<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Amendment No. 1
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 Section 240.14a-11(c) or Section
240.14a-12
PRINTWARE, 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)(4)
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.:
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3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE CONVENED APRIL 13, 2000
AND HELD APRIL XX, 2000
To the Shareholders of Printware, Inc.:
The Annual Meeting of Shareholders will be convened at the Corporate
Offices of Printware, Inc. at 1270 Eagan Industrial Road, St. Paul, Minnesota
55121 on Thursday, April 13, 2000, at 3:30 p.m., Central Daylight Time, and
adjourned to reconvene and transact business on XXXXXX, April XX, 2000, at
3:30 p.m. Central Daylight Time, for the following purposes:
1. To elect five Directors to hold office until the next annual meeting of
shareholders; and
2. To take action on any other business that may properly come before the
meeting.
Shareholders of record at the close of business on February 23, 2000 are
entitled to vote at the meeting and at any adjournment thereof.
The Company intends to convene the Annual Meeting as originally scheduled
on April 13, and then to immediately adjourn the meeting to reconvene on
April XX, 2000 to transact business at that time. The Company is doing this
because on March 31, 2000 a committee of dissident shareholders (the
"Dissidents") filed with the Securities and Exchange Commission ("SEC") a
draft proxy statement in connection with the Annual Meeting, and the Company
was late in electronically filing with the SEC the proxy statement that was
mailed on behalf of the Company beginning March 8, 2000. The adjournment and
reconvening of the Annual Meeting will allow the Dissidents and the Company
additional time to solicit proxies for the Annual Meeting. WHILE YOU ARE
WELCOME TO COME IN PERSON ON APRIL 13, ONLY LIMITED FORMALITIES WILL OCCUR AT
THAT TIME. SHAREHOLDERS WHO WISH TO ATTEND IN PERSON MAY WISH INSTEAD TO
COME TO THE RECONVENED MEETING ON APRIL XX.
Whether or not you expect to be present at the meeting, please complete,
sign, and return the enclosed WHITE proxy card as soon as possible to ensure
the presence of a quorum and save the Company further solicitation expense.
For your convenience, a return envelope is enclosed that requires no postage
if mailed in the United States. If you attend the meeting in person, your
proxy will be returned to you upon request.
Brian D. Shiffman
Secretary
Dated: April XX, 2000
Whether or not you expect to attend the meeting, please sign and date the
enclosed WHITE proxy card and return it in the enclosed envelope. Thank you.
<PAGE>
Printware, Inc.
1270 Eagan Industrial Road
St. Paul, Minnesota 55121
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE CONVENED APRIL 13, 2000
AND HELD APRIL XX, 2000
The Annual Meeting of Shareholders (the "Meeting") will be convened at the
Corporate Offices of Printware, Inc. at 1270 Eagan Industrial Road, St. Paul,
Minnesota 55121 on Thursday, April 13, 2000, at 3:30 p.m., Central Daylight
Time, and adjourned to reconvene and transact business on XXXXXX, April XX,
2000, at 3:30 p.m. Central Daylight Time, for the purposes set forth in the
Notice of Annual Meeting of Shareholders.
Your Board of Directors' solicits the enclosed WHITE proxy card. Such
solicitation is being made by mail, and may also be made by directors and
officers of Printware by facsimile, telephone, e-mail, in person, or by
advertisements. We have also engaged D. F. King & Co., Inc. to assist us as
is discussed later in this Proxy Statement. Any proxy given may be revoked by
the shareholder at any time prior to the voting thereof by so notifying the
Company in writing at the above address, attention Thomas W. Petschauer,
Executive Vice President and CFO, or by appearing in person at the Meeting.
Shares represented by proxies will be voted as specified in such proxies,
and if no choice is specified, will be voted:
FOR your Board of Directors' nominees named in this Proxy Statement, and
against any other proposals not appearing on the Company's WHITE proxy
card.
Only shareholders of record at the close of business on February 23, 2000,
may vote at the Meeting. As of that date, there were 3,275,557 shares of
common stock, no par value per share ("Common Stock"), of the Company
outstanding. Such shares constitute the only class of the Company's
outstanding equity securities. Each shareholder of record is entitled to one
vote for each share registered in his or her name on each matter presented at
the Meeting. Cumulative voting is not permitted.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith shall be paid by the
Company. Printware may reimburse banks, brokerage firms, and other
custodians, nominees, and fiduciaries for reasonable expenses incurred by
them in sending proxy materials to beneficial owners of stock.
THIS PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY ARE BEING MAILED TO
SHAREHOLDERS ON OR ABOUT APRIL XX, 2000.
We urge you to vote in favor of the election of your Board-recommended
director nominees for election as directors by voting:
FOR all nominees listed on our WHITE proxy card.
<PAGE>
BACKGROUND TO THE CURRENT PROXY CONTEST
Recent Purchases of Printware Stock by Dissidents
A group of recent Printware shareholders, consisting of Pyramid Trading
L.P., Daniel B. Asher, Gary S. Kohler, and Andrew J. Redleaf, have formed a
group they call the Shareholders' Committee to Improve Printware Shareholder
Value (the "Dissidents"). These Dissidents have filed preliminary proxy
material and an amended schedule 13D with the Securities and Exchange
Commission ("SEC") disclosing that they are proposing an alternate slate of
directors at the Company's upcoming Annual Meeting.
According to the Dissidents' SEC filings, the Dissidents did not own any
Company stock until their first purchase on September 27, 1999. Their
average purchase price per share is well below the current market price. The
Dissidents began purchasing more Printware stock in October, 1999 through
February, 2000.
