SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ASTA FUNDING, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ASTA FUNDING, INC.
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Stockholders of Asta Funding, Inc. (the "Company") to be
held at the Company's offices, 210 Sylvan Avenue, Englewood Cliffs, New Jersey,
on Friday, March 14, 1997 at 10:00 a.m.
The enclosed Notice of Meeting and the accompanying Proxy Statement
describe the business to be conducted at the Meeting. I am also pleased to
enclose a copy of the Company's fiscal 1996 Annual Report, which contains
certain information regarding the Company and its results for the fiscal year
ended September 30, 1996.
It is important that your shares of Common Stock be represented and voted
at the Meeting. Accordingly, regardless of whether you plan to attend the
Meeting in person, please complete, date, sign and return the enclosed proxy
card in the envelope provided, which requires no postage if mailed in the United
States. Even if you return a signed proxy card, you may still attend the Meeting
and vote your shares in person. Every stockholder's vote is important, whether
you own a few shares or many.
I look forward to seeing you at the Meeting.
Sincerely,
/S/ Gary Stern
______________________________
Gary Stern
President and Chief Executive Officer
<PAGE>
ASTA FUNDING, INC.
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 14, 1997
The Annual Meeting of Stockholders (the "Meeting") of Asta Funding, Inc.
(the "Company") will be held at the Company's offices, 210 Sylvan Avenue,
Englewood Cliffs, New Jersey, on Friday, March 14, 1997 at 10:00 A.M., to
consider and act upon the following:
1. The election of eight directors.
2. The ratification of the appointment of Richard A. Eisner &
Company, LLP as the Company's independent public accountants for 1997.
3. The transaction of such other business as may properly
come before the Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock, par value $.01 per
share, at the close of business on January 27, 1997 will be entitled to vote at
the Meeting. A complete list of those stockholders will be open to examination
by any stockholder, for any purpose germane to the meeting, during ordinary
business hours at the Company's executive offices at 210 Sylvan Avenue,
Englewood Cliffs, New Jersey 07632 for a period of 10 days prior to the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mitchell Herman, Secretary
__________________________________
Mitchell Herman, Secretary
February 14, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO COMPLETE,
DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
ASTA FUNDING, INC.
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
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ANNUAL MEETING OF STOCKHOLDERS
March 14, 1997
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Asta Funding,
Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held at
the Company's offices, 210 Sylvan Avenue, Englewood Cliffs, New Jersey on
Friday, March 14, 1997 at 10:00 A.M., and at any adjournments or postponements
thereof (the "Meeting") for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. A stockholder giving a proxy has the right to
revoke it by giving written notice of such revocation to the Secretary of the
Company at any time before it is voted, by submitting to the Company a
duly-executed, later-dated proxy or by voting the shares subject to such proxy
by written ballot at the Meeting. The presence at the Meeting of a stockholder
who has given a proxy does not revoke such proxy unless such stockholder files
the aforementioned notice of revocation or votes by written ballot.
The proxy statement and the enclosed form of proxy are first being mailed
to stockholders on or about February 14, 1997. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. If a proxy is signed but no
specification is given, the shares will be voted "FOR" Proposals 1 and 2 (to
elect the Board's nominees to the Board of Directors and to ratify the
appointment of Richard A. Eisner & Company, LLP, as the Company's independent
public accountants for 1997).
The solicitation of proxies may be made by directors, officers and regular
employees of the Company or any of its subsidiaries by mail, telephone,
facsimile or telegraph or in person without additional compensation payable with
respect thereto. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of stock held of record by such persons, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing. All costs relating to the solicitation of proxies will be borne by the
Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of shares of the Company's Common Stock, par value $.01 per
share ("Common Stock") of record on the close of business on January 27, 1997
(the "Record Date"), are entitled to vote at the Meeting. On the Record Date,
the Company had outstanding 4,460,000 shares of Common Stock. Each holder of
Common Stock will have the right to one vote for each share standing in such
holder's name on the books of the Company as of the close of business on the
Record Date with respect to each of the matters considered at the Meeting. There
is no right to cumulate votes in the election of directors. Holders of the
Common Stock will not have any dissenters' rights of appraisal in connection
with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares entitled to
cast a majority of the votes of all shares entitled to vote will constitute a
quorum for purposes of conducting business at the Meeting. Assuming that a
quorum is present, directors will be elected by a plurality vote and the
ratification of auditors will require the affirmative vote of a majority of the
votes cast with respect to such proposal. Stockholders vote at the Meeting by
casting ballots (in person or by proxy) which are tabulated by a person or
<PAGE>
persons appointed by the Board of Directors before the Meeting to serve as
inspector or inspectors of election at the Meeting. For purposes of determining
the votes cast with respect to any matter presented for consideration at the
Meeting, only those votes cast "for" or "against" are included. Pursuant to
Delaware corporate law, abstentions and broker non-votes are counted only for
the purpose of determining whether a quorum is present.
