SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of
the Commission Only
[X] Definitive proxy statement (as permitted by Rule
14a-6(e)(2))
[ ] Definitive additional materials
[ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
GREG MANNING AUCTIONS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
GREG MANNING AUCTIONS, INC.
775 Passaic Avenue
West Caldwell, New Jersey 07006
October 30, 2000
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders
of Greg Manning Auctions, Inc., which will be held at the Radisson Hotel &
Suites, 690 Route 46 East, Fairfield, New Jersey 07004, on Tuesday, December 12,
2000, at 10:00 AM 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 that you will attend the annual meeting in person. Whether or
not you plan to attend, please complete, sign, date. and return the enclosed
proxy card promptly in the accompanying reply envelope to assure that your
shares are represented at the meeting.
Sincerely,
/s/ Martha Husick
MARTHA HUSICK
Secretary
<PAGE>
GREG MANNING AUCTIONS, INC.
775 Passaic Avenue
West Caldwell, New Jersey 07006
973-882-0004
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------------------------------------------
The annual meeting of Shareholders of Greg Manning Auctions, Inc.
("GMAI") will be held at the Radisson Hotel & Suites, 690 Route 46 East,
Fairfield, New Jersey 07004, on Tuesday, December 12, 2000, at 10:00 AM Eastern
Standard Time, for the following purposes:
o to elect two directors to serve for terms of three years and until
their respective successors have been duly elected and qualified;
o to ratify the appointment of Amper, Politziner & Mattia P.A. as
GMAI's independent accountants for the fiscal year ending June 30,
2001;
o to consider and vote upon a reincorporation plan that would change
GMAI's state of incorporation from New York to Delaware; and
o 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, 2000,
are entitled to notice of, and to vote at, the annual meeting and any
adjournment or postponement. Whether or not you plan to attend the annual
meeting, please complete, sign, date and return the enclosed proxy card 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 card. By promptly returning your proxy card, you will
greatly assist us in preparing for the annual meeting.
By order of the board of directors,
/s/ Martha Husick
MARTHA HUSICK,
Secretary
West Caldwell, New Jersey
October 30, 2000
<PAGE>
GREG MANNING AUCTIONS, INC.
PROXY STATEMENT FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
To be held on December 12, 2000
Commencing on or about October 30, 2000, this proxy statement and the
enclosed form of proxy card are being mailed to shareholders of Greg Manning
Auctions, Inc. a New York corporation ("GMAI"), in connection with the GMAI
board of directors' solicitation of proxies for use at the annual meeting of
GMAI shareholders and at any adjournment or postponement. The annual meeting is
being held at the Radisson Hotel & Suites, 690 Route 46 East, Fairfield, New
Jersey 07004 on Tuesday, December 12, 2000, at 10:00 AM Eastern Standard Time,
for the purposes described in this proxy statement.
GMAI's annual report is included with this proxy statement. It contains
GMAI's financial statements for fiscal year 2000 and other information
concerning GMAI.
During the ten days prior to the annual meeting, a list of shareholders
entitled to vote at the annual meeting will be available for examination by
shareholders at GMAI's principal executive offices located at 775 Passaic
Avenue, West Caldwell, New Jersey 07006, during ordinary business hours. 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 the meeting. The board of directors is in this
proxy statement soliciting your proxy. Any proxy given pursuant to this
solicitation and received in time for the annual meeting will be voted as
specified on the proxy card. If no instructions are given, proxies will be voted
(1) FOR election of the nominees named below under the caption "Election of
Directors," (2) FOR ratification of the appointment of Amper, Politziner &
Mattia P.A. as GMAI's independent accountants for the fiscal year ending June
30, 2001, (3) FOR the plan of reincorporation that would change GMAI's state of
incorporation from New York to Delaware, and (4) 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, but 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 GMAI's
corporate secretary at GMAI's principal executive offices.
The holders of a majority of the outstanding shares of GMAI 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 in any
manner 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.
In order to be elected, a nominee for director must receive a plurality
of the votes cast. The affirmative vote of the holders of a majority of the
issued and outstanding shares of common stock present in person or by proxy and
voting thereon is required to approve the appointment of the independent public
accountants. The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of common stock is required to approve the plan of
reincorporation. In all cases abstentions and Broker Shares that are not voted
will not be included in determining the number of votes cast. GMAI has appointed
an inspector who will determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the validity and effect of proxies, and will 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 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 at the meeting, the inspectors
will make a report in writing of any challenge, question or matter determined by
them and execute a certificate
<PAGE>
of any fact found by them. Any report or certificate made by them will 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,
2000 are entitled to notice of, and to vote at, the annual meeting and any
adjournment or postponement. As of the close of business on October 25, 2000,
there were 9,889,462 shares of GMAI common stock outstanding. Each share of
common stock entitles the record holder to one vote on all matters properly
brought before the annual meeting and any adjournment or postponement, with no
cumulative voting.
On October 25, 2000, executive officers and directors of GMAI owned, in
the aggregate, 39% of the outstanding common stock. They have indicated that
they intend to vote in the manner recommended by the board of directors.
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees for Election
GMAI's restated certificate of incorporation provides that the members
of GMAI's board of directors must be divided into three classes, as nearly equal
in size as possible, with the term of office of one class expiring each year.
Accordingly, in any given year only those directors belonging to one class may
be changed and it would take elections in three consecutive years to change the
entire board of directors. At the upcoming annual meeting, two directors will be
elected to serve three-year terms (until the third succeeding annual meeting, in
2003) and until their respective successors are 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 nominees named below.
Scott S. Rosenblum and Anthony Bongiovanni have been nominated by the
board of directors for election to the board, to serve until the third
succeeding annual meeting, in 2003, and until their respective successors are
duly elected and qualified. No other nominations were submitted. There is one
vacancy in the class of directors whose term is currently expiring.
Richard M. Cohen and Mark B. Segall have been elected, and Gregory N.
Roberts has been appointed, to serve until the 2002 annual meeting of
shareholders.
Albertino de Figueiredo and Greg Manning have been elected, and James
Davin has been appointed, to serve until the 2001 annual meeting of
shareholders.
Although a director vacancy currently exists, the board of directors
has determined that it is in GMAI's best interest for no additional director to
be nominated other than the nominees set forth below, in order to give the board
of directors flexibility to appoint an additional director if the need arises.
Accordingly, proxies may not be voted for a greater number of persons than the
number of nominees named. GMAI'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 GMAI capital stock entitled to vote generally in the
election of directors. While GMAI believes that provision of the restated
certificate of incorporation is in the best interests of GMAI and its
shareholders, this requirement may have the effect of protecting management
against outside interests. (For a discussion of equivalent provisions in the
event the plan of reincorporation is approved and implemented, see "Proposal 3 -
Reincorporating GMAI in Delaware", below.)
Information Concerning Directors and Officers
You will find below background information with respect to the nominees
for election and the directors whose terms of office will continue after the
upcoming annual meeting. See "Security Ownership
2
<PAGE>
of Certain Beneficial Owners and Management" for information regarding their
holdings of GMAI common stock.
NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES IN 2003
Scott S. Rosenblum, age 51, has been a director of GMAI since December
8, 1992. Since 1991, Mr. Rosenblum has been a partner in the law firm of Kramer
Levin Naftalis & Frankel LLP, and he served as managing partner of that firm
from March 1994 to September 2000. Mr. Rosenblum received his J.D. degree from
the University of Pennsylvania. Mr. Rosenblum is also a director of Oak Tree
Medical Systems, Inc., a public company.
Anthony L. Bongiovanni, age 41, has been a director of GMAI since May
1997. Mr. Bongiovanni is the founder (in 1983) and President of Micro
Strategies, Inc., a leading developer and supplier of microcomputer-based
business applications throughout New York, New Jersey, and Pennsylvania. Mr.
Bongiovanni has a B.S. in mechanical engineering from Rensselaer Polytechnical
Institute.
The board of directors recommends that shareholders vote FOR the
election of the nominees named above.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Greg Manning, age 54, has been Chairman of the board of directors since
GMAI was formed in 1981 and has been Chief Executive Officer since December
1992. Mr. Manning has served as GMAI's President from 1981 until August 1993 and
from March 1995 to the present. Mr. Manning has also been Chairman of the Board
and President of Collectibles Realty Management, Inc. a privately-held
corporation, since he formed it in 1961.
Albertino de Figueiredo, age 69, has been a director of GMAI since
September 1997. In 1980, Mr. De Figueiredo founded Afinsa Bienes Tangibles S.A.,
a company engaged in the business of philatelics and numismatics, and is
currently Chairman of the Board of Afinsa Bienes Tangibles S.A. and its
subsidiaries. Mr. de Figueiredo is also Vice-Chairman of the Board of Finarte
Espana, an art auction house, and a member of the Executive Board of ASCAT, the
International Association of the Stamp Catalog and Philatelic Publishers.
James Davin, age 54, has been a director of GMAI since February 2000.
Since 1993, he has acted as President of Davin Capital Corporation, a private
investment company, and Davin Capital, L.P., a private investment partnership.
Mr. Davin is also a trustee and member of the Finance Committee of Blair
Academy, an independent school in Blairstown, New Jersey, and a former member of
the Advisory Board of the Georgetown University School of Business, from which
he graduated in 1967. Mr. Davin's investment career started in 1969 at First
Boston, from which he departed in 1988 as Managing Director to join Drexel
Burnham Lambert Group, Inc., where he became Executive Vice President, Senior
Trading Official, a position mandated by the SEC under the company's agreement
with the U.S. Attorney's office. In 1990, Mr. Davin left Drexel Burnham Lambert
Group, Inc. to join Lehman Brothers. Mr. Davin departed Lehman Brothers in 1993
as Managing Director to serve as Vice Chairman of Craig Drill Capital, a private
investment fund in New York. Mr. Davin has been an active member of the National
Association of Securities Dealers, and served as Chairman and Vice President of
the Board of Governors in 1987 as well as a board member from 1985 until 1988.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
Mark B. Segall, age 38, has been a director of GMAI since December
1999. Since October 1999 he has acted as Senior Vice President and General
Counsel at Investec Ernst & Company. Prior to joining Investec Ernst & Company,
Mr. Segall was a partner at Kramer Levin Naftalis & Frankel LLP, a New York law
firm.
3
<PAGE>
Richard M. Cohen, age 49, has been a director of GMAI since December
1999. Since 1996, Mr. Cohen has been the managing principal of Richard M. Cohen
Consultants. From 1992 to 1995, he served as President of General Media, Inc., a
public company with interests in magazines, cable, licensing, and the Internet.
He holds a B.S. from the University of Pennsylvania and an MBA from Stanford
University. He is also a Certified Public Accountant in the State of New York
and a director of National Auto Credit, Deyco Acquisition Corp., Symposium
Telecom, and Directrix, Inc.
Gregory N. Roberts, age 38, has been a director of GMAI since February
2000. Since 1995, Mr. Roberts has acted as President of Spectrum Numismatics
International, Inc., a California corporation and wholly-owned subsidiary of
GMAI. Mr. Roberts is also a lifetime member of the American Numismatic
Association and a member of the Professional Numismatists Guild.
Attendance at Board and Committee Meetings
During the fiscal year ended June 30, 2000, there were 11 meetings of
GMAI's board of directors. Only Mr. de Figueiredo attended fewer than 75% of the
meetings of the board of directors.
Committees of the Board of Directors
GMAI's board of directors has an audit committee. During fiscal year
2000 the Audit Committee consisted of Scott Rosenblum and Richard M. Cohen. The
audit committee advises the board of directors on the appointment of independent
accountants, reviews the scope and budget for the annual audit, and reviews the
results of the independent accountants' examination of GMAI's financial
statements. The audit committee met twice during fiscal 2000.
There were no meetings of the nominating or compensation committees of
the board of directors during fiscal year 2000.
EXECUTIVE OFFICERS
GMAI's executive officers are as follows:
Name Age Position
---- --- --------
Greg Manning 54 Chairman of the Board, Chief Executive
Officer and President
James Reiman 45 Executive Vice President, Strategic
Development/Investor Relations
James A. Smith 48 Chief Financial Officer
See "Election of Directors" for information relating to Mr. Manning.
James Reiman, age 45, has served as GMAI's Executive Vice President,
Strategic Development/Investor Relations since May 2000. Mr. Reiman was
appointed as Executive Vice President of e-Commerce Business Development of GMAI
in April 1999. Prior thereto, Mr. Reiman founded and operated TOB Consulting, a
firm providing direct marketing and e-Commerce consulting services. Since 1980,
Mr. Reiman also has been engaged in the practice of law, both independently and
with the firm of Barnes & Thurnberg, where he headed the Direct Marketing
practice group.
James A. Smith, age 48, has served as GMAI's Chief Financial Officer
since December 1997. Mr. Smith served as Chief Financial Officer of Imatec, Ltd.
from 1996 to 1997, and as Controller of Ferrara Food Company, Inc. from 1992 to
1996.
4
<PAGE>
Advisory Committee
GMAI has an 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 Mr. Manning 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.
GMAI reimburses members for reasonable out-of-pocket expenses in serving on the
advisory committee.
