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SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or 240.14a-12
E-STAMP CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
NA
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(2) Aggregate number of securities to which transaction applies:
NA
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
NA
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(4) Proposed maximum aggregate value of transaction:
NA
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(5) Total fee paid:
NA
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
NA
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(2) Form, Schedule or Registration Statement No.:
NA
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(3) Filing Party:
NA
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(4) Date Filed:
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E-STAMP CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD , 2001
Dear E-Stamp Corporation Stockholder:
Notice is hereby given that we will hold the annual meeting of the
stockholders of E-Stamp Corporation on , 2001, at
local time, for the following purposes:
1. To elect two Class II directors to serve for a term of three years
and until their successors are duly elected and qualified;
2. To consider and vote upon a proposal to approve an amendment of
E-Stamp's certificate of incorporation authorizing E-Stamp's board of
directors to effect a reverse stock split of not less than 1-for-5 and not
more than 1-for-20;
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of E-Stamp for the fiscal year ending December 31, 2001 in the
event that E-Stamp's proposed merger with Learn2.com, Inc. is not
completed;
4. To ratify the appointment of Arthur Andersen LLP as independent
public accountants of E-Stamp for the fiscal year ending December 31, 2001
in the event that E-Stamp's proposed merger with Learn2 is completed; and
5. To transact such other business as may properly come before the
meeting or at any and all continuation(s) or adjournment(s) thereof.
These items of business are described in the attached proxy statement.
Any action may be taken on any of the foregoing proposals at the annual
meeting on the date specified above or on any date to which the annual meeting
may be adjourned or postponed. Only holders of record of E-Stamp common stock at
the close of business on July 31, 2001 are entitled to notice of, and to vote
at, the annual meeting and any adjournments or postponements of the annual
meeting.
Your vote is very important. Whether or not you expect to attend the annual
meeting, please complete, date, sign and promptly return the accompanying proxy
in the enclosed postage paid envelope so that your shares may be represented at
the annual meeting. Returning your proxy does not deprive you of your right to
attend the meeting and vote your shares in person.
For the Board of Directors,
Robert H. Ewald
President, Chief Executive Officer and
Director
Mountain View, California
, 2001
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E-STAMP CORPORATION
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The enclosed Proxy is solicited on behalf of the board of directors of
E-Stamp Corporation, a Delaware corporation, for use at the annual meeting of
stockholders to be held on , 2001, at , local time, or at any
and all continuation(s) or adjournment(s) thereof, for the purposes set forth in
this proxy statement and in the accompanying notice of annual meeting of
stockholders. The annual meeting will be held at E-Stamp's headquarters, which
are located at 2051 Stierlin Court, Mountain View, California 94043 and the
telephone number is (650) 919-7500.
These proxy solicitation materials were mailed on or about ,
2001 to all stockholders entitled to vote at the annual meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
PURPOSES OF THE ANNUAL MEETING
The purposes of the annual meeting are:
- to elect two Class II directors to serve for a term of three years and
until their successors are duly elected and qualified;
- to approve the amendment to E-Stamp's certificate of incorporation for
the purpose of effectuating a reverse stock split of E-Stamp's
outstanding common stock of not less than 1-for-5 and not more than
1-for-20, with the board of directors having the authority to determine
which, if any, reverse stock split within the foregoing parameters to
effectuate;
- to ratify the appointment of Ernst & Young LLP as independent auditors of
E-Stamp for the fiscal year ending December 31, 2001 in the event that
E-Stamp's proposed merger with Learn2.com, Inc. is not completed;
- to ratify the appointment of Arthur Andersen LLP as independent public
accountants of E-Stamp for the fiscal year ending December 31, 2001 in
the event that E-Stamp's proposed merger with Learn2.com, Inc. is
completed; and
- to transact such other business as may properly come before the annual
meeting or at any and all continuation(s) or adjournment(s) thereof.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of E-Stamp common stock at the close of business on
July 31, 2001, the record date for the annual meeting, are entitled to notice
of, and to vote at, the annual meeting. On the record date, 37,915,194 shares of
E-Stamp's common stock were issued and outstanding. For information regarding
security ownership by management and 5% stockholders, see "OTHER
INFORMATION -- Security Ownership."
VOTING AND SOLICITATION
Each share of E-Stamp common stock outstanding on the record date will be
entitled to one vote on all matters. The two candidates for election as
directors at the annual meeting who receive the highest number of affirmative
votes of the shares of E-Stamp's common stock present or represented at the
annual meeting will be elected. The amendment to E-Stamp's certificate of
incorporation will require the affirmative vote of a majority of the outstanding
shares of E-Stamp's common stock. The ratification of the appointment of Ernst &
Young LLP as independent auditors for the fiscal year ending December 31, 2001
in the event that E-Stamp's
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proposed merger with Learn2.com., Inc. is not completed will require the
affirmative vote of a majority of the shares of E-Stamp's common stock present
or represented at the annual meeting. The ratification of the appointment of
Arthur Andersen LLP as independent public accountants for the fiscal year ending
December 31, 2001 in the event that E-Stamp's proposed merger with Learn2.com,
Inc. is completed will require the affirmative vote of a majority of the shares
of E-Stamp's common stock present or represented at the annual meeting.
All shares of E-Stamp common stock represented by properly executed proxies
received before or at the annual meeting will, unless the proxies have been
previously revoked, be voted in accordance with the instructions indicated in
those proxies. IF NO INSTRUCTIONS ARE INDICATED, SHARES OF E-STAMP COMMON STOCK
REPRESENTED BY THOSE PROXIES WILL BE VOTED (1) FOR THE ELECTION OF EACH OF
E-STAMP'S DIRECTOR NOMINEES, (2) FOR APPROVAL OF THE AMENDMENT TO E-STAMP'S
CERTIFICATE OF INCORPORATION FOR THE PURPOSE OF EFFECTING A REVERSE STOCK SPLIT
AS SELECTED BY E-STAMP'S BOARD OF DIRECTORS; (3) FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS E-STAMP'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2001 IN THE EVENT THAT E-STAMP'S PROPOSED MERGER
WITH LEARN2.COM, INC. IS NOT COMPLETED; AND (4) FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS E-STAMP'S INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001 IN THE EVENT THAT E-STAMP'S
PROPOSED MERGER WITH LEARN2.COM, INC. IS COMPLETED. E-Stamp does not know of any
matters other than those described in the notice of annual meeting of
stockholders that are to come before the annual meeting. If any other matter is
properly presented for action at the annual meeting, the persons named in the
enclosed proxy will have the discretion to vote on such matters as the board of
directors may recommend unless authority to do so is withheld on the proxy card.
REVOCABILITY OF PROXIES
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice to the Secretary of E-Stamp, by signing and
returning a later-dated proxy, or by voting in person at the annual meeting.
However, mere attendance at the annual meeting will not in and of itself have
the effect of revoking the proxy. Votes cast by proxy or in person at the annual
meeting will be tabulated by the inspector of elections appointed for the annual
meeting.
SOLICITATION OF PROXIES
E-Stamp will bear the cost of this solicitation. E-Stamp may reimburse
expenses incurred by brokerage firms and other persons representing beneficial
owners of shares in forwarding solicitation material to such beneficial owners.
E-Stamp has retained Mellon Investor Services as proxy solicitors and expects to
pay approximately $6,000 for this service. Proxies may also be solicited by
certain of E-Stamp's directors, officers and regular employees, without
additional compensation other than reimbursement of expenses, personally, by
telephone or by telefax.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence in person or by properly executed proxy of holders of a
majority of all issued and outstanding shares of E-Stamp common stock entitled
to vote is necessary to constitute a quorum at the annual meeting. For purposes
of determining whether or not a quorum is present, the inspector of elections
will include shares that are present or represented by proxy, even if the
holders of such shares abstain from voting on any particular matter. In the
event that a broker, bank, custodian, nominee or other record holder of E-Stamp
common stock indicates on a proxy that it does not have discretionary authority
to vote certain shares on a particular proposal, known as a broker non-vote,
those shares will not be considered for purposes of determining the number of
shares entitled to vote with respect to a particular proposal on which the
broker has expressly not voted, but will be counted for purposes of determining
the presence or absence of a quorum for the transaction of business.
Accordingly, abstentions and broker non-votes will have the effect of a "no"
vote
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on the proposal to amend E-Stamp's certificate of incorporation but will not
affect the outcome of the voting on the election of directors and the
ratification of accountants.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSAL
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in a company's
proxy statement and for consideration at the next annual meeting of its
stockholders by submitting their proposals to the company in a timely manner.
In order to be included in the proxy statement for the 2002 annual meeting
of E-Stamp stockholders, stockholder proposals must be received by E-Stamp no
later than , and must otherwise comply with the requirements of Rule
14a-8.
In addition, E-Stamp's bylaws establish an advance notice procedure with
regard to specified matters, including stockholder proposals not included in
E-Stamp's proxy statement, to be brought before an annual meeting of
stockholders. In general, notice must be received by the Secretary of E-Stamp
not less than 60 days nor more than 90 days prior to the anniversary date of the
immediately preceding annual meeting and must contain specified information
concerning the matters to be brought before such meeting and concerning the
stockholder proposing such matters.
Therefore, to be presented at E-Stamp's 2002 annual meeting, such a
proposal must be received by E-Stamp after but no later than
. If the date of the annual meeting is more than 30 days earlier or
more than 30 days later than such anniversary date, notice must be received not
later than the close of business on the later of the 90th day prior to such
annual meeting or the 10th day following the day on which public announcement of
the date of such annual meeting is first made. If a stockholder who has notified
E-Stamp of his or her intention to present a proposal does not appear or send a
qualified representative to present his or her proposal at such meeting, E-Stamp
need not present the proposal for a vote at such meeting. All notices of
proposals by stockholders, whether or not to be included in E-Stamp's proxy
materials, should be sent to the attention of the Secretary of E-Stamp at its
principal executive offices.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
E-Stamp's board of directors is currently comprised of eight members,
divided into three classes with overlapping three-year terms. As a result, a
portion of E-Stamp's board of directors will be elected each year. Messrs.
