SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under 240.14a-12
CYBER MERCHANTS EXCHANGE, INC., D.B.A. C-ME.COM
---------------------------------------------------------
(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
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
[_] Fee paid previously by written 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:
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4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 2000
--------------------------------------------------------------------------------
November 14, 2000
TO OUR SHAREHOLDERS:
I am pleased to invite you to attend the annual meeting of stockholders of Cyber
Merchants Exchange, Inc. as detailed below:
DATE AND TIME Thursday, December 14, 2000, at 10:00 a.m.
PLACE Sheraton Pasadena Hotel
303 East Cordova Street
Pasadena, CA 91101
ITEMS OF BUSINESS
1. To elect six directors of the Company to serve
until the 2001 Annual Meeting of Shareholders or
until their successors are duly elected and
qualified;
2. To ratify the selection of BDO Seidman LLP as the
Company's independent auditors for the fiscal year
ending 2001; and
3. To transact such other business as may properly
come before the meeting or any adjournment thereof.
RECORD DATE Only shareholders of record at the close of business on
November 1, 2000, the record date for the meeting, are
entitled to receive notice of and to vote at the Annual
Meeting or any adjournments thereof.
VOTING BY PROXY To assure your representation at the meeting, you are
urged to vote your shares by designating your proxies as
promptly as possible.
All of the Company's shareholders are invited to attend the Annual Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED ENVELOPE
PROVIDED WITH THIS NOTICE OR FAX IT TO (626) 793-5096. NO ADDITIONAL POSTAGE IS
REQUIRED IF THE PROXY CARD IS MAILED IN THE UNITED STATES. IF YOU ATTEND THE
ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU WISH.
By Order of the Board of Directors,
/s/ Frank S. Yuan
-----------------------------------
Frank S. Yuan
Chairman of the Board and Chief Executive Officer
<PAGE>
CYBER MERCHANTS EXCHANGE, INC., D.B.A. C-ME.COM
600 South Lake Avenue, Suite 405
Pasadena, California 91106
Tel: (626) 793-5000
Fax: (626) 793-5096
PROXY STATEMENT
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cyber Merchants Exchange, Inc., d.b.a.
C-ME.com (the "Company") for use at the 2000 Annual Meeting of Shareholders to
be held at the Sheraton Pasadena Hotel, 303 East Cordova Street, Pasadena,
California, 91101, on December 14, 2000, at 10:00 a.m., local time, and at any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice. The record date for the meeting is the close of business on November 1,
2000. All holders of record of the Company's common stock on the record date
are entitled to notice of the meeting and to vote at the meeting and any
meetings held upon adjournment of that meeting. The approximate date of mailing
of this Proxy statement and the accompanying proxy is November 14, 2000.
PROXY INFORMATION
A proxy form is enclosed. Whether or not you plan to attend the meeting in
person, please date, sign and return the enclosed proxy card, as promptly as
possible, in the postage prepaid envelope provided to insure that your shares
will be voted at the meeting. You may revoke your proxy at any time prior to
its use by filing with the Secretary of the Company an instrument revoking it or
a duly executed proxy bearing a later date, or by attending the meeting and
voting in person. Unless you instruct otherwise in the proxy, any proxy, if not
revoked, will be voted at the meeting:
(1) To elect six directors of the Company to serve until the 2001 Annual
Meeting of Shareholders or until their successors are duly elected and
qualified;
(2) To ratify the selection of BDO Seidman LLP as the Company's
independent auditors for the fiscal year ending 2001; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
RECORD DATE AND VOTING
RECORD DATE
The record date for the Special Meeting is the close of business on
November 1, 2000. If the shareholders of record on November 1, 2000 present, in
person or represented by their proxies, at the meeting hold a majority of the
Company's outstanding stock entitled to vote, a quorum will exist for the
transaction of business at the meeting. Shareholders of record who abstain from
voting, including brokers holding their customers' shares who cause abstentions
to be recorded, are counted as present for quorum purposes.
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<PAGE>
SHAREHOLDER LIST
At least 10 days before the Annual Meeting, the officer or agent in charge
of the stock transfer books for the shares of the corporation will make a
complete list of the shareholders entitled to vote at the meeting arranged in
alphabetical order, with the address and number of shares held by each
shareholder. The list will be kept on file at the principal offices of the
Company and will be subject to inspection by any shareholder at any time during
usual business hours. The list will be present for inspection at the Annual
Meeting.
PROXIES
Each shareholder entitled to vote at the Annual Meeting may vote by proxy
executed in writing by the shareholder or by his or her duly authorized
attorney-in-fact, but no proxy can be voted or acted upon after six months from
its date, unless the proxy provides for a longer period. The proxy must be
filed with the Inspector of Elections of the Company before or at the time of
the Annual Meeting.
