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[ X
]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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[ ]
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Definitive
Proxy Statement
|
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[ ]
|
Definitive
Additional Materials
|
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[ ]
|
Soliciting
Material Pursuant to Exchange Act Rule
14a-12
|
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[ X
]
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No
fee required.
|
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[ ]
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
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(1)
|
Title
of each class of securities to which transaction
applies:
|
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(2)
|
Aggregate
number of securities to which transaction
applies:
|
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(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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[ ]
|
Fee
paid previously with preliminary
materials.
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[ ]
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Check
box if any part of the fee if offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
Previously Paid:
|
|
(2)
|
Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
|
Date
Filed:
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1.
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electing
four (4) members of our board of
directors;
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2.
|
appointment
of our auditors;
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3.
|
to
consider and, if thought fit, with or without amendment, to approve a
special resolution to amend the Articles of the Corporation by changing
the corporate name of the Corporation from “LML Payment Systems Inc.”, to
“Beanstream Internet Commerce Inc.”, or such other name as the directors
in their absolute discretion may determine and which is acceptable to the
regulatory authorities; and
|
4.
|
transacting
any other business that may properly come before the meeting or any
adjournment or adjournments
thereof.
|
By
Order of the Board of Directors:
|
|
Patrick
H. Gaines
|
|
President
and CEO
|
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Dated: July
2, 2008
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1.
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by
delivering a written notice of revocation to the Corporate Secretary of
our corporation;
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2.
|
by
submitting a duly executed proxy bearing a later date;
or
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3.
|
by
attending our annual and special meeting and expressing the desire to vote
your common shares in person (attendance at our annual and special meeting
will not in and of itself revoke a
proxy).
|
Name
|
Age
|
Position
with the Corporation
|
Date
Position First Held
|
|||
Patrick
H. Gaines
|
49
|
President,
Chief Executive Officer and Director
|
1990
- Director; March 31, 1992 – President; February 9, 2000 –
CEO
|
|||
Greg
A. MacRae
|
54
|
Director
|
February
12, 1998
|
|||
L.
William Seidman
|
87
|
Director
|
October
13, 1999
|
|||
Jacqueline
Pace
|
64
|
Director
|
November
27, 2000
|
|
a)
|
the
number of shares of our corporation held by the shareholder making the
recommendation;
|
|
b)
|
the
name and address of the candidate;
|
|
c)
|
a
brief biographical description of the candidate, including his or her
occupation for at least the last five years, and a statement of the
candidate’s qualifications, taking into account the qualification
requirements set forth above;
|
|
d)
|
information
regarding the recommended candidate relevant to a determination of whether
the recommended candidate would be considered independent within the
meaning of the listing standards of The NASDAQ Stock Market;
and
|
|
e)
|
the
candidate's signed consent to serve as a director if elected and to be
named in the proxy statement.
|
|
(1)
|
reviewed
and discussed with our corporation's management our audited consolidated
financial statements;
|
|
(2)
|
discussed
with the independent accountants the matters described in Statement of
Auditing Standards No. 61, as
amended;
|
|
(3)
|
received
the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as amended, and has discussed with the
independent accountants their independence;
and
|
|
(4)
|
recommended
to our board of directors that the audited financial statements be
included in our corporation's Annual Report on Form 10-K for the period
ended March 31, 2008, based on the review and discussions referred to
above.
|
AUDIT
COMMITTEE
|
|
Greg
A. MacRae
|
|
L.
William Seidman
|
|
Jacqueline
Pace
|
Name
and Age of Executive Officers
|
Position
with Our Corporation and Work History
|
|
Patrick
H. Gaines
Age: 49
|
President
since March 31, 1992, Chief Executive Officer since February 9, 2000 and
Director since 1990
Patrick
H. Gaines has been President of LML Payment Systems Inc. (the
“Corporation”) since March 31, 1992, and Chief Executive Officer since
February 9, 2000, and a member of the Corporation’s board of directors
since 1990. Mr. Gaines is the Chairman and a director of the
Corporation’s subsidiary Beanstream Internet Commerce Inc., and is the
President and a director of the following subsidiaries of the Corporation:
LML Corp., Legacy Promotions Inc., LHTW Properties, Inc., LML Patent Corp.
and LML Payment Systems Corp. In addition to his position as
President of LML Corp., LML Patent Corp. and LML Payment Systems Corp., he
is also the Chief Executive Officer of each of those
subsidiaries. Mr. Gaines is married to Carolyn L. Gaines, our
Corporate Secretary.
|
|
Richard
R. Schulz
Age:
37
|
Controller
(Chief Accounting Officer) since June 2002
Richard
R. Schulz has been employed as our Controller and Chief Accounting Officer
since June 2002. Mr. Schulz also serves as the Chief Accounting
Officer and director of all of our subsidiaries. Mr.
