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[LOGO]
SONIC FOUNDRY, INC.
1617 Sherman Avenue
Madison, Wisconsin 53704
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 24, 2001
The Annual Meeting of Stockholders of SONIC FOUNDRY, INC. will be held at
the Monona Terrace Community and Convention Center, One John Nolen Drive,
Madison, Wisconsin 53703 on May 24, 2001 at 9:00 a.m. local time for the
following purposes:
1. To elect one director to hold office for a term of five years.
2. To ratify the appointment of Ernst & Young LLP as our independent auditors
for the fiscal year ending September 30, 2001.
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Only holders of record of Common Stock at the close of business on April 9,
2001 are entitled to notice of, and to vote at, this meeting or any adjournment
or adjournments thereof.
By Order of the Board of Directors,
Kenneth A. Minor
Secretary
Madison, Wisconsin
April 12, 2001
________________________________
If you cannot personally attend the meeting, it is earnestly requested that you
promptly indicate your vote on the issues included on the enclosed proxy and
date, sign and mail it in the enclosed self-addressed envelope, which requires
no postage if mailed in the United States. Doing so will save us the expense of
further mailings. If you sign and return your proxy card without marking
choices, it will be understood that you wish to have your shares voted in
accordance with the recommendations of the Board of Directors.
________________________________
SONIC FOUNDRY, INC.
1617 Sherman Avenue
Madison, WI 53704
April 12, 2001
PROXY STATEMENT
The Board of Directors of Sonic Foundry, Inc., a Maryland corporation (the
"Company"), hereby solicits the enclosed proxy. Unless instructed to the
contrary on the proxy, it is the intention of the persons named in the proxy to
vote the proxies FOR the election as a director of the nominee listed below for
a term expiring in 2006; and FOR the ratification of the appointment of Ernst &
Young LLP as independent auditors of the Company for the year ending September
30, 2001. In the event that a nominee for director becomes unavailable to serve,
which management does not anticipate, the persons named in the proxy reserve
full discretion to vote for any other person who may be nominated. Any
stockholder giving a proxy may revoke the same at any time prior to the voting
of such proxy. This Proxy Statement and the accompanying proxy are being mailed
on or about April 12, 2001.
Each stockholder will be entitled to one vote for each share of Common
Stock standing in his or her name on our books at the close of business on April
9, 2001. On that date, we had outstanding and entitled to vote 22,117,135 shares
of Common Stock.
PROPOSAL 1: ELECTION OF DIRECTOR
Our Articles of Incorporation and Bylaws provide that the Board of
Directors shall be divided into five classes, with each class having a five-year
term. Directors are assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors, each class consisting, as nearly
as possible, of one-fifth the total number of directors. Vacancies on the Board
of Directors resulting from death, resignation, disqualification, removal or
other causes may be filled by either the affirmative vote of the holders of a
majority of the then-outstanding shares or by the affirmative vote of a majority
of the remaining directors then in office, even if less than a quorum of the
Board of the Directors. Newly created directorships resulting from any increase
in the number of directors may, unless the Board of Directors determines
otherwise, be filled only by the affirmative vote of the directors then in
office, even if less than a quorum of the Board of Directors. A director elected
by the Board of Directors to fill a vacancy (including a vacancy created by an
increase in the number of directors) shall serve for the remainder of the full
term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.
Our Articles of Incorporation provide that the number of directors which
shall constitute the whole Board of Directors shall be fixed exclusively by one
or more resolutions adopted from time to time by the Board of Directors. The
authorized number of directors is currently set at six. One seat on the Board of
Directors, currently held by Frederick H. Kopko, Jr., has been designated as a
Class III Board seat, with the term of the director occupying such seat expiring
as of the Annual Meeting. Mr. Kopko will stand for re-election at this Annual
Meeting.
Mr. Kopko is currently a Board member of the Company who was previously
elected by the
1
stockholders. If elected at the Annual Meeting, Mr. Kopko would serve until the
2006 Annual Meeting and until his successor is elected and qualified, or until
such director's earlier death, resignation or removal.
Nominee for Director for a Five-Year term expiring on the 2006 Annual Meeting
FREDERICK H. KOPKO, JR.
Mr. Kopko, age 45, has been our Secretary from April 1997 to February 2001
and has been a Director since December 1995. Mr. Kopko is a partner of the law
firm of McBreen & Kopko, Chicago, Illinois, and has been a partner of that firm
since January 1990. Mr. Kopko practices in the area of corporate law. He has
been a Director of Butler International, Inc. since 1985 and a Director of
Mercury Air Group, Inc. since 1992. Mr. Kopko received a B.A. degree in
economics from the University of Connecticut, a J.D. degree from the University
of Notre Dame Law School, and an M.B.A. degree from the University of Chicago.
The election of the Class 3 Director requires the approval of a plurality
of the votes cast by holders of the shares of the Company's common stock. Any
shares not voted, whether by broker non-vote or otherwise, will have no impact
on the outcome of the election.
The Board of Directors unanimously recommends a vote FOR the election of
Mr. Kopko as a Class 3 Director.
DIRECTORS CONTINUING IN OFFICE
ARNOLD B. POLLARD Term Expires in 2005
Mr. Pollard, age 58, has been a Director of the Company since December 1997
and a Director of Firebrand Financial Group since August 1996. Since 1993, he
has been the President and Chief Executive Officer of Chief Executive Group,
which publishes "Chief Executive" magazine. For over 25 years, he has been
President of Decision Associates, a management consulting firm specializing in
organizational strategy and structure. Since 1996, Mr. Pollard has served as a
Director and a member of the compensation committee of Delta Financial Corp., a
public company engaged in the business of home mortgage lending and the
International Management Education Foundation, a non-profit educational
organization. He also serves on the advisory board of PeopleTrends. From 1989 to
1991, Mr. Pollard served as Chairman and Chief Executive Officer of Biopool
International, a biodiagnostic public company focusing on blood related testing;
and previously served on the boards of Lillian Vernon Corp. and DEBE Systems
Corp. From 1970 to 1973, Mr. Pollard served as adjunct professor at the Columbia
Graduate School of Business. Mr. Pollard graduated from Cornell University (Tau
Beta Pi), and holds a doctorate in Engineering-Economics Systems from Stanford
University.
