UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Cybernet Internet Services International, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(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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[CYBERNET LOGO]
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
Stefan-George-Ring 19-23
81929 Munich, Germany
To the Stockholders of Cybernet
Internet Services International, Inc.
You are cordially invited to attend the 2000 Annual Meeting of Stockholders of
Cybernet Internet Services International, Inc., a Delaware Corporation
("Cybernet" or "Company"), to be held at the Kuenstlerhaus Muenchen,
Lenbachplatz 8, Munich, Germany, on Wednesday, September, 13, 2000, at 11:00
a.m., local time. A Notice of Annual Meeting, a Proxy Statement, and a Proxy
containing information about the matters to be acted upon at the annual meeting
are enclosed.
At the Annual Meeting, you will be asked to (i) elect a Class B Director of
Cybernet to serve until the 2003 Annual Meeting of Stockholders; (ii) approve
the Cybernet 1998 Stock Incentive Plan; and (iii) ratify the appointment of
Ernst & Young Deutsche Allgemeine Treuhand AG as corporate auditors for the 2000
fiscal year.
The Board of Directors of Cybernet has fixed August 8, 2000 as the record date
for the determination of stockholders entitled to receive notice of, and to vote
at, the Annual Meeting. The formal notice of the meeting follows on the next
page. Certain of the Company's directors and officers are scheduled to be
available before and after the meeting to speak with you. During the meeting, we
will answer your questions regarding our business affairs and will consider the
matters explained in the Notice and Proxy Statement that follow.
It is very important that your views be represented, whether or not you are able
to attend the annual meeting. Accordingly, please complete, sign and date your
proxy card and return it to us in the enclosed envelope as soon as possible.
Returning your completed proxy card will not limit your right to vote in person
if you attend the annual meeting.
Sincerely,
/s/Andreas Eder
Andreas Eder
President, Chief Executive Officer
and Chairman of the Board
Munich, Germany
August 16, 2000
[CYBERNET LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 2000
-----------------
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
Cybernet Internet Services International, Inc., a Delaware corporation
("Cybernet" or "Company"), will be held at the Kuenstlerhaus Muenchen,
Lenbachplatz 8, Munich, Germany, on Wednesday, September 13, 2000, at 11:00
a.m., local time, for the following purposes:
(1) To elect a Class B Director to serve for a three-year term expiring
at the 2003 Annual Meeting of Stockholders.
(2) To approve the Cybernet 1998 Stock Incentive Plan.
(3) To ratify the appointment of Ernst & Young Deutsche Allgemeine
Treuhand AG as corporate auditors for the 2000 fiscal year.
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on August 8,
2000 as the record date for the determination of the holders of shares of Common
Stock and Series B Preferred Stock entitled to notice of and to vote at the 2000
Annual Meeting of Stockholders.
By Order of the
Board of Directors
/s/Andreas Eder
Andreas Eder
President, Chief Executive Officer and
Chairman of the Board
Munich, Germany
August 16, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING. NO POSTAGE IS NEEDED IF MAILED IN
THE UNITED STATES.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
STEFAN-GEORGE-RING 19-23
81929 MUNICH, GERMANY
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PROXY STATEMENT FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
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VOTING AND GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of Cybernet
Internet Services International, Inc., a Delaware corporation ("we" or
"Company"), in connection with the 2000 Annual Meeting of Stockholders to be
held at the Kuenstlerhaus Muenchen, Lenbachplatz 8, Munich, Germany, on
September 13, 2000, at 11:00 a.m., local time, or any adjournment thereof (the
"Annual Meeting"). The Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1999 accompanies this Proxy Statement. This Proxy
Statement and the accompanying Notice of Annual Meeting of Stockholders and the
enclosed proxy card were first sent or given to stockholders of the Company on
or about August 16, 2000.
Holders of record of the Company's Common Stock, par value $.001 per share
(the "Common Stock") and Series B Preferred Stock, par value $.001 per share
(the "Series B Preferred Stock"), as of the close of business on August 8, 2000
will be entitled to vote at the Annual Meeting, and each holder of record of
Common Stock or Series B Preferred Stock, on such date will be entitled to one
vote for each share of Common Stock or Series B Preferred Stock held, as the
case may be. As of August 8, 2000, there were approximately 23,355,663 shares of
Common Stock and 2,580,000 shares of Series B Preferred Stock outstanding,
respectively.
Shares of Common Stock and Series B Preferred Stock cannot be voted at the
Annual Meeting unless the beneficial owner is present or represented by proxy.
Any stockholder giving a proxy may revoke it at any time before it is voted by
giving written notice of revocation to the Company, c/o Andreas Eder, President,
Chief Executive Officer and Chairman of the Board, at the address shown above,
or by executing and delivering prior to the Annual Meeting a proxy bearing a
later date. Any stockholder who attends the Annual Meeting may revoke a
previously submitted proxy by voting his or her shares of Common Stock or Series
B Preferred Stock in person.
All properly executed proxies, unless previously revoked, will be voted at
the Annual Meeting in accordance with the directions given. With respect to the
election of a Class B Director to serve until the 2003 Annual Meeting of
stockholders (the "Election Proposal"), stockholders of the Company voting by
proxy may vote in favor of the nominee or may withhold their vote for the
nominee.
The by-laws of the Company (the "By-Laws") provide that a majority of the
outstanding shares of each class of Common Stock and Series B Preferred Stock
entitled to vote on a given matter must be represented in person or by proxy at
the Annual Meeting in order to constitute a quorum for the transaction of
business. Abstentions and broker non-votes will be counted for purposes of
determining the existence of a quorum at the Annual Meeting.
1
The nominee for election as Class B Director will be elected by the
affirmative vote of a plurality of the shares of Common Stock and Series B
Preferred Stock, voting together as a single class, present in person or by
proxy and actually voting at the Annual Meeting. Abstentions and broker
non-votes will have no effect on the outcome of the voting to elect the Class B
Director nominee. A broker non-vote may occur when a nominee holding shares of
Common Stock or Series B Preferred Stock for a beneficial owner does not vote on
a proposal because such nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
Except for dollar amounts taken from the Company's financial statements
contained in the Form 10-K for fiscal year ended 1999, all dollar amounts have
been converted from Deutsche Marks to U.S. Dollars at the exchange rate
indicated where applicable.
PROPOSAL 1
ELECTION OF CLASS B DIRECTOR
The Company currently has 5 directors. In accordance with the terms of the
Company's Certificate of Incorporation and Bylaws, the terms of office of the
Board of Directors are divided into three classes: Class A, whose term will
expire at the annual meeting of stockholders to be held in 2002; Class B, whose
term will expire at the Annual Meeting; and Class C, whose term will expire at
the annual meeting of stockholders to be held in 2001. The Class A directors are
Dr. Hubert Besner and Robert Fratarcangelo. The Class B director is G. W. Norman
Wareham. The Class C directors are Andreas Eder and Tristan Libischer. At each
annual meeting of stockholders, the successors to directors whose terms expire
at that 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. As a result of the resignation of Alessandro
Giacalone, formerly a Class B director, there is currently a vacancy on the
Board of Directors. The remaining directors intend to fill that vacancy when an
appropriate candidate is selected. The Class B director so elected will hold
office for the remainder of the full term of Class B directors and until such
director's successor shall have been duly elected and qualified. However, no
nominee to fill the Class B vacancy has been selected to date and the Board of
Directors does not intend to present such a nominee at the Annual Meeting. The
Proxy relating to this Proposal cannot be voted for more than the one nominee
named below.
The Board of Directors has nominated G. W. Norman Wareham for re-election
as Class B Director at the Annual Meeting. Mr. Wareham currently is a member of
the Board of Directors and has consented to serve as Director if elected. If
elected at the Annual Meeting, Mr. Wareham will serve until the 2003 Annual
Meeting and until the election and qualification of his successor or until his
earlier death, resignation or removal.