Schulz was employed with our corporation as the Assistant Controller from
August 2001 to June 2002. Prior to that, Mr. Schulz was
self-employed as a financial consultant with RRS Consulting from June 1,
2000 to July 31, 2001, and prior to that he was employed as a senior staff
accountant with Dale Matheson Carr-Hilton Chartered Accountants from May
1, 1992 to May 31, 2000.
|
|
Carolyn
L. Gaines
Age: 41
|
Corporate
Secretary since February 1995
Carolyn
L. Gaines has served as Corporate Secretary of our corporation and certain
of our subsidiaries since February 1995, and has served our corporation
and our subsidiaries in various administrative capacities since 1989. Mrs.
Gaines is married to Patrick H. Gaines, our President and Chief Executive
Officer.
|
|
Craig
Thomson
Age:43
|
Chief
Executive Officer and President of Beanstream Internet Commerce Inc. since
July 2007
Craig
Thomson has been President and Chief Executive Officer of Beanstream
Internet Commerce Inc., a subsidiary of LML Payment Systems Inc, since
July 1, 2007. Prior to that, Mr. Thomson served as Beanstream’s
President and CEO since July 2000. In 1999, Mr. Thomson
received the prestigious "Entrepreneur of the Year Award" in
manufacturing, wholesale and distribution for Pacific Canada by Ernst and
Young. Mr. Thomson holds a degree in Computer Engineering from
the Royal Military College of
Canada.
|
Name
|
Fees
Earned or
Paid
in Cash ($)
|
Option
Awards(1)
($)
|
Total
($)
|
|||
Greg
A. MacRae
|
$14,500
|
$42,571(2)
|
$57,071
|
|||
Jacqueline
Pace
|
$12,000
|
$42,571(2)
|
$54,571
|
|||
L.
William Seidman
|
$12,000
|
$42,571
(2)
|
$54,571
|
|
|
(1)
|
The
amounts reported in the “Option Awards” column reflect the dollar amount
of expense recognized for financial statement reporting purposes for the
fiscal year ended March 31, 2008, in accordance with SFAS 123R. For additional
information relating to the assumptions used in the calculation of these
amounts please refer to Note 5 in our financial statements for the second
quarter of the fiscal year ended March 31, 2008, included in our Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission on
November 9, 2007. The amounts in this column reflect our
accounting expense for these awards, and may not correspond to the actual
value that will be recognized by the independent directors. On
August 8, 2007, each of the independent directors was granted 25,000 stock
options at an exercise price of $3.16 per share. On August 30,
2006, each of the independent directors was granted 25,000 stock options
at an exercise price of $3.62 per share. Options granted to our
independent directors vest on the first anniversary of the date of
grant.
|
|
(2)
|
This
amount consists of (i) $23,703 related to 25,000 options granted in August
2007; and (ii) $18,867 related to 25,000 options granted in August
2006.
|
Number
of securities to be issued upon exercise of outstanding
options
|
Weighted-average
exercise price of outstanding options and warrants
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
|||
Equity
compensation plans approved by security holders
|
4,207,500(1)
|
$3.73
|
5,649,717(2)
|
||
Equity
compensation plans not approved by security holders (3)
|
400,000
|
$3.40
|
N/A
|
||
Total
|
4,607,500
|
5,649,717
|
(1)
|
Comprised
of 3,390,000 common shares to be issued upon exercise of outstanding
options as at March 31, 2008 under the 1996 Stock Option Plan and 817,500
common shares to be issued upon exercise of outstanding options as at
March 31, 2008 under the 1998 Stock Incentive
Plan.
|
(2)
|
Comprised
of 1,002,000 common shares which remain available for future issuance as
at March 31, 2008 under the 1996 Stock Option Plan, and 4,647,717 common
shares which remain available for future issuance as at March 31, 2008
under the 1998 Stock Incentive
Plan.
|
(3)
|
These
securities consist of warrants issued to Ladenburg Thalmann & Co.,
Inc. who acted as the placement agent and financial advisor to LML in
connection with the private placement transaction with Millennium Partners
LLP completed on March 31, 2008. The warrants are exercisable
for 400,000 shares of LML’s common stock for a period of five years from
March 26, 2008 at a price of $3.40 per
share.
|
·
|
our
executive officers should be rewarded fairly and competitively through a
mix of short-term compensation (i.e., base salary and performance-related
bonuses) and long-term compensation (i.e., stock option
grants);
|
·
|
our
compensation programs should be flexible in order to meet the needs of our
business and should be reviewed periodically, as appropriate, by our
Compensation Committee;
|
·
|
stock
ownership by our executive officers demonstrates an economic stake in our
business that aligns the interests of our executive officers with those of
our shareholders; and
|
·
|
our
executive officers should share appropriately with investors in the value
that their results help to create.
|
COMPENSATION
COMMITTEE
|
|
L.
