<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
COMPUTER MARKETPLACE, INC.
(Name of Registrant As Specified in its Charter)
NANCY KILEY, SECRETARY, COMPUTER MARKETPLACE, INC.
(Name of Person(s) Filing the Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
4) Proposed maximum aggregate value of transaction:
N/A
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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 date of its filing.
1) Amount Previously Paid:
N/A
2) Form, Schedule or Registration Statement No.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
<PAGE>
COMPUTER MARKETPLACE, INC.
1490 Railroad Street
Corona, California 91720
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 4, 1997
----------------------------------------
To the Stockholders of Computer Marketplace, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Computer Marketplace, Inc., a Delaware corporation (the
"Company"), will be held on April 4, 1997, at the Company's offices located at
1490 Railroad Street, Corona, California 91720 at 9:00 a.m., local time, and
thereafter as it may from time to time be adjourned, for the purposes stated
below:
1. To elect five (5) directors to the Board of the Company for a one
(1) year term;
2. To ratify the appointment of Moore Stephens, P.C. as the Company's
independent certified public accountants;
3. To effect a reverse stock split of the Company's issued Common
Stock, par value $.0001 per share ("Common Stock"), on the basis
of one (1) new share of Common Stock for each six (6) shares of
Common Stock outstanding (the "Reverse Stock Split"); and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting.
Only those Stockholders of record at the close of business on February 10, 1997
are entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. The stock transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nancy Kiley
March 6, 1997 Nancy Kiley, Secretary
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO AMERICAN
STOCK TRANSFER & TRUST COMPANY, 40 WALL STREET, NEW YORK, NEW YORK 10005.
<PAGE>
COMPUTER MARKETPLACE, INC.
1490 Railroad Street
Corona, California 91720
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Computer Marketplace, Inc., a Delaware
corporation (the "Company"), for use at the annual meeting of the Company's
Stockholders to be held at the Company's offices located at 1490 Railroad
Street, Corona, California 91720 on April 4, 1997 at 9:00 a.m., local time, and
at any adjournments thereof (the "Annual Meeting").
The Annual Meeting has been called to consider and take action on the
following proposals: (i) to elect five (5) directors to the Board of Directors
of the Company for a one (1) year term, (ii) to ratify the appointment of Moore
Stephens, P.C. as the Company's independent certified public accountants, (iii)
to effect a reverse stock split of the Company's issued Common Stock, par value
$.0001 per share ("Common Stock"), on the basis of one (1) new share of Common
Stock for each six (6) shares of Common Stock outstanding, (the "Reverse Stock
Split"), and (iv) to transact such other business as may properly come before
the Annual Meeting or any adjournments thereof. The Company's Board of Directors
has taken affirmative action with respect to each of the foregoing proposals and
recommends that the Stockholders vote in favor of each of the proposals. Only
holders of record of Common Stock, of the Company at the close of business on
February 10, 1997 (the "Record Date") will be entitled to vote at the Annual
Meeting.
The principal executive offices of the Company are located at 1490
Railroad Street, Corona, California, 91720 and its telephone number is (909)
735-2102. The approximate date on which this Proxy Statement, the proxy card and
other accompanying materials are first being sent or given to Stockholders is ,
1997. The Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1996, including audited financial statements, and Quarterly Reports on Form
10-QSB for the quarters ended September 30, 1996 and December 31, 1996 are
attached hereto as Exhibits A, B anc C, respectively, and are being sent to
stockholders together with this Proxy Statement.
VOTING REQUIREMENTS
As of February 10, 1997 (the "Record Date"), there were outstanding
8,114,542 shares of Common Stock. Only holders of shares of Common Stock on the
Record Date will be entitled to vote at the Annual Meeting, The holders of
Common Stock are entitled to one vote on all matters presented at the meeting
for each share held of record. As of the Record Date, the Company had
approximately 57 holders of record and approximately, 1,300 beneficial owners.
<PAGE>
The presence in person or by proxy of holders of record of a majority
of the shares outstanding and entitled to vote as of the Record Date shall be
required for a quorum to transact business at the Annual Meeting. If a quorum
should not be present, the Annual Meeting may be adjourned until a quorum is
obtained. The nominees to be selected as a Director named in Proposal 1 must
receive a plurality of the eligible votes cast at the Annual Meeting with
respect to such Proposal. The ratification of the Company's auditors contained
in Proposal 2 must receive the affirmative vote of a majority of the eligible
votes cast at the Annual Meeting on such matter. The affirmative vote of the
holders of a majority of the issued and outstanding shares of common stock of
the Company is necessary to approve and consent to the Reverse Stock Split.
Accordingly, an abstention or broker non-votes with respect to Proposals 1 and 2
will have no effect on the outcome of the voting on these proposals and will
have the effect as a negative vote on Proposal 3. Brokers who hold shares in
street name may vote on behalf of beneficial owners with respect to Proposals
1, 2 and 3. The Board of Directors recommends voting FOR Proposals 1, 2 and 3.
Unless otherwise instructed, proxies solicited by the Board of Directors will be
voted FOR Proposals.
In order to vote in favor of or against any of the proposals at the
Annual Meeting, stockholders may attend the Annual Meeting or deliver executed
proxies to the Secretary of the Company at 1490 Railroad Street, Corona, CA
91720 on or before the date of the Annual Meeting. Stockholders attending the
meeting may abstain from voting by marking the appropriate boxes designated as
Abstain on the Proxy. Abstentions shall be counted separately and shall be used
for purposes of calculating a quorum. It is not anticipated that any other
matters will be brought before the Annual Meeting.
The expense of preparing, printing and mailing this Proxy Statement,
exhibits and the proxies solicited hereby will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by officers and
directors and regular employees of the Company, without additional remuneration,
by personal interviews, telephone, telegraph or facsimile transmission. The
Company will also request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares of capital stock
held of record and will provide reimbursements for the cost of forwarding the
material in accordance with customary charges.
Proxies given by Stockholders of record for use at the Annual Meeting
may be revoked at any time prior to the exercise of the powers conferred. In
addition to revocation in any other manner permitted by law, Stockholders of
record giving a proxy may revoke the proxy by an instrument in writing, executed
by the Stockholder or his attorney authorized in writing or, if the Stockholder
is a corporation, under its corporate seal, by an officer or attorney thereof
duly authorized, and deposited either at the corporate headquarters of the
Company at any time up to and including the last business day preceding the day
of the Annual Meeting, or any adjournment thereof, at which the proxy is to be
used, or with the chairman of such Annual Meeting on the day of the Annual
Meeting or adjournment thereof, and upon either of such deposits the proxy is
revoked.
