<PAGE>
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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-ll(c) or Rule 14a-12
JUST TOYS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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-ll(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: __________________
<PAGE>
JUST TOYS, INC.
20 Livingstone Avenue
Dobbs Ferry, New York 10522
-----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------------
To the Stockholders of
JUST TOYS, INC.
Please take notice that the 1998 Annual Meeting of Stockholders of Just
Toys, Inc., a Delaware corporation (the "Company"), will be held on Tuesday,
September 1, 1998 at 10:30 a.m. at the Company's offices located at 20
Livingstone Avenue, Dobbs Ferry, New York for the following purposes:
1. to elect a board of seven directors;
2. to consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to implement a one-for-two
reverse stock split;
3. to ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the 1998 fiscal year; and
4. to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on July 15, 1998
as the record date for the purpose of determining stockholders entitled to
notice of, and to vote at, the meeting.
YOU ARE EARNESTLY REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT
THE MEETING, TO MARK, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors
SEYMOUR ROSENTHAL
Secretary
Dobbs Ferry, New York
August 3, 1998
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF
JUST TOYS, INC.
------------------
PROXY STATEMENT
------------------
The proxy accompanying this proxy statement is solicited by the
Board of Directors of Just Toys, Inc., a Delaware corporation (the "Company"),
for use at the 1998 Annual Meeting of Stockholders to be held on Tuesday,
September 1, 1998 at 10:30 a.m. at the Company's offices at 20 Livingstone
Avenue, Dobbs Ferry, New York, and at any adjournment or adjournments thereof.
All proxies in the accompanying form which are properly executed
and duly returned will be voted in accordance with the instructions specified
therein. If no instructions are given, the shares represented by the proxies
will be voted in accordance with the recommendations of the Board of Directors
as indicated in this proxy statement and in the discretion of the proxy holders
on any other matters that may properly come before the meeting. A proxy may be
revoked at any time prior to its exercise by written notice to the Company, by
submission of another proxy bearing a later date or by voting in person at the
meeting. Such revocation will not affect a vote on any matters taken prior
thereto. The mere presence at the meeting of the person appointing a proxy will
not revoke the appointment.
The approximate date of mailing of this proxy statement and the
accompanying proxy to stockholders is August 3, 1998. The Company's principal
executive offices are located at 20 Livingstone Avenue, Dobbs Ferry, New York
10522.
VOTING SECURITIES--RECORD DATE
Only holders of the Company's common stock, par value $.01 per
share (the "Common Stock"), of record at the close of business on July 15, 1998
(the "Record Date") will be entitled to notice of and to vote at the meeting or
at any adjournment or adjournments thereof. On that date, 4,407,104 shares of
Common Stock were issued and outstanding.
Each share of Common Stock entitles the holder thereof to one vote
with respect to each proposal properly brought before the meeting for
consideration by stockholders. The holders of a majority of the outstanding
shares of Common Stock entitled to vote must be present at the meeting in person
or by proxy to constitute a quorum.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information at July 15,
1998, as to shares of Common Stock beneficially owned by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) the Company's directors, the Chief Executive
Officer and the other four executive officers identified in the Summary
Compensation Table below and (iii) the directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class
------------------ ------------------------ ------
<S> <C> <C>
Roger Gimbel ....................................... 421,230(2) 9.5%
350 Fifth Avenue
New York, New York 10118
Morton J. Levy...................................... 329,295(3) 7.2%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
G. Gimbel\M. Meyers Voting Trust ................... 299,683(4) 6.8%
c/o Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
FMR Corp. .......................................... 253,900(5) 5.8%
82 Devonshire Street
Boston, Massachusetts 02109
Barry Shapiro ...................................... 63,866(6) 1.4%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
Donald D. Shack..................................... 26,000(7) Less than 1%
530 Fifth Avenue
New York, New York 10036
David Schwartz...................................... 12,500(8) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
Howard Kaufman...................................... 6,900(9) Less than 1%
Bishops Estate
Lenox, Massachusetts 01290
Robert Pagano....................................... 6,000(10) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class
------------------ ------------------------ ------
<S> <C> <C>
Charmaine Jefferson ................................ 6,000(10) Less than 1%
2003 Victoria Avenue
Los Angeles, California 90016
Irwin Naitove....................................... 6,000(10) Less than 1%
RR1
Box 630
Mount Holly, Vermont 05758
Larry Scott......................................... 3,000(11) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
All directors and executive officers as 884,291(12) 18.9%
a group (twelve persons)..........................
</TABLE>
- ---------------
(1) Except as otherwise indicated in the following footnotes, the persons
listed in the table own of record the shares of Common Stock opposite
their name and have sole voting and investment power with respect to such
shares of Common Stock.
(2) Includes 25 shares of Common Stock owned by the Voting Trust listed in
footnote 4 below and 12,000 shares issuable upon exercise of currently
exercisable stock options granted under the Company's 1992 Incentive and
Non-Qualified Stock Option Plan (the"Plan").
(3) Includes 1,500 shares owned by Mr. Levy as custodian for his grandson
under the Uniform Gifts to Minors Act and 80,900 shares issuable upon
exercise of currently exercisable stock options granted under the Plan and
100,000 shares issuable upon exercise of a separate currently exercisable
stock option.
(4) Based upon information set forth in Schedule 13D filed by Geoffrey Gimbel
and Murray Meyers as Trustees under the Voting Trust dated as of October
7, 1997 by and between Geoffrey Gimbel, Roger Gimbel, Bradley Meyers, Gary
Meyers, Lawrence Meyers, Murray Meyers and Susan Schulman (the "Voting
Trust") with the Securities and Exchange Commission on or about February
11, 1998. Geoffrey Gimbel as Trustee has sole voting power over 199,789
shares and Murray Meyers as Trustee has sole voting power over 99,894
shares.
(5) Based upon information set forth in Schedule 13G filed by FMR Corp. with
the Securities and Exchange Commission on or about February 14, 1998,
Fidelity Management and Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of 253,900 shares or 5.8%
of the Common Stock of the Company as a result of acting as investment
adviser to several investment companies. Mr. Edward C. Johnson 3d, FMR
Corp., through its control of Fidelity, and the aforementioned investment
companies each has sole power to dispose of these 253,900 shares. The
ownership of one investment company, Fidelity Advisor Strategic
Opportunities Fund, amounted to 253,900 shares or 5.8% of the Common Stock
outstanding at July 15, 1998.
(6) Includes 37,200 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
(7) Includes 16,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
(8) Includes 5,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
-3-
<PAGE>
(9) Includes 6,900 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
(10) Includes 6,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
(11) Includes 3,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.