Voting Information With Regard to the Election Proposal
It is the intention of the persons named as proxies to vote the proxies FOR
the election to the Board of Directors of the nominee named above, unless a
stockholder directs otherwise. In the event that a vacancy arises prior to the
Annual Meeting, the proxy may be voted for a substitute nominee designated by
the Board of Directors.
2
The affirmative vote of a plurality of the votes cast by the holders of the
Common Stock and Series B Preferred Stock, voting together as a single class,
will be required to elect the nominee as Director of the Company for the ensuing
three year term. Abstentions and broker non-votes will have no effect on the
outcome of the voting to elect the Director nominees.
Director and Director Nominee Information
Set forth below is information concerning the nominee to be elected at the
Annual Meeting for a three-year term expiring at the 2003 Annual Meeting, as
well as certain information concerning the Directors whose terms extend beyond
the Annual Meeting. Set forth below with respect to each Director or Director
nominee is his name, age, principal occupation and business experience for the
past five years and length of service as a Director.
Nominee for Class B Director to be Elected At the Annual Meeting
G.W. Norman Wareham .................... Age: 47
Mr. Wareham has been one of our Directors since May 1997. Mr. Wareham is a
director of Widepoint Corporation (formerly, ZMAX Corporation) and has served in
this capacity since September, 1996. He has been the President of Wareham
Management Ltd. since May 1996. Mr. Wareham is currently a director and officer
of Quantum Power Corporation, ASP Ventures Corp., Bullet Environmental
Technologies, Inc., Solar Energy Limited, ImuMed International, Inc., and San
Antonios Resources, Inc. and has served in these capacities since December 1998,
April 1999, March 1999, May 1997, November 1998 and February 1998, respectively.
Mr. Wareham has also been a director of two Canadian public companies, Anthian
Resources Corporation and Orko Gold Corporation, both of which he has resigned
from during 2000. From June 1995 to January 1996, Mr. Wareham was an accountant
with the certified general accounting firm of Wanzel, Sigmund, & Overes. From
April 1993 to February 1995, Mr. Wareham served as President and Chief Executive
Officer of Transatlantic Financial Corp., a private investment banking company.
From August 1986 to March 1993, Mr. Wareham was the proprietor of Wareham &
Company, providing accounting and management consulting services.
Directors Continuing in Office
Class C Directors - Term Expiring 2001
Andreas Eder .................... Age: 40
Mr. Eder, a co-founder of Cybernet AG, has been Head of the Management
Board of Cybernet AG since its formation in December 1995 and has been our
Chairman of the Board of Directors, President and Chief Executive Officer since
we acquired Cybernet AG in 1997. Before founding Cybernet AG, Mr. Eder held
management positions with The Boston Consulting Group from April 1991 to October
1995 and Siemens-Nixdorf from April 1986 to March 1991. Mr. Eder holds a Masters
degree in Business Administration from the University of Munich.
Tristan Libischer .................... Age: 31
Mr. Libischer has been one of our Directors since February 1999. He is a
co-founder of Vianet and has been a Managing Director of Vianet since September
1994. From February 1992 to August 1994, Mr. Libischer held various positions
with BARK Computer. From November 1990 to January 1992, he was a senior
consultant and sales engineer with 3C Group.
3
Class a Directors - Term Expiring 2002
Hubert Besner .................... Age: 37
Dr. Besner has been one of our Directors since 1997 and has been a member
of the Supervisory Board of Cybernet AG since February 1996. From April 1994 to
the present, he has been a partner in the law firm of Besner Kreifels Weber in
Munich, Germany. From January 1992 to March 1994, he was the head of the legal
department of Schneider AG, a German real estate development company. He is
currently a director of Marine Shuttle Operations, Inc., a member of the
Supervisory Board of Schueller Industrieentsorgung AG, Typhoon Networks AG and
IPO Beteiligungen AG, and is the head of the Supervisory Board of PIPECAD
Integrierte Softwaresyteme AG. Dr. Besner received his First State Exam in law
from Ludwig-Maximilians-Universitat in 1986, and his doctorate magna cum laude
form Ludwig-Maximilians-Universitat in 1988.
Robert Fratarcangelo .................... Age: 61
Mr. Fratarcangelo has been our Secretary since May 1999, and has been one
of our Directors since September 1997. Since September 1996, he has been the
President and Chief Executive Office of Criminal Investigative Technology, Inc.
From 1993 to 1996, Mr. Fratarcangelo was a District Manager at EMC2, Inc. From
1998 to 1993, Mr. Fratarcangelo was Vice President, Federal Sales at Teradata
and Digital Communications Associates. Previously, Mr. Fratarcangelo held
various positions at IBM. Mr. Fratarcangelo has a Bachelors Degree in Political
Science from the State University of New York.
The Board of Directors recommends that you vote "FOR" the
election of the nominee for Class B Director named above.
Beneficial Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of August 8, 2000
regarding the amount of Common Stock and Series B Preferred Stock beneficially
owned by (i) all persons known to us who beneficially own more than 5% of the
outstanding Common Stock or Series B Preferred Stock, as the case may be; (ii)
each of our directors with respect to the equity securities held by such
directors; (iii) each of our executive officers named in the Summary
Compensation Table with respect to the equity securities held by such executive
officer; and (iv) all of our current executive officers and directors as a group
with respect to the equity securities held by such executive officers and
directors. Stock ownership information has been furnished to us by such
beneficial owners or is based upon filings made by such owners with the
Securities and Exchange Commission (the "Commission"). As of August 8, 2000,
there were 23,355,663 shares of Common Stock, 600,000 of non-voting Series A
Preferred Stock and 2,580,000 shares of Series B Preferred Stock issued and
outstanding.
4
Approximate
Percentage of Class
Name Shares Beneficially Owned Percentage of Percentage of
Series A Series B Percentage Series A Series B
Executive Officers Common Preferred Preferred of Preferred Preferred
and Directors Stock Stock Stock Common Stock Stock Stock
------------- ----- ----- ----- ------------ ----- -----
Andreas Eder.................. 1,587,515 (1) 88,877 (1) 0 6.79% 14.8% *
Stefan-George-Ring 19
81929 Munich, Germany
Tristan Libischer............. 199,998 (2) 0 0 * * *
Mariannengasse 14
1090 Vienna, Austria
Hubert Besner................. 1,261 (3) 0 0 * * *
Widenmayerstr. 41
80538 Munich, Germany
Bernd Buchholz................. 97,913 (4) 0 0 * * *
Am Muehlenbach 19
40670 Meerbusch, Germany
G.W. Norman Wareham........... 0 0 0 * * *
1177 West Hastings Street
Suite 1818
Vancouver, B.C., Canada V6E 2K3
Robert Fratarcangelo........... 0 0 0 * * *
10842 Oak Crest
Fairfax, Virginia 22030
Paolo di Fraia ................ 0 0 0 * * *
Stefan-George-Ring 19
81929 Munich, Germany
Eckhard Freund 0 0 0 * * *
Stefan-George-Ring 19 .........
81929 Munich, Germany
All executive officers and
directors as a group........... 1,852,096 88,877 0 7.92% 14.8% *
(8 persons)
Principal Stockholders,
Other Than Executive
Officers and Directors
----------------------
Holger Timm.................... 3,748,446(5) 357,750(6) 2,580,000(7) 16% 59.6% 100%
Trabner Strasse 12
14193 Berlin, Germany
Cybermind Interactive Europe, AG 2,697,396 300,000 2,580,000(7) 11.5% 50% 100%
Am Borsigturm 48
13507 Berlin, Germany
- ------------------
*Indicates less than 1% beneficial ownership
5
(1) Includes 262,434 shares of Common Stock and 18, 816 shares of Series A
Preferred Stock held by Mr. Eder's spouse. She has sole investment and sole
voting power over all shares of Common Stock and Series A Preferred Stock
held by her, and Mr. Eder disclaims beneficial ownership of any of the
shares held by her. Includes options to purchase 33,333 shares of Common
Stock under the Company's Incentive Plan which became exercisable on June
30, 2000, options to purchase 5,555 shares of Common Stock which became
exercisable on July 31, 2000, options to purchase 5,555 shares of Common
Stock which will become exercisable on August 31, 2000, and options to
purchase 5,555 shares of Common Stock which will become exercisable on
September 30, 2000. Does not include options to purchase 150,002 shares of
Common Stock under the Company's Incentive Plan, which become exercisable
in monthly installments of 5,555 options beginning October 31, 2000.