DAVID C. KLEINMAN Term Expires in 2004
Mr. Kleinman, age 65, has been a Director of the Company since December
1997 and has taught at the Graduate School of Business at the University of
Chicago since 1971, where he is now Adjunct
2
Professor of Strategic Management. Mr. Kleinman has been a Director (trustee) of
the Acorn Funds since 1972 (of which he is also chairman of the Audit Committee
and a member of the Committee on the Investment Advisory Agreement), a Director
since 1984 of the Irex Corporation, a contractor and distributor of insulation
materials (where he is non-executive chairman of the Board of Directors), a
Director since 1994 of Wisconsin Paper and Products Company, a jobber of paper
and paper products, with operations in Milwaukee and Madison, a Director since
1993 of Plymouth Tube Company, a manufacturer of metal tubing and metal
extrusions (where he serves on the Audit Committee), a Director since 2000 of
AT&T Latin America, a facilities-based provider of telecom services in Brazil,
Argentina, Chile, Peru and Columbia (where he is a member of the Audit Committee
and of the Compensation Committee) and a member of the Advisory Board of DSC
Logistics, a logistics management and warehousing firm. From 1964 to 1971, Mr.
Kleinman was a member of the finance staff of the Ford Motor Company. Mr.
Kleinman received a B.S. in mathematical statistics and a Ph.D. in business from
the University of Chicago.
RIMAS P. BUINEVICIUS Term Expires in 2002
Mr. Buinevicius, age 38, has been our Chairman of the Board since October
1997 and Chief Executive Officer since January 1997. Mr. Buinevicius joined the
Company in 1994 as General Manager and Director of Marketing. Prior to joining
the Company, from 1991 to 1994, Mr. Buinevicius was employed by Alkar, Division
of DEC International, in Lodi, WI, where he was responsible for project
development and management of industrial control systems. From 1990 to 1991, Mr.
Buinevicius was employed as a Senior Electrical Engineer with Arzco Medical
Electronics, Chicago, Illinois, where he was responsible for both hardware and
software design of cardiac pacing equipment. Prior to 1990, Mr. Buinevicius was
employed in a number of research and development positions primarily focused in
the biomedical arena. Mr. Buinevicius has an M.B.A. degree from the University
of Chicago; a Master's degree in Electrical Engineering from the University of
Wisconsin, Madison; and a Bachelor's degree in Electrical Engineering from the
Illinois Institute of Technology, Chicago.
MONTY R. SCHMIDT Term Expires in 2003
Mr. Schmidt, age 37, has been our President since March 1994 and a Director
since February 1994. From October 1991 to February 1994, Mr. Schmidt performed
certain pre-incorporation services for the Company. From March 1991 to September
1991, Mr. Schmidt worked with Lunar Corporation, Madison, Wisconsin where he was
involved in the design of ultrasonic bone densitometry equipment. From 1988 to
1991 Mr. Schmidt held a position as a design engineer, designing hardware and
software for the Berg Company in Madison, Wisconsin. Mr. Schmidt has a B.S.
degree in Electrical Engineering from the University of Wisconsin, Madison. Mr.
Schmidt is a co-founder of the Company.
CURTIS J. PALMER Term Expires in 2003
Mr. Palmer, age 31, has been our Chief Technology Officer since January
1997 and a Director since February 1994. From June 1990 to January 1994, Mr.
Palmer was employed by Microsoft as a Software Design Engineer in the Multimedia
Technologies group, where he worked on the Windows 3.0 and 3.1 operating system
support for multimedia applications. In 1990, Mr. Palmer held a position as a
Software
3
Development Support Engineer at Microsoft, where he was responsible for
assisting third party Windows driver developers in their development of
communications, network and sound drivers for Windows 3.0. Mr. Palmer studied
software engineering at the Oregon Institute of Technology. Mr. Palmer is a co-
founder of the Company.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors met three times during the fiscal year ended
September 30, 2000 ("Fiscal 2000"). The Board of Directors has three standing
committees, the Audit Committee, the Executive Compensation Committee, and the
Stock Option Committee. The Company does not have a nominating committee of the
Board of Directors.
The Audit Committee consists of Messrs. Kopko, Pollard and Kleinman. The
Audit Committee provides assistance to the Board in fulfilling its oversight
responsibility to the stockholders, potential stockholders, the investment
community, and others relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, the annual independent audit of the Company's financial statements,
and the legal compliance and ethics programs as established by management and
the Board. The Audit Committee met twice in Fiscal 2000.
The Executive Compensation Committee consists of Messrs. Kopko, Pollard and
Kleinman. The Executive Compensation Committee makes recommendations to the
Board with respect to salaries of employees, the amount and allocation of any
incentive bonuses among the employees, and the amount and terms of stock options
to be granted to executive officers. The Executive Compensation Committee met
one time in Fiscal 2000.
The Stock Option Committee, which was formed in January 1999, consists of
Messrs. Pollard and Kleinman. The Stock Option Committee makes recommendations
to the Board with respect to the amount and terms of stock options to be granted
to employees (other than executive officers). The Stock Option Committee met one
time in Fiscal 2000.
Each member of the Board attended at least 75% of the aggregate of the
meetings of the Board and of the Committees on which he served and held during
the period for which he was a Board or Committee member, respectively.
DIRECTORS COMPENSATION
Each Non-Employee Director of the Company receives (i) a fee of $1,500 for
each Board or Board Committee meeting attended, and (ii) a fee of $850 for each
Board or Board Committee meeting in which such Director participates by
telephone. In the fiscal year ended September 30, 2000, the total amount of such
compensation paid to Non-Employee Directors was $25,650. When traveling from
out-of-town, the members of the Board of Directors are also eligible for
reimbursement for their travel expenses incurred in connection with attendance
at Board meetings and Board Committee meetings. Directors who are also employees
do not receive any compensation for their participation in Board or Board
Committee meetings.
