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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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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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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.:
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3) Filing Party:
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4) Date Filed:
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[SECURITY FIRST TECHNOLOGIES CORPORATION LOGO]
3390 PEACHTREE ROAD, NE, SUITE 1700
ATLANTA, GEORGIA 30326
May __, 1999
DEAR SHAREHOLDER:
You are cordially invited to attend the first annual meeting of
shareholders of Security First Technologies Corporation to be held on Friday,
June 4, 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: (i) elect one
director for a three-year term, (ii) approve an increase in the number of shares
of stock that we are authorized to issue, (iii) approve an Employee Stock
Purchase Plan, and (iv) 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,
James S. Mahan, III
Chairman, Chief Executive Officer
and President
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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 4, 1999
--------------------
DEAR SHAREHOLDER:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of
Security First Technologies Corporation will be held on Friday, June 4, 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 and Preferred 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 and 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 2);
3. Approval of Employee Stock Purchase Plan. To approve and adopt the
Employee Stock Purchase Plan (Proposal 3);
4. Approval of Amended and Restated 1995 Stock Option Plan. To
approve and adopt the Amended and Restated 1995 Stock Option Plan
(Proposal 4);
5. 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
James S. Mahan, III
Chairman, Chief Executive Officer
and President
Atlanta, Georgia
May __, 1999
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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 4, 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 Friday, June 4, 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 __, 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 and our
authorized preferred stock from 5,000,000 to 25,000,000 shares (Proposal 2),
(iii) to approve the Employee Stock Purchase Plan (Proposal 3), (iv) to approve
the Amended and Restated 1995 Stock Option Plan (Proposal 4), and (v) 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 AND 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.
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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 ______ holders of record of the ___________ 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 and 2, the presence, in person or by proxy, of one-third
of the ____________ 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, a plurality of the votes cast by the shares of common stock issued and
outstanding on April 21, 1999 and present in person or represented by proxy 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 is
required to approve the increase in our common and preferred stock.
For Proposals 3 and 4, the presence, in person or by proxy, of a majority
of the ________ shares of common stock that were issued and outstanding on April
21, 1999 will constitute a quorum. If there is a quorum, 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. YOU MAY OBTAIN A COPY OF OUR
FORM 10-K FREE OF CHARGE BY WRITING TO NANCY K. KENLEY, SECRETARY, SECURITY
FIRST TECHNOLOGIES CORPORATION, 3390 PEACHTREE ROAD, NE, SUITE 1700, ATLANTA,
GEORGIA 30326.
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 present in person
or represented by proxy and entitled to vote. 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
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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 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. To be timely, if we have given at least 45 days' prior public
notice of the date of
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the meeting, a shareholder's notice must be delivered to, or mailed and received
at, our principal executive offices not less than 30 and not more than 90 days
before the date of the meeting.
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 are made by our
stock option committee, which is comprised of Mr. Mahan and Mr. Stockwell.
The Chairman of the compensation committee is Mr. McCall and the other members
currently are Messrs. Gardner and Runnion. The compensation committee met two
times in 1998.
During 1998, our board of directors met __ 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 _______ 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 M. 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
Name and and nature of common stock
position(s) with S1 beneficial ownership (a) outstanding
- ------------------- ------------------------ -----------
<S> <C> <C>
James S. Mahan, III.................................... 2,019,442 (b) ___%
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
</TABLE>
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<TABLE>
<S> <C> <C>
Robert W. Copelan, D.V.M............................... 287,064 (e) ___%
Director
Dorsey R. Gardner...................................... 1,370,200 (f) ___%
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 ___%
</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.
(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.
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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) ___%
37 Muscogee Avenue
Atlanta, GA 30305
Lord, Abbett & Co....................... 2,037,390 (c) ___%
767 Fifth Avenue
New York, NY 10153
James S. Mahan, III .................... 2,019,442 (d) ___%
3390 Peachtree Road, NE
Atlanta, GA 30326
Dorsey R. Gardner....................... 1,370,200 (e) ___%
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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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 $100,000. We refer to these two officers
as our named executive officers. No stock appreciation rights have been granted
by S1 or its predecessor, Security First Network Bank.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
----------------------------------------------- ----------------------
Awards
------
Other annual Securities All other
Name and compensation underlying options compensation
Principal Position Year Salary ($) 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) Other annual compensation includes car allowance and club membership for
Mr. Mahan. 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.
