SECURITY FIRST TECHNOLOGIES CORP, DEF 14A, 1999-05-07

SECURITY FIRST TECHNOLOGIES CORP
DEF 14A, 1999-05-07
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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 Rule 14a-11(c) or Rule 14a-12

Security First Technologies Corporation
- --------------------------------------------------------------------------------
(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:

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2) Aggregate number of securities to which transaction applies:

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

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4) Proposed maximum aggregate value of transaction:

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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

[SECURITY FIRST LOGO APPEARS HERE]
3390 PEACHTREE ROAD, NE, SUITE 1700
ATLANTA, GEORGIA 30326

May 7, 1999

DEAR SHAREHOLDER:

You are cordially invited to attend the first annual meeting of
shareholders of Security First Technologies Corporation to be held on Thursday,
June 3, 1999, at 9:00 a.m., local time, at the Grand Hyatt Atlanta, 3300
Peachtree Road, Atlanta, Georgia 30305.

At the annual meeting, our shareholders will be asked to: elect one
director for a three-year term, approve an increase in the number of shares of
common stock that we are authorized to issue, approve an increase in the number
of shares of serial preferred stock that we are authorized to issue, approve an
Employee Stock Purchase Plan, and approve the Amended and Restated 1995 Stock
Option Plan.

Our board of directors unanimously recommends that you vote FOR the
proposals we are bringing to the annual meeting. We encourage you to read the
accompanying proxy statement, which provides information about our company and
the matters to be voted on at the annual meeting.

It is important that your shares be represented at the annual meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE COMPLETE,
DATE, SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.

Sincerely,

/s/ JAMES S. MAHAN, III
James S. Mahan, III
Chairman, Chief Executive Officer
and President
<PAGE> 3

SECURITY FIRST TECHNOLOGIES CORPORATION
3390 PEACHTREE ROAD, NE, SUITE 1700
ATLANTA, GEORGIA 30326
(404) 812-6200

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 3, 1999

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

DEAR SHAREHOLDER:

NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Security
First Technologies Corporation will be held on Thursday, June 3, 1999, at 9:00
a.m., local time, at the Grand Hyatt Atlanta, 3300 Peachtree Road, Atlanta,
Georgia 30305, for the following purposes:

1. Election of Director. To elect one director for a three-year term
(Proposal 1);

2. Increase in Authorized Common Stock. To approve and adopt an amendment
to our amended and restated certificate of incorporation to increase
the number of shares of common stock that we are authorized to issue
from 60,000,000 to 350,000,000 shares (Proposal 2);

3. Increase in Authorized Preferred Stock. To approve and adopt an
amendment to our amended and restated certificate of incorporation to
increase the number of shares of serial preferred stock that we are
authorized to issue from 5,000,000 to 25,000,000 shares (Proposal 3);

4. Approval of Employee Stock Purchase Plan. To approve and adopt the
Employee Stock Purchase Plan (Proposal 4);

5. Approval of Amended and Restated 1995 Stock Option Plan. To approve
and adopt the Amended and Restated 1995 Stock Option Plan (Proposal 5);

6. Other Business. To transact any other business that properly comes
before the annual meeting or any adjournments of the meeting.

If you held shares of our common stock at the close of business on April
21, 1999, you are entitled to notice of and to vote at the annual meeting or any
adjournments of the meeting.

By order of the Board of Directors

/s/ JAMES S. MAHAN, III
James S. Mahan, III
Chairman, Chief Executive Officer
and President

Atlanta, Georgia
May 7, 1999
<PAGE> 4

SECURITY FIRST TECHNOLOGIES CORPORATION
3390 PEACHTREE ROAD, NE, SUITE 1700
ATLANTA, GEORGIA 30326
(404) 812-6200
------------------------

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 3, 1999
------------------------

SOLICITATION, VOTING AND REVOCABILITY OF PROXIES

This proxy statement is being sent to holders of the common stock of
Security First Technologies Corporation, a Delaware corporation, as part of the
solicitation of proxies by our board of directors for use at our annual meeting
of shareholders to be held on Thursday, June 3, 1999, at 9:00 a.m., local time,
at the Grand Hyatt Atlanta, 3300 Peachtree Road, Atlanta, Georgia 30305, and at
any adjournments of the meeting. In this proxy statement, we sometimes refer to
our company as S1, which is the name by which we are commonly known. This proxy
statement, together with the enclosed proxy card, is being mailed to
shareholders on or about May 7, 1999.

The annual meeting has been called for the following purposes: (i) to elect
one director for a three-year term (Proposal 1), (ii) to approve an amendment to
our amended and restated certificate of incorporation to increase our authorized
common stock from 60,000,000 to 350,000,000 shares (Proposal 2), (iii) to
approve an amendment to our amended and restated certificate of incorporation to
increase our authorized serial preferred stock from 5,000,000 to 25,000,000
shares (Proposal 3), (iv) to approve the Employee Stock Purchase Plan (Proposal
4), (v) to approve the Amended and Restated 1995 Stock Option Plan (Proposal 5),
and (vi) to transact any other business that properly comes before the annual
meeting or any adjournments of the meeting.

If you properly execute the enclosed proxy card and return it to us in time
to be voted at the annual meeting, the shares represented by your proxy will be
voted in accordance with the instructions marked on the proxy card. EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED FOR THE ELECTION OF THE BOARD'S NOMINEE AS A
DIRECTOR, FOR APPROVAL OF THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE COMMON STOCK THAT WE ARE AUTHORIZED TO ISSUE,
FOR APPROVAL OF THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE SERIAL PREFERRED STOCK THAT WE ARE AUTHORIZED TO
ISSUE, FOR APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN, AND FOR APPROVAL OF THE
AMENDED AND RESTATED 1995 STOCK OPTION PLAN. Our board of directors does not
know of any other matters that are to come before the annual meeting other than
procedural matters related to the conduct of the annual meeting. If any other
matters properly come before the annual meeting, the persons named in the proxy
card will vote the shares represented by your proxy on those other matters as
determined by a majority of the board of directors. The proxies solicited by
this proxy statement confer discretionary authority to vote on any matter of
which S1 did not have notice at least 30 days prior to the date of the annual
meeting.

Your presence at the annual meeting will not automatically revoke your
proxy card. You may, however, revoke a proxy card at any time before it is
exercised by attending the annual meeting and voting in person or by delivering
either a written notice of revocation for a proxy card that you previously
submitted or a properly executed proxy card bearing a later date to Nancy K.
Kenley, Secretary, Security First Technologies Corporation, 3390 Peachtree Road,
NE, Suite 1700, Atlanta, Georgia 30326.

We will pay the cost of soliciting proxies for the annual meeting. In
addition to using the mail, our directors, officers and employees may solicit
proxies personally, by telephone or by fax. We will not pay additional
compensation to our directors, officers or employees for these activities. We
also will request persons, firms and companies holding shares in their names or
in the name of their nominees, which are beneficially owned by others, to send
proxy materials to and obtain proxies from the beneficial owners of those shares
and will reimburse these holders for the reasonable expenses they incur for
these efforts. We have

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retained D.F. King & Co., Inc., a proxy soliciting firm, to assist in the
solicitation of proxies at a fee of $4,500, plus reimbursement of certain
out-of-pocket expenses.

Only shares of our common stock held as of the close of business on April
21, 1999 can be voted at the annual meeting. Each share of common stock that you
owned at that time entitles you to one vote on all matters that properly come
before the annual meeting. There is no cumulative voting of shares. As of April
21, 1999, there were 343 holders of record of the 25,172,160 shares of common
stock which were then outstanding and are eligible to be voted at the annual
meeting, as adjusted to reflect the two-for-one split of our common stock
payable on May 7, 1999.

For Proposals 1, 2 and 3, the presence, in person or by proxy, of one-third
of the 25,172,160 shares of common stock that were issued and outstanding on
April 21, 1999 and entitled to vote at the meeting will constitute a quorum at
the annual meeting. If there is a quorum, a plurality of the votes cast by the
shares of common stock issued and outstanding on April 21, 1999 and entitled to
vote at the meeting is required to elect our director nominee; and the
affirmative vote of a majority of the shares of common stock issued and
outstanding on April 21, 1999 and entitled to vote at the meeting is required to
approve the proposed increases in our common and serial preferred stock.

For Proposals 4 and 5, the presence, in person or by proxy, of a majority
of the 25,172,160 shares of common stock that were issued and outstanding on
April 21, 1999 will constitute a quorum at the annual meeting. If there is a
quorum, the affirmative vote of a majority of the shares of common stock present
and entitled to vote at the annual meeting is required to approve the Employee
Stock Purchase Plan and the Amended and Restated 1995 Stock Option Plan.

The board of directors has appointed an inspector of election to tabulate
shareholder votes at the annual meeting. Abstentions and broker non-votes will
be treated as shares that are present, or represented, and entitled to vote for
purposes of determining the presence of a quorum at the annual meeting. Broker
non-votes will not be counted as a vote cast or entitled to vote on any matter
presented at the annual meeting. Abstentions will not be counted in determining
the number of votes cast on any matter presented at the annual meeting.

WE ARE REQUIRED TO FILE AN ANNUAL REPORT ON FORM 10-K FOR OUR 1998 FISCAL
YEAR WITH THE SECURITIES AND EXCHANGE COMMISSION. A COPY OF OUR FORM 10-K WAS
SENT TO YOU WITH THIS PROXY STATEMENT.

ELECTION OF DIRECTOR
(PROPOSAL 1)

At the annual meeting, one director will be elected to serve for a
three-year term. Unless otherwise specified on a proxy card, it is the intention
of the persons named in the proxy to vote the shares represented by each
properly executed proxy FOR the election as a director of the person named below
as the nominee. The board of directors believes that the nominee will stand for
election and will serve if elected as director. If, however, the nominee fails
to stand for election or is unable to accept election, the proxies will be voted
for the election of such other person as the board of directors may recommend.
If there is a quorum at the annual meeting, the director nominee will be elected
by a plurality of the votes cast by the shares of common stock issued and
outstanding on April 21, 1999 and entitled to vote at the meeting. There are no
cumulative voting rights in the election of directors.

Our amended and restated certificate of incorporation provides for the
board of directors to be divided into three classes. The terms of office of only
one class of directors expires in each year, and directors are elected for terms
of three years and until their successors are elected and qualified. Our amended
and restated bylaws provide that there are to be between four and fifteen
directors, with the number of directors determined by resolution of the board of
directors. Pursuant to a resolution of the board, the number of directors on our
board of directors is to be six. We currently have one vacancy on the board of
directors.

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INFORMATION AS TO THE NOMINEE, OTHER DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names of our current directors and
executive officers. Also provided is information as to each person's age at
December 31, 1998, the periods during which he has served as a director of S1
and its predecessor, Security First Network Bank, and positions currently held
with S1.

<TABLE>
<CAPTION>
AGE AT DIRECTOR EXPIRATION
NAME DECEMBER 31, 1998 SINCE OF TERM POSITIONS HELD WITH S1
- ---- ----------------- -------- ---------- ----------------------
<S> <C> <C> <C> <C>
Director Nominee:
Robert W. Copelan, D.V.M. ....... 72 1995 1999 Director

Continuing Directors and
Executive Officers:
Dorsey R. Gardner................ 56 1998 2001 Director
James S. Mahan, III.............. 47 1995 2000 Chairman, Chief Executive
Officer and President
Joseph S. McCall................. 49 1998 2001 Director
Howard J. Runnion, Jr. .......... 69 1995 2000 Director
Robert F. Stockwell.............. 44 -- -- Chief Financial Officer and
Treasurer
Daniel H. Drechsel............... 38 -- -- President and Chief Operating
Officer of S1's operating
subsidiary
</TABLE>

The following information concerns the principal occupation of each of our
directors and executive officers for the past five years. The executive officers
are elected by the board to serve a one-year term.

ROBERT W. COPELAN, D.V.M. has been President of Copelan & Thornbury, Inc.
in Paris, Kentucky since 1959 and President of R.W. Copelan, PSC in Paris,
Kentucky since 1979. Dr. Copelan is a veterinarian in private practice. From
1987 through September of 1996, Dr. Copelan served on the board of directors of
Cardinal Bancshares, Inc. and some of its subsidiaries. He served on the board
of Security First Network Bank from 1995 until its sale in 1998. He has served
as a director of S1 since May 1998. Dr. Copelan is the stepfather of James S.
Mahan, III, S1's Chairman, President and Chief Executive Officer.

DORSEY R. GARDNER has served as a director of S1 since his appointment in
June 1998. Mr. Gardner has served as general partner of Hollybank Investments,
LP from 1993 to the present. Since 1980, he has served as President of Kelso
Management Co., Inc., advisor to Fidelity International Limited, Integrity
Fund-FM&R private capital, American Values I-IV, Fidelity American Situations
Trust, Fidelity Discovery Fund, Johnson family accounts, Johnson Foundation, and
Fidelity Foundation from 1980 to 1993 and adviser to Hollybank Investments, LP
from 1993 to the present. Mr. Gardner has served on the board of directors of
several corporations, and is currently a member of the boards of Crane Company
and Filene's Basement.

JAMES S. MAHAN, III served as the Chief Executive Officer and a director of
Security First Network Bank from 1995 until its sale in 1998. He has served as a
director of S1 since May 1998, as Chief Executive Officer and President since
June 1998 and as Chairman of the Board since February 1999. He also has served
as Chairman of the Board of S1's operating subsidiary since May 1996. Mr. Mahan
was the Chairman of the Board and Chief Executive Officer of Cardinal
Bancshares, Inc., as well as some of its subsidiaries from November 1987 until
September 1996. Mr. Mahan is the stepson of director Robert W. Copelan.

JOSEPH S. MCCALL has served as a director of S1 since his appointment in
October 1998. In 1986, Mr. McCall founded and remains the President of McCall
Consulting Group, a company that provides consulting primarily to software
companies that are building software products with new technology or
transitioning old products to new technology. McCall Consulting also provides
direct sales and training support to enabling technology software companies that
are launching products with leading edge technologies. Since 1991, Mr. McCall
has also served as a director of Clarus Corp. (formerly known as SQL Financials
International, Inc.), a publicly traded software company that sells web-enabled
financial and human resource application software. Mr. McCall founded SQL in
1991 and served as Chief Executive

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Officer until early 1998. In 1994, Mr. McCall founded Technology Ventures, LLC,
which is an investment company that owns all of McCall Consulting and is the
largest single shareholder of Clarus Corp. Technology Ventures serves as Mr.
McCall's vehicle for investing in new companies and providing equity incentives
to employees of the companies in which Technology Ventures has invested. Mr.
McCall currently is a member of the boards of directors of McCall Consulting and
Technology Ventures.

HOWARD J. RUNNION, JR. was Vice Chairman of the Board and Chief Financial
Officer of The Wachovia Corporation in Winston-Salem, North Carolina from
December 1985 to June 1990. Since 1992, Mr. Runnion has served as a consultant
and an insurance broker. Mr. Runnion was a director of Cardinal Bancshares, Inc.
and some of its subsidiaries until September 1996 and a director of Security
First Network Bank from 1995 until its sale in 1998. He has served as a director
of S1 since May 1998.