GMAI believes that the members of the advisory committee have no
fiduciary or other obligations to GMAI or its shareholders, and they will not
acquire any such obligation as a result of any meeting or consultation they may
have with management of GMAI. Each member of the advisory committee has entered
into an agreement with GMAI that, among other things, confirms that he has no
such obligation, but also obligates the member to keep confidential and not
disclose (or in any manner use for personal benefit or attempt to profit from)
any non-public information relating to GMAI that the member receives in his
capacity as member, except to the extent that disclosure is required by law or
the information becomes public other than as a result of a breach of that
member's confidentiality agreement. The members serve at will and may resign, or
be asked to discontinue their services, at any time.
The current members of the advisory committee and their principal
occupations are as follows:
Sir Ronald Brierley, age 62, is founder and 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 68, has since 1981 been Chief Executive Officer
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 founded R&R Stamp Company in 1958 and served as its
President until it was sold in 1978 to General Mills. From 1978 to 1981, he
served as Vice President of H.E. Harris Company, a subsidiary of 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.
Herbert LaTuchie, age 81, was from 1954 to 1986 Chairman of the Board
and Chief Executive Officer 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 U.S. 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 74, is President of Levy Venture Management,
Inc., a real estate development company that he formed in 1984 specializing in
automotive retailing real estate. Prior to that, Mr. Levy was President of
Walton Chrysler-Plymouth (from 1953 to 1960), the world's largest Chrysler
dealership, and Carol Buick (from 1961 to 1984), then the world's largest Buick
dealership. Mr. Levy currently serves on the board of directors of CD Computer
Centers, Inc. (NASDAQ: CDWC), and has served as a director of several banks,
including NBD Evanston. He currently sits on the boards of the following
charitable and not-for-profit corporations: the Chicago Historical Society,
Culver Educational Foundation, Evanston Hospital, and the Levy Senior Centers.
Mr. Levy is a collector of stamps, coins, watches, and other collectibles.
Hector D. Wiltshire, age 58, is President and CEO of Wiltshire
Technologies, Inc., a high technology venture capital and consulting group, and
is an experienced collector of rare stamps.
5
<PAGE>
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.
Compliance with Section 16(a) of the Exchange Act
Each of GMAI's directors and executive officers was during fiscal year
2000 late in filing the forms required by Section 16(a) of the Exchange Act.
There are no family relationships among any of GMAI's directors or executive
officers.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the last three fiscal years, the
compensation earned for services rendered in all capacities by GMAI's chief
executive officer and the other four highest-paid executive officers serving as
such at the end of whose compensation for that fiscal year was in excess of
$100,000, as well as the compensation earned by any executive officer who would
otherwise have been included in this table on the basis of salary and bonus in
fiscal year 2000 but who resigned or terminated employment during that year. The
individuals named in the table will be hereinafter referred to as the "Named
Officers." No other executive officer of GMAI received compensation in excess of
$100,000 during fiscal year 2000.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Annual Compensation
Other
Annual
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($)(3)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greg Manning, (1) 2000 225,347 None 94,922 (2)(5)
Chairman of the Board, 1999 209,839 63,148 26,120 (2)
Chief Executive Officer and 1998 188,906 None 26,123 (2)
President
------------------------------------------------------------------------------------------------------
William T. Tully, (5) 2000 152,982 None 469,938 (4)
Chief Operating Officer and 1999 161,474 31,574 722,955 (4)
Executive Vice President 1998 132,272 None None
------------------------------------------------------------------------------------------------------
James Reiman, (1) 2000 142,308 None None
Executive Vice President
------------------------------------------------------------------------------------------------------
James Smith, 2000 110,366 None None
Chief Financial Officer
------------------------------------------------------------------------------------------------------
</TABLE>
(1) See "Employment Agreements and Insurance," below.
(2) Represents (1) a non-accountable expense allowance equal to $25,000,
and (2) the value of the use of certain automobiles.
(3) GMAI has concluded that the aggregate amount of perquisites and other
personal benefits, if any, paid did not exceed the lesser of 10% of the
Named Officer's total annual salary and bonus for this fiscal year and
$50,000; so that amount is not included in the table.
(4) Represents the taxable value of exercised non-qualifying employee stock
options during the fiscal year.
(5) Mr. Tully resigned as a director and officer of GMAI during the fiscal
year.
6
<PAGE>
GMAI has no long-term incentive plan.
Option Grants Table for Fiscal 2000
The following table contains information concerning the grant of stock
options under the 1997 Stock Incentive Plan to the Named Officers during the
fiscal year. No stock appreciation rights were granted during the year.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Individual Grants
------------------------------------------------------------------------------------------------------------------
Name Number of Securities % of Underlying Exercise Price Expiration
Underlying Options/ Options/SARs Granted to ($/Share) Date
SARs Granted(#) Employees in Fiscal Year
--------------------------------- ----------------------- ------------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Greg Manning (1) 175,000 25.6% 14.25 12/09/09
------------------------------------------------------------------------------------------------------------------
James Smith (1) 15,000 2.2% 13.94 12/16/09
------------------------------------------------------------------------------------------------------------------
James Reiman (1) 5,000 0.7% 11.44 06/29/10
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options are subject to a four-year vesting period, in substantially
equal installments.
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 Named Officers in the Summary
Compensation Table above and the fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Number of Value of
Securities Unexercised In-
Underlying The-Money
Unexercised Options at June 30,
Options at June 30, 2000
Shares 2000
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized (1) Unexercisable Unexercisable (2)
---- -------- ------------ ------------- -----------------
Greg Manning None N/A 100,000/175,000 $962,500/$ 0
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William T. Tully 50,750 566,523 0/0 $0/$0
----------------------------------------------------------------------------------------------------------
James Reiman None N/A 5,000/20,000 $8,125/$24,375
----------------------------------------------------------------------------------------------------------
James Smith 2,500 41,483 5,000/25,000 $29,063/$74,213
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the aggregate market value of the shares converted by the
options on the date of exercise less the aggregate exercise price paid
by the executive.
(2) Assumes a fair market value for GMAI's common stock of $11.00, the
closing market price per share of GMAI's common stock as reported by
NASDAQ on June 30, 2000.
Compensation of Directors
GMAI 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.
7
<PAGE>
Employment Agreements and Insurance
GMAI has entered into an employment agreement with Mr. Manning,
providing for his services as President and Chief Executive Officer. The
agreement with Mr. Manning for the period ending June 30, 2000 provided, among
other things, for a salary equal to $300,000 per annum and a bonus equal to 10%
of GMAI's audited pre-tax net income between $500,000 and $2,000,000 (as
calculated excluding the formula-based bonus payable to Mr. Manning and subject
to increase by the board of directors). Mr. Manning received from GMAI a base
salary of $300,000, $210,000, $188,906 for fiscal years 2000, 1999 and 1998,
respectively, and a bonus of 0, $63,148, and $0 for fiscal years 2000, 1999 and
1998, respectively. GMAI has entered into an agreement with Mr. Manning
extending the term of his agreement through June 30, 2001, with a new base
salary of $350,000 and all other terms remaining substantially the same.
Mr. Manning's employment agreement also provides that in the event the
agreement is terminated as a result of disability (as defined therein) or death,
for 12 months GMAI will pay Mr. Manning compensation equal to two-thirds of his
annual base salary and cash bonus. Mr. Manning is eligible to participate in any
employee benefit plan and fringe benefit programs, if any, as GMAI may from time
to time provide to its employees generally.
GMAI has entered into an employment agreement with Mr. Reiman dated as
of March 31, 1999, providing for a salary of $140,000 per annum, the issuance of
certain stock options, and reimbursement of certain expenses. The agreement was
amended as of May 1, 2000, providing for, among other things, a new base salary
of $155,000 per annum and a term ending April 30, 2001.
GMAI currently maintains term life insurance policies on the lives of
certain key employees, including Mr. Manning. These policies allow for coverage
of up to $7,000,000, with the benefits payable to GMAI.
GMAI offers basic health, major medical and life insurance to its
employees. GMAI maintains an employee savings plan under Section 401(k) of the
Internal Revenue Code. Employees are eligible to participate in the plan after
six months of service and become fully vested after five years of service.
Employee contributions are discretionary to a maximum of 15% of compensation.
For the fiscal year ended June 30, 2000, GMAI contributed an amount equal to 10%
of all eligible contributions by employees, up to a maximum annual contribution
of $500 per participating employee.
GMAI has adopted no other retirement, pension or similar program.
Indemnification of Directors and Officers
GMAI's restated certificate of incorporation includes certain
provisions permitted pursuant to the New York Business Corporation Law (the
"NYBCL"), whereby GMAI officers and directors 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 GMAI 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
rescission, for breach of fiduciary duty. GMAI believes that these provisions
will make it easier for GMAI to continue to attract and retain qualified
individuals to serve as directors and officers. (For a discussion of equivalent
provisions in the event the plan of reincorporation is approved and implemented,
see "Proposal 3 - Reincorporating GMAI in Delaware", below.)
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to GMAI with
respect to the beneficial ownership of GMAI common stock as of October 20, 2000,
by (1) all persons who are beneficial owners of 5% or more of GMAI common stock,
(2) each director and nominee, (3) the Named Officers in the Summary
Compensation Table above, and (4) all directors and executive officers as a
group.
The number of shares beneficially owned is determined under rules
promulgated by the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under those rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire within 60 days of October 25, 2000, through the exercise or
conversion of any stock option, convertible security, warrant or other right.
Including those shares in the tables does not, however, constitute an admission
that the named shareholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that person's
spouse) with respect to all shares of capital stock listed as owned by that
person or entity.
Security Ownership of Certain Beneficial Owners
--------------------------------------------------------------------------------
Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Common Stock
--------------------------------------------------------------------------------
Greg Manning (1)
775 Passaic Avenue
West Caldwell, New Jersey 07006 1,743,750 18%
--------------------------------------------------------------------------------
Afinsa Bienes Tangibles, S.A.
Lagasca 88
Madrid, Spain 28001 1,353,974 14%
--------------------------------------------------------------------------------
Warren Trepp
P.O. Box 4964
Incline Village, Nevada 89450 906,573 9%
--------------------------------------------------------------------------------
Gregory N. Roberts
775 Passaic Avenue
West Caldwell, New Jersey 07006 676,626 7%
--------------------------------------------------------------------------------
(1) Includes options to purchase 100,000 shares (all of which are
exercisable) granted pursuant to the 1993 plan.
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Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Common Stock (2)
--------------------------------------------------------------------------------
Greg Manning (3)
775 Passaic Avenue
West Caldwell, New Jersey 07006 1,743,750 18%
--------------------------------------------------------------------------------
Albertino de Figueiredo (4)
Lagasca 88
Madrid, Spain 28001 1,361,474 14%
--------------------------------------------------------------------------------
Gregory N. Roberts (5)
775 Passaic Avenue
West Caldwell, New Jersey 07006 676,626 7%
--------------------------------------------------------------------------------
Scott S. Rosenblum (6)
919 Third Avenue
New York, New York 10022 29,000 *
--------------------------------------------------------------------------------
Richard M. Cohen (7)
c/o Murphy & Partners
650 Fifth Avenue, Suite 1960
New York New York 10111 13,750 *
--------------------------------------------------------------------------------
Anthony Bongiovanni (8)
104 Broadway
Denville, New Jersey 07866 19,750 *
--------------------------------------------------------------------------------
James Reiman (9)
775 Passaic Avenue
West Caldwell, New Jersey 07006 15,500 *
--------------------------------------------------------------------------------
James A. Smith (10)
775 Passaic Avenue
West Caldwell, New Jersey 07006 13,750 *
--------------------------------------------------------------------------------
Mark B. Segall (11)
Investec Ernst & Company
1 Battery Park Plaza
New York, New York 10004 3,750 *
--------------------------------------------------------------------------------
All Executive Officers and Directors,
as a group 3,844,150 39%
--------------------------------------------------------------------------------
* 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 9,889,462 shares outstanding, calculated in accordance with
Rule 13d-3(d)(1)(I) under the Exchange Act.
(3) Includes 1,600,000 shares of common stock and 143,750 shares (all of
which are exercisable within 60 days of October 25, 2000) granted
pursuant to the 1993 and 1997 Plans (but does not include options not
exercisable within 60 days of October 25, 2000, to purchase 131,250
shares of common stock).
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(4) Includes 1,320,774 shares owned by Afinsa. Mr. De Figueiredo owns 50%
of the outstanding shares of common stock of Afinsa. Also includes
options exercisable within 60 days of October 25, 2000, to purchase
7,500 shares of common stock granted pursuant to the 1997 Plan (but
does not include options not exercisable within 60 days of October 25,
2000, to purchase 7,500 shares of common stock).
(5) Does not include options not exercisable within 60 days of October 25,
2000, to purchase 150,000 shares of common stock.
(6) Includes options exercisable within 60 days of October 25, 2000, to
purchase 25,000 shares of common stock (but does not include options
not exercisable within 60 days of October 25, 2000, to purchase 20,000
shares of common stock) granted pursuant to the 1997 Plan.
(7) Includes options exercisable within 60 days of October 25, 2000, to
purchase 13,750 shares of common stock (but does not include options
not exercisable within 60 days of October 25, 2000, to purchase 11,250
shares of common stock) granted pursuant to the 1997 Plan.
(8) Includes options exercisable within 60 days of October 25, 2000, to
purchase 18,750 shares of common stock (but does not include options
not exercisable within 60 days of October 25, 2000, to purchase 26,250
shares of common stock) granted pursuant to the 1997 Plan.
(9) Includes 500 shares of common stock owned by members of Mr. Reiman's
immediate family and options exercisable within 60 days of October 25,
2000, to purchase 5,000 shares of common stock (but does not include
options not exercisable within 60 days of October 25, 2000, to purchase
20,000 shares of common stock) granted pursuant to the 1997 Plan.