4
The Non-Employee Directors Stock Option Plan provides for an initial option
grant to purchase 20,000 shares of the Company's Common Stock to Non-Employee
Directors upon first joining the Board and an annual option grant to purchase
20,000 shares of the Company's Common Stock at the time of each annual meeting
to Non-Employee Directors who continue to serve on the Board. Options granted
under the Non-Employee Directors Stock Option Plan have exercise prices equal to
the fair market value of the underlying common stock on the date of the grant,
and vest in full one year after the date of the grant. The term of all options
under the Non-Employee Directors Stock Option Plan is ten years.
If any change is made in the stock subject to the Non-Employee Directors
Stock Option Plan, or subject to any option granted thereunder, the Non-Employee
Directors Stock Option Plan and options outstanding thereunder will be
appropriately adjusted as to the type(s), number of securities and price per
share of stock subject to such outstanding options.
During the fiscal year ended September 30, 2000, options to purchase an
aggregate of 60,000 shares of the Company's Common Stock were granted pursuant
to the Non-Employee Directors Stock Option Plan to Non-Employee Directors
serving on the Board on March 24, 2000 (the annual meeting date).
In addition to options granted pursuant to the Non-Employee Directors Stock
Option Plan, we granted Mr. Kopko a warrant in August 1999 to purchase 30,000
shares of Common Stock at an exercise price of $4.00 per share, in exchange for
a stand-by loan commitment of $2,000,000. In December 1999 we granted Mr. Kopko
a warrant to purchase 50,000 additional shares of common stock at an exercise
price of $28.13 per share in his capacity as a board member.
The options and warrants set forth above have an exercise price equal to
the fair market value of the underlying common stock on the date of grant, and
vest in full immediately. The term of all such options is ten years.
PROPOSAL 2: RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP ("E&Y")
as independent auditors to audit our financial statements for the year ending
September 30, 2001, and has further directed that management submit the
selection of independent accountants for certification by the stockholders at
the annual meeting. E&Y has been our auditors since September 1997.
Representatives of the firm are expected to be present at the annual meeting to
respond to stockholders' questions and to have the opportunity to make any
statements they consider appropriate.
Stockholder ratification of the selection of E&Y as our independent
auditors is not required by our Bylaws or otherwise. However, the Board is
submitting the selection of E&Y to the stockholders for ratification as a matter
of good corporate practice. If the stockholders fail to ratify the selection,
the Board and the Audit Committee will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Board and the Audit Committee in
their discretion may direct the appointment of a different independent
accounting firm at any time during the year if they determine that such a change
would be in the best interests of the Company and its stockholders.
5
The ratification of the appointment of E&Y as independent auditors requires
the approval of a majority of the votes cast by holders of our shares. Shares
may be voted for or withheld from this matter. Shares that are withheld and
broker non-votes will have no effect on this matter because ratification of the
appointment of E&Y requires a majority of the shares cast.
The Board of Directors unanimously recommends a vote FOR Proposal 2
ratifying the appointment of E&Y as independent auditors for the Company.
Relations with Independent Auditors
E&Y has served continuously as our independent auditors since 1997. As
stated in Proposal 2, the Board has selected E&Y to serve as our independent
auditors for the fiscal year ending September 30, 2001.
Audit services performed by E&Y for fiscal 2000 consisted of the
examination of our financial statements, review of quarterly results, and
services related to filings with the Securities and Exchange Commission (SEC).
We also retained E&Y to perform appraisal services associated with allocating
certain intangible assets purchased in connection with the acquisition of the
stock of STV Communications, Inc. ("STV") and International Image Services, Inc.
("II"), as well as certain other merger, tax and consultative services. All fees
paid to E&Y were reviewed and considered for independence by the Audit
Committee.
Fiscal 2000 Audit Firm Fee Summary
During Fiscal 2000, we retained our principal auditor, E&Y, to provide
services in the following categories and amounts:
Audit Fees $183,800
Financial Information Systems
Design and Implementation 0
Appraisal Services 68,900
Other Fees 154,015
REPORT OF THE AUDIT COMMITTEE/1/
It is the responsibility of the Audit Committee to provide assistance to
the Board of Directors in fulfilling its oversight responsibility to the
stockholders, potential stockholders, the investment community, and others
relating to the Company's financial statements and the financial reporting
process, the systems of internal accounting and financial controls, the annual
independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board.
______________________
/1/ The material in this report is not "soliciting material", is not deemed
filed with the SEC, and is not to be incorporated by reference in any of our
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language in such filing.
6
Management has the primary responsibility for the financial statements and the
reporting process, including the systems of internal controls.
In June 2000, the Audit Committee adopted a written charter governing the
operations of the Audit Committee. The charter requires that no member of the
Audit Committee have a relationship that may interfere with the exercise of his
or her independence from management and the Company, that all Audit Committee
members be financially literate, or shall become financially literate within a
reasonable period of time after appointment to the Audit Committee, and that at
least one member shall have accounting or related financial management
expertise. A copy of the Audit Committee Charter is attached as Appendix A to
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this proxy statement. In addition, the Audit Committee has reviewed the listing
standards of the National Association of Securities Dealers and determined that
each member has satisfied those requirements.
We discussed the audited financial statements for the year ended September
30, 2000 with management. We reviewed with E&Y, who is responsible for
expressing an opinion on the conformity of our audited financial statements with
accounting principles generally accepted in the United States, its judgment as
to the quality and acceptability of our accounting principles and any other
matters that we are required to discuss under generally accepted auditing
standards. In addition, we have discussed E&Y's independence from management and
the Company including matters set forth in the written disclosures required by
Independence Standards Board Standard No. 1 and matters required to be discussed
by Statement on Auditing Standards No. 61 pertaining to communications with the
Audit Committee.
We discussed with E&Y the overall scope and plans of their audit. We met
with E&Y, as the Company's independent auditors, with and without management
present, to discuss results of their examinations, their evaluations of our
internal controls, and the overall quality of our financial reporting. We held
two meetings during Fiscal 2000.