William Seidman
|
|
Greg
A. MacRae
|
|
Jacqueline
Pace
|
Name
and Principal Position
|
Fiscal
Year Ended
|
Salary
(US$)
|
Option
Awards
(US$)
(1)
|
All
Other Compensation (US$)
|
Total
(US$)
|
|||||
Patrick
H. Gaines, President, CEO and Director
|
2008
|
$184,899(2)(3)
|
$344,417
(4)
|
-
|
$529,316
|
|||||
2007
|
$154,194
(2)(5)
|
$91,214(6)
|
-
|
$245,408
|
||||||
2006
|
$140,783(2)
(7)
|
-
|
-
|
$140,783
|
||||||
Richard
R. Schulz, Controller, Principal and
Financial Officer
|
2008
|
$107,412(2)(3)
|
$100,474
(4)
|
-
|
$207,886
|
|||||
2007
|
$83,573(2)(5)
|
$146,941(6)
|
-
|
$230,514
|
||||||
2006
|
$68,192(2)
|
-
|
-
|
$68,192
|
||||||
Carolyn
L. Gaines, Corporate Secretary
|
2008
|
$64,156(2)(3)
|
$100,473
(4)
|
-
|
$164,629
|
|||||
2007
|
$51,554(2)(5)
|
$108,939(6)
|
-
|
$160,493
|
||||||
2006
|
$44,448(2)
|
-
|
-
|
$44,448
|
||||||
Craig
Thomson, Chief Executive Officer and President of Beanstream Internet
Commerce Inc.
|
2008
|
$121,012(2) (8)
|
$89,256(4)
|
$210,268
|
||||||
Robert
E. Peyton, Executive Former Vice-President of Information Technologies of
LML Payment Systems Corp.
|
2008
|
$117,000(9)
|
$39,180(4)(6)
|
$16,055
(10)
|
$172,235
|
|||||
2007
|
$173,076
|
$11,785(6)
|
$1,730(10)
|
$186,591
|
||||||
2006
|
$120,000
|
-
|
$1,473(11)
|
$121,473
|
(1)
|
The
amounts reported in the “Option Awards” column reflect the dollar amount
of expense recognized for financial statement reporting purposes for the
fiscal years ended March 31, 2007 and 2008, in accordance with SFAS 123R.
Other than indicated below or otherwise in this Proxy Statement, we have
not granted any restricted shares or restricted share units, stock
appreciation rights ("SARs") or long term incentive plan payouts to the
named officers and directors during the fiscal years
indicated.
|
(2)
|
Mr.
Gaines’, Mr. Schulz’s and Mrs. Gaines salaries are paid in Canadian
dollars and, for purposes of reporting such in this table, have been
converted to U.S. dollars at the exchange rates of 0.838, 0.878
and 0.969 being the average exchange rates for each of the
fiscal years ended March 31, 2006, 2007 and 2008
respectively. Mr. Thomson’s salary is also paid in Canadian
dollars and, for purposes of reporting such in this table, has been
converted to U.S. dollars at the exchange rate of $0.989, being the
average exchange rate for the period from July 1, 2007 (when Mr. Thomson’s
employment began with LML) to March 31,
2008.
|
(3)
|
On
March 31, 2008, the Compensation Committee increased Mr. Gaines’ annual
base salary, effective September 24, 2007, from CDN $181,000 for the
fiscal year ended March 31, 2008, to CDN $200,000 per year, Mr. Schulz’s
annual base salary, effective September 24, 2007, from CDN $101,000 for
the fiscal year ended March 31, 2008, to CDN $120,000 per year and Mrs.
Gaines’ annual base salary, effective September 24, 2007, from CDN $61,000
for the fiscal year ended March 31, 2008, to CDN $71,000 per
year.
|
(4)
|
For
additional information relating to the assumptions used in the calculation
of these amounts for Messrs. Gaines, Schulz, Thomson and Peyton, and Mrs.
Gaines refer to Note 11 in our financial statements for the fiscal year
ended March 31, 2008, included in our Annual Report on Form 10-K filed
with the SEC on June 19, 2008.
|
(5)
|
On
August 30, 2006, the Compensation Committee increased Mr. Gaines’ annual
base salary from Cdn.$168,000 for the fiscal year ended March 31, 2006 to
Cdn.$181,000 for the fiscal year ended March 31, 2007, and Mr. Schulz’
annual base salary from Cdn. $87,000 for the fiscal year ended March 31,
2006 to $101,000 for the fiscal year ended March 31, 2007 and Mrs.