(10) Includes options exercisable within 60 days of October 25, 2000, to
purchase 8,750 shares of common stock (but does not include options not
exercisable within 60 days of October 25, 2000, to purchase 21,250
shares of common stock) granted pursuant to the 1997 Plan.
(11) Includes options exercisable within 60 days of October 25, 2000, to
purchase 3,750 shares of common stock (but does not include options not
exercisable within 60 days of October 25, 2000, to purchase 11,250
shares of common stock) granted pursuant to the 1997 Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GMAI accepts rare stamps and other collectibles for sale at auction on
a consignment basis from Collectibles Realty Management, Inc. ("CRM"). Those
stamps and collectibles have been auctioned by GMAI or sold at private treaty
under substantially the same terms as for third party customers. GMAI charges
CRM a seller's commission. In the case of auction, the hammer price of the sale,
less the seller's commission (for lots valued at under $100,000; no seller's
commission is payable for lots valued at over $100,000), is paid to CRM upon
successful sale, and in the case of private treaty, the net price after selling
commissions is paid to CRM. For the year ended June 30, 2000, such auction and
private treaty sales (net of commission) were not material.
Scott S. Rosenblum, a director of GMAI, is a partner of the law firm
Kramer Levin Naftalis & Frankel LLP, which provides legal services to GMAI.
Anthony L. Bongiovanni, Jr., also a director of GMAI, is president of Micro
Strategies, Incorporated, which provides computer services to GMAI. Richard M.
Cohen, also a director, provided consulting services to GMAI during the fiscal
year.
The approximate amounts paid for services rendered by these parties for
the year ended June 30, 2000 were, in the case of Kramer Levin Naftalis &
Frankel LLP, $424,000; in the case of Micro Strategies, Incorporated, $464,000;
and, in the case of Mr. Cohen, $40,000.
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For the year ended June 30, 2000, sales of approximately $5,995,000
(representing 9% of revenues) were made to an equity method investee of GMAI,
former stockholders of Spectrum Numismatics International, Inc. ("Spectrum")
and/or entities in which they had an ownership interest, all of whom are current
stockholders of GMAI. Payments made during the year to these persons and
entities approximated $2,300,000.
Before GMAI acquired the company, Spectrum was indebted in the amount
of approximately $5,000,000 to one of its stockholders (who is a current
stockholder of GMAI). This indebtedness was evidence by three secured promissory
notes, payable on demand. These notes were paid in full during fiscal 2000.
Interest expense associated with these notes were approximately $242,000 for the
year ended June 30, 2000. Additionally, Spectrum paid this individual
approximately $95,000 for consulting and debt guarantee fees for the year.
In the normal course of business, Afinsa has consigned material to, and
purchased material from, GMAI. As of June 30, 2000, Afinsa had an outstanding
accounts receivable balance of approximately $614,000. During fiscal 2000,
Afinsa purchased product for an aggregate purchase price of approximately
$254,000.
GMAI acts as an agent of Afinsa with respect to its stock subscription
agreement with GMAI-Asia.com, Inc. Pursuant to this agreement, GMAI receives
funds from Afinsa and advances such funds to GMAI-Asia.com, Inc. on an
"as-needed" basis. GMAI does not segregate these funds. At June 30, 2000, GMAI
owed to GMAI-Asia.com, Inc., on Afinsa's behalf, approximately $2.0 million.
The board of directors has agreed to pay Mr. Manning a fee in
connection with Mr. Manning's guarantee of certain indebtedness of Spectrum to
Bank of America, equal to 3% per annum of the average loan balance outstanding
each month. During the year ended June 30, 2000, GMAI paid Mr. Manning
approximately $68,000 in debt guarantee fees.
PROPOSAL 2 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The board of directors has appointed the firm of Amper, Politziner &
Mattia P.A. as GMAI's independent accountants for the fiscal year ending June
30, 2001. At the annual meeting shareholders will be asked to ratify this
appointment. This requires the affirmative vote of a majority of the shares of
common stock present at the annual meeting (or represented by proxy) and
entitled to vote thereon. In the event at any time during the year the board of
directors believes that the appointment of a different independent accounting
firm would be in the best interests of GMAI, the board of directors may in its
discretion appoint that other firm.
The board of directors recommends that shareholders vote FOR
ratification of the appointment of Amper, Politziner & Mattia P.A.
GMAI expects that a representative of Amper Politziner & Mattia P.A.
will be present at the annual meeting. This representative will have the
opportunity to make a statement if Amper, Politziner & Mattia P.A. wishes, and
will be available to respond to appropriate questions.
PROPOSAL 3 - REINCORPORATING GMAI IN DELAWARE
The board of directors has unanimously approved and declared advisable
that GMAI change its state of incorporation from New York to Delaware. The board
of directors believes that this change in the domicile would for several reasons
be in the best interests of GMAI and its shareholders.
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Principally, the board of directors believes the more favorable
corporate environment afforded by Delaware will enable it to compete more
effectively with other public companies, most of which are incorporated in
Delaware.
Delaware has long been the leading state in adopting, construing, and
implementing comprehensive and flexible corporate laws that respond to the legal
and business needs of corporations. As a result, the Delaware General
Corporation Law is widely regarded to be the best-defined body of corporate law
in the U.S. The Delaware legislature is particularly sensitive to corporate law
issues and is especially responsive to developments in modern corporate law, and
Delaware courts have developed considerable expertise in construing Delaware's
corporate law. Consequently, the board of directors anticipates Delaware law
would provide greater predictability in GMAI's legal affairs than is currently
available under New York law.
The interests of GMAI's board of directors, management, and affiliated
shareholders in voting on the reincorporation proposal may not be the same as
those of unaffiliated shareholders. Delaware law does not afford minority
shareholders some of the rights and protections available under New York law. A
discussion of the principal differences between New York and Delaware law as
they affect shareholders is set forth below.
The reincorporation proposal may have the effect of deterring hostile
takeover attempts. A hostile takeover attempt may have a positive or a negative
effect on GMAI and its shareholders, depending on the circumstances surrounding
a particular takeover attempt. Takeover attempts that have not been negotiated
or approved by the board of directors of a corporation can seriously disrupt the
business and management of a corporation and result in a transaction that is
less than favorable to all of the shareholders than a board-approved transaction
would have been. Board-approved transactions may be carefully planned and
undertaken at an opportune time in order to obtain maximum value for the
corporation and all of its shareholders with due consideration to matters such
as recognition or postponement of gain or loss for tax purposes, the management
and business of the acquiring corporation and maximum strategic deployment of
corporate assets.
The board of directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences described above and may frequently
provide all shareholders with considerable value for their shares. However, the
board of directors believes that the potential disadvantages of unapproved
takeover attempts are sufficiently great that prudent steps to reduce the
likelihood of such takeover attempts are in the best interests of GMAI and its
shareholders. Accordingly, the reincorporation plan includes certain elements
that may have the effect of discouraging or deterring hostile takeover attempts.
The board of directors believes that adopting these measures will enable the
board of directors to consider fully any proposed takeover attempt and negotiate
terms that maximize the benefit to GMAI or its shareholders.
Notwithstanding the belief of the board of directors that the
takeover-deterring elements would benefit GMAI shareholders, shareholders should
recognize that one of the effects of these elements may be to discourage a
future attempt to acquire control of GMAI that is not approved by the board of
directors but which a substantial number and perhaps even a majority of GMAI
shareholders might believe to be in their best interests or in which
shareholders might receive a substantial premium for their shares over the
current market price. As a result, shareholders who might desire to participate
in such transaction may not have an opportunity to do so.
GMAI's current restated certificate of incorporation (the "New York
Certificate") and bylaws (the "New York Bylaws") do not prohibit action by
written consent of shareholders. This provision would be included in GMAI's new
organizational documents following reincorporation.
In considering the reincorporation proposal, shareholders should be
aware that the overall effect of certain of the proposed changes might be to
make it more difficult for holders of a majority of the outstanding shares of
common stock to change the composition of the board of directors and to remove
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existing management in circumstances where a majority of the shareholders may be
dissatisfied with the performance of the incumbent directors or otherwise desire
to make changes.
The new provisions in GMAI's organizational documents could make a
proxy contest a less effective means of removing or replacing existing directors
or could make it more difficult to effect a change in control of GMAI that is
opposed by the board of directors. This strengthened tenure and authority of the
board of directors could enable the board of directors to resist change and
otherwise thwart the desires of a majority of the shareholders. Because this
provision may have the effect of continuing the tenure of the current board of
directors, the board of directors has recognized that the individual directors
have a personal interest in this provision that may differ from those of the
shareholders. However, the board of directors believes that these provisions'
primary purpose is to ensure that the board of directors will have sufficient
time to consider fully any proposed takeover attempt in light of the short- and
long-term benefits and other opportunities available to GMAI and, to the extent
the board of directors determines to proceed with the takeover, to effectively
negotiate terms that would maximize the benefits to GMAI and its shareholders.
The board of directors has considered the potential disadvantages and
believes that the potential benefits of the provisions included in the proposed
organizational documents outweigh the possible disadvantages. In particular, the
board of directors believes that enabling the board to fully consider and
negotiate proposed takeover attempts, as well as the greater sophistication,
breadth, and certainty of Delaware law, make the proposed reincorporation
beneficial to GMAI, its management, and its shareholders.
The proposal to include these anti-takeover provisions in the proposed
reincorporation does not reflect knowledge on the part of the board of directors
or management of any currently proposed takeover or other attempt to acquire
control of GMAI. Management may in the future propose other measures designed to
discourage takeovers apart from those proposed in this proxy statement, if
warranted from time to time in the judgment of the board of directors.
Authorized Shares of Capital Stock
The proposed reincorporation would be accomplished by merging GMAI into
a newly formed Delaware corporation (the "Delaware Company") that, just before
the merger, will be a wholly-owned subsidiary of GMAI. The merger will be
pursuant to a merger agreement, a copy of which is attached as Exhibit A to this
proxy statement. Upon the effective date of the merger, the Delaware Company's
name will still be "Greg Manning Auctions, Inc." The reincorporation will not
result in any change in GMAI's business, assets or liabilities, will not cause
its corporate headquarters to be moved, and will not result in any relocation of
management or other employees.
As soon as the reincorporation becomes effective, the Delaware Company
will issue a press release announcing that the transaction has occurred. At the
same time, each outstanding share of GMAI common stock will automatically
convert into one share of common stock of the Delaware Company, and GMAI
shareholders will automatically become shareholders of the Delaware Company on
the following terms:
o The conversion will be on a one-for-one basis.
o Each share of GMAI common stock that is outstanding at the effective
date will become one share of common stock of the Delaware Company.
o Each share of common stock held in the treasury of GMAI will become
a share of treasury stock in the Delaware Company.
In addition, each outstanding option, right or warrant to acquire
shares of GMAI common stock will be converted into an option, right or warrant
to acquire an equal number of shares of common stock of
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the Delaware Company, under the terms and conditions as the original options,
rights or warrants. All of GMAI's employee benefit plans will be continued by
the Delaware Company following reincorporation. Shareholders should recognize
that approval of the proposed reincorporation will constitute approval of
adoption and assumption of those plans by the Delaware Company.
Shareholders do not need to take any action to exchange their stock
certificates for new Delaware Company stock certificates. Upon completion of the
reincorporation, stock certificates representing GMAI shares will automatically
represent an equal number of Delaware Company shares. Shareholders should not
destroy their old certificates and should not send their old certificates to
GMAI or GMAI's transfer agent, either before or after the effective date of
reincorporation. After reincorporation, those who were formerly GMAI
shareholders may continue to make sales or transfers using their GMAI stock
certificates. The Delaware Company will issue new certificates representing
shares of the Delaware Company common stock for transfers occurring after the
reincorporation. On request, the Delaware Company will issue new certificates to
anyone who holds GMAI stock certificates. Any request for new certificates will
be subject to normal stock transfer requirements, including proper endorsement,
signature guarantee, if required, and payment of applicable taxes.
Shareholders whose shares of GMAI common stock were freely tradable
before reincorporation will own shares of the Delaware Company that are freely
tradable after reincorporation. Similarly, any shareholders holding securities
with transfer restrictions before reincorporation will hold shares of the
Delaware Company that have the same transfer restrictions after reincorporation.
For purposes of computing the holding period under Rule 144 of the Securities
Act, those who hold Delaware Company stock certificates will be deemed to have
acquired their shares on the date they originally acquired their GMAI shares.
After reincorporation, the Delaware Company will continue to be a
publicly held company, and like GMAI shares, shares of the Delaware Company will
be quoted on the Nasdaq National Market under the symbol "GMAI". The Delaware
Company will also file with the SEC and provide to its shareholders the same
types of information that GMAI has previously filed and provided.
Required Vote
Under New York law, the affirmative vote of the holders of at least
two-thirds of the shares of GMAI common stock outstanding on the record date is
required for approval of reincorporation. As a result, abstentions and broker
non-votes will have the same effect as negative votes. If approved by the
shareholders, it is anticipated that reincorporation would be completed as soon
thereafter as practicable. The reincorporation may be abandoned or the merger
agreement may be amended (with certain exceptions), either before or after
shareholder approval has been obtained, if in the opinion of the board of
directors circumstances arise that make such action advisable, except that any
amendment that would effect a material change from the organizational document
provisions discussed in this proxy statement would require further approval by
the holders of at least two-thirds of the shares of GMAI common stock
outstanding on the record date.