2
<PAGE>
ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO
CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER BUSINESS THAT MAY
COME BEFORE THE ANNUAL MEETING.
None of the matters to be acted on at the Annual Meeting give rise to
any statutory right of a Stockholder to dissent and obtain the appraisal of or
payment for such Stockholder's shares.
PROPOSAL ONE
TO ELECT FIVE DIRECTORS TO SERVE FOR ONE YEAR AND UNTIL THEIR SUCCESSORS HAVE
BEEN DULY ELECTED AND QUALIFIED
Under the certificate of incorporation of the Company ("Certificate of
Incorporation"), the Board of Directors of the Company is required to be
comprised of a minimum of one to a maximum of ten directors, with all directors
elected by the stockholders each year at the annual stockholders meeting. The
Company's board presently consists of five (5) directors whose terms expire at
the Annual Meeting. Officers are elected annually by and serve at the discretion
of the Board of Directors.
The Board has nominated five (5) candidates to serve as directors all
of whom are currently directors, except for Rick Garian who is currently the
Chief Operating Officer of the Company. The names and biographical summaries of
the five (5) persons who have been nominated by the Board of Directors to stand
for election at the Annual Meeting have been provided below for your
information. The Board of Directors has proposed that these persons be elected
at the Annual Meeting to serve until the next annual meeting of stockholders.
The Proxies will be voted for the election of the five (5) nominees listed below
as directors of the Company unless otherwise specified on the form provided. The
vote of a majority of the capital stock, present and constituting a quorum at
the Annual Meeting, will be necessary to elect the directors listed below. If,
for any reason, any of the nominees shall be unable or unwilling to serve, the
Proxies will be voted for a substitute nominee who will be designated by the
Board of Directors at the Annual Meeting. Stockholders may abstain from voting
by marking the appropriate boxes on the enclosed Proxy. Abstentions shall be
counted separately and shall be used for purposes of calculating quorum.
Biographical Summaries of Nominees for the Board of Directors
L. Wayne Kiley has been the President and Chief Executive Officer of the Company
since March 2, 1984, and a director since June 19, 1983. From 1978 to 1983, he
was a self-employed independent real estate developer in Tucson, Arizona. From
1970 to 1978, he was the owner of the Business Exchange in Santa Ana,
California. He graduated in 1969 from Michigan State
University with a Bachelor of Arts degree in Political Science.
3
<PAGE>
Nancy Kiley has served as Secretary and director of the Company since March 2,
1984, and is the wife of L. Wayne Kiley, the Company's President and Chief
Executive Officer.
J. R. Achten has been a director of the Company since May 1993. Mr. Achten
has been President and Chief Executive Officer of Millennium Enterprises, Inc.,
located in Laguna Niguel, California, since 1987. Millennium Enterprises, Inc.
is in the business of real estate sales and development, as well as computer
sales. Mr. Achten attended Long Beach State College and graduated with a
Bachelor of Arts degree in Economics.
Thomas E. Evans, Jr. has been a director since February 1994. Mr. Evans, since
July 1995, has been the President, Orange County Division, of Fidelity National
Title Insurance Company. Since 1993, he served as Vice President, and prior to
that, held various senior management positions with that same company since
1980. Mr. Evans is a member of the American Land Title Association and is
President of California Land Title Association. Mr. Evans served from 1984 to
1992 as a director of Fidelity National Financial, Inc., which is listed on the
New York Stock Exchange.
Rick C. Garian has served as Chief Operating Officer of the Company since
January, 1997. Prior to becoming Chief Operating Officer, Mr. Garian served as
an executive consultant to the Company, as part of his own management consulting
practice, which was established in 1991. He graduated from Michigan State
University with a Business Administration degree.
Nancy Kiley and L. Wayne Kiley are married. Except for such relationship, there
are no family relationships among any of the directors or executive officers of
the Company.
The Board of Directors through a majority vote recommends a vote FOR
the election of Ms. Kiley and Messrs. Kiley, Achten, Evans and Garian. Unless
otherwise instructed or unless authority to vote is withheld, the enclosed
proxy will be voted FOR the election of the above listed nominees.
Directors and Executive Officers
The following persons are the current executive officers, directors and
key employees of the Company:
Name Age Position
- ---- --- --------
L. Wayne Kiley 53 President, Chief Executive Officer and
Director
Rick C. Garian 50 Chief Operating Officer
4
<PAGE>
Name Age Position
- ---- --- --------
Carmella Hume 32 Controller
A. Evan Windholz 32 Vice President-Sales-Eastern Region
Thomas Iwanski 39 Vice President, Chief Financial
Officer, Assistant Secretary and
Director(1)
Nancy Kiley 38 Secretary and Director
J. R. Achten 53 Director
Thomas E. Evans, Jr. 56 Director
- --------------------
(1) Mr. Iwanski's employment with the Company terminated in
January 1997.
Background of Executive Officers and Directors
For biographical information on Ms. Kiley and Messrs. Kiley, Garian,
Achten and Evans, see "Biographical Summaries of Nominees for the Board of
Directors", above.
Carmella Hume has served as Controller of the Company since January
1997 and previously served as a Senior Accountant from July 1995 to January
1997. From 1993 to 1995, Ms. Hume served as a Controller of Triple M. Apparel, a
clothing manufacturer, and from 1991 to 1993 she was the Controller of LeaJoy
Corporation, an artificial plant manufacturer. Ms. Hume received her Bachelor of
Science Degree in Business Administration from Chapman University.
A. Evan Windholz has served as Vice President Sales-Eastern Region
since July 1995, and previously served as Vice-President Sales and Operations
since December 1993. From March of 1992 through December 1993 Mr. Windholz was
employed by the Company as General Manager. From 1985 to 1991, Mr. Windholz was
Sales Manager, Wholesale Operations Manager, and Human Resource Manager for
Scher Tire, Inc., an independent Goodyear Automotive Center. Mr. Windholz
received formal education through the Business Department of California State
University Long Beach and various management training schools through the
Goodyear Tire & Rubber Co.
Thomas Iwanski has been a director of the Company since July 1994 and
was Vice President and Chief Financial Officer of the Company from July 1994 to
January 1997, Mr. Iwanski was also Assistant Secretary from April 1995 to
January 1997. From 1991 to 1994, Mr.
5
<PAGE>
Iwanski was employed at Wahlco Environmental Systems, Inc., a NYSE-listed
international company, where he was Corporate Controller. From 1981 to 1991, Mr.