The Dissidents' Dutch Auction Proposal
On December 10, 1999, the Dissidents first approached Company Management
with a proposal that the Company should repurchase its stock in a "Dutch
auction". In a typical Dutch auction, the Company's shareholders would be
invited to tender Company stock for repurchase by the Company (using the
Company's funds) at a specified range of prices per share. If more shares are
tendered then the offer contemplates, only a pro rata portion of the tendered
shares would be repurchased, and the other tendered shares would be returned
to shareholders. A Dutch auction would result in the Company having less cash
and fewer outstanding shares.
At the December 10 meeting, in a subsequent letter to Management, and in
subsequent telephone conversations, the Dissidents argued in part that
retiring stock would increase the Company's stock price. Management responded
that it doubted that a Dutch auction would help the stock price because a
buyback of 1,587,000 shares (32.7% of those then outstanding) earlier in the
year produced no discernable increase in Printware's stock price. The
Dissidents further argued that the Company's cost of capital was excessively
high, and that debt was a better source of funds. Management disagreed with
both the premise and conclusion of that point. The Dissidents also argued
that such a transaction could be in Management's self-interest. A number of
subsequent discussions were held between members of the Dissidents and the
Company's Management and Directors. Dr. Baker expressed his skepticism, but
agreed to bring the Dutch auction proposal before the Company's Board at its
next meeting in February, 2000. In a January 3, 2000 letter, the Dissidents
expressed disappointment that their demand for a Dutch auction had not been
implemented immediately.
The Dutch auction demand was discussed at the Company's February Board
meeting. The Board declined to act on the proposal because of concerns that
it was self-serving on the part of the Dissidents and not in the best
interest of all shareholders, since it would deplete the Company's cash,
might leave some shareholders with smaller, more illiquid holdings of the
Company shares due to proration, and might result in the Company being
delisted from the NASDAQ due to insufficient market capitalization of shares
held by non-affiliates or an insufficient number of shareholders. In a
February 17, 2000 SEC filing the Dissidents threatened, absent "quick"
Management action on their proposals, to call a special meeting of
shareholders to "reconstitute Printware's Board of Directors."
<PAGE>
On February 28, the Dissidents sent a letter to the Board, again
threatening to attempt to take "control of the Printware board" if their
proposal was not implemented.
The Dissidents subsequently contacted two individual Directors in addition
to Dr. Baker, and had meetings and telephone conversations with those
Directors. Both Directors asked for a detailed written description of the
Dissidents' proposal as background for the next Board meeting, scheduled for
April 13. No such description was provided to either Director or to
Management.
In a March 8, 2000 letter to a Director, following a meeting with another
Director which the Dissidents found unsatisfactory, the Dissidents issued a
written ultimatum citing March 14, 2000 as the deadline by which their
proposal was to be implemented. The Dissidents further threatened to call a
special shareholders meeting to elect a new Board if their proposal was not
implemented. The Dissidents were informed that their proposal would be on the
April 13 Board meeting agenda. The ultimatum time and date passed with no
demand from the Dissidents for a special meeting.
On March 31, 2000, the Dissidents filed a proxy statement with the SEC
initiating the current proxy contest, with the intent to give the
Dissidents "the power to control the actions of Printware's Board of
Directors."
The Dissidents' Claims
The Dissidents' main claims are that the Company is "overcapitalized," that
the Company has had unfavorable financial performance for the last several
years, and that a Dutch auction would benefit all shareholders by
alleviating "overcapitalization." Let us address each of these claims.
1. Printware is not Overcapitalized
We do not believe that Printware is "overcapitalized." In 1999, the Company
used approximately $4.6 million in cash to fund operations and financing
leases for customers and to repurchase stock. This left only $7.5 million in
cash, cash equivalents and available-for-sale securities. Printware needs its
capital to execute its growth plan, which is starting to show results. The
Company's growth plan emphasizes providing customers with equipment financing
to build market share and gain after-market revenues from sales of supplies.
Providing this equipment financing requires significant cash. Management knows
of no reliable formulae to predict the Company's capital requirements,
especially with the possibility of unanticipated contingencies and
opportunities such as acquisitions or bargain stock buybacks, such as the
buybacks executed in 1998 and 1999. Our competition in Internet printing,
Collabria, Inc., iPrint.com, and ImageX.com, are far better capitalized than
Printware, yet all are increasing, not shrinking, their equity bases.
<PAGE>
2. Printware is Responding to Loss of Revenues From Deluxe
The decline in operating performance cited in the Dissidents'
filings was due to the loss of what was our largest customer, Deluxe Corp.,
in 1998 and 1999. Deluxe shut down most of their printing plants and began
buying from Japan the supplies it had been buying from the Company. In 1997
Deluxe provided 59% of the Company's revenues and the Company had less than
$2.9 million in non-Deluxe revenues. By 1999 non-Deluxe revenues had grown to
$4.5 million. In late 1999, after two years of negotiations, the Company also
acquired rights to sell supplies for its newer equipment, which provides
additional potential to replace Deluxe revenue. In sum, after losing its
largest customer which accounted for most of its 1997 revenue, the Company has
responded, regained most of the lost revenue, and repositioned itself for
growth.
3. A Dutch Auction Has Significant Risks
We are concerned that a Dutch auction or other share repurchase could
be used by the Dissidents to realize large short-term profits, or by not
participating, significantly increase their percentage ownership in the
Company. If the Dissidents, having proposed a Dutch auction, purposefully the
chose not to participate in the auction, the expenditure of the Company's
money will increase their percentage ownership in the Company at no cost
to them. The Dissidents have not given assurances whether or not they
intend to participate in their own proposed Dutch auction. Nor have the
Dissidents adequately explained their inherent conflict of interest
between a Dutch auction and their personal interest in the Company's stock.