ROBERT F. STOCKWELL served as the Treasurer and Chief Financial Officer of
Security First Network Bank from 1995 until its sale in 1998, and has served as
Treasurer and Chief Financial Officer of S1's operating subsidiary since May
1996. He has served as Chief Financial Officer and Treasurer of S1 since June
1998. From June 1998 to November 1998, he also served as Secretary of S1. From
October 1996 through September 1998, he served as Acting President of Security
First Network Bank. Mr. Stockwell served as Treasurer of Cardinal Bancshares,
Inc. from January 1994 to September 1996 and as a director of Jefferson Banking
Company during 1994. From 1987 to 1993, Mr. Stockwell was Executive Vice
President and Chief Financial Officer of Security Financial Holding Company, a
thrift holding company located in Durham, North Carolina.

DANIEL H. DRECHSEL has served as President and Chief Operating Officer of
Security First Technologies, Inc., S1's operating subsidiary, since June 1998.
In his position as Chief Operating Officer, Mr. Drechsel oversees the day-to-day
operations of S1's operating subsidiary. Prior to joining our operating
subsidiary, Mr. Drechsel served as Vice President of Marketing with Meta4
Software, S.A., a Madrid-based enterprise software company from September 1997
to July 1998. Mr. Drechsel served as General Manager of ECPartners, a joint
venture between Checkfree Corporation and Automatic Data Processing, Inc.'s
Electronic Services Division from 1995 to 1997. Mr. Drechsel served on the board
of directors of InfoWare Technologies, Inc. from 1997 to 1999. Mr. Drechsel's
previous experience included a variety of management positions in sales,
marketing and software development at both Automatic Data Processing and Dun &
Bradstreet Corporation.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF ITS DIRECTOR NOMINEE.

BOARD COMMITTEES; NOMINATIONS BY SHAREHOLDERS

The board of directors acts as the nominating committee for selecting
nominees for election as directors. Our amended and restated bylaws also permit
shareholders eligible to vote at the annual meeting to make nominations for
directors, but only if their nominations are made by timely notice in writing to
our Secretary. We issued a press release on April 26, 1999 announcing the date
of the annual meeting. To be timely, a shareholder's notice must be delivered
to, or mailed and received at, our principal executive offices no later than the
close of business on May 11, 1999.

The board of directors has appointed a standing audit committee. The
Chairman of the audit committee is Mr. Gardner and the other members currently
are Messrs. Copelan, McCall and Runnion. The audit committee reviews the scope
of the independent annual audit, the independent public auditors' letter to the
board of directors concerning the effectiveness of our internal financial and
accounting controls and any response by the board of directors to that letter.
In addition, the audit committee will review internal audit plans and reports
and meet with our internal auditor to discuss financial and accounting controls.
The audit committee met one time in 1998.

The board of directors has appointed a compensation committee that reviews
executive compensation on an annual basis. The compensation committee makes
recommendations to our board of directors regarding compensation. Awards of
stock options under our stock option plans and agreements have been made in the
past by our stock option committee, which is comprised of Mr. Mahan and Mr.
Stockwell. The Chairman of

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the compensation committee is Mr. McCall and the other members currently are
Messrs. Gardner and Runnion. The compensation committee met one time in 1998.

During 1998, our board of directors met six times. Each incumbent director
attended at least 75% of the total of (1) the total number of meetings of the
board of directors held during the period that the director served and (2) the
total number of meetings held by all committees of the board on which the
director served during the period that he served.

STOCK OWNED BY MANAGEMENT

The following table sets forth information known to us regarding the
beneficial ownership of our common stock as of April 21, 1999 by each of our
directors and named executive officers and by all of our directors and executive
officers as a group. At April 21, 1999, there were 25,172,160 shares of our
common stock outstanding, as adjusted to reflect the two-for-one split of our
common stock payable on May 7, 1999. Information for Mr. Michael C. McChesney,
who resigned as Chairman of the Board of S1 in February 1999, is not included in
this table and is set forth in the table under the caption "Principal
Shareholders." All information as to beneficial ownership has been provided to
us by the directors and executive officers, and unless otherwise indicated, each
of the directors and executive officers has sole voting and investment power
over all of the shares that they beneficially own. The information set forth in
this table reflects the two-for-one split of our common stock payable on May 7,
1999.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
AND NATURE OF COMMON STOCK
NAME AND POSITION(S) WITH S1 BENEFICIAL OWNERSHIP(a) OUTSTANDING
- ---------------------------- ----------------------- ------------
<S> <C> <C>
James S. Mahan, III......................................... 2,019,442(b) 7.47%
Chairman, Chief Executive Officer and President
Robert F. Stockwell......................................... 243,388(c) *
Chief Financial Officer and Treasurer
Daniel H. Drechsel.......................................... 80(d) *
President and Chief Operating Officer of S1's operating
subsidiary
Robert W. Copelan, D.V.M. .................................. 287,064(e) 1.13%
Director
Dorsey R. Gardner........................................... 1,370,200(f) 5.44%
Director
Joseph S. McCall............................................ 27,000(g) *
Director
Howard J. Runnion, Jr. ..................................... 220,848(h) *
Director
All directors and executive officers of S1 as a group (7
persons).................................................. 4,168,022 15.22%
</TABLE>

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

(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of
any shares of common stock if that person has or shares voting power or
investment power over the security, or has the right to acquire beneficial
ownership at any time within 60 days from April 21, 1999. For this table,
voting power includes the power to vote or direct the voting of shares and
investment power includes the power to dispose or direct the disposition of
shares.

(b) The share ownership of Mr. Mahan includes 1,858,400 shares of common stock
that would be issued upon the exercise of options exercisable within 60 days
of April 21, 1999, 1,224 shares that are held directly by Mr. Mahan, 9,570
shares held in S1's 401(k) plan and 150,248 shares held by his wife.

(c) The share ownership of Mr. Stockwell includes 140,840 shares of common stock
that would be issued upon the exercise of options exercisable within 60 days
of April 21, 1999, 90,576 shares held jointly with his wife, 6,410 shares
held in S1's 401(k) plan, 3,728 shares held in an IRA and 1,834 shares held
by his mother in an IRA.

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<PAGE> 9

(d) The share ownership of Mr. Drechsel includes 80 shares held in S1's 401(k)
plan.

(e) The share ownership of Dr. Copelan includes 185,840 shares of common stock
that would be issued upon the exercise of options exercisable within 60 days
of April 21, 1999, 83,872 shares that are held directly by Dr. Copelan,
14,904 shares that are held by the Robert W. Copelan D.V.M. Retirement Plan
and 2,448 shares that are held by his wife.

(f) The share ownership of Mr. Gardner includes 153,000 shares held directly by
Mr. Gardner and 1,217,200 shares held by Hollybank Investments, LP, a
limited partnership of which Mr. Gardner is the general partner.

(g) The share ownership of Mr. McCall includes 25,000 shares held directly by
Mr. McCall and 2,000 shares held by Mr. McCall in an IRA.

(h) The share ownership of Mr. Runnion includes 20,848 shares of common stock
that would be issued upon the exercise of options exercisable within 60 days
of April 21, 1999 and 200,000 shares owned directly by Mr. Runnion.

PRINCIPAL SHAREHOLDERS

The following table sets forth information known to us regarding the
beneficial ownership of our common stock as of April 21, 1999 by each person
believed by management to be the beneficial owner of more than 5% of our
outstanding common stock. The information set forth in this table reflects the
two-for-one split of our common stock payable on May 7, 1999.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS AND NATURE OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(a) OUTSTANDING
- ------------------- ----------------------- ------------
<S> <C> <C>
Michael C. McChesney........................................ 2,384,032(b) 9.13%
37 Muscogee Avenue
Atlanta, GA 30305
Lord, Abbett & Co........................................... 2,037,390(c) 8.09%
767 Fifth Avenue
New York, NY 10153
James S. Mahan, III......................................... 2,019,442(d) 7.47%
3390 Peachtree Road, NE
Atlanta, GA 30326
Dorsey R. Gardner........................................... 1,370,200(e) 5.44%
One International Place
Suite 2401
Boston, MA 02110
</TABLE>

- ---------------
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of
any shares of common stock if that person has or shares voting power or
investment power over the security, or has the right to acquire beneficial
ownership at any time within 60 days from April 21, 1999. For this table,
voting power includes the power to vote or direct the voting of shares and
investment power includes the power to dispose or direct the disposition of
shares.

(b) The share ownership of Mr. McChesney includes 928,800 shares issuable upon
the exercise of options that are exercisable within 60 days of April 21,
1999, 1,438,692 shares owned directly by Mr. McChesney, 1,180 shares held in
S1's 401(k) plan and 15,360 shares held by two members of his family. Mr.
McChesney served as Chairman of the Board of S1 until his resignation in
February 1999.

(c) Lord, Abbett & Co. filed a Schedule 13G with the Securities and Exchange
Commission dated February 12, 1999 reporting sole voting and dispositive
power over the shares listed above.

(d) The share ownership of Mr. Mahan includes 1,858,400 shares of common stock
that would be issued upon the exercise of options exercisable within 60 days
of April 21, 1999, 1,224 shares that are held directly by Mr. Mahan, 9,570
shares held in S1's 401(k) plan and 150,248 shares held by his wife.

(e) The share ownership of Mr. Gardner includes 153,000 shares held directly by
Mr. Gardner and 1,217,200 shares held by Hollybank Investments, LP, a
limited partnership of which Mr. Gardner is the general partner.

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<PAGE> 10

EXECUTIVE COMPENSATION AND OTHER INFORMATION

EXECUTIVE AND DIRECTOR COMPENSATION

The following table shows the cash compensation paid by S1 for the last
three fiscal years, as well as compensation paid or accrued for those years, to
the Chief Executive Officer and the one other highest paid executive officer
serving at December 31, 1998, whose total annual salary and bonus for the fiscal
year ended December 31, 1998 exceeded $100,000. We refer to these two officers
as our named executive officers. No stock appreciation rights have been granted
by S1 or its predecessor, Security First Network Bank.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- ----------------------
AWARDS
----------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION UNDERLYING OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(b) (#)(c) ($)(d)
- ------------------ ---- --------- -------- ------------ ---------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James S. Mahan, III............. 1998 $200,000 -- $ -- -- $7,872
Chairman, Chief Executive 1997 200,000 -- 9,861 -- 9,756
Officer and President 1996 87,535(a) -- 68,080 -- 3,131
Robert F. Stockwell............. 1998 $150,000 -- $ -- 100,000 $5,950
Chief Financial Officer 1997 119,141 -- -- 40,000 6,392
and Treasurer 1996 104,962 -- 70,009 -- 2,272
</TABLE>

- ---------------
(a) During the first nine months of 1996, Mr. Mahan's annual rate of salary was
$50,000. During that time, he also served as the Chairman and Chief
Executive Officer of Cardinal Bancshares, Inc., which was then the parent of
Security First Network Bank.

(b) For 1996, other annual compensation includes reimbursement of moving
expenses of $56,880 for Mr. Mahan and $70,009 for Mr. Stockwell, including
applicable taxes associated with these reimbursements.

(d) All other compensation includes contributions to S1's 401(k) plan and
insurance premiums. 401(k) contributions for 1996, 1997 and 1998 were
$2,501, $2,667 and $2,666 for Mr. Mahan; and $2,002, $3,292 and $2,750 for
Mr. Stockwell. Insurance premiums for 1996, 1997 and 1998 were $630, $7,089
and $5,206 for Mr. Mahan; and $270, $3,100 and $3,200 for Mr. Stockwell.

Our directors do not receive any fees or other compensation for their
service as directors. Directors, however, are reimbursed for travel and other
expenses incurred in connection with attending meetings of our board of
directors. Upon joining the board of directors in 1998, Mr. Gardner and Mr.
McCall were awarded options to acquire 60,000 shares of our common stock under
our 1998 Directors' Stock Option Plan, as adjusted to reflect the two-for-one
split of our common stock payable on May 7, 1999.

EMPLOYMENT CONTRACTS

We currently do not have any employment contracts or other compensatory
plans or arrangements relating to resignation, retirement or any other
termination of a named executive officers' employment with S1 or our operating
subsidiary or from a change in control of S1 or a change of the named executive
officer's responsibilities following a change in control of S1. Unvested stock
options, however, generally vest upon a change in control, as defined.

OPTION GRANTS

The following table contains information concerning the grant of stock
options to the named executive officers during fiscal year 1998. The information
set forth in this table reflects the two-for-one split of our common stock
payable on May 7, 1999.

7
<PAGE> 11

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER % OF AT ASSUMED ANNUAL RATES OF
OF SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES OR BASE PRICE EXPIRATION ----------------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ------------- -------------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Stockwell........... 100,000 5% $3.3125 1/9/09 $208,321 $527,927
Chief Financial Officer and
Treasurer
</TABLE>

1998 OPTION EXERCISES AND VALUES

The following table provides information on exercises of stock options
during fiscal year 1998 by the named executive officers and the value of
unexercised options at the end of the year. The information set forth in this
table reflects the two-for-one split of our common stock payable on May 7, 1999.

AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)(b)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(a) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James S. Mahan, III........ -- -- 1,393,800/464,600 $20,819,888/$6,939,963
Robert F. Stockwell........ 50,000 $253,125 69,380/176,460 $ 1,009,174/$2,254,301
</TABLE>

- ---------------
(a) Based on the market value of our common stock at date of exercise, less the
exercise price.

(b) Based on the closing price per share of our common stock on December 31,
1998 of $15.25 on the Nasdaq National Market, as adjusted to reflect the
two-for-one split of our common stock payable on May 7, 1999, less the
exercise price, of all unexercised stock options having an adjusted exercise
price less than that market value.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Since 1996 through the corporate reorganization of Security First Network
Bank in September 1998, the full board of directors of Security First Network
Bank served as a compensation committee. In the fourth quarter of 1998, a
separate compensation committee of the S1 board was established. The Chairman of
the compensation committee is Mr. McCall and the other members are Mr. Gardner
and Mr. Runnion. The compensation committee recommends to the full board of
directors, which has ultimate responsibility over compensation matters. Set
forth below is a report of the compensation committee addressing S1's
compensation policies for fiscal year 1998 as they affected our executive
officers.

Compensation Policies for Executive Officers. S1's executive compensation
policies are designed to provide competitive levels of compensation, to assist
S1 in attracting and retaining qualified executives and to encourage superior
performance. In determining levels of executive officers' overall compensation,
the qualifications and experience of the persons concerned, the size of the
company and the complexity of its operation, the financial condition, including
revenues, the compensation paid to other persons employed by the company and the
compensation paid to persons having similar duties and responsibilities in the
technology industry were considered. Compensation paid to our executive officers
in 1998 consisted of the following components: base salary, long-term incentives
(awards of stock options) and participation in S1's other employee benefit
plans. No bonuses were paid to executive officers for 1998. While each of these
components has a separate purpose and may have a different relative value to the
total, a significant portion of the total compensation package for 1998 for the
executive officers is highly dependent on the public market value of S1 and
total return to shareholders. Our executive officers have significant equity
interests in S1's success by virtue of stock-based compensation.

