<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 Section 240.14a-11(c) or
Section 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:
-------------------------------------------------------------------------------
<PAGE>
PURCHASESOFT, INC.
ONE RESEARCH DRIVE
SUITE 100B
WESTBOROUGH, MASSACHUSETTS 01581
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF PURCHASESOFT, INC.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders of
PurchaseSoft, Inc. (the "Corporation") will be held at the Corporation's office
at One Research Drive, Suite 100B, Westborough, Massachusetts 01581, on Friday,
November 17, 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 4,500,000 to 6,000,000;
(3) To consider and vote upon a proposal to amend the
Corporation's Certificate of Incorporation to increase the
number of authorized shares of common stock of the Corporation
from 25,000,000 to 50,000,000; and
(4) To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed October 24, 2000 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
2001 Annual Meeting of Stockholders. Accordingly, only stockholders of record at
the close of business on October 24, 2000 will be entitled to notice of, and to
vote at, such meeting or any adjournments thereof.
By order of the Board of Directors,
/s/ J. Murray Logan
J. MURRAY LOGAN
Chairman of the Board of Directors
/s/ Donald S. LaGuardia
DONALD S. LA GUARDIA
President, Chief Executive Officer
and Director
October 31, 2000
--------------------------------------------------------------------------------
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 2001 Annual Meeting of
Stockholders on November 17, 2000 and at any adjournments or postponements
thereof (the "Meeting"), pursuant to the accompanying Notice of 2001 Annual
Meeting of Stockholders. The purposes of the Meeting and the matters to be acted
upon are set forth in the accompanying Notice of 2001 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 November 3, 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 materials, 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, in favor of the proposal to increase the authorized
common stock of the Corporation from 25,000,000 shares to 50,000,000 shares,
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 October 24,
2000, will be eligible to vote at the Meeting. Each share is entitled to one
vote. As of October 9, 2000, the Corporation had outstanding, 14,773,046 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 November 3, 2000.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 1,
2000, as reported to the Corporation, as to the beneficial ownership of the
Common Stock of the Corporation by each director, each named 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 August 1, 2000 or other date noted below.
As of August 1, 2000, 14,733,046 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 67.88%
Donald S. LaGuardia (4)
c/o L-R Global Partners, L.P.
30 Rockefeller Plaza, Room 5425
New York, New York 10112 9,969,128 66.21%
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 65.87%
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 6.92%
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 6.92%
Jeffrey B. Pinkerton (8) 438,156 2.89%
Brad I. Markowitz (9) 130,820 0.88%
Philip D. Wolf (10) 174,000 1.17%
Terry J. Bartz (11) 105,633 0.71%
P. Gopalakrishnan (12) 41,667 0.28%
All current directors and executive 11,160,223 70.26%
officers as a group (7 persons) (13)
</TABLE>
-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, and includes, 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 14,733,046 shares of the
Corporation's Common Stock being issued and outstanding as of August 1,
2000 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 9,627,553 shares held by L-R Global Partners, L.P. Also
includes 224,575 shares that L-R Global Partners, L.P. has the right to
acquire within 60 days of August 1, 2000 upon the exercise of warrants.
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.
(4) Includes 9,627,553 shares held by L-R Global Partners, L.P. Also
includes 224,575 shares that L-R Global Partners, L.P. has the right to
acquire within 60 days of August 1, 2000 upon the exercise of warrants.
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. Also includes 100,000
shares that Mr. La Guardia has the right to acquire within 60 days of
August 1, 2000 upon the exercise of stock options. On August 14, 2000,
Mr. LaGuardia was appointed interim President and CEO of the
Corporation.
(5) Includes 224,575 shares that L-R Global Partners, L.P. has the right to
acquire within 60 days of August 1, 2000 upon the exercise of warrants.
(6) Based upon information provided by Mr. Jeddeloh's Schedule 13D/A filed
with the SEC as of January 13, 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 August 1, 2000 upon the exercise
of a warrant.
(7) Based upon information provided by Mr. Jeddeloh's Schedule 13D/A filed
with the SEC as of January 13, 1999. See note (6) above.
