ASTA FUNDING, INC.
210 SYLVAN AVENUE
ENGLEWOOD CLIFFS, NEW JERSEY 07632
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend the
Annual Meeting of Stockholders (the "Meeting") of Asta Funding, Inc. (the
"Company") to be held at the Radisson Hotel, 401 South Van Brunt Street,
Englewood, New Jersey, on Friday, March 9, 2001 at 10:00 a.m.
The enclosed Notice of Meeting and the accompanying Proxy Statement describe
the business to be conducted at the Meeting. I am also pleased to enclose a copy
of the Company's 2000 Annual Report, which contains certain information
regarding the Company and its results for the fiscal year ended September 30,
2000.
It is important that your shares of Common Stock be represented and voted at
the Meeting. Accordingly, regardless of whether you plan to attend the Meeting
in person, please complete, date, sign and return the enclosed proxy card in the
envelope provided, which requires no postage if mailed in the United States.
Even if you return a signed proxy card, you may still attend the Meeting and
vote your shares in person. Every stockholder's vote is important, whether you
own a few shares or many.
I look forward to seeing you at the Meeting.
Sincerely,
/s/ Gary Stern
----------------------------------------
Gary Stern
President and Chief Executive Officer
Dated: February 7, 2001
ASTA FUNDING, INC.
210 SYLVAN AVENUE
ENGLEWOOD CLIFFS, NJ 07632
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 9, 2001
The Annual Meeting of Stockholders (the "Meeting") of Asta Funding, Inc. (the
"Company") will be held at the Radisson Hotel, 401 South Van Brunt Street,
Englewood, New Jersey, on Friday, March 9, 2001 at 10:00 A.M. to consider and
act upon the following:
1. The election of eight directors.
2. The ratification of the appointment of Richard A. Eisner & Company, LLP
as the Company's independent public accountants for 2001.
3. The transaction of such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock, par value $.01 per
share, at the close of business on February 2, 2001 will be entitled to vote at
the Meeting. A complete list of those stockholders will be open to examination
by any stockholder, for any purpose germane to the Meeting, during ordinary
business hours at the Company's executive offices at 210 Sylvan Avenue,
Englewood Cliffs, New Jersey 07632 for a period of ten days prior to the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Mitchell Herman
----------------------------------------------------
Mitchell Herman, Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO COMPLETE,
DATE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
Dated: February 7, 2001
ASTA FUNDING, INC.
210 SYLVAN AVENUE
ENGLEWOOD CLIFFS, NEW JERSEY 07632
---------------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 9, 2001
---------------------
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Asta Funding,
Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held at
the Radisson Hotel, 401 South Van Brunt Street, Englewood, New Jersey on Friday,
March 9, 2001 at 10:00 A.M., and at any adjournments or postponements thereof
(the "Meeting") for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. A stockholder giving a proxy has the right to revoke it
by giving written notice of such revocation to the Secretary of the Company at
any time before it is voted, by submitting to the Company a duly-executed,
later-dated proxy or by voting the shares subject to such proxy by written
ballot at the Meeting. The presence at the Meeting of a stockholder who has
given a proxy does not revoke such proxy unless such stockholder files the
aforementioned notice of revocation or votes by written ballot.
This Proxy Statement and the enclosed form of proxy are first being mailed to
stockholders on or about February 7, 2001. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the proxy. If a proxy is signed but no
specification is given, the shares will be voted "FOR" Proposals 1 and 2 (to
elect the Board's nominees to the Board of Directors and to ratify the
appointment of Richard A. Eisner & Company, LLP, as the Company's independent
public accountants for 2001).
The solicitation of proxies may be made by directors, officers and regular
employees of the Company or any of its subsidiaries by mail, telephone,
facsimile or telegraph or in person without additional compensation payable with
respect thereto. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to forward proxy-soliciting material to the
beneficial owners of stock held of record by such persons, and the Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing. All costs relating to the solicitation of proxies will be borne by the
Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of shares of the Company's Common Stock, par value $.01 per
share ("Common Stock") of record on the close of business on February 2, 2001
(the "Record Date"), are entitled to vote at the Meeting. On the Record Date,
the Company had outstanding 3,967,500 shares of Common Stock. Each holder of
Common Stock will have the right to one vote for each share standing in such
holder's name on the books of the Company as of the close of business on the
Record Date with respect to each of the matters considered at the Meeting. There
are no cumulative voting rights with respect to the election of Directors.
Holders of the Common Stock will not have any dissenters' rights of appraisal in
connection with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares entitled to cast
a majority of the votes of all shares entitled to vote will constitute a quorum
for purposes of conducting business at the Meeting. Assuming that a quorum is
present, directors will be elected by an affirmative vote of a plurality of the
Common Stock so represented and the ratification of auditors will require the
affirmative vote of a majority of the votes cast with respect to such proposals.
Stockholders vote at the Meeting by casting ballots (in person or by proxy),
which are tabulated, by a person or persons appointed by the Board of Directors
before the Meeting to serve as inspector or inspectors of election at the
Meeting. For purposes of determining the vote's cast with respect to any matter
presented for consideration at the Meeting, only those votes cast "for" or
"against" are included. Pursuant to Delaware corporate law, abstentions and
broker non-votes are counted only for the purpose of determining whether a
quorum is present.
1
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of January 15, 2001 with
respect to beneficial ownership of the Common Stock by (i) each director and
executive officer, (ii) each person known by the Company to own beneficially
more than five percent of the outstanding Common Stock, and (iii) all directors
and executive officers as a group. Unless otherwise indicated, the address of
each such person is c/o Asta Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs,
New Jersey 07632. All persons listed have sole voting and investment power with
respect to their shares unless otherwise indicated.
