Schedule 14A Information required in proxy statement
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 240.149-11(c) or Section 240.14a-12
Greg Manning Auctions, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check appropriate box):
[X] $125 per Exchange Act Rule 20a-1(c)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j) (3) [ ] Fee computed on table below per Exchange Act Rules 14a-6(j)(4)
and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it is determined):
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(5) Total fee paid:
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___ Fee paid previously with preliminary materials:
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<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid.
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
GREG MANNING AUCTIONS, INC.
775 Passaic Avenue
West Caldwell, New Jersey 07006
October 28, 1996
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Greg Manning Auctions, Inc. (the "Company"), which will be held at the Company's
offices at 775 Passaic Avenue, West Caldwell, New Jersey 07006, on Wednesday,
December 11, 1996, at 10:00 A.M., Eastern Standard Time.
The Notice of Annual Meeting and Proxy Statement covering the formal
business to be conducted at the Annual Meeting follow this letter.
We hope you will attend the Annual Meeting in person. Whether or not you
plan to attend, please complete, sign, date and return the enclosed proxy
promptly in the accompanying reply envelope to assure that your shares are
represented at the meeting.
Sincerely yours,
ROBERT J. GESSO
Secretary and Corporate Controller
<PAGE>
GREG MANNING AUCTIONS, INC.
775 PASSAIC AVENUE
WEST CALDWELL, NEW JERSEY 07006
(201) 882-0004
------------------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 1996
------------------------------------
The Annual Meeting of Shareholders of Greg Manning Auctions, Inc. (the
"Company") will be held at the Company's offices at 775 Passaic Avenue, West
Caldwell, New Jersey 07006, at 10:00 A.M., Eastern Standard Time, on Wednesday,
December 11, 1996, for the following purposes:
1. To elect one director to serve for a term of three years and until his
successor has been duly elected and qualified.
2. To ratify the appointment of Amper, Politziner & Mattia as the Company's
independent public accountants for the Company's fiscal year ending June
30, 1997.
3. To transact such other business as may be properly brought before the
meeting and any adjournment or postponement thereof.
Shareholders of record at the close of business on October 25, 1996 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment or
postponement thereof. Whether or not you plan to attend the Annual Meeting,
please complete, sign, date and return the enclosed proxy in the reply envelope
provided which requires no postage if mailed in the United States. Shareholders
attending the Annual Meeting may vote in person even if they have returned a
proxy. By promptly returning your proxy, you will greatly assist us in preparing
for the Annual Meeting.
By Order of the Board of Directors
ROBERT J. GESSO
Secretary and Corporate Controller
West Caldwell, New Jersey
October 28, 1996
<PAGE>
GREG MANNING AUCTIONS, INC.
PROXY STATEMENT FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 11, 1996
This Proxy Statement and the enclosed form of proxy are being furnished,
commencing on or about October 28, 1996, in connection with the solicitation of
proxies in the enclosed form by the Board of Directors of Greg Manning Auctions,
Inc., a New York corporation (the "Company"), for use at the Annual Meeting of
Shareholders ("Shareholders") of the Company (the "Annual Meeting") to be held
at the Company's offices at 775 Passaic Avenue, West Caldwell, New Jersey 07006,
at 10 A.M., on Wednesday, December 11, 1996, and at any adjournment or
postponement thereof, for the purposes set forth in the foregoing Notice of
Annual Meeting of Shareholders.
The annual report of the Company, containing financial statements of the
Company as of June 30, 1996, and for the year then ended, and other information
concerning the Company is included with this proxy statement. The principal
executive offices of the Company are located at 775 Passaic Avenue, West
Caldwell, New Jersey 07006.
A list of the Shareholders entitled to vote at the Annual Meeting will be
available for examination by Shareholders during ordinary business hours for a
period of ten days prior to the Annual Meeting at the offices of the Company,
775 Passaic Avenue, West Caldwell, New Jersey 07006. A Shareholder list will
also be available for examination at the Annual Meeting.
If you are unable to attend the Annual Meeting, you may vote by proxy on
any matter to come before that meeting. The enclosed proxy is being solicited by
the Board of Directors. Any proxy given pursuant to such solicitation and
received in time for the Annual Meeting will be voted as specified in such
proxy. If no instructions are given, proxies will be voted (i) FOR the election
of the nominee named below under the caption "Election of Directors," (ii) FOR
the ratification of the appointment of Amper, Politziner & Mattia ("APM") as
independent public accountants for the Company's fiscal year ending June 30,
1997, and (iii) in the discretion of the proxies named on the proxy card with
respect to any other matters properly brought before the Annual Meeting.
