<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Pursuant to Section 240.14a-11(c) or Section
240.14a-12
NORTHSTAR COMPUTER FORMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
NORTHSTAR COMPUTER FORMS, INC.
[Logo] 7130 Northland Circle North
Brooklyn Park, Minnesota 55428
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO BE HELD APRIL 11, 2000
TO: The Shareholders of Northstar Computer Forms, Inc.:
The annual meeting of the shareholders will be held at Northstar
Computer Forms, Inc. 7130 Northland Circle North, Brooklyn Park, Minnesota
55428, on Tuesday, April 11, 2000, at 3:30 p.m. for the following purposes:
1. To elect a Board of six directors, each to hold office until the next
Annual Shareholders Meeting or until their successors are elected;
2. To consider and act upon a proposal to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants of the Company
for the fiscal year ended October 31, 2000; and
3. To take action on any other business that may properly come before the
meeting.
The Board of Directors has fixed the close of business on February 28, 2000 as
the record date for the determination of shareholders entitled to vote at the
meeting and any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Roger T. Bredesen, Chairman
Minneapolis, Minnesota
March 2, 2000
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE.
<PAGE>
NORTHSTAR COMPUTER FORMS, INC.
[Logo]
7130 NORTHLAND CIRCLE NORTH
BROOKLYN PARK, MINNESOTA 55428
- -------------------------------------------------------------------------------
PROXY STATEMENT
MARCH 2, 2000
GENERAL MATTERS
SOLICITATION OF PROXIES
This Proxy Statement, mailed on or about March 2, 2000, is furnished to
shareholders of Northstar Computer Forms, Inc. (the "Company") in connection
with the solicitation of proxies by the Board of Directors of the Company to be
voted at the Annual Meeting of Shareholders to be held on Tuesday, April 11,
2000, or any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders. The cost of this
solicitation will be borne by the Company. In addition to solicitation by mail,
officers, directors and employees of the Company may solicit proxies by
telephone, special communications or in person. The Company may also request
banks and brokers to solicit their customers who have a beneficial interest in
the Company's Common Stock registered in the names of nominees and will
reimburse such banks and brokers for their reasonable out-of-pocket expenses.
VOTING, EXECUTION AND REVOCATION OF PROXIES
Only stockholders of record at the close of business on February 28, 1999,
will be entitled to vote. As of that date, the Company had 2,747,858 shares of
Common Stock outstanding and entitled to vote. Each shareholder is entitled to
one vote for each share registered in his or her name. Cumulative voting is not
permitted.
If a proxy is properly executed and returned on time in the form
enclosed, it will be voted at the meeting as specified. Where specification
has not been made, it will be voted FOR the election of the nominees for
Director, FOR ratification of the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending October 31, 2000, and will be deemed to grant
discretionary authority to vote upon any other matters properly coming before
the meeting. The presence in person or by proxy of the holders of a majority
of the shares of stock entitled to vote at the Annual Meeting of
Shareholders, or 1,373,929 shares, constitutes a quorum for the transaction
of business.
A list of those shareholders entitled to vote at the Annual Meeting will
be available for a period of 10 days prior to the Annual Meeting for
examination by any shareholder at the Company's principal executive offices,
7130 Northland Circle North, Brooklyn Park, Minnesota, and at the Annual
Meeting itself.
Any proxy may be revoked at any time before it is voted by written
notice to the Secretary, by receipt of a proxy properly signed and dated
subsequent to an earlier proxy, or by revocation of a written proxy by
request at the Annual Meeting. If not so revoked, the shares represented by
such proxy will be voted.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL
HOLDERS AND MANAGEMENT
The following table sets forth as of January 1, 2000 the number of
shares of Common Stock beneficially owned by each person known to the Company
to be the beneficial owner of more than five percent (5%) of the outstanding
shares of the Company's capital stock, by each director and by all executive
officers and directors as a group. Except as otherwise indicated, the persons
listed possess all voting and investment power with respect to the shares
listed for them.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
<S> <C> <C>
Roger T. Bredesen 211,698 Shares (1) 7.7%
7130 Northland Circle North
Brooklyn Park, MN 55428
Roger T. Bredesen 214,800 Shares 7.8%
Income Trust A dated
June 29, 1990
E. Burke Hinds, Trustee
150 So. 5th Street, Suite 1800
Minneapolis, MN 55402
Roger T. Bredesen 214,800 Shares 7.8%
Income Trust B dated
June 29, 1990
Clarence J. Hynes, Trustee
1433 Utica Avenue So.
Minneapolis, MN 55416
E. Fay Bredesen Income Trust 223,105 Shares 8.1%
dated June 29, 1990
Wendall J. Davidson, Trustee
11931 54th Avenue So.
