual Meeting, each entitled to one vote on all matters to be acted
upon. The Notice of Annual Meeting of Stockholders, this Proxy Statement and
the form of proxy card are first being mailed to each stockholder entitled to
vote at the Annual Meeting on or about April 27, 2000.
VOTING AND REVOCATION OF PROXIES
Voting
Only holders of record of shares of Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof. The presence, either
in person or by properly executed proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting and to permit action to be taken by the stockholders at the
Annual Meeting.
The affirmative vote of a plurality of the shares of Common Stock entitled
to vote thereon, present in person or represented by proxy, at the Annual
Meeting is required to elect the directors nominated pursuant to Proposal One.
The affirmative vote of a majority of the shares of Common Stock entitled to
vote thereon, present in person or represented by proxy, is required to
approve Proposal Two.
For purposes of determining the number of votes cast with respect to any
voting matter, only those cast "for" or "against" are included; abstentions
and broker non-votes are excluded. For purposes of determining whether the
affirmative vote of the holders of a majority of the shares entitled to vote
on a proposal and present at the Annual Meeting has been obtained, abstentions
will be included in, and broker non-votes will be excluded from, the number of
shares present and entitled to vote. Accordingly, abstentions will have the
effect of a vote "against" the matter (other than the election of directors)
and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve the majority vote.
1
<PAGE>
All shares of Common Stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated for a particular
proposal on a proxy, such proxy will be voted in accordance with the Board of
Directors' recommendations as set forth herein with respect to such
proposal(s).
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the stockholders entitled to
vote at the Annual Meeting, present in person or represented by proxy, will
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting. If the Company proposes to adjourn the Annual
Meeting by a vote of the stockholders, the persons named in the enclosed form
of proxy will vote all shares of Common Stock for which they have voting
authority in favor of such adjournment.
How to Vote
In addition to voting in person at the meeting, stockholders of record can
vote by proxy by mailing their signed proxy cards.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. Certain of these institutions may
offer telephone and/or Internet voting.
Revocation of Proxies
Any stockholder who executes and returns a proxy may revoke it at any time
prior to the voting of the proxies by giving written notice of revocation to
the Secretary of the Company or by executing a later-dated proxy. In addition,
voting by mail, telephone or Internet will not prevent you from voting in
person at the Annual Meeting should you be present and wish to do so.
2
<PAGE>
PROPOSAL ONE: ELECTION OF DIRECTORS
Three directors are to be elected. The Company's Board of Directors
currently consists of nine directors divided into three classes, Class I, Class
II and Class III, with members of each class holding office for staggered
three-year terms and until their successors have been duly elected and
qualified. There are currently: three Class I Directors, whose terms expire at
the Annual Meeting; three Class II Directors, whose terms expire at the 2001
Annual Meeting of Stockholders; and three Class III Directors, whose terms
expire at the 2002 Annual Meeting of Stockholders (in all cases subject to the
election and qualification of their successors and to their earlier death,
resignation or removal).
If any one or more of the nominees is unable to serve for any reason or
withdraws from nomination, proxies will be voted for the substitute nominee or
nominees, if any, proposed by the Board of Directors. The Board of Directors
has no knowledge that any nominee will or may be unable to serve or will or may
withdraw from nomination.
The Board of Directors has nominated Dan J. Hesser, Toni S. Hippeli and
Michael E. Shanahan for election as Class I Directors at the Annual Meeting for
three-year terms expiring at the 2003 Annual Meeting of Shareholders. Each
nominee has agreed to be named in this Proxy Statement and to serve if elected.
Biographical data on these nominees and the other members of the Board of
Directors is presented under the caption "Directors and Executive Officers" in
this Proxy Statement.
The Board of Directors recommends a vote FOR Dan J. Hesser, Toni S. Hippeli
and Michael E. Shanahan for election as directors to serve in the class with
terms expiring in 2003.
3
<PAGE>
MANAGEMENT OF THE COMPANY
Directors and executive officers
The following table contains information regarding our executive officers
and directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Larry G. Tanning...................... 52 Chairman of the Board, President
and Chief Executive Officer
Bipin Agarwal......................... 39 Director and Executive Vice
President of Strategy, Planning
and New Ventures
Henry F. Skelsey...................... 41 Director, Executive Vice President
and Chief Financial Officer
John N. Piccone....................... 39 Executive Vice President
P. Tracy Currie....................... 38 Senior Vice President of Global
Client Services
Frederick H. Fogel.................... 40 Senior Vice President of Business
Affairs and General Counsel
Mark W. Tanning....................... 47 Vice President of Human Resources
and Administration
Philip A. Purver...................... 41 Vice President of European
Operations
Dan J. Hesser......................... 60 Director
Leo J. Hindery, Jr. .................. 52 Director
Toni S. Hippeli....................... 52 Director
Christopher P. Mahan.................. 33 Director
Joseph P. Roebuck..................... 64 Director
Michael E. Shanahan................... 47 Director
</TABLE>
Larry G. Tanning, a co-founder of Tanning, has been our Chairman of the
Board, President and Chief Executive Officer since January 1997 and served as
the President of our predecessor entities from July 1993. Mr. Tanning has a
B.S. degree in marketing from the University of Minnesota and a M.S. equivalent
degree in business management with the American Management Association in New
York, New York. Larry Tanning and Mark Tanning are brothers.
Bipin Agarwal, a co-founder of Tanning, has been our Executive Vice
President of Strategy, Planning and New Ventures since July 1999 and served as
our Senior Vice President of North American Consulting Operations since July
1998. From August 1997 until June 1998 he was our Senior Vice President of
Business Development and Architecture Practice. Mr. Agarwal was responsible for
our consulting services and those of our predecessors from July 1994 until
August 1997. He has been a director since our incorporation in January 1997.
Mr. Agarwal has a M.S. degree in computer science from Roorkee University,
India.
Henry F. Skelsey has been our Executive Vice President and Chief Financial
Officer since September 1998. He has been a director since our incorporation in
January 1997. From March 1988 until August 1998, Mr. Skelsey was a Managing
Director of AEA Investors Inc., the parent of AEA Tanning Investors Inc., which
is a beneficial owner of our common stock. Since August 1998, Mr. Skelsey has
acted as a consultant to AEA Investors Inc. Mr. Skelsey is also a director of
Dal-Tile International Inc. and Rand McNally & Company. Mr. Skelsey has a
M.B.A. from the Darden School at the University of Virginia and a B.S. degree
in economics and finance from George Mason University.
