CYBERCASH INC, DEF 14A, 1997-05-28

CYBERCASH INC
DEF 14A, 1997-05-28
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE> 1

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

CYBERCASH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------

(3) Filing party:

- --------------------------------------------------------------------------------

(4) Date filed:

- --------------------------------------------------------------------------------
<PAGE> 2

[CYBERCASH LOGO]

May 29, 1997

Dear CyberCash Stockholder:

You are cordially invited to attend the first Annual Meeting of
Stockholders of CyberCash, Inc. (the "Company") to be held on June 27, 1997, at
10:00 a.m. (PDT), at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City,
California 94065.

At this meeting, we are asking you to reelect William N. Melton and Garen
K. Staglin as directors of the Company. In addition, we are seeking approval of
an amendment to the Company's 1995 Stock Option Plan which will increase the
number of shares of Common Stock the Company is authorized to issue pursuant to
stock options by 1,500,000 shares. The increase in the number of shares of
Common Stock available for issuance pursuant to stock options will permit the
Company to continue to offer stock options to new employees and to provide
incentive awards to existing employees.

Please read the enclosed materials carefully and return your proxy as soon
as possible. Thank you.

Sincerely,
/s/ Daniel C. Lynch
Daniel C. Lynch
Chairman of the Board of Directors
<PAGE> 3

CYBERCASH, INC.

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 1997
------------------------

To Our Stockholders:

The Annual Meeting of Stockholders of CyberCash, Inc., a Delaware
corporation (the "Company"), will be held at the Hotel Sofitel, 223 Twin Dolphin
Drive, Redwood City, California 94065 on Friday, June 27, 1997, at 10:00 a.m.
(PDT), to consider and take action on the following matters:

1. To elect two directors;

2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for 1997;

3. To approve an amendment of the Company's 1995 Stock Option Plan,
which, among other things, increases the number of shares of Common Stock
that the Company may grant to its employees pursuant to stock options;

4. To act on such other matters as may properly come before the
Meeting and any adjournment(s) thereof.

The above matters are described in the Proxy Statement. You are urged,
after reading the Proxy Statement, to mark, sign, date and return the enclosed
Proxy in the postage-prepaid envelope to assure that your shares are represented
at the Meeting.

Only stockholders of record at the close of business on May 9, 1997 are
entitled to vote at the Meeting, either in person or proxy. The Proxy Statement
is being mailed to those stockholders on or about May 29, 1997.

By order of the Board of Directors,
/s/ Russell B. Stevenson, Jr.
Russell B. Stevenson, Jr.
Secretary

Reston, Virginia
May 29, 1997
<PAGE> 4

May 29, 1997

CYBERCASH, INC.
------------------------

PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 1997
------------------------

GENERAL INFORMATION

The enclosed Proxy is solicited by the Board of Directors of CyberCash,
Inc. (the "Company") for use at the Annual Meeting of Stockholders ("Meeting")
to be held Friday, June 27, 1997, at 10:00 a.m., Pacific time, and at any
adjournment(s) or postponement(s) thereof, for the purposes set forth herein.
The Meeting will be held at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood
City, California 94065. The Company's principal executive offices are located at
2100 Reston Parkway, Third Floor, Reston, Virginia 20191 and its telephone
number is (703) 620-4200. These proxy solicitation materials were mailed on or
about May 29, 1997, to all stockholders entitled to vote at the Meeting. A copy
of the Company's Annual Report to Stockholders for 1996 was mailed to each
stockholder of record together with these materials.

REVOCABILITY OF PROXIES

A proxy may be revoked by a stockholder at any time before it is voted by
notice in writing delivered to the Secretary of the Company, by submission of
another proxy bearing a later date, or by voting in person at the Meeting.

SHARES OUTSTANDING AND VOTING RIGHTS

As of May 9, 1997, the Company had outstanding 10,882,664 shares of common
stock, $0.001 par value per share (the "Common Stock"), entitled to one vote per
share. Only stockholders of record at the close of business on May 9, 1997 (the
"Record Date") are entitled to vote at the Meeting. A majority of the shares
entitled to vote at the Meeting, represented in person or by proxy, will
constitute a quorum for the transaction of business.

PRINCIPAL STOCKHOLDERS OF THE COMPANY

The following table sets forth certain information known to the Company
with respect to the beneficial ownership of its Common Stock as of May 9, 1997
for (i) each stockholder who is known by the Company to own beneficially more
than 5% of the Common Stock, (ii) each executive officer of the Company; (iii)
each director of the Company, and (iv) all directors and executive officers of
the Company as a group. Unless otherwise specified, the address of all
stockholders is the address of the Company set forth herein.

<TABLE>
<CAPTION>
NAME AND ADDRESS OF % OF SHARES
BENEFICIAL OWNER NUMBER OF SHARES(1) OUTSTANDING
- -------------------------------------------------------------- ------------------- -----------
<S> <C> <C>
Daniel C. Lynch(4)............................................ 744,400 6.84
Edward R. Kozel(5)(6)......................................... 602,000 5.53
Cisco Systems, Inc.(6)........................................ 600,000 5.51
225 West Tasman Drive
San Jose, CA 95134
Stephen D. Crocker(7)......................................... 252,561 2.32
Bruce G. Wilson(8)............................................ 163,164 1.50
Denis Yaro(9)................................................. 60,000 *
Michael Rothschild(10)........................................ 38,924 *
Russell B. Stevenson, Jr.(9).................................. 13,125 *
Jeffrey S. Irby(9)............................................ 12,500 *
Garen K. Staglin(9)........................................... 1,826 *
All directors and executive officers as a group (10
persons)(11)................................................ 4,182,758 38.08
</TABLE>

- ---------------
* Less than one percent.

(1) The ownership of shares of Common Stock reported herein is based upon
filings with the Securities and Exchange Commission (the "Commission").
Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to securities. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Percentage of beneficial ownership is
based on 10,882,664 shares outstanding as of May 9, 1997.

(2) Includes 15,000 shares held by members of Mr. Melton's immediate family.

(3) Information presented is based on a Schedule 13G filed by VeriFone, Inc.
("VeriFone") with the Commission on February 12, 1997. Includes 100,000
shares owned by a wholly-owned subsidiary of VeriFone.