Minneapolis, MN 55442
E. Fay Bredesen 1996 Annuity 142,065 Shares 5.2%
Trust U/A dated December 20, 1996
E. Fay Bredesen and E. Burke
Hinds, Trustees
150 So. Fifth Street, Suite 1800
Minneapolis, MN 55402
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- -------------------- ----------------
<S> <C> <C>
E. Burke Hinds, Trustee of 396,304 Shares (2) 14.4%
Various Bredesen Trusts
150 So. Fifth Street, Suite 1800
Minneapolis, MN 55402
John Mutschler 3,400 Shares (3) *
7130 Northland Circle North
Brooklyn Park, MN 55428
Kenneth E. Overstreet 113,216 Shares (4) 4.0%
7130 Northland Circle North
Brooklyn Park, MN 55428
J.S. Braun 13,999 Shares (5) *
7130 Northland Circle North
Brooklyn Park, MN 55428
Roy W. Terwilliger 8,000 Shares (6) *
7130 Northland Circle North
Brooklyn Park, MN 55428
Dr. Lester A. Wanninger 6,000 Shares (7) *
7130 Northland Circle North
Brooklyn Park, MN 55428
All executive officers (5)
and directors as a group
(9 individuals) 422,186 Shares (1, 3-8) 14.7%
</TABLE>
- --------------------------------
* Represents less than 1%
(1) Includes 39,439 shares held in an annuity trust, 13,060 shares in a
revocable trust and 14,199 shares held in the Company's Profit Sharing
Plan and Trust in a segregated directed account.
(2) Represents 214,800 shares beneficially owned by the Roger T. Bredesen
Income Trust A dated June 29, 1990, 142,065 shares beneficially owned
by the E. Fay Bredesen 1996 Annuity Trust U/A dated December 20, 1996
and 39,439 shares beneficially owned by the Roger T. Bredesen 1996
Annuity Trust U/A dated December 20, 1996, as to all of which trusts
Mr. Hinds serves as trustee.
(3) Includes 900 shares owned by a profit sharing trust of which Mr.
Mutschler is a co-trustee.
(4) Includes 70,000 shares issuable upon exercise of currently exercisable
options and 3,216 shares held in the Company's Profit Sharing Plan in a
segregated directed account.
(5) Includes 10,000 shares issuable upon exercise of currently exercisable
options.
(6) Consists of 8,000 shares issuable under currently exercisable options.
(7) Consists of 6,000 shares issuable upon exercise of currently
exercisable options.
(8) Includes 27,900 shares issuable to three officers upon exercise of
currently exercisable options.
<PAGE>
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors currently consists of six persons. Each Director
will be elected to serve until the Annual Meeting of Shareholders to be held
in 2001 or until a successor is elected and qualified. Vacancies and
newly-created directorships resulting from an increase of the number of
Directors may be filled by a majority of the Directors then in office and the
Directors so chosen will hold office until the next election.
The Board of Directors has nominated for election Roger T. Bredesen,
John G. Mutschler, J.S. Braun, Kenneth E. Overstreet, Roy W. Terwilliger and
Dr. Lester A. Wanninger. It is intended that proxies accompanying this Proxy
Statement will be voted at the 2000 Annual Meeting FOR the election to the
Board of all of these individuals. The Board of Directors believes that each
nominee will be able to serve, but should any nominee be unable to serve as a
Director, the persons named in the proxies have advised that they will vote
for the election of such substitute nominee as the Board of Directors may
propose.
The Board recommends a vote FOR the election of the nominees for director.
