UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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SEC 1913 (3-99)
[Logo] SONIC FOUNDRY, INC.
1617 Sherman Ave.
Madison, Wisconsin 53704
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 9, 2002
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 9, 2002 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, 2002.
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 March
22, 2002 are entitled to notice of, and to vote at, this meeting or any
adjournment or adjournments thereof.
Please complete and return the enclosed proxy in the envelope provided or,
for shareholders receiving a mailing from ADP, you may also follow the
instructions on the proxy card to vote by telephone or over the Internet whether
or not you intend to be present at the meeting in person.
By Order of the Board of Directors,
/s/Kenneth A. Minor
Kenneth A. Minor
Secretary
Madison, Wisconsin
April 5, 2002
_____________________________________
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 or, for shareholders receiving a
mailing from ADP, you may also follow the instructions on the proxy card to vote
by telephone or over the Internet. 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
March 25, 2002
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 2007; and FOR the ratification of the appointment of Ernst &
Young LLP as independent auditors of the Company for the year ending September
30, 2002. 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. Proxies may
also be voted by telephone or over the Internet by following the instructions on
the proxy card, if you received your mailing from ADP. 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 5,
2002.
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 March
22, 2002. On that date, we had outstanding and entitled to vote 27,012,016
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 Rimas P. Buinevicius, has been designated as a
Class IV Board seat, with the term of the director occupying such seat expiring
as of the Annual Meeting. Mr. Buinevicius will stand for re-election at this
Annual Meeting.
1
Mr. Buinevicius is currently a Board member of the Company who was
previously elected by the stockholders. If elected at the Annual Meeting, Mr.
Buinevicius would serve until the 2007 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 2007 Annual Meeting
Rimas P. Buinevicius
Mr. Buinevicius, age 39, has been our Chairman of the Board since October
1997 and Chief Executive Officer since January 1997. In addition to his
organizational duties, Mr. Buinevicius is a recognized figure in the rich media
industry focused on the convergence of technology, digital media and
entertainment. Mr. Buinevicius joined the Company in 1994 as General Manager and
Director of Marketing. Prior to joining the Company, Mr. Buinevicius spent the
majority of his professional career in the fields of biomedical and industrial
control research and development. Mr. Buinevicius earned an M.B.A. degree from
the University of Chicago; a Master's degree in Electrical Engineering from the
University of Wisconsin, Madison; a Bachelor's degree in Electrical Engineering
from the Illinois Institute of Technology, Chicago; and is a recipient of Ernst
and Young's Entrepreneur of the Year award.
The election of the Class 4 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. Buinevicius as a Class 4 Director.
DIRECTORS CONTINUING IN OFFICE
FREDERICK H. KOPKO, JR. Term Expires in 2006
Mr. Kopko, age 46, 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.
ARNOLD B. POLLARD Term Expires in 2005
Mr. Pollard, age 59, has been a Director of the Company since December 1997
and a Director of Firebrand Financial Group since August 1996. From 1993 until
January 2002, he was the President and Chief Executive Officer of Chief
Executive Group, which publishes "Chief Executive" magazine. For
2
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 66, 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 Professor of Strategic Management.
Mr. Kleinman has been a Director (trustee) of the Acorn Funds since 1972 (of
which he is also chair 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 chair 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 chair of the Audit Committee and a member 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.
MONTY R. SCHMIDT Term Expires in 2003
Mr. Schmidt, age 38, has been our President since March 1994 and a Director
since February 1994. Throughout his tenure at Sonic Foundry, Mr. Schmidt has
spearheaded a variety of engineering and strategic initiatives that have helped
grow the Company from the one-person startup he founded in 1991. In addition to
acting as an industry liaison, Mr. Schmidt is responsible for managing and
facilitating technology development and utilization throughout the company's
three operating divisions. Prior to joining the Company, Mr. Schmidt served in
software and hardware engineering capacities for companies in the medical and
food service equipment industries. 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 32, has been our Chief Technology Officer since January
1997 and a Director since February 1994. Mr. Palmer is a recognized technology
visionary who oversees the Company's engineering and advanced research efforts.
