<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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or
Sections 240.14A-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
PURCHASESOFT, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
PURCHASESOFT, INC.
7301 OHMS LANE
SUITE 220
EDINA, MINNESOTA 55439
NOTICE OF A SPECIAL MEETING IN LIEU OF THE
2000 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF PURCHASESOFT, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting in Lieu of the 2000
Annual Meeting of Stockholders of PurchaseSoft, Inc. (the "Corporation") will
be held at the Corporation's office at 7301 Ohms Lane, Suite 220, Edina,
Minnesota 55439, on Tuesday, January 25, 2000 at 10:00 a.m. (local time) for
the following purposes:
(1) To elect four (4) directors of the Corporation to hold office
for a one year term;
(2) To consider and vote upon a proposal to increase the maximum
number of shares that may be made available upon exercise of
stock options under the PurchaseSoft, Inc. 1997 Stock Option
Plan from 3,500,000 to 4,500,000; and
(3) To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed December 31, 1999 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Special Meeting in Lieu of the 2000 Annual Meeting of Stockholders.
Accordingly, only stockholders of record at the close of business on December
31, 1999 will be entitled to notice of, and to vote at, such meeting or any
adjournments thereof.
By order of the Board of Directors,
J. Murray Logan
J. MURRAY LOGAN
Chairman of the Board of Directors
Jeffrey B. Pinkerton
JEFFREY B. PINKERTON
President and Director
December 23, 1999
- --------------------------------------------------------------------------------
NOTE: THE BOARD OF DIRECTORS SOLICITS THE EXECUTION AND PROMPT RETURN OF THE
ACCOMPANYING PROXY. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ACCOMPANYING PROXY
AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT
PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN
BY YOU AND VOTE YOUR SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
PURCHASESOFT, INC.
PROXY STATEMENT
PROXY SOLICITATION
The enclosed proxy is solicited by the Board of Directors of
PurchaseSoft, Inc. (the "Corporation") for use at the Special Meeting in Lieu
of the 2000 Annual Meeting of Stockholders on January 25, 2000 and at any
adjournments or postponements thereof (the "Meeting"), pursuant to the
accompanying Notice of the Special Meeting in Lieu of the 2000 Annual Meeting
of Stockholders. The purposes of the Meeting and the matters to be acted upon
are set forth in the accompanying Notice of the Special Meeting in lieu of
the 2000 Annual Meeting of Stockholders. The Board of Directors knows of no
other business that will come before the Meeting.
This Proxy Statement and proxies for use at the Meeting will be
mailed to stockholders on or about January 7, 2000, and such proxies will be
solicited chiefly by mail, but additional solicitations may be made by
telephone or telegram by the officers or regular employees of the
Corporation. The Corporation may enlist the assistance of brokerage houses in
soliciting proxies. All solicitation expenses, including costs of preparing,
assembling and mailing proxy material, will be borne by the Corporation.
REVOCABILITY AND VOTING OF PROXY
A form of proxy and a return envelope for the proxy are enclosed.
You may revoke your proxy at any time prior to its use by giving written
notice to the Secretary of the Corporation, by executing a revised proxy at a
later date or by attending the Meeting and voting in person. Proxies in the
form enclosed, unless previously revoked, will be voted at the Meeting in
accordance with the specifications made by you on the proxy or, in the
absence of such specifications, in favor of the election of the nominees for
directors listed herein, in favor of the proposal to increase the maximum
number of shares which may be made available upon exercise of stock options
under the Corporation's 1997 Stock Option Plan, and, with respect to any
other business which may properly come before the meeting, in the discretion
of the named proxies.
If, in a proxy submitted on your behalf by a person acting solely in
a representative capacity, the proxy is marked clearly to indicate that the
shares represented thereby are not being voted with respect to one or more
proposals, then your proxy will not be counted as present at the meeting with
respect to such proposals. Votes withheld from any nominee, abstentions and
broker "non-votes" are counted as present or represented for purposes of
determining the presence or absence of a quorum for the Meeting. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner. Abstentions are included in the number of shares present or
represented and voting on each matter. Broker "non-votes" are not so included.
All holders of record of the common stock, par value $0.01 per share
(the "Common Stock"), of the Corporation at the close of business on December
31, 1999, will be eligible to vote at the Meeting. Each share is entitled to
one vote. As of December 22, 1999, the Corporation had outstanding 13,807,015
shares of Common Stock. The presence, in person or by proxy, of a majority of
the issued and outstanding Common Stock will constitute a quorum for the
transaction of business at the Meeting. This proxy statement and the enclosed
proxy are first being mailed or given to stockholders on or about January 7,
2000.
<PAGE>
OWNERSHIP OF EQUITY SECURITIES BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of December
22, 1999, as reported to the Corporation as to the beneficial ownership of
the Common Stock by each director, each named executive officer, by all
directors and executive officers as a group and each person known to the
Corporation to be the beneficial owner of more than 5% of the issued and
outstanding Common Stock as of December 22, 1999 or other date noted below.