(12) Includes 282,500 shares issuable upon exercise of currently exercisable
stock options.
PROPOSAL 1: ELECTION OF DIRECTORS
At the 1998 Annual Meeting of Stockholders, seven directors,
constituting the entire Board of Directors, are to be nominated for election, to
serve until the 1999 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualify. Unless a proxy shall specify that it is
not to be voted for the directors, it is intended that the shares of Common
Stock represented by each duly executed and returned proxy will be voted FOR the
election as directors of the persons named below.
Each of the persons named below as a nominee for director is currently
a director of the Company and their respective stock ownership is set forth
above under "Security Ownership of Certain Beneficial Owners and Management."
If any nominee is not a candidate for election at the meeting, an event
which the Board of Directors does not anticipate, the proxies will be voted for
a substitute nominee and for the others named below.
The Company's By-Laws provide that directors be elected by a plurality
of the votes cast at the meeting by the holders of the outstanding shares of
Common Stock entitled to notice of, and to vote in, the election.
The Board of Directors recommends a vote FOR the election of each of
the nominees.
-4-
<PAGE>
Nominees for Election as Directors
<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
------------ ------- ------------------------- ----------------
<S> <C> <C>
Roger Gimbel................. 67 Vice Chairman of the Board of 1992
Directors; Chairman of Worldwide
Dreams LLC
Charmaine Jefferson......... 44 Director of the Company; Attorney; 1995
President of Kelan Resources
Howard Kaufman.............. 71 Director of the Company; private 1992
investor
Morton J. Levy.............. 76 Chairman of the Board of Directors 1992
Irwin Naitove............... 80 Director of the Company; private 1995
investor
Donald D. Shack............. 69 Director of the Company; member of 1992
the law firm of Shack & Siegel, P.C.
Barry Shapiro............... 56 Director, President and Chief 1995
Executive Officer of the Company
</TABLE>
Roger Gimbel was appointed Vice Chairman of the Board of Directors,
Chief Financial Officer and Vice President of the Company in August 1992. Mr.
Gimbel resigned as Chief Financial Officer and Vice President of the Company in
April 1995. Mr. Gimbel was one of the founders of the Company. Mr. Gimbel is the
Chairman of Worldwide Dreams LLC, an importer and distributor of personal
accessories, small leather goods and related items.
Charmaine Jefferson was appointed a director of the Company in July
1995. Ms. Jefferson is an attorney and President of Kelan Resources, an arts and
entertainment consulting firm operating since 1995. From April 1996 to November
1997, Ms. Jefferson served as Vice President - Business Affairs for de Passe
Entertainment, Inc. and from November 1997 to June 1998 Ms. Jefferson served as
the Business Affairs Consultant of such company. From August 1992 to June 1995,
Ms. Jefferson was employed as the Executive Director of the Dance Theatre of
Harlem, Inc. From 1988 through August 1992, Ms. Jefferson was Deputy and Acting
Commissioner for the New York City Department of Cultural Affairs.
Howard Kaufman was appointed a director of the Company in October 1992.
Mr. Kaufman has been engaged in the toy business for approximately 34 years,
having been a founder and principal officer of KayBee Stores, a division of the
Melville Corporation. For more than the past five years, Mr. Kaufman has been a
private investor. Mr. Kaufman is also a director of Berkshire Life Insurance
Company.
-5-
<PAGE>
Morton J. Levy was appointed the Company's Chairman on March 30, 1995
and also served as the Chief Executive Officer from such date until July 1,
1997. Mr. Levy is a director and officer of each of the Company's subsidiaries.
He was appointed a director of the Company in October 1992 and became a
consultant to the Company in 1994 until being hired as Chief Executive Officer
in March 1995. Mr. Levy has been engaged in the toy business for over 35 years,
having been a founder and principal officer of Gabriel Industries, Inc., a
diversified toy manufacturer. For more than five years prior to his engagement
as a consultant to the Company, Mr. Levy was a private investor.
Irwin Naitove was appointed a director of the Company in May 1995. Mr.
Naitove has been in corporate finance for the past 45 years. For more than the
past five years, Mr. Naitove has been a private investor.
Donald D. Shack was appointed a director of the Company in August 1992.
Mr. Shack is an attorney and, since April 1993, has been a member of the law
firm of Shack & Siegel, P.C., general counsel to the Company. From January 1990
through March 1993, Mr. Shack was a member of the law firm of Whitman & Ransom
which served as general counsel to the Company during that period. Mr. Shack is
also a director of the following publicly-held companies: Andover Togs, Inc.,
Ark Restaurants Corp. and International Citrus Corporation.
Barry Shapiro became the Chief Executive Officer of the Company on July
1, 1997. Mr. Shapiro was appointed President and Chief Operating Officer of the
Company on March 30, 1995. Mr. Shapiro is Chairman of the Company's Hong Kong
subsidiaries and a director and officer of each of the Company's subsidiaries.
He was appointed a director of the Company in April 1995. Mr. Shapiro has been
engaged in the toy business for over 30 years. In November 1994, Mr. Shapiro was
appointed Executive Vice President of the Company. From December 1993 until
November 1994, he served as Managing Director for the Company's Hong Kong
subsidiaries, Joyful World Enterprises, Ltd. and Just Toys Products, Ltd. From
October 1991 to November 1993, he was the President of Packaging Specialists, a
manufacturer and distributor of protective packaging. From January 1984 to June
1991, Mr. Shapiro was Executive Vice President and General Manager of
Imagineering, Inc.
Information Concerning the Board of Directors
During the Company's 1997 fiscal year, the Board of Directors held four
meetings and took action three times by unanimous written consent. During the
Company's past fiscal year, each member of the Board attended at least 75% of
the meetings of the Board and Board Committees on which he or she served.
The Compensation Committee, comprised of Messrs. Gimbel and Naitove and
Ms. Jefferson, which makes determinations pertaining to the compensation of the
Company's executive officers, held one meeting and took action by unanimous
written consent one time during the past fiscal year. The Stock Option
Committee, consisting of Howard Kaufman and Irwin Naitove, makes determinations
pertaining to the grant of options both under the Company's 1992 Incentive and
Non-Qualified Stock Option Plan and outside of the plan. During the Company's
past fiscal year, the Stock Option Committee held one meeting and took action by
unanimous written consent five times.
-6-
<PAGE>
The Board of Directors' Audit Committee, comprised of Messrs. Kaufman
and Shack and Ms. Jefferson, reviews the performance of the Company's
independent auditors, their fees and services and the scope of their audit. The
selection of the independent auditors, however, is made by the Board as a whole.
The Audit Committee held one meeting during the past fiscal year. The Board of
Directors does not maintain a standing nominating committee, the customary
functions of such committee being performed by the entire Board of Directors.
