<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Section 240.14a-11(c) or Section 240.14a-12
COLLECTORS UNIVERSE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
[ ] 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:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
COLLECTORS UNIVERSE, INC.
1921 E. ALTON PARKWAY
SANTA ANA, CALIFORNIA 92705
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, DECEMBER 5, 2000
TO THE STOCKHOLDERS OF COLLECTORS UNIVERSE, INC.:
The 2000 Annual Meeting of Stockholders of COLLECTORS UNIVERSE, INC. (the
"Company"), will be held at the Company's new offices, at 1921 E. Alton Parkway,
Santa Ana, California 92705, at 10:00 A.M. on Tuesday, December 5, 2000, for the
following purposes:
(1) To elect the following five nominees to serve as directors until the
next annual meeting of stockholders or until their successors are
elected and have qualified:
David G. Hall Q. David Bowers
Roger W. Johnson Ben A. Frydman
Van D. Simmons
(2) To approve an amendment to the 1999 Stock Incentive Plan to increase
the authorized number of shares of Common Stock that are issuable under
that Plan from 1,748,575 to 2,998,575 shares; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Additional information regarding these matters are contained in the
accompanying Proxy Statement, which stockholders are urged to review. Only
stockholders of record at the close of business on October 16, 2000 will be
entitled to vote at the meeting or any adjournment or postponement thereof.
By Order of the Board of Directors
DAVID G. HALL
Chairman of the Board and
Chief Executive Officer
Santa Ana, California
October 25, 2000
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
YOU SHOULD COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. Any stockholder
present at the meeting may withdraw his or her proxy and vote personally on each
matter brought before the meeting. Stockholders attending the meeting whose
shares are held in the name of a broker or other nominee who desire to vote
their shares at the meeting should bring with them a proxy or letter from that
firm confirming their ownership of shares.
<PAGE> 3
COLLECTORS UNIVERSE, INC.
1921 E. ALTON PARKWAY
SANTA ANA, CALIFORNIA 92705
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Collectors Universe, Inc., a Delaware
corporation (the "Company" or "Collectors Universe"), for use at its 2000 Annual
Meeting of Stockholders ("Annual Meeting"). The Annual Meeting will be held at
10:00 A.M. Pacific time on December 5, 2000, at the Company's new offices, at
1921 E. Alton Parkway, Santa Ana, California 92705. This Proxy Statement and the
accompanying proxy are being mailed to stockholders on or about October 27,
2000.
Holders of shares of Common Stock of the Company ("stockholders") who
execute proxies retain the right to revoke them at any time before they are
voted, by executing and mailing a later dated proxy or a written notice of
revocation, to the Secretary, Collectors Universe, Inc., P.O. Box 6280, Newport
Beach, California 92658, prior to meeting or by giving such written notice at
the meeting or by attending the meeting and voting in person. A proxy, when
executed and not so revoked, will be voted in accordance with the instructions
given in the proxy. If a choice is not specified in the proxy, the proxy will be
voted "FOR" the nominees for election of directors named in this Proxy Statement
and "FOR" approval of the increase in the number of shares issuable under the
1999 Incentive Stock Plan.
It is contemplated that this solicitation of proxies will be made primarily
by mail; however, if it should appear desirable to do so in order to ensure
adequate representation at the meeting, directors, officers and employees of the
Company may communicate with stockholders, brokerage houses and others by
telephone, telegraph or in person to request that proxies be furnished and may
reimburse banks, brokerage houses, custodians, nominees and fiduciaries for
their reasonable expenses in forwarding proxy materials to the beneficial owners
of the shares held by them. All expenses incurred in connection with this
solicitation shall be borne by the Company.
VOTING SECURITIES
The shares of Common Stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. Only the stockholders of
the Company of record as of the close of business on October 16, 2000 (the
"Record Date"), will be entitled to vote at the meeting or any adjournment or
postponement thereof. Each stockholder is entitled to one vote for each share of
Common Stock held as of the Record Date. As of the Record Date, there were
25,335,631 shares of Common Stock outstanding and entitled to vote. A majority
of shares entitled to vote, represented in person or by proxy, will constitute a
quorum at the meeting. Abstentions and broker non-votes will be included in the
determination of the number of shares present for the purpose of determining
whether a quorum is present. Abstentions will be treated as shares present and
entitled to vote for purposes of any matter requiring the affirmative vote of a
majority or other proportion of the shares present and entitled to vote. With
respect to shares relating to any proxy as to which a broker non-vote is
indicated on a proposal, those shares will not be considered as having been
entitled to vote with respect to any such proposal. Abstentions or broker
non-votes or other failures to vote will have no effect in the election of
directors, because directors are elected by a plurality of the affirmative votes
cast. With respect to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the outstanding shares, an
abstention or broker non-vote will have the same effect as a vote against the
matter being voted upon.
<PAGE> 4
SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table presents certain information as of October 16, 2000
regarding the shares of Common Stock of the Company beneficially owned by (i)
persons known by the Company to hold more than 5% of its shares, (ii) the
incumbent directors and the persons nominated for election to the Board of
Directors at the upcoming Annual Meeting, (iii) the executive officers named in
the Summary Compensation Table, and (iv) the directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES % OF COMPANY'S
NAME BENEFICIALLY OWNED(1) COMMON STOCK
---- --------------------- --------------
<S> <C> <C>
Persons (other than management) owning more than 5%
of the outstanding Shares
Gordon Wrubel(2)................................. 1,601,600 6.3%
John W. Dannreuther(2)........................... 1,516,506 6.0%
Directors, Nominees and Executive Officers
David G. Hall.................................... 8,300,480(3) 32.8%
Van D. Simmons................................... 2,265,431(4) 8.9%
Q. David Bowers.................................. 1,425,060(5) 5.5%
Louis M. Crain................................... 1,050,807(6) 4.0%
Armen R. Vartian................................. 42,000(6) *
Roger W. Johnson................................. 10,000(6) *
Ben A. Frydman................................... 2,500(7) *
Gary N. Patten................................... 287,000(6) 1.1%
David Gioia...................................... 20,000(6) *
All Directors and Officers, as a group (8
persons)...................................... 13,400,778(8) 49.9%
</TABLE>
---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Under those rules (a) if a person has
decision-making power over either the voting or the disposition of any
shares, that person is generally deemed to be a beneficial owner of those
shares; (b) if two or more persons share decision-making power over either
the voting or the disposition of any shares, they will be deemed to share
beneficial ownership of those shares, in which case the same shares will be
included in each of such person's share ownership totals; and (c) if a
person holds options or warrants to purchase shares that are or will become
exercisable in the succeeding sixty (60) days, that person will be deemed to
be the beneficial owner of those shares and those shares (but not any shares
that are subject to options or warrants held by any other stockholder) will
be deemed to be outstanding for purposes of computing the percentage of the
outstanding shares that are beneficially owned by that person.