Ewald, Rosch and Cresci have been designated Class I directors, and their terms
expire at the 2003 annual meeting of stockholders. Messrs. Gumucio and Wagner
have been designated Class II directors, and their terms expire at this annual
meeting of stockholders. Messrs. Boit and Balen and Ms. Saeger have been
designated as Class III directors, and their terms expire at the 2002 annual
meeting of stockholders.
Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of an equal number of directors.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for E-Stamp's two nominees named below, all of whom are
currently directors of E-Stamp. In the event that any nominee of E-Stamp is
unable or declines to serve as a director at the time of the annual meeting, the
proxies will be voted for any nominee who shall be designated by the present
board of directors to fill the vacancy. It is not expected that any nominee will
be unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the 2004 annual meeting of
stockholders or until his or her successor has been duly elected and qualified
or until his or her earlier death, resignation or removal.
E-Stamp has agreed to merge with Learn2.com, Inc., subject to completion of
closing conditions including the approval of E-Stamp and Learn2 stockholders.
E-Stamp will be the surviving corporation upon
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completion of the merger and the board of directors will be comprised of five
designees of E-Stamp and four designees of Learn2. See "E-Stamp Directors After
the Merger" below.
DIRECTORS AND NOMINEES FOR DIRECTOR
Information Regarding Nominee Directors
Two Class II directors are to be elected at the Annual Meeting for a
three-year term ending in 2003. The board of directors has nominated MARCELO A.
GUMUCIO and ADAM WAGNER for re-election as Class II directors. The following
sets forth information concerning the nominees for Class II directors, including
information as to each nominee's age as of the Record Date, position with the
Company and business experience.
<Table>
<Caption>
NAME AGE POSITION
---- --- --------
Marcelo A. Gumucio........................... 63 Chairman of the Board of Directors
Adam Wagner.................................. 42 Director
</Table>
Marcelo A. Gumucio has served as Chairman of the board of directors since
November 1998. Mr. Gumucio is Managing Partner of Gumucio, Burke and Associates,
a private investment firm that he co-founded in 1992. From April 1996 to July
1997, Mr. Gumucio was Chief Executive Officer of Micro Focus PLC, an enterprise
software provider. He has also served as a member of the Micro Focus' board of
directors since January 1996. Before joining Micro Focus, Mr. Gumucio was
President and Chief Executive Officer of Memorex Telex NV between 1992 and 1996.
Mr. Gumucio currently serves on the board of directors of BidCom, Inc., Digital
Island and Burr Brown Corporation and serves as Chairman of the boards of
directors of WebSentric and NetFreight. Mr. Gumucio received his B.S. in
mathematics from the University of San Francisco and M.S. in applied mathematics
and operations research from the University of Idaho. Mr. Gumucio is also a
graduate of the Harvard Business School Advanced Management Program.
Adam Wagner has served on the board of directors since November 1996. Mr.
Wagner is the founder and principal of Neo Ventures, LLC, a privately held
investment firm, since its formation in September 1999. From June 1992 until
September 1999, Mr. Wagner served as Vice President, Investments at Wagner &
Brown, Ltd., a closely-held oil and gas investment company. Mr. Wagner currently
serves on the boards of directors of Advanced Data Analysis and Preservation
Technology, Inc., Innotek Powder Coatings, L.L.C. and SeaSound, LLC. Mr. Wagner
received his B.S. in geology from the University of Oklahoma and M.B.A. from the
University of Southern California.
REQUIRED VOTE
The two nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted for them shall be elected
as directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum for the transaction of business,
but have no other legal effect in the election of directors under Delaware law.
RECOMMENDATION OF THE BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES LISTED ABOVE.
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INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
The following sets forth information concerning the directors whose terms
of office continue after the annual meeting, including information as to each
director's age as of the record date, position with E-Stamp and business
experience.
<Table>
<Caption>
NAME AGE POSITION
---- --- --------
Robert H. Ewald........................... President, Chief Executive Officer and
53 Director
John V. Balen............................. 41 Director
Thomas L. Rosch........................... 38 Director
Peter G. Boit............................. 41 Director
Rebecca Saeger............................ 45 Director
Robert J. Cresci.......................... 57 Director
</Table>
Robert H. Ewald has been our President and Chief Executive Officer since
February 1999 and has been a Director since January 1999. From July 1996 to July
1998, Mr. Ewald held various executive positions at Silicon Graphics, Inc., a
manufacturer of computer workstations, servers and supercomputers, most recently
as Executive Vice President and Chief Operating Officer. From August 1984 to
June 1996, Mr. Ewald held various management and executive positions with Cray
Research, Inc., a manufacturer of high performance computers, including
President and Chief Operating Officer. Before joining Cray Research, Inc., Mr.
Ewald led the Computing and Communications Division of the Los Alamos National
Laboratory and was responsible for providing computing and communications
services to government customers nationwide between 1980 and 1984. Mr. Ewald
currently serves on the board of directors of Ceridian, Inc., an information
technology services company, and is a member of the President's Information
Technology Advisory Committee chartered by the White House. Mr. Ewald received
his B.S. in civil engineering from the University of Nevada and his M.S. in
civil engineering from the University of Colorado.
John V. Balen has served on the board of directors since July 1998. Mr.
Balen joined Canaan Partners, a national venture capital investment firm, in
September 1995 where he is currently a general partner. From June 1985 to June
1995, Mr. Balen served as Managing Director of Horsley Bridge Partners, a
private equity investment management firm. Mr. Balen currently serves on the
boards of directors of Intraware and Commerce One. Mr. Balen received his B.S.
in electrical engineering and M.B.A. from Cornell University.
Thomas L. Rosch has served on the board of directors since September 1997.
Mr. Rosch joined InterWest Partners in January 2000 where he is currently
general partner and managing director. InterWest Partners is a Silicon
Valley-based venture capital firm that invests in information technology and
health care companies. Previously, Mr. Rosch was a partner at AT&T Ventures from
December 1996 to January 2000. AT&T Ventures is an independent venture capital
fund that invests in information technology companies. Prior to AT&T Ventures,
Mr. Rosch served as a senior member of The Boston Consulting Group from November
1989 to November 1996. Mr. Rosch received his A.B. in government and philosophy
from Harvard University and J.D./M.B.A. from Stanford University.
Peter G. Boit has served on the board of directors since July 2000. Since
1994, Mr. Boit has been with Microsoft Corporation in various positions,
including Sales Manager, Director of Licensing, General Manager of Licensing,
and most recently as Vice President of e-Commerce. Since January 2000, he has
served as a director for Vertaport, a privately held company. Mr. Boit received
his B.A. in English from the University of Vermont and M.B.A from the Kellogg
Graduate School of Management at Northwestern University.
Rebecca Saeger has served on the board of directors since September 1999.
Since June 1997, Ms. Saeger has served as Executive Vice President of Brand
Marketing for VISA U.S.A., a provider of payment products and services. From
June 1991 to May 1997, Ms. Saeger served in various positions at Foote, Cone &
Belding San Francisco, an advertising agency, including Senior Vice President,
Group Management Supervisor and Director of Account Management. From June 1980
to April 1991, Ms. Saeger worked at Ogilvy and Mather New York, an advertising
agency, where she held a variety of positions, including most recently, Senior
Vice President, Group Director. Ms. Saeger received her B.A. from Muhlenberg
College and M.B.A. from the Wharton School of Business, University of
Pennsylvania.
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Robert J. Cresci has served on the board of directors since October 1999.
Since 1990, Mr. Cresci has served as a Managing Director of Pecks Management
Partners Ltd., which specializes in managing portfolios of public and private
convertible securities for institutional clients. Mr. Cresci currently serves on
the boards of directors of Sepracor, Inc., Aviva Petrolium Ltd., Film Roman,
Inc., Castle Dental Centers, Inc., j2 Global Communications, Inc., Candlewood
Hotel Co. and SeraCara, Inc. Mr. Cresci is a graduate of the United States
Military Academy at West Point and received an MBA from Columbia University.
There are no family relationships among any of our directors, officers or
key employees.
BOARD OF DIRECTORS MEETINGS & COMMITTEES
Our board of director met eight (8) times during the year ended December
31, 2000. Peter Boit attended less than 75% of the aggregate of all meetings of
our board of directors and any committees of the board on which such director
served, if any, during the year ended December 31, 2000. Our board of directors
established an audit committee and a compensation committee in July 1998 and an
executive committee in January 2001, but has not established a nominating
committee or a committee performing the functions of a nominating committee.
Our audit committee currently consists of Messrs. Balen, Wagner and Cresci.
Among other duties, our audit committee reviews our internal accounting
procedures and consults with and reviews the services provided by our
independent auditors. Our audit committee met five (5) times during the year
ended December 31, 2000.
Our compensation committee currently consists of Mr. Rosch and Ms. Saeger.
Our compensation committee sets the level of compensation of executive officers
and advises management with respect to compensation levels for key employees.
Our compensation committee also administers our stock option plans and employee
stock purchase plan. Our compensation committee met four (4) times and acted by
unanimous written consent four (4) times during the year ended December 31,
2000.