The following constitute valid means by which a shareholder may authorize
another person to act for him or her as proxy:
(1) A shareholder may execute a writing authorizing another person or
persons to act for him or her as proxy. The proxy may be limited to specific
proposals. Execution may be accomplished by the signing of the writing by the
shareholder or his or her authorized officer, director, employee or agent or by
causing his or her signature to be affixed to the writing by any reasonable
means including, but not limited to, a facsimile signature.
(2) A shareholder may authorize another person or persons to act for him
or her as proxy by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission to the person who will be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder
of the proxy. The transmission must either set forth or be submitted with
information from which it can be determined that it was authorized by the
shareholder.
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their reasonable out-of-pocket expenses regarding these
solicitations. Certain of the Company's directors, officers and regular
employees, without additional compensation, may solicit proxies personally or by
telephone, electronic mail, facsimile or telegram. The Company will pay no
additional compensation to its officers, directors and employees for these
activities.
DATE AND TIME OF OPENING AND CLOSING OF THE POLLS
The date and time of the opening of the polls for the Annual Meeting of the
Shareholders of the Company shall be 10:00 a.m. on December 14, 2000. The time
of the closing of the polls for voting shall be announced at the Annual Meeting.
No ballot, proxies or votes, nor any revocations or changes to a vote, shall be
accepted after the closing of the polls unless a court of equity, upon
application by a shareholder, determines otherwise.
VOTING
The Inspector of Elections will tabulate votes cast by proxy or in person
at the Annual Meeting with the assistance of the Company's transfer agent. The
Inspector of Elections will also determine whether a quorum is present. Each
shareholder of record at the close of business on November 1, 2000, is entitled
to one vote for each share then held on each matter submitted to a vote of
shareholders. Brokers holding shares of record for their customers generally
are not entitled to vote on certain matters unless their customers give them
specific voting instructions. If the broker does not receive specific
instructions, the broker will note this on the proxy form or otherwise advise
the Company that it lacks voting authority.
The voting requirements for the election of directors and any other
proposals to be considered by the shareholders at the Annual Meeting are as
follows:
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Election of Directors
-----------------------
- A shareholder submitting a Proxy may vote for all or any of the nominees
for election to the Board of Directors or may withhold his or her vote from
all or any of such nominees. Directors are elected by a plurality of votes.
- If a submitted proxy is properly signed but unmarked in respect of the
election of directors to the board, the proxy agents named in the proxy
will vote all the shares represented thereby for the election of all of the
nominees for director.
- All of the nominees have agreed to serve the Company as a director if
elected. However, should any nominee become unwilling or unable to serve if
elected, the Proxy Agents named in the Proxy will exercise their voting
power in favor of such other person as the Board of Directors of the
Company may recommend.
- In accordance with California corporations law and the Company's Bylaws,
the election of a nominee to the Board requires a quorum consisting of a
majority of the Company's issued and outstanding shares entitled to vote,
and a favorable vote by a plurality of the Company's issued and outstanding
shares entitled to vote for the nominee. An abstention from voting on this
matter by a shareholder, while included for purposes of calculating a
quorum for the meeting, has no effect on the election of nominees to the
Board. In addition, although broker "non-votes" will be counted for
purposes of attaining a quorum, they will have no effect on the vote for
nominees.
Ratification of Board's Selection of Independent Auditors
---------------------------------------------------------------
- A shareholder submitting a Proxy may vote for or against or abstain from
voting for ratification of the Board's selection of independent auditors
for the fiscal year ending June 30, 2001.
- If a submitted proxy is properly signed but unmarked in respect of the
ratification of the selection of independent auditors, the proxy agents
named in the proxy will vote all the shares represented thereby for
ratification of the independent auditors.
- In accordance with California corporations law and the Company's Bylaws, a
proposal submitted to the shareholders of the Company requires a quorum
consisting of a majority of the Company's issued and outstanding shares
entitled to vote, and a favorable vote of a majority of the Company's
issued and outstanding shares entitled to vote on the proposal. An
abstention from voting on this matter by a shareholder, while included for
purposes of calculating a quorum for the meeting, has no effect on the
ratification of the selection of independent auditors. In addition,
although broker "non-votes" will be counted for purposes of attaining a
quorum, they will have no effect on the vote for ratification of the
selection of independent auditors.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report of the Company for
the fiscal year ended June 30, 2000. Shareholders are encouraged to read the
Annual Report in connection with the information contained herein.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of October 15, 2000, the Company had 7,589,669 shares of its common
stock issued and outstanding. Each share of record on November 1, 2000, will be
entitled to one vote at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of October 15, 2000 certain information
known to the Company regarding the beneficial ownership of the Company's common
stock, and as adjusted to reflect the share ownership for (i) each executive
officer or director of the Company who beneficially owns shares; (ii) each
shareholder known to the Company to beneficially own five percent or more of the
outstanding shares of its common stock; and (iii) all executive officers and
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<PAGE>
directors as a group. The Company believes that the beneficial owners of the
common stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such Shares, subject to
community property laws where applicable. The individuals listed in the table
are accessible at the following address: 600 South Lake Avenue, Suite 405,
Pasadena, California, 91106.