(c) Reflects the two-for-one split of our common stock payable on May 7,
1999.
(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 $3,200 for Mr.
Stockwell.
Our directors do not receive any fees or other compensation for their
service as directors. Directors, however, are reimbursed for travel and other
expenses incurred in connection with attending meetings of our board of
directors. Upon joining the board of directors in 1998, Mr. Gardner and Mr.
McCall were awarded options to acquire 60,000 shares of our common stock under
our 1998 Directors Stock Option Plan, as adjusted to reflect the two-for-one
split of our common stock payable on May 7, 1999.
EMPLOYMENT CONTRACTS
We currently do not have any employment contracts or other compensatory
plans or arrangements relating to resignation, retirement or any other
termination of a named executive officers' employment with S1 or our operating
subsidiary or from a change in control of S1 or a change of the named executive
officer's responsibilities following a change in control of S1. Unvested stock
options, however, generally vest upon a change in control, as defined.
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OPTION GRANTS
The following table contains information concerning the grant of stock
options to the named executive officers during fiscal year 1998. The information
set forth in this table reflects the two-for-one split of our common stock
payable on May 7, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------------------------------------------------
Potential realizable value
Number % of at assumed annual rates
of securities total options of stock price appreciation
underlying granted to Exercise for option term
options employees or base price Expiration ---------------------------
Name granted (#) in fiscal year ($/share) date 5% 10%
- ---- ----------- -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert F. Stockwell........... 100,000 5% $3.3125 1/9/09 $208,321 $527,927
Chief Financial
Officer and Treasurer
</TABLE>
1998 OPTION EXERCISES AND VALUES
The following table provides information on exercises of stock options
during fiscal year 1998 by the named executive officers and the value of
unexercised options at the end of the year. The information set forth in this
table reflects the two-for-one split of our common stock payable on May 7, 1999.
AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of securities
underlying unexercised Value of unexercised in-the
Shares options at FY-end (#) money options at FY-end ($)(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 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.
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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 other than the CEO is highly dependent on the public market
value of S1 and total return to shareholders. S1 believes that the total cash
compensation for our executive officers for 1998 was below the average for
similar positions at comparable companies. Such persons, however, have
significant equity interests in S1's success by virtue of stock based
compensation.
The compensation committee currently is re-evaluating S1's executive
compensation structure, and is likely to propose significant revisions to bring
our compensation closer to the compensation received by executive officers of
comparable companies. 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, 200,000 stock options were granted to our executive
officers.
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 beginning of the company in 1996, the
compensation for the Chief Executive Officer has been primarily 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 CEO did not receive a
bonus or an award of stock options in 1997 or 1998. S1 believes that cash
compensation for the Chief Executive Officer for 1998 was below the average for
comparable companies. 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. Although
S1 has not taken this limitation into account in the past in structuring its
compensation programs and in determining executive compensation, the
compensation committee expects to take the deductibility limit for compensation
into consideration beginning in fiscal 1999.
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Compensation Committee
----------------------
Dorsey R. Gardner
Joseph S. McCall (Chairman)
Howard J. Runnion, Jr.
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
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------
INDEX 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.
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
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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 M.
McChesney created and funded his own company to develop Webtone. Michael
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 AND PREFERRED 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
and 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 common stock that we are authorized to issue
from 60,000,000 to 350,000,000 shares and increase the number of shares of
serial preferred stock that we are authorized to issue from 5,000,000 to
25,000,000 shares. The number of shares of common and preferred 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.