Iwanski was employed in the public accounting firm of KPMG Peat Marwick, where
he served most recently as a senior manager in the audit department. Mr. Iwanski
is a Certified Public Accountant. Mr. Iwanski received his Bachelor of Business
Administration degree from the University of Wisconsin-Madison.
All directors hold office until the next annual meeting of stockholders and the
election and qualification of their successors. Officers are elected annually by
the Board of Directors and, subject to existing employment agreements, serve at
the discretion of the Board.
Outside directors shall receive $10,000 per year as compensation for their
services. Directors who are also officers of the Company do not receive any
compensation for serving on the Board of Directors. All directors are reimbursed
by the Company for any expenses incurred in attending directors' meetings.
There are no family relationships among any of such persons, except that L.
Wayne Kiley, the Company's President and Chief Executive Officer, is married to
Nancy Kiley, the Company's Secretary.
Meetings and Committees of the Board of Directors
The Board of Directors met 3 times during the fiscal year ended June
30, 1996. No incumbent Director attended fewer than 75% of the total number of
Board of Directors meetings and meetings of Committees of which such Director
was a member.
The Board of Directors established a Compensation Committee in February
1994 and an Audit Committee in August 1994. The Compensation Committee's
responsibility is to review proposals by management regarding executive
officers' salaries as well as general remuneration policies of the Company. The
Audit Committee's responsibility is to make recommendations to the Board of
Directors regarding the engagement of independent auditors, the results and
scope of its audit and the fees incurred by the Company in connection therewith.
The current members of the Compensation Committee and the Audit Committee are
Messrs, Achten, and Evans.
Compliance with Section 16(a) of the Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company during the year ended June 30, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were satisfied.
6
<PAGE>
Executive Compensation
The following table shows all the cash compensation paid or to be paid
by the Company to the Chief Executive Officer, three of the Company's executive
officers and a former officer who received in excess of $100,000 in annual
salary and bonus, for the fiscal years ended June 30, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
(a) (b) (c) (d) (g) (I)
Number of All Other
Name and Principal Position Year Salary Bonus Options Compensation
- --------------------------- ---- ------ ----- --------- ------------
<S> <C> <C> <C> <C> <C>
L. Wayne Kiley, President 1996 $ 303,814 $ - 1,175,000 (5) $ 1,313
Chief Executive Officer and 1995 $ 302,500 $ - 1,000,000 $ 3,702
Director 1994 $ 275,000 $ 1,077 - $ 4,966
David L. Roekle, 1996 $ 223,717 $ - 250,000 (5) $ -
Senior Vice President 1995 $ 218,400 $ - - $ -
Chief Operating Officer and 1994 $ 84,618 $ - 100,000 $ 921
Director (1)
Thomas Iwanski 1996 $ 97,885 $ - 180,000 (5) $ -
Vice-President 1995 $ 87,561 $ - $ -
Chief Financial Officer
Assistant Secretary and
Director (2)
Richard S. Pisapia 1996 $ 80,808 $19,423 125,000 $ 3,461
Senior Vice President
Sales(3)
Joanne Mitchell 1995 $ 18,386 $ - - $ -
Account Executive (4) 1994 $ 305,214 $ 468 - $ 4,285
</TABLE>
(1) Mr. Roekle's employment with the Company terminated in August 1996.
(2) Mr. Iwanski's employment with the Company terminated in January 1997.
(3) Mr. Pisapia's employment with the Company terminated in December 1996.
(4) Ms. Mitchell's employment with the Company terminated in June 1994.
Her 1995 salary includes amounts paid in July 1994 related to prior
sales.
(5) The number of stock options awarded includes 1,000,000, 100,000 and 30,000
for L. Wayne Kiley, David L. Roekle and Thomas Iwanski, respectively, which
were replacements for an equal number of stock options previously issued to
these individuals.
7
<PAGE>
The 1995 and 1994 salaries for David L. Roekle do not include $8,000
and $128,307, respectively, of consulting fees paid to Mr. Roekle's wholly owned
company, Solid Rock Computer Group, Inc. See "Certain Relationships and Related
Transactions".
The Company adopted a profit sharing plan in January 1991. The plan
provided for voluntary employee contributions and discretionary contributions by
the Company. The plan was intended to qualify as a defined contribution plan
under the Internal Revenue Code of 1986. The amounts earned under the plan by
the named individuals in the Executive Compensation table are reflected under
the column headed "All Other Compensation". Due to the differences between the
plan year and the Company's fiscal year, the 1994 amount represents fifty
percent (50%) of the 1993 plan year contribution for L. Wayne Kiley and David L.
Roekle.
In January 1995, the Company adopted a new combined 401(k) and profit
sharing plan (the "Plan") which replaced the prior plans. The new Plan covers
substantially all of the Company's eligible employees. The new Plan is available
to all employees with more than one (1) year of service or, to employees
employed by the Company on February 1, 1995. Company contributions to the profit
sharing component of the Plan will be at the discretion of management. Company
contributions to the 401(K) component of the Plan will be based on a percentage
of employee contributions as determined by management. The charge to operations
related to the Plan for the years ended June 30, 1996 and 1995, was $18,421 and
$23,398, respectively.
In February 1995, the stockholders approved the Company's 1994 Stock
Plan which allows for the issuance of stock options, restricted stock, deferred
stock, bonus shares performance awards, dividend equivalent rights, limited
stock appreciation rights and other stock-based awards, or any combination
thereof. The maximum number of shares of Common Stock with respect to which
awards may be granted is initially 1,000,000 shares.
The Board of Directors may, in the future, adopt such other employee
benefit and executive compensation programs as it deems advisable and consistent
with the best interest of the stockholders and the financial condition of the
Company.
In May 1994, the Board of Directors of the Company approved the
issuance of up to 1,800,000 options to certain employees and consultants of the
Company (the "Options"). The Options vested immediately upon the grant thereof
and are exercisable at $2.40 per share (or 80% of the fair market value on the
date of grant) at any time prior to May 10, 1997. The Company granted 800,000 of
the available Options during fiscal year 1994. The remaining 1,000,000 Options
were granted in July 1994 to L. Wayne Kiley, the President and Chief Executive
Officer of the Company. In June 1996, the Board of Directors of the Company
approved the issuance of new non-qualified stock options to those employees and
consultants who currently held the Options. These replacement options required
the cancellation of the prior options, vested immediately and were exercisable
at $1.00 per share at any time prior to June 11, 2000. A total of 1,683,000
options were issued at $1.00 per share. In December 1996, the Company's
Compensation Committee approved the issuance to certain employees, officers and
directors options to purchase an aggregate of 6,000,000 shares of Common Stock
(the "December Options"). In exchange for the issuance of these options, certain
option holders surrendered for cancellation an aggregate of 1,455,000 options
issued in June 1996 for 4,335,000 of the December Options. These options vest
immediately and are exercisable over a four (4) year period at $.167 per share.