(2) Includes options to purchase 33,333 shares of Common Stock under the
Company's Incentive Plan which became exercisable on June 30, 2000, options
to purchase 5,555 shares of Common Stock which became exercisable on July
31, 2000, options to purchase 5,555 shares of Common Stock which will
become exercisable on August 31, 2000, and options to purchase 5,555 shares
of Common Stock which will become exercisable on September 30, 2000. Does
not include options to purchase 150,002 shares of Common Stock under the
Company's Incentive Plan which become exercisable in monthly installments
of 5,555 options beginning October 31, 2000.
(3) Includes 1,261 shares of Common Stock held by Dr. Besner's spouse who has
sole voting and investment power with respect to such shares. Dr. Besner
disclaims beneficial of any of the shares held by her.
(4) Includes 8,053 shares of Common Stock held by Mr. Buchholz's spouse. She
has sole investment and sole voting power over all shares of Common Stock
held by her, and Mr. Buchholz disclaims beneficial ownership of any of the
shares held by her. Includes options to purchase 33,333 shares of Common
Stock under the Company's Incentive Plan which became exercisable on June
30, 2000, options to purchase 5,555 shares of Common Stock which became
exercisable on July 31, 2000, options to purchase 5,555 shares of Common
Stock which will become exercisable on August 31, 2000, and options to
purchase 5,555 shares of Common Stock which will become exercisable on
September 30, 2000. Does not include options to purchase 150,002 shares of
Common Stock under the Company's Incentive Plan which become exercisable in
monthly installments of 5,555 options beginning October 31, 2000.
(5) Mr. Timm can be deemed to control Cybermind as a result of his position as
Chief Executive Officer and Head of the Managing Board and principal
shareholder. Includes 2,697,396 shares of Common Stock held by Cybermind.
Does not include 154,800 shares of Common Stock sold by Mr. Timm to
Alessandro Giacalone, a former Director and employee, pursuant to a stock
purchase agreement dated April 8, 1997 (the "April 8 Stock Purchase
Agreement"). Also, does not include 18,000 shares of Series A Preferred
Stock sold by Mr. Timm to Mr. Giacalone pursuant to the April 8 Stock
Purchase Agreement. These shares sold to Mr. Giacalone are re-transferable
to Holger Timm.
(6) Includes 300,000 shares of Series A Preferred Stock held by Mr. Timm
indirectly through Cybermind. Does not include 18,000 shares of Series A
Preferred Stock sold by Mr. Timm to Alessandro Giacalone which are
re-transferable to Mr. Timm. For an explanation of these shares and Mr.
Timm's relationship to Cybermind, see footnote 5 above.
(7) Reflects shares of Series B Preferred Stock held by Mr. Timm indirectly
through Cybermind. For an explanation of Mr. Timm's relationship to
Cybermind, see footnote 5 above.
Compliance With Section 16(A) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires our Directors, executive officers and persons who
beneficially own more than 10% of the Common Stock or Series B Preferred Stock
to file with the Commission initial reports of beneficial ownership and reports
of changes in beneficial ownership of such Common Stock or Series B Preferred
Stock. Directors, executive officers and beneficial owners of more than 10% of
the Common Stock or Series B Preferred Stock are required by Commission rules to
furnish us with copies of all such reports. To our knowledge, based solely upon
a review of the copies of such reports furnished to us, all Section 16(a) filing
requirements applicable to our Directors and executive officers have been
complied with since we registered under the Exchange Act on March 31, 1999.
6
Board of Directors' Meetings and Attendance
During the last fiscal year, the Board of Directors of the Company held a
total of eight meetings. Except for one meeting missed by Tristan Libischer due
to illness, all members of the Board of Directors have attended all of the
meetings.
Committees of the Board of Directors
The Board of Directors has three committees: an Executive Committee, an
Audit Committee and a Compensation Committee. The Committees were created
contemporaneously with the Company's reincorporation in Delaware.
The Executive Committee consists of Andreas Eder and Hubert Besner. The
Executive Committee met two times during the last fiscal year. The Executive
Committee has authority to act on the same matters as the Board of Directors
when the Board of Directors is not available.
The Audit Committee consists of Robert Fratarcangelo and G.W. Norman
Wareham. The Audit Committee met twice during the last fiscal year. The Audit
Committee reviews the Company's accounting processes, financial controls and
reporting systems, as well as the selection of the Company's independent
auditors and the scope of the audits to be conducted.
The Compensation Committee consists of Robert Fratarcangelo, Hubert Besner
and G.W. Norman Wareham. The Compensation Committee met two times during the
last fiscal year. The Compensation Committee reviews executive compensation and
organization structure. The Compensation Committee also administers the
Company's Incentive Plan and the Company's 1998 Outside Director's Stock Option
Plan. Except for Mr. Fratarcangelo who was elected Secretary of the Company in
May 1999, none of the members of the Compensation Committee is currently, or has
been at any time since the formation of the Company or its predecessor, an
officer or employee of the Company or its predecessor.
Cash Compensation of Outside Directors
Directors, who are not also employees of the Company ("Outside Directors"),
receive $15,000 annually (the "Annual Director Fee") and are reimbursed for
out-of-pocket expenses incurred in connection with their service on the Board of
Directors. Each Outside Director can elect to receive his Annual Director Fee in
cash, stock options or a combination thereof. If an Outside Director elects to
receive options, they will be granted pursuant to the Company's Directors' Stock
Option Plan, which is described below.
1998 Outside Directors' Stock Option Plan
The Company maintains the 1998 Outside Directors' Stock Option Plan
("Directors' Plan") for the purpose of granting options to Outside Directors
electing to receive them. The Board of Directors has reserved 150,000 shares of
Common Stock for issuance pursuant to awards that may be made under the
Directors' Plan, subject to adjustment as provided therein. The number of shares
of Common Stock associated with any forfeited option are added back to the
number of shares that can be issued under the Directors' Plan. As of the date of
this Proxy Statement, 15,000 options have been granted under the Directors'
Plan.
Only Outside Directors are eligible to participate in the Directors' Plan.
In lieu of receiving annual Director's fees in cash, each Director who is not an
employee may elect to receive all or a portion of his fees in stock options.
Each Outside Director must make an election on or before
7
January 1 of the year in which the election is to be made or by such other date
as determined by the committee administering the Directors' Plan. The value of
the stock options will be determined pursuant to the Black-Sholes method, and
the options will be fully vested at the date of grant. Each option granted
pursuant to the Directors' Plan will be evidenced by an agreement and will be
subject to additional terms as set forth in the agreement. The Directors' Plan
was effective on November 16, 1998 and will continue to be effective until the
earlier of ten (10) years after the effective date of the Directors' Plan or
until terminated by the Board of Directors.
Executive Officers
Executive officers are elected by the Board of Directors following each
annual meeting of stockholders to serve for a term set by the Board of Directors
and until their successors are duly elected and qualified. Our current executive
officers are listed below, together with their age, positions with the Company
and business experience for the past five years.
Andreas Eder ....................................... Age: 40
See "Director and Director Nominee Information - Directors Continuing in
Office" under Proposal 1 above.
Bernd Buchholz ................................... Age: 48
Mr. Buchholz joined the Company as Executive Vice President Sales and
Marketing in November 1999. From July 1998 to October 1999, Mr. Buchholz was
Chief Executive Officer and a major stockholder of Novento Telecom AG. From June
1997 to June 1998, Mr. Buchholz was Managing Director Germany for Espirit
Telecom GmbH (GTS Global Telesystems Group). From October 1996 to May 1997, Mr.