Serving as the primary architect for the Company's full product line offering,
Mr. Palmer is instrumental in maintaining an advanced market position for the
Company's technology offering. Prior to joining the Company, Mr. Palmer served
in various engineering capacities for Microsoft in
3
the Multimedia Technologies group, where he worked on Windows operating system
support for multimedia applications and was responsible for assisting third
party Windows driver developers in their development of communications, network
and drivers for Windows. 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 five times during the fiscal year ended
September 30, 2001 ("Fiscal 2001"). 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 including: (i) internal and external financial reporting, (ii)
risks and controls related to financial reporting, and (iii) the internal and
external audit process. The Audit Committee is also responsible for recommending
to the Board the selection of our independent public accountants and for
reviewing all related party transactions. The Audit Committee met three times in
Fiscal 2001.
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 Committee is also responsible for
establishing objective, formula-based performance goals, as well as subjective
goals and certifying such goals as having been met. The Executive Compensation
Committee met one time in Fiscal 2001.
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 2001.
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, 2001, the total amount of such
compensation paid to Non-Employee Directors was $28,200. 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
Pursuant to the Non-Employee Directors' Stock Option Plan, we grant to each
non-employee director who is reelected or who is continuing as a member of the
Board of Directors at each annual stockholders meeting a stock option to
purchase 20,000 shares of Common Stock. Options were granted pursuant to the
Non-Employee Directors' Stock Option Plan on May 24, 2001 (the annual meeting
date) to purchase an aggregate of 60,000 shares of the Company's common stock.
On December 20, 2000 we granted each outside director additional options to
purchase 40,000 shares of common stock pursuant to the 1999 Non-Qualified Stock
Option Plan. The exercise price of each stock option is equal to the market
price of Common Stock on the date the stock option is granted. Stock options
issued under the Non-Employee Directors' Stock Option Plan generally will vest
fully on the first anniversary of the date of grant and expire after ten years.
An aggregate of 600,000 shares are reserved for issuance under the Non-Employee
Directors' Stock Option Plan.
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.
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. The
term of all such options is ten years.
PROPOSAL 2: RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("E&Y") as independent auditors to audit
our financial statements for the year ending September 30, 2002, 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.
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.
5
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, 2002.
Audit services performed by E&Y for fiscal 2001 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 certain other tax and consultative services. All
fees paid to E&Y were reviewed and considered for independence by the Audit
Committee.
Fiscal 2001 Audit Firm Fee Summary
During Fiscal 2001, we retained our principal auditor, E&Y, to provide
services in the following categories and amounts:
Audit Fees $ 126,430
Tax Related 55,230
Other Fees 2,500
REPORT OF THE AUDIT COMMITTEE/1/
The Audit Committee of the Board of Directors is responsible for providing
independent objective oversight of the Company's accounting functions and
internal controls. The Audit Committee is an oversight committee and is not
involved in the operations of the Company; consequently, it must, by its nature,
rely upon management's representations and on the representations of the
independent auditors. The Audit Committee's oversight does not provide the Audit
Committee with an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or policies, or
appropriate internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations.
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 any 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. 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, 2001 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
three meetings during Fiscal 2001.
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, 2001 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 "Nominee for Director".)
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".)
Kenneth A. Minor, age 40, 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 where he was responsible for financial, treasury and investor relations
functions. Prior to 1993, Mr. Minor served in various senior accounting and
financial positions for public and private corporations as well as the
international accounting firm of Deloitte Haskins and Sells. Mr. Minor is a
certified public accountant and has a B.B.A. degree in accounting from Western
Michigan University.
Ted J. Lingard, age 37, has been our Senior Vice President - General
Manager Media Services since March 2001, General Manager Media Services starting
in March 2000 through March 2001 and Vice President of Operations from September
1999 to March 2001. Mr. Lingard is in charge of managing the development of next
generation digital media services for the Company's entertainment clientele.
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 39, has been our Senior Vice President - General
Manager Product Software since March 2001, Vice President of Sales and Marketing
from December 2000 to March 2001 and Vice President of Sales from October 1999
to December 2000. From August 1998 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. Mr. Reinke has a B.B.A. in
marketing from the University of Wisconsin - Whitewater.