Relying on the reviews and discussions referred to above, we recommended to
the Board that the audited financial statements be included in the Annual Report
on Form 10-K for the fiscal year ended September 30, 2000 for filing with the
SEC.
Respectfully submitted,
AUDIT COMMITTEE
Frederick H. Kopko, Jr.
Arnold B. Pollard
David C. Kleinman
EXECUTIVE OFFICERS OF THE COMPANY
Our executive officers, who are appointed by the Board of Directors, hold
office for one-year terms or until their respective successors have been duly
elected and have qualified.
Rimas P. Buinevicius is our Chairman of the Board of Directors and Chief
Executive Officer. (See "Directors Continuing in Office".)
Monty R. Schmidt is our President and a Director. (See "Directors
Continuing in Office".)
7
Curtis J. Palmer is our Chief Technology Officer and a Director. (See
"Directors Continuing in Office".)
Jan B. Brzeski, age 34, served as Vice President - Business Development
from April 2000 to December 2000, and was a member of the Board of Directors
from June 2000 to March 2001. From 1994 to April 2000, Mr. Brzeski was the co-
founder and CEO of STV, a provider of streaming media services that offered
webcasting, production and post-production services, high-end encoding, signal
acquisition, hosting, content management, digital rights management, and
syndication, based in Santa Monica, California. We acquired STV in April 2000.
Mr. Brzeski has a B.S. degree in Physics from Dartmouth College and a Masters
degree in Philosophy, Politics & Economics from Oxford University. Mr. Brzeski
is no longer affiliated with the Company.
Kenneth A. Minor, age 39, has been our Chief Financial Officer since June
1997, Assistant Secretary from December 1997 to February 2001 and Secretary
since February 2001. From September 1993 to April 1997, Mr. Minor was employed
as Vice President and Treasurer for Fruehauf Trailer Corporation, a manufacturer
and global distributor of truck trailers and related after market parts and
service. From May 1988 to September 1993 he was employed as Assistant Treasurer
and Controller for Autodie Corporation, an automotive stamping die company. From
1984 to 1987 Mr. Minor was employed with Deloitte Haskins & Sells as a staff
accountant. Mr. Minor is a certified public accountant and has a B.B.A. degree
in accounting from Western Michigan University.
Daniel P. McLellan, age 47, served as our Senior Vice President and General
Manager - Media Services from August 2000 to March 2001. From June 1998 to
August 2000 Mr. McLellan was President of II and from May 1994 to June 1998
served as its Vice President of Marketing and Sales. II provides media
production solutions for the television and film industries, and we acquired II
effective June 1, 2000. Mr. McLellan studied at York University, Toronto Canada.
Mr. McLellan is no longer affiliated with the Company.
Jeffrey B. Conover, age 40, served as our Vice President of Marketing from
September 1999 to December 2000. From 1985 to September 1999, Mr. Conover was
employed by RPS, Inc., a small package ground, air and international delivery
business that merged with Federal Express Corporation in 1997. Mr. Conover held
a variety of marketing positions with RPS and was most recently the Director of
Marketing, Research and Strategic Planning. Mr. Conover has a B.S. Degree in
Marketing from West Virginia University and a M.B.A. from the University of
Pittsburgh. Mr. Conover is no longer affiliated with the Company.
Ted J. Lingard, age 36, has been our Vice President of Operations since
September 1999. From 1989 to September 1999, Mr. Lingard was employed by
Advanced Input Devices, a custom electronics manufacturer, in various
manufacturing, engineering, and sales management capacities including Sales
Engineering Manager, International Business Manager, and Director of
Manufacturing Engineering. Mr. Lingard has a Bachelors Degree in Mechanical
Engineering from the University of Wisconsin, a Masters degree in Mechanical
Engineering from the University of Maryland and a M.B.A. from Gonzaga
University.
Bradley W. Reinke, age 38, has been our Senior Vice President of Sales and
Marketing since December 2000 and the Vice President of Sales from October 1999
to December 2000. From August 1998
8
to October 1999, Mr. Reinke was employed by Universal Studios - Music and Video
Distribution Company as Vice President of Sales. From September 1993 to July
1998 Mr. Reinke held various positions including Regional Sales Manager and
Director of Sales for Buena Vista Home Video, a division of the Walt Disney
Company. From July 1987 to April 1993, he held various sales management
positions at SmithKline Beecham Consumer Brands. Mr. Reinke has a B.B.A. in
marketing from the University of Wisconsin -Whitewater.
Christopher C. Cain, age 32, has been our Vice President-General Counsel
since December 2000, and our Assistant Secretary since February 2001. Mr. Cain
was our Corporate Counsel from July 2000 to November 2000. From September 1998
to July 2000, Mr. Cain was an attorney at the law firm of Foley & Lardner,
Madison, WI. From 1996 to September 1998, Mr. Cain was an attorney at the law
firm of Oppenheimer Wolff & Donnelly, LLP, Minneapolis, MN. Mr. Cain has a J.D.
degree from the University of Minnesota Law School and a B.B.A. in accounting
from the University of Wisconsin, Madison. Mr. Cain also holds a C.P.A. license
from the State of Minnesota.
Jeffrey S. Hackel, age 34, has been our Vice President - Human Resources
since February 2000 and was our Director of Human Resources from July 1998 to
February 2000. From January 1992 to July 1998, Mr. Hackel was employed in
various human resource management capacities at TDS TELECOM, a national
telecommunications company providing local, long distance and Internet services.
