BOTTOMLINE TECHNOLOGIES INC /DE/, DEF 14A, 2000-10-18

BOTTOMLINE TECHNOLOGIES INC /DE/
DEF 14A, 2000-10-18
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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material under Rule 14a-12

Bottomline Technologies(de), Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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BOTTOMLINE TECHNOLOGIES (de), INC.
155 Fleet Street
Portsmouth, New Hampshire 03801

Notice of Annual Meeting of Stockholders
To be held on November 16, 2000

To the stockholders of Bottomline Technologies (de), Inc.:

The annual meeting of stockholders of Bottomline Technologies (de), Inc., a
Delaware corporation, will be held on Thursday, November 16, 2000 at 3:00 p.m.,
local time, at the Sheraton Harborside Portsmouth Hotel, 250 Market Street,
Portsmouth, New Hampshire 03801, for the purpose of considering and voting upon
the following matters:

1. To elect two Class II directors for the ensuing three years;

2. To approve the company's 2000 Stock Incentive Plan and the authorization
of an initial 1,350,000 shares, subject to increase as described herein,
of common stock, par value $.001 per share, for issuance under such
plan;

3. To approve the company's 2000 Employee Stock Purchase Plan and the
authorization of 750,000 shares of common stock for issuance under such
plan;

4. To ratify the selection of Ernst & Young LLP as independent auditors of
the company for the current fiscal year; and

5. To transact such other business as may properly come before the annual
meeting, including any postponements or adjournments thereof.

Our board of directors has no knowledge of any other business to be
transacted at the annual meeting.

We are enclosing a copy of our annual report to stockholders for the fiscal
year ended June 30, 2000 with the proxy statement that accompanies this notice
of meeting. The annual report contains financial statements and other
information of interest to you.

Holders of record of our common stock at the close of business on October
12, 2000 are entitled to receive this notice and to vote at the annual meeting.

We urge you to attend the annual meeting in person. However, in order to
make sure that you are represented at the annual meeting, we also urge you to
complete, sign and return the enclosed proxy card as promptly as possible in
the enclosed postage-prepaid envelope.

By order of the Board of Directors,

/s/ Daniel M. McGurl

Daniel M. McGurl, Chairman
and Chief Executive Officer
October 19, 2000
Portsmouth, New Hampshire

<PAGE>

BOTTOMLINE TECHNOLOGIES (de), INC.
155 Fleet Street
Portsmouth, New Hampshire 03801

Proxy Statement

For the Annual Meeting of Stockholders
To be held on November 16, 2000

This proxy statement is furnished to you in connection with the solicitation
of proxies by our board of directors for the annual meeting of stockholders to
be held on Thursday, November 16, 2000 at 3:00 p.m., local time, at the
Sheraton Harborside Portsmouth Hotel, 250 Market Street, Portsmouth, New
Hampshire 03801, including any postponements or adjournments thereof.

The notice of the annual meeting, this proxy statement, our annual report to
stockholders for the fiscal year ended June 30, 2000, which we sometimes refer
to as "fiscal 2000," and the enclosed proxy are being mailed to stockholders on
or about October 19, 2000.

Voting of Proxies

All shares held by stockholders who are entitled to vote and who are
represented at the annual meeting by properly executed proxies received prior
to or at the annual meeting will be voted in accordance with the instructions
indicated on the respective proxy card, unless it is revoked prior to the vote.
If a proxy card does not specify how the proxy is to be voted with respect to a
particular matter, the shares will be voted "FOR" approval of the matter.

A proxy may be revoked before it is used to cast a vote. To revoke a proxy,
a stockholder must:

. file with the corporate secretary of the company, at or before the
taking of the vote, a written notice of revocation bearing a later date
than the proxy;

. duly execute a later dated proxy relating to the same shares and deliver
it to the corporate secretary of the company before the taking of the
vote; or

. attend the annual meeting and vote in person. Attendance at the annual
meeting, if a stockholder does not vote, will not be sufficient to
revoke a proxy.

Any written notice of revocation or subsequent proxy should be sent to us at
the following address: Bottomline Technologies (de), Inc., 155 Fleet Street,
Portsmouth, New Hampshire 03801, Attention: Corporate Secretary.

If a stockholder indicates on a proxy that the shares should be voted "FOR"
approval of the matters presented at the annual meeting, the proxies will have
discretion to vote the shares on any other matters which are properly presented
at the annual meeting for consideration, including a motion to adjourn the
annual meeting to another time or place for the purpose of soliciting
additional proxies, unless a stockholder withholds authorization for the
proxies to use their discretion.

Stockholders Entitled to Vote

Our board of directors has fixed October 12, 2000 as the record date for
determination of stockholders entitled to vote at the annual meeting. Only
holders of record of our common stock at the close of business on the record
date are entitled to notice of and to vote at the annual meeting. On October
12, 2000, there were 12,876,593 shares of our common stock outstanding and
entitled to vote. Each share of common stock will have one vote for each matter
to be voted upon at the annual meeting.

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Votes Required

The holders of a majority of the shares of common stock issued and
outstanding and entitled to vote at the annual meeting will constitute a quorum
for the transaction of business at the annual meeting. Shares of common stock
present in person or represented by proxy, including shares which abstain or do
not vote with respect to one or more of the matters presented for stockholder
approval, will be counted for purposes of determining whether a quorum is
present at the annual meeting.

If a broker does not have discretionary voting authority to vote shares for
which it is the holder of record with respect to a particular matter at the
annual meeting, the shares cannot be voted by the broker, although they will be
counted in determining whether a quorum is present. Accordingly, these broker
non-votes and abstentions would have no effect on the voting on a matter that
requires the affirmative vote of a certain percentage of the votes cast on that
matter (such as the election of the Class II directors, the adoption of the
stock plans and the ratification of the selection of independent auditors).

The affirmative vote of the holders of shares representing a plurality of
the votes cast by the holders of common stock entitled to vote at the annual
meeting is required for the election of the Class II directors. The affirmative
vote of the holders of shares representing a majority of the votes cast by the
holders of common stock entitled to vote at the annual meeting is required to
approve the adoption of the 2000 Stock Incentive Plan and the 2000 Employee
Stock Purchase Plan and for the ratification of the selection of our
independent auditors for the current fiscal year ending June 30, 2001.

2
<PAGE>

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information, as of August 15, 2000, regarding
the beneficial ownership of shares of our common stock by (a) each person or
entity known by us to own beneficially more than 5% of the outstanding shares
of common stock, (b) each of the "named executive officers," as described in
the Summary Compensation Table below, (c) each director and director nominee of
the company, and (d) the executive officers and directors of the company as a
group. The address of each of our named executive officers and directors is c/o
Bottomline Technologies (de), Inc., 155 Fleet Street, Portsmouth, New Hampshire
03801. The address of the John H. Harland Company is 2939 Miller Road, Decatur,
Georgia 30035. The address of Nevada Bond Investment Corp. II is c/o United
Technologies Corporation, United Technologies Building, Hartford, Connecticut
06101.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, which we sometimes refer to as the "SEC,"
and generally includes voting power and/or investment power with respect to
securities. Shares of common stock subject to options or warrants currently
exercisable or exercisable within 60 days of August 15, 2000 are deemed
outstanding for purposes of computing the percentage beneficially owned by the
person holding the options or warrants but are not deemed outstanding for
purposes of computing the percentage beneficially owned by any other person.
Except as indicated by footnote, we believe that the persons named in this
table, based on information provided by them, have sole voting and investment
power with respect to the shares of common stock indicated.

<TABLE>
<CAPTION>
Options
Included in
Shares
Beneficially
Shares Beneficially Owned Owned
----------------------------- ------------
Name of Beneficial Owner Number Percent Number
------------------------ --------------- ------------- ------------
<S> <C> <C> <C>
5% Stockholders
John H. Harland Company........... 581,394 5.2% --
Nevada Bond Investment Corp.
II(1)............................ 615,764 5.3% 307,882
Directors and Executive Officers
Daniel M. McGurl(2)............... 1,591,250 14.1% 22,500
Joseph L. Mullen.................. 242,106 2.2% 22,500
Robert A. Eberle.................. 109,793 * 58,501
Leonard J. DiIuro, Jr.(3)......... 40,504 * 31,254
Joseph L. Barry, Jr............... 189,375 1.7% 30,000
Dianne Gregg...................... -- * --
James L. Loomis................... 1,508,750 13.4%
James W. Zilinski................. 56,000 * 30,000
All executive officers and
directors as a group (8
persons)......................... 3,932,533 34.4% 194,755
</TABLE>
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* Represents less than 1% of the outstanding shares of common stock.

(1) Nevada Bond Investment Corp. II is an indirect, wholly-owned subsidiary of
United Technologies Corporation.

(2) 1,568,750 of these shares are held by a family limited partnership. Mr.
McGurl disclaims beneficial ownership of such shares except to the extent
of his pecuniary interest therein.

(3) 250 of these shares are held by the daughter of Mr. DiIuro. Mr. DiIuro
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.

3
<PAGE>

PROPOSAL 1--ELECTION OF CLASS II DIRECTORS

We have three classes of directors, currently consisting of three Class I
directors, two Class II directors and two Class III directors. At each annual
meeting, directors are elected for a full term of three years to succeed those
whose terms are expiring. The terms of the three classes are staggered in a
manner so that only one class is elected by stockholders annually. Mr. Joseph
L. Mullen and Mr. James W. Zilinski are currently serving as Class II
directors. The Class II directors elected this year will serve as members of
our board of directors until the 2003 annual meeting of stockholders, or until
their respective successors are elected and qualified.

The persons named in the enclosed proxy will vote to re-elect Mr. Mullen and
Mr. Zilinski as Class II directors unless the proxy is marked otherwise. Mr.
Mullen and Mr. Zilinski have indicated their willingness to serve on our board
of directors, if elected; however, if either should be unable to serve, the
person acting under the proxy may vote the proxy for a substitute nominee
designated by our board of directors. Our board of directors has no reason to
believe that either Mr. Mullen or Mr. Zilinski will be unable to serve if
elected.

Set forth below for each director, including the Class II director nominees,
is information as of October 1, 2000 with respect to his or her (a) name and
age, (b) position and offices at the company, (c) principal occupation and
business experience during at least the past five years, (d) directorships, if
any, of other publicly held companies and (e) the year such person became a
director of the company.

