Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use
of the 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.
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(Name of Registrant as Specified in Its Charter)
Name of Person(s) Filing Proxy Statement, if other than the registrant)
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Payment of Filing Fee (Check the appropriate box):
|X| No Fee required
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HERTZ TECHNOLOGY GROUP, INC.
75 Varick Street
11th Floor
New York, New York 10013
Notice of Annual Meeting of Stockholders to be held January 18, 1999
------------------
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 18, 1999 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, 1999.
3. To act on a proposal to amend the Company's Certificate of
Incorportion to reduce the authorized Common Stock from
25,000,000 to 3,000,000 shares, $.001 par value.
4. 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 14,
1998 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 15, 1998
- ------------------------------------------------------------------------------
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 18, 1999
-----------------
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 18, 1999, 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 15, 1998.
THE VOTING AND VOTE REQUIRED
On the record date for the meeting, December 14, 1998, there were
outstanding 1,065,116* 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.
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.
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* Unless otherwise indicated, all references in this Proxy Statement to
shares of the Company's Common Stock reflect the one for three reverse
stock split effective on November 2, 1998.
<PAGE>
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 49 Chairman, President and Chief 1996
Executive Officer; Director
I. Marilyn Hertz 47 Vice Chairperson, Secretary and 1996
Director
Barry J. Goldsammler 45 Senior Vice President, Chief 1997
Financial and Accounting Officer and
Director
Beryl Ackerman 52 Director 1996
Bruce Borner 47 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. Mrs. 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.
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Board of Directors and Committees
The Board of Directors of the Company (the "Board") held three meetings,
the Audit Committee had one meeting and the Compensation Committee had no
meetings during the fiscal 1998 year. The Audit and Compensation Committees are
comprised of Messrs. Ackerman and Borner. The Audit Committee met with
representatives of Arthur Andersen LLP in December, 1997 and reviewed 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.
Information about Executive Officer who is not a director:
Steven Spinelli, age 53, Vice President-Sales and Marketing was
employed by the Company in February, 1998 and became Vice President-Sales and
Marketing on April 9, 1998. Prior to joining the Company and since September,
1989 Mr. Spinelli was president, chief executive officer and principal
stockholder of Genesis Distribution System, a trucking warehouse and logistics
business.
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 $100,000 for services
rendered in all capacities to the Company for its fiscal year ended August 31,
1998.
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- -------------------------
Awards
-------------------------
Restricted Securities
Name and Principal Stock Underlying
Position Year Salary Bonus Awards($) Options(#)
- ------------------ ---- -------- ---- ----------- -----------
Eli E. Hertz 1998 $225,000 --
Chairman, President and 1997 210,674 -- 83,333
Chief Executive Officer 1996 175,000 -- 300,000
Barry J. Goldsammler, 1998 $122,274 -- $79,725* 8,333
Senior Vice President 1997 $106,680 --
1996 $111,500 --
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* Represents market value of 25,000 shares on day of grant.
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Stock Options
The following table shows certain information with respect to the stock
options granted in 1998 to named executive officers. No Options granted have
been exercised.
Option Grants in 1998
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Individual Grants of Options
Percent Of
Total
Number of Options
Securities Granted Exercise
Underlying To Employees Price Expiration
Name Option # in fiscal 1998 ($/Sh) Date
- ------------------- ---------- -------------- -------- ----------
Eli E. Hertz 83,333 64% 4.50 9/22/02
Barry J.Goldsammler 8,333 6% 4.50 9/22/02
* The above options become exercisable as to 1/3 of each grant on
September 23rd of each of three successive years beginning with 1998.
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 300,000 Shares at an exercise price of $16.50 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.
Directors' Compensation
Non-Employee Directors are compensated at the rate of $500 per meeting. In
addition, each Non-Employee Director received options to purchase 2,500 shares
of the Company's Common Stock at a price of $4.50 per share exercisable as to
one-third of the options granted
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on the same date in each of three successive years beginning on the expiration
of one year from the granting date. All options expire on September 22, 2002.