8
<PAGE> 12

The compensation committee currently is re-evaluating S1's executive
compensation structure, and is likely to propose significant revisions. No
determination has been made regarding this matter and no date has been set for
making this determination.

Base Salary. Base salary is intended to signal the internal value of the
position. In establishing the 1998 salary for each executive officer, the
officer's responsibilities, qualifications and experience were considered. The
base salary for one of our executive officers increased in 1998 in recognition
of the responsibilities of that officer.

Long-Term Incentive Compensation. S1 uses stock options to provide
long-term incentive compensation. The compensation committee endorses the
position that stock ownership by management is beneficial in aligning
management's and shareholders' interests in the enhancement of shareholder
value. The purpose of stock option awards is to provide an opportunity for the
recipients to acquire or increase a proprietary interest in S1, thereby creating
a stronger incentive to expend maximum effort for the long-term growth and
success of S1 and encouraging recipients to remain in the employ of S1. Officers
and other full-time employees of S1 and its subsidiaries are eligible for grants
under our 1995 and 1997 stock option plans. Stock options are normally granted
each year with the size of the grants generally tied to and weighted
approximately equally based on an officer's responsibility level and
performance. During 1998, 400,000 stock options were granted to our executive
officers, as adjusted to reflect the two-for-one split of our common stock
payable on May 7, 1999.

Other. In addition to the compensation paid to executive officers
described above, executive officers received, along with and on the same terms
as other employees, certain benefits such as health insurance and participation
in S1's 401(k) Plan.

CEO Compensation. Since the company began its current internet business in
1995, the compensation for the Chief Executive Officer has been primarily cash
compensation in the form of a base salary, and stock-based in the form of
options. In 1998, the Chief Executive Officer's 1998 base salary was $200,000,
which was the same as his 1997 base salary. The Chief Executive Officer did not
receive a bonus or an award of stock options in 1997 or 1998. Nonetheless, as
noted above, a significant portion of S1's total compensation package is highly
dependent on the public market value of S1 and total return to shareholders.
This has been the case since the company began its operations as an internet
business in 1995. Notwithstanding that the Chief Executive Officer did not
receive an increase in base salary, a bonus or an award of stock options in
1998, the public market value of S1 common stock did increase significantly
during 1998, thereby considerably enhancing the value of long-term stock awards
granted to the Chief Executive Officer in previous years. At the beginning of
1998, the reported per share price of our common stock was $3.75, and at
year-end 1998 it was $15.25, in both cases, as adjusted for the two-for-one
split of our common stock payable on May 7, 1999. As noted above, the
compensation committee is re-evaluating the compensation structure for all the
executive officers, including the Chief Executive Officer.

Internal Revenue Code Section 162(m). In 1993, the Internal Revenue Code
of 1986, as amended, was amended to disallow publicly traded companies from
receiving a tax deduction on compensation paid to executive officers in excess
of $1 million (section 162(m) of the Code), unless, among other things, the
compensation meets the requirements for performance-based compensation. S1 has
not taken this limitation into account in the past in structuring most of its
equity compensation programs and in determining executive compensation. The
compensation committee expects to take the deductibility limit for compensation
into consideration when awarding equity-based compensation beginning in fiscal
1999, and the Amended and Restated 1995 Stock Option Plan contains provisions to
allow option grants to qualify for an exemption from that limit.

Compensation Committee
---------------------------

Dorsey R. Gardner
Joseph S. McCall (Chairman)
Howard J. Runnion, Jr.

9
<PAGE> 13

PERFORMANCE OF OUR COMMON STOCK

The following table sets forth comparative information regarding the
cumulative shareholder return on our common stock since May 26, 1996. Share
information from May 26, 1996 to September 30, 1998 is based on the common stock
of our predecessor, Security First Network Bank. Total shareholder return is
measured by dividing cumulative dividends for the measurement period (assuming
dividend reinvestment) plus share price change for the period by the share price
at the beginning of the measurement period. Neither S1 nor Security First
Network Bank has paid dividends on its common stock from May 26, 1996 to
December 31, 1998. Our cumulative shareholder return over this period is based
on an investment of $100 on May 26, 1996 and is compared to the cumulative total
return of the Interactive Week Internet Index and the Nasdaq Composite Index.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
S1, INTERACTIVE WEEK INTERNET INDEX AND NASDAQ COMPOSITE INDEX
FROM MAY 26, 1996 TO DECEMBER 31, 1998

[PERFORMANCE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Period Ending
-------------------------------------------------------
Company/Index Name 5/26/96 12/31/96 12/31/97 12/31/98
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SECURITY FIRST TECHNOLOGIES CORPORATION $100.00 $25.00 $17.68 $74.39
- -------------------------------------------------------------------------------------------------------
INTERACTIVE WEEK INTERNET INDEX 100.00 92.89 100.10 238.53
- -------------------------------------------------------------------------------------------------------
NASDAQ COMPOSITE INDEX 100.00 106.02 128.94 177.36
- -------------------------------------------------------------------------------------------------------
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Chairman of our compensation committee is Mr. McCall and the other
members of the committee are Mr. Gardner and Mr. Runnion. None of the members of
this committee have served as an officer or employee of S1 or its operating
subsidiary. During 1998, S1 used technology consulting services from McCall
Consulting Group. Mr. McCall is the president of McCall Consulting. During 1998,
the total amount paid to McCall Consulting was $1.1 million. At December 31,
1998, S1 had outstanding payables to McCall Consulting Group of $282,000.

10
<PAGE> 14

TRANSACTIONS WITH MANAGEMENT

Prior to our 1998 sale of Security First Network Bank, the bank made loans
to its directors and executive officers for the financing of their homes, as
well as home improvement and consumer loans. It is the belief of management that
these loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and
neither involved more than normal risk of collectability nor presented other
unfavorable features.

During the latter part of 1996, among its ordinary course research and
development activities, the company that is now S1's operating subsidiary
started a project known as "Webtone." The Webtone project was established to
assess the customer care issues raised as a result of interacting with retail
customers over new delivery channels and subsequently to develop software
solutions to resolve these issues more efficiently. In November 1997, after the
assessment phase of the project was completed at a cost of approximately
$300,000, the board of directors determined not to proceed with Webtone,
primarily because of the board's uncertainty about the potential profitability
of the project and because of the limited resources, both capital and personnel,
of the operating subsidiary. The board believes this decision is consistent with
the determination to discontinue the banking business of Security First Network
Bank and focus resources on the Virtual Financial Manager suite of products and
related services. With the board's full knowledge and agreement, Michael C.
McChesney created and funded his own company to develop Webtone. Mr. McChesney
resigned as Chairman of the Board of S1 in February 1999. In undertaking these
activities, Mr. McChesney and the board of directors have acknowledged that
Webtone and Mr. McChesney should enter into some form of arrangement for a
future business relationship. However, the parties have not determined what that
arrangement should be. Since abandoning the Webtone project, S1's operating
subsidiary has provided Webtone with administrative and technical services on a
time and materials basis amounting to approximately $192,000 in 1998 and $80,000
in 1997. As of December 31, 1998, the operating subsidiary had a receivable from
Webtone related to these services of $173,000.

During 1998, S1 used technology consulting services from McCall Consulting
Group. The president of McCall Consulting, Mr. Joseph S. McCall, is one of our
directors. During 1998, the total amount paid to McCall Consulting was
approximately $1.1 million. At December 31, 1998, S1 had outstanding payables to
McCall Consulting of $282,000.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and officers, and persons who own more than 10% of our common stock, to file
with the Securities and Exchange Commission initial reports of ownership of our
equity securities and to file subsequent reports when there are changes in their
ownership. Based on a review of reports submitted to us, we believe that during
the fiscal year ended December 31, 1998, all Section 16(a) filing requirements
applicable to our directors, officers and more than 10% owners were complied
with on a timely basis, other than a Form 4 that was not timely filed by Mr.
Stockwell for one transaction which was reflected in a Form 5 filing.

APPROVAL OF INCREASE IN AUTHORIZED COMMON STOCK
(PROPOSAL 2)

Our board of directors has approved an amendment to our amended and
restated certificate of incorporation to increase the number of shares of common
stock that we are authorized to issue, subject to approval of this amendment by
our shareholders at the annual meeting. This proposal would increase the number
of shares of common stock that we are authorized to issue from 60,000,000 to
350,000,000 shares. The number of shares of common stock that would be
authorized by this proposal takes into effect the two-for-one split of our
common stock payable on May 7, 1999. Our board of directors has determined that
this proposal is advisable and in the best interests of S1 and its shareholders
and recommends that you vote to approve this proposal. Unless otherwise
indicated, properly executed proxies will be voted FOR approval of the proposed
increase.
11
<PAGE> 15

The share information set forth in this section has been adjusted to
reflect the two-for-one split of our common stock payable on May 7, 1999. As of
April 21, 1999, we had issued and outstanding 25,172,160 shares of common stock,
466,450 shares of series A convertible preferred stock, 749,064 shares of series
B redeemable convertible preferred stock and 215,000 shares of series C
redeemable convertible preferred stock.

In addition, as of April 21, 1999, 932,900, 1,070,090 shares and 430,000
shares of common stock, respectively, were reserved for issuance in the event of
the conversion of all of the outstanding series A, series B and series C
preferred stock; 10,419,504 shares of common stock were reserved for issuance
upon the exercise of stock options previously granted but unexercised or
available for grant under our stock option plans and agreements; 1,046,760
shares of common stock were reserved for issuance upon the exercise of options
held by a subsidiary of Royal Bank of Canada; and 200,000 shares and 800,000
shares of common stock, respectively, were reserved for issuance upon the
exercise of a warrant issued to Anderson Consulting LLP and a warrant issued to
Royal Bank of Canada.

If the proposals to approve the Employee Stock Purchase Plan and the
Amended and Restated 1995 Stock Option Plan are approved at the annual meeting,
we would reserve 400,000 shares of common stock under the Employee Stock
Purchase Plan and 1,600,000 additional shares of common stock under the Amended
and Restated 1995 Stock Option Plan for issuance upon the exercise of options
granted under these plans.

Accordingly, taking into account all of these matters, only 17,928,586
shares of authorized but not outstanding common stock remain available for
issuance based on the number of shares of common and preferred stock outstanding
as of April 21, 1999. Approval of this proposal would result in S1 having
307,928,586 authorized but not outstanding shares of common stock available for
issuance based on the number of shares of common and preferred stock outstanding
on April 21, 1999. Our board of directors believes that the increase in the
authorized number of shares of common stock of S1 is necessary to provide a
sufficient number of shares available in the future for use in connection with
raising additional capital through public offerings or private placements,
possible future mergers or acquisitions, possible stock dividends or splits and
employee option or stock ownership plans.

The unissued and unreserved shares of our common stock will be available
for any proper corporate purpose, as authorized by the board of directors,
without further approval by our shareholders, except as otherwise required by
law or the rules of The Nasdaq Stock Market, Inc. Our shareholders do not have
any preemptive or other rights to purchase additional shares of our common
stock. Further issuances of additional shares of common stock or securities
convertible into common stock, therefore, may have a dilutive effect on the
existing holders of our common stock.

REQUIRED VOTE

The affirmative vote of a majority of the shares of common stock issued and
outstanding on April 21, 1999 and entitled to vote at the annual meeting is
required to approve the increase in common stock that we are authorized to
issue.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE INCREASE IN OUR AUTHORIZED COMMON STOCK.

APPROVAL OF INCREASE IN AUTHORIZED SERIAL PREFERRED STOCK
(PROPOSAL 3)

Our board of directors has approved an amendment to our amended and
restated certificate of incorporation to increase the number of shares of serial
preferred stock that we are authorized to issue, subject to approval of this
amendment by our shareholders at the annual meeting. This proposal would
increase the number of shares of serial preferred stock that we are authorized
to issue from 5,000,000 to 25,000,000 shares. Our board of directors has
determined that this proposal is advisable and in the best interests of S1 and
its shareholders and recommends that you vote to approve this proposal. Unless
otherwise indicated, properly executed proxies will be voted FOR approval of the
proposed increase.
12
<PAGE> 16

As of April 21, 1999, we had issued and outstanding 466,450 shares of
series A convertible preferred stock, 749,064 shares of series B redeemable
convertible preferred stock and 215,000 shares of series C redeemable
convertible preferred stock. Accordingly, taking into account the outstanding
preferred stock, only 3,569,486 shares of authorized but not outstanding serial
preferred stock remain available for issuance based on the number of shares of
preferred stock outstanding as of April 21, 1999. Approval of this proposal
would result in S1 having 23,569,486 authorized but not outstanding shares of
serial preferred stock available for issuance based on the number of shares of
preferred stock outstanding on April 21, 1999.

Our board of directors believes that the increase in the authorized number
of shares of serial preferred stock of S1 is necessary to provide a sufficient
number of shares available in the future for use in connection with raising
additional capital. S1 has used serial preferred stock to raise capital through
private placements and strategic alliance programs.

The unissued and unreserved shares of our serial preferred stock will be
available for any proper corporate purpose, as authorized by the board of
directors, without further approval by our shareholders, except as otherwise
required by law or the rules of The Nasdaq Stock Market, Inc. Our shareholders
do not have any preemptive or other rights to purchase additional shares of our
preferred stock. Further issuances of additional shares of securities
convertible into common stock, therefore, may have a dilutive effect on the
existing holders of our common stock.

Our amended and restated certificate of incorporation authorizes the
issuance of "blank check" preferred stock with the designations, rights and
preferences as may be determined from time to time by our board of directors.
Accordingly, the board is empowered, without shareholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
our common stock. The issuance of preferred stock could discourage, delay or
prevent a change in control of S1 and also may have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of S1 even though the transaction might be economically beneficial to S1 and its
shareholders.

REQUIRED VOTE

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE INCREASE IN OUR SERIAL PREFERRED STOCK.

APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 4)

The board of directors has adopted the Employee Stock Purchase Plan, which
we refer to as the Purchase Plan, and is submitting the Purchase Plan to our
shareholders for approval. The purpose of the Purchase Plan is to encourage
stock ownership in S1 by employees of S1 and those subsidiaries of S1 designated
by our board of directors as eligible to participate, thereby enhancing employee
interest in the continued success and progress of S1. The Purchase Plan is
subject to approval by shareholders and no stock will be issued under the
Purchase Plan unless and until our shareholders approve it. The effective date
of the Purchase Plan will be June 3, 1999. We have designed the Purchase Plan to
qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986, as amended, which we refer to as the Code. We have
reserved 400,000 shares of our common stock for issuance over the term of the
Purchase Plan, subject to periodic adjustment for changes in the outstanding
common stock occasioned by stock split-ups, stock dividends, recapitalizations
or other similar changes. We are summarizing the material features of the
Purchase Plan in this section, but the description is subject to and is
qualified in its entirety by the full text of the Purchase Plan, which is
attached as Appendix A to this proxy statement. Unless otherwise indicated,
properly executed proxies will be voted FOR approval of the Purchase Plan.

13
<PAGE> 17

GENERAL TERMS AND CONDITIONS

The board of directors has appointed S1's compensation committee to
administer the Purchase Plan. The committee has broad powers to administer and
interpret the Purchase Plan.