Buchholz was Vice President Europe for Novadigm Inc. From April 1995 to
September 1996, Mr. Buchholz was Chief Executive Officer and owner of Beki GmbH.
From June 1993 to March 1995, Mr. Buchholz was Managing Director for Symantec
Europe and from February 1989 to May 1993 Mr. Buchholz was Vice President Europe
and Managing Director for Novell Europe.
Paolo di Fraia ..................................... Age: 39
Dr. di Fraia has been our Chief Financial Officer since June 2000 and the
Vice President International and Managing Director of Cybernet Italia since June
2000. From March 1998 to March 2000, Dr. di Fraia was Managing Director (Europe)
of Destia Communications, Inc. From September 1994 to February 1998, he was
Finance Director (Europe) of Viatel, Inc. From April 1989 to August 1994, he was
the Financial Controller (Europe) of Philip Crosby Associates and from January
1985 to March 1989 he practiced public accounting in Turin, Italy with the firm
of Ernst & Whinney. Dr. di Fraia holds a doctorate in finance, economics and
trade from the University of Salerno.
Robert Fratarcangelo ............................... Age: 61
See "Director and Director Nominee Information - Directors Continuing in
Office" under Proposal 1 above.
8
Tristan Libischer .............................. Age: 31
Mr. Libischer has been one of our Directors since February 1999. He is a
co-founder of Vianet Telekommunikations AG ("Vianet") and has been a Managing
Director of Vianet since September 1994. From February 1992 to August 1994, Mr.
Libischer held various positions with BARK Computerhandelgesellschaft mbH & Co.
KG ("BARK Computer"). From November 1990 to January 1992, Mr. Libischer was a
senior consultant and sales engineer with 3C Group Computerhandelsgesellschaft
mbH ("3C Group").
Eckhard Freund ................................. Age: 37
Mr. Freund has been our Vice President of Operations since May 2000 and
responsible for the operation of our network and our data center facilities in
Europe. From March 2000 until May 2000 he was in charge for the build out of a
data center for Telecity, PLC. Since November 1997 Mr. Freund has held various
positions at Destia (formerly, Econophone GmbH) which was acquired in December
1999 by Viatel Inc. His last position there was Operations Manager for
Germany/Austria/Switzerland. Mr. Freund holds a Master Degree of "Fachschule fur
Technik", Berlin.
Family Relationships Between Certain Directors and Executive Officers
No family relationship exists between any director or executive officer and
any other director or executive officer.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving on the Company's Board of Directors or Compensation Committee.
Executive Compensation
Our compensation program for executive management includes base salaries,
annual performance-based incentive bonus plans, and stock option plans. The
compensation of each executive officer was established by the Board of Directors
acting upon the recommendations of the Compensation Committee. See "Compensation
Committee Report on Executive Compensation" below.
The following table sets forth the annual long-term and other compensation
for our Chief Executive Officer and our other most highly compensated executive
officers during the last fiscal year ("Named Executives"), as well as the total
annual compensation paid to each individual for the two previous fiscal years.
Each of the persons listed has or had an employment contract with us
calling for the payment of an annual bonus if certain performance standards are
achieved. No bonus was paid in the years listed.
9
Summary Compensation Table
Annual Long-term
Compensation Compensation
------------ ------------
Securities
Underlying All
Fiscal Optional Other
Name and Principal Position Year Salary ($)(1) Sars(#) Compensation($)(1)
--------------------------- ---- ------------- ------- ------------------
Andreas Eder (2) 1999 108,173 200,000 0
Chairman, President and Chief Executive 1998 108,173 0 0
Officer; Head of Management Board of Cybernet 1997 36,058 0 0
AG
Alessandro Giacalone (3) 1999 108,173 0 0
Former Director and Chief Operating Officer; 1998 108,173 33,333 0
Former Member of Supervisory and the Management 1997 27,043 0 0
Boards of Cybernet AG
Tristan Libisher (4) 1999 96,153 200,000 33,654
Director, Co-Founder of Vianet and Member of 1998 47,676 0 0
Management Board of Vianet 1997 N/A N/A N/A
Robert Eckert (5) 1999 42,735 100,000 17,094
Former Chief Financial Officer and Treasurer 1998 N/A N/A N/A
1997 N/A N/A N/A
Bernd Buchholz (6) 1999 18,029 200,000 0
Executive Vice President for Sales and Marketing 1998 N/A N/A N/A
1997 N/A N/A N/A
- -----------------------
(1) Indicated amounts are translated into U.S. Dollars at an exchange rate of
2.08 DM for each U.S. Dollar unless otherwise indicated.
(2) Mr. Eder became an executive officer of Cybernet in September 1997. As a
result, the information presented for fiscal year 1997 represents payments
made from September 1, 1997 through December 31, 1997. Mr. Eder is entitled
to receive an annual salary of 225,000 DM.
(3) Mr. Giacalone joined Cybernet in October 1997 and resigned in December
1999. The information presented for fiscal year 1997 represents payments
made from October 1, 1997 through December 31, 1997. In 1999, Mr. Giacalone
received an annual salary of 225,000 DM. Mr. Giacalone resigned all
positions with the Company on December 31, 1999.
(4) Mr. Libischer joined Cybernet in June 1998. The information presented for
fiscal year 1998 represents payments made from June 1, 1998 through
December 31, 1998. In 1999, Mr. Libischer received an annual salary of
200,000 DM and a bonus of 70,000 DM.
(5) Mr. Eckert joined Cybernet in May 1999 and resigned in June 2000. The
information presented for fiscal year 1999 represents payments made from
May 1, 1999 through December 31, 1999. In 1999, Mr. Eckert received an
annual salary of 133,334 DM and a bonus of 53,334 DM.
(6) Mr. Buchholz joined the Company in November 1999. The information presented
for fiscal year 1999 represents payments made from November 1, 1999 through
December 31, 1999. In 1999, Mr. Buchholz received an annual salary of
225,000 DM.
10
1998 Stock Incentive Plan
The Company maintains the Cybernet Internet Services International, Inc.
1998 Stock Incentive Plan (the "Incentive Plan"). The Board of Directors has
reserved 3,000,000 shares of Common Stock for issuance pursuant to awards that
may be made under the Incentive Plan, subject to adjustment as provided therein.
The Incentive Plan allows for the grant of incentive stock options,
non-qualified stock options, stock appreciation rights, stock awards, dividend
equivalent rights, performance units and phantom shares. For a description of
the Incentive Plan, see "1998 Stock Incentive Plan" under Proposal 2 below.
Option Grants in Last Fiscal Year
The following table provides information on options to purchase Common
Stock that were granted to the Named Executives and directors during fiscal year
1999.
Potential Realizable
Value At Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option
Term
- ---------------------------------------------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Share) Date 5% ($) 10% ($)
-------- --------- --------- --------- --------- --------- ---------
Andreas Eder 200,000 10.33% 9.0242 12/31/09 1,135,064 2,876,373
Chairman, President
and Chief Executive
Officer; Head of
Supervisory Board of
Cybernet AG
Bernd Buchholz 200,000 10.33% 9.0242 12/31/09 1,135,064 2,876,373
Executive Vice
President for Sales
and Marketing
Tristan Libischer 200,000 10.33% 9.0242 12/31/09 1,135,064 2,876,373
Director, Co-Founder
of Vianet and Member of
the Management Board
of Vianet
Robert Fratarcangelo 5,000 0.26% 9.0242 12/31/09 28,377 71,909
Secretary and Director
Dr. Hubert Besner 5,000 0.26% 9.0242 12/31/09 28,377 71,909
Director and Member of
Supervisory Board
of Cybernet AG
G.W. Norman Wareham 5,000 0.26% 9.0242 12/31/09 28,377 71,909
Director
Robert Eckert 100,000 5.16% 9.0242 12/31/09 567,532 1,438,187
Former Chief Financial
Officer and Treasurer
Alessandro Giacalone 0 0% N/A N/A N/A N/A
Former Director and
Chief Operating
Officer; Former
Member of Supervisory
Board of Cybernet AG
11
Employment and Severance Agreements
Our executives officers are appointed by the Board of Directors and serve
until their successors are elected or appointed. We have entered into employment
agreements with each of the following officers and directors on the following
material terms.