DIRECTOR COMPENSATION
Except for our Chairman of the board of directors, we do not currently
compensate our directors in cash for their service as members of the board of
directors, although we reimburse our directors for expenses in connection with
attendance at board of director and compensation committee meetings. We
currently pay Mr. Gumucio $9,537 per month for his service as Chairman of the
board of directors. In addition, we provide Mr. Gumucio with health coverage and
other employee benefits, and have agreed to provide Mr. Gumucio and his
dependents with continued health coverage until Mr. Gumucio reaches the age of
65. Under our stock option plan, directors are eligible to receive stock option
grants at the discretion of the board of directors or other administrator of the
plan. During the year ended December 31, 2000, the board of directors did not
grant options to any director under E-Stamp's 1999 Director Plan. During the
year ended December 31, 2000, the board of directors granted options to acquire
an aggregate of 928,906 shares of E-Stamp common stock to Robert Ewald for his
service as President and Chief Executive Officer of E-Stamp.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership on Form 3 and changes
in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10%
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on its review of the copies
of such forms received by it, the Company believes that, during the fiscal year
ended December 31, 2000, all Section 16(a) filing requirements applicable to its
officers, directors and 10% stockholders were satisfied, except that Peter Boit
and Paul Goldman each filed a Form 3 late and Adam Wagner filed a Form 4 late.
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E-STAMP DIRECTORS AFTER THE MERGER
Upon completion of the proposed merger of Learn2.com, Inc. into E-Stamp,
the board of directors of E-Stamp will be comprised of nine individuals, five of
whom will be designated by E-Stamp and four of whom will be designated by
Learn2. E-Stamp and Learn2 have designated the individuals set forth below to be
directors of E-Stamp upon completion of the merger.
<Table>
<Caption>
NAME AGE POSITION
---- --- --------
Robert H. Ewald........................... 53 Chairman of the Board of Directors
Donald Schupak............................ 58 Chairman of the Executive Committee of the
Board of Directors
Stephen P. Gott........................... 52 President, Chief Executive Officer and
Director
Marcelo A. Gumucio........................ 63 Director
Robert J. Cresci.......................... 57 Director
James A. Cannavino........................ 56 Director
S. Lee Kling.............................. 72 Director
Rebecca Saeger............................ 45 Director
John V. Balen............................. 40 Director
</Table>
The five E-Stamp designees are: Messrs. Ewald, Gumucio, Cresci and Balen
and Ms. Saeger, all of who are currently directors of E-Stamp and their
information is provided above. The four Learn2 designees are described below.
Donald Schupak currently serves as Chairman of the board of directors of
Learn2. He has been a member of the board of directors of Learn2 since January
1997 and has been Chairman since March 1997. Mr. Schupak is the President and
Chief Executive Officer of The Schupak Group, Inc., an organization that
provides strategic planning, management consulting and corporate services to
corporations worldwide. Mr. Schupak has been with The Schupak Group, Inc. since
1990. Mr. Schupak is also Chairman of the board of directors of Danskin, Inc., a
women's apparel company. He previously served as Chairman and Chief Executive
Officer of the Horn & Hardart Company (now known as Hanover Direct) from 1988 to
1990 and as Vice Chairman from 1977 to 1988. Mr. Schupak also served as a member
of the Advisory Board of the Maxwell School of Citizenship and Public Affairs at
Syracuse University from 1995 to 1999. He is also the founder of the High School
for Leadership and Public Service, an experimental high school in New York City
established in 1993.
Stephen P. Gott has served as Learn2's President, Chief Executive Officer
and a Director since February 1999. From November 1994 to February 1999, Mr.
Gott served as the President, Chief Executive Officer and Chairman of the board
of directors of Street Technologies, Inc., which Learn2 acquired in February
1999. From June 1986 to November 1994, Mr. Gott served as the Chief Technology
and Operations Officer at Lehman Brothers.
James A. Cannavino currently serves as a Director of Learn2. Mr. Cannavino
is Chief Executive Officer and Chairman of the board of directors of CyberSafe
Corporation, a developer of software used for security applications. Prior to
joining CyberSafe, Mr. Cannavino served as President and Chief Operating Officer
for Perot Systems Corporation. Until March 1995, he also held a variety of
senior executive positions at IBM, serving as senior vice president for strategy
and development at the time of his departure from IBM. Mr. Cannavino has served
as a member of the IBM Corporate Executive Committee and Worldwide Management
Council and as a member of the board of directors of IBM's Integrated Services
and Solutions Company. He currently serves as Chairman of the Internet
Technology Committee of Computer Concepts and as Chairman of the board of
directors of Softworks, a provider of enterprise data, storage and performance
management products and services. Mr. Cannavino is also a Director of OPUS360
Corporation and Marist College.
S. Lee Kling currently serves as a Director Learn2. Since 1991, Mr. Kling
has been Chairman of the board of directors of Kling Rechter & Co., LP, a
merchant banking company. Mr. Kling is also Director of
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Bernard Chaus, Inc., Electro Rent Corporation, National Beverage Corp., Kupper
Parker Communications, Inc. and Engineered Support Systems, Inc.
PROPOSAL NO. 2
REVERSE STOCK SPLIT AMENDMENT
This proposal, if ratified, will approve an Amendment to the Company's
Certificate of Incorporation for the purpose of effectuating a reverse stock
split of E-Stamp outstanding common stock of not less than 1-for-5 and not more
than 1-for-20, with the board of directors having the authority to determine
which, if any, of these reverse stock splits to effectuate within the foregoing
parameters.
INTRODUCTION AND BOARD RECOMMENDATION
Our board of directors has determined that it would be advisable to obtain
the approval of the stockholders for a reverse stock split that would reduce the
number of shares of E-Stamp's outstanding common stock in order to increase the
trading price of E-Stamp's common stock on the OTC Bulletin Board. The board of
directors proposes this action because the trading price of shares of E-Stamp
common stock has declined below $1.00 and the failure to increase the trading
price above $1.00 resulted in delisting of E-Stamp's common stock from The
Nasdaq National Market on August 2, 2001, which our board of directors believes
could harm E-Stamp's stockholders by reducing the marketability and the
liquidity of their shares. If a reverse stock split were to be implemented, the
number of shares of E-Stamp common stock owned by each stockholder would be
reduced in the same proportion as the reduction in the total number of shares
outstanding, so that the percentage of the outstanding shares owned by each
stockholder would remain unchanged.
By obtaining stockholder approval of a reverse stock split at the annual
meeting, our board of directors will be able to determine the most appropriate
time to effectuate the reverse stock split, by filing an amendment to the
Company's Certificate of Incorporation in the form attached as Annex A. Our
board of directors will decide whether to file the amendment based on factors
such as prevailing market conditions, prevailing trading prices of E-Stamp's
common stock on the OTC Bulletin Board and the steps E-Stamp will need to take
to achieve compliance with the trading price requirements and other listing
regulations of Nasdaq. Our board of directors also believes that, because it is
not possible to predict market conditions at the time the reverse stock split is
to be effectuated, it would be in the best interests of the stockholders if the
board of directors were to be able to determine, within specified limits
approved in advance by the stockholders, the appropriate reverse stock split
ratio.
Accordingly, the board of directors is asking that the stockholders approve
a range of reverse stock splits of not less than 1-for-5 and not more than
1-for-20; and further that the board of directors be authorized to determine
which of the reverse stock splits in the specified range, if any, to implement.
In determining which reverse stock split to implement, the board of directors
will assess a variety of factors, including but not limited to analysis of
general market conditions. However, primary emphasis will be placed on the
trading price of our common stock on the days leading up to the date of the
reverse stock split. Based on the price of our common stock, the board will
select the authorized stock split which it believes is most likely to increase
our trading price sufficiently above $1.00 in order to comply with the Nasdaq
National Market's listing requirements.
A vote in favor of Proposal No. 2 will be a vote for approval of each of
the reverse split ratios in the specified range and for the granting of
authority to the board of directors to effectuate one of the reverse stock
splits in the range as it deems advisable at the time the reverse stock split is
to be effectuated. The proposal gives the board of directors the discretion to
abandon the reverse stock split if the trading price of shares of E-Stamp common
stock increases above Nasdaq's minimum trading price requirements prior to its
implementation, or if market or other conditions make implementation of the
reverse stock split inadvisable. The vote required for approval of the reverse
stock split proposal is a majority of the outstanding shares of E-Stamp common
stock.
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REASONS FOR THE REVERSE STOCK SPLIT
The primary purpose of the reverse stock split is to combine the
outstanding shares of E-Stamp common stock into a smaller number of shares so
that the shares will trade at a significantly higher price per share than their
recent trading prices. During the period from September 27, 2000 to August 1,
2001, the closing bid price of shares of E-Stamp common stock on the Nasdaq
ranged from a high of $1.0312 to a low of $0.0625 per share. On August 2, 2001
our common stock was delisted from Nasdaq and began trading on the OTC Bulletin
Board. On [ , 2001], the reported closing bid price was $0.[ ]
per share. The board of directors believes that such a low quoted market price
per share is discouraging potential new investors and decreasing the liquidity
of E-Stamp common stock. Most importantly, pursuant to Nasdaq listing
requirements, the minimum bid price of shares of E-Stamp's common stock must be
at least $1.00 per share in order to regain inclusion on the Nasdaq.
We believe, although we cannot assure you, that the reverse stock split
will enable shares of E-Stamp common stock to trade above the $1.00 minimum bid
price which is one of the requirements to regain listing on the Nasdaq. We
believe that regaining the listing of E-Stamp's common stock on the Nasdaq is in
the best interests of E-Stamp and its stockholders. Inclusion on the Nasdaq
increases liquidity and may minimize the spread between the "bid" and "asked"
prices quoted by market makers. Further, regaining Nasdaq listing may enhance
E-Stamp's access to capital and increase its flexibility in responding to
anticipated capital requirements. We also believe that prospective investors
will view an investment in E-Stamp more favorably if our shares regain their
listing on the Nasdaq.
