SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Compu-DAWN, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
<PAGE>
(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:
<PAGE>
COMPU-DAWN, INC.
333 First North Street
Jacksonville Beach, FL 32250
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 20, 2000
To the Stockholders of Compu-DAWN, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Compu-DAWN, Inc., a Delaware corporation (the "Company" or "Compu-
DAWN"), will be held at the Marriot Sawgrass, 1000 PGA Tour Boulevard, Ponte
Vedra Beach, Florida 32082 at 1:00 p.m. local time, for the following purposes:
(1) To elect two (2) Class III Directors of the Company, whose term of
office shall expire at Compu-DAWN's Annual Meeting of Stockholders in 2002.
(2) To approve an amendment to Compu-DAWN's 1996 Stock Option Plan
increasing the number of shares of Common Stock authorized to be issued
thereunder from 2,000,000 to 10,000,000.
(3) To approve an amendment to Compu-DAWN's Certificate of
Incorporation to change the name of Compu-DAWN to "MyTurn.com, Inc."
(4) To approve an amendment to Compu-DAWN's Certificate of
Incorporation to increase the number of authorized Common Shares from 20,000,000
to 60,000,000.
(5) To ratify the appointment of PriceWaterhouseCoopers LLP as
Compu-DAWN's independent auditors for the year ending Dec. 31, 1999.
(6) To transact such other business as may properly come before the
Meeting.
Only stockholders of record at the close of business on December 17,
1999 are entitled to notice of and to vote at the Meeting or any adjournment
thereof.
By Order of the Compu-DAWN
Board of Directors
R.E. (Teddy) Turner, IV
Chairman of the Board
Jacksonville Beach, Florida
December 20, 1999
<PAGE>
==============================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE URGE YOU
TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS OF COMPU-DAWN, AND RETURN IT IN THE PRE-ADDRESSED
ENVELOPE PROVIDED FOR THAT PURPOSE. A STOCKHOLDER MAY REVOKE HIS
PROXY AT ANY TIME BEFORE THE VOTE BY WRITTEN NOTICE TO SUCH EFFECT, BY
SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
==============================================================================
<PAGE>
COMPU-DAWN, INC.
333 First North Street
Jacksonville Beach, Florida 32250
PROXY STATEMENT
SOLICITING, VOTING AND REVOCABILITY OF PROXY
This Proxy Statement is being mailed to all stockholders of record of
Compu-DAWN, Inc. (the "Company" or "Compu-DAWN") at the close of business on
December 17, 1999 in connection with the solicitation by the Board of Directors
of Proxies to be voted at the Annual Meeting of Stockholders (the "Meeting") to
be held at the Marriot Sawgrass, 1000 PGA Tour Boulevard, Ponte Vedra Beach,
Florida 32082 on January 20, 2000, at 1:00 p.m. local time, or any adjournment
thereof. The Proxy and this Proxy Statement were mailed to stockholders on or
about December 22, 1999.
All shares represented by Proxies duly executed and received will be voted
on the matters presented at the Meeting in accordance with the instructions
specified in such Proxies. Proxies so received without specified instructions
will be voted as follows:
(1) FOR the nominees named in the Proxy to Compu-DAWN's Board of Directors,
consisting of two (2) Class III directors, whose term of office shall expire at
Compu-DAWN's Annual Meeting of Stockholders in 2002;
(2) FOR the approval of an amendment to Compu-DAWN's 1996 Stock Option Plan
increasing the number of shares of Common Stock authorized to be issued
thereunder from 2,000,000 to 10,000,000;
(3) FOR the approval of an amendment to Compu-DAWN's Certificate of
Incorporation to change the name of Compu-DAWN to "MyTurn.com, Inc."
(4) FOR the approval of an amendment to Compu-DAWN's Certificate of
Incorporation to increase the number of authorized Common Shares from 20,000,000
to 60,000,000.
(5) FOR the ratification of the appointment of PriceWaterhouseCoopers LLP
as Compu- DAWN's independent auditors for the year ending December 31, 1999; and
The Board does not know of any other matters that may be brought before the
Meeting nor does it foresee or have reason to believe that Proxy holders will
have to vote for substitute or alternate nominees to the Board. In the event
that any other matter should come before the Meeting or any nominee is not
available for election, the persons named in the enclosed Proxy will have
discretionary authority to vote all Proxies not marked to the contrary with
respect to such matters in accordance with their best judgment.
The total number of shares of Common Stock of Compu-DAWN, par value $.01
per share ("Common Shares"), outstanding and entitled to vote as of December 17,
1999 was 5,721,649. The Common Shares are the only class of securities of
Compu-DAWN entitled to vote on matters presented to the stockholders of
Compu-DAWN, each share being entitled to one noncumulative vote. A majority of
the Common Shares outstanding and entitled to vote as of December 17, 1999 or
2,860,825 Common Shares,
<PAGE>
must be present at the Meeting in person or by proxy in order to constitute a
quorum for the transaction of business. Only stockholders of record as of the
close of business on December 17, 1999 will be entitled to vote. With regard to
the election of directors, votes may be cast in favor or withheld. Directors
shall be elected by a plurality of the votes cast in favor. Votes withheld in
connection with the election of one or more of the nominees for director will
not be counted as votes cast for such individuals. Stockholders may expressly
abstain from voting on Proposals 2, 3, 4 and 5 by so indicating on the Proxy.
Abstentions and broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions are
counted as present in the tabulation of votes on each of the proposals presented
to stockholders. Broker non-votes are not counted for the purpose of determining
whether a particular proposal has been approved. Since Proposal 2 requires the
affirmative vote of a majority of the votes cast at the Meeting, abstentions and
broker non-votes will have no effect. Since Proposals 3 and 4 require the
approval of a majority of the outstanding Common Shares of Compu-DAWN,
abstentions and broker non-votes will have the effect of a negative vote. Since
Proposal 5 requires the affirmative approval of a majority of the Common Shares
present in person or represented by proxy at the Meeting and entitled to vote
(assuming a quorum is present at the Meeting), abstentions will have the effect
of a negative vote while broker non-votes will have no effect.
Any person giving a Proxy in the form accompanying this Proxy Statement has
the power to revoke it at any time before its exercise. The Proxy may be revoked
by filing with Compu-DAWN written notice of revocation or a fully executed Proxy
bearing a later date. The Proxy may also be revoked by affirmatively electing to
vote in person while in attendance at the Meeting. However, a stockholder who
attends the Meeting need not revoke a Proxy given and vote in person unless the
stockholder wishes to do so. Written revocations or amended Proxies should be
sent to Compu-DAWN at 333 First North Street, Jacksonville Beach, Fl 32250,
Attention: Corporate Secretary.
The Proxy is being solicited by the Compu-DAWN Board of Directors.
Compu-DAWN will bear the cost of the solicitation of Proxies, including the
charges and expenses of brokerage firms and other custodians, nominees and
fiduciaries for forwarding Proxy materials to beneficial owners of Compu-DAWN
shares. Solicitations will be made primarily by mail, but certain directors,
officers or employees of Compu- DAWN may solicit Proxies in person or by
telephone, telecopier or telegram without special compensation. Additionally,
Compu-DAWN's Board of Directors is considering engaging a firm to assist the
Board in its solicitation of proxies. Since no determination has been made,
Compu-DAWN cannot estimate the cost of such engagement.
A list of stockholders entitled to vote at the Meeting will be available
for examination by any stockholder for any purpose germane to the Meeting,
during ordinary business hours, for ten days prior to the Meeting, at the
offices of Compu-DAWN, 333 First North Street, Jacksonville Beach, Florida
32250, and also during the whole time of the Meeting for inspection by any
stockholder who is present.
FORWARD-LOOKING STATEMENTS
Certain information contained herein and/or incorporated by reference in
this Proxy Statement includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, and is subject to the safe
harbor created by that act. Compu-DAWN cautions readers that certain important
factors may affect Compu-DAWN's actual results and could cause such results to
differ materially from any forward-looking statements which may be deemed to
have been made in this Proxy Statement or which are otherwise made by or on
behalf of Compu-DAWN. For this purpose, any statements contained in this Proxy
Statement that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate," or "continue" or the negative variations thereof or
<PAGE>
comparable terminology are intended to identify forward-looking statements.
Factors which may affect Compu-DAWN's results include, but are not limited to,
the risks and uncertainties associated with the ability of Compu-DAWN to raise
additional capital which will be required in the next 60 days to continue to
develop and sustain business at current levels, the Internet and
Internet-related technology and products, new technology developments,
developments and regulation in the telecommunications industry, the competitive
environment within the Internet and telecommunications industries, the ability
of Compu-DAWN to expand its operations, the level of costs incurred in
connection with Compu-DAWN's planned expansion efforts, the financial strength
of Compu-DAWN's customers and suppliers, unascertainable risks related to
possible unspecified acquisitions, the competence required and experience of
management, the risk of loss of management and personnel, and economic
conditions. Compu-DAWN is also subject to other risks detailed herein or from
time to time in Compu-DAWN's Securities and Exchange Commission filings. Readers
are also urged to carefully review and consider the various disclosures made by
Compu-DAWN which attempt to advise interested parties of the factors which
affect Compu-DAWN's business.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information for the fiscal years
ended December 31, 1998, 1997 and 1996 concerning the compensation of Mark
Honigsfeld, the then Chairman of the Board and Chief Executive Officer of
Compu-DAWN, and the other persons who were Compu- DAWN's most highly compensated
executive officers during the 1998 fiscal year. No other executive officer of
Compu-DAWN had a combined salary and bonus in excess of $100,000 for the fiscal
year ended December 31, 1998.
