UNITED STATES
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
(Amendment No. )
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Filed by the Registrant [_]
Filed by a Party other than the Registrant [x]
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 Sec.240.14a-12
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
MFC BANCORP LTD. AND VENTEGIS CAPITAL AG
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ANNUAL MEETING OF STOCKHOLDERS OF
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
FOR THE ELECTION OF DIRECTORS
SCHEDULED TO BE HELD ON JANUARY 18, 2002
PROXY STATEMENT OF
MFC BANCORP LTD. AND VENTEGIS CAPITAL AG
IN OPPOSITION TO THE BOARD OF DIRECTORS OF
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
This proxy statement and the enclosed YELLOW proxy card are being furnished to
you, the stockholders of Cybernet Internet Services International, Inc.
("Cybernet" or the "Company"), in connection with the solicitation of proxies by
MFC Bancorp Ltd. ("MFC") and Ventegis Capital AG ("Ventegis", and collectively
with MFC, the "Shareholders Group") for use at the meeting of stockholders to
elect directors of Cybernet, and at any adjournments, postponements or
reschedulings thereof (the "Stockholders Meeting").
The Shareholders Group and the management of Cybernet agreed to a stipulated
final order dated December 19, 2001 (the "Order") from the Court of Chancery
of the State of Delaware (the "Delaware Court") setting a meeting date for the
election of two Class B directors and two Class C directors of Cybernet. The
Order specifies that the Stockholders Meeting is to be held on January 18, 2002
at 11:00 a.m. (local time) at Cybernet's offices at Stefan-George-Ring 19-23,
Munich, Germany. The Order also set December 20, 2001 as the record date
for determining stockholders entitled to receive notice of and to vote at
the Stockholders Meeting, and December 27, 2001 as the notice date for the
Stockholders Meeting. The Order provides that the shares of Cybernet
represented at the Stockholders Meeting shall constitute a quorum, the slate
of directors nominated by the Shareholders Group shall be permitted to stand for
election at the Stockholders Meeting, the Stockholders Meeting shall be held in
English and the Stockholders Meeting shall be overseen by a monitor and chair
mutually agreed to by the parties.
Accordingly, the Shareholders Group intends to nominate four directors for
election at the Stockholders Meeting: Roy Zanatta and Greg Elderkin as Class B
directors and Michael J. Smith and Eduard Seligman as Class C directors.
The Shareholders Group is soliciting proxies to take the following actions at
the Stockholders Meeting:
(1) to elect Roy Zanatta and Greg Elderkin as Class B directors of Cybernet
to serve until the 2003 annual meeting of stockholders of Cybernet;
(2) to elect Michael J. Smith and Eduard Seligman as Class C directors of
Cybernet to serve until the 2004 annual meeting of stockholders of
Cybernet;
(3) to reject the approval of the Cybernet 1998 Stock Incentive Plan;
(4) to ratify the appointment of Ernst & Young Deutsche Allgemeine Treuhand
AG as corporate auditors of Cybernet for the 2000 and 2001 calendar
years; and
(5) to transact such other business as may properly come before the
Stockholders Meeting.
Information concerning the Shareholders Group, its nominees and other persons
who are participants in its solicitation of proxies is provided in this proxy
statement under the headings "Election of Directors" and "Information About the
Participants" and in Annex A.
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A PROXY MAY BE GIVEN BY ANY PERSON WHO HELD SHARES OF COMMON STOCK OR SHARES OF
SERIES B PREFERRED STOCK OF CYBERNET ON DECEMBER 20, 2001, THE RECORD DATE FOR
THE STOCKHOLDERS MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE STOCKHOLDERS
MEETING, YOU ARE URGED TO SIGN AND DATE THE ENCLOSED YELLOW PROXY CARD AND
RETURN IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOUR LATEST-DATED PROXY IS THE
ONLY ONE THAT COUNTS, SO YOU MAY RETURN THE YELLOW PROXY CARD EVEN IF YOU HAVE
ALREADY DELIVERED A PROXY. WE URGE YOU NOT TO RETURN ANY PROXY SENT TO YOU BY
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CYBERNET.
The date of this proxy statement is January , 2002. This proxy statement and
the enclosed YELLOW proxy card are first being sent or given to stockholders of
Cybernet on or about January , 2002.
INDEX TO THE PROXY STATEMENT
ITEM PAGE
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Introduction 4
Why We Believe the Current Board of Directors of
Cybernet Must be Changed 4
Objectives of the Shareholders Group 7
The Right Leadership for Cybernet 7
Intent of the Shareholders Group 7
Background to the Solicitation 7
Commitment of the Shareholders Group 10
Litigation Allegations 10
Election of Directors 11
Information About Our Nominees 12
Approval of Cybernet 1998 Stock Incentive Plan 13
Ratification of Appointment of Corporate Auditors 14
Voting Procedures 14
Proxy Solicitation and Expenses 17
Information About the Participants 17
Information About Cybernet 17
Other Matters to be Voted Upon 18
Annex A - Information Concerning the Shareholders Group and
Other Participants A-1
Security Ownership A-1
Transactions in Cybernet Securities A-2
Arrangements, Interests and Transactions A-3
Additional Information About the Nominees of the
Shareholders Group A-4
Appendix - Yellow Proxy Card
INTRODUCTION
We intend to nominate four directors for election to the board of Cybernet: Roy
Zanatta and Greg Elderkin as Class B directors and Michael J. Smith and Eduard
Seligman as Class C directors.
If the slate of directors nominated by the Shareholders Group is elected, it may
constitute a change of control(1) under Cybernet's bond indentures relating
to bonds with total outstanding principal of approximately $160 million.
A change of control may trigger an acceleration of the bonds which could
result in the bankruptcy of Cybernet. However, both management of Cybernet
and the Shareholders Group have a strong incentive to avoid a change of
control. In addition, both management of Cybernet and the Shareholders
Group have the ability to avoid a change of control.
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(1) The applicable definition of "change of control" as it appears in section
1.1 of each bond indenture is as follows:
"change of control" means such time as. . . (ii) individuals who at
the beginning of any period of two consecutive calendar years constituted
the Board of Directors (together with any directors who are members
of the Board of Directors on the date hereof and any new directors
whose election by the Board of Directors or whose nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the members of the Board of Directors then
still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the members of such Board of Directors then
in office. . .
To avoid a change of control, we believe that two-thirds of the incumbent board
of directors of Cybernet could simply approve of two of the nominees of the
Shareholders Group for election as a director of Cybernet while maintaining its
own slate of nominees. On the other hand, the Shareholders Group has the
ability to avoid a change of control by, among other things, voting its own
shares for two of the nominees of management of Cybernet rather than two of its
own nominees. However, there is no assurance that either the management of
Cybernet or the Shareholders Group will take the necessary actions to avoid a
change of control.
The Shareholders Group is soliciting your proxy in support of the election of
our slate of nominee directors of Cybernet. For more information regarding the
nominees of the Shareholders Group, see "Election of Directors - Information
About Our Nominees".
YOUR VOTE IS IMPORTANT SO PLEASE SIGN, DATE AND MAIL YOUR YELLOW PROXY CARD AT
YOUR EARLIEST CONVENIENCE.
If you have any questions concerning this proxy statement or need help voting
your shares, please call Marlene Bryl, of MFC Capital Partners AG, at (49 30) 20
94 58 00.
WHY WE BELIEVE THE CURRENT BOARD OF DIRECTORS
OF CYBERNET MUST BE CHANGED
Cybernet has not held an election of directors since May 17, 1999 and
stockholders of Cybernet have not voted to elect directors of Cybernet for more
than two and a half years.
WE BELIEVE THAT IT IS TIME TO CHANGE THE BOARD OF DIRECTORS OF CYBERNET. WE
BELIEVE THAT CYBERNET IS CURRENTLY IN A FINANCIAL CRISIS.