The Purchase Plan permits employees to purchase our stock at a favorable
price and possibly with favorable tax consequences to the participants. All of
the employees of S1 and of those subsidiaries designated by the board who are
regularly scheduled to work at least 20 hours per week and more than five months
per year are eligible to participate in any of the purchase periods of the
Purchase Plan immediately after being hired. A person on a leave of absence is
deemed to be an employee for the first 90 days of the leave of absence or for
any longer period during which he or she has a right to reemployment based on a
contract or a statute. However, a participant will not be granted an option
under the Purchase Plan if, after receiving the option, that person would own
stock or outstanding options possessing 5% or more of the total combined voting
power or value of all classes of our stock, as determined under the Code. As of
April 21, 1999, we had approximately 334 employees of S1 and its operating
subsidiary who would be eligible to participate in the Purchase Plan.

Under the Purchase Plan, eligible employees may elect to participate in the
Purchase Plan on July 1, 1999 and on February 1 of each subsequent year. Once an
eligible employee elects to participate, the employee will continue to be a
participant for subsequent offering periods, unless the employee elects not to
participate. The offering periods are generally 12-month periods beginning on
February 1 and ending on the following January 31, except that the first
offering period will begin on July 1, 1999 and end on January 31, 2000. However,
the committee can change the offering periods to six-month periods beginning
February 1 and August 1, if it determines to do so.

On the first day of each offering period, each participant will receive an
option to purchase up to a specified number of shares of stock on the last
business day on or before the end of the offering period, which is referred to
as the exercise date. Upon enrollment in the Purchase Plan, the participant will
authorize a payroll deduction, on an after-tax basis, in an amount of not more
than 20% of the participant's base pay on each payroll date. Except as otherwise
determined by the committee before the first day of an offering period, no more
than $106,250 of base pay will be taken into account under the Purchase Plan.

Unless the participant withdraws from the Purchase Plan before the end of
an offering period, if the exercise price of the option is not more than the
fair market value of a share of common stock on the last day of the offering
period, the participant's option for the purchase of shares will be exercised
automatically on each exercise date, and the participant's accumulated payroll
deductions will be used to purchase the maximum number of full shares available
under the option. The purchase price for the shares will come from the
accumulated payroll deductions credited to the participant's account under the
Purchase Plan. We will refund any excess payroll deduction amounts to the
participant. We will not pay any interest on funds withheld, and we will use
these funds for general operating purposes. The withheld amounts will not be
held in a trust or other account separate from our other funds. If the exercise
price exceeds the fair market value of a share of common stock on the last day
of the offering period, the participant will be deemed to have elected to
withdraw all of his or her accumulated payroll deductions.

American Stock Transfer & Trust Company, which we refer to as AST, as agent
will hold in custody for 12 months shares that a participant purchases under the
Purchase Plan. At any time after 12 months from the date a participant buys
shares under the Purchase Plan, the participant can instruct AST in writing to
reissue the shares in the participant's name. After receiving a notice from an
eligible participant, AST will deliver a stock certificate for the shares to the
participant. While the shares are held by AST, the participant will not be able
to sell or otherwise transfer the shares. If we pay any dividends on shares that
AST is holding, AST will transmit the dividends to the appropriate participant.

14
<PAGE> 18

The maximum number of shares that can be purchased by a participant under
an option will be determined by a formula. Subject to a limitation required by
law that is discussed below and to the availability of shares under the Purchase
Plan, the maximum number will be:

- the percentage of base pay that the participant has elected to have
withheld not in excess of 20%, multiplied by

- the participant's projected base pay for the offering period up to
$106,250 per year, unless the committee determines otherwise before the
start of an offering period, divided by

- 85% of the market value of our common stock at the beginning of the
offering period.

A participant's base pay for the offering period will be projected using
the rate of base pay in effect as of the beginning of the offering period.

The option exercise price per share will be 85% of the closing market price
of our common stock on the first day of the offering period or the nearest prior
business day on which trading occurred unless the participant's entry date is
not the first day of the offering period, in which case the exercise price may
not be lower than the exercise price in effect for an employee who participated
in the Purchase Plan during the entire period of the offering.

As required by tax law, no participant may receive an option under the
Purchase Plan for shares that have a fair market value in excess of $25,000 for
any calendar year in which the option is outstanding, determined at the time the
participant receives the option grant.

No participant can assign or transfer payroll deductions or rights
regarding the exercise of options granted under the Purchase Plan, other than by
will or by the laws of descent and distribution or as provided under the
Purchase Plan. During the lifetime of a participant, only the participant can
exercise the option. Upon termination of a participant's employment for any
reason not including a leave of absence beyond 90 days and other than death, we
will return the participant's accumulated payroll deductions and the participant
will not have the right to purchase any more shares under the Purchase Plan. If
a participant dies, the participant's beneficiary, determined under the Purchase
Plan, will have the right to withdraw the deceased participant's accumulated
payroll deductions or to exercise the participant's existing option to purchase
shares at the end of the then current offering period, using the accumulated
payroll deductions. The beneficiary must give us written notice of the
beneficiary's decision to withdraw funds within 60 days after the participant's
death, or before the end of the applicable offering period, if earlier,
otherwise we will use the funds to exercise the participant's option unless the
option price is more than the fair market value of a share of common stock at
the end of that offering period.

The board will determine when to end the Purchase Plan, but no options can
be granted after ten years from the effective date of the Purchase Plan. Under
circumstances of dissolution or liquidation of S1, or upon a merger,
consolidation or reorganization in which S1 is not than the surviving
corporation, or upon a sale of all or substantially all of S1's assets, or upon
a transaction approved by the board of directors that results in any person or
entity owing more than 80% of the combined voting power of all of S1's classes
of stock, the Purchase Plan and the options outstanding under it will terminate,
unless otherwise provided in writing. In the event of a termination of the
Purchase Plan, the last day of an offering that is in progress will be deemed to
be the last trading day before the termination and the outstanding options of
participating employees will be deemed to be automatically exercised that day.
In the event that S1 is the surviving corporation in a reorganization, merger or
consolidation, each outstanding option under the Purchase Plan will apply to the
securities to which the option holder would have been entitled if he or she
exercised the option immediately before such action. No option may be granted
under the Purchase Plan after June 3, 2009.

The Purchase Plan provides for adjustment of the number of shares for which
options may be granted, the number of shares subject to outstanding options and
the exercise price of outstanding options in the event of any increase or
decrease in the number of issued and outstanding shares of common stock as a
result of one or more recapitalizations, reclassifications, stock split-ups,
combinations of shares, exchanges of shares, stock

15
<PAGE> 19

dividends, or other distribution payable in capital stock, or other increase or
decrease in shares without consideration.

The board may amend the Purchase Plan at any time, provided that no
amendment may change any option previously granted in a way that adversely
affects the rights of the holder of the option and, without shareholder
approval, the Board may not increase the maximum number of shares available for
purchase under the Purchase Plan or amend the requirements as to the
corporations or class of corporations whose employees are eligible to purchase
stock under the Purchase Plan.

Our shareholders will not have any preemptive rights to purchase or
subscribe for the shares reserved for issuance under the Purchase Plan. If any
option granted under the Purchase Plan expires or terminates for any reason
other than having been exercised in full, the unpurchased shares subject to that
option will again be available for purposes of the Purchase Plan.

FEDERAL INCOME TAX EFFECTS

Options granted under the Purchase Plan are intended to qualify for
favorable tax treatment to the employees under Sections 421 and 423 of the Code.
Employee contributions are made on an after-tax basis. A participant will not be
taxed on the grant or exercise of an option under the Purchase Plan.

A participant will realize gain or loss on common stock purchased under the
Purchase Plan when the participant sells the shares of common stock. If a
participant disposes of shares two years or more after the date of the beginning
of the offering period in which he or she acquired the shares, and more than one
year after purchasing the shares, the participant will recognize as ordinary
income the lesser of:

- the excess of the fair market value of the shares on the date of sale
over the price paid for the shares or

- the discount of the fair market value of the shares as of the beginning
of the applicable offering period, which currently is 15%.

Additionally, the participant will recognize a long-term capital gain or loss
within the meaning of the Code equal to the difference between:

- the amount realized from the sale of the shares and

- his or her basis in the shares, which normally would be the purchase
price paid, plus any amount taxed as ordinary compensation income under
the rules described above.

If a participant disposes of shares within two years of the date of the
beginning of the offering period in which the participant bought the shares, or
within one year after buying the shares, whichever is later, the participant
would recognize ordinary compensation income equal to:

- the excess of the fair market value of the shares on the applicable
purchase date over

- the price paid for the shares.

If a participant dies while holding shares of stock acquired under the
Purchase Plan, the participant's estate will be subject to tax at ordinary
income rates on an amount equal to the lesser of:

- the excess of the fair market value of the shares on the date of death
over the price the participant paid for the shares or

- the discount of the fair market value of the shares as of the beginning
of the applicable offering period, which currently is 15%.

We will not receive an income tax deduction upon either the grant or exercise of
the option by a participant, but generally will receive a deduction equal to the
ordinary compensation income required to be recognized by a participant as a
result of the disposition of the shares, if the shares are disposed of by the
participant within two years of the date of the beginning of the purchase period
in which the shares were acquired, or within one year after the shares were
purchased, whichever is later.

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<PAGE> 20

As of April 21, 1999, there have been no shares purchased under the
Purchase Plan by any eligible employees.

The foregoing is a brief summary of the principal federal income tax
consequences of awards under the Purchase Plan. Recipients of options should
consult with their own personal tax advisors with respect to grants and
transactions in stock acquired under the Purchase Plan.

REQUIRED VOTE

To approve the Employee Stock Purchase Plan, holders of a majority of the
shares of common stock present and entitled to vote at the annual meeting will
need to vote for Proposal 4.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN.

APPROVAL OF THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN
(PROPOSAL 5)

Our board of directors has adopted an amendment and restatement of our
Employee Stock Option Plan, which we refer to as the Amended and Restated Plan,
and is submitting the plan to our shareholders for approval at the annual
meeting. The Amended and Restated Plan is subject to approval by shareholders
and no options will be issued under the Amended and Restated Plan unless and
until shareholders approve it. The effective date of the Amended and Restated
Plan is May 5, 1999, the date the plan was approved by our board of directors.
We have reserved an additional 1,600,000 shares of our common stock for issuance
over the term of the Amended and Restated Plan. The number of shares of common
stock that may be issued under the Amended and Restated Plan is 6,802,480,
subject to periodic adjustment for changes occasioned by stock split-ups, stock
dividends, recapitalizations or other similar changes. The amended provisions
apply only to options granted after the effective date of the Amended and
Restated Plan, not options granted under the provisions of the Employee Stock
Option Plan as in effect before the amendment and restatement. We are
summarizing the material features of the Amended and Restated Plan in this
section, but the description is subject to and is qualified in its entirety by
the full text of the plan, which is attached as Appendix B to this proxy
statement. Unless otherwise indicated, properly executed proxies will be voted
FOR approval of the Amended and Restated Plan.

The board of directors believes that stock options are important to attract
and to encourage the continued service of directors, officers and other key
employees and service providers by facilitating their purchase of a stock
interest in S1. The board of directors has concluded that it is advisable that
S1 and its shareholders have the incentive of stock options available as a means
of attracting and retaining directors, officers and other key employees and
service providers. This objective would be served by adopting the Amended and
Restated Plan. As S1 progresses, officers and key employees continually are
being retained in or moving into positions where, in the judgment of the board
of directors, an initial or increased option will be a valuable incentive and
will serve to the ultimate benefit of our shareholders.

By submitting the Amended and Restated Plan for shareholder approval at the
annual meeting, we intend to comply with the plan requirements related to
options qualifying as "incentive stock options" for federal income tax purposes
and to the deduction for such purposes of the full amount to which S1 is
entitled with respect to options that constitute "qualified performance based
compensation" under federal tax law. For more information about these matters,
we refer you to the section below captioned "Federal Income Tax Consequences of
the Amended and Restated Plan."

DESCRIPTION OF THE PLAN

In this section, we refer to the Internal Revenue Code of 1986, as amended,
as the Code. The Amended and Restated Plan provides for the grant to employees
of options that are intended to qualify as "incentive stock options" under
Section 422 of the Code and the regulations promulgated under the Code as well
as the grant of nonqualifying options to employees, directors and service
providers of S1 and its subsidiaries. As of
17
<PAGE> 21

April 21, 1999, there were approximately 334 employees of S1 and its subsidiary,
four non-employee directors of S1 and no non-employee directors of S1's
subsidiary not also serving as directors of S1 who would be eligible to
participate in the Amended and Restated Plan.

The compensation committee of S1 will administer the Amended and Restated
Plan. The compensation committee consists of at least two directors who qualify
as "outside directors" for purposes of the federal income tax rules on
"qualified performance based compensation." Our compensation committee will make
all final determinations concerning the persons to whom we grant incentive stock
options and nonqualifying options.

The compensation committee will set the option exercise price for each
share of common stock under the Amended and Restated Plan at the time it grants
options. In the case of an incentive stock option, the exercise price may not be
less than 100% of the fair market value of a share of our common stock on the
date we grant the option, or 110% in the case of an incentive stock option
granted to an optionee beneficially owning more than 10% of the outstanding
common stock. The maximum option term is 10 years, or five years in the case of
an incentive stock option granted to an optionee beneficially owning more than
10% of the outstanding common stock. Options may be exercised at any time after
grant until termination of the option, except as otherwise provided in the
particular option agreement. The limitation on the number of shares that may be
subject to options granted to any executive officer or other employee under the
Amended and Restated Plan is 2,000,000 shares, which includes options previously
granted under the Employee Stock Option Plan. There is also a $100,000 limit on
the value of stock, determined at the time of grant, covered by incentive stock
options under the Amended and Restated Plan and S1's other plans that first
become exercisable by an optionee in any calendar year. No option may be granted
after the expiration of the term of the Amended and Restated Plan, which will
expire on May 5, 2009, the tenth anniversary of the date of the adoption of the
plan by our board of directors. Options are non-transferable other than by
reason of the death of the optionee, except that an optionee may transfer a
nonqualified option by gift to one or more members of the optionee's family or
to a trust for the exclusive benefit of (1) the optionee, (2) one or more
members of the optionee's family or (3) the optionee and one or more of his or
her family members, as long as the transferee enters into a written agreement to
be bound by the terms of the Amended and Restated Plan. For this purpose, family
refers to the optionee's spouse, siblings, lineal ancestors and descendants.

An optionee can pay for shares purchased under the Amended and Restated
Plan in cash or cash equivalents or by exchanging shares of our common stock
with a fair market value equal to the total option exercise price and paying
cash for any difference. Unless otherwise provided by the particular option
agreement, an optionee can exercise an option by directing that certificates for
the shares purchased be delivered to a licensed broker as agent for the
optionee, provided that the broker tenders to S1 cash or cash equivalents equal
to the option exercise price plus the amount of any taxes that we may be
required to withhold in connection with the exercise of the option. If an
optionee exercises an option at a time when a sale of the shares of stock
acquired would subject to the optionee to liability under section 16 of the
Securities Exchange Act of 1934, as amended, the certificates representing such
shares will bear a legend restricting the transfer of such shares until the
expiration of the period during which such a transfer would subject the optionee
to liability under that section.

