DEF 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12 |
ASTA FUNDING, 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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Date Filed: |
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 Crowne Plaza Englewood,
401 South Van Brunt Street, Englewood, New Jersey, on Tuesday,
March 31, 2009 at 11:00 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 Companys 2008
Annual Report on
Form 10-K,
which contains certain information regarding the Company and its
financial results for the fiscal year ended September 30,
2008.
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
stockholders vote is important, whether you own a few
shares or many.
I look forward to seeing you at the Meeting.
Sincerely,
Gary Stern
Chairman, President and Chief Executive Officer
Dated: March 6, 2009
TABLE OF
CONTENTS
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A-1
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B-1
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C-1
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D-1
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Proxy Card
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ASTA
FUNDING, INC
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
March 31, 2009
The Annual Meeting of Stockholders (the Meeting) of
Asta Funding, Inc. (the Company) will be held at the
Crowne Plaza Englewood, 401 South Van Brunt Street, Englewood,
New Jersey, on March 31, 2009 at 11:00 a.m. to
consider and act upon the following:
1. The election of seven directors.
2. The ratification of Grant Thornton LLP as the
independent registered public accounting firm for the fiscal
year ended September 30, 2009
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 Companys Common Stock, par
value $.01 per share, at the close of business on
January 30, 2009 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 Companys 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
Robert J. Michel,
Chief Financial Officer and Secretary
Dated: March 6, 2009
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT
URGES YOU TO COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE. YOU MAY
REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
ASTA
FUNDING, INC
210 Sylvan Avenue
Englewood Cliffs, New Jersey 07632
ANNUAL
MEETING OF STOCKHOLDERS
March 31, 2009
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 Crowne Plaza
Englewood, 401 South Van Brunt Street, Englewood, New Jersey on
Tuesday, March 31, 2009 at 11:00 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 March 6, 2009. 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. The Board of Directors
recommends a vote FOR the proposal listed. If no
directions are given by the person(s) executing this Proxy, the
shares will be voted in favor of the listed proposal
the election of managements nominees to the Board of
Directors. This Proxy, when properly executed, will be voted in
the manner directed herein by the undersigned stockholder, and
unless otherwise specified, the shares will be voted for the
proposal.
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.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to Be Held on
March, 31 2009. This proxy statement, the accompanying form of
proxy card and our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2008, including
financial statements are available on the internet at
http://www.proxydocs.com/asfi.
Under new rules issued by the Securities and Exchange
Commission, we are providing access to our proxy materials both
by sending you this full set of proxy materials and by notifying
you of the availability of our proxy materials on the
internet.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of shares of the Companys Common Stock, par
value $.01 per share (Common Stock), of record on
the close of business on January 30, 2009 (the Record
Date), are entitled to vote at the Meeting. On the Record
Date, the Company had outstanding 14,271,824 shares of
Common Stock. Each holder of Common Stock will have the right to
one vote for each share outstanding in such holders 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 a plurality vote. Pursuant to
Delaware corporate law, abstentions and broker non-votes will be
counted for the purpose of determining whether a quorum is
present and do not have an effect on the election of directors.
SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth information as of
December 31, 2008 with respect to beneficial ownership of
the Companys Common Stock by (i) each director and
executive officer acting in the capacity as such on
September 30, 2008, (ii) each person known by the
Company to own beneficially more than five percent of the
Companys 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.