Andreas Eder. On March 1, 1999, we entered into an employment agreement
with Mr. Eder to serve as President and Chief Executive Officer. The agreement
provides for a three-year term and an annual base salary of approximately
$125,716 per year. It also permits Mr. Eder to earn an annual bonus of up to
approximately $41,906 if certain performance standards established by the
Compensation Committee are achieved. On June 9, 2000, we amended the agreement
in order to increase Mr. Eder's annual base salary to $146,135 and the potential
annual bonus to $48,712 (based on the exchange rate of 2.0529 Deutsche Marks for
one U.S. Dollar, the exchange rate in place on June 9, 2000). We may terminate
the agreement as a result of Mr. Eder's "disability" or for "cause."
Upon Mr. Eder's death, we are obligated to pay to his estate an amount
equal to his base salary for the period ended 12 months after his death. If Mr.
Eder resigns or we terminate his employment as a result of Mr. Eder's
"disability" or for "cause," we are obligated to pay his base salary through the
date of termination.
Under the agreement, "disability" is defined as (a) any mental or physical
disability which the Board of Directors deems in good faith would preclude Mr.
Eder from performing his duties; or (b) a mental or physical disability which
lasts for a period of 60 consecutive days or for 90 days in any six-month period
and which the Board of Directors elects to treat as permanent in nature. The
agreement defines "cause" as any material breach of its terms by Mr. Eder or the
commission of a felony or a crime involving moral turpitude.
Tristan Libischer. On December 28, 1998, Vianet (a wholly-owned subsidiary
of the Company) entered into an employment agreement with Mr. Libischer to serve
as a member of the Management Board of Vianet. The agreement is for a five-year
term beginning January 1, 1999, provides an annual base salary of approximately
$100,573 and permits Mr. Libischer to earn an annual bonus of approximately
$33,524 if certain performance standards established by the Management Board of
Vianet are achieved.
Vianet may terminate the agreement for "good cause." "Good cause" is
defined as a gross breach of duty, the inability to properly conduct affairs of
Vianet or a vote of no confidence at an annual meeting of Vianet.
Mr. Libischer is not entitled to severance pay if his employment is
terminated for good cause or if he resigns prematurely without the permission of
the Management Board of Vianet. If Mr. Libischer is unable to perform his duties
due to illness or accident, Vianet is required to pay Mr. Libischer his full
base salary for a maximum of six months and 49% of his base salary for another
12
three months. If Mr. Libischer leaves Vianet in the middle of a fiscal year, any
bonus earned will be paid on a pro-rata basis.
Bernd Buchholz. On November 1, 1999, we entered into an employment
agreement with Mr. Buchholz to serve as Executive Vice President Sales and
Marketing. The agreement provides for a three-year term and an annual base
salary of approximately $120,734 and also permits Mr. Buchholz to earn an annual
bonus of up to approximately $40,245 (based on the exchange rate of 1.8636
Deutsche Marks for one U.S. Dollar, the exchange rate in place on November 1,
1999) according to the bonus scheme, if any, as approved by the Board of
Directors. On June 9, 2000, we amended the agreement in order to increase Mr.
Buchholz's annual base salary to $146,135 and the potential annual bonus to
$48,712 (based on the exchange rate of 2.0529 Deutsche Marks for one U.S.
Dollar, the exchange rate in place on June 9, 2000). We may terminate the
agreement as a result of Mr. Buchholz's "disability" or for "cause."
Upon Mr. Buchholz's death, we are obligated to pay his estate an amount
equal to his base salary for the period ended 12 months after his death. If Mr.
Buchholz resigns or we terminate his employment as a result of Mr. Buchholz's
"disability" or for "cause," we are obligated to pay his base salary through the
date of termination.
Under the agreement, "disability" is defined as (a) any mental or physical
disability which the Board of Directors deems in good faith would preclude Mr.
Eder from performing his duties; or (b) a mental or physical disability which
lasts for a period of 60 consecutive days or for 90 days in any six-month period
and which the Board of Directors elects to treat as permanent in nature. The
agreement defines "cause" as any material breach of its terms by Mr. Eder or the
commission of a felony or a crime involving moral turpitude.
Paolo di Fraia. On June 1, 2000, we entered into an employment agreement
with Dr. di Fraia. Dr. di Fraia serves as Chief Financial Officer and the Vice
President International and Managing Director of Cybernet Italia. The agreement
provides for a one-year term and an annual base salary of approximately $142,803
and also permits Dr. di Fraia to earn an annual bonus of up to approximately
$47,601 (based on the exchange rate of 2.1008 Deutsche Marks for one U.S.
Dollar, the exchange rate in place on June 1, 2000) according to the bonus
scheme, if any, as approved by the Board of Directors. We may terminate the
agreement as a result of Dr. di Fraia's "disability" or for "cause."
Upon Dr. di Fraia's death, we are obligated to pay his estate an amount
equal to his base salary for the period ended 12 months after his death. If Dr.
di Fraia resigns or we terminate his employment as a result of Dr. di Fraia's
"disability" or for "cause," we are obligated to pay his base salary through the
date of termination.
Under the agreement, "disability" is defined as (a) any mental or physical
disability which the Board of Directors deems in good faith would preclude Mr.
Eder from performing his duties; or (b) a mental or physical disability which
lasts for a period of 60 consecutive days or for 90 days in any six-month period
and which the Board of Directors elects to treat as permanent in nature. The
agreement defines "cause" as any material breach of its terms by Mr. Eder or the
commission of a felony or a crime involving moral turpitude.
13
Certain Transactions With Management
Dr. Hubert Besner, a director of the Company, is a partner with the law
firm of Besner Kreifels Weber, which represents the Company and to which the
Company paid fees of approximately $270,000 during fiscal year 1999.
We provide Internet connectivity services to Cybermind Interactive Europe,
AG ("Cybermind"), a principal stockholder of Cybernet, pursuant to a standard
service contract. In 1999, Cybermind paid us approximately $87,476 (based on the
exchange rate of 1.9434 Deutche Marks for one U.S. dollar, the exchange rate in
place on December 31, 1999) for such services. Holger Timm, one of our principal
stockholders and a former director, is Chief Executive Officer and Head of the
Managing Board, as well as the principal stockholder, of Cybermind.
Compensation Committee Report On Executive Compensation
This report by the Compensation Committee of the Board of Directors
discusses the Compensation Committee's compensation objectives and policies
applicable to the Company's executive officers. The report reviews the
Compensation Committee's policy generally with respect to the compensation of
all executive officers as a group for fiscal year 1999 and specifically reviews
the compensation established for the Company's Chairman, President and Chief
Executive Officer as reported in the Summary Compensation Table. Except for Mr.
Fratarcangelo who was elected Secretary of the Company in May 1999, the
Compensation Committee is composed entirely of nonemployee Directors of the
Company.
The Compensation Committee of the Board of Directors approves all policies
under which compensation is paid or awarded to the Company's executive officers.
The Compensation Committee is composed of Dr. Besner and Messrs. Fratarcangelo
and Wareham. Mr. Eder is the Chairman, President and Chief Executive Officer of
the Company.
Compensation Philosophy
The Company's executive compensation program has three objectives: (i) to
align the interests of the executive officers with the interests of the
Company's stockholders by basing a significant portion of an executive's
compensation on the Company's performance, (ii) to attract and retain highly
talented and productive executives, and (iii) to provide incentives for superior
performance by the Company's executives. To achieve these objectives, the
Compensation Committee has crafted a program that consists of base salary,
short-term incentive compensation in the form of a bonus, and long-term
incentive compensation in the form of stock options. These compensation elements
are in addition to the general benefit programs that are offered to all of the
Company's employees.