(2) Mr. Wrubel's address is 61 S. Main, Wolfeboro, NH 03894. Mr. Dannreuther's
address is 868 Mount Moriah, Suite 202, Memphis, TN 38117.
(3) Includes 216,650 shares held in grantor trusts established for Mr. Hall's
children. Mr. Hall may, under limited circumstances, exercise dispositive
power over those shares and, for that reason, may be deemed to share such
dispositive power with the trustees of those trusts. He does not, however,
have voting power with respect to those shares.
(4) Includes 92,850 of the shares included in the grantor trusts established by
Mr. Hall for his children that are referred to in footnote (3) above,
because Mr. Simmons is a trustee for certain of those trusts. As trustee, he
exercises voting power, and he shares dispositive with Mr. Hall, over those
92,850 shares and, therefore, these 92,850 shares are included in both of
their share ownership totals. Mr. Simmons does not have any financial or
pecuniary interests in any of the shares held in these trusts.
(5) Includes 485,628 shares which Mr. Bowers has the right to acquire by the
exercise of warrants and stock options that are currently exercisable or
will become exercisable within sixty (60) days of October 16, 2000.
(6) Includes the following number of shares which may be purchased on exercise
of employee stock options that are currently exercisable or will become
exercisable within sixty (60) days of October 16,
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<PAGE> 5
2000: Mr. Crain -- 807,000 shares; Mr. Vartian -- 40,000 shares; Mr.
Johnson -- 10,000; Mr. Patten -- 180,000 shares; and Mr. Gioia -- 20,000
shares.
(7) Does not include, and Mr. Frydman disclaims beneficial ownership of, a total
of 17,500 shares beneficially owned by other shareholders of the law firm of
Stradling Yocca Carlson & Rauth.
(8) Includes 1,542,628 shares which executive officers and directors have the
right to acquire by exercise of stock options or warrants that are currently
exercisable or will become exercisable within (60) days of October 16, 2000.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Bylaws currently authorize a total of six directors. Pursuant
to action of the Board of Directors amending the Bylaws, effective as of the
date of the Annual Meeting that number will be reduced to five and the Board of
Directors has nominated five candidates for election as directors at the Annual
Meeting. The name of and other information regarding each of those nominees is
set forth below. Unless otherwise instructed, the proxy holders named in the
enclosed proxy will vote the proxies received by them for the five nominees
named below. All of the nominees are presently directors of the Company, except
Ben A. Frydman, who has been nominated by the Board of Directors for election to
the Board. All of the nominees have consented to serve, if elected. If, prior to
the Annual Meeting, any nominee becomes unavailable to serve for any reason, the
enclosed proxy will be voted for the election of such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors. The Board of
Directors has no reason to believe that any of the nominees will be unavailable
to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES NAMED BELOW.
DIRECTORS
All members of the Company's Board of Directors hold office until the next
annual meeting of stockholders or until their successors are elected and have
qualified.
NOMINEES:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE OF DIRECTOR SINCE POSITION WITH COLLECTORS UNIVERSE
------------------------ -------- ---------------------------------
<S> <C> <C>
David G. Hall, 53.................. 1986* Chairman of the Board and Chief
Executive Officer
Q. David Bowers, 61................ 2000 President of the Company's Bowers
and Merena Division and Director
Van Simmons, 53.................... 1986* Vice President of the Company's
Bowers and Merena Division and
Director
Roger W. Johnson, 65............... 1999 Director
Ben A. Frydman, 53................. N/A Nominee for Election to the Board
of Directors
</TABLE>
---------------
* Although Collectors Universe was organized in February 1999, Mr. Hall and Mr.
Simmons were both founders and served as directors of its predecessor company,
Professional Coin Grading Service, beginning in 1986.
DAVID G. HALL is and has served as Chief Executive Officer of Collectors
Universe since April 2000 and as the Chief Executive Officer of its predecessor
company and wholly owned subsidiary, Professional Coin Grading Service, since
1986. He also served as the Chairman of the Board and a Director of Collectors
Universe since its founding in February 1999 and of Professional Coin Grading
Service since its was founded
3
<PAGE> 6
in 1986. Mr. Hall was honored in 1999 by COINage Magazine as Numismatist of the
Century, along with Q. David Bowers and 13 other individuals. In 1990, Mr. Hall
was named an Orange County Entrepreneur of the Year by INC. Magazine. In
addition, he has written A Mercenary's Guide to the Rare Coin Market, a book
dedicated to coin collecting. Mr. Hall also is a member of the Professional
Numismatists Guild.
ROGER W. JOHNSON has served as a Director of Collectors Universe since
November 1999. Since 1996, Mr. Johnson has been a private investor. He was
appointed by President Clinton and served as the Administrator of the General
Services Administration of the United States from 1993 to 1996. Mr. Johnson also
has been Chief Executive Officer of the Young Presidents' Organization,
International since 1998. He is a member of the boards of directors of The
Needham Funds, Inc., Sypris Solutions, Inc., Insulectro, Carole Little and the
Women's Consumer Network, Washington, D.C. Mr. Johnson was Chairman and Chief
Executive Officer of Western Digital Corporation from 1982 to 1993. Mr. Johnson
holds an M.B.A. in industrial management from the University of Massachusetts.
VAN D. SIMMONS currently is and since July 2000 has served as Vice
President of Sales of the Company's Bowers and Merena Division. From 1981 to
1997 he served as the President of David Hall Rare Coins and Collectibles, a
retailer of rare coins. Mr. Simmons was a founding director of the Company in
February 1999 and was also a founder and has served as a director of its
predecessor company, Professional Coin Grading Service, since 1986. He served as
Chairman of the Board of David Hall's North American Trading, LLC, a retailer of
rare coins, from February 1997 to July 2000.
Q. DAVID BOWERS has served as President of the Bowers and Merena Division
and as a Director since March 2000. Mr. Bowers co-founded Bowers and Merena in
1982 and served as its President until it was acquired by Collectors Universe in
March 2000. Mr. Bowers was honored in 1999 by COINage Magazine as Numismatist of
the Century, along with David Hall and 13 others. Mr. Bowers has written
numerous books on the history of US coins and historical events. He received a
B.A. degree from Penn State University and received its Alumnus Achievement
Award in 1976.