For the above reasons, we believe that having the ability to effectuate the
reverse stock split in an effort to regain compliance with the Nasdaq listing
requirements is in the best interests of E-Stamp and its stockholders. We
anticipate that, following the consummation of the reverse stock split,
E-Stamp's common stock will trade at a price per share that is proportionately
higher than current market prices. However, there can be no assurances that the
reverse stock split, if implemented, will have the desired effect of
proportionately raising E-Stamp's common stock price.
If the reverse stock split proposal is approved by the stockholders at the
annual meeting, we expect to implement it only if we believe we can comply with
the listing requirements of the Nasdaq. Accordingly, notwithstanding approval of
the reverse stock split proposal by the stockholders, the board of directors may
elect to delay or even abandon entirely the reverse stock split.
IMPLEMENTATION AND EFFECTS OF THE REVERSE STOCK SPLIT
If the stockholders approve the reverse stock split proposal and the board
of directors determines it is necessary to effectuate a reverse stock split, the
board of directors would:
1. Determine which, if any, of the reverse stock splits of not less
than 1-for-5 and not more than 1-for-20 is advisable, based on market and
other relevant conditions and the trading prices of E-Stamp common stock at
that time; and
2. Direct management to file an amendment of the Certificate of
Incorporation with the Delaware Secretary of State that would specify that,
on the filing of the amendment, every three to thirteen shares (depending
on the reverse stock split selected by the board of directors) of E-Stamp
common stock outstanding would automatically be combined and converted into
one share. For example, if the board of directors selected a 1-for-5
reverse stock split, the amendment would specify that every five shares of
E-Stamp common stock outstanding be combined and converted into a single
share.
We estimate that, following the reverse stock split, E-Stamp would have
approximately the same number of stockholders and, except for the effect of cash
payments for fractional shares as described below, the completion of the reverse
stock split would not affect any stockholder's proportionate equity interest in
E-Stamp. Therefore, by way of example, a stockholder who owns a number of shares
that, prior to the reverse stock split, represented one-half of a percent of the
outstanding shares of E-Stamp, would continue to own one-half of a percent of
its outstanding shares after the reverse stock split.
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The reverse stock split also will not affect the number of shares of common
stock that the board of directors is authorized to issue by the Certificate of
Incorporation of E-Stamp, which will remain unchanged at 200,000,000 shares.
However, it will have the effect of increasing the number of shares available
for future issuance, because of the reduction in the number of shares that will
be outstanding after giving effect to the reverse stock split.
Based on the 37,915,194 shares of common stock outstanding as of July 31,
2001, the following table reflects that approximate percentage reduction in the
outstanding shares of common stock and the approximate number of shares of
common stock that would be outstanding as a result of the reverse stock split:
<Table>
<Caption>
PROPOSED REVERSE STOCK SPLIT PERCENTAGE REDUCTION SHARES TO BE OUTSTANDING
- ---------------------------- -------------------- ------------------------
1 for 5 80% 7,583,038
1 for 6 83% 6,319,199
1 for 7 86% 5,416,456
1 for 8 87% 4,739,399
1 for 9 89% 4,212,799
1 for 10 90% 3,791,519
1 for 11 91% 3,446,835
1 for 12 91.6% 3,159,594
1 for 13 92.3% 2,916,553
1 for 14 92.9% 2,708,228
1 for 15 93.3% 2,527,679
1 for 16 93.8% 2,369,699
1 for 17 94.1% 2,230,305
1 for 18 94.4% 2,106,399
1 for 19 94.7% 1,995,536
1 for 20 95% 1,895,759
</Table>
CASH TO BE PAID FOR FRACTIONAL SHARES
Whichever reverse stock split ratio is selected, implementation of a
reverse stock split will result in some stockholders owning a fractional share
of common stock. For example, if a 1-for-8 reverse stock split were to be
implemented, the shares owned by a stockholder with 98 shares would be converted
into 12.25 shares. To avoid such a result, stockholders that would otherwise be
entitled to receive a fractional share of E-Stamp common stock as a consequence
of the reverse stock split will, instead, receive from E-Stamp a cash payment in
U.S. dollars equal to the value of that fractional share, determined on the
basis of the average bid prices of E-Stamp common stock on the OTC Bulletin
Board for the five trading days immediately preceding the effective date of the
reverse stock split (as adjusted for that reverse stock split). If any
stockholder owns, in total, fewer than the number of E-Stamp shares to be
converted into one share as a result of the reverse stock split, that
stockholder's shares would be converted into a fractional share of stock and,
therefore, that stockholder would receive only cash in place of the fractional
share as a result of the implementation of the reverse stock split. For example,
if a 1-for-6 reverse stock split is implemented then stockholders with fewer
than six shares would receive only cash. See "Exchange of Stock Certificates and
Payment for Fractional Shares" below. The interest of such stockholders in
E-Stamp would, therefore, be terminated, and such stockholders would have no
right to share in the assets or future growth of E-Stamp. Based on the foregoing
example, each stockholder that owns six shares or more of E-Stamp common stock
prior to the reverse stock split will continue to own one or more shares after
the reverse stock split and would continue to share in the assets and future
growth of E-Stamp as a stockholder, and any stockholder that owns less than six
shares would receive only cash in place of the factional share resulting from
the reverse stock split. Because the maximum reverse split under this proposal
would be a 1-for-20 reverse stock split, a stockholder could assure his or her
continued ownership of shares of stock of E-Stamp after the reverse split by
purchasing a number of shares sufficient to increase the total number of shares
that he or she owns to 20 or more. The reverse stock split will result in some
stockholders owning "odd lots" of less than 100 shares of E-Stamp common stock
as a
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result of the reverse stock split. Brokerage commissions and other costs of
transactions in odd lot shares may be higher, particularly on a per-share basis,
than the cost of transactions in even multiples of 100 shares.
EFFECT OF REVERSE STOCK SPLIT ON OPTIONS
The number of shares subject to outstanding E-Stamp common stock options
also will automatically be reduced in the same ratio as the reduction in the
outstanding shares. Correspondingly, the per share exercise price of those
options will be increased in direct proportion to the reverse stock split ratio,
so that the aggregate dollar amount payable for the purchase of the shares
subject to the options will remain unchanged. For example, assume that a 1-for-5
reverse stock split is implemented and that an optionee holds options to
purchase 1,000 shares at an exercise price of $1.00 per share. On the
effectiveness of the 1-for-5 reverse stock split, the number of shares subject
to that option would be reduced to 200 shares and the exercise price would be
proportionately increased to $5.00 per share.
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
The combination of, and reduction in, the number of E-Stamp's outstanding
shares as a result of the reverse stock split will occur automatically on the
date that the reverse stock split amendment is filed with the Delaware Secretary
of State (the "Effective Date"), without any action on the part of our
stockholders and without regard to the date that stock certificates representing
the shares prior to the reverse stock split are physically surrendered for new
stock certificates.
Exchange of Stock Certificates. As soon as practicable after the Effective
Date, transmittal forms will be mailed to each holder of record of certificates
for shares of E-Stamp common stock to be used in forwarding such certificates
for surrender and exchange for certificates representing the number of shares of
E-Stamp's common stock such stockholder is entitled to receive as a result of
the reverse stock split. The transmittal forms will be accompanied by
instructions specifying other details of the exchange. Upon receipt of such
transmittal form, each stockholder should surrender the certificates
representing shares of E-Stamp common stock prior to the reverse stock split in
accordance with the applicable instructions. Each holder who surrenders
certificates will receive new certificates representing the whole number of
shares of E-Stamp common stock that he or she holds as a result of the reverse
stock split and any cash payable in lieu of a fractional share. STOCKHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
Effect of Failure to Exchange Stock Certificates. After the Effective Date,
each certificate representing shares of E-Stamp's common stock outstanding prior
to the Effective Date (an "old certificate") will, until surrendered and
exchanged as described above, be deemed, for all corporate purposes, to evidence
ownership of the whole number of shares of E-Stamp's common stock, and the right
to receive from the Company the amount of cash for any fractional shares, into
which the shares of E-Stamp's common stock evidenced by such certificate have
been converted by the Reverse Stock Split. However, the holder of such
unexchanged certificates will not be entitled to receive any dividends or other
distributions payable by the Company after the Effective Date, until the old
certificates have been surrendered. Such dividends and distributions, if any,
will be accumulated, and at the time of surrender of the old certificates, all
such unpaid dividends or distributions will be paid without interest.
Determination of Amount of Cash Payable for Fractional Shares. If the
number of shares of E-Stamp's common stock to which a holder is entitled as a
result of the Reverse Stock Split would otherwise include a fraction, the
Company will pay to that stockholder, in lieu of issuing fractional shares of
stock, cash in an amount equal to the same fraction multiplied by the average
closing price of E-Stamp's shares on the Nasdaq for the five days immediately
preceding the Effective Date (as adjusted for the Reverse Stock Split). For
example, if the board of directors determined to implement a 1-for-8 Reverse
Stock Split, the shares of a stockholder that owned 98 shares prior to the
Reverse Stock Split would be converted into 12.25 shares as a result of the
Reverse Stock Split. If the average of the pre-split closing bid prices of
shares of E-Stamp's common stock for that five day period was $1.00 per share,
that stockholder would receive, in exchange for his
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stock certificates evidencing his 98 shares, a stock certificate for 12 whole
shares and a check in the amount of $1.00 for his .25 fractional share.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes certain federal income tax
considerations relating to the Reverse Stock Split. This discussion is based
upon the Internal Revenue Code of 1986 (the "Code"), existing and proposed
regulations thereunder, legislative history, judicial decisions, and current
administrative rulings and practices, all as amended and in effect on the date
of this Proxy Statement. Any of these authorities could be repealed, overruled,
or modified at any time and could be retroactive and, accordingly, could cause
the tax consequences to vary substantially from the consequences described
herein. No ruling from the Internal Revenue Service (the "IRS") with respect to
the matters discussed herein has been requested, and there is no assurance that
the IRS would agree with the conclusions set forth in this discussion. All
stockholders should consult with their own tax advisors.