The Board of Directors' Executive Committee comprised of Messrs. Levy,
Shack and Shapiro is authorized to exercise the power and authority of the Board
of Directors in the management of the business and affairs of the Company as
permitted under Section 141 of the General Corporation Law of the State of
Delaware. The Executive Committee took action by unanimous consent three times
during the Company's last fiscal year.
All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Executive officers serve
at the pleasure of the Board of Directors.
Directors who are not officers of the Company receive a $10,000 annual
retainer, plus reimbursement of reasonable out-of-pocket expenses. Pursuant to
the Company's 1992 Incentive and NonQualified Stock Option Plan, each director
who is not an officer of the Company and who does not provide legal or
consulting services to the Company is entitled to receive, on the commencement
of service as a director and on each anniversary thereof on which such director
remains a director of the Company, options to purchase 5,000 shares of Common
Stock at an exercise price equal to the fair market value of such shares on the
date of grant. During 1997, the Company's Stock Option Committee granted an
option to purchase 5,000 shares of Common Stock to Mr. Shack, a director of the
Company who is a member of Shack & Siegel, P.C., counsel to the Company.
Directors who are also officers of the Company do not receive any compensation
for services rendered in their capacity as directors.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names and ages as of July 15, 1998
of executive officers of the Company and all offices held by each person.
<TABLE>
<CAPTION>
Name Age Title Officer Since
- ---------------------------------------- ------- ---------------------------------------------- ------------------
<S> <C> <C> <C>
Morton J. Levy........................ 76 Chairman of the Board of Directors 1995
Barry Shapiro......................... 56 President, Chief Executive Officer and 1995
Director of the Company
David Schwartz........................ 38 Chief Financial Officer and Treasurer 1996
Seymour Rosenthal..................... 67 Secretary 1996
Robert Pagano......................... 43 Vice President--Marketing and Product 1996
Planning
Jerry Carroll......................... 49 Vice President--Domestic 1997
Manufacturing Operations
Larry Scott........................... 48 Vice President of Sales 1997
</TABLE>
-7-
<PAGE>
See "Election of Directors" above for a description of Messrs. Levy's
and Shapiro's occupations and prior engagements.
David Schwartz was appointed Chief Financial Officer and Treasurer of
the Company in November 1996. Mr. Schwartz is an officer of each of the
Company's United States subsidiaries. From January 1996 through November 1996,
Mr. Schwartz was self-employed as a consultant to a number of companies in the
consumer products business. From May 1994 through December 1995, he was the
Chief Financial Officer of Philips Industries, Inc., a distributor of women's
hair and cosmetic accessories. From December 1990 through May 1994, Mr. Schwartz
was the Controller of Ameriscribe Management Services, Inc., a provider of
facilities management services.
Seymour Rosenthal was appointed Secretary of the Company in November
1996. Mr. Rosenthal has been the Director of Internal Operations for the Company
since September 1995. From 1993 through 1995, he was a consultant working with
various financial institutions in the workout of bankrupt organizations. During
1992, Mr. Rosenthal was the Manager of Operations of Sunweave Linens, a
manufacturer and distributor of linens.
Robert Pagano was appointed Vice President-- Marketing and Product
Planning of the Company in February 1996. From May 1994 through December 1995,
Mr. Pagano was the Vice President for Research and Development at Toy Biz, Inc.
Prior to that time, starting in November 1991 through May 1994, Mr. Pagano was
Vice President--Marketing of the joint venture that was the predecessor of the
Company and then of the Company.
Jerry Carroll was appointed Vice President - Domestic Manufacturing
Operations of the Company in September 1997. From 1994 through 1997, Mr. Carroll
was the Vice President - Operations of Empire Industries, Inc., a manufacturer
and distributor of toys. From 1991 through 1994, Mr. Carroll was Vice
President-Operations of Marchon, Inc., a manufacturer and distributor of toys.
Larry Scott was appointed Vice President of Sales of the Company in
February 1997. From 1994 through 1996, Mr. Scott was the Vice
President--Seasonal Product and Regional Sales Manager of Trendmasters, Inc., a
manufacturer and distributor of toys. Prior to that time, starting in 1990, he
was the Vice President of International Sales of Collegeville Imagineering, Inc.
-8-
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth certain information
concerning compensation paid or accrued in 1997 to the Chief Executive Officer
of the Company and the four executive officers whose total salary and bonus in
1997 exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
----------------
Annual Compensation
----------------------------- Options All Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Awarded (#) Compensation ($)
- ----------------------------------- ------- ----------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C>
Morton J. Levy(2) 1997 113,365 - 50,000 50,000(3)
Chairman of the Board 1996 229,327 9,300 50,000 -
1995 166,833 - 85,000 -
Barry Shapiro(4) 1997 237,197 - 100,000 -
President and Chief 1996 217,778 7,750 30,000 -
Executive Officer 1995 185,000 - 39,000 -
David Schwartz(5)(7) 1997 130,000 - 10,000 -
Chief Financial Officer and 1996 17,395 500 15,000 -
Treasurer
Robert Pagano(5) 1997 139,808 - - -
Vice President - Marketing and 1996 142,850 2,000 20,000 -
Product Planning
Larry Scott (6)(7) 1997 138,384 - 15,000 34,039(8)
Vice President - Sales
- -------------------
</TABLE>
(1) Represents bonuses paid in 1997 relating to the 1996 fiscal year.
(2) Mr. Levy was appointed as Chairman and Chief Executive Officer of the
Company in 1995. In July 1997, Mr. Shapiro was appointed Chief Executive
Officer and Mr. Levy remained as Chairman of the Company.
(3) Represents consulting fees paid pursuant to Mr. Levy's agreement with the
Company.
(4) Mr. Shapiro was appointed as an executive officer of the Company at the end
of 1994.
(5) Mr. Schwartz and Mr. Pagano were appointed as executive officers of the
Company in 1996.
(6) Mr. Scott was appointed as an executive officer of the Company in 1997.
(7) Mr. Schwartz started with the Company in November 1996. Mr. Scott started
with the Company in January 1997.
(8) Represents amounts paid to Mr. Scott for relocation expenses and related
matters.
