<PAGE>
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:
[x] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PurchasePro.com, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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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3) Filing Party:
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4) Date Filed:
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<PAGE>
[PURCHASEPRO.COM LOGO APPEARS HERE]
PurchasePro.com, Inc.
3291 North Buffalo Drive
Las Vegas, NV 89129
(702) 316-7000
2000
Dear Shareholder:
You are cordially invited to attend the special meeting of shareholders of
PurchasePro.com which will be held on , , 2000,
at [9:00 a.m.] (Pacific Time), at our offices, 3291 North Buffalo Drive, Las
Vegas, NV 89129.
The formal notice of the special meeting and the proxy statement have been
made a part of this invitation.
After reading the proxy statement, please mark, date, sign and return, at
an early date, the enclosed proxy in the prepaid envelope addressed to
, our agent, to ensure that your shares will be
represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE
ENCLOSED PROXY OR ATTEND THE SPECIAL MEETING IN PERSON.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
Charles E. Johnson, Jr.
Chief Executive Officer
<PAGE>
PurchasePro.com, Inc.
----------------
Notice of special meeting of shareholders
to be held , 2000
----------------
To the Shareholders of PurchasePro.com, Inc.:
The special meeting of shareholders of PurchasePro.com, Inc., a Nevada
corporation (the "Company"), will be held at our offices, 3291 North Buffalo
Drive, Las Vegas, NV 89129, on , , 2000, at
[9:00 a.m.] (Pacific Time), for the following purposes:
1. To approve a proposal to authorize the Board of Directors to amend our
Amended and Restated Articles of Incorporation to increase the number of
shares of Common Stock authorized for issuance by 150,000,000 shares;
2. To approve a proposal to amend our 1999 Stock Plan to increase the
number of shares issuable under the Plan by 1,500,000 shares; and
3. To transact such other business as may properly come before the special
meeting and any adjournment of the special meeting.
Shareholders of record as of the close of business on March 22, 2000, are
entitled to notice of and to vote at the special meeting and any adjournment of
the meeting. A complete list of shareholders entitled to vote will be available
at the Secretary's office, 3291 North Buffalo Drive, Las Vegas, NV 89129, for
ten days before the meeting.
It Is Important That Your Shares Are Represented At This Meeting. Even If
You Plan To Attend The Meeting, We Hope That You Will Promptly Mark, Sign, Date
And Return The Enclosed Proxy. This Will Not Limit Your Rights To Attend Or
Vote At The Meeting.
By Order of the Board of Directors.
Christopher P. Carton
President, Chief Operating Officer
, 2000
<PAGE>
PurchasePro.com, Inc.
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished in connection with the solicitation by our
Board of Directors of proxies to be used at a special meeting of shareholders
to be held at our offices, 3291 North Buffalo Drive, Las Vegas, NV 89129, on
, , 2000, and any adjournment thereof. The shares represented by
the proxies received in response to this solicitation and not revoked will be
voted at the special meeting. A proxy may be revoked at any time before it is
exercised by filing with our Secretary a written revocation or a duly executed
proxy bearing a later date or by voting in person at the special meeting. On
the matters coming before the special meeting for which a choice has been
specified by a shareholder by means of the ballot on the proxy, the shares will
be voted accordingly. If no choice is specified, the shares will be voted FOR
the approval of Proposal 1 and Proposal 2 described in the notice of special
meeting and in this proxy statement.
Stockholders of record at the close of business on March 22, 2000, are
entitled to notice of and to vote at the special meeting. As of the close of
business on that date, we had approximately 31,300,000 shares of common stock
outstanding and entitled to vote. Each holder of common stock is entitled to
one vote for each share held as of the record date.
Any disabled stockholder or stockholder's representative may request
reasonable assistance or accommodation from us in connection with the special
meeting by contacting us at PurchasePro.com, Inc., Investor Relations, 3291
North Buffalo Drive, Las Vegas, NV 89129 (702) 316-7000. To provide us
sufficient time to arrange for reasonable assistance or accommodation, please
submit all requests by , 2000.