This discussion may not address certain federal income tax consequences
that may be relevant to particular stockholders in light of their personal
circumstances (such as persons subject to the alternative minimum tax) or to
certain types of stockholders (such as dealers in securities, insurance
companies, foreign individuals and entities, financial institutions, and
tax-exempt entities) who may be subject to special treatment under the federal
income tax laws. This discussion also does not address any tax consequences
under state, local, or foreign laws.
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE APPLICABILITY
OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS, CHANGES IN APPLICABLE TAX LAWS, AND
ANY PENDING OR PROPOSED LEGISLATION.
Tax Consequences to E-Stamp Corporation. E-Stamp should not recognize any
gain or loss as a result of the reverse stock split.
Tax Consequence to Stockholders Generally. No gain or loss should be
recognized by a stockholder who receives only E-Stamp common stock as a result
of the reverse stock split. A stockholder who receives cash in lieu of a
fractional share of E-Stamp common stock that otherwise would be held as a
capital asset generally should recognize capital gain or loss on an amount equal
to the difference between the cash received and the stockholder's basis in such
fractional share of E-Stamp common stock. For this purpose, a stockholder's
basis in such fractional share of E-Stamp common stock will be determined as if
the stockholder actually received such fractional share.
A Stockholder's Tax Basis in Shares Received upon the Reverse Stock
Split. Except as provided above with respect to fractional shares, the aggregate
tax basis of the shares of E-Stamp common stock held by a stockholder following
the reverse stock split will equal the stockholder's aggregate basis in the
shares of E-Stamp common stock held immediately prior to the reverse stock split
and generally will be allocated among the shares of E-Stamp common stock held
following the reverse stock split on a pro rata basis. Stockholders who have
used the specific identification method to identify their basis in shares of
E-Stamp common stock combined in the reverse stock split should consult their
own tax advisors to determine their basis in the post-reverse stock split shares
that they will receive in exchange therefor.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding shares
of E-Stamp common stock is required to approve the reverse stock split proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE REVERSE STOCK SPLIT PROPOSAL
IS ADVISABLE AND IN THE BEST INTERESTS OF THE STOCKHOLDERS AND RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL AND THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS
(TO BE EFFECTIVE IN THE EVENT THAT E-STAMP'S PROPOSED MERGER WITH LEARN2.COM,
INC. IS NOT COMPLETED)
Our board of directors has appointed Ernst & Young LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending December 31, 2001 in the event that E-Stamp's proposed merger
with Learn2.com, Inc. is not completed and seeks ratification of such
appointment. In the event of a negative vote on such ratification, the board of
directors will reconsider its appointment. Representatives of Ernst & Young LLP
are expected to be present at the annual meeting, will have the opportunity to
make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of
E-Stamp's common stock present or represented at the annual meeting is required
to ratify the appointment of Ernst & Young LLP as E-Stamp's independent auditors
for the fiscal year ending December 31, 2001 in the event that E-Stamp's
proposed merger with Learn2.com, Inc. is not completed.
RECOMMENDATION OF THE BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF ERNST &
YOUNG LLP AS E-STAMP'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 2001, WITH THIS APPOINTMENT TO BE EFFECTIVE IN THE EVENT THAT E-STAMP'S
PROPOSED MERGER WITH LEARN2.COM, INC. IS NOT COMPLETED.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
(TO BE EFFECTIVE IN THE EVENT THAT E-STAMP'S PROPOSED MERGER WITH LEARN2.COM,
INC. IS COMPLETED)
Our board of directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the consolidated financial statements of E-Stamp
for the fiscal year ending December 31, 2001 in the event that E-Stamp's
proposed merger with Learn2.com, Inc. is not completed and seeks ratification of
such appointment. In the event of a negative vote on such ratification, the
board of directors will reconsider its appointment. Representatives of Arthur
Andersen LLP are expected to be present at the annual meeting, will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of
E-Stamp's common stock present or represented at the annual meeting is required
to ratify the appointment of Arthur Andersen LLP as E-Stamp's independent public
accountant for the fiscal year ending December 31, 2001 in the event that
E-Stamp's proposed merger with Learn2.com, Inc. is completed.
RECOMMENDATION OF THE BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS E-STAMP'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2001, WITH THIS APPOINTMENT TO BE EFFECTIVE IN THE EVENT THAT
E-STAMP'S PROPOSED MERGER WITH LEARN2.COM, INC. IS COMPLETED.
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OTHER INFORMATION
SECURITY OWNERSHIP
The following table sets forth information regarding beneficial ownership
of our common stock as of the record date for the annual meeting by (1) our
Chief Executive Officer, (2) each of our four other most highly compensated
executive officers during the year ended December 31, 2000, (3) any individual
that would have qualified for category (2) had they be employed by us as an
executive officer at year's end, and (4) all those known by us to be beneficial
owners of more than five percent of outstanding shares of our common stock. This
table is based on information provided to E-Stamp or filed with the Securities
and Exchange Commission by our directors, executive officers and principal
stockholders.
Unless otherwise indicated in the footnotes below, and subject to community
property laws where applicable, each of the named persons have sole voting and
investment power with respect to the shares shown as beneficially owned. Unless
otherwise indicated, the address for each stockholder listed in the following
table is c/o E-Stamp Corporation, 2051 Stierlin Court, Mountain View, California
94043. Applicable percentage ownership in the following table is based on
37,915,194 shares of common stock outstanding as of the record date for the
annual meeting.
<Table>
<Caption>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING
---------------- ------------------ --------------------
Microsoft Corporation(1).................................. 2,026,225 5.3%
DIRECTORS AND EXECUTIVE OFFICERS:
Robert H. Ewald(2)...................................... 1,150,597 3.0%
Thomas J. Reinemer(3)................................... 36,500 *
Nicole Eagan(4)......................................... 102,941 *
Roderick M. Witmond(5).................................. 68,126 *
Edward F. Malysz(6)..................................... 125,442 *
Laurie L. Lindsey(7).................................... 85,000 *
Marcelo A. Gumucio(8)................................... 470,222 1.2%
John V. Balen(9)........................................ 1,497,877 4.0%
Thomas L. Rosch......................................... 2,780 *
Peter G. Boit........................................... 500 *
Adam Wagner(10)......................................... 741,192 2.0%
Rebecca Saeger(11)...................................... 25,000 *
Robert J. Cresci(12).................................... 727,448 1.9%
All current directors and executive officers as a group
nine (9) persons(13)................................. 4,741,058 12.3%
</Table>
- ---------------
* Less than 1% of the outstanding shares of common stock.
(1)The address for Microsoft Corporation is One Microsoft Way, Redmond,
Washington 98502.
(2)Includes 370,312 options exercisable within 60 days of July 31, 2001.
(3)Mr. Reinemer's employment as an officer terminated in September 2000.
(4)Ms. Egan's employment as an officer terminated in May 2000.
(5)Includes 21,251 options exercisable within 60 days of July 31, 2001. Mr.
Witmond's employment as an officer terminated in May 2001.
(6)Includes 63,907 options exercisable within 60 days of July 31, 2001.
(7)Includes 85,000 options exercisable within 60 days of July 31, 2001. Ms.
Lindsey's employment as an officer terminated in May 2001.
(8)Includes 31,250 shares exercisable within 60 days of July 31, 2001 and
139,907 shares that are unvested and subject to a right of repurchase in
favor of the Company, which right lapses over time.
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(9)These shares are beneficially owned by Canaan Equity, L.P. Mr. Balen is a
principal of Canaan Partners. Mr. Balen disclaims beneficial ownership of
these shares.
(10)Includes 250,000 shares of common stock held by Wagner & Brown, Ltd., Mr.
Wagner's former employer. Mr. Wagner has disclaimed beneficial ownership of
these shares. Also includes 62,500 shares of common stock held by Wagner
Family Partnership VI, of which Mr. Wagner is a partner. Mr. Wagner has a
12.5% beneficial ownership of these shares. Includes 200,000 shares of
common stock held in escrow and for which Mr. Wagner is an escrow agent.
Wagner & Brown, Ltd. claims beneficial ownership of 38,280 shares and Wagner
Family Partnership VI claims beneficial ownership of 9,560 shares. Includes
163,594 shares held by Wagner & Brown, Ltd., and 56,328 shares held by
Wagner Family Partnership VI, in each case transferred by Unified Holdings,
LLC. Mr. Wagner is a managing member of Unified Holdings, LLC. Includes
3,385 shares of common stock held by Wagner & Brown, Ltd. and 3,385 shares
of common stock held by Wagner Family Partnership VI. Includes 2,000 shares
held by Mr. Wagner's wife.
(11)Includes 25,000 shares issuable upon exercise of options held by Ms. Saeger
within 60 days of July 31, 2001.
(12)Includes 96,968 shares of common stock held by the Declaration of Trust for
Defined Benefit Plans of Zeneca Holdings Inc., 145,490 shares of common
stock held by the Declaration of Trust for Defined Benefit Plans of ICI
American Holdings Inc. and 484,990 shares held by the Delaware State
Employees' Retirement Fund. Such funds are managed by Pecks Management
Partners Ltd., of which Mr. Cresci is a Managing Director. Mr. Cresci
disclaims beneficial ownership of these shares.
(13)Includes 1,069,118 shares issued under the 1999 Stock Plan and 1996 Stock
Option and Restricted Stock Plan which were vested and 139,907 shares which
were unvested at July 25, 2001 and subject to a right of repurchase in favor
of E-Stamp, which right lapses over time. Includes 490,469 shares issuable
upon exercise of options within 60 days of July 31, 2001.