Joseph L. Mullen 48 1996 Mr. Mullen has served as President and Chief
Operating Officer of Bottomline since
September 2000. From July 1996 to September
2000, Mr. Mullen served as Executive Vice
President of Operations of Bottomline. From
July 1991 to July 1996, Mr. Mullen served as
Vice President of Sales and Marketing of
Bottomline. From 1977 to 1989, Mr. Mullen
held a variety of positions at IBM
Corporation, including Marketing Manager and
Northeast Area Market Planning Manager.

James W. Zilinski 56 1994 Mr. Zilinski has served as President, Chief
Executive Officer and a director of Berkshire
Life Insurance Company since 1995. From
February 1995 to July 1995, Mr. Zilinski
served as an independent consultant. From
August 1994 to January 1995, Mr. Zilinski
served as President of the Investment
Services Group of The BISYS Group, Inc., a
provider of outsourcing services to financial
institutions. Prior to August 1994,
Mr. Zilinski served as Executive Vice
President and Chief Marketing Officer of New
England Mutual Life Insurance Company.
</TABLE>

4
<PAGE>

Daniel M. McGurl 64 1989 Mr. McGurl co-founded Bottomline in May 1989,
and has served as Chairman of the Board of
Directors and Chief Executive Officer of
Bottomline since May 1989. From May 1989 to
September 2000, Mr. McGurl also served as
President of Bottomline. From 1987 to 1989,
Mr. McGurl served as Senior Vice President of
State Street Bank and Trust Company. Prior to
1987, Mr. McGurl held a variety of positions
at IBM Corporation, including Director of
Marketing Planning and Director of Far East
Operations.

James L. Loomis 50 1989 Mr. Loomis co-founded Bottomline in May 1989.
From August 1998 to September 2000, Mr.
Loomis served as Senior Executive Advisor of
Bottomline. From July 1996 to August 1998,
Mr. Loomis served as Executive Vice President
of Bottomline and from May 1989 to July 1996,
Mr. Loomis served as Vice President and
Treasurer. Prior to 1989, Mr. Loomis held a
variety of positions with the Nashua
Corporation, a manufacturer of imaging supply
products, including Director of International
Finance and Treasurer of a foreign
subsidiary.

Class I directors (terms
expiring in 2002)

Joseph L. Barry, Jr. 67 1990 Mr. Barry has served as President of Hallmark
Mechanical Corp., a machinery service
company, since 1990, and as President of
Hallamore Corp., a transportation and rigging
company, since 1956. Since 1975, Mr. Barry
has served as Chairman of Northeast Concrete
Products and since 1978 as co-chairman of New
England Teamsters Pension Fund.

Robert A. Eberle 39 2000 Mr. Eberle has served as Executive Vice
President, Chief Financial Officer, Treasurer
and Secretary of Bottomline since September
1998. From December 1996 to September 1998,
Mr. Eberle served as Executive Vice President
of Telxon Corporation, a mobile computing and
wireless data company, with primary
responsibility for its Technical Subsidiaries
Group. From August 1994 to December 1996, Mr.
Eberle served as Executive Vice President and
Chief Operating Officer of Itronix
Corporation (then a subsidiary of Telxon
Corporation), a designer and manufacturer of
notebook and hand-held computers. From August
1993 to August 1994, Mr. Eberle served as
Vice President of Corporate Development of
Telxon Corporation.
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
Principal Occupation, Other Business
Experience
Director During the Past Five Years and Other
Name Age Since Directorships
---- --- -------- ---------------------------------------------
<S> <C> <C> <C>
Dianne Gregg 45 1999 Ms. Gregg has served as a Vice President of
the Industry Solutions Group of Microsoft,
Inc. since August 1996. From June 1994 to
August 1996, Ms. Gregg served as General
Manager of the Eastern Region of Microsoft,
Inc. and became Regional Director in 1995.
</TABLE>

Pursuant to the First Amendment and Restatement of Stock Rights and Voting
Agreement, as amended, dated as of March 31, 1992 among Bottomline and some of
our stockholders, those stockholders were granted the right, which terminated
upon the closing of our initial public offering in February 1999, to designate
representatives on our board of directors. Under this agreement, Messrs.
McGurl, Loomis and Barry were elected to our board of directors.

Board of Directors and Committee Meetings

Our board of directors met eight times, including by telephone conference,
during fiscal 2000. The compensation committee of our board of directors held
one meeting during fiscal 2000. The audit committee of our board of directors
held two meetings during fiscal 2000. All directors, other than Ms. Gregg,
attended 100% of the meetings of our board of directors and the committees on
which they served during the period that they served on the board of directors
or such committees. Ms. Gregg attended 60% of such meetings of the board of
directors.

The compensation committee of our board of directors, currently composed of
Mr. Barry and Mr. Zilinski, makes recommendations concerning salaries and
incentive compensation for our employees and administers and grants stock
options under our stock option plans to our executive officers. The audit
committee of our board of directors reviews the results and scope of the audit
and other services provided by our independent public auditors. Mr. Barry and
Mr. Zilinski are the current members of our audit committee. We do not have a
nominating committee or a committee serving a similar function. Nominations are
made by and through our full board of directors.

Director Compensation

All of our directors are reimbursed for expenses incurred to attend board of
directors and committee meetings. In addition, our non-employee directors
receive stock options under our 1998 Director Stock Option Plan. The Director
Stock Option Plan currently provides that each non-employee director will be
granted an option to purchase 15,000 shares of common stock of the company on
the date of his or her initial election to our board of directors, which will
vest ratably over four years on each anniversary of the date of grant. In
addition, each non-employee director receives an option to purchase 7,500
shares of common stock of the company on the date of each annual meeting of
stockholders other than a director who was initially elected to the board of
directors at any such annual meeting or, if previously, at any time after the
prior year's annual meeting. Such options vest annually upon the earlier of one
year from the date of grant or the date immediately preceding the next annual
meeting of stockholders, so long as the director remains a director of
Bottomline. The exercise price per share of all options granted under the plan
is the fair market value of a share of our common stock on the date of grant.
In fiscal 2000, under our Director Stock Option Plan, Mr. Barry and Mr.
Zilinski each received an option to purchase 7,500 shares of common stock of
the company and Ms. Gregg received an option to purchase 15,000 shares of
common stock of the company.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely on our review of copies of reports filed by reporting persons
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
or written representations from reporting persons that no Form 5 filing was
required for such person, we believe that, during fiscal 2000, all filings
required to be made by our

6
<PAGE>

reporting persons were timely made in accordance with the requirements of the
Securities Exchange Act of 1934, other than the filing of one Form 4 by Mr.
Loomis reporting the sale of 20,000 shares of common stock of the company.

Executive Compensation

Summary Compensation Table

The following table sets forth for each of the last three fiscal years the
compensation paid and the shares underlying options granted to (a) our chief
executive officer and (b) the three other executive officers who received
annual compensation in excess of $100,000 during fiscal 2000, collectively, the
"named executive officers."

Summary Compensation Table

<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
----------------- ------------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary Bonus Options(1) Compensation
--------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Daniel M. McGurl(2)........ 2000 $250,000 $100,000 50,000 $ 3,616(3)
Chairman of the Board of
Directors, 1999 $185,000 $190,000 -- $ 3,371(3)
President and Chief
Executive Officer 1998 $172,333 $ 50,000 30,000 $ 1,680(3)

Robert A. Eberle(4)........ 2000 $200,000 $ 80,000 50,000 $32,197(5)
Chief Financial Officer,
Executive Vice 1999 $131,913 $150,000 162,000 $34,722(6)
President, Treasurer and
Secretary

Joseph L. Mullen(2)........ 2000 $200,000 $ 80,000 50,000 $ 3,213(3)
Executive Vice President,
Operations 1999 $175,000 $150,000 -- $ 4,088(3)
1998 $144,375 $ 62,966 30,000 $ 2,158(3)

Leonard J. DiIuro, Jr.(7).. 2000 $175,000 $ 63,653 20,000 $ 2,789(3)
Executive Vice President,
Sales 1999 $120,000 $193,201 30,000 $ 4,199(3)
</TABLE>
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(1) The number of shares covered by options to purchase shares of our common
stock granted during the fiscal year indicated.

(2) Mr. Mullen became President and Chief Operating Officer in September 2000.
Mr. McGurl continues to serve as Chairman of the Board of Directors and
Chief Executive Officer.

(3) Consists of contributions made to the named executive officer's account in
our 401(k) Plan.

(4) Mr. Eberle became Executive Vice President, Chief Financial Officer,
Treasurer and Secretary of the company in September 1998.

(5) Consists of a $4,900 contribution made to the named executive officer's
account in our 401(k) Plan and $27,297 of relocation and moving expenses.

(6) Consists of relocation and moving expenses.

(7) Mr. DiIuro became Executive Vice President, Sales of the company in July
1998. Mr. DiIuro became Executive Vice President and Group Executive,
National Sales of the company in August 2000.

7
<PAGE>

Stock Options

The following table sets forth information for each of the named executive
officers with respect to the grant of stock options to purchase shares of
common stock of the company during fiscal 2000.

Option Grants During Fiscal 2000

<TABLE>
<CAPTION>
Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates of
Securities Options Exercise Stock Price Appreciation for
Underlying Granted to or Base Option Term(2)
Options Employees in Price Per Expiration -----------------------------
Name Granted Fiscal Year Share(1) Date 5% 10%
---- ---------- ------------ --------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. McGurl........ 6,981 .76% $34.65 8/26/04 $ 38,765 $ 112,262
23,019 2.50% $31.50 8/26/09 $ 456,010 $ 1,155,620
2,511 .27% $43.80 2/24/05 $ 17,621 $ 51,034
17,489 1.90% $39.81 2/24/10 $ 437,893 $ 1,109,706

Robert A. Eberle........ 30,000 3.26% $31.50 8/26/09 $ 594,305 $ 1,506,087
20,000 2.17% $39.81 2/24/10 $ 500,764 $ 1,269,033

Joseph L. Mullen........ 30,000 3.26% $31.50 8/26/09 $ 594,305 $ 1,506,087
20,000 2.17% $39.81 2/24/10 $ 500,764 $ 1,269,033

Leonard J. DiIuro, Jr... 20,000 2.17% $39.81 2/24/10 $ 500,763 $ 1,269,033
</TABLE>
--------

(1) Options were granted at the fair market value determined as of the date of
the grant, based on the closing price of a share of common stock of the
company as reported on The Nasdaq National Market.

(2) Amounts that may be realized upon exercise of the options immediately
before the expiration of their respective term, assuming the specified
compound rates of appreciation (5% and 10%) on the market value of our
common stock on the date of the option grant over the term of the
respective option. These numbers are calculated based on rules promulgated
by the SEC and do not reflect our estimate of future stock price growth, if
any. Actual gains, if any, on stock option exercises and common stock
holdings are dependent on the timing of exercise and the future performance
of our common stock.