The New York Certificate provides that the affirmative vote of 75% of
the voting power of GMAI capital stock is required to authorize a business
combination with any other entity. This requirement does not, however, apply to
any transaction approved by two-thirds of the board of directors, as long as a
majority of the board of directors constitutes "continuing directors." Given
that the reincorporation was approved by more than two-thirds of the board of
directors, all of which constitute continuing directors, as defined in the New
York certificate, the affirmative vote of two-thirds of the outstanding shares
of GMAI common stock would be sufficient to approve the reincorporation.
Significant Changes Caused by Reincorporation
In general, GMAI's corporate affairs are governed at present by the
Business Corporation Law of New York (the "New York Law") and by the New York
Certificate and the New York Bylaws, which were adopted pursuant to New York
law. The New York Certificate and New York Bylaws are available for
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inspection during business hours at GMAI's principal executive offices. In
addition, copies may be obtained by writing to GMAI at Greg Manning Auctions,
Inc., 775 Passaic Avenue, Caldwell, NJ 10016, Attention: Corporate Secretary.
If shareholders approve the reincorporation proposal, GMAI will merge
into, and its business will be continued by, the Delaware Company. Following the
merger, issues of corporate governance and control would be controlled by the
General Corporation Law of Delaware ("Delaware Law"), rather than New York Law.
The New York Certificate and New York Bylaws will, in effect, be replaced by the
Certificate of Incorporation of the Delaware Company (the "Delaware
Certificate") and the bylaws of the Delaware Company (the "Delaware Bylaws"),
copies of which are attached as Exhibit B and Exhibit C, respectively, to this
proxy statement. Accordingly, the differences among these documents and between
Delaware Law and New York Law are relevant to your decision whether to approve
the reincorporation proposal.
Those differences between New York Law and Delaware Law and between the
various organizational documents that the board of directors, with the advice of
counsel, considers to be the most significant are discussed below. Shareholders
are advised that many provisions of Delaware Law and New York Law may be subject
to differing interpretations, and that those offered in this proxy statement may
be incomplete in certain respects. The following discussion is not a substitute
for direct reference to the statutes themselves or for professional guidance as
to how to interpret them. In addition, the following discussion is qualified in
its entirety by reference to Delaware Law, New York Law, case law applicable in
Delaware and in New York, and the organizational documents of each of the
companies. Shareholders are requested to read the following discussion in
conjunction with the merger agreement, the Delaware Certificate and the Delaware
Bylaws attached to this proxy statement.
Amendment of Charter
Delaware Law allows a board of directors to recommend that shareholders
amend the certificate of incorporation, and a majority of the shares entitled to
vote at a shareholders' meeting are normally enough to approve that amendment.
Under New York Law, except for certain ministerial changes to the certificate of
incorporation that the board of directors may authorize and except as otherwise
required by the certificate of incorporation, the board of directors recommends
a charter amendment for approval by shareholders, and a majority of the shares
entitled to vote at a shareholders' meeting is enough to approve that amendment.
Both laws require that a majority of the holders of any particular class of
stock must approve the amendment if it would have an adverse effect on the
holders of that class. In addition, both laws allow a corporation to require a
vote larger than a majority on special types of issues.
The New York Certificate provides that the affirmative vote of at least
75% of the combined voting power of then outstanding shares of GMAI capital
stock entitled to vote is required to amend, alter, change, or repeal any of the
provisions of certain articles of the New York Certificate. The Delaware
Certificate provides that any amendment to the Delaware Certificate may only be
effected by the affirmative vote of the holders of at least a majority of the
voting power of the then outstanding voting stock of the Delaware Company.
The New York Bylaws provide that they may be altered, amended or
repealed, or new bylaws may be adopted, by the board of directors when that
power is conferred upon the board of directors by the Certificate of
Incorporation. The New York Certificate confers that power upon the board of
directors, subject to the power of the shareholders at the time entitled to vote
to amend or repeal by-laws made by the board of directors. The Delaware
Certificate will specifically permit the board of directors to amend the
Delaware Bylaws.
The indemnification provisions of the New York Bylaws may only be
amended or repealed by the affirmative vote of at least 75% of the combined
voting power of all the issued and outstanding shares of GMAI capital stock
entitled to vote generally in the election of directors The board of directors
of the Delaware Company may adopt, amend or repeal any of the Delaware Bylaws,
subject to the power of the
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shareholders of the Delaware Company to adopt by-laws and to amend or repeal
by-laws adopted by the board of directors.
Who May Call a Special Meeting of Shareholders
Under both the New York Law and the Delaware Law, the board of
directors or anyone authorized in the charter or bylaws may call a special
meeting of shareholders. Currently, the New York Bylaws provide that a special
meeting can be called only by the Chairman of the Board or the President, or by
the President or the Secretary upon the written consent of a majority of the
board of directors. The President must call a special meeting of shareholders
upon the written request of shareholders who together own of record a majority
of the outstanding stock of any class entitled to vote at such meeting. The
Delaware Bylaws provide that a meeting of shareholders may be called by the
board of directors, the Chairman of the Board, the Chief Executive Officer or
the holders of at least 20% of the outstanding shares entitled to vote at that
meeting. Pursuant to the Delaware Bylaws, if the meeting is called by a person
or persons other than the board of directors (that is, by the Chairman of the
Board or the Chief Executive Officer), the board of directors must determine the
time and the place of that meeting, which must be held between 35 and 120 days
after receipt of the request for the meeting.
Action by Written Consent of Shareholders in Lieu of a Shareholder Vote
The New York Law permits a shareholder action in lieu of a meeting only
by unanimous written consent of those shareholders who would have been entitled
to vote on a given action at a meeting, unless the certificate of incorporation
permits that action to be taken by the holders of outstanding shares having at
least the minimum number of votes required to authorize the action at a meeting
at which all shares entitled to vote thereon were present and voted. The New
York Certificate does not contain such a provision. The Delaware Law, on the
other hand, states that unless the certificate of incorporation provides
otherwise, shareholders may act by written consent of at least the minimum
number of votes required to authorize that action at a meeting at which all
shares entitled to vote thereon were present and voted. The Delaware Certificate
states that shareholders may not take action by written consent, unless the
action to be effected by written consent of the shareholders and the taking of
that action by written consent have been expressly approved in advance by the
board of directors of the Corporation.
Eliminating the ability of shareholders to take action by written
consent may lengthen the time required to take shareholder actions, as certain
actions by written consent are not subject to the minimum notice requirement for
a meeting of shareholders. It will also deter hostile takeover attempts, due to
the lengthened shareholder approval process. The board of directors believes
this provision, like the other provisions to be included in the Delaware
Certificate and Delaware Bylaws, will enhance the board of directors' ability to
fully consider and effectively negotiate in the context of a takeover attempt.
Right of Shareholders to Inspect Shareholder List
Under the New York Law, a shareholder of record may inspect the list of
shareholders of record if at least five days previously it issued a written
demand to do so. A corporation may deny a shareholder's demand if the
shareholder refuses to give an affidavit that its inspection is not for certain
purposes unrelated to company business and that the shareholder has not been
involved in the last five years in selling or offering to sell a list of record
shareholders. Under the Delaware Law, any shareholder may, upon making a demand
under oath stating the purpose thereof, inspect the shareholders' list for any
purpose reasonably related to that person's interest as a shareholder. In
addition, for at least ten days prior to each shareholders' meeting, as well as
at the meeting, a Delaware corporation must make available for examination a
list of shareholders entitled to vote at the meeting.
Vote Required for Certain Transactions
Until February 1998, the New York Law required the holders of at least
two-thirds of the outstanding stock of a New York corporation to approve certain
mergers, consolidations or sales of all or
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substantially all the corporation's assets that may occur outside the ordinary
course of business. Since February 1998, a New York corporation then in
existence, which would include GMAI, may provide in its certificate of
incorporation that the holders of a majority of the outstanding stock may
approve such transactions. GMAI has not, however, adopted such a provision in
its certificate of incorporation, and so the holders of at least two-thirds of
GMAI's outstanding stock must approve such transactions.
Under the Delaware Law and the Delaware Certificate, holders of a
majority of the outstanding stock entitled to vote on such transactions have the
power to approve a merger, consolidation, or sale of all or substantially all
the assets. Notwithstanding the foregoing, the vote of the shareholders of the
surviving corporation is not required to authorize a merger if these three
conditions are met:
o the merger agreement does not amend of the surviving corporation's
certificate of incorporation; and
o each share of stock of the surviving corporation that is outstanding
or in the treasury immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of the
surviving corporation after the effective date; and
o the merger results in no more than a 20% increase in its outstanding
common stock.
Special vote requirements may apply to certain business combinations
with interested shareholders. See the discussion of these requirements below
under the heading "Business Combinations with Interested Shareholders."
Classified Board
Both the New York Law and the Delaware Law permit "classified" boards
of directors, which means the directors have staggered terms that do not all
expire at once. The New York Law permits as many as four classes, the Delaware
Law only up to three. GMAI now has three classes of directors, and the Delaware
Company will also have three.
Removal of Directors by Shareholders
Under the New York Law, directors may be removed for cause by the
shareholders, or, if the certificate of incorporation or bylaws provide, by
either the shareholders or the directors. Furthermore, if the certificate of
incorporation or bylaws so provide, directors may be removed without cause by a
vote of the shareholders. The New York Certificate provides that directors may
be removed only for cause and only by majority vote of the outstanding shares of
GMAI capital stock entitled to vote generally in the election of directors,
voting together as a single class. After the reincorporation, directors under
the Delaware Law would generally be subject to removal with or without cause by
a majority of the shareholders, unless the certificate of incorporation provides
otherwise, but in a Delaware corporation with a classified board, unless the
certificate of incorporation provides otherwise, directors can only be removed
by shareholders for cause. Under the Delaware Certificate, the directors would
only be subject to removal for cause, by majority vote.
Limitation of Directors' Liability
Both states permit a corporation to limit a director's personal
liability for actions taken in that director's official capacity. Under the New
York Law, a director is not liable to the corporation for the benefit of its
creditors or shareholders for damages if the director has acted in good faith
and with the same degree of care that an ordinarily prudent person would
exercise in similar circumstances. The New York Law also permits a corporation
to include in its certificate of incorporation a provision eliminating or
limiting the personal liability of a director, with certain specific exceptions,
to the corporation or its shareholders for damages for any breach of duty in
that capacity. Under the Delaware Law limits on a director's liability must be
addressed in the certificate of incorporation. The New York Certificate limits
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monetary liability to the fullest extent permitted by the New York Law, and the
Delaware Certificate will likewise limit such liability to the fullest extent
permitted by the Delaware Law. However, in some cases directors may be liable
despite these limitations. The New York Certificate limits liability of a
director, except for the liability of any director if a judgment or other final
adjudication adverse to that director establishes that (1) that director's acts
or omissions were in bad faith or involved intentional misconduct or a knowing
violation of the law, (2) that director personally gained a financial profit or
other advantage to which that director was not legally entitled, or (3) that
director's acts were in violation of Section 719 of the New York Law. The
Delaware Law forbids any limitation of liability if (1) the director breached
the duty of loyalty to the corporation or its shareholders, (2) that director's
acts or omissions were not in good faith or involved intentional misconduct or a
knowing violation of law, (3) that director received an improper personal
benefit from the corporation, or (4) that director authorized a dividend or
stock repurchase that was forbidden by the Delaware Law.
Indemnification of Directors and Officers; Insurance
With some variations, both the New York Law and the Delaware Law allow
a corporation to "indemnify," that is, to make whole, any person who is or was a
director or officer of the corporation if that person is held liable for
something that person did or failed to do in an official capacity. Besides
covering court judgments, out-of-court settlements, fines, and penalties, both
laws also allow the corporation to advance certain reasonable expenses the
person incurs or to reimburse the person's expenses after they are incurred,
even if liability is not actually proven. The right to indemnification under
both laws does not normally exclude other rights of recovery the indemnified
person may have.
Additionally, each of the two laws permits a corporation to purchase
insurance for its directors and officers against some or all of the costs of
such indemnification or against liabilities arising from actions and omissions
of the insured person, even though the corporation may not have power to
indemnify the person against such liabilities. The New York Law, however,
restricts the kinds of claims that may be made under insurance purchased by the
corporation against these liabilities. For example, there would be no insurance
coverage if the person to be indemnified was guilty of deliberate dishonesty and
that dishonesty was material to the event that produced the claim, or if the
person gained some financial profit or other advantage to which he or she was
not legally entitled.
Neither the New York Law nor the Delaware Law permits indemnification
of a director or officer if a court finds the person liable to the corporation
itself, unless the court determines otherwise. Furthermore, if the corporation
sues the person because of some act or omission, the corporation does not need
to indemnify the person unless a court determines the person was not liable. In
addition, the New York Law and Delaware Law generally require that the person to
be indemnified must have acted in good faith and in a manner he or she
reasonably believed was consistent with the best interests of the corporation.
The New York Bylaws currently provide for indemnification to the
fullest extent permitted by the New York Law.
The Delaware Bylaws contain broad indemnification provisions (including
indemnification except in the case of a final adjudication that the acts in
question were committed in bad faith, or were the result of active or deliberate
dishonesty, and were material to the action so adjudicated, or that the director
or officer personally gained a financial profit to which that person was not
legally entitled; advancing of funds; and notice prior to any elimination of the
provision, among other things), except to the extent expressly prohibited by the
Delaware Law.