Based upon information available to the Company, the following stockholders
beneficially owned more than 5% of the Common Stock as of January 15, 1996:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS
Asta Group, Incorporated 2,605,000(2) 58.4%
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Arthur Stern 2,616,833(2)(3)(4) 58.5
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Gary Stern 2,605,000(2)(3) 58.4
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
Martin Fife 286,666(5) 6.4
405 Lexington Avenue
New York, New York 10174
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(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days of January 15, 1997. Any security
that any person named above has the right to acquire within 60 days is
deemed to be outstanding for purposes of calculating the ownership
percentage of such person, but is not deemed to be outstanding for purposes
of calculating the ownership percentage of any other person.
(2) Includes 352,500 shares of Common Stock held in the Escrow Account (as
defined below). Upon consummation of the Company's initial public offering
of Common Stock on November 13, 1995, the Company's controlling
stockholders and certain officers and directors of the Company deposited an
aggregate of 1,000,000 shares of Common Stock (the "Escrow Shares") into an
escrow account (the "Escrow Account") pursuant to an agreement with the
underwriters. One half of the Escrow Shares have been released to the
depositing stockholders. The remainder of the Escrow Shares will only be
released if certain earnings goals or stock price goals are reached. The
stockholders may vote but not transfer the Escrow Shares.
(3) Includes all of the shares of Common Stock owned beneficially by Asta
Group, Incorporated as shown in the table. Arthur Stern is the Chairman of
the Board of Directors and a principal stockholder of Asta Group,
Incorporated. Gary Stern is Vice President, Secretary, Treasurer and a
director and principal stockholder of Asta Group, Incorporated. As such,
each may be deemed to be the beneficial owner of such shares.
(4) Includes 11,833 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997.
(5) Includes 16,666 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days of January 15, 1997 and 45,000 shares of
Common Stock held in the Escrow Account.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the Company's Certificate of Incorporation and Bylaws,
the number of directors of the Company has been set by the Board of Directors at
eight. At the Meeting, eight directors will be elected by the stockholders to
serve until the next annual meeting of stockholders and until their successors
are duly elected and qualified.
Seven of the nominees currently are directors. Each person named herein as
a nominee for director has consented to serve, and it is not contemplated that
any nominee will be unable to serve, as a director. However, if a nominee is
unable to serve as a director, a substitute will be selected by the Board of
Directors and all proxies eligible to be voted for the Board's nominees will be
voted for such other person.
The following table includes the names of each of the current directors of
the Company (who are all nominees), the name of the additional nominee for
director and the executive officers of the Company and certain information with
regard to each person:
Held Position with
Name Age Office Since Company
Arthur Stern 75 1994 Chairman of the Board
Gary Stern 44 1994 Director, President and
Chief Executive Officer
Mitchell Herman 38 1995 Director, Secretary and
Chief Financial Officer
Mark Levy 48 1994 Executive Vice President and
Chief Operating Officer
Martin D. Fife 69 1995 Director
Herman Badillo 67 1995 Director
General Buster Glosson 53 1995 Director
Edward Celano 57 1995 Director
Alan Cohen 60 ____ Nominee only
Set forth below for each nominee and each executive officer, is his name,
the year in which he became a director or officer of the Company, if applicable,
his principal occupations during the last five years and any additional
directorships in publicly-held companies. The information is as of January 15,
1997.
Arthur Stern has been a Director and has served as Chairman of the Board of
Directors of the Company since the Company's inception in July 1994. Since 1963,
Mr. Stern has been Chairman of the Board of Asta Group, Incorporated ("Group"),
a consumer finance company, which is a majority stockholder of the Company. Mr.
Stern served as President of Group from 1963 to March 1996. In such capacities,
he has obtained substantial experience in sub prime credit analysis and
receivables collections.
Gary Stern has been a Director and the President of the Company since the
Company's inception in July 1994. Mr. Stern has been Vice President, Secretary,
Treasurer and a director of Group since 1980 and held other positions with Group
prior thereto. In such capacities, he has obtained substantial experience in sub
prime credit analysis and receivables collections.
Mitchell Herman has been a Director of the Company since September 1995. He
has been the Chief Financial Officer of the Company since the Company's
inception in July 1994 and the Chief Financial Officer of Group since May 1994.