As of December 22, 1999, 13,807,015 shares of common stock were outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING SHARES OF
OF BENEFICIAL OWNER OF COMMON STOCK (1) COMMON STOCK OWNED (2)
------------------- ------------------- ----------------------
<S> <C> <C>
J. Murray Logan (3)
c/o L-R Global Partners, L.P.
30 Rockefeller Plaza, Room 5425
New York, New York 10112 10,152,947 72.36%
Donald S. LaGuardia (4)
c/o L-R Global Partners, L.P.
30 Rockefeller Plaza, Room 5425
New York, New York 10112 9,869,128 70.34%
L-R Global Partners, L.P. (5)
c/o Rockefeller & Co., Inc.
30 Rockefeller Plaza, Room 5425
New York, New York 10112 9,852,128 70.21%
Larry E. Jeddeloh (6)
c/o T.I.S. Acquisition & Management Group, Inc.
200 South Sixth Street, Suite 450
Minneapolis, MN 55402 1,020,337 7.39%
T.I.S. Group, Inc. (7)
c/o T.I.S. Acquisition & Management Group, Inc.
200 South Sixth Street, Suite 450
Minneapolis, MN 55402 1,019,504 7.38%
Jeffrey B. Pinkerton (8) 438,876 3.08%
Brad I. Markowitz (9) 110,820 *
All current directors and executive 10,860,276 74.09%
officers as a group (6 persons) (10)
</TABLE>
-----------------------------------------
* Represents less than 1%.
-2-
<PAGE>
(1) The shares owned, and the shares included in the total number of shares
outstanding, have been adjusted, and the percentage owned has been
computed, in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and include,
options and warrants to the extent called for by such rule, with
respect to shares of Common Stock, that can be exercised within 60
days. Except as set forth in the footnotes below, such shares are
beneficially owned with sole investment and sole voting power.
(2) The percent of class calculation is based on 13,807,015 shares of the
Common Stock being issued and outstanding as of December 22, 1999 and
effect being given, where appropriate, pursuant to Rule 13d-3(d)(1)(i)
under the Exchange Act, to any option or warrant then exercisable or
exercisable within 60 days thereafter.
(3) Includes 9,852,128 shares held by L-R Global Partners, L.P. Mr. Logan,
together with L-R Managers, LLC, Rockefeller & Co., Inc., and
Rockefeller Financial Services, Inc. share voting and investment
control with respect to L-R Global Partners, L.P. Mr. Logan may be
deemed the beneficial owner of shares held by L-R Global Partners, L.P.
although he disclaims beneficial ownership to the extent of his
purported ownership interest. Based upon information provided by L-R
Global Partners, L.P. as reported on their questionnaire for executive
officers, directors, nominees for director and record or beneficial
owners of more than 5% of outstanding voting stock dated December 15,
1999.
(4) Includes 9,852,128 shares held by L-R Global Partners, L.P. Mr.
LaGuardia, together with L-R Managers, LLC, Rockefeller & Co., Inc.,
and Rockefeller Financial Services, Inc. share voting and investment
control with respect to L-R Global Partners, L.P. Mr. LaGuardia may be
deemed the beneficial owner of shares held by L-R Global Partners, L.P.
although he disclaims beneficial ownership to the extent of his
purported ownership interest. Based upon information provided by L-R
Global Partners, L.P. as reported on their questionnaire for executive
officers, directors, nominees for director and record or beneficial
owners of more than 5% of outstanding voting stock dated December 16,
1999.
(5) Based upon information provided by L-R Global Partners, L.P. as
reported on their questionnaire for executive officers, directors,
nominees for director and record or beneficial owners of more than 5%
of outstanding voting stock dated December 15, 1999. Includes 224,575
shares that L-R Global Partners, L.P. has the right to acquire within
60 days of December 22, 1999 upon the exercise of warrants.
(6) Based upon information provided by Mr. Jeddeloh's Schedule 13D/A filed
with the SEC on February 17, 1999. By virtue of his positions with
T.I.S. Acquisition and Management Group ("TIS Acquisition") and T.I.S.
Group, Inc. ("TIS Group"), which owns a majority of the stock of and
controls TIS Acquisition, Mr. Jeddeloh has the right to vote and
dispose of the shares of common stock held by TIS Acquisition and TIS
Group, respectively, and may be deemed the beneficial owner of such
shares. Includes 193,888 shares held by TIS Acquisition, which may be
deemed beneficially owned by TIS Group. Includes 820,616 shares held
by TIS Group for client accounts managed by T.I.S. Group Managers. TIS
Group has the right to dispose of the shares held by T.I.S. Group
Managers and may be deemed the beneficial owner of such shares.
Includes 833 shares held by Mr. Jeddeloh over which he has sole power
to vote and power to dispose. Includes 5,000 shares that TIS Group has
the right to acquire within 60 days of December 22, 1999 upon the
exercise of a warrant.