Attendance in person at the Annual Meeting will not of itself revoke a proxy;
however, any Shareholder who does attend the Annual Meeting may revoke a proxy
orally and vote in person. Proxies may be revoked at any time before they are
voted by submitting a properly executed proxy with a later date or by sending a
written notice of revocation to the Secretary of the Company at the Company's
principal executive offices.
The holders of a majority of the outstanding shares of Common Stock
entitled to vote, present in person or represented by proxy, will constitute a
quorum for the transaction of business. Abstentions and shares held of record by
a broker or its nominee ("Broker Shares") that are voted on any matter are
included in determining the number of votes present. Abstentions and Broker
Shares that are not voted on any matter will not be included in determining
whether a quorum is present.
The election of each nominee for director requires a plurality of votes
cast. The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Common Stock present in person or by proxy and voting
thereon is required for the approval of the appointment of the independent
public accountants. In all cases abstentions and Broker Shares that are not
voted will not be included in determining the number of votes cast. The Company
has appointed an inspector who shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the result, and do such acts as
<PAGE>
are proper to conduct the election or vote with fairness to all Shareholders. On
request of the person presiding at the meeting or any Shareholder entitled to
vote thereat, the inspectors shall make a report in writing of any challenge,
question or matter determined by them and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated and of the vote as certified by them.
Only Shareholders of record at the close of business on October 25, 1996
are entitled to notice of, and to vote at, the Annual Meeting, and any
adjournment or postponement thereof. As of the close of business on October 28,
1996, there were 4,419,997 shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), outstanding. Each share of Common Stock entitles
the record holder thereof to one vote on all matters properly brought before the
Annual Meeting and any adjournment or postponement thereof, with no cumulative
voting.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Company's Restated Certificate of Incorporation provides that the
members of the Company's Board of Directors be divided into three classes, as
nearly equal in size as possible, with the term of office of one class expiring
each year. Accordingly, only those directors of a single class can be changed in
any one year and it would take elections in three consecutive years to change
the entire Board. At the upcoming annual meeting, one director will be elected
to serve a three-year term (until the third succeeding annual meeting, in 1999)
and until his successor is duly elected and qualified. Unless authority to vote
for the election of directors is withheld, the enclosed proxy will be voted FOR
the election of the nominee named below.
William T. Tullly, Jr., who is presently a director of the Company, has
been nominated by the Board of Directors for re-election to the Board, to serve
until the third succeeding annual meeting, in 1999, and until his successor is
duly elected and qualified. No other nominations were submitted. There are two
vacancies in the class of directors whose term is currently expiring.
William J. Dolan and Scott S. Rosenblum have been elected to serve until
the 1997 annual meeting of shareholders. There is one vacancy in the class of
directors whose terms expires in 1997.
Greg Manning has been elected to serve until the 1998 annual meeting of
Shareholders. There are two vacancies in the class of directors whose terms
expire in 1998.
Although a number of Director vacancies currently exist, the Board has
determined that it is in the Company's best interest for no additional Directors
to be nominated at this time other than the nominee set forth below in order to
give the Board of Directors flexibility to appoint additional directors if the
need arises. Accordingly, proxies may not be voted for a greater number of
persons than the number of nominees named. The Company's Restated Certificate of
Incorporation also provides that directors may be removed only for cause and
that any such removal must be approved by the affirmative vote of at least a
majority of the outstanding shares of capital stock of the Company entitled to
vote generally in the election of directors. While the Company believes that the
foregoing provisions of the Company's Restated Certificate of Incorporation are
in the best interests of the Company and its Shareholders, such requirements may
have the effect of protecting management against outside interests and in
retaining its position.
INFORMATION CONCERNING DIRECTORS AND OFFICERS
Background information with respect to the nominee for election, and
certain information regarding such nominee, including his principal occupation
and business experience for at least the past five years, and the directors
whose terms of office will continue after the upcoming annual meeting, appears
below. See "Security
<PAGE>
Ownership of Certain Beneficial Owners and Management" for information regarding
such persons' holdings of common stock.
NOMINEES TO SERVE UNTIL 1999:
WILLIAM T. TULLY, age 50, has been Executive Vice President of the Company
since September 20, 1993 and a director of the Company since June 5, 1995, when
he was appointed to fill the vacancy created by the resignation of Michael
Haynes in the class of directors whose terms expire in 1996. Mr. Tully has
served as Chief Operating Officer of the Company from August 12, 1993 to August
14, 1994 and from March 6, 1995 to present. From the Company's inception in 1981
until August 14, 1994, Mr. Tully was Secretary and Treasurer of the Company. Mr.