<TABLE>
<CAPTION>
Annual CompensatioLong-Term Compensation Long-Term Compensation
Awards
Name and Common Shares
Principal Position(1) Year Salary Bonus Underlying Options
<S> <C> <C> <C> <C>
Mark Honigsfeld(2) 1998 $251,847 - 125,000
Chief Executive 1997 $250,000 - 100,000
Officer, President and 1996 $ 62,500(3) - 233,000
Secretary
Louis Libin(4) 1998 $223,699 - 65,000(5)
Chief Technology 1997 $178,651 - 100,000
Office1 1996 - - -
Executive Vice-
President
- -------------------
</TABLE>
(1) Dong Lew, who served as Compu-DAWN's President, Treasurer and a
director until his retirement in April 1998 is not included as a named
executive officer. He received salary of $39,650 in 1998 and $216,000
in consideration for the termination of his Employment Agreement in
April 1998. R.E. (Teddy) Turner, IV, Compu-DAWN's Chairman of the
Board, Paul K. Danner, Compu- DAWN's Chief Executive Officer, and Rudy
C. Theale, Jr., Compu-DAWN's President, were not executive officers at
the end of the 1998 fiscal year. The material terms of Messrs.
Turner's and Theale's Employment Agreements are summarized in
"Executive Compensation--Employment Contracts; Termination of
Employment and Change-in-Control Arrangements."
(2) Mr. Honigsfeld was elected Chief Executive Officer of Compu-DAWN
and was entitled to compensation effective as of October 1, 1996. He
served as Chairman of the Board from August 1996 until January 8, 1999
and was elected President of Compu-DAWN effective January 8, 1999.
Pursuant to a Termination Agreement and a Consulting Agreement each
dated May 11, 1999, as amended by an Amended and Restated Termination
Agreement and Termination of Consulting Agreement dated July 2, 1999,
Mr. Honigsfeld and Compu-DAWN ended their employment relationship. See
"Executive Compensation -- Employment Contracts; Termination of
Employment and Change-in-Control Arrangements."
(3) Represents accrued and unpaid salary relating to 1996 (based on a
salary of $250,000 per annum) that was converted into 12,500 Common
Shares upon the closing of Compu-DAWN's initial public offering in
June 1997 (the "IPO").
<PAGE>
(4) Compu-DAWN and Mr. Libin mutually agreed to terminate Mr. Libin's
employment agreement as of July 31, 1999, ending their employment
relationship. Mr. Libin remains as a Director of Compu- DAWN. See
"Executive Compensation -- Employment Contracts; Termination of
Employment and Change-in-Control Arrangements."
(5) Includes 50,000 options granted to replace options to purchase a
like number of Common Shares which were cancelled in order to
effectuate a repricing. See "Executive Compensation - Report on
Repricing of Options."
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning
individual grants of stock options during the fiscal year ended December
31, 1998:
<TABLE>
<CAPTION>
Number of Common Percentage of Total
Shares Underlying Options Granted to
Name Options Granted Employees in Fiscal Year Exercise Price Expiration Date
<S> <C> <C> <C> <C>
Mark Honigsfeld 125,000(1) 25.3% $5.00 October 21, 2008
Louis Libin 65,000(2) 13.1% $5.0O October 21, 2008
- ---------------
</TABLE>
(1) These options were initially granted in 1998 at an exercise price of
$7.00 per share and later repriced to $5.00 per share pursuant to a
cancellation and regrant. See "Executive Compensation - Report on
Repricing of Options."
(2) Of such options, (a) 15,000 were initially granted in 1998 at an
exercise price of $7.00 per share and later repriced to $5.00 per share
pursuant to a cancellation and regrant and (b) the other 50,000 were
granted to replace options to purchase a like amount of Common Shares
which were cancelled in order to effectuate a repricing. See "Executive
Compensation -- Report on Repricing of Options."
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Value Table
The following table sets forth certain information concerning the value of
options unexercised as of December 31, 1998:
<TABLE>
<CAPTION>
Number of Value of Unexercised In-
Common Number of Common Shares Underlying the-Money Options at
Shares Acquired on Value Unexercised Options at December 31, 1998 December 31, 1998
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
==== ======== ======== ========================= =========================
<S> <C> <C> <C> <C>
Mark Honigsfeld - - 225,000/0 $396,875/$0
Louis Libin - - 33,334/81,666 $62,501/$138,124
</TABLE>
<PAGE>
Report on Repricing of Options
At a meeting of the Board of Directors held on September 18, 1998, the
Board of Directors approved the repricing of certain existing stock options,
including options covering an aggregate of 190,000 Common Shares held by Messrs.
Honigsfeld and Libin and options covering 34,700 Common Shares held by other
persons. The Board discussed that the purpose of granting options to employees
was to provide incentive for the employees to align their interest with the
stockholders of Compu-DAWN as well as to engender employee loyalty to
Compu-DAWN. It was noted that many of the options were granted at a time when
the price of Compu-DAWN's Common Shares was substantially higher than the
current market price at such date, and that those options currently did not and
would not provide incentive to those employees to remain with Compu-DAWN if they
received competing offers for their services. The Board determined that the
current options which were granted to employees at exercise prices above $5.00
per share should be cancelled and new options issued at an exercise price of
$5.00 per share, which was the floor price for the conversion of the Series A
Preferred Shares issued in Compu-DAWN's private placement in 1998, as well as
Compu-DAWN's initial public offering price.
The Board determined that the repricing of such options would be
effectuated, subject to the consent of the affected stock option holders, by the
cancellation of all stock options granted pursuant to Compu-DAWN's 1996 Stock
Option Plan which have exercise prices above $5.00 per share and the replacement
of such options with substantially similar options at an exercise price of $5.00
per share.
Compensation of Directors
As of December 31, 1998 each non-employee director of Compu-DAWN was
entitled to receive a director's fee of $1,000 per meeting attended in person
and $500 per meeting attended by telephone and options to purchase 5,000 Common
Shares of Compu-DAWN each year, which options will be exercisable for a period
of ten years from the date of grant at an exercise price equal to the market
price of Compu-DAWN's Common Shares on the date of grant. Additionally, each
non-employee director is entitled to be reimbursed for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors of Compu-DAWN.
The members of the Board of Directors meet regularly, as needed.
Employment Contracts; Termination of Employment and Change-in-Control
Arrangements
Mark Honigsfeld
Compu-DAWN was a party to an Employment Agreement with Mark Honigsfeld (the
"Employment Agreement") for a term of three years commencing as of October 1,
1996, which was subject to continuing, annual, automatic one-year extensions.
The Employment Agreement provided for base annual compensation of $250,000.
In addition to such base compensation, until January 8, 1999, Mr. Honigsfeld was
entitled to receive (i) an annual bonus amount equal to a percentage of base
salary (ranging from 7% to 20%) based
<PAGE>
upon Compu-DAWN achieving certain sales levels and (ii) an annual bonus based on
Compu- DAWN's EBITANC (as defined below), if any. EBITANC was defined as an
amount equal to the Company's earnings before deducting the following: interest
expense, taxes, and any one time nonrecurring charges resulting from
divestitures, acquisitions, consolidations, restructurings and changes in
accounting principles. Mr. Honigsfeld never received any such bonus.
Also, up until January 8, 1999, the Employment Agreement provided that Mr.
Honigsfeld was entitled to receive, for each year thereof, options for the
purchase of 5,000 Common Shares of the Company for each $100,000 of EBITANC.
Such options were to be exercisable for a five year period at an exercise price
of no less than 110% of the market value of the Common Shares on the date of the
grant. Mr. Honigsfeld never received any such options.
Mr. Honigsfeld also received an expense allowance of up to $500 per month
and an automobile allowance in the amount of $1,000 per month. He was also
entitled to reimbursement of accountable customary business expenses.
The Employment Agreement provided that, notwithstanding the rolling
three-year term thereof, it could be terminated prior to the expiration date
under the following circumstances: (i) death; (ii) total disability (as provided
for in the Employment Agreement); (iii) termination by Compu-DAWN for "cause"
(as defined in the Employment Agreement); (iv) termination by Compu-DAWN at any
time upon written notice to Mr. Honigsfeld; (v) termination by Mr. Honigsfeld
upon 30 days written notice to Compu-DAWN; (vi) termination by Mr. Honigsfeld at
any time for "good reason" (as defined in the Employment Agreement); or (vii)
termination by the Company at any time within 12 months after a "change in
control" (as defined in the Employment Agreement). Additionally, the Employment
Agreement allowed Mr. Honigsfeld to devote up to 10% of his working time to
other endeavors that were not in competition with Compu-DAWN.
The Employment Agreement provided for compensation under certain
circumstances upon termination of employment (in addition to accrued but unpaid
compensation) as follows: (i) in the event of Mr. Honigsfeld's death, his estate
or spouse would be entitled to receive an amount equal to his monthly salary as
of the date of death multiplied by the number of full years that he had been an
employee of Compu-DAWN or a subsidiary or a predecessor in interest thereof;
(ii) in the event of termination of the Employment Agreement due to disability,
Mr. Honigsfeld would be entitled to receive an amount equal to his monthly
salary as of the date of termination of the Employment Agreement, multiplied by
the number of full years that he had been an employee of Compu-DAWN or a
subsidiary or a predecessor in interest thereof (but, in no event, would he be
entitled to an amount equal to less than six months of salary); and (iii) in the
event of termination of employment by Compu-DAWN following a "change of control"
or for any reason other than death, disability or "cause," or in the event of
termination of the Employment Agreement by Mr. Honigsfeld for "good reason," he
would be entitled to receive his full salary for the unexpired term of such
agreement, without mitigation of damages based upon employment obtained
elsewhere.