Krishna V. Pendyala, age 39, has been our Senior Vice President of Strategy
and Consulting since October 2001. Previously, Mr. Pendyala served as Chief
Technical Officer and co-founder for MediaSite, Inc. from 1996 to October 2001
when the Company acquired its assets. He is a multimedia software designer with
over 15 years experience developing informational and learning applications. He
was the Assistant Director of the National Science Foundation sponsored
Informedia project - networked full-content searchable digital video library -
at Carnegie Mellon University's School of Computer Science, a. From 1990 to
1995, Mr. Pendyala served as Founder and President of Visual Symphony, Inc., an
award-winning software company that specialized in networked, interactive
multimedia applications designed to enhance human performance. He has been a
consultant to Boeing, Blue Cross Blue Shield, CSX, Sealand, and USX among
others. Mr. Pendyala also serves as an advisor to UNESCO on multimedia
infrastructure and training. Mr. Pendyala has a B.S. degree in Civil Engineering
from the Indian Institute of Technology and an M.S. degree in Educational Media,
TV & Film from Indiana State University.
8
Howard J. Affinito, age 45, has been our Senior Vice President - General
Manager Media Systems since December 2001. From January 2001 to December 2001
Mr. Affinito was a Vice President with printCafe Systems, a print e-procurement
company where he was responsible for sales, business development and strategy.
From June 1999 to December 2000 he was Vice President and General Manager for
MediaSite. From February 1994 to June 1999 Mr. Affinito worked for CBS
Corporation in various senior management capacities including Assistant General
Counsel of CBS/Westinghouse Broadcasting and a Business Affairs Manager/Station
Manager for the CBS Television Stations Division. Mr. Affinito has B.A. and J.D.
degrees from the University of Pittsburgh.
Christopher C. Cain, age 33, 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. Prior to practicing
law, Mr. Cain was a C.P.A. for Arthur Andersen, 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 35, has been our Vice President - Human Resources of
the Company 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 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 March 22, 2002, 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 March 22, 2002, 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.
9
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.
Number of Shares of
Class Percent
Name of Beneficial Owner(1) Beneficially Owned of Class (2)
--------------------------- ------------------ ------------
Common Stock
Monty R. Schmidt (3) 3,251,419 12.0%
Curtis J. Palmer(4) 3,248,449 12.0
Omicron Partners, L.P. (5) 2,285,714 7.8
Rimas P. Buinevicius(6) 1,799,680 6.5
Zero Stage Capital Associates VI Limited Partnership
101 Main Street, 17th Floor
Cambridge, MA 02142-1519 1,470,508 5.4
Frederick H. Kopko, Jr.(7)
20 North Wacker Drive
Chicago, IL 60606 363,192 1.3
Bradley Reinke (8) 271,568 1.0
Ted J. Lingard (9) 264,522 *
Arnold B. Pollard(8)
733 Third Avenue
New York, NY 10017 152,745 *
David C. Kleinman(8)
1101 East 58/th/ Street
Chicago, IL 60637 100,000 *
All Executive Officers and Directors as a Group
(13 persons)(10) 9,867,285 33.8%
* less than 1%
(1) The Company believes that the persons named in the table above, based upon
information furnished by such persons, have sole voting and investment
power with respect to the number of shares indicated as beneficially owned
by them.
(2) Applicable percentages are based on 27,012,016 shares outstanding, adjusted
as required by rules promulgated by the Securities and Exchange Commission.
(3) Includes 108,283 shares subject to Presently Exercisable Options.
(4) Includes 105,313 shares subject to Presently Exercisable Options.
(5) Consists of 1,632,653 shares of Common Stock which Omicron Partners, L.P.