BEN A. FRYDMAN has been nominated by the Board of Directors as one of its
candidates for election to the Board at the Annual Meeting. Mr. Frydman is, and
for more than the past five years has been, engaged in the private practice of
law, as a member and shareholder of Stradling Yocca Carlson & Rauth, a
Professional corporation, which provided legal services to the Company in the
fiscal year ended July 1, 2000. Mr. Frydman is a member of the Board of
Directors of The Coast Distribution System, a publicly traded company which is
the largest distributor of after-market accessories and parts to the
recreational vehicle industry in North America. He is a founding member of the
Board of The Forum for Corporate Directors of Orange County, a non-profit
organization that conducts educational programs devoted to corporate governance
primarily for executive officers and directors of public and private
corporations. Mr. Frydman has a B.A. degree from UCLA and a Juris Doctorate
degree, with honors, from Harvard Law School.
BOARD MEETINGS AND ATTENDANCE
The Board of Directors of the Company held five meetings during the fiscal
year ended July 1, 2000. Each incumbent Director attended at least seventy-five
percent (75%) of the aggregate of the number of meetings of the Board and the
number of meetings held by all committees of the Board on which he or she served
during his term of office. There are no family relationships among any of the
directors or executive officers of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Audit Committee and a standing
Compensation Committee.
During the fiscal year ended July 1, 2000, the members of the Audit
Committee were Roger Johnson and Van D. Simmons. Mr. Simmons was not an employee
of the Company during fiscal 2000, and, therefore, was eligible to serve as a
member of that Committee. It is currently anticipated that the members of the
Audit Committee for fiscal 2001 will be Roger Johnson and Ben A. Frydman
(assuming they are elected as directors
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<PAGE> 7
at the Annual Meeting). The Audit Committee is authorized to act upon such
matters as the scope of the annual audit and the accounting methods and the
accounting and internal control systems employed by the Company. The Committee
meets directly with the Company's outside accountants to discuss the results of
their review of the Company's quarterly financial statements and their audit of
the Company's annual financial statements and their findings regarding the
adequacy of the Company's accounting and internal control systems. In addition,
the Audit Committee makes recommendations to the Board of Directors with respect
to the selection of the Company's independent accountants. The Audit Committee
held one meeting during the fiscal year ended July 1, 2000.
The Compensation Committee is comprised of two directors selected by the
Board of Directors of the Company. The current members of the Compensation
Committee are Van D. Simmons and Roger W. Johnson. The functions of the
Compensation Committee are to advise and make recommendations to the Board of
Directors with respect to compensation to be paid to, and the benefit programs
to be established for, officers and other management personnel. The Compensation
Committee also makes recommendations to the Board of Directors regarding the
granting of stock options to officers and other management personnel under the
Company's Incentive Stock Plan. The Compensation Committee held one meeting
during the fiscal year ended July 1, 2000.
The Company does not have a nominating committee. Instead, the Board of
Directors, as a whole, identifies and screens candidates for membership on the
Company's Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based on its review of copies of reporting forms and certifications of the
Company's directors and executive officers, the Company believes that all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934
applicable to its directors and executive officers in the fiscal year ended July
1, 2000 were satisfied.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation for
the fiscal years ended July 1, 2000 and June 30, 1999 and 1998 paid by the
Company (i) to each individual serving as the chief executive officer of the
Company during fiscal 2000, and (ii) all other executive officers of the Company
who earned total cash compensation during fiscal 2000 exceeding $100,000 (the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
-------------
STOCK OPTIONS ALL OTHER
YEAR SALARY BONUS($)(1) (SHARES)(#) COMPENSATION
---- -------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
David G. Hall(2).................. 2000 $140,000 $ -- -- $ --
Chairman of the Board/CEO 1999 330,000 -- -- --
1998 360,000 -- -- --
Louis M. Crain(3)................. 2000 $243,461 $ -- -- $100,000(4)
President and CEO 1999 180,000 -- 950,000
1998 N/A N/A N/A N/A
Gary N. Patten(5)................. 2000 $195,250 $11,800 100,000 --
President, CFO & Secretary 1999 36,300 11,700 180,000 --
1998 N/A N/A -- N/A
Stephen H. Mayer (6).............. 2000 $120,519 $37,000 -- --
Senior Vice President 1999 134,944 71,944 25,000 --
1998 146,980 -- -- --
David E. Gioia(7)................. 2000 $105,200 $ -- 100,000 --
Vice President, Marketing 1999 N/A N/A N/A --
1998 N/A N/A N/A
</TABLE>
---------------
(1) The bonuses paid to Messrs. Patten and Mayer were discretionary bonuses
awarded by action of the Board of Directors.
(2) During fiscal 2000, Mr. Hall voluntarily agreed to forego his salary for a
period of four months and to accept a reduced salary for the balance of the
year. Mr. Hall's current rate of compensation is $300,000 per year.
(3) Mr. Crain joined the Company as its Chief Executive Officer in January 1999.
He resigned that position in March 2000.
(4) Consists of a relocation allowance.
(5) Mr. Patten joined the Company as the Chief Financial Officer in April 1999
and, therefore, he received three months of salary in fiscal 1999.
(6) Mr. Mayer retired in July 2000.
(7) Mr. Gioia joined the Company as Vice President of Marketing in August 1999,
and, therefore, he received 11 months of salary in fiscal 2000.
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<PAGE> 9
OPTION GRANTS IN THE LAST FISCAL YEAR
Gary N. Patten and David Gioia were the only Named Officers to be granted
options during the fiscal year ended July 1, 2000. The following table sets
forth certain information regarding those options.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE OF
OPTIONS AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
PERCENT OF APPRECIATION FOR
NUMBER OF SHARES TOTAL OPTIONS EXERCISE OPTION TERM(2)
SUBJECT TO OPTIONS GRANTED IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED 2000 ($/SHARE) DATE(1) 5% 10%
---- ------------------ ----------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gary N. Patten........ 100,000 8.3% $6.75 2009 $424,500 $1,075,800
David Gioia........... 100,000 8.3% $5.00 2009 314,400 796,900
</TABLE>
---------------
(1) The term of the options granted to Messrs. Patten and Gioia is ten years.
Mr. Patten's options will become fully exercisable on December 31, 2000. Of
the options granted to Mr. Gioia, 20% became exercisable on December 31,
1999 and the other 80% will become exercisable in four annual installments,
of 20% each, on the same day of each succeeding year commencing on December
31, 2000.
(2) There is no assurance that the values that may be realized by Messrs. Patten
and Gioia on exercise of their options will be at or near the respective
values estimated in the table, which utilize compounded rates of growth of
stock price mandated by Securities and Exchange Commission of 5% and 10% per
year for the ten year term of the options.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Mr. Crain was the only Named Officer that exercised any stock options
during the fiscal year ended July 1, 2000 or held any "in-the-money" stock
options at July 1, 2000. The following table sets forth certain information with
respect to Mr. Crain's option exercise and his "in-the-money" options:
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS/
SHARES AT JULY 1, 2000 AT JULY 1, 2000
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Louis M. Crain....... 143,000 $413,270(1) 807,000 0 $669,800(2) $0
</TABLE>
---------------
(1) The options were exercised at an exercise price of $2.11 per share prior to
the completion of the Company's initial public offering and the commencement
of a trading market for its shares. The value realized is based upon a
deemed value per share as of that exercise date of $5.00.