The Compensation Committee reviews the Company's executive compensation
program. In its review, the Compensation Committee assesses the competitiveness
of the Company's executive compensation program and reviews the Company's
financial performance for the previous fiscal year. In future years, the
Compensation Committee will gauge the success of the compensation program in
achieving its objectives in the previous year and will consider the Company's
overall performance objectives.
Each element of the Company's executive compensation program is discussed
below.
14
Base Salaries
The Compensation Committee will annually review the base salaries of the
Company's executive officers. The base salaries for certain of the Company's
executive officers for fiscal year 1999 are reflected in the Summary
Compensation Table and were paid in accordance with the provisions of the
employment agreements applicable to each of the Company's executive officers.
The salaries of the Company's executive officers, who do not have employment
agreements, will be set by the Compensation Committee based on its annual
review. In addition to considering the factors listed in the foregoing section
that support the Company's executive compensation program generally, the
Compensation Committee will review the responsibilities of the specific
executive position and the experience and knowledge of the individual in that
position in setting the salary in a given executive's employment agreement or
otherwise. In setting base salaries for employment agreements or otherwise, the
Compensation Committee will also consider individual performance based upon a
number of factors, including a measurement of the Company's historic and recent
financial performance and the individual's contribution to that performance, the
individual's performance on non-financial goals and other contributions of the
individual to the Company's success, and will give each of these factors
relatively equal weight without confining its analysis to a rigorous formula. As
is typical of most corporations, the actual payment of base salary is not
conditioned upon the achievement of any predetermined performance targets.
Incentive Compensation
Bonuses established for executive officers are intended to motivate the
individual to work hard to achieve the Company's financial and operational
performance goals or to otherwise motivate the individual to aim for a high
level of achievement on behalf of the Company in the coming year. The
Compensation Committee does not have a formula for determining bonus payments,
but establishes general target bonus levels for executive officers at the
beginning of the fiscal year based in relatively equal measures upon the
Compensation Committee's subjective assessment of the Company's projected
revenues and other operational and individual performance factors and may adjust
these targets during the year. The bonuses to the executive officers are based
on the achievement of annual goals, both quantitative, such as increase in
revenues or number of customers, and qualitative such as successful integration
of an acquisition or development of a new segment of customers. At the end of
the year, the results of the Company and each department are compared to the set
goals and recommendations are made to the Board of Directors with respect to the
bonuses for each executive.
Long-Term Incentive Compensation
The Company's long-term incentive compensation plan for its executive
officers is based upon the Company's 1998 Stock Incentive Plan (the "Incentive
Plan"). The Compensation Committee believes that placing a portion of
executives' total compensation in the form of stock options achieves three
objectives. It aligns the interest of the Company's executives directly with
those of the Company's stockholders, gives executives a significant long-term
interest in the Company's success and helps the Company retain key executives.
In determining the number and terms of options to grant an executive, the
Compensation Committee will primarily consider subjectively the executive's past
performance and the degree to which an incentive for long-term performance would
benefit the Company.
15
Benefits
The Compensation Committee believes the Company must offer a competitive
benefits program to attract and retain key executives. The Company provides the
same medical and other benefits to its executive officers that are generally
available to its other employees.
Compensation of the Chief Executive Officer
Mr. Eder has served as the Chief Executive Officer of the Company since
September 1997. During fiscal year 1999, Mr. Eder was paid a base salary of
$108,173. In addition, he received an option to purchase 200,000 shares of
Common Stock at an exercise price of $9.0242 per share. The criteria upon which
Mr. Eder's compensation was determined is the same as that described above with
regard to all of the other of the Company's executive officers.
Submitted by the Compensation Committee of the Board of Directors.
Dr. Hubert Besner
Robert F. Fratarcangelo
G. W. Norman Wareham
16
Stock Return Performance Graph
The following graph indicates the Company's cumulative total return to
stockholders from March 31, 1999 (the effective date of the Company's
registration of its Common Stock under Section 12 of the Exchange Act) through
December 31, 1999, as compared to the cumulative total returns for the Neuer
Markt 50 Index.
Comparison of Cumulative Total Returns
Performance Graph for
Cybernet Internet Services International, Inc.
[GRAPHIC OMITTED]
3/31/99 12/31/99
------- --------
Cybernet Internet Services $100 $33
International, Inc.
Neuer Markt 50 Index $100 $132
------------------
* Assumes $100 invested in the Common Stock of the Company
and in the Neuer Markt 50 Index on March 31, 1999. Assumes
reinvestment of dividends, if any.
PROPOSAL 2
APPROVAL OF THE CYBERNET 1998 STOCK INCENTIVE PLAN
Background
The Company's 1998 Stock Incentive Plan ("Incentive Plan") was approved by
our Board of Directors and sole shareholder prior to the Company's
reincorporation in Delaware in November 1998. On November 30, 1999, our Board of
Directors approved an amendment to increase the total number of shares of Common
Stock issuable under the Incentive Plan from 2,000,000 to 3,000,000. We are now
seeking stockholder approval of the Incentive Plan because such approval is
required under the Internal Revenue Code to preserve incentive stock option
treatment and will maximize the potential for deductions associated with any
non-qualified options granted under the Incentive Plan. Under 162(m) of the
Internal Revenue Code, shareholder approval of performance-based compensation
plans (including material amendments thereto) is necessary to qualify for the
performance-based compensation exception to the limitation on a company's
17
ability to deduct compensation paid to certain specified individuals in excess
of $1 million. Approval of the amendment to the Incentive Plan and the Incentive
Plan as amended requires the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock and Series B Preferred Stock
of the Company represented and entitled to vote at the Annual Meeting.
The following description of the Incentive Plan is intended only as a
summary and is qualified in its entirety by reference to the Incentive Plan.
Purpose
The purposes of the Incentive Plan is to (a) provide incentive to officers
and key employees of the Company and its affiliates to stimulate their efforts
toward our continued success and to operate and manage the business in a manner
that will provide for our long-term growth and profitability; (b) encourage
stock ownership by our officers and key employees by providing them with a means
to acquire a proprietary interest in the Company, acquire shares of stock, or to
receive compensation which is based upon appreciation in the value of the stock;
and (c) provide a means of obtaining, rewarding and retaining key personnel and
consultants.
Stock Incentives
The Incentive Plan permits us to make awards of incentive stock options,
non-qualified stock options, stock appreciation rights, stock awards, dividend
equivalent rights, performance unit awards and phantom shares.
Eligibility
All officers, key employees and consultants of the Company and its
affiliates designated by the Board of Directors of the Company to participate in
the Incentive Plan are eligible to receive stock incentives under the Incentive
Plan, except that only an incentive stock option may be granted to an employee
of the Company and its subsidiaries. In the case of incentive stock options, the
aggregate fair market value of stock underlying stock options intended to meet
the requirements of Internal Revenue Code Section 422 that become exercisable
during any calendar year under all plans of the Company and its subsidiaries may
not exceed $100,000. If the limitation is exceeded, the incentive stock
option(s) which cause the limitation to be exceeded will be treated as
non-qualified stock option(s).
Available Shares
The Board of Directors has authorized and reserved 3,000,000 shares of
Common Stock for issuance pursuant to stock incentives under the Incentive Plan.
During fiscal year 1999, the Compensation Committee granted stock options to
purchase a total of 1,936,475 shares of Common Stock under the Incentive Plan
(and 15,000 shares of Common Stock under the Directors' Plan). If a stock
incentive expires, terminates or is cancelled, the unissued shares of Common
Stock subject to the stock incentive will again be available under the Incentive
Plan.