John N. Piccone joined Tanning as our Vice President of Strategy and
Marketing in April 1999, becoming our Chief Operating Officer in June 1999, and
is now serving as an Executive Vice President. From November 1993 until January
1999, Mr. Piccone served as a Senior Vice President at Cambridge Technology
Partners, an information technology consulting services company. He was a
member of Cambridge Technology Partners' executive committee from October 1997
until January 1999. Mr. Piccone has a B.S. degree in chemical engineering from
the Massachusetts Institute of Technology.
4
<PAGE>
P. Tracy Currie has been our Senior Vice President of Global Client Services
since February 2000 and served as our Senior Vice President of International
Operations since July 1999. Mr. Currie was our Vice President--International
from October 1998 until July 1999, and was our Vice President--Service Delivery
from May 1996 until October 1998. Mr. Currie was the Director of UNIX Computing
at McKesson Corporation, a healthcare company, from March 1995 until April 1996
and he was McKesson's Manager of Client Network Computing from August 1993
until March 1995. Mr. Currie has a B.S. degree in computer science engineering
from Montana State University.
Frederick H. Fogel has been our Senior Vice President of Business Affairs
and General Counsel since February 2000 and joined us as Vice President of
Business Affairs and General Counsel in July 1999. Mr. Fogel has been a partner
at the law firm of Fried, Frank, Harris, Shriver & Jacobson since 1992, and was
an associate at the firm from 1986 to 1992. Mr. Fogel continues to be a partner
at this law firm. Mr. Fogel has a J.D. and an A.B. degree in philosophy from
Harvard University.
Mark W. Tanning has been our Vice President of Human Resources and
Administration since January 1997. He was the Director of Human Resources at HB
Fuller Company, a multinational specialty chemicals company, from July 1988
until December 1996 and the Director of International Human Resources at HB
Fuller from June 1986 until July 1988. Mr. Tanning has B.A. and M.A. degrees in
economics and business administration from the University of Minnesota. Mr.
Tanning also has a professional certification degree from the Wharton School
and has done post-graduate studies in industrial relations. Mark Tanning and
Larry Tanning are brothers.
Philip A. Purver has been our Vice President of European Operations since
March 1999. Mr. Purver served as Commercial Vice President--Europe at Cambridge
Technology Partners from December 1998 until March 1999 and Director of Sales--
Europe from December 1997 until December 1998. He was Cambridge Technology
Partners' Western European Director of Sales from October 1995 until December
1997. Mr. Purver was the Sales Director for Easel UK Limited, a software
development company, from August 1994 until October 1995. From 1993 until
August 1994, he was in charge of international business development at Legent
P.L.C., a software development company. Mr. Purver has a BSc. in mathematics
and geography from Exeter University, England.
Dan J. Hesser has been a Director since November 1999. Mr. Hesser most
recently served as Chairman, President and Chief Executive Officer of INVESCO
Funds, a mutual fund management company, where he worked for the past 37 years.
Mr. Hesser is currently the Chairman of the Board of the American Medical
Center and a director of the Colorado Symphony Association.
Leo J. Hindery, Jr. has been a Director since November 1999. Mr. Hindery has
been the Chief Executive Officer of Global Crossing Ltd. since March 2000, and
has been the Chairman and Chief Executive Officer of GlobalCenter Inc., the
Internet commerce services subsidiary of Global Crossing Ltd., since December
1999. From March 1999 to November 1999 Mr. Hindery served as President and
Chief Executive Officer of AT&T's Broadband & Internet Services, and from
February 1997 to February 1999, he was President of Tele-Communications, Inc.
(TCI). Mr. Hindery was the founder and Managing General Partner of Intermedia
Partners from 1988 to February 1997.
Toni S. Hippeli, a co-founder of Tanning, has been with us since November
1994. She has been a Director since our incorporation in January 1997 and had
been a managing partner of our predecessor since January 1995. Ms. Hippeli has
been the owner of Hippeli Enterprises, a business and financial consulting firm
and a beneficial owner of our common stock, since December 1991. From October
1982 until selling the company to BMC Software in July 1991, Ms. Hippeli was
the co-founder and President of Integrity Solutions, a mainframe computer
software company. Ms. Hippeli has a B.A. degree in psychology from the
University of Colorado.
Christopher P. Mahan has been a Director since our incorporation in January
1997. Mr. Mahan has been a Principal at AEA Investors Inc. since December 1997
and has been associated with AEA Investors Inc. since
5
<PAGE>
August 1991. AEA Investors Inc. is the parent of AEA Tanning Investors Inc.,
which is a beneficial owner of our common stock. From August 1989 to August
1991, Mr. Mahan was a consultant with Bain & Company, a management consulting
company. Mr. Mahan is also a Director of Rand McNally & Company. Mr. Mahan has
a B.A. degree in economics and history from Amherst College.
Joseph P. Roebuck has been a Director since April 1999. Mr. Roebuck has been
Vice President--Strategic Sales of Sun Microsystems Inc., a computer hardware
company, since November 1998. He was Vice President of Worldwide Sales at Sun
Microsystems from June 1990 until November 1998. Mr. Roebuck joined Sun
Microsystems in 1983 as the Vice President of Sales. Mr. Roebuck has an A.B. in
business administration from Cornell University.
Michael E. Shanahan has been a director since July 1999. Mr. Shanahan has
been the Vice President of Football Operations for the Denver Broncos, a
National Football League franchise, since April 1999. He has been the coach and
general manager of the Broncos since January 1995. Mr. Shanahan has a B.A.
degree and a M.A. degree from Eastern Illinois University.
Board of directors
Our board of directors is currently composed of nine directors.