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Amount and
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Nature
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of Beneficial
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Name and Address of Beneficial Owner
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Ownership
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Percentage(1)
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Arthur Stern
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647,683
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(2)
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4.5
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%
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Gary Stern
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1,535,987
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(3)
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10.3
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%
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Mitchell Cohen(4)
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35,000
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(4)
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*
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Cameron Williams
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0
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n/a
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Mary Curtin
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9,667
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(5)
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*
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Robert J. Michel(6)
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1,257
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*
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Herman Badillo
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45,000
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(7)
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*
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120 Broadway
New York, NY 10271
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Edward Celano
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20,334
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(8)
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*
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2115 Scotch Gamble Road
Scotch Plains, NJ
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Harvey Leibowitz
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80,000
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(9)
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*
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211 West 56th Street, Suite 20C
New York, NY 10019
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David Slackman
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54,834
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(10)
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*
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28 Markwood Lane
East Northport, NY 11731
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Alan Rivera
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49,666
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(11)
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*
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1370 6th Avenue 25th Floor
New York, NY 10019
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Louis A. Piccolo
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34,769
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(12)
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*
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350 West 50th Street
New York, NY 10019
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Asta Group, Incorporated
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842,000
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(13)
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5.9
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%
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Barbara Marburger
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440,451
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(14)
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3.1
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%
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9 Locust Hollow Road
Monsey, NY 10952
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Judith R. Feder
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1,573,000
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(15)
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11.0
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%
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928 East 10th Street
Brooklyn, NY 11230
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Stern Family Investors LLC
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928 East 10th Street
Brooklyn, NY 11230
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692,000
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(16)
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4.8
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GMS Family Investors LLC
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862,000
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(17)
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6.0
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%
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928 East 10th Street
Brooklyn, NY 11230
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2
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Amount and
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Nature
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of Beneficial
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Name and Address of Beneficial Owner
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Ownership
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Percentage(1)
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Private Capital Management
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1,316,238
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(18)
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9.2
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%
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8889 Pelican Bay Blvd. Suite 500
Naples, FL 34108
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Wellington Management Company, LLP
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840,647
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(19)
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5.9
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%
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75 State Street
Boston, MA 02109
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Peters MacGregor Capital Management Pty Ltd
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1,793,630
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(20)
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12.6
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%
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P.O. Box 107
Spring Hill Old 4004
Australia
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First Wilshire Securities Management Inc.
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808,520
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(21)
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5.7
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%
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1224 East Green Street Suite 200
Pasadena, CA 91106
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All executive officers and directors as a group (10 persons)
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2,512,939
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(22)
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16.4
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%
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Less than 1% |
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Any shares of common stock that any person named above has the
right to acquire within 60 days of December 31, 2008,
are deemed to be outstanding for purposes of calculating the
ownership percentage of such person, but are not deemed to be
outstanding for purposes of calculating the beneficial ownership
percentage of any other person not named in the table above. |
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Includes 186,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008, and 214,599 shares of common stock
owned by Asta Group, Incorporated which shares are attributable
to Arthur Stern based on his percentage ownership of Asta Group.
Includes 8,334 shares of restricted stock that will not
have vested within 60 days of December 31, 2008 which
Mr. Stern has the right to vote. Excludes
349,460 shares owned by Stern Family Investors LLC which
