<PAGE>
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use
of the Commission
Only (as permitted by
Rule 14a-6(e)(2)
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-(11(c) or Rule 14a-12
Hertz Technology Group, Inc
---------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Name of Person(s) Filing Proxy Statement, if other than the registrant)
-------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
75 Varick Street
11th Floor
New York, New York 10013
Notice of Annual Meeting of Stockholders to be held January 12, 1998
------------------
The Annual Meeting of Stockholders of Hertz Technology Group, Inc. will
be held at the Company's offices, 75 Varick Street, 11th Floor, New York, New
York 10013 on January 12, 1997 at 4:00 P.M., for the purpose of considering and
acting upon the following:
1. Election of five Directors
2. Confirmation of the appointment of Arthur Andersen LLP as
auditors for the fiscal year ending August 31, 1998.
3. Any and all matters incident to the foregoing, and such
other business as may legally come before the meeting and
any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on December 9,
1997 as the record date for determining the stockholders having the right to
notice of and to vote at the meeting.
By order of the Board of Directors
Eli E. Hertz
Chairman of the Board,
President and Chief Executive Officer
New York, New York
December 12, 1997
IMPORTANT: Every stockholder, whether or not he or she expects to
attend the annual meeting in person, is urged to execute
the proxy and return it promptly in the enclosed business
reply envelope.
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
PROXY STATEMENT
For Annual Meeting of Stockholders
to be Held January 12, 1998
Proxies in the form enclosed with this Statement are solicited by
Management of Hertz Technology Group, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders to be held at 4:00 P.M. on January 12, 1998, for
the purposes set forth in the Notice of Meeting and this Proxy Statement. The
Company's principal executive offices are at 75 Varick Street, 11th Floor, New
York, New York 10013. The approximate date on which this Statement and the
accompanying proxy will be mailed to Stockholders is December 12, 1997.
THE VOTING AND VOTE REQUIRED
On the record date for the meeting, December 9, 1997, there were
outstanding 3,154,500 Common Shares, each of which will be entitled to one vote.
The only persons known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock as of the Record Date are listed under
"Security Ownership of Certain Beneficial Owners" below.
Directors are elected by a plurality of the votes cast at the meeting.
Confirmation of the appointment of auditors is by the affirmative vote of a
majority of the votes cast at the meeting
All shares represented by valid proxies will be voted in accordance
with the instructions contained therein. In the absence of instructions, proxies
will be voted FOR each of the stated matters being voted on at the meeting. A
proxy may be revoked by the stockholder giving the proxy at any time before it
is voted, either by oral or written notice, and a prior proxy is automatically
revoked by a stockholder giving a subsequent proxy or attending and voting at
the meeting. Attendance at the meeting in and of itself does not revoke a prior
proxy. Shares represented by proxies which are marked "ABSTAIN" with respect to
any proposal will not be counted in determining whether the requisite vote has
been received for such proposal. In instances where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not returned
proxies (so called "broker non-votes"), those shares will be disregarded and,
therefore, have no effect on the outcome of the vote.
<PAGE>
ELECTION OF DIRECTORS
Five Directors are to be elected at the Annual Meeting, each for a term
of one year and until the election and qualification of a successor.
It is intended that votes pursuant to the enclosed proxy will be cast
for the election of the five nominees named below. In the event that any such
nominee should become unable or unwilling to serve as a Director, the Proxy will
be voted for the election of such person, if any, as shall be designated by the
Board of Directors. The five nominees are currently members of the Board of
Directors. Management has no reason to believe these nominees will not be
available for election.
The nominees for election and certain information about them are shown
in the following table:
Director
Name Age Position Since
---- --- -------- -----
Eli E. Hertz 48 Chairman, President and Chief Executive 1996
Officer; Director
I. Marilyn Hertz 46 Vice Chairperson, Secretary and Director 1996
Barry J. Goldsammler 44 Senior Vice President, Chief Financial 1997
and Accounting Officer and Director
Beryl Ackerman 51 Director 1996
Bruce Borner 46 Director 1996
Certain information about the five nominees are set forth below:
Eli E. Hertz was a co-founder of the Company in 1982. He has a B.S.
degree in Management Science and Economics and an MBA in Accounting and
Management from Long Island University. Mr. Hertz is the husband of I. Marilyn
Hertz.
I. Marilyn Hertz was a co-founder of the Company. She has been a
principal officer of the Company since its formation in 1982. Before becoming a
full time employee of the Company, Mrs. Hertz was an officer of Citibank in its
computer systems department. Mrs. Hertz is a graduate of Queens College, and for
over 12 years, has lectured on micro and mainframe computer programming at
Queens College. Ms. Hertz is the wife of Eli E. Hertz.
Barry J. Goldsammler joined the Company in 1990 and has served in
various executive positions since then. Before joining the Company he was vice
president for a sheet metal fabricator and treasurer and principal financial
officer for a public manufacturing company. Mr. Goldsammler received a B.S.
degree in Accounting from Brooklyn College.