(7) Based upon information provided by Mr. Jeddeloh's Schedule 13D/A filed
with the SEC on February 17, 1999. See note (6) above.
(8) Includes 424,999 shares issuable within 60 days of December 22, 1999
upon the exercise of stock options.
(9) Includes 95,833 shares issuable to Mr. Markowitz within 60 days of
December 22, 1999 upon exercise of stock options.
(10) Includes 626,465 shares issuable within 60 days of December 22, 1999
upon the exercise of stock options and 224,575 shares issuable within
60 days upon the exercise of warrants.
-3-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors has set the number of Board members at five
for the upcoming year. At this time however, only four Directors are being
nominated for re-election, which will leave one seat vacant. This vacancy was
created when Michael G. Kerrison resigned from his directorship on September
9, 1999 and at this time, the Board has not nominated a replacement. Each
director is elected to hold office until the next annual meeting of
stockholders, or special meeting in lieu thereof, and until their respective
successors are duly elected and qualified. The Board has nominated all of the
current members of the Board for re-election. The affirmative vote of a
plurality of the shares of Common Stock present at the Meeting, in person or
by proxy, is required for the re-election of the members of the Board. If for
any reason any nominee is not a candidate (which is not now expected), a new
nominee will be designated by the Board to fill such vacancy. Proxies cannot
be voted for a greater number of persons than the number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED
BELOW. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED IN EACH
PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE ELECTION OF THE
NOMINEES.
INFORMATION AS TO DIRECTORS AND NOMINEES FOR DIRECTOR
There is shown below for each director and nominee for director, as
reported to the Corporation, the name, age and family relationship, if any,
with any other director or officer, the principal occupation and employment
over at least the last five years, the position, if any, with the
Corporation, the period of service as a director of the Corporation, and
certain other directorships held.
<TABLE>
<CAPTION>
NAME AGE OFFICE HELD DIRECTOR SINCE
---- --- ----------- --------------
<S> <C> <C> <C>
Donald S. LaGuardia 32 Director June 1998
J. Murray Logan 64 Chairman of the Board of Directors and June 1998
a Director
Brad I. Markowitz 41 Director February 1994
Jeffrey B. Pinkerton 51 President and a Director October 1995
</TABLE>
DONALD S. LAGUARDIA has served as a member of the Board of Directors
of the Corporation since June 1998. From 1987 to 1991, Mr. LaGuardia served
as a senior auditor for Price Waterhouse. From 1991 to 1997, Mr. LaGuardia
served as a network business planning manager and financial analyst for BMW
of North America, Inc. Since 1997, Mr. LaGuardia has served as an equity
analyst for Rockefeller & Co. Mr. LaGuardia is also a member of L-R Managers,
LLC which is the management company for L-R Global Partners, L.P. Mr.
LaGuardia is a Certified Public Accountant and a candidate for the Chartered
Financial Analyst designation. Mr. LaGuardia received his B.A. in 1989 from
Pace University and his M.B.A. from New York University in 1997.
-4-
<PAGE>
J. MURRAY LOGAN has served as a member of the Board of Directors of
the Corporation since June 1998 and was named acting Chairman of the Board of
Directors on September 9, 1999. Since 1975, Mr. Logan has served as a vice
president, portfolio manager, Chairman of Investment Policy of Rockefeller &
Co., Inc., and as a vice president of Rockefeller Gas & Oil Inc., general
partner of various Rockefeller partnerships. Mr. Logan is the Investment
Manager of L-R Global Partners, L.P. since its inception in 1997 and along
with Donald S. LaGuardia and Rockefeller & Co., Inc., is a member of L-R
Managers, LLC which is the management company for L-R Global Partners, L.P.
Mr. Logan is a director of two unaffiliated trusts: The World Trust Fund and
The Europe Fund, Inc. and a Trustee of the United Kingdom Fund. Mr. Logan
served as a trustee of the Johns Hopkins University and chaired its Committee
on Investments. Mr. Logan is also a director of the Camphill Foundation,
Camphill Village USA and the Berkshire Opera Company. Mr. Logan received his
B.A. from Johns Hopkins University in 1959.
BRAD I. MARKOWITZ has served as a member of the Board of Directors
of the Corporation since February 1994. From February 1994 to June 1997, Mr.
Markowitz served as Chairman of the Board of Directors. Since 1995, Mr.
Markowitz has served as President and a member of the Board of Directors of
Park Avenue Health Care Management, Inc., a physician practice management
company. From 1987 to 1995, Mr. Markowitz served as Vice President of the
ADCO Group, a real estate, banking and venture capital company.