shares are attributable to Arthur Stern based on his percentage
ownership of such LLC and 948 shares owned by GMS Family
Investors LLC which shares are attributable to Arthur Stern
based on his percentage ownership of such LLC. Arthur Stern does
not have voting or investment power with respect to any of the
shares held by either LLC and disclaims beneficial ownership of
the shares owned by the LLCs. |
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Includes 586,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008, and 196,656 shares of common stock
owned by Gary Stern as custodian for his minor child and
285,607 shares of common stock owned by Asta Group, which
shares are attributable to Gary Stern based on his percentage
ownership of Asta Group. Includes 18,334 shares of
restricted stock that will not have vested within 60 days
of December 31, 2008 which Mr. Stern has the right to
vote. Excludes 684,945 shares owned by GMS Family Investors
LLC which shares are attributable to Gary Stern based on his
percentage ownership of such LLC. Gary Stern does not have
voting or investment power with respect to any of the shares
held by the LLC and disclaims beneficial ownership of the shares
owned by the LLC. Also excludes 196,656 shares of common
stock held by one of his children who is no longer a minor and
for which he disclaims beneficial ownership. |
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Includes 20,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Mr. Cohen resigned from the Company
effective February 20, 2009. |
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Includes 3,668 shares of restricted stock that will not
have vested within 60 days of December 31, 2008 which
Ms. Curtin has the right to vote. |
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Mr. Michel assumed the role of Chief Financial Officer
effective February 20, 2009. |
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Includes 37,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 3,666 shares of restricted
stock that will not have vested within 60 days of |
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December 31, 2008 which Mr. Badillo has the right to
vote. Excludes 1,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2008. |
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Includes 10,334 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 3,666 shares of restricted
stock that will not have vested within 60 days of
December 31, 2008 which Mr. Celano has the right to
vote. Excludes 1,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2008. |
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Includes 72,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 2,666 shares of restricted
stock that will not have vested within 60 days of
December 31, 2008 which Mr. Leibowitz has the right to
vote. Excludes 1,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2008. |
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Includes 45,334 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 3,666 shares of restricted
stock that will not have vested within 60 days of
December 31, 2008 which Mr. Slackman has the right to
vote. Excludes 1,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2008. |
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(11) |
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Includes 44,000 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Mr. Rivera resigned from the Board
of Directors effective December 17, 2008. Effective with
his resignation Mr. Rivera forfeited 4,334 restricted
shares of common stock and 1,000 stock options that did not vest
prior to his resignation. |
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(12) |
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Includes 25,769 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 3,666 shares of restricted
stock that will not have vested within 60 days of
December 31, 2008 which Mr. Piccolo has the right to
vote. Excludes 1,000 shares of common stock issuable upon
exercise of options that are not exercisable within 60 days
of December 31, 2008. |
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(13) |
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Asta Group, Incorporated is owned by Arthur Stern, our Chairman
Emeritus and Director, Gary Stern, our Chairman, President and
Chief Executive Officer, and other members of the Stern family,
including Barbara Marburger. (Asta Group) |
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(14) |
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Includes 90,676 shares of common stock owned by
Ms. Marburger as custodian for her minor child and
70,907 shares of common stock owned by Asta Group, which
shares are attributable to Ms. Marburger based on her
percentage ownership of Asta Group. Excludes shares of common
stock held by her children who are no longer minors and for
which she disclaims beneficial ownership. Ms. Marburger is
the daughter of Arthur Stern and the sister of Gary Stern. |
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(15) |
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Includes 19,000 shares of common stock owned directly,
692,000 shares owned by Stern Family Investors LLC and
862,000 shares owned by GMS Family Investors LLC.
Ms. Feder is the manager of each LLC and as such has sole
voting and investment power as to such shares. |
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(16) |
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A limited liability company of which Judith R. Feder has sole
voting and investment power. Arthur Stern has a 49.5% beneficial
interest in the LLC, his wife, Alice Stern, has a 1% beneficial
interest, and a trust for the benefit of the descendants of
Arthur Stern, of which Judith R. Feder is trustee, has a 49.5%
beneficial interest in the LLC. |
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(17) |
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A limited liability company of which Judith R. Feder has sole
voting and investment power. Gary Stern has a 79.46% beneficial
interest in the LLC, trusts for the benefit of the children of
Gary Stern of which Judith R. Feder is the trustee have a
combined 20.43% beneficial interest (10.215% each), and Arthur
Stern has a .11% beneficial interest in the LLC. |
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(18) |
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Based on Information reported by Private Capital Management in
its Form 13G/A filed with the Securities &
Exchange Commission (SEC) on December 10, 2008. |
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(19) |
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Based on information contained in a NASDAQ online report as of
January 14, 2009, based on the Form 13G and 13F
filings with the SEC as of such date. The Company is not aware
of any additional filings by any person or Company known to
beneficially own more than 5% of the outstanding shares of
common stock. During 2008, Wellington Management Company, LLP
(Wellington) beneficially owned more than 5% of the
Companys outstanding Common Stock. On February 17,
2009, Wellington filed an amendment to its |
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Form 13G originally filed with the SEC on February 14,
2007, indicating that it was no longer a beneficial owner of
any% of the Companys outstanding Common Stock |
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(20) |
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Based on Information reported by Peters MacGregor Capital
Management Pty, Ltd in its Form 13G/A filed with the
Securities & Exchange Commission on February 3,
2009. |
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(21) |
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Based on information contained in a NASDAQ online report as of
January 14, 2009, based on the Form 13G and 13F
filings with the SEC as of such date. The Company is not aware
of any additional filings by any person or Company known to
beneficially own more than 5% of the outstanding shares of
common stock. |
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(22) |
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Includes 1,029,771 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2008. Includes 57,006 shares of
restricted stock that will not have vested within 60 days
of December 31, 2008. Excludes 5,000 shares of common
stock issuable upon exercise of options that are not exercisable
within 60 days of December 31, 2008. Excludes the
shares owned in the aggregate by Stern Family Investors LLC and
GMS Family Investors LLC. |
5
PROPOSAL ONE
ELECTION
OF DIRECTORS
In accordance with the Companys Certificate of
Incorporation and Bylaws, the number of directors of the Company
has been set by the Board of Directors at seven. At the Meeting,
seven 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 seven nominees named in this proxy statement are currently
directors who will serve until their successors are duly elected
and qualified. 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 of Directors nominees will be voted
for such other person.