Our certificate of incorporation divides the board of directors into three
classes: Class I, whose terms will expire at the Annual Meeting, Class II,
whose terms will expire at the annual meeting of stockholders to be held in
2001, and Class III, whose terms will expire at the annual meeting of
stockholders to be held in 2002. Our Class I directors are Toni S. Hippeli,
Michael E. Shanahan and Dan J. Hesser. Our Class II directors are Christopher
P. Mahan, Joseph P. Roebuck and Leo J. Hindery, Jr. Our Class III directors are
Larry G. Tanning, Bipin Agarwal and Henry F. Skelsey. At each annual meeting of
stockholders beginning in 2000, the successors to directors whose terms will
then expire will be elected to serve from the time of election and
qualification until the third annual meeting following election.
In addition, our certificate of incorporation provides that the authorized
number of directors may be changed only by resolution of the board of
directors. Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as
nearly as possible, each class will consist of one-third of the total number of
directors.
Holders of approximately 62% of the outstanding shares of our common stock
are parties to an agreement under which they have agreed to vote in favor of
their nominees to our board of directors. As a result of their voting power,
they will have the ability to cause their nominees to be elected. See "Certain
Relationships and Transactions with Related Parties--Stock Purchase Agreement,
Shareholder Agreement and Registration Rights Agreement."
Committees of the board of directors and meetings
The Board of Directors held 6 meetings in 1999. Other than Mr. Roebuck and
Mr. Shanahan, no director attended fewer than 75% of the aggregate of such
meetings of the Board and of the committees of the Board on which he or she
served. Our committees consist of an audit committee and a compensation
committee.
The audit committee recommends the annual appointment of our auditors with
whom the audit committee reviews the scope of audit and non-audit assignments
and related fees, accounting principles we use in financial reporting, internal
auditing procedures and the adequacy of our internal control procedures. During
1999, until November 9, 1999, our audit committee was composed of Bipin
Agarwal, Toni S. Hippeli and Christopher P. Mahan. Thereafter its members were
and continue to be Dan J. Hesser, Toni S. Hippeli and Christopher P. Mahan. The
audit committee held one meeting during 1999.
6
<PAGE>
The compensation committee reviews and approves the compensation and
benefits for our employees, directors and consultants, administers our employee
benefit plans, authorizes and ratifies stock option grants and other incentive
arrangements and authorizes employment and related agreements. During 1999,
until July 22, 1999, our compensation committee was composed of Larry G.
Tanning, Bipin Agarwal, Henry F. Skelsey and Christopher P. Mahan. Thereafter,
its members were and continue to be Christopher P. Mahan, Joseph P. Roebuck and
Michael E. Shanahan. The compensation committee held one meeting during 1999,
and acted four times during 1999 by unanimous written consent of its members.
Compensation of directors
Directors who are also our employees receive no additional compensation for
their services as directors. Directors who are not our employees will not
receive a fee for attendance in person at meetings of our board of directors or
committees of our board of directors, but they will be reimbursed for travel
expenses and other out-of-pocket costs incurred in connection with the
attendance of meetings. Directors who are not our employees or employees of AEA
Investors Inc. will be eligible to receive options to purchase our common stock
in connection with their appointment to our board of directors.
In connection with his election to the board of directors, we granted Mr.
Hesser options to purchase 50,000 shares of our common stock at an exercise
price of $34.125 per share. Options to purchase 12,500 shares were immediately
exercisable. Options to purchase another 12,500 shares will vest on the first
anniversary of their grant date and the remaining options will vest over the
succeeding two years.
In connection with his election to the board of directors, we granted Mr.
Hindery options to purchase 50,000 shares of our common stock at an exercise
price of $34.125 per share. Options to purchase 12,500 shares were immediately
exercisable and were exercised. Options to purchase another 12,500 shares will
vest on the first anniversary of their grant date and the remaining options
will vest over the succeeding two years.
In connection with his election to the board of directors, we granted Mr.
Roebuck options to purchase 49,108 shares of our common stock at an exercise
price of $5.35 per share. Options to purchase 16,369 shares were immediately
exercisable and were exercised; the remaining options will vest over the
succeeding four years.
In connection with his engagement as a consultant and his election to the
board of directors, we granted Mr. Shanahan options to purchase 49,108 shares
of our common stock at an exercise price of $5.35 per share. Options to
purchase 16,369 shares were immediately exercisable and were exercised; the
remaining options will vest over the succeeding four years.
Executive officers
Our board of directors appoints our executive officers. Our executive
officers serve at the discretion of our board of directors.
Employment and non-competition agreements
We have entered into an employment agreement, as amended to date, with Larry
G. Tanning, providing for his employment as our President and Chief Executive
Officer. Pursuant to the agreement, Mr. Tanning is entitled to an annual salary
of $206,500.
If we terminate Mr. Tanning's employment without cause (as defined in the
employment agreement) or we constructively terminate (as defined in the
employment agreement) Mr. Tanning's employment, we are required to pay Mr.
Tanning (1) any unpaid portion of his annual salary earned through the date of
termination, (2) the annual bonus, if any, for the fiscal year immediately
preceding the fiscal year of termination to the extent not already paid and (3)
during a period of twelve months following termination, an amount equal to his
annual
7
<PAGE>
salary at the time of termination. In addition, Mr. Tanning (and each other
currently employed Named Executive Officer, as defined below in "Executive
Compensation," and certain other employees) is entitled to a gross-up payment
in the event he is subject to a federal excise tax resulting from payments or
benefits received in connection with a change in control of our company. Mr.
Tanning is also subject to customary non-competition, non-solicitation and non-
disclosure covenants.
We have entered into an employment agreement, as amended to date, with Bipin
Agarwal pursuant to which he is entitled to an annual salary of $192,500.
If we terminate Mr. Agarwal's employment without cause (as defined in the
employment agreement) or we constructively terminate (as defined in the
employment agreement) Mr. Agarwal's employment, we are required to pay to Mr.
Agarwal (1) any unpaid portion of his annual salary earned through the date of
termination, (2) the annual bonus, if any, for the fiscal year immediately
preceding the fiscal year of termination to the extent not already paid and (3)
during a period of twelve months following termination, an amount equal to his
annual salary at the time of termination. Mr. Agarwal is also subject to
customary non-competition, non-solicitation and non-disclosure covenants.