<PAGE>
The Employment Agreement provided for a restriction on the solicitation of
customers of the Company for a period of two years following termination
thereof, and a covenant not to compete with the Company for a period of six
months following termination of employment for cause.
Compu-DAWN and Mr. Honigsfeld entered into a Termination Agreement as of
May 11, 1999 (the "Honigsfeld Termination Agreement"); simultaneously, Mr.
Honigsfeld and Compu-DAWN entered into a Consulting Agreement. Both such
Agreements were terminated and rendered of no further force or effect pursuant
to an Amended and Restated Termination Agreement and Termination of Consulting
Agreement, dated as of July 2, 1999 (the " Amended and Restated Agreement").
Pursuant to the Honigsfeld Termination Agreement, and the Amended and Restated
Agreement, Compu-DAWN paid Mr. Honigsfeld $100,000 in cash and issued 75,000
Common Shares to him. Such shares have not been registered under the Securities
Act of 1933, as amended, and Compu-DAWN is not under any obligation to register
them at any time in the future. Additionally, pursuant to the Consulting
Agreement Compu-DAWN issued 62,500 Common Shares to Mr. Honigsfeld out of
treasury and paid him $66,666 in cash. Furthermore, pursuant to the Amended and
Restated Agreement, Compu-DAWN is obligated to pay to Mr. Honigsfeld an amount
equal to eighty percent (80%) of the royalty payable by Admit Computer Services,
Inc. ("Admit") to Compu-DAWN; such royalty is based on revenues derived by Admit
from the sale or licensing of products and/or assets acquired by Admit from
Compu-DAWN in connection with its purchase of Compu-DAWN's Public Safety
Business. Mr. Honigsfeld also entered into certain restrictive covenants, which
prohibit him from disclosing certain information about customers of Compu- DAWN
or soliciting any such customers, and prohibit him from revealing any of
Compu-DAWN's trade secrets. In addition, all unexercised options held by Mr.
Honigsfeld became immediately vested as of the date of the Amended and Restated
Agreement in accordance with their respective terms.
Furthermore, pursuant to the Amended and Restated Agreement, Compu-DAWN
registered on Form S-8 the resale of 62,500 Common Shares that had been issued
to Mr. Honigsfeld in connection with the Consulting Agreement.
Effective January 7, 1999, Mr. Honigsfeld was granted stock options to
purchase 200,000 Common Shares at an exercise price of $5.82 which vest to the
extent of 25,000 Common Shares on each of April 8, 1999, January 8, 2000, July
8, 2000, and January 8, 2001 and 100,000 Common Shares on January 8, 2002.
On May 7, 1999, all of Mr. Honigsfeld's Options were repriced to $3.25 per
share, the closing price of Compu-DAWN's Common Shares on the Nasdaq SmallCap
Market on May 6, 1999 and all unvested options became immediately exercisable.
Louis Libin
Effective January 6, 1997, Compu-DAWN and Louis Libin entered into a
three-year Employment Agreement which provided for a salary of $200,000,
$225,000, and $250,000 per annum in the first, second and third years,
respectively. Additionally, Mr. Libin's Employment Agreement allowed him to
devote up to one day each week to other endeavors that were not in
<PAGE>
competition with Compu-DAWN. Other terms of Mr. Libin's Employment Agreement
generally conformed in structure to the material provisions of Mr. Honigsfeld's,
such as with respect to bonuses, benefits, restrictive covenants and
termination. Effective January 7, 1999, Mr. Libin was also granted options to
purchase 200,000 Common Shares upon the same terms and conditions as those
granted to Mr. Honigsfeld prior to the repricing and vesting acceleration
described above.
Mr. Libin entered into a Termination Agreement with Compu-DAWN effective as
of July 31, 1999 (the "Libin Termination Agreement"). Pursuant to the Libin
Termination Agreement, Compu-DAWN is paying to Mr. Libin an aggregate of
$107,500 in six monthly installments commenced in August, 1999. In addition, a
stock option to purchase 50,000 Common Shares previously granted to Mr. Libin
became immediately exercisable and the exercise price was repriced to $3.25 per
share, the closing price of Compu-DAWN's Common Shares on the day preceding the
repricing. Furthermore, Compu-DAWN granted Mr. Libin a stock option to purchase
50,000 Common Shares, vesting in one-third increments on July 31, 2000, 2001,
and 2002, at an exercise price of $5.25 per share, which options the Board of
Directors subsequently re-priced and declared fully vested.
Robert E. (Teddy) Turner
Effective January 8, 1999, Compu-DAWN and Robert E. (Teddy) Turner, IV
entered into a three-year Employment Agreement pursuant to which Mr. Turner
serves as the Company's Chairman of the Board. Such Employment Agreement
provides for a salary of $208,000 per annum, although Mr. Turner and Compu-DAWN
mutually agreed, as of May 7, 1999, to reduce his annual salary to $100,000;
simultaneously, Mr. Turner was granted options to purchase 32,250 Common Shares
at an exercise price of $3.25 per share, the closing price of Compu- DAWN's
Common Shares on the day preceding the grant. Mr. Turner's employment agreement
does not require Mr. Turner to devote all of his time to Compu-DAWN's business
and allows him to participate in other activities which do not prevent Mr.
Turner from fulfilling his obligations to Compu-DAWN. In addition to salary, Mr.
Turner is entitled to receive a sales and marketing bonus upon the same terms
and conditions as were formerly applicable to Mr. Honigsfeld's bonus. Mr. Turner
was also granted options to purchase 200,000 Common Shares upon the same terms
and conditions as were formerly applicable to the options granted to Mr.
Honigsfeld prior to the Honigsfeld Termination Agreement. Other terms of Mr.
Turner's Employment Agreement conform in structure to the material provisions
that were formerly applicable to Mr. Honigsfeld's, such as renewal, benefits,
restrictive covenants, and termination without any requirement to mitigate any
damages. Mr. Turner's Employment Agreement was extended an additional two years
in December 19999.
Rudy C. Theale, Jr.
Effective January 8, 1999, Compu-DAWN and Rudy C. Theale, Jr. entered into
a three-year employment agreement which provided for Mr. Theale to serve as
Compu-DAWN's Executive Vice President on a full-time basis. On June 8, 1999 Mr.
Theale was appointed Compu- DAWN's Vice-Chairman of the Board. Mr. Theale and
Compu-DAWN subsequently agreed that Mr. Theale would serve as Compu-DAWN's
President, in lieu of the aforementioned positions. Mr.
<PAGE>
Theale's Employment Agreement provides for a salary of $208,000 per annum,
although Mr. Theale and Compu-DAWN mutually agreed, as of May 7, 1999, to reduce
his annual salary to $160,000. In addition to salary, Mr. Theale is entitled to
receive a sales and marketing bonus upon the same terms and conditions as were
formerly applicable to Mr. Honigsfeld's bonus. Mr. Theale was also granted
options to purchase 650,000 Common Shares upon the same terms and conditions as
were formerly applicable to the options granted to Mr. Honigsfeld prior to the
Honigsfeld Termination Agreement. Other terms of Mr. Theale's employment
agreement conform in structure to the material provisions that were formerly
applicable to Mr. Honigsfeld's, such as renewal, benefits, restrictive covenants
and termination without any requirement to mitigate damages. Mr. Theale's
Employment Agreement was extended an additional two years in December 1999.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Common Shares
The following table sets forth, to the knowledge of Compu-DAWN based solely
upon records available to it, certain information as of December 3, 1999
regarding the beneficial ownership of Compu-DAWN's Common Shares (i) by each
person who Compu-DAWN believes to be the beneficial owner of more than 5% of its
outstanding Common Shares, (ii) by each current director, (iii) by each person
listed in the Summary Compensation Table under "Executive Compensation" and (iv)
by all current executive officers and directors as a group:
Name and Address
of Beneficial Owner Number Percent
Mark Honigsfeld 122,400(1) 2.0%
77 Spruce Street
Cedarhurst, New York
Louis Libin 396,000(2) 6.4%
77 Spruce Street
Cedarhurst, New York
Robert E. (Teddy) 481,429(3)(8) 7.7%
333 First North Street
Jacksonville Beach, Florida 32250
Rudy C. Theale, Jr. 818,353(4)(8) 12.5%
333 First North Street
Jacksonville Beach, Florida 32250
Paul K. Danner 410,631(5)(8) 6.6%
333 First North Street
Jacksonville Beach, Florida 32250
Christopher Liston 215,758(6)(8) 3.6%
333 First North Street
Jacksonville Beach, Florida 32250
Harold Lazarus 50,495(7)(8) 0.8%
134 Hofstra University
Hempstead, New York
All execu ive officers and directors
as a group (7 pers 2,669,777(2)(3)(4)(5) 31.8%
(6)(7)(8)(9)
<PAGE>
- -------------------
(1) Includes 94,770 shares issuable to Mr. Honigsfeld upon the exercise of
currently exercisable options and 15,500 shares issuable upon the
exercise of warrants currently exercisable.
(2) Includes 360,000 shares issuable to Mr. Libin upon the exercise of
currently exercisable options and 10,000 shares to be issued to Mr.
Libin as of January 1, 2000 as a bonus for services rendered during the
1999 fiscal year.
(3) Includes 370,279 shares issuable to Mr. Turner upon the exercise of
options currently exercisable or exercisable within 60 days and 75,000
shares to be issued to Mr. Turner as of January 1, 2000, as a bonus for
services rendered during the 1999 fiscal year.