Proposal 1 requires the affirmative vote of sixty-six and two-thirds percent
(66 2/3%) of our outstanding shares. Proposal 2 requires the affirmative vote
of a majority of our shares present and represented. Abstentions will be
treated as shares present or represented and entitled to vote and will have the
same effect as negative votes. If shares are not voted by the broker who is the
record holder of such shares, or if shares are not voted in other circumstances
in which proxy authority is defective or has been withheld with respect to any
matter, these non-voted shares will not be deemed to be present or represented
for purposes of determining whether stockholder approval has been obtained and
will have the same effect as negative votes in deciding whether Proposal 1 is
approved and will be disregarded in deciding whether Proposal 2 is approved.
The expense of printing and mailing proxy materials will be borne by us. In
addition to the solicitation of proxies by mail, solicitation may be made by
our directors, officers and other employees by personal interview, telephone or
facsimile. No additional compensation will be paid to these persons for such
solicitation. We will reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation materials to beneficial owners of the our
common stock. We have retained to assist in the
solicitation of proxies at a cost of approximately $ .
This Proxy Statement and the accompanying form of proxy are being mailed to
our shareholders on or about , 2000.
IMPORTANT
Please mark, sign and date the enclosed proxy and return it at your earliest
convenience in the enclosed postage-prepaid return envelope so that, whether
you intend to be present at the Special Meeting or not, your shares can be
voted. This will not limit your rights to attend or vote at the Special
Meeting.
1
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 16, 2000 as to
shares of Common Stock beneficially owned by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
the Common Stock of the Company, (ii) each of the Company's directors and
nominees for director, (iii) the Company's directors and executive officers as
a group. In computing the number of shares owned by a person and the percentage
of ownership of that person, shares of common stock subject to options held by
that person that are currently exercisable or exercisable within 60 days of
this Proxy Statement are deemed outstanding, including the following shares
held by the following individuals: Mr. Johnson--487,500 shares; Mr. Carton--
300,000 shares; Mr. St. Peter -112,500 shares; Mr. Moskal--75,000; Mr. Miller--
37,500 shares; Mr. Layne--112,500 shares; Mr. Chiles--52,500 shares; Mr.
Fuente--150,000 shares; Mr. Lanni--15,000 shares; and Mr. O'Brien--15,000
shares. Options and warrants to purchase 2,244,250 shares are deemed held by
all directors and officers as a group. These shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of any other
person. Except as otherwise indicated and subject to applicable community
property laws, each person has sole investment and voting power with respect to
the shares shown. Ownership information is based upon information furnished, or
filed with the Securities and Exchange Commission, by the respective
individuals or entities, as the case may be.
<TABLE>
<CAPTION>
Beneficial Ownership
---------------------
Name and Address of Beneficial Owner Number Percentage
------------------------------------ ---------- ----------
<S> <C> <C>
Executive Officers and Directors
Charles E. Johnson, Jr.(1) .......................... 7,078,750 22.9%
Christopher P. Carton................................ 1,371,000 4.4%
Richard St. Peter(2)................................. 112,500 *
Richard T. Moskal.................................... 75,000 *
Scott H. Miller...................................... 37,500 *
Robert G. Layne...................................... 300,000 *
Bradley D. Redmon(3)................................. 514,676 1.7%
John G. Chiles(4).................................... 379,235 1.2%
David I. Fuente(5)................................... 1,372,223 4.4%
J. Terrence Lanni.................................... 15,000 *
Michael D. O'Brien(6)................................ 15,000 *
All directors and executive officers as a group (14)
persons............................................. 11,499,417 37.2%
Lexington Investor Group(3) ......................... 2,072,724 6.7%
c/o Steven Singleton
800 Corporate Drive
Lexington, KY 40503
</TABLE>
- --------
* Less than 1%.
(1) Excludes 75,000 shares of common stock that Mr. Johnson acquired from Mr.
St. Peter on February 23, 2000 for $84.625 per share and 12,000 shares of
common stock that Mr. Johnson acquired from another executive officer on
February 23, 2000 for $84.625 per share.
(2) Includes 75,000 shares of common stock which were sold to Mr. Johnson on
February 23, 2000 for $84.625 per share.
(3) Each person in the Lexington Investor Group disclaims beneficial ownership
of the other individuals' shares. The Lexington Investor Group includes the
following persons: Pat Madden, Harry Cohen, Steve Singleton, Cornelia
Lockstadt, John Burrus, Robert Langely, Wally Langely, Frank Cassell, Ron
Gaudiano, Charles Lisle, Tom Padgett, Sara Levy and Brad Redmon, a member
of our board of directors.
