SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-2.
STANDARD FUNDING CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule, and the date of its filing.
1) Amount Previously Paid: ________________________________________
2) Form, Schedule or Registration Statement No.: __________________
3) Filing Party: __________________________________________________
4) Date Filed: ____________________________________________________
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
STANDARD FUNDING CORP.
TO BE HELD
JUNE 5, 1998
To the Holders of the Common Stock of
STANDARD FUNDING CORP.:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of STANDARD
FUNDING CORP. (the "Company") will be held at The Holiday Inn, 215 Sunnyside
Boulevard, Plainview, New York 11803, in the West Room, on June 5, 1998 at 10:00
a.m., for the purpose of considering and acting upon the following matters, all
as described in the accompanying Proxy Statement:
1) To elect a Board of five Directors to hold office until the next annual
meeting and until the election and qualification of their respective successors.
2) To consider and act upon all other matters which may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has set the close of business on Monday, April 20,
1998, as the record date for the purpose of determining the shareholders
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof, and only shareholders of record on that date shall be entitled to
notice of and to vote at said meeting.
Your Proxy is enclosed. You are cordially invited to attend the meeting.
If you do not expect to be present and wish your shares to be voted, you are
requested to fill in, date, sign, and mail the enclosed Proxy promptly. A return
envelope with prepaid postage is enclosed for your convenience. If you attend
the Annual Meeting, your Proxy will be returned to you upon request to the
Secretary.
By Order of the Board of Directors,
By: /s/ Joyce S. Karp
-------------------------------------------
Joyce S. Karp
Secretary
Dated: Woodbury, New York
May 5, 1998
STANDARD FUNDING CORP.
335 Crossways Park Drive
Woodbury, New York 11797
(516) 364-0200
<PAGE>
STANDARD FUNDING CORP.
335 Crossways Park Drive
Woodbury, New York 11797
(516) 364-0200
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1998
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of STANDARD FUNDING CORP. (the "Company") of proxies for
use at the Annual Meeting of Shareholders of the Company (the "Annual Meeting")
to be held at The Holiday Inn, 215 Sunnyside Boulevard, Plainview, New York
11803, in the West Room, on June 5, 1998 at 10:00 a.m. and at any adjournments
thereof. This Proxy Statement and the accompanying Proxy Card are being mailed
to shareholders on or about May 5, 1998.
Unless contrary instructions are indicated on the proxy, all valid proxies
received pursuant to this solicitation (and not revoked before they are voted)
will be voted FOR the election of the nominees for director named herein. If a
shareholder specifies a different choice on the proxy, such shareholder's shares
of Common Stock will be voted in accordance with such specifications.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. A proxy may be
revoked by filing with the Secretary of the Company an instrument revoking it,
by presenting an executed proxy bearing a later date at the Annual Meeting, or
by attending the Annual Meeting and voting in person.
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by mail, personal interview, telephone and/or telegram by directors,
officers and employees of the Company, without additional compensation for such
solicitation activities. Arrangements will be made by the Company with its
transfer agent, OTC Corporate Transfer Service Co; P.O. Box 501, Hicksville, New
York 11801, to forward solicitation material to the beneficial owners of the
shares held of record. The Company will reimburse banks, brokerage firms, other
custodians, nominees and fiduciaries for reasonable expenses incurred in sending
proxy material to beneficial owners of the Company's Common Stock held in their
respective names.
VOTING SECURITIES
The total number of authorized shares of capital stock of the Company is
5,000,000, of which 4,000,000 are shares of common stock, $.001 par value (the
"Common Stock"), and 1,000,000 are shares of preferred stock, $.001 par value
(the "Preferred Stock"). Of the shares of Common Stock authorized for issuance,
2,760,000 were issued and outstanding at April 21, 1998. Of the shares of
Preferred Stock authorized for issuance, no shares were issued and outstanding
at April 21, 1998. The Preferred Stock has no voting rights.
Only shareholders of record at the close of business on Monday, April 20,
1998 have the right to receive notice of and to vote at the Annual Meeting and
any adjournments thereof. Each share of Common Stock entitles the holder thereof
to one vote. Under the New York Business Corporation Law, the presence, in
person or by proxy, of shareholders holding a majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Abstentions and broker non-votes are each
included for purposes of determining the presence or absence of a sufficient
number of shares to constitute a quorum for the transaction of business. With
respect to the approval of any particular proposal, abstentions and broker
non-votes are not counted in determining the number of votes cast.