JEFFREY B. PINKERTON has served as President of the Corporation
since August 1996 and as a member of the Board of Directors since October
1995. Since 1994 and from 1987 to 1991, Mr. Pinkerton has served in various
positions for the Corporation, including President, Executive Vice President,
Vice President-Product Development, and as a member of the Board of
Directors. From 1991 to 1994, Mr. Pinkerton founded and operated Viewpoint
Consulting, a reseller of the Corporations software products. Prior to
joining the Corporation, Mr. Pinkerton was Director of Purchasing for
American-Standard, Inc. in New York. His industrial experience includes both
materials management and systems analysis. Mr. Pinkerton has published
numerous articles on Purchasing and Purchasing Applications, taught a course
on application design for procurement at Baruch College, NY, and published
two books. Mr. Pinkerton received a BSc in Mathematics and Statistics from
Sheffield University in England in 1970.
INFORMATION AS TO EXECUTIVE OFFICERS
As of December 22, 1999, the executive officers of the Corporation were as
follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE HELD YEAR BECAME
OFFICER
- ---- --- ----------- -----------
<S> <C> <C> <C>
Jeffrey B. Pinkerton 51 President and a Director 1994
Terry J. Bartz 40 Vice President, General Counsel, 1999
and Secretary
Philip D. Wolf 48 Chief Financial Officer, Treasurer, 1998
and Assistant Secretary
</TABLE>
JEFFREY B. PINKERTON has served as President of the Corporation
since August 1996 and as a member of the Board of Directors since October
1995. Since 1994 and from 1987 to 1991, Mr. Pinkerton has served in various
positions for the Corporation, including President, Executive Vice President,
Vice President-Product Development, and as a member of the Board of
Directors. From 1991 to 1994, Mr. Pinkerton founded and operated Viewpoint
Consulting, a reseller of the Corporation's software products. Prior to
joining the Corporation, Mr. Pinkerton was Director of Purchasing for
American-Standard, Inc. in New York. His industrial experience includes both
materials management and systems analysis. Mr. Pinkerton has published
numerous articles on Purchasing and Purchasing Applications, taught a course
on application design for procurement at Baruch College, NY, and published
two books. Mr. Pinkerton received a BSc in Mathematics and Statistics from
Sheffield University in England in 1970.
-5-
<PAGE>
TERRY J. BARTZ began advising PurchaseSoft as outside counsel in
1996 and joined the Corporation in May 1999 as Vice President and General
Counsel. Prior to joining the Corporation, Mr. Bartz had a private law
practice focused on serving the needs of start-up, financially distressed and
emerging businesses. Mr. Bartz law practice provided representation and
advice on a wide variety of general business and corporate law matters
including litigation, corporate governance, employment and executive
compensation. Mr. Bartz received his B.A. degree (with major in business)
from Gustavus Adolphus College in 1982 and his J.D. degree, cum laude, from
Hamline University School of Law in 1985.
PHILIP D. WOLF joined the Corporation in October 1997 and has served
as Chief Financial Officer since January 1998. During 1997, Mr. Wolf served
as a consultant to several start-up companies. From 1989 to 1997, Mr. Wolf
was Vice President of Finance and CFO for Nice Man Merchandising, a worldwide
entertainment merchandising Corporation. From 1987 to 1989, he was Chief
Financial Officer for Benchmark Computer Systems, Inc., a value-added
reseller and software developer of integrated computer systems. From 1983 to
1987, Mr. Wolf was Vice President of Finance and Administration for National
Information Systems, Inc., which provided computer and information services
to the direct marketing industry. From 1974 to 1983, Mr. Wolf was staff
accountant and became the Controller for Patchin Appraisals, Inc., a national
valuation firm. Mr. Wolf received his B.S. Degree in Accounting from the
University of Minnesota in 1974.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met seven times during the last full fiscal
year and took other actions by unanimous consent. Each director attended at
least 75% of the total number of such meetings of the Board of Directors
during the time that such person was a member of the Board. The Board has
created the following committees:
COMPENSATION COMMITTEE
The Compensation Committee is chaired by Brad I. Markowitz and
includes J. Murray Logan and Donald S. LaGuardia. This committee reviews and
recommends executive compensation levels, incentive programs and grants of
stock options. The committee did not meet during the 1999 fiscal year.
AUDIT COMMITTEE
The Audit Committee is chaired by Donald S. LaGuardia and includes
Brad I. Markowitz. This committee reviews the annual audit and hears the
report of the annual audit provided by the Corporation's auditors which
includes discussion on significant audit adjustments, audit areas of
emphasis, deficiencies in internal control structure, disagreements with
management, selection of or changes in accounting policies, use of estimates
and the auditor's responsibilities. The committee met one time during the
1999 fiscal year.
-6-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain compensation information for the
fiscal years ended May 31, 1999, 1998, and 1997 with respect to the
Corporation's Chief Executive Officers and each of the most highly
compensated executive officers whose compensation for fiscal 1999 exceeded
$100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
--------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Michael G. Kerrison 1999 (1) $ 100,000 - - - - $ 35,000 (4)
Chairman and Chief
Executive Officer
Joseph D. Mooney 1999 (2) $ 133,333 - - - - $ 445,200 (5)
Chairman and Chief 1998 $ 200,000 - - 366,666 $ 68,083 (6)
Executive Officer 1997 $ 75,000 - - - - $ 211,357 (7)
Jeffrey B. Pinkerton 1999 (3) $ 160,000 - - - - $ 7,800 (8)
President 1998 $ 125,000 - - 304,166 $ 9,750 (9)
1997 $ 116,667 - - - - - -
</TABLE>
- ---------------------------
(1) Mr. Kerrison was appointed Chairman of the Board of Directors and Chief
Executive Officer by the Board of Directors on January 31, 1999 and
resigned on September 9, 1999.