(8) Includes 424,279 shares issuable within 60 days of August 1, 2000 upon
the exercise of stock options. On August 14, 2000, Mr. Pinkerton was
appointed Vice Chairman and Chief Product Strategist for the
Corporation. Donald S. LaGuardia succeeded Mr. Pinkerton in the offices
of President and Chief Executive Officer effective August 14, 2000.
(9) Includes 115,833 shares issuable within 60 days of August 1, 2000 upon
exercise of stock options and 10,544 shares owned by Focus Capital
Corp. Mr. Markowitz may be deemed the beneficial owner of shares held
by Focus Capital Corp. although he disclaims beneficial ownership of
such shares.
(10) Includes 139,000 shares issuable within 60 days of August 1, 2000 upon
the exercise of stock options.
(11) Includes 105,633 shares issuable within 60 days of August 1, 2000 upon
the exercise of stock options.
(12) Includes 41,667 shares issuable within 60 days of August 1, 2000 upon
the exercise of stock options.
(13) Includes 926,412 shares issuable within 60 days of August 1, 2000 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 33 President, Chief Executive Officer and June 1998
a Director
J. Murray Logan 65 Chairman of the Board of Directors and June 1998
a Director
Brad I. Markowitz 42 Director February 1994
Jeffrey B. Pinkerton 52 Vice Chairman, Chief Product Strategist October 1995
and a Director
</TABLE>
DONALD S. LAGUARDIA has served as President and Chief Executive Officer
of the Corporation since August 14, 2000 and as a member of the Board of
Directors since June 1998. Mr. LaGuardia is a member of L-R Managers, LLC, the
general partner of L-R Global Partners, LP, the majority stockholder in
PurchaseSoft. Mr. LaGuardia was an auditor and then a consultant with
PricewaterhouseCoopers from 1987 to 1991. From 1991 to 1997, he held various
managerial positions with BMW of North America, Inc. until he left in 1997 to
join L-R Global Partners, LP. Mr. LaGuardia also serves as the chairman of the
audit committee for PurchaseSoft. 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 MBA in International
Finance 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. 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 Managing Partner
of L-R Global Partners, L.P. since its inception in 1997 and along with
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 The
World Trust Fund, an unaffiliated investment trust. 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 Vice Chairman and Chief Product
Strategist of the Corporation since August 14, 2000 and as a member of the Board
of Directors since October 1995. He formerly served as President and Chief
Executive Officer from March 2000 to August 14, 2000 and as President from
August 1996 to March 2000. From 1987 to 1991 and from 1994 to July 1996, Mr.
Pinkerton served in various positions for the Corporation, including Executive
Vice President and Vice President-Product Development. 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.
INFORMATION AS TO EXECUTIVE OFFICERS
As of October 13, 2000, the executive officers of the Corporation were as
follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE HELD YEAR BECAME
---- --- ----------- OFFICER
-------
<S> <C> <C> <C>
Donald S. LaGuardia 33 President, Chief Executive Officer and 2000
a Director
Terry J. Bartz 40 Vice President, General Counsel, 1999
And Secretary
Philip D. Wolf 48 Chief Financial Officer, Treasurer, 1998
And Assistant Secretary
P. Gopalakrishnan 39 Senior Vice President, Business 2000
Development
</TABLE>
DONALD S. LAGUARDIA has served as President and Chief Executive Officer
of the Corporation since August 14, 2000 and as a member of the Board of
Directors since June 1998. Mr. LaGuardia is a member of L-R Managers, LLC, the
general partner of L-R Global Partners, LP, the majority stockholder in
PurchaseSoft. Mr. LaGuardia was an auditor and then a consultant with
PricewaterhouseCoopers from 1987 to 1991. From 1991 to 1997, he held various
managerial positions with BMW of North America, Inc. until he left in 1997 to
join L-R Global Partners, LP. Mr. LaGuardia also serves as the chairman of the
audit committee for PurchaseSoft. 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 MBA in International
Finance from New York University in 1997.
-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.