* Ernst & Young Deutsche Allgemeine Treuhand AG, Cybernet's independent
auditors, have recognized the state of Cybernet's financial crisis
and have reported on Cybernet's consolidated financial statements
for the year ended December 31, 2000 the following:
"[T]he Company has incurred recurring operating losses and
used significant amounts of cash to operate the Company.
These conditions raise substantial doubt about the Company's
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ability to continue as a going concern." (Emphasis added)
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* Cybernet has confirmed and reiterated such concerns in its most recent
quarterly report on Form 10-Q for the period ended September 30, 2001
stating the following:
"Investors in the Company should review carefully the report of
Ernst & Young. There can be no assurance that we will be able
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to continue as a going concern." (Emphasis added)
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. . .
"We believe that our cash and cash equivalents will provide
adequate liquidity to fund our normal operating activities
over the next four months." (Emphasis added)
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* Since December 31, 1998, Cybernet's total debt has risen from euro
10.4 million to euro 180.1 million as at September 30, 2001, an
increase of approximately 1,632%.(2)
[GRAPH]
DEBT(2)
(EUROS, IN THOUSANDS)
December 31, 1998 10,357
December 31, 1999 218,041
December 31, 2000 182,618
September 30, 2001 180,121
* Since December 31, 1998, Cybernet's shareholders' equity has eroded
dramatically. As at September 30, 2001, Cybernet's liabilities
exceeded its assets by euro 27.8 million.(2)
[GRAPH]
SHAREHOLDERS' EQUITY (DEFICIT)(2)
(EUROS, IN THOUSANDS)
December 31, 1998 57,724
December 31, 1999 68,448
December 31, 2000 13,203
September 30, 2001 (27,751)
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(2) Source: Cybernet's annual reports on Form 10-K for the periods ended
December 31, 1998, 1999 and 2000, respectively, and Cybernet's quarterly
report on Form 10-Q for the period ended September 30, 2001.
* Cybernet's share price as quoted on the OTC Bulletin Board in the
United States has fallen from a high of $47.00 on January 20, 1999
to $0.52 on December 14, 2001.(3) The following chart demonstrates
Cybernet's declining monthly closing share price from December 30,
1998 to November 30, 2001.(3)
[GRAPH]
COMMON STOCK PRICE(3)
(U.S.$)
December 31, 1998 $ 36.875
January 29, 1999 $ 40.50
February 26, 1999 $ 33.50
March 31, 1999 $ 28.00
April 30, 1999 $ 24.75
May 28, 1999 $ 20.00
June 30, 1999 $ 19.00
July 30, 1999 $ 16.875
August 31, 1999 $ 15.00
September 30, 1999 $ 15.25
October 29, 1999 $ 15.375
November 30, 1999 $ 11.00
December 31, 1999 $ 8.75
January 31, 2000 $ 11.00
February 29, 2000 $ 15.50
March 31, 2000 $ 11.50
April 28, 2000 $ 9.00
May 31, 2000 $ 6.50
June 30, 2000 $ 5.5625
July 31, 2000 $ 4.75
August 31, 2000 $ 4.00
September 29, 2000 $ 4.4375
October 31, 2000 $ 4.50
November 30, 2000 $ 3.25
December 29, 2000 $ 1.8125
January 31, 2001 $ 2.625
February 28, 2001 $ 2.00
March 30, 2001 $ 1.0938
April 30, 2001 $ 0.90
May 31, 2001 $ 0.95
June 29, 2001 $ 0.72
July 30, 2001 $ 0.60
August 31, 2001 $ 0.55
September 28, 2001 $ 0.40
October 31, 2001 $ 0.49
November 30, 2001 $ 0.55
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(3) Source: Blomberg.
* Despite Cybernet being in a financial crisis and with
knowledge of a contested proxy solicitation, the board of
directors of Cybernet recently approved the following:
* the amendment of Andreas Eder's employment agreement by extending
its term to expire in December 2004 and increasing his annual base
salary by euro 25,564 or 16.7% from euro 153,388 to euro 178,952,
thereby further entrenching management;
* the amendment of Dr. Paolo di Fraia's employment agreement by
extending its term to expire in December 2004, thereby further
entrenching management;
* the issuance of 400,000 stock options to each of Andreas Eder and
Dr. Paolo di Fraia with an exercise price per share of $0.56,
subject to certain conditions;(4) and
* the issuance of 30,000 stock options to each of Dr. Hubert
Besner and Robert Fratarcangelo with an exercise price per
share of $0.56, subject to certain conditions.(4)
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(4) These stock options are exercisable only in the event that Cybernet
reaches the following milestones by January 31, 2002: (i) Cybernet
successfully eliminates 85% of its current debt; and (ii) Cybernet
achieves a minimum of euro 10,000,000 in operating funds.
OBJECTIVES OF THE SHAREHOLDERS GROUP
THE RIGHT LEADERSHIP FOR CYBERNET
We represent the right to vote approximately 26% of the issued and outstanding
shares of common stock of Cybernet. To provide what we believe is the right
leadership for the future of Cybernet, we have assembled a slate of director
nominees comprised of people who have public company experience. For more
information regarding the nominees of the Shareholders Group, see "Election
of Directors - Information About Our Nominees".
INTENT OF THE SHAREHOLDERS GROUP
We intend to elect a slate of directors to lead a restructuring of Cybernet.
The newly elected board members intend to work with continuing board members
and management to develop and formulate the appropriate plans and strategies
to carry out such a restructuring and preserve and enhance shareholder value.
There is no assurance that the Shareholders Group will be successful in the
implementation of these objectives.
BACKGROUND TO THE SOLICITATION
MFC and Holger Timm have a prior relationship which predates any involvement of
MFC with Ventegis or Cybernet. Holger Timm introduced MFC to Ventegis, a
company in which Holger Timm is a minority shareholder and a member of the
supervisory board of directors.
MFC is a public corporation that operates in the financial services industry,
specializing in merchant banking internationally. Ventegis and Holger Timm are
significant shareholders of Cybernet, a company experiencing financial
difficulties and a declining share price, and believed that the representatives
of MFC had the appropriate experience in restructuring companies to work in some
capacity to attempt to improve Cybernet's financial condition. Accordingly,
Ventegis and Holger Timm referred MFC to Cybernet.
On September 19, 2001, MFC submitted a preliminary draft, non-binding proposal
to Cybernet. MFC proposed to act as the merchant bank for Cybernet and provide
corporate finance services in connection with a restructuring of Cybernet's
long-term debt. MFC's preliminary draft proposal was submitted independently of
Ventegis and Holger Timm, and Ventegis and Holger Timm were not to derive any
benefit from the implementation of MFC's preliminary draft proposal, other than
indirectly through any resulting increase in Cybernet's share price.
Despite a series of written correspondence and meetings involving Cybernet and
the members of the Shareholders Group in September and October, 2001, Cybernet
did not decide to engage MFC and the preliminary draft proposal was not further
advanced. To date, MFC has not received any fees from Cybernet in connection
with its preliminary draft proposal.
The Shareholders Group believed that Cybernet's existing board of directors was
incapable of successfully leading a restructuring of Cybernet and that a board
of directors including representatives of MFC was more likely to successfully
lead a restructuring and thereby potentially preserve and enhance shareholder
value. Accordingly, on October 31, 2001, the Shareholders Group sent a letter
to the board of directors of Cybernet requesting that Michael J. Smith, Eduard
Seligman and Roy Zanatta be appointed to the board of directors of Cybernet and
that any three existing directors resign, other than Andreas Eder who should
continue as a board member. Such request was not resolved.