(2) Mr. Mooney was appointed President and Chief Executive Officer by the
Board of Directors on June 23, 1997 and resigned on January 31, 1999.
(3) See the section captioned "Information as to Directors and Nominees for
Director" for information as to the offices held by Mr. Pinkerton in
fiscal 1997 and thereafter.
(4) Represents $35,000 earned as an independent contractor.
(5) Includes a $400,000 compensation charge under Mr. Mooney's termination
agreement, of which $66,667 was paid as of May 31, 1999 and the balance
of $333,333 to be paid evenly over the next twenty months, a $40,000
contract settlement payment, and a $5,200 automobile allowance.
(6) Includes $58,333 in deferred compensation and a $9,750 automobile
allowance.
(7) Includes $116,667 in deferred compensation, a $91,667 independent
contractor payment and a $3,023 automobile allowance.
(8) Represents a $7,800 automobile allowance.
(9) Represents a $9,750 automobile allowance.
-7-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANT
NUMBER OF ------------------
SECURITIES % OF TOTAL OPTIONS EXERCISE
NAME UNDERLYING GRANTED TO EMPLOYEES IN PRICE EXPIRATION
OPTIONS GRANTED LAST FISCAL YEAR ($ / SHARE) DATE
---- --------------- ---------------- ----------- ----
<S> <C> <C> <C> <C>
Michael G. Kerrison 625,000 (1) 28.7% $1.06 January 31, 2004
Joseph D. Mooney - - - - - - - -
Jeffrey B. Pinkerton - - - - - - - -
</TABLE>
- ---------------------------
(1) Mr. Kerrison was granted an incentive stock option on February 1, 1999
exercisable for an aggregate of up to 625,000 shares of common stock,
of which 250,000 were vested immediately. The remaining 375,000 shares,
under the terms of the option agreement, were to vest on an accelerated
basis if certain business plan milestones were exceeded, but in any
event such balance was to vest by the end of the fifty-seventh month
following the date of grant. Mr. Kerrison resigned on September 9, 1999
and his entire option for 625,000 shares expired unexercised on
December 9, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
No options were exercised during the year by any person who held
options that were eligible to be exercised. The following table sets forth
information as to options exercised during the fiscal year ended May 31,
1999, and unexercised options held at the end of such fiscal year, by the
individuals listed in the Summary Compensation Table.
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBERS OF UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT 5/31/99 AT 5/31/99
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
---- ------------- ------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
Michael G. Kerrison (2) 0 $0 250,000 / 375,000 $0 / $0
Joseph D. Mooney (3) 0 $0 366,666 / 0 $0 / $0
Jeffrey B. Pinkerton 0 $0 324,999 / 0 $0 / $0
</TABLE>
- --------------------------
(1) Value is based on the closing bid price supplied by the National
Quotations Bureau in the Nasdaq System and reported by the NASD as of May
28, 1999, the last trading date during fiscal 1999, which was $0.906 minus
the exercise price.
(2) Mr. Kerrison resigned on September 9, 1999 and his entire option for
625,000 shares expired unexercised on December 9, 1999.
(3) Mr. Mooney resigned on January 31, 1999 and his entire options for 366,666
shares is exercisable through April 29, 2000.
-8-
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENTS
The Corporation entered into an employment agreement with Jeffrey B.
Pinkerton, the President of the Corporation, effective as of December 15,
1996 for a five (5) year term from the effective date (the "Pinkerton
Employment Agreement"). Pursuant to the Pinkerton Employment Agreement, the
Corporation agreed to grant Mr. Pinkerton options exercisable for up to
200,000 shares of Common Stock. Mr. Pinkerton's current annual base salary is
$165,000, subject to annual review and increase by the Board of Directors of
the Corporation.
If the Pinkerton Employment Agreement is terminated by the
Corporation for any reason other than cause, death, disability, mutual
agreement or is terminated by Mr. Pinkerton for good reason, the Corporation
shall continue to pay Mr. Pinkerton his base salary for twenty-four (24)
months (or twelve (12) months for termination as a result of good reason) and
provide benefits, including but not limited to, plan participation, vacation
time, and office facilities for a twelve (12) month period. In the event of a
termination in connection with a change in control of the Corporation (as
defined in the Pinkerton Employment Agreement), the Corporation shall pay a
lump sum payment to Mr. Pinkerton equal to 2.99 times the sum of (i) his
annual base salary and (ii) his earned executive compensation plan benefits,
which shall be "grossed-up" in the event of certain excise tax charges. In
addition the Corporation shall reimburse, for a twelve (12) month period, Mr.