Mr. Herman is a certified public accountant. From September 1993 to May 1994 he
<PAGE>
was a manager with Paul Abrams & Co., a certified public accounting firm. From
September 1990 to September 1993, Mr. Herman was a senior accountant with
Shapiro & Lieberman, a certified public accounting firm.
Mark Levy has been an Executive Vice President and Chief Operating Officer
of the Company since September 1994. From January 1992 to September 1994, he was
an independent consultant in the area of automobile lease financing and
securitizations programs. From April 1989 to January 1992, Mr. Levy was
President of Tilden Commercial Alliance, Inc. an automobile and equipment lease
finance company.
Martin D. Fife has been a Director of the Company since September 1995.
Since November 1992, he has been Chairman of the Board of Directors and Chief
Executive Officer of Skysat Communications Network Corporation, a public company
engaged in research and development relating to, and production of, unmanned
aircraft systems for applications in the telecommunications industry. Since
1988, Mr. Fife has been a director of Projectavision, Inc., a public company
engaged in the development of solid state projection television and related
video display technology. Since November 1996, he has been Chairman of the Board
of Directors of Magar Inc., a company specializing in the marketing of financial
products and the development of early-stage companies.
Herman Badillo has been a Director of the Company since September 1995. He
has been a member of Fischbein Badillo Wagner & Harding, a law firm located in
New York City, for more than five years. Since April 1994, he has been Special
Counsel to the Mayor of New York City for Fiscal Oversight of Education and
since July 1994, he has been a member of the Mayor's Advisory Committee on the
Judiciary. Mr. Badillo served as a United States Congressman from 1971 to 1978
and Deputy Mayor of New York City from 1978 to 1979.
General Buster Glosson (Ret.) has been a Director of the Company since
September 1995. He has been President of Eagle Limited, a venture capital and
consulting firm, since September 1994. He served as an officer in the United
States Air Force from 1965 until he retired in September 1994. From June 1992 to
September 1994, he was Deputy Chief of Staff for Plans and Operations for the
United States Air Force. From May 1991 to May 1992, General Glosson was
Legislative Liaison and Director of the Air Force Issues Team. From August 1990
to May 1991, he commanded the 14th Air Division and was a Director of Campaign
Plans for U.S. Central Command Air Forces, Ryadh, Saudi Arabia.
Edward Celano has been a Director of the Company since September 1995. Mr.
Celano has been an Executive Vice President of Atlantic Bank since May 1, 1996.
Prior to that, Mr. Celano was a Senior Vice President of NatWest Bank and held
different positions at the bank for over 20 years.
Alan Cohen has been the Chairman of the Board of Directors and the owner of
Alco Capital, Group, Inc., a diversified financial service and investment
company specializing in corporate restructuring and reorganizations since 1975.
Mr. Cohen has lectured extensively on restructuring and asset-based lending and
has served as a consultant and adviser to many of the country's leading banks
and financial institutions.
Arthur Stern is the father of Gary Stern. There are no other family
relationships among the directors or officers of the Company.
In connection with the Company's underwritten initial public offering of
Common Stock, effective November 13, 1995 (the "IPO"), the Company agreed, for a
period of 5 years thereafter, if so requested by Whale Securities Co., L.P. (the
"Underwriter"), to nominate and use its best efforts to elect a designee of the
Underwriter as a director of the Company and as a member of the Executive
Committee, or at the Underwriter's option, as a non-voting adviser to the
Company's Board of Directors. The Company's officers, directors and stockholders
existing prior to the consummation of the IPO have agreed to vote their shares
of Common Stock in favor of such designee. The Underwriter has not yet exercised
its right to designate such a person.
<PAGE>
BOARD ORGANIZATION AND MEETINGS
During the fiscal year ended September 30, 1996, the Board of Directors
held 1 meeting and acted 6 times by unanimous consent. During the 1996 fiscal
year, each member of the Board of Directors attended at least 75% of all
meetings of the Board of Directors and committees of the Board of Directors of
which such director was a member. There are two standing committees of the Board
of Directors, each of which is described below.
Executive Committee. The Executive Committee consists of three directors.
The members of the Executive Committee currently are Martin D. Fife (the
Chairman), Arthur Stern and Gary Stern. The Executive Committee gives
preliminary consideration to policy and strategic matters and determines whether
proposals shall be submitted for consideration by the full Board of Directors.
The Executive Committee does not have the authority to make a final
determination on any matter without approval by the full Board of Directors. The
Executive Committee did not meet in fiscal 1996.
Nominating Committee. The Nominating Committee consists of three directors.