P. GOPALAKRISHNAN has served as Senior Vice President, Business
Development of the Corporation since January 17, 2000. From August 1998 to
January 2000, Mr. Gopalakrishnan was a Principal Consultant for the
PricewaterhouseCoopers Management Consulting Services specializing in e-Commerce
best practices and major project implementation and management. From 1994 to
1998, he was a Senior Consultant/Project Manager (EC Services) with ABB, Inc.
From 1989 to 1994, he was a Technical Consultant for Datronics, Inc. From 1987
to 1989, he was a Senior Consultant for Tata-Unisys Ltd. From 1986 to 1987, he
was an Analyst/Programmer with American Express Bank. From 1983 to 1986, he was
a Consultant with ORG Systems. From 1981 to 1983 he was a Programmer with ABC
Consultants. He has concentrated on design, development and implementation for
multinational and multi location e-Commerce projects for the last nine years.
Mr. Gopalakrishnan received his BSc in Science from the University of Delhi,
Delhi, India an FBA in Business Administration from the Canadian School of
Management, Toronto and an MBA in Management from City University, Seattle, WA.
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 last full fiscal year but took other
actions by unanimous consent.
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 last full
fiscal year.
-6-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth certain compensation information for the
fiscal years ended May 31, 2000, 1999, and 1998 with respect to the
Corporation's Chief Executive Officers and each of the most highly compensated
executive officers whose compensation for fiscal year 2000 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>
Jeffrey B. Pinkerton 2000(1) $ 160,360 - - 320,113 $ 10,880 (4)
President and Chief 1999 $ 160,000 - - - - $ 7,800(16)
Executive Officer 1998 $ 125,000 - - 304,166 $ 9,750 (5)
Pamela Cabalka
Chief Executive Officer 2000(11) $ 82,227 - - - - $ 75,188(12)
Michael G. Kerrison 2000(2) $ 42,045 - - - - - -
Chairman and Chief 1999 $ 100,000 - - 625,000 $ 35,000 (6)
Executive Officer
Joseph D. Mooney 2000 - - - - - - - -
Chairman and Chief 1999(3) $ 133,333 - - - - $ 445,200 (7)
Executive Officer 1998 $ 200,000 - - 366,666 $ 68,083 (8)
Philip D. Wolf 2000 $ 100,630 - - - - $ 1,644 (9)
Chief Financial Officer, 1999 $ 88,717 - - 139,000 - -
Treasurer and Ass't. Secretary 1998(14) $ 51,667 - - - - - -
Terry J. Bartz 2000 $ 100,150 - - - - $ 1,630(10)
Vice President, General 1999(15) $ 4,688 - - 135,000 $ 80,803(13)
Counsel and Secretary
</TABLE>
---------------------------
(1) See the section "Executive Officers and Directors" for information as
to the offices held by Mr. Pinkerton in fiscal year 2000 and his
subsequent appointment as Vice Chairman and Chief Product Strategist
effective August 14, 2000. Mr. LaGuardia succeeded Mr. Pinkerton in the
offices of President and Chief Executive Officer effective August 14,
2000.
(2) Mr. Kerrison was appointed Chief Executive Officer by the Board of
Directors on January 31, 1999 and resigned on September 9, 1999.
(3) Mr. Mooney was appointed President and Chief Executive Officer by the
Board of Directors on June 23, 1997 and resigned on January 31, 1999.
(4) Represents a $7,800 automobile allowance and a $3,080 contribution by
the Corporation to employee's 401K account.
(5) Represents a $9,750 automobile allowance.
(6) Represents $35,000 earned as an independent contractor.
(7) Represents a $400,000 compensation charge under Mr. Mooney's
termination agreement, of which $266,668 was paid as of May 31, 2000
and the balance of $133,332 to be paid evenly over the next eight
months, a $40,000 contract settlement payment, and a $5,200 automobile
allowance.
-7-
<PAGE>
(8) Represents $58,333 in deferred compensation and a $9,750 automobile
allowance.
(9) Represents a $1,644 contribution by the Corporation to employee's 401K
account.
(10) Represents a $1,630 contribution by the Corporation to employee's 401K
account.