A Dutch auction, as admitted in the Dissidents' SEC filings, could result
in the Company's Common Stock becoming ineligible for continued listing on
NASDAQ for failure to meet capitalization requirements. Such delisting could
reduce the liquidity of shareholders' positions, decrease Printware's value
in any potential merger or acquisition transaction, limit the marketability
of the Company's stock to non-institutional investors, and limit the Company's
access to capital markets in the future. Your Board vigorously opposes any
action that has the potential of jeopardizing the Company's NASDAQ listing.
The Dissidents' risky and expensive financial gambit adds absolutely
nothing to the Company's business or revenues. The maneuver will, however,
increase the Company's expenses by requiring it to pay for increased legal,
financial and accounting expenses.
<PAGE>
The Dissidents offer no concrete plan for the future of your company, or to
increase shareholders' value. They offer only a vague commitment to "perform
a comprehensive review of Printware's operations, capital structure and
management in order to commence a [undefined] course of action..." Such a
review is conducted continuously by your current Board of Directors.
Management is unaware of who would manage the Company should the Dissidents
gain control of the Board, or what, if any, impact that might have on any
continuing business relationships the Company now has with its customers
and/or suppliers.
In summary, for many reasons, we believe strongly that now is not the right
time to offer a Dutch auction, and that the interests of all Printware
shareholders will best be served by the Company's current group of
experienced Directors. Your Board plans to continue its work with Management to
pursue its carefully designed long-term business strategy--a strategy that
will deliver maximum shareholder value for all shareholders, not just short-
term gains that will benefit the Dissidents who have only owned their shares
for a short time.
We urge you to reject the Dissidents' shortsighted answer to increasing
shareholder value. We further urge you to reject their nominees and to vote
FOR your Board's current nominees by signing, dating, and returning the
enclosed WHITE proxy card.
ITEM 1: ELECTION OF DIRECTORS
Printware Directors are elected serve until the following annual meeting.
Management believes its current Board of directors is well-qualified,
committed to Printware's success, and committed to enhancing all
shareholders' value.
The Dissidents are proposing to increase the size of the Company's Board of
Directors from five members to six members. Management recommends that
shareholders vote AGAINST this proposal. The Dissidents do not identify
and discuss why the present board size should be increased. Increasing the
board size provides the Dissidents with one more member for them to exercise
control over the Company.
Our WHITE proxy card does not address increasing the size of the board of
directors. Our WHITE proxy card does, however, give the named proxies
discretion to vote on such other business as may properly come before the
meeting of shareholders. The persons named as proxies on the Company's WHITE
proxy card intend to exercise discretion and vote against the Dissidents'
proposal to increase the size of the Company's Board.
<PAGE>
The Company's nominees are listed below, all of whom are currently directors
of the Company:
Daniel A. Baker, Ph.D., age 42, has served as the Company's President and a
Director since 1993, and additionally as Chief Executive Officer since 1995.
Dr. Baker joined the Company in 1990 as Vice President of Engineering and was
later promoted to Vice President of Sales, Marketing, and Product
Development. He has over 20 years of experience in high-tech industry, and
personally holds 15 patents. His previous experience includes executive
positions at Minntech Corporation and Percom Data Corporation. Dr. Baker
holds Ph.D. and M.S. degrees in engineering from the University of Minnesota,
a B.S. degree in Engineering from Case Western Reserve University, and an
M.B.A. degree in Finance from the University of Minnesota.
Allen L. Taylor, Ph.D., age 64, is a co-founder of the Company and has
served as a Director since the Company's incorporation in 1985. Dr. Taylor
was an employee of Minnesota Mining and Manufacturing Company ("3M") for over
33 years until his retirement in 1996. At 3M, he led the development of a
number of products for the printing industry. In 1985, Dr. Taylor was
instrumental in obtaining for the Company a license from 3M for the key
resonant-galvanometer technology used in the Company's platesetters. Dr.
Taylor holds Ph.D. and M.Sc. degrees in physics from McGill University, and a
B.Sc. degree in physics from the University of Alberta.
Brian D. Shiffman, age 60, has served as a Director since the Company's
incorporation in May 1985, when he was instrumental in the formation of the
Company. Mr. Shiffman served as President of Northstar Photonics, Inc., a
developer of high-speed lasers from 1998 to 2000. Previously, Mr. Shiffman
was Business Development Director at Minnesota Project Innovation, Inc., and
Vice President at the Minnesota Cooperation Office as a loaned executive
from Control Data Corporation, where he was employed for over 20 years. Mr.
Shiffman holds a B.S. degree in Mathematics from the University of Illinois.
Michael C. Berg, age 64, was elected a Director in 1998. Mr. Berg is
president of Graphic and Printing Specialists, a Minneapolis-based printing
design firm, and a partner in Paragon Forms, which prints optical-mark
reading forms. He previously owned Hoppe printing in Minneapolis. Mr. Berg
has served on the boards of several public companies, including Intran, NCS,
and Swenko Medical.
Victor H. Weiss, age 72, was elected a Director in 1998. Mr. Weiss is retired
chairman of Hopkins, Minnesota-based MACtac Engineered Products, a subsidiary
of MACtac, a Bemis Company. MACtac supplies pressure-sensitive materials for
graphic products, digital imaging, and printed labels for specialized end-
users. Prior to being appointed Chairman of MACtac Engineered Products,
Mr. Weiss held a number of engineering and executive positions, and has
extensive experience with printed products. Mr. Weiss holds a B.S. degree in
chemical engineering from New York University.
Although we have no reason to believe that Dr. Baker, Dr. Taylor,
Mr. Shiffman, Mr. Berg or Mr. Weiss will be unable to serve as a Director,
if that contingency should occur, it is intended that the shares represented
by the proxies will be voted, in the absence of contrary indication, for any
substitute nominee designated by the persons named proxies.