Gaines’ annual base salary from Cdn. $54,912 for the fiscal year ended
March 31, 2006 to Cdn$61,000 for the fiscal year ended March 31,
2007.
|
(6)
|
For
additional information relating to the assumptions used in the calculation
of these amounts for Messrs. Gaines, Schulz and Mrs. Gaines, refer to Note
3 in our financial statements for the second quarter of the fiscal year
ended March 31, 2007, included in our Quarterly Report on Form 10-Q filed
with the SEC on November 8, 2006. For additional information
relating to the assumptions used in the calculation of these amounts for
Mr. Peyton, refer to Note 3 to our financial statements for the third
quarter of the fiscal year ended March 31, 2007, included in our Quarterly
Report on Form 10-Q filed with the SEC on February 9,
2007.
|
(7)
|
On
March 30, 2004, the Compensation Committee determined that, for
administrative reasons, Mr. Gaines’ salary be changed from United States
dollars to Canadian dollars. This resulted in Mr. Gaines’ annual
compensation of US$120,000 becoming Cdn.$168,000 for the fiscal years
ended March 31, 2005 and 2006.
|
(8)
|
Mr.
Thomson is party to an employment agreement with the Corporation’s
subsidiary Beanstream Internet Commerce Inc., which was principally the
result of negotiations between Mr. Thomson and the Corporation as part of
the acquisition of Beanstream Internet Commerce Inc., on July 2,
2007.
|
(9)
|
During
the fiscal year ended March 31, 2008, Mr. Robert E. Peyton was employed as
Executive Vice-President of the Corporation’s subsidiary, LML Payment
Systems Corp., from April 1, 2001 to November 15, 2007. Mr. Peyton
resigned as Executive Vice President of the Corporation’s subsidiary, LML
Payment Systems Corp., on November 15, 2007. Subsequent to Mr. Peyton’s
resignation he continued to provide certain services to the Corporation’s
subsidiary on a consulting basis. On March 27, 2008, the
Corporation and Mr. Peyton entered into a Support Services and Software
Licensing Letter Agreement with respect to the consulting services Mr.
Peyton continues to provide to LML Payment Systems Corp. The compensation
amounts for Mr. Peyton for 2008 do not include the amount of any
consulting fees paid to Mr. Peyton.
|
(10)
|
Represents
$1,170 in matching payments made by LML to Mr. Peyton’s account under the
Corporation’s 401(k) plan and $14,885 in accrued vacation pay paid to Mr.
Peyton upon his resignation as Executive Vice-President of the
Corporation’s subsidiary, LML Payment Systems
Corp.
|
(11)
|
Represents
matching payments made by LML to Mr. Peyton’s account under the
Corporation’s 401(k) plan.
|
Name
|
Grant
Date
|
All
Other Option Awards: Number of Securities Underlying Options (#)(1)
|
Exercise
or Base Price of Option Awards
(US$/Sh)
|
Grant
Date Fair Value of Option Awards(2)
(US$)
|
||||
Patrick
H. Gaines
President,
CEO and Director
|
March
31, 2008
|
1,200,000
|
$3.00
|
$1,719,264
|
||||
Richard
R. Schulz
Controller
and Principal Financial Officer
|
March
31, 2008
|
210,000
|
$3.00
|
$300,871
|
||||
Carolyn
L. Gaines
Corporate
Secretary
|
March
31, 2008
|
210,000
|
$3.00
|
$300,871
|
||||
Craig
Thomson, Chief Executive Officer and President of Beanstream Internet
Commerce Inc.
|
October
4, 2007
|
300,000
|
$3.90
|
$546,507
|
||||
Robert
E. Peyton
Former
Executive Vice-President of Information Technology of LML Payment Systems
Corp.
|
October
4, 2007
|
50,000
|
$3.90
|
$91,085
|
|
(1)
|
The
amount reported for Mr. Gaines for the fiscal year ended March 31, 2008 is
related to stock options to purchase 1,200,000 common shares granted on
March 31, 2008, of which 240,000 options vested on March 31,
2008.
|
|
The
amount reported for Mr. Schulz for the fiscal year ended March 31, 2008 is
related to stock options to purchase 210,000 common shares granted on
March 31, 2008, of which 70,000 options vested on March 31,
2008.
|
|
The
amount reported for Mrs. Gaines for the fiscal year ended March 31, 2008
is related to stock options to purchase 210,000 common shares granted on
March 31, 2008, of which 70,000 options vested on March 31,
2008.
|
|
The
amount reported for Mr. Thomson for the fiscal year ended March 31, 2008
is related to stock options to purchase 300,000 common shares granted on
October 4, 2007, of which 50,000 options vested on April 4,
2008.
|
|
The
amount reported for Mr. Peyton is related to stock options to purchase
50,000 common shares granted on October 4, 2007, of which 12,500 options
vested on October 4, 2007 and 6,250 options vested on April 4,
2008.
|
(2)
|
Represents
the total SFAS 123R grant date fair value of the
grant.