RELATED PARTY TRANSACTIONS
Since the beginning of our last fiscal year, there has not been, nor is
there currently proposed, any transaction or series of similar transactions to
which we were or are to be a party in which the amount involved exceeds $60,000
and in which any director, executive officer or holder of more than 5% of our
common stock had or will have a direct or indirect interest other than
compensation arrangements, which are described in the section entitled
"Executive Compensation" in this Proxy Statement, and the transactions described
below.
In connection with the early exercise of stock options held by officers
Robert Ewald, Edward Malysz, and Roderick Witmond, E-Stamp extended secured
loans in the form of promissory notes to each officer in 1999. The loans are
secured pursuant to restricted stock purchase agreements and related letter
agreements between E-Stamp and each officer. In October 2000, E-Stamp
repurchased certain of the shares held by Messrs. Ewald, Malysz and Witmond, and
reduced the principal amount remaining under the promissory notes. The principal
amounts currently outstanding under the notes are $469,688, $70,313, and
$56,250, respectively. On May 4, 2001, E-Stamp forgave Mr. Witmond's obligation
to repay all outstanding principal and accrued interest under the loan in
connection with the severance or Mr. Witmond's employment with E-Stamp.
In connection with stock grants awarded to Robert Ewald and Marcelo Gumucio
in 1999, E-Stamp provided forgivable loans to Mr. Ewald and Mr. Gumucio in the
amounts of $410,000 and a $150,000, respectively, for the purpose of the loans
was to pay the taxes incurred by both parties upon receipt of a the shares of
E-Stamp common stock. The loans are forgivable over 8 quarterly periods
commencing on August 18, 1999 so long as Mr. Ewald and Mr. Gumucio remain in the
service of E-Stamp, and are secured by stock pledge agreements. During the
fiscal year ended December 31, 2000, E-Stamp forgave approximately $256,225
under the loan to Mr. Ewald and $75,440 under the loan to Mr. Gumucio.
On May 23, 2000, E-Stamp entered into a merger agreement, an escrow
agreement, and related agreements with Paul Goldman in connection with E-Stamp's
acquisition of Infinity Logistics Corporation
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and Automated Logistics Corporation. Commencing in May 2000, the Company paid
two automotive leasing companies an aggregate of $7,152.32 for two automobiles
operated by Paul Goldman, its Vice President, Sales.
On June 7, 2000, E-Stamp provided a relocation loan to Roderick Witmond in
the original principal sum of $400,000. The loan is due and payable on the
earlier of 90 days following the termination of his employment with E-Stamp or
the fifth anniversary of the loan. The loan will be partially forgiven in the
amount of $100,000 if Mr. Witmond remains employed by E-Stamp for the term of
the loan and in the amount of $200,000 if Mr. Witmond's employment with the
Company is terminated as a result of a reduction in force or business
combination. The loan is secured by a deed of trust encumbering his residence.
On May 24, 2001, E-Stamp forgave Mr. Witmond's obligation to repay $200,000 of
principal under the loan in connection with the severance or Mr. Witmond's
employment with E-Stamp.
On November 17, 2000, E-Stamp has entered into change of control severance
agreements with each of its officers, which agreements provide for the payment
of one year of base salary, continued health coverage for a one year period, the
forgiveness of certain loans related to the early exercise of stock options and
outplacement services.
During 2000, we paid Microsoft Corporation the aggregate sum of $2,762.557
pursuant to the terms of a marketing arrangement. Microsoft owned approximately
5.3% of E-Stamp's issued and outstanding common stock as of December 31, 2000.
On May 4, 2001, E-Stamp entered into a severance agreement with Roderick
Witmond pursuant to which E-Stamp agreed to provide Mr. Witmond with severance
equal to his annual base salary; forgive Mr. Witmond's obligation to repay
outstanding principal and accrued interest under his promissory note dated
August 1, 1999; forgive Mr. Witmond's obligation to repay $200,000 of principal
under his relocation loan dated June 7, 2000; and reimburse Mr. Witmond for the
cost of health coverage for a period of eleven months.
On May 4, 2001, E-Stamp entered into a severance agreement with Paul
Goldman pursuant to which E-Stamp agreed to provide Mr. Goldman with severance
equal to his annual base salary and reimburse Mr. Goldman for the cost of health
coverage for a period of eleven months.
Prior to the completion of the merger, E-Stamp intends to enter into a
retention agreement with Mr. Ewald, which with Learn2 retention agreement will
provide for the payment of one year base salary, continued health coverage for a
one year period, and the forgiveness of loans related to the early exercise of
stock options in the event that Mr. Ewald's employment is terminated without
cause or as result of a constructive termination within the two year period
following the merger.
OTHER TRANSACTIONS
We have entered into indemnification agreements with each of our executive
officers and directors.
We have granted options to our executive officers and some of our
directors.
We believe that all related party transactions described above were on
terms no less favorable than could have been obtained from unrelated third
parties.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the compensation earned for services rendered to
us in all capacities for the fiscal years ended December 31, 2000, December 31,
1999 and December 31, 1998 by our chief executive officer, our next three most
highly compensated executive officers and our two most highly compensated former
executive officers who earned more than $100,000 during the fiscal year ended
December 31, 2000. These executives are referred to as the Named Executive
Officers elsewhere in this Proxy Statement.
<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL COMPENSATION UNDERLYING
----------------------------- OPTIONS ALL OTHER
YEAR SALARY($) BONUS($) (# OF SHARES) COMPENSATION
---- --------- -------- ------------- ------------
Robert H. Ewald.................... 2000 $296,657 $100,000 928,906 $273,398(5)
President and Chief Executive 1999 227,169 125,000(4) 1,626,250 862,084(6)
Officer 1998 -- -- -- --
Edward F. Malysz................... 2000 150,024 50,000 60,000 60,635(7)
Vice President, General 1999 73,235 70,500(4) 187,500 2,125(8)
Counsel, Secretary and Acting 1998 -- -- -- --
Chief Financial Officer
Roderick M. Witmond................ 2000 166,500 54,000 85,000 66,955(9)
Vice President, Business 1999 62,826 40,000(4) 187,500 1,425(8)
Development(1) 1998 -- -- -- --
Laurie L. Lindsey.................. 2000 139,346 18,000 340,00 2,841(8)
Vice President, Product 1999 -- -- -- --
Development 1998 -- -- -- --
Nicole Eagan....................... 2000 115,001 46,668 -- 2,841(8)
Vice President, Marketing and 1999 172,819 182,268(4) 62,500 --
Sales(2) 1998 128,750 28,000 35,000 --
Thomas J. Reinemer................. 2000 138,599 82,693 -- 50,404(10)
Vice President, International(3) 1999 160,342 139,072(4) -- 2,860(8)
1998 128,750 28,000 35,000 --
</Table>
- ---------------
(1) Mr. Witmond served as Vice President, Operations from August to September
1999, Vice President, Strategic Development from October 1999 to June 2000,
and Vice President, Shipping, Mailing and Supplies from July 2000 until May
2001.
(2) Ms. Eagan served as Vice President, Marketing and Sales from July 1999
until May 2000 and as Vice President, Marketing and Business Development
from May 1996 until July 1999.
(3) Mr. Reinemer served as Vice President, International from March 1999 to
September 2000 and as Vice President, Operations from August 1996 until
March 1999.
(4) Performance bonuses applicable to 1999 but paid in 2000 are shown as
bonuses in 1999.
(5) Includes $270,523 for forgiveness of a portion of a loan and E-Stamp's
contributions to its 401(k) plan in 2000 on behalf of Mr. Ewald.
(6) Includes $860,000 for a stock bonus award and E-Stamp's contributions to
its 401(k) plan in 1999 on behalf of Mr. Ewald.
(7) Includes $58,008 for stock repurchased at a price exceeding the fair value
of the stock at the date of repurchase and E-Stamp's contributions to its
401(k) plan in 2000 on behalf of Mr. Malysz.
(8) Represents E-Stamp's contributions to its 401(k) plan on behalf of the
Named Executive Officers.
(9) Includes $63,408 for stock repurchased at a price exceeding the fair value
of the stock at the date of repurchase and E-Stamp's contributions to its
401(k) plan in 2000 on behalf of Mr. Witmond.
(10) Includes severance pay of $46,816 and E-Stamp's contributions to its 401(k)
plan in 2000 on behalf of Mr. Reinemer.
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OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information with respect to stock options
granted to each of the Named Executive Officers in the fiscal year ended
December 31, 2000, including the potential realizable value over the ten-year
term of the options, based on assumed rates of stock appreciation of 5% and 10%,
compounded annually, and based upon the fair market value at the date of grant
as determined by the board of directors which was equal to the exercise price.
These assumed rates of appreciation comply with the rules of the Securities and
Exchange Commission and do not represent our estimate of future stock price.
Actual gains, if any, on stock option exercises will be dependent on the future
performance of our common stock.
In the fiscal year ended December 31, 2000, we granted options to purchase
up to an aggregate of 4,061,299 shares to employees, directors and consultants.
All options were granted under our 1996 Stock Option and Restricted Stock Plan
or our 1999 Stock Plan at exercise prices at or above the fair market value of
our common stock on the date of grant. All options have a term of ten years.
Optionees may pay the exercise price by cash, certified check, or delivery of
already-owned shares of our common stock. The option shares vest pursuant to
various schedules.