<PAGE>
SOLICITATION OF PROXIES
As a result of the Dissidents' proxy contest, the Company has had to retain
its own solicitation and advisory firm, significantly increasing the
cost of the Annual Meeting. The Company has retained D. F. King in connection
with this solicitation, for which D. F. King will receive a fee of up to
$50,000, together with reimbursement of its reasonable out-of-pocket
expenses, and will be indemnified against certain liabilities and expenses,
including certain liabilities under the federal securities laws. D. F. King
will solicit proxies from individuals, brokers, banks, bank nominees, and
other institutional holders. We have requested banks, brokerage houses, and
other custodians, nominees, and fiduciaries to forward all solicitation
materials to the beneficial owners of the Shares they hold of record. We will
reimburse these record holders for their reasonable out-of-pocket expenses in
so doing. It is anticipated that D. F. King will employ approximately 20
persons to solicit the Company's shareholders for the Meeting.
For any questions you may have on proxy voting, please call
D. F. King at (800) 290-6426.
The entire expense of soliciting proxies for the nominees listed in this
Proxy Statement will be borne by the Company. Costs of this solicitation of
proxies are currently estimated to be approximately $100,000.
A shareholder may revoke his or her proxy at any time before it is voted by
written notice addressed to the Secretary at the offices of the Company, by
filing another proxy bearing a later date with the Secretary or by appearing
at the Meeting and voting in person. Unless revoked, all properly executed
proxies will be voted. This proxy statement and enclosed WHITE proxy cards
are being mailed to shareholders on or about April XX, 2000.
Only shareholders of record at the close of business on February 23, 2000,
may vote at the Meeting. As of that date, there were 3,275,557 shares of
common stock, no par value per share ("Common Stock"), of the Company
outstanding. Such shares constitute the only class of the Company's
outstanding equity securities. Each shareholder of record is entitled to one
vote for each share registered in his or her name on each matter presented at
the Meeting. Cumulative voting is not permitted.
Shares of Common Stock represented by proxies in the form solicited will be
voted in the manner directed by the holder of such shares. The persons named
as proxies may also vote on any other matter to properly come before the
Meeting. If an executed proxy is returned and the executing shareholder has
elected to "abstain" from voting on any matter (or to "withhold authority" as
to the election of any Director), the shares represented by such proxy will
be considered present at the Meeting for purposes of determining a quorum and
for purposes of calculating the vote, but will not be considered to have been
voted in favor of such matter. If an executed proxy is returned by a broker
holding shares in street name that indicates that the broker does not have
discretionary authority to vote certain of such shares on one or more
matters, those shares will be considered present at the Meeting for purposes
of determining a quorum, but will not be considered to be represented at the
Meeting for purposes of calculating the vote with respect to such matters.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 2000, the number of
shares of Common Stock owned by each person who is known by the Company to
beneficially own more than five percent of the Company's outstanding Common
Stock, each Director, each person named in the Summary Compensation Table
that appears elsewhere in this proxy statement, and all of the Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Shares Issuable Upon the
beneficial ownership Exercise of Options that
(including shares under- are Currently or Will Percentage
Name and Address of lying the options de- Become Exercisable Within of Outstanding
Beneficial Owner scribed in next column) the Next 60 Days Shares
======================= ======================== ========================= =============
<S> <C> <C> <C>
Daniel A. Baker 324,421 287,337 9.1%
c/o Printware, Inc.
1270 Eagan Industrial Road
St. Paul, MN 55305
Thomas W. Petschauer 208,985 117,489 6.1%
c/o Printware, Inc.
1270 Eagan Industrial Road
St. Paul, MN 55305
Timothy S. Murphy 25,162 20,248 *
c/o Printware, Inc.
1270 Eagan Industrial Road
St. Paul, MN 55305
Allen L. Taylor 334,374(1) 12,000 10.1%
212 Ilwaco Road
River Falls, WI 54022
Brian D. Shiffman 12,500 12,000 *
3656 Robin Lane
Minnetonka, MN 55305
Michael C. Berg 16,000 10,000 *
108 Washington Ave. North
Minneapolis, MN 55401
Victor H. Weiss 10,000 10,000 *
376 Waycliffe Drive
Wayzata, MN 55391
All Directors and 931,442(2) 469,074 24.8%
executive officers
as a group (7 persons)
Pyramid Trading Ltd. Partnership 449,200(3) 0 13.7%
440 South LaSalle Street
Chicago, IL 60605
Donald M. Hall and DennisHanish 251,500(4) 0 7.7%
c/o RJ Steichen & Co.
7900 Xerxes Ave. S.
Bloomington, MN 55435
</TABLE>
* Less than one percent
(1) Based on a Schedule 13G/A filed February 10, 2000 with the SEC.
(2) Voting and investment power with respect to the shares described above as
held by a Director or executive officer are held solely by the indicated
Director or executive officer and spouse.
(3) Based on a Schedule 13D filed March 31, 2000 with the SEC by a
group consisting of (i) Pyramid Trading Limited Partnership, Oakmont
Investments, LLC, the general partner of Pyramid Trading and Daniel Asher,
as Manager of Oakmont Investments and individually, as beneficial owners of
333,400 shares; (ii) Gary Kohler, as beneficial owner of 7,500 shares; and
(iii) Andrew Redleaf, as beneficial owner of 108,300 shares.
Mssrs. Kohler and Redleaf are limited partners of Pyramid Trading.
(4) Based on a Schedule 13D filed February 10, 2000 with the SEC.