(4) Consists of 719,400 shares held by The Lynch Living Trust U/T/A dated March
2, 1990 of which Daniel C. Lynch and Karen D. Lynch are co-trustees; 10,000
shares held by The Katherine Danielle Lynch Irrevocable Trust of which
Daniel C. Lynch is trustee; 10,000 shares held by The Michael MacAllen
Lynch Irrevocable Trust of which Daniel C. Lynch is trustee; and 5,000
shares held by The Francis Troy Lynch Irrevocable Trust of which Daniel C.
Lynch is trustee.

(5) Includes 600,000 shares held by Cisco Systems, Inc. Mr. Kozel is a director
and chief technology officer of Cisco Systems, Inc. and therefore may be
deemed to share voting and investment power with respect to such shares.

(6) Information presented is based on a Schedule 13G filed by Cisco Systems,
Inc. with the Commission on February 14, 1997.

(7) Includes 41,250 shares of common stock issued upon early exercise of
employee stock options that are subject to repurchase by the Company as of
May 9, 1997.

(8) Includes 12,825 shares subject to stock options exercisable within 60 days
of May 9, 1997.

(9) Consists of shares subject to stock options exercisable within 60 days of
May 9, 1997.

(10) All shares held by The Michael L. Rothschild Trustee Revocable Trust U/T/A
dated August 9, 1993.

(11) Includes 600,000 shares held by an entity affiliated with a director of the
Company as described in footnote 5 above, 100,276 shares subject to stock
options exercisable within 60 days of May 9, 1997 and 41,250 shares of
common stock issued upon early exercise of employee stock options that are
subject to repurchase by the Company as of May 9, 1997.

2
<PAGE> 6

PROPOSAL 1

ELECTION OF DIRECTORS

BOARD COMPOSITION

The Company's Board of Directors comprises five directors divided into
three classes. The Board of Directors proposes the election of two Class I
directors at the Meeting, each to hold office for a three-year term and until
his successor is duly elected and qualified. Class II and Class III directors
will be elected at the annual meetings of stockholders to be held in 1998 and
1999, respectively, for three-year terms, and until their respective successors
are duly elected and qualified. It is intended that the accompanying Proxy will
be voted for the nominees set forth below, each of whom is currently a director
of the Company. If some unexpected occurrence should make necessary, in the
Board of Directors' judgment, the substitution of some other person or persons
for any of the nominees, shares will be voted for such other person or persons
as the Board of Directors may select. The Board of Directors is not aware that
any nominee may be unable or for good reason unwilling to serve as a director.
In the election of directors, those receiving the greatest number of votes shall
be elected, even if such votes do not constitute a majority. The following sets
forth certain information as of May 9, 1997 with respect to each nominee and
also with respect to each director whose term of office will continue after the
Meeting.

NOMINEES FOR ELECTION

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ------------------------------------- --------------
<S> <C> <C> <C>
William N. Melton...................... 55 President and Chief Executive Officer 1994
CyberCash, Inc.
Garen K. Staglin....................... 52 Chairman and Chief Executive Officer 1996
Safelite Glass Corporation
</TABLE>

William N. Melton, a founder of the Company, has served as a member of the
Company's Board of Directors and as its President and Chief Executive Officer
since the Company's inception in August 1994. Mr. Melton founded VeriFone, Inc.,
a transaction automation company, in 1981 and was a director of VeriFone from
1981 until 1996. He served as President and Chief Executive Officer of VeriFone
from 1981 until 1986, and served as its Chairman of the Board from 1986 until
1992. Mr. Melton was a founding investor of Transaction Network Services, Inc.,
a transaction network communications company, and continues to serve on its
Board of Directors. Mr. Melton is also a director of America Online, Inc.

Garen K. Staglin has served as a member of the Company's Board of Directors
since July 1996. He is the Chairman and Chief Executive Officer of Safelite
Glass Corporation, a manufacturer and retailer of replacement autoglass and
related services. Mr. Staglin is also a director of First Data Corporation,
Quick Response Services, Inc. and Grimes Aerospace Corporation. He is a member
of the Advisory Board of the Stanford Graduate School of Business.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR REELECTION OF MESSRS. MELTON
AND STAGLIN AS DIRECTORS OF THE COMPANY.

3
<PAGE> 7

DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE MEETING

<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- --------------------------------------- --- ------------------------------------- --------------
<S> <C> <C> <C>
Daniel C. Lynch........................ 55 Chairman of the Board of Directors 1994
CyberCash, Inc.
Edward R. Kozel........................ 41 Chief Technology Officer and Vice 1995
President of Business Development
Cisco Systems, Inc.
Michael Rothschild..................... 44 President 1994
The Bionomics Institute
President and Chief Executive Officer
Maxager Technology Inc.
</TABLE>

Daniel C. Lynch, a founder of the Company, has served as Chairman of the
Company's Board of Directors since the Company's inception in August 1994 and
served briefly as Vice President during its formation in August 1994. Mr. Lynch
was the founder of Interop, a conference and tradeshow company for the computer
and communications industry, now a division of Softbank Expos and formerly
Ziff-Davis Conference and Exhibition Company, and from 1980 to 1983, he was
Director of Information Processing Division for the Information Sciences
Institute. Mr. Lynch is also a member of the Board of Trustees of the Santa Fe
Institute.

Edward R. Kozel has been a member of the Company's Board of Directors since
November 1995. Since 1989, Mr. Kozel has served in several management positions
at Cisco Systems, Inc., a network communications and software company, including
Market Development Manager from 1989 to 1992; Director of Field
Operations/Business Development from 1992 to 1993; Vice President of Business
Development from 1993 to the present and Chief Technical Officer from May 1995
to the present. In addition, Mr. Kozel is a member of the Board of Directors of
Cisco Systems and NetFRAME Systems, Inc.

Michael Rothschild has served as a member of the Company's Board of
Directors since November 1995. He is an author, economic columnist and president
of The Bionomics Institute, a non-profit educational foundation. Since 1993, Mr.
Rothschild has been President and Chief Executive Officer of Maxager Technology
Inc., a software maker specializing in advanced product costing systems for
manufacturers. Mr. Rothschild is also a director of Ramtron International
Corporation.