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price
|
Option
Expiration Date
|
||||
Patrick
H. Gaines
|
250,000
|
-
|
$6.25
|
April
1, 2009
|
||||
75,000
|
-
|
$4.52
|
August
24, 2010
|
|||||
50,000
|
-
|
$3.62
|
August
30, 2011
|
|||||
240,000
|
960,000(1)
|
$3.00
|
March
31, 2018
|
|||||
Richard
R. Schulz
|
80,000
|
-
|
$6.25
|
April
1, 2009
|
||||
25,000
|
-
|
$4.52
|
August
24, 2010
|
|||||
25,000
|
-
|
$3.62
|
August
30, 2011
|
|||||
70,000
|
140,000(2)
|
$3.00
|
March
31, 2018
|
|||||
Carolyn
L. Gaines
|
50,000
|
-
|
$6.25
|
April
1, 2009
|
||||
50,000
|
-
|
$4.52
|
August
24, 2010
|
|||||
25,000
|
-
|
$3.62
|
August
30, 2011
|
|||||
70,000
|
140,000(2)
|
$3.00
|
March
31, 2018
|
|||||
Craig
Thomson
|
0
|
300,000(3)
|
$3.90
|
October
4, 2012
|
||||
Robert
E. Peyton
|
||||||||
25,000
|
25,000(4)
|
$2.95
|
October
5, 2011
|
|||||
12,500
|
37,500
(5)
|
$3.90
|
October
4, 2012
|
|||||
|
(1)
|
These options
will vest as to 240,000 stock options on each of March 31, 2009, March 31,
2010, March 31, 2011 and March 31,
2012.
|
(2)
|
These
options will vest as to 70,000 stock options on each of March 31, 2009 and
March 31, 2010.
|
(3)
|
These
options will vest as to 50,000 options on each of April 4, 2008, October
4, 2008, April 4, 2009, October 4, 2009, April 4, 2010 and October 4,
2010.
|
(4)
|
These
options will vest as to 6,250 options on each of April 5, 2008, October 5,
2008, April 5, 2009 and October 5,
2009.
|
(5)
|
These
options will vest as to 6,250 shares April 4, 2008, October 4, 2008, April
4, 2009, October 4, 2009, April 4, 2010, and October 4,
2010
|
Shares
of Common Stock Beneficially Owned
|
|||
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class(1)
|
|
Patrick
H. Gaines (President/CEO/Director)
1680
– 1140 West Pender St. Vancouver, British Columbia
|
1,032,914(2)
|
3.8%
|
|
Richard
R. Schulz (Controller and Chief Accounting Officer)
1680
– 1140 West Pender St. Vancouver, British Columbia
|
200,000(3)
|
*
|
|
Carolyn
L. Gaines (Corporate Secretary)
1680
– 1140 West Pender St. Vancouver, British Columbia
|
242,112(4)
|
*
|
|
Greg
A. MacRae (Director)
613
– 375 Water St. Vancouver, British Columbia
|
135,000(5)
|
*
|
|
L.
William Seidman (Director)
Suite
800 - 1025 Connecticut Ave. N.W. Washington, D.C.
|
135,000(6)
|
*
|
|
Jacqueline
Pace (Director)
P.O.
Box 141 Bailey, MS
|
110,500(7)
|
*
|
|
Craig
Thomson (President and Chief Executive Officer of Beanstream Internet
Commerce Inc.)
302
– 2659 Douglas Street, Victoria, British Columbia
|
899,469(8)
|
3.5%
|
|
Robert
E. Peyton
27629
N. 66th
Way
Scottsdale,
Arizona
|
666,999(9)
|
2.6%
|
|
The
Estate of Robert E. Moore
c/o
Mr. Howard J. Kellough
2800
– 1055 Dunsmuir St. Vancouver, British Columbia
|
4,743,912
(10)
|
18.0%
|
|
Millennium
Partners, L.P
c/o
Millennium Management LLC
666
Fifth Avenue, 8th
Floor, New York, NY
|
4,000,000
(11)
|
15.2%
|
|
Directors
and Executive Officers as a Group (7 persons)
|
2,754,995(12)
|
9.9%
|
|
*
|
Indicates
less than 1%
|
|
(1)
|
Based
on 26,341,832 shares of common stock issued and outstanding as of June 16,
2008. Except as otherwise indicated, we believe that the
beneficial owners of the common stock listed above, based on information
furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and generally
includes voting or investment power with respect to
securities. Shares of common stock subject to options or
warrants currently exercisable, or exercisable within 60 days of June 16,
2008, are deemed outstanding for purposes of computing the percentage
ownership of the person holding such option or warrants, but are not
deemed outstanding for purposes of computing the percentage ownership of
any other person.
|
|
(2)
|
On
April 1, 2004, we granted to Mr. Gaines options to purchase 250,000 common
shares in the capital of our corporation. The options vested on
April 1, 2004, are exercisable at a price of $6.25 per share, and expire
on April 1, 2009. On August 24, 2005 we granted to Mr. Gaines options to
purchase 75,000 common shares in the capital of our
corporation. The options vested on August 24, 2005, are
exercisable at a price of $4.52 per share and expire on August 24, 2010.
