<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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 sec.240.14a-11(c) or sec.240.14a-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:
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(4) Date Filed:
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<PAGE> 2
[CYBERCASH LOGO]
May 7, 1999
Dear CyberCash Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
CyberCash, Inc. (the "Company") to be held on June 25, 1999, at 10:00 a.m.
(local time), at the Hyatt Reston, 1800 Presidents Street, Reston, Virginia
20190.
At this meeting, we are asking you to take the following actions:
- Re-elect Michael Rothschild as a director of the Company;
- Approve an amendment to the Company's 1995 Stock Option Plan, which will
increase by 4 million shares the number of shares of Common Stock the
Company is authorized to issue pursuant to stock options under that plan;
- Approve an amendment to the Company's Non-Employee Directors' 1995 Stock
Option Plan, which will increase by 500,000 shares the number of shares
of Common Stock the Company is authorized to issue pursuant to stock
options under that plan; and
- Ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 1999.
Please read the enclosed materials carefully, complete your proxy card and
return it promptly in the pre-addressed postage-paid envelope provided. This
will allow your shares to be voted whether or not you plan to attend the
meeting. Thank you.
Sincerely,
/s/ William N. Melton
William N. Melton
Chairman of the Board of Directors
<PAGE> 3
CYBERCASH, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1999
------------------------
To Our Stockholders:
The Annual Meeting of Stockholders of CyberCash, Inc., a Delaware
corporation (the "Company"), will be held at the Hyatt Reston, 1800 Presidents
Street, Reston, Virginia 20190 on Friday, June 25, 1999, at 10:00 a.m. (local
time), to consider and take action on the following matters:
1. To elect one Class III director;
2. To approve an amendment of the Company's 1995 Stock Option Plan,
which increases the number of shares of Common Stock that the Company may
grant to its employees pursuant to stock options;
3. To approve an amendment of the Company's Non-Employee Directors'
1995 Stock Option Plan, which increases the number of shares of Common
Stock that the Company may grant to its outside directors pursuant to stock
options;
4. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999; and
5. 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 April 26, 1999 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 7, 1999.
By order of the Board of Directors,
/s/ Russell B. Stevenson, Jr.
Russell B. Stevenson, Jr.
Secretary
Reston, Virginia
May 7, 1999
<PAGE> 4
May 7, 1999
CYBERCASH, INC.
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1999
------------------------
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 25, 1999, at 10:00 a.m. (local time), and at any
adjournment(s) or postponement(s) thereof, for the purposes set forth herein.
The Meeting will be held at the Hyatt Reston, 1800 Presidents Street, Reston,
Virginia 20190. 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
7, 1999, to all stockholders entitled to vote at the Meeting. A copy of the
Company's Annual Report to Stockholders for 1998 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 April 26, 1999, the Company had outstanding 20,166,134 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 April
26, 1999 (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 April 26,
1999 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>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) % OF CLASS
------------------- ----------------------- ----------
<S> <C> <C>
William N. Melton(2)........................................ 2,644,258 13.14%
First USA Bank, N.A.(3)..................................... 2,200,000 9.85
Three Christine Centre
201 North Walnut Street
Wilmington, Delaware 19801
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) % OF CLASS
------------------- ----------------------- ----------
<S> <C> <C>
Halifax Fund LP(4).......................................... 1,686,981 8.19
c/o The Palladin Group, Inc.
40 West 57th Street
New York, New York 10019
RGC International Investors, LDC(5)......................... 1,539,327 7.31
c/o Rose Glen Capital Management, L.P.
251 St. Asaphs Road, 3 Bala Plaza-East
Bala Cynwyd, Pennsylvania 19004
Daniel C. Lynch(6).......................................... 603,043 3.00
Bruce G. Wilson(7).......................................... 199,314 *
Denis Yaro(8)............................................... 168,406 *
James J. Condon(9).......................................... 97,401 *
Russell B. Stevenson, Jr.(10)............................... 76,425 *
Michael Rothschild(11)...................................... 53,366 *
Garen K. Staglin(12)........................................ 47,869 *
Charles T. Russell(13)...................................... 5,782 *
All directors and executive officers as a group(9
persons)(14).............................................. 3,895,864 18.97%
</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 20,126,134 shares outstanding as of April 26, 1999. Securities
issuable upon exercise of options are deemed to be outstanding for the
purpose of computing the percentage of outstanding securities owned by the
holder of such options.