The following information is furnished with respect to each nominee as of
February 28, 2000:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE EXPERIENCE FOR THE PAST 5 YEARS DIRECTOR SINCE
- ------------ ------------------------------- --------------
<S> <C> <C>
Roger T. Bredesen, 73 Chief Executive Officer and Chairman of 1964
the Board of Directors of the Company
since its incorporation in 1964. Until 1994,
Mr. Bredesen was also President of the
Company, a position he held since founding
the Company.
John G. Mutschler, 71 Director of the Company since 1972. Mr. 1972
Mutschler is an attorney in Minnesota, and
since 1958 has been the President of John G.
Mutschler & Associates, Inc., a firm which
designs and administers qualified pension
and profit-sharing plans for businesses in
Minnesota and adjacent states. He has also
been the President of JGM Agency, Inc., a
firm engaged in the management of real estate,
since 1980.
J.S. Braun, 67 Director of the Company since 1992. Mr. Braun 1992
is the Chairman of Braun Intertec Corporation,
an engineering and environmental consulting firm
that he founded in 1957, Board member of
Community Bank Group and Vice Chairman of
a joint venture firm in China, Yucai-Braun Intertec.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE EXPERIENCE FOR THE PAST 5 YEARS DIRECTOR SINCE
- ------------ ------------------------------- --------------
<S> <C> <C>
Kenneth E. Overstreet, 58 Director of the Company since 1993. Since
December 1994, Mr. Overstreet has been the 1993
President of the Company. From 1989 to 1994, he
was the Executive Vice President of the Company.
Roy W. Terwilliger, 62 Director of the Company since 1994. Since 1992, 1994
Mr. Terwilliger has been a Minnesota Senator in
District 42. Since 1989, Mr. Terwilliger has been
President of Community Bank Group, Inc. of Eden
Prairie, Minnesota.
Dr. Lester A. Wanninger, 62 Director of the Company since 1996. Since 1989, 1996
Dr. Wanninger has been a faculty member and
coordinator of extension classes in Information
and Decision Sciences at the Carlson School
of Management of the University of Minnesota.
Dr. Wanninger has a Ph.D. in chemical engineering.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
MEETINGS. During the fiscal year ended October 31, 1999, there were six
meetings of the Board of Directors. All of the meetings were attended by
every director except for one by Mr. Braun.
BOARD COMMITTEES. The Board of Directors has established both an Audit
Committee and a Compensation Committee.
The Audit Committee acts as a liaison between the Company's outside
auditing firm and Company management and, in connection therewith, may (i)
recommend to the Board of Directors an annual selection or retention of the
Company's outside auditing firm, (ii) communicate with the Company's outside
auditing firm concerning matters of accounting and auditing policy which such
firm may desire to discuss with other than Company management, and (iii)
review and recommend to Company management improvements in the Company's
accounting and auditing procedures. The members of the Audit Committee in
fiscal 1999 consisted of Mr. Mutschler and Dr. Wanninger. The Audit Committee
held one meeting during the 1999 fiscal year.
The Compensation Committee makes recommendations to the Board of
Directors respecting the sufficiency and adequacy of the Company's
compensation programs for management and other key employees, including (i)
salary and bonus programs, (ii) incentive and other stock option programs
(including the recommendation of persons who should receive options and the
exercise price and other terms therefor), and (iii) other perquisites. The
members of the Compensation Committee consist of Messrs. Braun, Mutschler and
Terwilliger. One meeting was held in the fiscal year ended October 31, 1999,
at which all members of the Compensation Committee were in attendance. The
Compensation Committee's Report on Executive Compensation is contained below
in this Proxy Statement.
REMUNERATION OF DIRECTORS. Directors receive annual directors' fees of
$3,000 plus $800 per meeting attended (except for the Chairmen of the
Compensation and Audit Committees, who are paid $1,000 per meeting attended).
In addition, directors of the Company receive options to purchase an
aggregate of 10,000 shares of the Company's Common Stock at a purchase price
equal to the closing price of the Common Stock on the date of grant.
<PAGE>
The options are granted on the date a director is elected to the
Board and vest and become exercisable over a five year period at the rate of
twenty percent (20%) per year commencing one year from the date of grant. Mr.