The current Board of Directors, based on the recommendation of
our Nominating and Corporate Governance Committee (the
Governance Committee), nominated the individuals
named below for election to our Board of Directors. Background
information on each of the nominees as of January 25, 2009
is set forth below:
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Name
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Age
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Position
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Arthur Stern
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88
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Director, Chairman Emeritus
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Gary Stern
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56
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Chairman, President and Executive Officer
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Herman Badillo(1)(3)
|
|
|
79
|
|
|
Director
|
Edward Celano(1)
|
|
|
70
|
|
|
Director
|
Harvey Leibowitz(1)(2)
|
|
|
74
|
|
|
Director
|
Louis A. Piccolo(3)
|
|
|
56
|
|
|
Director
|
David Slackman(2)(4)
|
|
|
61
|
|
|
Director
|
|
|
|
(1) |
|
Member of Audit Committee |
|
(2) |
|
Member of Compensation Committee |
|
(3) |
|
Member of Governance Committee |
|
(4) |
|
Lead Independent Director |
Arthur Stern has been a director and has served as
Chairman Emeritus since January 2009. Mr. Stern served as
Chairman of the Board of Directors and Executive Vice President
of the Company since the Companys inception in July 1994
through January 2009. Since 1963, Mr. Arthur Stern has been
President of Asta Group, Incorporated, a consumer finance
company (Group). In such capacities, he has obtained
substantial experience in distressed consumer credit analysis
and receivables collections.
Gary Stern has been a director and the President and
Chief Executive Officer of the Company since the Companys
inception in July 1994. Mr. Gary Stern assumed the role of
Chairman in January 2009. Mr. Gary Stern has been Vice
President, Secretary, Treasurer and a director of the Group
since 1980 and held other positions with Group prior thereto. In
such capacities, he has obtained substantial experience in
distressed consumer credit analysis and receivables collections.
Herman Badillo has been a director of the Company since
September 1995. He has been Of Counsel at Sullivan Papain Block
McGrath & Cannavo P.C. since 2005. Prior to joining
his current firm Mr. Badillo was a founding member of
Fischbein, Badillo, Wagner & Harding, a law firm
located in New York City, for more than six years. He has
formerly served as Special Counsel to the Mayor of New York City
for Fiscal Oversight of Education and as a member of the
Mayors 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.
Edward Celano has been a director of the Company since
September 1995. Mr. Celano has served as a consultant to
Walters and Samuels, Incorporated since 2003. He was formally a
consultant with M.R. Weiser & Co., from 2001 to 2003
and an Executive Vice President of Atlantic Bank from May 1996
to February 2001. Prior to May
6
1996, Mr. Celano was a Senior Vice President of NatWest
Bank, now Bank of America, 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 served as a Senior Vice
President of Sterling National Bank since June 1994. Prior to
June 1994, Mr. Leibowitz was employed as a Senior Vice
President and Vice President of several banks and financial
institutions since 1963.
Louis A. Piccolo has been a director of the Company since
June 2004. Mr. Piccolo has served as President of A.L.
Piccolo & Co., Inc since 1988. A.L.
Piccolo & Co. is a business consulting firm
specializing in management and financial consulting. Prior to
1988, Mr. Piccolo was an Executive Vice President and Chief
Financial Officer of Alfred Dunhill of London, Inc from 1983 to
1988, and held the same positions at Debenhams PLC, from
1981 to 1983. From 1977 to 1981, Mr. Piccolo was a senior
accountant at KPMG Peat Marwick.
David Slackman has been a director of the Company since
May 2002. Mr. Slackman has served as Managing Director at
HT Capital Advisors LLC from August 2008 to present.
Mr. Slackman served as President, Manhattan
Market New York of Commerce Bank from March 2001
through June 2008. Prior to March 2001, Mr. Slackman was an
Executive Vice President of Atlantic Bank of New York from 1994
to 2001 and a Senior Vice President of the Dime Savings Bank
from 1986 to 1994.