(2) Includes 15,000 shares held by members of Mr. Melton's immediate family,
40,000 shares held by The William N. Melton 1994 Charitable Remainder
Annuity Trust, 70,000 shares held by The William N. Melton 1995 Charitable
Remainder Annuity Trust and 110,000 shares held by The Melton Foundation.
(3) Consists of shares subject to warrants exercisable within 60 days of April
26, 1999.
(4) Includes 228,659 shares subject to warrants and 236,128 shares subject to
investment options, in each case exercisable within 60 days of April 26,
1999.
(5) Includes 457,317 shares subject to warrants and 472,254 shares subject to
investment options, in each case exercisable within 60 days of April 26,
1999.
(6) Consists of 572,576 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; 5,000 shares
held by The Francis Troy Lynch Irrevocable Trust of which Daniel C. Lynch
is trustee and 5,467 shares subject to stock options exercisable within 60
days of April 26, 1999.
(7) Includes 600 shares subject to forfeiture within 60 days of April 26, 1999
and 47,400 shares subject to stock options exercisable within 60 days of
March 19, 1999.
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<PAGE> 6
(8) Includes 360 shares subject to forfeiture within 60 days of April 26, 1999
and 165,240 shares subject to stock options exercisable within 60 days of
April 26, 1999.
(9) Includes 1,800 shares subject to forfeiture within 60 days of April 26,
1999, and 93,575 shares subject to stock options exercisable within 60 days
of April 26, 1999.
(10) Includes 1,200 shares subject to forfeiture within 60 days of April 26,
1999 and 74,425 shares subject to stock options exercisable within 60 days
of April 26, 1999.
(11) Consists of 48,924 shares held by The Michael L. Rothschild Trustee
Revocable Trust U/T/A dated August 9, 1993 and 4,442 shares subject to
stock options exercisable within 60 days of April 26, 1999.
(12) Includes 16,700 shares held by The Garen K. and Sharalyn King Staglin 1997
Charitable Remainder Unit Trust dated July 8, 1997 and 11,169 shares
subject to stock options exercisable within 60 days of April 26, 1999.
(13) Consists of shares subject to stock options exercisable within 60 days of
April 26, 1999.
(14) Includes 3,960 shares subject to forfeiture within 60 days of April 26,
1999 and 407,500 shares subject to stock options exercisable within 60 days
of April 26, 1999.
PROPOSAL 1
ELECTION OF DIRECTORS
BOARD COMPOSITION
The Company's Board of Directors is made up of five directors divided into
three classes. The Board of Directors proposes the election of one Class III
director at the Meeting to hold office for a three-year term and until his
successor is duly elected and qualified. Class I and Class II directors will be
elected at the annual meetings of stockholders to be held in 2000 and 2001,
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 nominee set forth below, who 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 the
nominee, shares will be voted for such other person as the Board of Directors
may select. The Board of Directors is not aware that the nominee may be unable
or for good reason unwilling to serve as a director. In this election of a
director, the person 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 April 26, 1999 with respect to the nominee and also
with respect to each director whose term of office will continue after the
Meeting.
NOMINEE FOR ELECTION
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Michael Rothschild.................. 46 President 1995
The Bionomics Institute
President and Chief Executive
Officer
Maxager Technology, Inc.
</TABLE>
Michael Rothschild has served as a member of CyberCash'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 1996, Mr.
Rothschild has been President and Chief Executive Officer of Maxager Technology,
Inc., a software maker specializing in advanced profit analysis systems for
manufacturers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR REELECTION OF MR. ROTHSCHILD
AS DIRECTOR 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>
William N. Melton...................... 56 Chairman and Chief Executive Officer 1994
CyberCash, Inc.
Daniel C. Lynch........................ 57 Private Investor 1994
Charles T. Russell..................... 69 Private Consultant 1997
Garen K. Staglin....................... 54 Chairman, Safelite Glass Corporation 1996
</TABLE>
William N. Melton, a founder of CyberCash, has served as a member of its
Board of Directors and as its Chief Executive Officer since its inception in
August 1994. He also served as CyberCash's President until January 1999. Mr.