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<C> <C> <C>
Daniel A. Baker, Ph.D. 42 President, Chief Executive Officer, and Director
Thomas W. Petschauer 60 Executive Vice President and Chief Financial Officer
Timothy S. Murphy 36 Vice President of Marketing and Sales
Joseph F. Dayton 53 Senior Vice President
</TABLE>
Daniel A. Baker, Ph.D. has served as the Company's President and a Director
since 1993, and additionally as Chief Executive Officer since 1995. Dr. Baker
joined the Company in 1990 as Vice President of Engineering and was later
promoted to Vice President of Sales, Marketing, and Product Development. He
has over 20 years of experience in high-tech industry, and personally holds
15 patents. His previous experience includes executive positions at Minntech
Corporation and Percom Data Corporation. Dr. Baker holds Ph.D. and M.S.
degrees in engineering from the University of Minnesota, a B.S. degree in
Engineering from Case Western Reserve University, and an M.B.A. degree in
Finance from the University of Minnesota.
Thomas W. Petschauer has served as a Vice President of the Company since
1985 and was named Executive Vice President and Chief Financial Officer
in 1995. Mr. Petschauer is a co-founder of the Company. He has over 30 years
of technical, managerial and business experience in the computer and
peripheral field. Prior to joining Printware, he was Venture Executive at
Sperry Corporation, where he was employed for over 20 years. Mr. Petschauer
is a graduate of the University of Minnesota.
Timothy S. Murphy has held increasingly responsible positions in Sales
and Marketing since joining the Company in 1987, and was promoted to Vice
President of Marketing and Sales in 1997. His prior positions included
Director of Marketing and Sales from 1994 through 1997, and Southeast
District Sales Manager, based in Atlanta, from 1992 through 1994. Prior to
1992, he held various sales, marketing, and technical positions with the
Company. Before joining Printware, Mr. Murphy was a Peace Corps volunteer in
Benin, West Africa. Mr. Murphy received a B.A. degree in quantitative methods
and attended graduate school at the University of St. Thomas.
Joseph F. Dayton served as Vice President of the Company beginning in
1986 and was named Senior Vice President of Manufacturing and Customer
Service in 1995. Prior to joining Printware he was employed by E. F. Johnson
Company in various program management, quality and manufacturing functions.
Mr. Dayton has a B.S. degree in engineering from the University of Detroit.
Mr. Dayton's employment with the Company ended on January 10, 2000.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation =====================
================================= Securities All Other
Name and Other Annual Underlying Compen-
Principal Position Year Salary<F1> Bonus<F2> Compensation Awards Options<F3> sation<F4>
===================== ==== ========= ======== ============ ========= ========== =========
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel A. Baker 1999 $143,000 $ 0 $0 $0 73,000 $ 982
President and Chief 1998 138,930 73,904 0 0 73,000 2,400
Executive Officer 1997 140,205 38,745 0 0 36,000 1,920
Thomas W. Petschauer 1999 116,018 0 0 0 30,000 870
Executive Vice Presi- 1998 112,769 60,080 0 0 30,000 1,784
dent and CFO 1997 114,242 31,750 0 0 15,000 1,738
Timothy S. Murphy<F5> 1999 107,630 0 0 0 14,000 759
Vice President 1998 123,563 13,290 0 0 14,000 1,853
1997 79,957 0 0 0 5,000 800
_________________________
<FN>
<F1>
Based on 26 biweekly paydays in 1999, with 26 in 1998 and 27 in 1997.
<F2>
Consists of bonuses listed according to which year's performance they were
awarded. No bonuses were paid for 1999 performance.
<F3>
Consists of incentive stock options listed according to which year's
performance they were awarded. In February 1999 incentive stock options of
73,000 shares, 30,000 shares, and 14,000 shares were issued to Dr. Baker, Mr.
Petschauer, and Mr. Murphy, respectively, as incentives for 1999 performance.
<F4>
Consists of matching contributions made under the Company's 401(k) Plan,
plus matches of $320 to Dr. Baker and $400 to Mr. Petschauer to support one-
time personal computer purchases in 1997.
<F5>
Mr. Murphy was promoted to Vice President of Marketing and Sales in May
1997. His salary included sales commissions of $32,630 in 1999, $53,571 in
1998, and $20,082 in 1997.
</FN>
</TABLE>
<PAGE>
CHANGE IN CONTROL AGREEMENTS
The Company is a party to change in control agreements ("Agreements") with
two officers, Dr. Baker and Mr. Petschauer. These Agreements provide that in
the event of a change in control of the Company (which is defined to include
an event that would be reported under Item 1 of Form 8-K under the Securities
Exchange Act of 1934) followed by a termination of the executive within one
year of the change in control, the Company must pay certain severance
payments and other benefits as described below.
Under the Agreements, termination of employment includes termination of the
executive by the Company for reasons other than for cause, or termination by
the executive for good reason. Cause includes gross neglect or gross breach
of duties to Printware. The executive can terminate employment for good
reason if the executive does not hold the office he currently holds, his
compensation is reduced, or there is a material reduction in benefits. Dr.
Baker's agreement provides for the payment of a lump sum equal to 24 months
at 125% of Dr. Baker's monthly base salary as of the termination date, or
approximately $357,000 if the termination occurred today. The Company's
Board may consider an amendment to Dr. Baker's agreement to provide that he
may receive the benefits of the agreement upon termination for any reason,
including voluntary resignation within one year following a change in control.
Mr. Petschauer's agreement provides for payment of a lump sum equal to 12
months at 125% of Mr. Petschauer's monthly base salary as of the termination
date, or approximately $145,000 if the termination occurred today. The
Company is also planning to enter into a similar agreement with Mr. Murphy,
whose lump sum payment in the event of termination within one year after a
change in control will equal 125% of 12 months of Mr. Murphy's monthly base
salary as of the date of the termination, or approximately $94,000, if the
termination occurred today.