Amount of Beneficial Ownership (1)
-----------------------------------
Percentage
Name and Address Shares Owned
- ---------------- ------ -----
Arthur Stern ..................................... 671,741(2) 15.6%
Gary Stern ....................................... 1,468,673(3) 34.1
Martin Fife ...................................... 215,550(4) 5.0
405 Lexington Avenue
New York, New York 10174
Mitchell Herman .................................. 145,174(5) 3.4
Herman Badillo ................................... 22,500(6) *
909 Third Avenue
New York, NY 10022
Edward Celano .................................... 22,500(6) *
1133 Avenue of the Americas
New York, New York 10036
General Buster Glosson ........................... 22,500(6) *
Two First Union Centre
Charlotte, North Carolina 28282
Harvey Leibowitz ................................. 2,500(7) *
487 Bernard Ave
Cedarhurst, New York 11516
Barbara Marburger ................................ 423,410(8) 9.8
9 Locust Hollow Rd
Monsey, New York 10952
All executive officers and directors as a group
(8 persons) ..................................... 2,571,138(9) 59.8%
- ---------------
* Less than 1%
(1) Any security that any person named above has the right to acquire within 60
days is deemed to be outstanding for purposes of calculating the ownership
percentage of such person, but is not deemed to be outstanding for purposes
of calculating the beneficial ownership percentage of any other person.
(2) Includes 65,500 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001 and 107,271 shares of Common
Stock owned by Asta Group, Incorporated. Excludes 50,000 shares of Common
Stock issuable upon exercise of options that are not exercisable within 60
days of January 15, 2001.
(Footnotes continued on next page)
2
(Footnotes continued from previous page)
(3) Includes 96,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001 and 216,656 shares of Common
Stock owned by Gary Stern as custodian for his minor children and 142,761
shares of Common Stock owned by Asta Group, Incorporated. Excludes 183,334
shares of Common Stock issuable upon exercise of options that are not
exercisable within 60 days of January 15, 2001.
(4) Includes 52,500 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001.
(5) Includes 40,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001 and 8,500 shares of Common
Stock owned by Mitchell Herman as custodian for his minor child. Excludes
5,000 shares of Common Stock issuable upon exercise of options that are not
exercisable within 60 days of January 15, 2001.
(6) Represents 22,500 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001.
(7) Represents 2,500 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001.
(8) Includes 217,328 shares of Common stock owned by Barbara Marburger as
custodian for her minor children and 35,448 shares of Common Stock owned by
Asta Group, Incorporated.
(9) Includes 324,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of January 15, 2001. Excludes 238,334 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days of January 15, 2001.
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the Company's Certificate of Incorporation and Bylaws, the
number of directors of the Company has been set by the Board of Directors at
eight. At the Meeting, eight directors will be elected by the stockholders to
serve until the next annual meeting of stockholders and until their successors
are duly elected and qualified.
All eight of the nominees are currently directors. Each person named herein
as a nominee for director has consented to serve, and it is not contemplated
that any nominee would be unable to serve, as a director. However, if a nominee
is unable to serve as a director, a substitute will be selected by the Board of
Directors and all proxies eligible to be voted for the Board's nominees will be
voted for such other person.
The following table includes the names of each of the current directors of
the Company (who are all nominees), and the executive officers of the Company
and certain information with regard to each person:
Held Position with
Name Age Office Since Company
- ---- --- ----------- -------
Arthur Stern............... 79 1994 Chairman of the Board
Gary Stern................. 48 1994 Director, President and Chief
Executive Officer
Mitchell Herman............ 42 1995 Director, Secretary and Chief
Financial Officer
Martin D. Fife............. 73 1995 Director
Herman Badillo............. 71 1995 Director
General Buster Glosson..... 57 1995 Director
Edward Celano.............. 61 1995 Director
Harvey Leibowitz........... 67 2000 Director
3
Set forth below for each nominee and each executive officer is his name, the
year in which he became a director or officer of the Company, if applicable, his
principal occupations during the last five years and any additional
directorships in publicly held companies. The information is as of January 15,
2001.
Arthur Stern has been a Director and has served as Chairman of the Board of
Directors of the Company since the Company's inception in July 1994. Since 1963,
Mr. Stern has been President of Asta Group, Incorporated ("Group"), a consumer
finance company. In such capacities, he has obtained substantial experience in
distressed consumer credit analysis and receivables collections.
Gary Stern has been a Director, the President and Chief Executive Officer of
the Company since the Company's inception in July 1994. Mr. Stern has been Vice
President, Secretary, Treasurer and a director of Group since 1980 and held
other positions with Group prior thereto. In such capacities, he has obtained
experience in distressed consumer credit analysis and receivables collections.
Mitchell Herman has been a Director of the Company since September 1995. He
has been the Chief Financial Officer of the Company since the Company's
inception in July 1994 and the Chief Financial Officer of Group since May 1994.
Mr. Herman is a certified public accountant. From September 1993 to May 1994 he
was a manager with Paul Abrams & Co. a certified public accounting firm. From
September 1990 to September 1993, Mr. Herman was a senior accountant with
Shapiro & Lieberman, a certified public accounting firm.
Martin D. Fife has been a Director of the Company since September 1995. Since
November 1992, he has been Chairman of the Board of Directors and Chief
Executive Officer of Skysat Communications Network Corporation, a public company
engaged in the research and development and production of, unmanned aircraft
systems for applications in the telecommunications industry. He is also a
Director for ten Dreyfus mutual funds and a Trustee for three Dryfus funds.