The members of the Nominating Committee currently are Arthur Stern, Gary Stern
and Mitchell Herman. The Nominating Committee has the power and authority to (i)
fix the record date, meeting date and meeting place for the Annual Meeting of
Stockholders, (ii) set the agenda for the Annual Meeting of Stockholders, (iii)
fix the number of persons who shall constitute the Board of Directors for the
coming year, (iv) designate the Board's nominees for directors at the Annual
Meeting of Stockholders, (v) approve the Annual Report to Stockholders and the
Proxy Statement for the Annual Meeting of Stockholders and (vi) take any and all
further or other action necessary or desirable in connection with the Annual
Meeting of Stockholders. The Nominating Committee will not consider nominees
recommended by stockholders. The Nominating Committee was formed in December
1996.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company receives a fee of $500 per each Board meeting attended and each
Board committee meeting attended (unless held on the same day as a Board
meeting). The Company reimburses each director for the expenses incurred in
connection with attendance at such meetings.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of January 15, 1997 with
respect to beneficial ownership of the Common Stock by (i) each director and
executive officer, and (ii) all director and executive officers as a group.
Unless otherwise indicated, the address of each such person is c/o Asta Funding,
Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632. All persons listed
have sole voting and investment power with respect to their shares unless
otherwise indicated.
<TABLE>
Amount of Beneficial Ownership (1)
<CAPTION>
<S> <C> <C>
Percentage
Name and Address Shares Owned
Arthur Stern 2,616,833(2)(3)(4) 58.5%
Gary Stern 2,605,000(2)(3) 58.4
Martin Fife 286,666(5) 6.4
405 Lexington Avenue
New York, New York 10174
Mark Levy 197,333(6) 4.4
Mitchell Herman 45,833(7) 1.0
Herman Badillo 6,666(8) *
909 Third Avenue
New York, New York 10022
Edward Celano 6,666(8) *
1133 Avenue of the Americas
New York, New York 10036
General Buster Glosson 6,666(8) *
Two First Union Centre
Charlotte, North Carolina 28282
All executive officers and directors
as a group
(8 persons) 3,166,663(9) 69.8%
</TABLE>
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*Less than 1%
(1) Excludes options which are not exercisable within 60 days of January 15,
1997. Any security that any person named above has the right to acquire
within 60 days is deemed to be outstanding for purposes of calculating the
ownership percentage of such person, but is not deemed to be outstanding
for purposes of calculating the ownership percentage of any other person.
(2) Includes 352,500 shares of Common Stock held in the Escrow Account.
(3) Includes 2,605,000 shares of Common Stock owned beneficially by Asta Group,
Incorporated. Arthur Stern is the Chairman of the Board of Directors and a
principal stockholder of Asta Group, Incorporated. Gary Stern is Vice
<PAGE>
President, Secretary, Treasurer and a director and principal stockholder of
Asta Group, Incorporated. As such, each may be deemed to be the beneficial
owner of such shares.
(4) Includes 11,833 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997.
(5) Includes 16,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997 and 45,000 shares of Common
Stock held in the Escrow Account.
(6) Includes 17,333 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997 and 90,000 shares of Common
Stock held in the Escrow Account.
(7) Includes 13,333 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997, 12,500 shares of Common
Stock held in the Escrow Account and 7,500 shares of Common Stock owned by
Mitchell Herman as custodian for a minor child.
(8) Includes 6,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 1997.
(9) Includes 500,000 shares of Common Stock held in the Escrow Account and
79,163 shares of Common Stock issuable upon exercise of options exercisable
within 60 days of January 15, 1997.
<PAGE>
EXECUTIVE COMPENSATION
The Company was incorporated in New Jersey on July 7, 1994 and was
reincorporated in Delaware on October 12, 1995 as a result of a merger of the
New Jersey corporation into a newly formed Delaware corporation. The following
table summarizes certain information relating to the compensation paid or
accrued by the Company for services rendered during the fiscal year ended
September 30, 1996 and the fiscal year ended September 30, 1995 (the year prior
to the year in which the Company's IPO was consummated), with respect to the
Chief Executive Officer, the Chief Financial Officer of the Company and each
other executive officer of the Company whose total annual salary and bonus are
$100,000 or more:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards (1)
--------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options/SARs Compensation
Principal Position Year ($) ($) ($) (3) ($)(4)
- ---------------------------- -------- ------------- ------------ ------------------ ----------------- -------------
Gary Stern............... 1996 125,000 25,000 - 30,000 1,770
President and Chief 1995 5,769 - - - -
Executive Officer
Mark Levy................ 1996 110,000 - - 95,000 1,440
Executive Vice 1995 96,000(2) - - 52,000 -
President and Chief
Operating Officer
Mitchell Herman.......... 1996 75,000 15,000 - 25,000 753
Chief Financial Officer 1995 5,769 - - 40,000 -
</TABLE>
<PAGE>
- ----------------------------
(1) The Company did not grant any stock appreciation rights, restricted stock
awards or make any long-term incentive plan payout during the fiscal years
ended September 30, 1996 and September 30, 1995.