The Agreements also provide that all unvested stock options shall vest in
full upon a change in control followed by termination within one year. If
the executive's employment terminated today under the Agreements, Dr. Baker
would vest in options to purchase 146,000 shares of common stock, Mr.
Petschauer would vest in options to purchase 60,000 shares of common stock,
and Mr. Murphy, if he executes an agreement, would vest in options to
purchase 67,999 shares of common stock. In addition, the Agreements provide
that the terminated executive is entitled to exercise all stock purchase plan
rights and stock option plan rights within 90 days following termination.
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants Potential Realizable
=============================================== Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to for Option Term
Options Employees Exercise or =====================
Granted in Fiscal Base Price Expiration
Name <F1> Year<F2> Per Share Date 5%<F3> 10%<F3>
====================== ========== ========== =========== ========== ========= =========
<S> <C> <C> <C> <C> <C> <C>
Daniel A. Baker 73,000 45.5% $3.13 2/4/09 $143,467 $363,572
Thomas W. Petschauer 30,000 18.7 3.13 2/4/09 58,959 149,413
Joseph F. Dayton<F4> 26,000 16.2 3.13 2/4/09 0 0
Timothy S. Murphy 14,000 8.7 3.13 2/4/09 27,514 69,726
_________________________
<FN>
<F1>
The options were incentive stock options granted at the fair market value on
the date of grant, February 4, 1999. All of the officers' options vest one-
third after one year, another one-third after two years, and the last one-
third after three years.
<F2>
Excludes options in the amounts of 5,000 shares exercisable at $2.66 per
share granted on April 15, 1999 to each Independent Director: Dr. Taylor,
Mr. Shiffman, Mr. Berg, and Mr. Weiss.
<F3>
Represents the potential net realizable value of each grant of options
assuming that the market price of the underlying Common Stock appreciates in
value from its fair market value on the date of grant to the end of the
option term at the dedicated annual rates. The stock price appreciation at
5 and 10% per year are shown for illustrative purposes only.
<F4>
Mr. Dayton's employment with the Company as Senior Vice President ended on
January 10, 2000. His stock options became unexercisable on February 9, 2000.
</FN>
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Securities Underlying Value of Unexercised
Number of Unexercised In-The-Money
Options at Fiscal Options at Fiscal
Shares Year End Year End<F1>
Acquired Value ========================= =========================
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
==================== =========== ======== =========== ============= =========== =============
<S> <C> <C> <C> <C> <C> <C>
Daniel A. Baker 0 $0 226,671 133,667 $0 $0
Thomas W. Petschauer 0 0 92,489 55,000 0 0
Joseph F. Dayton 0 0 64,390 46,334 0 0
Timothy S. Murphy 0 0 9,248 25,002 0 0
_________________________
<FN>
<F1>
The value of unexercised options at December 31, 1999, the last trading day of
1999, is determined by multiplying the difference between the exercise prices
of the options and the closing price of the Common Stock on The NASDAQ Stock
Market on December 31, 1999 ($2.25 per share) by the number of shares
underlying the options.
</FN>
</TABLE>
<PAGE>
MEETINGS AND COMPENSATION OF DIRECTORS
There were four meetings of the Board of Directors in 1999.
The Board of Directors has an Audit Committee, a Compensation Committee,
and a Nominating Committee. The Audit Committee, which consists of Dr.
Taylor, Mr. Berg and Mr. Shiffman, reviews the reports of and engages in
direct discussions with the independent auditors. The Audit Committee held
two meetings in 1999. The Compensation Committee consists of Messrs. Berg,
Shiffman and Weiss, and has overall responsibility for compensation actions
affecting the Company's officers. The Compensation Committee held three
meetings in 1999. The Nominating Committee consists of Dr. Taylor, and
Messrs. Berg, Shiffman and Weiss. It reviews the qualifications for election
to the Board of Directors and, in consultation with the Company's management,
identifies prospective nominees. The Nominating Committee met once in 1999.
The Nominating Committee will consider nominees to the Board of Directors
recommended by shareholders. Such recommendations should be submitted by mail,
addressed to the Nominating Committee in care of the Secretary of the Company.
During 1999 each incumbent Director attended at least 75 percent of the
meetings of the Board of Directors and committees of the Board on which he
served.
Directors who are employees of the Company do not receive compensation for
service on the Board other than their compensation as employees. Independent
Directors receive no cash compensation, with the exception of Mr. Shiffman,
who received $5,000 for his additional services as Secretary in 1999.
Under the Company's 1996 Stock Plan, each new Independent Director receives
a one-time grant of a nonqualified option to purchase 5,000 shares of Common
Stock as of the date of his or her initial election as a Director. These
options have an exercise price equal to the fair market value of the
underlying Common Stock on the date of grant, are fully exercisable upon
the date of grant, and expire on the fifth anniversary of such grant.
Each Independent Director also receives a grant of a nonqualified option
to purchase 5,000 shares of Common Stock under the 1996 Stock Plan as amended
at the fair market price on the date of each annual meeting of the
shareholders of the Company, provided that each such Director continues to
serve as an Independent Director immediately following the annual meeting.
Dr. Taylor, Mr. Shiffman, Mr. Berg, and Mr. Weiss each received such a grant
with an exercise price of $2.66 upon their reelection on April 15, 1999.
Dr. Baker was ineligible for such a grant upon his reelection since he was an
employee of the Company on that date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of three Independent Directors, none
of whom is or has been an officer of the Company. The Company has no
compensation committee interlocks--that is, no officer of the Company serves
as a Director or a compensation committee member of a company that has an
officer or former officer serving on the Company's Board of Directors or the
Compensation Committee.