Pinkerton's reasonable expenses while seeking employment. In addition to
compensatory provisions, the Pinkerton Employment Agreement also contains
certain confidentially and non-competition provisions intended to protect the
Corporation.
DIRECTOR COMPENSATION
At the current time, directors of the Corporation receive no
compensation for their service to the Corporation as directors.
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<PAGE>
CERTAIN TRANSACTIONS
On March 26, 1998, the Corporation sold 333,333 shares of Common
Stock to TIS Growth Fund at a price of $0.75 per share and raised $250,000 in
gross proceeds. A warrant to purchase 125,000 shares of the Corporation's
Common Stock at an exercise price of $1.50 per share was issued in
conjunction with this transaction. The exercise price of the Warrant was
subsequently reduced to $1.14 per share due to an anti-dilution clause in the
warrant agreement. This Warrant provided that it could be called by the
Corporation if the bid price of the Common Stock were to trade at or above
$2.00 per share for ten trading days.
On June 15, 1998, the Corporation called the Warrant and on
September 1, 1998, issued 125,000 shares of its Common Stock to TIS Group
Managers, Inc. The exercise of the warrant raised an aggregate sum of
$142,500 and had an exercise price of $1.14 per share.
On April 17, 1998, the Corporation sold a convertible promissory
note in the principal amount of $3.2 million to L-R Global Partners, L.P.
("L-R Global"), an accredited investor. The note was convertible at any time
into shares of Common Stock at a conversion price equal to the lesser of $.80
or 80% of the average closing bid price of the Common Stock for the five
trading days preceding the conversion date. The note would have automatically
converted into shares of Common Stock at the applicable conversion price upon
the later of the filing of certain amendments to the Corporation's
Certificate of Incorporation, or July 16, 1998, provided that certain
covenants were not in default. On May 29, 1998, L-R Global elected to convert
its note into 4,000,000 shares of Common Stock at a price of $0.80 per share.
On February 9, 1999, the Corporation received $2 million from L-R
Global Partners, L.P. and signed a demand promissory note in return. The note
provided for interest at 6% per annum. The note was cancelled as partial
payment for the Common Stock that L-R Global Partners, L.P. purchased in the
rights offering in May 1999, as described in the following paragraph.
On May 5, 1999, the Corporation issued 5,605,173 shares of its
Common Stock for rights subscribed to in a rights offering and shares
purchased on a standby basis as part of the rights offering. These shares
were purchased at $0.90 per share and raised $5,044,655 in gross proceeds.
L-R Global Partners, L.P. purchased a total of 4,930,000 shares in the
offering for $4,437,000 and Michael G. Kerrison, CEO of the Corporation
purchased 111,111 shares in the offering for $100,000. Expenses associated
with the rights offering were $119,052.
On January 31, 1999, the Corporation entered into an Agreement and
General Release with Joseph D. Mooney, CEO and Chairman of the Board of the
Corporation. Under this agreement, the Corporation accepted the resignation
of Mr. Mooney as Chief Executive Officer, Chairman of the Board of Directors
and as a Director of the Corporation. Mr. Mooney was granted the following
benefits under this agreement: $400,000 gross salary continuation, payable in
48 equal installments beginning February 15, 1999 and ending January 31, 2001
($233,333 remaining to be paid as of November 30, 1999); $60,000 representing
the balance of Mr. Mooney's deferred employment compensation; a $40,000
contract settlement payment; and continuation of insurance benefits until
January 31, 2000.
On March 15, 1999, the Corporation entered into a letter agreement
with Pamela Cabalka, the Vice President of Sales of the Corporation. On
September 9, 1999, Ms. Cabalka was named the acting Chief Executive Officer
of the Corporation and resigned from the Corporation on December 9, 1999. The
agreement provided for an annual base salary of $150,000 per year and
quarterly performance bonuses based on objectives approved by the Board of
Directors. Pursuant to the agreement, the Corporation granted Ms. Cabalka an
option exercisable for up to 375,000 shares of Common Stock; 150,000 shares
were vested at the date of grant and the remaining 225,000 shares would have
been earned based on performance as defined by the Board of Directors. The
agreement provided for severance payments of six months base salary in the
event that Ms. Cabalka was terminated without cause and provided for twelve
months base salary in the event of a termination resulting from an
acquisition where her position was eliminated.
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<PAGE>
In conjunction with Ms. Cabalka's resignation on December 9, 1999,
the Corporation agreed to pay her base salary for the next six months. Under
the terms of the 1997 Stock option plan, up to 150,000 vested shares of
common stock under her option agreement may be exercised within 90 days from
the date of her resignation. The remaining 225,000 shares of Common Stock
under her option agreement cannot be exercised as certain performance
milestones were not achieved and will expire 90 days after the date of her
resignation.