(11) Ms. Cabalka was appointed interim Chief Executive Officer by the Board
of Directors on September 10, 1999 and resigned on December 8, 1999.
(12) Represents a $75,000 accrued severance benefit of which $71,023 was
paid as of May 31, 2000 and the balance of $3,977 was paid in June 2000
and a $188 contribution by the Corporation to employee's 401K account.
(13) Represents $80,803 earned as an independent contractor.
(14) Mr. Wolf joined the Corporation in October 1997 and was appointed Chief
Financial Officer in January 1998.
(15) Mr. Bartz joined the Corporation in May 1999 as Vice President, General
Counsel and Corporate Secretary.
(16) Represents a $7,800 automobile allowance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANT
NUMBER OF ------------------ EXERCISE
SECURITIES % OF TOTAL OPTIONS PRICE EXPIRATION
NAME UNDERLYING GRANTED TO EMPLOYEES IN ($ / SHARE) DATE
---- OPTIONS GRANTED FISCAL YEAR ----------- ----
--------------- -----------
<S> <C> <C> <C> <C>
Jeffrey B. Pinkerton 300,000 (1) 16.5% $0.920 December 12, 2004
1,334 (2) 0.1% $0.937 October 14, 2003
1,483 (2) 0.1% $0.843 November 15, 2003
1,741 (2) 0.1% $0.718 December 14, 2003
953 (2) 0.1% $1.312 January 14, 2004
1,177 (2) 0.1% $1.062 February 15, 2004
1,250 (2) 0.1% $1.000 March 14, 2004
1,483 (2) 0.1% $0.843 April 14, 2004
1,111 (2) 0.1% $1.125 May 13, 2004
1,483 (2) 0.1% $0.843 June 14, 2004
1,905 (2) 0.1% $0.656 July 14, 2004
2,860 (2) 0.2% $0.437 August 15, 2004
3,333 (2) 0.2% $0.375 September 14, 2004
Pamela Cabalka - - - - - - - -
Michael G. Kerrison - - - - - - - -
Joseph D. Mooney - - - - - - - -
Philip D. Wolf - - - - - - - -
Terry J. Bartz - - - - - - - -
</TABLE>
-8-
<PAGE>
---------------------------
(1) Mr. Pinkerton was granted an incentive stock option exercisable for an
aggregate of 300,000 shares of common stock of which 100,000 shares
vested immediately, 100,000 will vest on December 13, 2000 and 100,000
will vest on December 13, 2001.
(2) Mr. Pinkerton was granted options, which were fully vested on the date
of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information as to options exercised
during the fiscal year ended May 31, 2000, and unexercised options held at the
end of such fiscal year, by the individuals listed in the Summary Compensation
Table.
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBERS OF UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT 5/31/00 AT 5/31/00
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
---- ------------- ------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
Jeffrey B. Pinkerton 0 $ 0 424,279 / 200,000 $795,094 / $391,000
Pamela Cabalka 150,000 $ 604,641 0 / 0 $ 0 / $ 0
Michael G. Kerrison 0 $ 0 0 / 0 $ 0 / $ 0
Joseph D. Mooney 366,666 $1,230,615 0 / 0 $ 0 / $ 0
Philip D. Wolf 0 $ 0 139,000 / 0 $261,885 / $ 0
Terry J. Bartz 0 $ 0 105,633 / 29,533 $192,894 / $ 52,877
</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
31, 2000, the last trading date during fiscal 2000, which was $2.875 minus
the exercise price.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Corporation entered into an employment agreement with Jeffrey B.
Pinkerton, the then 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 confidentiality and non-competition
provisions intended to protect the Corporation.
-9-
<PAGE>
DIRECTOR COMPENSATION
At the current time, directors of the Corporation receive no cash
compensation for their service to the Corporation as directors.
CERTAIN TRANSACTIONS
On September 1, 1998, the Corporation issued 125,000 shares of its
Common Stock to TIS Group Managers, Inc. upon the exercise of a warrant held by
TIS Growth Fund at an exercise price of $1.14 per share, for an aggregate sum of
$142,500. The issuance of the Common Stock was made in reliance on Section 4(2)
of the Securities Act of 1933, as amended.