We have entered into an employment agreement with P. Tracy Currie dated June
1, 1997. Pursuant to the agreement, Mr. Currie is entitled to an annual salary
of $250,000, and is eligible to receive an annual bonus of between 13% and 80%
of his annual salary upon attainment of performance goals, which is based upon
attainment of performance targets involving the following: (1) revenue, and (2)
earnings (before deductions for interest, taxes, depreciation and
amortization). If we attain 100% of our target performance goals for a fiscal
year, Mr. Currie's maximum bonus opportunity for that fiscal year will equal
approximately 55% of his base salary.
If we terminate Mr. Currie's employment without cause (as defined in the
employment agreement) or we constructively terminate (as defined in the
employment agreement) Mr. Currie's employment after he completes one year of
continuous service, we are required to provide to Mr. Currie nine months of
annual base salary and benefits coverage continuation and the post-termination
period during which Mr. Currie will be subject to non-competition and non-
disclosure provisions will be reduced from one year to nine months. If we
terminate Mr. Currie's employment without cause or we constructively terminate
Mr. Currie's employment after three years of continuous service or after a
change in control of our company, we are required to provide to Mr. Currie one
year of base salary and benefits coverage continuation. The employment
agreement also contains customary non-competition, non-solicitation and non-
disclosure covenants.
We have also entered into an employment and expatriate assignment agreement
with Mr. Currie dated November 15, 1998, specifying the terms and conditions of
his employment while on an expatriate assignment in London, England. Pursuant
to the expatriate agreement, Mr. Currie is entitled to the same base salary and
bonus schedule as under his employment agreement, and he is entitled to
additional compensation primarily to make up for cost of living differentials
while working in London.
We have entered into an employment agreement with Louis A. D'Alessandro
dated February 1, 1999. Pursuant to the agreement, Mr. D'Alessandro is entitled
to an annual salary of $175,000, and for fiscal 1999 is eligible to receive an
annual bonus of between 16% and 87% of his annual salary upon attainment of
performance goals, which for fiscal 1999 is based upon attainment of
performance targets involving the following: (1) domestic revenue, (2) domestic
technical services cost as a percentage of revenue, (3) domestic earnings
(before deductions for interest and taxes), and (4) management and
organizational objectives. Mr. D'Alessandro is guaranteed a minimum bonus of
$48,125 for 1999. The employment agreement contains customary non-competition,
non-solicitation and non-disclosure covenants.
We have entered into an employment agreement with Mark Tanning, as amended
to date, pursuant to which he is entitled to an annual salary of $155,000. If
we constructively terminate (as defined in the employment agreement) Mark
Tanning's employment, we are required to provide to Mark Tanning six months
8
<PAGE>
of annual base salary and benefits coverage continuation. If we terminate Mark
Tanning's employment without cause or we constructively terminate Mark
Tanning's employment after three years of continuous service or after a change
in control of our company, we are required to provide to Mark Tanning nine
months of base salary and benefits coverage continuation. The employment
agreement contains customary non-competition, non-solicitation and non-
disclosure covenants.
We have entered into an employment agreement with John Piccone, as amended
to date, pursuant to which he is entitled to an annual salary of $175,000. If
we terminate Mr. Piccone's employment without cause, we are required to provide
to Mr. Piccone six months of annual base salary. The employment agreement also
contains customary non-competition, non-solicitation and non-disclosure
covenants.
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES
Stock Purchase Agreement, Shareholder Agreement and Registration Rights
Agreement
Tanning, Tanning's founders, and the TTC Investors Group are parties to a
stock purchase agreement dated as of December 24, 1996, as amended. Under this
agreement, the TTC Investors Group purchased an aggregate of 5,696,770 shares
of our common stock for an aggregate consideration of $14.6 million.
Larry G. Tanning, Bipin Agarwal, Toni Hippeli and entities controlled by
them, together with the TTC Investors Group have entered into an amended and
restated shareholder agreement dated as of July 20, 1999, which provides, among
other things:
. the TTC Investors Group may nominate one director to Class II of our
board of directors;
. Tanning Family Partnership, L.L.L.P., which is indirectly controlled by
Larry G. Tanning, and WinSoft Corporation, which is controlled by Bipin
Agarwal, each may nominate one director to any class of our board of
directors;
. the TTC Investors Group may appoint one member to each of the audit and
compensation committees; and
. all of the parties to the shareholder agreement have agreed to vote the
shares of common stock owned by them in favor of each other's nominees.
If there are insufficient vacancies in a particular class of directors, the
available positions shall be allocated first to the nominee of the TTC
Investors Group (as to Class II only), second to the nominee of Tanning Family
Partnership, L.L.L.P., and third to the nominee of WinSoft Corporation. The
rights of each person mentioned above will terminate when such person no longer
owns at least ten percent of our common stock.
The parties to the stock purchase agreement and affiliated entities,
together with Mr. Skelsey, have entered into an amended and restated
registration rights agreement dated as of July 20, 1999, which provides, among
other things:
. the TTC Investors Group has the right to require the filing of a total
of two registration statements with the SEC to register for sale shares
of our common stock owned by it, or, under certain circumstances, by the
persons who were members of the limited liability companies comprising
the TTC Investors Group;
. holders of a majority of the shares of our common stock held by
Tanning's founders and Mr. Skelsey have the right to require the filing
of one registration statement with the SEC during any twelve month
period to register for sale shares of our common stock owned by them;
. the Company has the right to participate in any of the registrations
described above and sell shares of its common stock under such
registration to the extent of 25% of the shares to be sold in such
offering; and
9
<PAGE>
. all parties to the registration rights agreement have rights to
participate in registration statements filed by Tanning for the sale of
common stock in an underwritten offering for its own account, subject to
the ability of the underwriters to limit the number of shares included
in the registration and giving priority to issuances by Tanning.
The existence and exercise of these registration rights may make it more
difficult for us to arrange future financing and may have an adverse effect on
the market price of our common stock.
Loans to our directors and officers
On October 15, 1999, we extended a loan to Philip A. Purver in the amount of
$100,000. The loan bears interest at 6.02% per annum and will be repaid on a
periodic basis from Mr. Purver's earned bonus payments. All outstanding
principal and unpaid interest on the loan is repayable on October 15, 2004.