-9-
<PAGE>
The following table sets forth certain information with respect to
options to purchase Common Stock granted in fiscal year 1997 under the Company's
1992 Incentive and Non-Qualified Stock Option Plan for the executive officers
named in the Summary Compensation Table above.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for
Individual Grants Option Term
- ----------------------------------------------------------------------------------- ------------------------------
Percent of Total
Options Granted Exercise
to Employees in Price Expiration
Name Options Granted (#) 1997 ($/Share) Date 5% ($) 10% ($)
------ ------------------- ----- --------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Morton J. Levy 50,000 23.1% 1.375 06/29/07 43,237 109,570
Barry Shapiro 100,000 46.2% 1.500 06/30/07 -- 59,765
David Schwartz 10,000 4.6% 1.281 06/02/07 8,058 20,421
Larry Scott 15,000 6.9% 1.500 01/06/07 14,150 35,859
</TABLE>
The following table details the value on December 31, 1997 of options
to purchase Common Stock held by the executive officers named in the Summary
Compensation Table above.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Unexercised Options at Value of Unexercised in-the-Money
December 31, 1997 Options at December 31, 1997 (1)
----------------------------------------- -----------------------------------------
Name Exercisable (#) Unexercisable (#) Exercisable ($) Unexercisable ($)
- ------------ -------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Morton J. Levy 173,900 27,100 --- ---
Barry Shapiro 29,100 152,400 --- ---
David Schwartz 3,000 22,000 --- ---
Robert Pagano 4,000 16,000 --- ---
Larry Scott --- 15,000 --- ---
</TABLE>
- --------------
(1) Based on closing price of the Common Stock on the Nasdaq National Market on
December 31, 1997 of $0.875 per share.
-10-
<PAGE>
Executive Officer Option Repricings
10/1/92 to 12/31/97
<TABLE>
<CAPTION>
Number of Length of
Securities Original Option
Underlying Market Price of Term Remaining
Options Stock at Time Exercise New Exercise at Date of
Name Date Repriced of Repricing ($) Price ($) Price ($) Repricing
- ---------------------- ----- -------- ---------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Morton J. Levy 7/31/97 500* 1.375 14.25 1.50 5 yrs. 3 mos.
Chairman of the 7/31/97 500* 1.375 12.50 1.50 6 yrs. 3 mos.
Board
Barry Shapiro 7/31/97 1,500* 1.375 10.50 1.50 6 yrs. 5 mos.
President and
Chief Executive
Officer
George Funk 1/1/94 15,000** 10.50 19.25 10.50 9 yrs. 6 mos.
Former Vice
President-Sales
</TABLE>
- ---------------
* On July 31, 1997, the Company's Stock Option and Compensation Committees
approved a reduction in the exercise price and number of outstanding
options under the Company's 1992 Incentive and Nonqualified Stock Option
Plan having an exercise price greater than $10.50 per share. Upon the
consent of the holder, the Company amended each such option to reflect an
exercise price of $1.50 per share and to reduce the number of shares to 10%
of the shares covered by the option. Accordingly, two 5,000 share options
held by Mr. Levy were reduced to 500 shares and a 15,000 share option held
by Mr. Shapiro was reduced to 1,500 shares. See "-Report on Executive
Compensation."
** Mr. Funk resigned from the Company in June 1995 and the option was
subsequently cancelled in accordance with its terms.
Compensation Arrangements
The Compensation Committee of the Board of Directors (the "Compensation
Committee") has established a company wide bonus pool that enables employees of
the Company to participate in the profits the Company earns in 1997 and 1998.
The pool consists of 20% of the first $1,000,000 of pre-tax earnings after
preferred stock dividends and accretion, 15% of the next $1,000,000 of such
pre-tax earnings and 10% of such pre-tax earnings over $2,000,000. No bonuses
were earned for 1997. For 1998, Mr. Shapiro will receive 30% of the bonus pool
and the balance of the bonus pool will be distributed to the Company's other
officers and employees as determined by Mr. Shapiro after consultation with the
Compensation Committee.
In December 1996, Mr. Levy entered into an agreement with the Company
which provided for Mr. Levy to relinquish the post of Chief Executive Officer of
the Company on July 1, 1997, render
-11-
<PAGE>
consulting services to the Company thereafter and remain as Chairman of the
Board. Until June 30, 1997, Mr. Levy received a base salary at the rate of
$225,000 per annum. The Company paid Mr. Levy at the rate of $100,000 per annum
during the period from July 1, 1997 through December 31, 1997, and will pay Mr.
Levy $75,000 per annum during the period from January 1, 1998 through December
31, 1998, and $50,000 per annum during the period from January 1, 1999 through
December 31, 1999. Such payments will be made to Mr. Levy's beneficiary in the
event of his death. Through December 31, 1999, the Company will provide Mr. Levy
with the use of an office, private telephone and secretarial services. In
addition, on each of December 5, 1996 and June 30, 1997, the Company granted Mr.
Levy a fully vested and exercisable ten year option to purchase up to 50,000
shares of Common Stock at an exercise price equal to the closing price of the
Common Stock on the Nasdaq National Market on the grant date ($1.50 on December
of 1996; $1.375 on June 30, 1997). Neither of such options is governed by the
Company's stock option plan. Both options will remain outstanding for their full
term until exercised, whether or not Mr. Levy is still a Director or consultant
to the Company.
On July 1, 1997, Mr. Shapiro entered into an employment agreement with
the Company in connection with his appointment as Chief Executive Officer. The
agreement provides for Mr. Shapiro to be paid $250,000 per year and to
participate in the company wide bonus pool. Mr. Shapiro was also granted an
option to purchase 100,000 shares of Common Stock at an exercise price of $1.50
per share. The option is exercisable by Mr. Shapiro in installments of 25,000
shares when the price of the Common Stock reaches the following stock prices for
a minimum of 30 trading consecutive trading days: $3.00; $4.00; $5.00; and
$6.00. Within one year after a change in control (as defined in the agreement)
of the Company, if Mr. Shapiro's employment with the Company is terminated
without cause or if Mr. Shapiro voluntarily elects to terminate his employment
with the Company, the Company will (i) pay Mr. Shapiro a lump sum amount equal
to 12 months of his base salary in effect at the time of the change in control,
(ii) provide Mr. Shapiro with medical, insurance and other benefits for 12
months after termination and (iii) provide Mr. Shapiro use of an office and
secretarial assistance for six months after termination. If Mr. Shapiro or the
Company elect to terminate Mr. Shapiro's employment within one year following a
change in control, at the Company's request, Mr. Shapiro will continue to be
employed by the Company at his then current salary and benefits for up to six
months. However, Mr. Shapiro is under no obligation to continue his employment
if he has elected to terminate his employment because (i) his position as Chief
Executive Officer or duties, performance requirements or working conditions with
respect thereto have been changed, (ii) he ceases to serve as a member of the
Board of Directors, (iii) his base salary in effect prior to the change in
control is reduced or (iv) he is required to relocate.