(4) Includes 723,353 shares issuable to Mr. Theale upon the exercise of
options currently exercisable or exercisable within 60 days and 75,000
shares to be issued to Mr. Theale as of January 1, 2000, as a bonus for
services rendered during the 1999 fiscal year.
(5) Represents (i) 367,631 shares issuable to Mr. Danner upon the exercise
of options currently exercisable or exercisable within 60 days, (ii)
40,000 shares to be issued as of January 1, 2000 as a bonus for
services rendered during the 1999 fiscal year, and (iii) 3,000 shares
held by Mr. Danner as custodian for his children.
(6) Represents 180,758 shares issuable to Mr. Liston upon the exercise of
options currently exercisable or exercisable within 60 days and 35,000
shares to be issued as of January 1, 2000, as a bonus for services
rendered during the 1999 fiscal year.
(7) Represents 40,495 shares issuable to Dr. Lazarus upon the exercise of
options currently exercisable or exercisable within 60 days and 10,000
shares to be issued as of January 1, 2000, as a bonus for services
rendered during the 1999 fiscal year.
(8) The options referred to in footnotes (3), (4), (5), (6) and (7) are
subject to accelerated vesting. In the event there is a change in
control in Compu-DAWN, such options shall become exercisable to
purchase 100% of the Common Shares thereunder on the date preceding the
change in control. For this purpose, "change in control" means
any transfer of 50% of Compu-DAWN's outstanding Common
Shares or voting power, except in connection with any
acquisition of Company Common Shares by certain members
of Compu-DAWN's management;
the approval by Compu-DAWN's stockholders of a merger
or consolidation in which the pre-merger or
pre-consolidation stockholders of Compu-DAWN do not own
more than 50% of the voting power of the merged or
consolidated entity;
the transfer of more than 50% of Compu-DAWN's assets;
or
a change in the composition of the Board of Directors
of Compu-DAWN where those persons who were directors at
the beginning of a calendar year and those persons
elected as directors during such calendar year with the
approval of a majority of directors then still in
office cease to constitute a majority of the directors.
(9) Includes 142,711 shares issuable to David Greenspan, the Chief
Financial Officer, Treasurer and Secretary of Compu-DAWN, upon the
exercise of options currently exercisable or
<PAGE>
exercisable within 60 days, and 32,000 shares to be issued to Mr.
Greenspan as of January 1, 2000, as a bonus for services rendered
during the 1999 fiscal year. Mr. Greenspan's options are subject to
the accelerated vesting provision described in footnote 8 above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1997, Compu-DAWN entered into a secured Credit Agreement with
Mr. Honigsfeld. Pursuant to the Credit Agreement, Compu-DAWN initially borrowed
$200,000. In April 1997, Compu-DAWN and Mr. Honigsfeld amended the Credit
Agreement to provide for an additional line of credit of $500,000. The principal
balance and all accrued interest were paid in full on May 25, 1999. Compu-DAWN
entered into the Credit Agreement because it required additional financing to
fund Compu-DAWN's working capital needs and no other sources of financing were
available at that time. Contemporaneously with the closing of Compu-DAWN's
Initial Public Offering in June 1997, $200,000 of indebtedness was converted
into 40,000 Common Shares pursuant to an agreement between Compu-DAWN and Mr.
Honigsfeld. In May 1997, Compu- DAWN borrowed an additional $200,000 under the
Credit Agreement. In 1997 and 1998, Compu- DAWN paid Mr. Honigsfeld an aggregate
of $9,316 and $11,250, respectively, in interest under the Credit Agreement.
Compu-DAWN believes that the terms of the Credit Agreement were commercially
reasonable and as favorable to Compu-DAWN as it could have obtained from an
unrelated third party at that time. The Credit Agreement was approved by, among
others, all the disinterested directors of Compu-DAWN.
On January 8, 1999, e.TV Commerce, Inc., Compu-DAWN's wholly owned
subsidiary ("e.TV"), acquired certain assets of LocalNet Communications, Inc.
("LocalNet"), a Jacksonville, Florida-based corporation. The LocalNet assets
were acquired pursuant to a peaceful surrender agreement (the "Peaceful
Surrender Agreement") to satisfy $750,000 in principal of a $1,800,000 secured
loan previously made by Compu-DAWN to LocalNet pursuant to a Loan and Security
Agreement dated as of October 6, 1998, as amended as of October 23, 1998 and as
of November 12, 1998 (the "Loan"). The Loan was secured by all of the assets of
LocalNet. During the period October 6, 1998 through January 8, 1999, Messrs.
Theale and Turner were directors and officers of LocalNet but did not serve in
any capacity for Compu-DAWN.
On December 22, 1998, Compu-DAWN elected David Greenspan as Chief Financial
Officer. At that time Mr. Greenspan was the Chief Financial Officer and a
director of LocalNet and remained so until his resignation on February 12, 1999
. Mr. Greenspan was elected Compu- DAWN's Treasurer and Secretary on May 17,
1999. Other than the Loan and the Peaceful Surrender Agreement, Compu-DAWN has
not had any relationship with LocalNet.
On January 7, 1999, Compu-DAWN's Board of Directors adopted resolutions
expanding the number of members of the Board from five to seven. Also on that
date, resolutions were adopted authorizing the execution of employment
agreements between Compu-DAWN and each of Messrs. Turner and Theale, pursuant to
which Agreements Messrs. Turner and Theale would serve as both directors and
officers of Compu-DAWN. See "Executive Compensation--Employment Contracts;
Termination of Employment and Change-in-Control Arrangements."
Mr. Liston became a Director of Compu-DAWN on March 21, 1999. He was a
consultant to, and then an officer of, LocalNet prior to the asset acquisition.
To the extent that Compu-DAWN may enter into any agreements with related
parties
<PAGE>
in the future (of which none are presently contemplated), the Board of Directors
of Compu-DAWN has determined that the terms of such agreements must be
commercially reasonable and no less favorable to Compu-DAWN than it could obtain
from unrelated third parties. Additionally, the Board of Directors of Compu-DAWN
has further determined that such agreements must be approved by a majority of
the disinterested directors of Compu-DAWN.
PROPOSAL 1: ELECTION OF DIRECTORS
Compu-DAWN's Board of Directors is currently divided into three classes.
Each class of directors is elected for a three-year term. Class I directors will
serve until the Annual Meeting of Stockholders in 2000 or until their successors
are elected and qualified. Christopher Liston currently serves as Compu-DAWN's
Class I director. Class II directors will serve until the Annual Meeting of
Stockholders in 2001 or until their successors are elected and qualified. Rudy
C. Theale, Jr. and Harold Lazarus, Ph.D. are Compu-DAWN's Class II Directors.
There is currently one vacancy in the Class I directorships and one vacancy in
the Class II directorships. With respect to the filling of such vacancies, see
"Directors and Executive Officers" below.
Class III Directors will be elected at the Meeting and will serve until the
Annual Meeting of Stockholders in 2002. Robert E. (Teddy) Turner, IV and Louis
Libin currently serve as the Class III directors of Compu-DAWN. Mr. Turner and
Mr. Libin will serve until their respective successors are elected and
qualified.
Nominees for Director
The following table sets forth the positions and offices held by each of
Robert E. (Teddy) Turner, IV and Louis Libin, Compu-DAWN's nominees for Class
III directors, his age as of December 1, 1999 and the year in which he became a
director. The Board unanimously recommends a vote FOR both nominees.
<TABLE>
<CAPTION>
Class III Directors
Term Expiring at 2002 Annual Meeting
====================================================================================================================
Positions and Offices Presently Year Became
Name Age Held with Compu-DAWN a Director
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert E. (Teddy) Turner, IV 36 Chairman of the Board and 1999
Director
====================================================================================================================
Louis Libin 41 Director 1997
====================================================================================================================
</TABLE>
Biographies of Messrs. Turner and Libin are provided in the following
section of this Proxy Statement, "Directors and Executive Officers."
Directors and Executive Officers.
The names and ages of, and the positions held by, the executive officers
and directors of Compu-DAWN are set forth below.
<PAGE>
<TABLE>
<CAPTION>
Class of
Name Age Positions Held Directorship
<S> <C> <C> <C>
Robert E. (Teddy) Turner, IV 36 Chairman of the Board and Director III
Rudy C. Theale, Jr. 25 President and Director II
Louis Libin 41 Director III
Harold Lazarus, Ph.D. 72 Director II
Christopher Liston 39 Director I
Mark Bradlee 50 Director appointee(1) I (expected)
Brian Dougherty 43 Director appointee(1) I (expected)
Paul Danner 42 Chief Executive Officer and
Chief Operating Officer -
David Greenspan 34 Chief Financial Officer,
Treasurer and Secretary -
</TABLE>
Robert E. (Teddy) Turner, IV
Mr. Turner joined Compu-DAWN in January 1999 as Chairman of the Board. He
was elected as a director of Compu-DAWN in March 1999. Mr. Turner was the
founder of, and served from December 1997 until September 1998 as Chairman of
the Board and President of, Zekko Corp. ("Zekko"). Zekko operated predominantly
in the areas of technology acquisition, development and marketing. From October
1996 until December 1997, Mr. Turner served as the President of Turner
Telecommunication, an organization which concentrated in the acquisition and
development of telecommunication products. Mr. Turner specialized in the
research and analysis of potential telecommunication product acquisitions. From
June 1993 until October 1996, Mr. Turner was a manager with Turner Home
Entertainment, a domestic home video company where he was responsible for the
Southeastern United States sales and promotional divisions. Mr. Turner has been
a director of All Seasons Vehicles, Inc., a publicly traded manufacturer of
track driven all season vehicles, since April 1997, and Chairman of the Board of
U.S. Bison Co., an Atlanta, Georgia- based bison ranching company. Mr. Turner
sits on the Boards of several foundations including The Turner Foundation, Inc.,
Jane Smith Turner Foundation, and the Georgia Chapter of Juvenile Diabetes
Foundation. He also sits on the Board of Trustees of St. Mary's College of
Maryland. Mr. Turner holds a Bachelor of Science
- --------
1 Compu-DAWN has agreed that Messrs. Bradlee and Dougherty will be elected as
directors to fill two vacancies on the Board at the time of the closing of
the acquisition of the assets of GlobalPC, Inc., a corporation engaged in
the design and manufacture of a low-cost computer and Internet-access
device intended to be marketed to those unfamiliar with computers and the
Web ("GlobalPC"). Compu-DAWN expects that this transaction will close in
December 1999.