If an optionee's employment or service with S1 or a subsidiary terminates
by reason of death or disability, his or her options, whether or not then
exercisable, may be exercised within one year after death or disability unless a
different date is provided in the particular option agreement, but not later
than the date the option would otherwise expire. If the optionee's employment or
service terminates for any reason other than death or disability, his or her
options terminate one year after the date of such termination unless a different
date is provided in the particular option agreement, but not later than the date
the option would otherwise expire.

If the outstanding shares of our common stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or securities
of S1 by reason of any recapitalization, reclassification, stock split-up,
reverse split, combination of shares, exchange of shares, stock dividend or
other distribution payable in capital stock, or other increase or decrease
without receipt of consideration by S1, an appropriate and proportionate
adjustment will be made in the number and kinds of shares subject to the Amended
and

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<PAGE> 22

Restated Plan, and in the number, kinds, and per share exercise price of shares
subject to the unexercised portion of options granted prior to the change. Any
adjustment in an outstanding option, however, will be made without a change in
the total price applicable to the unexercised portion of the option but with a
corresponding adjustment in the per share option price. If we distribute shares
of stock of a subsidiary, to the extent consistent with federal income tax
regulations, each outstanding option also will pertain to the number of shares
of the spun-off subsidiary that would have been received by the optionee if he
or she had owned the number of shares of our common stock that were subject to
the option at the time of the distribution.

Upon any dissolution or liquidation of S1, or upon a merger, consolidation,
reorganization or other business combination in which S1 is not the surviving
corporation, or upon the sale of all or substantially all of the assets of S1 to
another entity, or upon any transaction approved by the board of directors which
results in any person or entity owning 80% or more of the total combined voting
power of all classes of our stock, the Amended and Restated Plan and the options
issued under the plan will terminate, unless provision is made in connection
with the transaction for the continuation of the plan, the assumption of the
outstanding options or both, or for the substitution for such options of new
options covering the stock of a successor entity or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
the per share exercise price. In the event of such termination, all outstanding
options will be exercisable in full during such period immediately before the
occurrence of such termination as the board of directors in its discretion will
determine. In the event that S1 is the surviving corporation in any
reorganization, merger or consolidation, each option outstanding under the
Amended and Restated Plan will apply to the securities that the option holder
would have been entitled to receive if he or she had exercised the option
immediately before such action.

The board of directors may amend the Amended and Restated Plan with respect
to shares of our common stock as to which options have not been granted.
However, our shareholders must approve any amendment that would (i) change the
requirements as to eligibility to receive incentive stock options or (ii)
increase the maximum number of shares in the aggregate for which incentive
options may be granted under the plan, except for adjustments upon changes in
capitalization. No amendment, suspension or termination of the Amended and
Restated Plan may alter or impair the rights or obligations of any outstanding
option without the consent of the option holder. Unless previously terminated,
this plan will terminate automatically 10 years from May 5, 1999, the date of
the adoption of the Amended and Restated Plan by our board of directors.

MATERIAL DIFFERENCES BETWEEN THE ORIGINAL PLAN AND THE AMENDED AND RESTATED PLAN

The Amended and Restated Plan amends and restates our Employee Stock Option
Plan. Currently, we are authorized to issue a total of 5,202,480 shares under
the Employee Stock Option Plan, taking into account the two-for-one split of our
common stock payable on May 7, 1999. Under the Amended and Restated Plan, we
would be authorized to issue 6,802,480 shares. Because the number of authorized
shares under the Amended and Restated Plan takes into account the two-for-one
split of our common stock payable on May 7, 1999, the Amended and Restated Plan
effectively increases the number of shares we are authorized to issue under the
plan by 1,600,000, or 800,000 on a pre-split basis. The maximum number of shares
for which an option can be granted to any executive officer or other employee is
the same, as the difference between the limitation of 1,000,000 shares under the
Employee Stock Option Plan and 2,000,000 shares under the Amended and Restated
Plan reflects our two-for-one stock split.

Under the Employee Stock Option Plan, options can be granted to any
employee of S1 or its subsidiaries. Under the Amended and Restated Plan,
directors and other service providers of S1 and its subsidiaries also are
eligible for option grants.

The effective date and termination date of the Employee Stock Option Plan
are October 5, 1995 and October 5, 2005. The effective date and termination date
of the Amended and Restated Plan are May 5, 1999 and May 5, 2009.

The Amended and Restated Plan permits an optionee to transfer a
nonqualified option by gift to certain family members, to a trust for the
exclusive benefit of the optionee, or one or more members of the optionee's

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<PAGE> 23

family, or a combination of the above. The Employee Stock Option Plan does not
provide for this exception to the general prohibition on transfers during an
employee's lifetime.

In regard to amendments to the Employee Stock Option Plan that require
shareholder approval, the plan provides that shareholder approval is necessary
to materially increase the benefits accruing to participants under the plan, to
change the requirements as to eligibility to receive options or increase the
maximum number of shares of stock in the aggregate that may be sold pursuant to
options under the plan, except for adjustments caused by changes in
capitalization. The Amended and Restated Plan does not require shareholder
approval to materially increase the benefits accruing to participants under the
plan and limits the need for shareholder approval of changes in the requirements
as to eligibility to receive options to incentive stock options and increasing
the maximum number of shares of stock that may be issued pursuant to options to
incentive stock options.

PLAN BENEFITS

As of April 21, 1999, as adjusted to reflect the two-for-one split of our
common stock payable on May 7, 1999, options to purchase 4,084,340 shares of our
common stock (140,000 of which were incentive stock options and 3,944,340 of
which were nonqualifying options) were outstanding under the Employee Stock
Option Plan. The option exercise price for an incentive stock option under the
Employee Stock Option Plan may not be less than 100% of the fair market value of
the common stock on the date of grant of the option, or 110% in the case of an
incentive stock option granted to an optionee beneficially owning more than 10%
of the outstanding common stock. The option exercise price for nonqualified
options is fixed by the committee. The table below provides information
regarding stock options granted to date under the Employee Stock Option Plan to
(i) our Chief Executive Officer and our other named executive officer, (ii) our
director nominee, (iii) all current executive officers of S1 as a group, (iv)
all current non-employee directors of S1 as a group and (v) all employees of S1,
including all current officers who are not executive officers, as a group.

PLAN BENEFITS

<TABLE>
<CAPTION>
1995 EMPLOYEE STOCK OPTION PLAN
-----------------------------------
NAME AND POSITION EXERCISE PRICE NUMBER OF OPTIONS
- ----------------- -------------- -----------------
<S> <C> <C>
James S. Mahan, III................................... $0.3125 1,858,400(a)
Chairman, Chief Executive Officer and President
Robert F. Stockwell................................... $0.3125 185,840(b)
Chief Financial Officer and Treasurer 3.0315 40,000(c)
3.3125 100,000(d)
Robert W. Copelan..................................... -- --
Director and Director Nominee
All current executive officers as a group (3
persons)............................................ $0.9993(e) 2,184,240
All current non-employee directors (4 persons)........ -- --
All employees, including all current officers who are
not executive officers, as a group (29 persons)..... $2.6435(f) 1,652,640
</TABLE>

- ---------------
(a) Option currently exercisable in full.
(b) 80,000 shares exercised. Remaining shares exercisable in full.
(c) Option will become exercisable in full on December 12, 2001.
(d) Option will become exercisable in full on January 9, 2002.
(e) Weighted average exercise price of options granted to executive officers.
(f) Weighted average exercise price of options granted to non-executive officer
employees.

Based on the closing sales price of our common stock on April 21, 1999 of
$52.875, the aggregate market value of the shares underlying the options to
purchase 4,084,340 shares outstanding as of that date under the Employee Stock
Option Plan is $215,959,478. The information in the preceding sentence has been
adjusted to reflect the two-for-one split of our common stock payable on May 7,
1999.

FEDERAL INCOME TAX CONSEQUENCES OF THE AMENDED AND RESTATED PLAN

The grant of an option is not a taxable event for the optionee or S1 so
long as the option exercise price is not insubstantial in comparison to the
value of the stock covered by the option at the time of grant. With respect to
"incentive stock options," an optionee will not recognize taxable income upon
grant or exercise of an incentive stock option, and any gain realized upon a
disposition of shares received pursuant to the exercise of an incentive stock
option will be taxed as capital gain if the optionee holds the shares for at
least two years after the date of grant and for one year after the date of
exercise. However, the excess of the fair market value

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<PAGE> 24

of the shares subject to an incentive stock option on the exercise date over the
option exercise price will be included in the optionee's alternative minimum
taxable income in the year of exercise for purposes of the alternative minimum
tax. If the optionee is subject to certain restrictions, the determination of
the amount included in alternative minimum taxable income may be delayed, unless
the optionee elects within 30 days following exercise to have income determined
without regard to such restrictions. An optionee may be entitled to a credit
against regular tax liability in future years for minimum taxes paid with
respect to the exercise of incentive stock options, for example for a year in
which he or she sells the shares. S1 and its subsidiaries will not be entitled
to any business expense deduction for the grant or exercise of an incentive
stock option, except as discussed below.

For the exercise of an incentive stock option to qualify for the foregoing
tax treatment, the optionee generally must be an employee of S1 or a subsidiary
from the date the option is granted through a date that is within three months
before the date of exercise. In the case of an optionee who is disabled, this
three month period is extended to one year. In the case of an employee who dies,
the three month period and the holding period for shares received pursuant to
the exercise of the option are waived.

If all of the requirements for incentive stock option treatment are met
except for the special holding period rules set forth above, the optionee will
recognize ordinary income upon the disposition of the shares in an amount equal
to the excess of the fair market value of the shares at the time he or she
exercises the option over the option exercise price. However, if the optionee is
subject to certain restrictions at the time he or she exercises the option, the
measurement date may be delayed, unless the optionee has made a special tax
election within 30 days after the date of exercise to have taxable income
determined without regard to such restrictions. The balance of the realized
gain, if any, will be capital gain. If the optionee sells the shares before he
or she satisfies the holding period rules but at a price below the fair market
value of the shares at the time he or she exercised the option, the amount of
ordinary income, and the amount included in alternative minimum taxable income,
if the sale occurs during the same year as he or she exercised the option, will
be limited to the excess of the amount realized on the sale over the option
exercise price. If S1 complies with applicable reporting requirements, it will
be allowed a business expense deduction to the extent the optionee recognizes
ordinary income, subject to applicable limitations on the deduction of amounts
becoming vested as a result of a change in control and on the deduction of
compensation paid to executive officers if such options do not constitute
"qualified performance based compensation."

If an optionee exercises an incentive stock option by tendering shares of
common stock with a fair market value equal to part or all of the option
exercise price, the exchange of shares will be treated as a nontaxable exchange,
except that this treatment would not apply if the optionee acquired the shares
being transferred pursuant to the exercise of an incentive stock option and has
not satisfied the special holding period requirements summarized above. If the
exercise is treated as a tax free exchange, the optionee would have no taxable
income from the exchange and exercise, other than minimum taxable income as
discussed above, and the tax basis of the shares exchanged would be treated as
the substituted basis for the shares received. These rules would not apply if
the optionee used shares received pursuant to the exercise of an incentive stock
option or another statutory option as to which the optionee has not satisfied
the applicable holding period requirement. In that case, the exchange would be
treated as a taxable disqualifying disposition of the exchanged shares, with the
result that the excess of the fair market value of the shares tendered over the
optionee's basis in the shares would be taxable.

Upon exercising a nonqualifying option, an optionee will recognize ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the common stock on the date of exercise, except that, if
the optionee is subject to certain restrictions, the measurement date may be
delayed, unless the optionee makes a special tax election within 30 days after
exercise to have income determined without regard to the restrictions. If S1
complies with applicable reporting requirements, it will be entitled to a
business expense deduction in the same amount, subject to applicable limitations
on the deduction of amounts becoming vested as a result of a change in control
and on the deduction of compensation paid to executive officers if such options
do not constitute "qualified performance based compensation." Upon a subsequent
sale or exchange of shares acquired pursuant to the exercise of a non qualifying
option, the optionee will have taxable gain or loss, measured by the difference
between the amount realized on the disposition and the tax

21
<PAGE> 25

basis of the shares, generally, the amount paid for the shares plus the amount
treated as ordinary income at the time the option was exercised.

If the optionee surrenders shares of common stock in payment of part or all
of the exercise price for non-qualifying options, no gain or loss will be
recognized with respect to the shares surrendered, regardless of whether the
shares were acquired pursuant to the exercise of an incentive stock option, and
the optionee will be treated as receiving an equivalent number of shares
pursuant to the exercise of the option in a nontaxable exchange. The basis of
the shares surrendered will be treated as the substituted tax basis for an
equivalent number of option shares received and the new shares will be treated
as having been held for the same holding period as had expired with respect to
the transferred shares. However, the fair market value of any shares received in
excess of the number of shares surrendered, which would be the difference
between the aggregate option exercise price and the aggregate fair market value
of the shares received pursuant to the exercise of the option, will be taxed as
ordinary income.

The foregoing is a brief summary of the principal federal income tax
consequences of awards under the Amended and Restated Plan. Recipients of
options should consult with their own personal tax advisors with respect to
grants and transactions in stock acquired under the Amended and Restated Plan.

REQUIRED VOTE

In order to approve the Amended and Restated Plan, holders of a majority of
the shares of our common stock present and entitled to vote at the annual
meeting will need to vote for Proposal 5. If our shareholders do not approve the
Amended and Restated Plan, the amendment and restatement will be of no effect
and the Employee Stock Option Plan will continue in effect without regard to the
amendment and restatement.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDED
AND RESTATED 1995 STOCK OPTION PLAN.

DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
FOR INCLUSION IN PROXY STATEMENT

Any proposal which an S1 shareholder wishes to have included our proxy
statement and form of proxy for our 2000 annual meeting of shareholders under
Rule 14a-8 of the Securities and Exchange Commission must be received by our
Secretary at 3390 Peachtree Road, NE, Atlanta, Georgia 30326 by January 8, 2000.
Any other proposal for consideration by shareholders at our 2000 annual meeting
of shareholders must be delivered to, or mailed to and received by, our
Secretary not less than 30 days and not more than 90 days prior to the date of
the meeting if we give at least 45 days' notice or prior public disclosure of
the date of the meeting. Nothing in this paragraph shall be deemed to require us
to include in our proxy statement and form of proxy for the annual meeting any
shareholder proposal which does not meet the requirements of the Securities and
Exchange Commission in effect at the time.

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<PAGE> 26

OTHER MATTERS

As of the date of this proxy statement, the board of directors does not
know of any other matters to be presented for action by the shareholders at the
annual meeting. If any other matters not now known properly come before the
meeting, the persons named in the accompanying proxy will vote your proxy in
accordance with the determination of a majority of our board of directors.