Mr. Hackel has a B.A. degree from the University of Wisconsin-Madison and holds
a Senior Professional in Human Resources certification.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table shows information known to us about the beneficial
ownership of our Common Stock as of April 1, 2001, by each stockholder known by
us to own beneficially more than 5% of our Common Stock, each of our executive
officers named in the Summary Compensation Table ("Named Executive Officers"),
each of our directors, and all of our directors and executive officers as a
group. Unless otherwise noted, the mailing address for these stockholders is
1617 Sherman Avenue, Madison, Wisconsin 53704.
Beneficial ownership is determined in accordance with the rules of the SEC,
and includes voting or investment power with respect to shares. Shares of common
stock issuable upon the exercise of stock options or warrants exercisable within
60 days after April 1, 2001, which we refer to as Presently Exercisable Options,
are deemed outstanding for computing the percentage ownership of the person
holding the options but are not deemed outstanding for computing the percentage
ownership of any other person. Unless otherwise indicated below, to our
knowledge, all persons named in the table have sole voting and investment power
with respect to their shares of common stock, except to the extent authority is
shared by spouses under applicable law. The inclusion of any shares in this
table does not constitute an admission of beneficial ownership for the person
named below.
Based on currently available Schedules 13D and 13G filed with the SEC, we
do not know of any beneficial owners of more than 5% of our Common Stock, other
than listed below.
9
Number of Shares of
Class Percent
Name of Beneficial Owner Beneficially Owned of Class (1)
------------------------ ------------------- ------------
Common Stock
Rimas P. Buinevicius(2) 1,243,014 5.6%
Monty R. Schmidt (2) 3,193,136 14.4
Curtis J. Palmer(2) 3,193,136 14.4
Kenneth A. Minor(3) 81,264 *
Jeffrey Conover(4) 50,000 *
Frederick H. Kopko, Jr.(5) 323,192 1.5
20 North Wacker Drive
Chicago, IL 60606
Arnold B. Pollard(6) 62,745 *
733 Third Avenue
New York, NY 10017
David C. Kleinman(7) 60,000 *
1101 East 58th Street
Chicago, IL 60637
------------------- ---------------
All Executive Officers and Directors as a Group
(12 persons)(8) 8,888,622 39.0%
=================== ===============
* Less than 1%
(1) Applicable percentages are based on 22,117,135 shares outstanding, adjusted
as required by rules promulgated by the SEC.
(2) Includes 50,000 shares subject to Presently Exercisable Options.
(3) Includes 71,001 shares subject to Presently Exercisable Options. Consists
of 50,000 shares subject to Presently Exercisable Options. Mr. Conover
resigned from the Company in December 2000.
(5) Includes 140,000 shares subject to Presently Exercisable Options.
(6) Consists of 62,745 shares subject to Presently Exercisable Options.
(7) Consists of 60,000 shares subject to Presently Exercisable Options.
(8) Includes an aggregate of (i) 621,881 shares subject to Presently
Exercisable Options; and (ii) 48,510 options to purchase non-voting
exchangeable shares, which shares are exchangeable on a one-for-one basis,
per share, of our Common Stock.
10
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation we paid during the
fiscal year ended September 30, 2000 to our Named Executive Officers.
Long Term
Compensation
------------
Awards of
Annual Compensation(1) Securities All Other
------------------------- Underlying Compen-
Name and Principal Position Year Salary Bonus Option sation(2)
---------------------------------------------------------------------------------------------------
Rimas P. Buinevicius 2000 $221,154 $70,000 -- $ 7,033
Chief Executive Officer and 1999 125,000 25,000 20,000 4,360
Chairman 1998 96,154 500 20,000 2,947
Monty R. Schmidt 2000 184,615 70,000 -- 6,563
President and Director 1999 125,000 25,000 20,000 3,713
1998 96,154 500 20,000
Curtis J. Palmer 2000 184,615 70,000 -- 4,466
Chief Technology Officer 1999 125,000 25,000 20,000 4,742
1998 96,154 500 20,000
Kenneth A. Minor 2000 139,231 40,000 13,000 3,367
Chief Financial Officer 1999 120,000 15,000 10,000 6,365
1998 102,692 500 40,000 10,000(3)
Jeffrey B. Conover(4) 2000 176,346 1,650 -- 24,009(5)
Vice President - Marketing 1999 -- -- 30,000 --
1998 -- -- -- --
(1) As permitted by rules established by the SEC, no amounts are shown with
respect to certain "perquisites" where such amounts do not exceed in the
aggregate the lesser of 10% of bonus plus salary or $50,000.
(2) Unless otherwise indicated, consists of personal use of Company vehicle
included as a portion of executive's taxable compensation.
(3) Consists of moving and relocation costs reimbursed to Mr. Minor.
(4) Mr. Conover commenced employment with us in September 1999 and resigned
effective December 2000.
(5) Consists of (i) personal use of Company vehicle ($3,164), and (ii) moving
and relocation costs ($20,864).
Employment Agreements
We entered into employment agreements with Rimas Buinevicius, Monty R.
Schmidt, and Curtis Palmer and renewed them on substantially the same terms as
the prior agreements in January 2001. The salaries of each of Messrs.
Buinevicius, Schmidt and Palmer are subject to increase each year at the
discretion of the Board of Directors. Messrs. Buinevicius, Schmidt, and Palmer
are also entitled to incidental benefits of employment under the agreements.
Each of the employment agreements provides that if (i) we breach our duty under
such employment agreement, (ii) the employee's status or responsibilities
11
with us has been reduced, (iii) we fail to perform our obligations under such
employment agreement, or (iv) after a Change in Control, our financial prospects
have significantly declined, the employee may terminate his employment and
receive all salary and bonus owed to him at that time, prorated, plus three
times the highest annual salary and bonus paid to him in any of the three years
immediately preceding the termination. If the employee becomes disabled, he may
terminate his employment and receive all salary owed to him at that time,
prorated, plus a lump sum equal to the highest annual salary and bonus paid to
him in any of the three years immediately preceding the termination. Pursuant to
the employment agreements, each of Messrs. Buinevicius, Schmidt and Palmer has
agreed not to disclose our confidential information and not to compete against
us during the term of his employment agreement and for a period of one year
thereafter. Such non-compete clauses may not be enforceable, or may only be
partially enforceable, in state courts of relevant jurisdictions.