<PAGE>
Degree in Business Administration from the Citadel.
Rudy C. Theale, Jr.
Mr. Theale served as Executive Vice President of Compu-DAWN from January
1999 until November 19, 1999, when he was elected President. He also served as
the Vice Chairman of the Board of Compu-DAWN from June 8, 1999 until July 27,
1999, and has served as a director since March 21, 1999. Mr. Theale had served
as President and a director of LocalNet from April 1997, where he was primarily
responsible for sales and marketing efforts, and the general oversight of daily
operations. From February 1996 until January 1997, Mr. Theale served as
President of SDI, Inc. where he was primarily responsible for sales and
marketing management as well as the general oversight of daily operations.
Louis Libin
Mr. Libin has served as a director of Compu-DAWN since January 1997. He
served as Compu-DAWN's Chief Technology Officer from January of 1997 to July 31,
1999. Mr. Libin also served as Senior Executive Vice President of Compu-DAWN
from January 1999 to July 31, 1999. Since 1989, Mr. Libin has represented the
United States on satellite and transmission issues at the International
Telecommunications Union (the "ITU") in Geneva, Switzerland. Mr. Libin has also
been Chairman of the Expert Group On Broadcast Interactive Services of the ITU
since 1991. From 1987 to 1997, Mr. Libin served as the Director of Technology
(specializing in broadcast transmission systems) for the General Electric
Corporation ("GE") and the National Broadcasting Corporation. From 1995 to 1997,
Mr. Libin also served as Assistant Secretary of all of GE's wholly-owned
subsidiaries that are involved in broadcast media, with the responsibility for
technical developments and all Federal Communications Commission (the "FCC")
issues and licenses. From 1983 to 1986, Mr. Libin was a project manager for
Radio Corporation of America ("RCA") until RCA's acquisition by GE. From 1981 to
1982, Mr. Libin was employed by the Loral Corporation as an electronic design
engineer where he designed radio frequency systems for the United States
military. From 1980 to 1981, Mr. Libin was a design engineer for the Chryon
Corporation, a computer graphics company. From 1979 to 1980, he worked for
Burroughs Computer Systems, Inc. (now part of Unisys) as a field engineer.
Additionally, since 1988, Mr. Libin has acted as a consultant and advisor to the
FCC in connection with the planning of communications systems and logistics for
major events in the United States and abroad, including political conventions,
presidential inaugurations, and the 1996 Summer Olympics in Atlanta. Mr. Libin
is an active member of the National Society of Professional Engineers and the
Association of Federal Communications Consulting Engineers. He also sits on the
Engineering Advisory Board of the National Association of Broadcasters. Mr.
Libin received a B.S.E.E. Degree in Electrical Engineering from the Pratt
Institute and completed his graduate studies in optical electronics at M.I.T.'s
Executive Program in 1991. Mr. Libin has planned and managed telecommunications
projects in the United States and in Europe. Mr. Libin was responsible for the
planning and implementation of a new television and telecommunications network
in New Zealand in 1990. Mr. Libin has also provided expert consulting on
satellite issues in certain of the republics of the former Soviet Union. Mr.
Libin was also instrumental in the development of the new transmission
technology and the algorithms for software modeling of the new North American
digital terrestrial television system which was approved by the FCC in 1996.
Since January 1999, Mr. Libin has served as a director of NetWolves Corp., a
publicly traded Tampa, Florida-based computer
<PAGE>
manufacturer. Mr. Libin has published numerous scientific papers on radio
frequency and telecommunications.
Harold Lazarus, Ph.D
Dr. Lazarus joined Compu-DAWN as a director in March 1997. Dr. Lazarus has
been a Professor of Management at the Hofstra University Frank G. Zarb School of
Business (the "Hofstra Business School") since 1980. From 1973 to 1980, Dr.
Lazarus served as Dean of the Hofstra Business School. Dr. Lazarus is an
organization development consultant who lectures in Europe, Asia, North America
and South America on leadership, time management, total quality management,
managing change, effective meetings, problem solving, decision making, mission
statements, management by objectives, and communications. Dr. Lazarus was
Professor of Management at the New York University Leonard N. Stern School of
Business for ten years, and he also taught at Columbia University Graduate
School of Business and Harvard University Business School. Dr. Lazarus has
served on several boards of directors of public companies in the past, including
FACE, Ideal Toy Corporation, Superior Surgical Manufacturing Company, Stage II
Apparel Corporation, and Graham- Field Health Products, Inc. Dr. Lazarus has
published seven books and 65 articles on business management. He also chairs the
board of Phi Beta Kappa Alumni of Long Island (New York). Dr. Lazarus received a
Masters of Science Degree and a Doctor of Philosophy Degree in Management and
Marketing from Columbia University.
Christopher Liston
Mr. Liston was elected a director of Compu-DAWN in March 1999. From
December 1998 until July 27, 1999 he was the Vice President, Business
Development of LocalNet. From May 1993 to September 1998, Mr. Liston was a Vice
President of Osprey Capital, Inc., an investment banking company. Mr. Liston
received a Bachelor of Arts Degree in Political Science from the College of
Charleston in South Carolina.
Paul Danner
Paul Danner served as President of Compu-DAWN from June, 1999 until
November 19, 1999 and is serving as Compu-DAWN's Chief Executive Officer. From
January 1999 until June 1999, Mr. Danner served as Chief Operating Officer of
e.TV Commerce, Inc. Compu-DAWN's referral network marketing subsidiary, which
ceased operations in July 1999, and from September 1998 until December 1998
served in the same position for LocalNet. In this position he was responsible
for the oversight and direction of, among other things, LocalNet's network sales
operations, supervising approximately 30 employees. From December of 1997 until
August of 1998, Mr. Danner was the Vice President Operations of Zekko Corp.,
which operated predominantly in the areas of technology acquisition, development
and marketing, and supervised the research and development, finance and
operations staff. From April 1997 to December 1997, he was the sole principal of
Technology Ventures, Inc., a provider of strategic planning, financial and other
consulting services. From 1991 to 1996, Mr. Danner was Vice president of Command
Communications, Inc., a designer, manufacturer and distributor of communications
products.
<PAGE>
Mark Bradlee
Mr. Bradlee is expected to become a director of Compu-DAWN at the time that
Compu- DAWN's acquisition of the assets of GlobalPC closes, which is expected to
occur in December of 1999, to fill a vacancy on the Board. Mr. Bradlee serves as
the President and Chief Executive Officer of GlobalPC, a position he has held
since April of 1998, the time of GlobalPC's inception. From October of 1992 to
October of 1997, Mr. Bradlee was the Executive Vice-president of YES!
Entertainment, a toy manufacturer. In or about June, 1999, a bankruptcy petition
was filed with respect to YES! Entertainment. Mr. Bradlee is one of the founders
of GlobalPC.
Brian Dougherty
Mr. Dougherty is expected to become a director of Compu-DAWN at the time
that Compu- DAWN's acquisition of the assets of GlobalPC closes, which is
expected to occur in December of 1999, to fill a vacancy on the Board. Since
January 1997 until presently, Mr. Dougherty has been Chairman and Chief
Technology Officer of Wink Communications ("Wink") an interactive television
software designer and provider of interactive television services. From October
of 1994 until January of 1997, Mr. Dougherty was Chairman and Chief Executive
Officer of Wink. Mr. Dougherty was one of the founders of GlobalPC and is
GlobalPC's Chairman and Chief Technology Officer.
David Greenspan
Mr. Greenspan has served as Chief Financial Officer of Compu-DAWN since
December 1998. He was elected Secretary and Treasurer of Compu-DAWN on May 17,
1999. From December 1997 until February 1999, Mr. Greenspan served as Chief
Financial Officer and a director of LocalNet. From March 1997 to December 1997,
Mr. Greenspan served as the Chief Operating Officer of PGA Tour Radio Network, a
national sport broadcasting company based in Atlanta, Georgia. From August 1996
to March 1997, he was the Vice President, Business Affairs of Turner Media
Consultants, a broadcast consulting company. From March 1994 to August 1996, Mr.
Greenspan served as a project manager for Atlanta Olympic Broadcasting, with
responsibility for planning and coordinating all television and radio operations
for the 1996 Summer Olympic games. Mr. Greenspan holds a Bachelor of Science
Degree in Accounting from Troy State University in Alabama.
There are no family relationships among any of Compu-DAWN's executive
officers and directors.