(2) Based on the closing price of the Company's shares on the NASDAQ National
Market on June 30, 2000, which was $2.94 per share.
DIRECTORS' FEES
Directors who are not employees receive cash compensation of $20,000 per
year, paid quarterly, for service on our Board of Directors. Each of our
directors also is eligible to receive stock option grants under our 1999 Stock
Incentive Plan. On November 4, 1999, Mr. Johnson was granted a stock option to
purchase 10,000 shares of our Common Stock at $6.00 per share with 100% vesting
on the date of grant. Mr. Johnson's stock option expires ten years from the date
of grant.
CERTAIN TRANSACTIONS
Pursuant to the agreement under which Mr. Louis M. Crain was employed as
the President and Chief Executive Officer, the Company loaned him the sum of
$180,000 in January 1999. This loan bears interest at a rate of 9% per year and,
under its terms, $2,500 of the loan was forgiven for each month that Mr. Crain
was employed as the Company's Chief Executive Officer. Upon Mr. Crain's
resignation in March 2000, loan forgiveness ceased and, as of July 1, 2000,
unpaid principal and interest totaled $178,000. Pursuant to a
7
<PAGE> 10
consulting agreement entered into with Mr. Crain following his resignation as
the Company's Chief Executive Officer in March 2000, he has agreed to repay the
loan in quarterly installments of $15,000 and to pay the remaining balance of
the loan, together with any unpaid interest on December 1, 2001.
In October 2000, the Company made a $500,000 loan to David G. Hall, its
Chairman and Chief Executive Officer. The loan is secured by Mr. Hall's pledge
of 1,000,000 shares of his Collectors Universe Common Stock. The loan bears
interest at a rate of 10% per annum, which is the maximum rate of interest
permitted to be charged under applicable law, and the loan is to be repaid in
four quarter-annual installments beginning October 1, 2001 and ending June 30,
2002. The loan was approved by unanimous consent of the disinterested members of
the Board of Directors.
David Hall's North American Trading ("DHNAT"), which is a business
primarily engaged in the retail sale of rare coins through a direct sales force,
was owned by Mr. Hall and Mr. Simmons until June 30, 2000. Although DHNAT does
not conduct auctions, it sells coins to collectors who also buy or sell coins at
auctions conducted by the Company. DHNAT also purchases rare coins for resale
through a sole source supplier that is also one of the Company's coin suppliers.
Therefore, DHNAT indirectly competes with the Company in connection with the
purchase and sale of rare coins. Additionally, during fiscal 2000, the Company
purchased $105,000 of collectibles for its inventory from DHNAT and another
entity affiliated with Mr. Hall and the Company sublet excess space at its
offices to DHNAT at an annual rent of $60,000.
On June 30, 2000, Mr. Hall and Mr. Simmons sold their respective ownership
interests in DHNAT to various unrelated entities in order to eliminate any
potential conflicts of interest that they might appear to have by reason of
their ownership of DHNAT.
Since December 1999, it has been the Company's policy that employees and
their affiliates will not be allowed to purchase collectibles at its
collectibles auctions. However, employees and their affiliates are permitted to
consign collectibles to us to be sold in our auctions or galleries. Upon sales
of those collectibles by the Company, those employees and affiliates pay
sellers' commissions to the Company in amounts and on terms comparable to those
that apply to unaffiliated consignors.
John Dannreuther, a beneficial owner of 6.0% of our outstanding shares of
Common Stock, is the sole owner of J.D.R.C. Inc., which received payments from
us in the amount of $102,000 in fiscal 2000 for research and consulting services
performed for us relating to our coin authentication and grading services. In
addition, during fiscal 2000 we made $142,000 of collectibles purchases from
J.D.R.C. Inc.
Armen Vartian, a director of the Company, provided legal services to the
Company during fiscal 2000.
EMPLOYMENT AND CONSULTING AGREEMENTS
Mr. Patten is employed as the Company's President and Chief Financial
Officer under a three-year employment agreement. Pursuant to that Agreement, he
is currently receiving a base annual salary of $218,000 and for the final 18
months of that agreement, his base annual salary will be $250,000. We have also
entered into a severance agreement with Mr. Patten that will entitle him to two
and one-half years' annual base compensation and bonus in the event his
employment is terminated following a sale or change of control of Collectors
Universe.
Mr. Crain was employed as Chief Executive Officer, under an employment
agreement with the Company, from January 1999 through March 2000, when he
resigned his employment and that agreement was terminated. At that time the
Company entered into a 20-month consulting agreement with Mr. Crain under which
he is receiving consulting fees of $15,000 per month and medical benefits for
the term of that agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Members of the Compensation Committee of the Board of Directors in
fiscal 2000 were Roger Johnson and Van Simmons, who were non-employee directors
of the Company during that fiscal year.
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<PAGE> 11
Subsequent to the end of fiscal 2000, Mr. Simmons joined the Company as Vice
President of its Bowers and Merena Rare Coin Division.
No executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as members of the Company's Board of Directors or Compensation
Committee.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee makes recommendations to the Board of Directors
with respect to the compensation of the Company's executive officers. It also is
the responsibility of the Compensation Committee to assure that the executive
compensation programs are reasonable and appropriate, meet their stated purposes
and effectively promote the interests of the Company and its stockholders.
COMPENSATION PHILOSOPHY AND POLICIES FOR EXECUTIVE OFFICERS
The Company's strategic goal is to become the leading provider of
value-added services to the high-end collectibles markets in which it operates,
and thereby to maintain a high level of revenue growth and achieve increasing
profitability and, in that way, increase stockholder value. As a result, in
recommending compensation programs for the Company's executive officers, the
Compensation Committee seeks to create incentives and provide rewards for
performance and accomplishments by those officers that will further these goals.
The Committee's compensation policy emphasizes competitive base salaries
and long-term incentive compensation in the form of stock options. Stock options
are granted at exercise prices that usually are set at 100% of the market value
of the Company's shares on the date they are granted. Since the financial reward
provided by stock options is dependent on appreciation in the market value of
the Company's shares above those exercise prices, stock options effectively
reward executives only for performance that results in improved market
performance of the Company's stock, which directly benefits all stockholders.
Discretionary bonuses are paid from time to time, but are not a key element of
executive compensation, and the Company provides essentially no perquisites to
its executive officers.