<TABLE>
<CAPTION>
PRINCIPAL STOCKHOLDERS
----------------------------------------------------- ---------------- ---------------------
AMOUNT AND
NATURE OF PERCENTAGE OF COMMON
NAME BENEFICIAL OWNER SHARES OUTSTANDING
----------------------------------------------------- ---------------- ---------------------
(I) DIRECTORS AND EXECUTIVE OFFICER
----------------------------------------------------- ---------------- ---------------------
<S> <C> <C>
Frank S. Yuan Family Trust - CEO and Chairman of the
Company (1) 2,862,600 34.04%
----------------------------------------------------- ---------------- ---------------------
John F. Busey, President and Director (2) 165,928 1.97%
----------------------------------------------------- ---------------- ---------------------
Serena Kokjer-Greening, COO (3) 77,093 0.92%
----------------------------------------------------- ---------------- ---------------------
James Vandeberg, Corporate Secretary (4) 10,315 0.12%
----------------------------------------------------- ---------------- ---------------------
Philip Hawley, Director (5) 235,000 2.80%
----------------------------------------------------- ---------------- ---------------------
Deborah Shamaley, Director 300,000 3.57%
----------------------------------------------------- ---------------- ---------------------
Charles Rice, Director (6) 85,000 1.01%
----------------------------------------------------- ---------------- ---------------------
Howard Moore, Director (7) 30,000 0.36%
----------------------------------------------------- ---------------- ---------------------
(II) ALL DIRECTORS AND OFFICERS AS A GROUP 3,765,936 44.79%
----------------------------------------------------- ---------------- ---------------------
TOTAL OUTSTANDING SHARES 7,589,669 100.00%
----------------------------------------------------- ---------------- ---------------------
<FN>
(1) Includes 2,388,000 shares of common stock held by the Frank S. Yuan Family Trust. Frank
Yuan is the trustee of the trust and he and his wife are its sole members. Also includes
274,600 shares of common stock issuable within 60 days upon exercise of stock options.
(2) Includes 165,928 shares of common stock issuable within 60 days upon exercise of stock
options.
(3) Includes 77,093 shares of common stock issuable within 60 days upon exercise of stock
options.
(4) Includes 10,315 shares of common stock issuable within 60 days upon exercise of stock
options.
(5) Includes 235,000 shares of common stock issuable within 60 days upon exercise of stock
options.
(6) Includes 25,000 shares of common stock issuable within 60 days upon exercise of stock
options.
(7) Includes 30,000 shares of common stock issuable within 60 days upon exercise of stock
options.
</TABLE>
CHANGE IN CONTROL
The Company is not aware of any arrangement that would upset the control
mechanisms currently in place. Although it is conceivable that a third party
could attempt a hostile takeover of the Company, the Company has not received
notice of any such effort.
ELECTION OF DIRECTORS - NOMINEES
At the Annul Meeting, six directors, who will constitute the entire Board
of Directors, are to be elected to serve until the next Annual Meeting of
shareholders or until their successors shall be elected and shall qualify. All
nominees have consented to being named as nominees and have agreed to serve if
elected.
4
<PAGE>
The table below sets forth certain information with respect to the nominees
for election as directors of the Company to serve until the 2001 Annual Meeting
of Shareholders. The Board of Directors has no reason to believe that the six
nominees will be unwilling or unable to serve.
NAME OF NOMINEE AGE POSITIONS HELD
----------------- --- ---------------
John F. Busey 53 President and Director since 1999
Philip M. Hawley 75 Director since 2000
Howard Moore 70 Vice-Chairman of the Board since 1998
Charles Rice 58 Director since 1996
Deborah Shamaley 42 Director since 1996
Frank S. Yuan 53 Chairman of the Board since 1996
Chief Executive Officer since 1996
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR EACH OF THE NOMINEES NAMED
ABOVE TO SERVE ON THE COMPANY'S BOARD OF DIRECTORS.