Tully had served since December 8, 1992 as a director in the class whose terms
expire in 1996, until his resignation on August 14, 1994. Mr. Tully served as
Senior Vice President of the Company from its inception in 1981 to September 20,
1993. Mr. Tully has been Executive Vice President of CRM from September 20,
1993, and has served CRM in other management capacities since 1974.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEE
NAMED ABOVE.
DIRECTORS WHOSE TERMS EXPIRE IN 1997:
WILLIAM J. DOLAN, age 48, has been a director of the Company since December
8, 1992. Mr. Dolan has been President of Dolan/Wohlers, a printing company which
he co-founded, since 1973.
SCOTT S. ROSENBLUM, age 47, has been a director of the Company since
December 8, 1992. Mr. Rosenblum has been a partner since 1991 in the law firm of
Kramer, Levin, Naftalis & Frankel and has served as Managing Partner of that
firm since March 1994. Mr. Rosenblum received his J.D. degree from the
University of Pennsylvania.
DIRECTORS WHOSE TERMS EXPIRE IN 1998:
GREG MANNING, age 50, has been Chairman of the Board of the Company since
its inception in 1981 and Chief Executive Officer since December 8, 1992. Mr.
Manning has served as President of the Company from 1981 until August 12, 1993
and from March 8, 1995 to the present. Mr. Manning also has been Chairman of the
Board and President of CRM since its inception, which he founded as "Greg
Manning Company, Inc." in 1961. Mr. Manning is currently on the Board of
Directors of the State Bank of South Orange, New Jersey and is Chairman of the
bank's audit committee and member of the bank's executive committee
Of the Company's current directors, only Messrs. Dolan and Rosenblum might
qualify as disinterested directors with respect to any transaction between the
Company and CRM. The Company has agreed, for a period of five years from the
completion of its initial public offering in May 1993, that J.W. Charles
Securities, Inc. and Corporate Securities Group (collectively, the
"Underwriters") may designate a nominee to the Board of Directors, reasonably
acceptable to the Company, or have a representative attend all Board meetings.
CRM and Messrs. Manning, Tully, Dolan, Graham and Rosenblum each have previously
agreed with the Underwriters to vote any shares of Common Stock that they own or
beneficially own for the election of such nominee. It is expected that any such
nominee by the Underwriters would qualify as disinterested with respect to
transactions between the Company and CRM.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1996, there were three meetings of
the Board of Directors of the Company. No director attended fewer than 75% of
the meetings of the Board of Directors. There are no audit, nominating or
compensation committees of the Board of Directors.
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME AGE POSITION
Greg Manning 50 Chairman of the Board, Chief
Executive Officer and President
William T. Tully, Jr. 50 Executive Vice President and
Chief Operating Officer
David C. Graham 56 Senior Vice President
Daniel M Kaplan 51 Chief Financial Officer and
Vice-President
Robert J. Gesso 44 Secretary and Corporate Controller
See "Election of Directors" for information relating to Messrs. Manning and
Tully.
DAVID C. GRAHAM, age 56, has been a Senior Vice President of the Company
since August 1990 and has been Senior Vice President of CRM since August 1990.
Mr. Graham has served the Company and CRM in various capacities since September
1978. Mr. Graham has been a licensed auctioneer since 1965. Prior to joining the
Company, Mr. Graham was employed by H.R. Harmer, a public auction house, from
1955 to 1977.
ROBERT J. GESSO, age 44, has been Secretary of the Company since August 4,
1994. Mr. Gesso was the secretary, treasurer and controller of Y & S Candies,
Inc. from 1985 to 1994. Mr. Gesso holds a masters degree in finance from New
York University and a bachelors degree in accounting from Seton Hall University.
DANIEL M. KAPLAN, age 51, has served as Chief Financial Officer of the
Company since October 18, 1995 and as a Vice President since October 31, 1995.
Mr. Kaplan served as controller of Horowitz Rae Book Manufacturers, Inc. from
1994 to 1995, as controller of Apex One, Inc. during 1993 and as a private
management consultant from 1991 to 1993.
There are no family relationships among any of the directors or executive
officers of the Company.