Fiscal Year-End Option Values

The following table sets forth information for each of the named executive
officers with respect to the exercise of options to purchase shares of common
stock of the company during fiscal 2000 and the number and value of options
outstanding as of the fiscal year ended June 30, 2000.

Aggregated Option Exercises in Fiscal Year 2000 and
Fiscal Year-End Option Values

<TABLE>
<CAPTION>
Number of Shares Value of Unexercised In-
Underlying Options the-Money Options
at June 30, 2000 at June 30, 2000(2)
Shares Acquired Value Realized ------------------------- -------------------------
Name on Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel M. McGurl........ -- -- 15,000 65,000 $380,820 $ 442,695

Robert A. Eberle........ 34,999 $1,008,983 5,501 171,500 $133,058 $3,019,482

Joseph L. Mullen........ -- -- 15,000 65,000 $392,820 $ 473,460

Leonard J. DiIuro, Jr... 3,750 $ 119,063 11,250 50,000 $257,115 $ 673,140
</TABLE>
--------
(1) Based on the closing price of a share of common stock of the company as
reported on The Nasdaq National Market on the date of exercise less the
aggregate exercise price.

(2) Based on the closing price of a share of common stock of the company as
reported on The Nasdaq National Market on June 30, 2000, $34.1875 per
share, less the aggregate exercise price.

8
<PAGE>

Report of the Compensation Committee on Executive Compensation

This report is submitted by the compensation committee of our board of
directors, which is responsible for making recommendations concerning salaries
and incentive compensation for our employees and administering and granting
stock options under our stock option plans. In addition, the compensation
committee consults with our management regarding pension and other benefit
plans and our compensation policies and practices.

General Compensation Policy

The compensation committee seeks to achieve the following three broad goals
in connection with Bottomline's executive compensation program:

. enable Bottomline to attract and retain qualified executives;

. create a performance-oriented environment by rewarding executives for
the achievement of Bottomline's business objectives and/or in the
individual executive's particular area of responsibility; and

. provide executives with equity incentives in Bottomline so as to link a
portion of the executive's compensation with the performance of
Bottomline's common stock.

Components of Compensation

To achieve these goals, the executive compensation program consists
principally of the following three elements:

. base salary;

. cash bonuses; and

. stock-based equity incentives in the form of participation in
Bottomline's stock option plans.

General Factors for Establishing Compensation

The compensation committee reviews the executive compensation of industry
peers with which Bottomline competes for employees to compare the
competitiveness of Bottomline's executive compensation packages. In addition to
its review of industry compensation levels, the compensation committee also
considers a number of other factors in establishing the components of each
executive officer's compensation package, as summarized below.

Base Salary

Salaries for executive officers, including the chief executive officer, are
generally determined on an individual basis by evaluating the following:

. the executive's scope of responsibility, performance, prior employment
experience and salary history;

. Bottomline's financial performance, including increases in its revenues
and profits, if any; and

. internal consistency within Bottomline's salary structure.

Annual Incentive Compensation

The compensation committee considers the payment of cash bonuses as part of
the compensation packages of Bottomline's executive officers. Annual bonuses
reflect a policy of requiring a certain level of company financial and
operational performance for the prior fiscal year before any cash bonuses are
earned by executive officers. In general, the compensation committee has tied
potential bonus compensation to performance factors, including the executive
officer's efforts and contributions towards obtaining Bottomline's objectives
and overall

9
<PAGE>

growth. In determining the amounts of the cash bonuses to be paid to the
executive officers in fiscal 2000, including the chief executive officer, the
compensation committee specifically considered the following achievements and
the role played by the executive officer in accomplishing these achievements:

. development of key customers and channel partner relationships;

. acquisition, development and introduction of the NetTransact product;

. acquisition and integration of Integrated Cash Management Services, Inc.
and OLC Software, Inc.; and

. financial performance of Bottomline during the fiscal year 2000.

Long-term Incentive Compensation

Stock options are an element of the compensation packages of Bottomline's
executive officers, including the chief executive officer, because they provide
an incentive to executives to maximize stockholder value and because they
reward the executives only to the extent that stockholders of Bottomline also
benefit. The compensation committee believes that it is to Bottomline's
advantage to increase the executives' interest in Bottomline's future
performance, as these employees share the primary responsibility for
Bottomline's management and growth. The value of the stock options derives
solely from appreciation of Bottomline's common stock. In order to promote a
longer term management focus and to provide incentive for continued employment
with Bottomline, stock option grants generally become exercisable over a four
year period, with the exercise price being equal to 100% of the fair market
value of Bottomline's common stock on the date of grant or, in the case of
Mr. McGurl, 110% of the fair market value on the date of grant if the option is
an incentive stock option.

The size of the option grant made to each executive officer is based upon
the following factors:

. an evaluation of the executive's past performance;

. the total compensation being paid to the executive;

. the anticipated value of the executive's contribution to Bottomline's
future performance;

. the executive's scope of responsibility;

. the executive's current position with Bottomline;

. options awarded to the executive officer during previous fiscal years;
and

. internal comparability with option grants made to other executives.

In fiscal 2000, stock options were granted under Bottomline's 1997 Stock
Incentive Plan to Mr. McGurl, Mr. Eberle, Mr. Mullen and Mr. DiIuro, our named
executive officers.

Chief Executive Officer's Compensation

In December 1998, Bottomline entered into an employment agreement with Mr.
McGurl. Pursuant to his employment agreement, which is more fully described
below, Mr. McGurl received a base salary of $250,000 for fiscal 2000. The
compensation of Mr. McGurl is based upon the same elements and measures of
performance as is the compensation of Bottomline's other executive officers. In
its determination to approve a cash bonus to Mr. McGurl of $100,000 in fiscal
2000, the compensation committee specifically considered the following:

. development of key customers and channel partner relationships;

. acquisition, development and introduction of the NetTransact product;

. acquisition and integration of Integrated Cash Management Services, Inc.
and OLC Software, Inc.; and

. financial performance of Bottomline during the fiscal year 2000.

10
<PAGE>

Compliance with Internal Revenue Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer and its four other most highly compensated
executive officers. Qualifying performance-based compensation is not subject
to the deduction limitation if certain requirements are met. In particular,
income recognized upon the exercise of a stock option is not subject to the
deduction limitation if, among other things, the option was issued under a
plan approved by the stockholders and such plan provides a limit on the number
of shares that may be issued under the plan to any individual. Based on the
compensation awarded to our Chief Executive Officer and our other named
executive officers, it does not appear that the Section 162(m) limitation will
have a significant impact on Bottomline in the near term.

Compensation Committee

Joseph L. Barry, Jr.
James W. Zilinski

Employment Agreements

We entered into an employment agreement with each of Messrs. McGurl and
Mullen in December 1998 and with Mr. Eberle in September 1998. The provisions
of each agreement are substantially the same. The term of each employment
agreement is the greater of 36 months or 24 months after we experience a
change in control.

A change in control of Bottomline occurs if:

. any person becomes the beneficial owner of 50% or more of the voting
power of our outstanding securities;

. we are acquired through a merger;

. we are liquidated; or

. all or substantially all of our assets are sold.

If the employee's employment is terminated either by the employee as a
result of an involuntary termination or by us without cause, then (a) all
outstanding options held by the employee would become immediately exercisable
in full, and (b) the employee would be entitled to receive a lump sum payment
and continuation of benefits for a period of 12 months, in the case of Messrs.
Eberle and Mullen, and for a period of 24 months in the case of Mr. McGurl. In
the case of Messrs. Mullen and Eberle, the lump sum payment would equal one
year's salary plus the maximum amount of bonus they were eligible to earn in
the then current year. In the case of Mr. McGurl, the lump sum payment would
equal two times the sum of his then annual salary plus the maximum amount of
bonus he was eligible to earn in the then current year.

An involuntary termination would occur if an employee's duties were
terminated without cause, his benefits were reduced or he was demoted or
relocated after a change in control.

Cause means, prior to a change in control of Bottomline, the discharge of
the employee resulting from:

. a felony conviction;

. failure to attend to material duties or obligations;

. the breach of confidentiality, non-competition or similar obligations by
the employee; or

. an act or omission which would constitute a crime involving Bottomline's
property.

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<PAGE>

The second and third items specified above would not constitute cause after
a change in control of Bottomline.

If the employee's employment is terminated upon or after a potential change
in control either by the employee as a result of an involuntary termination or
by us without cause, all then outstanding options held by the employee would
become immediately exercisable in full and the employee would be entitled to
receive a lump sum payment and continuation of benefits for a period of 24
months. In the case of Mr. Mullen and Mr. Eberle, the lump sum payment would
equal two times the sum of his then annual salary plus the maximum amount of
bonus he was eligible to earn in the then current year. In the case of Mr.
McGurl, the lump sum payment would equal three times the sum of his then annual
salary plus the maximum amount of bonus he was eligible to earn in the then
current year.

A potential change in control of Bottomline would occur if:

. we enter into an agreement that would cause a change in control;

. any person publicly announces an intention to take any action which, if
consummated, would constitute a change in control; or

. the adoption of a resolution by our board of directors approving a
change in control.

Each of the employment agreements also provides that, in the event of a
change in control, we would pay any excise tax which the employee would be
liable for under Section 4999 of the Internal Revenue Code as a result of
having received the severance benefits, as well as the amount necessary to pay
all additional taxes imposed on the respective employee attributable to having
received the severance benefits. Pursuant to their respective employment
agreements, in fiscal 2000, Mr. McGurl was paid an annual base salary of
$250,000 and each of Messrs. Mullen and Eberle was paid an annual base salary
of $200,000. Based upon the recommendations of the compensation committee, and
as more fully described above, in fiscal 2000, Mr. McGurl received a bonus of
$100,000 and Messrs. Mullen and Eberle each received a bonus of $80,000.

Compensation Committee Interlocks and Insider Participation

The current members of the compensation committee of our board of directors
are Messrs. Barry and Zilinski. No executive officer of Bottomline has served
as a director or member of the compensation committee of any other entity whose
executive officers served as a director or member of our compensation
committee. From August 1997 to November 1998, Mr. McGurl served as a member of
the compensation committee of our board of directors. Mr. McGurl did not
participate in any compensation deliberations with respect to any of his
compensation. Mr. McGurl is Chief Executive Officer of Bottomline.