On August 30, 2006 we granted to Mr. Gaines options to purchase 50,000
common shares in the capital of our corporation. The options
vested on August 30, 2006, are exercisable at a price of $3.62 per share
and expire on August 30, 2011. On March 31, 2008, we granted Mr. Gaines
options to purchase 1,200,000 common shares in the capital of our
corporation, of which 240,000 options vested on March 31, 2008 and an
additional 240,000 options will vest on each of March 31, 2009, March 31,
2010, March 31, 2011 and March 31, 2012. The options are
exercisable at a price of $3.00 per share and will expire on March 31,
2018.
|
|
Also
includes shares held by companies controlled by Mr. Gaines as
follows:
|
|
(a)
|
Keats
Investments Ltd.: 168,400
shares
|
|
(b)
|
397389
British Columbia Ltd.: 16,622
shares
|
|
(c)
|
Does
not include 242,112 shares (including 195,000 options exercisable within
sixty days of June 16, 2008) that are beneficially held by Carolyn L.
Gaines, Mr. Gaines’ spouse
|
|
(3)
|
On
April 1, 2004, we granted to Mr. Schulz options to purchase 80,000 common
shares in the capital of our corporation. The options vested as
to 5,000 options on April 1, 2004, and 12,500 options on each of October
1, 2004, April 1, 2005, October 1, 2005, April 1, 2006 and October 1, 2006
and April 1, 2007, are exercisable at a price of $6.25 per share, and
expire on April 1, 2009. On August 24, 2005 we granted to Mr. Schulz
options to purchase 25,000 common shares in the capital of our
corporation. The options vested on August 24, 2005, are
exercisable at a price of $4.52 per share and expire on August 24, 2010.
On August 30, 2006 we granted to Mr. Schulz options to purchase 25,000
common shares in the capital of our corporation. The options
vested on August 30, 2006, are exercisable at a price of $3.62 per share
and expire on August 30, 2011. On March 31, 2008, we granted Mr. Schulz
options to purchase 210,000 common shares in the capital of our
corporation, of which 70,000 options vested on March 31, 2008 and an
additional 70,000 options will vest on each of March 31, 2009 and March
31, 2010. The options are exercisable at a price of $3.00 per
share and will expire on March 31,
2018.
|
|
(4)
|
On
April 1, 2004, we granted to Mrs. Gaines options to purchase 50,000 common
shares in the capital of our corporation. The options vested as
to 5,000 options on April 1, 2004, and 7,500 options on each of October 1,
2004, April 1, 2005, October 1, 2005, April 1, 2006 and October 1,
2006 and April 1, 2007, are exercisable at a price of $6.25 per
share, and expire on April 1, 2009. On August 24, 2005 we granted to Mrs.
Gaines options to purchase 50,000 common shares in the capital of our
corporation. The options vested on August 24, 2005, are
exercisable at a price of $4.52 per share and expire on August 24, 2010.
On August 30, 2006 we granted to Mrs. Gaines options to purchase 25,000
common shares in the capital of our corporation. The options
vested on August 30, 2006, are exercisable at a price of $3.62 per share
and expire on August 30, 2011. On March 31, 2008, we granted Mrs. Gaines
options to purchase 210,000 common shares in the capital of our
corporation, of which 70,000 options vested on March 31, 2008 and an
additional 70,000 options will vest on each of March 31, 2009 and March
31, 2010. The options are exercisable at a price of $3.00 per
share and will expire on March 31,
2018.
|
|
(5)
|
On
August 20, 2003, we granted to Mr. MacRae options to purchase 10,000
common shares in the capital of our corporation, all of which vested on
August 20, 2004. These options are exercisable at a price of $4.74 per
share and expire on August 20, 2008. On August 25, 2004, we
granted to Mr. MacRae options to purchase 25,000 common shares in the
capital of our corporation, all of which vested on August 25,
2005. These options are exercisable at a price of $5.08 per
share and expire on August 25, 2009. On August 24, 2005, we granted to Mr.
MacRae options to purchase 25,000 common shares in the capital of our
corporation, all of which vested on August 24, 2006. These
options are exercisable at a price of $4.52 per share and expire on August
24, 2010. On August 30, 2006, we granted to Mr. MacRae options to purchase
25,000 common shares in the capital of our corporation, all of which
vested on August 30, 2007. These options are exercisable at a
price of $3.62 per share and expire on August 30, 2011. On August 8, 2007,
we granted to Mr. MacRae options to purchase 25,000 common shares in the
capital of our corporation, all of which will vest on August 8,
2008. These options are exercisable at a price of $3.16 per
share and expire on August 8, 2012.
|
|
(6)
|
On
August 20, 2003, we granted to Mr. Seidman options to purchase 10,000
common shares in the capital of our corporation, all of which vested on
August 20, 2004. These options are exercisable at a price of $4.74 per
share and expire on August 20, 2008. On August 25, 2004, we
granted to Mr. Seidman options to purchase 25,000 common shares in the
capital of our corporation, all of which vested on August 25,
2005. These options are exercisable at a price of $5.08 per
share and expire on August 25, 2009. On August 24, 2005, we granted to Mr.