ADVISORY COMMITTEE
The Company has an advisory committee (the "Advisory Committee") that
includes prominent collectors and other individuals involved in the philatelic
and collectibles business, with whom Mr. Manning has developed relationships
over the years. The members of the Advisory Committee individually meet from
time to time with the Company's Chairman and Chief Executive Officer to discuss
current trends or developments in the collectibles market. Members of the
Advisory Committee receive no compensation for their services, and their
availability is subject to their personal schedules and other time commitments.
The Company reimburses members for their reasonable out-of-pocket expenses in
serving on the Advisory Committee.
The Company believes that the members of the Advisory Committee have no
fiduciary or other duties, obligations or responsibilities to the Company or its
Shareholders, and they will not acquire any such duty, obligation or
responsibility as a result of any meeting or consultation they may have with
management of the Company. Each member of the Advisory Committee has entered
into an agreement with the Company which, among other things, confirms that the
member has no such duty, obligation or responsibility, but also commits the
member to keep confidential and not disclose (or in any manner use for personal
benefit or attempt to profit from)
<PAGE>
any non-public information relating to the Company that the member receives in
such capacity, except to the extent that disclosure is required by applicable
law or legal process or to the extent the information becomes public other than
as a result of a breach of any member's confidentiality agreement. The members
serve at will and may resign, or be asked to discontinue their services, at any
time.
The members of the current Advisory Committee and their principal
occupations are as follows:
ANTHONY L. BONGIOVANNI, JR., age 37, is President of Micro Strategies,
Incorporation, a leading developer and supplier of microcomputer based business
applications throughout the New York, New Jersey and Pennsylvania areas, which
he founded in 1983. Mr. Bongiovanni has a B.S. in mechanical engineering from
Rensellaer Polytechnical Institute.
SIR RONALD BRIERLEY, age 59, is Founder/President of Brierley Investments,
Limited, a publicly held New Zealand investment company. Sir Ronald is also
Chairman of GPG P/C, an investment company based in London, England. Sir Ronald
serves on the boards of Advance Bank, Australia, Ltd., Adriadne Australia Ltd.,
Australia Oil & Gas Corporation, Ltd., and the Australian Gaslight Company, and
he is also a trustee of Sydney Cricket and Sports Ground Trust. Sir Ronald has
had a life-long interest in stamps, beginning as a schoolboy, when he formed
Kiwi Stamp Company and acquired a dealer's certificate from the New Zealand
Stamp Dealers Federation. Sir Ronald has been selling and collecting stamps
since that time.
ROBERT G. DRISCOLL, age 64, has been Chief Executive Officer (since 1981)
of Barrett & Worthen, Inc. and the Brookman Stamp Company of Bedford, New
Hampshire, both of which are engaged in the business of buying and selling
stamps. Mr. Driscoll served as Vice President of H.E. Harris Company, a
subsidiary of General Mills from 1978 to 1981, after having founded R&R Stamp
Company in 1958 and serving as its President until it was sold in 1978 to
General Mills. Mr. Driscoll is a past President of the American Stamp Dealers
Association (from 1977 to 1978) and is a lifetime member of the American First
Day Cover Society. He has been a member of the American Philatelic Society for
over 45 years.
HERMAN HERST, JR., age 87, is recognized as the most prolific philatelic
author in the world, and has written numerous articles on philately and has
authored several stamp related books, including NASSAU STREET. Mr. Herst was
President of Hennan Herst Jr. Auctions Inc., a public auction house (from 1934
to 1972) and conducted a private retail stamp business as a sole proprietorship.
He was also an active philatelic auctioneer for many years, until his
semi-retirement in 1981. He is a former President of the Society of Philatelic
Americans and served two terms on the Board of Directors of the American Stamp
Dealers Association. Among his many accomplishments, Mr. Herst received the John
Luff Award from the American Philatelic Society, the merit award from the
Society of Philatelic Americans and the Collectors Club of New York's award for
Service to Philately. He is currently a senior member of the American Society of
Appraisers, an honorary life member of the Philatelic Traders' Society of London
and an honorary life member of the American Stamp Dealers Association, a life
member of the Philatelic Traders' Society of London and an honorary life member
of the Writers Unit of the American Philatelic Society. He is also the only
American stamp dealer to have ever served on the council of the Philatelic
Traders' Society of London.