<Table>
<Caption>
INDIVIDUAL GRANTS
------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN LAST PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ----------- --------- ---------- --------- -----------
Robert H. Ewald.................... 14,500 0.36 12.31 2/18/10 112,277 284,533
35,500 0.87 12.31 2/18/10 274,886 696,615
878,906 21.64 0.75 2/18/09 330,212 798,047
Edward F. Malysz................... 9,000 0.22 12.31 2/18/10 69,689 176,607
1,000 0.02 12.31 2/18/10 7,743 19,623
16,571 0.41 1.47 9/18/10 15,307 38,791
33,429 0.82 1.47 9/18/10 30,879 78,254
Roderick M. Witmond................ 9,000 0.22 12.31 2/18/10 69,689 176,607
1,000 0.02 12.31 2/18/10 7,743 19,623
19,697 0.49 1.47 9/18/10 18,195 46,108
55,303 1.36 1.47 9/18/10 51,085 129,458
Laurie L. Lindsey.................. 30,000 0.74 10.19 3/13/10 192,206 487,088
120,000 2.95 10.19 3/13/10 768,824 1,948,350
16,929 0.42 3.38 5/22/10 35,932 91,059
73,071 1.80 3.38 5/22/10 155,095 393,040
12,502 0.31 1.47 9/18/10 11,548 29,266
87,498 2.15 1.47 9/18/10 80,824 204,823
Nicole Eagan....................... 14,000 0.34 12.31 2/18/10 108,406 274,721
16,000 0.39 12.31 2/18/10 123,892 373,967
Thomas J. Reinemer................. 17,500 0.43 12.31 2/18/01 135,507 343,402
2,500 0.06 12.31 2/18/01 19,358 49,057
</Table>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table describes for the Named Executive Officers their option
exercises for the fiscal year ended December 31, 2000, and exercisable and
unexercisable options held by them as of December 31, 2000.
The "Value of Unexercised In-the-Money Options at December 31, 2000" is
based on a value of $0.1875 per share, the fair market value of our common stock
as of December 31, 2000, which was the closing price of our common stock on
December 29, 2000, as reported on the Nasdaq stock market, less the per share
exercise price, multiplied by the number of shares issued upon exercise of the
option. All options were granted under
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our 1996 Stock Option and Restricted Stock Plan and our 1999 Stock Plan. The
option shares vest pursuant to various schedules.
<Table>
<Caption>
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2000(#) DECEMBER 31, 2000($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Robert H. Ewald........ -- $ -- 87,891 841,015 $ -- $ --
Edward F. Malysz....... -- -- 6,250 53,750 -- --
Roderick M. Witmond.... -- -- 9,375 75,625 -- --
Laurie L. Lindsey...... -- -- 23,750 316,250 --
Nicole Eagan........... -- -- -- -- -- --
Thomas J. Reinemer..... 10,938 88,024 -- -- -- --
</Table>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the compensation committee serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of our board of directors or compensation
committee.
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22
PERFORMANCE GRAPH AND REPORTS OF THE COMPENSATION COMMITTEE AND
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set for in any of our filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this proxy
statement, in whole or in part, the following performance graph and reports of
the compensation committee and audit committee shall not be deemed to be
incorporated by reference into such filings, except to the extent that we
specifically incorporate it by reference into any such filing, nor shall such
information be deemed to be "soliciting material" or to be "filed" with the SEC.
PERFORMANCE GRAPH
The following line graph compares the cumulative total return to holders of
E-Stamp's common stock from October 8, 1999, the date of our initial public
offering, to December 31, 2000 to the cumulative total return over such period
of (i) Nasdaq Composite Index and (ii) a peer group consisting of Stamps.com, an
Internet postage provider that has a product line that competed directly with
our products prior to our exit from the Internet postage business. The graph
assumes that $100 was invested on October 8, 1999 in our common stock at its
initial public offering price of $17.00 per share and in each of the other two
indices and the reinvestment of all dividends, if any.
The graph is presented in accordance with SEC requirements. Stockholders
are cautioned against drawing any conclusions from the data contained therein,
as past results are not necessarily indicative of future performance.
[E-Stamp Performance Graph]
<Table>
<Caption>
---------------------------------------------------------------------
10/8/99 10/29/99 11/30/99 12/31/99 12/31/00
---------------------------------------------------------------------
E-Stamp Corporation $100 $137 $213 $131 $ 1.11
Peer Group 100 171 234 124 $ 8.29
Nasdaq Composite Index 100 103 116 141 $92.59
---------------------------------------------------------------------
</Table>
20
23
REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The compensation committee is comprised of Thomas L. Rosch and Rebecca
Saeger, each of whom is a non-employee director. The compensation committee
reviews and approves E-Stamp's executive compensation programs. The role of the
compensation committee is to approve salaries and other compensation paid to our
executive officers and to administer our stock plans. The compensation committee
approves all stock option grants to executive officers, all executive officer
base salaries and any cash bonus payments to executive officers and approves all
stock option grants to employees.
E-Stamp's executive pay programs are currently designed to retain
executives who will contribute to E-Stamp's current objectives and to provide a
compensation program that recognizes individual contributions and accomplishment
of company objectives.
The compensation committee has determined that the most effective means of
compensation are base salaries and retention bonuses to retain executives to
complete the company's objectives and long-term incentives through the use of
E-Stamp's stock option plan.
BASE SALARY
The compensation committee meets annually to review and approve each
executive officer's salary for the ensuing year. When reviewing base salaries,
we consider the following factors: competitive pay practices, individual
performance against goals, levels of responsibility, breadth of knowledge and
prior experience. The relative importance of these factors varies, depending on
the particular individual whose salary is being reviewed. To provide us with
more information for making compensation comparisons, E-Stamp provides us with
surveys of compensation for a group of comparable companies with revenues
similar to E-Stamp's revenue. Our objective in setting base salaries is
generally to pay salaries at a level roughly comparable to the median for public
companies with which E-Stamp competes for personnel and to bias cash
compensation towards bonus compensation rather than salaries. For the year ended
December 31, 2000, we increased the salary levels of the executive officers to a
level closer to this median level and approved base salaries between $125,000
and $200,000 for executives other than our Chief Executive Officer.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Ewald's 2000 base salary was established at $290,000. This salary was
the result of our review of Mr. Ewald's prior experience and breadth of
knowledge together with competitive pay practices. Based on E-Stamp's financial
performance during 2000, we did not award Mr. Ewald a performance bonus for 2000
or salary increase for 2001. In considering the competitive nature of the
employment market, compensation committee approved a retention bonus for Mr.
Ewald equal to $50,000 for the fourth quarter of 2000 and for each subsequent
quarter through the third quarter of 2001 that Mr. Ewald remains employed with
E-Stamp and fulfills his responsibilities as President and Chief Executive
Officer.
BONUS
The compensation committee meets annually to review and approve executive
and employee bonuses for the prior year. The bonus award depends on the extent
to which individual performance objectives are achieved. Based on E-Stamp's
financial performance during 2000, we did not award any performance bonuses for
2000 or salary increases for 2001. The compensation committee approved retention
bonuses for executive officers (other than the Chief Executive Officer) equal to
$15,000 for the fourth quarter of 2000 and for each subsequent quarter through
the third quarter of 2001 that the executive officer remains employed with
E-Stamp and fulfills his or her responsibilities to the company.
STOCK OPTIONS
E-Stamp's stock option plan is designed to provide its executives and
employees with an opportunity to share, along with its stockholders, in
E-Stamp's long-term performance. Initial grants of stock options are
21
24
generally made to eligible executives and employees upon commencement of
employment, with additional grants being made periodically based on performance
or following a significant change in job responsibilities. Stock options under
the stock option plans generally vest over a four-year period and expire ten
years from the date of grant. The exercise price of our stock options is usually
100% of the fair market value of the common stock on the date of grant. The
board of directors has delegated the authority to the compensation committee to
grant stock options to all employees and executive officers. Guidelines for the
number of stock options for each participant under the option plans are
generally determined by the compensation committee. Initial stock option grants
to executive officers are negotiated as part of their offer letters, and
subsequent grants are determined based upon levels of responsibility, individual
performance and competitive compensation practices. We believe the existing
grants and vesting schedules currently align the executive officers' objectives
with those of E-Stamp's stockholders.
OTHER
Other elements of executive compensation include company-wide medical and
life insurance benefits and the ability to defer compensation pursuant to a
401(k) plan. During fiscal 2000, the Company matched 50% of the first 4% of
employee pay contributed under the 401(k) plan.
E-Stamp has considered the potential impact of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder.
Section 162(m) disallows a tax deduction for any publicly-held corporation for
individual compensation exceeding $1 million in any taxable year for any of the
Named Executive Officers, unless such compensation is performance-based. Since
the cash compensation of each of the Named Executive Officers is below the $1
million threshold and the compensation committee believes that any options
granted under the Stock Plan will meet the requirements of being
performance-based, the compensation committee believes that Section 162(m) will
not reduce the tax deduction available to E-Stamp. E-Stamp's policy is to
qualify, to the extent reasonable, its executive officers' compensation for
deductibility under applicable tax laws. However, the compensation committee
believes that its primary responsibility is to provide a compensation program
that will attract, retain and reward the executive talent necessary to E-Stamp's
success. Consequently, the compensation committee recognizes that the loss of a
tax deduction could be necessary in some circumstances.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Thomas L. Rosch
Rebecca Saeger
REPORT OF THE AUDIT COMMITTEE
The audit committee is comprised of John Balen, Adam Wagner and Robert
Cresci. Each of the members of the audit committee is "independent" as defined
under the National Association of Securities Dealers, Inc.'s listing standards
and is financially literate as that qualification is interpreted by our board of
directors. In addition, at least one member of the audit committee has
accounting or related financial management experience, as our board of directors
interprets that qualification. Our board of directors has adopted a written
charter with respect to the audit committee's roles and responsibilities. A copy
of the charter is attached as Annex B to this proxy statement.
The audit committee's primary duties and responsibilities are to (1)
monitor the integrity of E-Stamp's financial reporting process and systems of
internal controls regarding finance, accounting and legal compliance, (2)
monitor the independence and performance of E-Stamp's independent auditors and
(3) provide an avenue of communication among the independent auditors,
management and the board of directors.