On November 2, 2001, MFC, Holger Timm, Ventegis, and Consors Bank AG (the
"Depositary") entered into an agreement (the "Agreement") dated for reference
October 29, 2001 pursuant to which MFC was granted voting rights for the term of
the Agreement with respect to in aggregate 6,872,796 shares of common stock of
Cybernet deposited by Holger Timm and Ventegis with the Depositary. MFC will
retain such voting rights until the shares deposited with the Depositary are
delivered to the holders of voting trust certificates representing such shares
upon the termination of the Agreement.
Ventegis and Holger Timm granted MFC voting power over shares of common stock of
Cybernet to allow MFC to actively influence the strategy and policy of Cybernet,
including potentially electing MFC's slate of directors who may be able to
preserve and enhance shareholder value more effectively than the current
directors of Cybernet. The Agreement grants MFC a right of first refusal such
that in the event either Holger Timm or Ventegis wishes to sell his or its
shares of Cybernet to a third party, MFC has the right to either match the offer
of the third party and purchase the shares, or allow the shares to be sold to
the third party. Also under the Agreement, Ventegis is obligated to pay MFC 30%
of any increase after one year in the total value of the shares of Cybernet
held by Ventegis which are subject to the Agreement.
The term of the Agreement is 18 months to be renewed automatically for further
three month periods unless terminated by the parties. If Holger Timm and
Ventegis acquire any additional common stock of Cybernet during the term of the
Agreement, such shares will also be subject to the Agreement.
In addition, if MFC acquires all of the issued and outstanding 14% senior notes,
due 2009 of Cybernet (the "Notes"), MFC will offer to sell the Notes to Cybernet
at its cost. If MFC acquires less than all of the Notes and subsequently
disposes of any Notes, MFC will divide the net proceeds among MFC, Ventegis and
Holger Timm based upon their proportionate percentage interests in the
outstanding common stock of Cybernet.
In addition, on October 31, 2001, MFC and Ventegis entered into an agreement
dated for reference October 29, 2001 pursuant to which MFC engaged Ventegis to
provide consulting and informational services to MFC with relation to Cybernet
in consideration of euro 10,500. Ventegis agreed to support the engagement
of MFC as a financial advisor to Cybernet in the restructuring of its debt in
consideration for Ventegis receiving an agency fee of 15% of the fees actually
received by MFC for such services rendered.
On November 13, 2001, Cybernet's Chief Executive Officer applied for and
received an order dated November 15, 2001 from the Delaware Court scheduling an
adjourned meeting of stockholders of Cybernet to elect directors of Cybernet for
December 4, 2001 and waiving all quorum requirements. The Shareholders Group was
not provided notice of such application despite Cybernet's awareness of its
interest in board representation and its demands for a stockholders meeting.
On November 16, 2001, the Shareholders Group moved to intervene in the Delaware
action and asked the Delaware Court, inter alia, to vacate its order dated
November 15, 2001 that set December 4, 2001 as the date for an adjourned meeting
of stockholders of Cybernet.
On November 21, 2001, the Shareholders Group sent a letter to Cybernet, inter
alia, providing formal written notice to Cybernet of its intent to nominate its
nominees for election to Cybernet's board of directors at the next meeting of
stockholders of Cybernet. It also notified Cybernet that the Delaware Court had
scheduled a hearing on December 3, 2001 to consider the Shareholders Group's
requests for relief in the Delaware Action.
On December 3, 2001, the Delaware Court vacated its order dated November 15,
2001 which waived all quorum requirements for the adjourned meeting of
stockholders of Cybernet scheduled for December 4, 2001. On December 4, 2001,
a quorum was not present for a meeting of stockholders of Cybernet.
Management of Cybernet filed a preliminary proxy statement on December 17, 2001
rescheduling a meeting of stockholders to elect directors of Cybernet for
February 28, 2002.
The Shareholders Group and the management of Cybernet agreed to the Order dated
December 19, 2001 from the Delaware Court setting a meeting date for the
election of two Class B directors and two Class C directors of Cybernet. The
Order specifies that the Stockholders Meeting is to be held on January 18, 2002
at 11:00 a.m. (local time) at Cybernet's offices at Stefan-George-Ring 19-23,
Munich, Germany. The Order also set December 20, 2001 as the record date
for determining stockholders entitled to receive notice of and to vote at
the Stockholders Meeting, and December 27, 2001 as the notice date for the
Stockholders Meeting. The Order provides that the shares of Cybernet
represented at the Stockholders Meeting shall constitute a quorum, the slate
of directors nominated by the Shareholders Group shall be permitted to stand
for election at the Stockholders Meeting, the Stockholders Meeting shall be held
in English and the Stockholders Meeting shall be overseen by a monitor and chair
mutually agreed to by the parties.
If the nominees of the Shareholders Group are elected as directors of Cybernet
at the Stockholders Meeting, Cybernet may engage MFC or its affiliates to
provide financial and other advisory services to Cybernet in connection with any
restructuring on an as-and-when needed basis in the future. The scope of such
services will be determined by the board of directors of Cybernet and may
include the restructuring of Cybernet's debt. The fees for such services will
be based upon fees customarily charged by MFC or its affiliates to third parties
and as approved by the directors of Cybernet who are not affiliated with MFC.
MFC operates in the financial services industry, specializing in merchant
banking internationally, and regularly provides financial and other advisory
services to its clients.
In connection with the rendering of services by MFC to Cybernet, MFC may, from
time to time, engage Ventegis to assist it in providing consulting and other
advisory services to Cybernet on an as-and-when needed basis in the future.
COMMITMENT OF THE SHAREHOLDERS GROUP
The Shareholders Group is dissatisfied with the performance of the current board
of directors of Cybernet. The nominees of the Shareholders Group are wholly
independent of Cybernet's current management and are committed to salvaging
Cybernet and preserving stockholder value. No assurance can be given that
electing the nominees of the Shareholders Group will enhance stockholder value.
The nominees of the Shareholders Group, if elected, are committed to acting in
the best interest of Cybernet's stockholders and, subject to their fiduciary
duties as directors of Cybernet, will pursue any restructuring of Cybernet
diligently and promptly. No stockholder vote may be required for implementation
of the objectives of the Shareholders Group and none is specifically
contemplated.
* * * * * *
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED YELLOW PROXY CARD (AND NOT TO
RETURN ANY PROXY CARD SENT TO YOU BY CYBERNET).
* * * * * *
LITIGATION ALLEGATIONS
In its [preliminary proxy statement filed on December 17, 2001], management of
Cybernet references four litigation matters involving MFC and/or Michael J.
Smith and Roy Zanatta. Management of Cybernet presumably includes such
references in its [preliminary proxy statement] in order to infer allegations of
wrongdoing on the part of such parties in these matters. We note that the board
of directors of Cybernet itself acknowledges that the allegations set forth in
its description of the litigation matters "are obtained from the plaintiffs'
complaints in the applicable case and are not findings of fact" (emphasis
-------------------------
added). Accordingly, MFC wishes to clarify some of the misstatements referenced
in management's [preliminary proxy statement filed on December 17, 2001].
FARDAFIN HOLDINGS, S.A., AND OTHERS V. ICHOR CORPORATION, MFC BANCORP LTD. AND
ROY ZANATTA, AND OTHERS, IN THE UNITED STATES DISTRICT COURT, WESTERN DISTRICT
OF PENNSYLVANIA (THE "FARDAFIN ACTION").
The Fardafin Action was dismissed by the United States District Court, Western
District of Pennsylvania in June 2001.
MACDONALD OIL EXPLORATION LIMITED V. 32565 YUKON INC., MFC BANCORP LTD.,
MICHAEL J. SMITH, ROY ZANATTA, AND OTHERS, IN THE SUPERIOR COURT IN THE PROVINCE
OF QUEBEC, DISTRICT OF MONTREAL.
The Quebec Superior Court issued an interim order in May 2001 which, inter alia,
prevented a subsidiary of MFC from exercising voting rights over its shares of
Bresea Resources Ltd. without obtaining the approval of the Court. Such interim
order was vacated in December 2001 by the Quebec Court of Appeal.