A "Change in Control" is defined in the employment agreements to mean: (i)
a change in control of a nature that would have to be reported in our proxy
statement; (ii) we are merged or consolidated or reorganized into or with
another corporation or other legal person and as a result of such merger,
consolidation or reorganization less than 75% of the outstanding voting
securities or other capital interests of the surviving, resulting or acquiring
corporation or other legal person are owned in the aggregate by our stockholders
immediately prior to such merger, consolidation or reorganization; (iii) we sell
all or substantially all of our business and/or assets to any other corporation
or other legal person, less than 75% of the outstanding voting securities or
other capital interests of which are owned in the aggregate by our stockholders,
directly or indirectly, immediately prior to or after such sale; (iv) any person
(as the term "person" is used in Section 13(d) (3) or Section 14(d) (2) of the
Securities Exchange Act of 1934 (the "Exchange Act") had become the beneficial
owner (as the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of 25% or more
of the issued and outstanding shares of our voting securities; or (v) during any
period of two consecutive years, individuals who at the beginning of any such
period constitute our directors cease for any reason to constitute at least a
majority thereof unless the election, or the nomination or election by our
stockholders, of each new director was approved by a vote of at least two-thirds
of such directors then still in office who were directors at the beginning of
any such period.
12
OPTIONS GRANTED IN FISCAL 2000
The Company grants options to its executive officers under our employee
stock option plans. As of September 30, 2000, options to purchase a total of
1,720,469 shares were outstanding under the plans, and options to purchase
1,633,104 shares remained available for grant thereunder. During Fiscal 2000,
options to purchase 13,000 shares were granted to Named Executive Officers.
The following tables show for the fiscal year ended September 30, 2000
certain information regarding options granted to, exercised by and held at year
end by the Named Executive Officers.
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (2)
-------------------------------------------------------------------------------------------
Number of % of Total
securities Options Exercise
Underlying Granted to Price
Options Employees in Per Expiration
Granted (1) Fiscal Year Share Date 5% 10%
----------- ----------- ----- ---- -- ---
Rimas P. Buinevicius - - - - - -
Monty R. Schmidt - - - - - -
Curtis J. Palmer - - - - - -
Kenneth A. Minor 13,000 1.6 $5.91 12/13/09 $48,000 $122,000
Jeffrey B. Conover - - - - - -
(1) This option has a grant price that is equal to the fair market value on the
date of grant. Such option vests according to the following schedule: 4,333
vest on each of December 13, 2000 and 2001 and 4,334 vest on December 13,
2002. This option generally has a maximum term of ten years.
(2) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, in accordance with the SEC's rules. Actual gains, if any, on stock
option exercises are dependent on the future performance of the common
stock, overall market conditions and the option holders continued employment
through the vesting period. The amounts reflected in this table may not
necessarily be achieved.
13
2000 FISCAL YEAR OPTION EXERCISES AND YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at Fiscal
Year-End Year-End (1)
--------------------------------------------------------------------
Shares
Acquired
on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------------------
Rimas P.
Buinevicius - - 40,000 - $221,000 -
Monty R.
Schmidt - - 40,000 - $221,000 -
Curtis J.
Palmer - - 40,000 - $221,000 -
Kenneth A.
Minor 10,000 $100,000 53,334 19,666 $338,000 $77,000
Jeffrey B.
Conover - - 10,000 20,000 $ 44,000 $89,000
(1) Representing the closing price per share of the underlying shares on the
last day of the fiscal year less the option exercise price multiplied by the
number of shares. The closing value per share was $8.88 on the last trading
day of the fiscal year as reported on the NASDAQ National Market.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE /1/
The Executive Compensation Committee (the "Committee") of the Board of
Directors is composed entirely of outside, non-management directors. The
Committee sets and administers the policies governing annual compensation of
executive officers, including cash compensation and stock option programs for
executive employees.
Compensation Policies
Sonic Foundry operates in the competitive and rapidly changing high
technology and media business environment. The goals of our executive
compensation program are to motivate executives to achieve our business
objectives in this environment and reward them for their achievement, foster
teamwork, and attract and retain executive officers who contribute to our long-
term success. During fiscal 2000, we used salary, bonus, stock options and
personal use of company vehicles to meet these goals.
_______________________
/1/ The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
14
Our philosophy and guiding principles are to provide compensation levels
that are comparable to those offered by other leading high technology companies.
Our compensation policies align the interests of our officers with the long-term
interests of our stockholders through stock compensation. For example, in fiscal
2000, compensation included options to purchase shares granted under our 1995
Stock Option Plan that vest and become exercisable over a three-year period.
Another principle is that a substantial portion of each executive's compensation
be in the form of an incentive bonus. Receipt of this bonus, which is typically
payable annually in January, is contingent upon meeting both individual
performance goals and company objectives. However, we retain the authority to
alter the bonus amounts because qualitative factors and long-term results need
to be evaluated as well as the short-term operating results. For the bonus paid
in January 2000, we considered factors such as achievement of a 98.5% growth in
fiscal 1999 revenues over 1998 levels, achievement of certain management goals,
market share increases and new product development.
Annual Compensation
The salary portion of executive compensation is determined annually by
reference to multiple surveys of high technology companies in comparable
geographic regions. The executive officers are matched to each position by
comparing their responsibilities to the survey description most accurately
representing their position with us by content, organizational level and
revenue. Given the officers' levels of responsibility and our past performance,
we target the median percentile competitive position as stated by the survey in
determining salary for each executive officer. As the executives mature in their
respective positions, we expect to target a high percentile competitive position
for salary compensation. A substantial portion of the annual compensation of
each executive officer is in the form of an incentive bonus, which becomes a
greater portion of an officer's potential total compensation as the executive's
level of responsibility increases. Mssrs. Conover, Lingard, Reinke, Brzeski and
McLellan joined the Company either late in fiscal 1999 or in fiscal 2000 and
therefore did not receive bonuses or received only limited bonuses in January
2000.
Long-term Compensation.
The Committee has utilized stock options for all employees to motivate and
retain them for the long-term. The Committee believes that these forms of
compensation closely align the employee's interests with those of stockholders
and provide a major incentive to them in building stockholder value.
Options are typically granted annually and are subject to vesting provisions
to encourage employees to remain employed with Sonic Foundry. The Committee
considered fiscal 1999 annual grants in December 1999, and fiscal 2000 annual
grants in December 2000. Officers, including our Chief Executive Officer, who
are also members of the Board of Directors were not awarded options in fiscal
2000.