Certain Relationships and Related Transactions

Nevada Bond Investment Corp. II, a beneficial owner of more than five
percent of our common stock, is an indirect, wholly-owned subsidiary of United
Technologies Corporation. In fiscal 2000, another subsidiary of United
Technologies Corporation entered into an agreement with us to license our
NetTransact software, under which agreement the subsidiary committed to pay
license and minimum transaction fees of $4.55 million.

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<PAGE>

Stock Performance Graph
[GRAPH APPEARS HERE]

The stock performance graph above compares the percentage change in
cumulative stockholder return on the common stock of the company for the period
from February 12, 1999, the first day of trading of our common stock, through
June 30, 2000 with the cumulative total return on The Nasdaq Stock Market
(U.S.) and Nasdaq Computer & Data Processing Index.

This graph assumes the investment of $100.00 in our common stock (at the
initial public offering price), The Nasdaq Stock Market (U.S.) and Nasdaq
Computer & Data Processing Index on February 12, 1999, and assumes dividends,
if any, are reinvested.

<TABLE>
<CAPTION>
February 12, 1999 June 30, 1999 June 30, 2000
----------------- ------------- -------------
<S> <C> <C> <C>
Bottomline Technologies (de),
Inc............................ $100.00 $408.00 $263.00
Nasdaq Stock Market (U.S.)...... $100.00 $116.00 $171.00
Nasdaq Computer & Data
Processing Index............... $100.00 $114.00 $162.00
</TABLE>

PROPOSAL 2--APPROVAL OF 2000 STOCK INCENTIVE PLAN

In August 2000, our board of directors adopted the company's 2000 Stock
Incentive Plan, subject to stockholder approval. The purpose of the 2000
Incentive Plan is to advance the interests of the company's stockholders by
enhancing the company's ability to attract, retain and motivate persons who
make or are expected to make important contributions to the company by
providing them with equity ownership opportunities and performance-based
incentives and thereby better aligning their interests with those of the
company's stockholders. The board of directors believes that continued grants
of stock options will be an important element in attracting, retaining and
motivating persons who make and who are expected to make contributions to the
company's growth and success.

If approved by the stockholders, an initial 1,350,000 shares of common stock
will be authorized for issuance under the 2000 Incentive Plan. In addition, on
the first day of each of the company's fiscal years beginning in fiscal year
2001 and ending in fiscal year 2010, the number of shares of common stock
authorized for issuance under the 2000 Incentive Plan will automatically
increase, without additional board or stockholder approval, by such number of
shares which, when added to the number of initial shares that remain available
for grant under the plan, will equal 12% of the number of our then outstanding
shares of common stock on such

13
<PAGE>

date or such lesser number as our board of directors may determine. At no time
may the annual increase exceed 5,000,000 shares. The 2000 Incentive Plan also
provides that up to 800,000 shares of common stock reserved for issuance under
our 1997 Stock Incentive Plan, which are not issued or which are subject to
awards that terminate or are otherwise surrendered, will be available for
issuance under the 2000 Incentive Plan.

The board of directors believes that the approval of the 2000 Incentive Plan
and the authorization of the shares of common stock for issuance under such
plan is in the best interests of the company and its stockholders and
recommends a vote FOR this proposal.

Summary of the 2000 Incentive Plan

The following is a brief summary of the material provisions of the 2000
Incentive Plan. This summary is qualified in all respects by reference to the
full text of the 2000 Incentive Plan, which is attached hereto as Appendix A.

The 2000 Incentive Plan provides for the grant of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code, options not
intended to qualify as incentive stock options ("nonstatutory stock options")
and restricted stock awards. Generally, awards under the 2000 Incentive Plan
are not assignable or transferable except by will or by the laws of descent and
distribution.

Eligibility to Receive Awards

Employees, officers, directors, consultants and advisors of the company,
including any present or future parent or subsidiary corporations or business
ventures in which we have a significant interest, are eligible to receive
awards under the 2000 Incentive Plan. Under current law, however, incentive
stock options may only be granted to employees of the company and our parent or
subsidiary corporations. No participant may receive awards for more than an
aggregate of 1,000,000 shares of common stock in any calendar year.

As of October 12, 2000, we had 551 employees and four non-employee
directors, all of whom were eligible to participate in the 2000 Incentive Plan.
On October 12, 2000, the record date, the closing sale price of a share of our
common stock on The Nasdaq National Market was $31.375.

Grants and Benefits under the 2000 Incentive Plan to Directors and Executive
Officers

The stock option grants and the benefits to be received under the 2000
Incentive Plan by any particular executive officer, by all current executive
officers as a group or by non-executive officer employees as a group are not
currently determinable. The number of individuals receiving awards varies from
year to year depending on various factors, such as the number of promotions and
hiring needs, and we are not currently able to determine award recipients or
specific award amounts.

Incentive Stock Options, Nonstatutory Stock Options and Restricted Stock Awards

Optionees receive the right to purchase a specified number of shares of
common stock of the company at a specified option price and subject to such
other terms and conditions as are specified in connection with the option
grant. The board of directors may establish the exercise price for each option.
Under current law, however, incentive stock options and options intended to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code may not be granted at an exercise price which is less than the
fair market value of the common stock on the date of grant (or less than 110%
of the fair market value in the case of incentive stock options granted to
optionees holding more than 10% of the total combined voting power of the
company or its parent or subsidiaries). Restricted stock awards entitle
recipients to acquire shares of common stock, subject to the company's right to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable restricted stock award are not satisfied
prior to the end of the applicable restriction period established for such
restricted stock award.

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<PAGE>

The 2000 Incentive Plan permits the board of directors to determine the
manner of payment of the exercise price of options, including through payment
by cash or check, by surrender to the company of shares of common stock of the
company, by delivery to the company of a promissory note, by payment of such
other consideration as the board of directors may determine, or by any
combination of the permitted forms of payment. The board of directors may grant
options with different terms and conditions, as it considers necessary or
advisable.

Reorganization, Change in Control and Liquidation Events

In a "reorganization event," which the plan defines as any merger or
consolidation of the company as a result of which the common stock of the
company is converted into or exchanged for the right to receive cash,
securities or other property, or any exchange of shares of the company pursuant
to a share exchange agreement, all outstanding options will be assumed or
equivalent options will be substituted by the acquiring company. In the event
the acquiring company does not assume or substitute for the options of the
company, the options will become exercisable in full and will terminate
immediately prior to the reorganization event, except to the extent exercised
prior to the reorganization event. To the extent any options so vest and are
exercised, the shares issued will be subject to a right of repurchase of the
acquiring company, which lapses according to the original vesting schedule of
the option. In the case of a reorganization event which also results in a
"change in control," as described below, 25% of the unvested options of an
optionee will automatically vest and will not be subject to the right of
repurchase.

Under the plan, a "change in control" is defined as the acquisition of a
majority of the beneficial ownership or voting power of the company, or a
specified change in the composition of the existing board of directors. Upon a
change in control, regardless of whether the change in control also constitutes
a reorganization event, the plan provides that 25% of the outstanding unvested
options of an optionee become exercisable, with the remaining shares subject to
the option continuing to vest in accordance with the original vesting schedule
of the option. However, if the change in control event is intended to be
accounted for as a "pooling of interests" for financial accounting purposes,
and if the acceleration described above would preclude accounting for the
change in control event as such a pooling of interests, then no such
acceleration will occur upon the change in control event.

In the event of a liquidation or dissolution of the company, all unexercised
options become exercisable in full and terminate upon the liquidation or
dissolution, except to the extent exercised before such event.

Adjustment upon Changes in Capitalization

In the event of changes in the outstanding common stock by reason of any
stock splits, reverse stock splits, stock dividends, combinations,
reclassifications or other similar changes in the capital structure of the
company, an appropriate adjustment shall be made to (i) the number of shares of
common stock subject to the 2000 Incentive Plan, (iii) the per-participant
award limit and (iii) the number and purchase price of shares of stock subject
to any purchase right outstanding under the 2000 Incentive Plan.

Administration

The 2000 Incentive Plan may be administered by the board of directors or a
committee of the board of directors. The board of directors or its committee
has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the 2000 Incentive Plan and to interpret
its provisions. The board of directors has appointed the compensation committee
to administer certain aspects of the 2000 Incentive Plan. Subject to any
applicable limitations contained in the 2000 Incentive Plan, the board of
directors or a committee of the board of directors to whom the board of
directors delegates authority, as the case may be, selects the recipients of
awards and determines the following:

. the number of shares of common stock covered by options and the dates
upon which such options become exercisable;

15
<PAGE>

. the exercise price of options;

. the duration of options; and

. the number of shares of common stock subject to any restricted stock
award and the terms and conditions of such award, including the
conditions for repurchase, issue price and repurchase price.

No award may be granted under the 2000 Incentive Plan after August 2010,
which is ten years after the date on which the 2000 Incentive Plan was adopted
by our board of directors, but the vesting and effectiveness of awards
previously granted may extend beyond that date. The board of directors may at
any time amend, suspend or terminate the 2000 Incentive Plan, except that no
award granted after an amendment of the 2000 Incentive Plan and designated as
subject to Section 162(m) by the board of directors will become exercisable,
realizable or vested, to the extent the amendment was required to grant the
award, unless and until the amendment is approved by the company's
stockholders.

Federal Income Tax Consequences

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to awards of incentive
stock options, nonstatutory stock options and restricted stock granted under
the 2000 Incentive Plan and with respect to the sale of common stock acquired
under the 2000 Incentive Plan.

Incentive Stock Options

In general, a participant will not recognize taxable income upon the grant
or exercise of an incentive stock option. Instead, a participant will recognize
taxable income with respect to an incentive stock option only upon the sale of
common stock acquired through the exercise of the option ("ISO Stock"). The
exercise of an incentive stock option, however, may subject the participant to
the alternative minimum tax.

Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock. If the participant
sells ISO Stock after having owned it for at least two years from the date the
option was granted (the "Grant Date") and one year from the date the option was
exercised (the "Exercise Date"), then the participant will recognize long-term
capital gain in an amount equal to the excess of the sale price of the ISO
Stock over the exercise price.

If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.

If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a long-
term capital loss if the participant has held the ISO Stock for more than one
year prior to the date of sale.

Nonstatutory Stock Options

As in the case of an incentive stock option, a participant will not
recognize taxable income upon the grant of a nonstatutory stock option. Unlike
the case of an incentive stock option, however, a participant who exercises a
nonstatutory stock option generally will recognize ordinary compensation income
in an amount equal to the excess of the fair market value of the common stock
acquired through the exercise of the option ("NSO Stock") on the Exercise Date
over the exercise price.

With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO Stock for more
than one year prior to the date of the sale.