CLARION INVESTMENT AND MORTGAGE AND CLIFFTOWN HOLDINGS INTERNATIONAL INC., AND
OTHERS V. EURO TRADE & FORFAITING INC., MFC BANCORP LTD., MICHAEL J. SMITH, AND
OTHERS, IN THE UNITED STATES DISTRICT COURT, DISTRICT OF COLUMBIA AND
SUBSEQUENTLY TRANSFERRED TO THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT
OF NEW YORK (THE "CLIFFTOWN ACTION"); AND NORTH CASCADE LIMITED, COLLINGWOOD
INVESTMENTS LIMITED AND KISHOR KUMAR KANTILAL NAIK V. EURO TRADE & FORFAITING,
INC., MFC BANCORP LTD. AND MICHAEL J. SMITH, AND OTHERS, IN THE UNITED STATES
DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK (THE "COLLINGWOOD ACTION").
In November 2000, Euro Trade & Forfaiting, Inc. ("Euro Trade"), of which Michael
J. Smith was a director and officer, commenced an action, as amended, in the
United States District Court, Southern District of New York (the "New York
Court") against its former Chief Executive Officer, John Vowell, its former
Chairman, Chandra Sekar, its former Chief Financial Officer, Naren Desai, John
W. Duffell and John Does 1-10 alleging, in part, that Mr. Vowell, Mr. Sekar and
Mr. Desai breached their fiduciary duties to Euro Trade and, along with the
other defendants, participated in a wide-ranging fraudulent scheme to benefit
themselves and their associates at the expense of Euro Trade (the "Euro Trade
Action"). Euro Trade is seeking to recover from the defendants, among other
things, actual and punitive damages, as well as the return of certain shares
issued to the defendants as a result of their fraudulent behaviour. In April
2001, Euro Trade entered into a settlement agreement with one of the defendants,
John Vowell, pursuant to which Mr. Vowell agreed to transfer to Euro Trade
1,250,000 common shares of Euro Trade and to cooperate and assist Euro Trade in
its claims against the other defendants.
The Clifftown Action was filed in November 2000. Euro Trade reports on its
annual report filed on September 28, 2001 that it considers the Clifftown Action
to be without merit and intends to vigorously defend itself against the
claimant's allegations. Euro Trade regards the Clifftown Action to be a
response to the Euro Trade Action. The Clifftown Action has subsequently been
transferred to the New York Court to be heard with the Euro Trade Action.
The Collingwood Action was commenced in December 2000. In April 2001, the
claimants filed a Notice of Voluntary Dismissal with the New York Court, thereby
dismissing the Collingwood Action.
GIBRALT CAPITAL CORPORATION V. DRUMMOND FINANCIAL CORPORATION, MFC BANCORP LTD.,
MICHAEL J. SMITH AND ROY ZANATTA, AND OTHERS, IN THE DELAWARE COURT (THE
"GIBRALT ACTION").
The Gibralt Action was filed in September 1999 in the form of a class action on
behalf of shareholders of Drummond Financial Corporation, but has not received
Court certification as such. MFC believes the claims of Gibralt Holdings Ltd.
to be entirely without merit and intends to vigorously defend against the
lawsuit.
ELECTION OF DIRECTORS
In accordance with the terms of Cybernet's Certificate of Incorporation and
Bylaws, the terms of office of the board of directors are divided into three
classes: the term of the existing Class A directors will expire at the annual
meeting of stockholders to be held in 2002; the term of the newly elected Class
B directors will expire at the annual meeting of stockholders to be held in
2003; and the term of the newly elected Class C directors will expire at the
annual meeting of stockholders to be held in 2004. At each annual meeting of
stockholders, the successors to directors whose terms expire at the annual
meeting will be elected to serve from the time of the annual meeting until the
third annual meeting following their election and until their successors are
duly elected and qualified. Any additional directorships resulting from an
increase in the number of directors will be distributed among the three classes
so that, as nearly as possible, each class will consist of one-third of the
directors.
We intend to nominate Roy Zanatta and Greg Elderkin as Class B directors and
Michael J. Smith and Eduard Seligman as Class C directors for election at
the Stockholders Meeting. Based on their business and professional experience,
we believe that our nominees are qualified to serve as directors of Cybernet.
Each nominee of the Shareholders Group has consented to serve as a director
of Cybernet if elected and to be named in this proxy statement and in any
other soliciting materials of the Shareholders Group as a nominee of the
Shareholders Group.
INFORMATION ABOUT OUR NOMINEES
Each nominee of the Shareholders Group has furnished the information about him
that is provided in this proxy statement.
NAME AND
BUSINESS PRESENT PRINCIPAL OCCUPATION AND
ADDRESS AGE FIVE YEAR BUSINESS EXPERIENCE
- -------- --- --------------------------------
Roy Zanatta 37 Mr. Zanatta is the Secretary, Vice-President and a
1620 - 400 Burrard director of MFC. Mr. Zanatta has been an employee of
Street MFC since 1993 and has been the Secretary, Vice-President
Vancouver, and a director of MFC since 1996. Mr. Zanatta is also a
British Columbia director of TriMaine Holdings, Inc. Formerly, Mr. Zanatta
Canada V6C 3A6 consulted for and held positions with the British
Columbia Hydro and Power Authority, the Canadian Standards
Association and Atomic Energy of Canada Ltd. Mr. Zanatta
earned a B.A.Sc. degree in 1987 from the University of
British Columbia (Canada) and an MBA in 1991 from
McGill University (Canada).
Greg Elderkin 38 Mr. Elderkin is the Executive Vice President, a
555 S. Renton Village Pl. director and the designated real estate broker at Pacific
Suite 700 West Brokerage, Inc. Mr. Elderkin has held
Renton, Washington 98055 these positions since 1989. In addition, Mr. Elderkin is
a co-founder and director of the SFG Funds, a private real
estate lending organization, and a director of Med Net
International Ltd.
Michael J. Smith 53 Mr. Smith is the President, Chief Executive
17 Dame Street Officer and a director of MFC. Mr. Smith has
Dublin 2, Ireland been the President and Chief Executive
Officer of MFC since 1996 and a director since
1986. Mr. Smith is also a director of
TriMaine Holdings, Inc., Drummond Financial
Corporation and Euro Trade & Forfaiting,
Inc. and a member of the management board of
Digitale Telekabel AG. Formerly, Mr. Smith
was the Executive Vice-President, Chief
Financial Officer, Secretary and a trustee of
Mercer International Inc. from 1985 to 1996.
Mr. Smith was one of the founding members of the
Prentiss Howard Group, a company organized in 1979
which assists domestic and international companies
with investments, mergers and acquisitions.
Eduard Seligman 36 Mr. Seligman is a Vice-President of MFC Merchant Bank
Cours de rive 6 S.A., a fully licensed Swiss bank. Mr. Seligman has
1211 Geneva, been an employee of MFC Merchant Bank S.A. since 1998.
Switzerland Mr. Seligman is also a member of the management board
of Digitale Telekabel AG. Formerly, Mr. Seligman held the
position of co-manager of a private fund with
Performance Plus S.A. (Switzerland) from 1996 to
1998 and worked in the commercial department of
Credit Suisse from 1993 to 1995. Mr. Seligman is a
Certified Financial Analyst and earned a lic. Oec.
HSG. degree in 1992 from the St. Gallen University for
Business Administration, Law and Social Studies
(Switzerland).
No corporation or organization identified in the preceding table is an affiliate
of Cybernet. The present principal occupation of each director nominee is the
first occupation described in his biography.
MFC has agreed to pay each nominee of the Shareholders Group any out-of-pocket
expenses and/or losses incurred by such nominee that arise from investigating or
defending any claim brought against him with respect to actions taken in
connection with the solicitation of proxies to which this proxy statement
relates, other than claims resulting from the nominee's bad faith, willful
misconduct or gross negligence.