(2) Includes $72,000 which originally was paid by Asta Group, Incorporated on
behalf of the Company. The Company reimbursed Asta Group, Incorporated for
such expense through an allocation of expenses. See "Certain Transactions."
(3) Comprised solely of incentive stock options and non-qualified stock
options. See "1995 Stock Option Plan".
(4) Includes insurance premium amounts paid for by the Company.
Employment and Consulting Agreements
Each of Gary Stern, Mark Levy and Mitchell Herman have entered into an
employment agreement (an "Employment Agreement") with the Company which
commenced on November 13, 1995 and will continue until September 30, 1998.
<PAGE>
The Employment Agreements provide for base annual salaries of $125,000,
$110,000 and $75,000 for Messrs. Stern, Levy and Herman, respectively. On
September 30, 1996, the base salaries for Messrs. Stern, and Herman were
increased by $12,500 and $7,500, respectively. Each of Messrs. Stern, Levy and
Herman may be granted annual bonuses in the discretion of the Board of
Directors. Under the terms of each of the Employment Agreements with Messrs.
Levy and Herman, if the employee is terminated prior to September 30, 1998,
under certain circumstances, the Company will have the right to repurchase, for
nominal consideration, 90,000 and 12,500 shares of Common Stock, respectively,
owned by them.
Each of the Employment Agreements provide that, in the event of a
termination of employment by the Company without cause (as defined in the
Employment Agreements) the employee will be entitled to certain benefits,
including the continuation of the payment of base salary through the initial
term of employment. In addition, each Employment Agreement contains certain
non-competition covenants and confidentiality provisions.
Arthur Stern has entered into a consulting agreement (the "Consulting
Agreement") with the Company for a term of one year which commenced November 13,
1996. Pursuant to the Consulting Agreement, Mr. Stern will perform certain
management and consulting services determined by the Board of Directors for an
annual consulting fee of $75,000. Arthur Stern previously had a consulting
agreement with the Company which terminated on November 13, 1996. The Consulting
Agreement is terminable by Mr. Stern upon 30 days written notice. If the
Consulting Agreement is terminated for any reason, the Company is obligated to
pay Mr. Stern's salary through the end of the month in which the termination
occurs. The Consulting Agreement contains certain non-competition covenants and
confidentiality provisions.
STOCK OPTION PLAN
1995 Stock Option Plan
In September 1995, the Board of Directors adopted, and the stockholders of
the Company approved, the 1995 Stock Option Plan (the "1995 Stock Option Plan")
in order to attract and retain qualified directors, officers and employees of
the Company. The following is a description of certain of the terms and
conditions of the 1995 Stock Option Plan. Such description does not purport to
be complete and is qualified in its entirety by reference to the full text of
the 1995 Stock Option Plan.
The 1995 Stock Option Plan authorizes the granting of incentive stock
options (as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) and non-qualified stock options to eligible employees of
the Company, including officers and directors of the Company (whether or not
employees) and consultants of the Company. The Company has reserved 420,000
shares of Common Stock for issuance in connection with the 1995 Stock Option
Plan. In the event that an option granted under the 1995 Stock Option Plan
expires or is terminated prior to exercise or vesting, the number of shares of
Common Stock covered thereby will again become eligible for grant under the 1995
Stock Option Plan.
The Employee Stock Compensation Program currently is administered by the
Board of Directors (the "Administrator") but may in the future be administered
by a committee of the Board of Directors (such committee would then become the
Administrator). Subject to applicable law and the terms of the 1995 Stock Option
Plan, the Administrator has the authority to grant options and awards under the
1995 Stock Option Plan, including to determine the terms and conditions of each
individual grant, to interpret and administer the provisions of the 1995 Stock
Option Plan, to adopt, amend and rescind rules and regulations pertaining to the
administration of the 1995 Stock Option Plan and to make all determinations
relative thereto.
Options granted under the 1995 Stock Option Plan will have an exercise
price established by the Administrator at the time of grant, provided that the
exercise price of incentive stock options may not be less than the fair market
value of the underlying shares on the date of grant. In the case of an incentive
stock option granted to a 10% stockholder, the per share exercise price may not
be less than 110% of such fair market value on the date of grant. Upon exercise
<PAGE>
of an option, the participant will be required to provide the exercise price in
full, in cash, in shares of the Company's securities valued at fair market value
on the date of the exercise of the option or in such other manner as the
administrator may specify. In connection with any exercise of options, the
Company will have the right to collect or withhold all taxes required to be
withheld under applicable law.