("Omicron Partners") has the right to acquire upon conversion of our 10%
Convertible Note due 2004 and 653,061 shares of our Common Stock which
Omicron Partners has the right to acquire upon exercise of a warrant. Based
on publicly available information reported on February 15, 2002, (i)
Omicron Capital, L.P. ("Omicron Capital") serves as investment subadvisor
to Omicron Partners, and by reason of such relationship, may be deemed to
share dispositive power over the shares of Common Stock listed as
beneficially owned by
10
Omicron Partners; (ii) Omicron Capital, Inc. ("OCI") serves as general
partner of Omicron Capital, and by reason of such relationship, may be
deemed to share dispositive power over the shares of Common Stock listed as
beneficially owned by Omicron Capital; (iii) Oliver Morali ("Morali")
serves as president and is a director and stockholder of OCI, and by reason
of such relationships, may be deemed to share dispositive power over the
shares of Common Stock listed as beneficially owned by OCI; (iv) Grove
Management Limited ("Grove") serves as general partner of Omicron Partners,
and by reason of such relationship, may be deemed to share voting and
dispositive power over the shares of Common Stock listed as beneficially
owned by Omicron Partners; (v) Grove is wholly owned by Winchester
Fiduciary Services Limited ("WFSL"), and by reason of such relationship,
may be deemed to share voting and dispositive power over the shares of
Common Stock listed as beneficially owned by Grove; (vi) WFSL is wholly
owned by Winchester Global Trust Company Limited ("WGTCL"), and by reason
of such relationship, may be deemed to share voting and dispositive power
over the shares of Common Stock listed as beneficially owned by WFSL; and
(vii) WGTCL may be deemed to be controlled by Oliver Lewnowski
("Lewnowski"), and by reason of such control, may be deemed to share voting
and dispositive power over the shares of Common Stock listed as
beneficially owned by WGTCL. The address of Omicron Partners is c/o Olympia
Capital International, Inc., Williams House, 20 Reid Street, Hamilton HM11,
Bermuda. The addresses of Omicron Capital, OCI and Morali are 153 E. 53rd
Street, 45th Floor, New York, New York 10022. The addresses of Grove, WSFC,
WGTCL, and Lewnowski are c/o Winchester Fiduciary Limited, Williams House,
20 Reid Street, Hamilton HM11 Bermuda.
(6) Includes 616,666 shares subject to Presently Exercisable Options.
(7) Includes an aggregate of 80,000 warrants exercisable within sixty (60) days
of the date hereof and 100,000 Presently Exercisable Options.
(8) Consists of shares subject to Presently Exercisable Options.
(9) Includes 259,666 shares subject to Presently Exercisable Options.
(10) Includes an aggregate of 2,013,143 shares subject to Presently Exercisable
Options and 180,000 warrants exercisable within sixty (60) days of the date
hereof.
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation we paid during the
fiscal year ended September 30, 2001 to our Chief Executive Officer and our four
other most highly compensated executive officers ("Named Executive Officers").
Annual Compensation
-------------------
Long Term
Compensation
------------
Other Awards of
Annual Securities All Other
Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation(1) Option sation
-------------------------------------------------------------------------------------------------------------------
Rimas P. Buinevicius 2001 $ 201,654 - $ 9,731 110,000 _
Chief Executive Officer and 2000 221,154 $70,000 7,033 - _
Chairman 1999 125,000 25,000 4,360 20,000 _
Bradley W. Reinke 2001 159,808 65,000 4,247 183,000 _
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Senior Vice President - General 2000 145,303 - - 30,000 _
Manager Product Software 1999 - - - - _
Monty R. Schmidt 2001 169,231 - 10,671 90,000 _
President and Director 2000 184,615 70,000 6,563 - _
1999 125,000 25,000 3,713 20,000 _
Curtis J. Palmer 2001 169,231 - 7,248 90,000 _
Chief Technology Officer 2000 184,615 70,000 4,466 - _
1999 125,000 25,000 4,742 20,000 _
Ted J. Lingard 2001 152,308 - 500 157,000 _
Senior Vice President - General 2000 155,133 - 811 25,000 _
Manager Media Services 1999 - - - - _
(1) Consists of personal use of company vehicle included as portion of
executive's taxable compensation.
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) Sonic Foundry breaches
its duty under such employment agreement, (ii) the employee's status or
responsibilities with Sonic Foundry has been reduced, (iii) Sonic Foundry fails
to perform its obligations under such employment agreement, or (iv) after a
Change in Control of Sonic Foundry, 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 two years 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) Sonic Foundry is 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) Sonic
Foundry sells all or substantially all of its 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;
12
(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.