Base Salaries. With the exception of the Company's President and Chief
Financial Officer, whose annual base salary is set under the terms of his
employment agreement with the Company (see "Employment and Consulting
Agreements" above), all other executive officer salaries are reviewed and
evaluated on an annual basis. In determining appropriate salary levels and
salary increases, the Compensation Committee considers the extent to which the
Company has achieved, and the extent of the executive's contribution to the
achievement of, its strategic goals, the level of responsibility of the
executive, and his or her individual performance. In addition, the Committee
recognizes that to be able to retain its existing executives and attract new
executives, the Company must offer salaries that are competitive with those paid
by its competitors to their executive officers. As a result, the Committee also
considers published data regarding the executive compensation paid by its
competitors.
CEO Compensation. In fiscal 1999, prior to the Company's initial public
offering, Mr. Hall's base annual salary was $330,000. During fiscal 2000,
following completion of the Company's initial public offering Mr. Hall
voluntarily agreed to forego his salary for a period of four months during which
the Company was experiencing rapid growth and a resulting increase in
infrastructure expenses. At the end of that period, at the recommendation of the
Compensation Committee and with Mr. Hall's approval, the Board of Directors set
Mr. Hall's annual base salary of $180,000. In June 2000, the Compensation
Committee increased Mr. Hall's base salary to $300,000, which the Compensation
Committee determined was competitive for the Company's performance, geographic
location and industry. Another factor that the Compensation Committee considered
in determining Mr. Hall's salary is that he does not receive cash bonus awards
or perquisites. In addition, he has not been granted any stock options, because
he already owns a substantial number of the Company's shares, which aligns his
interests with those of the stockholders.
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<PAGE> 12
Stock Options and Equity-Based Programs. The grant of stock options
represents the only form of long term incentive compensation that is awarded by
the Company to its executive officers. As discussed above, the grant of stock
options provides executive officers with the right to purchase shares of our
Common Stock, usually at a price equal to their fair market value on the date of
grant. As a result, the grant of options serves to align the interests of
management with those of the stockholders by rewarding executive officers for
increases in the market value of the Company's shares. In addition, the
Compensation Committee believes that stock option grants provide the Company
with a mechanism for recruiting talented management personnel by providing them
with an opportunity to profit from the results of their contributions to the
Company and its share price performance. These grants also help ensure that
operating decisions are based on long-term results that benefit the Company's
stockholders.
Each stock option becomes vested and exercisable over a period of time that
ranges from immediate vesting to vesting over a five year period. The number of
shares covered by each option grant and the frequency of option grants to
executives reflects the Compensation Committee's assessment of the executive's
level of responsibility, his or her past and anticipated future contributions to
the Company and the impact the executive has on decisions that affect the
overall success of the Company.
During fiscal 2000, the Company also initiated an Employee Stock Purchase
Plan, which enables management and other employees to make $25,000 of purchases
of (but in no event more than a total of 5,000) shares per year, by means of
payroll deductions at discounted prices. This Plan is designed to increase
management ownership of the Company's Common Stock and, thereby, to provide
management with a continuing interest in the Company's share price performance.
The Compensation Committee
Roger W. Johnson
Van Simmons
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing Compensation
Committee Report and the Performance Graph on the following page shall not be
incorporated by reference into any such filings.
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<PAGE> 13
STOCKHOLDER RETURN COMPARISON
The following line-graph compares, for the period from the commencement of
the Company's initial public offering on November 4, 1999 through the end of its
fiscal year on July 1, 2000, the cumulative stockholder returns for the Company,
the Russell 2000 Index and a Peer Group composed of 8 companies classified as
"Auction House/Art Dealers." The Peer Group companies include AbleAuctions.com,
Inc., Autoco.com Inc., Bid.com International Inc., Gallery of History, Greg
Manning Auctions, Inc., Ritchie Bros. Auctioneers, Inc., RMS Titanic Inc. and
Sotheby's Holdings Inc.
The graph uses, as the beginning price, the initial public offering price
of the Company's shares on November 4, 1999, which was $6.00 per share, and
assumes $100 invested on that date.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
PARTIAL FISCAL YEAR
COMPANY/PEER GROUP/INDEX NOVEMBER 4, 1999 JULY 1, 2000
<S> <C> <C>
-----------------------------------------------------------------------------------
Collectors Universe, Inc. 100.00 48.97
-----------------------------------------------------------------------------------
Peer Group Index 100.00 74.28
-----------------------------------------------------------------------------------
Russell 2000 Index 100.00 134.39
-----------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
PROPOSAL TWO
AMENDMENT OF THE 1999 STOCK INCENTIVE PLAN
TO INCREASE THE SHARES ISSUABLE UNDER THAT PLAN
FROM 1,748,575 TO 2,998,575 SHARES
INTRODUCTION
In February 1999, the Company adopted the 1999 Stock Incentive Plan (the
"1999 Plan"), which authorized the Board of Directors to grant to executive
officers and other key management personnel, non-employee directors and outside
consultants and service providers, stock options and restricted stock purchase
rights that would entitle them to purchase shares of Common Stock of the
Company. The Plan currently provides that the maximum aggregate number of shares
for which options and restricted stock purchase rights can be granted is
1,748,575.
The primary purposes of the 1999 Plan are:
- to enhance the Company's ability to attract and retain the services of
officers and other key management employees, directors and outside
consultants and service providers who have the capabilities to make
meaningful contributions to the growth and profitability of the Company's
business; and
- to align the interests of those persons with the interests of the
stockholders by rewarding them for performance that leads to significant
improvements in the market value of the Company's shares.
In recent years the granting of stock options has become one of the more
powerful tools available to corporations in their efforts to attract new
executives, because stock options and stock purchase rights provide them with
the potential of significant financial rewards for their performance in
increasing the value of a corporation's shares that cannot be realized alone
from the payment of salaries and bonuses. In fact, the Board of Directors
believes that the ability to grant options and stock purchase rights is critical
to the competitiveness and long-term success of the Company.
As of October 16, 2000, options for the purchase of an aggregate of
approximately 1,675,000 shares had been issued and were outstanding under the
1999 Plan. As a result, options to purchase only 73,585 shares remained
available for the grant of future options and stock purchase rights under the
1999 Plan. The Board of Directors believes that this number of available shares
is not sufficient to enable the Company to compete successfully with other
companies for the services of talented personnel and to prevent key management
employees from accepting employment with other companies offering attractive
option or equity incentive packages. For these reasons, the Board concluded that
it was advisable for the Company to increase the number of shares that it could
grant under the 1999 Plan by 1,250,000 shares. If the increase is approved, the
number of options that will be available for grant by the Company will be
1,323,585. Currently, there are a total of 3,251,817 shares subject to
outstanding options (inclusive of those outstanding under the 1999 Plan);
however, all but 507,000 of those shares are purchasable at prices exceeding the
recent trading prices of our shares.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of this increase in the number of shares available for option
grants and stock purchase rights requires the affirmative vote of the holders of
a majority of the shares of Common Stock present or represented and entitled to
vote at the Annual Meeting. In determining the number of votes received for
approval of Proposal Two, management proxies on which no specific instruction is
given with respect to this Proposal will be voted "FOR" the increase in the
number of shares authorized under the 1999 Plan.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE PROPOSAL TO INCREASE IN THE AUTHORIZED NUMBER OF SHARES AVAILABLE FOR
ISSUANCE UNDER THE 1999 PLAN BY 1,250,000 SHARES.