Since 1988, Mr. Fife has been a director of Projectavision, Inc., a public
company engaged in the development of solid-state projection television and
related video display technology. Since November 1996, he has been Chairman of
the Board of Directors of Magar Inc. a Company specializing in the marketing of
financial products and the development of early-stage companies.
Herman Badillo has been a Director of the Company since September 1995. He
has been a member of Fischbein, Badillo, Wagner & Harding, a law firm located in
New York City, for more than five years. Since April 1994, he has been Special
Counsel to the Mayor of New York City for Fiscal Oversight of Education and
since July 1994, he has been a member of the Mayor's Advisory Committee on the
Judiciary. Mr. Badillo served as a United States Congressman from 1971 to 1978
and Deputy Mayor of New York City from 1978 to 1979.
General Buster Glosson (Ret.) has been a Director of the Company since
September 1995. He has been President of Eagle Limited, a venture capital and
consulting firm, since September 1994. He served as an officer in the United
States Air Force from 1965 until he retired in September 1994. From June 1992 to
September 1994, he was Deputy Chief of Staff for Plans and Operations for the
United States Air Force. From May 1991 to May 1992, General Glosson was
Legislative Liaison and Director of the Air Force Issues Team. From August 1990
to May 1991, he commanded the 14th Air Division and was a Director of Campaign
Plans for U.S. Central Command Air Forces, Ryadh, Saudi Arabia.
Edward Celano has been a Director of the Company since September 1995. Mr.
Celano has been an Executive Vice President of Atlantic Bank since May 1996.
Prior to that, Mr. Celano was a Senior Vice President of NatWest Bank after
having held different positions at the bank for over 20 years.
Harvey Leibowitz has been a Director of the Company since March 2000. Mr.
Leibowitz has been a Senior Vice President of Sterling National Bank since June
1994. Prior to that, Mr. Leibowitz was employed as a Senior Vice President and
Vice President of several banks and financial institutions since 1963.
Arthur Stern is the father of Gary Stern. There are no other family
relationships among the directors or officers of the Company.
BOARD ORGANIZATION AND MEETINGS
During the fiscal year ended September 30, 2000 the Board of Directors held 4
meetings and acted 5 times by unanimous consent. During the 2000 fiscal year,
each member of the Board of Directors attended at least 75% of all meetings of
the Board of Directors and committees of the Board of Directors of which such
director was a member. There are four standing committees of the Board of
Directors, each of which is described below.
4
Executive Committee. The Executive Committee consists of three directors. The
members of the Executive Committee currently are Martin D. Fife (the Chairman),
Arthur Stern and Herman Badillo. The Executive Committee gives preliminary
consideration to policy and strategic matters and determines whether proposals
shall be submitted for consideration by the full Board of Directors. The
Executive Committee does not have the authority to make a final determination on
any matter without approval by the full Board of Directors.
Nominating Committee. The Nominating Committee consists of three directors.
The members of the Nominating Committee currently are Buster Glosson (the
Chairman), Gary Stern and Herman Badillo. The Nominating Committee has the power
and authority to (i) fix the record date, meeting date and meeting place for the
Annual Meeting of Stockholders, (ii) set the agenda for the Annual Meeting of
Stockholders, (iii) fix the number of persons who shall constitute the Board of
Directors for the coming year, (iv) designate the Board's nominees for directors
at the Annual Meeting of Stockholders, (v) approve the Annual Report to
Stockholders and the Proxy Statement for the Annual Meeting of Stockholders and
(vi) take any and all further or other action necessary or desirable in
connection with the Annual Meeting of Stockholders. The Nominating Committee
will not consider nominees recommended by stockholders.
Audit Committee. The Audit Committee consists of three directors. The members
of the Audit Committee currently are Harvey Leibowitz (the Chairman), Buster
Glosson, and Edward Celano. The Audit Committee is empowered by the Board of
Directors to review the financial books and records of the Company in
consultation with the Company's accounting staff and its independent auditors
and to review with the accounting staff and independent auditors any questions
raised with respect to accounting and auditing policies and procedures.
Compensation Committee. The Compensation Committee consists of three
directors. The members of the Compensation Committee are Edward Celano (the
Chairman), Herman Badillo and Harvey Leibowitz. The Compensation Committee is
empowered by the Board of Directors to review the executive compensation of the
Company's Officers and Directors and to recommend any changes in compensation to
the full Board of Directors.
Audit Committee Charter. The Audit Committee has adopted a charter which is
attached to this Proxy Statement as Appendix A.
Independence of Audit Committee Members. The Company's securities are listed
on the Nasdaq National Market and are governed by its listing standards. All
members of the Audit Committee have been determined to be independent pursuant
to Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards.
Audit Committee Report. In connection with the preparation and filing of the
Company's Annual Report on Form 10-KSB for the fiscal year ended September 30,
2000:
(1) The Audit Committee reviewed and discussed the audited financial
statements with the Company's management.
(2) The Audit Committee discussed with the Company's independent auditors the
matters required to be discussed by SAS 61, as may be modified or supplemented.
(3) The Audit Committee received and reviewed the written disclosures and the
letter from the Company's independent auditors required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
as may be modified or supplemented, and discussed with the Company's independent
auditors any relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the audited financial statements be included in
the 2000 Annual Report on Form 10-KSB.