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<PAGE>

Restricted Stock

A participant will not recognize taxable income upon the grant of a
restricted stock award unless the participant makes an election under Section
83(b) of the Internal Revenue Code. If the participant makes a Section 83(b)
election within 30 days of the date of the grant, then the participant will
recognize ordinary compensation income, for the year in which the award is
granted, in an amount equal to the difference between the fair market value of
the common stock at the time the award is granted and the purchase price paid
for the common stock. If a Section 83(b) election is not made, then the
participant will recognize ordinary compensation income, at the time that the
forfeiture provisions or restrictions on transfer lapse, in an amount equal to
the difference between the fair market value of the common stock at the time of
such lapse and the original purchase price paid for the common stock. The
participant will have a tax basis in the common stock acquired equal to the sum
of the price paid and the amount of ordinary compensation income recognized.

Upon the disposition of the common stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the common stock and the
participant's tax basis in the common stock. This capital gain or loss will be
a long-term capital gain or loss if the shares are held for more than one year.
For this purpose, the holding period shall begin the day after the forfeiture
provisions or restrictions lapse if a Section 83(b) election is not made, or
the day after the award is granted if a Section 83(b) election is made.

Tax Consequences to the Company

The grant of an award under the 2000 Incentive Plan will have no tax
consequences to the company. Moreover, in general, neither the exercise of an
incentive stock option nor the sale of any common stock acquired under the 2000
Incentive Plan will have any tax consequences to the company. The company (or
our parent, subsidiary or affiliate, as the case may be) generally will be
entitled to a business-expense deduction, however, with respect to any ordinary
compensation income recognized by a participant under the 2000 Incentive Plan,
including as a result of the exercise of a nonstatutory stock option, a
Disqualifying Disposition or a Section 83(b) election. Any such deduction will
be subject to the limitations of Section 162(m) of the Internal Revenue Code.

PROPOSAL 3--APPROVAL OF 2000 EMPLOYEE STOCK PURCHASE PLAN

In August 2000, our board of directors adopted the company's 2000 Employee
Stock Purchase Plan subject to stockholder approval. The purpose of the 2000
Purchase Plan is to provide eligible employees of the company with
opportunities to purchase shares of common stock of the company. The board of
directors believes that the 2000 Purchase Plan is an important factor in
attracting, motivating and retaining qualified personnel essential to the
success of the company.

The 2000 Purchase Plan permits eligible employees to purchase common stock
at a discount from fair market value through payroll deductions. The 2000
Purchase Plan is intended to qualify under Section 423 of the Internal Revenue
Code. The board of directors has adopted the 2000 Purchase Plan because the
number of shares currently available under the company's 1998 Employee Stock
Purchase Plan is insufficient to satisfy the expected employee participation in
the future. If approved by the stockholders, 750,000 shares of common stock
will be authorized for issuance under the 2000 Purchase Plan.

The board of directors believes that the approval of the 2000 Purchase Plan
and the authorization of the shares of common stock for issuance under such
plan is in the best interests of the company and its stockholders and
recommends a vote FOR this proposal.

Summary of the 2000 Purchase Plan

The following is a brief summary of the material provisions of the 2000
Purchase Plan. This summary is qualified in all respects by reference to the
full text of the 2000 Purchase Plan, which is attached hereto as Appendix B.

17
<PAGE>

Administration

The 2000 Purchase Plan may be administered by the board of directors or a
committee of the board of directors. The board of directors or its committee
has full and exclusive discretionary authority to construe, interpret and apply
the terms of the 2000 Purchase Plan, to determine eligibility and to adjudicate
all disputed claims under the 2000 Purchase Plan. Every decision by the board
of directors or its committee with respect to the 2000 Purchase Plan is final
and binding.

Eligibility; Limitations

The 2000 Purchase Plan provides that all employees are eligible to
participate if they are customarily employed by the company or any designated
subsidiary for at least 20 hours per week and for more than five months in any
calendar year on a date that an offering commences. As of October 12, 2000, 379
employees of the company satisfied the eligibility criteria for participation
in the 2000 Purchase Plan.

Terms and Conditions of Subscription

Participation under the 2000 Purchase Plan is evidenced by a written
subscription agreement between the employee and the company and is subject to
the following terms and conditions:

Offering Periods. The 2000 Purchase Plan will be implemented by consecutive,
overlapping 24-month offering periods with a new offering period commencing on
the first trading day on or after October 1 and April 1 of each year,
terminating on the last trading day in the respective period ending 24 months
later. Each 24-month offering period consists of four purchase periods of
approximately six months duration. The first offering period under the plan
commenced on October 1, 2000.

Purchase Price and Method. Employees who participate in the 2000 Purchase
Plan purchase common stock through payroll deductions of up to 10% of their
salary. Participating employees receive an option to purchase by payment from
existing funds in their payroll deduction account up to a maximum number of
shares per offering period determined by dividing $50,000 by the fair market
value of a share of common stock on the first day of the offering period (the
"Option Shares"). The option becomes exercisable for 25% of the Option Shares
at the end of each six-month purchase period within the offering period. The
price of common stock purchased under the 2000 Purchase Plan is 85% of the
lower of the fair market value of the common stock on the first day of each 24-
month offering period and the last day of the applicable six-month purchase
period. To the extent the fair market value of the common stock on the first
day of the subsequent offering period is lower than the fair market value of
the common stock on the first day of the current offering period, then all
participants in such current offering period will be automatically withdrawn
from such offering period immediately after the exercise of their options on
the exercise date and automatically re-enrolled in the subsequent offering
period as of the first day thereof. On October 12, 2000, the record date, the
closing sale price of a share of our common stock as reported on The Nasdaq
National Market was $31.375.

Withdrawal; Termination of Employment. If an employee decides to terminate
his or her participation in the 2000 Purchase Plan, he or she must withdraw all
the payroll deductions credited to his or her purchase account, and such funds
will be returned to him or her. Upon the termination of employment for any
reason, all payroll deductions credited to the employee's account during the
Offering Period but not yet used to exercise the option will likewise be
returned to the (former) employee.

Death. A participating employee may designate who is to receive any shares
of common stock and cash, if any, from the participant's account under the 2000
Purchase Plan in the event of such participant's death subsequent to exercising
a purchase option but prior to delivery of any shares of common stock and cash,
if any.

Nontransferability. Rights granted under the 2000 Purchase Plan are not
transferable by a participant other than by will, the laws of descent and
distribution, or as otherwise provided under the plan, and the company may
treat any prohibited attempt to transfer as an election to withdraw from an
offering period.

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<PAGE>

Other Provisions. The subscription agreement may contain such other terms,
provisions and conditions not inconsistent with the 2000 Purchase Plan as may
be determined by the plan administrator.

Adjustment upon Changes in Capitalization; Corporate Transactions

In the event of changes in the outstanding common stock by reason of any
stock splits, reverse stock splits, stock dividends, combinations,
reclassifications or other similar changes in the capital structure of the
company, an appropriate adjustment shall be made to (i) the number of shares of
common stock subject to the 2000 Purchase Plan and (ii) the number and purchase
price of shares of stock subject to any purchase right outstanding under the
2000 Purchase Plan.

In a "reorganization event," which the plan defines as any merger or
consolidation of the company as a result of which the common stock of the
company is converted into or exchanged for the right to receive cash,
securities or other property pursuant to a share exchange agreement, or any
sale of all or substantially all of the assets of the company, unless the
acquiring or succeeding corporation (or an affiliate thereof) agrees to assume,
or substitute for, outstanding options under the plan, each offering period
then in progress shall be shortened by setting a new exercise date, which will
be before the proposed event. Any offering period then in progress would end on
the new exercise date.

In the event of a proposed dissolution or liquidation of the company, the
offering periods shall terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the board of directors.

Amendment and Termination of the 2000 Purchase Plan

The board of directors may at any time amend or terminate the 2000 Purchase
Plan. The company shall obtain stockholder approval of any amendment to the
2000 Purchase Plan in such a manner and to such a degree as is necessary to
comply with Section 423 of the Internal Revenue Code. In addition, no such
amendment shall be made to the 2000 Purchase Plan which would cause the plan to
fail to comply with Section 423 of the Internal Revenue Code. Except as
provided in connection with certain changes in the capitalization of the
company and certain reorganization events of the company, any amendment or
termination of the 2000 Purchase Plan shall not adversely affect options
already granted.

Federal Income Tax Consequences

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to participation in the
2000 Purchase Plan and with respect to the sale of common stock acquired under
the 2000 Purchase Plan. The 2000 Purchase Plan is intended to qualify as an
"Employee Stock Purchase Plan" within the meaning of Section 423 of the
Internal Revenue Code. The 2000 Purchase Plan is not a qualified plan under
Section 401(a) of the Internal Revenue Code.

Tax Consequences to Participants

In general, a participant will not recognize taxable income upon enrolling
in the 2000 Purchase Plan or upon purchasing shares of common stock at the end
of a purchase period. Instead, if a participant sells common stock acquired
under the 2000 Purchase Plan at a sale price that exceeds the price at which
the participant purchased the common stock, then the participant will recognize
taxable income in an amount equal to the excess of the sale price received for
the common stock over the price at which the participant purchased the common
stock. A portion of that taxable income will be ordinary income, and a portion
may be capital gain.

If the participant sells the common stock more than one year after acquiring
it and more than two years after the date on which the offering commenced, then
the participant will be taxed as follows. If the sale price of the common stock
is higher than the price at which the participant purchased the common stock,
then the participant will recognize ordinary compensation income in an amount
equal to the lesser of:

. fifteen percent of the fair market value of the common stock on the
Grant Date; and

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. the excess of the sale price of the common stock over the price at which
the participant purchased the common stock.

Any further income will be long-term capital gain. If the sale price of the
common stock is less than the price at which the participant purchased the
common stock, then the participant will recognize long-term capital loss in an
amount equal to the excess of the price at which the participant purchased the
common stock over the sale price of the common stock.

If the participant sells the common stock within one year after acquiring it
or within two years after the Grant Date, then the participant will recognize
ordinary compensation income in an amount equal to the excess of the fair
market value of the common stock on the date that it was purchased over the
price at which the participant purchased the common stock. The participant will
also recognize capital gain in an amount equal to the excess of the sale price
of the common stock over the fair market value of the common stock on the date
that it was purchased, or capital loss in an amount equal to the excess of the
fair market value of the common stock on the date that it was purchased over
the sale price of the common stock. This capital gain or loss will be a long-
term capital gain or loss if the participant has held the common stock for more
than one year prior to the date of the sale and will be a short-term capital
gain or loss if the participant has held the common stock for a shorter period.