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<PAGE> 15
DESCRIPTION OF THE 1999 STOCK INCENTIVE PLAN
General
The essential features of the 1999 Plan are summarized below. The summary
does not purport to be a complete description of the 1999 Plan. A copy of the
1999 Plan may be obtained, free of charge, by mailing a written request
therefor, to the Secretary, Collectors Universe, Inc., P.O. Box 6280, Newport
Beach, California 92658.
The 1999 Plan provides for the grant by the Company of options to purchase
Common Stock, and also provides for sales of shares of restricted shares of
Common Stock, to officers and other key employees and directors of and
consultants and service providers to the Company or its subsidiaries. If the
increase in the authorized number of shares covered by the Plan is approved at
the Annual Meeting, the maximum number of shares that could be issued under the
Plan will be 2,998,575.
At October 16, 2000, options to purchase a total of 1,675,000 shares had
been granted under the 1999 Plan. As of that same date, there were three
executive officers, three non-employee directors and approximately 250 other
employees of the Company and its subsidiaries that were eligible to participate
in the 1999 Plan. Outside consultants and service providers also are eligible to
be granted stock options and restricted rights to purchase shares of stock under
the 1999 Plan.
The aggregate number and kind of shares covered by the 1999 Plan, and the
number and kind of shares and the exercise price per share covered by
outstanding stock options, will be subject to adjustment in the event of any
changes in the character or number of outstanding shares of Common Stock by
reason of stock splits, reverse stock splits, stock dividends, reclassifications
or similar changes in the capital structure of the Company.
The 1999 Plan provides that it is to be administered by the Board of
Directors or a committee of at least two directors appointed by the Board (the
"Committee"). The 1999 Plan is administered by the Company's Compensation
Committee, the current members of which are Roger W. Johnson and Van Simmons.
The Committee has broad discretion, subject to the terms of the 1999 Plan, to
determine the persons entitled to receive options and/or restricted stock, and
the terms and conditions on which options and/or restricted stock are granted
and to interpret and prescribe rules and regulations relating to the 1999 Plan.
Provisions of the Plan Relating to Stock Options
Exercise Prices of Stock Options. Options granted under the 1999 Plan may
be either "incentive stock options," within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonqualified stock
options," as determined by the Board of Directors or the Committee at the time
of grant. The exercise price of incentive stock options must be at least equal
to 100% of the fair market value of the Common Stock as of the date of grant;
except that in the case of an incentive stock option granted to any person who
owns, at the time of the grant, stock possessing more than 10% of the combined
voting power of all classes of the Company's stock or of any parent or
subsidiary corporation (a 10% stockholder), the exercise price must be at least
110% of the fair market value as of the date of grant. Nonqualified stock
options may be granted at an exercise prices of not less than 85% of the fair
market value of the Common Stock as of the date of grant.
Persons Eligible to Receive Stock Options. Incentive stock options may be
granted under the 1999 Plan to officers and other key employees of the Company
or of any parent or subsidiary corporation of the Company, including directors
if they are also employees. Nonqualified stock options may be granted to
officers, key employees and directors (whether or not employed by the Company)
and to outside consultants and service providers. Options may be exercised at
such times and be subject to such restrictions and conditions as the Board or
Committee approves, which need not be the same for all optionees. The Board or
Committee has full discretion to determine the terms of vesting of options,
whether by the tenure of employment or affiliation with the Company, by
performance goals or by other events, which may include a change of control of
the Company (provided that the aggregate fair market value of shares subject to
incentive stock options that become exercisable for the first time in any
calendar year cannot exceed $100,000).
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<PAGE> 16
Non-Transferability of Stock Options. Options granted under the 1999 Plan
are not transferable except by will or the laws of descent and distribution,
except that nonqualified stock options may be transferred pursuant to a
qualified domestic relations order, as defined in the Code. Options may have a
term not exceeding ten years from the date of grant, and not more than five
years from the date of grant in the case of an incentive stock option granted to
a 10% stockholder.
Payment of Exercise Price of Stock Options. The exercise price of stock
options may be paid in cash; by delivery of other shares of Common Stock owned
by the optionee or by cancellation of indebtedness of the Company to the
optionee (in either case with the consent of the Board of Directors); and,
provided that a public market for the Common Stock exists, by a "same day sale"
commitment from the optionee and a broker to deliver proceeds of the sale of
Common Stock acquired on exercise or through a "margin" commitment from the
optionee and a broker to use the stock acquired on exercise as security for a
loan from the broker to pay the exercise price; or such other form of
consideration as the Board or Committee in its discretion may determine.
Provisions Governing Restricted Stock Purchase Grants
The Committee may grant, to officers, key employees and directors (whether
or not employed by the Company) and outside consultants and other service
providers, rights to purchase shares Common Stock, at a price of not less than
85% of the fair market value of the Company's shares on the date of grant. The
Committee is authorized and ordinarily would place restrictions on the shares
for a specified period of time after their purchase by the purchaser of the
shares. Those restrictions could restrict the recipient from transferring the
shares or require the recipient to resell the shares to the Company, at cost, on
the occurrence of such conditions or events as the Committee may determine, such
as a termination of employment prior to a specified date or prior to the
achievement of specified performance goals. The restrictions on transfer and any
resale obligation usually will lapse in accordance with a time schedule or on
other conditions as the Committee may determine, which may include continued
employment or service with the Company, achievement of performance goals, or
upon the death, disability or retirement of the recipient. Until all of the
restrictions have lapsed, the shares of restricted stock will be held by the
Company or an escrow holder and may not be sold or otherwise transferred by the
purchaser, but the purchaser will retain the right to vote the shares and all
other rights incident to the ownership of the shares, subject to the
restrictions imposed by the Committee. In addition, the Committee may at any
time, in its sole discretion, accelerate the time at which any or all of the
restrictions will lapse or remove any and all such restrictions.