Arthur Stern is the father of Gary Stern. There are no other
family relationships among directors or officers of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS DESCRIBED ABOVE IN
PROPOSAL ONE.
PROPOSAL TWO
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Grant Thornton LLP served as the Companys independent
registered public accounting firm during the fiscal year ended
September 30, 2008 and has been appointed by the
Companys Audit Committee to serve as the Companys
independent registered accountants for the current fiscal year.
The Companys Audit Committee has the responsibility to
select, retain and oversee the work of outside auditors and when
appropriate, to replace the outside auditors. Stockholder
ratification of the appointment of Grant Thornton LLP as the
Companys independent registered public accounting firm for
the fiscal year ending September 30, 2009 is not required
by law, by the NASDAQ Stock Market listing requirements or by
the Companys certificate of incorporation or bylaws.
However, the Board of Directors is submitting the selection of
Grant Thornton LLP to the Companys stockholders for
ratification as a matter of good corporate governance and
practice. If the stockholders fail to ratify the appointment,
the Company will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Company may appoint a
different independent registered public accounting firm during
the year if the Audit Committee of the Board of Directors
determines that such a change would be in the best interests of
the Company and its stockholders.
A representative of Grant Thornton LLP is expected to be present
at the Annual Meeting, will make such statements as Grant
Thornton LLP may desire and will be available to respond to
appropriate questions from the shareholders.
During fiscal 2008, Grant Thornton LLP provided various audit,
audit related and non-audit services to the Company as follows:
|
|
|
|
|
|
Audit Fees:
|
|
$
|
1,141,000
|
|
Financial Information Systems Design Implementation Fees:
|
|
$
|
0
|
|
Tax Fees:
|
|
$
|
0
|
|
All Other Fees:
|
|
$
|
0
|
|
7
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
Shareholder
Communication with Directors
Shareholders may contact an individual director, the Board as a
group, or a specified Board committee or group, including the
non-employee directors as a group, by the following means:
Mail:
Attn: Board of Directors
Asta Funding, Inc
210 Sylvan Avenue
Englewood Cliffs, NJ 07632
Each communication should specify the applicable addressee or
addressees to be contacted as well as the general topic of the
communication. We will initially receive and process
communications before forwarding them to the addressee. We also
may refer communications to other departments at Asta Funding,
Inc. We generally will not forward to the directors a
communication that is primarily commercial in nature, relates to
an improper or irrelevant topic, or requests Asta Funding, Inc.
general information.
Concerns about accounting or auditing matters or possible
violations of our business conduct should be reported pursuant
to the procedures outlined in the Asta Funding Code of Business
Conduct and Ethics which is available by writing to the
Companys Corporate Secretary, or the Code of Ethics for
Senior Financial Officers which is attached as Exhibit A to
the Companys Proxy Statement.
THE
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Introduction
This discussion presents the principles underlying our executive
officer compensation program. Our goal in this discussion is to
provide the reasons why we award compensation as we do and to
place in perspective the data presented in the tables that
follow this discussion. The focus is primarily on our
executives compensation for the fiscal year ended
September 30, 2008, but some historical and forward-looking
information is also provided to put the fiscal 2008 information
in context. The information we present relates to Gary Stern,
our President and Chief Executive Officer, Mitchell Cohen, our
Chief Financial Officer, Arthur Stern, our Chairman of the Board
and Executive Vice President, Cameron Williams, our Chief
Operating Officer and Mary Curtin, our Senior Vice President,
collectively referred to as Named Executive
Officers. (Please note, Mitchell Cohen resigned form the
Company effective February 20, 2009.)
Compensation
Philosophy and Objectives
We seek to have compensation programs for our Named Executive
Officers that achieve a variety of goals, including to:
|
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|
|
|
attract and retain talented and experienced executives in the
competitive debt buying industry;
|
|
|
|
motivate and fairly reward executives whose knowledge, skills
and performance are critical to our success; and
|
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|
|
provide fair and competitive compensation.
|
In determining executive compensation for 2008, the Compensation
Committee continued its process, initiated the prior year, to
focus more on a pay-for-performance objective, to attempt to
better link pay and performance, and to assure that its
compensation practices are competitive with those in the
industry, both for executive officers and for directors. To that
end, the Compensation Committee again engaged a professional
compensation consultant, Compensation Resources, Inc.