On November 12, 1999, we extended a loan to Mark W. Tanning in the amount of
$100,000. The loan bears interest at 6.02% per annum and will be repaid on a
periodic basis from Mr. Tanning's earned bonus payments. All outstanding
principal and unpaid interest on the loan is repayable on November 12, 2004.
For more information in connection with loans to our directors and officers,
see "Compensation Committee Interlocks and Insider Participation."
Agreements with family members of our directors and officers
In connection with an agreement entered into between our company and Mr.
Jerome Nickerson, husband of Ms. Hippeli, as of January 1997, Mr. Nickerson
received a commission on the sale of a software product by one of our
subsidiaries in the amount of approximately $100,000, of which approximately
$85,000 has been paid, and $15,000 of which will be paid between now and
September 1, 2000. In addition, Mr. Nickerson also received approximately
$18,000 in wage compensation in 1998.
For more information relating to agreements with family members of our
directors and officers, see "Compensation Committee Interlocks and Insider
Participation."
Fees paid to related parties
Stephen Brobst, a significant stockholder, has served as a consultant on
project engagements. We paid Mr. Brobst $240,000 for consulting services in
1996, $790,535 for consulting services in 1997, $293,502 for consulting
services in 1998 and $338,101 for consulting services in 1999. In addition, in
connection with the stock purchase agreement, we paid Mr. Brobst a sign-on
bonus of $413,422 in 1997.
We paid a fee of $250,000 to AEA Investors Inc., the parent of AEA Tanning
Investors Inc., which is a beneficial owner of our common stock, for strategic
advisory services in July 1999 in connection with the initial public offering
of our common stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and holders of more than 10% of
the Common Stock to file with the Securities and Exchange Commission (the
"Commission") reports of ownership and changes in ownership of Common Stock and
other equity securities of the Company on Forms 3, 4 and 5. Based solely upon a
review of the forms received by the Company, or written representations of
reporting persons and a review of those reports, the Company believes that,
during the year ended December 31, 1999, its officers and directors and holders
of more than 10% of the Common Stock complied with all applicable Section 16(a)
filing requirements.
10
<PAGE>
EXECUTIVE COMPENSATION
The table below summarizes information concerning the compensation paid by
us during 1999 to our chief executive officer, our four other most highly
compensated executive officers who held their offices on December 31, 1999 and
one other highly compensated individual who held his office during 1999 but not
on December 31, 1999 (collectively defined as the "Named Executive Officers"):
Summary compensation table
<TABLE>
<CAPTION>
Long Term
Compensation
---------------------
Annual Compensation Awards
--------------------------------------- ---------------------
Name and Principal Other Annual Securities Underlying All Other
Position Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($) (1)
- ------------------ ---------- --------- ---------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Larry G. Tanning........ 380,792 -- -- -- 1,351
Chairman of the Board,
President and Chief
Executive Officer
Bipin Agarwal........... 356,458 -- -- -- 4,232
Director and Executive
Vice
President of Strategy,
Planning and New
Ventures
John N. Piccone......... 150,000 -- 43,315(2) 427,986 --
Executive Vice
President
P. Tracy Currie......... 296,935(3) -- 117,102(4) 24,554 3,047
Senior Vice President
of
Global Client Services
Mark W. Tanning......... 175,693 -- -- 6,250 3,968
Vice President of Human
Resources and
Administration
Louis A. D'Alessandro... 174,860 108,688 -- -- 3,458
Vice President
</TABLE>
- --------
(1) Includes certain group term life insurance premiums paid by us and a
matching contribution under our Section 401(k) plan.
(2) Includes $34,369 paid for temporary housing in Denver, Colorado.
(3) Includes $46,935 of foreign service compensation allowance.
(4) Includes $80,314 housing allowance for local housing in London, England and
$15,742 for amounts reimbursed for payment of taxes. See "Employment and
non-competition agreements."
11
<PAGE>
Option grants in fiscal 1999
The following table sets forth information regarding stock options granted
during 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential realized
value at assumed
annual rates
of stock price
appreciation for
Individual grants option term (1)
----------------------------------------------------- -------------------
Percent of
Number of total options
securities granted to Exercise or
underlying employees base price Expiration
Name options granted in fiscal 1999 per share date 5% 10%
- ---- --------------- -------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Tanning........ -- -- -- -- -- --
Bipin Agarwal........... -- -- -- -- -- --
John N. Piccone......... 18,750(2) 0.40 $35.00 11/01/09 $412,712 $1,045,893
81,847(3) 1.75 15.00 06/29/09 772,097 1,956,646
81,847(4) 1.75 8.13 06/29/09 418,477 1,060,502
245,542(5) 5.26 5.35 04/01/09 826,147 2,093,619
P. Tracy Currie......... 24,554(6) 0.53 9.99 06/29/09 154,265 390,939
Mark W. Tanning......... 6,250(7) 0.13 35.00 11/01/09 137,571 348,631
Louis A. D'Alessandro... -- -- -- -- -- --
</TABLE>
- --------
(1) The 5% and 10% assumed annual rates of stock price appreciation are
mandated by the rules of the SEC and do not represent our estimate or
projection of future common stock prices.
(2) 1,250 shares subject to the option vested upon grant. The remaining shares
will vest pro rata on the last day of each month from November 1999 through
December 2000.
(3) 12,278 shares vest on June 30, 2000; 12,277 vest on June 30, 2001; 16,369
vest on June 30, 2002; 16,369 vest on June 30, 2003; and 24,554 vest on
June 30, 2004.
(4) 12,278 shares vest on June 30, 2000; 12,277 vest on June 30, 2001; 16,369
vest on June 30, 2002; 16,369 vest on June 30, 2003; and 24,554 vest on
June 30, 2004.
(5) One-fifth of the shares subject to the option vested upon grant. One-fifth
of the shares subject to the option will vest on each of April 1, 2000,
2001, 2002 and 2003.
(6) One-half of the shares subject to the option vested on December 31, 1999.
One-fourth of the shares subject to the option will vest on each of June
30, 2001 and 2002.
(7) Four hundred seventeen of the shares subject to the option vested upon
grant. The remaining shares will vest pro rata on the last day of each
month from November 1999 through December 2000.
Aggregate option exercises in fiscal 1999 and fiscal year-end option values
The following table sets forth information concerning the value realized
upon the exercise of stock options during 1999 by Named Executive Officers and
the value of unexercised in-the-money options held by Named Executive Officers
as of December 31, 1999.