FAMILY RELATIONSHIPS
There are no family relationships among any of the directors or
executive officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as
amended, the Corporation's directors and certain of its officers and persons
holding more than ten percent of the Corporation's Common Stock are required
to report their ownership of the Common Stock and any changes in ownership to
the Securities and Exchange Commission and the Corporation. Specific due
dates have been established and the Corporation is required to report in this
proxy statement any failure to file by these dates during the fiscal year
ended May 31, 1999. Based on the Corporation's review of copies of such
reports, Mr. Wolf filed one untimely Form 4 and Mr. Bartz filed one untimely
Form 3.
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<PAGE>
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S 1997 STOCK OPTION PLAN
On November 30, 1999, the Corporation's Board of Directors, subject
to stockholder approval, adopted and approved an amendment to the
Corporation's 1997 Stock Option Plan (the "1997 Plan") for the purpose of
increasing the number of shares of Common Stock authorized for issuance under
the 1997 Plan from 3,500,000 shares to 4,500,000 shares.
The Board of Directors believes that an increase in the number of
shares available for issuance under the 1997 Plan will enable the Corporation
to meet industry norms and to continue to attract and retain key employees,
officers and directors essential to the long-term success of the Corporation.
By encouraging stock ownership by key employees, officers and directors of
the Corporation and its subsidiaries, the Corporation is providing additional
incentives for them to promote the success of the Corporation's business.
The purposes of the 1997 Plan are to promote the interests of the
Corporation and its stockholders by strengthening the Corporation's ability
to attract, motivate, and retain key employees, directors, consultants and
advisers of exceptional ability and to provide a means to encourage stock
ownership and a proprietary interest in the Corporation to selected
employees, directors, consultants and advisers of the Corporation upon whose
judgment, initiative, and efforts the financial success and growth of the
Corporation largely depend.
The discussion below provides a summary description of certain
provisions of the 1997 Plan, as amended, and a brief and general description
of the incentive stock options and nonqualified stock options granted under
the 1997 Plan.
The 1997 Plan provides for grants of stock options intended to
qualify for preferential tax treatment (the "Incentive Stock Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonstatutory stock options that do not qualify for such treatment. All
employees of the Corporation are eligible for stock options under the 1997
Plan in amounts and at prices determined by the Compensation Committee,
provided that, in the case of Incentive Stock Options, the price will not be
less than 100% of the fair market value of the Common Stock on the date of
grant, or not less than 110% of the fair market value of the Common Stock on
the grant date if the optionee owns, directly or indirectly, more than 10% of
the total combined voting power of all classes of stock.
The 1997 Plan is administered by the Compensation Committee. The
Compensation Committee or the Board of Directors has complete authority,
subject to the limitations described herein, to interpret and enforce the
1997 Plan and to determine all rights with respect to participants under the
1997 Plan. The Board may, at any earlier time, amend, modify, suspend or
terminate the 1997 Plan as it shall deem advisable, subject to the rights of
holders of stock options or restricted stock subject thereto and to approval
of the stockholders of the Corporation if required by applicable law or
regulation. No stock options or restricted stock may be granted or sold under
the 1997 Plan after March 17, 2007.
Stock options may be granted under the 1997 Plan to key employees,
directors, consultants, and advisers to the Corporation or any of its
subsidiaries and others as the Compensation Committee or the Board of
Directors may determine.
The shares authorized for issuance under the 1997 Plan are shares of
the Corporation's Common Stock, which may be newly issued shares or shares
held in the treasury or acquired in the open market. Currently, the maximum
number of shares of Common Stock which may be made available upon exercise of
stock options granted under the 1997 Plan is 3,500,000 shares, subject to
increase or decrease in the event of subsequent stock splits or other capital
changes, including reorganizations or mergers. No person may in any calendar
year be granted stock options under the 1997 Plan with respect to more than
250,000 shares of Common Stock, subject to adjustment in the event of capital
changes.
Incentive Stock Options granted under the 1997 Plan are not
transferable except by will or the laws of descent and distribution and may
be exercised during the life of the optionee only by the optionee.
Nonstatutory stock options granted under the 1997 Plan are not transferable
except by will or the laws of descent and distribution and except that
nonstatutory stock options may be transferred if and to the extent authorized
by the Compensation Committee or the Board of Directors.
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<PAGE>
The following table sets forth information as of December 22, 1999
with respect to stock options which have been received since the 1997 Plan
was adopted by the Corporation by (i) each of the Corporation's Chief
Executive Officer and the other executive officers of the Corporation named
in the Summary Compensation Table, (ii) all current executive officers of the
Corporation as a group, (iii) all current directors of the Corporation as a
group, (iv) all current directors of the Corporation, other than those who
are executive officers, as a group, and (v) all employees of the Corporation,
excluding executive officers, as a group, since the 1997 Plan was adopted by
the Corporation.