Melton founded VeriFone, Inc., a transaction automation company, in 1981 and was
a director of VeriFone from 1981 until 1996, 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 also serves as a
director of America Online, Inc.
Daniel C. Lynch, a founder of the Company, served as Chairman of
CyberCash's Board of Directors since from the Company's inception in August 1994
until January 1999, and continues to serve as a director. He also served briefly
as Vice President during the Company's 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. 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, a
director of Exodus Communications, Inc., a provider of Internet system and
network management solutions, and a director of Covad Communications Group,
Inc., a provider of high speed Internet and network access services.
Charles T. Russell has been a member of CyberCash's Board of Directors
since August 1997. Mr. Russell was President and Chief Executive Officer of Visa
International from 1984 to 1994. Mr. Russell is a member of the Board of
Directors of First Data Corporation.
Garen K. Staglin has served as a member of CyberCash's Board of Directors
since July 1996. Mr. Staglin served as Chairman and Chief Executive Officer from
1991 to 1998 of Safelite Glass Corporation, a manufacturer and retailer of
replacement autoglass and related services. He continues to serve as Chairman of
Safelite's Board of Directors. Mr. Staglin is also a director of First Data
Corporation, Quick Response Services, Inc. and Specialized Bicycle Corporation.
He is a member of the Advisory Board of the Stanford Graduate School of
Business.
BOARD COMPOSITION
CyberCash's Board of Directors is divided into three classes: Class I
expires at the annual meeting of stockholders to be held in 2000; Class II
expires at the annual meeting of stockholders to be held in 2001; and Class III
expires at this annual meeting of stockholders. The Class I directors are
Messrs. Melton and Staglin; the Class II directors are Messrs. Lynch and
Russell; and the Class III director is Mr. Rothschild. At each annual meeting of
stockholders, the successors to directors whose terms are expiring will be
elected to serve from the time of election and qualification until the third
annual meeting following election and until their successors have been duly
elected and qualified. Any additional directorships resulting from an increase
in the number of directors will be distributed among the three classes so that,
as nearly as possible, each class will consist of an equal number of directors.
BOARD COMMITTEES AND MEETINGS
During 1998, the Board of Directors held six meetings and had two standing
committees -- an Audit Committee and a Compensation Committee. No incumbent
Board member attended fewer than
4
<PAGE> 8
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 1998 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 twice during 1998.
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 Company's 1995
Non-Employee Directors' Stock Option Plan, which is administered by the Board of
Directors. Messrs. Staglin, Lynch and Russell comprise the Compensation
Committee. The Compensation Committee met once during 1998.
DIRECTOR COMPENSATION
Directors currently do not receive any cash compensation from CyberCash for
their service as members of its board of directors, although they are reimbursed
for certain expenses in connection with attendance at board and committee
meetings. Directors who are not otherwise officers or employees of CyberCash
receive automatic grants of options under the Company's 1995 Non-Employee
Directors' Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of CyberCash served as a director or member of (i) the
compensation committee of another entity which has an executive officer who is a
director of CyberCash or a member of CyberCash's Compensation Committee,
(ii) the board of directors of another entity in which one of the executive
officers of such entity served on CyberCash'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 CyberCash's board of
directors, during the year ended December 31, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires
CyberCash's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission, by a specified date, reports regarding their respective ownership of
CyberCash Common Stock. To the Company's knowledge, based solely on its review
of the copies of such reports furnished to it and written representations that
no other reports were required, we believe that all of its officers and
directors and greater than ten percent beneficial owners complied with all
Section 16(a) filing requirements applicable to them with respect to those
transactions during 1998.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain compensation awarded or paid by the
Company during the three fiscal years ended December 31, 1998 to its Chairman of
the Board 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
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
--------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
William N. Melton........................... 1998 -- -- -- --
Chairman of the Board and Chief 1997 100,000 -- -- --
Executive Officer 1996 100,000 -- -- --
James J. Condon............................. 1998 207,853 -- -- 165,000
President and Chief Operating Officer 1997 126,628 -- -- 90,000
Bruce G. Wilson............................. 1998 186,806 -- -- 23,000
Executive Vice President 1997 180,000 9,000 -- 15,000
1996 180,000 15,000 -- --
Russell B. Stevenson, Jr.................... 1998 209,160 -- -- 55,000
Senior Vice President, General 1997 210,000 20,475 -- 30,000
Counsel and Secretary 1996 168,523 20,475 -- 35,000
Denis Yaro.................................. 1998 220,000 -- -- 10,000
Executive Vice President 1997 220,000 26,000 -- 10,000
1996 175,389 22,533 -- 160,000
</TABLE>
EMPLOYMENT AGREEMENT
In March 1998, CyberCash entered into an employment agreement with James J.