Terwilliger and Dr. Wanninger were granted their options under the Company's
Outside Directors Stock Option Plan (the "Directors Plan") which provides
formula grants of stock options to outside (non-employee) directors ("Outside
Directors"). Options granted under the Directors Plan expire at the earlier
of (i) ten years from the date of grant, or (ii) one year after the Outside
Director ceases to be a member of the Board.
In addition, on February 5, 1999, the four outside directors were each
granted an additional option to purchase 10,000 shares of Common Stock at the
average price of the Common stock on the last trading day prior to the date
of grant.
EXECUTIVE COMPENSATION
The following table summarizes the cash and non-cash compensation earned
by the Company's Chief Executive Officer and its four other executive
officers during the past three fiscal years whose annual salary and bonus
exceeded $100,000 during the Company's fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
================================ ========== ============================ ========================== ======================
NAME AND PRINCIPAL FISCAL ANNUAL COMPENSATION LONG-TERM ALL OTHER
POSITION YEAR COMPENSATION COMPENSATION($)(1)
ENDED
10/31
- -------------------------------- ---------- ---------------------------- -------------------------- ----------------------
SALARY ($) BONUS ($) AWARDS OF OPTIONS (#)
================================ ========== ============================ ========================== ======================
<S> <C> <C> <C> <C> <C>
ROGER T. BREDESEN, 1999 200,000 50,000 -0- 82,697(2)
---------- ------------- -------------- -------------------------- ----------------------
Chairman of the Board 1998 200,000 25,000 -0- 86,987(2)
---------- ------------- -------------- -------------------------- ----------------------
1997 200,000 50,000 -0- 87,799(2)
================================ ========== ============================ ========================== ======================
KENNETH E. OVERSTREET, 1999 180,000 75,208 35,000 23,227(3)
---------- ------------- -------------- -------------------------- ----------------------
President and Director 1998 180,000 38,924 -0- 28,429(3)
---------- ------------- -------------- -------------------------- ----------------------
1997 160,000 64,382 -0- 20,573(3)
================================ ========== ============================ ========================== ======================
MARY ANN MORIN, 1999 95,000 37,040 20,000 14,014
---------- ------------- -------------- -------------------------- ----------------------
Treasurer and 1998 90,000 17,060 -0- 13,853
---------- ------------- -------------- -------------------------- ----------------------
Chief Financial Officer 1997 84,929 30,546 -0- 15,353
================================ ========== ============================ ========================== ======================
STANLEY KLARENBEEK, 1999 105,000 30,995 10,000 5,893
---------- ------------- -------------- -------------------------- ----------------------
Vice President, Sales and 1998 105,000 11,766 -0- 7,171
---------- ------------- -------------- -------------------------- ----------------------
Mrktg. Internal Bank Forms 1997 76,657 27,652 20,000 4,664
================================ ========== ============= ============== ========================== ======================
DON E. DEARBORN, 1999 100,000 36,440 10,000 15,835
---------- ------------- -------------- -------------------------- ----------------------
Vice President (GFS) 1998 90,000 12,001 -0- 13,542
---------- ------------- -------------- -------------------------- ----------------------
1997 78,231 33,861 -0- 20,459
================================ ========== ============= ============== ========================== ======================
</TABLE>
<PAGE>
(1) Other compensation includes contributions under the Company's Profit
Sharing Plan and Trust ($8,089, $8,089, $5,589, $5,893 and $6,852 in
1999 to each of Messrs./Ms. Bredesen, Overstreet, Morin, Klarenbeek and
Dearborn, respectively) and the value of deferred compensation benefits
under the Company's Deferred Compensation Plan ($8,938, $8,425 and
$8,983 in 1999 for Mr. Overstreet, Ms. Morin and Mr. Dearborn,
respectively).
(2) Also includes amounts paid as deferred compensation pursuant to an
annual deferred compensation benefit established pursuant to Mr.
Bredesen's employment agreement with the Company ($68,408 in 1999,
$67,496 in 1998 and $65,786 in 1997) and directors' fees.
(3) Also includes amounts paid as directors' fees.