1
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of April 3, 1998, information with
respect to (i) each person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, its only class of voting securities, (ii) the
ownership of Common Stock by each current Director and nominee for election as
director, (iii) the ownership of Common Stock by each executive officer named
below in the "Summary Compensation Table" and (iv) the ownership of Common Stock
by all current Directors and executive officers of the Company as a group.
Except as otherwise provided in the footnotes to the table, the beneficial
owners have sole voting and investment powers as to all securities.
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership (1) of Class (1)
- ------------------- ------------------------ ------------
Alan J. Karp(2) 623,800(3) 22.6%(3)
David E. Fisher(2) 623,800(3) 22.6%(3)
Cambridge Management
Corporation 170,000 6.2%
c/o Bernard G. Palitz
215 E. 68th Street, Apt 8-L
New York, NY 10021
James Faust(2) 5,000(3) *
Joyce S. Karp(2) 7,000(3) *
Richard Belz 13,500(3)(4) *
c/o Redstone Securities, Inc.
101 Fairchild Avenue
Plainview, New York 11803
All Directors and executive
officers as a group (5 persons) 1,264,600 46.1%
- --------------------
* Less than 1 percent.
(1) Except as described in the footnotes below, all of the above shareholders
were both the beneficial olders shareholders and shareholders of record of
the shares listed as of April 3, 1998.
(2) The address for Messrs. Karp, Fisher and Faust and Mrs. Karp is c/o
Standard Funding Corp., 335 Crossways Park Drive, Woodbury, New York
11797.
(3) Includes currently exerciseable options to purchase 5,000 shares of Common
Stock at $4.375 per share under the Company's Equity Incentive Plan.
(4) Includes 8,500 shares owned by Kathleen Belz, Richard Belz's wife.
ELECTION OF DIRECTORS
It is intended that, unless otherwise indicated thereon, the proxies
received will be voted in favor of the election of the five persons named below
to serve as Directors until the next Annual Meeting of Shareholders and until
their successors shall be elected and shall qualify. Although it is expected
that each of the nominees will be available for
2
<PAGE>
election, if a nominee is not a candidate at the time the election occurs, it is
intended that such proxies will be voted for the election of a substitute
nominee selected by the Board of Directors, unless the Board chooses to reduce
the number of Directors to the number of nominees then available for election.
In this event, the proxies would be voted for the reduced number of nominees.
Unless otherwise indicated on the enclosed Proxy Card, the votes represented by
any proxy may be voted at the discretion of the person or persons voting the
proxy. The five nominees receiving a plurality of the votes cast by the
shareholders represented at the meeting, in person or by proxy, will be elected
as Directors of the Company.
BACKGROUND OF NOMINEES FOR ELECTION AS DIRECTORS
ALAN J. KARP
Mr. Karp, 56 years of age, has served as Chairman of the Board, Chief
Executive Officer, President and a Director since founding the Company in 1978.
Prior to founding the Company, Mr. Karp held positions with three
publicly-traded commercial finance companies. His last position prior to joining
the Company was that of Senior Vice President of Commercial Alliance
Corporation.
DAVID E. FISHER
Mr. Fisher, 54 years of age, has been Treasurer and a Director of the
Company since its inception in October 1978. He also served as Secretary of the
Company from its inception until February 1987. Mr. Fisher held positions with
two publicly-traded companies in the field of accounting and finance prior to
joining the Company.
JAMES FAUST
Mr. Faust, 77 years of age, has been a Director of the Company since 1984.
Prior to his retirement in 1980, Mr. Faust acquired over thirty years of
experience in the banking industry and was an assistant vice president of a New
York bank.
JOYCE S. KARP
Ms. Karp, 55 years of age, has been Secretary of the Company since
February l987. She has served the Company in various capacities since its
inception.
RICHARD BELZ
Mr. Belz, 42 years of age, has been a Director, Vice President and
Secretary of Redstone Securities, Inc., a full service brokerage house, since
February 1988.
The Board of Directors held one meeting in the year ended December 31,
1997 and acted at various times by consent during the course of the year. It is
anticipated that immediately following the Annual Meeting, the Board of
Directors will hold its Annual Meeting of the Board of Directors. At such
meeting, it is anticipated that the current officers of the Company will be
re-elected to serve in their present capacities until the next annual meeting of
the Board of Directors or until their successors are duly elected and qualified.
The Company, at this time, does not compensate its directors for their services
in such capacity.
The Board of Director's Equity Incentive Committee met once in the year
ended December 31, 1997. The Equity Incentive Committee administers the
Company's Equity Incentive Plan. The Audit Committee met once in the year ended
December 31, 1997. The Audit Committee reviews and evaluates the results and
scope of the audit and other services provided by the Company's independent
accountants, as well as the Company's accounting principles and system of
internal accounting controls. The Company had no nominating or other
compensation committee of the Board of Directors or committee performing similar
functions during the year ended December 31, 1997.