HERBERT LATUCHIE, age 77, is President of House of Collectors, a retail
collectibles business, as well as President of Herb LaTuchie Auctions, a public
auction house of stamps. He was Chairman of the Board and Chief Executive
Officer (from 1954 to 1986) of Modern Builders Supply Company, Inc. and Modern
Manufacturing, Inc., the latter of which is one of the ten leading distributors
of building products in the United States. Mr. LaTuchie has been a life-long
collector of rare stamps, and he also collects sheet music and other paper
collectibles.
JOSEPH LEVY, JR., age 70, is president of Levy Venture Management, a real
estate rental development group involved in automotive retailing real estate in
three states. He is also a real estate developer of several properties located
in Illinois. Prior to joining Levy Venture Management, Mr. Levy was President of
Walton
<PAGE>
Chrysler-Plymouth (from 1953 to 1960), a car dealership in Chicago, Illinois,
and of Carol Buick (from 1961 to 1984), a car dealership in Evanston, Illinois.
He serves as a director of the Evanston Historical Society. He is also a trustee
of Evanston Hospital and the Culver Educational Foundation, a life trustee of
the Evanston Historical Society and the Levy Senior Centers, and a member of the
Community Advisory Board of N.B.D. Bank. Mr. Levy is a collector of stamps,
coins, watches and other collectibles.
HECTOR D. WILTSHIRE, age 54, is President and CEO of Wiltshire
Technologies, Inc., a high technology venture capital and consulting group, and
is an experienced collector of rare stamps. Mr. Wiltshire is a member of the
Association of Certified and Corporate Accountants (A.C.C.A) and the British
Computer Society (M.B.C.S.). Mr. Wiltshire holds degrees in Executive Business
Administration and marketing.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services in all capacities for the fiscal years ended June 30, 1996, June 30,
1995 and June 30, 1994 of those persons who were, during all or part of the
fiscal year ended June 30, 1996, the chief executive officer and the three
executive officers of the Company or its wholly owned subsidiary who received
compensation in excess of $100,000 in fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
Long Term Compensation
ANNUAL COMPENSATION
Awards Payouts
Other Restricted
Name and Principal Annual Stock Options/ LTIP
Position Year Salary Bonus Compensation Awards SARs(4) Payouts
<S> <C> <C> <C> <C> <C> <C> <C>
Greg Manning, 1996 $175,000 54,758(1) $26,650(2) None None None
Chairman of the Board, 1995 $150,000 0(1) (3) None None None
Chief Executive Officer and 1994 $100,496 $5,777(1) (3) None None None
President
William T. Tully, 1996 $129,769 $17,379(1) (3) None None None
Chief Operating Officer and 1995 $114,223 0(1) (3) None 50,000 None
Executive Vice President 1994 $105,419 $3,468(1) (3) None None None
</TABLE>
(1) Employment agreements with Messrs. Manning and Tully provide for an annual
bonus equal (i) in the case of Mr. Manning, for fiscal years 1994 and 1995,
8.33% of the pre-tax net income of the Company in excess of $700,000 and
10% of such pre-tax net income in excess of $1,000,000; and for fiscal
1996, 10% of pre-tax net income between $500,000 and $2,000,000; and (ii)
in the case of Mr. Tully, for fiscal years 1994, 1995 and 1996, 5% of
pre-tax income of the Company in excess of $700,000, in each case subject
to certain limitations. See "Executive Compensation -- Employment
Agreements and Insurance."
(2) Represents (a) a non-accountable expense allowance equal to $25,000, and
(b) the value of the use of certain automobiles.
(3) The Company has concluded that the aggregate amount of perquisites and
other personal benefits, if any, paid did not exceed the lesser of 10% of
such officer's total annual salary and bonus for such years or $50,000;
such amounts are not included in the table.
(4) Each option represents a right to receive one share of the Company's Common
Stock.
The Company has no long-term incentive plan.
<PAGE>
OPTION GRANTS TABLE FOR FISCAL 1996
No stock option grants were made during the fiscal year ended June 30, 1996
under the 1993 Stock Option Plan, as amended, of the Company (the "Stock Option
Plan") to the executive officers named in the Summary Compensation table. The
Company has not granted any stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding the exercise of stock
options during the last fiscal year by the executives named in the Summary
Compensation Table and the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Acquired Unexercised In-the-Money
ON EXERCISE Value Options at Options at
NAME REALIZED JUNE 30, 1996 JUNE 30,1996
======================================================================================================================
<S> <C> <C> <C> <C>
Greg Manning None N/A 100,000 (25,000 0
unexercisable)
William T. Tully, Jr. None N/A 100,000 $56,250(1)
(12,500 unexercisable)
======================================================================================================================
</TABLE>
(1) Based on a closing sale price per share of $3.125 on June 30, 1996, as
reported by NASDAQ.