By order of the Board of Directors

/s/ JAMES S. MAHAN, III
James S. Mahan, III
Chairman, Chief Executive Officer
and President

Atlanta, Georgia
May 7, 1999

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<PAGE> 27

APPENDIX A

SECURITY FIRST TECHNOLOGIES CORPORATION
EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I - - PURPOSE

The Security First Technologies Corporation Employee Stock Purchase Plan is
intended to provide a method whereby Employees, as defined below, of Security
First Technologies Corporation (the "Company") and its Subsidiaries, as defined
below (referred to collectively, unless the context otherwise requires, as the
"Employer"), will have an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of the Common Stock of the Company, par
value $0.01 per share (the "Stock"). It is the intention of the Employer to have
the Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that Section.

ARTICLE II - - DEFINITIONS

2.01. Base Pay

"Base Pay" shall mean regular salary or straight-time hourly earnings,
excluding payments for overtime, shift premium, bonuses, special payments,
commissions and other marketing incentive payments. Except as otherwise
determined by the Committee before the beginning of an Offering, the annual Base
Pay of each Employee taken into account under the Plan shall not exceed the
first $106,250 of such Base Pay.

2.02. Committee

"Committee" shall mean the Compensation Committee of the Company's Board of
Directors.

2.03. Employee

"Employee" means any person who is employed by the Employer other than such
a person whose customary employment is 20 hours per week or less or whose
customary employment is for not more than five months in any calendar year.

2.04. Offering, Offering Commencement Date and Offering Termination Date

These terms are defined in Article IV.

2.05. Option

"Option" shall mean a right to purchase one or more shares of Stock in
accordance with the terms of this plan.

2.06. Option Price

This term is defined in Section 6.02.

2.07. Stock

"Stock" shall mean the Common Stock, par value $0.01 per share, of the
Company.

2.08. Subsidiary

"Subsidiary" shall mean any present or future corporation which (i) is or
becomes a "subsidiary corporation" of Security First Technologies Corporation as
that term is defined in Section 424 of the Code and (ii) is designated as a
participating Employer in the Plan by the Company.

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ARTICLE III - - ELIGIBILITY AND PARTICIPATION

3.01. Initial Eligibility.

Each Employee shall be eligible to participate in Offerings under the Plan.
An Employee who is hired after an Offering has commenced shall be eligible to
participate in the Plan for the remainder of such Offering.

3.02. Leave of Absence.

For purposes of participation in the Plan, a person on leave of absence
shall be deemed to be an employee for the first 90 days of such leave of absence
and such employee's employment shall be deemed to have terminated at the close
of business on the 90th day of such leave of absence unless such employee shall
have returned to regular full-time or part-time employment (as the case may be)
before the close of business on such 90th day or, if longer, so long as the
individual's right to reemployment is guaranteed either by statute or contract.
Termination by the Employer of any employee's leave of absence, other than
termination of such leave of absence on return to full time or part time
employment, shall terminate an employee's employment for all purposes of the
Plan and shall terminate such employee's participation in the Plan and right to
exercise any Option.

3.03. Restrictions on Participation.

Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an Option under the Plan:

(a) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing five percent
or more of the total combined voting power or value of all classes of stock
of the Company (for purposes of this paragraph, the rules of Section 424(d)
of the Code shall apply in determining stock ownership of any Employee); or

(b) which permits his or her rights to purchase stock under the Plan
and all other employee stock purchase plans of the Employer to accrue at a
rate that exceeds $25,000 in fair market value of the stock (determined at
the time such option is granted) for each calendar year in which such
option is outstanding.

3.04. Commencement of Participation.

An eligible Employee may become a participant for an Offering by completing
an authorization for a payroll deduction on the form provided by the Employer
and filing it with the office of the Secretary of the Employer on or before the
date set therefor by the Committee. Such authorization shall continue in effect
for subsequent Offerings until modified or terminated by the Employee in
accordance with the Plan (or until the Employee ceases to be an Employee by
reason of termination of employment or otherwise, if earlier). Payroll
deductions for a participating Employee shall commence on the applicable
Offering Commencement Date when his or her authorization for a payroll deduction
becomes effective and shall end on the Offering Termination Date of the Offering
to which such authorization is applicable, unless sooner terminated by the
participating Employee as provided in Article VIII.

ARTICLE IV - - OFFERINGS

The Plan will be implemented by a series of offerings of the Stock (the
"Offerings") beginning on July 1, 1999 and on the 1st day of February in each of
the next nine calendar years, each Offering terminating on the January 31 next
following the beginning date, provided, however, that each annual Offering after
1999 may, in the discretion of the Committee exercised before the commencement
thereof, be divided into two six-month Offerings commencing, respectively, on
February 1 and August 1 of such year and terminating on July 31 of such year and
January 31 of the following year, respectively. As used in the Plan, "Offering
Commencement Date" means July 1, 1999 and each February 1 or August 1, as the
case may be, on which the particular Offering begins (except that, in the case
of an Employee who is hired during an Offering, the Offering Commencement Date
with respect to such Employee shall be the date the Employee is hired) and
"Offering

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Termination Date" means the July 31 or January 31 as the case may be, on which
the particular Offering terminates.

ARTICLE V - - PAYROLL DEDUCTIONS

5.01. Amount of Deduction.

At the time a participating Employee files his or her authorization for
payroll deduction, he or she shall elect to have deductions made from his or her
pay on each payday during the time he or she is a participant in an Offering at
the rate of a whole number percentage (not more than 20 percent) of his or her
Base Pay in effect at the Offering Commencement Date of such Offering.

5.02. Participant's Account.

All payroll deductions made for a participating Employee shall be credited
to his or her account under the Plan. A participating Employee may not make any
separate cash payment into such account except when on leave of absence and then
only as provided in Section 5.04.

5.03. Changes in Payroll Deductions.

A participating Employee may discontinue his or her participation in the
Plan as provided in Article VIII, but no other change can be made during an
Offering and, specifically, a participating Employee may not alter the amount of
his or her payroll deductions for that Offering.

5.04. Leave of Absence.

If a participating Employee goes on a leave of absence, such participating
Employee shall have the right to elect: (a) to withdraw the balance in his or
her or her account pursuant to Section 7.02, (b) to discontinue contributions to
the Plan but remain a participant in the Plan, or (c) to remain a participant in
the Plan during such leave of absence, authorizing deductions to be made from
payments by the Employer to the participating Employee during such leave of
absence and undertaking to make cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Employer to such
participating Employee are insufficient to meet such participating Employee's
authorized Plan deductions.

ARTICLE VI - - GRANTING OF OPTION

6.01. Number of Option Shares.

Subject to Section 10.01 below, and except as otherwise determined by the
Committee, on the Offering Commencement Date of each Offering, a participating
Employee shall be granted an Option to purchase a maximum number of shares of
the Stock equal to an amount determined as follows: an amount equal to (i) that
percentage of the Employee's Base Pay which he or she has elected to have
withheld (but not in any case in excess of 20 percent) multiplied by (ii) the
Employee's Base Pay during the period of the Offering (iii) divided by 85
percent of the market value of the Stock on the applicable Offering Commencement
Date. The market value of the Stock shall be determined as provided in Section
6.02 below. An Employee's Base Pay during the period of an Offering shall be
determined by multiplying, in the case of a one-year Offering, his or her normal
weekly rate of pay (as in effect on the last day before the Offering
Commencement Date with respect to such Offering) by 52 or the hourly rate by
2,080 or, in the case of a six-month Offering, by 26 or 1040, as the case may
be, provided that, in the case of a part-time hourly Employee and any Employee
who is hired during an Offering, the Employee's Base Pay during the period of an
Offering shall be determined by multiplying such Employee's hourly rate by the
number of regularly scheduled hours of work for such Employee during such
Offering.

6.02. Option Price.

The exercise price per share (the "Option Price") of Stock subject to an
Option granted hereunder shall be 85 percent of the closing price of the Stock
on the Offering Commencement Date with respect to such

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Option or the nearest prior business day on which trading occurred on the NASDAQ
National Market System.

Notwithstanding the foregoing, in the case of an Employee who is hired
during an Offering, the Option Price shall not be less than the Option Price in
effect for an Employee who participated in the Plan during the entire period of
such Offering. If the Stock is not admitted to trading on any of the foregoing
dates for which closing prices of the Stock are to be determined, then reference
shall be made to the fair market value of the Stock on that date, as determined
on such basis as shall be established or specified for the purpose by the
Committee.

ARTICLE VII - - EXERCISE OF OPTION

7.01. Automatic Exercise.

Unless a participating Employee gives written notice to the Employer as
hereinafter provided, if the Option Price of his or her Option is not more than
the fair market value of a share of the Stock on the Offering Termination Date
with respect to such Option, his or her Option for the purchase of Stock with
payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering, for the purchase of the number of full shares of Stock that the
accumulated payroll deductions in his or her account at that time will purchase
at the applicable Option Price (but not in excess of the number of shares
available for purchase under the Option granted to the Employee pursuant to
Section 6.01), and any excess in his or her account at that time will be
returned to him or her.

7.02. Withdrawal of Account.

By written notice to the Secretary of the Employer, at any time before the
Offering Termination Date applicable to any Offering, an Employee may elect to
withdraw all the accumulated payroll deductions in his or her account at such
time. If the Option Price of an Employee's Option is more than the fair market
value of a share of Stock on the Offering Termination Date with respect to such
Option, the Employee shall be deemed to have given such notice on such Offering
Termination Date.

7.03. Fractional Shares.

Fractional shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
be returned to the participating Employee promptly following the termination of
an Offering, without interest.

7.04. Transferability of Option.

During a participating Employee's lifetime, Options held by such
participating Employee shall be exercisable only by that participating Employee.

7.05 Delivery of Stock.

American Stock Transfer & Trust Company, as agent (the "Agent") will hold
in custody all shares of Stock purchased pursuant to Options. The Agent may hold
such shares in stock certificates in nominee names, and may commingle shares
held in its custody in a single account or stock certificate, without
identification as to individual employees. A participating Employee may, at any
time after the expiration of 12 months following his or her purchase of shares
under an Option (or such other period as may be specified by the Committee in a
written notice to Employees before the Offering Commencement Date with respect
to an Offering), by written notice instruct the Agent to have all or part of
such shares reissued in the Employee's own name and have the stock certificate
delivered to the Employee or his or her agent. During the 12 months (or other
applicable period) that the Agent holds such shares, the Employee will not be
entitled to sell or otherwise transfer the shares. Any dividends paid on shares
held by the Agent for a participating Employee's account will be transmitted to
the Employee.

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ARTICLE VIII - - WITHDRAWAL

8.01. In General.

As provided in Section 7.02, a participating Employee may elect to withdraw
payroll deductions credited to his or her account under the Plan at any time by
giving written notice to the Secretary of the Employer. All of the participating
Employee's payroll deductions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal, and no further
payroll deductions will be made from his or her pay during such Offering. The
Employer may, at its option, treat any attempt to borrow by an Employee on the
security of his or her accumulated payroll deductions as an election to withdraw
such deductions.

8.02. Effect on Subsequent Participation.

A participating Employee's withdrawal from any Offering will not have any
effect upon his or her eligibility to participate in any succeeding Offering or
in any similar plan which may hereafter be adopted by the Employer.

8.03. Termination of Employment.

Upon termination of the participating Employee's employment for any reason,
including retirement (but excluding death while in the employ of the Employer or
continuation of a leave of absence for a period beyond the period specified in
Section 3.02), the payroll deductions credited to his or her account will be
returned to him or her, or, in the case of his or her death subsequent to the
termination of his or her employment, to the person or persons entitled thereto
under Section 12.01.

8.04. Termination of Employment Due to Death.

Upon termination of the participating Employee's employment because of his
or her death, his or her beneficiary (as defined in Section 12.01) shall have
the right to elect, by written notice given to the Secretary of the Employer
before the Offering Termination Date, either:

(a) to withdraw all of the payroll deductions credited to the
participating Employee's account under the Plan, or

(b) to exercise the participating Employee's Option for the purchase
of Stock on the Offering Termination Date next following the date of the
participating Employee's death for the purchase of the number of full
shares of Stock which the accumulated payroll deductions in the
participating Employee's account at the date of the participating
Employee's death will purchase at the applicable Option Price, and any
excess in such account will be returned to said beneficiary, without
interest.

In the event that no such written notice of election shall be duly received
by the office of the Secretary of the Employer, the beneficiary shall
automatically be deemed to have elected, pursuant to paragraph (b), to exercise
the participating Employee's Option, except that, if the Option Price of such
Employee's Option is more than the fair market value of a share of Stock on the
Offering Termination Date with respect to such Option, the beneficiary shall be
deemed to have given notice pursuant to paragraph (a) above.

8.05. Leave of Absence.

A participating Employee on leave of absence shall, subject to the election
made by such participating Employee pursuant to Section 5.04, continue to be a
participating Employee in the Plan so long as such participating Employee is on
continuous leave of absence. Notwithstanding any other provisions of the Plan,
except as otherwise required by applicable law, unless a participating Employee
on leave of absence returns to regular full time or part time employment with
the Employer at the earlier of: (a) the termination of such leave of absence or
(b) three months after the expiration of the period specified in Section 3.02,
such participating Employee's participation in the Plan shall terminate on
whichever of such dates first occurs.

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ARTICLE IX - - INTEREST

No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participating Employee.

ARTICLE X - - STOCK

10.01. Maximum Shares.

The maximum number of shares of Stock which shall be sold pursuant to
Options granted under the Plan, subject to adjustment upon changes in
capitalization of the Company as provided in Section 12.04 shall be 400,000
shares. The shares that are sold pursuant to Options may, in the discretion of
the Committee, be authorized but unissued shares, treasury shares or shares
purchased in the market or in negotiated transactions for sale under the Plan.
If the total number of shares for which Options are exercised on any Offering
Termination Date in accordance with Article VI exceeds the maximum number of
shares available for the applicable Offering, the Company shall make a pro rata
allocation of the shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participating Employee under the Plan shall be returned to him or her as
promptly as possible.

10.02. Participant's Interest in Option Stock.

The participating Employee will have no interest in Stock covered by his or
her Option until such Option has been exercised.

10.03. Registration of Stock.

Shares of Stock to be delivered to a participating Employee under the Plan
will be registered in the name of the participating Employee, or, if the
participating Employee so directs by written notice to the Secretary of the
Employer before the Offering Termination Date applicable thereto, in the names
of the participating Employee and one such other person as may be designated by
the participating Employee, as joint tenants with rights of survivorship or as
tenants by the entireties, to the extent permitted by applicable law.

10.04. Securities Law and other Requirements.

The Company shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or the Company of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.
Specifically, in connection with the Securities Act of 1933 (as now in effect or
as hereafter amended), upon exercise of any Option, unless a registration
statement under such Act is in effect with respect to the shares of Stock
covered by such Option, the Company shall not be required to sell or issue such
shares unless the Committee has received evidence satisfactory to it that the
holder of such Option may acquire such shares pursuant to an exemption from
registration under such Act. Any determination in this connection by the
Committee shall be final, binding, and conclusive. The Company may, but shall in
no event be obligated to, register any securities covered hereby pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended). The Company
shall not be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable unless
and until the shares of Stock covered by such Option are registered or are
subject to an available exemption from registration the exercise of such Option
(under circumstances in which the laws of such jurisdiction apply) shall be
deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.