Audit Committee Members:
Harvey Leibowitz
Buster Glosson
Edward Celano
The foregoing report of the Audit Committee is not to be deemed "soliciting
material" or deemed to be filed with the Securities and Exchange Commission (the
"SEC") or subject to Regulation 14A of the Securities Exchange Act of 1934,
except to the extent specifically requested by the Company or incorporated by
reference in documents otherwise filed.
5
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as directors. Each director who is not an employee of
the Company receives a fee of $10,000 per year. The Company reimburses each
director for the expenses incurred in connection with attendance at such
meetings.
EXECUTIVE COMPENSATION
The following table summarizes certain information relating to the
compensation paid or accrued by the Company for services rendered during the
fiscal years ended September 30, 2000, 1999 and 1998 with respect to the
Company's Chief Executive Officer and each other executive officer and Chairman
of the Company whose total annual salary and bonus are $100,000 or more:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards (1)
----------------------------------------- ------------
Other Securities
Annual Underlying All other
Name and Salary Bonus Compensation Options/SARs Compensation
Principal Position Year ($) ($) ($) (2) ($) (3)
----------------------------------------------- ---- --- --- --- --- ------
Gary Stern ..................................... 2000 175,000 100,000 -- 150,000 1,591
President and Chief 1999 151,250 100,000 -- 100,000 1,794
Executive Officer 1998 151,250 -- -- -- 1,860
Mitchell Herman ................................ 2000 145,000 87,500 -- -- 686
Chief Financial Officer 1999 125,000 25,000 -- 15,000 753
1998 110,000 -- -- -- 802
Arthur Stern ................................... 2000 112,500 -- -- 50,000 --
Chairman
- ---------------
(1) The Company did not grant any stock appreciation rights, restricted stock
awards or make any long-term incentive plan payout during the fiscal years
ended September 30, 2000, September 30, 1999 and September 30, 1998.
(2) Comprised solely of incentive stock options and non-qualified stock
options granted under the Company's 1995 Stock Option Plan. See "1995
Stock Option Plan".
(3) Includes insurance premium amounts paid for the Company.
Employment Agreements
Each of Gary Stern and Mitchell Herman has entered into an employment
agreement (an "Employment Agreement") with the Company, which commenced on
October 1, 1998 and will continue until September 30, 2001.
The Employment Agreements provide for base annual salaries of $300,000 and
$175,000 for Messrs. Stern and Herman, respectively, effective October 1, 2000.
Each of Messrs. Stern and Herman may be granted annual bonuses in the discretion
of the Board of Directors.
Each of the Employment Agreements contains certain non-competition covenants
and confidentiality provisions.
STOCK OPTION PLAN
1995 Stock Option Plan
The 1995 Stock Option Plan was adopted in order to attract and retain
qualified directors, officers and employees of the Company. The following is a
description of certain of the terms and conditions for the 1995
6
Stock Option Plan. Such description does not purport to be complete and is
qualified in its entity by reference to the full text of the 1995 Stock Option
Plan.
The 1995 Stock Option Plan authorizes the granting of incentive stock options
(as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and non-qualified stock options to eligible employees of the Company,
including officers and directors of the Company (whether or not employees) and
consultants of the Company. In the event that an option granted under the 1995
Stock Option Plan expires or is terminated prior to exercise or vesting, the
number of shares of Common Stock covered thereby will again become eligible for
grant under the 1995 Stock Option Plan.
The 1995 Stock Option Plan currently is administered by the Board of
Directors (the "Administrator") but may in the future be administered by a
committee of the Board of Directors (such committee would then become the
Administrator). Subject to applicable law and the terms of the 1995 Stock Option
Plan, the Administrator has the authority to grant options and awards under the
1995 Stock Option Plan, including to determine the terms and conditions of each
individual grant, to interpret and administer the provisions of the 1995 Stock
Option Plan and to adopt, amend and rescind rules and regulations pertaining to
the administration of the 1995 Stock Option Plan and to make all determination
relative thereto.
Options granted under the 1995 Stock Option Plan will have an exercise price
established by the Administrator at the time of grant, provided that the
exercise price of incentive stock options may not be less than the fair market
value of the underlying shares on the date of grant. In the case of an incentive
stock option granted to a 10% stockholder, the per share exercise price may not
be less than 110% of such fair market value on the date of grant. Upon exercise
of an option, the participant will be required to provide the exercise price in
full, in cash, in shares of the Company's securities valued at fair market value
on the date of the exercise of the option or in such other manner as the
Administrator may specify. In connection with any exercise of options, the
Company will have the right to collect or withhold all taxes required to be
withheld under applicable law.
No option will vest more than ten years from the date of grant and no option
may be granted after September 14, 2005. Subject to limitations imposed by
Section 16(b) of the Securities Exchange Act of 1934, the Administrator may
accelerate the vesting of any option or award granted under the 1995 Stock
Option Plan, including upon occurrence of a merger, reorganization or other
similar transaction.
Options granted under the 1995 Stock Option Plan are nontransferable, except
by will or by the laws of descent and distribution. During the lifetime of a
participant, an option may be exercised only by the participant. In the event
that a participant's employment terminates as a result of death, the
participant's estate will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or one year from
the date of death. If the participant's employment terminates as a result of a
disability (as defined in the 1995 Stock Option Plan), the participant will have
the right to exercise vested options for a period ending on the earlier of the
expiration dates of such options or one year from the date of termination. If
the participant's employment terminates for cause, all options will
automatically expire upon termination. If the participant's employment
terminates other than a result of death, disability or termination for cause,
the participant will have the right to exercise vested options for a period
ending on the earlier of the expiration dates of such options or thirty days
from the date of termination. In all cases, any unvested options will terminate
as of the date of termination of employment.