Condon. The agreement provides that Mr. Condon will serve as Executive Vice
President and Chief Operating Officer of the Company. For his services, Mr.
Condon is entitled to receive an annual salary of $230,000 and an annual bonus
determined in the discretion of the Board of Directors. Mr. Condon's base salary
will be evaluated by the Board of Directors annually with consideration given to
a salary increase. The agreement also contains provisions regarding severance
pay if Mr. Condon is terminated by the Company without cause, if there is a
change of control of the Company or if Mr. Condon's responsibilities are changed
from those normally performed by the Chief Operating Officer. Mr. Condon is
prohibited by the terms of the agreement from using the Company's confidential
information for any purposes other than those contemplated by the agreement. The
agreement has a two year term.
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 7,500,000 shares of
Common Stock (of which 4,000,000 shares are subject to stockholder approval at
this annual meeting). 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 is
administered by the Compensation Committee of the Board of Directors, 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,
6
<PAGE> 10
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 vesting
options and performance-based vesting options. Time-based vesting options
granted to newly hired employees 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. For time-based vesting options granted to existing employees, the options
generally monthly vest at the rate of 2.5% of the shares subject to option per
month, beginning one month after the date of grant.
Performance-based vested options vary, but typically fall into one of two
categories: Some performance-based vesting options vest in their entirety 10
years after the date of grant, but are subject to accelerated vesting upon
achievement of milestone events specified in the terms of the options. Upon the
occurrence of a milestone event, vesting accelerates so that the shares begin to
vest monthly at a rate of 2.5% of the shares per month, beginning on the date of
the milestone event. Other performance-based vesting options vest monthly at the
rate of 2.5% of the shares subject to the option per month, beginning one month
after the date of grant, but may become fully vested upon achievement of
milestone events specified in the terms of the options.
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 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, 1998, 791,624 shares of Common Stock had been issued
upon the exercise of options granted under the Option Plan, options to purchase
2,639,949 shares of Common Stock at exercise prices ranging from $2.00 to $45.75
per share were outstanding and 68,427 shares remained available for future
option grants. Assuming the proposed increase in shares reserved under the
Option Plan is approved, the shares available for future grants on that date
would be 4,068,427. 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. In April 1999,
the Board of Directors approved an amendment increasing the shares reserved to
its current level of 600,000 (of which 500,000 shares are subject to stockholder
approval at this annual meeting). The Directors' Plan is administered by the
Board of Directors.
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, 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
5,000 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
7
<PAGE> 11
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. In addition, on the date of each annual meeting of the Company, each
person who is then a Non-Employee Director of the Company will be granted an
option to purchase 1,500 shares of Common Stock of the Company under the
Directors' Plan for each committee of the Board of Directors of the Company on
which such person has served for at least the five months immediately prior to
the annual meeting of the Company's stockholders.
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, 1998, options to purchase 71,158 shares of Common Stock
at exercise prices ranging from $10.75 to $32.25 per share were outstanding
under the Directors' Plan and 28,842 shares remained available for future option
grants under the Directors' Plan. Assuming the proposed increase in shares
reserved under the Directors' Plan is approved, the shares available for grant
on that date would be 528,842.