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 ________ shares of common 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, 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 B and series C preferred stock;
_________ shares of common stock were reserved for issuance upon the exercise of
stock options pursuant to our stock option plans and agreements; 1,046,760
shares of common
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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 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 _________
shares of authorized but not outstanding common stock and _________ shares of
authorized but not outstanding serial preferred stock remain available for
issuance based on the number of shares of common stock and preferred stock
outstanding as of April 21, 1999.
Approval of this proposal would result in S1 having _________ authorized
but not outstanding shares of common stock and ________ authorized but not
outstanding shares of serial preferred stock available for issuance based on the
number of shares of common stock and preferred stock outstanding on April 21,
1999. Although we have no specific plans to issue shares of common stock or
serial preferred stock, our board of directors believes that the increase in the
authorized number of shares of capital 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 and 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 common stock or preferred 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.
Our 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
The affirmative vote of a majority of the shares of common stock issued
and outstanding on April 21, 1999 is required to approve the increase in the
common and preferred 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 AND PREFERRED STOCK.
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 3)
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
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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 4, 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.
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. 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 __ 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 June 15, 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 June 15, 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 are not held in
a trust or other account separate from our other funds. If the exercise price
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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.
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, up to $106,250 per
year, unless the committee determines otherwise before the
start of an offering period, for the 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 the then current offering period.
The expiration date of the Purchase Plan will be determined by the board
and may be made any time following the close of any offering period, but may not
be longer than 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
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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 50% 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 that the
option holder would had been entitled to immediately following such action. No
option may be granted under the Purchase Plan after _________ __, 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 dividends, or
other distribution payable in capital stock, or other increase or decrease in
shares without consideration.
The board may terminate or 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
taxable 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 (currently 15%) of the fair market value of
the shares as of the beginning of the applicable offering
period.
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:
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- 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, currently 15%, of the fair market value of
the shares as of the beginning of the applicable offering
period.
We would not receive an income tax deduction upon either the grant or exercise
of the option by the participant, but generally would receive a deduction equal
to the ordinary compensation income required to be recognized by the 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.
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 such grants and
transactions in stock acquired under the Purchase Plan.
REQUIRED VOTE
A majority of the shares of our common stock present and entitled to
vote at the annual meeting is required to approve the Employee Stock Purchase
Plan.
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 4)
Our board of directors has adopted the Amended and Restated 1995 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 amends and restates our 1995 Employee Stock Option
Plan. 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
_______, 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 provisions of the Amended and
Restated Plan apply only to options granted after the effective date of the
plan, not options granted under the provisions of the 1995 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.
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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 April 21, 1999, there were
approximately ___ employees of S1 and its subsidiary, four non-employee
directors of S1, __ non-employee directors of S1's subsidiary not also serving
as directors of S1, and ___ service providers of S1 and its subsidiary who would
be eligible to participate in the Amended and Restated Plan.
The Amended and Restated Plan will be administered by the compensation
committee of S1, which consists of at least two outside directors who qualify as
"outside directors" for purposes of the federal income tax rules on "qualified
performance based compensation." Our stock option committee will make all final
determinations concerning the persons to whom incentive stock options and
nonqualifying options are granted.
The option exercise price for each share of common stock under the
Amended and Restated Plan will be fixed by the stock option committee 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 the option is granted, 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 granted under the 1995 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 _______, 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, to a trust for the exclusive benefit of the optionee, one
or more members of the optionee's family or to any combination of the above, 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.
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Payment for shares purchased under the Amended and Restated Plan may be
made either 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. Options may, unless otherwise provided by the
particular option agreement, be exercised 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 employee's employment 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 such death or disability unless a different
date is otherwise provided in the particular option agreement, but not later
than the date the option would otherwise expire. If the employee's employment
terminates for any reason other than death or disability, options held by such
optionee terminate one year after the date of such termination unless a
different date is otherwise 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 Restated Plan, and in the number, kinds, and per share
exercise price of shares subject to the unexercised portion of options granted
prior to any 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 will
also 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 and/or the
assumption of the outstanding options 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
prior to 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 immediately following 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
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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 _____, 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 1995 Employee Stock
Option Plan. Currently, we are authorized to issue a total of 5,202,480 shares
under the 1995 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 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 1995 Employee Stock Option Plan and 2,000,000 under the Amended
and Restated Plan reflects our two-for-one stock split.