In the event that the proposed Reverse Stock Split is approved by the
shareholders of the Company, the 6,000,000 options issued in December 1996 will
become exercisable for 1,000,000 shares of Common Stock at $1.00. See "Proposal
No. 3".
8
<PAGE>
On January 3, 1996, the Company's Board of Directors approved the
issuance of 948,500 non-qualified stock options to substantially all employees
of the Company, its subsidiaries, and the non-employee directors, to purchase
shares of the Company's common stock at an exercise price equal to 100% of the
market value of the Company's common stock on the date of grant. The stock
options require future employment or services to the Company and vest one third
each on January 3, 1997, January 3, 1998, and January 3, 1999, respectively. The
stock options must be exercised by January 3, 2006. On January 3, 1996, 942,500
stock options were granted at an exercise price of $.28125 per share of which
416,000 are currently outstanding.
On June 11, 1996, the Company's Board of Directors approved the
issuance of 65,000 non-qualified stock options to seven employees of the
Company. These stock options require future employment with the Company and vest
one third each on June 11, 1997, June 11, 1998 and June 11, 1999, respectfully.
The stock options must be exercised by June 11, 2006. On June 11, 1996, 65,000
stock options were granted at an exercise price of $.5625 per share.
As of December 1996, the Company's subsidiary, Medical Marketplace,
Inc., issued to certain employees of, and a consultant to, Medical Marketplace
options to purchase an aggregate of 1,000,000 shares of Medical Marketplace
common stock at an exercise price of $.80 per share. Such options vest over a
two (2) year period commencing in December 1997; provided however, that in the
event of an initial public offering of Medical Marketplace such options vest
immediately.
9
<PAGE>
The following table contains information concerning the grant of stock options
to executive officers of the Company during the fiscal year ended June 30, 1996:
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates of Stock
Options Granted in Exercise Expiration Price For Option Appreciation
Name Granted Fiscal Year Price ($/sh) Date Term
<S> <C> <C> <C> <C> <C>
L. Wayne Kiley,
President 175,000 (5) 44% $.28125 1/03/06 $30,953 $ 78,442
Chief Executive 1,000,000(6) $1.00 6/10/00 $215,506 $464,100
Officer and
Director
David L. Roekle 150,000 (5) 9% $.28125 1/03/06 $26,531 $67,236
Senior Vice 100,0001 (6) $1.00 6/10/00 $21,550 $46,410
President (1)
Thomas Iwanski 150,000 (5) 7% $.28125 1/03/06 $26,531 $67,236
Vice-President 30,000 (6) $1.00 6/10/00 $6,465 $13,923
Chief Fin Officer
Asst. Sec. and
Dir. (2)
Richard S. Pisapia 125,000 (5) 5% $.28125 1/03/06 $19,818 $52,382
Senior Vice - - - - -
President Sales(3)
A. Evan 50,000 (5) 3% $.2815 1/03/06 $8,843 $22,412
Windholz 40,000 (6) $1.00 6/10/00 $8,620 $18,564
Vice-Pres Sales
Eastern Region
Michael 10,000 (5) 1% $.28125 1/03/06 $1,768 $4,482
MacQueen 15,000 (6) $1.00 6/10/00 $3,232 $6,961
Controller(4)
</TABLE>
(1) Mr. Roekle's employment with the Company terminated in August 1996.
(2) Mr. Iwanski's employment with the Company terminated in January 1997.
(3) Mr. Pisapia's employment with the Company termianted in December 1996.
(4) Mr. MacQueen's employment with the Company termianted in January 1997,
although Mr. MacQueen continues to serve as a consultant to the Company.
(5) Stock options granted in January 1996.
(6) Stock options granted in June 1996.
10
<PAGE>
The following table contains information concerning the aggregated
option exercises during the last fiscal year and option positions at June 30,
1996, by executive officers of the Company:
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options Options at
Number of at FY-End, FY-End,
Shares Acquired Dollar Value Exercisable/ All
Name on Exercise Realized Unexercisable Unexercisable
---- --------------- ------------ ------------------- --------------
<S> <C> <C> <C> <C>
L. Wayne Kiley - - 1,000,000/
175,000 $54,688
David L. Roekle - - 100,000/
150,000 $46,875
Richard S. Pisapia - 0/
125,000 $39,063
Thomas Iwanski - - 30,000/
150,000 $46,875
A. Evan Windholz - - 40,000/
50,000 $15,625
Michael MacQueen - - 15,000/
10,000 $ 3,125
</TABLE>
11
<PAGE>
Employment Agreements
On October 16, 1992, the Company entered into an employment agreement for
a five (5) year term (the "Employment Term") with an additional one (1) year
renewal term with L. Wayne Kiley, President and Chief Executive Officer of the
Company. Pursuant to such employment agreement, Mr. Kiley will receive an annual
salary of $275,000 per annum with an annual ten percent (10%) increase,
effective on the agreement anniversary date, so long as the Company is
profitable for the preceding fiscal year. The employment agreement also provides
for the use by Mr. Kiley of a Company car, disability insurance and for bonuses
and other incentive compensation as the Board of Directors deems appropriate,
based upon the Company's operating performance or other reasonable criteria. In
addition, Mr. Kiley will have the option (the "Original Option") to purchase up
to eighteen percent (18%) of the Company's common stock, so long as the Company
achieves certain earnings before the payment of interest and taxes ("EBIT"),
such targets to commence with EBIT of $1,250,000 during any of the Company's
fiscal years occurring during the Employment Term. The purchase price for the
shares of common stock purchased pursuant to the Original Option was equal to
$1.60 per share, which was eighty percent (80%) of the per share price offered
to the public in connection with the Company's initial public offering.
In October 1996, the Company has amended its employment agreement with L.
Wayne Kiley, the Company's Chairman of the Board, President and Chief Executive
Officer. Pursuant to such amendment, (i) the employment agreement's expiration
date of October 16, 1997 was extended to October 16, 1999, (ii) in exchange for
termination of the Original Option Mr. Kiley was granted the right to purchase a
number of shares of Common Stock for a period of four (4) years, at a price
equal to seventy five percent (75%) of the closing bid price of the Company's
shares of Common Stock on the date of grant equal to 2.5%, 3% and 3.5% of the
shares outstanding, should the Company report annual earnings before the payment
of interest and taxes of $635,000, $875,000 and $1,000,000, respectively, (iii)
Mr. Kiley will be paid a cash bonus equal to 5% of any profit realized by the
Company from the sale of assets outside the ordinary course of business, and
(iv) an insurance policy covering the life of Mr. Kiley whereby Mr. Kiley's
estate will be paid $2,000,000 in exchange for the redemption of the shares of
the Company's capital stock beneficially owned by Mr. Kiley. The Agreement
contains other customary terms and conditions including termination for cause,
non-competition on confidentiality provisions.