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ARTICLE XI - - ADMINISTRATION

11.01. Appointment of Committee.

Except as otherwise determined by the Board of Directors of the Company,
the Committee shall administer the Plan except that, if no Committee is
appointed, the full Board of Directors of the Company shall constitute the
Committee for purposes of the Plan.

11.02. Authority of Committee.

Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive. No member of the Board of Directors or the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan.

11.03. Rules Governing the Administration of the Committee.

Actions of the Committee shall be taken in accordance with the Amended and
Restated Bylaws of the Company.

11.04. Account Statements.

The Company will cause the Agent to deliver to each participating Employee
a statement for each Offering during which the Employee purchases Stock under
the Plan, reflecting the amount of payroll deductions accumulated during the
Offering, the number of shares purchased for the Employee's account, the price
per share of the shares purchased for the Employee's account, the number of
shares held for the Employee's account at the Offering Termination Date and such
other information as the Company deems relevant.

ARTICLE XII - - MISCELLANEOUS

12.01. Designation of Beneficiary.

A participating Employee may file a written designation of a beneficiary
who is to receive any Stock purchased under the Plan that has not been delivered
to the Employee at the time of his or her death. Such designation of beneficiary
may be changed by the participating Employee at any time by written notice to
the Secretary of the Employer. Upon the death of a participating Employee and
upon receipt by the Employer of proof of identity and existence at the
participating Employee's death of a beneficiary validly designated by him or her
under the Plan, the Company shall direct the Agent to deliver such Stock to such
beneficiary (but not earlier than the date on which the Employee could have
received a distribution of such shares). In the event of the death of a
participating Employee and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such participating Employee's death,
the Company shall direct the Agent to deliver such Stock to the executor or
administrator of the estate of the participating Employee, or if no such
executor or administrator has been appointed (to the knowledge of the Employer),
the Company, in its discretion, may direct the Agent to deliver such Stock to
the spouse or to any one or more dependents of the participating Employee as the
Employer may designate (but not earlier than the date on which the Employee
could have received a distribution of such shares). No beneficiary shall, before
the death of the participating Employee by whom he or she has been designated,
acquire any interest in the Stock or cash credited to the participating Employee
under the Plan.

12.02. Transferability.

Neither payroll deductions credited to a participating Employee's account
nor any rights with regard to the exercise of an Option or to receive Stock
under the Plan may be assigned, transferred, pledged, or otherwise disposed of
in any way by the participating Employee other than by will or the laws of
descent and

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distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Employer may treat such act
as an election to withdraw funds in accordance with Section 7.02.

12.03. Use of Funds.

All payroll deductions received or held by the Employer under this Plan may
be used by the Employer for any corporate purpose and the Employer shall not be
obligated to segregate such payroll deductions.

12.04. Adjustment Upon Changes in Capitalization.

(a) If the outstanding shares of Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization, reclassification,
stock split-up, combination of shares, exchange of shares, stock dividend, or
other distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company occurring
after the effective date of the Plan, the number and kinds of shares that may be
purchased pursuant to Options shall be adjusted proportionately and accordingly
by the Company. In addition, the number and kind of shares for which Options are
outstanding under the Plan shall be similarly adjusted so that the proportionate
interest of a participating Employee immediately following such event shall to
the extent practicable be the same as immediately prior to such event. Any such
adjustment in outstanding Options shall not change the aggregate Option Price
payable by a participating Employee with respect to shares subject to such
Options, but shall include a corresponding proportionate adjustment in the
Option Price per share. In the event of any spin-off of a Subsidiary of the
Company, the Committee also may adjust outstanding Options to preserve the
benefits or potential benefits of such Options. Any such action by the Committee
may include adjustment of: (i) the number and kind of shares subject to
outstanding Options and (ii) the Option Price per share of outstanding Options,
as well as any other adjustments that the Committee determines to be equitable.
No such adjustment shall be made in a manner that would constitute a
"modification" within the meaning of Section 424(h)(3) of the Code.

(b) Subject to Subsection (c) of this Section 12.04, if the Company shall
be the surviving corporation in any reorganization, merger or consolidation of
the Company with one or more other corporations, all outstanding Options under
the Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Options would have been entitled,
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the shares subject to such Options immediately prior to such
reorganization, merger or consolidation.

(c) Upon any dissolution or liquidation of the Company, or upon a merger,
consolidation or reorganization of the Company with one or more other
corporations in which the Company is not the surviving corporation, or upon a
sale of all or substantially all of the assets of the Company to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving corporation) approved by
the Board of Directors of the Company that results in any person or entity
owning more than 80 percent of the combined voting power of all classes of stock
of the Company, the Plan and all Options outstanding hereunder shall terminate,
except to the extent provision is made in writing in connection with such
transaction for the continuation of the Plan and/or the assumption of the
Options outstanding under the Plan, or for the substitution for such Options of
new Options covering the stock of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and Option Prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided. In the
event of any such termination of the Plan, the Offering Termination Date with
respect to any Offering that is in progress at such time shall be deemed to be
the last trading day prior to such termination, and the Options of each
participating Employee then outstanding shall be deemed to be automatically
exercised on such last trading day. The Board of Directors shall send written
notice of an event that will result in such a termination to all participating
Employees not later than the time at which the Company gives notice thereof to
its stockholders.

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(d) Adjustments under this Section 12.04 related to stock or securities of
the Company shall be made by the Committee, whose determination in that respect
shall be final, binding, and conclusive. No fractional shares of Stock or units
of other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.

(e) The grant of an Option pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

12.05. Amendment and Termination.

The Board of Directors shall have complete power and authority to terminate
or amend the Plan; provided, however, that the Board of Directors shall not,
without the approval of the stockholders of the Company (i) increase the maximum
number of shares which may be issued under the Plan (except pursuant to Section
12.04); (ii) amend the requirements as to the corporations or class of
corporations whose employees will be eligible to purchase Stock under the Plan.
No termination, modification, or amendment of the Plan may, without the consent
of an Employee then having an Option under the Plan to purchase Stock, adversely
affect the rights of such Employee under such Option.

12.06. Effective Date.

The Plan shall become effective as of June 3, 1999. The Plan shall be
submitted to the stockholders of the Company for approval by a majority of the
votes present and entitled to vote at a duly held special or annual meeting of
the shareholders at which a quorum representing a majority of all outstanding
voting stock is present, either in person or by proxy, or by written consent in
accordance with the Company's Amended and Restated Certificate of Incorporation
and Amended and Restated Bylaws; provided that such a meeting must be held on or
before March 31, 2000. If the Plan is not so approved, the Plan shall not become
effective and no shares of Stock shall be issued hereunder.

12.07. No Employment Rights.

The Plan does not, directly or indirectly, create any right for the benefit
of any employee or class of employees to purchase any shares under the Plan, or
create in any employee or class of employees any right with respect to
continuation of employment by the Employer, and it shall not be deemed to
interfere in any way with the Employer's right to terminate, or otherwise
modify, an employee's employment at any time.

12.08. Effect of Plan.

The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, all successors of each Employee participating
in the Plan, including, without limitation, such Employee's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such Employee.

12.09. Governing Law.

The law of the State of Delaware (other than choice of law principles that
would cause the law of some other jurisdiction to apply) will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.

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* * *

This Plan was duly adopted and approved by the Board of Directors of the
Company by unanimous written consent dated as of May 5, 1999.

/s/ NANCY K. KENLEY

--------------------------------------
Secretary of the Company

This Plan was duly approved by the stockholders of the Company at a meeting
held on the ________ day of __________, 1999.

--------------------------------------
Secretary of the Company

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APPENDIX B

SECURITY FIRST TECHNOLOGIES CORPORATION
AMENDED AND RESTATED 1995 STOCK OPTION PLAN

Security First Technologies Corporation (the "Company") hereby amends and
restates in its entirety the terms of the Security First Network Bank, FSB
Employee Stock Option Plan as heretofore amended (the "Plan") as follows:

1. PURPOSE; TYPES OF OPTIONS

The Plan is intended to advance the interests of the Company by providing
eligible individuals (as designated pursuant to Section 4 below) with an
opportunity to acquire or increase a proprietary interest in the Company, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of the Company and its subsidiaries, and will encourage such
eligible individuals to remain in the employ or service of the Company or one or
more of its subsidiaries. Each stock option granted under the Plan (an "Option")
shall be specifically designated either as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, or the
corresponding provision of any subsequently-enacted tax statute, as amended from
time to time (the "Code") ("Incentive Stock Option") or as an Option not so
qualifying (a "Nonqualified Option"). Each Option shall be a Nonqualified Option
unless such Option is granted to an employee of the Company or a subsidiary and
is specifically designated at the time of grant as being an Incentive Stock
Option. The provisions of the amended and restated Plan shall apply only to
Options granted after the effective date set forth in Section 5 below.

2. ADMINISTRATION

(a) Board. The Plan shall be administered by the Board of Directors of the
Company (the "Board"), which shall have the full power and authority to take all
actions and to make all determinations required or provided for under the Plan
or any Option granted or Option Agreement (as defined in Section 8 below)
entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or without a meeting by written consent of the
Board executed in accordance with the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Amended and Restated
Bylaws (the "Bylaws"), and with applicable law. The interpretation and
construction by the Board of any provision of the Plan or of any Option granted
or Option Agreement entered into hereunder shall be final and conclusive.

(b) Committee. The Board may from time to time appoint a Stock Option
Committee (the "Committee") consisting of not less than two members of the
Board. In the discretion of the Board, the Committee may be comprised of members
each of whom qualifies as a "non-employee director" as defined in Rule 16b-3 of
the Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "Exchange Act") and an "outside director" for purposes of Section 162(m) of
the Code, in order to qualify grants under the Plan for the exemption provided
by such Rule and as "qualified performance-based compensation" under such
Section, respectively. The Board, in its sole discretion, may provide that the
role of the Committee shall be limited to making recommendations to the Board
concerning any determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate to the
Committee such powers and authorities related to the administration of the Plan,
as set forth in Section 2(a) above, as the Board shall determine, consistent
with the Certificate of Incorporation and Bylaws of the Company and applicable
law. The Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's Certificate of
Incorporation and Bylaws, and with applicable law. The majority vote of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee.

B-1
<PAGE> 38

(c) No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.

(d) Delegation to the Committee. In the event that the Plan or any Option
granted or Option Agreement entered into hereunder provides for any action to be
taken by or determination to be made by the Board, such action may be taken by
or such determination may be made by the Committee if the power and authority to
do so has been delegated to the Committee by the Board as provided for in
Section 2(b) above. Unless otherwise expressly determined by the Board, any such
action or determination by the Committee shall be final and conclusive.

3. STOCK

The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, par value $0.01 per share, of the Company (the
"Stock"), which shares may be treasury shares or authorized but unissued shares.
The number of shares of Stock that may be issued pursuant to Options granted
under the Plan shall not exceed in the aggregate 6,802,480 shares. The foregoing
number of shares is subject to adjustment as provided in Section 17 below. If
any Option expires, terminates, or is terminated or canceled for any reason
prior to exercise in full, the shares of Stock that were subject to the
unexercised portion of such Option shall be available for future Options granted
under the Plan.

4. ELIGIBILITY

(a) Eligible Individuals. Options may be granted under the Plan to any
employee, director or other service provider of the Company or any "subsidiary
corporation" (a "Subsidiary") thereof within the meaning of Section 424(f) of
the Code as the Board shall determine and designate from time to time prior to
expiration or termination of the Plan. The maximum number of shares of Stock
subject to Options that may be granted under the Plan to any executive officer
or other employee of the Company or any Subsidiary is 2,000,000 shares (subject
to adjustment as provided in Section 17 hereof).

(b) Multiple Grants. An individual may hold more than one Option, subject
to such restrictions as are provided herein.

5. EFFECTIVE DATE AND TERM OF THE PLAN

(a) Effective Date. The effective date of this amendment and restatement
of the Plan shall be the earlier of (1) the date the Plan is adopted by the
Board or (2) the date the Plan is approved by stockholders of the Company by a
majority of the votes present and entitled to vote at a duly held meeting of the
stockholders at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy or by written consent in
accordance with the Company's Certificate of Incorporation and Bylaws; provided,
that such approval of stockholders must occur within one year before or after
the adoption of the Plan by the Board. If the stockholders fail to approve the
Plan within one year after the Plan is approved by the Board, or if the Board
fails to adopt the Plan within one year after the Plan is approved by
stockholders, this amendment and restatement of the Plan shall be null and void
and of no effect, and the Plan shall continue in effect without regard to this
amendment and restatement. No Options shall be granted under this amendment and
restatement of the Plan before it has been approved by the Board and the
stockholders of the Company, as set out in this Section 5(a).

(b) Term. The Plan shall terminate on the date 10 years from the effective
date.

6. GRANT OF OPTIONS

Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, after the effective date and prior to the date of
termination of the Plan, grant to such eligible individuals as the Board may
determine ("Optionees"), Options to purchase such number of shares of the Stock
on such terms and conditions as the Board may determine, including any terms or
conditions which may be necessary to

B-2
<PAGE> 39

qualify such Options as Incentive Stock Options. The date on which the Board
approves the grant of an Option (or such later date as is specified by the
Board) shall be considered the date on which such Option is granted.

7. LIMITATION ON INCENTIVE STOCK OPTIONS

An Option shall constitute an Incentive Stock Option only to the extent
that the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year (under
the Plan and all other plans of the Optionee's employer corporation and its
parent and subsidiary corporations within the meaning of Section 422(d) of the
Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

8. OPTION AGREEMENTS

All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Company and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan. Any amendment or
modification to an Option Agreement shall be made by a written instrument
approved by the Board and executed by or on behalf of the Company and the
Optionee (or permitted transferee of the Optionee).

9. OPTION PRICE

The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement,
except that the Option Price of a share of Stock subject to an Option that is
intended to constitute an Incentive Stock Option shall be not less than 100
percent of the fair market value of a share of the Stock on the date the Option
is granted (as determined in good faith by the Board); provided, however, that
in the event the Optionee would otherwise be ineligible to receive an Incentive
Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the
Code (relating to stock ownership of more than 10 percent), the Option Price of
an Option that is intended to be an Incentive Stock Option shall be not less
than 110 percent of the fair market value of a share of Stock at the time such
Option is granted. In the event that the Stock is listed on an established
national or regional stock exchange, is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or is publicly
traded on an established securities market, in determining the fair market value
of the Stock, the Board shall use the closing price of the Stock on such
exchange or System or in such market (the highest such closing price if there is
more than one such exchange or market) on the trading date immediately before
the Option is granted (or, if there is no such closing price, then the Board
shall use the mean between the high and low prices on such date), or, if no sale
of the Stock had been made on such day, on the next preceding day on which any
such sale shall have been made.

10. TERM AND EXERCISE OF OPTIONS

(a) Term. Each Option granted under the Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of 10 years
from the date such Option is granted, or on such date prior thereto as may be
fixed by the Board and stated in the Option Agreement relating to such Option;
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), an Option granted to such Optionee that is intended to be an Incentive
Stock Option shall in no event be exercisable after the expiration of five years
from the date it is granted.