OPTION GRANTS UNDER 1997 PLAN
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
NAME OPTIONS GRANTED
- ---- ----------------
<S> <C>
Joseph Mooney (1).................................................................... 366,666
Michael G. Kerrison (2).............................................................. 0
Jeffrey Pinkerton.................................................................... 604,166
All executive officers of the Corporation, as a group................................ 878,332
All current directors of the Corporation, as a group................................. 739,999
All directors of the Corporation, excluding executive officers, as a group........... 135,833
All employees of the Corporation, excluding executive officers, as a group........... 1,989,621
</TABLE>
(1) Mr. Mooney resigned on January 31, 1999 but his entire option for 366,666
shares is exercisable through April 29, 2000.
(2) Mr. Kerrison resigned on September 9, 1999 and his entire option for
625,000 shares expired unexercised on December 9, 1999.
The affirmative vote of the holders of a majority of the shares of
Common Stock voted on the issue at the Meeting, in person or by proxy, is
required to ratify the adoption and approval by the Board of Directors of the
amendment to the 1997 Plan. If the proposal to ratify the amendment to the
1997 Plan is not approved at the Meeting, the 1997 Plan, as previously
adopted by the Board of Directors and ratified by the stockholders, will
remain in full force and effect.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST
INTERESTS OF THE CORPORATION AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
APPROVAL THEREOF. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSON(S) NAMED
IN EACH PROXY WILL VOTE THE SHARES REPRESENTED THEREBY "FOR" THE APPROVAL OF
THE AMENDMENT TO THE 1997 PLAN.
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<PAGE>
MISCELLANEOUS
ACCOUNTANTS
PricewaterhouseCoopers LLP ("PWC," formerly Price Waterhouse LLP)
has served as the Corporation's independent public accountants and auditors
since May 15, 1997.
Neither the Corporation nor any person acting on its behalf, prior
to the engagement of PWC, consulted PWC regarding the application of
accounting principles to a specific completed or contemplated transaction, or
the type of audit opinion that might be rendered on the Corporation's
financial statements.
The financial statements of the Corporation for the fiscal year
ended May 31, 1999, have been audited by PWC. It is not expected that
representatives of PWC will be present at the Meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters that may
be presented at the Meeting, except for routine matters. If other business
does properly come before the Meeting, however, the person(s) named on the
accompanying proxy intend to vote on such matters in accordance with their
best judgment.
2001 ANNUAL MEETING OF STOCKHOLDERS PROPOSALS
In order for stockholder proposals to be presented at the
Corporation's 2001 Annual Meeting of Stockholders (or special meeting in lieu
thereof), such proposals must be received by the Secretary of the Corporation
at the Corporation's principal office in Edina, Minnesota not later than
August 31, 2000 for inclusion in the proxy statement for that meeting,
subject to the applicable rules of the Securities and Exchange Commission.
Delivery of such proposals should be by Certified Mail, Return Receipt
Requested.
ANNUAL REPORT ON FORM 10-KSB
The Corporation's Annual Report on Form 10-KSB (without exhibits for
the fiscal year ended May 31, 1999) is being furnished to stockholders of
record together with this Proxy Statement. Requests for additional copies
should be directed to: PurchaseSoft, Inc., 7301 Ohms Lane, Suite 220, Edina,
Minnesota 55439, Attn: Philip D. Wolf, CFO.
December 23, 1999
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<PAGE>
PURCHASESOFT, INC.
7301 Ohms Lane, Suite 220
Edina, Minnesota 55439
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Philip D. Wolf as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and
to vote as designated below, all the shares of common stock, $0.01 par value
per share (the "Common Stock"), of PurchaseSoft, Inc. (the "Corporation")
held of record by the undersigned on December 31, 1999, at the Special
Meeting in Lieu of the 2000 Annual Meeting of Stockholders (the "Meeting") to
be held on Tuesday, January 25, 2000, or any postponement or adjournment
thereof.
1. To elect directors
____ FOR all nominees (except as marked to the contrary below)
____ WITHHOLD AUTHORITY for ALL nominees listed below
Brad I. Markowitz
Jeffrey B. Pinkerton
J. Murray Logan
Donald S. LaGuardia
(Instruction: To WITHHOLD authority to vote for any individual, write the
nominee's name in the space provided below.)
2. To approve an increase in the maximum number of shares which may be made
available upon exercise of stock options under the Corporation's 1997
Stock Option Plan from 3,500,000 to 4,500,000.
____ FOR ____ AGAINST ____ ABSTAIN
----------------------------------------------------------------------
Account No. No. of Shares Proxy No.
__________________________ _____________________ ______________________
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be
voted FOR all nominees for director and FOR the action described in each of
the Items above. In his discretion, the Proxy is authorized to vote upon such
other business as may properly come before the Meeting or any adjournment
thereof.
Please sign exactly as the name appears below. When shares are held by joint
tenants, both should sign.
Dated________________________________________________
Signature____________________________________________
Signature____________________________________________
(if held jointly)
----------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PAPER PROMPTLY USING THE ENCLOSED
ENVELOPE.
----------------------------