The Administrator may suspend or terminate the 1995 Stock Option Plan at any
time. In addition, the Administrator may amend or revise the terms of the 1995
Stock Option Plan from time to time; however no such amendment or revision may
alter or impair an option or award without the consent of the holder thereof and
no amendment shall, unless stockholder approval of such amendment or revision is
obtained, (i) increase the maximum number of shares which may be acquired
pursuant to options granted under the 1995 Stock Option Plan, (ii) change the
minimum exercise price of options granted under the 1995 Stock Option Plan,
(iii) increase the maximum term of options granted pursuant to the 1995 Stock
Option Plan, or (iv) change the designation of persons eligible to receive
options under the 1995 Stock Option Plan. The 1995 Stock Option Plan will
terminate on September 14, 2005, unless earlier terminated by the Administrator.
No options may be granted under the 1995 Stock Option Plan after its
termination; however, termination of the 1995 Stock Option Plan will not affect
the status of any option outstanding on the date of termination.
7
Subject to certain exceptions not discussed herein, neither the Company nor
the participant will recognize taxable income or loss upon the grant of non-
qualified stock options under the 1995 Stock Option Plan. In general, the
participant will recognize ordinary income upon exercise of a non-qualified
stock option. The amount of income recognized generally will equal the
difference between (i) the fair market value of the underlying shares of Common
Stock on the date of the exercise and (ii) the exercise price. The Company
generally will receive a corresponding tax deduction equal to the amount
includable in the participant's income.
In addition, neither the Company nor the participant will recognize taxable
income or loss upon the grant or exercise of incentive stock options, although
there may be alternative minimum tax consequences to the participant upon
exercise. Upon subsequent disposition of the shares of Common Stock covered by
incentive stock options, the participant generally will recognize either capital
gain or loss or ordinary income, depending on whether certain holding period
requirements are satisfied. The Company generally will be entitled to a tax
deduction if the participant recognizes ordinary income.
On September 15, 1995, the Company granted non-qualified stock options at an
exercise price of $5.00 per share to the following officers and directors of the
Company in the amounts indicated: (i) to Mark Levy options covering 52,000
shares of Common Stock; (ii) to Mitchell Herman options covering 40,000 shares
of Common Stock; (iii) to Arthur Stern options covering 35,000 shares of Common
Stock; (iv) to Martin Fife options covering 12,500 shares of Common Stock; and
(v) to each of Herman Badillo, General Buster Glosson and Edward Celano options
covering 20,000 shares of Common Stock. All such options are currently
exercisable. In addition, upon the effectiveness of the Company's
reincorporation on October 13, 1995, the Company issued to Mark Levy and
Mitchell Herman incentive stock options covering 95,000 and 25,000 shares of
Common Stock, respectively, at an exercise price of $.01 per share in exchange
for incentive stock options that had been previously issued to them by the
predecessor company. Such options became exercisable on September 30, 1998 and
expire in October 2004.
On January 15, 1996, the Company granted non-qualified stock options covering
an aggregate of 37,500 shares of Common Stock to Martin Fife, at an exercise
price of $5.00 per share. All such options are currently exercisable. On August
6, 1996, the Company granted options covering an aggregate of 30,000 shares of
Common Stock to each of Arthur Stern and Gary Stern at exercise prices of $4.50
and $4.95 per share, respectively. The stock options granted to Arthur Stern are
non-qualified stock options and the stock options granted to Gary Stern are
incentive stock options. Options to purchase one-third of such shares become
exercisable on each of the first, second and third anniversaries of the date of
the grant.
On June 19, 1997, the Company granted non-qualified stock options covering an
aggregate of 10,000 shares of Common Stock to Mitchell Herman, at an exercise
price of $1.75 per share. All such options are currently exercisable. In
addition, the Company granted non-qualified stock options to an employee of the
Company covering an aggregate of 4,000 shares of Common Stock at an exercise
price of $1.75 per share. One fourth of such options became exercisable on the
date of grant in 1997, one fourth became exercisable in 1998 and the remaining
one half of such options will become exercisable equally in the years 1999 and
2000.
On June 1, 1999, the Company granted non-qualified stock options covering an
aggregate of 100,000 and 15,000 shares of Common Stock to Gary Stern and
Mitchell Herman respectively, at an exercise price of $1.625 per share. One
third of such options became exercisable on September 30, 1999, and the
remaining become exercisable equally in the years 2000 and 2001. Also on June 1,
1999, the Company granted non-qualified stock options of 2,500 shares of Common
Stock at an exercise price of $1.625 per share to all four of the independent
directors. All such options are currently exercisable. In addition the Company
granted non-qualified stock options covering an aggregate of 4,500 shares to two
employees of the Company at an exercise price of $1.625 per share. The options
become exercisable in equal installments on June 1, 2000, 2001 and 2002.
On March 10, 2000, the stockholders approved an amendment to the Company's
1995 Stock Option Plan (the "1995 Stock Option Plan") increasing the number of
shares reserved for issuance thereunder by 500,000 shares, from 420,000 shares
to 920,000 shares of Common Stock.
On June 13, 2000, the Company granted non-qualified stock options covering an
aggregate of 3,000 shares of Common Stock to two employees of the Company at an
exercise price of $4.50 per share. The options become exercisable in equal
installments on June 13, 2001, 2002 and 2003. On September 18, 2000, the Company
granted non-qualified stock options covering an aggregate of 150,000 and 50,000
shares of Common Stock to Gary Stern
8
and Arthur Stern respectively, at an exercise price of $5.25 per share. The
options become exercisable in equal installments on September 18, 2001, 2002 and
2003. In addition, In May 2000, an employee left the Company and forfeited
previously granted non-qualified stock options covering 3,000 shares of Common
Stock.