No option will vest more than ten years from the date of grant and no
option may be granted after September 14, 2005. Subject to limitations imposed
by Section 16(b) of the Exchange Act, the Administrator may accelerate the
vesting of any option or award granted under the 1995 Stock Option Plan,
including upon occurrence of a merger, reorganization or other similar
transaction.
Options granted under the 1995 Stock Option Plan are nontransferable,
except by will or by the laws of descent and distribution. During the lifetime
of a participant, an option may be exercised only by the participant. In the
event that a participant's employment terminates as a result of death, the
participant's estate will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or one year from
the date of death. If the participant's employment terminates as a result of a
disability (as defined in the 1995 Stock Option Plan), the participant will have
the right to exercise vested options for a period ending on the earlier of the
expiration dates of such options or one year from the date of termination. If
the participant's employment terminates for cause, all options will
automatically expire upon termination. If the participant's employment
terminates other than as a result of death, disability or termination for cause,
the participant will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or thirty days
from the date of termination. In all cases, any unvested options will terminate
as of the date of termination of employment.
The Administrator may suspend or terminate the 1995 Stock Option Plan at
any time. In addition, the Administrator may amend or revise the terms of the
1995 Stock Option Plan from time to time; however no such amendment or revision
may alter or impair an option or award without the consent of the holder thereof
and no amendment shall, unless stockholder approval of such amendment or
revision is obtained, (i) increase the maximum number of shares which may be
acquired pursuant to options granted under the 1995 Stock Option Plan, (ii)
change the minimum exercise price of options granted under the 1995 Stock Option
Plan, (iii) increase the maximum term of options granted pursuant to the 1995
Stock Option Plan, or (iv) change the designation of persons eligible to receive
options under the 1995 Stock Option Plan. The 1995 Stock Option Plan will
terminate on September 14, 2005, unless earlier terminated by the Administrator.
No options may be granted under the 1995 Stock Option Plan after its
termination; however, termination of the 1995 Stock Option Plan will not affect
the status of any option outstanding on the date of termination.
Subject to certain exceptions not discussed herein, neither the Company nor
the participant will recognize taxable income or loss upon the grant of
non-qualified stock options under the 1995 Stock Option Plan. In general, the
participant will recognize ordinary income upon exercise of a non-qualified
stock option. The amount of income recognized generally will equal the
difference between (i) the fair market value of the underlying shares of Common
Stock on the date of the exercise and (ii) the exercise price. The Company
generally will receive a corresponding tax deduction equal to the amount
includable in the participant's income.
In addition, neither the Company nor the participant will recognize taxable
income or loss upon the grant or exercise of incentive stock options, although
there may be alternative minimum tax consequences to the participant upon
exercise. Upon subsequent disposition of the shares of Common Stock covered by
incentive stock options, the participant generally will recognize either capital
gain or loss or ordinary income, depending on whether certain holding period
requirements are satisfied. The Company generally will be entitled to a tax
deduction if the participant recognizes ordinary income.
On September 15, 1995, the Company granted non-qualified stock options at
an exercise price of $5.00 per share to the following officers and directors of
the Company in the amounts indicated: (i) to Mark Levy options covering 52,000
shares of Common Stock; (ii) to Mitchell Herman options covering 40,000 shares
of Common Stock; (iii) to Arthur Stern options covering 35,500 shares of Common
Stock; (iv) to Martin Fife options covering 12,500 shares of Common Stock; and
(v) to each of Herman Badillo, General Buster Glosson and Edward Celano options
covering 20,000 shares of Common Stock. One third of those options became
<PAGE>
exercisable in September 1996. An additional one-third of those options become
exercisable on the second anniversary of the date of grant and the remaining
one-third of those options become exercisable on the third anniversary of the
date of grant. In addition, upon the effectiveness of the Company's
reincorporation on October 13, 1995, the Company issued to Mark Levy and
Mitchell Herman incentive stock options covering 95,000 and 25,000 shares of
Common Stock, respectively, at an exercise price of $.01 per share in exchange
for incentive stock options that had been previously issued to them by the
predecessor company. Such options become exercisable on September 30, 1998 and
expire in October 2004.
On January 15, 1996, the Company granted non-qualified stock options
covering an aggregate of 37,500 shares of Common Stock to Martin Fife, at an
exercise price of $5.00 per share. One-third of such options became exercisable
in September 1996. An additional one-third of such options become exercisable in
September 1997 and the remaining one-third of such options become exercisable in
September 1998. On August 6, 1996, the Company granted options covering an
aggregate of 30,000 shares of Common Stock to each of Arthur Stern and Gary
Stern at exercise prices of $4.50 and $4.95 per share, respectively. The stock
options granted to Arthur Stern are non-qualified stock options and the stock
options granted to Gary Stern are incentive stock options. Options to purchase
one-third of such shares become exercisable on each of the first, second and
third anniversaries of the date of the grant.