Board Committees
The Audit Committee is responsible for reviewing and making recommendations
regarding Compu-DAWN's employment of independent auditors, the annual audit of
Compu-DAWN's financial statements and Compu-DAWN's internal accounting controls,
practices and policies. In 1998, the Audit Committee Members were Mr.
Honigsfeld, Faith Griffin and Dr. Lazarus. The current members of the Audit
Committee are Mr. Libin and Dr. Lazarus. The Audit Committee met once during the
fiscal year ended December 31, 1998. Mr. Honigsfeld and Ms. Griffin ceased to be
members when they resigned as directors, in May and July of 1999, respectively.
<PAGE>
Compu-DAWN's Compensation Committee, which is responsible for establishing
and periodically reviewing the compensation of Compu-DAWN's executive officers
and managers and recommending appropriate adjustments, was created by resolution
of the Board in April of 1999. Its initial members were Faith Griffin, Harold
Lazarus and Christopher Liston, with Mr. Liston to be replaced by Mr. Greenspan
for purposes of discussing Mr. Liston's compensation. The Compensation Committee
did not exist in 1998. Ms. Griffin ceased to be a Committee Member when she
resigned as a director in July 1999.
Compu-DAWN does not have a nominating committee, charged with the search
for and recommendation to the Board of potential nominees for Board positions.
The Board will consider stockholder recommendations for Board positions which
are made in writing to the Chairman of the Board.
Meetings
The Board held seven meetings during the year ended December 31, 1998. All
of the then incumbent directors of Compu-DAWN attended such meetings. The Board
also acted on three occasions during 1998 by unanimous written consent in lieu
of a meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934, as amended ("Section
16"), requires that reports of beneficial ownership of capital stock and changes
in such ownership be filed with the Securities and Exchange Commission (the
"SEC") by Section 16 "reporting persons," including directors, certain officers,
holders of more than 10% of the outstanding Common Shares and certain trusts of
which reporting persons are trustees. Compu-DAWN is required to disclose in this
Proxy Statement each reporting person whom it knows to have failed to file any
required reports under Section 16 on a timely basis during the fiscal year ended
December 31, 1998.
To Compu-DAWN's knowledge, based solely on a review of copies of Forms 3, 4
and 5 furnished to it and written representations that no other reports were
required, during the fiscal year ended December 31, 1998, Compu-DAWN's officers,
directors and 10% stockholders complied with all Section 16(a) filing
requirements applicable to them except that Messrs. Honigsfeld, Libin, Lazarus,
Luciani and Rizzardi failed to file a Form 5, due on February 14,1999, with
respect to the receipt of certain stock options from Compu-DAWN during 1998, Mr.
Libin filed a Form 4 (reporting one transaction) for September 1998 11 days
late, and Mr. Greenspan filed his Form 3 due on January 4, 1999, 15 days late.
<PAGE>
PROPOSAL 2:
AMENDMENT TO THE
COMPANY'S 1996 STOCK OPTION PLAN
Compu-DAWN's Board of Directors deems it advisable, subject to stockholder
approval, to increase the number of Common Shares reserved for issuance upon the
exercise of options granted under Compu-DAWN's 1996 Stock Option Plan (the "1996
Plan") from 2,000,000 to 10,000,000 in order to have sufficient Common Shares
available to be able to grant eligible recipients options in the future to
achieve and advance the purposes of the 1996 Plan as described below. The
Company has granted options to purchase Common Shares which, if all of such
options were exercised, would require the issuance of a number of Common Shares
which would exceed the number reserved for issuance under the 1996 Stock Option
Plan. Compu-DAWN's current directors and executive officers have informally
agreed that they will not exercise their options which would preclude Compu-DAWN
from issuing Common Shares out of the 1996 Plan upon the exercise of stock
options by other optionees, unless and until this proposed amendment is approved
by the stockholders of Compu- DAWN. All of the options so granted were granted
at the then-current market price of the Common Shares and all are currently
exercisable at prices ranging from $1.00 to $3.25. The following statements
include summaries of certain provisions of the 1996 Plan. The statements do not
purport to be complete and are qualified in their entirety by reference to the
provisions of the 1996 Plan, a copy of which is available at the offices of
Compu-DAWN.
Purpose
The purpose of the 1996 Plan is to advance the interests of Compu-DAWN by
inducing individuals and eligible entities of outstanding ability and potential
to join and remain with, or provide consulting or advisory services to,
Compu-DAWN, by encouraging and enabling eligible employees, non-employee
Directors, consultants and advisors to acquire proprietary interests in
Compu-DAWN, and by providing such employees, non-employee Directors, consultants
and advisors with an additional incentive to promote the success of Compu-DAWN.
Administration
The 1996 Plan provides for its administration by the Board or by a
committee (the "Committee") chosen by the Board of Directors. The Board or the
Committee has authority (subject to certain restrictions) to select from the
group of eligible employees, non-employee Directors, consultants and advisors
the individuals or entities to whom options will be granted, and to determine
the times at which and the exercise price for which options will be granted. The
Board or the Committee is authorized to interpret the 1996 Plan and the
interpretation and construction by the Board or the Committee of any provision
of the 1996 Plan or of any option granted thereunder shall be final and
conclusive. The receipt of options by Directors or any members of the Committee
shall not preclude their vote on any matters in connection with the
administration or interpretation of the 1996 Plan.
<PAGE>
Nature of Options
The Board or Committee may grant Incentive Stock Options or Nonstatutory
Stock Options under the 1996 Plan. The Federal income tax consequences relating
to the grant and exercise of Incentive Stock Options and Nonstatutory Stock
Options are described below under "Federal Income Tax Consequences."
Eligibility
Subject to certain limitations as set forth in the 1996 Plan, options to
purchase Common Shares may be granted thereunder to persons or entities who, in
the case of Incentive Stock Options, are employees (including Directors and
officers) of either Compu-DAWN or its subsidiaries or, in the case of
Nonstatutory Stock Options, are employees (including Directors and officers) or
non-employee Directors of, or certain consultants or advisors to, Compu-DAWN or
its subsidiaries. At December 8, 1999, approximately 12 employees and 2
non-employee Directors were eligible to receive options under the 1996 Plan.
Option Price
The option price of the Common Shares subject to an Incentive Stock Option
may not be less than the fair market value (as such term is defined in the 1996
Plan) of the Common Shares on the date upon which such option is granted. In
addition, in the case of a recipient of an Incentive Stock Option who, at the
time the option is granted, owns more than 10% of the total combined voting
power of all classes of stock of Compu-DAWN or of a parent or subsidiary
corporation of Compu-DAWN (a "10% Stockholder"), the option price of the Common
Shares subject to such option must be at least 110% of the fair market value of
the Common Shares on the date upon which such option is granted.
The option price of shares subject to a Nonstatutory Stock Option will be
determined by the Board of Directors or the Committee at the time of grant and
may be less than the market price for Compu-DAWN's Common Shares.
On December 17, 1999, the closing sale price for Compu-DAWN's Common
Shares, as reported by the Nasdaq SmallCap Market, was $6.25 per share.
Exercise of Options
An option granted under the 1996 Plan shall be exercised by the delivery by
the holder thereof to Compu-DAWN at its principal office (attention of the
Secretary) of written notice of the number of shares with respect to which the
option is being exercised. Such notice shall be accompanied , or followed within
ten days, by payment of the full option price of such shares which shall be made
by the holder's delivery of (i) a check payable to the order of Compu-DAWN in
such amount; or (ii) previously acquired Common Shares, the fair market value of
which shall be determined as of the date of exercise; or (iii) a combination of
(i) and (ii).
<PAGE>
Reload Feature
The Board of Directors or the Stock Option Committee may grant options with
a reload feature. A reload feature shall only apply when the option price is
paid by delivery of Common Shares. The agreement for options containing the
reload feature shall provide that the option holder shall receive,
contemporaneously with the payment of the option price in Common Shares, a
reload stock option to purchase that number of Common Shares equal to the number
of Common Shares used to exercise the option, and, with respect to Nonstatutory
Stock Options, the number of Common Shares used to satisfy any tax withholding
requirement incident to the exercise of such Nonstatutory Stock Option. The
exercise price of the reload options shall be equal to the fair market value of
the Common Shares on the date of grant of the reload option (or 110% of fair
market value in the case of a 10% Stockholder) and the term of the reload option
shall be equal to the remaining term of the option which gave rise to the reload
option. Subject to the foregoing, the terms of the 1996 Plan applicable to the
option shall be equally applicable to the reload option.
Alternate Stock Appreciation Rights
The Board of Directors or the Stock Option Committee may award to an
optionee, with respect to each Common Share covered by an option ("Related
Option"), a related alternate stock appreciation right ("SAR"), permitting the
optionee to be paid the appreciation on the Related Option in lieu of exercising
the Related Option. An SAR granted with respect to an incentive stock option
must be granted together with the Related Option; an SAR granted with respect to
a Nonstatutory Stock Option may be granted together with, or subsequent to, the
grant of such Related Option. An SAR may be exercised only if and to the extent
that its Related Option is eligible to be exercised. The SAR may be exercised
from time to time by delivery by the holder thereof to Compu-DAWN of a written
notice of the number of shares with respect to which it is being exercised.