<TABLE>
<CAPTION>
Number of securities
underlying unexercised Value of unexercised
options at fiscal year- in-the-money options at
end fiscal year-end (1)
Shares acquired Value ------------------------- -------------------------
Name on exercise realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Tanning........ -- -- -- -- -- --
Bipin Agarwal........... -- -- -- -- -- --
John N. Piccone......... 49,108 $136,520 52,860 375,126 $ 2,566,387 $17,539,690
P. Tracy Currie......... -- -- 257,412 222,213 13,404,875 11,535,895
Mark W. Tanning......... -- -- 75,730 136,774 3,946,503 6,992,477
Louis A. D'Alessandro... -- -- 65,478 140,775 3,450,510 7,357,167
</TABLE>
- --------
(1) Fair market value of the common stock underlying the options on December
31, 1999 minus the aggregate exercise price of the options.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, until July 22, 1999, our compensation committee was composed of
Larry G. Tanning, Bipin Agarwal, Henry F. Skelsey and Christopher P. Mahan.
Thereafter, its members were and continue to be Christopher P. Mahan, Joseph P.
Roebuck and Michael E. Shanahan. Larry G. Tanning is the Company's President
and Chief Executive Officer. Bipin Agarwal is the Company's Executive Vice
President of Strategy, Planning and New Ventures. Henry F. Skelsey is an
Executive Vice President and the Company's Chief Financial Officer.
In connection with a significant reduction in the compensation of Messrs.
Agarwal and Tanning pursuant to their revised employment agreements, on July 30
and August 2, 1999, respectively, we extended loans in the amount of $250,000
to each of Bipin Agarwal and Larry G. Tanning. The loans bear interest at 5.36%
and 5.25%, respectively. The principal and all accrued interest on the loans
are repayable on July 31, and August 2, 2001, respectively.
We have employed Adesh Gupta, a brother-in-law of Bipin Agarwal, as a
Practice Leader since January, 1997 and as a Consultant from October 1994 until
January 1997. In addition to being one of our directors and our Executive Vice
President of Strategy, Planning and New Ventures, Mr. Agarwal also controls
WinSoft Corporation, which is a significant stockholder of Tanning. In 1999,
Mr. Gupta received approximately $262,012 in compensation.
On April 7, 1997, we granted Mr. Gupta an option to acquire 327,389 shares
of our common stock at a per share purchase price of $2.90 per share. Of these
options, 245,542 vested upon the grant, 16,369 vested on April 7, 1998, 32,739
vested on April 7, 1999 and the remaining 32,739 vested on April 7, 2000. On
June 9, 1998, we granted Mr. Gupta an additional option to acquire 65,478
shares of our common stock at a per share purchase price of $3.82 per share.
One-fourth of the shares subject to this option vested on June 9, 1999, and the
remaining three-fourths will vest in equal installments on each of June 9,
2000, 2001 and 2002. On July 20, 1999, we granted Mr. Gupta an additional
option to acquire 3,785 shares of our common stock at a per share purchase
price of $10.00 per share. These options vest over a five-year period. On July
22, 1999, we granted Mr. Gupta an additional option to acquire 2,435 shares of
our common stock at a per share purchase price of $15.00 per share. These
options also vest over a five-year period.
REPORT OF THE COMPENSATION COMMITTEE
ON THE COMPENSATION OF EXECUTIVE OFFICERS
General
The Compensation Committee reviews and approves the compensation and
benefits for the Company's employees, directors and consultants, administers
its employee benefit plans, authorizes and ratifies stock option grants and
other incentive arrangements and authorizes employment and related agreements.
Compensation Policy
The objectives of the Company's executive officer compensation program are:
(i) to attract qualified executive officers, (ii) to reward, motivate and
retain the Company's executive officers and (iii) to align the interests of its
executive officers with those of the Company's stockholders by linking the
executives' annual cash and long-term compensation to the Company's
performance.
The Company's executive officer compensation program generally consists of
three basic components: base salary, annual cash incentive-based compensation,
and long-term compensation in the form of stock options.
13
<PAGE>
Base Salary
The base salary for each of the Company's executive officers, including the
Chief Executive Officer, is determined by subjectively evaluating the
responsibilities and strategic value of the executive's position, and the
experience and performance of the individual. While no specific formula is used
to set salaries, the Company considers the levels of base salary offered by
other companies in the information technology services industry and in other
technology companies with whom the Company competes for executive talent.
During 1999, the base salaries of certain executive officers were adjusted to
reflect these factors.
Annual Cash Incentive Compensation
Certain of the Company's executive officers are eligible for an annual cash
bonus based on the level of achievement of certain pre-established Company and
individual performance goals, which vary based on the executive's position. The
level of bonus opportunity is determined based upon subjective factors similar
to those considered in determining salary levels.
Stock Option Plans
Long-term incentive compensation is provided to employees in the form of
stock options. The Company grants options to a broad base of its employees.
Stock options are generally granted to an executive at the time the executive
joins the Company and periodically thereafter at the discretion of the
Committee. The Committee determines the timing of stock option awards and the
size of each option award based on subjective factors similar to those used to
determine salary levels and on the amount and timing of any previous option
awards.
Stock options are granted with an exercise price equal to the fair market
value of the Company's common stock on the date of the option award. Because of
this, the value of the options is wholly dependent upon an increase in the
Company's stock price. Options generally become exercisable over time based on
continuous employment with the Company.
CEO Compensation
Larry Tanning, the Company's Chief Executive Officer, President, Chairman of
the Board and co-founder of the Company, became a party to an employment
agreement with the Company in July of 1999. Prior to July, Mr. Tanning's base
salary was $480,000. Pursuant to his employment agreement his base salary was
reduced to $295,291. Mr. Tanning was eligible for a performance-based bonus
equal to an amount up to 88% of his base salary, based on the level of
attainment of certain revenue, earnings and stock appreciation targets and
certain subjective individualized goals. In November of 1999, Mr. Tanning
agreed to forgo his bonus and to accept a reduced base salary of $206,500. No
options were granted to Mr. Tanning in 1999.
Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for annual compensation in excess of $1 million
paid to their chief executive officers and to certain other highly compensated
executive officers. The Code excludes from the $1 million cap compensation that
is based on the attainment of pre-established, objective performance goals, if
certain other requirements are met. The Committee considers the deductibility
of executive compensation as one factor to be considered in the context of its
overall compensation objectives.
COMPENSATION COMMITTEE
Christopher P. Mahan
Joseph P. Roebuck
Michael E. Shanahan
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's common stock between July 23, 1999 (the first trading date for the
Company's common stock) and December 31, 1999 with the cumulative total return
of (i) the Nasdaq National Market Index, and (ii) an SIC Code Index that
includes organizations in the Company's Standard Industrial Classification
(SIC) code number 7373--Computer Integrated System Design. The graph assumes an
investment of $100.00 on July 23, 1999 in the Company's common stock and each
of the foregoing indices and assumes reinvestment of dividends, if any. The
comparisons in this table are set forth in response to the Securities and
Exchange Commission disclosure requirements, and therefore are not intended to
forecast or be indicative of future performance of the common stock.
COMPARE CUMULATIVE TOTAL RETURN
AMONG TANNING TECHNOLOGY CORPORATION,
NASDAQ MARKET INDEX AND SIC CODE INDEX
TANNING TECHNOLOGY CORP. SIC CODE INDEX NASDAQ MARKET INDEX
7/23/99 100.00 100.00 100.00
7/30/99 97.63 100.00 100.00
8/31/99 94.92 101.17 103.43
9/30/99 142.37 112.10 103.58
10/29/99 190.51 123.90 111.60
11/30/99 331.53 146.30 124.81
12/31/99 319.66 181.00 152.59
ASSUMES $100 INVESTED ON JULY 23, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1999
15
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table presents information regarding the beneficial ownership
of our common stock as of April 18, 2000 by all directors and the persons
listed in the Summary Compensation Table as well as by directors and executive
officers of the Company as a group and, to the best knowledge of the Company's
management, beneficial owners of 5% or more of the outstanding Common Stock.
As used in this table, "beneficial ownership" means the sole or shared power
to vote or direct the voting or to dispose or direct the disposition of any
security. A person is deemed to be the beneficial owner of securities that can
be acquired within 60 days from the date of the Annual Meeting Record Date
through the exercise of any option, warrant or right. Shares of common stock
subject to options, warrants or rights that are currently exercisable or
exercisable within 60 days are deemed outstanding for computing the ownership
percentage of the person holding such options, warrants or rights, but are not
deemed outstanding for computing the ownership percentage of any other person.
<TABLE>
<CAPTION>
Number of shares Percentage Number of Number of
of common stock of shares exercisable excluded
Name beneficially owned outstanding options(1) options(2)
- ---- ------------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
TTC Investors II LLC(3).. 4,143,022 20.0 -- --
AEA Tanning Investors
Inc.(3)................. 5,696,770 27.5 -- --
Tanning Family
Partnership, L.L.L.P.... 3,261,351 15.8 -- --
Larry G. Tanning(4)...... 3,461,713 16.7 -- --
WinSoft Corporation...... 2,313,291 11.2 -- --
Bipin Agarwal(5)......... 2,313,291 11.2 -- --
Stephen Brobst........... 2,322,021 11.2 -- --
Hippeli Enterprises,
Inc..................... 1,161,010 5.6 -- --
Toni S. Hippeli(6)....... 1,161,010 5.6 -- --
Henry F. Skelsey(7)(8)... 814,380 3.9 407,190 814,380
John N. Piccone.......... 108,219 * 59,111 319,767
P. Tracy Currie(9)....... 289,332 1.4 289,332 190,293
Mark W. Tanning.......... 117,944 * 115,462 97,042
Louis A. D'Alessandro.... 87,625 * 86,643 159,610
Christopher P.
Mahan(7)(10)............ -- * -- --
Dan J. Hesser............ 12,500 * 12,500 37,500
Leo J. Hindery, Jr....... 12,500 * 0 37,500
Joseph P. Roebuck........ 24,553 * 8,184 24,555
Michael E. Shanahan...... 24,553 * 8,184 24,555
All directors and
executive officers as a
group (14 persons)(11).. 8,447,179 38.9 1,005,181 1,979,105
</TABLE>
- --------
* Represents beneficial ownership of less than one percent.
(1) Shows shares of our common stock issuable upon exercise of options that
are currently exercisable or are exercisable within 60 days of April 18,
2000 and that are included in the total number of shares beneficially
owned.
(2) Shows shares of our common stock issuable upon exercise of options that
will not be exercisable within 60 days of April 18, 2000 and that are not
included in the total number of shares beneficially owned.
(3) AEA Tanning Investors Inc. is the managing member of TTC Investors I LLC,
which holds 984,237 shares of our common stock, TTC Investors II LLC, TTC
Investors IA LLC, which holds 108,986 shares of our common stock, and TTC
Investors IIA LLC, which holds 460,525 shares of our common stock, and
accordingly may be deemed to beneficially own the shares held by these
entities. AEA Tanning Investors Inc. is a wholly owned subsidiary of AEA
Investors Inc. The address for each member of the TTC Investors Group is
c/o AEA Investors Inc., Park Avenue Tower, 65 East 55th Street, New York,
New York 10022.
16
<PAGE>
(4) Includes 3,261,351 shares of our common stock that Mr. Tanning is deemed
to beneficially own because he indirectly controls Tanning Family
Partnership, L.L.L.P., as to which Mr. Tanning disclaims beneficial
ownership. Excludes 94,288 shares of our common stock held by immediate
family members, and 32,738 shares of our common stock held by trusts for
the benefit of immediate family members, as to which Mr. Tanning disclaims
beneficial ownership.
(5) Includes 2,313,291 shares that Mr. Agarwal is deemed to beneficially own
as the controlling investor of WinSoft Corporation. Excludes 2,182 shares
of our common stock held by Mr. Agarwal's wife, Shashi Agarwal, as to
which Mr. Agarwal disclaims beneficial ownership.