Tax Consequences to the Company

The offering of common stock under the 2000 Purchase Plan will have no tax
consequences to the company. Moreover, in general, neither the purchase nor the
sale of common stock acquired under the 2000 Purchase Plan have any tax
consequences to the company except that the company (or our subsidiaries, as
the case may be) will be entitled to a business-expense deduction with respect
to any ordinary compensation income recognized by a participant upon making a
Disqualifying Disposition. Any such deduction will be subject to the
limitations of Section 162(m) of the Internal Revenue Code.

Grants and Benefits under the 2000 Purchase Plan to Certain Individuals

Because participation in the 2000 Purchase Plan is at the election of the
employees of the company, the benefits to be received by any particular
executive officer, by all current executive officers as a group or by non-
executive officer employees as a group cannot be determined by the company at
this time.

PROPOSAL 4--RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS

Our board of directors has selected Ernst & Young LLP as our auditors for
the current fiscal year, subject to ratification by stockholders at the annual
meeting. If the stockholders do not ratify the selection of Ernst & Young LLP,
our board of directors will reconsider the matter. A representative of Ernst &
Young LLP, which served as our auditors for fiscal 2000, is expected to be
present at the annual meeting to respond to appropriate questions and to make a
statement if he or she so desires.

STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

Any proposal that a stockholder intends to present at the 2001 annual
meeting of stockholders must be submitted to the attention of the corporate
secretary of the company at our offices, 155 Fleet Street, Portsmouth, New
Hampshire 03801, Attention: Corporate Secretary, no later than June 20, 2001 in
order to be considered for inclusion in the proxy statement relating to the
2001 annual meeting.

The persons named in the enclosed proxy will have discretionary authority to
vote on any matter proposed by a stockholder for consideration at the annual
meeting that is not included in this proxy statement and on any matter proposed
by a stockholder for consideration at the 2001 annual meeting that is not
included in the proxy statement for that meeting if we have not received notice
of the proposal by September 4, 2001.

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OTHER MATTERS

Our board of directors knows of no other business which will be presented
for consideration at the annual meeting other than that described above.
However, if any other business should come before the annual meeting, it is the
intention of the persons named in the enclosed proxy to vote, or otherwise act,
in accordance with their best judgment on such matters.

We will bear the costs of soliciting proxies. In addition to solicitations
by mail, our directors, officers and regular employees may, without additional
remuneration, solicit proxies by telephone, telegraph, facsimile and personal
interviews. We will also request brokerage houses, custodians, nominees and
fiduciaries to forward copies of the proxy material to those persons for whom
they hold shares and request instructions for voting the proxies. We will
reimburse brokerage houses and other persons for their reasonable expenses in
connection with this distribution. In addition, we have also retained Corporate
Investor Communications, Inc., a proxy soliciting firm, to assist in soliciting
proxies. Corporate Investor Communications, Inc. will be paid a fee and
reimbursed for certain out-of-pocket expenses in connection with the
solicitation of the proxies. We expect to pay an aggregate of approximately
$10,000 to Corporate Investor Communications, Inc. for such solicitation of
proxies.

By order of the Board of Directors,

/s/ Daniel M. McGurl

Daniel M. McGurl, Chairman
and Chief Executive Officer

October 19, 2000
Portsmouth, New Hampshire

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Appendix A

BOTTOMLINE TECHNOLOGIES (de), INC.

2000 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2000 Stock Incentive Plan (the "Plan") of Bottomline
Technologies (de), Inc., a Delaware corporation ("Bottomline" or the
"Company"), is to advance the interests of the Company's stockholders by
enhancing the Company's ability to attract, retain and motivate persons who
make (or are expected to make) important contributions to the Company by
providing such persons with equity ownership opportunities and performance-
based incentives and thereby better aligning the interests of such persons with
those of the Company's stockholders. Except where the context otherwise
requires, the term "Company" shall include any of the Company's present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the "Code") and any other business venture (including,
without limitation, joint venture or limited liability company) in which the
Company has a significant interest, as determined by the Board of Directors of
the Company (the "Board").

2. Eligibility

All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options or restricted stock awards (each, an "Award")
under the Plan. Each person who has been granted an Award under the Plan shall
be deemed a "Participant".

3. Administration and Delegation.

(a) Administration by Board of Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the
Board shall be made in the Board's sole discretion and shall be final and
binding on all persons having or claiming any interest in the Plan or in any
Award. No director or person acting pursuant to the authority delegated by the
Board shall be liable for any action or determination relating to or under the
Plan made in good faith.

(b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board to the
extent that the Board's powers or authority under the Plan have been delegated
to such Committee.

4. Stock Available for Awards.

(a) Number of Shares. Subject to adjustment under Section 8, Awards may be
made under the Plan for a number of shares of common stock, $.001 par value per
share, of the Company (the "Common Stock") equal to the sum of:

(1) 1,350,000 shares of Common Stock (the "Initial Shares"); plus

(2) such additional number of shares of Common Stock (up to 800,000
shares) as is equal to the sum of (x) the number of shares of Common Stock
reserved for issuance under the Company's 1997 Stock Incentive Plan (the
"Existing Plan") that remain available for grant under the Existing Plan
immediately prior to the adoption of this Plan by the Board and (y) the
number of shares of Common Stock subject to

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awards granted under the Existing Plan which awards expire, terminate or
are otherwise surrendered, canceled, forfeited or repurchased by the
Company at their original issuance price pursuant to a contractual
repurchase right (subject, however, in the case of Incentive Stock Options
(as hereinafter defined) to any limitations of the Code); plus

(3) an annual increase to be added on the first day of each of the
Company's fiscal years during the period beginning in fiscal year 2001 and
ending on the second day of fiscal year 2010 equal to the lesser of (i) 5
million shares of Common Stock, (ii) a number of shares of Common Stock
which, when added to the Initial Shares that remain available for grant
under the Plan, is equal to 12% of the outstanding shares on such date or
(iii) an amount determined by the Board.

If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part (including as
the result of shares of Common Stock subject to such Award being repurchased by
the Company at the original issuance price pursuant to a contractual repurchase
right) or results in any Common Stock not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan, subject, however, in the case of Incentive Stock Options, to any
limitations under the Code. Shares issued under the Plan may consist in whole
or in part of authorized but unissued shares or treasury shares.

(b) Per-Participant Limit. Subject to adjustment under Section 7, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 1,000,000 shares per
calendar year. The per-Participant limit described in this Section 4(b) shall
be construed and applied consistently with Section 162(m) of the Code ("Section
162(m)").

5. Stock Options.

(a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive
Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of Bottomline or its
subsidiaries (as defined in Section 424(f) of the Code) and shall be subject to
and shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) which is intended to be an Incentive Stock
Option is not an Incentive Stock Option.

(c) Exercise Price. The Board shall establish the exercise price at the time
each Option is granted and specify it in the applicable option agreement.

(d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.

(e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other
form of notice (including electronic notice) approved by the Board together
with payment in full as specified in Section 5(f) for the number of shares for
which the Option is exercised.

(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

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(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price and any required tax withholding
or (ii) delivery by the Participant to the Company of a copy of irrevocable
and unconditional instructions to a creditworthy broker to deliver promptly
to the Company cash or a check sufficient to pay the exercise price and any
required tax withholding;

(3) if the Common Stock is registered under the Securities Exchange Act
of 1934 (the "Exchange Act"), by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by (or
in a manner approved by) the Board in good faith ("Fair Market Value"),
provided (i) such method of payment is then permitted under applicable law
and (ii) such Common Stock, if acquired directly from the Company was owned
by the Participant at least six months prior to such delivery;

(4) to the extent permitted by the Board, in its sole discretion by (i)
delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration
as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

(g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.

6. Restricted Stock.

(a) Grants. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all
or part of such shares at their issue price or other stated or formula price
(or to require forfeiture of such shares if issued at no cost) from the
recipient in the event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable restriction period
or periods established by the Board for such Award (each, a "Restricted Stock
Award").

(b) Terms and Conditions. The Board shall determine the terms and conditions
of any such Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any.

(c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company (or its
designee). At the expiration of the applicable restriction periods, the Company
(or such designee) shall deliver the certificates no longer subject to such
restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant
to receive amounts due or exercise rights of the Participant in the event of
the Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

7. Adjustments for Changes in Common Stock and Certain Other Events

(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this
Plan, (ii) the per-Participant limit set forth in Section 4(b), (iii) the
number and class of securities and exercise price per share subject to each
outstanding Option, and (iv) the repurchase price per share subject to each
outstanding Restricted Stock Award shall be

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appropriately adjusted (or substituted Awards may be made, if applicable). The
Board may make any determinations with respect to the effect of any such
adjustment, which determination shall be final, binding and conclusive. If this
Section 7(a) applies and Section 7(c) also applies to any event, Section 7(c)
shall be applicable to such event, and this Section 7(a) shall not be
applicable.

(b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation
or dissolution on any Restricted Stock Award or other Award granted under the
Plan at the time of the grant of such Award.

(1) Definitions

(a) A "Reorganization Event" shall mean:

(i) any merger or consolidation of the Company with or into
another entity as a result of which the Common Stock is converted
into or exchanged for the right to receive cash, securities or other
property; or

(ii) any exchange of shares of the Company for cash, securities
or other property pursuant to a share exchange transaction.

(b) A "Change in Control Event" shall mean:

(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership of any capital stock of the
Company if, after such acquisition, such Person beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) 50% or more of either (x) the then-outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (y)
the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions
shall not constitute a Change in Control Event: (A) any acquisition
directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for,
convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising, converting
or exchanging such security acquired such security directly from the
Company or an underwriter or agent of the Company), (B) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled
by the Company, or (C) any acquisition by any corporation pursuant
to a Business Combination (as defined below) which complies with
clauses (x) and (y) of subsection (iii) of this definition; or

(ii) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board
of Directors of a successor corporation to the Company), where the
term "Continuing Director" means at any date a member of the Board
(x) who was a member of the Board on the date of the initial
adoption of this Plan by the Board or (y) who was nominated or
elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who
were Continuing Directors at the time of such nomination or
election; provided, however, that there shall be excluded from this
clause (y) any individual whose initial assumption of office
occurred as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents, by or on behalf
of a person other than the Board; or

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<PAGE>

(iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the
Company or a sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), unless,
immediately following such Business Combination, each of the
following two conditions is satisfied: (x) all or substantially all
of the individuals and entities who were the beneficial owners of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-
outstanding shares of common stock and the combined voting power of
the then-outstanding securities entitled to vote generally in the
election of directors, respectively, of the resulting or acquiring
corporation in such Business Combination (which shall include,
without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the Company's
assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the
"Acquiring Corporation") in substantially the same proportions as
their ownership of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively, immediately
prior to such Business Combination and (y) no Person (excluding the
Acquiring Corporation or any employee benefit plan (or related
trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 50% or more
of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the
election of directors (except to the extent that such ownership
existed prior to the Business Combination).