BOARD COMMITTEES AND MEETINGS

During 1996, the Board of Directors held four meetings and had two standing
committees -- an Audit Committee and a Compensation Committee. No incumbent
Board member, other than Mr. Kozel, attended fewer than 75 percent of the
aggregate of (i) the total number of meetings of the Board of Directors which
such director was eligible to attend during 1996 and (ii) the total number of
meetings held by any committee of the Board upon which such director served.

The Audit Committee of the Board of Directors reviews the internal
accounting procedures of the Company and consults with and reviews the services
provided by the Company's independent auditors. Messrs. Lynch, Rothschild and
Staglin comprise the Audit Committee. The Audit Committee met once during 1996.
The Compensation Committee of the Board of Directors reviews and recommends to
the Board the compensation and benefits of employees of the Company. The
Compensation Committee also administers the issuance of stock options and other
awards under the Company's stock plans, except for the 1995 Non-Employee
Directors' Stock Option Plan, which is administered by the Board of Directors.
Messrs. Lynch, Kozel and Staglin comprise the Compensation Committee. The
Compensation Committee met once during 1996.

4
<PAGE> 8

DIRECTOR COMPENSATION

Directors currently do not receive any cash compensation from the Company
for their service as members of the Board of Directors, although they are
reimbursed for certain expenses in connection with attendance at Board and
Committee meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

From August 1995 until July 1996, Hatim A. Tyabji served as a director of
the Company and as a member of the Compensation Committee. Mr. Tyabji is the
Chairman, President and Chief Executive Officer of VeriFone, Inc. Until July
1996, Mr. Melton was a director of VeriFone. No other executive officer of the
Company served as a director or member of (i) the compensation committee of
another entity which has an executive officer who is a director of the Company
or a member of the Company's Compensation Committee, (ii) the board of directors
of another entity in which one of the executive officers of such entity served
on the Company's Compensation Committee, or (iii) the compensation committee of
any other entity in which one of the executive officers of such entity served as
a member of the Company's Board of Directors, during the year ended December 31,
1996.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the exercise of stock options during 1995, Stephen
Crocker, Larry Gilbert and Magdalena Yesil executed promissory notes in the
amounts of $400,000, $150,000 and $330,000, respectively, with interest payable
at an annual rate of 6%, which mature three years from the date of the note and
are secured by the Common Stock issued upon exercise of the options. The Company
paid Mr. Crocker, the Company's Chief Technology Officer, $29,021 to reimburse
him for the interest that he paid on his note during 1996. The Company paid Mr.
Gilbert, who was the Company's Secretary and General Counsel prior to April
1996, $10,883 to reimburse him for the interest that he paid on his note during
1996. During 1996, the Company repurchased from Ms. Yesil, who was an executive
officer of the Company prior to September 1996, 20,000 shares of the Company's
Common Stock at $6.00 per share upon the termination of her employment. In
addition, Ms. Yesil repaid $224,454, representing principal and interest on her
promissory note, in satisfaction of the note. As of May 9, 1997, the outstanding
amounts of principal owed by Mr. Crocker and Mr. Gilbert were $400,000 and
$150,000, respectively.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Commission, by a specified date,
reports regarding their ownership of Common Stock. Based solely on a review of
Forms 3 and 4 and amendments thereto furnished under the Securities Exchange Act
of 1934, Daniel C. Lynch, Bruce G. Wilson and Stephen D. Crocker failed to file
on a timely basis reports on Form 5 with respect to three transactions by Mr.
Lynch which occurred in 1996 and one transaction by each of Messrs. Wilson and
Crocker which occurred in 1996.

5
<PAGE> 9

EXECUTIVE COMPENSATION

The following table sets forth certain compensation awarded or paid by the
Company during the fiscal year ended December 31, 1996 to its President and
Chief Executive Officer and the Company's four other most highly compensated
officers and key employees:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
- ---------------------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
William N. Melton....................... 1996 100,000 -- -- --
President and Chief Executive Officer 1995 100,000 -- -- --
Bruce G. Wilson......................... 1996 195,000 24,000 -- --
Executive Vice President 1995 170,000 -- -- 27,000
Stephen D. Crocker...................... 1996 195,000 28,000 29,021(1) --
Chief Technology Officer 1995 170,000 -- -- 200,000
Russell B. Stevenson, Jr................ 1996 168,523 20,475 -- 35,000
Secretary and General Counsel 1995 -- -- -- --
Denis Yaro.............................. 1996 175,389 22,533 -- 160,000
Executive Vice President 1995 -- -- -- --
</TABLE>

- ---------------
(1) In connection with the exercise of certain options during 1995, Mr. Crocker
executed a promissory note in the amount of $400,000, which accrues interest
at an annual rate of 6%. The Company paid Mr. Crocker $29,021 to reimburse
him for the interest that he paid on the note.

EQUITY INCENTIVE PLANS

1995 Stock Option Plan. In April 1995, the Company adopted the 1995 Stock
Option Plan (the "Option Plan") under which 1,000,000 shares of Common Stock
were reserved for issuance upon exercise of options granted to employees,
officers and consultants of the Company. Subsequent amendments to the Option
Plan increased the share reserve to its current level of 2,000,000 shares of
Common Stock. The Option Plan provides for grants of incentive stock options to
employees (including officers and employee directors) and nonstatutory stock
options to employees (including officers and employee directors), directors and
consultants of the Company. The Option Plan previously was administered by the
Board of Directors and presently is being administered by the Compensation
Committee, which determines recipients and types of awards to be granted,
including the exercise price, number of shares subject to the award and the
exercisability thereof.