Each executive officer receives stock options based upon that officer's
relative position, responsibilities and performance by the individual over the
previous fiscal year and the officer's anticipated performance and
responsibilities. Additionally, we consider the net present value of the grant
compared to typical grants at high technology companies of a similar size to
Sonic Foundry. We also review the prior level of grants to the officers and to
other members of senior management, including the number of shares that continue
to be subject to vesting under outstanding options, in setting the level of
options to be granted to the executive officers. The size of the option grants
is not related to Sonic Foundry's performance.
15
Stock options are granted at an option price equal to the fair market value
of the Company's Common Stock on the date of the grant and are subject to
vesting over five years. The option vesting period is designed to encourage
employees to work with a long-term view of the Company's welfare and to
establish their long-term affiliation with the Company. It is also designed to
reduce employee turnover and to retain the knowledge and skills of valued staff.
Chief Executive Officer Compensation
Rimas Buinevicius led the Company to a successful year in Fiscal 1999.
Revenues increased approximately 100% from the previous fiscal year and the
Company successfully introduced new products and broadened its product line.
Consequently, the Committee increased the base salary of Mr. Buinevicius (who
served as Chief Executive Officer during all of fiscal 2000) in January 2000 to
$250,000. The Committee also approved the payment of Mr. Buinevicius' fiscal
1999 bonus of $70,000 in January 2000. Mr. Buinevicius was not granted any
common stock options in fiscal 2000 under the Company's 1995 Stock Option Plan.
Although the Company has continued its revenue growth and growth of its product
line in Fiscal 2000, the Company has, due to financial constraints impacting the
Company and the entire industry, reduced the salary of Mr. Buinevicius to
$200,000 effective January 1, 2001.
EXECUTIVE COMPENSATION COMMITTEE
Frederick H. Kopko, Jr.
Arnold B. Pollard
David C. Kleinman
Compensation Committee Interlocks and Insider Participation
The members of the Executive Compensation Committee of the Company's Board of
Directors for Fiscal 2000 were those named in the Executive Compensation
Committee Report. No member of the Committee was at any time during Fiscal 2000
or at any other time an officer or employee of Sonic Foundry, Inc.
No executive officer of Sonic Foundry, Inc. has served on the board of
directors or compensation committee of any other entity that has or has had one
or more executive officers serving as a member of the Board of Directors of
Sonic Foundry, Inc. During Fiscal 2000, we retained the Chicago law firm of
McBreen & Kopko to perform certain legal services. Frederick H. Kopko, Jr. is a
partner in McBreen & Kopko.
16
COMPANY STOCK PRICE PERFORMANCE
The stock price performance graph below shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, or under
the Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
soliciting material or filed under such acts, irrespective of our general
incorporation language in such filing. The graph below compares the cumulative
total stockholder return on our Common Stock from April 22, 1998 through and
including September 30, 2000 with the cumulative total return on The AMEX Market
Value Index, The NASDAQ Stock Market (US only) and the Chase Hambrecht & Quist
Technology Index (assuming the investment of $100 in our Common Stock on April
22, 1998 or on March 31, 1998 for each of the indexes and reinvestment of all
dividends). Unless otherwise specified, all dates refer to the last day of each
month presented. Our Common Stock is traded on the NASDAQ National Market.
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG SONIC FOUNDRY, INC., THE AMEX MARKET VALUE INDEX,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
American NASDAQ
Chase H&Q Stock Exchange Stock Market
Sonic Foundry Technology (U.S.) (U.S.)
------------- ---------- ------ ------
4/22/98 100.0 100.0 100.0 100.0
9/30/98 79.17 91.01 84.58 92.73
9/30/99 125.83 175.29 108.66 151.51
9/30/00 236.67 285.41 135.22 201.12
* $100 INVESTED ON 4/22/98 IN STOCK OR ON 3/31/98
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING SEPTEMBER 30.
Our closing stock price on September 29, 2000, the last trading day of our
2000 fiscal year, was $8.88 per share.
17
CERTAIN TRANSACTIONS
During Fiscal 2000, we retained the Chicago law firm of McBreen & Kopko to
perform certain legal services. Frederick H. Kopko, Jr., one of our directors
and substantial stockholders, is a partner in McBreen & Kopko.
In June 1998, the disinterested members of the Board of Directors
unanimously approved the issuance of Company guaranties of certain obligations
of Monty Schmidt and Rimas Buinevicius. We executed these guaranties in June and
July of 1998 to a bank in order to facilitate the purchase of personal
residences by Mr. Schmidt and Mr. Buinevicius. At September 30, 2000, there was
a balance of approximately $63,000 remaining on the loans.
During Fiscal 2000, we loaned certain officers $61,000 to exercise employee
stock options. In addition, the Company loaned an officer $171,000, in
connection with the sale of his former residence and his relocation to Madison,
Wisconsin.
In January 2001, a $4,000,000 note was due the former shareholders of II.
We withheld paying the note pending the resolution of certain disputed
representations made during the acquisition. In February 2001 the note holders
initiated litigation against the Company in Toronto for payment of the note. Dan
McLellan, our former Senior Vice President and General Manager - Media Services
and the former President of II is a plaintiff in the action.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than ten percent of our Common Stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Based on this review of the copies of such forms received
by us, except as noted below, we believe that all filing requirements applicable
to its officers, directors, and greater than ten-percent beneficial owners were
complied with. Messr. Minor filed one late report reflecting the exercise of
employee stock options and Messrs. Hackel, Brzeski, McLellan and Cain each filed
a late initial report reflecting their ownership of our stock and options at the
time they became our officers.
18
STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be considered for inclusion in our
proxy statement and form of proxy relating to the Annual Meeting of Stockholders
for the year 2002, the proposal must be received by us no later than December
13, 2001.
OTHER MATTERS
The Board of Directors has at this time no knowledge of any matters to be
brought before this year's Annual Meeting other than those referred to above.