The following text sets forth certain biographical information concerning
each nominee:
John F. Busey. John F. Busey, president of C-ME.com, has more than two
---------------
decades of experience in strategic, operational and financial planning and
management with the former Carter Hawley Hale Stores, the multi-billion dollar
department and specialty holding company which operated under the following
names: The Broadway; Neiman Marcus; Contempo Casuals; Emporium; Weinstock's;
Bergdorf Goodman; Holt Renfrew - Canada; Waldenbooks; John Wanamaker;
Thalhimers; and Sunset House. As president of Carter Hawley Hale Stores finance
subsidiary, and vice president and treasurer of the company, Mr. Busey was
responsible for all finance, banking and investment functions, including
mergers, acquisitions and divestitures, an initial public offering, and
corporate restructuring and recapitalization. From 1995 until joining the
Company as President in 1999, Mr. Busey focused his energy on the non-profit
efforts of the Southern California Housing Development Corporation helping local
cities create affordable housing. Mr. Busey received a B.S. in finance and
economics from the Menlo School of Business and a M.B.A. from the University of
Southern California. He also completed the Executive Financial Management
Program at the Stanford University Graduate School of Business.
Philip M. Hawley. Philip Hawley has served as a director and member of the
----------------
Company's Executive and Audit Committees since February, 2000. For the past
three years, Mr. Hawley has been Chairman and C.E.O. of Krause's Furniture Inc.
(AMEX: KFI), a leading manufacturer and retailer of custom-crafted furniture
that is involved in business-to-business e-commerce. Prior to joining Krause's,
Mr. Hawley served as Chairman and C.E.O. of the former Carter Hawley Hale
Stores, Inc., the multi-billion dollar department and specialty store holding
company which operated under the following names: The Broadway; Neiman Marcus;
Contempo Casuals; Emporium; Weinstock's; Bergdorf Goodman; Holt Renfrew -
Canada; Waldenbooks; John Wanamaker; Thalhimers; and Sunset House. Mr. Hawley
has retired from the positions on the Boards of Directors for AT&T, Atlantic
Richfield Company, Bank of America Corporation, Johnson and Johnson, and the
Weyerhaeuser Company. In addition, he is a life trustee for the Huntington
Library and Art Gallery, Pasadena, and the University of Notre Dame, and a
trustee for the California Institute of Technology. Mr. Hawley holds a B.S.
degree from the University of California, Berkeley, and completed the Advanced
Management Program at Harvard University's Graduate School of Business
Administration.
Howard Moore. Howard Moore, director of Toys 'R' Us, has fifty years of
-------------
retail experience. From 1984, when Mr. Moore joined Toys 'R' Us as executive
vice president and general merchandise manager, until 1990, when he retired,
sales increased from $480 million to $4.8 billion. Mr. Moore has served on the
Toys 'R' Us board of directors since 1984. He is also founder and president of
Howard Moore Associates, a company, which provides marketing, product licensing,
packaging and merchandising consulting to the toy industry. Previously, he
was president and CEO of Toy Town, USA, Inc. after founding and operating two
other toy chain stores.
5
<PAGE>
Charles Rice. Charles Rice, a former senior international and domestic
-------------
buyer, has more than 30 years of apparel buying experience, working for both
Sears and Ward's. He brings extensive lists of long established contacts with
both retailers and vendors to the Company's board. Mr. Rice holds a B.S.
degree in business and economics from the University of Delaware.
Deborah Shamaley. Deborah Shamaley, a chain store entrepreneur, has 20
-----------------
years of retail and wholesale apparel experience. Ms. Shamaley co-founded the
Texas Apparel Group (TAG). TAG imported and sold women's apparel wholesale to
more than 1800 retailers including Nordstrom's, J.C. Penney's, Sears, and
Burlington Coat Factory. TAG also owned and operated a 23 apparel store-chain
under the name $11.99 Puff. Ms. Shamaley sold the company in 1996.
Frank Yuan. Combining decades of experience in the apparel and computer
-----------
industries, Frank Yuan has developed a business that draws on his extensive
knowledge of the retail industry, apparel manufacturing, computer technology,
and financial businesses. Before starting the Company, he founded a retail
clothing chain and a men's clothing line and co-founded UNI-CGS, Inc., a
computer hardware importer and wholesaler. Mr. Yuan also founded UNI-Fortune,
a real-estate development company, and co-founded United National Bank,
Evertrust Bank, Western Cities Title Company and Serv-American National Title.
Mr. Yuan received a B.A. degree in economics from Fu-Jen Catholic University in
Taiwan and a M.B.A. degree from Utah State University.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and officers of the Company are required by Section 16 of the
Securities Exchange Act of 1934 to report to the Securities and Exchange
Commission their transactions in, and beneficial ownership of, the Company's
common stock, including any grants of options to purchase common stock. To the
best of the Company's knowledge, for the period from July 1, 1999, to June 30,
2000, all reports were filed on a timely basis.