Nancy Kiley entered into a five (5) year employment agreement with the
Company as Secretary, effective October 1992. This agreement provides for a base
salary of $18,000 for fiscal year 1992 with increases of $2,000 per year
thereafter. The employment agreement also provides annual cost of living
increases, the use of a Company car, bonuses and other incentive compensation as
the Board of Directors deems appropriate, based upon the Company's operating
performance or other reasonable criteria.
12
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of the Record Date,
with respect to the beneficial ownership of the outstanding common stock by (i)
any holder of more than five percent (5%) of the outstanding shares of the
Company's common stock; (ii) each of the Company's executive officers and
directors; and (iii) the directors and executive officers of the Company as a
group:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Approximate Percent
of Beneficial Owner(1) Beneficial Ownership of Class
-------------------------- -------------------- ------------
<S> <C> <C>
L. Wayne Kiley(2) 5,678,433(3) 48.5%
Nancy Kiley(2) 2,056,766(4) 25.3%
Kiley Children's Trust(5) 500,000 6.2%
J. R. Achten 681,667(6) 8.3%
A. Evan Windholz 196,667(7) 2.4%
Thomas E. Evans, Jr. 61,667(8) .8%
Rick Garian 450,000(9) 5.2%
Thomas Iwanski 194,500(10) 2.3%
Carmella Hume 60,333(11) 0.7%
Victoria Holdings, Inc. 6,000,000(12) 42.5%
c/o Biltmore Securities, Inc.
6700 North Andrews Avenue
Ft. Lauderdale, FL 333094
Directors and Executive 6,703,265 52.5%
Officers as a Group
(7 persons) (3)(4)(6)(7)(8)(9)(10)
</TABLE>
(1) Unless otherwise indicted, the address of the beneficial owner is:
c/o Computer Marketplace(Registered), Inc., 1490 Railroad Street,
Corona, California, 91720.
(2) L. Wayne Kiley and Nancy Kiley are the joint owners of 1,495,100
shares of the common stock. The children of L. Wayne Kiley and Nancy
Kiley are the beneficiaries of the Kiley Children's Trust, which
trust holds 500,000 shares of common stock. In addition L. Wayne
Kiley and Nancy Kiley formed and are directors of a charitable
organization called Operation Frontline which holds 60,000 shares of
common stock. The Kiley's disclaim beneficial ownership with respect
to the shares of common stock held by the Kiley Children's Trust and
Operation Frontline.
(3) Includes (a) 500,000 shares of Common Stock held by the Kiley
Children's Trust, (b) 60,000 shares of Common Stock held by Operation
Frontline, (c) options issued in January 1996 exercisable for 175,000
shares of Common Stock at $.28125 per share, one-third of which
vested on January 3, 1997 and (d) options issue as of December 1996
exercisable for 3,565,000 shares of Common Stock at $.167 per share.
See "Executive Compensation."
(4) Includes (a) 500,000 shares of Common Stock held by the Kiley
Children's Trust, (b) 60,000 shares of Common Stock held by
13
<PAGE>
Operation Frontline, and (c) options issued in January 1996
exercisable for 5,000 shares of Common Stock at $.28125 per share,
one-third of which vested on January 3, 1997.
(5) The Kiley Children's Trust was formed by L. Wayne Kiley and Nancy
Kiley for the benefit of their children.
(6) Includes (a) 500,000 shares of common stock held by the Kiley
Children's Trust of which Mr. Achten is the sole trustee, (b) 60,000
shares of common stock held by Operation Frontline of which Mr.
Achten is a director, (c) options issued in January 1996 exercisable
for 5,000 shares of Common Stock at $.28125 one-third of which
vested on January 3, 1997, and (d) options issued as of December
1996 exercisable for 120,000 shares of Common Stock at $.167 per
share. Mr. Achten disclaims beneficial ownership with respect to
the shares of common stock held by the Kiley Children's Trust and
Operation Frontline.
(7) Includes (a) options issued in January 1996 exercisable for 50,000
shares of Common Stock at $.28125 per share, one-third of which
vested on January 3, 1997 and (b) options issued as of December 1996
exercisable for 180,000 shares of Common Stock at $.167 per share.
(8) Includes (a) options issued in January 1996 exercisable for 5,000
shares of Common Stock at $.28125 per share, one-third of which
vested on January 3, 1997, and (b) options issued as of December
1996 exercisable for 60,000 shares of Common Stock at $.167 per
share.
(9) Includes options issued as of December 1996 exercisable for 450,000
shares of Common Stock at $.167 per share.
(10) Includes (a) options issued in June 1996 exercisable for 30,000
shares of Common Stock at $1.00 per share and (b) options issued
in January 1996 exercisable for 150,000 shares of Common Stock at
$.28125 per share.
(11) Includes (a) options issued in January 1996 exercisable for 1,000
shares of Common Stock at $.28125 per share, one-third of which
vested on January 3,1997, and (b) options issued as of December
1996 exercisable for 60,000 shares of Common Stock at $.167 per
share.
(12) Includes options issued as of December 1996 exercisable for
6,000,000 shares of Common Stock at $.167 per share pursuant to a
Consulting Agreement with the Company. See "Certain Transactions."
14
<PAGE>
CERTAIN TRANSACTIONS
On April 16, 1987, the Board of Directors of the Company approved the
issuance of shares of the Company's common stock to L. Wayne Kiley and Nancy
Kiley as the purchase price for their one-half (1/2) interest in the premises
located at 205 East Fifth Street, Corona, California, along with the assumption
of certain debt owing on such premises.
The Company leased, on a month-to-month basis, 3,000 square feet of
warehouse space located at 8509 Bedford Motorway, Corona, California, from L.
Wayne Kiley, the Company's President and founder, for $1,000 per month. The
Company terminated this arrangement shortly after the Company's closing on the
Corona headquarters/warehouse facility. Total rent paid on this lease was
$8,000 for fiscal year 1994.
In January 1994, the Company entered into a one-year consulting
agreement with Alan M. Novich, a director of the Company pursuant to which it
paid Mr. Novich $10,000 per month. This agreement expired and was not renewed.