Seidman options to purchase 25,000 common shares in the capital of our
corporation, all of which vested on August 24, 2006. These
options are exercisable at a price of $4.52 per share and expire on August
24, 2010. On August 30, 2006, we granted to Mr. Seidman options to
purchase 25,000 common shares in the capital of our corporation, all of
which vested on August 30, 2007. These options are exercisable
at a price of $3.62 per share and expire on August 30, 2011. On August 8,
2007, we granted to Mr. Seidman options to purchase 25,000 common shares
in the capital of our corporation, all of which will vest on August 8,
2008. These options are exercisable at a price of $3.16 per
share and expire on August 8, 2012.
|
|
(7)
|
On
August 20, 2003, we granted to Ms. Pace options to purchase 10,000 common
shares in the capital of our corporation, all of which vested on August
20, 2004. These options are exercisable at a price of $4.74 per share and
expire on August 20, 2008. On August 25, 2004, we granted to
Ms. Pace options to purchase 25,000 common shares in the capital of our
corporation, all of which vested on August 25, 2005. These
options are exercisable at a price of $5.08 per share and expire on August
25, 2009. On August 24, 2005, we granted to Ms. Pace options to purchase
25,000 common shares in the capital of our corporation, all of which
vested on August 24, 2006. These options are exercisable at a
price of $4.52 per share and expire on August 24, 2010. On August 30,
2006, we granted to Ms. Pace options to purchase 25,000 common shares in
the capital of our corporation, all of which vested on August 30,
2007. These options are exercisable at a price of $3.62 per
share and expire on August 30, 2011. On August 8, 2007, we granted to Ms.
Pace options to purchase 25,000 common shares in the capital of our
corporation, all of which will vest on August 8, 2008. These
options are exercisable at a price of $3.16 per share and expire on August
8, 2012.
|
|
(8)
|
On
October 4, 2007 we granted to Mr. Thomson 300,000 common shares in the
capital of the corporation, of which 50,000 options vested
on April 4, 2008, and 50,000 options will vest on each of
October 4, 2008, April 4, 2009, October 4, 2009, April 4, 2010 and October
4, 2010. The options are exercisable at a price of $3.90 per
share and expire on October 4,
2012.
|
|
(a)
|
588267
BC Ltd.: 840,436 shares
|
|
(b)
|
Owned
by spouse: 9,033 shares
|
|
(9)
|
Includes
50,000 options exercisable within sixty days of June 16,
2008. On October 5, 2006 we granted to Mr. Peyton options to
purchase 50,000 common shares in the capital of our corporation, of which
12,500 options vested on October 5, 2006 and 6,250 options vested on each
of April 5, 2007, October 5, 2007 and April 5, 2008, and 6,250
options will vest on each of October 5, 2008, April 5, 2009 and
October 5, 2009. The options are exercisable at a price of
$2.95 per share and expire on October 5, 2011. On October 4, 2007 we
granted to Mr. Peyton options to purchase 50,000 common shares in the
capital of our corporation, of which 12,500 options vested on October 4,
2007 and 6,250 options vested on April 4, 2008 and 6,250
options will vest on each of October 4, 2008, April 4, 2009, October
4, 2009, April 4, 2010 and October 4, 2010. The options are
exercisable at a price of $3.90 per share and expire on October 4,
2012. Mr. Peyton ceased to be an executive officer of the
Corporation upon his resignation as Executive Vice President of the
Corporation’s subsidiary, LML Payment Systems Corp., on November 15, 2007
and, as a result, the number of shares being reported in this table as
beneficially owned by Mr. Peyton is based on the last Form 4 filed by Mr.
Peyton with the SEC on October 5, 2007. The Corporation has no
knowledge, other than the exercise of options, of the sale or acquisition
of shares of the Corporation made by Mr. Peyton following February 14,
2008, such date being ninety days following the date of his
resignation.
|
(10)
|
Includes
1,233,332 shares held by 716377 Alberta Ltd., a company controlled by Mr.