BOARD MEETINGS AND COMMITTEES
The Board of Directors has, as standing committees, an Executive Committee,
a Compensation Committee and an Audit Committee. During the fiscal year ended
June 30, 2000, the Board of Directors held four regular meetings and three
special meetings. All directors attended 80% or more of the total meetings of
the Board and committees of the Board on which they served.
The Executive Committee consists of Frank Yuan, John Busey, Howard Moore,
Philip Hawley and Charles Rice. The Executive Committee has authority to take
any action other than appointment of auditors, election and removal of directors
and appointment of officers, which can be taken only by the entire Board.
During the fiscal year ended June 30, 2000, the Executive Committee held seven
meetings.
The Compensation Committee consists of Frank Yuan, Howard Moore and Charles
Rice. The principal functions of the Compensation Committee are to establish the
compensation of executive officers, review management organization and
development, review significant employee benefit programs and to administer the
Company's Stock Option Plan.
The Audit Committee consists of three independent directors, Howard Moore,
Philip Hawley and Charles Rice. The Audit Committee is responsible for aiding
management in the establishment and supervision of the Company financial
controls, evaluating the scope of the annual audit, reviewing audit results,
consulting with management and the Company's independent accountants prior to
the presentation of financial statements to the shareholders and, if
appropriate, initiating inquiries into aspects of the Company's financial
affairs. The Audit Committee held two meetings during the fiscal year ended
June 30, 2000.
The Company does not have a Nominations Committee. The Board of Directors,
as a whole, identifies and screens candidates for membership on the Company's
Board.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth the compensation we have paid to each
executive officer and all executive officers as a group, for the fiscal year
ended June 30, 2000, annual compensation, including salary and bonuses paid by
the Company to the CEO. No other executive officers received more than 100,000
in the fiscal year ended June 30, 2000. The Company does not currently have a
long term compensation plan and does not grant any long term compensation to its
executive officers or employees. The table does not reflect certain personal
benefits, which in the aggregate are less than ten percent of each Named
Executive Officer's salary and bonus. No other compensation was granted for
this fiscal year ended June 30, 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
---------------------------------- ------------------------ --------
Securities
Name Other Restricted Underlying
and Annual Stock Options/ LTIP All Other
Principal Compens- Award(s) SARs (#) Payouts Compen-
Position Year Salary ($) Bonus ($) tion ($) ($) (1) ($) ation ($)
------------ ---- ----------- --------- ---------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Yuan, Frank 2000 $ 84,000 N/A $ 0 N/A 525,000 N/A $ 0
(CEO) 1999 $ 50,000 N/A $ 0 N/A 0 N/A $ 0
1998 $ 25,818 N/A $ 0 N/A 0 N/A $ 0
------------ ---- ----------- --------- ---------- ----------- ----------- -------- -----------
Busey, John 2000 $ 75,000 N/A $ 0 N/A 300,000 N/A $ 0
(President)
------------ ---- ----------- --------- ---------- ----------- ----------- -------- -----------
Kokjer 2000 $ 63,174 N/A $ 0 N/A 180,000 N/A $ 0
reening,
Serena
(COO)
------------ ---- ----------- --------- ---------- ----------- ----------- -------- -----------
</TABLE>
(1) Consists of grants of stock options under the Company's 1996 and 1999 Stock
Option Plans.
The following table sets forth certain information concerning grants of
stock options pursuant to the 1996 and/or 1999 Stock Option Plans to each Named
Executive Officer during the year ended June 30, 2000.
<TABLE>
<CAPTION>
OPTION / SAR GRANTS IN LAST FISCAL YEAR
% of Total
Number of Options /
Securities SARS
Underlying Granted to
Options / SARS Employees in Exercise or Base
Name Granted Fiscal Year (1) Price ($/Sh) Expiration Date
----------------- -------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Yuan, Frank (CEO) 525,000 46.8% $ 0.40 to $3.25 10/1/09
----------------- -------------- --------------- ------------------ ---------------
Busey, John 300,000 26.8% $ 3.25 10/1/09
(President)
----------------- -------------- --------------- ------------------ ---------------
Kokjer-Greening, 180,000 16.1% $ 6.75 10/1/10
Serena (COO)
----------------- -------------- --------------- ------------------ ---------------
</TABLE>
(1) Options to purchase an aggregate of 1,121,252 shares of Common Stock were
granted to employees, including the Named Executive Officers, during the fiscal
year ended June 30, 2000. Stock options granted are under the terms of the 1996
and/or 1999 Stock Option Plans. Generally, vesting of granted stock options are
based on the following schedule: 25% of grant vests 6 months after the start of
employment, then at 4.16% per month, to be completely vested in two years.