In May 1994, the Board of Directors of the Company approved the issuance
of up to 1,800,000 options to certain employees and consultants of the Company
(the "Options"). The Options vest immediately upon the grant thereof and are
exercisable at $2.40 per share (or 80% of the fair market value on the date of
grant) at any time prior to May 10, 1997. The Company granted 800,000 of the
available Options during fiscal year 1994. The remaining 1,000,000 Options were
granted in July 1994 to L. Wayne Kiley, the President and Chief Executive
Officer of the Company.
In February 1995, the stockholders approved the Company's 1994 Stock
Plan which allows for the issuance of stock options, restricted stock, deferred
stock, bonus shares performance awards, dividend equivalent rights, limited
stock appreciation rights and other stock-based awards, or any combination
thereof. The maximum number of shares of Common Stock with respect to which
awards may be granted is initially 1,000,000 shares. No awards or shares have
been granted under this Plan.
The Company has made consulting fee payments to David L. Roekle's wholly
owned Company, Solid Rock Computer Group, Inc., in the amounts of $8,000 and
$128,307 for fiscal years 1995 and 1994, respectively. On August 15, 1994, the
consulting arrangement with Solid Rock Computer Group, Inc. was terminated.
The Company leases office space for its branch office at Traverse City,
Michigan, from the Company's President. The rent for this approximately 2,700
square foot location is $2,700 per month. The three-year lease, which contains
an option for the Company or the landlord to cancel with six (6) months notice
after each full year, expires on July 31, 1998.
15
<PAGE>
In January 1996, the Board of Directors of the Company approved the
issuance of up to 948,500 options to certain employees and consultants of the
Company (the "Options"). The Options vest over a three (3) year period of time
and are exercisable at $0.28125 per share (the fair market value on the date of
grant) at any time prior to January 3, 2006.
As of October 1996, the Company amended its employment agreement with L.
Wayne Kiley, the Company's Chairman of the Board, President and Chief Executive
Officer. Pursuant to such amendment, (i) the employment agreement's expiration
date of October 16, 1997 was extended to October 16, 1999, (ii) Mr. Kiley was
granted the right to purchase a number of shares of Common Stock for a period of
four (4) years, at a price equal to seventy five percent (75%) of the closing
bid price of the Company's shares of Common Stock on the date of grant equal to
2.5%, 3% and 3.5% of the shares outstanding, should the Company report annual
earnings before the payment of interest and taxes of $635,000, $875,000 and
$1,000,000, respectively, (iii) Mr. Kiley will be paid a cash bonus equal to 5%
of any profit realized by the Company from the sale of assets outside the
ordinary course of business, and (iv) an insurance policy covering the life of
Mr. Kiley whereby Mr. Kiley's estate will be paid $2,000,000 in exchange for the
redemption of the shares of the Company's capital stock beneficially owned by
Mr. Kiley. The Agreement contains other customary terms and conditions including
termination for cause, non-competition on confidentiality provisions.
In December 1996 the Company entered into a one year consulting
agreement with Victoria Holdings, Inc., an affiliate of Biltmore Securities,
Inc. ("Victoria Holdings" and "Biltmore," respectively). Pursuant to the
Consulting Agreement, Victoria Holdings agreed to act as a consultant to the
Company in connection with, among other things, corporate finance and
evaluations of possible business partners and will seek to find business
partners suitable for the Company. In addition, Victoria Holdings agreed to
assist the Company in the structuring, negotiating and financing of such
transactions. The consulting agreement provides for the issuance to Victoria
Holdings of options (the "Victoria Holdings Options") exercisable to purchase
6,000,000 shares of Common Stock at an exercise price of $.167 per share and for
the additional issuance to Victoria Holdings of 1,000,000 shares (the "Victoria
Fee Shares") of Common Stock upon consummation by the Company of (i) an
acquisition of a company (or companies) introduced to the Company by Victoria
Holdings with net assets of at least $2,500,000 or (ii) a divestiture of the
Company's assets, or a sale of a controlling interest in the Company's capital
stock, to a purchaser introduced to the Company by Victoria Holdings resulting
in net proceeds to the Company in excess of $2,000,000.
As of December 1996, the Company issued to certain employees, officers
and directors options to purchase an aggregate of 6,000,000 shares of the
Company's Common Stock during a four (4) year period commencing on January 1,
1997 at an exercise price of $.167 per share (the "Management Options"). In
exchange for the issuance of certain of the Management Options, certain option
holders surrendered for cancellation an aggregate of 1,445,000 options
previously issued in June 1996 for 4,335,000 of the Management Options.
16
<PAGE>
As of December 1996, the Company's subsidiary, Medical Marketplace, Inc.,
issued to certain employees of, and a consultant to, Medical Marketplace options
to purchase an aggregate of 1,000,000 shares of Medical Marketplace common stock
at an exercise price of $.80 per share. Such options vest over a two (2) year
period commencing in December 1997; provided however, that in the event of an
initial public offering of Medical Marketplace such options vest immediately.
On December 31, 1996 the Company concluded a private placement of 500,000
Units (the "December 1996 Private Placement") which were placed by Biltmore
Securities, Inc., a broker-dealer and a member of the National Associates of
Securities Dealers, on a firm commitment basis. Each Unit was offered at a
price of $2.00 per Unit, and consisted of one (1) share of Common Stock of
Medical Marketplace, Inc., and eighteen (18) Class D Redeemable Common Stock
Purchase Warrants (the "Class D Warrants"). The Class D Warrants are exercisable
for one (1) share of the Company's Common Stock commencing March 31, 1997 at an
exercise price of $.417 per share for a one (1) year period. The Company intends
to use the proceeds of the offering to expand the business of Medical
Marketplace, repay advances made by the Company to Medical Marketplace, and for
working capital purposes. Prior to the December 1996 Private Placement, Medical
Marketplace issued options to certain key employees to purchase an aggregate of
1,000,000 shares of Medical Marketplace Common Stock at $.80 per share.
The Company, its officers, directors and employees and holders of 5% or
more of the outstanding shares of Common Stock have agreed not to sell, pledge,
transfer or hypothecate any shares of capital stock of the Company or any
securities convertible into, or exercisable or exchangeable for, shares of
capital stock of the Company for a period eighteen (18) months from December 16,
1996 without Biltmore's prior consent.