ICVerify, Inc. Stock Option Plan. In connection with the acquisition of
ICVerify, Inc., CyberCash assumed ICVerify's 1995 Employee Stock Option Plan
("ICVerify Option Plan"). All vested and unvested options granted under the
ICVerify Option Plan continue to have the same terms and conditions as under the
ICVerify Option Plan. The options may be exercised for CyberCash Common Stock
equal to the number of shares exercisable under the ICVerify Option Plan
multiplied by .2464 and the per share exercise price will be the exercise price
under the ICVerify Option Plan divided by .2464. Stock options generally vest as
to 25% of the shares subject to the option twelve months after the date of grant
and approximately 2% of such shares at the end of each month thereafter, so that
the option is fully vested 48 months after grant. The maximum number of shares
of Common Stock that may be issued pursuant to options granted under the
ICVerify Option Plan is 2,200,000.
As of December 31, 1998, 220,610 shares of Common Stock had been issued
upon the exercise of options granted under the Option Plan, options to purchase
98,860 shares of Common Stock at exercise prices ranging from $0.41 to $16.875
per share were outstanding and 220,530 shares remained available for future
option grants.
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.
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.
8
<PAGE> 12
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, 1998, 54,829 shares of Common Stock were purchased at
prices ranging from $6.4281 to $24.225 per share, and 386,271 shares remained
available for future purchases.
STOCK OPTION INFORMATION
The following table shows for the fiscal year ended December 31, 1998,
certain information regarding options granted to, exercised by, and held at year
end by the Company's Chairman of the Board and Chief Executive Officer and the
Company's four other most highly compensated officers and key employees:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER STOCK PRICE
OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS EXERCISE FOR OPTION
UNDERLYING GRANTED TO OR BASE TERM ($)(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.............. -- -- -- -- -- --
James J. Condon................ 15,000 0.81% $11.625 1/9/2008 $ 109,665 $ 227,905
40,000 2.16% $13.625 2/23/2008 $ 342,760 $ 868,600
100,000 5.39% $15.938 3/16/2008 $1,002,300 $2,540,100
10,000 0.54% $ 8.875 8/17/2008 $ 55,810 $ 141,440
Bruce G. Wilson................ 15,000 0.81% $11.625 1/9/2008 $ 109,665 $ 277,905
8,000 0.43% $ 8.875 8/17/2008 $ 44,648 $ 113,152
Denis Yaro..................... 10,000 0.54% $11.625 1/9/2008 $ 73,110 $ 185,270
Russell B. Stevenson, Jr....... 15,000 0.81% $11.625 1/9/2008 $ 109,665 $ 277,905
25,000 1.35% $13.625 2/23/2008 $ 214,225 $ 542,875
15,000 0.81% $ 8.875 8/17/2008 $ 83,715 $ 212,180
</TABLE>
- ---------------
(1) The options are generally incentive stock options with vesting occurring
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.
(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 Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price.
The following table sets forth information with respect to (i) the exercise
of stock options during the fiscal year ended December 31, 1998 by the Company's
Chairman of the Board and Chief Executive
9
<PAGE> 13
Officer and the Company's four other most highly compensated officers and key
employees, (ii) the number of unexercised options held as of December 31, 1998
by the Company's Chairman of the Board and Chief Executive Officer and the
Company's four other most highly compensated officers and key employees and
(iii) the value as of December 31, 1998 of unexercised in-the-money options;
that is, the amount by which the fair market value exceeds the exercise price of
the Common Stock as of December 31, 1998 ($15.00).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END(#) FISCAL YEAR-END($)(1)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE(#) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
William N. Melton................. -- -- -- -- --
James J. Condon................... -- 69,626 185,374 $ 94,041 $125,022
Bruce G. Wilson................... -- 36,275 28,725 $252,363 $110,888
Denis Yaro........................ -- 41,000 139,000 $ 15,125 $ 32,375
Russell B. Stevenson, Jr.......... -- 52,625 67,375 $ 49,234 $168,891
</TABLE>
- ---------------
(1) Based on the closing price of the Company's Common Stock on December 31,
1998 of $15.00 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 Garen K. Staglin, Daniel C. Lynch and Charles T. Russell. 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 the Company's and the electronic commerce 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
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
10
<PAGE> 14
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. In December 1997, Mr. Melton
volunteered not to draw a salary from the Company, beginning in 1998, until the
Company becomes profitable. 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, stock bonus and
employee stock purchase plans. The Compensation Committee is responsible for
administering the plans. In the case of stock option grants, the Compensation
Committee 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.