(b) Option Period and Limitations on Exercise. Each Option shall be
exercisable, in whole or in part, at any time and from time to time, over a
period commencing on or after the date of grant and ending upon the expiration
or termination of the Option, as the Board shall determine and set forth in the
Option Agreement

B-3
<PAGE> 40

relating to such Option. Without limiting the foregoing, the Board, subject to
the terms and conditions of the Plan, may in its sole discretion provide that an
Option may not be exercised in whole or in part for any period or periods of
time during which such Option is outstanding; provided, however, that any such
limitation on the exercise of an Option contained in any Option Agreement may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised. Each Option shall be
exercisable, in whole or in part, at any time and from time to time, over a
period commencing on the date of grant and ending upon the expiration of the
Option.

(c) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office, addressed to the attention of the Committee, of written notice of
exercise, which notice shall specify the number of shares with respect to which
the Option is being exercised. The minimum number of shares of Stock with
respect to which an Option may be exercised, in whole or in part, at any time
shall be the lesser of 100 shares or the maximum number of shares available for
purchase under the Option at the time of exercise. Payment of the Option Price
for the shares of Stock purchased pursuant to the exercise of an Option shall be
made (i) in cash or in cash equivalents; (ii) through the tender to the Company
of shares of Stock, which shares shall be valued, for purposes of determining
the extent to which the Option Price has been paid thereby, at their fair market
value (determined in the manner described in Section 9 above) on the date of
exercise; (iii) by delivering a written direction to the Company that the Option
be exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the option are delivered to the Company by a broker
upon receipt of stock certificates from the Company) or a cashless exercise/loan
procedure (pursuant to which the optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to the Company
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to the Company cash
(or cash equivalents acceptable to the Company) equal to the Option Price for
the shares of Stock purchased pursuant to the exercise of the Option plus the
amount (if any) of federal and other taxes that the Company, may, in its
judgment, be required to withhold with respect to the exercise of the Option; or
(iv) by a combination of the methods described in (i), (ii), and (iii);
provided, however, that the Board may in its discretion impose and set forth in
the Option Agreement such limitations or prohibitions on the use of shares of
Stock to exercise Options as it deems appropriate. Payment in full of the Option
Price need not accompany the written notice of exercise if the Option is
exercised pursuant to the cashless exercise/sale procedure described above. If
shares of Stock that are acquired by the Optionee through exercise of an Option
or an option issued under another stock option plan maintained by the Company
are surrendered in payment of the Option Price, the Stock surrendered in payment
must have been (i) held by the Optionee for more than six months at the time of
surrender, or (ii) acquired under an Option granted not less than six months
prior to the time of surrender. Promptly after the exercise of an Option and the
payment in full of the Option Price of the shares of Stock covered thereby, the
individual exercising the Option shall be entitled to the issuance of a Stock
certificate or certificates evidencing his ownership of such shares. A separate
Stock certificate or certificates shall be issued for any shares purchased
pursuant to the exercise of an Option which is an Incentive Stock Option, which
certificate or certificates shall not include any shares which were purchased
pursuant to the exercise of an Option which is not an Incentive Stock Option. An
individual holding or exercising an Option shall have none of the rights of a
shareholder until the shares of Stock covered thereby are fully paid and issued
to him and, except as provided in Section 17 below, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date of
such issuance.

(d) Restrictions on Transfer of Stock. If an Option is exercised prior to
the date that is six months from the date of grant of the Option and a sale of
the shares of Stock acquired thereby would subject the individual exercising the
Option to liability under Section 16 of the Exchange Act, then the certificate
or certificates representing such shares shall bear a legend restricting the
transfer of the Stock covered thereby until the expiration of six months from
such date, or for such other period during which such a transfer would subject
such individual to such liability.

B-4
<PAGE> 41

11. TRANSFERABILITY OF OPTIONS

During the lifetime of an Optionee to whom an Incentive Stock Option is
granted, only such Optionee (or, in the event of legal incapacity or
incompetence, the Optionee's guardian or legal representative) may exercise the
Incentive Stock Option. No Option shall be assignable or transferable by the
Optionee to whom it is granted, other than by will or the laws of descent and
distribution, except that the Optionee may transfer a Nonqualified Option by
gift: to a member of his "Family" (as defined below) or to a trust for the
exclusive benefit of the Optionee, one or more members of the Optionee's Family,
or any combination of the foregoing, provided that any such transferee shall
enter into a written agreement to be bound by the terms of the Plan. For this
purpose, "Family" shall mean the spouse, siblings, lineal ancestors and
descendants of the Optionee.

12. TERMINATION OF EMPLOYMENT OR SERVICE

Upon the termination of the employment or service of an Optionee with the
Company or a Subsidiary, other than by reason of the death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option granted to an Optionee pursuant to the Plan shall terminate
one year after the date of such termination of employment or service, unless
earlier terminated pursuant to Section 10(a) above, and such Optionee shall have
no further right to purchase shares of Stock pursuant to such Option; provided,
however, that the Board may provide, by inclusion of appropriate language in any
Option Agreement, that the Optionee may (subject to the general limitations on
exercise set forth in Section 10(b) above), in the event of termination of
employment or service of the Optionee with the Company or a Subsidiary, exercise
an Option, in whole or in part, at any time subsequent to such termination of
employment or service and prior to termination of the Option pursuant to Section
10(a) above, either subject to or without regard to any installment limitation
on exercise imposed pursuant to Section 10(b) above. Whether a leave of absence
or leave on military or government service shall constitute a termination of
employment or service for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive. For purposes of the Plan, a
termination of employment or service with the Company or a Subsidiary shall not
be deemed to occur if the Optionee is immediately thereafter employed by the
Company or any Subsidiary.

13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

(a) Death. If an Optionee dies while in the employ or service of the
Company or a Subsidiary or within the period following the termination of
employment or service during which the Option is exercisable under Section 12
above or Section 13(b) below, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above), at any time
within one year after the date of such Optionee's death and prior to termination
of the Option pursuant to Section 10(a) above, to exercise any Option held by
such Optionee at the date of such Optionee's death, whether or not such Option
was exercisable immediately prior to such Optionee's death; provided, however,
that the Board may provide by inclusion of appropriate language in any Option
Agreement that, in the event of the death of the Optionee, the executors or
administrators or legatees or distributees of such Optionee's estate may
exercise an Option (subject to the general limitations on exercise set forth in
Section 10(b) above), in whole or in part, at any time subsequent to such
Optionee's death and prior to termination of the Option pursuant to Section
10(a) above, either subject to or without regard to any installment limitation
on exercise imposed pursuant to Section 10(b) above.

(b) Disability. If an Optionee terminates employment or service with the
Company or a Subsidiary by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right (subject to the general limitations on exercise
set forth in Section 10(b) above), at any time within one year after such
termination of employment or service and prior to termination of the Option
pursuant to Section 10(a) above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of employment or service,
whether or not such Option was exercisable immediately prior to such termination
of employment or service; provided, however, that the Board may provide, by
inclusion of appropriate language in any Option Agreement, that the Optionee may
(subject to the general limitations on exercise set forth in Section 10(b)
above), in the event of the
B-5
<PAGE> 42

termination of employment or service of the Optionee with the Company or a
Subsidiary by reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an Option in whole
or in part, at any time subsequent to such termination of employment or service
and prior to termination of the Option pursuant to Section 10(a) above, either
subject to or without regard to any installment limitation on exercise imposed
pursuant to Section 10(b) above. Whether a termination of employment or service
is to be considered by reason of "permanent and total disability" for purposes
of this Plan shall be determined by the Board, which determination shall be
final and conclusive.

14. USE OF PROCEEDS

The proceeds received by the Company from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.

15. REQUIREMENTS OF LAW

16. AMENDMENT AND TERMINATION OF THE PLAN

The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the shareholders of the Company at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance with
applicable state law and the Certificate of Incorporation and Bylaws of the
Company, change the requirements as to eligibility to receive Incentive Stock
Options or increase the maximum number of shares of Stock in the aggregate that
may be issued pursuant to Incentive Stock Options granted under the Plan (except
as permitted under Section 17 hereof). Except as permitted under Section 17
hereof, no amendment, suspension or termination of the Plan shall, without the
consent of the holder of the Option, alter or impair rights or obligations under
any Option theretofore granted under the Plan.

17. EFFECT OF CHANGES IN CAPITALIZATION

(a) Changes in Stock. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split-up, reverse split, combination of shares, exchange
of shares, stock dividend or other distribution payable in capital stock, or
other increase or decrease in such shares effected without receipt of
consideration by the Company, occurring after the effective date of the Plan,
the number and kinds of shares for the purchase of which Options may be granted
under the Plan shall be adjusted proportionately and accordingly by the Company.
In addition, the number and kind of shares for which Options are outstanding
shall be adjusted proportionately and accordingly so that the proportionate
interest of the holder of the Option immediately following such event shall, to
the extent practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding Options shall not change the aggregate Option Price
payable with respect to shares subject to the unexercised portion of the Option
outstanding but shall include a corresponding proportionate adjustment in the
Option Price per share. If there is a distribution
B-6
<PAGE> 43

payable in the capital stock of a subsidiary corporation of the Company
("Spin-off Shares"), to the extent consistent with Treasury Regulation Section
1.425-1(a)(6) or the corresponding provision of any subsequent regulation, each
outstanding Option shall thereafter additionally pertain to the number of
Spin-off Shares that would have been received in such distribution by a
shareholder of the Company who owned a number of shares of Common Stock equal to
the number of shares that are subject to the Option at the time of such
distribution, and the aggregate Option Price of the Option shall be allocated
between the Spin-off Shares and the Common Stock in proportion to the relative
fair market values of a Spin-off Share and a share of Common Stock immediately
after the distribution of Spin-off Shares.

(b) Reorganization in Which the Company Is the Surviving Corporation.
Subject to Subsection (c) hereof, if the Company shall be the surviving
corporation in any reorganization, merger, or consolidation of the Company with
one or more other corporations, any Option theretofore granted pursuant to the
Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Option would have been entitled
immediately following such reorganization, merger, or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that
the aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option immediately prior to such
reorganization, merger, or consolidation.

(c) Reorganization in Which the Company Is Not the Surviving Corporation or
Sale of Assets or Stock. Upon the dissolution or liquidation of the Company, or
upon a merger, consolidation, reorganization or other business combination of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of all or substantially all of the assets of
the Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
corporation) approved by the Board which results in any person or entity (or
persons or entities acting as a group or otherwise in concert) owning 80 percent
or more of the combined voting power of all classes of stock of the Company, the
Plan and all Options outstanding hereunder shall terminate, except to the extent
provision is made in writing in connection with such transaction for the
continuation of the Plan and/or the assumption of the Options theretofore
granted, or for the substitution for such Options of new options covering the
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices, in which
event the Plan and Options theretofore granted shall continue in the manner and
under the terms so provided. In the event of any such termination of the Plan,
each individual holding an Option shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above and except as otherwise
specifically provided in the Option Agreement relating to such Option),
immediately prior to the occurrence of such termination and during such period
occurring prior to such termination as the Board in its sole discretion shall
determine and designate, to exercise such Option in whole or in part, whether or
not such Option was otherwise exercisable at the time such termination occurs
and without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. The Board shall send written notice of an event that will
result in such a termination to all individuals who hold Options not later than
the time at which the Company gives notice thereof to its shareholders.

(d) Adjustments. Adjustments under this Section 17 related to stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. No fractional shares of
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.

(e) No Limitations on Company. The grant of an Option pursuant to the Plan
shall not affect or limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve or liquidate, or to sell
or transfer all or any part of its business or assets.

18. DISCLAIMER OF RIGHTS

No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of the Company

B-7
<PAGE> 44

or any Subsidiary, or to interfere in any way with the right and authority of
the Company or any Subsidiary either to increase or decrease the compensation of
any individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any Subsidiary.

19. NONEXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.

* * *

This Plan was duly adopted and approved by the Board of Directors of the
Company by unanimous written consent dated as of May 5, 1999.

/s/ NANCY K. KENLEY

--------------------------------------
Secretary of the Company

This Plan was duly approved by the shareholders of the Company by
resolution at a meeting held on the ____day of ____________, 1999.

--------------------------------------
Secretary of the Company

B-8
<PAGE> 45

REVOCABLE PROXY

SECURITY FIRST TECHNOLOGIES CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder of Security First Technologies Corporation
hereby appoints James S. Mahan, III or Robert F. Stockwell, or either of them,
with full power of substitution in each, as proxies to cast all votes which the
undersigned shareholder is entitled to cast at the annual meeting of
shareholders to be held at 9:00 a.m., local time, on Thursday, June 3, 1999, at
the Grand Hyatt Atlanta, 3300 Peachtree Road, Atlanta, Georgia 30305, and at any
adjournments thereof, upon the following matters. The undersigned shareholder
hereby revokes any proxy or proxies for the annual meeting that were given
before this proxy.

This proxy will be voted as directed by the undersigned shareholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE NOMINEE LISTED IN PROPOSAL 1, FOR APPROVAL OF THE INCREASE IN OUR AUTHORIZED
COMMON STOCK, FOR APPROVAL OF THE INCREASE IN OUR AUTHORIZED SERIAL PREFERRED
STOCK, FOR APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN, AND FOR APPROVAL OF THE
AMENDED AND RESTATED 1995 STOCK OPTION PLAN. The undersigned shareholder may
revoke this proxy at any time before it is voted by attending the annual meeting
and voting in person or by delivering to our Secretary either a written
revocation of the proxy or a properly executed proxy bearing a later date. The
undersigned shareholder hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement.

If you receive more than one proxy card, please sign and return all cards
in the accompanying envelope.

(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE)
<PAGE> 46
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF SHAREHOLDERS
SECURITY FIRST TECHNOLOGIES CORPORATION

JUNE 3, 1999

Please Detach and Mail in the Envelope Provided

<TABLE>
<S> <C> <C> <C>
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE USING
DARK INK ONLY.

WITHHOLD Nominee: For a three-year term
AUTHORITY expiring in 2002:
FOR the nominee to vote for the
listed at right nominee listed at right
1. Election of Director [ ] [ ] Robert W. Copelan

2. To approve an amendment to our amended and restated certificate of
incorporation to increase our authorized common stock from 60,000,000 to
350,000,000 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. To approve an amendment to our amended and restated certificate of
incorporation to increase our authorized serial preferred stock from
5,000,000 to 25,000,000 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. To approve and adopt the Employee Stock Purchase Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. To approve and adopt the Amended and Restated 1995 Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

6. The proxies are authorized to vote on any other business that properly
comes before the annual meeting, or any adjournments of the meeting, in
accordance with the determination of a majority of our board of
directors.

Date:
- ----------------------------------- ---------------------
Signature(s) of Shareholder or
Authorized Representative

NOTE: Please date and sign exactly as your name appears on this proxy card. Each executor, administrator, trustee,
guardian, attorney-in-fact and other fiduciary should sign and indicate his or her full title. When stock has been
issued in the name of two or more persons, all should sign.
</TABLE>