Bruce Borner has, for more than five years, been president of Computer
Projections, a company which is a consultant to, and developer of, a wide range
of information/database systems for diverse industries. Mr. Borner has an MBA
from the Management Development Institute (IMD) in Lausanne, Switzerland founded
by the Harvard Business School.
Beryl Ackerman has since June 1994 been a consultant to Justified
Computer System, a computer consulting firm. Prior thereto, he was a computer
specialist for the New York City Department of Sanitation. He is also a
Coordinator for Computer Systems in the Continuing Education Program at Queens
College, and a lecturer at Baruch College.
2
<PAGE>
Board of Directors and Committees
The Board of Directors of the Company (the "Board") held seven meetings
and the Audit Committee and the Compensation Committee had no meetings during
fiscal 1997. The Audit and Compensation Committees are comprised of Messrs.
Ackerman and Borner. The Audit Committee is expected to convene its first
meeting within the next 30 days to meet with representatives of Arthur Andersen
LLP and review their report on the Company's internal controls and other
matters. The Compensation Committee, though not having met as a separate body
during the past fiscal year, did meet and discuss with the full Board matters
relating to stock options and other compensation matters. There is no nominating
committee. All directors attended more than 75% of the aggregate number of
meetings of the Board.
The Compensation Committee's function is to review and recommend to the
Board the compensation and benefits of all officers of the Company, review
general policy matters relating to compensation and benefits of employees of the
Company and administer the issuance of stock options and discretionary cash
bonuses to the Company's officers, employees, directors and consultants. The
Audit Committee meets with management and the Company's independent auditors to
determine the adequacy of internal controls and other financial reporting
matters. It is the intention of the Company to appoint only independent
directors to the Audit and Compensation Committees.
The Board of Directors unanimously recommends a vote FOR the election
of each of the nominees.
3
<PAGE>
Remuneration
The following table sets forth the combined remuneration earned during
the last three fiscal years by its Chief Executive Officer and the only other
executive officer that received compensation in excess of $100,000 for services
rendered in all capacities to the Company for its fiscal year ended August 31,
1997.
Summary Compensation Table
Annual Compensation
-------------------
Name and Principal
Position Year Salary Bonus
-------- ---- -------- -----
Eli E. Hertz, 1997 $210,674 --
Chairman, President and 1996 175,000 --
Chief Executive Officer 1995 140,769 --
Barry J. 1997 $106,680 --
Goldsammler, 1996 $111,500 --
Senior Vice President 1995 $97,401 --
Stock Options
The following table shows certain information with respect to the only
stock options granted in 1997. No Options granted have been exercised.
Option Grants in 1997
Individual Grants of Options
- ----------------------------
Percent Of
Total
Number of Options
Securities Granted Exercise
Underlying To Employees Price Expiration
Name Option # in 1997 ($/Sh) Date
- ------------------ ---------- --------- ------------ ----------
Eli E. Hertz 900,000 100% 5.50 11/11/01
4
<PAGE>
Employment Agreement
The Company has entered into an employment agreement ("Agreement")
effective as of November 12, 1996 with Eli E. Hertz. The term of his employment
will expire on November 11, 2001. The annual salary under the Agreement with Mr.
Hertz is $225,000. His salary may not be increased during the first three years
and can be increased thereafter only with the approval of a disinterested
majority of the Board of Directors. Under Mr. Hertz' Agreement, he is granted
options to purchase 900,000 Shares at an exercise price of $5.50 per share.
The Agreement provides, among other things, for participation in an
equitable manner in any profit-sharing or retirement, separation and disability
plans for employees or executives and for participation in other employee
benefits applicable to employees and executives of the Company. The Agreement
further provides for the use of an automobile and other fringe benefits
commensurate with his duties and responsibilities. The Agreement with Mr. Hertz
also provides for benefits in the event of retirement, separation and
disability.
Under the Agreement, employment may be terminated by the Company with
cause or by Mr. Hertz with good reason. Termination by the Company without
cause, or by Mr. Hertz for good reason, would subject the Company to liability
for liquidated damages in an amount equal to Mr. Hertz' base salary for the
remaining term of his employment agreement or 12 months, whichever is higher.
Non-Employee Directors are compensated at the rate of $500 per meeting.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock on December 1, 1997 by (i)
each person who is known by the Company to own beneficially more than five
percent (5%) of the Company's Common Stock; (ii) each of the Company' officers
and directors; and (iii) all officers and directors as a group:
Position with Percent of
Name and Address (1) Company Number of Shares Shares
---------------- ------- ---------------- ------
Eli E. Hertz Chairman,
President and Chief
Executive Officer;
Director 1,488,750(2) 37%(3)
I. Marilyn Hertz Vice Chairperson,
Secretary and
Director 888,750 28%
Barry J. Goldsammler Senior Vice
President, Principal
Financial Officer
and Chief Accounting
Officer --
Beryl Ackerman Director --
Bruce Borner Director 200 --
All Officers and
Directors as a Group
(3 persons) 2,377,700(2) 59%(3)
- --------------------
(1) The address of all the persons listed above is c/o Hertz Technology
Group, Inc., 75 Varick Street, 11th Floor, New York, New York 10013.