Administration
The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee has full authority in its discretion to determine the
officers and key employees of the Company or its affiliates to whom stock
incentives will be granted and the terms and provisions
18
of stock incentives, subject to the Incentive Plan. The Compensation Committee
has full and conclusive authority to interpret the Incentive Plan, to prescribe,
amend and rescind rules and regulations relating to the Incentive Plan, to
determine the terms and provisions of the stock incentive agreements, and to
make all other determinations necessary or advisable for the proper
administration of the Incentive Plan.
General Terms of All Stock Incentives
The number of shares of Common Stock as to which a stock incentive may be
granted will be determined by the Compensation Committee. To the extent required
under Section 162(m) of the Internal Revenue Code for compensation to be treated
as qualified performance based compensation, the maximum number of shares of
Common Stock with respect to which options or stock appreciation rights may be
granted during any one year period to any employee may not exceed 100,000. Each
stock incentive will either be evidenced by a stock incentive agreement or be
made subject to the terms of a stock incentive program as the Compensation
Committee may determine to be appropriate. Except as to incentive stock options,
stock incentives are not transferable or assignable except by will or by the
laws of descent and distribution.
Grants of Stock Options
The Incentive Plan permits the grant of both incentive stock options and
non-qualified stock options. Incentive stock options may only be granted to
employees of the Company or any subsidiary. With respect to an incentive stock
option, options may be made exercisable at a price no less than the fair market
value of the Common Stock on the date that the option is awarded. With respect
to each grant of an incentive stock option to a participant who is an over 10%
owner, the exercise price may not be less than 110% of the fair market value on
the date the option is granted.
The term of incentive stock options granted to a participant who is not an
over 10% owner is ten years after the date the option is granted. The term of
incentive stock options granted to a participant who is an over 10% owner is
five years after the date the option is granted. The term of any non-qualified
stock option will be specified in the applicable stock incentive agreement.
The option price upon exercise may be made in cash or any form or manner
authorized by the Compensation Committee in the applicable stock incentive
agreement. In its discretion, the Compensation Committee also may authorize
Company financing to assist the participant with payment of the exercise price
on such terms as may be offered by the Compensation Committee in its discretion.
Subject to limited exceptions, options are forfeited upon termination of
employment or service. Options are not assignable (except by will or the laws of
descent and distribution).
Grants of Stock Incentives Other Than Stock Options
Stock appreciation rights under the Incentive Plan may be granted
separately or in connection with another stock incentive. A stock appreciation
right entitles the participant to receive the excess of (a) the fair market
value of a specified or determinable number of shares of Common Stock at the
time of payment or exercise over (b) a specified or determinable price which, in
the case of stock appreciation right granted in connection a stock option, may
not be less than the exercise price for that number of shares subject to that
stock option. The Compensation Committee may provide that they are exercisable
at the discretion of the holder or that they will
19
be paid at a time or times certain or upon the occurrence or non-occurrence of
certain events. A stock appreciation right granted in connection with a stock
incentive may only be exercised to the extent that the related stock incentive
has not been exercised, paid or otherwise settled. Stock appreciation rights may
be settled in shares of Common Stock or in cash, according to terms established
by the Compensation Committee with respect to any particular award.
Stock awards. The number of shares of Common Stock subject to the stock
award and the restrictions and condition on such shares will be as the
Compensation Committee determines. The Compensation Committee may require a cash
payment from the participant in an amount no greater than the aggregate fair
market value of the shares of Common Stock awarded determined at the date of
grant in exchange for the grant of a stock award, or may grant a stock award
without the requirement of a cash payment.
Dividend equivalent rights granted under the Incentive Plan entitles the
participant to receive payments from the Company in an amount determined by
reference to any cash dividends paid on a specified number of shares of Common
Stock to Company stockholders of record during the period such rights are
effective. The Compensation Committee may impose such restrictions and
conditions on any dividend equivalent right as the Compensation Committee in its
discretion shall determine. Payment of a dividend equivalent right may be made
by the Company in cash or shares of Common Stock (valued at Fair Market Value on
the date of payment) or as the Compensation Committee may determine.
Performance unit awards granted under the Incentive Plan entitles the
participant to receive, at a specified future date, payment of an amount equal
to all or a portion of the value of a specified or determinable number of units
granted by the Compensation Committee. At the time of the grant, the
Compensation Committee will determine the base value of each unit, the number of
units subject to a performance unit award, the performance factors applicable to
the determination of the ultimate payment value of the performance unit award
and the period over which company performance shall be measured. Payment of a
performance unit award may be made by the Company in cash or shares of Common
Stock (valued at Fair Market Value on the date of payment) or as the
Compensation Committee may determine.
Phantom shares granted under the Incentive Plan entitles the participant to
receive, at a specified future date, payment of an amount equal to all or a
portion of the fair market value of a specified number of shares of Common Stock
at the end of a specified period. At the time of grant, the Compensation
Committee will determine the factors which will govern any payment, and any
performance criteria that must be satisfied as a condition to payment. Payment
in respect of phantom shares may be made by the Company in cash or shares of
Common Stock (valued at Fair Market Value on the date of payment) or as the
Compensation Committee may determine.
Recapitalizations and Reorganizations
The Incentive Plan provides for appropriate adjustments of the number and
kind of shares to be issued upon exercise of a stock incentive and of the
exercise price or payment amount to reflect changes in the capital structure of
the corporation, stock splits, recapitalizations, mergers and reorganizations.
Amendment or Termination of the Incentive Plan
Although the Incentive Plan may be amended by the Board of Directors
without stockholder approval, the Board of Directors also may condition any such
amendment upon
20
stockholder approval if stockholder approval is deemed necessary or appropriate
in consideration of tax, securities or other laws.
Benefits to Named Executive Officers and Others
The following table sets forth information regarding stock incentives
granted made under the Incentive Plan during fiscal year 1999 to each of the
Named Executives, all persons who serve as executive officers of the Company as
a group, and all persons who are employees of the Company as a group.
Number of
--------------
Stock Options
Name and Position Granted
-----------
Andreas Eder 200,000
Chairman, President and Chief Executive Officer;
Head of Supervisory Board of Cybernet AG
Bernd Buchholz 200,000
Executive Vice President for Sales and Marketing
Robert Fratarcangelo 5,000
Secretary and Director
Robert Eckert 100,000
Former Chief Financial Officer and Treasurer
Alessandro Giacalone 0
Former Director and Chief Operating Officer
Tristan Libischer 200,000
Director; Co-Founder of Vianet and Member of the
Management Board of Vianet
All Executive Officers as a Group 705,000
Hubert Besner 5,000
Director and Member of Supervisory Board of Cybernet AG
G.W. Norman Wareham 5,000
Director
All Non-Executive Directors as a Group 10,000
All Non-Executive Employees as a Group 1,136,475
Federal Income Tax Consequences for United States Persons
Incentive Stock Options. An optionee who is a U.S. person will not
recognize income upon the grant or exercise of an incentive stock option.
Instead, the optionee will be taxed at the time he or she sells the stock
purchased pursuant to the option. The optionee will be taxed on the difference
between the price he or she paid for the stock and the amount for which he or
she sells the stock. If the optionee does not sell the stock within two years
from the date of grant of the
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option and one year from the date the stock is transferred to the optionee, the
gain will be a long-term capital gain, and the Company will not be entitled to a
deduction. If the optionee sells the stock at a gain prior to that time, the
difference between the amount the optionee paid for the stock and the lesser of
the fair market value on the date of exercise or the amount for which the stock
is sold will be taxed as ordinary income and the Company will be entitled to a
corresponding deduction. If the stock is sold for an amount in excess of the
fair market value on the date of exercise, the excess amount will be taxed as
capital gain. If the optionee sells the stock for less than the amount he or she
paid for it prior to the expiration of the one- or two-year periods indicated,
no amount will be taxed as ordinary income and the loss will be taxed as a
capital loss. Exercise of an incentive stock option may subject an optionee to,
or increase an optionee's liability for, the alternative minimum tax.