Each of the nominees of the Shareholders Group, if elected, will be entitled to
receive compensation customarily paid by Cybernet to its independent directors,
which is described in management's [preliminary proxy statement filed on
December 17, 2001].
We have no reason to believe that any of the nominees of the Shareholders Group
will be disqualified or unwilling or unable to serve if elected. The
Shareholders Group reserves the right to nominate substitute persons if Cybernet
makes or announces any changes to its Bylaws or takes or announces any other
action that has, or if consummated would have, the effect of disqualifying any
of the nominees of the Shareholders Group. In addition, if any additional
directorships are to be voted upon at the Stockholders Meeting, the Shareholders
Group reserves the right to nominate additional persons to fill the added
positions. SHARES REPRESENTED BY PROXIES GIVEN TO US WILL BE VOTED FOR ANY
SUBSTITUTE OR ADDITIONAL NOMINEES OF THE SHAREHOLDERS GROUP.
THE SHAREHOLDERS GROUP BELIEVES THAT IT IS IN THE BEST INTEREST OF STOCKHOLDERS
OF CYBERNET TO ELECT THE NOMINEES OF THE SHAREHOLDERS GROUP AT THE STOCKHOLDERS
MEETING. WE STRONGLY RECOMMEND THAT YOU VOTE "FOR" THE ELECTION OF THE NOMINEES
OF THE SHAREHOLDERS GROUP.
APPROVAL OF CYBERNET 1998 STOCK INCENTIVE PLAN
At the Stockholders Meeting, the management of Cybernet is asking stockholders
to approve the Cybernet 1998 Stock Incentive Plan. A copy of the Cybernet 1998
Stock Incentive Plan is attached to the registration statement on Form S-1/A
filed by Cybernet on November 5, 1998 and a description of the Cybernet 1998
Stock Incentive Plan is included in management's [preliminary proxy statement
filed on December 17, 2001]. Reference is hereby made to such information
pursuant to Rule 14a-5(c) under the Securities Exchange Act of 1934.
The mandate of the 1998 Stock Incentive Plan should be assessed and reviewed in
the context of the compensation arrangements of Cybernet in its entirety by
directors independent of management.
THE SHAREHOLDERS GROUP RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THE APPROVAL
OF THE CYBERNET 1998 STOCK INCENTIVE PLAN.
RATIFICATION OF APPOINTMENT OF CORPORATE AUDITORS
At the Stockholders Meeting, the management of Cybernet is asking stockholders
to ratify the appointment of Ernst & Young Deutsche Allgemeine Treuhand AG as
corporate auditors of Cybernet for the 2000 and 2001 calendar years. Ernst &
Young Deutsche Allgemeine Treuhand AG served as Cybernet's independent auditors
for the fiscal years ended December 31, 1999 and December 31, 2000. Cybernet
has approved and engaged Ernst & Young Deutsche Allegemeine Treuhand AG to serve
as Cybernet's auditors for the fiscal year ending December 31, 2001.
THE SHAREHOLDERS GROUP RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG DEUTSCHE ALLGEMEINE TREUHAND AG AS CORPORATE
AUDITORS OF CYBERNET FOR THE 2000 AND 2001 CALENDAR YEARS.
* * * * * *
WHEN YOU RETURN THE YELLOW PROXY CARD, YOU WILL BE VOTING "FOR" THE NOMINEES OF
THE SHAREHOLDERS GROUP TO SERVE AS DIRECTORS OF CYBERNET, "AGAINST" THE APPROVAL
OF THE CYBERNET 1998 STOCK INCENTIVE PLAN AND "FOR" THE RATIFICATION OF ERNST &
YOUNG DEUTSCHE ALLGEMEINE TREUHAND AG AS CORPORATE AUDITORS OF CYBERNET FOR THE
2000 AND 2001 CALENDAR YEARS, UNLESS YOU APPROPRIATELY INDICATE OTHERWISE.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER OR
NOT YOU PLAN TO ATTEND THE STOCKHOLDERS MEETING, PLEASE SIGN AND DATE THE
ENCLOSED YELLOW PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED.
VOTING PROCEDURES
To support the nominees of the Shareholders Group at the Stockholders Meeting,
please sign and date the enclosed YELLOW proxy card and return it to Marlene
Bryl, of MFC Capital Partners AG, Charlottenstrasse 59, D-10117 Berlin, Germany
in the enclosed postage-paid envelope. Submitting a proxy will not affect your
right to attend the Stockholders Meeting and vote in person.
HOW DO I VOTE IF I HOLD SHARES AT MY BANK OR BROKERAGE FIRM?
If you held shares on December 20, 2001, the record date for the Stockholders
Meeting, in the name of a brokerage firm, bank nominee or other institution,
only it can give a proxy with respect to your shares. You may have received
either a blank, executed proxy card from the record holder (which you can
complete and send directly to Marlene Bryl, of MFC Capital Partners AG) or an
instruction card (which you can complete and return to the record holder to
direct its voting of your shares). If the record holder has not sent you either
a blank, executed proxy card or an instruction card, you may contact the record
holder directly to provide it with instructions. If you need assistance, please
contact Marlene Bryl, of MFC Capital Partners AG, at (49 30) 20 94 58 00.
If you do not have record ownership of your shares and want to vote in person at
the Stockholders Meeting, you may obtain a document called a "legal proxy" from
the record holder of your shares and bring it to the Stockholders Meeting. If
you need assistance, please contact Marlene Bryl, of MFC Capital Partners AG, at
(49 30) 20 94 58 00.
HOW DO I VOTE IF I HOLD SHARES IN MY OWN NAME?
If you owned shares in your own name on December 20, 2001, the record date for
the Stockholders Meeting, you may attend the Stockholders Meeting and vote in
person. If you are not the record holder of your shares, please refer to the
discussion following the question "How do I vote if I hold shares at my bank or
brokerage firm?"
To vote by proxy, you should complete, sign and date the enclosed YELLOW proxy
card and return it promptly in the enclosed postage-paid envelope.
To be able to vote your shares in accordance with your instructions at the
Stockholders Meeting, we must receive your proxy as soon as possible but in any
event prior to their being voted at the Stockholders Meeting. You may vote your
shares without submitting a proxy to us if you vote in person, submit a proxy to
the Secretary of Cybernet or, in some cases, if you provide appropriate
instructions to the record holder of your shares.
If you need assistance, please contact Marlene Bryl, of MFC Capital Partners AG,
at (49 30) 20 94 58 00.
WHAT SHOULD I DO IF I RECEIVE A WHITE PROXY CARD?
Proxies on the white proxy card are being solicited by the incumbent board of
directors of Cybernet. If you submit a proxy to us by signing and returning the
enclosed YELLOW proxy card, do not sign or return the white proxy card or follow
any voting instructions provided by Cybernet unless you intend to change your
vote, because only your latest-dated proxy will be counted.
If you have already sent a white proxy card to Cybernet, you may revoke it and
provide your support to the nominees of the Shareholders Group by signing,
dating and returning the enclosed YELLOW proxy card.
WHAT IF I WANT TO REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is voted on your
behalf. You may do so in three ways:
* By delivering a later-dated proxy to either Marlene Bryl, of MFC Capital
Partners AG, or the Secretary of Cybernet; or
* By delivering a written notice of revocation to either Marlene Bryl, of
MFC Capital Partners AG, or the Secretary of Cybernet; or
* By voting in person at the Stockholders Meeting.
If you choose to revoke a proxy by giving written notice or a later-dated proxy
to the Secretary of Cybernet, we would appreciate if you would assist us in
representing the interests of stockholders on an informed basis by sending us a
copy of your revocation or proxy or by calling Marlene Bryl, of MFC Capital
Partners AG, at (49 30) 20 94 58 00. REMEMBER, YOUR LATEST-DATED PROXY IS THE
ONLY ONE THAT COUNTS.