(2) Effect on Options

(a) Reorganization Event. Upon the occurrence of a Reorganization
Event (regardless of whether such event also constitutes a Change in
Control Event), or the execution by the Company of any agreement with
respect to a Reorganization Event (regardless of whether such event
will result in a Change in Control Event), the Board shall provide that
all outstanding Options shall be assumed, or equivalent options shall
be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof); provided that if such Reorganization Event also
constitutes a Change in Control Event, except to the extent
specifically provided to the contrary in the instrument evidencing any
Option or any other agreement between a Participant and the Company
one-quarter (25%) of the number of shares subject to the Option which
were not already vested shall be vested upon the occurrence of such
Reorganization Event and the remaining three-quarters of such number of
shares shall continue to become vested in accordance with the original
vesting schedule set forth in such option, with three-quarters of the
number of shares that would otherwise have become vested on each
subsequent vesting date in accordance with the original schedule
becoming vested on each subsequent vesting date. For purposes hereof,
an Option shall be considered to be assumed if, following consummation
of the Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately prior
to the consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a result of
the Reorganization Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the
Reorganization Event (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however,
that if the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist
solely of common stock of the acquiring or succeeding corporation (or
an affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock
as a result of the Reorganization Event.

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Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants, provide
that all Options will become exercisable in full as of a specified time prior
to the Reorganization Event and will terminate immediately prior to the
consummation of such Reorganization Event, except to the extent exercised by
the Participants before the consummation of such Reorganization Event;
provided, however, that in the event of a Reorganization Event under the terms
of which holders of Common Stock will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered pursuant to such
Reorganization Event (the "Acquisition Price"), then the Board may instead
provide that all outstanding Options shall terminate upon consummation of such
Reorganization Event and that each Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if any) by which (A) the
Acquisition Price multiplied by the number of shares of Common Stock subject to
such outstanding Options (whether or not then exercisable), exceeds (B) the
aggregate exercise price of such Options. To the extent all or any portion of
an Option becomes exercisable solely as a result of the first sentence of this
paragraph, upon exercise of such Option the Participant shall receive shares
subject to a right of repurchase by the Company or its successor at the Option
exercise price. Such repurchase right (1) shall lapse at the same rate as the
Option would have become exercisable under its terms and (2) shall not apply to
any shares subject to the Option that were exercisable under its terms without
regard to the first sentence of this paragraph.

(b) Change in Control Event that is not a Reorganization Event. Upon
the occurrence of a Change in Control Event that does not also
constitute a Reorganization Event, except to the extent specifically
provided to the contrary in the instrument evidencing any Option or any
other agreement between a Participant and the Company, the vesting
schedule of such Option shall be accelerated in part so that one-
quarter (25%) of the number of shares that would otherwise have first
become vested on any date after the date of the Change in Control Event
shall immediately become vested. The remaining three-quarters of such
number of shares shall continue to become vested in accordance with the
original vesting schedule set forth in such Option, with three-quarters
of the number of shares that would otherwise have become vested on each
subsequent vesting date in accordance with the original schedule
becoming vested on each such subsequent vesting date.

(3) Effect on Restricted Stock Awards

(a) Reorganization Event that is not a Change in Control Event. Upon
the occurrence of a Reorganization Event that is not a Change in
Control Event, the repurchase and other rights of the Company under
each outstanding Restricted Stock Award shall inure to the benefit of
the Company's successor and shall apply to the cash, securities or
other property which the Common Stock was converted into or exchanged
for pursuant to such Reorganization Event in the same manner and to the
same extent as they applied to the Common Stock subject to such
Restricted Stock Award.

(b) Change in Control Event. Upon the occurrence of a Change in
Control Event (regardless of whether such event also constitutes a
Reorganization Event), except to the extent specifically provided to
the contrary in the instrument evidencing any Restricted Stock Award or
any other agreement between a Participant and the Company, the vesting
schedule of all Restricted Stock Awards shall be accelerated in part so
that one-quarter of the number of shares that would otherwise have
first become free from conditions or restrictions on any date after the
date of the Change in Control Event shall immediately become free from
conditions or restrictions. Subject to the following sentence, the
remaining three-quarters of such number of shares shall continue to
become free from conditions or restrictions in accordance with the
original schedule set forth in such Restricted Stock Award, with three-
quarters of the number of shares that would otherwise have become free
from conditions or restrictions on each subsequent vesting date in
accordance with the original schedule becoming free from conditions or
restrictions on each subsequent vesting date.

(4) Limitations. Notwithstanding the foregoing provisions of this
Section 7(c), if the Change in Control Event is intended to be accounted
for as a "pooling of interests" for financial accounting purposes, and if
the acceleration to be effected by the foregoing provisions of this Section
7(c) would

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preclude accounting for the Change in Control Event as a "pooling of
interests" for financial accounting purposes, then no such acceleration
shall occur upon the Change in Control Event.

8. General Provisions Applicable to Awards

(a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution,
and, during the life of the Participant, shall be exercisable only by the
Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

(b) Documentation. Each Award shall be evidenced in such form (written,
electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms
of each Award need not be identical, and the Board need not treat Participants
uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

(e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law
to be withheld in connection with Awards to such Participant no later than the
date of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, if the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery
of shares of Common Stock, including shares retained from the Award creating
the tax obligation, valued at their Fair Market Value; provided, however, that
the total tax withholding where stock is being used to satisfy such tax
obligations cannot exceed the Company's minimum statutory withholding
obligations (based on minimum statutory withholding rates for federal and state
tax purposes, including payroll taxes, that are applicable to such supplemental
taxable income). The Company may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to a
Participant.

(f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.

(g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has
executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.

(h) Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.

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<PAGE>

9. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right
at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Award.

(b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

(c) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a Participant
that is intended to comply with Section 162(m) shall become exercisable, vested
or realizable, as applicable to such Award, unless and until the Plan has been
approved by the Company's stockholders to the extent stockholder approval is
required by Section 162(m) in the manner required under Section 162(m)
(including the vote required under Section 162(m)). No Awards shall be granted
under the Plan after the completion of ten years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan was
approved by the Company's stockholders, but Awards previously granted may
extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).

(e) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State
of Delaware, without regard to any applicable conflicts of law.

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Appendix B

BOTTOMLINE TECHNOLOGIES (de), INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of Bottomline Technologies (de), Inc.

1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock
of the Company through accumulated payroll deductions. It is the intention of
the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Code. The provisions of the Plan, accordingly, shall
be construed so as to extend and limit participation in a manner consistent
with the requirements of that section of the Code.

2. Definitions.

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(d) "Company" shall mean Bottomline Technologies (de), Inc. and any
Designated Subsidiary of the Company.

(e) "Compensation" shall mean the amount of money reportable on an
Employee's Federal income Tax Withholding Statement (Form W-2) before any
withholdings for health insurance or under a Section 401(k), 125, 129 or
similar plan, including without limitation, salary, wages, and sales
commissions, but excluding overtime, shift premium, bonuses and incentive
compensation other than sales commissions, third party sick or disability pay,
allowances or reimbursements for expenses such as relocation allowances or
travel expenses, whether specifically designated as such or designated as
signing bonuses, income or gains attributable to restricted stock, stock
options, stock appreciation rights or other similar equity-based compensation,
imputed income or non-cash items, such as life insurance premiums, and similar
items, whether or not specifically itemized on the Form W-2.

(f) "Designated Subsidiaries" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible
to participate in the Plan.

(g) "Employee" shall mean any individual who is an Employee of the Company
for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.

(h) "Enrollment Date" shall mean the first day of each Offering Period.

(i) "Exercise Date" shall mean the last day of each Purchase Period.

(j) "Fair Market Value" shall mean, as of any date, the value of Common
Stock determined as follows:

(1) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination,
as reported in The Wall Street Journal or such other source as the Board
deems reliable, or;

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(2) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be
the mean of the closing bid and asked prices for the Common Stock on the
date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;

(3) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.

(k) "Offering Periods" shall mean the periods of approximately twenty-four
(24) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after October 1 and April
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.

(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.

(m) "Purchase Period" shall mean the period commencing the day after an
Exercise Date and ending on the Trading Day closest to the day that is six
months after the preceding Exercise Date, except that the first Purchase Period
of any Offering Period shall commence on the Enrollment Date and end with the
Trading Day that is six months after the Enrollment Date. The duration and
timing of Purchase Periods may be changed pursuant to Section 4 of the Plan.

(n) "Purchase Price" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock on the Enrollment Date or on the Exercise
Date, whichever is lower.

(o) "Reserves" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.

(p) "Subsidiary" shall mean any present or future subsidiary corporation as
defined in Section 424(f) of the Code.

(q) "Trading Day" shall mean a day on which national stock exchanges and the
Nasdaq System are open for trading.

3. Eligibility.

(a) Any Employee (as defined in Section 2(g)), who shall be employed by the
Company on a given Enrollment Date shall be eligible to participate in the
Plan; provided, however, that an Employee may not participate in more than one
Offering Period at the same time.

(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) to the extent that, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company or of any Subsidiary and/or hold outstanding
options to purchase such stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
Subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. In the event that an Employee may not be granted an
option under the Plan because of the foregoing restrictions, the Employee shall
be granted an option to purchase the maximum number of shares that would not
violate the foregoing restrictions.

4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after October 1 and April 1 each year, or on

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such other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 19 hereof. The Board shall have the power
to change the duration of Offering Periods and Purchase Periods (including the
commencement dates thereof) with respect to future offerings without
stockholder approval.

5. Participation.

(a) An eligible Employee may become a participant in the Plan by completing
a subscription agreement authorizing payroll deductions in the form of Exhibit
A to this Plan and filing it on or prior to the applicable Enrollment Date with
the Company's payroll office or such other office as the Company may direct.

(b) Payroll deductions for a participant shall commence on the first payroll
following the Enrollment Date and shall end on the last payroll in the Offering
Period to which such authorization is applicable, unless sooner terminated by
the participant as provided in Section 10 hereof.

6. Payroll Deductions.

(a) At the time a participant files his or her subscription agreement, he or
she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period. Such payroll deductions shall be in whole percentages only.