COMPENSATION OF DIRECTORS
The Company currently reimburses each director for expenses incurred in
connection with his attendance at each meeting of the Board of Directors or a
committee on which he serves.
EMPLOYMENT AGREEMENTS AND INSURANCE
The Company has entered into employment agreements with each of Messrs.
Manning and Tully. The agreement (dated January 5, 1996 but effective June 30,
1995, the date his prior employment agreement terminated) with Mr. Manning
provides for his services as President and Chief Executive Officer for a term
ending June 30, 1997. The agreement provides, among other things, for a salary
equal to $175,000 per annum and a bonus equal to 10% of the Company's audited
pre-tax income between $500,000 and $2,000,000 (as calculated excluding the
formula-based bonus payable to either of Messrs. Manning or Tully and subject to
increase by the Board of Directors). Mr. Manning received from the Company a
base salary of $175,000, $150,000 and $100,000 for fiscal years 1996, 1995 and
1994, respectively, and a bonus of $54,758,$0 and $2,968 for fiscal years 1996,
1995 and 1994, respectively. The bonus for the fiscal years 1995 and 1994 were
based on 8.33% of the Company's audited pre-tax income above $700,000
(increasing to 10% of such pre-tax income above $1,000,000) in each such year,
as calculated excluding the formula-based bonus payable to either of Messrs.
Manning or Tully.
On September 20, 1993 the Company amended Mr. Tully's employment agreement,
extending the term to June 30, 1998 and increasing the base salary to $110,000
per year, with an annual increases equal to the increase in the Consumer Price
Index plus 1.5%, plus a bonus based on 5% of the Company's audited pre-tax
income above $700,000 in each such year, as calculated excluding the
formula-based bonus payable to either of Messrs. Manning or Tully and subject to
a maximum of $25,000, $40,000 and $50,000 for fiscal years 1994, 1995 and 1996,
respectively. The limit to the cash bonuses for the fiscal years 1997 and 1998
is $50,000 for each year. Mr. Tully received a bonus of $3,468, $0 and $17,379
for fiscal years 1994, 1995 and 1996, respectively. Mr. Tully is also entitled
to a vehicle for business use. On March 6, 1995, Mr. Tully assumed the duties of
Chief
<PAGE>
Operating Officer as well as Executive Vice President. Messrs. Manning and Tully
are both eligible to participate in any employee benefit plan and fringe benefit
programs, if any, as may be maintained by the Company for its employees
generally from time to time.
Each employment agreement also provides that in the event the agreement is
terminated as a result of disability (as defined therein) or death, Mr. Manning
and Mr. Tully will receive from the Company compensation equal to 66-2/3% of
such executive's annual base salary and the executive's cash bonus for a period
of 12 months.
Messrs. Manning and Tully is each permitted to devote some working time to
the business of CRM, so long as, in the judgment of a majority of the Company's
disinterested directors, it does not interfere with his complete and faithful
performance of his duties to the Company. The Company expects that substantially
all of Messrs. Manning and Tully's time will be devoted to the Company.
The Company currently maintains a $1,000,000 term life insurance policy on
the life of Greg Manning with benefits payable to the Company.