(4) Includes 13,451 shares held by Jefferies & Company, Inc., 115,711 shares of
common stock held by the John G. and Cynthia M. Chiles Revocable Trust and
38,574 shares held by Mr. Chiles' minor children, and options to purchase
52,500 shares of common stock. Does not include 310,150 shares of common
2
<PAGE>
stock and options to purchase 3,750 shares of common stock held by persons
associated with Jefferies & Company, Inc. Mr. Chiles is a Managing Director
of Jefferies & Company, Inc. Mr. Chiles disclaims beneficial ownership of
these shares.
(5) Includes options to purchase 150,000 shares of common stock issued to Mr.
Fuente, warrants to purchase 472,223 shares of common stock and 750,000
shares of common stock owned by Office Depot, Inc., of which Mr. Fuente is
the Chairman and Chief Executive Officer. Office Depot, Inc. disclaims
beneficial ownership of the options to purchase shares of common stock
held by Mr. Fuente. Office Depot, Inc. has a strategic e-business
relationship and marketing agreement with us. Mr. Fuente disclaims
beneficial ownership of the shares of common stock and warrants to
purchase shares of common stock held by Office Depot, Inc.
(6) Does not include 757,901 shares of common stock held by Cincinnati Bell,
Inc., the parent of ZoomTown.com. Mr. O'Brien disclaims beneficial
ownership of shares held by Cincinnati Bell, Inc.
3
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table summarizes all compensation earned by or paid to
PurchasePro.com's Chief Executive Officer and to each of PurchasePro.com's
three most highly compensated executive officers other than the Chief Executive
Officer whose total annual salary and bonus exceeded $100,000, for services
rendered in all capacities to PurchasePro.com during the fiscal year ended
December 31, 1999.
Summary Compensation Table for Last Fiscal Year
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation(1) Awards
---------------- ------------
Securities
Underlying
Name and Principal Position Salary Bonus Options (#)
- --------------------------- -------- ------- ------------
<S> <C> <C> <C>
Charles E. Johnson, Jr.(2)....................... $240,000 $ -- 487,500
Chairman and Chief Executive Officer
Christopher P. Carton(3)......................... $179,000 $ -- 300,000
President, Chief Operating Officer and Secretary
Richard T. Moskal(4)............................. $156,410 $25,000 112,500
Vice President--Hospitality Purchasing Systems
Scott H. Miller.................................. $118,125 $25,000 67,500
Vice President--Finance, Chief Accounting
Officer
Robert G. Layne(5)............................... $114,875 $ -- 150,000
Senior Vice President--Strategic Development and
e-Commerce
</TABLE>
- --------
(1) Other than the salary described herein, PurchasePro.com did not pay any
executive officer named in the Summary Compensation Table any fringe
benefits, perquisites or other compensation in excess of 10% of such
executive officer's salary and bonus during fiscal 1999.
(2) In July 1999, we entered into a new employment agreement with Mr. Johnson
that provides for an annual salary of $240,000 as of May 1999. In May 1999,
Mr. Johnson was granted options to acquire 487,500 shares of common stock
at $2.33 per share. The Compensation Committee accelerated the vesting of
these options to vest in full upon completion of the initial public
offering.
(3) In July 1999, we entered into a new employment agreement with Mr. Carton
that provides for an annual salary of $200,000 as of May 1999. In May 1999,
Mr. Carton was granted options to acquire 300,000 shares of common stock at
$2.33 per share. The Compensation Committee accelerated the vesting of
these options to vest in full upon completion of the initial public
offering.
(4) Mr. Moskal joined PurchasePro.com's subsidiary, Hospitality Purchasing
Systems, in January 1999, and entered into an employment agreement that
provides for an annual salary of $160,000. In August 1999 Mr. Moskal was
granted options to purchase 112,500 shares of common stock at $7.20 per
share.