Transactions with Interested Directors
New York law provides several methods for establishing the validity of
transactions between a corporation and interested directors, including a vote by
the uninterested directors. The comparable provision of Delaware law provides
that no transaction between a corporation and an interested director is void or
voidable solely because such director is present at or participates in the
meeting or because that
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director's votes are counted if the material facts of that director's interest
are known to the board of directors and the board of directors in good faith
authorizes the transaction by vote of a majority of the disinterested directors,
or if that director's interest is disclosed to shareholders and the shareholders
in good faith approve the transaction.
Loans and Guarantees of Obligations for Directors
Under the New York Law, a corporation may not lend money to or
guarantee the obligation of a director unless (1) the shareholders (other than
the interested director) approve the transaction or (2) the certificate of
incorporation provides that the board may approve any such loan or guarantee
that it determines will benefit the corporation. The New York Certificate makes
no provision for approval by the board of directors of such a loan or guaranty.
For purposes of shareholder approval, the holders of a majority of the votes of
the shares entitled to vote constitute a quorum, but shares held by directors
who are benefited by the loan or guarantee are not included in the quorum. Under
the Delaware Law, a board of directors may authorize loans or guarantees of
indebtedness to, or otherwise assist, employees, officers, and directors
whenever, in the judgment of the board of directors, such a loan, assistance or
guaranty may reasonably be expected to benefit the corporation.
Issuance of Rights and Options to Directors, Officers, and Employees
Although the Delaware Law and the New York Law differ with respect to
whether shareholder approval is required is required in connection with the
issuance of stock rights or stock options (or plans to issue rights or options)
to directors, officers, or employees, the rules of the Nasdaq National Market,
on which GMAI common stock is quoted and on which the stock of the Delaware
Company will be quoted, require (with certain limited exceptions) shareholder
approval of any plans under which such rights or options may be issued.
Consideration for Shares
Under the New York Law, consideration for the issuance of shares may
consist of money or other property, tangible or intangible, labor or services
actually received, a binding obligation to pay the purchase price, a binding
obligation to perform services, or any combination of the above. Stock
certificates may not be issued until the amount of consideration determined to
be stated capital has been paid in the form of cash, services rendered, personal
or real property, or any combination of these, plus consideration for the
balance, if any, which may include the above-referenced binding obligations.
Under the Delaware Law a corporation can receive cash, services, personal or
real property, leases of real property or any combination of these as payment in
full or in part for the shares. A purchaser of shares under the Delaware Law may
pay an amount equal to or greater than the par value of those shares if the
corporation receives a binding obligation of the purchaser to pay the balance of
the purchase price.
Dividends; Redemption of Stock
Subject to its charter provisions, under both the New York Law and the
Delaware Law, a corporation may generally pay dividends, redeem shares of its
stock or make other distributions to shareholders if the corporation is solvent
and would not become insolvent because of the dividend, redemption, or
distribution. The assets supplied to such a distribution may not be greater than
the corporation's "surplus."
Under New York Law, dividends may be paid or distributions made out of
surplus only, so that the net assets of the corporation remaining after any such
payment or distribution must be at least equal to the amount of surplus. The New
York Law defines surplus as the excess of net assets over stated capital and
permits the board to adjust stated capital. The Delaware Law defines surplus as
the excess of net assets over capital and permits the board to adjust capital.
If there is no surplus, the Delaware Law allows the corporation to apply net
profits from the current or preceding fiscal year, or both, unless the
corporation's
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net assets are less than the capital represented by issued and outstanding stock
that has a preference on any distribution of assets.
In general, with certain restrictions, the New York Law permits a
corporation to provide in its certificate of incorporation for redemption of one
or more classes or series of its shares. One such restriction provides that
common stock may be redeemed, with certain exceptions, only when the corporation
has an outstanding class of common shares that is not subject to redemption. The
Delaware Law permits redemption of a corporation's common stock only when, among
other things, no class of preferred stock is outstanding, with certain
exceptions.
Appraisal Rights
Generally, "appraisal rights" entitle dissenting shareholders to
receive the fair value of their shares in a merger or consolidation of a
corporation or in a sale of all or substantially all its assets. The New York
Law also extends appraisal rights to an exchange of a corporation's shares. The
New York Law provides that dissenting shareholders have no appraisal rights if
their shares are listed on the New York Stock Exchange or another national
securities exchange. However, in the case of shares not listed on an exchange,
appraisal rights under the New York Law allow a voting and dissenting
shareholder of a New York corporation, with various exceptions, to receive fair
value for its shares in such transactions. One exception is a merger between a
parent corporation and its subsidiary when the parent owns at least 90% of the
subsidiary. In this case, a shareholder of the parent corporation has no
appraisal rights. On the other hand, appraisal rights are available to
shareholders who are not allowed to vote on a merger or consolidation and whose
shares will be cancelled or exchanged for cash or something else of value other
than shares of the surviving corporation or another corporation. When appraisal
rights are available, the shareholder may have to request the appraisal and
follow other required procedures.
Similarly, under the Delaware Law, appraisal rights are not available
to a shareholder if, among other things, the corporation's shares are listed on
a national securities exchange or, as is the case with GMAI common stock and as
will be the case with the Delaware Company's common stock, listed for quotation
on the Nasdaq National Market, held by more than 2,000 shareholders of record,
or if the corporation will be the surviving corporation in a merger that does
not require the approval of the surviving corporation's shareholders. However,
regardless of the foregoing, a dissenting shareholder in a merger or
consolidation has appraisal rights under the Delaware Law if the transaction
requires him or her to exchange shares for anything of value other than one or
more of the following:
o shares of stock of the surviving corporation or of a new corporation
that results from the merger or consolidation;
o shares of another corporation that will be listed on a national
securities exchange, authorized for quotation on the NASDAQ National
Market, or held by more than 2,000 shareholders of record after the
merger or consolidation occurs; and
o cash instead of fractional shares of the surviving corporation or
another corporation.
Business Combinations with Interested Shareholders
Provisions in both the New York Law and the Delaware Law may help to
prevent or delay changes of corporate control. In particular, both the New York
Law and the Delaware Law restrict or prohibit an interested shareholder from
entering into certain types of business combinations unless the board of
directors approves the transaction in advance.
Under the New York Law, an interested shareholder is generally
prohibited from entering into certain types of business combinations with a New
York corporation for a period of five years after becoming an "interested
shareholder," unless the board of directors approved either the business
combination or the acquisition of stock by the interested shareholder
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before the interested shareholder acquired its shares. An "interested
shareholder" under the New York Law is generally a beneficial owner of at least
20% of the corporation's outstanding voting stock. "Business combinations" under
the New York Law include the following:
o mergers and consolidations between corporations or with an
interested shareholder;
o sales, leases, mortgages or other dispositions to an interested
shareholder of assets with an aggregate market value which either
equals 10% or more of the corporation's consolidated assets or
outstanding stock, or represents 10% or more of the consolidated
earning power or net income of the corporation;
o issues and transfers to an interested shareholder of stock with an
aggregate market value of at least 5% in relation to the aggregate
market value of the outstanding stock of the corporation;
o liquidation or dissolution of the corporation proposed by or in
connection with an interested shareholder;
o reclassification or recapitalization of stock that would increase
the proportionate stock ownership of an interested shareholder; and
o the receipt by an interested shareholder of benefit from loans,
guarantees, pledges or other financial assistance or tax benefits
provided by the corporation.
The New York Law allows such a business combination to take place five
or more years after the interested shareholder became an interested shareholder
if the transaction is approved by a majority of the voting stock not owned by
the interested shareholder or by an affiliate or associate of the interested
shareholder. Business combinations are also permitted when certain statutory
"fair price" requirements are met and in certain other circumstances.
Section 203(a) of the Delaware Law generally prohibits an interested
shareholder from entering into certain types of business combinations with a
Delaware corporation for three years after becoming an interested shareholder
unless:
o before the shareholder became an interested shareholder, the board
of directors approved the business combination or the transaction
that resulted in the shareholder becoming an interested shareholder;
o after the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder owned at least
85% of the voting stock of the corporation outstanding at the time
the transaction commenced, subject to technical calculation rules;
or
o on or after the time the interested shareholder became an interested
shareholder, the board of directors approved the business
combination, and at least two-thirds of the outstanding voting stock
that is not owned by the interested shareholder also ratified the
business combination at a shareholders' meeting.
An "interested shareholder" under the Delaware Law is any person other
than the corporation and its majority-owned subsidiaries who owns at least 15%
of the outstanding voting stock or who owned at least 15% of the outstanding
stock within the preceding three years, and this definition includes affiliates
of the corporation. Briefly described, the prohibited combinations include:
o mergers or consolidations;
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o sales, leases, exchanges or other dispositions of 10% or more of (1)
the aggregate market value of all assets of the corporation or (2)
the aggregate market value of all the outstanding stock of the
corporation;
o issuances or transfers by the corporation of its stock that would
increase the proportionate share of stock owned by the interested
shareholder;
o receipt by the interested shareholder of the benefit of loans,
advances, guarantees, pledges or other financial benefits provided
by the corporation; and
o any other transaction, with certain exceptions, that increases the
proportionate share of the stock owned by the interested
shareholder.
Although the Delaware Law permits a corporation to elect not to be
governed by the provisions of Section 203(a), the board of directors has
determined that it would be in the best interests of GMAI to be subject to the
protections afforded by these provisions and, accordingly, the Delaware
Certificate does not include a waiver of the Section 203(a) provisions.
The Delaware Law, like the comparable provision of the New York Law,
may have anti-takeover effects as a result of these restrictions on "business
combinations" with "interested shareholders." The reincorporation is not being
proposed in order to prevent a business combination or change in control and the
board of directors is not aware of any current attempt to acquire control of us
or to obtain representation on our board of directors.
Proxies
Under New York law, a proxy cannot be voted or acted upon after 11
months from its date unless the proxy provides for a longer period. Under
Delaware law a proxy cannot be voted or acted upon after three years from its
date unless the proxy provides for a longer period.
Capitalization; Blank Check Preferred
GMAI's capital stock currently consists of 40,000,000 authorized shares
of common stock, $.01 par value, of which 10,061,562 were issued and 9,889,462
were outstanding as of October 25, 2000, and 10,000 authorized shares of
preferred stock, $.01 par value, none of which were issued and outstanding as of
October 25, 2000.
Upon effectiveness of the reincorporation, the Delaware Company will
have the same number of outstanding shares of common stock and preferred stock
that GMAI had outstanding immediately prior to the reincorporation.
Under the Delaware Certificate, as under the New York Certificate, the
board of directors may authorize the issuance of preferred stock in connection
with various corporate transactions, including corporate partnership
arrangements. The board of directors may also authorize the issuance of
preferred stock for the purpose of adopting a shareholder rights (or "poison
pill") plan. Under both the New York Certificate and the Delaware Certificate,
the board of directors has the authority to determine the designations and such
voting powers, full or limited, or no voting powers, and such of the preferences
and relative, participating, optional, or other special rights, and the
qualifications, limitations or restrictions thereof, of any series of the
preferred stock to the full extent permitted by the applicable law.
The board of directors does not currently intend to seek shareholder
approval prior to any issuance of preferred stock if the reincorporation
proposal is approved, except as required by law or regulation. Frequently,
opportunities arise that require prompt action, and the board of directors
believes that the delay necessary for shareholder approval of a specific
issuance would be a detriment to the Delaware Company and its shareholders. The
board of directors does not intend to issue any preferred stock except on terms
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which the board of directors deems to be in the best interest s of the Delaware
Company and its then existing shareholders.
In addition to the various anti-takeover measures that would be
available to the Delaware Company after the reincorporation due to the
application of Delaware Law, the Delaware Company would retain the rights
currently available to GMAI under New York Law to issue shares of its authorized
but unissued capital stock. Shares of authorized and unissued common stock and
preferred stock of the Delaware Company could (within the limits imposed by
applicable law) be issued in one or more transactions, or preferred stock could
be issued with terms, provisions, and rights which would make more difficult,
and therefore less likely, a takeover of the Delaware Company. Any such issuance
of additional stock could have the effect of diluting the earnings per share and
book value per share, and such additional shares could be used to dilute the
stock ownership of persons seeking to obtain control of the Delaware Company.
It should be noted that the voting rights to be accorded to any
unissued series of preferred stock of the Delaware Company remain to be fixed by
the Delaware Board. Accordingly, if the Delaware Board so authorizes, the
holders of preferred stock may be entitled to vote separately as a class in
connection with approval of certain extraordinary corporate transactions in
circumstances where Delaware Law does not ordinarily require such a class vote,
or might be given a disproportionately large number of votes. Such preferred
stock could also be convertible into a large number of shares of common stock of
the Delaware Company under certain circumstances or have other terms that might
make acquisition of a controlling interest in the Delaware Company more
difficult or more costly, including the right to elect additional directors to
the board of directors of the Delaware Company. Potentially, preferred stock
could be used to create voting impediments or to frustrate persons seeking to
effect a merger or otherwise to gain control of the Delaware Company. Also,
preferred stock could be privately placed with purchasers who might side with
the management of the Delaware Company in opposing a hostile tender offer or
other attempt to obtain control.