The Company offers basic health, major medical and life insurance to its
employees. No retirement, pension or similar program has been adopted by the
Company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation includes certain
provisions permitted pursuant to the New York Business Corporation Law (the
"NYBCL"), whereby officers and directors of the Company are to be indemnified
against certain liabilities. The Restated Certificate of Incorporation also
limits to the fullest extent permitted by the NYBCL a director's liability to
the Company or its Shareholders for monetary damages for breach of any duty as a
director, except for certain instances of bad faith, intentional misconduct, a
knowing violation of any law or illegal personal gain. This provision of the
Restated Certificate of Incorporation has no effect on any director's liability
under Federal securities laws or the availability of equitable remedies, such as
injunction or recission, for breach of fiduciary duty. The Company believes that
these provisions will facilitate the Company's ability to continue to attract
and retain qualified individuals to serve as directors and officers of the
Company.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information with respect to persons known by the
Company to own beneficially, as of October 28, 1996, 5% or more of the
outstanding shares of its Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent
Beneficial Owner Ownership of Common Stock
============================================= ============================================ =========================
<S> <C> <C> <C>
Collectibles Realty Management, Inc.(1) 1,375,000 30.5%
775 Passaic Avenue
West Caldwell, NJ 07006
============================================= ============================================ =========================
</TABLE>
(1) Collectibles Realty Management, Inc. ("CRM") owns 1,300,000 shares of
Common Stock of the Company. All the shares owned by CRM are owned
beneficially by Greg Manning. On June 11, 1993, Mr. Manning was granted an
option to purchase 100,000 shares of Common Stock pursuant to the Stock
Option Plan, of which options to purchase 75,000 shares are currently
exercisable and are included in the above table.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of October 28, 1996 by each director, each executive officer
named in the Summary Compensation Table, and by all directors and executive
officers of the Company as a group:
Amount and Nature Percent
Name and Address of of Beneficial of Common
Beneficial Owner Ownership (1) Stock (2)
================================================================================
Greg Manning (3) 1,300,000 29.4%
775 Passaic Avenue
West Caldwell, NJ 07006
William J. Dolan (4) 6,000 *
5 Astro Place
Denville, NJ 07834
Scott S. Rosenblum (5) 4,000 *
919 Third Avenue
New York, NY 10022
William T. Tully, Jr. (6) 400 *
775 Passaic Avenue
West Caldwell, NJ 07006
All Executive Officers and 1,310,400 30.7%
Directors as a group,
including those named
above (8 persons) (7)
===============================================================================
* Less than 1%.
(1) Except as otherwise indicated below, each named person has voting and
investment power with respect to the securities owned by them.
(2) Based on 4,419,997 shares outstanding.
(3) Greg Manning is the owner of all the outstanding shares of common stock of
CRM. CRM owns 1,300,000 shares of the Company's Common Stock. Does not
include options to purchase 100,000 shares (currently exercisable as to
75,000 shares) granted pursuant to the Stock Option Plan.
(4) Does not include (a) 6,000 shares of Common Stock issuable upon the
exercise of Warrants owned by Mr. Dolan, or (b) an option to purchase
10,000 shares of Common Stock granted to Mr. Dolan pursuant to the Stock
Option Plan, which is not currently exercisable.
(5) Does not include (a) 4,000 shares of Common Stock issuable upon the
exercise of Warrants owned by Mr. Rosenblum, or (b) an option to purchase
10,000 shares of Common Stock granted to Mr. Rosenblum pursuant to the
Stock Option Plan, which is not currently exercisable.
<PAGE>
(6) The shares of Common Stock listed above are owned by members of Mr. Tully's
immediate family. Does not include (i) an option to purchase 100,000 shares
of Common Stock granted to Mr. Tully pursuant to the Stock Option Plan,
currently exercisable as to 87,500 shares and (ii) 400 shares of Common
Stock issuable upon the exercise of Warrants held directly by members of
Mr. Tully's immediate family.
(7) Does not include (a) an option to purchase 22,500 shares of Common Stock
granted pursuant to the Stock Option Plan to David Graham, a Senior Vice
President of the Company, which option is currently exercisable as to
11,250 shares, or (b) an option to purchase 10,000 shares of Common Stock
granted pursuant to the Stock Option Plan to Daniel M. Kaplan, Chief
Financial Officer and a Vice President of the Company, which is not
currently exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the completion of its initial public offering in May 1993, the
Company operated as a wholly owned subsidiary of CRM. CRM owns 1,300,000 shares,
or approximately 29.4%, of the total outstanding shares of the Company's Common
Stock. CRM is wholly owned by Greg Manning, the founder, Chairman and Chief
Executive Officer of the Company. CRM has historically been engaged in the
business of acquiring collectibles (including collectibles of the type that are
currently being sold by the Company) and selling them both through direct sales
and through consignments for sale at auction.
In the past, CRM was an important source of property consigned to the
Company for sale at auction. Although CRM continues to provide the Company with
property, the amounts in relation to the Company's overall business has been
decreasing. For the year ended June 30, 1996, consignments by CRM accounted for
$12,706, or less than 1% of the Company's aggregate sales, generating $3,177 in
commission revenues, or less than 1% of aggregate revenues.