The terms of stock options granted under the Option Plan may not exceed 10
years. The exercise price of options granted under the Option Plan is determined
by the Compensation Committee; provided, however, that the exercise price of a
nonstatutory stock option cannot be less than 85% of the fair market value of
the Common Stock on the date of the option grant; and the exercise price of an
incentive stock option cannot be less than 100% of the fair market value of the
Common Stock on the date of grant. Options granted under the Option Plan are
generally of two types: time-based vested options and performance-based vested
options. Time-based vested options generally vest as to 7.5% of the shares
subject to option three months after the date of grant and 2.5% of such shares
at the end of each month thereafter, so that the option is fully vested 40
months after grant. Performance-based vested options generally vest in their
entirety 10 years after the date of grant; provided, however, that vesting is
accelerated upon achievement of a milestone event, as specified in the terms of
the options. Upon occurrence of a milestone event, vesting accelerates so that
2.5% of the shares generally vest each month after the event, and the option is
fully vested 40 months after the occurrence of the event. No option may be
transferred by the optionee other than by will or the laws of descent or
distribution. An optionee whose relationship with the Company or any related
corporation ceases for any reason (other than by death or permanent and total
disability) may exercise options within the three month period following

6
<PAGE> 10

such cessation (unless such options terminate or expire sooner by their terms)
or within such longer period as determined by the Compensation Committee.

Shares subject to options which have lapsed or terminated may again be
subject to options granted under the Option Plan. Furthermore, the Compensation
Committee may offer to exchange new options for existing options, with the
shares subject to the existing options again becoming available for grant under
the Option Plan. In the event of a decline in the value of the Company's Common
Stock, the Compensation Committee has the authority to offer optionees the
opportunity to replace outstanding higher priced options with new lower priced
options. Upon any merger or consolidation in which the Company is acquired, all
outstanding vested options will either be assumed or substituted by the
surviving entity. If the surviving entity determines not to assume or substitute
unvested options, the unvested portion of the options will terminate as of the
closing of the merger or consolidation.

As of December 31, 1996, 581,431 shares of Common Stock had been issued
upon the exercise of options granted under the Option Plan (130,624 of which
were subject to a repurchase option in favor of the Company as of December 31,
1996), options to purchase 1,339,958 shares of Common Stock at exercise prices
ranging from $2.00 to $45.75 per share were outstanding and 98,611 shares
remained available for future option grants. The Option Plan will terminate on
April 5, 2005, unless terminated sooner by the Compensation Committee.

Non-Employee Directors' Stock Option Plan. In December 1995, the Board of
Directors adopted the 1995 Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") to provide for the automatic grant of options to purchase
shares of Common Stock to non-employee directors of the Company. The Directors'
Plan is administered by the Board of Directors.

The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 100,000. Pursuant to the terms of
the Directors' Plan, each newly elected director of the Company who is not
otherwise an employee of the Company (a "Non-Employee Director") will
automatically be granted an option to purchase 10,000 shares of Common Stock on
the date of his or her election to the Board. On the date of each annual meeting
of the Company starting with the Meeting, each person who is then a Non-Employee
Director of the Company and who has continuously served as a Non-Employee
Director since the last annual meeting, will be granted an option to purchase
3,000 shares of Common Stock of the Company under the Directors' Plan, and each
other person who is then a Non-Employee Director will be granted an option to
purchase a pro rated number of shares of Common Stock based on the number of
days such person has continuously served as a Non-Employee Director since the
last annual meeting.

Outstanding options under the Directors' Plan will vest monthly over a five
year period. The exercise price of options granted under the Directors' Plan
will be equal to the fair market value of the Common Stock on the date of grant.
No option granted under the Directors' Plan may be exercised after the
expiration of ten years from the date it was granted. Options granted under the
Directors' Plan are generally non-transferable. The Directors' Plan will
terminate at the direction of the Board of Directors.

In the event of certain transactions by which the Company is acquired or
controlled by a single investor or group of investors, options outstanding under
the Directors' Plan will automatically become fully vested and will terminate if
not exercised prior to such event.

As of December 31, 1996, options to purchase 10,000 shares of Common Stock
at an exercise price of $32.25 per share were outstanding under the Directors'
Plan and 90,000 shares remained available for future option grants under the
Directors' Plan.

Employee Stock Purchase Plan. In December 1995, the Company adopted the
Employee Stock Purchase Plan (the "Purchase Plan") covering an aggregate of
500,000 shares of Common Stock. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Internal
Revenue Code. The Purchase Plan is administered by the Compensation Committee.
Under the Purchase Plan, the Compensation Committee may authorize participation
by eligible employees, including officers, in periodic offerings. The offering
period for any offering will be no more than 27 months.

7
<PAGE> 11

Employees are eligible to participate if they are employed by the Company
or a subsidiary of the Company designated by the Compensation Committee for at
least 20 hours per week and are employed by the Company or a subsidiary of the
Company designated by the Committee for at least five months per calendar year.
Employees who participate in an offering can have up to 15% of their earnings
withheld pursuant to the Purchase Plan. The amount withheld will then be used to
purchase shares of Common Stock on specified dates determined by the
Compensation Committee. The price of Common Stock purchased under the Purchase
Plan will be equal to 85% of the lower of the fair market value of the Common
Stock on the commencement date of each offering period or the relevant purchase
date. Employees may end their participation in the offering at any time during
the offering period, and participation ends automatically on termination of
employment with the Company.

In the event of certain transactions by which the Company is acquired or
becomes controlled by a single investor or group of investors, the Compensation
Committee has discretion to provide that each right to purchase Common Stock
will be assumed or an equivalent right substituted by the successor corporation,
if any, or the Compensation Committee may shorten the offering period and
provide for all sums collected by payroll deductions to be applied to purchase
stock immediately prior to such transaction. The Purchase Plan will terminate at
the Board's direction. The Board of Directors has the authority to amend or
terminate the Purchase Plan, subject to the limitation that no such action may
adversely affect any outstanding rights to purchase Common Stock.

As of December 31, 1996, 23,449 shares of Common Stock were purchased at
$14.45 per share, and 476,551 shares remained available for future purchases.

STOCK OPTION INFORMATION

The following table shows for the fiscal year ended December 31, 1996,
certain information regarding options granted to, exercised by, and held at year
end by the Company's President and Chief Executive Officer and the Company's
five other most highly compensated officers and key employees:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM($)(3)(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
- --------------------------------- ------------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William N. Melton................ -- -- -- -- -- --
Bruce G. Wilson.................. 27,000 0 6.00 11/30/05 101,881 258,186
Denis Yaro....................... 80,000 7.8 15.00 1/26/06 754,674 1,912,491
80,000 7.8 15.00 6/7/06 754,674 1,912,491
Jeffrey S. Irby.................. 30,000 2.9 32.25 10/21/06 608,456 1,541,946
Stephen D. Crocker............... 200,000 0 2.00 4/05/05 251,558 637,497
Russell B. Stevenson, Jr......... 35,000 3.4 31.75 4/12/06 698,859 1,771,046
</TABLE>

- ---------------
(1) The options are generally incentive stock options with vesting based either
on time or performance. Time-based vesting generally occurs over 40 months,
with 7.5% of the shares vesting after three months, and 2.5% of the shares
vesting each month for the next 37 months. Performance based vesting is
specified by the specific terms of the option.