(5) In July 1999, we entered into an employment agreement with Mr. Layne that
provides for an annual salary of $120,000 and options to purchase 112,500
shares of common stock as of May 1999. Mr. Layne's salary was increased to
$175,000 per year in September 1999. In October 1999, Mr. Layne was granted
options to purchase 75,000 shares of common stock at $21.48 per share. In
January 1998, Mr. Johnson granted to Mr. Layne options to purchase 187,500
shares of Mr. Johnson's common stock at $0.33 per share. Mr. Layne
exercised his option to acquire 187,500 shares from Mr. Johnson in June
1999
4
<PAGE>
Director Compensation
We reimburse each member of our board of directors for out-of-pocket
expenses incurred in connection with attending board meetings. Each non-
employee member of our board currently receives $10,000 cash compensation per
year for their service as a member of the board of directors. Under our 1999
Stock Plan, non-employee directors also receive options to purchase 15,000
shares of common stock annually and are eligible to receive additional stock
option grants at the discretion of the Compensation Committee. See "--Stock
Option Plans."
Option Grants in Last Fiscal Year
The following table sets forth information regarding options granted to our
executive officers listed in the Summary Compensation Table during the fiscal
year ended December 31, 1999.
<TABLE>
<CAPTION>
Potential Realizable Value
Number of Percentage of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term(3)
Options Employees in Base Price Expiration ---------------------------
Name Granted Fiscal Year(1) ($/Share)(2) Date 5% 10%
- ---- ---------- -------------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Johnson, Jr. .. 487,500 11.3% $ 2.33 May 2009 $ 1,852,868 $ 2,950,382
Chairman and Chief
Executive Officer
Christopher P. Carton..... 300,000 7.0% 2.33 May 2009 1,140,226 1,815,620
President, Chief
Operating Officer and
Secretary
Richard T. Moskal......... 112,500 2.6% 7.20 Aug. 2009 1,466,005 2,334,368
Vice President--
Hospitality Purchasing
Systems
Scott H. Miller........... 67,500 1.6% 8.72 Oct. 2009 958,767 1,526,677
Vice President--Finance,
Chief Accounting Officer
Robert G. Layne........... 150,000 3.5% 11.91 Oct. 2009 2,910,000 4,633,721
Senior Vice President--
Strategic Development and
e-Commerce
</TABLE>
- --------
(1) Based on options to purchase an aggregate of 4,316,495 shares of common
stock granted during fiscal 1999. Under the terms of PurchasePro.com's 1998
Stock Option and Incentive Plan and 1999 Stock Plan, the committee
designated by the board of directors to administer each stock option plan
retains the discretion, subject to certain limitations within each plan, to
modify, extend or renew outstanding options and to reprice outstanding
options. Options may be repriced by canceling outstanding options and
reissuing new options with an exercise price equal to the fair market value
on the date of reissue, which may be lower than the original exercise price
of such cancelled options. See "Stock Option Plans."
(2) The exercise price on the date of grant was equal to 100% of the fair
market value on the date of grant as determined by the board of directors.
(3) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent
PurchasePro.com's estimate or projection of the future common stock price.
There can be no assurance that any of the values reflected in the table
will be achieved.
5
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year-End at Fiscal Year-End(1)
Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable / Unexercisable Exercisable / Unexercisable
- ---- ----------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Charles E. Johnson, Jr. .. -- $ -- 487,500/ $67,031,250/$--
Chairman and Chief
Executive Officer
Christopher P. Carton..... -- -- 300,000/-- $41,250,000/$--
President, Chief
Operating Officer and
Secretary
Richard T. Moskal......... -- -- --/112,500 $--/$15,468,750
Vice President--
Hospitality Purchasing
Systems
Scott H. Miller........... -- -- 15,000/ 82,500 $ 2,062,500/$11,343,750
Vice President--Finance,
Chief Accounting Officer
Robert G. Layne........... -- -- 187,500/-- $25,781,250/$--
Senior Vice President--
Strategic Development and
e-Commerce
</TABLE>
- --------
(1) Assumes a per share fair market value equal to $137.50, the last reported
sale price of our common stock in the Nasdaq National Market on December
31, 1999.