STOCK OPTIONS
The following table summarizes option grants made under the Company's
1994 Employees Incentive Stock Option Plan (the "1994 Plan") during the fiscal
year ended October 31, 1999 to the executive officers named in the Summary
Compensation table:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1999 FISCAL YEAR
- --------------------------- --------------------------------------------------------------------------------------
Individual Grants(1)
--------------------------------------------------------------------------------------
Potential Realizable
Value of Assumed
Annual Rates of
Number of Percentage of Stock Price
Securities Total Options Exercise of Appreciation for
Underlying Granted to Base Price Option
OPTION Employees in ($/SHARE) Expiration Term(2)
NAME GRANTED FISCAL YEAR DATE -------------------------
5%($) 10% ($)
- --------------------------- -------------- ------------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Overstreet 5,000 16.6% $ 8.00 02/09 $194,405 $554,193
5,000 $12.00 08/09
25,000(3) $10.75 10/09
- --------------------------- -------------- ------------------- ------------- ----------- ------------- -----------
Mary Ann Morin 5,000 9.5% $ 8.00 02/09 $ 30,496 $334,702
5,000 $12.00 08/09
10,000(4) $10.75 10/09
- --------------------------- -------------- ------------------- ------------- ----------- ------------- -----------
Stanley Klarenbeek 5,000 4.7% $ 8.00 02/09 $ 62,889 $163,374
5,000 $12.00 08/09
- --------------------------- -------------- ------------------- ------------- ----------- ------------- -----------
Don E. Dearborn 5,000 4.7% $ 8.00 02/09 $ 62,889 $163,374
5,000 $12.00 08/09
- --------------------------- -------------- ------------------- ------------- ----------- ------------- -----------
</TABLE>
(1) All options were granted at a price equal to the fair market value of
the Company's Common Stock on the date of grant. Except for the grants
referenced in footnotes (3) and (4) below, options become exercisable
30% on the third anniversary of the date of grant, 30% on the fourth
anniversary of the date of grant, and the remaining 40% on the fifth
anniversary of the date of grant.
(2) Amounts shown in these columns have been derived by multiplying the
exercise price by the annual appreciation rate shown (compounded for
the term of the options), multiplying the result by the number of
shares covered by the options, and subtracting the aggregate exercise
price of the options. The dollar amounts set forth under this heading
are the result of calculations at the 5% and 10% rates set by the
Securities and Exchange Commission, and therefore are not intended to
forecast possible future appreciation, if any, of the Company's stock
price.
<PAGE>
(3) These options become exercisable as to 9,275 shares in April 2000, 9,275
shares in April 2001 and 6,450 shares in April 2002.
(4) These options become exercisable as to 7,800 shares in April 2000 and 2,200
shares in April 2001.
The following table summarizes the value of the unexercised options
held by the executive officers named in the Summary Compensation Table as of
October 31, 1999:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
=========================== =============== ============ ============================== ================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE FISCAL YEAR-END FISCAL YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- --------------------------- --------------- ------------ ------------------------------ --------------------------------
<S> <C> <C> <C> <C>
Roger T. Bredesen N/A N/A 0/0 0/0
- --------------------------- --------------- ------------ ------------------------------ --------------------------------
Kenneth Overstreet N/A N/A 70,000/35,000(2) $435,700/12,900
- --------------------------- --------------- ------------ ------------------------------ --------------------------------
Mary Ann Morin N/A N/A 15,300/22,700(3) $90,153/26,157
- --------------------------- --------------- ------------ ------------------------------ --------------------------------
Stanley Klarenbeek N/A N/A 6,300/42,700(3) $30,933/26,157
- --------------------------- --------------- ------------ ------------------------------ --------------------------------
Don E. Dearborn N/A N/A 6,300/12,700(3) $30,933/26,157
=========================== =============== ============ ============================== ================================
</TABLE>
(1) Value of unexercised options is calculated by determining the difference
between the fair market value of the shares underlying the options at
October 31, 1999 and the exercise price of the options.
(2) Consists of options to purchase 10,000 shares for serving on the Board of
Directors, and 95,000 shares under the 1999 Plan.
(3) Granted pursuant to the 1994 Plan.
EMPLOYMENT AGREEMENTS
The Company entered into an Employment Agreement with Roger T. Bredesen,
its Chief Executive Officer, effective December 17, 1986, to serve in such
capacity until terminated by one of the parties upon 90 days' notice. Mr.