(b) All payroll deductions made for a participant shall be credited to his
or her account under the Plan. A participant may not make any additional
payments into such account.

(c) A participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing and filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in payroll
deduction rate shall be effective with the first full payroll period following
ten (10) business days after the Company's receipt of the new subscription
agreement. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.

(d) At the time the option is exercised, in whole or in part, or at the time
any of the Company's Common Stock issued under the Plan is disposed of, the
participant must make adequate provision for the Company's federal, state, or
other tax withholding obligations, if any, which arise upon the exercise of the
option or the disposition of the Common Stock. At any time, the Company may,
but shall not be obligated to, withhold from the participant's compensation the
amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefits attributable to sale or other disposition of Common
Stock by the Employee.

7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase (at the applicable Purchase Price) up to a whole number of
shares of the Company's Common Stock the ("Option Shares") determined by
dividing $50,000 by the Fair Market Value of a share of Common Stock on the
Enrollment Date (subject to any adjustment pursuant to Section 18), and
provided that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof. The option shall be exercisable as to 25% of the
Option Shares on each Exercise Date during the Offering Period. Exercise of the
option shall occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof. The option shall expire on the last
day of the Offering Period.

8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on each Exercise Date during the Offering
Period, and a number of full shares not exceeding the number of shares as to
which such participant's

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<PAGE>

option is exercisable on such Exercise Date shall be purchased for such
participant at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. No fractional shares shall be purchased. Any
payroll deductions accumulated in a participant's account which are not
sufficient to purchase a full share of Common Stock shall be retained in the
participant's account for the subsequent Purchase Period or Offering Period,
subject to earlier withdrawal by the participant as provided in Section 10
hereof. Any other monies left over in a participant's account after the
Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant or to his or her designee, as appropriate, of a certificate
representing the shares purchased upon exercise of his or her option. The
Company may, in its sole discretion and in compliance with applicable laws,
authorize the use of book entry registration of shares in lieu of issuing
certificates.

10. Withdrawal; Termination of Employment.

(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company
in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option
for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such Offering
Period. If a participant withdraws from an Offering Period, payroll deductions
shall not resume at the beginning of the succeeding Offering Period unless the
participant delivers to the Company a new subscription agreement.

(b) Upon a participant's ceasing to be an Employee (as defined in Section
2(g) hereof), for any reason, he or she shall be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof, and
such participant's option shall be automatically terminated. If, prior to the
last day of the Offering Period, the Designated Subsidiary by which the
Employee is employed shall cease to be a Subsidiary of the Company, or if the
Employee is transferred to a Subsidiary of the Company that is not a Designated
Subsidiary, the Employee shall be deemed to have terminated employment for
purposes of this Plan.

(c) A participant's withdrawal from an Offering Period shall not have any
effect upon his or her eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Offering Periods.

11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

12. Stock.

(a) The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 750,000 shares, subject to
adjustment as provided in Section 18(a) hereof. If, on a given Exercise Date,
the number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan, the Company shall make a
pro rata allocation of the shares remaining available for purchase in as
uniform a manner as shall be practicable and as it shall determine to be
equitable.

(b) The participant shall have no interest or voting right in shares covered
by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

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<PAGE>

13. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

14. Designation of Beneficiary.

(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to an Exercise Date on
which the option is exercised but prior to delivery to such participant of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to exercise of the option.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the participant at any
time by written notice. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash
to the spouse or to any one or more dependents or relatives of the participant,
or if no spouse, dependent or relative is known to the Company, then to such
other person as the Company may designate.

15. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

17. Reports. Individual accounts shall be maintained for each participant in
the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

18. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.

(a) Changes in Capitalization. The maximum number of shares of Common Stock
available for sale under the Plan, the Reserves, the maximum number of shares
each participant may purchase during each Purchase Period (pursuant to Section
7), as well as the Purchase Price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration". The Board may make any
determinations with respect to the effect of any such adjustment, which
determinations shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of

5
<PAGE>

any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option granted
hereunder.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Offering Periods shall terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.

(1) Definition. A "Reorganization Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property, (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a share
exchange transaction, or (c) any sale of all or substantially all of the
assets of the Company, each while unexercised options remain outstanding
under the Plan.

(2) Consequences of a Reorganization Event on Options. Upon the
occurrence of a Reorganization Event, or the execution by the Company of
any agreement with respect to a Reorganization Event, the Board shall
provide that all outstanding options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof). For purposes hereof, an option shall be
considered to be assumed if, following consummation of the Reorganization
Event, the option confers the right to purchase, for each share of Common
Stock subject to the option immediately prior to the consummation of the
Reorganization Event, the consideration (whether cash, securities or other
property) received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately prior to the
consummation of the Reorganization Event (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding shares of Common Stock); provided, however,
that if the consideration received as a result of the Reorganization Event
is not solely common stock of the acquiring or succeeding corporation (or
an affiliate thereof), the Company may, with the consent of the acquiring
or succeeding corporation, provide for the consideration to be received
upon the exercise of options to consist solely of common stock of the
acquiring or succeeding corporation (or an affiliate thereof) equivalent in
fair market value to the per share consideration received by holders of
outstanding shares of Common Stock as a result of the Reorganization Event.

Notwithstanding the foregoing, in the event that the acquiring or succeeding
corporation refuses to assume, or substitute for, the options, any Offering
Periods then in progress shall be shortened by setting a new Exercise Date (the
"New Exercise Date"), determined by the Board. The New Exercise Date shall be
before the date of the proposed Reorganization Event. The Board shall notify
each participant in writing at least ten (10) business days prior to the New
Exercise Date that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.

19. Amendment or Termination.

(a) The Board of Directors of the Company may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18 hereof, no such
termination can affect options previously granted, provided that an Offering
Period may be terminated by the Board on any Exercise Date if the Board
determines that the termination of the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 18 hereof, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.

6
<PAGE>

(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
limit the frequency and/or number of changes in the amount withheld during an
Offering Period, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.

20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

22. Effective Date. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company.

23. Automatic Transfer to Low Price Offering Period. To the extent permitted
by any applicable laws, regulations, or rules of the established stock
exchange, national market system, or over-the-counter market on which the
Common Stock trades, if the Fair Market Value of the Common Stock on the
Enrollment Date of the next Offering Period is lower than the Fair Market Value
of the Common Stock on the Enrollment Date of any current Offering Period, then
all participants in such current Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
option on the Exercise Date and shall be automatically re-enrolled in the next
Offering Period as of the first day thereof.

24. Governmental Regulations. The Company's obligation to sell and deliver
Common Stock under this Plan is subject to listing on an established stock
exchange or quotation on a national market system or an over the counter market
(to the extent the Common Stock is then so listed or quoted) and the approval
of all governmental authorities required in connection with the authorization,
issuance, or sale of such stock.

25. Governing Law. The Plan shall be governed by Delaware law except to the
extent that such law is preempted by federal law.

26. Source of Shares. Shares may be issued upon exercise of an option from
authorized but unissued Common Stock, from shares held in the treasury of the
Company, or from any other proper source.

27. Notification Upon Sale of Shares. Each employee agrees, by participating
in the Plan, to promptly give notice to the Company of any disposition of
shares purchased under the Plan where such disposition occurs within two years
after the date of the grant of the option pursuant to which such shares were
purchased or within one year of the date of exercise of such option pursuant to
which such shares were purchased.

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<PAGE>

PROXY

BOTTOMLINE TECHNOLOGIES (de), INC.

ANNUAL MEETING OF STOCKHOLDERS
November 16, 2000

This Proxy is solicited on behalf of the Board of Directors of Bottomline
Technologies (de), Inc. (the "Company")

The undersigned, having received notice of the annual meeting of stockholders
and the proxy statement therefor and revoking all prior proxies, hereby
appoint(s) Daniel M. McGurl, Robert A. Eberle and John A. Burgess (with full
power of substitution), as proxies of the undersigned, to attend the annual
meeting of stockholders of the Company to be held on Thursday, November 16,
2000, and any adjourned or postponed session thereof, and there to vote or act
upon, with all powers the undersigned would possess if personally present.

Attendance of the undersigned at the annual meeting of stockholders or at any
adjourned or postponed session thereof will not be deemed to revoke this proxy
unless the undersigned affirmatively indicate(s) thereat the intention of the
undersigned to vote said shares of common stock in person. If the undersigned
hold(s) any of the shares of common stock in a fiduciary, custodial or joint
capacity or capacities, this proxy is signed by the undersigned in every such
capacity as well as individually.

Please vote, date and sign on reverse side and return promptly in the enclosed
postage pre-paid envelope.

Has your address changed? Do you have any comments?

------------------------------------ ----------------------------------------

SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE

<PAGE>
[1824 - BOTTOMLINE TECHNOLOGIES (de), INC.] [FILE NAME:ZBTM2A.ELX]
[VERSION - (2)] [10/21/00] [orig. 10/06/00]
DETACH HERE
ZBTM2A
[X] Please mark
votes as in
this example.

The shares of common stock of Bottomline Technologies (de), Inc. represented
by this proxy will be voted as directed by the undersigned. If no direction
is given with respect to any proposal specified herein, this proxy will be
voted FOR the proposal.

1. To elect the following people 2. To approve the Company's FOR
as Class II directors for the 2000 Stock Incentive Plan [ ]
ensuing three years: and the authorization of AGAINST
FOR WITHHOLD an initial 1,350,000 shares, [ ]
[ ] [ ] subject to increase as ABSTAIN
[ ] described in the Proxy [ ]
----------------------------- Statement, of common stock,
(INSTRUCTION: To withhold par value $.001 per share,
authority to vote for any for issuance under such plan.
individual nominee, write
that nominee's name in the 3. To approve the Company's FOR
space provided above.) 2000 Employee Stock Purchase [ ]
Plan and the authorization AGAINST
of 750,000 shares of common [ ]
stock for issuance under ABSTAIN
such plan. [ ]

4. To ratify the selection of FOR
Ernst & Young LLP as the [ ]
Company's independent AGAINST
auditors for the current [ ]
fiscal year. ABSTAIN
[ ]

MARK HERE FOR ADDRESS CHANGE AND
NOTE ON REVERSE SIDE [ ]

Please sign exactly as your name(s)
appear(s) hereon. All holders must
sign. When signing as attorney,
executor, administrator or other
fiduciary, please give your full title
as such. Joint owners should each sign
personally. If a corporation, please
sign in full corporate name, by
authorized officer. If a partnership,
please sign in partnership name by
authorized person.

Please be sure to sign and date this
proxy below.

Stockholder(s) sign here: Date:

------------------------- ------------------

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EPAY-PS-00