IF I PLAN TO ATTEND THE STOCKHOLDERS MEETING, SHOULD I STILL SUBMIT A PROXY?
Whether you plan to attend the Stockholders Meeting or not, we urge you to
submit a proxy. Returning the enclosed YELLOW proxy card will not affect your
right to attend the Stockholders Meeting and vote.
WHO CAN VOTE?
You are eligible to vote or to execute a proxy only if you owned Cybernet common
stock or Series B preferred stock on December 20, 2001, the record date for the
Stockholders Meeting. Even if you sell your shares after the record date, you
will retain the right to execute a proxy in connection with the Stockholders
Meeting. It is important that you grant a proxy regarding shares you held on
the record date, or vote those shares in person, even if you no longer own those
shares. Based upon Cybernet's most recent public disclosure, approximately
[26,535,627] shares of Cybernet common stock and no shares of Cybernet Series B
preferred stock were outstanding on the record date for the Stockholders
Meeting. With respect to each matter to be considered at the Stockholders
Meeting, each stockholder will have one vote for each share of Cybernet common
stock held by it on the record date.
HOW WILL MY SHARES BE VOTED?
If you give a proxy on the accompanying YELLOW proxy card, your shares will be
voted as you direct. If you submit a proxy to us without instructions, our
representatives will vote your shares in favor of our nominees as directors of
Cybernet, against the approval of the 1998 Stock Incentive Plan of Cybernet and
in favor of the ratification of the appointment of Ernst & Young Deutsche
Allegemeine Treuhand AG as corporate auditors of Cybernet for the 2000 and 2001
calendar years. Submitting a YELLOW proxy card will entitle our representatives
to vote your shares in accordance with their discretion on matters not described
in this proxy statement that may arise at the Stockholders Meeting.
Unless a proxy specifies otherwise, it will be presumed to relate to all shares
held of record on the record date by the person who submitted it.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AND HOW WILL VOTES BE COUNTED?
Directors will be elected by a plurality of the votes cast by the holders of
Cybernet common stock present in person or by proxy and actually voting at the
Stockholders Meeting. This means that the two nominees as Class B directors and
the two nominees as Class C directors of Cybernet receiving the highest number
of votes will be elected as directors. Accordingly, abstentions and broker
non-votes do not have the effect of a vote against the election of any nominees.
Each proposal other than the election of directors will be adopted if a majority
of the shares represented at the meeting and entitled to vote on the proposal
are voted in its favor. Accordingly, abstentions on each such proposal will have
the same effect as a vote against the proposal. Broker non-votes will not have
the effect of a vote for or against any such proposal.
HOW CAN I RECEIVE MORE INFORMATION?
If you have any questions about giving your proxy or about our solicitation, or
if you require assistance, please call Marlene Bryl, of MFC Capital Partners AG,
at (49 30) 20 94 58 00.
PROXY SOLICITATION AND EXPENSES
The following persons are or may be deemed to be participants (the
"Participants" and, each, a "Participant") in the solicitation of proxies in
support of electing the nominees of the Shareholders Group to the board of
directors of Cybernet: (i) MFC; (ii) Ventegis; (iii) Holger Timm; and (iv) the
nominees of the Shareholders Group: Roy Zanatta, Greg Elderkin, Michael J. Smith
and Eduard Seligman. The Participants may solicit proxies in person and by
mail, press release, advertisements in newspapers, magazines and/or trade
publications, telephone, telecopier, telegraph, electronic mail, Internet
(World Wide Web) publication, television, radio and newspapers. No person
identified above has or will receive compensation for soliciting proxies.
The Participants will ask banks, brokers, custodians, nominees, other
institutional holders and other fiduciaries to forward all soliciting materials
to the beneficial owners of the shares that those institutions hold of record.
The Shareholders Group will reimburse those institutions for reasonable expenses
that they incur in connection with forwarding our materials.
The entire expense of our proxy solicitation is being borne by the Shareholders
Group. The Shareholders Group may, particularly if the nominees of the
Shareholders Group are elected to Cybernet's board of directors, seek
reimbursement of expenses from Cybernet. The Shareholders Group does not intend
to seek stockholder approval of any such reimbursement.
Costs related to the solicitation of proxies include expenditures for printing,
postage, legal services and other related items. Total expenditures are expected
to be approximately $500,000. Total payment of costs to date in furtherance of
our proxy solicitation is approximately $200,000.
INFORMATION ABOUT THE PARTICIPANTS
The Participants are or may be deemed to be participants in the solicitation of
proxies by the Shareholders Group for the Stockholders Meeting within the
meaning of the federal securities laws. Information related to the Participants,
including their beneficial ownership of Cybernet common stock, is set forth in
Annex A to this proxy statement and is incorporated into this proxy statement by
- -------
reference. Except as set forth in Annex A, none of the Participants is party to
-------
any commercial dealing with Cybernet or its subsidiaries that is required to be
discussed in this proxy statement by the federal securities laws. Information in
this proxy statement about each Participant was provided by that Participant.
INFORMATION ABOUT CYBERNET
Based upon Cybernet's quarterly report on Form 10-Q for the period ended
September 30, 2001, the mailing address of the principal executive offices of
Cybernet is Stefan-George-Ring 19-23, 81929 Munich, Germany.
Management's [preliminary proxy statement filed on December 17, 2001] was
required to set forth information regarding (i) the beneficial ownership of
securities of Cybernet by (A) any person known to Cybernet to beneficially own
5% or more of any class of voting securities of Cybernet; (B) each director and
executive officer of Cybernet; and (C) all directors and executive officers of
Cybernet as a group; (ii) information concerning Cybernet's directors and
management, including information relating to management compensation; and (iii)
information concerning the procedures for submitting stockholder proposals for
consideration at the 2002 annual meeting of stockholders of Cybernet. Except as
otherwise disclosed herein, reference is hereby made to such afore-mentioned
information which, to the extent it may be deemed required, is incorporated
herein pursuant to Rule 14a-5(c) under the Securities Exchange Act of 1934.
Except as otherwise noted herein, the information in this proxy statement
concerning Cybernet has been taken from or is based upon documents and records
on file with the Securities and Exchange Commission and other publicly available
information. Although the Shareholders Group does not have any knowledge
indicating that any statement contained herein is untrue, we do not take any
responsibility for the accuracy or completeness of statements taken from public
documents and records that were not prepared by or on behalf of the Shareholders
Group, or for any failure by Cybernet to disclose events that may affect the
significance or accuracy of such information.
OTHER MATTERS TO BE VOTED UPON
Subject to the outcome of the Delaware Action, except for the election of
directors of Cybernet, the approval of the Cybernet 1998 Incentive Option Plan
and the ratification of the appointment of Ernst & Young Deutsche Allgemeine
Treuhand AG as the corporate auditors of Cybernet for the 2000 and 2001 calendar
years, the Shareholders Group is not aware of any other matter to be presented
for consideration at the Stockholders Meeting. However, if any other matter
properly comes before the Stockholders Meeting, the persons named as proxies by
the Shareholders Group will exercise their discretionary authority to vote on
such matters in accordance with their best judgement. If the Shareholders Group
becomes aware a sufficient time in advance of the Stockholders Meeting that
Cybernet's management intends to present for stockholder vote at the
Stockholders Meeting any matter not included on the enclosed YELLOW proxy card,
the Shareholders Group intends to either (i) refrain from voting on any such
matter (in which case stockholders will only be able to vote on such matter on
the proxy card furnished by Cybernet's management); or (ii) revise the YELLOW
proxy card in order to include any such additional matter thereon. The
Shareholders Group may also furnish stockholders with additional proxy materials
describing any such additional matter. If stockholders voted or vote on the
original YELLOW proxy card which does not include such additional matter, the
persons named as proxyholders on the enclosed YELLOW proxy card will exercise
their discretionary authority with respect to such additional matter and the
Shareholders Group will advise stockholders as to how the proxyholders will use
such discretionary authority. If a stockholder wishes to specify the manner in
which his or her shares are to be voted on any such additional matter, the
stockholder will have the opportunity to vote on a revised YELLOW proxy card.