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<PAGE>
The following table sets forth certain information concerning exercises of
stock options pursuant to the 1996 and/or 1999 Stock Option Plans by each Named
Executive Officer during the year ended June 30, 2000 and stock options held at
year end.
<TABLE>
<CAPTION>
AGGREGATED OPTION / SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION / SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options / SARs Options / SARs
At FY-End (#) at FY-End ($)
Shares Acquired Exercisable / Exercisable /
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable *
----------------- ---------------- ------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Yuan, Frank (CEO) 0 $ 0 191,400 / 333,600 $ 693,300 /
$ 1,084,200
----------------- ---------------- ------------------- ------------------ -----------------
Busey, John 0 $ 0 99,960 / 200,040 $ 324,870 /
(President) $ 650,130
----------------- ---------------- ------------------- ------------------ -----------------
Kokjer-Greening, 0 $ 0 0 / 180,000 $ 0 / $0
Serena (COO)
----------------- ---------------- ------------------- ------------------ -----------------
</TABLE>
* On June 30, 2000, the average of the high and low price of the stock trading
on the OTC BB was $6.50.
THE 1996 STOCK OPTION PLAN
The Company's 1996 stock option plan (the Plan) provides for granting of
stock options to employees, and non-employee directors. The Company has
reserved 250,000 shares of common stock for issuance under the Plan. The Board
of Directors determines the terms and conditions of grants of stock options.
Generally, one-half of the granted option is exercisable after the employee's
first year of employment. The remaining option is exercisable after the end of
the employee's third year of employment. The option granted will expire within
three months after termination of employment.
During the year ended June 30, 1999, the Company granted 15,000 options
under 1996 Plan to a non-employee director at exercise price of $0.40 per share.
During the year ended June 30, 2000, the Company granted 70,000 options under
the 1996 Plan to all directors for their service for the year ended June 30,
1999 and 35,000 options to four employees as incentive at exercise price of
$0.40 per share. The Company recognized a total stock compensation expense of
$275,800, among which $91,000 was related to employees and $184,800 was related
to non-employees.
THE 1999 STOCK OPTION PLAN
The Company's 1999 stock option plan (the Plan) provides for granting of
stock options to employees, officers, directors, and other entities that have
made contributions to the Company. The Company has reserved 2,000,000 shares of
common stock for issuance under the Plan. The Board of Directors determines the
terms and conditions of granting stock options. Generally, the vesting period
is two years allocating as follows: the first 25% of options granted is
exercisable after the first six months of employment, then 4.16% is vested each
month thereafter. The Plan provides for the useful life of the options granted
to be 10 years starting from the granting date. The options granted will be
expired within one month after the termination of employment.
8
<PAGE>
During the year ended June 30, 2000, the Company granted a total of
1,655,315 options to employees, directors, officers, consultants, attorneys,
finders, and outside sales representatives. The exercise prices of options
granted vary and range from $3.25 to $13.12. The Company applies APB Opinion
No. 25 "Accounting for Stock Issued to Employees" and related interpretations
in accounting for its stock option plans. As a result, the Company recognized a
total stock compensation expense of $2,077,187 among which $1,258,214 was
related to employees and $818, 973 were related to non-employees.
COMPENSATION OF DIRECTORS
At this time, non-employee directors of the company are compensated with
stock options under the Company's 1996 and 1999 Stock Option Plans. Employee
directors are not compensated beyond their regular salaries. All directors are
reimbursed for any reasonable expenses incurred in the course of fulfilling
their duties as a director of the Company.
Stock options have been granted to non-employee directors of the Company
for the year ended June 30, 2000, as follows:
Name Date 1996 Plan 1999 Plan Total
-------------------- -------- --------- --------- ------
HOWARD MOORE
OPTIONS @ $0.40 1/28/99 15,000 15,000
OPTIONS @ $0.40 10/25/99 10,000 10,000
OPTIONS @ $3.25 10/1/99 15,000 15,000
------
TOTAL 40,000
------------------------------------------------------------
CHARLES RICE
OPTIONS @ $0.40 10/25/99 10,000 10,000
OPTIONS @ $3.25 10/1/99 15,000 15,000
------
TOTAL 25,000
------------------------------------------------------------
DEBORAH SHAMALEY
OPTIONS @ $0.40 10/25/99 10,000 10,000
OPTIONS @ $3.25 10/1/99 15,000 15,000
------
TOTAL 25,000
------------------------------------------------------------
PHILIP M HAWLEY
OPTIONS @ $6.50 1/3/00 15,000 15,000
------
TOTAL 15,000
Employment / Consulting Contracts
John F. Busey Employment Agreement
--------------------------------------
On October 1, 1999, the Company entered into an employment agreement with
Mr. John F. Busey. Mr. Busey is appointed as President and member of the board
of directors of the Company, effective October 1, 1999 for a three-year term
through October 1, 2002. The term of the 1999 Busey Agreement will be extended
for one additional year at the end of each year unless either Mr. Busey or the
Company elects not to extend the term by notice given at least 30 days prior to
the expiration of the current term. If either party elects not to extend the
1999 Busey Employment Agreement in accordance with the foregoing, then, upon the
then-current effective date of expiration, the Company will continue to pay Mr.