Bredesen's annual base salary under the Employment Agreement is adjusted
annually by the Compensation Committee of the Board of Directors (in 1999,
Mr. Bredesen's base salary was $200,000). The Employment Agreement also
establishes a ten-year deferred compensation arrangement under which Mr.
Bredesen began receiving payments in November 1996 and pursuant to which he
received $68,408 for 1999.
Effective January 1, 2000, the Company entered into new management
agreements (the "Agreements") with each of Kenneth Overstreet, Mary Ann Morin,
Don E. Dearborn and Stanley Klarenbeek (each an "Executive"), the Company's four
senior executive officers other than Roger T. Bredesen. Under the Agreements,
Mr. Overstreet is entitled to an annual base salary of $200,000, Ms. Morin is
entitled to an annual base salary of $110,000, and Messrs. Dearborn and
Klarenbeek are entitled to annual base salaries of $112,000. In addition, each
of the Executives is entitled to participate in the Company's incentive
compensation programs. Each Agreement has a term of five years, subject to early
termination in the event of the Executive's death, disability, resignation or
discharge by the Company. Upon the Executive's discharge from employment by the
Company for reasons other than for cause (as
<PAGE>
defined in the Agreements), in the case of Mr. Overstreet and Ms. Morin, the
Company is obligated to pay the Executive a sum equal to two times his or her
average annual compensation for the five most recently completed calendar years
ending before the date of his or her termination, and in the case of Messrs.
Dearborn and Klarenbeek, one times their base salary and bonus for the last
completed calendar year prior to the date of termination. In addition, each
Executive would be entitled to the acceleration of unvested stock options in the
event of his or her discharge from the Company. In the event of the Executives'
voluntary resignation, they will be entitled to one-times (in the case of Mr.
Overstreet and Ms. Morin) or one-half times (in the case of Messrs. Dearborn and
Klarenbeek) their base salary and bonus for the last completed calendar year
prior to the date of resignation.
In the event of a change in control of the Company (as defined in the
Agreements), the Executives will be entitled to share in a fund to be
established by the Company or its successor equal to one percent (1%) of the
change in control transaction price, payable one-half at closing of the change
in control transaction, and the remainder on the one year anniversary of such
date, provided the Executive is still employed with the Company or its successor
on such date. Each Executive's proportionate share of this amount is calculated
as the percentage by which each person's 1999 base salary bears to all four
Executives' 1999 base salary. In addition, upon an Executive's termination from
employment with the Company for any reason (other than for cause) within the two
years following a change in control, the Executive will be entitled to certain
severance payments ranging from two times the Executive's average annual
compensation for the previously completed five calendar years to one times such
average annual compensation, depending on how long after the change in control
the termination occurs.
The Agreements also provide that the Executives will not compete with
the Company for a period of two years after termination of employment, will not
divulge confidential information and other customary matters.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW, PHILOSOPHY AND OBJECTIVES
The Compensation Committee of the Board of Directors, composed of three
non-employee directors, is responsible for determining and periodically
evaluating various levels and methods of compensating the Company's employees,
directors and officers. The Committee recommends, on an annual basis, the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company. Such recommendations are then discussed by
the Board of Directors, which is ultimately responsible for incentive
compensation. The Committee also evaluates and oversees other, more broadly
based benefit programs of the Company. The objective of the Compensation
Committee is to establish a compensation program for executive officers that
will motivate and retain management, recognize and reward individual
performance, and align the financial interests of the executive officers with
the success of the Company.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation, including that of the
Chief Executive Officer, consists of base salary, annual cash bonuses, long term
incentive compensation in the form of stock options and other long term deferred
compensation. Executive officers are also entitled to participate in various
benefits offered to all of the Company's employees such as profit sharing plan
contributions.
BASE SALARY. The Compensation Committee meets in December of each year
to recommend executive officer base salaries for the succeeding calendar year.
Base salary decisions are based on what the Committee believes is reasonable in
light of each executive's individual performance, the financial results of the
Company for the preceding fiscal year, compensation paid to executive officers
in prior years
<PAGE>
and compensation being paid to executive officers of companies similar (in terms
of size, type of business, etc.) to the Company.