An optionee may exercise an SAR only when the fair market value on the
exercise date of a share of Common Stock exceeds the exercise price per share of
the Related Option (the "SAR Spread"). The amount of payment to which an
optionee shall be entitled upon the exercise of each SAR shall be equal to 100%
of the SAR Spread. Such amount is payable by Compu-DAWN, in the sole
determination of Compu-DAWN, in Common Shares, cash or a combination thereof, as
set forth in the SAR agreement. In the case of a payment in Common Shares, the
number of Common Shares to be paid upon exercise of an SAR shall be determined
by dividing the amount of payment due to the optionee by the fair market value
of a Common Share on the exercise date of such SAR. The exercise of any SAR
shall cancel and terminate the right to purchase an equal number of shares
covered by the Related Option. Upon the exercise or termination of any Related
Option, the SAR with respect to such Related Option shall terminate to the
extent of the number of Common Shares as to which the Related Option was
exercised or terminated.
Duration of Options
No Incentive Stock Option granted under the 1996 Plan shall be exercisable
after the expiration of ten years from the date of its grant. However, if an
Incentive Stock Option is granted to a 10% Shareholder, such option shall not be
exercisable after the expiration of five years from the date of its grant.
<PAGE>
Nonstatutory Stock Options granted under the 1996 Plan may be of such
duration as shall be determined by the Board or the Committee.
Non-Transferability
Options granted under the 1996 Plan are not transferable otherwise than by
will or the laws of descent and distribution and such options are exercisable,
during a holder's lifetime, only by the optionee.
Death, Disability or Termination of Employment
Subject to the terms of any stock option agreement, if the employment of an
employee or the services of a non-employee Director, consultant or advisor shall
be terminated for cause or voluntarily, any options held by such persons or
entities shall expire immediately. If such employment or services shall
terminate other than by reason of death or disability, voluntarily or for cause,
then, subject to the terms of any stock option agreement, such option may be
exercised at any time within three months after such termination, but in no
event after the expiration of the option. For purposes of the 1996 Plan, the
retirement of an individual either pursuant to a pension or retirement plan
adopted by Compu-DAWN or at the normal retirement date prescribed from time to
time by Compu-DAWN shall be deemed to be a termination of such individual's
employment other than voluntarily by the employee or for cause.
Subject to the terms of any stock option agreement, if an option holder
under the 1996 Plan (i) dies while employed by Compu-DAWN or its subsidiary or
while serving as a non-employee Director of, or consultant or advisor to,
Compu-DAWN or its subsidiary, or (ii) dies within three months after the
termination of his employment or services other than voluntarily or for cause,
then such option may be exercised at any time within one year after his death by
the estate of the employee, non-employee Director, consultant or advisor, or by
a person who acquired such option by bequest or inheritance from the deceased
option holder. Subject to the terms of any stock option agreement, if the holder
of an option under the 1996 Plan ceases employment or services because of
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) while employed by, or while serving as a non-employee Director of, or
consultant or advisor to, Compu-DAWN or its subsidiary, then such option may be
exercised at any time within one year after his termination of employment,
termination of Directorship, or termination of consulting or advisory
arrangement or agreement due to the disability.
Exercise of Options
An option granted under the 1996 Plan shall be exercised by the delivery by
the holder thereof to Compu-DAWN at its principal office (attention of the
Secretary) of written notice of the number of shares with respect to which the
option is being exercised. Such notice shall be accompanied, or followed within
ten days, by payment of the full option price of such shares which shall be made
by the holder's delivery of (i) a check payable to the order of Compu-DAWN in
such amount or (ii) previously acquired Common Shares, the fair market value of
which shall be determined as of the date of exercise, or (iii) any combination
of the foregoing.
<PAGE>
Amendment and Termination
The 1996 Plan (but not options previously granted thereunder) shall
terminate on July 31, 2006, ten (10) years from the date that it was adopted by
the Board. Subject to certain limitations, the 1996 Plan may be amended or
modified from time to time or terminated at an earlier date by the Board or by
the affirmative vote of the holders of a majority of the outstanding shares
entitled to vote thereon present in person or by proxy at a meeting of
shareholders.
Federal Income Tax Consequences
Nonstatutory Stock Options
Under the Code and the Treasury Department Regulations (the "Regulations"),
a Nonstatutory Stock Option does not ordinarily have a "readily ascertainable
fair market value" when it is granted. This rule will apply to Compu-DAWN's
grant of Nonstatutory Stock Options. Consequently, the grant of a Nonstatutory
Stock Option to an optionee will result in neither income to him nor a deduction
to Compu-DAWN. Instead, the optionee will recognize compensation income at the
time he exercises the Nonstatutory Stock Option in an amount equal to the
excess, if any, of the then fair market value of the shares transferred to him
over the option price. Subject to the applicable provisions of the Code and the
Regulations regarding withholding of tax, a deduction will be allowable to
Compu-DAWN in the year of exercise in the same amount as is includable in the
optionee's income.
For purposes of determining the optionee's gain or loss on the sale or
other disposition of the shares transferred to him upon exercise of a
Nonstatutory Stock Option, the optionee's basis in such shares will be the sum
of his option price plus the amount of compensation income recognized by him on
exercise. Such gain or loss will be capital gain or loss and will be long-term
or short-term depending upon whether the optionee held the shares for more than
one year or one year or less. No part of any such gain will be an "item of tax
preference" for purposes of the "alternative minimum tax."
Incentive Stock Options
Options granted under the 1996 Plan which qualify as Incentive Stock
Options under Section 422 of the Code will be treated as follows:
Except to the extent that the alternative minimum tax rule described below
applies, no tax consequences will result to the optionee or Compu-DAWN from the
grant of an Incentive Stock Option to, or the exercise of an Incentive Stock
Option by, the optionee. Instead, the optionee will recognize gain or loss when
he sells or disposes of the shares transferred to him upon exercise of the
Incentive Stock Option. For purposes of determining such gain or loss, the
optionee's basis in such shares will be his option price. If the date of sale or
disposition of such shares is at least two years after the date of the grant of
the Incentive Stock Option, and at least one year after the transfer of the
shares to him upon exercise of the Incentive Stock Option, the optionee will
realize long-term capital gain treatment upon their sale or disposition.
Compu-DAWN generally will not be allowed a deduction with respect to an
Incentive Stock
<PAGE>
Option. However, if an optionee fails to meet the foregoing holding period
requirements (a so-called disqualifying disposition), any gain recognized by the
optionee upon the sale or disposition of the shares transferred to him upon
exercise of an Incentive Stock Option will be treated in the year of such sale
or disposition as ordinary income, rather than capital gain, to the extent of
the excess, if any, of the fair market value of the shares at the time of
exercise (or, if less, in certain cases the amount realized on such sale or
disposition) over their option price, and in that case Compu-DAWN will be
allowed a corresponding deduction.
For purposes of the alternative minimum tax, the amount, if any, by which
the fair market value of the shares transferred to the optionee upon such
exercise exceeds the option price will be included in determining the optionee's
alternative minimum taxable income. In addition, for purposes of such tax, the
basis of such shares will include such excess.
To the extent that the aggregate fair market value (determined at the time
the option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by the optionee during any calendar
year exceeds $100,000, such options will not be Incentive Stock Options. In this
regard, under existing Internal Revenue Service guidelines, Compu-DAWN may
designate which shares issued upon exercise of such options are Incentive Stock
Options and which shares are Nonstatutory Stock Options. In the absence of such
designation, a pro rata portion of each share issued is to be treated as issued
pursuant to the exercise of an Incentive Stock Option and the balance of each
share treated as granted pursuant to the exercise of a Nonstatutory Stock
Option.
In the event Compu-DAWN does not receive approval by the stockholders of
this Proposal 2, Compu-DAWN's ability to attract and retain individuals with
outstanding ability and potential, and to continue to compete in the marketplace
for the talents and experience of such individual by offering additional
incentives, may be impaired.
The Board of Directors unanimously recommends a vote FOR the adoption of
this proposal.
PROPOSAL 3:
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO CHANGE NAME
Compu-DAWN's Board of Directors has determined that it would be in the best
interest of Compu-DAWN and its stockholders to amend Compu-DAWN's Certificate of
Incorporation to change Compu-DAWN's name to MyTurn.com, Inc. The Board of
Directors believes that the proposed new name is unique, highly recognizable,
and conveys Compu-DAWN's marketing objective to provide products which give the
user easy access to computer use, the Internet and e-commerce opportunities and
that, accordingly, its adoption will enhance Compu-DAWN's competitive position
in its new business.
The Board of Directors unanimously recommends a vote FOR the adoption of
this proposal.
<PAGE>
PROPOSAL 4:
AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED COMMON SHARES
The Board of Directors has recommended an amendment to Compu-DAWN's
Certificate of Incorporation to increase the number of authorized Common Shares
from 20,000,000 to 60,000,000. The Board believes such action to be in the best
interest of Compu-DAWN so as to make additional shares available for
acquisitions, financings, present and future employee benefit programs and other
corporate purposes.
As indicated above, Compu-DAWN is currently authorized to issue 20,000,000
Common Shares. As of December 17, 1999, there were 5,721,649 Common Shares
issued and outstanding. In addition, as of such date there were 4,760,383 Common
Shares issuable pursuant to the exercise of outstanding options (of which
approximately 36% are currently exercisable), and approximately 6,100,000 Common
Shares are issuable pursuant to the terms of various transactions which have
been recently consummated or are pending. Among these transactions is the
agreement with GlobalPC, pursuant to which Compu-DAWN has agreed to purchase all
of Global's assets and is obligated to issue up to 699,284 Common Shares, and
Warrants (the "Global Warrants") exercisable to purchase up to 4,553,684 Common
Shares. The Global Warrants are not exercisable to purchase any Common Shares to
the extent such issuance would violate Rule 4310(c)(25)(H) of the Nasdaq Stock
Market, Inc., which relates to the requirement for stockholder approval, in
certain instances, for the issuance of Common Shares in excess of 20% of
Compu-DAWN's outstanding Common Shares. Compu-DAWN has not obtained stockholder
approval with respect to the exercise of the Global Warrants. However,
Compu-DAWN plans to seek to obtain such stockholder approval in the future.