Pursuant to an Inventory Acquisition and Non-Competition Agreement (the
"CRM Inventory Agreement"), dated May 14, 1993, the Company was granted the
right to accept on a consignment basis any or all collectibles in CRM's existing
inventory on terms no less favorable to the Company than would be offered to
unrelated third parties. The CRM Inventory Agreement provides that, with respect
to all property from CRM's existing inventory that is accepted on consignment by
the Company, the Company will receive from CRM a commission in the amount of 10%
of the sales price (exclusive of any buyer's commission received by the
Company); provided that the Company will receive no commission from CRM with
respect to items valued at over $100,000 per lot (but will earn any commission
or premium paid by the buyer). The inventory available for consignment to the
Company pursuant to the CRM Inventory Agreement has been diminishing. The CRM
Inventory Agreement also provides that CRM will not compete with the Company for
the acquisition of collectibles from third parties that are suitable for
acquisition by the Company from time to time for use in its business.
Until May 29, 1995, the Company's headquarters, including its office and
warehouse facilities, were located in approximately 5,500 square feet of space
leased by CRM. On April 1, 1995, the Company entered into a direct lease with
respect to an approximately 18,600 square foot building in West Caldwell, New
Jersey, where its headquarters are now located.
In addition, CRM has advanced funds to the Company from time to time. No
such advances were made during the year ended June 30, 1996; however, subsequent
to that date, the Company received advances from CRM of up to $600,000, all of
which were repaid, together with interest at the rate of 8% per annum, by
October 23, 1996.
William Dolan, a director of the Company, lent the Company $300,000 for
operating purposes, to be repaid from commissions relating to consignments in
the Company's auctions held on December 31, 1994 and March 31, 1995. This loan,
together with interest in the amount of $7,960, was paid in full in August 1995.
<PAGE>
Scott Rosenblum, a director of the Company, is a partner of the law firm
Kramer, Levin, Naftalis & Frankel, which provides legal services to the Company.
PROPOSAL 2 - APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Amper, Politziner & Mattia
as the Company's independent public accountants for the fiscal year ending June
30, 1997.
The Shareholders will be asked to ratify the appointment of Amper,
Politziner & Mattia as independent public accountants of the Company for the
fiscal year ending June 30, 1997. Ratification of the appointment requires the
affirmative vote of a majority of the shares of Common Stock present at the
Annual Meeting and entitled to vote thereon. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR RATIFICATION OF THE APPOINTMENT OF AMPER, POLITZINER & MATTIA.
It is expected that a representative of Amper, Politziner & Mattia will be
present at the Annual Meeting with the opportunity to make a statement if Amper,
Politziner & Mattia desires to do so, and will be available to respond to
appropriate questions.
On October 31, 1995, the Company dismissed Price Waterhouse LLP (PW) as its
independent auditors. Such dismissal was approved by the Company's Board of
Directors. PW's report upon the Company's consolidated financial statements for
its fiscal year ended June 30, 1995 did not contain an adverse opinion or a
disclaimer of opinion, nor was such report qualified or modified as to
uncertainty, audit scope or accounting principles. In connection with its audit
for the fiscal year ended June 30, 1995 and through October 31, 1995: (i) there
were no disagreements with PW, whether or not resolved, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
PW would have caused them to make reference thereto in their report on the
financial statements for such years; and (ii) there were no reportable events of
the nature contemplated by Item 304(a)(1)(iv)(B) of Regulation S-B.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered as of the next Annual
Meeting of Shareholders must be received by the Company, addressed to the
attention of the Company's Secretary, at its offices at 775 Passaic Avenue, West
Caldwell, New Jersey 07006, no later than June 27, 1997, in order to be included
in the Company's proxy statement relating to that meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other matter that is to be
presented to Shareholders for formal action at the Annual Meeting. If, however,
any other matter properly comes before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of proxy to vote such proxies in accordance with their judgment on such
matters.
OTHER INFORMATION
Although it has entered into no formal agreements to do so, the Company
will reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding proxy-soliciting
materials to their principals. The cost of soliciting proxies on behalf of the
Board of Directors will be borne by the Company. Such proxies will be solicited
principally through the mail but, if deemed desirable, may also be solicited
personally or by telephone, telegraph, facsimile transmission or special letter
by directors, officers and regular employees of the Company without additional
compensation.
<PAGE>
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING. THE BOARD URGES YOU TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID
REPLY ENVELOPE. YOUR COOPERATION AS A SHAREHOLDER, REGARDLESS OF THE NUMBER OF
SHARES OF STOCK YOU OWN, WILL REDUCE THE EXPENSES INCIDENT TO A FOLLOW-UP
SOLICITATION OF PROXIES.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE TELEPHONE THE
COMPANY AT (201) 882-0004.
Sincerely yours,
ROBERT J. GESSO
Secretary and Corporate Controller
West Caldwell, New Jersey
October 28, 1996
<PAGE>