As of January 15, 2001, approximately 42 of the Company's employees were
eligible to participate in the 1995 Stock Option Plan. Future grants under the
1995 Stock Option Plan have not yet been determined.
The following tables summarize certain information relating to the grant of
options to purchase Common Stock to the executive officers named in the Summary
Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
Individual Grants
--------------------------------------------------------
Number of Total
Securities Options/SARs
Underlying Granted to Exercise of
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date
- ---- ------------ ------------ ---------- ----------
Gary Stern .............................. 150,000 73.9% $5.25 6/1/2009
Mitchell Herman ......................... -- -- -- --
Arthur Stern ............................ 50,000 24.6% $5.25 6/1//2009
- ---------------
(1) The Company did not grant any stock appreciation rights in fiscal 2000.
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)
Value of Value of
Number of Securities Exercised Unexercised
Underlying Unexercised In-The Money In-The Money
Options/SARs Options/SARs Options/SARs
at FY-End (#)(1) at FY-End ($)(3) at FY-End ($)(3)
--------------------------- --------------- ---------------
Shares acquired Value
Name on Exercise (#) realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ----------- ----------- ------------- --------------- ---------------
Gary Stern ............. -- -- 96,666 183,334 $298,997 $13,750
Mitchell Herman ........ 10,000(2) $17,500 40,000 5,000 -- --
Arthur Stern ........... -- -- 65,500 50,000 -- $20,625
- ---------------
(1) No stock appreciation rights have been granted by the Company.
(2) Mitchell Herman exercised 10,000 options in 2000 at an exercise price of
$1.75.
(3) In accordance with SEC rules, values are calculated by subtracting the
exercise price from the fair market value of the underlying common stock.
For purposes of this table, fair market value is deemed to be $5.75, the
fair market value of a share of Common Stock on September 29, 2000 (presumed
to equal the last reported sale price of the Common Stock as reported on the
Nasdaq National Market on such date).
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons holding more than 10% of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission ("SEC") and to provide the Company with initial reports of
ownership, reports of changes in ownership and annual reports of ownership of
Common Stock and other equity securities of the Company. Based solely upon a
review of such reports furnished to the Company, the Company believes that all
such Section 16(a) reporting requirements were timely fulfilled during the
fiscal year ended September 30, 2000, except that a report on Form 3 reporting
the election of Harvey Leibowitz to the Company's Board of Directors in March
2000 was filed by Mr. Leibowitz in January 2001.
9
CERTAIN RELATED PARTY TRANSACTIONS
On August 15, 1997, Asta Group, Incorporated (Group), the majority
stockholder of the Company, sold all of its 2,252,500 shares of Common Stock to
its shareholders, including Gary Stern, Arthur Stern, Mitchell Herman and
certain members of the Stern family, for an aggregate purchase price of $788,375
($.35 per share) The $788,375 paid by the purchasers was in addition to a
$1,005,000 investment made by them during the fiscal years ended September 30,
1994 and September 30, 1995. Payment of the purchase price was made by each
purchaser by delivering a promissory note to Group for such purchaser's portion
of the aggregate purchase price. The following number of shares of Common Stock
were purchased by directors or executive officers of the Company: Gary Stern,
891,900 shares for $312,196, Arthur Stern, 655,584 shares for $229,459, and
Mitchell Herman, 21,174 for $7,410.
From the commencement of operations of the Company in July 1994 until August
31, 1995, Group advanced to the Company approximately $3,600,000, of which
approximately $1,005,000 was forgiven in March 1995 in exchange for the issuance
to Group of 2,252,500 shares of Common Stock. The balance of such advances were
repaid with interest at the rate of 8% per annum with the proceeds of a
$4,000,000 revolving credit facility obtained by the Company from Israel
Discount Bank of New York ("IDB"). The Company repaid its outstanding
indebtedness to IDB with a portion of the proceeds from the Company's IPO and
proceeds from the Company's credit facility with BankAmerica Business Credit,
Inc. (the "Credit Facility").
From October 1, 1995 until November 14, 1995, Group made additional advances
to the Company in the amount of approximately $786,000. Such advances were
payable upon demand and accrued interest at the rate of 8% per annum. The
Company repaid to Group the entire outstanding balance of such loans with a
portion of the proceeds under the Credit Facility. From August 27, 1996 until
October 1, 1996, Group advanced approximately an additional $1,900,000 to the
Company. In October 1996, the Company repaid the $1,900,000, with interest at
the rate of 8% per annum, with a portion of the proceeds from the sale of a
portfolio of loans in connection with the Company's securitization transaction
with Greenwich Capital Markets, Inc.
During the year ended September 30, 1998, Group made advances to the Company
and its subsidiaries in the amount of approximately $1,200,000. Such advances
were payable on demand and accrued interest at the rate of 12% per annum. At
September 30, 1998, the amount outstanding was approximately $916,000.
During the year ended September 30, 1999, Group made advances to the Company
and its subsidiaries aggregating approximately $2,949,000. Such advances were
payable on demand and accrued interest at the rate of 12% per annum. At
September 30, 1999, the amount outstanding was approximately $2,473,000.
During the year ended September 30, 2000, Group did not make any advances to
the Company or any of its subsidiaries. At September 30, 2000, the amount
outstanding was approximately $816,000.