Non-Qualified Stock Options. An optionee who is a U.S. person will not
recognize income upon the grant of a non-qualified stock option under the
Incentive Plan or at any time prior to the exercise of the option or a portion
thereof. Generally, at the time the optionee exercises a non-qualified option or
portion thereof, the optionee will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the
underlying stock on the date the option is exercised over the option price of
the stock and the Company will then entitled to a corresponding deduction. At
that time, the Company will be subject to income tax withholding requirements
and will have the right to require an optionee who is or was an employee of the
Company to remit in cash to the Company an amount sufficient to satisfy any
federal, state and local tax requirements prior to the delivery of any
certificate or certificates for such shares of stock.
A subsequent taxable disposition of the stock acquired upon exercise of an
option and held as a capital asset will result in a capital gain or loss
measured by the difference between the fair market value of the stock on the
date of the option exercise and the amount realized on later disposition.
Other Stock Incentives. A participant who is a U.S. person will not
recognize income upon the grant of certain equity incentive such as a stock
appreciation right, dividend equivalent right, performance unit award or phantom
share. Generally, at the time a participant receives payment under any equity
incentive, he or she will recognize compensation taxable as ordinary income in
an amount equal to the cash or the fair market value of the Common Stock
received, and the Company will then be entitled to a corresponding deduction.
A participant will not be taxed upon the grant of a stock award if such
award is not transferable by the participant or is subject to a "substantial
risk of forfeiture," as defined in the Internal Revenue Code. However, when the
shares of Common Stock that are subject to the stock award are transferable by
the participant and are no longer subject to a substantial risk of forfeiture,
the participant will recognize compensation taxable as ordinary income in an
amount equal to the fair market value of the stock subject to the stock award,
less any amount paid for such stock, and the Company will then be entitled to a
corresponding deduction. However, if a participant so elects a the time of
receipt of a stock award, he or she may include the fair market value of the
stock subject to the stock award, less any amount paid for such stock, in income
a that time and the Company also will be entitled to a corresponding deduction
at that time.
The foregoing is a summary discussion of certain U.S. Federal income tax
consequences to certain participants under the internal revenue code and should
not be construed as legal, tax or investment advice. All incentive plan
participants should consult their own tax advisors as to the specific tax
consequences applicable to them, including federal, state, local and foreign tax
laws.
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Stockholder Approval
The Board of Directors seeks stockholder approval because such approval is
required under the Internal Revenue Code as a condition to incentive stock
option treatment and will maximize the potential for deductions associated with
any non-qualified options granted under the Incentive Plan.
The Board of Directors recommends
that you vote "FOR" the approval of
the Cybernet 1998 Stock Incentive Plan.
PROPOSAL 3
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young Deutsche Allgemeine Treuhand AG served as the Company's
independent auditors for the fiscal year ended December 31, 1999. The Company
has approved and engaged Ernst & Young Deutsche Allgemeine Treuhand AG to serve
as the Company's auditors for fiscal year ending December 31, 2000.
Representatives of Ernst & Young Deutsche Allgemeine Treuhand AG are expected to
be present at the Annual Meeting where they will have an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
The Board of Directors Recommends that you vote "FOR" the
ratification of Ernst & Young Deutsche Allgemeine Treuhand AG
as the Company's independent accountants.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders who wish to submit a proposal for consideration at the 2001
Annual Meeting should submit the proposal in writing to the Company at the
address set forth on page 1 of this Proxy Statement. A proponent of a proposal
is required to have been a record or beneficial owner of at least 1% or $2,000
in market value of Common Stock of the Company for a period of at least one year
and must continue to own such securities through the date on which the 2001
Annual Meeting is held. The Company has the right to request documentary support
(as provided in Rule 14a-8 promulgated by the Commission pursuant to the
Exchange Act) of the proponent's ownership claim within 14 calendar days after
receipt of the proposal, and the proponent shall furnish appropriate
documentation within 21 days after receiving such request. Proposals must be
received by the Company on or before December 28, 2000 for inclusion in next
year's proxy materials. Stockholders who submit proposals must, in all other
respects, comply with Rule 14a-8 under the Exchange Act.
INCORPORATION BY REFERENCE
We have incorporated by reference the financial statements and related
disclosures contained in the Form 10-K filed with the SEC on March 30, 2000, as
amended on May 1, 2000, and the
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Form 10-Q filed with the SEC on August 15, 2000. The Annual Report to
Shareholders is included with this Proxy Statement and contains the financial
statements and related disclosures of the Form 10-K. A copy of the Form 10-Q is
also included in the same package as this Proxy Statement and the Annual Report
to Shareholders.
OTHER MATTERS
The Board of Directors does not intend to present and knows of no other
person who intends to present any matter of business at the Annual Meeting other
than as set forth in the accompanying Notice of Annual Meeting of stockholders.
However, if other matters properly come before the meeting, it is the intention
of the persons named on the enclosed proxy card to vote in accordance with their
best judgment.
EXPENSES OF SOLICITATION
The Company will bear the costs of preparing and mailing the Proxy
Statement, proxy card and other material that may be sent to stockholders in
connection with this solicitation. In addition to solicitations by mail,
officers and other employees of the Company may solicit proxies personally or by
telephone or telegram.
By Order of the Board of Directors
/s/Andreas Eder
Andreas Eder
President and Chief Executive Officer
Munich, Germany
August 16, 2000
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY; THEREFORE, STOCKHOLDERS WHO
DO NOT EXPECT TO ATTEND THE 2000 ANNUAL MEETING IN PERSON ARE REQUESTED TO FILL
IN, SIGN AND RETURN THE PROXY FORM AS SOON AS POSSIBLE.
24
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 13, 2000
The undersigned stockholder of Cybernet Internet Services International, Inc.
(the "Company") hereby appoints Mr. Andreas Eder and Dr. Hubert Besner as
proxies with full power of substitution, acting unanimously or by either of them
if only one be present and acting, to vote all shares of Common Stock and Series
B Preferred Stock of the Company which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders (the "Meeting") to
be held at the Kuenstlerhaus Muenchen, Lembachplatz 8, Munich, Germany on
Wednesday, September 13, 2000 at 11:00 a.m., local time, and at any adjournments
thereof, upon the proposals described in the accompanying Notice of the Meeting
and the Proxy Statement relating to the Meeting (the "Proxy Statement"), receipt
of which is hereby acknowledged.
(continued, and to be signed and dated on the reverse side)
PROPOSAL 1: To elect the nominee listed at right to serve as Class B Director
of the Company for a three year term that will expire at the 2003
Annual Meeting of Stockholders:
Nominee: Mr. G. W. Norman Wareham
------ FOR all nominees ------- WITHHOLD authority to
listed at right (except as vote for all nominees
indicated to the listed at right.
contrary below).
INSTRUCTION: To withhold authority for any individual nominee,
mark "FOR" above, and write that nominee's name
in the space below: ________________________________
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
calendar year:
------ FOR ------ AGAINST ------ ABSTAIN
-----------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. This proxy,
when properly executed and returned, will be voted as directed, but if no
direction to the contrary is indicated, it will be voted FOR Proposal 1,
Proposal 2, and Proposal 3.
Discretionary authority is hereby conferred as to all other matters which may
come before the meeting.
Please mark, date and sign this Proxy, and return it in the enclosed
self-addressed envelope. No postage is necessary if mailed in the United States.
Please Return Proxy As Soon As Possible
-----------------------------------------
Name(s) of Stockholder(s)
-----------------------------------------
Signature(s) of Stockholder(s)
Dated: _________________ , 2000
(Be sure to date your Proxy)
Note: If stock is held in the name of more than one person, all holders
should sign. Signatures must correspond exactly with the name or names
appearing on the stock certificate(s). When signing as attorney,
executor, administrator, trustee, guardian or custodian, please
indicate the capacity in which you are acting. If a corporation,
please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in name by
authorized person.