However, if any other matters properly come before this year's Annual Meeting,
it is the intention of the persons named in the proxy to vote such proxy in
accordance with their judgment on such matters.
GENERAL
A copy of our Annual Report to Stockholders for the fiscal year ended
September 30, 2000 is being mailed, together with this Proxy Statement, to each
stockholder. Additional copies of such Annual Report and of the Notice of Annual
Meeting, this Proxy Statement and the accompanying proxy may be obtained from
us. We have retained Continental Stock Transfer and Trust Company to assist in
the solicitation of proxies, primarily from brokers, banks and other nominees,
for an estimated fee of $2,000 plus expenses. We will, upon request, reimburse
brokers, banks and other nominees, for costs incurred by them in forwarding
proxy material and the Annual Report to beneficial owners of Common Stock. In
addition, directors, officers and regular employees of the Company and its
subsidiaries, at no additional compensation, may solicit proxies by telephone,
telegram or in person. All expenses in connection with soliciting management
proxies for this year's Annual Meeting, including the cost of preparing,
assembling and mailing the Notice of Annual Meeting, this Proxy Statement and
the accompanying proxy, are to be paid by the Company.
The Company will provide without charge (except for exhibits) to any record
or beneficial owner of its securities, on written request, a copy of the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended September 30, 2000, including the financial
statements and schedules thereto. Exhibits to said report will be provided upon
payment of fees limited to the Company's reasonable expenses in furnishing such
exhibits. Written requests should be directed to Investor Relations, 1617
Sherman Avenue, Madison, Wisconsin 53704.
In order to assure the presence of the necessary quorum at this year's
Annual Meeting, and to save the Company the expense of further mailings, please
date, sign and mail the enclosed proxy promptly in the envelope provided. No
postage is required if mailed within the United States. The signing of a proxy
will not prevent a stockholder of record from voting in person at the meeting.
By Order of the Board of Directors,
Kenneth A. Minor
April 12, 2001 Secretary
19
Appendix A
SONIC FOUNDRY, INC.
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the Audit Committee. The Audit Committee
shall review and reassess the Charter at least annually and obtain the approval
of the Board of Directors. The Audit Committee shall be appointed by the Board
of Directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the Audit Committee shall
be considered independent if they have no relationship that may interfere with
the exercise of their independence from management and the Company. All
committee members shall be financially literate, or shall become financially
literate within a reasonable period of time after appointment to the committee,
and at least one member shall have accounting or related financial management
expertise.
Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its oversight responsibility to the stockholders, potential
stockholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board. In so
doing, it is the responsibility of the Audit Committee to maintain free and open
communication between the Audit Committee, independent auditors, the internal
auditors and management of the Company. In discharging its oversight role, the
Audit Committee is empowered to investigate any matter brought to its attention
with full access to all books, records, facilities, and personnel of the Company
and the power to retain outside counsel, or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of its
activities to the board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The Audit Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
. The Audit Committee shall have a clear understanding with management and
the independent auditors that the independent auditors are ultimately
accountable to the Board
Dated June 9, 2000
Appendix A
and the Audit Committee, as representatives of the Company's stockholders.
The Audit Committee shall have the ultimate authority and responsibility to
evaluate and, where appropriate, replace the independent auditors. The
Audit Committee shall discuss with the auditors its independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board. Annually, the
Audit Committee shall review and recommend to the Board the selection of
the Company's independent auditors, subject to stockholders' approval.
. The Audit Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the Audit
Committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the
Audit Committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss the
results of its examinations.
. The Audit Committee shall review the interim financial statements with
management prior to the filing of the Company's Quarterly Report on Form
10-Q. Also, the Audit Committee shall discuss the results of the quarterly
review and any other matters required to be communicated to the Audit
Committee by the independent auditors under generally accepted auditing
standards. The chair of the Audit Committee may represent the entire
committee for the purposes of this review.
. The Audit Committee shall review with management and the independent
auditors the financial statements to be included in the Company's Annual
Report on Form 10-K (or the annual report to stockholders if distributed
prior to the filing of Form 10-K), including their judgment about the
quality, not just acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of the disclosures
in the financial statements. Also, the Audit Committee shall discuss the
results of the annual audit and any other matters required to be
communicated to the Audit Committee by the independent auditors under
generally accepted auditing standards.
Dated June 9, 2000
PROXY
(1) To elect one director to hold office FOR__ WITHHOLD__
for a term of five years.
(2) To ratify the appointment of Ernst & FOR__ AGAINST__ ABSTAIN__
Young LLP as independent auditors
of the Company for the fiscal year
ending September 30, 2001.
A vote for proposals 1 and 2 is recommended by the Board of Directors
Please be sure to sign and date this Proxy.
Please sign this proxy exactly as
your name appears hereon. Joint
owners should each sign personally.
Trustees and other fiduciaries
should indicate the capacity in
which they sign. If a corporation
or partnership, this signature
should be that of an authorized
officer who would state his or her
title.
_________________________________________
Date
_________________________________________
Stockholder sign here Co-owner sign here
PLEASE VOTE, DATE, SIGN AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE.
SONIC FOUNDRY, INC.
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders - May 24, 2001
Those signing on the reverse side, revoking any prior proxies, hereby appoint(s)
R. Buinevicius and K. Minor, or each or any of them with full power of
substitution, as proxies for those signing on the reverse side to act and vote
all shares of stock of Sonic Foundry, Inc. (the "Company") which the undersigned
would be entitled to vote if personally present at the 2000 Annual Meeting of
Stockholders of the Company and at any adjournments thereof as indicated upon
all matters referred to on the reverse side and described in the Proxy Statement
for the Meeting, and, in their discretion, upon any other matters which may
properly come before the Meeting. Attendance of the undersigned at the Meeting
or at any adjournment thereof will not be deemed to revoke this proxy unless
those signing on the reverse side shall revoke this proxy in writing.
This proxy when properly executed will be voted in the manner directed by the
undersigned Stockholder(s). If no other indications are made, the proxies shall
vote "For" proposals 1 and 2.