Employment Agreements and Change in Control Agreements
We have entered into the following employment agreements with our executive
officers listed in the Summary Compensation Table:
<TABLE>
<CAPTION>
Officer Term Salary Position
- ------- ---- ------ --------
<S> <C> <C> <C>
Charles E. Johnson, Jr. .. May 1999-May 2001 $240,000 Chairman and Chief Executive
Officer
Christopher P. Carton..... May 1999-May 2001 $200,000 President, Chief Operating
Officer and Secretary
Richard T. Moskal......... August 1999- August 2001 $160,000 Senior Vice President--
Hospitality Purchasing
Systems
Scott H. Miller........... None $125,000 Vice President--Finance,
Chief Accounting Officer
Robert G. Layne........... May 1999-May 2001 $175,000 Senior Vice President--
Strategic Development and
e-Commerce
</TABLE>
Mr. Johnson's and Mr. Carton's agreements provide for a discretionary annual
bonus as determined by the Compensation Committee of the board of directors. We
provide each of Mr. Johnson and Mr. Carton with a company car. We may terminate
either for cause at any time. If we terminate them without cause or because of
their disability or death, or if they terminate their employment because we
breach the agreements, change their title or duties or relocate their
employment outside of Las Vegas, we must pay, in the case of Mr. Johnson, three
times his annual base salary plus the greater of his last paid bonus or one
half of his annual base salary, and, in the case of Mr. Carton, twice his
annual base salary plus the greater of his last paid bonus or one half of his
annual base salary. We also pay for life insurance for each of them under their
agreements. The agreements
6
<PAGE>
contain nonsolicitation and noncompetition provisions that are intended to
survive the termination of their employment for one year.
We provide Mr. Moskal with a monthly car allowance. Under his agreement, Mr.
Moskal received stock options pursuant to our 1999 Stock Option Plan to
purchase in the aggregate 112,500 shares of common stock at an exercise price
of $7.20 per share, of which 75,000 shares will vest on February 29, 2000.
Options to purchase 18,750 shares vest on August 31, 2000 and the remaining
shares vest on August 31, 2001. We may terminate him for cause at any time. The
agreement contains noncompetition provisions that are intended to survive the
termination of Mr. Moskal's employment for one year.
Mr. Miller received stock options pursuant to our 1998 Stock Option and
Incentive Plan to purchase an aggregate of 30,000 shares of common stock at an
exercise price of $1.67 per share. We may terminate him for cause at any time.
Mr. Layne's agreement provides for a discretionary, annual bonus up to the
amount of his base salary. We provide Mr. Layne with a monthly car allowance.
We may terminate him for cause at any time. If we terminate him without cause
or if Mr. Layne terminates his agreement for good reason, we must pay Mr. Layne
his salary for 24 months. If we terminate him because of disability or death,
we must pay him or his heirs his salary for 24 months. The agreement contains
noncompetition and nonsolicitation provisions that are intended to survive the
termination of Mr. Layne's employment for one year.
In addition, in July 1999, we entered into an employment agreement with
Richard C. St. Peter. He serves as our Executive Vice President, Chief
Financial Officer and Treasurer and receives an annual salary of $190,000.
Under his agreement, Mr. St. Peter has received stock options pursuant to our
1999 Stock Option Plan to purchase an aggregate of 225,000 shares of common
stock at an exercise price of $4.00 per share. These stock options vest over
the two year term of his agreement. We may terminate Mr. St. Peter at any time.
If we terminate him without cause or because of his disability or death, or we
terminate the agreement because we breach the agreement or change his title or
duties, we must pay Mr. St. Peter his accrued salary and bonus, his vested
stock options and one year's base salary. The agreement contains
nonsolicitation and noncompetition provisions that are intended to survive the
termination of Mr. St. Peter's employment for one year.
7
<PAGE>
PROPOSAL 1
PROPOSAL TO AMEND OUR AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK BY
150,000,000 SHARES
Our Board of Directors has approved the amendment of our Amended and
Restated Articles of Incorporation (the "Articles of Incorporation") to
increase the number of authorized shares of common stock from 40,000,000 to
190,000,000. Our Board of Directors recommends that our stockholders approve
this amendment.
As of February 16, 1999, we had 30,927,694 shares of common stock
outstanding. An additional 5,950,782 shares were reserved for future issuance
under our stock plans, of which 5,901,544 shares were covered by outstanding
options and 49,238 shares were available for future grant or purchase.
Warrants to purchase a total of 3,555,781 shares of common stock are
outstanding, of which Office Depot, Inc. holds warrants to purchase 472,223
shares of common stock, Advance Star holds warrants to purchase 383,558 shares
of common stock and Sprint holds warrants to purchase 2,700,000 shares of
common stock.