Performance Measurement Comparison
The following graph sets forth as of December 31, 1997, the cumulative
total stockholder return on the Common Stock compared with the cumulative total
return of a broad equity market index (Nasdaq Index) and a peer group common
stock index. The Nasdaq Index is comprised of all companies which trade on the
Nasdaq Stock Market and the peer group common stock index is comprised of those
public companies whose business activities fall within the same Standard
Industrial Classification Code as the Company. The total return assumes a $100
investment on January 1, 1993 and reinvestment of dividends in the Common Stock
and in each index. Each index is weighted by outstanding shares.
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<PAGE>
Comparison of Cumulative Total Return of the
Common Stock, Peer Group Common
Stock Index and Nasdaq Index
FISCAL YEAR ENDING
- -------------------------------------------------------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
JUST TOYS INC. 100 45.45 13.64 10.45 9.55 6.36
INDUSTRY INDEX 100 116.06 107.78 142.95 171.61 220.71
BROAD MARKET 100 119.95 125.94 163.35 202.99 248.30
Report on Executive Compensation
The Compensation Committee of the Board of Directors consists of
Messrs. Gimbel and Naitove and Ms. Jefferson. The Compensation Committee
determines the compensation of the Company's Chief Executive Officer and
President and sets policies for and reviews with the Chief Executive Officer and
President the compensation of the other executive officers identified in the
Summary Compensation Table above and the Company's other principal executives.
The Company's executive compensation packages are comprised primarily of base
salaries, performance based bonus awards and stock options. It is the philosophy
of the Compensation Committee that a substantial portion of a senior executive
officer's compensation be directly related to the performance of the Company.
Individual compensation is reviewed on the basis of various considerations,
including Company performance, individual performance, position tenure, and
internal comparability.
In March 1995, the Company employed Mr. Levy as Chairman of the Board
and Chief Executive Officer for a base annual salary of $225,000. Mr. Levy's
salary was the result of negotiations between Mr. Levy and the other members of
the Board of Directors at the time of his retention. The Board sought to
compensate Mr. Levy fairly to reflect his extensive experience in the toy
industry and the substantial difficulties facing the Company at the time of his
retention. Prior to becoming an officer of the Company, Mr. Levy had received
options to purchase 25,000 shares of Common Stock in connection with his service
as a director and consultant to the Company. In keeping with the Company's
philosophy that a substantial portion of an executive's compensation be
performance based, from his appointment as Chief Executive Officer through
November 1996, Mr. Levy received options to purchase an additional 85,000 shares
of
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<PAGE>
Common Stock having exercise prices equal to or higher than the fair market
value of the Common Stock on the date of grant of such options.
In November 1996, the Company entered into an agreement with Mr. Levy
which provided for an orderly transition to his successor and for Mr. Levy to be
available to the Company in the future for advice and assistance. On July 1,
1997, Mr. Levy relinquished the post of Chief Executive Officer of the Company
and remains as Chairman of the Board. Since July 1, 1997, Mr. Levy has rendered
consulting services to the Company. The Company paid Mr. Levy at the rate of
$100,000 per annum from July 1, 1997 through December 31, 1997 for such
consulting services. In recognition of Mr. Levy's contributions to the Company,
Mr. Levy was granted a fully vested stock option for 50,000 shares of Common
Stock in December 1996 and an additional fully vested stock option for 50,000
shares of Common Stock in June 1997 having exercise prices of $ 1.50 and $
1.375, respectively, the fair market value of the Common Stock on the dates of
grant. Such options were authorized by the stockholders at the 1997 Annual
Meeting of Stockholders. See "-- Compensation Arrangements."
On July 1, 1997, Mr. Shapiro, who has served as President and Chief
Operating Officer since March 1995, was appointed Chief Executive Officer. Mr.
Shapiro entered into an employment agreement with the Company which provides for
him to be paid $250,000 per year and to participate in the Company's bonus pool
as described in the following paragraph. Mr. Shapiro was also granted an option
to purchase 100,000 shares of Common Stock at an exercise price of $1.50 per
share. The option is exercisable by Mr. Shapiro in installments of 25,000 shares
when the price of the Common Stock reaches the following stock prices for a
minimum of 30 consecutive trading days: $3.00; $4.00; $5.00; and $6.00. See
"-Compensation Arrangements." From his appointment as President and Chief
Operating Officer in March 1995 through June 1997, Mr. Shapiro received options
to purchase 59,000 shares of Common Stock having exercise prices equal to or
higher than the fair market value of the Common Stock on the date of grant of
such options.
During 1997, the compensation of the other executive officers
identified in the Summary Compensation Table and the Company's other principal
executives consisted of a combination of base salary, participation in the
Company's bonus pool and stock options. The Compensation Committee has
established a Company wide bonus pool that enables management employees to
participate in the Company's profits. The pool consists of 20% of the first
$1,000,000 of pre-tax earnings after preferred stock dividends and accretion,
15% of the next $1,000,000 of such pre-tax earnings and 10% of all such pre-tax
earnings over $2,000,000. No bonuses were earned for 1997. For 1998, Mr. Shapiro
will receive 30% of the bonus pool and the balance of the bonus pool will be
distributed to the Company's other officers and employees as determined by Mr.
Shapiro after consultation with the Compensation Committee.
The Company's stock option program is designed to further align the
interests of the executives with those of the stockholders at large. Generally,
options are granted with exercise prices equal to or above market on the grant
date and vest in 20% increments over a period of five years. The option granted
to Mr. Shapiro on July 1, 1998 described above has an exercise price above
market on such date and vests in 25% increments when the price of the Common
Stock reaches $3.00, $4.00, $5.00 and $6.00, respectively, for 30 consecutive
trading days. The stock option program is intended to incentivise creation of
stockholder value since the full benefit of the option cannot be realized unless
price appreciation occurs and the executive is rewarded only to the extent that
stockholders at large have benefitted. The Company does not issue options to
executives on any fixed basis preferring to maintain a flexible program.
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<PAGE>
In June 1997, the Board of Directors authorized, and on August 12,1997,
the Compensation Committee approved, the repricing and reduction of shares
subject to certain options granted under the Company's 1992 Incentive and
Non-qualified Stock Option Plan. Upon consent of the holder, options having an
exercise price of $10.50 per share or more were amended to (i) provide for an
exercise price of $1.50 per share and (ii) reduce the number of shares to 10% of
the shares covered by the option. The vesting and term of such options did not
change. The Board and the Compensation Committee took such action because of
their belief that the exercise price of such options were so far in excess of
the market price of the Common Stock that the options no longer constituted an
incentive to performance. The closing price of the Common Stock on the Nasdaq
National Market on August 12, 1997 was $1.375 per share. See the Executive
Officer Option Repricing table on page 11 of this Proxy Statement for
information with respect to repriced options of the executive officers
identified in the Summary Compensation table above.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
corporation's Chief Executive Officer and the four other most highly compensated
executive officers unless such compensation is paid pursuant to performance
standards prescribed under Section 162(m). Section 162(m) provides that
qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Company currently intends to
structure grants under future stock option plans in a manner that complies with
this requirement. The Company does not anticipate that the compensation package
for the Chief Executive Officer or any of the four most highly compensated
executive officers, will exceed $1,000,000 as contemplated by Section 162(m)
within the next year. The Company has not found it necessary to address the
issue of Section 162(m) in respect of compensation paid in excess of $1,000,000.