The following tables summarize certain information relating to the grant of
options to purchase Common Stock to the executive officers named in the Summary
Compensation Table.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
Individual Grants
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Percent of
Number of Total
Securities Options /SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) (2) Fiscal Year (3) ($/sh) Date
- ---------------------------- ------------------- ----------------- -------------- --------------
Gary Stern........... 30,000 30.8% 4.95 8/5/2006
Mark Levy............ -- -- -- --
Mitchell Herman...... -- -- -- --
</TABLE>
- ------------------------
(1) The Company did not grant any stock appreciation rights in fiscal 1996.
(2) For a description of certain terms of the options listed above, see "1995
Stock Option Plan."
(3) Options covering a total of 97,500 shares of Common Stock were granted
under the 1995 Stock Option Plan in fiscal 1996.
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)
Value of
Number of Securities Unexercised
Underlying Unexercised In-The-Money
Options/SARs Options/SARs
at FY-End (#)(2) at FY-End ($)(3)
----------------- -------------- -------------------
Exercisable/
Name Exercisable Unexercisable Unexercisable
- ------------------ ----------------- -------------- --------------------
Gary Stern............ 0 30,000 --
Mark Levy............. 17,333 129,667 --
Mitchell Herman....... 13,333 51,667 --
- -------------------------
(1) No stock appreciation rights have been granted by the Company.
(2) No options were exercised in fiscal 1996.
(3) As of September 30, 1996, the fair market value of a share of Common Stock
(presumed to equal the last reported sale price as reported on the NASDAQ
SmallCap Market) was less than the exercise price per share of the
outstanding options.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors, certain
officers and persons holding more than 10% of a registered class of the
Company's equity securities to file with the Securities and Exchange Commission
and to provide the Company with initial reports of ownership, reports of changes
in ownership and annual reports of ownership of Common Stock and other equity
securities of the Company. Based solely upon a review of such reports furnished
to the Company, the Company believes that all such Section 16(a) reporting
requirements were timely fulfilled during the fiscal year ended September 30,
1996.
<PAGE>
CERTAIN TRANSACTIONS
Group owns approximately 58.4% of the Company's outstanding Common Stock.
From the commencement of operations of the Company in July 1994 until August 31,
1995, Group advanced to the Company approximately $3,600,000, of which
approximately $1,005,000 was forgiven in March 1995 in exchange for the issuance
to Group of 2,205,000 shares of Common Stock. The balance of such advances were
repaid with interest at the rate of 8% per annum with the proceeds of a
$4,000,000 revolving credit facility obtained by the Company from Israel
Discount Bank of New York ("IDB"). The Company repaid its outstanding
indebtedness to IDB with a portion of the proceeds from the Company's IPO and
proceeds from the Company's credit facility with BankAmerica Business Credit,
Inc. (the "Credit Facility").
From October 1, 1995 until November 14, 1995, Group made additional
advances to the Company in the amount of approximately $786,000. Such advances
were payable upon demand and accrued interest at the rate of 8% per annum. The
Company repaid to Group the entire outstanding balance of such loans with a
portion of the proceeds under the Credit Facility. From August 27, 1996 until
October 1, 1996, Group advanced approximately an additional $1,900,000 to the
Company. In October 1996, the Company repaid the $1,900,000, with interest at
the rate of 8% per annum, with a portion of the proceeds from the sale of a
portfolio of loans in connection with the Company's securitization transaction
with Greenwich Capital Markets, Inc.
In October 1994, the Company issued the following number of shares of
Common Stock to the following persons for nominal consideration: Martin Fife, a
Director of the Company and the Chairman of the Executive Committee of the Board
of Directors, 270,000 shares of Common Stock; Mark Levy, the Executive Vice
President and Chief Operating Officer of the Company, 180,000 shares of Common
Stock; and Mitchell Herman, the Chief Financial Officer, Secretary and a
Director of the Company, 25,000 shares of Common Stock.
The Company subleases its offices located in Englewood Cliffs, New Jersey,
from a wholly owned subsidiary of Group. The term of the sublease expires on
July 31, 2000, and calls for current rent payments of $8,677 per month. The
terms of the sublease are substantially similar to the terms of the underlying
lease between the subsidiary of Group and the lessor.