Busey's salary and employee benefits for a period of three months.
Mr. Busey's base salary shall be $100,000 per year. The Company will
provide Mr. Busey with medical/health insurance, three weeks paid vacation and
sick leave. Mr. Busey is eligible to receive all other benefits made available
by the Company to similarly situated corporate offices and employees, subject to
the terms, conditions and overall administration of such benefits and plans, in
accordance with the Company's Employee Handbook. The Company will reimburse
all business expenses incurred by Mr. Busey on behalf of the Company.
9
<PAGE>
Mr. Busey was granted stock options for 300,000 shares of common stock at
the exercise price of $3.25 per share under the 1999 Stock Incentive Plan, which
will vest in accordance with the newly-hired employee vesting schedule. Mr.
Busey is also entitled to receive stock options for 5% of the shares of any new
issuance of the Company's common stock on an undiluted basis at the exercise
price equal to the current market price at the end of the day of new issuance.
This additional stock option is subject to the approval of the investment
bankers or investors who are leading the new issuance of the Company's common
stock. Subsequent to June 30, 2000, Mr. Busey received additional 77,154 stock
options pursuant to the aforementioned term.
In the event that the 1999 Busey Agreement is terminated with cause by Mr.
Busey or without cause by the Company, Mr. Busey is entitled to receive the full
amount of salary and employee benefits for three months. These damages shall be
reduced by all amounts that he earns during the period between the termination
of his employment under this agreement and payment of the damages. Any dispute
arising between the Company and Mr. Busey will be resolved in arbitration.
Serena Kokjer-Greening Employment Agreement
----------------------------------------------
On January 31, 2000 the Company entered into an employment agreement with
Ms. Serena Kokjer-Greening. Ms. Kokjer-Greening is appointed as Chief Operating
Officer of the Company, effective January 31, 2000 for a three-year term through
January 30, 2003 unless earlier terminated. The term of employment shall
continue on an annual basis until terminated at the option of either party upon
(30) days written notice prior to the expiration of the term. The agreement
may be terminated at any time by written agreement between the parties.
Ms. Kokjer-Greening's base salary shall be $150,000 per year. The Company
will provide Ms. Kokjer-Greening with medical/health insurance, three weeks paid
vacation and sick leave. Ms. Kokjer-Greening is eligible to receive all other
benefits made available by the Company to similarly situated corporate officers
and employees, subject to the terms, conditions and overall administration of
such benefits and plans, in accordance with the Company's Employee Handbook.
The Company will also reimburse all business expenses incurred by Ms.
Kokjer-Greening on behalf of the Company.
Ms. Kokjer-Greening received a grant of stock options for 180,000 shares of
common stock at the exercise price of $6.75 per share under the 1999 Stock
Incentive Plan, which will vest in accordance with the newly hired employee
vesting schedule. Ms. Kokjer-Greening is also entitled to receive stock options
for 3% of the shares of any new issuance of the Company's common stock on
undiluted basis at the exercise price equal to the current market price at the
end of the day of new issuance. This additional stock option is subject to the
approval of the investment bankers or investors who are leading the new issuance
of the Company's common stock. Subsequent to June 30, 2000, Ms. Kokjer-Greening
received additional 46,292 stock options pursuant to the aforementioned term.
In the event that the 2000 Kokjer-Greening Agreement is terminated with
cause by Ms. Kokjer-Greening or without cause by the Company, Ms.
Kokjer-Greening is entitled to receive the full amount of salary and employee
benefits for three months. These damages shall be reduced by all amounts that
she earns during the period between the termination of her employment under this
agreement and payment of damages. Any dispute arising between the Company and
Ms. Kokjer-Greening will be resolved in arbitration.
Philip Hawley - Consulting Agreement
----------------------------------------
On January 3, 2000, the Company entered into a consulting agreement with
Mr. Philip M. Hawley. Mr. Hawley is contracted to provide consulting services
for the Company when requested by the Company subject to his availability and to
the terms and conditions of the agreement. The term of the consulting agreement
is for three (3) years commencing on January 3, 2000.