(2) The exercise price is equal to 100% of the fair market value of the Common
Stock on the date of the grant.

(3) The options have a ten-year term, subject to earlier termination upon death,
permanent and total disability or termination of employment.

(4) The potential realizable value is calculated based on the term of the option
at its time of grant (10 years) and is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last day
of its term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the Commission and do not
represent the Company's estimate or projection of the future Common Stock
price.

8
<PAGE> 12

The following table sets forth information with respect to (i) the exercise
of stock options during the fiscal year ended December 31, 1996 by the Company's
President and Chief Executive Officer and the Company's five other most highly
compensated officers and key employees, (ii) the number of unexercised options
held as of December 31, 1996 by the Company's President and Chief Executive
Officer and the Company's five other most highly compensated officers and key
employees and (iii) the value as of December 31, 1996 of unexercised
in-the-money options; that is, the amount by which the exercise price exceeds
the fair market value of the Common Stock as of December 31, 1996 ($23.00).

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR-END($)(2)
ACQUIRED ---------------------------- ----------------------------
NAME ON EXERCISE(#) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
William N. Melton..................... -- -- -- -- --
Bruce G. Wilson....................... 0 8,775 18,225 149,175 309,825
Denis Yaro............................ 0 34,000 126,000 272,000 1,008,000
Jeffrey S. Irby....................... 0 2,000 28,000 0 0
Stephen D. Crocker(1)................. 0 0 60,000 0 1,260,000
Russell B. Stevenson, Jr.............. 0 7,000 28,000 0 0
</TABLE>

- ---------------
(1) Includes 60,000 shares held by Mr. Crocker issued upon exercise of options
but subject to a right of repurchase by the Company.

(2) Based on the closing price of the Company's Common Stock on December 31,
1996 of $23.00 per share, minus the exercise price, multiplied by the number
of shares underlying the option.

REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

The Compensation Committee was formed on December 20, 1995, and its current
members are Daniel C. Lynch, Edward R. Kozel and Garen K. Staglin. It is the
responsibility of the Compensation Committee to review and recommend changes to
the Company's compensation policies and benefits programs and to administer the
Company's incentive compensation and benefit plans, including approving stock
option grants.

COMPENSATION PHILOSOPHY

The Company's overall approach to compensating its executives is (i) to
provide compensation packages that enable the Company to attract and retain
executive talent and (ii) to link compensation to the accomplishment of the
Company's goals. The Compensation Committee believes that the Company has
aligned the financial interests of the Company's executives with the interests
of its stockholders by granting stock options to its executives and offering
cash and stock awards to executives who meet performance objectives.

COMPENSATION PROGRAM

The Company executive compensation plan includes a base salary,
participation in equity plans, and awards under a performance incentive plan.

BASE SALARY

The Compensation Committee intends to compensate its executive officers
competitively within its industry. In order to evaluate the Company's
competitive position in the industry, the Compensation Committee reviews and
analyzes the compensation packages, including base salary levels, offered by
comparable technology companies and targets the base salaries of the Company's
executives at or near the 50th percentile of executive salaries paid by
comparative companies. In addition, the Compensation

9
<PAGE> 13

Committee, together with the Board of Directors, subjectively evaluates the
level of performance of each executive officer, including the Chief Executive
Officer, in order to determine current and future appropriate base pay levels.
The Compensation Committee reviews each senior executive officer's salary
annually. In determining the appropriate salary levels, the Compensation
Committee considers the officer's scope of responsibility, prior experience and
data on prevailing compensation levels in relevant executive labor markets. With
his concurrence, for William N. Melton, the Company's Chief Executive Officer,
the Company targets the lower end of the range of salaries for chief executive
officers of similar companies. As the Company's largest stockholder, Mr. Melton
already has significant incentives to see that the Company reaches its strategic
and performance goals. With respect to the other executive officers of the
Company, the Company sets base salaries in line with competitive compensation
levels in relevant executive labor markets.

EQUITY PLANS

The Compensation Committee provides the Company's executive officers with
long-term incentive compensation through its stock option and employee stock
purchase plans. The Compensation Committee is responsible for administering the
plans and determines the individuals to whom grants should be made, the timing
of grants, the exercise price per share and the number of shares subject to each
option. The Compensation Committee believes that stock options provide
executives with a strong economic interest in maximizing stock price
appreciation over the longer term. The Company believes that the practice of
granting stock options is critical to retaining and recruiting the key talent
necessary at all employee levels to ensure the Company's continued success.
Options granted by the Compensation Committee typically vest over 40 months in
order to encourage employees to continue in the employ of the Company. It is
also the Company's practice to set option exercise prices at the fair market
value of the Company's stock on the date of grant. Thus, the value of the
stockholders' investment in the Company must appreciate before an optionee
receives any financial benefit from the option. Because of his significant
equity ownership in the Company, no stock options have been granted to Mr.
Melton. Mr. Melton does not participate in the Company's stock purchase plan.

PERFORMANCE INCENTIVE PLAN

The Company has adopted a Performance Incentive Plan for its employees,
including its executive officers, which provides cash bonuses or stock option
awards twice a year to employees who achieve pre-determined performance goals
during the preceding six months. The operation of this plan commenced in 1997.
The Compensation Committee believes that the Performance Incentive Plan will
provide significant incentives for the Company's employees, including its
executives, to meet the Company's strategic and performance goals throughout
1997. Because Mr. Melton's significant equity ownership in the Company already
provides adequate performance incentives, he is not eligible to receive awards
under this plan.

POLICY ON DEDUCTIBILITY OF COMPENSATION

Present tax law limits to $1 million the Company's deduction for
compensation paid to each of the Chief Executive Officer and the other four most
highly compensated executives. However, compensation which qualifies as
"performance-based" is excluded from the $1 million limit if, among other
requirements, the compensation is payable only upon attainment of
pre-established, objective performance goals under a plan approved by
shareholders.