OPTIONS GRANTED IN FISCAL 2001
The Company grants options to its executive officers under our employee
stock option plans. As of September 30, 2001, options to purchase a total of
2,974,314 shares were outstanding under the plans, and options to purchase
1,032,501 shares remained available for grant thereunder. During Fiscal 2001,
options to purchase 630,000 shares were granted to Named Executive Officers.
The following tables show for the fiscal year ended September 30, 2001
certain information regarding options granted to, exercised by and held at
year-end by the Named Executive Officers.
Individual Grants
-----------------
Potential Realizable
% of Total Value at Assumed
Number of Options/ Annual Rates Price
securities SARs Appreciation for
Underlying Granted to Option Term
Options/ Employees Exercise or -----------
SARs in Base Price
Granted (#) Fiscal Year ($/Sh) Expiration Date 5%($) 10%($)
----------- ----------- ------ ---- ----- ------
Rimas P. Buinevicius 110,000 5.2% 1.09 12/10 76,000 192,000
Bradley W. Reinke 183,000 8.6% 1.09 to 2.63 11/10 to 4/11 153,000 387,000
Monty R. Schmidt 90,000 4.2% 1.09 12/10 62,000 157,000
Curtis J. Palmer 90,000 4.2% 1.09 12/10 62,000 157,000
Ted J. Lingard 157,000 7.4% 1.09 to 1.25 12/10 to 4/11 115,000 292,000
13
2001 FISCAL YEAR-END OPTION VALUES
Number of Unexercised Value of Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at Fiscal
Year-End(#) Year-End($)
----------- -----------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Rimas P. Buinevicius 83,333 66,667 6,000 9,000
Bradley W. Reinke 52,667 160,333 5,000 7,000
Monty R. Schmidt 76,667 53,333 5,000 7,000
Curtis J. Palmer 76,667 53,333 5,000 7,000
Ted J. Lingard 52,333 144,667 5,000 7,000
No stock was acquired upon exercise of options in the last fiscal year.
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 2001, we use primarily salary, stock options
and personal use of company vehicles to meet these goals. The Company's
executive compensation programs are intended to attract and retain qualified
executives and to motivate them to achieve goals that will lead to appreciation
of stockholder value.
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
2001, compensation included options to purchase shares granted under our 1999
Non-Qualified Stock Option Plan that vest and become exercisable over a two-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
has typically been 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.
______________________________
/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
Based on weak economic and industry factors, only one executive received a bonus
in fiscal 2001.
Annual Compensation
The salary portion of executive compensation is determined annually by
reference to multiple surveys of high technology companies. 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 level of revenue. Given the officers' levels
of responsibility and our past performance, we target a competitive salary for
each executive officer. A substantial portion of the annual compensation of each
executive officer has been 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. In an effort to conserve cash and invest in
the long-term success of the Company, all executive officers, including our
Chief Executive Officer, agreed to reduce their base compensation as of January
2001 by between 10 and 20%. The officer group offered further base compensation
reductions effective December 1, 2001 of a total of $466,000 or an average of
40% of the already reduced salary level. Rimas Buinevicius asked the
compensation committee to reduce his base compensation from $250,000 to $200,000
as of January 1, 2001 and to $1,229 as of December 1, 2001. The compensation
committee awarded larger option grants than what had historically been granted
to certain of the officers in lieu of cash compensation (see Long-term
Compensation below).
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 annual grants in December 2000 and granted options to
executives on October 5, 2001. Grants to certain executives in October 2001,
including Mr. Buinevicius, reflected the long-term commitment to the Company
they made by waiving significant portions of their salary. Such grants totaled
options to purchase 1.4 million shares, of which Mr. Buinevicius received
750,000. Mr. Buinevicius also received 250,000 performance-based stock options.
Total stock which may be acquired upon options granted to executives in October
2001, including options granted to Mr. Pendyala and Mr. Affinito upon joining
the Company, totaled 2.3 million shares.
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, responsibilities
and cash compensation. 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.