Under the 1995 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 1995 Employee Stock Option
Plan are _________ _______ and ________. The effective date and termination date
of the Amended and Restated Plan are _______, 1999 and ______, 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
family, or a combination of the above. The 1995 Employee Stock Option Plan does
not provide for this exception to the general prohibition or transfers during an
employee's lifetime.
In regard to amendments to the 1995 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 incentive stock options and
increasing the maximum number of shares of stock that may be issued pursuant 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 _______ shares of our
common stock (_______ of which were incentive stock options and _______ of which
were nonqualifying options) were outstanding under the 1995 Employee Stock
Option Plan. The option exercise price for an incentive stock option under the
1995 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 1995 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.
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PLAN BENEFITS
<TABLE>
<CAPTION>
1995 EMPLOYEE STOCK OPTION PLAN
-----------------------------------------------
NAME AND POSITION EXERCISE PRICE NUMBER OF OPTIONS
- ----------------------------------------------------- ------------------ ----------------------
<S> <C> <C>
James S. Mahan, III
Chairman, Chief Executive $
Officer and President
Robert F. Stockwell
Chief Financial Officer and Treasurer $
Robert W. Copelan
Director and Director Nominee -- --
All current executive officers as a group
(3 persons) $
All current non-employee directors (4 persons) -- --
All employees, including all current officers who $
are not executive officers, as a group
(__ persons)
</TABLE>
- ------------------------
Based on the closing sales price of our common stock on April 21, 1999 of
$____, the aggregate market value of the shares underlying the options to
purchase ______ shares outstanding as of such date under the 1995 Employee Stock
Option Plan is $___________. The information in the preceding sentence reflects
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 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 securities law 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. This excess increases the optionee's basis
in the shares for purposes of the alternative minimum tax but not for purposes
of the regular income tax. 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 the shares
are sold at a gain. 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,
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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 the option is
exercised over the option exercise price. However, if the optionee is subject to
certain restrictions under the securities laws at the time the option is
exercised, 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
prior to the satisfaction of the holding period rules but at a price below the
fair market value of the shares at the time the option is exercised, or other
applicable measurement date, the amount of ordinary income, and the amount
included in alternative minimum taxable income, if the sale occurs during the
same year as the option was exercised, 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 imposed by the
securities laws, 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 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
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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
A majority of the shares of our common stock present and entitled to
vote at the annual meeting is required to approve the Amended and Restated Plan.
If our shareholders do not approve the Amended and Restated Plan, the amendment
and restatement will be of no effect and the 1995 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 ________ ___,
_____. 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.
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
James S. Mahan, III
Chairman, Chief Executive Officer
and President
Atlanta, Georgia
May ___, 1999
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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 June 15, 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 June 15, 1999 and each February 1 or
August 1,
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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 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.
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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 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
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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.
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.
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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.
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
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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.
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
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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 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
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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 50 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.
(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 4, 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.
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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.
* * *
This Plan was duly adopted and approved by the Board of Directors of the
Company by resolution at a meeting held on the ____ day of _____, 1999.
-------------------------------------
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
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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.
(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.
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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 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
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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 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.
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(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.
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.
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(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 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
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. Any
determination in this connection by the Board shall be final, binding, and
conclusive. 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.
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
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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 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,
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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 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 resolution at a meeting held on the ____ day of _____, 1999.
-----------------------------------
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 ________________, ____.
-----------------------------------
Secretary of the Company
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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 Friday, June 4, 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 AND 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, 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 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)
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(CONTINUED FROM OTHER SIDE)
1. Election of director.
For a three-year term expiring in 2002: Robert W. Copelan.
FOR the nominee listed above. WITHHOLD AUTHORITY to vote for the nominee
listed above.
[ ] [ ]
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 and to increase in our authorized preferred stock from
5,000,000 to 25,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve and adopt the Employee Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To approve and adopt the Amended and Restated 1995 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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
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.