Amendment and Termination of the 1999 Plan
The Board of Directors may amend or terminate the 1999 Plan at any time
without stockholder approval; provided, however, that stockholder approval will
be sought for any amendment to the 1999 Plan to the extent that stockholder
approval is necessary or desirable to comply with either Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or with Section 422 of the Code (or
any other applicable law or regulation). In addition, no amendment, modification
or termination of the 1999 Plan may adversely affect or impair any rights or
obligations under any option or restricted stock purchase right granted prior to
the date of the amendment, modification or termination, without the consent of
the holder of such option or restricted stock purchase right. Unless it is
terminated sooner by the Board of Directors, the 1999 Plan will terminate on
January 31, 2009.
Summary of Federal Income Tax Consequences
The following is a summary of certain federal income tax consequences of
participation in the 1999 Plan. The summary should not be relied upon as being a
complete statement. Federal tax laws are complex and subject to change.
Moreover, participation in the 1999 Plan also may have consequences under state
and local tax laws which may vary from the federal tax consequences described
below.
Incentive Options. No taxable income will be recognized by an optionee
under the 1999 Plan upon either the grant or the exercise of an incentive
option. Instead, a taxable event will occur upon the sale or other
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<PAGE> 17
disposition of the shares acquired upon exercise of an incentive option, and the
tax treatment of the gain or loss realized will depend upon how long the shares
were held before their sale or disposition. As is discussed below, the exercise
of an incentive option also may result in items of "tax preference" for purposes
of the "alternative minimum tax."
If a sale or other disposition of the shares received upon the exercise of
an incentive option occurs on a date that is more than (i) one year after the
date of exercise of the option and (ii) two years after the date of grant of the
option, the holder will recognize long-term capital gain or loss at the time of
sale equal to the full amount of the difference between the proceeds realized
and the exercise price paid. However, a sale, exchange, gift or other transfer
of legal title of such stock before the expiration of either the one-year or
two-year period described above will constitute a "disqualifying disposition." A
disqualifying disposition will result in ordinary income to the optionee in an
amount equal to the lesser of (i) the fair market value of the stock on the date
of exercise minus the exercise price, or (ii) the amount realized on disposition
minus the exercise price. If the amount realized in a disqualifying disposition
exceeds the fair market value of the stock on the date of exercise, the gain
realized, in excess of the amount taxed as ordinary income as indicated above,
will be taxed as capital gain. A disqualifying disposition as a result of a gift
will result in ordinary income to the optionee in an amount equal to the
difference between the exercise price and the fair market value of the stock on
the date of exercise. Any loss realized upon a disqualifying disposition will be
treated as a capital loss. Capital gains and losses resulting from disqualifying
dispositions will be treated as long-term or short-term depending upon whether
the shares were held for more or less than the applicable statutory holding
period (which is currently more than 12 months for long-term capital gains). The
Company will be entitled to a tax deduction in an amount equal to the ordinary
income recognized by the optionee as a result of the disqualifying disposition.
If legal title to any shares acquired upon exercise of an incentive option
is transferred by sale, gift or exchange, such transfer will be treated as a
disposition for purposes of determining whether a "disqualifying disposition"
has occurred. However, certain transfers will not be treated as dispositions for
such purposes, such as transfers to an estate or by inheritance upon an
optionee's death, a mere pledge or hypothecation, or a transfer into the name of
the optionee and another person as joint tenants.
Section 55 of the Code imposes an "alternative minimum tax" on an
individual's income to the extent the amount of the alternative minimum tax
exceeds the individual's regular tax for the year. For purposes of computing the
alternative minimum tax, the excess of the fair market value (on the date of
exercise) of the shares received upon the exercise of an incentive option over
the exercise price paid is included in alternative minimum taxable income in the
year the option is exercised. If the shares are sold in the same year that the
option is exercised, the regular tax treatment and the alternative tax treatment
will be the same. If the shares are sold during a year subsequent to that in
which the option was exercised, the basis of the stock acquired will equal its
fair market value on the date of exercise for purposes of computing alternative
minimum taxable income in the year of sale. For example, assume that an
individual pays an exercise price of $10 to purchase stock having a fair market
value of $15 on the date of exercise. The amount included in alternative minimum
taxable income is $5, and the stock has a basis of $10 for regular tax purposes
and $15 for alternative minimum tax purposes. If the individual sells the stock
in a subsequent year for $20, the gain recognized is $10 for regular tax
purposes and $5 for alternative minimum tax purposes.
An optionee who is subject to the alternative minimum tax in the year of
exercise of an incentive option may claim as a credit against the optionee's
regular tax liability in future years, the amount of alternative minimum tax
paid that is attributable to the exercise of the incentive option. This credit
is available in the first year following the year of exercise in which the
optionee has a regular tax liability.
Under the 1999 Plan, the Committee may permit an optionee to pay the
exercise price of an incentive option by delivering shares of Common Stock of
the Company already owned by the optionee, valued at their fair market value on
the date of exercise. Generally, if the exercise price of an incentive option is
paid with already-owned shares or by a combination of cash and already-owned
shares, there will be no current taxable gain or loss recognized by the optionee
on the already-owned shares exchanged. A special rule applies, however, if the
shares exchanged were previously acquired through the exercise of an incentive
option and the
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<PAGE> 18
applicable holding period requirements for favorable tax treatment of such
shares have not been met at the time of the exchange. In such event, the
exchange will be treated as a disqualifying disposition of such shares and will
result in the recognition of income to the optionee, in accordance with the
rules described above for disqualifying dispositions. If this special rule does
not apply, then the new shares received by the optionee upon the exercise of the
option equal in number to the old shares exchanged will have the same tax basis
and holding period for capital gain purposes as the optionee's basis and holding
period in the old shares. The balance of the shares received by the optionee
upon exercise of the option will have a tax basis equal to any cash paid by the
optionee, and if no cash was paid, the tax basis of such shares will be zero.
The holding period of the additional shares for capital gain purposes will
commence on the date of exercise. The holding period for purposes of the
one-year and two-year periods described above will commence on the date of
exercise as to all of the shares received upon the exercise of an incentive
option. If any of the shares subject to the basis allocation rules described
above are subsequently transferred in a disqualifying disposition, the shares
with the lowest tax basis will be treated as having been transferred first.
Nonqualified Options. No taxable income is recognized by an optionee upon
the grant of a nonqualified option. Upon exercise, however, the optionee will
recognize ordinary income in the amount by which the fair market value of the
shares purchased exceeds, on the date of exercise, the exercise price paid for
such shares. The income recognized by an optionee who is an employee will be
subject to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the optionee,
provided certain reporting requirements are satisfied.
If the exercise price of a nonqualified option is paid by the optionee in
cash, the tax basis of the shares acquired will be equal to the cash paid plus
the amount of income recognized by the optionee as a result of such exercise. If
the exercise price is paid by delivering shares of Common Stock of the Company
already owned by the optionee or by a combination of cash and already-owned
shares, there will be no current taxable gain or loss recognized by the optionee
on the already-owned shares exchanged (however, the optionee will nevertheless
recognize ordinary income to the extent that the fair market value of the shares
purchased on the date of exercise exceeds the price paid, as described above).