(6) Includes 1,161,010 shares that Ms. Hippeli is deemed to beneficially own
as a controlling investor of Hippeli Enterprises, Inc. Ms. Hippeli and her
husband, Jerome Nickerson, own 76% of the outstanding shares of common
stock of Hippeli Enterprises, Inc. Mr. Nickerson disclaims beneficial
ownership of the shares of our common stock owned by Hippeli Enterprises,
Inc.
(7) Mr. Skelsey and Mr. Mahan are each members of two of the limited liability
companies constituting the TTC Investors Group. Neither Mr. Skelsey nor
Mr. Mahan has voting or investment power over the shares of common stock
owned by the TTC Investors Group as a result of the memberships and
therefore neither is deemed to have beneficial ownership of the shares as
a result of the memberships. Each of Mr. Skelsey's and Mr. Mahan's
indirect ownership interest in our company through his memberships in the
limited liability companies constituting the TTC Investors Group is less
than one percent.
(8) Includes 100,000 shares of our common stock held by trusts for the benefit
of immediate family members, as to which Mr. Skelsey is the trustee and
disclaims beneficial ownership.
(9) Includes options to purchase 154,686 shares of our common stock held by
Connor Patrick, Ltd., a partnership controlled by Mr. Currie. Excludes
options to purchase 8,600 shares of our common stock which are held by a
trust for Mr. Currie's children, as to which Mr. Currie disclaims
beneficial ownership.
(10) Mr. Mahan's total excludes 5,696,770 shares of our common stock owned by
the TTC Investors Group. Mr. Mahan is a director of AEA Tanning Investors
Inc. Mr. Mahan disclaims beneficial ownership of the shares beneficially
owned by the TTC Investors Group.
(11) See footnotes 4 through 6 above.
17
<PAGE>
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF AUDITOR
The Board of Directors appointed the firm of Ernst & Young LLP as
independent auditor to examine the books of account and other records of the
Company and its subsidiaries for the 2000 fiscal year. The Board of Directors
is asking the stockholders to ratify and approve this action. Ernst & Young LLP
served in such capacity in 1999 and has been the Company's independent auditor
since 1996. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting to be available to respond to appropriate questions and to
make a statement, if they desire.
Although such ratification is not required by law, the Board of Directors
believes that stockholders should be given the opportunity to express their
views on the subject. While not binding on the Board of Directors, the failure
of the stockholders to ratify the appointment of Ernst & Young LLP as the
Company's independent auditor would be considered by the Board of Directors in
determining whether to continue with the services of Ernst & Young LLP.
The Board of Directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP as the Company's independent auditor for 2000.
STOCKHOLDER PROPOSALS FOR THE COMPANY'S 2001 ANNUAL MEETING
Stockholders who intend to present proposals at the 2001 Annual Meeting of
Stockholders, and who wish to have such proposals included in the proxy
statement for such meeting, must submit such proposals in writing by notice
delivered or mailed by first-class United States mail, postage prepaid, to the
Secretary, Tanning Technology Corporation, 4600 South Syracuse Street, Suite
1200, Denver, Colorado 80237. Such notice must be received no earlier than
January 22, 2001 and no later than February 21, 2001, as set forth more fully
in the By-laws. Proposals must meet the requirements set forth in the rules and
regulations of the Securities and Exchange Commission and with certain
procedures described in the Company's By-laws in order to be eligible for
inclusion in the Company's proxy statement for its 2001 Annual Meeting of
Stockholders. A copy of the Company's By-laws, which describes all advance
notice procedures regarding stockholder proposals, can be obtained from the
Secretary of the Company.
SOLICITATION OF PROXIES
Proxies will be solicited electronically, by mail, telephone, or other means
of communication. Solicitation of proxies also may be made by directors,
officers and regular employees of the Company. The Company will reimburse
banks, brokerage firms, custodians, nominees, fiduciaries and others for
reasonable expenses incurred by them in forwarding materials to the beneficial
owners of shares. The entire cost of solicitations will be borne by the
Company.
OTHER MATTERS
The Company knows of no other matter to be brought before the Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the Annual Meeting, it is the intention of the persons named in the
proxy to vote with respect to any such matter in accordance with their best
judgment.
18
<PAGE>
The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to Tanning
Technology Corporation, 4600 South Syracuse Street, Suite 1200, Denver,
Colorado 80237, Attention: Secretary.
By Order of the Board of Directors,
Mark W. Reinhardt
Secretary
Dated: April 27, 2000
Denver, Colorado
19
<PAGE>
P R O X Y
TANNING TECHNOLOGY CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
May 22, 2000
This Proxy is Solicited on Behalf of the Tanning Technology Corporation
The undersigned hereby appoints Henry F. Skelsey, Frederick H. Fogel and
Katherine L. Scherping and each of them, proxies for the undersigned with full
power of substitution, to vote all shares of Tanning Technology Corporation
Common Stock which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of Tanning Technology Corporation to be held in Englewood,
Colorado, on Monday May 22, 2000 at 3:00 P.M. local time or at any adjournment
thereof, upon the matters set forth on the reverse side and described in the
accompanying Proxy Statement and upon such other business as may properly come
before the meeting or any adjournment thereof.
Please mark this proxy as indicated on the reverse side to vote on any item.
If you wish to vote in accordance with the Board of Directors' recommendations,
please sign the reverse side, no boxes need to be checked.
COMMENTS/ADDRESS CHANGE PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- -----------------------------------------------------------------------
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
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<PAGE>
Please mark
your votes as [X]
indicated in
this example
The Board of Directors recommends a vote FOR each of the nominees on Item 1, and
FOR Item 2.
Item 1- ELECTION OF DIRECTORS
FOR all WITHHELD
Nominees: Dan J. Hesser, Toni S. Hippeli nominees AUTHORITY
and Michael E. Shanahan for all nominees
WITHHELD FOR: (To withhold authority to vote [_] [_]
for any individual nominee, write that
nominee's name in the space provided below)
- ----------------------------------------------
Item 2- Ratification of the appointment of FOR AGAINST ABSTAIN
Ernst & Young LLP as the Company's [_] [_] [_]
independent auditors for 2000 fiscal year.
I PLAN TO ATTEND MEETING [_]
COMMENTS/ADDRESS CHANGE
Please mark this box if you have [_]
written comments/address change
on the reverse side.
Signature(s) _________________________________________________ Date__________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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