Stock bonus awards are made under a 1999 Restricted Stock Plan that the
Company adopted in 1999. The Compensation Committee determines the individuals
to whom awards are made, the type or types of award to be made to a recipient,
the number of shares of Common Stock to be subject to an award, and the terms
and conditions of each award. Terms and conditions may include the nature and
duration of any restriction or condition (or provision for lapse thereof)
relating to the vesting, transfer, or forfeiture of an award or the shares of
Common Stock subject thereto. The Compensation Committee typically makes
restricted stock bonus awards, of which 20% of the shares subject to the award
are vested on the date of grant, with the remaining 80% vesting in four equal
installments over the following 12 month period. The Compensation Committee
believes that these stock bonus awards encourage employees to continue in the
employ of the Company, enhances the Company's ability to attract, retain and
compensate highly qualified officers, key employees and persons and, by
increasing the recipients' direct proprietary interest in the Company's,
provides a means for the Company to motivate these individuals to expend maximum
effort to improve the business results and earnings of the Company. Because of
his significant equity ownership in the Company, the Compensation Committee
believes Mr. Melton already has significant incentives to see that the Company
reaches its strategic and performance goals. Accordingly, Mr. Melton does not
participate in the Company's 1999 Restricted Stock Plan.
PERFORMANCE INCENTIVE PLAN
The Company has adopted a Performance Incentive Plan for its employees,
including its executive officers, which provides cash bonuses, stock bonuses or
stock option awards twice a year to employees who achieve pre-determined
performance goals during the six months preceding the award date. 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 1999. Because Mr. Melton's significant equity
11
<PAGE> 15
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 1998, 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, but not the 1999 Restricted Stock 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 1999. The Compensation Committee will continue to monitor the
compensation 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
Garen K. Staglin
Daniel C. Lynch
Charles T. Russell
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, 1998. 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.
12
<PAGE> 16
[BAR CHART]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
2/15/96 12/96 12/97 12/98
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cybercash, Inc. 100 135 75 88
- -----------------------------------------------------------------------------
NASDAQ Stock Market (U.S.) 100 119 146 205
- -----------------------------------------------------------------------------
Hambrecht & Quist Technology 100 117 138 214
- -----------------------------------------------------------------------------
</TABLE>
PROPOSAL 2
AMENDMENT OF
THE 1995 STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders are being asked to
approve an amendment of the Company's 1995 Stock Option Plan (as amended, the
"Option Plan") in order to increase by 4,000,000 shares the number of shares
underlying options that may be granted to the Company's employees, officers,
directors and consultants. The Board adopted the amendment in January 1999,
subject to stockholder approval at the Annual Meeting. If approved by the
stockholders, a total of 4,068,427 shares underlying options will be available
for grant under the Option Plan.
The Company, by means of the Option Plan, seeks to retain the services of
current 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 all of these persons to exert maximum efforts for the success of
the Company and its affiliates. As of December 31, 1998, 74,515 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. The Company believes that the proposed
increase in shares underlying options available for grant under the Option Plan
is critical to Company's success in continuing to retain and recruit the key
talent necessary at all employee levels to ensure the Company's continued
success.
REQUIRED VOTE
Stockholders are requested in this Proposal 2 to approve the Option Plan,
as amended. If the stockholders fail to approve this Proposal 2, 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.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT OF THE 1995 STOCK
OPTION PLAN.
13
<PAGE> 17
A summary of the principal features of the Option Plan is set forth in this
Proxy Statement under the heading "Executive Compensation". The summary,
however, does not purport to be a complete description of all the provisions of
the Option Plan. Any stockholder of the Company who wishes to obtain a copy of
the actual plan document may do so upon written request to the Secretary at the
Company's principal offices at 2100 Reston Parkway, Third Floor, Reston,
Virginia 20191.