Respectfully submitted,
ROGER GIMBEL
CHARMAINE JEFFERSON
IRWIN NAITOVE
Compensation Committee Interlocks and Insider Participation
None
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Shack, a director of the Company, is a member of the law firm of
Shack & Siegel, P.C., which is general counsel to the Company.
PROPOSAL 2: APPROVAL OF 1 FOR 2 REVERSE STOCK SPLIT
The Company's Board of Directors has adopted a resolution to effect a 1
for 2 reverse stock split of its Common Stock ("Reverse Split"). If the Reverse
Split is approved by the stockholders, on the effective date of the Reverse
Split (the "Effective Date"), the number of shares of Common Stock held by each
stockholder will be deemed automatically, without further action on the part of
the stockholders, to
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<PAGE>
represent one-half of the number of shares of Common Stock owned immediately
prior to the Reverse Split adjusted, as described below, for any fractional
shares. Provisions for the Reverse Split are contained in an Amendment to the
Company's Certificate of Incorporation (the "Amendment") which is attached as
Exhibit A to this Proxy Statement.
Reasons for the Reverse Split
Since October 1992, the Common Stock has been listed and traded on the
Nasdaq National Market. Effective February 23, 1998, the Nasdaq National Market
adopted changes to its continued listing standards including a $5,000,000 market
value of public float with which the Company is unable to comply. The Board of
Directors believes that transferring the listing of the Common Stock to the
Nasdaq SmallCap Market is the Company's next best alternative. Such a listing
requires that the Common Stock maintain a $1.00 per share minimum bid price and
the Company has submitted a plan to the Nasdaq Stock Market ("Nasdaq") providing
for the taking of action designed to achieve compliance with the $1.00 per share
minimum bid price requirement. The action to be taken includes the Reverse Split
which the Board of Directors believes may have the effect of increasing the
market price per share of the Common Stock allowing the Common Stock to be
included on the Nasdaq SmallCap Market. The Common Stock currently meets all of
the Nasdaq SmallCap Market's other continued listing standards.
The Board of Directors has determined that listing of the Common Stock
on the Nasdaq SmallCap Market would be in the best interest of the stockholders.
If the Common Stock were removed from Nasdaq, trading would be conducted in the
over-the-counter market on an electronic bulletin board established for
securities that do not meet the Nasdaq inclusion requirements, or in the "pink
sheets." Market interest in the Common Stock most likely would decrease
significantly because investors would find it more difficult to obtain accurate
price quotations of the Common Stock. In addition, if the Common Stock is
removed from Nasdaq, it would be subject to certain rules that impose additional
broker-dealer sales practice requirements. Consequently, removal of the Common
Stock from Nasdaq could affect the ability or willingness of broker-dealers to
sell the Common Stock and the ability of stockholders to sell their Common Stock
in the market.
There can be no assurance that the market price of the Common Stock
will rise in proportion to the reduction in the number of outstanding shares
resulting from the Reverse Split or that a post-Reverse Split market price of at
least $1.00 per share can be achieved or maintained. Also, the $1.00 minimum bid
price is only one of a number of new Nasdaq listing standards and, even if the
Company achieves a minimum bid price of $1.00 or more, there can be no assurance
that the Company will be able to maintain the other requirements for continued
inclusion on the Nasdaq SmallCap Market. Additionally, it is possible that the
liquidity of the Common Stock after the Reverse Split may be adversely affected
by the reduced number of shares outstanding. In addition, the Reverse Split
might leave some stockholders with one or more "odd lots" of Common Stock (stock
in amounts of less than 100 shares), which may be more difficult to sell or
require greater commission per share to sell than shares in round lots of 100.
Principal Effects of the Reverse Split
The number of shares of capital stock authorized by the Company's
Certificate of Incorporation will not be changed by the Amendment. The
Certificate of Incorporation authorizes the Company to issue up to 15,000,000
shares of common stock, par value $.01 per share and 2,000,000 shares of
preferred
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<PAGE>
stock, par value $1.00 per share. As of date of this proxy statement, the
Company had issued and outstanding 4,407,104 shares of Common Stock and 412,917
shares of preferred stock (the "Preferred Stock") consisting of 120,000 shares
of Series A Convertible Redeemable Preferred Stock and 292,917 shares of Series
B Convertible Redeemable Preferred Stock. The Certificates of Designations,
Preferences and Rights related to these series of preferred stock each provide
that the number of shares of Common Stock issuable upon conversion of the
preferred stock shall be proportionately adjusted in the event of a stock split
such as the Reverse Split. Additionally, the Company's outstanding warrants and
options for the future issuance of Common Stock provide for proportionate
adjustment of the number of shares issuable and exercise price in the event of a
stock split such as the Reverse Split. The number of shares of Common Stock
reserved for issuance under the Company's 1992 Incentive and Non-qualified Stock
Option Plan which are not subject to outstanding options will not be affected by
the Reverse Split. If, and to the extent that the Company issues additional
shares of Common Stock subsequent to the Effective Date, each stockholder's
percentage ownership in the Company and proportionate voting power will be
reduced. Except for changes resulting from the Reverse Split as described
herein, the rights and privileges of holders of shares of Common Stock would
remain unchanged, and implementation of the Reverse Split would not result in
any change of the relative equity interest in the Company, the voting power or
the rights and privileges of the holders of Common Stock.
If the Reverse Split is implemented, then the decrease in number of
shares of Common Stock outstanding and reserved for issuance pursuant to the
exercise of outstanding options and warrants and the conversion of the Preferred
Stock will result in an increase in the number of shares of Common Stock
available for issuance by the Board of Directors for raising additional capital,
stock options and warrants, acquisitions, stock splits, stock dividends or other
corporate purposes. The Board of Directors will determine whether, when and on
what terms the issuance of shares of Common Stock may be warranted. Like the
presently authorized but unissued shares of Common Stock, the additional shares
of Common Stock which would become available for issuance upon the
implementation of the Reverse Split would be available for issuance without
further action by the Company's stockholders, unless such action is required by
applicable law or rules of Nasdaq or any other stock exchange or stock market on
which the Common Stock may be listed in the future. Holders of Common Stock have
no preemptive rights to subscribe to or for any additional shares of the
Company. Except in certain cases such as stock dividends, the issuance of
additional shares of Common Stock would have the effect of diluting the voting
power of existing stockholders. The Company has no present arrangements,
commitments, understandings or agreements with respect to the sale or issuance
of any additional shares of Common Stock, except in connection with outstanding
options and warrants and the Preferred Stock.