<PAGE>
INDEPENDENT AUDITORS
Deloitte & Touche has acted as independent auditors of the Company since
1991. A representative of Deloitte & Touche is expected to be present at the
Meeting, will be given the opportunity to make a statement if he desires to
do so, and will be available to answer appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) under the Securities Exchange Act of 1934,
executive officers, directors and 10% shareholders ("insiders") of the
Company are required to file reports on Forms 3, 4, and 5 of their beneficial
holdings and transactions in the Company's securities. To the Company's
knowledge, all insiders of the Company made timely filings of Forms 3, 4, or
5 with respect to transactions or holdings during 1999, except that Dr.
Taylor did not make timely reports of two gifts of 6,800 and 9,400 shares to
his daughter on January 7 and December 31, 1999.
ABSENCE OF DISSENTERS RIGHTS
The Company's shareholders do not have dissenters' rights in connection
with the dissidents' proposals.
PARTICIPANTS IN THE SOLICITATION
Under applicable SEC regulations, each member of the Company's Board of
directors, certain executive officers and other employees of the Printware
and certain other persons may be deemed to be a "participant" as defined in
Schedule 14A promulgated under the Securities Exchange Act of 1934, as
amended, in the Company's solicitation of proxies for the Annual Meeting.
The principal occupations and business addresses of each participant are set
forth on Annex A. Information about present ownership of securities of
certain executive officers of Printware is provided in this proxy statement
and the present ownership of Printware securities by other participants, if
any, is listed on Annex A.
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders of a
company, after timely notice to the company, to present proposals for
shareholder action in the company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by company action in accordance with the
proxy rules. The Company's 2001 Annual Meeting of Shareholders is expected
to be held on or about April 13, 2001, and proxy materials in connection with
that meeting are expected to be mailed and filed with the SEC on or about
March 7, 2001. The deadline for submission of shareholder proposals pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, for
inclusion in the Company's proxy statement for its 2001 Annual Meeting of
Shareholders is November 8, 2000. Additionally, if the Company receives
notice of a shareholder proposal after January 22, 2001, such proposal will
be considered untimely pursuant to Rules 14a-4 and 14a-5(e) and the persons
named in proxies solicited by the Board of Directors of the Company for its
2001 Annual Meeting of Shareholders may exercise discretionary voting power
with respect to such proposal.
<PAGE>
OTHER BUSINESS
The Dissidents are proposing to increase the size of the Company's Board of
Directors from five members to six members. Management recommends that
shareholders vote AGAINST this proposal. The Dissidents do not identify
and discuss why the present board size should be increased. Increasing the
board size provides the Dissidents with one more member for them to exercise
control over the Company. Management recommends a vote AGAINST
the Dissidents' proposal to increase the size of the Company's Board.
Our WHITE proxy card does not address increasing the size of the board of
directors. Our WHITE proxy card does, however, give the named proxies
discretion to vote on such other business as may properly come before the
meeting of shareholders. For the reasons described above, the persons names
as proxies on the Company's WHITE proxy card intend to exercise discretion
and vote against the Dissidents' proposal to increase the size of the
Company's Board.
The Board of Directors does not intend to present any business at the
Meeting other than the matters specifically set forth in this proxy
statement, and knows only of the Dissidents' proposal to increase the number
of directors to six to as other business scheduled to come before the
Meeting. If any other matters are brought before the Meeting, the persons
named as proxies will vote on such matters in accordance with their judgment
of the best interests of the Company.
The Company's Annual Report to Shareholders for the year ended December 31,
1999 was previously mailed to shareholders with a proxy statement dated
March 8, 2000 and a WHITE proxy card. Shareholders may receive, without
charge, a copy of the Company's Annual Report on Form 10-K, including
financial statements and schedules thereto, as filed with the Securities and
Exchange Commission, by writing to: Thomas W. Petschauer, Printware, Inc.,
1270 Eagan Industrial Road, St. Paul, MN 55121, or by accessing the Company's
Internet Web site at: http://PrintwareInc.com.
By order of the Board of Directors:
Brian D. Shiffman
Secretary
April XX, 2000
<PAGE>
ANNEX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN EXECUTIVE OFFICERS OF
PRINTWARE AND OTHER PARTICIPANTS WHO MAY ALSO SOLICIT PROXIES.
In connection with the Printware's solicitation of proxies for its annual
meeting of shareholders, certain other persons may be deemed to be
participants in the solicitation.
The following table sets forth the name, principal business address and the
present employment or other principal occupation, and the name, principal
business and address of any corporation or other organization in which such
employment is carried on, of the Directors and certain executive officers and
employees of Printware, and other representatives of Printware who may be
deemed to be participants in the solicitation.
DIRECTORS OF PRINTWARE
The principal occupations of Printware's Directors who are deemed
participants in the solicitation are set forth in the section entitled "Item
1 Election of Directors", preceding in this proxy statement. The principal
business addresses for the Directors are listed under the section entitled
"Security Ownership of Certain Beneficial Owners and Management" preceding in
this proxy statement.
EXECUTIVE OFFICERS OF PRINTWARE
The principal occupations of certain executive officers of Printware who
are deemed participants in the solicitation are set forth below.
Name Occupation
Daniel A. Baker Ph.D. President and Chief Executive Officer
Thomas W. Petschauer Executive Vice President and Chief Financial Officer
Timothy S. Murphy Vice President of Marketing and Sales
PROXY SOLICITOR
The Company has retained the services of D. F. King, located at 77 Water
Street, New York, N. Y. 10005 to represent the Company in the solicitation
of proxies.
INFORMATION REGARDING OWNERSHIP OF PRINTWARE SECURITIES BY PARTICIPANTS
None of the participants owns any shares of Printware of record but not
beneficially. The number of shares of Common Stock held by Directors and
certain executive officers is set forth under the section entitled "Security
Ownership of Certain Beneficial Owners and Management" preceding in this
proxy statement.