Moore’s Estate.
|
|
(11)
|
On
March 26, 2008, LML Payment Systems Inc. entered into a definitive
Securities Purchase Agreement with Millennium Partners, LLP
(“Purchaser”). Under the Securities Purchase Agreement, LML and
the Purchaser completed a private placement transaction pursuant to which
the Purchaser acquired 4,000,000 common shares of the Corporation for an
aggregate purchase price of $7,200,000, or $1.80 per
share.
|
(12)
|
Includes
1,390,000 options exercisable within sixty days of June 16,
2008.
|
|
(a)
|
the
Articles of the Corporation be amended by changing the corporate name of
the Corporation from “LML Payment Systems Inc.” to “Beanstream Internet
Commerce Inc.”, or such other corporate name as may be determined by the
directors and which is acceptable to the regulatory authorities;
and
|
|
(b)
|
any
director or officer of the Corporation be and is hereby authorized and
directed, for and on behalf of the Corporation, to execute and
deliver all such documents as are necessary or desirable in order to
effect such change of corporate
name.
|
By
Order of the Board of Directors:
|
|
Patrick
H. Gaines
|
|
President
and CEO
|
|
Dated: July
2, 2008
|
|
Computershare
|
|
9th
Floor, 100 University Avenue
|
||
Toronto, Ontario M5J
2Y1
|
||
www.computershare.com
|
000001
|
||
Sam
Sample
|
||
123
Samples Street
|
Security
Class:COMMON-NEW
|
|
Sampletown
SS X9X X9X
|
||
Holder
Account Number
|
||
C9999999999 I
N D
|
1.
|
Every
holder has the right to appoint some other person or company of their
choice, who need not be a holder, to attend and act on their behalf at the
meeting. If you wish to appoint a person or company other than the persons
whose names are printed herein, please insert the name of your chosen
proxyholder in the space provided (see
reverse).
|
2.
|
If
the securities are registered in the name of more than one owner (for
example, joint ownership, trustees, executors, etc.), then all those
registered should sign this proxy. If you are voting on behalf of a
corporation or another individual you may be required to provide
documentation evidencing your power to sign this proxy with signing
capacity stated.
|
3.
|
This
proxy should be signed in the exact manner as the name appears on the
proxy.
|
4.
|
If
this proxy is not dated, it will be deemed to bear the date on which it is
mailed by Management to the holder.
|
5.
|
The securities represented by
this proxy will be voted as directed by the holder, however, if such a
direction is not made in respect of any matter, this proxy will be voted
as recommended by
Management.
|
6.
|
The
securities represented by this proxy will be voted or withheld from
voting, in accordance with the instructions of the holder, on any ballot
that may be called for and, if the holder has specified a choice with
respect to any matter to be acted on, the securities will be voted
accordingly.
|
7.
|
This
proxy confers discretionary authority in respect of amendments to matters
identified in the Notice of Meeting or other matters that may properly
come before the meeting.
|
8.
|
This
proxy should be read in conjunction with the accompanying documentation
provided by Management.
|
To
Vote Using the Telephone
|
To
Vote Using the Internet
|
|
Call
the number listed BELOW from a touch-tone
|
Got
o the following web site:
|
|
Telephone.
|
www.investorvote.com
|
|
1-866-732-VOTE
(8683) Toll Free
|
CONTROL
NUMBER
|
014249
|
HOLDER
ACCOUNT NUMBER
|
C9999999999
|
ACCESS
NUMBER
|
99999
|
+ SAM
SAMPLE
|
C9999999999 | ||
IND C05 |
Appointment
of Proxyholder
|
|||
I/We, being holder(s) of LML
Payment Systems Inc. hereby appoint: Patrick H. Gaines, or failing
him, Greg A. MacRae
|
or
|
Enter
the name of the person you are appointing if this person is someone other
than the foregoing.
|
|
1.
Election of Directors
|
||||||||
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
|||
01.
Patrick H. Gaines
|
□
|
□
|
02.
Greg A. MacRae
|
□
|
□
|
03.
Jacqueline Pace
|
□
|
□
|
04.
L. William Seidman
|
□
|
□
|
For
|
Withhold
|
||
2.Appointment
of Auditors
|
|||
To
appoint Grant Thornton LLP as Auditors of the Corporation for the ensuing
year and authorizing the Directors to fix their
remuneration.
|
□
|
□
|
|
For
|
Against
|
||
3.Corporate
Name Change
|
|||
To
approve a special resolution to amend the Articles of the Corporation by
changing the corporate name of the Corporation from “LML Payment Systems
Inc.” to “Beanstream Internet Commerce Inc.” or such other name as the
directors in their absolute discretion may determine and which is
acceptable to the regulatory authorities.
|
□
|
□
|
|
Authorized
Signature(s) - This section must be completed for your instructions to be
executed.
|
Signature
|
Date
|
||
I/We
authorize you to act in accordance with my/our instructions set out above.
I/We hereby revoke any proxy previously given with respect to the Meeting.
If no voting instructions
are indicated above, this Proxy will be voted as recommended by
Management.
|
Mm/dd/yy
|
|||
Interim Financial
Statements - Mark this box if you would like to receive interim
financial statements and accompanying Management’s Discussion and Analysis
by mail.
|
□
|
Annual Financial Statements -
Mark this box if you would NOT like to receive the Annual Report
and accompanying Management’s Discussion and Analysis by
mail.
|
□
|
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