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 ($133,332
remaining to be paid as of May 31, 2000); $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 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.
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 March 23, 2000, the Corporation borrowed $5,000,000 from L-R Global
Partners, L.P. and signed a demand promissory note in return. Under the terms of
this note, the Corporation must repay the principal and interest due at any time
upon the demand of L-R Global. Subsequent to year-end, L-R Global provided the
Corporation with a letter stating that they would not make a demand for
repayment prior to June 15, 2001. This note provided for interest at 6% per
annum.
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, 2000. Based on the Corporation's review of copies of such
reports, Michael Kerrison failed to file one Form 4, Pamela Cabalka failed to
file one Form 3 and one Form 4, Donald LaGuardia filed one untimely Form 5,
and P. Gopalakrishnan filed one untimely Form 3.
-10-
<PAGE>
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S 1997 STOCK OPTION PLAN
On September 15, 2000, 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 4,500,000 shares to 6,000,000 shares. There are no planned grants of
these increased shares to any specific individuals.
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 4,500,000 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.
-11-
<PAGE>
The following table sets forth information as of September 30, 2000
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 and each nominee for election as a
director, (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 current executive
officers, as a group, and (v) all employees of the Corporation, excluding
current 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
OPTIONS
NAME GRANTED
---- -----------
<S> <C>
Donald S. LaGuardia (1).................................. 250,000
Jeffrey B. Pinkerton (2)................................. 624,279
Pamela Cabalka (3)....................................... 375,000
Michael G. Kerrison (4).................................. 625,000
Joseph D. Mooney (5)..................................... 366,666
Philip D. Wolf .......................................... 139,000
Terry J. Banz ........................................... 135,166
J. Murray Logan ......................................... 0
Brad I. Markowitz ....................................... 115,833
All current executive officers of the Corporation,
as a group ............................................ 724,166
All current directors of the Corporation, as a group..... 990,112
All directors of the Corporation, excluding current
executive officers, as a group ........................ 740,112
All employees of the Corporation, excluding current
executive officers, as a group ........................ 2,000,575
</TABLE>
(1) Mr. LaGuardia was appointed interim President and CEO on August 14, 2000,
succeeding Jeffrey Pinkerton who was appointed Vice Chairman and Chief Product
Strategist.
(2) Mr. Pinkerton was appointed CEO on March 7, 2000 and was subsequently
appointed Vice Chairman and Chief Product Strategist effective August 14,
2000. Donald S. LaGuardia succeeded Mr. Pinkerton in the offices of President
and Chief Executive Officer effective August 14, 2000.
(3) Ms. Cabalka was appointed interim Chief Executive Officer on September
10, 1999 and resigned on December 8, 1999. Ms. Cabalka exercised 150,000
option shares and the remaining 225,000 option shares expired unexercised on
March 9, 2000.
(4) Mr. Kerrison resigned as Chief Executive Officer on September 9, 1999 and
his entire option for 625,000 shares expired unexercised on December 9, 1999.
(5) Mr. Mooney resigned as Chief Executive Officer on January 31, 1999. Mr.
Mooney exercised all 366,666 option shares.
The affirmative vote of the holders of a majority of the shares of
Common Stock voting on the proposal 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.
-12-
<PAGE>
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The current authorized shares of common stock of the Corporation
consists of 25,000,000 shares of Common Stock, $.01 par value, of which
[14,773,046] shares of Common Stock were issued and outstanding as of October 9,
2000. The Board of Directors, on September 15, 2000, adopted a resolution to
increase the authorized number of shares of Common Stock from 25,000,000 to
50,000,000. The proposed increase requires an amendment to the Corporation's
Certificate of Incorporation and, therefore, submission to the stockholders at
the Annual Meeting. The proposed amendment does not change any other aspect of
the Corporation's Certificate of Incorporation.
Holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders of the Corporation and to ratably
receive dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. Upon liquidation, dissolution
or winding up of the Corporation, holders of Common Stock are entitled to share
ratably in any assets available for distribution to stockholders after payment
of all obligations of the Corporation.