ANNUAL CASH BONUS. In addition to base compensation, the Committee
reviews an annual bonus pool pursuant to a formula (previously adopted by the
Board) based on return on shareholders' equity. For 1999, the pool consisted of
4.625% of the Company's fiscal year net income before taxes, profit sharing,
bonus and deferred compensation up to 15% return on shareholders' equity plus
14.5% of its net income above a 15% return on shareholders' equity. After
calculating this amount, which for fiscal 1999 was an aggregate of $471,164, the
Chief Executive Officer then divides this pool among the executive officers and
other employees over a specified seniority level pursuant to a point system
which allocates points among participants according to their level of
responsibility. The Chief Executive Officer adds up the number of points
assigned to all participants in the bonus pool and divides that total into the
amount of the bonus pool yielding a bonus amount per point. For example, Kenneth
E. Overstreet was allocated 2,880 points in fiscal 1999 and the least senior
employee in the pool was allocated 130 points. All employees participating in
the bonus program were allocated a total of 18,045 points, yielding a bonus
amount per point of $26.11, which, in Mr. Overstreet's case, translated to a
bonus of $75,208. The Committee has the discretion, which it has exercised in
prior years, to adjust the aggregate amount of the bonus pool upwards or
downwards.
STOCK OPTION PLAN. The Company also grants stock options under the
shareholder-approved 1994 Employees' Incentive Stock Option Plan to executive
officers, key personnel and other employees as long term incentive compensation.
Currently, 50,752 shares of common stock are reserved for issuance upon exercise
of options granted under the Stock Option Plan (out of a total of 500,000 shares
available under the Plan). Options are granted at prices equal to the fair
market value of the Company's Common Stock on the date of grant. The Committee
encourages the use of stock options as a component of compensation because it
believes that options most closely tie executive officer compensation to the
financial performance of the Company, as evidenced by its stock price. In fiscal
1999, the Company awarded options to Mr. Overstreet, Ms. Morin, Mr. Klarenbeek
and Mr. Dearborn, to acquire 35,000 shares, 20,000 shares, 10,000 shares, and
10,000 shares, respectively, under the Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
Roger Bredesen is the founder of the Company and has been its Chief
Executive Officer since its inception in 1962. Mr. Bredesen's base salary for
fiscal 1999 and 1998 was $200,000. Mr. Bredesen was granted a bonus of $50,000
in fiscal 1999, which was subjectively determined and recommended by the
Committee and not based on the annual bonus formula specified above. Mr.
Bredesen also received an aggregate of $68,408 in deferred compensation pursuant
to his employment agreement with the Company, which provides for payments to be
paid over 10 years at a rate which is subject to adjustment annually based upon
changes in the Consumer Price Index. Mr. Bredesen began receiving these payments
in November, 1996.
The Compensation Committee will continue to evaluate the Company's
executive officer compensation program to ensure that it continues to be
reasonable, performance-based and consistent with the Company's overall
compensation objectives.
<PAGE>
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
John G. Mutschler, Chairman
J.S. Braun
Roy W. Terwilliger
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
As noted above, the Company's Compensation Committee consists of John
G. Mutschler, Chairman, J.S. Braun and Roy W. Terwilliger. No executive officer
of the Company is a member of the Compensation Committee.
No executive officer of the Company serves as a member of the
Compensation Committee or is a director of any other entity, one of whose
executive officers serves on the Compensation Committee or is a director of the
Company.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return of the Dow Jones Publishing Index (consisting of a group of 12 companies)
(the "Industry Index") and the Nasdaq Stock Market (the "Nasdaq Index").
[CHART]
<TABLE>
<CAPTION>
10-94 10-95 10-96 10-97 10-98 10-99
<S> <C> <C> <C> <C> <C> <C>
Nasdaq $100 $135 $160 $210 $235 $393
NSCF $109 $123 $133 $293 $178 $279
Dow Jones
Publishing Index $ 99 $117 $141 $187 $209 $278
</TABLE>
Assumes $100 invested in close of trading on the last trading day preceding the
first day of the fifth preceding year in the Company's Common Stock, the
Industry Index, and the Nasdaq Index. The cumulative total return assumes the
reinvestment of dividends.