3
<PAGE>
MANAGEMENT
The officers of the Company are as follows:
Name Age Office Held
---- --- -----------
Alan J. Karp 56 President and Chief
Executive Officer
David E. Fisher 54 Treasurer and Chief
Financial Officer
Joyce S. Karp 55 Secretary
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid or accrued
during the fiscal year ended December 31, l997 of the Chief Executive Officer
and each other executive officer of the Company whose total annual salary and
bonus exceeded $100,000 for services in all capacities:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------- ---------------------------------------
Number of Long-Term
Shares Incentive
Name and Fiscal Underlying Plan All Other
Principal Position Year Salary Bonus Other(1) Options Payouts Compensation (2)
- ------------------ ---- ------ ----- -------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan J. Karp 1997 $188,050 -- $3,574 5,000 -- $6,118
President, Chief 1996 $182,000 -- $3,949 -- -- $5,280
Executive Officer 1995 $175,000 -- $3,949 -- -- $8,093
David E. Fisher 1997 $193,050 -- $6,857 5,000 -- $6,596
Treasurer, Chief 1996 $187,000 -- $6,857 -- -- $7,125
Financial Officer 1995 $180,000 $1,100 $1,619 -- -- $9,545
</TABLE>
- -------
(1) The reported amounts represent payments by the Company for company cars.
(2) The reported amounts paid consist of Company contributions under the
Company's 401(k) and profit sharing plans.
EMPLOYMENT AGREEMENTS
Mr. Karp and Mr. Fisher entered into employment agreements with the
Company in July 1994, which provide for their full-time employment by the
Company in the executive capacities indicated therein, with successive one-year
renewal terms unless terminated by either party upon ninety days' written notice
prior to any renewal term. Mr. Karp's agreement provides for a base salary of
$188,050, a performance bonus awarded annually at the discretion of the Board of
Directors, and such other benefits as may be generally provided by the Company
to its employees. Mr. Fisher's agreement provides for a base salary of $193,050,
a performance bonus awarded annually at the discretion of the Board of Directors
or the Chief Executive Officer of the Company, and such other benefits as may be
generally provided by the Company to its executive employees. In addition, both
Mr. Karp and Mr. Fisher received grants of options under the Company's Equity
Incentive Plan to purchase 5,000 shares each of the Company's Common Stock. The
options are exercisable at $4.375 per share and terminate five years from the
date of grant. Each employment agreement provides that in the event the Company
exercises its right to terminate the agreement prior to any renewal term without
cause, the
4
<PAGE>
Company is obligated to make severance payments in the amount of one year's base
salary. Both agreements contain customary confidentiality provisions and
covenants not to compete with the Company for a period of one year following the
date of termination.
STOCK PLANS
Equity Incentive Plan
The Board of Directors of the Company adopted, and the shareholders of the
Company approved, an Equity Incentive Plan (the "Plan") on January 25, 1994 and
February 7, 1994, respectively. The Plan covers 250,000 shares of Common Stock
(subject to adjustments for stock splits and similar capital changes) and is
intended to strengthen the Company's ability to attract and retain key
employees, to provide an incentive for such employees to achieve long-range
performance goals and to enable them to participate in the long-term growth of
the Company.
The Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock,
stock units and other stock-based awards. Awards under the Plan can be granted
to employees, consultants and non-employee directors as determined by a
committee of at least two directors appointed by the Board of Directors to
administer the Plan (The "Equity Incentive Committee") or, in the absence of the
appointment by the Board of a Committee, by the Board of Directors. The Equity
Incentive Committee selects the participants and establishes the terms and
conditions of each option or other equity right granted under the Plan,
including the exercise price, the number of shares subject to options or other
equity rights and the time at which such options become exercisable. The
exercise price of all "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, granted under the Plan
must be at least equal to the fair market value of the option shares on the date
of grant. The term of any incentive stock option granted under the Plan may not
exceed ten years.
The Board of Directors has appointed Alan J. Karp and David E. Fisher to
the Equity Incentive Committee. On February 28, 1997, the committee awarded an
aggregate of 58,525 five-year options to purchase shares of the Company's Common
Stock at an exercise price of $4.375 per share.