The Company's management is not aware of any present efforts of any
persons to accumulate Common Stock or to obtain control of the Company, and the
proposed Reverse Split is not intended to be an anti-takeover device.
Fractional Shares
If the Reverse Split is implemented, no fractional shares of post-split
Common Stock will be issued. All fractional shares will be increased to the next
highest whole share.
-17-
<PAGE>
Exchange of Certificates
If the Reverse Split is approved by the stockholders and implemented by
the Board of Directors, then as soon as practicable after the Effective Date
stockholders will exchange their certificates representing shares of pre-split
Common Stock ("Pre-Split Certificates") for certificates representing the number
of shares of post-split Common Stock into which the shares of pre-split Common
Stock have been converted as a result of the Reverse Split. After the Effective
Date, each stockholder will receive a letter of transmittal from the Company's
transfer agent, containing the necessary materials and instructions. From and
after the Effective Date, each Pre-Split Certificate will, until surrendered in
exchange as described above, be deemed for all corporate purposes after the
Effective Date to evidence ownership of one-half the number of shares of Common
Stock identified thereon. DO NOT SEND STOCK CERTIFICATES TO THE COMPANY OR TO
THE TRANSFER AGENT AT THIS TIME. NOTIFICATION OF THE DETAILED PROCEDURES FOR
EFFECTING THE EXCHANGE IF THE REVERSE SPLIT IS APPROVED AND IMPLEMENTED WILL BE
PROVIDED AT A LATER DATE.
Certain Federal Income Tax Consequences
The following is a summary of the federal income tax consequences of
the Reverse Split. This summary does not purport to be complete and does not
address all aspects of federal income taxation that may be relevant to a
particular stockholder. The summary also does not discuss any consequence of the
Reverse Split under any state, local, foreign, gift or estate tax laws. No
ruling from the Internal Revenue Service or opinion of counsel will be obtained
regarding the federal income tax consequences to the stockholders of the Company
as a result of the Reverse Split. EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED REVERSE
STOCK SPLIT TO SUCH STOCKHOLDER. The Company believes that:
1. A stockholder will not recognize gain or loss as a result of the
Reverse Split.
2. A stockholder's holding period for shares of post-Reverse Split Common
Stock will be the same as the holding period of the pre-Reverse Split
Common Stock.
3. The Reverse Split will not be a taxable transaction to the Company.
Miscellaneous
The Board of Directors may abandon the proposed Amendment at any time
before it is filed with the Delaware Secretary of State. The Board of Directors
may make any and all changes to the Amendment that it deems necessary to file
the Amendment with the Delaware Secretary of State and give effect to the
Reverse Split on the terms described in this Proxy Statement.
Under Delaware law, stockholders are not entitled to dissenters' rights
of appraisal with respect to the Reverse Split.
The Common Stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, as a
result, the Company is subject to the periodic
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<PAGE>
reporting and other requirements of the Exchange Act. The Reverse Split will not
affect the registration of the Common Stock under the Exchange Act.
Financial Information
The Company's Annual Report for the fiscal year ended December 31, 1997
includes the Company's audited financial statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," which are
incorporated by reference in this Proxy Statement. A copy of the Annual Report
accompanies this Proxy Statement.
Required Vote
The affirmative vote of the holders of a majority of the shares of
Common Stock outstanding and entitled to vote at the Annual Meeting is required
to adopt and approve the Reverse Split.
The following resolution will be submitted to the stockholders for
approval at the 1998 Annual Meeting of Stockholders:
RESOLVED, that the amendment to the Company's Certificate of
Incorporation set forth in Exhibit A to the Company's proxy statement,
dated August 3, 1998, be, and it hereby is, approved and adopted.
The Board of Directors recommends a vote FOR Proposal 2.
PROPOSAL 3: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
It is proposed that the stockholders ratify the appointment by the
Board of Directors of Ernst & Young LLP as the independent auditors of the
Company for the fiscal year ending December 31, 1998. The Company expects a
representative of Ernst & Young LLP to be present at the annual meeting who will
respond to appropriate questions submitted by stockholders and will make such
statements as he or she may desire.
Approval by the stockholders of the appointment of independent auditors
is not required, but the Company's Board of Directors deems it desirable to
submit this matter to the stockholders. If a majority of the votes cast at the
meeting should not ratify the selection of Ernst &Young LLP, the selection of
independent auditors will be reconsidered by the Board of Directors. Even if the
selection is ratified, the Company's Board of Directors reserves the right to
appoint, and at its discretion, may direct the appointment of, any other
independent certified public accounting firm at any time if the Company's Board
of Directors determines that such a change would be in the best interests of the
Company and its stockholders.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Ernst & Young LLP as independent auditors of the Company.
-19-
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
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 on Forms 3, 4 and 5 with the Commission
and the National Association of Securities Dealers, Inc. Officers, directors and
greater than ten percent stockholders are required by the Commission's
regulations to furnish the Company with copies of all Forms 3, 4 and 5 they
file.
Based solely on the Company's review of the copies of such forms it has
received and written representations that no Form 5 is required to be filed, the
Company believes that all of its officers, directors and greater than ten
percent beneficial owners complied with all filing requirements applicable to
them with respect to transactions during fiscal 1997.
VOTING PROCEDURES
Pursuant to Securities and Exchange Commission rules, a designated
blank space is provided on the proxy card to withhold authority to vote for one
or more nominees for director and boxes are provided on the proxy card for
stockholders to mark if they wish to abstain on Proposal 2 and Proposal 3. Votes
withheld in connection with the election of one or more of the nominees for
director will not be counted in determining the votes cast and will have no
effect on the vote. Abstentions in connection with Proposal 2 will have the
effect of a negative vote. Abstentions in connection with Proposal 3 are not
counted in determining the votes cast with respect to such proposal and will
have no effect on the vote.
Under the rules of the National Association of Securities Dealers,
Inc., brokers who hold shares in street name for customers have the authority to
vote on certain items when they have not received instructions from beneficial
owners. Brokers that do not receive instructions are not entitled to vote upon
Proposal 2 and are entitled to vote upon the election of directors and Proposal
3. Under the General Corporation Law of the State of Delaware, a broker non-vote
will have no effect on the outcome of the election of directors or upon Proposal
3.