<PAGE>
INFORMATION REGARDING TRANSACTIONS IN PRINTWARE SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of Printware securities
by the participants listed below during the two years from April 1, 1998 to
March 31, 2000. Unless otherwise indicated all transactions are in the
public market.
Transaction Number of
Directors: Date Shares Acquired or Sold
====================== =========== ========= ================
Daniel A. Baker, Ph.D. 6/30/98 1,371 Acquired(1)
9/30/98 1,529 Acquired(1)
12/31/98 1,519 Acquired(1)
3/31/99 1,497 Acquired(1)
6/30/99 1,907 Acquired(1)
9/30/99 1,679 Acquired(1)
1/03/00 2,013 Acquired(1)
3/31/00 1,774 Acquired(1)
2/04/99 73,000 Acquired(2)
2/10/00 73,000 Acquired(2)
Michael C. Berg 10/08/98 2,000 Acquired(3)
10/15/98 2,000 Acquired(3)
10/26/98 2,000 Acquired(3)
10/22/98 5,000 Acquired(2)
4/15/99 5,000 Acquired(2)
Brian D. Shiffman 4/16/98 5,000 Acquired(2)
4/15/99 5,000 Acquired(2)
Allen L. Taylor, Ph.D. 4/16/98 5,000 Acquired(2)
4/15/99 5,000 Acquired(2)
1/07/99 6,800 Gift (4)
12/31/99 9,400 Gift (4)
Victor H. Weiss 10/22/98 5,000 Acquired(2)
4/15/99 5,000 Acquired(2)
Executive Officers:
======================
Thomas W. Petschauer 6/30/98 1,114 Acquired(1)
9/30/98 1,243 Acquired(1)
12/31/98 1,244 Acquired(1)
3/31/99 1,215 Acquired(1)
6/30/99 1,546 Acquired(1)
9/30/99 1,362 Acquired(1)
1/03/00 1,632 Acquired(1)
3/31/00 1,439 Acquired(1)
2/04/99 30,000 Acquired(2)
2/10/00 30,000 Acquired(2)
Timothy S. Murphy 6/30/98 483 Acquired(1)
9/30/98 770 Acquired(1)
12/31/98 771 Acquired(1)
3/31/99 706 Acquired(1)
1/03/00 549 Acquired(1)
3/31/00 403 Acquired(1)
2/04/99 14,000 Acquired(2)
2/10/00 54,000 Acquired(2)
__________________________
(1) Purchased through Employee Stock Purchase Plan
(2) Stock option grant
(3) Open market purchase
(4) Gift to daughter
<PAGE>
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Annex A or in the amended and restated
Printware proxy statement, none of the persons who may be deemed
"participants" as defined in Schedule 14A promulgated under the Exchange Act
nor any of their respective affiliates or associates (together, the
"Participant Affiliates"), (1) directly or indirectly beneficially owns any
shares of Printware Common Stock or any securities of any subsidiary of
Printware or (2) has had any relationship with Printware in any capacity
other than as a stockholder, employee, officer, or director. Furthermore,
except as described in this Annex A or in the amended and restated proxy
statement, no Participant Affiliate is either a party to any transaction or
series of transactions since April, 1998, or has knowledge of any
currently proposed transaction or series of transactions, (1) to which
Printware or any of its subsidiaries was or is to be a party, (2) in which
the amount involved exceeds $60,000, and (3) in which any Participant
Affiliate had, or will have, a direct or indirect material interest.
Except for the change in control agreements ("Agreements") described in the
amended and restated proxy statement as otherwise described therein or in
Annex A, no Participant Affiliate has entered into any agreement or
understanding with any person respecting any future employment by Printware,
its affiliates, or any future transactions to which Printware or any of its
affiliates will or may be a party. Except as described in this Annex A, in
the amended and restated Printware proxy statement, or in Annex A thereto,
there are no contracts, arrangements, or understandings by any Participant
Affiliate within the past year with any person with respect to Printware's
securities.
In the event that the Dissidents are successful in its efforts to replace
the Printware Board, a change in control will be deemed to have occurred
under the terms of Printware's agreements with Messrs. Baker, Petschauer, and
Murphy, and these participants in this solicitation will become eligible for
severance benefits in the event they leave the employ of the Company
following such change in control. See the section of this amended and
restated proxy statement entitled "Change In Control Agreements" for a
further description of these severance benefits.
<PAGE>
PRINTWARE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 13, 2000
The undersigned hereby appoints Daniel A. Baker, Ph.D. or Thomas W.
Petschauer, or either of them, as proxies with full powers of substitution,
to vote all shares of common stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders (the "Meeting"), to be
held at the corporate offices of Printware, Inc. at 1270 Eagan Industrial
Road, St. Paul, MN 55121 on Thursday, April 13, 2000, at 3:30 p.m. Central
Standard Time, and at any and all adjournments thereof, hereby revoking all
former proxies.
1. The election of directors to serve until the 2001 annual meeting:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as indicated below)
Daniel A. Baker, Ph.D. Allen L. Taylor, Ph.D. Brian D. Shiffman
Michael C. Berg Victor H. Weiss
INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON ITEM 1 IN ACCORDANCE
WITH THE SPECIFICATIONS MADE, AND "FOR" SUCH ITEM IF THERE IS NO
SPECIFICATION.
Please date and sign exactly as your name appears on this form of proxy. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each shareholder should sign.
Dated: __________________________, 2000
/ / Please check here if you plan to attend the Meeting.
SIGNATURE OF SHAREHOLDER ____________________________________
SIGNATURE OF SHAREHOLDER ____________________________________
(if held jointly)
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