5
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table sets forth all stock options grants to the executive
officers named in the Summary Compensation table during the year ended December
31, 1997:
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------
Number of % of Total
Securities Options/SARS
Underlying Granted to
Options/SARS Employees in Exercise or Base Expiration
Name Granted Fiscal Year Price ($/Sh) Date
- ---- ------------ ------------ ---------------- -------------
<S> <C> <C> <C> <C>
Alan J. Karp........ 5,000(1) 8.5% $4.38 February 2002
David E. Fisher..... 5,000(1) 8.5% $4.38 February 2002
</TABLE>
- -------
(1) Represents five-year qualified incentive stock options granted February
28, 1997, which were exerciseable on the date of grant.
Aggregate Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth stock options exercised during the year
ended December 31, 1997 and all unexercised stock options of the executive
officers named in the Summary Compensation Table as of December 31, 1997:
<TABLE>
<CAPTION>
Number of Value of Outstanding
Outstanding Options In-The-Money Options at
Shares at Fiscal Year-End Fiscal Year-End(1)
Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan J. Karp -- -- 5,000 -- $0 --
David E. Fisher -- -- 5,000 -- $0 --
</TABLE>
- ---------
(1) Values are calculated by subtracting the exercise price from the fair
market value of the stock as of December 31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A portion of the commercial paper and subordinated debt (33.1% and 13%
respectively) issued by the Company has been purchased by officers, directors
and affiliates of the Company. Such commercial paper and subordinated debt has
been issued at interest rates then prevailing in the commercial paper and
subordinated debt markets and on terms customary in such markets. The maximum
aggregate principal amount of commercial paper outstanding held by the officers,
members of the Board of Directors and affiliates of the Company at any one time
during 1995, 1996 and 1997 was $1,094,134, $876,396 and $804,957, respectively.
Interest expense incurred in connection with such commercial paper amounted to
$73,008, $60,848 and $57,284 in 1995, 1996 and 1997, respectively. The maximum
aggregate principal amount of subordinated debt outstanding held by the
officers, members of Board of Directors and affiliates of the Company at any one
time during 1995, 1996 and 1997 was $650,000, $650,000 and $650,000,
respectively. Interest expense incurred in connection with such subordinated
debt amounted to $56,587, $92,805 and $91,500 in 1995, 1996 and 1997,
respectively.
The Company completed its initial public offering of 1,060,000 shares of
Common Stock in August 1994. In connection with the initial public offering, the
lead underwriters received as additional compensation warrants entitling the
lead underwriters (or their designees) to purchase up to 100,000 shares of
Common Stock at $6.17 per share, exercisable until August 8, 1999. In addition,
the Company entered into a three-year financial consulting agreement with
Redstone Securities, Inc., the lead underwriter ("Redstone"), pursuant to which
the Company is obligated to pay a fee of $9,800 in 1997 to Redstone. Richard
Belz, a director of the Company, is a controlling person of Redstone.
6
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, requires the Company's Directors and
officers and holders of more than 10% of the Company's Common Stock to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Based solely on a
review of copies of reports furnished to the Company and written representations
that no other reports were required, the Company believes that during the year
ended December 31, 1997, its officers and Directors and holders of more than 10%
of the Company's Common Stock complied with all applicable Section 16(a)
reporting requirements, except that each of Alan J. Karp, David E. Fisher, James
Faust, Joyce S. Karp and Richard Belz inadvertently failed to timely file a
required report on Form 5 reporting a grant of stock options within 45 days of
the year ended December 31, 1997.
INFORMATION CONCERNING INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, independent accountants, examined the
Company's financial statements for the fiscal year ending December 31, 1997. The
Board of Directors has appointed Deloitte & Touche LLP to serve as the Company's
auditors for its year ending December 31, 1998.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. The representative will be given the opportunity to make a
statement at the meeting and is expected to be available to respond to
appropriate questions.
FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1997 has been provided to all stockholders as of the record
date. Stockholders are referred to the report for financial and other
information about the Company, but such report is not incorporated in this proxy
statement and is not a part of the proxy soliciting material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be considered for inclusion in the
Company's proxy materials for the 1998 Annual Meeting, it must be received by
the Company at 335 Crossways Park Drive, Woodbury, New York 11797, Attention:
Alan J. Karp, no later than December 7, 1998.
OTHER BUSINESS
The Board of Directors is not aware of any matters to come before the
Annual Meeting other than the election of Directors. However, it is intended
that the proxy solicited herein will be voted on any other matters that may
properly come before the meeting in the discretion of the person or persons
named in the enclosed form of proxy.
By Order of the Board of Directors
By: /s/ Joyce S. Karp
------------------------------------------
Joyce S. Karp
Secretary
Woodbury, New York
May 5, 1998