In 1996, all of the compensation paid to the Chief Executive Officer and
the other four most highly compensated executives qualified for deduction under
the Internal Revenue Code. The Company's 1995 Stock Option Plan and Employee
Stock Purchase Plan provide for equity awards to be qualified as "performance-
based" under Section 162(m) of the Internal Revenue Code and have been approved
by the Company's stockholders in order to permit the deductibility of such
compensation.

The Compensation Committee does not currently expect total compensation
payable in connection with base salaries, the Company's equity plans and the
Performance Incentive Plan to exceed the $1 million limit for any individual
executive in 1997. The Compensation Committee will continue to monitor the
compensa-

10
<PAGE> 14

tion levels potentially payable under the Company's compensation programs. The
Committee, however, reserves the right to award compensation to its executives
in the future that may not qualify as deductible compensation in order to
provide cash compensation in line with competitive practice and the Company's
best interests.

SUMMARY

The Compensation Committee believes that its executive compensation
philosophy of paying its executive officers well by providing competitive base
salaries, long-term equity incentives and performance incentives, as described
in this report, serves the interests of the Company and the Company's
stockholders.

Compensation Committee
Daniel C. Lynch
Edward R. Kozel
Garen K. Staglin

PERFORMANCE GRAPH

Set forth below is a line graph comparing the Company's stock price
performance to the Nasdaq Stock Market (U.S.) Total Return Index and the
Hambrecht & Quist Technology Stock Index for the period commencing on February
15, 1996 (the date on which the Company's Common Stock began trading on the
Nasdaq Stock Market) and ending on December 31, 1996. The stock price
performance on the following graph is not necessarily indicative of future stock
price performance. All stock price performance assumes an initial investment of
$100 at the beginning of the period and assumes the reinvestment of any
dividends.

<TABLE>
<CAPTION>
Measurement Period NASDAQ Stock Hambrecht & Quist
(Fiscal Year Covered) CyberCash, Inc. Market-US Technology
<S> <C> <C> <C>
02/15/96 100 100 100
12/31/96 135 119 114
</TABLE>

11
<PAGE> 15

PROPOSAL 2

RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has selected Ernst & Young LLP as independent
auditors of the Company for the year ending December 31, 1997. Ernst & Young LLP
served in this capacity for the year ended December 31, 1996. A representative
of Ernst & Young LLP will attend the Meeting and will be afforded an opportunity
to make a statement if he or she desires to do so. It also is expected the
representative will be available to respond to appropriate questions.

The appointment of auditors is approved annually by the Board and
subsequently submitted to the stockholders for ratification. The decision of the
Board is based on the recommendation of the Audit Committee. Before making its
recommendation to the Board for appointment of Ernst & Young LLP, the Audit
Committee carefully considered that firm's qualifications as auditors for the
Company. This included a review of its performance last year, as well as its
reputation for integrity and competence in the fields of accounting and
auditing. The Audit Committee has expressed its satisfaction with Ernst & Young
LLP in all of these respects.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS.

PROPOSAL 3

AMENDMENT OF
THE 1995 STOCK OPTION PLAN

In 1995, the Board of Directors adopted, and the stockholders subsequently
approved, the Company's 1995 Stock Option Plan (as amended, the "Option Plan"),
which authorized the issuance of 2,000,000 shares of the Company's Common Stock
in connection with stock options. As of December 31, 1996, 98,611 shares of
Common Stock (plus any shares that might in the future be returned to the Option
Plan as a result of the cancellation or expiration of options) remained
available for future grant under the Option Plan.

In April 1997, the Board approved an amendment to the Option Plan, subject
to stockholder approval, to increase the number of shares authorized for
issuance under the Option Plan from a total of 2,000,000 shares to 3,500,000
shares. The Board adopted this amendment to ensure that the Company can continue
to grant stock options to employees at levels determined appropriate by the
Board and the Compensation Committee. During the last fiscal year, under the
Option Plan, the Company granted to all current executive officers as a group
options to purchase 225,000 shares at exercise prices ranging from $15.00 to
$32.25 per share and to all employees (excluding executive officers) as a group
options to purchase 791,948 shares at exercise prices ranging from $8.00 to
$45.75 per share.

The Board also approved in April 1997 certain other amendments to the
Option Plan (i) to state in the Option Plan that "cashless" exercises of options
are permitted, (ii) to permit non-qualified options to be transferable for
estate planning purposes, (iii) to give the Board of Directors the discretion to
grant options covering up to the total number of shares available for issuance
under the Option to one participant so that options issued under the Option Plan
are not subject to the limitation of Section 162(m) of the Internal Revenue Code
of 1986 (the "Code"), and (iv) to reflect certain recent changes in rules issued
under Section 16 of the Securities Exchange Act of 1934.

Stockholders are requested in this Proposal 3 to approve the Option Plan,
as amended. If the stockholders fail to approve this Proposal 3, the number of
shares authorized for issuance under the Option Plan will not be increased. The
affirmative vote of the holders of a majority of the shares present in person or
represented by proxy and entitled to vote at the meeting will be required to
approve the amendment of the Option Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT OF THE 1995 STOCK
OPTION PLAN.

12
<PAGE> 16

The material features of the Option Plan are outlined below:

PURPOSE AND GENERAL DESCRIPTION

The purpose of the Option Plan is to provide a means by which selected
employees of and consultants to the Company, and its affilitates, may be given
an opportunity to purchase stock of the Company. The Company, by means of the
Option Plan, seeks to retain the services of persons who are now employees of or
consultants to the Company or its affiliates, to secure and retain the services
of new employees and consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its affiliates.

The options issued under the Option Plan may be either incentive stock
options or nonstatutory stock options. Incentive stock options granted under the
Option Plan are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code. Nonstatutory stock options granted under the
Option Plan are intended not to qualify as incentive stock options under the
Code. See "Federal Income Tax Information" below for a discussion of the tax
treatment of incentive and nonstatutory stock options.