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
To the knowledge of the Company, based solely upon review of Forms 3
and 4 and amendments thereto furnished to the Company during the fiscal year
ended October 31, 1999, pursuant to Rule 16(a)-3(e) of the Rules and Regulations
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and forms 5 and amendments thereto furnished to the Company with respect
to its fiscal year ended October 31, 1999, no one failed to file, on a timely
basis, such filings for the Company's 1999 fiscal year.
TRANSACTIONS WITH MANAGEMENT
Effective August 1997, the Company leased its Roseville, Minnesota
facility from two trusts controlled by Roger T. Bredesen and his spouse, E. Fay
Bredesen. The facility is rented at an annual rate of $191,000 (for the first
three Lease years and then escalates based on various price indices thereafter)
plus taxes, utilities, insurance, certain repair and maintenance obligations and
other operating costs for the property. The initial term of the Lease is 10
years with the Company having the right to extend the term for two additional
periods of five years each.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of its Audit Committee,
has selected PricewaterhouseCoopers LLP as independent accountants to examine
the accounts of the Company for the fiscal year ending October 31, 2000, and to
perform other accounting services. PricewaterhouseCoopers has acted as
independent accountants of the Company since 1984. Representatives of
PricewaterhouseCoopers are expected to be present at the 2000 Annual Meeting.
The Board recommends a vote FOR ratification of the appointment of
PricewaterhouseCoopers.
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders
of the Company, after 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 published by the Securities and Exchange Commission. The Northstar
Computer Forms, Inc. 2001 Annual Meeting of Shareholders is expected to be held
on or about April 5, 2001, and proxy materials in connection with that meeting
are expected to be mailed on or about March 1, 2001. Shareholder proposals
prepared in accordance with the proxy rules must be received by the Company on
or before December 1, 2000.
OTHER PROPOSALS
The Board of Directors of the Company does not intend to present any
business at the meeting other than the matters specifically set forth in this
Proxy Statement and knows of no other business to come before the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Roger T. Bredesen, Chairman
<PAGE>
NORTHSTAR COMPUTER FORMS, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 11, 2000
PROXY
The undersigned shareholder of Northstar Computer Forms, Inc. (the "Company")
hereby constitutes and appoints either Roger T. Bredesen or Kenneth E.
Overstreet, or both of them, his or her proxy, with full power of
substitution, to attend the Annual Shareholders Meeting of the shareholders
to the Company to be held on April 11, 2000, at 3:30 P.M., Central Time, at
Northstar Computer Forms, Inc., 7130 Northland Circle North, Brooklyn Park,
MN 55428, or at any and all adjournments thereof, and there to act for and to
vote all stock of the undersigned, in the manner specified below, upon the
following matters:
1. Election of six directors to serve until the next Annual Shareholders
Meeting or until their successors are elected:
Roger T. Bredesen, John G. Mutschler, J.S. Braun, Kenneth E. Overstreet,
Roy W. Terwilliger, and Lester A. Wanninger
<TABLE>
<S> <C>
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY to vote
(except as indicated to the contrary below) for all nominees listed above
</TABLE>
(INSTRUCTION: to withhold authority to vote for any individual, write that
nominee's name in the space provided below.)
--------------------------------------------------------------------------
2. Selection of PricewaterhouseCoopers LLP as independent accountants for the
Company for the fiscal year ending October 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion on any other matter that may properly come before the
meeting or any adjournment or adjournments.
PLEASE FILL IN, SIGN, AND DATE AND MAIL IN THE ENCLOSED ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED BY THE
UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF PROPOSALS 1 AND 2 AND GRANT DISCRETIONARY AUTHORITY ON
ANY OTHER MATER THAT MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE COMPANY'S NOTICE OF ANNUAL
SHAREHOLDERS MEETING TO BE HELD APRIL 11, 2000, AND PROXY STATEMENT.
Dated: , 2000
----------------------------------
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IMPORTANT: Signature(s) should correspond with the
name appearing on the books of the Company. When
signing in a fiduciary or representative capacity,
give full title as such. When more than one owner,
each should sign.