Nomination of Directors
Both the New York Bylaws and the Delaware Bylaws provide that a
shareholder may nominate candidates for the election of directors only if
written notice of that shareholder's intent to nominate candidates is provided
to GMAI's corporate secretary not later than (1) with respect to an election to
be held at an annual meeting of shareholders, 60 days prior to the first
anniversary of the date of the last GMAI annual meeting of shareholders that
called for the re-election of directors, and (2) with respect to an election
held at a special meeting of shareholders for the election of directors, the
close of business on the seventh day following the date on which notice of such
special meeting is first given to shareholders. That notice must set forth
certain basic information with regard to each individual to be nominated by the
shareholder.
Number of Directors; Filling Vacancies
The New York Certificate provides that the number of directors
constituting the board of directors must be fixed by resolution adopted by a
majority of the board of directors. GMAI currently has eight members on its
board of directors, and one vacancy. The New York Bylaws provide that additional
directors must be elected by the board of directors in the event of an increase
in the number of directors.
The Delaware Certificate provides that the number of directors
constituting the board of directors must be fixed by resolution adopted by the
majority of the board of directors. In addition, the Delaware Bylaws provide
that any vacancy on the Delaware Company board of directors that results from
death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from an increase in the number of directors
must, unless the board of directors determines by resolution that any such
vacancies or newly created directorships are to be filled by the shareholders,
and except as otherwise provided by law, be filled only by the affirmative vote
of a majority of the directors then in office, even though less than a quorum of
the board of directors, and not by the shareholders.
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Quorum
The New York Bylaws provide that the presence, in person or represented
by proxy, of a majority of the capital stock issued and outstanding and entitled
to vote at any meeting of shareholders constitutes a quorum. The Delaware Bylaws
provide that the presence of a majority of the shares entitled to vote, in
person or represented by proxy, constitutes a quorum.
Other Changes to Reflect Technical Differences Between Delaware Law and New York
Law
In addition to the changes described above, certain technical changes
have been made in the Delaware Certificate and Delaware Bylaws from the New York
Certificate and New York Bylaws to reflect differences between the Delaware Law
and the New York Law. Such technical changes include designation of a registered
office and registered agent in the State of Delaware, changes in the minimum and
maximum number of days applicable for giving notice of meetings and providing
for setting record dates consistent with Delaware Law.
Certain Federal Income Tax Consequences of the Reincorporation
The discussion of U.S. federal income tax consequences set forth below
is for general information only and does not purport to be a complete discussion
or analysis of all potential tax consequences that may apply to a shareholder.
We strongly urge you to consult your tax advisors to determine the particular
tax consequences to you of the reincorporation, including the applicability and
effect of federal, state, local, foreign and other tax laws.
The following discussion sets forth the principal U.S. federal income
tax consequences of the reincorporation to GMAI shareholders who hold their
shares as a capital asset. It does not address all of the federal income tax
consequences that may be relevant to particular shareholders based upon their
individual circumstances or to shareholders who are subject to special rules,
such as financial institutions, tax-exempt organizations, insurance companies,
dealers in securities, foreign holders or holders who acquired their shares
pursuant to the exercise of employee stock options or otherwise as compensation.
The following disclosure is based on the Internal Revenue Code of 1986, as
amended, laws regulations, rulings and decisions in effect as of the date of
this proxy statement, all of which are subject to change, possibly with
retroactive effect, and to differing interpretations. The following disclosure
does not address the tax consequences to our shareholders under state, local and
foreign laws. We have neither requested nor received a tax opinion from legal
counsel with respect to the consequences of reincorporation. No rulings have
been or will be requested from the Internal Revenue Service with to the
consequences of reincorporation. There can be no assurance that future
legislation, regulations, administrative rulings or court decisions would not
alter the consequences set forth below.
The reincorporation provided for in the merger agreement is intended to
be a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Assuming the reincorporation qualifies as a reorganization, no gain or
loss will be recognized to the holders of GMAI capital stock as a result of
consummation of the reincorporation, and no gain or loss will be recognized by
GMAI or the Delaware Company. Each former holder of GMAI capital stock will have
the same basis in the capital stock of the Delaware Company received by that
holder pursuant to the reincorporation as that holder has in GMAI capital stock
held by that holder at the time the reincorporation is consummated. Each
shareholder's holding period with respect to the Delaware Company's capital
stock will include the period during which that holder held the corresponding
GMAI capital stock, provided the latter was held by such holder as a capital
asset at the time of consummation of the reincorporation was consummated.
Accounting Treatment
In accordance with generally accepted accounting principles, GMAI
expects that the merger will be accounted for as a reorganization of entities
under common control at historical cost.
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Regulatory Approvals
The merger is not expected to be consummated until GMAI has obtained
all required consents of governmental authorities. To GMAI's knowledge, the only
required consents to consummation of the merger will be the filing of the
certificate of merger by the Tax Commissioner of the State of New York with the
Secretary of State of the State of New York and the filing of a certificate of
merger with the Secretary of the State of Delaware.
Board Recommendation
The foregoing discussion is an attempt to summarize the more important
differences in the corporation laws of Delaware and New York and in the New York
Certificate and the New York Bylaws and the Delaware Certificate and the
Delaware Bylaws, and does not purport to be an exhaustive discussion of all of
the differences. Those differences can be determined in full by reference to the
New York Law and to the Delaware Law, and to the New York charter documents and
to the Delaware charter documents, attached as Exhibit B and Exhibit C,
respectively, to this proxy statement. In addition, both the New York Law and
the Delaware Law provide that some of the statutory provisions as they affect
various rights of holders of shares may be modified by provisions in the charter
or bylaws of the corporation.
The board of directors unanimously recommends that shareholders vote
FOR the proposal to change the state of incorporation of GMAI from New York to
Delaware by means of a merger of GMAI with and into a wholly-owned Delaware
subsidiary.
A vote FOR the reincorporation proposal will constitute approval of the
merger, the Delaware Certificate, the Delaware Bylaws, and adoption and
assumption by the Delaware Company of each of GMAI's stock option, stock
purchase, and employee benefit plans.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered as of the next annual
meeting of shareholders must be received by GMAI, addressed to the attention of
GMAI's corporate secretary, at its offices at 775 Passaic Avenue, West Caldwell,
New Jersey 07006, no later than 120 days prior to the first anniversary of the
date of this proxy statement, in order to be included in GMAI'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 card to vote proxies in accordance with their judgement on such
matters.
OTHER INFORMATION
Although it has entered into no formal agreements to do so, GMAI 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 GMAI. 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 GMAI without additional compensation.
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It is important that your stock be represented at the annual meeting
whether or not you expect to attend. The board of directors urges you to
complete, date, sign, and return the enclosed proxy card 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
GMAI at (973) 882-0004.
Sincerely,
/s/ Martha Husick
MARTHA HUSICK
Secretary
West Caldwell, New Jersey
October 30, 2000
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Exhibit A
MERGER AGREEMENT
This merger agreement is dated December , 2000, and is between GREG
MANNING AUCTIONS, INC., a New York corporation ("GM New York"), and GREG MANNING
DELAWARE, INC., a Delaware corporation ("GM Delaware").
GM New York is a corporation duly organized and validly existing under
the laws of the State of New York having at the date hereof authorized capital
stock of 40,000,000 shares of common stock, par value $.001 per share ("New York
Common Stock"), of which __________ shares were issued and __________ were
outstanding on December __, 2000.
GM Delaware is a corporation duly organized and existing under the laws
of the State of Delaware having at the date hereof authorized capital stock of
40,000,000 shares of common stock, par value $.001 per share ("Delaware Common
Stock"), of which 100 shares are issued and outstanding and held by GM New York
on the date of this agreement.
GM New York desires to reincorporate into the State of Delaware by
merging with and into GM Delaware with GM Delaware continuing as the surviving
corporation in such merger, upon the terms and subject to the conditions herein
set forth and in accordance with the laws of the State of Delaware.
The parties therefore agree as follows:
ARTICLE 1
PRINCIPAL TERMS OF THE MERGER
1.1 Merger. At the Effective Time, GM New York will merge into GM
Delaware in accordance with the New York Business Corporation Law (the "NYBCL")
and the General Corporation Law of the State of Delaware (the "DGCL"; that
merger, the "Merger"). The separate existence of GM New York will thereupon
cease and GM Delaware will be the surviving corporation (in that capacity, the
"Surviving Corporation") and will continue its corporate existence under the
laws of the State of Delaware.
1.2 Effective Time. The Merger will become effective upon the date a
certificate of merger is filed by the Surviving Corporation with the Department
of State of the State of New York pursuant to Section 907(c)(2)of the NYBCL, or
the date a certificate of ownership and merger is filed by the Surviving
Corporation with the Secretary of State of the State of Delaware pursuant to
Section 253 of the DGCL whichever filing occurs last (that date, the "Effective
Time").
1.3 Effects of the Merger. At the Effective Time, the Merger will have
the effects specified in the NYBCL, the DGCL, and this agreement.
1.4 Certificate of Incorporation. At the Effective Time, the
certificate of
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incorporation of GM Delaware as in effect immediately prior to the Effective
Time will become the certificate of incorporation of the Surviving Corporation
until duly amended in accordance with its terms and as provided by the DGCL.
1.5 Bylaws. At the Effective Time, the bylaws of GM Delaware as in
effect immediately prior to the Effective Time will become the bylaws of the
Surviving Corporation until duly amended in accordance with their terms and as
provided by the DGCL.
1.6 Name of Surviving Corporation. At the Effective Time, the name of
the Surviving Corporation will be changed to "Greg Manning Auctions, Inc."
1.7 Directors and Officers. At the Effective Time, the directors and
officers of GM New York in office at the Effective Time will retain their
positions as the directors and officers, respectively, of the Surviving
Corporation, each of those directors and officers to hold office, subject to the
applicable provisions of the certificate of incorporation and bylaws of the
Surviving Corporation and the DGCL, until his or her successor is duly elected
or appointed or until his or her earlier death, incompetency or removal.
ARTICLE 2
CONVERSION AND CANCELLATION OF STOCK
2.1 Conversion. At the Effective Time, each share of New York Common
Stock issued and outstanding immediately prior to the Effective Time will by
virtue of the Merger and without any action on the part of the holder thereof be
converted into one share of Delaware Common Stock. At the Effective Time, each
option and warrant to purchase shares of New York Common Stock outstanding
immediately prior to the Effective Time will be automatically converted into
options and warrants to acquire an equal number of shares of Delaware Common
Stock.
2.2 Cancellation. At the Effective Time, each share of Delaware Common
Stock issued and outstanding immediately prior to the Effective Time and held by
GM New York will be canceled without any consideration being issued or paid
therefor.
2.3 Exchange of Certificates. At any time on or after the Effective
Time, the holders of New York Common Stock will be entitled, upon surrender to
the Surviving Corporation of any certificate representing shares of New York
Common Stock, to receive in exchange therefor one or more new stock certificates
evidencing ownership of the same number of shares of Delaware Common Stock. If
any certificate representing shares of Delaware Common Stock is to be issued in
a name other than that in which the certificate surrendered in exchange therefor
is registered, it will be a condition of the issuance thereof that the
certificate or other writing so surrendered must be properly endorsed and
otherwise in proper form for transfer and that the person requesting that
exchange must pay to the Surviving Corporation or its transfer agent any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Delaware Common Stock in any name other than that of the
registered holder of the certificate surrendered, or otherwise required, or must
establish to the satisfaction of the transfer agent that any such taxes have
been paid or is not payable.
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ARTICLE 3
CONDITIONS
Consummation of the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
3.1 Approval. That this agreement and the Merger are adopted and
approved by GM New York in the manner provided in Section 905 of the NYBCL and
by GM Delaware in the manner provided in Section 253 of the DGCL.
3.2 Third Party Consents. That the parties have received all required
consents to the Merger.
ARTICLE 4
MISCELLANEOUS
4.1 Amendment. This agreement may be amended, in whole or in part, at
any time prior to the Effective Time with the mutual consent of the board of
directors of GM New York and the board of directors of GM Delaware to the full
extent permitted under applicable law.
4.2 Termination. This agreement may be terminated at any time prior to
the Effective Time by either the board of directors of GM New York or the board
of directors of GM Delaware, without any action of the stockholders of GM New
York or GM Delaware, notwithstanding the approval of this agreement by the
stockholders or board of directors of either GM New York or GM Delaware.
4.3 Necessary Actions, etc. If at any time after the Effective Time the
Surviving Corporation considers that any assignments, transfers, deeds, or other
assurances in law are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation title to any property or
rights of GM New York, GM New York and its directors and officers at the
Effective Time shall execute and deliver such documents and do all things
necessary and proper to vest, perfect or confirm title to such property or
rights in the Surviving Corporation, and the officers and directors of the
Surviving Corporation are fully authorized in the name of GM New York or
otherwise to take any and all such action.
4.4 Counterparts. This agreement may be executed in any number of
counterparts, all of which shall be considered to be an original instrument.
4.5 Governing Law. This agreement is governed by the laws of the State
of Delaware.
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The parties are executing this agreement on the date stated in the
introductory clause.
GREG MANNING AUCTIONS, INC.
By:
------------------------------------------
Greg Manning
President
GREG MANNING DELAWARE, INC.
By:
------------------------------------------
Greg Manning
President
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Exhibit B
CERTIFICATE OF INCORPORATION
OF
GREG MANNING DELAWARE, INC.