The number of authorized shares available is not enough for the future
issuance of the common stock issuable under the warrant held by Sprint. We
intend to reserve the shares of common stock required for future issuance under
such warrant as soon as this proposal has been approved by the stockholders and
the amendment of the Articles of Incorporation to increase the number of shares
of authorized common stock has been filed with the Secretary of State of
Nevada.
In addition to the reasons discussed above, our Board of Directors believes
that the authorized common stock remaining available is not sufficient to
enable the Company to respond to potential business opportunities and to pursue
important objectives that may be anticipated. Accordingly, our Board of
Directors believes that it is in our best interests to increase the number of
authorized shares of common stock by 150,000,000 shares. Our Board of Directors
also believes that the availability of additional shares will provide us with
the flexibility to issue common stock for proper corporate purposes that may be
identified by our Board of Directors from time to time, such as financings,
acquisitions, strategic business relationships or stock dividends, including
stock splits in the form of stock dividends. Further, our Board of Directors
believes the availability of additional shares of common stock will enable us
to attract and retain talented employees through the grant of stock options and
other stock-based incentives. The issuance of additional shares of common stock
may have a dilutive effect on earnings per share and, for a person who does not
purchase additional shares to maintain his or her pro rata interest, on a
stockholder's percentage voting power.
The authorized shares of common stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as our
Board of Directors may deem advisable without further action by our
stockholders, except as may be required by applicable laws or the rules of any
stock exchange or national securities association trading system on which the
securities may be listed or traded. Upon issuance, such shares will have the
same rights as the outstanding shares of common stock. Holders of common stock
do not have preemptive rights. Our Board of Directors does not intend to issue
any common stock except on terms which the Board deems to be in our best
interests and the best interests of our then-existing stockholders.
Our Board of Directors does not recommend this proposed amendment with the
intent to use the ability to issue additional common stock to discourage tender
offers or takeover attempts. However, the availability of authorized common
stock for issuance could render more difficult or discourage a merger, tender
offer, proxy contest or other attempt to obtain control of us. The proposed
amendment is not in response to any effort on the part of any party to
accumulate material amounts of common stock or to acquire control of us by
means of merger, tender offer, proxy contest or otherwise, or to change our
management. In addition, the proposal is not part of any plan by management to
recommend a series of similar amendments to our Board of Directors and our
stockholders.
8
<PAGE>
The text of Paragraph 1 of Article IV of the Articles of Incorporation, as
it is proposed to be amended pursuant to this proposal, is as follows:
ARTICLE IV.
The authorized capital stock of the Corporation shall consist of a total of
one hundred ninety-five million (195,000,000) shares of stock which are divided
into classes and which has such designations, preferences, limitations and
relative rights as follows:
A. One hundred ninety million (190,000,000) shares of common stock with a
par value of $.01 per share, designated as "Common Stock."
B. Five million (5,000,000) shares of preferred stock of $.001 par value,
designated as "Preferred Stock." The Board of Directors is vested with
the authority to authorize by resolution from time to time the issuance
of the Preferred Shares in one or more series, and to prescribe the
number of Preferred Shares within each such series and the voting
powers, designations, preferences, limitations, restrictions and
relative rights of each such series, including preferences and relative
rights that may be superior to the Common Shares.
The affirmative vote of the holders of a sixty-six and two-thirds percent
(66-2/3%) of our outstanding common stock is required to approve this proposal.
If approved by the stockholders, the proposed amendment to our Articles of
Incorporation will become effective upon the filing of a Certificate of
Amendment with the Secretary of State of Nevada, which will occur as soon as
reasonably practicable.
The Board of Directors recommends a vote FOR Proposal 1.
9
<PAGE>
PROPOSAL 2
APPROVAL OF THE AMENDMENT OF THE
PURCHASEPRO.COM, INC. 1999 STOCK PLAN
1999 STOCK OPTION PLAN
Our 1999 Stock Plan was adopted by our Board of Directors on June 2, 1999.
The 1999 Stock Plan provides selected employees, directors, independent
contractors and advisers an opportunity to acquire a proprietary interest in
the success of PurchasePro.com or to increase their interest. The 1999 Stock
Plan is administered by the Compensation Committee of the board of directors.