In October 1994, the Company issued the following number of shares of Common
Stock to the following persons for nominal consideration: Martin Fife, a current
Director of the Company and the Chairman of the Executive Committee of the Board
of Directors, 270,000 shares of Common Stock; Mark Levy, the then Executive Vice
President and Chief Operating Officer of the Company, 180,000 shares of Common
Stock; and Mitchell Herman, the current Chief Financial Officer Secretary and a
Director of the Company, 25,000 shares of Common Stock. Upon termination of his
employment with the Company in March 1997, Mr. Levy returned 105,000 shares of
Common Stock to the Company.
The Company subleases its offices located in Englewood Cliffs, New Jersey,
from a wholly owned subsidiary of Group. The term of the sublease expires on
July 31, 2005, and calls for current rent payments of $10,975 per month. The
terms of the sublease are substantially similar to the terms of the underlying
lease between the subsidiary of Group and the lessor.
Group charged the Company for insurance approximately $15,000 and $49,000,
respectively, during the fiscal years ended September 30, 2000 and 1999.
In the future, transactions with officers, directors and affiliates of the
Company are anticipated to be minimal and will be approved by a majority of the
Board of Directors, including a majority of the disinterested members of the
Board of Directors, and will be made on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
10
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
DESCRIBED ABOVE IN PROPOSAL ONE.
PROPOSAL TWO
RATIFICATION OF AUDITORS
The Board of Directors has appointed Richard A. Eisner & Company, LLP as the
Company's independent public accountants for the fiscal year ending September
30, 2000. Richard A. Eisner & Company, LLP served as the Company's independent
public accountants for the fiscal year ended September 30, 1999. Although the
appointment of independent public accountants is not required to be approved by
stockholders, the Board of Directors believes stockholders should participate in
the selection of the Company's independent public accountants. Accordingly, the
stockholders will be asked at the meeting to ratify the Board's appointment of
Richard A. Eisner & Company, LLP as the Company's independent public accountants
for the fiscal year ended September 30, 2001. Representatives of Richard A.
Eisner & Company, LLP will be present at the Meeting. They will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL TWO DESCRIBED ABOVE.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at the next Annual
Meeting of Stockholders must be received by the Company at the address specified
below no later than the close of business on October 20, 2001 to be eligible for
inclusion in the Company's Proxy Statement for next year's meeting. Any proposal
should be addressed to Mitchell Herman, Secretary, Asta Funding, Inc. 210 Sylvan
Avenue, Englewood Cliffs, New Jersey 07632 and should be sent by certified mail,
return receipt requested.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in the accompanying Notice of the Meeting, to be presented at the
Meeting for action by the stockholders. However, if any other matters are
properly brought before the Meeting or any adjournments thereof, it is intended
that votes will be cast with respect to such matters, pursuant to the proxies,
in accordance with the best judgment of the person acting under the proxies.
The Company will provide without charge to each person being solicited by
this Proxy Statement, on the written request of any such person, a copy of the
Annual Report of the Company on Form 10-KSB for the fiscal year ended September
30, 2000 (as filed with the SEC) including the financial statements thereto. All
such requests should be directed to Mitchell Herman, Secretary, Asta Funding,
Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632.
By Order of the Board of Directors
Mitchell Herman, Secretary
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2000 (EXCLUDING EXHIBITS) ACCOMPANIES THIS PROXY STATEMENT.
THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A
COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
11
ASTA FUNDING, INC.
Proxy Statement--Appendix A
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board of Directors of Asta Funding,
Inc. ("Asta Funding") to assist the Board of Directors of Asta Funding in
monitoring (a) the integrity of the consolidated financial statements of Asta
Funding and its subsidiaries (the "Company") and (b) the independence of
performance of the Company's external and, if applicable, internal auditors.
The members of the Audit Committee shall meet the independence and experience
requirements, if applicable, of the Nasdaq SmallCap Market or such other
securities exchange or market on which the common stock of Asta Funding is
traded, subject to such qualifications and exceptions as may be permitted by
such requirements. The members of the Audit Committee shall be appointed from
time to time by the Board of Directors of Asta Funding. The Board of Directors
of Asta Funding reserves the right to amend, modify or replace this Charter in
its discretion at any time.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Audit Committee. The Audit
Committee may request any officer or employee of the Company, the Company's
outside counsel or independent auditor to attend meetings of the Audit Committee
or to meet with any members of, or consultants to, the Audit Committee.
The primary goals of this Charter are to specify the following:
o the scope of the Audit Committee's responsibilities and the approaches to
be used in carrying out those responsibilities, including structure,
processes and membership requirements;
o the Audit Committee's responsibility for (a) insuring its receipt from the
Company's independent auditor of a formal written statement delineating
all relationships between such auditor and the Company, consistent with
Independence Standards Board Standard No. 1, (b) actively engaging in a
dialogue with such auditor with respect to any disclosed relationships or
services that may impact the objectivity and the independence of the
auditor and (c) taking, or recommending that the Board of Directors of
Asta Funding take, appropriate action to oversee the independence of the
independent auditor; and
o the independent auditor's ultimate accountability, to the Board of
Directors of Asta Funding and the Audit Committee, as representatives of
the stockholders of Asta Funding and the ultimate authority and
responsibility of the Board of Directors of Asta Funding and/or the Audit
Committee to select, evaluate and, where appropriate, replace the
independent auditor (or, if applicable, to nominate the independent
auditor to be proposed for stockholder approval in any proxy statement).
To the extent any statement set forth below is inconsistent with the three
principles set forth above, the three principles set forth above shall govern.