22
25
In fulfilling its oversight responsibilities, the audit committee reviewed
and discussed E-Stamp's audited financial statements with our management and
Ernst & Young LLP, our independent auditors. The audit committee also discussed
with Ernst & Young the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees) as amended by Statement
on Auditing Standards No. 90 (Audit Committee Communications). This included a
discussion of the independent auditor's judgments as to the quality, not just
the acceptability, of E-Stamp's accounting principles, and such other matters
that generally accepted auditing standards require to be discussed with the
audit committee. The audit committee also received the written disclosures and
the letter from Ernst & Young required by Independence Standards Board Standard
No. 1 (Independence Discussion with Audit Committee) and the audit committee
discussed the independence of Ernst & Young with that firm.
Based on the audit committee's review and discussions noted above, the
audit committee recommended to the board of directors, and the board of
directors approved, the audited financial statements to be included in E-Stamp's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000 for
filing with the SEC.
Respectfully submitted,
THE AUDIT COMMITTEE
John V. Balen
Adam Wagner
Robert Cresci
FEES BILLED FOR SERVICES RENDERED BY PRINCIPAL ACCOUNTANT
For the year ended December 31, 2001, Ernst & Young LLP, our independent
auditors and principal accountant, billed the approximate fees set forth below:
<Table>
Audit fees for fiscal year 2000........................... $220,000
Financial Information Systems Design and Implementation
Fees.................................................... $ 0
All other fees for services rendered during 2000.......... $262,000
</Table>
OTHER MATTERS
Our board of directors does not presently intend to bring any other
business before the annual meeting. If any other matters properly come before
the annual meeting, it is the intention of the persons named in the enclosed
proxy card to vote the shares they represent as the board of directors may
recommend.
FOR THE BOARD OF DIRECTORS
Robert H. Ewald
President, Chief Executive Officer and
Director
Mountain View, California
, 2001
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26
ANNEX A
CERTIFICATE OF AMENDMENT
OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
E-STAMP CORPORATION
A DELAWARE CORPORATION
E-Stamp Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:
FIRST: The name of the Corporation is E-Stamp Corporation, and the original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on August 23, 1996.
SECOND: Pursuant to Section 242(b) of the Delaware General Corporation Law
(the "DGCL") the Board of Directors of the Corporation has duly adopted, and a
majority of the outstanding stock entitled to vote thereon and a majority of the
outstanding stock of each class entitled to vote as a class has approved, the
amendments to the Amended and Restated Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment.
THIRD: That Article FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation is amended to insert the following paragraph as
the fourth paragraph of Article FOURTH:
"Effective at 4:30 p.m. Eastern Standard Time on the date of filing of
this Certificate of Amendment with the Delaware Secretary of State, every
outstanding shares of Common Stock shall without further
action by this corporation or the holder thereof be combined into and
automatically become one share of Common Stock. The authorized shares of
the Corporation shall remain as set forth in this Certificate of
Incorporation. No fractional share shall be issued in connection with the
foregoing stock split; all shares of Common Stock so split that are held by
a stockholder will be aggregated and each fractional share resulting from
such aggregation shall be rounded down to the nearest whole share. In lieu
of any interest in a fractional share of Common Stock to which a
stockholder would otherwise be entitled as a result of the foregoing split,
the Corporation shall pay a cash amount to such stockholder equal to the
fair value as determined by the board of directors of such fractional share
as of the effective date of the foregoing split."
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of the Amended and Restated Certificate of Incorporation on this day
of , 2001.
E-STAMP CORPORATION
By:
--------------------------------------
Robert H. Ewald
President and Chief Executive Officer
A-1
27
ANNEX B
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF E-STAMP CORPORATION
PURPOSE:
The Audit Committee will make such examinations as are necessary to monitor
the corporate financial reporting and the internal and external audits of Public
Company Corporation and its subsidiaries (the "Company"), to provide to the
board of directors the results of its examinations and recommendations derived
therefrom, to outline to the board of directors improvements made, or to be
made, in internal accounting controls, to nominate independent auditors, and to
provide to the board of directors such additional information and materials as
it may deem necessary to make the board of directors aware of significant
financial matters that require board of directors attention.
In addition, the Audit Committee will undertake those specific duties and
responsibilities listed below and such other duties as the board of directors
from time to time prescribe.
MEMBERSHIP:
The Audit Committee will consist of at least three (3) members of the board
of directors, all of whom shall be independent directors in accordance with the
marketplace rules of Nasdaq Stock Market, Inc. Each member of the Audit
Committee shall be able to read and understand fundamental financial statements,
including the Company's balance sheet, income statement and cash flow statement
or will become able to do so within a reasonable period of time his or her
appointment to the Audit Committee. Additionally, at least one member of the
Audit Committee shall have past employment experience in finance or accounting,
requisite professional certification in accounting or any other comparable
experience or background which results in the individual's financial
sophistication. The members of the Audit Committee will be appointed by and will
serve at the discretion of the board of directors.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
(i) Reviewing on a continuing basis the adequacy of the Company's
system of internal controls.
(ii) Reviewing on a continuing basis the activities, organizational
structure and qualifications of the Company's internal audit function.
(iii) Reviewing the independent auditors' proposed audit scope and
approach.
(iv) Conducting a post-audit review of the financial statements and
audit findings, including any significant suggestions for improvements
provided to management by the independent auditors.
(v) Reviewing the performance of the independent auditors.
(vi) Recommending the appointment of independent auditors to the board
of directors.
(vii) Reviewing fee arrangements with the independent auditors.
(viii) Reviewing before release the audited financial statements and
Management's Discussion and Analysis in the Company's annual report on Form
10-K;
(ix) Reviewing before release the unaudited quarterly operating
results in the Company's quarterly earnings release;
(x) Overseeing compliance with SEC requirements for disclosure of
auditor's services and Audit Committee members and activities;
B-1
28
(xi) Overseeing compliance with SEC and Nasdaq requirements for
auditor independence, including receipt from the auditors of a formal
written statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard 1, and
pre-approval of any material non-audit services provided by the auditor;
(xii) Reviewing management's monitoring of compliance with the Foreign
Corrupt Practices Act;
(xiii) Reviewing, in conjunction with counsel, any legal matters that
could have a significant impact on the Company's financial statements;
(xiv) Providing oversight and review of the Company's asset management
policies, including an annual review of the Company's investment policies
and performance for cash and short-term investments;
(xv) If necessary, instituting special investigations and, if
appropriate, hiring special counsel or experts to assist;
(xvi) Reviewing related party transactions for potential conflicts of
interest; and
(xvii) Performing other oversight functions as requested by the full
board of directors.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the board of directors delegates to it, and will
report, at least annually, to the board of directors regarding the Audit
Committee's examinations and recommendations.
MATTERS PERTAINING TO INDEPENDENT AUDITORS:
The independent auditors shall have ultimate accountability to the Audit
Committee and the board of directors. The Audit Committee and the board of
directors shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent auditors.
MEETINGS:
The Audit Committee will meet at least four (4) times each year.
The Audit Committee will meet separately with the Chief Executive Officer
and separately with the Chief Financial Officer of the Company at least annually
to review the financial affairs of the Company. The Audit Committee will meet
with the independent auditors of the Company, at such times as it deems
appropriate, to review the independent auditor's examination and management
report.
REPORTS:
The Audit Committee will record its summaries of recommendations to the
board of directors in written form which will be incorporated as a part of the
minutes of the board of directors meeting at which those recommendations are
presented.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the board of
directors.
B-2
29
E-STAMP CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
____________, ___________, 2001
The undersigned hereby appoints Robert H. Ewald and Edward F. Malysz, or
either of them, as proxies and attorneys-in-fact, each with full power of
substitution, to represent the undersigned at the annual meeting of stockholders
of E-Stamp Corporation (the "Company") to be held at 2051 Stierlin Court,
Mountain View, California on _________, 2001 at ______ local time, and any
adjournments or postponements thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present at the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3 AND FOR
PROPOSAL 4, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH. In
their discretion, the proxies are authorized to vote upon such other business as
may properly come before the meeting or any adjournment thereof to the extent
authorized by Rule 14a-4(c) promulgated by the Securities and Exchange
Commission.
(Continued and to be signed on the other side.)
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30
MANAGEMENT RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR DIRECTOR LISTED
BELOW, A VOTE FOR PROPOSAL 2, A VOTE FOR PROPOSAL 3 AND A VOTE FOR PROPOSAL 4.
Proposal 1: To elect directors to hold office for three years or until their
successors are elected.
FOR all nominees listed at right WITHHOLD AUTHORITY to vote Nominees: Marcelo Gumucio, and
(except as marked to the contrary). FOR ALL nominees listed at right. Adam Wagner
To withhold authority to vote for any nominee(s), write such nominee(s)' name(s)
below:
Proposal 2: To approve the amendment to the Company's certificate of
incorporation authorizing the Company's board of directors to effect
a reverse stock split of not less than 1-for-5 and not more than
1-for-20.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 3: To ratify the selection of Ernst & Young L.L.P. as the Company's
independent auditors in the event that the Company's proposed merger
with Learn2.com, Inc. is not completed.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 4: To ratify the selection of Arthur Andersen L.L.P. as the Company's
independent auditors in the event that the Company's proposed merger
with Learn2.com, Inc. is completed.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Sign exactly as your name(s) appears on your stock certificate. If
shares of stock stand of record in the names of two or more persons or in the
name of husband and wife, whether as joint tenants or otherwise, both or all of
such persons should sign the Proxy. If shares of stock are held of record by a
corporation, the Proxy should be executed by the President or Vice President and
the Secretary or Assistant Secretary. Executors or administrators or other
fiduciaries who execute the Proxy for a deceased Stockholder should give their
full title. Please date the Proxy.
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Signature
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Signature
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Date
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED
TO SIGN AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK
MAY BE REPRESENTED AT THE MEETING.