However, the Chief Executive Officer may grant options up to 37,500 in each
instance under the 1999 Stock Plan to employees. As of February 14, 2000,
2,250,000 shares had been authorized for issuance. On February 15, 2000, our
Board of Directors amended the plan (as amended the "1999 Stock Plan") to
reserve an additional 1,500,000 shares for issuance under the plan, subject to
the approval of our stockholders at the special meeting.
The 1999 Stock Plan provides for the grant of incentive stock options and
nonqualified stock options. However, eligibility for the grant of incentive
stock options is limited to common law employees. Options need not have
identical terms with respect to each optionee. Options shall have such terms
and be exercisable in such manner and at such times as the Compensation
Committee may determine. Each option must expire within 10 years from the grant
date. In no event will the exercise price for incentive stock options be less
than 100% of the fair market value of the stock on the date of grant. The
exercise price of incentive stock options granted an employee who owns 10% or
more of the total combined voting power of all classes of outstanding stock of
PurchasePro.com or any subsidiary of PurchasePro.com must equal at least 110%
of the fair market value of the common stock on the date of grant and the term
of such an incentive stock option may not be greater than five years.
The 1999 Stock Plan defines "fair market value" as:
. the closing price of a share on the principal exchange on which the
shares are trading,
. if the shares are not traded on an exchange but are traded on the Nasdaq
National Market or a successor quotation system, the closing price, or
. if the shares are not traded on an exchange or the Nasdaq National
Market or a successor quotation system, the fair market value of a
share, as determined by the Compensation Committee in good faith.
Upon exercise of an option, payment of the exercise price shall be made in
lawful money of the United States. If an option agreement so provides, payment
may be made by delivery of shares owned by the optionee or his representative
at least 12 months or via an irrevocable direction to a securities broker to
sell shares and to deliver all or part of the sale proceeds to PurchasePro.com.
Each option shall be transferable only by will or the law of descent and
distribution and shall only be exercisable by the optionee during his or her
lifetime.
No person shall be granted options to purchase more than 750,000 shares of
common stock in any calendar year.
The terms of each award or sale of shares are determined by the Compensation
Committee. Such awards or sales may be subject to forfeiture, rights of
repurchase, rights of first refusal or other transfer restrictions, and may not
be transferred. A right to acquire shares shall automatically expire if not
exercised within 30 days after the grant of the right is communicated to the
offeree. The purchase price of any share may be paid in lawful money of the
United States or services previously rendered.
The 1999 Stock Plan shall remain in effect until June 1, 2009 or earlier, if
it is terminated by the board of directors. Any amendment of the 1999 Stock
Plan shall be subject to the approval of the stockholders of
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<PAGE>
PurchasePro.com only to the extent required by applicable laws, regulations or
rules. Rights and obligations under any option may not be materially altered or
impaired without the optionee's consent.
As of February 16, 2000, 50,000 shares had been issued upon exercise of
options granted under the 1999 Stock Plan, options to purchase 2,150,800 shares
were outstanding and options to purchase 1,549,200 shares of common stock were
available for future grant. The number of shares available for future grant
includes the 1,500,000 share increase we are asking you to approve.
Purpose
The purpose of our 1999 Stock Plan is to promote our interests and the
interests of our stockholders by encouraging key individuals to acquire stock
or to increase their proprietary interest in the Company. By providing the
opportunity to acquire stock or receive other incentives, the Company seeks to
attract and retain those key employees upon whose judgment, initiative and
leadership the success of the Company largely depends. The Company's Board of
Directors believes that the 1999 Stock Plan constitutes an important means of
compensating key employees.
Outstanding Grants
As of February 16, 2000, options to purchase an aggregate of 2,200,800
shares of Company Common Stock at a weighted average exercise price of $55.65
per share were outstanding under the 1999 Stock Plan. The foregoing numbers do
not include options granted to former employees. As of February 16, 2000,
approximately 440 employees, 7 directors and no consultants or advisors were
eligible to participate in the 1999 Stock Plan. On March 14, 2000, the closing
price of the Company's Common Stock on the Nasdaq National Market was $122.31
per share. Of all options granted, 50,000 shares have been exercised. As of
February 16 2000, 50,000 shares of Company Common Stock had been issued for
direct sale under the 1999 Stock Plan. As of February 16, 2000, a total of
1,549,200 shares of Company Common Stock were available for future awards under
the 1999 Stock Plan. The number of shares available for future grant includes
the 1,500,000 share increase we are asking you to approve.