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 varying periods. 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
Despite a weak environment for retail software in fiscal 2001, revenues
were flat compared to fiscal 2000 and losses before amortization of goodwill and
restructuring charges were significantly reduced from $21 million to $16.3
million. In an effort to conserve cash, Mr. Buinevicius asked the compensation
committee to reduce his base compensation from $250,000 to $200,000 as of
January 1, 2001. No cash bonus was awarded to Mr. Buinevicius in fiscal 2001.
Mr. Buinevicius was granted 110,000 common stock options in fiscal 2001 under
the Company's 1999 Non-Qualified Stock Option Plan. Following the end of the
2001 fiscal year, Mr. Buinevicius offered to virtually eliminate his salary.
Effective December 1, 2001, the Compensation Committee agreed to reduce Mr.
Buinevicius' salary to $1,229, an amount just high enough to cover his health
insurance deductions. The Committee also granted Mr. Buinivicius 750,000 Common
Stock options issued under the 1999 non-qualified stock option plan as
consideration for reducing his salary and 250,000 performance-based stock
options.
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 2001 were those named in the Executive Compensation
Committee Report. No member of the Committee was at any time during Fiscal 2001
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 2001, we retained the Chicago law firm of
McBreen & Kopko to perform certain legal services. Frederick H. Kopko, Jr. is a
partner in McBreen & Kopko.
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
16
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, 2001
with the cumulative total return on The NASDAQ Stock Market (US only) and the JP
Morgan 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.
Our closing stock price on September 28, 2001, the last trading day of our
2001 fiscal year, was $1.23 per share.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
JP Morgan H&Q NASDAQ
Sonic Foundry Technology Stock Market (U.S.)
------------- ---------- -------------------
4/22/98 100.0 100.0 100.0
9/30/98 79.17 42.99 88.83
9/30/99 125.83 82.80 145.13
9/30/00 236.67 134.81 192.69
9/30/01 32.80 44.73 78.76
CERTAIN TRANSACTIONS
Frederick H. Kopko, Jr., a director and stockholder of Sonic Foundry, is a
partner in McBreen & Kopko. Pursuant to the Directors' Stock Option Plan, Mr.
Kopko has been granted options to purchase 80,000 shares of Common Stock at
exercise prices ranging from $2.50 to $59.88. He also has options to purchase
40,000 shares of Common Stock at an exercise price of $1.09 pursuant to the 1999
Non - Qualified Stock Option Plan in his capacity as a director. 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 February, 2000 Mr. Kopko was also granted 50,000 warrants at an
exercise price of $28.12 for services in his capacity as a director. During
fiscal 2001, we paid the Chicago law firm of McBreen & Kopko certain
compensation for legal services rendered subject to standard billing rates.
In September 2000 the Company issued 2,745 options with an exercise price
of $6.00 per share pursuant to the 1999 Non-qualified Stock Option Plan to
Arnold Pollard, a director of Sonic Foundry, as compensation for strategic
consulting services he provided. In October 2001 Mr. Pollard was granted options
pursuant to the 1999 Non-qualified Stock Option Plan to purchase 50,000 shares
for services in his capacity as a director with an exercise price equal to $1.01
per share. Both option grants to Mr. Pollard expire 10 years after grant.
In June 1998 the Board of Directors approved the issuance of guarantees of
certain obligations of certain officers of the Company. The guarantees were
executed in June and July of 1998 to a bank in
17
order to facilitate the issuance of loans to the officers. As of September 30,
2001 the loans were paid in full.
For the years ended September 30, 2001 and 2000, the Company had loans
outstanding to certain officers for $25,000 and $61,000 to exercise employee
stock options. In addition, the Company loaned an officer $175,000, in
connection with the sale of his former residence and his relocation to Madison,
Wisconsin. This loan was repaid in June 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the 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 it, the Company believes that all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial owners were
complied with.
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 2003, the proposal must be received by us no later than December 6,
2002. Additionally, the Company will be authorized to exercise discretionary
voting authority with respect to any stockholder proposal not disclosed in the
Company's 2002 proxy statement if the Company has not received written notice of
such proposal by February 5, 2002.
18
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, 2001 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, 2001, 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 5, 2002 Secretary
19
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, 2002.
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 9, 2002
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 2001 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.