The undersigned, being the sole incorporator of Greg Manning Delaware,
Inc., hereby certifies as follows:
1. Name. The name of the corporation is Greg Manning Delaware, Inc.
(the "Corporation").
2. Registered Office; Registered Agent. The address of the registered
office of the Corporation in Delaware is 2711 Centerville Road, Suite 400, City
of Wilmington, County of New Castle, State of Delaware 19808. The name of its
registered agent at that address is the Corporation Service Company.
3. Purpose. The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
4. Capital Stock. The aggregate number of shares of all classes of
capital stock that the Corporation has authority to issue is 50,000,000, of
which 40,000,000 are shares of common stock, $.01 par value per share, and of
which 10,000,000 are shares of preferred stock, $.01 par value per share. A
description of the different classes and series (if any) of the Corporation's
capital stock, and a statement of the relative powers, designations, preferences
and rights of the shares of each class and series (if any) of capital stock, and
the qualifications, limitations or restrictions thereof, are as follows:
Common Stock.
Except as provided in this certificate of incorporation, the holders of
the common stock possess all voting power. Subject to the provisions of this
certificate of incorporation, each holder of shares of common stock will be
entitled to one vote for each share held by that holder. Whenever there have
been paid, or declared and set aside for payment, to the holders of outstanding
shares of any class or series of stock having preference over the common stock
as to the payment of dividends, the full amount of those dividends and that
sinking fund or retirement fund or those other retirement payments, if any, to
which those holders are respectively entitled in preference to the common stock,
then dividends may be paid on the common stock, and on any class or series of
stock entitled to participate therewith as to dividends, out of any assets
legally available for the payment of dividends, but only when and as declared by
the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class having preference over the
common stock in any such event, the full preferential
<PAGE>
amounts to which they are respectively entitled, the holders of the common stock
and of any class or series of stock entitled to participate therewith, in whole
or in part, as to distribution of as sets shall be entitled, after payment or
provision for payment of all debts and liabilities of the Corporation, to
receive the remaining assets of the Corporation available for distribution, in
cash or in kind.
Each share of common stock will have the same relative powers,
preferences, and rights as, and shall be identical in all respects with, all the
other shares of common stock of the Corporation.
Serial Preferred Stock.
Except as provided in this certificate of incorporation, the board of
directors of the Corporation is authorized, by resolution or resolutions from
time to time adopted, to provide for the issuance of serial preferred stock in
series and to fix and state the powers, designations, preferences and relative,
participating, optional, or other special rights of the shares of each that
series, and the qualifications, limitation or restrictions thereof, including,
but not limited to determination of any of the following:
(1) the distinctive serial designation and the number of shares constituting
that series;
(2) the rights in respect of dividends, if any, to be paid on the shares of
that series, whether dividends are cumulative and, if so, from which date
or dates, the payment date or dates for dividends, and the participating
or other special rights, if any, with respect to dividends;
(3) the voting powers, full or limited, if any, of the shares of that series;
(4) whether the shares of that series are redeemable and, if so, the price or
prices at which, and the terms and conditions upon which, those shares may
be redeemed;
(5) the amount or amounts payable upon the shares of that series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation;
(6) whether the shares of that series are entitled to the benefits of a
sinking or retirement fund to be applied to the purchase or redemption of
those shares, and, if so entitled, the amount of that fund and the manner
of its application, including the price or prices at which those shares
may be redeemed or purchased through the application of that fund;
(7) whether the shares of that series are convertible into, or exchangeable
for, shares of any other class or classes or any other series of the same
or any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate
or rates of exchange, and the adjustments thereof, if any, at which that
conversion or exchange may be made, and any other terms and conditions of
that conversion or exchange;
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(8) the subscription or purchase price and form of consideration for which the
shares of that series are to be issued; and
(9) whether the shares of that series that are redeemed or convened will have
the status of authorized but unissued shares of serial preferred stock and
whether those shares may be reissued as shares of the same or any other
series of serial preferred stock.
Each share of each series of serial preferred stock will have the same
relative powers, preferences, and rights as, and will be identical in all
respects to, all other shares of the same series, except with respect to the
times from which dividends begin to accrue on shares of that series that may be
issued from time to time.
5. Limitation of Personal Liability of Directors. (a) The personal
liability of the directors of the Corporation is hereby eliminated to the
fullest extent permitted by the provisions of paragraph (7) of subsection (b) of
ss. 102 of the Delaware General Corporation Law. If the Delaware General
Corporation Law is hereafter amended to the further eliminate or limit the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
6. Meetings of Stockholders. No action that is required or permitted to
be taken by the stockholders of the Corporation at any annual or special meeting
of stockholders may be effected by written consent of stockholders in lieu of a
meeting of stockholders, unless the action to be effected by written consent of
stockholders and the taking of that action by written consent have expressly
been approved in advance by the board of directors of the Corporation.
7. Amendment of Bylaws. The board of directors of the Corporation has
the power to adopt, amend, or repeal bylaws of the Corporation, subject to the
power of the stockholders of the Corporation to adopt by-laws and to amend or
repeal bylaws adopted by the board of directors.
8. Amendment of Certificate of Incorporation. Any repeal, alteration,
amendment, or rescission of any provision contained in this certificate of
incorporation must be adopted by resolution of at least a majority of the board
of directors, and may only be effected by the affirmative vote of the holders of
at least a majority of the voting power of the outstanding voting stock of the
Corporation cast at a meeting called for that purpose (provided that notice of
such proposed adoption, repeal, alteration, amendment or rescission is included
in the notice of such meeting) .
9. Incorporator. The name and mailing address of the sole incorporator
are as follows:
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Name Mailing Address
---- ---------------
Amy Carlucci Behar Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
The undersigned is signing this certificate of incorporation on
December __, 2000.
--------------------------
Amy Carlucci Behar
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Exhibit C
BY-LAWS
OF
GREG MANNING DELAWARE, INC.
ARTICLE 1
Stockholders
1.1 Place of Meetings. Meetings of stockholders must be held at such
place, either within or without the State of Delaware, as the board of directors
designates from time to time.
1.2 Annual Meetings. Annual meetings of stockholders must be held at
the day and time fixed, from time to time, by the board of directors, except if
that day is a legal holiday, then the annual meeting will be held on the next
following business day. At each annual meeting the stockholders may elect a
board of directors by plurality vote and transact such other business as may be
properly brought before the meeting.
1.3 Special Meetings. Special meetings of the stockholders may be
called by the board of directors, the Chairman of the Board, or the Chief
Executive Officer, and must be called by the Chief Executive Officer at the
request of the holders of at least 20% of the outstanding shares entitled to
vote at that meeting. If the special meeting is called by a person or persons
other than the board of directors, the board of directors must determine the
time and place of that meeting, which must be held between 35 and 120 days after
receipt of the request for the meeting.
1.4 Notice of Meetings. Written notice of each meeting of the
stockholders stating the place, date and hour of the meeting must be given by or
at the direction of the board of directors to each stockholder entitled to vote
at the meeting at least ten, but not more than 60, days prior to the meeting.
Notice of any special meeting must state in general terms the purpose or
purposes for which the meeting is called.
1.5 Quorum; Adjournments of Meetings. The holders of a majority of
the issued and outstanding shares of the capital stock of the Corporation
entitled to vote at a meeting, present in person or represented by proxy, will
constitute a quorum for the transaction of business at that meeting; but if
there is less than a quorum, the holders of a majority of the stock so present
or represented may adjourn the meeting to another time or place, from time to
time, until a quorum is present, whereupon the meeting may be held, as
adjourned, without further notice, except as required by law, and any business
may be transacted thereat that might have been transacted at the meeting as
originally called.
1.6 Voting. At any meeting of the stockholders every registered
owner of shares entitled to vote may vote in person or by proxy and, except as
otherwise provided by statute, in the certificate of incorporation or these
bylaws, will have one vote for each such share standing in that registered
owner's name on the books of the Corporation. Except as otherwise required by
statute, the certificate of incorporation, or these bylaws, all matters other
than the election of
<PAGE>
directors brought before any meeting of the stockholders will be decided by a
vote of a majority in interest of the stockholders of the Corporation present in
person or by proxy at that meeting and voting thereon, a quorum being present.
1.7 Record Date. The board of directors may fix in advance a record
date for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, which record date will not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date will not be less than ten nor more than 60 days
prior to that meeting. In the absence of any action by the board of directors,
the close of business on the date next preceding the day on which the notice is
given will be the record date, or, if notice is waived, the close of business on
the day next preceding the day on which the meeting is held will be the record
date.
1.8 Inspectors of Election. The board of directors, or, if the board
of directors has not made the appointment, the chairman presiding at any meeting
of stockholders, will have the power to appoint one or more persons to act as
inspectors of election at the meeting or any adjournment thereof, but no
candidate for the office of director may be appointed as an inspector at any
meeting for the election of directors.
1.9 Chairman of Meetings. The Chairman of the Board or, in his
absence, the Chief Executive Officer will act as chairman of any meeting of the
stockholders. In the absence of both the Chairman of the Board and the Chief
Executive Officer, a majority of the members of the board of directors present
in person at that meeting may appoint any other officer or director to act as
chairman of the meeting.
1.10 Secretary of Meetings. The Secretary of the Corporation will act
as secretary of all meetings of the stockholders. In the absence of the
Secretary, the chairman of the meeting may appoint any other person to act as
secretary of the meeting.
1.11 Nominations of Directors. Nominations for the election of
directors and proposals for any new business to be taken up at any annual or
special meeting of stockholders may be made by the board of directors of the
Corporation or by any stockholder of the Corporation entitled to vote generally
in the election of directors. In order for a stockholder of the Corporation to
make any such nomination or proposal at an annual meeting or special meeting,
that stockholder must give notice thereof in writing, delivered or mailed by
first class U.S. mail, postage prepaid, to the Secretary of the Corporation, of
that stockholder's intent to nominate candidates or make one or more proposals
no later than (1) with respect to an election to be held at an annual meeting of
stockholders, 60 days prior to the first anniversary of the date of the last
annual meeting of stockholders that called for the reelection of directors, and
(2) with respect to an election held at a special meeting of stockholders for
the election of directors, the close of business on the seventh day following
the date on which notice of that special meeting is first given to stockholders.
Each such notice must set forth (1) the name, age, business address, and if
known, residence address of each nominee proposed in such notice, (2) the
principal occupation for employment of each such nominee, and (3) the number of
shares of stock of the Corporation that are beneficially owned by each such
nominee. In addition, the stockholder making that nomination must promptly
provide any other information reasonably requested by the Corporation.
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ARTICLE 2
BOARD OF DIRECTORS
2.1 Number of Directors. The board of directors must consist of no
less than one member. Subject to the foregoing limitation, the number of
directors may from time to time be fixed by resolution of a majority of the
board of directors at any meeting thereof.
2.2 Classified Board. The board of directors must be divided into
three classes that are as nearly equal in number as is possible. At the first
election of directors to that classified board of directors, each Class I
director will be elected to serve until the next ensuing annual meeting of
stockholders, each Class II director will be elected to serve until the second
ensuing annual meeting of stockholders, and each Class III director will be
elected to serve until the third ensuing annual meeting of stockholders. At each
annual meeting of stockholders following the meeting at which the board of
directors is initially classified, the number of directors equal to the number
of the class whose term expires at the time of that meeting will be elected to
serve until the third ensuing annual meeting of stockholders. At each annual
meeting of stockholders, directors will be elected to hold office until their
successors are elected and qualified or until their earlier resignation, removal
from office, or death.
2.3 Changes in Number. In the event of any change in the authorized
number of directors, the number of directors in each class will be adjusted so
that thereafter each of the three classes are composed, as nearly as may be
possible, of one-third of the authorized number of directors; provided that any
change in the authorized number of directors will not increase or shorten the
term of any director, and any decrease will become effective only as and when
the term or terms of office of the class or classes of directors affected
thereby expire, or a vacancy or vacancies in such class or classes occurs.
2.4 Vacancies. Whenever any vacancy occurs in the board of directors
by reason of death, resignation, removal, increase in the number of directors,
or otherwise, it may be filled only by the affirmative vote of a majority of the
directors then in office, although less than a quorum of the board of directors,
or by a sole remaining director until a successor is elected and qualified at an
annual meeting of stockholders or at a special meeting called for that purpose.
2.5 First Meeting. The first meeting of each newly elected board of
directors, with respect to which no notice will be necessary, must be held
immediately following the annual meeting of stockholders at which directors were
elected or any adjournment thereof, at the place that annual meeting of
stockholders was held or at such other place as a majority of the members of the
newly elected board of directors who are then present determine, for the
election or appointment of officers for the ensuing year and the transaction of
such other business as may be brought before that meeting.
2.6 Regular Meetings. Regular meetings of the board of directors,
other than the first meeting, may be held without notice at such times and
places as the board of directors may from time to time determine.
2.7 Special Meetings. Special meetings of the board of directors may
be called by order of the Chairman of the Board, the Chief Executive Officer, or
any two directors. Notice of
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the time and place of each special meeting must be given by or at the direction
of the person or persons calling the meeting by mailing the same at least three
days before the meeting or by telephoning, sending by facsimile, or delivering
personally the same at 24 hours before the meeting to each director. Except as
otherwise specified in the notice thereof, or as required by statute, the
certificate of incorporation or these bylaws, any and all business may be
transacted at any special meeting.
2.8 Place of Conference Call Meeting. Any meeting at which one or
more of the members of the board of directors or of a committee designated by
the board of directors participates by means of conference telephone or similar
communications equipment will be deemed to have been held at the place
designated for that meeting, provided that at least one member is at that place
while participating in the meeting.