The Audit Committee shall make regular reports to the Board of Directors of
Asta Funding, as required by the Delaware General Corporation Law.
Pursuant to this Charter:
1. THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of Asta Funding will consist of
at least two members of the Board of Directors, including a Chairman designated
by the Board of Directors of Asta Funding. The majority of the members of the
Audit Committee may not be employees of the Company. The Committee will meet at
least three times a year, with additional meetings if circumstances require, for
the purpose of satisfying its responsibilities.
2. SCOPE
The Audit Committee serves at the pleasure of and is subject to the control
and direction of the Board of Directors.
12
3. RESPONSIBILITIES OF THE AUDIT COMMITTEE
o The responsibilities of the Audit Committee to assist the Board of
Directors in fulfilling its fiduciary responsibilities to the stockholders
with respect to matters relating to the Company's business, accounting,
reporting, audit and internal controls practices.
o To maintain a direct line of communications between the Board of Directors
and the Company's independent auditors and internal auditors to provide
for an exchange of views and information.
4. FUNCTIONS OF THE AUDIT COMMITTEE
The Audit Committee will satisfy its responsibilities by completing the
following functions:
o Discuss the results of the annual internal and independent audits with
management and the internal and independent auditors.
o Consider the comments from the independent auditors and internal auditors
with respect to internal accounting and management controls and the
consideration given or action taken by management.
o Recommend, for appointment by the Board of Directors, the selection of
independent auditors for the coming year.
o Appraise the effectiveness of the independent audit effort through
discussions with the independent auditors regarding their planned
arrangements and scope of the annual audit, including fees.
o Review the scope of planned activities and budget along with a review of
the effectiveness of the Company's internal auditors, if any.
o Review the anticipated scope and related fees of any non-audit services to
be provided by the independent auditors to ensure that these services do
not detract from the independence of the auditors in their audit function.
o Consider the comments from the independent auditors with respect to
internal accounting and management controls and the consideration given or
action taken by management.
o Review the Audit Committee's responsibilities and functions, evaluate its
performance, and institute appropriate modifications to reflect changes in
the business environment.
o Monitor the procedures or systems used in preparing the financial
statements of the Company.
o Obtain the assessment of management and the independent auditors as to the
adequacy of:
o the Company's internal accounting procedures and controls.
o the Company's procedures for complying with SEC Regulations and The
Foreign Corrupt Practices Act.
o Receive and review the assessment of management as to the quality and
depth of staffing in the accounting and financial departments worldwide.
o Receive from the Company's independent auditor a formal written statement
delineating all relationships between such auditor and the Company,
consistent with Independence Standards Board Standard No. 1.
o Engage in dialogue with the Company's independent auditor with respect to
any disclosed relationships or services that may impact the objectivity
and independence of such firm.
o Recommend to the Board of Directors appropriate actions to ensure the
independence of the Company's independent auditor.
o Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board of Directors for approval.
o The Audit Committee should meet with independent auditor without
management present.
13
o Review the interim financial statements and financial results with
independent auditor prior to filing Form 10-QSBs.
o Review Year-End financial statements and financial results prior to filing
Form 10-KSB.
o Discuss required communication with independent auditor as required by SAS
61 of GAAS.
o Review any information submitted to the Audit Committee pursuant to
Section 10A of the Private Securities Litigation Reform Act of 1995.
o Prepare the report to the Board of Directors for inclusion in Asta
Funding's annual proxy statement.
o Review with the independent auditor any material problems or difficulties
the auditor may have encountered during an audit including any
restrictions on the scope of activities or access to required information;
review any management letter provided by the auditor and the Company's
response to that letter.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate or are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations.
14
ASTA FUNDING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MARCH 9, 2001
The undersigned hereby appoints Gary Stern and Mitchell Herman, and each of
them, attorneys and proxies with power of substitution, to vote for and on
behalf of the undersigned at the Asta Funding, Inc. Annual Meeting of
Stockholders to be held on March 9, 2001 and at any adjournments or
postponements thereof (the "Meeting"), upon the following matters and upon any
other business that may properly come before the Meeting, as set forth in the
related Notice of Meeting and Proxy Statement, both of which have been received
by the undersigned.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If this proxy is executed but no direction is made,
this proxy will be voted FOR the board's nominees for director and FOR the
ratification of the Company's independent public accountants.
PLEASE INDICATE YOUR VOTE FOR THE ELECTION OF DIRECTORS ON THE OTHER SIDE.
The nominees are: Gary Stern, Mitchell Herman, Arthur Stern, Martin Fife, Herman
Badillo, General Buster Glosson, Edward Celano and Harvey Leibowitz.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
Please mark your
/X/ votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 and 2.
FOR WITHHELD EXCEPTION* FOR AGAINST ABSTAIN
(1) Election of / / / / / / (2) Ratification of Richard A. Eisner / / / / / /
8 directors. & Company, LLP as
independent public accountants
for fiscal year 2001.
*To withhold authority for individual nominees, print nominee's If you have noted an address change or comments on either side
name on the line below and check Exception Box. of this card, mark here: / /
- ---------------------------------------------------------------
Plase sign this proxy and return it promptly whether or not
you expect to attend this Meeting. You may nevertheless vote
in person if you attend.
Pease sign exactly as your name appears hereon. Give full
title if an Attorney, Executor, Administrator, Trustee,
Guardian, etc.
For an account in the name of two or more persons, each should
sign, or if one signs, he or she should attach evidence of
authority.
SIGNATURE(S)_______________________________________________ DATE_______________
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.