The new shares received by the optionee equal in number to the old shares
exchanged will have the same tax basis and holding period as the optionee's
basis and holding period in the old shares. The balance of the shares received
will have a tax basis equal to any cash paid by the optionee plus the amount of
income recognized by the optionee as a result of such exercise, and will have a
holding period commencing with the date of exercise.
Upon the sale or disposition of shares acquired pursuant to the exercise of
a nonqualified option, the difference between the proceeds realized and the
optionee's basis in the shares will be a capital gain or loss and will be
treated as long-term or short-term capital gain or loss if the shares have been
held for more than the applicable statutory holding period (which is currently
more than 12 months for long-term capital gains).
Restricted Stock. The receipt of restricted stock will not result in a
taxable event to the participant until the expiration of any repurchase rights
retained by the Company with respect to such stock, unless the participant makes
an election under Section 83(b) of the Code to be taxed as of the date of
purchase. If no repurchase rights are retained, or if a Section 83(b) election
is made, the participant will recognize ordinary income in an amount equal to
the excess of the fair market value of such shares on the date of purchase over
the purchase price paid for such shares. Even if the purchase price and the fair
market value of the shares are the same (in which case there would be no
ordinary income), a Section 83(b) election must be made to avoid deferral of the
date ordinary income is recognized. The election must be filed with the Internal
Revenue Service not later than 30 days after the date of transfer.
If no Section 83(b) election is made and repurchase rights are retained by
the Company, a taxable event will occur on each date the participant's ownership
rights vest (e.g., when the Company's repurchase rights expire) as to the number
of shares that vest on that date, and the holding period for capital gain
purposes will not commence until the date the shares vest. The participant will
recognize ordinary income on each date shares vest in an amount equal to the
excess of the fair market value of such shares on that date over the
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<PAGE> 19
amount paid for such shares. Any income recognized by a participant who is an
employee will be subject to income tax withholding by the Company out of the
optionee's current compensation. If such compensation is insufficient to cover
the amount to be withheld, the participant will be required to make a direct
payment to the Company for the balance of the tax withholding obligation. The
Company is entitled to a tax deduction in an amount equal to the ordinary income
recognized by the participant. The participant's basis in the shares will be
equal to the purchase price, if any, increased by the amount of ordinary income
recognized.
Tax Withholding. Under the 1999 Plan, the Company has the power to
withhold, or require a participant to remit to the Company, an amount sufficient
to satisfy Federal, state and local withholding tax requirements with respect to
any options exercised or restricted stock granted under the 1999 Plan. To the
extent permissible under applicable tax, securities, and other laws, the
Committee may, in its sole discretion, permit a participant to satisfy an
obligation to pay any tax to any governmental entity in respect of any option or
restricted stock up to an amount determined on the basis of the highest marginal
tax rate applicable to such participant, in whole or in part, by (i) directing
the Company to apply shares of Common Stock to which the participant is entitled
as a result of the exercise of an option or as a result of the lapse of
restrictions on restricted stock, or (ii) delivering to the Company shares of
Common Stock owned by the participant.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP were the Company's independent public accountants for
the fiscal year ended July 1, 2000. A representative of Deloitte & Touche LLP
will attend the Meeting, will have an opportunity to make a statement and will
be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at the Company's
2001 Annual Meeting of Stockholders and presentation in the Company's Proxy
Statement with respect to such meeting should arrange for such proposal to be
delivered to the Company at its principal place of business no later than June
27, 2001 in order to be considered for inclusion in the Company's proxy
statement relating to that meeting. Matters pertaining to such proposals,
including the number and length thereof, eligibility of persons entitled to have
such proposals included and other aspects are regulated by the Securities
Exchange Act of 1934, Rules and Regulations of the Securities and Exchange
Commission and other laws and regulations to which interested persons should
refer.
OTHER MATTERS
Management is not aware of any other matters to come before the meeting. If
any other matter not mentioned in this Proxy Statement is brought before the
meeting, the proxy holders named in the enclosed Proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
October 25, 2000 DAVID G. HALL
Chairman of the Board,
Chief Executive Officer and Director
The Annual Report to stockholders of the Company for the fiscal year ended
July 1, 2000 is being mailed concurrently with this proxy statement to all
stockholders of record as of October 16, 2000. 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.
17
<PAGE> 20
COPIES OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED JULY 1,
2000 WILL BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
SECRETARY, COLLECTORS UNIVERSE, INC. P.O. BOX 6280, NEWPORT BEACH, CALIFORNIA
92658
18
<PAGE> 21
PROXY COLLECTORS UNIVERSE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF THE STOCKHOLDERS -- DECEMBER 5, 2000
The undersigned hereby revokes all previously granted proxies and nominates,
constitutes and appoints David G. Hall and Gary N. Patten, and each of them
individually, the attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all stock of Collectors Universe, Inc. which the
undersigned is entitled to represent and vote at the 2000 Annual Meeting of
Stockholders of the Company to be held at 10:00 A.M. Pacific Time on December 5,
2000 at 1921 E. Alton Parkway, Santa Ana, California 92705, and at any and all
adjournments or postponements thereof, as fully as if the undersigned were
present and voting at the meeting, as follows:
THE DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2.
PROPOSAL ONE: ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR [ ] WITHHOLD AUTHORITY
all nominees listed below (except as marked to the to vote for all nominees listed
contrary below) below
</TABLE>
David G. Hall Roger W. Johnson Van D. Simmons Q. David Bowers Ben A.
Frydman
(Instructions: To withhold authority to vote for any nominee, print the
nominee's name in the space below.)
--------------------------------------------------------------------------------
PROPOSAL TWO: AMENDMENT OF 1999 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES ISSUABLE UNDER THAT PLAN FROM 1,748,575 TO 2,998,575
SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL THREE: IN THEIR DISCRETION, ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
IMPORTANT -- PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
<PAGE> 22
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. WHERE NO DIRECTION IS GIVEN, SUCH SHARES WILL BE VOTED "FOR
APPROVAL" OF PROPOSAL ONE AND "FOR APPROVAL" OF PROPOSAL TWO. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY TO VOTE ON ALL OTHER MATTERS WHICH MAY COME BEFORE THE
ANNUAL MEETING.
Date ____________ , 2000
________________________
________________________
(Signature of
stockholder)
Please sign your name
exactly as it appears
hereon. Executors,
administrators,
guardians, officers of
corporations and others
signing in a fiduciary
capacity should state
their full titles as
such.