As of February 16, 2000, the following persons or groups had in total
received options to purchase shares or shares of Company Common Stock under the
1999 Stock Plan.
<TABLE>
<CAPTION>
Number of
Executive Officers and Directors Shares Granted
-------------------------------- --------------
<S> <C>
Charles E. Johnson, Jr........................................ --
Christopher P. Carton......................................... --
Richard St. Peter............................................. 225,000
Richard T. Moskal............................................. 162,500
Scott H. Miller............................................... 112,500
Robert G. Layne............................................... 75,000
James C. Clough............................................... 150,000
Bradley D. Redmon............................................. --
John G. Chiles................................................ --
David I. Fuente............................................... --
J. Terrence Lanni............................................. --
Michael D. O'Brien............................................ --
All executive officers as a group............................. 522,500
Nonexecutive officers as a group.............................. --
Nonexecutive officer employees as a group..................... 801,250
</TABLE>
Of the additional 1,500,000 shares proposed for issuance under the 1999
Stock Plan, 375,000 are expected to be granted to nonexecutive officers as a
group.
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<PAGE>
Administration
The 1999 Stock Plan is administered by the Compensation Committee (the
"Committee"), composed of directors who are disinterested persons under Rule
16b-3 of the Exchange Act ("Rule 16b-3") or Code Section 162(m) and smaller
committees of directors as established by the Company's Board. In the case of
grants to persons who are not also insiders for purposes of Section 16 of the
Exchange Act, the 1999 Stock Plan may be administered by officers who are not
directors. The Company's Board may fill vacancies from time to time to remove
or add members.
The Committee selects those employees of the Company or its subsidiaries who
will be eligible to receive awards under the 1999 Stock Plan. The 1999 Stock
Plan provides that the Committee may grant to eligible individuals nonqualified
stock options or incentive stock options. Each grant will be memorialized in a
separate agreement with the person receiving the grant. This agreement will
indicate the type and terms of the award.
The affirmative vote of a majority of the shares present or represented at
the special meeting will be required to approve the proposal.
The Board of Directors recommends a vote FOR Proposal 2
12
<PAGE>
OTHER MATTERS
We know of no other business that will be presented at the Special Meeting.
If any other business is properly brought before the Special Meeting, it is
intended that proxies in the enclosed form will be voted in accordance with the
judgment of the persons voting the proxies.
Whether you intend to be present at the special meeting or not, we urge you
to return your signed proxy promptly.
By order of the Board of Directors.
-------------------------------------
Christopher P. Carton
President, Chief Operating Officer
, 2000
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<PAGE>
PURCHASEPRO.COM, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING ON _________________, 2000
Charles E. Johnson, Jr. and Christopher P. Carton , or each of them, each
with the power of substitution, are hereby authorized to represent as proxies
and vote all shares of stock of PurchasePro.Com, Inc. (the "Company") the
undersigned is entitled to vote at the Special Meeting of Stockholders of the
Company to be held at 3291 N. Buffalo Drive, Las Vegas, Nevada 89129 at 9:00
a.m. or at any postponement or adjournment thereof, and instructs said proxies
to vote as follows:
Shares represented by this proxy will be voted as directed by the
stockholder. If no such directions are indicated, the proxies will have
authority to vote FOR Proposal 1 and FOR Proposal 2.
(continued and to be signed on reverse side)
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FOLD AND DETACH HERE
<PAGE>
The Board of Directors recommends a vote FOR Proposal 1 and FOR Proposal 2.
Please mark
your votes as
indicated in this [X]
example
FOR AGAINST ABSTAIN
Proposal 1: To approve a proposal [_] [_] [_]
to amend our Amended and Restated
Articles of Incorporation to
increase the number of shares of
Common Stock by 150,000,000 shares.
Proposal 2: To approve a proposal [_] [_] [_]
to amend our 1999 Stock Plan to
reserve an additional 1,500,000
shares for issuance under the plan.
PLEASE MARK, SIGN, DATE AND MAIL
THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE
_____________________________________________ Dated: __________, 2000
Signature(s)
Please sign exactly as your name or name(s) appear on this proxy. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held jointly, each holder should sign.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