Mr. Hawley was granted stock options for 220,000 shares of common stock at
an exercise price of $6.50 per share under the 1999 Stock Incentive Plan. Of
the 220,000 stock options, options for 110,000 shares were immediately
exercisable by Mr. Hawley and the remainder are exercisable on or after June 3,
2000. The Company will reimburse all reasonable business expenses incurred by
Mr. Hawley in connection with the Company's business upon presentation of
receipts or other acceptable documentation of the expenditures.
10
<PAGE>
The Company and/or Mr. Hawley may terminate the agreement without cause
upon 30 days prior written notice to the other. In either event, all
unexercised options granted to Mr. Hawley by the Company will be terminated on
the date of termination. The Company will indemnify Mr. Hawley from all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies that result from or relate to the discharge of his duties under
the agreement.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected BDO Seidman LLP, Los Angeles,
California, as independent certified public accountants to act as the Company's
auditors for the fiscal year ending June 30, 2001. BDO Seidman LLP has examined
the accounts of the Company since July 1, 1999, and in the opinion of
management, the firm should continue as the Company's auditors. Unless
otherwise specified, the shares of common stock represented by the proxies
solicited hereby will be voted "FOR" the proposal to appoint BDO Seidman LLP as
the Company's auditors.
Representatives of BDO Seidman LLP are expected to be present at the
meeting, will have an opportunity to make a statement if they wish to do so, and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPOINTMENT OF BDO
SEIDMAN LLP AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 2001.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy materials
for the 2001 annual meeting of shareholders, written notice of any shareholder
proposal must be received by the Company by June 29, 2001. The Company did not
receive notice of any shareholder proposal or nominations of persons for
election to the Board of Directors relating to the 2000 Annual Meeting. All
proposals and nominations should be directed to the Company's principal
executive offices at 600 South Lake Avenue, Suite 405, Pasadena, California,
91106, Attention: Manager of Investor Relations.
OTHER MATTERS
A copy of the Company's 2000 Annual Report is included with this Proxy
Statement.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Any Proxy in which no direction is specified will be voted
in favor of each of the nominees and ratification of the Board's selection of
independent auditors.
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than as stated in this Proxy Statement and is not aware
that any other matters will be presented for action at the meeting. Should any
other matters be properly presented, the person named in the enclosed form of
Proxy will vote the Proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the Proxy.
Copies of the Company's Annual Report on Form 10-KSB for the year ended
June 30, 2000, as filed with the Securities and Exchange Commission will be
provided to stockholders without charge upon request to the Manager of Investor
Relations, Cyber Merchants Exchange, Inc., 600 S. Lake Avenue, Suite 405,
Pasadena, CA 91106. (888) 564-6263.
By Order of the Board of Directors,
/s/ Frank S. Yuan
-------------------------
Frank S. Yuan
Chairman of the Board and Chief Executive Officer
November 14, 2000
11
<PAGE>
NOTE: THIS PROXY SHOULD BE MARKED, DATED AND SIGNED BY THE SHAREHOLDER(S)
EXACTLY AS HIS OR HER NAME APPEARS HEREON, AND RETURNED IN THE ENCLOSED
ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY POSTPONEMENT(S) OR
ADJOURNMENTS(S) THEREOF WITH RESPECT TO THE ELECTION OF DIRECTORS AND
RATIFICATION OF AUDITORS. IF NO CONTRARY OBJECTION IS INDICATED OR
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND FOR
RATIFICATION OF THE INDEPENDENT AUDITORS.
DATED: ________________________________, 2000.
___________________________________________________
Print name(s) exactly as shown on Stock Certificate
___________________________________________________
(Signature)
___________________________________________________
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears hereon. 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, please sign in partnership name by an authorized person.
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CYBER MERCHANTS EXCHANGE, INC., D.B.A. C-ME.COM
2000 ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 14, 2000
The undersigned shareholder of CYBER MERCHANTS EXCHANGE, INC., a California
corporation, (the "Company") hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated October 27, 2000, and
hereby appoints Frank S. Yuan or John F. Busey or either of them, as proxies and
attorneys-in-fact with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2000 Annual Meeting
of Shareholders of the Company to be held on December 14, 2000, at
adjournment(s) or postponement(s) thereof, and to vote all shares of Common
Stock that the undersigned would be entitled to vote if then and there
personally present, on the matter set forth below:
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
[_] For all nominees listed below [_] Withhold authority for all
nominees listed below
If you wish to withhold authority for any individual nominee(s), strike a
line through his or her name(s) in the list below:
Frank S. Yuan John F. Busey Howard Moore
Charles Rice Deborah Shamaley Philip M. Hawley
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF BDO SEIDMAN LLP AS AUDITORS OF THE
COMPANY FOR FISCAL YEAR ENDING JUNE 30, 2001
[_] For [_] Against [_] Abstain
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