ADMINISTRATION

The Option Plan is administered by the Board of Directors of the Company.
The Board has the power to construe and interpret the Option Plan and, subject
to the provisions of the Option Plan, to determine the persons to whom and the
dates on which options will be granted, the number of shares to be subject to
each option, the time or times during the term of each option within which all
or a portion of such option may be exercised, the exercise price, the type of
consideration and other terms of the option. The Board of Directors is
authorized to delegate administration of the Option Plan to a committee composed
of not fewer than two members of the Board who are not employees of the Company,
and with respect to grants to employees who are not executive officers of the
Company, to a committee composed of one or more members of the Board. The Board
has delegated administration of the Option Plan to the Compensation Committee of
the Board and has delegated to the Company's Chief Executive Officer the
authority to grant stock options to employees who are not executive officers of
the Company in accordance with guidelines approved by the Compensation
Committee. As used herein with respect to the Option Plan, the "Board" refers to
the Compensation Committee as well as to the Board of Directors itself.

SHARES SUBJECT TO THE PLAN

Prior to April 1997, the Option Plan provided that a total of 2,000,000
shares of the Company's Common Stock may be issued pursuant to options granted
under the Option Plan. If options granted under the Option Plan expire or
otherwise terminate without being exercised in full, the stock not purchased
pursuant to such options again becomes available for issuance pursuant to
exercises of options granted under the Option Plan.

ELIGIBILITY

Incentive stock options may be granted only to employees. Nonstatutory
stock options may be granted only to employees, consultants or directors. No
person is eligible for the grant of an incentive stock option if, at the time of
grant, such person owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company unless the
exercise price of such option is at least one hundred ten percent (110%) of the
fair market value of such stock at the date of grant and the option is not
exercisable after the expiration of five (5) years from the date of grant. There
are currently approximately 220 employees and consultants eligible to
participate in the Option Plan.

In the event an optionee's status as an employee, director or consultant is
terminated, the optionee may exercise his or her option but only within the
earlier of three (3) months after the termination of the optionee or the
expiration of the term of the option as set forth in the option agreement. In
the event an optionee's status as an employee or consultant terminates as a
result of the optionee's disability, the optionee may exercise his or her
option, but only within the earlier of twelve (12) months following such
termination or the expiration of the term of the option as set forth in the
option agreement. In the event of the death of an

13
<PAGE> 17

optionee, the option may be exercised by the optionee's estate or by a person
who acquired the right to exercise the option by bequest or inheritance, but
only with the earlier of eighteen (18) months following the date of death or the
expiration of the term of such option as set forth in the option agreement.

The Option Plan provides that the Board may grant options covering up to
the entire number of shares available for issuance under the Option Plan to any
one participant or to several participants. The purpose of this provision is to
permit the Company to continue to be able to deduct for tax purposes the
compensation attributable to the exercise of options granted under the Option
Plan or certain dispositions of stock purchased by the exercise of such options.

TERM

No option is exercisable after the expiration of ten (10) years from the
date it was granted.

PRICE

The exercise price of each incentive stock option cannot be less than one
hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted. The exercise price of each
nonstatutory stock option shall be not less than eighty-five percent (85%) of
the fair market value of the stock subject to the option on the date the option
is granted.

CONSIDERATION

The purchase price of stock acquired pursuant to an option may be paid in
cash at the time the option is exercised, by delivery to the Company of certain
other common stock of the Company, by deferred payment or other arrangement, or
in any other form of legal consideration that may be acceptable to the Board. In
the case of any deferred payment arrangement, interest is to be payable at least
annually and is charged at the minimum rate of interest necessary to avoid
adverse tax consequences under various provisions of the Code.

VESTING

The total number of shares of stock subject to an option may, but need not,
be allotted in periodic installments. The option agreement may provide that from
time to time during each of such installment periods, the option may become
exercisable ("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allotted
to such period and/or any prior period as to which the option became vested but
was not fully exercised.

The options that currently have been granted under the Option Plan are
generally of two types: time-based vested options and performance-based vested
options. Time-based vested options generally vest as to 7.5% of the shares
subject to option three months after the date of grant and 2.5% of such shares
at the end of each month thereafter, so that the option is fully vested 40
months after grant. Performance-based vested options generally vest in their
entirety 10 years after the date of grant; provided, however, that vesting is
accelerated upon achievement of a milestone event, as specified in the terms of
the options. Upon occurrence of a milestone event, vesting accelerates so that
2.5% of the shares generally vest each month after the event, and the option is
fully vested 40 months after the occurrence of the event.

RESTRICTIONS ON TRANSFER

Under the Option Plan, an incentive stock option may not be transferred by
the optionee otherwise than by will or by the laws of descent and distribution.
The transfer of a nonstatutory stock option is similarly restricted under the
Option Plan, except that under certain circumstances transfers may be made to
immediate family members and certain family trusts.

ADJUSTMENTS UPON CHANGES IN STOCK

If any change is made in the stock subject to the Option Plan, or subject
to any option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split,

14
<PAGE> 18

liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or otherwise), the Option Plan and outstanding options will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Option Plan and the class(es) and number of shares and price per share of
stock subject to outstanding options.

In the event of (i) a merger or consolidation in which the Company is not
the surviving corporation or (ii) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise then to the
extent permitted by applicable law, then any surviving corporation shall assume
any options outstanding under the Option Plan or shall substitute similar
options for those outstanding under the Option Plan or such options shall
continue in full force and effect. In the event any surviving corporation
refuses to assume or continue such options, or to substitute similar options for
those outstanding under the Option Plan, then such options shall be terminated
if not exercised prior to such event. In the event of a dissolution or
liquidation of the Company, any options outstanding under the Option Plan shall
terminate if not exercised prior to such event.

AMENDMENT OF THE PLAN

The Board at any time, and from time to time, may amend the Option Plan.
However, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will increase the number of shares reserved for
options under the Option Plan; modify the requirements as to eligibility for
participation; or modify the Option Plan in any other way if such modification
requires stockholder approval in order for the Option Plan to satisfy the
requirements of Section 422 of the Code, or to comply with the requirements of
Rule 16b-3 issued under the Securities Exchange Act of 1934.

TERMINATION OR SUSPENSION OF THE PLAN

The Board may suspend or terminate the Option Plan at any time. Unless
sooner terminated, the Option Plan shall terminate on April 5, 2005. No options
may be granted under the Option Plan while the Option Plan is suspended or after
it is terminated.