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, 1998 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:
<TABLE>
<CAPTION>
Name and Address(1) Position with Company Number of Shares Percent of Shares
------------------- --------------------- ---------------- -----------------
<S> <C> <C> <C>
Eli E. Hertz Chairman,
President and Chief Executive
Officer; Director 587,658(2) 42%(7)
I. Marilyn Hertz Vice Chairperson, Secretary and
Director 301,806(3) 28%(7)
Barry J. Goldsammler Senior Vice President, Principal
Financial Officer and Chief
Accounting Officer 27,778(4) 3%(7)
Steven Spinelli Vice President-Sales and -0- --
Marketing
Beryl Ackerman Director 834(5)
Bruce Borner Director 901(5) --
All Officers and Directors
as a Group (6 persons) 918,977(6) 65%(7)
</TABLE>
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(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 327,777 shares issuable upon exercise of currently exercisable
warrants and options. Does not include shares owned by his wife, I.
Marilyn Hertz, with respect to which Mr. Hertz disclaims any beneficial
interest.
(3) Includes 5,556 shares issuable upon exercise of currently exercisable
options. Does not include shares owned by her husband, Eli E. Hertz, with
respect to which Mrs. Hertz disclaims any beneficial interest.
(4) Includes 2,778 shares issuable upon exercise of currently exercisable
options.
(5) Includes 834 shares issuable upon exercise of currently exercisable
options.
(6) Includes 337,779 shares issuable upon exercise of currently exercisable
options and warrants.
(7) Assumes for Mr. Hertz, Mrs. Hertz and Mr. Goldsammler that curently
exercisable options for each such person has been exercised and that for
Officers and Directors as a group all currently exercisable options by
such members 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.
On July 23, 1998 48,450 shares of Common Stock were issued to Eli Hertz in
exchange for the transfer to the Company by Mr. Hertz of all the outstanding
stock of Edutec Computer Institute, Inc.
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("Edutec"). The purchase price for the Edutec stock was determined to be fair by
Josepberg Grosz & Co., Inc., an independent investment bank engaged by the
Company to provide such an opinion.
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"). 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
1998, except that Eli Hertz's Form 4 for the months of July, 1998 reporting
purchases of 26,675 shares of stock and his Form 5 for the Company's 1998 fiscal
year reporting the granting of an option to purchase 83,333 shares were filed in
each case approximately 10 days late.
AMENDMENT TO REDUCE AUTHORIZED COMMON STOCK
The authorized capital stock of the Company currently consists of
25,000,000 shares of Common Stock, $.001 par value of which 3,195,348 shares
were issued and outstanding prior to November 2, 1998. By reason of a
one-for-three reverse stock split that became effective on that date the number
of outstanding shares of Common Stock was reduced to approximately 1,065,116.
The reason for the proposed amendment is to reduce the annual franchise taxes
payable to the state of Delaware, the state in which the Company is
incorporated. By reducing the authorized capital stock from 25,000,000 shares to
3,000,000 shares the Company will on the basis of its current capital structure
be able to save approximately $30,000 per year. By reason of this one-for-three
reverse stock split 25,000,000 shares is now considerably more shares than
needed for the Company's present and projected needs. An authorized
capitalization of 3,000,000 shares should give the Company about 1,700,000
shares for issuance for incentive options and acquisitions. This should be
sufficient to meet the anticipated needs of the Company.
Adoption of the proposed amendment requires the affirmative vote of the
holders of not less than a majority of the shares of Common Stock outstanding
and entitled to vote at the Annual Meeting.
The Board of Directors recommends a vote FOR the approval of the proposed
amendment reducing the authorized Common Stock.
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, 1999. Arthur Andersen LLP were the Company's independent auditors for
the fiscal year ending on August 31, 1998. The report of Arthur Andersen LLP
with respect to the Company's financial statements appears in the Company's
Annual Report for the 1998 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.
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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, 1998 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 1999
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement relating to that meeting not later than August 15, 1999. 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 15, 1998
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HERTZ TECHNOLOGY GROUP, INC.
This proxy solicited by the Board of Directors for the
Annual Meeting on January 18, 1999
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 18, 1999 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.
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The Board of Directors recommends a vote FOR all nominees and FOR
Proposals 2 and 3.
2. Proposal to amend the Company's Certificate of Incorporation to reduce its
authorized Common Stock.
FOR |_| AGAINST |_| ABSTAIN |_|
3. Proposal to ratify the appointment of independent auditors for 1999.
FOR |_| AGAINST |_| ABSTAIN |_|
(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 Proposals 2 and 3. 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.
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(Date)
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(Signature of Stockholder)
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(Signature of Stockholder)