The Company's Common Stock is traded on The Nasdaq SmallCap Market
("Nasdaq"). Under the rules of Nasdaq in order to qualify for continued
quotation of securities on Nasdaq, the Company, among other things, must have
either (i) $2,000,000 in assets, $1,000,000 in stockholder equity and a minimum
bid price of $1.00 per share (the " Minimum Bid Requirement") or alternatively
(ii) $2,000,000 in total capital and surplus, and $1,000,000 in market value of
public float (the "Capital/Market Value Requirement"). On February 12, 1997, the
Company's Common Stock had a closing price of $.156. On January 21, 1997, the
Staff of Nasdaq advised the Company that the Company failed to satisfy the
Capital/Market Value Requirement and the Minimum Bid Requirement with respect to
its shares of Common Stock. The Company was then provided 90 days to comply with
either of such requirements in order to continue the listing of its Common Stock
on Nasdaq. Failure to do so would result in delisting the Company's shares of
Common Stock. The Company's Board of Directors approved a 1-for-6 reverse stock
split with respect to its shares of Common Stock, subject to shareholder
approval (the "Reverse Stock Split").
17
<PAGE>
PROPOSAL TWO
TO RATIFY THE SELECTION OF THE FIRM OF MOORE STEPHENS, P.C. AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY
The Board of Directors upon recommendation of the members of the Audit
Committee, concluded that the continued engagement of Moore Stephens, P.C. as
the Company's independent public accountants for the fiscal year ending June,
1997 was in the best interests of the Company. The Board of Directors recommends
that Stockholders ratify its choice of Moore Stephens, P.C.
The Board of Directors unanimously recommends a vote FOR the ratification
of the selection of Moore Stephens, P.C. as independent public accountants for
the Company. Unless marked to the contrary, proxies received from Stockholders
will be voted in favor of the proposed amendment.
PROPOSAL THREE
REVERSE STOCK SPLIT
General. The stockholders of the Company are being asked to approve a
one-for-six reverse stock split of the Common Stock of the Company which may be
considered a modification or exchange of securities invoking the requirements of
Item 12 of Rule 14a-101 of the Securities Exchange Act of 1934. In compliance
therewith, the Company has attached hereto its Annual Report on Form 10-KSB (as
amended) for the fiscal year ended June 30, 1996 which is incorporated by
reference herein.
The Board of Directors believes that it would be in the best interests of
both the Company and its stockholders to effect the reverse stock split of one
share of newly issued share of Common Stock ("New Common Stock") for each six
(6) shares of the Company's presently issued and outstanding Common Stock. This
amendment has been adopted by the Board of Directors subject to approval of the
Company's stockholders. Approval will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock. The Board of
Directors reserves the right, notwithstanding stockholder approval and without
further action by the stockholders, not to proceed with the Reverse Stock Split,
if, at any time prior to filing the amendment with the Secretary of State of the
State of Delaware, the Board of Directors, in its sole discretion, determines
that the Reverse Stock Split is no longer in the best interests of the Company
and its stockholders.
The Company is authorized to issue 50,000,000 shares of Common Stock,
$.0001 par value, of which 8,114,542 shares were issued and outstanding at the
close of business on the Record Date. As proposed and if effected, the Reverse
Stock Split would reduce the number of issued
18
<PAGE>
and outstanding shares to approximately 1,352,500. The proposed Reverse Stock
Split would not affect any stockholder's proportionate equity interest in the
Company. Neither the par value of the Common Stock nor any rights presently
accruing to holders of Common Stock would be affected by this transaction.
To effect the one-for-six reverse stock split of the Common Stock of the
Company, shareholder approval is sought to amend Article Fourth of the Company's
Certificate of Incorporation relating to the authorized capital stock with the
following:
"FOURTH: The total number of shares of stock which the corporation shall
have the authority to issue is fifty-one million (51,000,000) shares, fifty
million (50,000,000) of which shall be shares of common stock, $.0001 par value
per share, and one million (1,000,000) of which shall be shares of preferred
stock, $.0001 par value per share.
Each six (6) shares of the corporation's common stock, $.0001 par value
per share, issued and outstanding as of the close of business on the date
this Certificate of Amendment is filed shall be converted into one (1) share of
the corporation's common stock, $.0001 par value per share, so that each share
of the corporation's common stock issued and outstanding is hereby converted and
reclassified. No fractional interests resulting from such conversion shall be
issued, but in lieu thereof, stockholders who ostensibly would be entitled to
receive fractional shares because they hold a number of shares not evenly
divisible by six (6) will be entitled, upon surrender to the Exchange Agent of
certificates representing such shares, to receive one (1) additional share of
common stock for any fractional share they may be entitled to."
Reasons for the Proposed Stock Split. The Company's Common Stock is
traded on The Nasdaq SmallCap Market ("Nasdaq"). Under the rules of Nasdaq in
order to qualify for continued quotation of securities on Nasdaq, the Company,
among other things, must have either (i) $2,000,000 in assets, $1,000,000 in
stockholder equity and a minimum bid price of $1.00 per share (the " Minimum Bid
Requirement") or alternatively (ii) $2,000,000 in total capital and surplus, and
$1,000,000 in market value of public float (the "Capital/Market Value
Requirement"). On February 12, 1997, the Company's Common Stock had a closing
bid price of $.156.
The Board of Directors believes that a relatively low stock price may
affect not only the liquidity of the Company's Common Stock, but also its
ability to raise additional capital through the sale of equity securities. Thus,
the Company believes that the expected increase in trading price is expected to
be attractive to the financial community, the investing public, and to users of
the Company's products.
19
<PAGE>
The Board of Directors is hopeful that a decrease in the number of shares
of Common Stock outstanding, as a consequence of the proposed Reverse Stock
Split, and the anticipated corresponding increase price per share will stimulate
interest in the Company's Common Stock and possibly promote greater liquidity
for the Company's Common stockholders with respect to those shares presently
held by them. However, the possibility does exist that such liquidity could be
adversely affected by the reduced number of shares which would be outstanding if
the proposed Reverse Stock Split is effected.
If, in the future, the Company is unable to satisfy either the Minimum
Bid Requirement or the Capital/Market Requirement or any other requirements of
Nasdaq, trading, if any, in the Company's securities would be conducted in the
over-the-counter market in what are commonly referred to as the "pink sheets",
or the NASD Electronic Bulletin Board. As a result, an investor may find it more
difficult to dispose of, or to obtain accurate quotation as to the price of, the
securities of the Company. In addition, if the securities are removed from
Nasdaq, they could be subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities.
Management of the Company is not aware of any present efforts of any
persons to accumulate Common Stock or to obtain control of the Company, and the
proposed Reverse Stock Split is not intended to be an anti-takeover device. The
amendment is being sought solely to enhance the image of the Company, its
corporate flexibility, and to price the Common Stock in the price range that
would meet the Minimum Bid Requirement and be more acceptable to the brokerage
community, and to investors generally.