The Company and Group lease office space in the same building and allocate
certain office expenditures including telephone charges, copying charges and
utilities, incurred by those entities at their offices. Pursuant to such
allocation, Group charged the Company approximately $88,445 and $141,818,
respectively, during the fiscal years ended September 30, 1996 and 1995. Such
amounts also included allocated salaries and payroll expenses. In addition,
during the fiscal years ended September 30, 1996 and 1995, Group paid direct
expenses and purchased equipment for the Company aggregating $16,647 and $2,000,
respectively.
Company Policy
In the future, transactions with officers, directors and affiliates of the
Company are anticipated to be minimal and will be approved by a majority of the
Board of Directors, including a majority of the disinterested members of the
Board of Directors, and will be made on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
DESCRIBED ABOVE IN PROPOSAL ONE.
<PAGE>
PROPOSAL TWO
RATIFICATION OF AUDITORS
The Board of Directors has appointed Richard A. Eisner & Company, LLP as
the Company's independent public accountants for the fiscal year ending
September 30, 1997. Richard A. Eisner & Company, LLP served as the Company's
independent public accountants for the fiscal year ended September 30, 1996.
Although the appointment of independent public accountants is not required to be
approved by stockholders, the Board of Directors believes stockholders should
participate in the selection of the Company's independent public accountants.
Accordingly, the stockholders will be asked at the Meeting to ratify the Board's
appointment of Richard A. Eisner & Company, LLP as the Company's independent
public accountants for the fiscal year ending September 30, 1997.
Representatives of Richard A. Eisner & Company, LLP will be present at the
Meeting. They will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL TWO DESCRIBED ABOVE.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at the 1997 Annual
Meeting of Stockholders must be received by the Company at the address specified
below no later than the close of business on October 18, 1997 to be considered
for inclusion in the Proxy Statement for the 1997 Annual Meeting. Any proposal
should be addressed to Mitchell Herman, Secretary, Asta Funding, Inc., 210
Sylvan Avenue, Englewood Cliffs, New Jersey 07632 and should be sent by
certified mail, return receipt requested.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice for the Meeting, to be presented at the
Meeting for action by the stockholders. However, if any other matters are
properly brought before the Meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant to the proxies,
in accordance with the best judgment of the person acting under the proxies.
By Order of the Board of Directors
/S/ Mitchell Herman, Secretary
_____________________________________
Mitchell Herman, Secretary
February 14, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 1996, INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY STATEMENT. THE
ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A
COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1996 (EXCLUDING EXHIBITS) WILL BE FURNISHED WITHOUT CHARGE,
TO ANY SHAREHOLDER MAKING A WRITTEN REQUEST FOR THE SAME TO MITCHELL HERMAN,
SECRETARY, ASTA FUNDING, INC., 210 SYLVAN AVENUE, ENGLEWOOD CLIFFS, NEW JERSEY
07632.
<PAGE>
ASTA FUNDING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MARCH 14, 1997
The undersigned hereby appoints Gary Stern and Mitchell Herman, and each of
them, attorneys and proxies with power of substitution, to vote for and on
behalf of the undersigned at the Asta Funding, Inc. Annual Meeting of
Stockholders to be held on March 14, 1997 and at any adjournments or
postponements thereof (the "Meeting"), upon the following matters and upon any
other business that may properly come before the Meeting, as set forth in the
related Notice of Meeting and Proxy Statement, both of which have been received
by the undersigned.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If this proxy is executed but no direction is made,
this proxy will be voted FOR the board's nominees for director and FOR the
ratification of the Company's independent public accountants.
PLEASE INDICATE YOUR VOTE FOR THE ELECTION OF DIRECTORS ON THE OTHER SIDE.
The nominees are: Gary Stern, Mitchell Herman, Arthur Stern, Martin Fife, Herman
Badillo, General Buster Glosson, Edward Celano and Alan Cohen.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
<PAGE>
PLEASE MARK BOXES [ ] IN BLUE OR BLACK INK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 and 2.
1. Election of 8 directors.
For all nominees [ ] Against all nominees [ ] Exception* [ ]
* To withhold authority for individual nominees, print nominee's name on the
line below and check Exception Box.
- ------------------------------------
2. Ratification of Richard A. Eisner & Company, LLP as independent public
accountants for fiscal year 1997.
For [ ] Against [ ] Abstain [ ]
If you have noted an address change or comments on either side of this card,
mark here: [ ]
Dated: _________________________, 1997
__________________________
Please sign this proxy and return it promptly whether or not you expect to
attend the Meeting. You may nevertheless vote in person if you attend.
Please sign exactly as your name appears hereon. Give full title if an Attorney,
Executor, Administrator, Trustee, Guardian, etc.
For an account in the name of two or more persons, each should sign, or if one
signs, he or she should attach evidence of authority.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