Submission of any properly executed proxy card will revoke all prior proxy
cards.
* * * * * *
Questions or requests for additional copies of this proxy statement should be
directed to:
MARLENE BRYL
MFC CAPITAL PARTNERS AG
CHARLOTTENSTRASSE 59
D-10117 BERLIN, GERMANY
TEL: (49 30) 20 94 58 00
FAX: (49 30) 20 94 58 11
WE URGE YOU TO VOTE YOUR SHARES IN FAVOR OF THE NOMINEES OF THE SHAREHOLDERS
GROUP, AGAINST THE APPROVAL OF THE CYBERNET 1998 STOCK INCENTIVE PLAN AND IN
FAVOR OF THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG DEUTSCHE
ALLGEMEINE TREUHAND AG AS CORPORATION AUDITORS OF CYBERNET FOR THE 2000 AND 2001
CALENDAR YEARS BY SIGNING, DATING AND RETURNING THE ENCLOSED YELLOW PROXY CARD
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
Sincerely,
MFC BANCORP LTD. VENTEGIS CAPITAL AG
PER: /S/ MICHAEL J. SMITH PER: /S/ KARSTEN HAESEN
----------------------- --------------------
MICHAEL J. SMITH KARSTEN HAESEN
PRESIDENT AND BOARD MEMBER
CHIEF EXECUTIVE OFFICER
January , 2002
ANNEX A
-------
INFORMATION CONCERNING THE SHAREHOLDERS GROUP
AND OTHER PARTICIPANTS
The following persons are or may be deemed to be participants (the
"Participants" and, each, a "Participant") in the solicitation of proxies in
support of electing the nominees of the Shareholders Group to the board of
directors of Cybernet: (i) MFC; (ii) Ventegis; (iii) Holger Timm; and (iv) the
nominees of the Shareholders Group: Roy Zanatta, Greg Elderkin, Michael J.
Smith and Eduard Seligman. Information set forth herein about each Participant
was provided by that Participant.
MFC is a public corporation organized under the laws of the Yukon Territory,
Canada with its common shares quoted on the Nasdaq SmallCap Market and on the
Frankfurt Stock Exchange. MFC operates in the financial services industry,
specializing in merchant banking internationally, and has an address at 17
Dame Street, Dublin 2, Ireland.
Ventegis is venture capital company, focusing on the biotechnology and
information and communication fields. Ventegis is a German corporation with
principal executive offices at Cicerostrasse 21, 10709 Berlin, Germany.
Holger Timm is a member of the board of Berliner Effektengesellschaft AG. Mr.
Timm has a business address at Kurfurstendamm 119, 10711 Berlin, Germany.
A description of each nominee of the Shareholders Group, including name,
business address, age, present principal occupation and five year business
experience, is described in the proxy statement of the Shareholders Group under
the heading "Election of Directors".
SECURITY OWNERSHIP
The beneficial ownership of securities of Cybernet by the Participants is
described in the following table. No Participant and no associate of any
Participant (within the meaning of the federal proxy rules) beneficially owns
any securities of Cybernet other than common stock as described in the following
table. No Participant beneficially owns any securities of any parent or
subsidiary of Cybernet. No Participant has record but not beneficial ownership
with respect to any securities of Cybernet.
APPROXIMATE
SHARES BENEFICIALLY OWNED PERCENTAGE OF CLASS
NAME COMMON STOCK COMMON STOCK
- ---- ------------------------- -------------------
MFC Bancorp Ltd.(1) 6,872,796(2) 25.9%
17 Dame Street
Dublin 2, Ireland
- ------------------
(1) MFC is a public corporation with its common shares quoted on the
Nasdaq SmallCap Market and on the Franfurt Stock Exchange. Based
solely upon public records and filings, Peter Kellogg directly
and/or indirectly owns approximately 25% of the common shares of
MFC. Mr. Kellogg disclaims beneficial ownership of approximately
92% of such common shares.
APPROXIMATE
SHARES BENEFICIALLY OWNED PERCENTAGE OF CLASS
NAME COMMON STOCK COMMON STOCK
- ---- ------------------------- -------------------
Ventegis Capital 5,577,396(2) 21.0%
AG (formerly
Cybermind Interactive
Europe, AG)(3)
Kurfurstendamm 119
10711 Berlin, Germany
Holger Timm(4) 1,295,400(2) 4.9%
Cicerostrasse 21
10709 Berlin, Germany
- ------------------
(2) On November 2, 2001, MFC was granted voting rights over 1,295,400
and 5,577,396 shares of common stock of Cybernet beneficially owned
by Holger Timm and Ventegis, respectively, pursuant to an agreement
among MFC, Holger Timm, Ventegis, and Consors Capital Bank AG dated
for reference October 29, 2001.
(3) The dispositive power over the shares of Cybernet beneficially
owned by Ventegis is exercised by the directors and executive
officers of Ventegis. The executive board of Ventegis is comprised
of Karsten Haesen and Carsten Dujesiefken and the supervisory board
of Ventegis is comprised of Holger Timm, Klaus Gerd Kleversaat and
Wolfgang Hermanni.
(4) Holger Timm is a minority shareholder of Ventegis and a member of its
supervisory board of directors. However, Holger Timm disclaims
beneficial ownership of any securities of Cybernet beneficially
owned by Ventegis.
TRANSACTIONS IN CYBERNET SECURITIES
Other than the transactions described below, no Participant has purchased or
sold any securities of Cybernet in the past two years.
TRANSACTIONS IN CYBERNET
SECURITIES BY MFC
------------------------
NUMBER AND TYPE OF
DATE OF TRANSACTION NATURE OF TRANSACTION SECURITIES OF CYBERNET
- ------------------- --------------------- ----------------------
November 2, 2001 Was granted voting rights 6,872,796
over shares beneficially
owned by Holger Timm and
Ventegis pursuant to an
agreement dated for
reference October 29, 2001
TRANSACTIONS IN CYBERNET
SECURITIES BY VENTEGIS
------------------------
NUMBER AND TYPE OF
DATE OF TRANSACTION NATURE OF TRANSACTION SECURITIES OF CYBERNET
- ------------------- --------------------- ----------------------
January 10, 2000 Converted preferred stock, 1,440,000 shares of
series A and preferred stock, common stock
series B into common stock
on a one-for-one basis
January 2, 2001 Converted preferred stock, 2,880,000 shares of
series A and preferred stock, common stock
series B into common stock
on a one-for-one basis
November 2, 2001 Granted voting rights over 5,577,396 shares of
common stock to MFC common stock
pursuant to an agreement
dated for reference
October 29, 2001
TRANSACTIONS IN CYBERNET
SECURITIES BY HOLGER TIMM
-------------------------
NUMBER AND TYPE OF
DATE OF TRANSACTION NATURE OF TRANSACTION SECURITIES OF CYBERNET
- ------------------- --------------------- ----------------------
December 31, 1999 Sold common stock in 43,000 shares of
a private transaction common stock
January 10, 2000 Converted preferred stock, 30,375 shares of
series A into common common stock
stock on a one-for-one
basis
November 9, 2000 Acquired common stock 172,000 shares of
at a price of DM 0.28 common stock
per share pursuant to a
stock purchase agreement
dated April 28, 1997 in
which such shares were sold
to an employee of Cybernet
and were to revert back to
Holger Timm upon termination
of the employee's employment
contract
January 2, 2001 Converted preferred stock, 60,750 shares of
series A into common stock common stock
on a one-for-one basis
November 2, 2001 Granting voting rights 1,295,400 shares of
over common stock to common stock
MFC pursuant to an
agreement dated for
reference October 29, 2001
ARRANGEMENTS, INTERESTS AND TRANSACTIONS
Except as otherwise disclosed herein, no Participant is, or was within the past
year, a party to any contract, arrangement or understanding with any person with
respect to any securities of Cybernet, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies.