FEDERAL INCOME TAX INFORMATION

INCENTIVE STOCK OPTIONS. Incentive stock options under the Option Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code. To the extent an optionee recognizes
ordinary income by reason of a "disqualifying disposition" of stock acquired
upon exercise of options for the purposes of the Code, the Company will
generally be entitled (subject to the requirement of reasonableness, the
provisions of Section 162(m) of the Code, and the satisfaction of a tax
reporting obligation) to a corresponding business expense deduction in the tax
year in which the disqualifying disposition occurs.

NONSTATUTORY STOCK OPTIONS. Generally, there are no tax consequences to
the optionee or the Company by reason of the grant of a nonstatutory stock
option. Upon exercise of a nonstatutory stock option, the optionee normally will
recognize taxable ordinary income equal to the excess of the stock's fair market
value on the date of exercise over the option exercise price. Generally, with
respect to employees, the Company is required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, the provisions of Section 162(m)
of the Code and the satisfaction of a tax reporting obligation, the Company will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the optionee.

POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m), which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1,000,000 for a covered employee. It is possible that
compensation attributable to stock options,

15
<PAGE> 19

when combined with all other types of compensation received by a covered
employee from the Company, may cause this limitation to be exceeded in any
particular year.

Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that the option is granted by a committee comprised solely of two or
more "outside directors" and: (i) the option plan contains a per-employee
limitation on the number of shares for which options may be granted during a
specified period, the per-employee limitation is approved by the stockholders,
and the exercise price of the option is no less than the fair market value of
the stock on the date of grant; or (ii) the option is granted (or becomes
exercisable) only upon the achievement (as certified by the committee of outside
directors) of an objective performance goal established by that committee while
the outcome is substantially uncertain and the stockholders approve the option
grant. As noted above, the Option Plan contains a per-employee limitation on the
number of shares for which options may be granted annually and are intended to
qualify as "performance-based" compensation: such limit is the total number of
shares of available for issuance under the Option Plan.

OTHER MATTERS

The Company knows of no other matters that will be presented for consideration
at the Meeting. If any other matters should be presented at the Meeting for
action, it is the intention of the persons named in the enclosed Proxy to vote
the shares they represent in their own discretion.

VOTING PROCEDURES

Votes are tabulated by an Inspector of Election. Assuming the presence of a
quorum, directors are elected by the affirmative vote of a plurality of all the
votes cast by holders of Common Stock, and all other proposals are approved by
the affirmative vote of a majority of all the votes cast by holders of Common
Stock present in person or represented by a proxy at the Meeting. The Company
intends to include abstentions and broker non-votes as present or represented
for purposes of establishing a quorum for the transaction of business, to
include abstentions as shares entitled to vote and to exclude broker non-votes
from the calculation of shares entitled to vote with respect to any proposal for
which authorization to vote was withheld.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting of Stockholders must
be received by the Company no later than January 28, 1998 in order to be
considered for possible inclusion in the proxy statement and form of proxy
relating to that meeting.

COPIES OF FORM 10-K

The Company will mail without charge, upon written request, a copy of the
Annual Report on Form 10-K, including the financial statements and list of
exhibits. Requests should be sent to CyberCash, Inc., 2100 Reston Parkway, Third
Floor, Reston, Virginia 20191, Attn: General Counsel. The Annual Report on Form
10-K is also available on the Company's web site at www.cybercash.com.

16
<PAGE> 20

SOLICITATION OF PROXIES

The cost of soliciting proxies is being borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or electronic mail.

May 29, 1997

By order of the Board of Directors,
/s/ Russell B. Stevenson, Jr.
Russell B. Stevenson, Jr.
Secretary

17
<PAGE> 21

1484-PS-97
<PAGE> 22

DETACH HERE CBC F

CYBERCASH, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 27,1997

P The undersigned stockholder of CyberCash, Inc., a Delaware
R corporation, hereby constitutes and appoints Daniel C. Lynch, William N.
O Melton and Russell B. Stevenson, Jr., or any of them, proxies for the
X undersigned, each with full power of substitution, to attend the Annual
Y Meeting of Stockholders of CyberCash, Inc. to be held on Friday, June 27,
1997 at 10 a.m., Pacific time, at the Hotel Sofitel, 223 Twin Dolphin Drive,
Redwood City, California, and at any adjournments or postponements thereof,
and to vote as specified in this Proxy all the shares of stock of the
Company which the undersigned would be entitled to vote if personally
present. Any appointment of proxy heretofore made by the undersigned for
such meeting is hereby revoked.

Your vote with respect to the election of directors and the other
proposals may be indicated on the reverse. Nominees for director are William
N. Melton and Garen K. Staglin.

YOUR VOTE IS IMPORTANT!
PLEASE SIGN AND DATE THE REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.

This Proxy When Properly Executed Will Be Voted In The Manner
Directed Herein. If No Direction Is Made, This Proxy Will Be Voted For The
Election Of Each Nominee Identified In Proposal 1 And For Proposals 2 And 3,
And In The Discretion Of The Proxy Holders As To Other Matters.

--------------------
(PROXY CONTINUED ON REVERSE) SEE REVERSE
SIDE
-------------------
<PAGE> 23

DETACH HERE CBC F

<TABLE>
<CAPTION>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE IN PROPOSAL 1 AND FOR
PROPOSALS 2 AND 3.
<S> <C>
FOR AGAINST ABSTAIN
1. Election of William N. Melton and Garen K. Staglin. 2. Ratification of the Appointment of [ ] [ ] [ ]
Ernst & Young LLP as the
FOR WITHHELD Company's Independent Auditors.

[ ] [ ] 3. Approval of an amendment to the [ ] [ ] [ ]
Company's 1995 Stock Option
Plan.

[ ]
----------------------------------------
For both nominees except as noted above MARK HERE [ ]
FOR ADDRESS
CHANGE AND
NOTE AT LEFT

Please sign exactly as name appears hereon. Joint owners
should each sign.

When signing as attorney, executor, administrator, trustee,
guardian, officer, general partners, etc., please give
full title as such.

Signature: Date: Signature: Date:
--------------------------- ------------- --------------------------- -------------
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