(2) Includes 900,000 shares issuable upon exercise of currently exercisable
options at $5.50 per share.
(3) Assumes that all currently exercisable options by Mr. Hertz have been
exercised.
Certain Relationships and Related Transactions
The Company is the beneficiary of key-man life insurance in the amount
of $1,000,000 covering the life of Mr. Hertz.
The Company had two notes payable at 9.25%, due on demand to Eli E.
Hertz and I. Marilyn Hertz in the amounts of $211,966 and $34,720, respectively.
During fiscal 1997, the loans were repaid in full. Interest expense for both
notes for the years ended August 31, 1997 and 1996 were $3,745 and $36,369,
respectively.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC").
6
<PAGE>
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 best of the Company's knowledge, based solely on review of the
copies of such forms furnished to the Company, or written representations that
no other forms were required, the Company believes that all Section 16(a) filing
requirements applicable to its officers and directors were complied with during
1997.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board proposes that the stockholders ratify the appointment of
Arthur Andersen LLP as the Company's independent auditors for its fiscal year
ending on August 31, 1998. Arthur Andersen LLP were the Company's independent
auditors for the fiscal year ending on August 31, 1997. The report of Arthur
Andersen LLP with respect to the Company's financial statements appears in the
Company's Annual Report for the 1997 fiscal year. A representative of Arthur
Andersen LLP will be at the annual meeting and will have an opportunity to make
a statement if he desires to do so and will be available to respond to
appropriate questions. In the event the stockholders fail to ratify the
appointment, the Board will consider it a directive to consider other auditors
for a subsequent year.
Approval of the foregoing proposal requires the affirmative vote of a
majority of the votes cast.
The Board of Directors recommends a vote FOR this proposal.
MISCELLANEOUS
Other Matters
Management knows of no matter other than the foregoing to be brought
before the Annual Meeting of Stockholders, but if such other matters properly
come before the meeting, or any adjournment thereof, the persons named in the
accompanying form of proxy will vote such proxy on such matters in accordance
with their best judgment.
Reports and Financial Statements
The Company's Annual Report for the year ended August 31, 1997
including Audited Financial Statements, accompanies this Proxy Statement.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-KSB is incorporated in the Annual Report.
Solicitation of Proxies
The entire cost of the solicitation of proxies will be borne by the
Company. In addition, proxies may be solicited by directors, officers and
regular employees of the Company, without extra compensation, by telephone,
telegraph, mail or personal interview. The Company will also reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses for sending proxies and proxy material to the beneficial owners of its
Common Shares.
Stockholder Proposals
Stockholder proposals intended to be presented at the Company's 1998
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement relating to that meeting not later than August 12, 1998. Such
proposals should be addressed to I. Marilyn Hertz, Secretary, Hertz Technology
Group, Inc., 75 Varick Street, 11th Floor, New York, New York 10013.
EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE
ANNUAL MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED BUSINESS REPLY ENVELOPE.
By order of the Board of Directors
Eli E. Hertz
Chairman of the Board,
President and Chief Executive Officer
New York, New York
December 12, 1997
7
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
This proxy solicited by the Board of Directors for the
Annual Meeting on January 12, 1998
The undersigned hereby appoints I. Marilyn Hertz and Barry J.
Goldsammler, and each of them, with full power of substitution, the attorneys
and proxies of the undersigned to attend the Annual Meeting of Stockholders of
Hertz Technology Group, Inc. to be held January 12, 1998 at 4:00 P.M., and at
any adjournment or adjournments thereof, hereby revoking any proxies heretofore
given, to vote all shares of stock of the Company held or owned by the
undersigned as indicated on the proposals as more fully set forth in the Proxy
Statement, and in their discretion upon such other matters as may come before
the meeting.
1. Election of the following Directors - Eli E. Hertz, I. Marilyn Hertz, Barry
J. Goldsammler, Beryl Ackerman and Bruce Borner.
FOR all nominees / / WITHHOLD authority to vote for all nominees / /
FOR all nominees, EXCEPT nominee(s) written below.
----------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees.
2. Proposal to ratify the appointment of independent auditors for 1998.
FOR / / AGAINST / / ABSTAIN / /
The Board of Directors recommends a vote FOR Proposal 2.
(continued and to be signed on reverse side)
<PAGE>
The shares represented by this proxy will be voted as directed or if no
direction is indicated, will be voted FOR the election of each of the nominees
and FOR Proposal 2. As to any other matter, said proxies shall vote in
accordance with their best judgment.
The undersigned hereby acknowledges receipt of the Notice of and Proxy
Statement for the aforesaid Annual Meeting.
Date and sign exactly as name appears
hereon. Each Joint Tenant must sign.
When signed as Attorney, Executor,
Trustee, etc. give full title. If
signer is corporation, sign in full
corporate name by authorized officer.
------------------------
(Date)
-------------------------
(Signature of Stockholder)
--------------------------
(Signature of Stockholder)