Exchange of Stock Certificates. If the Reverse Stock Split is approved by
the Company's stockholders, the Company will instruct its transfer agent to
act as its exchange agent (the "Exchange Agent") and to act for holders of
Common Stock in implementing the exchange of their certificates.
Commencing on the effective date of the Reverse Stock Split (the
"Effective Date"), stockholders will be notified and requested to surrender
their certificates representing shares of Common Stock to the Exchange Agent in
exchange for certificates representing New Common Stock. One share of New Common
Stock will be issued in exchange for each six (6) presently issued and
outstanding shares of Common Stock. Beginning on the Effective Date, each
certificate representing shares of the Company's Common Stock will be deemed for
all corporate purposes to evidence ownership of shares of New Common Stock.
Liquidation of Fractional Shares. No scrip or fractional certificates
will be issued in connection with the Reverse Stock Split. Stockholders who
ostensibly would be entitled to receive fractional shares because they hold a
number of shares of Common Stock not evenly divisible by six (6) will be
entitled, upon surrender to the Exchange Agent of certificates representing such
shares, to receive one (1) additional share of Common Stock for any fractional
share they may be entitled to. Stockholders may now hold "odd lots" as a result
of the Reverse Stock Split and as
20
<PAGE>
such may be subject to increased transaction costs on the sale of their Common
Stock.
Stockholders are encouraged to surrender their certificates to the
Exchange Agent for certificates evidencing whole shares of the Common Stock due
them for fractional interests.
Federal Income Tax Consequences. The Reverse Stock Split should not
result in the recognition of gain or loss (except in the case of additional
shares received for fractional shares as described below). The holding period of
the shares of New Common Stock will include the stockholders' respective holding
periods for the shares of Common Stock exchanged therefore, provided that the
shares of Common Stock were held as a capital asset. The adjusted basis of the
shares of New Common Stock will be the same as the adjusted basis of the Common
Stock exchanged therefore, reduced by the basis applicable to the receipt of
additional shares in lieu of fractional shares described below.
A stockholder who receives additional shares in lieu of fractional shares
will be treated as if the Company would issue additional shares to him. Such
stockholder should generally recognize gain or loss, as the case may be,
measured by the difference between the number of additional shares received and
the basis of his old Common Stock applicable to such fractional shares had they
actually been issued. Such gain or loss shall be a capital gain or loss (if such
stockholder's Common Stock was held as a capital asset), any such capital gain
or loss shall generally be long-term capital gain or loss to the extent such
stockholder's holding for his Common Stock exceeds twelve months.
No Dissenter's Rights. Under Delaware law, stockholders are not entitled
to dissenter's rights of appraisal with respect to the Reverse Stock Split.
Other Proposed Action
The Board of Directors does not intend to bring any other matters before
the meeting, nor does the Board of Directors know of any matters which other
persons intend to bring before the meeting. If, however, other matters not
mentioned in this Proxy Statement properly come before the Annual Meeting, the
persons named in the accompanying form of Proxy will vote thereon in accordance
with the recommendation of the Board of Directors.
Stockholders should note that the Company's By-Laws provide that no
proposals or nominations of Directors by Stockholders shall be presented for
vote at an Annual Meeting of Stockholders unless notice complying with the
requirements in the By-Laws is provided to the Board of Directors or the
Company's Secretary no later than the close of business on the fifth day
following the day on which notice of the meeting is first given to Stockholders.
21
<PAGE>
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any Stockholder wishes to present a proposal for inclusion in the
proxy materials to be solicited by the Company's Board of Directors with
respect to the 1997 Annual Meeting of Stockholders, that proposal must be
presented to the Company's secretary prior to August 1, 1997.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. YOUR VOTE IS IMPORTANT. IF YOU ARE
A STOCKHOLDER OF RECORD AND ATTEND THE ANNUAL MEETING AND WISH TO VOTE IN
PERSON, YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
COMPUTER MARKETPLACE, INC.
March 6, 1997 By: /s/ Nancy Kiley
----------------------------------
Nancy Kiley, Secretary
22
<PAGE>
Computer Marketplace(Registered), Inc.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE CLEARLY INDICATE A RESPONSE BY CHECKING EITHER THE PROXY
(THE "PROXY") [FOR] OR [AGAINST] BOX NEXT TO EACH OF THE THREE (3)
PROPOSALS
The undersigned hereby appoint(s) Mr. L. Wayne Kiley with the power
of substitution and resubstitution to vote any and all shares of capital
stock of Computer Marketplace, Inc.(Registered) (the "Company") which the
undersigned would be entitled to vote as fully as the undersigned could do if
personally present at the Annual Meeting of the Company, to be held on April 4,
1997, at 9:00 A.M. local time, and at any adjournments thereof, hereby revoking
any prior proxies to vote said stock, upon the following items more fully
described in the notice of any proxy statement for the Annual Meeting (receipt
of which is hereby acknowledged):
1. ELECTION OF DIRECTORS
VOTE
/ / FOR ALL nominees list below EXCEPT as marked to the
contrary below
/ / WITHHOLD AUTHORITY to vote for ALL nominees listed
below (INSTRUCTION: To withhold authority to vote for
any individual nominee strike a line through the
nominee's name below.)
/ / ABSTAIN
L. Wayne Kiley, Nancy Kiley, J.R. Achten, Thomas Evans and Rick Garian
2. RATIFY APPOINTMENT
/ / FOR Moore Stephens, P.C.
/ / WITHHOLD AUTHORITY
/ / ABSTAIN
3. APPROVE REVERSE STOCK SPLIT
/ / FOR Reverse Stock Split
23
<PAGE>
/ / WITHHOLD AUTHORITY
/ / ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE FIVE (5) NOMINEES NAMED
IN ITEM 1, MOORE STEPHENS, P.C. AS AUDITOR IN ITEM 2, AND IN FAVOR OF THE
REVERSE STOCK SPLIT AS DESCRIBED IN ITEM 3.
In his discretion, the Proxy is authorized to vote upon such
other business as may properly come before the meeting.
Please mark, sign date and return this Proxy promptly using
the accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF COMPUTER MARKETPLACE(Registered), INC.
Dated: ______________
________________________________
Signature
_________________________________
Signature if jointly owned:
__________________________________
Print name:
Please sign exactly as the name appears on
your stock certificate. When shares of
capital stock are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee, guardian, or corporate officer,
please include full title as such. If the
shares of capital stock are owned by a
corporation, sign in the full corporate
name by an authorized officer. If the
shares of capital stock are owned by a
partnership, sign in the name of the
partnership by an authorized officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE
24