Except as otherwise disclosed herein, no Participant, no associate of any
Participant and no person who is a party to any arrangement or understanding
pursuant to which a nominee of the Shareholders Group is proposed to be elected
has any arrangement or understanding with any person with respect to any future
employment by Cybernet or its affiliates or with respect to any future
transactions to which Cybernet or any of its affiliates will or may be a party.
MFC, Ventegis and Holger Timm have or may be deemed to have interests in the
solicitation of proxies in support of the nominees of the Shareholders Group
from beneficial ownership of the common stock of Cybernet. Participants who are
nominees of the Shareholders Group are expected to receive customary
compensation from Cybernet in exchange for their services as directors, if
elected. The nominees of the Shareholders Group also have an interest in the
solicitation through the forms of compensation described in the proxy
statement of the Shareholders Group under the heading "Election of
Directors".
There has been no transaction or series of similar transactions since the
beginning of Cybernet's last completed fiscal year, and there is no currently
proposed transaction or series of similar proposed transactions, to which
Cybernet or any of its subsidiaries was or is to be a party, in which the amount
involved exceeds $60,000 and in which any Participant or any associate of any
Participant had, or will have, a direct or indirect material interest.
ADDITIONAL INFORMATION ABOUT THE NOMINEES OF THE SHAREHOLDERS GROUP
No nominee of the Shareholders Group presently holds any position with Cybernet.
Other than the arrangements described in the preceding paragraph and the
agreements described in the proxy statement of the Shareholders Group under the
heading "Election of Directors", there is no arrangement or understanding
between any nominee of the Shareholders Group and any other person pursuant to
which the nominee of the Shareholders Group was selected as a nominee.
There is no family relationship (within the meaning of the federal securities
laws) between any nominee of the Shareholders Group and (i) any other nominee of
the Shareholders Group; or (ii) any director of Cybernet, executive officer of
Cybernet or person nominated by Cybernet to become a director or executive
officer. There is, and has been, no legal or other proceeding involving any
nominee of the Shareholders Group that is required to be disclosed under the
federal proxy rules.
No nominee of the Shareholders Group (i) has any business relationship that is
required to be disclosed by the federal proxy rules; (ii) has had any such
relationship since the beginning of Cybernet's most recently completed fiscal
year; or (iii) has, since the beginning of Cybernet's last completed fiscal
year, been indebted to Cybernet or any of its subsidiaries in an amount that
exceeds $60,000.
No nominee of the Shareholders Group and no associate of any nominee of the
Shareholders Group has received any compensation from Cybernet as a director or
executive officer of Cybernet.
No nominee of the Shareholders Group has failed to file reports related to
Cybernet that are required by Section 16(a) of the Securities Exchange Act of
1934, as amended.
Compensation Committee Interlocks and Insider Participation
Michael J. Smith, a nominee of the Shareholders Group, is the President, Chief
Executive Officer and a director of MFC and a director and/or officer of
certain of MFC's subsidiaries. MFC does not have a compensation committee and
its executive compensation program is administered by its Chief Executive
Officer under the supervision of its board of directors. Roy Zanatta, a nominee
of the Shareholders Group, is the Secretary and a director of MFC and a director
and/or officer of certain of MFC's subsidiaries.
APPENDIX
--------
YELLOW PROXY CARD
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
PROXY FOR THE MEETING OF STOCKHOLDERS
TO ELECT DIRECTORS
SCHEDULED TO BE HELD ON JANUARY 18, 2002
THIS PROXY IS SOLICITED BY MFC BANCORP LTD. AND VENTEGIS CAPITAL AG
(NOT BY THE BOARD OF DIRECTORS OF
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.)
The undersigned stockholder of Cybernet Internet Services International, Inc.
("Cybernet") hereby appoints Michael J. Smith and Eduard Seligman, and each of
them, as attorneys and proxies, each with full power of substitution and
revocation, acting unanimously or by either of them if only one be present
and acting, to represent the undersigned at the meeting (the "Meeting") of
Stockholders to elect directors of Cybernet scheduled to be held on
January 18, 2002, and at any adjournment, postponement or rescheduling thereof,
with authority to vote all shares held or owned by the undersigned in
accordance with the directions indicated herein.
Receipt of the Proxy Statement relating to the Meeting is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL CAUSE YOUR SHARES OF CYBERNET WHICH YOU
WOULD BE ENTITLED TO VOTE IF PERSONALLY PRESENT AT THE MEETING TO BE VOTED AS
YOU DIRECT. IF YOU RETURN THIS PROXY, PROPERLY EXECUTED, WITHOUT SPECIFYING A
CHOICE, YOUR SHARES OF CYBERNET WILL BE VOTED IN FAVOR OF THE NOMINEES LISTED ON
THE REVERSE SIDE IN PROPOSAL 1, AGAINST THE APPROVAL OF THE CYBERNET 1998 STOCK
INCENTIVE PLAN IN PROPOSAL 2 AND IN FAVOR OF THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG DEUTSCHE ALLGEMEINE TREUHAND AG IN PROPOSAL 3.
(Continued and to be signed on the reverse side) See reverse side
PROPOSAL 1. To elect the director nominees listed below:
Class B nominee: Roy Zanatta
--- FOR --- WITHHOLD AUTHORITY
Class B nominee: Greg Elderkin
--- FOR --- WITHHOLD AUTHORITY
Class C nominee: Michael J. Smith
FOR WITHHOLD AUTHORITY
--- ---
Class C nominee: Eduard Seligman
FOR WITHHOLD AUTHORITY
--- ---
PROPOSAL 2. To approve the Cybernet 1998 Stock Incentive Plan:
FOR AGAINST ABSTAIN
--- --- ---
PROPOSAL 3. To ratify the appointment of Ernst & Young Deutsche Allgemeine
Treuhand AG as corporate auditors for the 2000 and 2001 calendar years:
FOR AGAINST ABSTAIN
--- --- ---
MFC BANCORP LTD. AND VENTEGIS CAPITAL AG RECOMMEND A VOTE "FOR" THE NOMINEES
LISTED IN PROPOSAL 1 ABOVE, "AGAINST" THE APPROVAL OF THE CYBERNET 1998 STOCK
INCENTIVE PLAN IN PROPOSAL 2 ABOVE AND "FOR" THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG DEUTSCHE ALLGEMEINE TREUHAND AG IN PROPOSAL 3 ABOVE.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT, POSTPONEMENT OR
RESCHEDULING THEREOF AND IS UNKNOWN TO MFC BANCORP LTD. OR VENTEGIS CAPITAL AG
AND THEIR REPRESENTATIVES A REASONABLE TIME BEFORE THE COMMENCEMENT OF THE
SOLICITATION OF PROXIES BY MFC BANCORP LTD. AND VENTEGIS CAPITAL AG.
Please mark, date and sign this Proxy, and return it in the enclosed
return-addressed envelope. No postage is necessary.
PLEASE RETURN PROXY AS SOON AS POSSIBLE
Dated:
---------------------------------------
(Be sure to date your Proxy)
- ----------------------------------------------
Number and Class of Shares
- ----------------------------------------------
Name(s) of Stockholder(s)
- ----------------------------------------------
Signature(s) of Stockholder(s)
NOTE: Signatures must correspond exactly with the name or names appearing on the
stock certificate(s). If stock is held in the name of more than one person, all
holders should sign. When stock is held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. The signer hereby revokes all proxies
previously given by the signer to vote at the Meeting of Cybernet, and any
adjournment, postponement or rescheduling thereof.