2.9 Organization. Every meeting of the board of directors must be
presided over by the Chairman of the Board, or, in his absence, the Chief
Executive Officer. In the absence of the Chairman of the Board and the Chief
Executive Officer, a presiding officer must be chosen by a majority of the
directors present. The Secretary of the Corporation shall act as secretary of
the meeting, but, in his absence, the presiding officer may appoint any person
to act as secretary of the meeting.
2.10 Quorum; Vote. A majority of the directors then serving will
constitute a quorum for the transaction of business, but less than a quorum may
adjourn any meeting to another time or place from time to time until a quorum is
present, whereupon the meeting may be held, as adjourned, without further
notice. Except as otherwise required by statute, the certificate of
incorporation, or these bylaws, all matters coming before any meeting of the
board of directors will be decided by the vote of a majority of the directors
present at the meeting, a quorum being present.
2.11 Removal of Directors. Notwithstanding any other provision of the
certificate of incorporation or these bylaws, any director or class (but not the
entire board of directors) of the Corporation may be removed, at any time, but
only for cause and only by the affirmative vote of the holders of at least a
majority of the voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose. Notwithstanding the foregoing, whenever the holders of any one or
more series of preferred stock of the Corporation have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
preceding provisions of this Article 2 will not apply with respect to the
director or directors elected by those holders of preferred stock.
2.12 Compensation. The board of directors may fix the compensation,
including fees and reimbursement of expenses, of directors for services to the
Corporation in any capacity.
2.13 Resignations. Any director of the Corporation may resign at any
time by giving written notice of his or her resignation to the board of
directors, the Chairman of the Board, the Chief Executive Officer, or the
Secretary. Any such resignation will take effect at the time specified therein
or, if the time when it becomes effective is not specified therein, immediately
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upon its receipt. Unless otherwise specified therein, the acceptance of any such
resignation is not necessary to make it effective.
2.14 Committees. (a) The board of directors, by resolution or
resolutions adopted by a majority of the members of the whole board of
directors, may appoint an Executive Committee. Any Executive Committee must
consist of one or more members of the board of directors and must include the
Chairman of the Board or the Chief Executive Officer or both of them. Between
any meetings of the board of directors, any Executive Committee will have and
may exercise all the powers and authority of the board of directors except as
forbidden by law or these bylaws or as the board of directors may specifically
reserve by resolution.
(b) The board of directors, by resolution or resolutions adopted
by a majority of the members of the whole board of directors, may also appoint
such other committees as it may deem appropriate. Each such committee will
consist of one or more members of the board of directors and will have only such
authority as the board of directors may specifically delegate by resolution. The
Chairman of the Board or the Chief Executive Officer will be an ex officio
member with full voting rights as a member of each committee.
(c) No committee will have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, amending the bylaws of the Corporation or adopting, amending or
recommending to the stockholders any other action or matter expressly required
by the Delaware General Corporation Law to be submitted to stockholders for
approval; and, unless a resolution of the board of directors, the certificate of
incorporation, or these bylaws expressly so provide, no committee will have the
power or authority to declare a dividend or to authorize the issuance of stock.
(d) A majority of each committee may determine its agenda and may
fix the time and place of its meetings, unless provided otherwise by the board
of directors. The board of directors has the power at any time to fill vacancies
in, to change the size or membership of and to discharge any such committee. No
director will continue to be a member of any committee after that director
ceases to be a director of the Corporation.
(e) Each committee must keep a written record of its acts and
proceedings and must submit that record to the board of directors at such times
as requested by the board of directors. Failure to submit any such record, or
failure of the board of directors to approve any action indicated therein, will
not, however, invalidate such action to the extent it has been carried out by
the Corporation prior to the time the record of that action was, or should have
been, submitted to the board of directors as herein provided.
ARTICLE 3
OFFICERS
3.1 General. The board of directors must elect the officers of the
Corporation, which include a Chairman of the Board, a Chief Executive Officer, a
President, a Secretary, a Chief
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Financial Officer, and such other or additional officers (including, without
limitation, one or more Vice-Chairmen of the Board, Executive Vice-Presidents,
Vice-Presidents, Assistant Vice-Presidents, Assistant Secretaries, and Assistant
Treasurers) as the board of directors may designate.
3.2 Term of Office; Removal and Vacancy. Each officer will hold
office until that officer's successor is elected and qualified or until that
officer's earlier resignation or removal. Any officer or agent will be subject
to removal with or without cause at any time by the board of directors. The
board of directors may fill any vacancies in any office, whether occurring by
death, resignation, removal or otherwise.
3.3 Powers and Duties. Each of the officers of the Corporation will,
unless otherwise ordered by the board of directors, have such powers and duties
as generally pertain to that officer's office as well as those powers and duties
as from time to time may be conferred upon that officer by the board of
directors. Unless otherwise ordered by the board of directors after these bylaws
are adopted, the Chief Executive Officer is the chief executive officer of the
Corporation.
3.4 Power to Vote Stock. Unless otherwise ordered by the board of
directors, the Chairman of the Board and the Chief Executive Officer each have
full power and authority on behalf of the Corporation to attend and to vote at
any meeting of stockholders of any corporation in which the Corporation holds
stock, and may exercise on behalf of the Corporation any and all of the rights
and powers incident to the ownership of that stock at any such meeting and have
power and authority to execute and deliver proxies, waivers, and consents on
behalf of the Corporation in connection with exercise by the Corporation of the
rights and powers incident to the ownership of that stock. The board of
directors, from time to time, may confer like powers upon any other person or
persons.
ARTICLE 4
CAPITAL STOCK
4.1 Certificates of Stock. The board of directors shall from time to
time prescribe the form of certificates representing shares of capital stock of
the Corporation. To be valid, such each such certificate must be signed by the
Chairman of the Board, the Chief Executive Officer, or the President and by the
Chief Financial Officer or the Secretary.
4.2 Transfer of Stock. Shares of capital stock of the Corporation
are transferable on the books of the Corporation only by the holder of record
thereof, in person or by duly authorized attorney, upon surrender and
cancellation of certificates for a like number of shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, and
with such proof of the authenticity of the signature and of authority to
transfer, and of payment of transfer taxes, as the Corporation or its agents may
require.
4.3 Ownership of Stock. The Corporation is entitled to treat the
holder of record of any share or shares of stock as the owner thereof in fact
and is not bound to recognize any equitable or other claim to or interest in
those shares on the part of any other person, whether or not it has express or
other notice thereof, except as otherwise expressly provided by law.
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ARTICLE 5
INDEMNIFICATION
5.1 Indemnification. Except to the extent expressly prohibited by
the Delaware General Corporation Law, the Corporation shall indemnify each
person made or threatened to be made a party to any action or proceeding,
whether civil or criminal, and whether by or in the right of the Corporation or
otherwise, by reason of the fact that such person or such person's testator or
intestate is or was a director or officer of the Corporation, or serves or
served at the request of the Corporation any other corporation, partnership,
joint venture or other enterprise in any capacity while he or she was such a
director or officer (hereinafter referred to as "Indemnified Person"), against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such indemnification shall
be made if a judgment or other final adjudication adverse to such Indemnified
Person establishes that either (a) his or her acts were committed in bad faith,
or were the result of active and deliberate dishonesty, and were material to the
cause of action so adjudicated, or (b) that he or she personally gained in fact
a financial profit or other advantage to which he or she was not legally
entitled.
5.2 Expenses. The Corporation shall advance or promptly reimburse
upon request any Indemnified Person for all expenses, including attorneys' fees,
reasonably incurred in defending any action or proceeding in advance of the
final disposition thereof upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if such Indemnified Person is ultimately
found not to be entitled to indemnification or, where indemnification is
granted, to the extent the expenses so advanced or reimbursed exceed the amount
to which such Indemnified Person is entitled.
5.3 Nonexclusivity. Nothing herein shall limit or affect any right
of any Indemnified Person otherwise than hereunder to indemnification or
expenses, including attorneys' fees, under any statute, rule, regulation,
certificate of incorporation, by-law, insurance policy, contract or otherwise.
5.4 Amendment. Anything in these bylaws to the contrary
notwithstanding, no elimination of this Article 5, and no amendment of this
Article 5 adversely affecting the right of any Indemnified Person to
indemnification or advancement of expenses hereunder will be effective until the
60th day following notice to that Indemnified Person of that action, and no
elimination of or amendment to this Article 5 will thereafter deprive any
Indemnified Person of his or her rights hereunder arising out of alleged or
actual occurrences, acts or failures to act prior to that 60th day.
5.5 No Inconsistent Action. The Corporation shall not, except by
elimination or amendment of this Article 5 in a manner consistent with the
Article 5.4, take any corporate action or enter into any agreement that
prohibits, or otherwise limits the rights of any Indemnified Person to,
indemnification in accordance with the provisions of this Article 5. The
indemnification of any Indemnified Person provided by this Article 5 will be
deemed to be a contract between the Corporation and each Indemnified Person and
will continue after that Indemnified Person has ceased to be a director or
officer of the Corporation and will inure to the
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benefit of that Indemnified Person's heirs, executors, administrators and legal
representatives. If the Corporation fails timely to make any payment pursuant to
the indemnification and advancement or reimbursement of expenses provisions of
this Article 5 and an Indemnified Person commences an action or proceeding to
recover such payment, the Corporation in addition shall advance or reimburse
such Indemnified Person for the legal fees and other expenses of such action or
proceeding.
5.6 Indemnification Agreement. The Corporation is authorized to
enter into agreements with any of its directors or officers extending rights to
indemnification and advancement of expenses to such Indemnified Person to the
fullest extent permitted by applicable law, but the failure to enter into any
such agreement will not affect or limit the rights of such Indemnified Person
pursuant to this Article 5, it being expressly recognized hereby that all
directors or officers of the Corporation, by serving as such after the adoption
hereof, are acting in reliance hereon and that the Corporation is estopped to
contend otherwise. Persons who are not directors or officers of the Corporation
will be similarly indemnified and entitled to advancement or reimbursement of
expenses to the extent authorized at any time by the board of directors.
5.7 Unenforceability. In case any provision in this Article 5 shall
be determined at any time to be unenforceable in any respect, the other
provisions shall not in any way be affected or impaired thereby, and the
affected provision shall be given the fullest possible enforcement in the
circumstances, it being the intention of the Corporation to afford
indemnification and advancement of expenses to its directors or officers, acting
in such capacities or in the other capacities mentioned herein, to the fullest
extent permitted by law whether arising from alleged or actual occurrences, acts
or failures to act occurring before or after the adoption of this Article 5.
5.8 Definition. For purposes of this Article 5, the term
"Corporation" includes any legal successor to the Corporation, including any
corporation that acquires all or substantially all of the assets of the
Corporation in one or more transactions.
ARTICLE 6
MISCELLANEOUS
6.1 Corporate Seal. The seal of the Corporation must be circular in
form and contain the name of the Corporation and the year and state of
incorporation.
6.2 Fiscal Year. The board of directors has the power to fix, and to
change from time to time, the fiscal year of the Corporation.
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PROXY CARD
GREG MANNING AUCTIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned stockholder of Greg Manning Auctions, Inc. ("GMAI")
hereby revokes all previous proxies, acknowledges receipt of the notice of
annual meeting of stockholders and the related proxy statement, and appoints
Greg Manning and James Smith, and each of them, as proxies of the undersigned,
with full power of substitution to vote all shares of GMAI's common stock that
the undersigned is entitled to vote at the annual meeting of stockholders to be
held at the Radisson Hotel & Suites, 690 Route 46 East, Fairfield, New Jersey
07004, on Tuesday, December 12, 2000, at 10:00 AM Eastern Standard Time. and at
any adjournments thereof. The shares represented by the proxy may only be voted
in the manner specified below.
1. To elect two directors to serve for terms of three years and until their
respective successors have been duly elected and qualified.
FOR To WITHHOLD authority to vote for any
nominees, enter their name or names below:
Scott S. Rosenblum |_| _________________________________________
Anthony L. Bongiovanni |_| _________________________________________
2. To ratify the appointment of Amper, Politziner & Mattia P.A. as GMAI's
independent accountants for the fiscal year ending June 30, 2001.
FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve the reincorporation plan that would change GMAI's state of
incorporation from New York to Delaware.
FOR |_| AGAINST |_| ABSTAIN |_|
4. To transact such other business as may properly come before the special
meeting and any adjournment or adjournments thereof.
FOR |_| AGAINST |_| ABSTAIN |_|
The board of directors recommends you vote "FOR" the above proposals.
This proxy when properly executed will be voted in the manner directed
above. In the absence of direction for the above proposal, this proxy will be
voted "FOR" that proposal.
(Continued on the other side.)
<PAGE>
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please print the shareholder name exactly as it appears on this proxy.
If the shares are registered in more than one name, the signature of each person
in whose name the shares are registered is required. A corporation should sign
in its full corporate name, with a duly authorized officer signing on behalf of
the corporation and stating his or her title. Trustees, guardians, executors,
and administrators should sign in their official capacity, giving their full
title as such. A partnership should sign in its partnership name, with an
authorized person signing on behalf of the partnership.
Dated: ____________, 2000
------------------------------------------
(Print Name)
------------------------------------------
(Authorized Signature)
I plan to attend the special meeting in person:
|_| Yes
|_| No
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