OTHER MATTERS
Manner and Expenses of Solicitation
The solicitation of proxies in the accompanying form is made by the
Board of Directors and the cost thereof will be borne by the Company. In
addition to the solicitation of proxies by use of the mails, some of the
officers, directors and other employees of the Company may also solicit proxies
personally or by mail, telephone or telegraph, but they will not receive
additional compensation for such services. Brokerage firms, custodians banks,
trustees, nominees or other fiduciaries holding shares of Common Stock in their
names will be requested by the Company to forward proxy materials to their
principals and will be reimbursed for their reasonable out-of-pocket expenses in
such connection.
It is important that proxies be returned promptly. Therefore, whether
or not you plan to attend the meeting in person, you are urged to mark, date,
execute, and return your proxy in the enclosed envelope, to which no postage
need be affixed if mailed in the United States.
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<PAGE>
Discretionary Authority to Vote Proxy
As of the date of this proxy statement, the Board of Directors is not
aware of any other matters to be presented for action, but if any other matters
properly come before the meeting, it is intended that the persons voting the
accompanying proxy will vote the shares represented thereby in accordance with
their best judgment.
Annual Report
The Annual Report of the Company for 1997, including financial
statements, accompanies this proxy statement.
Submission of Stockholder Proposals
Stockholder proposals in respect of matters to be acted at the
Company's 1999 Annual Meeting of Stockholders should be received by the Company
on or before April 6, 1999 in order that they may be considered for inclusion
in the Company's proxy materials.
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES THERETO, TO EACH OF THE COMPANY'S
STOCKHOLDERS OF RECORD ON JULY 15, 1998 AND EACH BENEFICIAL SHAREHOLDER ON THAT
DATE, UPON RECEIPT OF A WRITTEN REQUEST THEREFORE MAILED TO THE COMPANY'S
OFFICES, 20 LIVINGSTONE AVENUE, DOBBS FERRY, NEW YORK 10522, ATTENTION: INVESTOR
RELATIONS. REQUESTS FROM BENEFICIAL STOCKHOLDERS MUST SET FORTH A GOOD FAITH
REPRESENTATION AS TO SUCH OWNERSHIP ON THAT DATE.
By Order of the Board of Directors
SEYMOUR ROSENTHAL
Secretary
Dated: August 3, 1998
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<PAGE>
EXHIBIT A
Amendment to the Company's Certificate of Incorporation
Providing for the 1 for 2 Stock Split
If Proposal 2 is approved, Article FOURTH of the Certificate shall be
amended by the addition of the following:
Effective as of 5:00 p.m., New York time, on the date the
Certificate of Amendment to this Certificate of Incorporation
amending the Article FOURTH is filed with the Secretary of
State of Delaware (the "Effective Date"), each two issued and
outstanding shares of common stock, par value $.01 per share,
of this Corporation ("Pre-Split Common Stock") shall be
automatically, without further action by the holders of the
Pre-Split Common Stock, converted into one share of common
stock, par value $.01 per share, of this Corporation ("Post-
Split Common Stock") to give effect to a one-for-two reverse
stock split (the "Reverse Split"). From and after the
Effective Date, each certificate representing shares of
Pre-Split Common Stock shall be deemed to represent for all
purposes the number of shares of Post- Split Common Stock into
which the shares of Pre-Split Common Stock were converted
pursuant to the Reverse Split, with fractional shares rounded
to the next highest whole share.
A-1
<PAGE>
JUST TOYS, INC.
Proxy Solicited by the Board of Directors
for the Annual Meeting of Stockholders
September 1, 1998
THE UNDERSIGNED, revoking all previous proxies, hereby appoints BARRY
SHAPIRO and DONALD D. SHACK, or either of them as attorneys, agents and proxies
with power of substitution, and with all powers the undersigned would possess if
personally present, to vote all shares of Common Stock of JUST TOYS, INC. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, September 1, 1998 at 10:30
a.m. local time at the Company's offices located at 20 Livingstone Avenue, Dobbs
Ferry, New York, and all adjournments thereof. The shares represented by this
Proxy will be voted as indicated below upon the following matters, all more
fully described in the Proxy Statement dated August 3, 1998.
(1) Election of a board of seven directors.
WITHHOLD AUTHORITY
Nominee VOTE FOR TO VOTE FOR
---------------------------------------------------------------------------
Roger Gimbel [ ] [ ]
Charmaine Jefferson [ ] [ ]
Howard Kaufman [ ] [ ]
Morton J. Levy [ ] [ ]
Irwin Naitove [ ] [ ]
Donald D. Shack [ ] [ ]
Barry Shapiro [ ] [ ]
(See reverse side)
<PAGE>
(2) Approval of the following resolution:
RESOLVED, that the amendment to the Company's Certificate of
Incorporation set forth in Exhibit A to the Company's proxy
statement, dated August 3, 1998, be and it hereby is, approved and
adopted.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) Ratification of the appointment of Ernst & Young LLP as independent
auditors for the 1998 fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN. IF NO SUCH INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS
DESIGNATED BY THE BOARD OF DIRECTORS AND FOR ITEMS 2 and 3.
Dated: __________________________________, 1998
----------------------------------------------
(Signature)
----------------------------------------------
(Signature)
NOTE: Please sign exactly as your name or
names appear hereon. Joint owners should each
sign personally. When signing as executor,
administrator, corporation, officer, attorney,
agent, trustee or guardian, etc., please add
your full title to your signature.
NOTE: PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE ENCLOSED FOR
THIS PURPOSE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
<PAGE>
JUST TOYS, INC.
20 Livingstone Avenue
Dobbs Ferry, New York 10522
An Urgent Request To Our Stockholders:
As the Company has previously disclosed in its public filings, the
Company's common stock does not meet Nasdaq requirements for continued listing
on the Nasdaq National Market. Nasdaq has agreed to permit the Company's common
stock to be listed on the Nasdaq SmallCap Market on two conditions:
1. By September 2, 1998 the Company must effect a one-for-two
reverse stock split sufficient for the common stock to meet or
exceed a closing bid price of $1.00 per share; and
2. The stock must meet or exceed a closing bid price of $1.00 per
share for a minimum of ten consecutive trading days.
The required reverse split is scheduled for approval by stockholders at
the Company's Annual Meeting on September 1, 1998. The affirmative vote of a
majority of the outstanding common stock is required. Therefore, your vote is
essential in order to preserve our Nasdaq listing.
A Notice of Meeting, Proxy Statement and Proxy for the Annual Meeting
are enclosed. It is urgent that you sign and return your proxy as soon as
possible.
Very truly yours,
Barry Shapiro
President and Chief Executive Officer