If the proposed amendment is approved, all or any part of the
authorized but unissued shares of Common Stock may thereafter be issued without
further approval from the stockholders, except as may be required by law or the
policies of any stock exchange or stock market on which the shares of stock of
the Corporation may be listed or quoted, for such purposes and on such terms as
the Board of Directors may determine. Holders of the Common Stock of the
Corporation do not have any preemptive rights to subscribe for the purchase of
any shares of Common Stock, which means that current stockholders do not have a
prior right to purchase any new issue of Common Stock in order to maintain their
proportionate ownership.
The proposed amendment will not affect the rights of existing holders
of Common Stock except to the extent that future issuances of Common Stock will
reduce each existing stockholder's proportionate ownership.
The Board of Directors has determined that it would be appropriate for
the Corporation to increase the number of its authorized shares of Common Stock
in order to have additional shares available for possible future acquisition or
financing transactions and other issuances, or to satisfy requirements for
additional reservations of shares by reason of future transactions which might
require increased reservations. The Board of Directors believes that the
complexity of customary financing, employment and acquisition transactions
requires that the Directors be able to respond promptly and effectively to
opportunities that involve the issuance of shares of Common Stock. For example,
if the proposal is approved, the Corporation will have the flexibility to
authorize stock splits and stock dividends and to enter into joint ventures and
corporate financings involving the issuance of shares of Common Stock. The
Corporation has no present plans, agreements, understandings or arrangements
regarding transactions expected to require issuance of the additional shares of
Common Stock that would be authorized by the proposed amendment.
The flexibility of the Board of Directors to issue additional shares of
stock could enhance the Board's ability to negotiate on behalf of stockholders
in a takeover situation. Although it is not the purpose of the proposed
amendment, the authorized but unissued shares of Common Stock also could be used
by the Board of Directors to discourage, delay or make more difficult a change
in control of the Corporation. For example, such shares could be privately
placed with purchasers who might align themselves with the Board of Directors in
opposing a hostile takeover bid. The issuance of additional shares might serve
to dilute the stock ownership of persons seeking to obtain control and thereby
increase the cost of acquiring a given percentage of the outstanding shares. The
Board of Directors is not aware of any pending or proposed effort to acquire
control of the Corporation.
If this Proposal 3 (Amendment to Increase the Authorized Shares of
Common Stock) is adopted by the Corporation's stockholders, this Proposal will
become effective on the date a Certificate of Amendment is filed with the
Secretary of State of the Delaware (the Corporation's state of incorporation).
-13-
<PAGE>
Approval of this Proposal 3 requires the affirmative vote of the
holders of a majority of the outstanding shares of the Corporation's Common
Shares entitled for vote at the Annual Meeting.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 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 INCREASE THE AUTHORIZED CAPITAL SHARES.
-14-
<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.
The financial statements of the Corporation for the fiscal year ended
May 31, 2000, 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.
2002 ANNUAL MEETING OF STOCKHOLDERS PROPOSALS
In order for stockholder proposals to be presented at the Corporation's
2002 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 Westborough, Massachusetts not later than
August 31, 2001 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, 2000) is being furnished to stockholders of record
together with this Proxy Statement. Requests for additional copies should be
directed to: PurchaseSoft, Inc., 5001 W. 80th Street, Suite 835, Bloomington,
Minnesota 55437, Attn: Philip D. Wolf, CFO.
October 31, 2000
-15-
<PAGE>
PURCHASESOFT, INC.
One Research Lane, Suite 100B
Westborough, Massachusetts 01581
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 October 24, 2000, at the 2001 Annual Meeting of Stockholders (the
"Meeting") to be held on Friday, November 17, 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 4,500,000 to 6,000,000.
____ FOR ____ AGAINST ____ ABSTAIN
3. To approve an amendment to the Corporation's Certificate of Incorporation
to increase the number of authorized shares of Common Stock of the
Corporation from 25,000,000 to 50,000,000.
____ 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)
<PAGE>
------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PAPER PROMPTLY USING THE ENCLOSED
ENVELOPE.
------------------------------
-2-