PROPOSAL 3
AMENDMENT OF
THE 1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders are being asked to
approve the amendment of the Directors' Plan in order to increase by 500,000
shares the number of shares underlying options that may be granted automatically
to directors of the Company who are not otherwise employees of the Company
("Non-Employee Directors"). The Board adopted the amendment in April 1999,
subject to stockholder approval at the Annual Meeting. If approved by the
stockholders, a total of 528,842 shares underlying options will be available for
grant under the Directors' Plan, and the additional 500,000 shares will first
become available for the annual options granted on the date of the Company's
1999 Annual Meeting of Stockholders.
The purpose of the Directors' Plan is to provide an incentive for directors
to continue to serve the Company as directors and to assist the Company in
recruiting highly qualified individuals when vacancies occur on the Board of
Directors. As of December 31, 1998, 28,842 shares of Common Stock (plus any
shares that might in the future be returned to the Directors' Plan as a result
of the cancellation or expiration of options) remained available for future
grant under the Directors' Plan. The Company believes that the proposed increase
in shares underlying options available for grant under the Directors' Plan is
critical to the Company's success in continuing to retain and recruit the key
talent necessary at all employee levels to ensure the Company's continued
success.
A summary of the principal features of the Directors' Plan is set forth in
this Proxy Statement under the heading "Executive Compensation". The summary,
however, does not purport to be a complete description of all the provisions of
the Directors' Plan. Any stockholder of the Company who wishes to obtain a copy
of the actual plan document may do so upon written request to the Secretary at
the Company's principal offices at 2100 Reston Parkway, Third Floor, Reston,
Virginia 20191.
REQUIRED VOTE
Stockholders are requested in this Proposal 3 to approve the Directors'
Plan, as amended. If the stockholders fail to approve this Proposal 3, the
number of shares authorized for issuance under the Directors' 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 Directors' Plan.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT OF THE 1995
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
PROPOSAL 4
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, 1999. Ernst & Young LLP
served in this capacity for the years ended December 31, 1996, 1997 and 1998. 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
14
<PAGE> 18
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.
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
The deadline for the submission of proposals of stockholders of the Company
to be considered for inclusion in the proxy statement and form of proxy for the
Company's 2000 annual meeting of stockholders is December 31, 1999. The deadline
for the submission of any proposals sought to be presented at the 2000 annual
meeting of stockholders (other than a stockholder proposal under Rule 14a-8) is
March 16, 2000.
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: Investor Relations. The Annual Report on
Form 10-K is also available on the Company's web site at www.cybercash.com.
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 7, 1999
By Order of the Board of Directors
/s/ Russell B. Stevenson, Jr.
Russell B. Stevenson, Jr.
Secretary
15
<PAGE> 19
1484-PS-99
<PAGE> 20
PROXY
CYBERCASH, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 25, 1999
The undersigned hereby appoints William N. Melton, James J. Condon,
Russell B. Stevenson, Jr., or any of them, the proxies of the undersigned, with
full power of substitution, to vote all shares of Common Stock of CYBERCASH,
INC. which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held June 25, 1999, or any adjournment
thereof, as follows on the reverse side.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 21
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. Election of One Director by all Stockholders
NOMINEES: Michael Rothschild
FOR WITHHELD MARK HERE
THE [ ] [ ] FROM THE IF YOU PLAN TO [ ]
NOMINEE NOMINEE ATTEND THE
MEETING
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE BELOW
2. Proposal to amend the CyberCash, Inc. 1995 Stock FOR AGAINST ABSTAIN
Option Plan by increasing the number of shares [ ] [ ] [ ]
of Common Stock that CyberCash may grant
pursuant to stock options thereunder from
3,500,000 shares to 7,500,000 shares.
3. Proposal to amend the CyberCash, Inc. 1995 Non- FOR AGAINST ABSTAIN
Employee Directors' Stock Option Plan by [ ] [ ] [ ]
increasing the number of shares of Common
Stock that CyberCash may grant pursuant to
stock options thereunder from 100,000 shares
to 600,000 shares.
4. Proposal to ratify the selection of Ernst & FOR AGAINST ABSTAIN
Young LLP as independent auditors for [ ] [ ] [ ]
CyberCash, Inc.
5. The proxies are authorized to vote in their discretion on any other matters
which may properly come before the Annual Meeting to the extent set forth in
the proxy statement.
Execute proxy exactly as your name appears on this form. If stock is registered
in more than one name, each joint holder should sign. When signing as trustee,
executor or other fiduciary, please so indicate.
Signature: Date: Signature: Date:
-------------- ----------- ------------- ---------