There are at present no plans to issue any Common Shares beyond the
currently authorized number. The number of Common Shares currently outstanding
and proposed to be issued will not exceed the currently authorized number of
Common Shares. If all of the Common Shares that were proposed to be issued were
issued, Compu-DAWN would have approximately 16,400,000 Common Shares
outstanding. The Board of Directors believes that additional Common Shares can
be utilized either directly or underlying derivative securities to acquire
assets or businesses, or to raise capital or for other corporate purposes. Given
that only approximately 3,600,000 Common Shares remain unreserved, Compu-DAWN
may not have sufficient Common Shares to accomplish acquisitions, raise capital
or achieve other corporate goals in the future. If Compu-DAWN is required to
seek stockholder approval to increase the number of authorized Common Shares at
a time when a transaction or offering is pending or contemplated, the necessary
delay resulting from the proxy process to obtain such stockholder approval could
cause Compu-DAWN to lose the acquisition, financing or other opportunity, to the
detriment of Compu-DAWN and its stockholders. The additional authorized Common
Shares may be issued from time to time as the Board of Directors may determine,
in most cases without further action of the shareholders of Compu-DAWN.
The Board has no current plans to utilize such shares to entrench present
management. It may, however, in the future, be able to utilize the additional
shares, together with or apart from Compu-DAWN's authorized Preferred Shares, as
a defensive tactic against hostile takeover attempts. The authorization of
additional Common Shares shall have no current anti-takeover effect. No hostile
<PAGE>
takeover attempts are, to management's knowledge, threatened. There are no other
provisions in Compu-DAWN's charter or By-laws or other material agreements to
which Compu-DAWN is a party which would, in management's judgment, have an
anti-takeover effect, other than the classification of the Board of Directors.
The relative rights and limitations of the Common Shares would remain
unchanged under the proposed amendment. Shareholders of Compu-DAWN do not
currently possess, nor upon the adoption of the proposed amendment will they
acquire, preemptive rights, which would entitle such persons, as a matter of
right, to subscribe for the purchase of any shares, rights, warrants or other
securities or obligations convertible into, or exchangeable for, securities of
Compu-DAWN.
The Board of Directors unanimously recommends a vote FOR adoption of this
proposal.
PROPOSAL 5:
APPOINTMENT OF
INDEPENDENT AUDITORS
Compu-DAWN has engaged PriceWaterhouseCoopers, LLP ("PWC") as its principal
independent auditors for the fiscal year ending December 31, 1999.
Lazar Levine & Felix, LLP ("Lazar") was Compu-DAWN's independent auditors
for the fiscal year ended December 31, 1998.
A representative of PWC is also expected to be available at the meeting,
will have the opportunity to make a statement, if such representative so
desires, and will be available to respond to appropriate questions.
On October 12, 1999, Compu-DAWN dismissed Lazar as its principal
independent accountant. Lazar's report on Compu-DAWN's financial statements for
either of the years ended December 31, 1997 or 1998 did not contain an adverse
opinion or disclaimer, nor were either of those reports modified as to
uncertainty, scope, or accounting principles.
Compu-Dawn's decision to change accountants was approved by its Board of
Directors as well as its Audit Committee.
There were no disagreements between Compu-DAWN and Lazar on any matter of
accounting principles or practices, financial statements, disclosure, or
auditing scope or procedure.
The Board of Directors unanimously recommends a vote FOR the adoption of
this proposal.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at Compu-DAWN's 2000 Annual
Meeting of
<PAGE>
Stockholders pursuant to the provisions of Rule 14a-8 of the SEC, promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), must
be received by the Secretary of Compu-DAWN at the principal executive offices of
Compu-DAWN by August 22, 2000, for inclusion in Compu-DAWN's Proxy Statement and
form of Proxy relating to such meeting. Compu-DAWN, however, may hold its next
annual meeting earlier in 2000 than such date. Accordingly, Compu- DAWN suggests
that shareholder proposals intended to be presented at the next annual meeting
be submitted well in advance of April 22, 2000, the earliest date upon which
Compu-DAWN anticipates the Proxy Statement and form of Proxy relating to such
meeting will be released to shareholders.
In order for a stockholder to nominate a candidate for director, under
Compu-DAWN's ByLaws, timely notice of the nomination must be received by
Compu-DAWN in advance of the meeting. Ordinarily, such notice must be received
at the principal executive offices of Compu-DAWN (as provided below) not less
than 60 days nor more than 90 days prior to the meeting; however, in the event
that less than 70 days' notice of the date of the meeting is given to
stockholders and public disclosure of the meeting date, pursuant to a press
release, is either not made at all or is made less than 70 days prior to the
meeting date, notice by such stockholder to be timely made must be so received
no later than the close of business on the tenth day following the earlier of
(i) the day on which the notice of the date of the meeting was mailed to
stockholders or (ii) the day on which such public disclosure of the meeting date
was made. The stockholder filing the notice of nomination must describe various
matters, including such information as (x) the name, age, business and residence
addresses, occupation or employment and shares held by the nominee; (y) any
other information relating to such nominee required to be disclosed in a Proxy
Statement; and (z) the name, address and class and number of shares held by the
stockholder.
In order for a stockholder to bring other business before an annual meeting
of stockholders, under Compu-DAWN's By-Laws, timely notice must be received by
Compu-DAWN within the time limits described above. A stockholder's notice must
set forth as to each matter the stockholder proposes to bring before the annual
meeting certain information regarding the proposal, including (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at such meeting; (ii) the name and address
of such stockholder proposing such business; (iii) the class and number of
shares of Compu-DAWN which are beneficially owned by such stockholder; and (iv)
any material interest of such stockholder in such business. These requirements
are separate from and in addition to the requirements a stockholder must meet to
have a proposal included in Compu-DAWN's Proxy Statement.
Any notice given pursuant to the foregoing requirements must be sent to the
Secretary of Compu-DAWN at 333 North First Street, Ste. 200, Jacksonville Beach,
Florida 32250. Any stockholder desiring a copy of Compu-DAWN's By-Laws will be
forwarded one without charge upon receipt of written request therefor.
OTHER BUSINESS
While the accompanying Notice of Annual Meeting of Stockholders provides
for the
<PAGE>
transaction of such other business as may properly come before the Meeting,
Compu-DAWN has no knowledge of any matters to be presented at the Meeting other
than those listed as Proposals 1 through 5 in the Notice. However, the enclosed
Proxy gives discretionary authority in the event that any other matters should
be presented.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement is accompanied by a copy of Compu-DAWN's Annual Report
on Form 10-KSB for the year ended December 31, 1998 (the "Form 10-KSB") and
Compu-DAWN's Quarterly Report on Form 10-QSB for the period ended September 30,
1999 (the "Form 10-QSB").
The following information from the Form 10-KSB, as filed with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, is hereby incorporated by
reference into this Proxy Statement:
(i) the consolidated financial statements of Compu-DAWN as of
December 31, 1998 and 1997 and for each of the two years ended
December 31, 1998 and 1997, included in Item 7 thereof; and
(ii) "Management's Discussion and Analysis or Plan of Operation"
included in Item 6 thereof.
The following information from the Form 10-QSB, as filed with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, is hereby incorporated by
reference into this Proxy Statement:
(i) the consolidated financial statements of Compu-DAWN as of
September 30, 1999 and for each of the nine months ended
September 30, 1999 and 1998, included in Item 1 of Part I
thereof; and
(ii) "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in Item 2 of Part I
thereof.
Any statement contained in a document incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this Proxy
Statement to the extent that a statement contained herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement.
By Order of the Compu-DAWN
Board of Directors
R.E. (Teddy) Turner, IV
Chairman of the Board
Jacksonville Beach, Florida
December 20, 1999
<PAGE>
COMPU-DAWN, INC.
333 First North Street
Suite 200
Jacksonville Beach, Florida 32250
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert E. (Teddy) Turner, IV and Rudy
C. Theale as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, and each of them, to represent and vote, as designated below,
all the shares of Common Stock of Compu-DAWN, Inc. (the "Company") held of
record by the undersigned at the close of business on December 17, 1999, at
the Annual Meeting of Stockholders to be held on January 20, 2000 or any
adjournment thereof.
1. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed below
(Instruction: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list below.)
Robert E. (Teddy) Turner, IV
Rudy C. Theale
2. Proposal to amend the Company's 1996 Stock Option Plan increasing the number
of shares of Common Stock authorized to be issued thereunder from 2,000,000 to
10,000,000.
FOR ____ AGAINST ____ ABSTAIN ____
3. Proposal to amend the Company's Certificate of Incorporation to change the
name of the Company to "MyTurn.com, Inc."
FOR ____ AGAINST ____ ABSTAIN ____
4. Proposal to amend the Company's Certificate of Incorporation to increase the
number of authorized Common Shares from 20,000,000 to 60,000,000.
FOR ____ AGAINST ____ ABSTAIN ____
5. Proposal to ratify the appointment of PriceWaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999.
FOR ____ AGAINST ____ ABSTAIN ____
<PAGE>
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the election of Directors and FOR Proposals 2, 3, 4 and 5.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as
name appears below. When
shares are 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
the President or other
authorized officer. If a
partnership or limited
liability company, please
sign in full partnership or
limited liability company
name by an authorized
person.
Dated:_______________
__________________________
Signature
__________________________
Signature if held jointly