(CRI), to provide benchmarking data, make
suggestions, and assist it in the
8
compensation process. CRI had assisted the Compensation
Committee in determining appropriate bonuses and equity grants
made in January 2008. CRI this year assisted the Committee in
developing a more detailed performance plan for the Named
Executive Officers for fiscal 2008, including the development of
appropriate performance metrics for variable compensation
determinations. Again this year, the chief executive officer
assisted the Compensation Committee in determining compensation
for the other Named Executive Officers.
Prior to this effort, the Compensation Committee determined
bonuses and equity grants on a discretionary basis. In
exercising discretion for fiscal 2007 performance, however, the
Compensation Committee noted the results of the CRI study of
comparable peer companies and sought to begin to make sure that
its officers and directors had competitive compensation
consistent with the Companys financial performance in
fiscal 2007.
In fiscal 2008, the Compensation Committee continued the process
of making sure that compensation rewarded good performance, that
a greater percentage of overall compensation be tied to
performance, and that there be a reasonable mix of cash and
equity compensation. The Company also sought compensation levels
that would put its executives within the range of compensation
for its five peer group companies in its industry (Asset
Acceptance Capital Corp., Encore Capital Group, Inc., NewStar
Financial, Inc., Portfolio Recovery Associates, Inc., and Primus
Guaranty, Ltd.), and for comparable companies available to our
consultant from general compensation surveys. We selected our
peer group companies with the concurrence of CRI. Our
Compensation Committee realizes that benchmarking compensation
may not always be appropriate, but believes that engaging in a
comparative analysis of our compensation practices is useful.
As part of the process for fiscal 2008, the Compensation
Committee first had a series of meetings and discussions with
CRI to determine the appropriate performance measures on which
to base its plan for variable compensation. The Compensation
Committee desired a program that had internal and external
components and that was also flexible, so that targets could be
adjusted and weighted differently over time as the needs of the
business changed. There was also a desire to take into account
windfalls or unfair detriments that objective factors might
produce at times, and to retain some measure of discretion for a
portion of bonuses to be awarded each year. The Compensation
Committee determined with the help of CRI to utilize the
following performance measures for determining variable
compensation: (a) performance of the Companys stock
vs. NASDAQ, (b) performance vs. the identified peer
companies, (c) net income, (d) return on equity and
(e) net collections as a percent of total investment.
Different weights were assigned to each component, as well as a
10% discretionary reserve. The Compensation Committee also
believed there should be a circuit breaker, i.e., a
minimum level of performance that must be achieved in order to
qualify for payment of any variable compensation award. The
Compensation Committee reviewed its tentative conclusions with
respect to the plan with the full Board to get the input of the
entire Board about the process and the results of the
Compensation Committees deliberations, and the Board
approved the plan subject to development of threshold, target
and maximum bonus level performance goals.
During the first quarter of calendar 2008 when the plan was
being developed with CRI, there had already been a significant
decline in the market price of the Companys common stock.
As a result of that decline, the Compensation Committee believed
that the circuit breaker feature of any plan would be such that
there would be no bonus and equity grants made for fiscal 2008.
Accordingly, there was no need to develop specific performance
parameters for 2008. Performance measures for fiscal year 2009
have not been finalized.
Elements
of Executive Officer Compensation
Overview. Total compensation paid to our
executive officers is divided among three principal components.
Salary is generally fixed and does not vary based on our
financial and other performance. Some components, such as
bonuses, stock options and restricted stock award grants, are
variable and dependent upon our performance. Historically,
judgments about these elements have been made subjectively. The
value of certain of these components, such as stock options and
restricted stock, is dependent upon our future stock price. At
the recommendation of CRI, we have begun to move away from stock
options towards restricted stock as the preferred form of equity
compensation, as we believe it will result in less dilution and
more straightforward accounting treatment.
We view the three components of our executive officer
compensation as related but distinct. Our Compensation
Committee, with the assistance of our compensation consultant,
reviews total compensation to see if it falls in line with peer
company and overall market data, and has made a
comparison of the relationship of variable
9
compensation, as well as base, to total compensation. Last year,
the Compensation Committee determined that our compensation
program was generally competitive on base salary, but had been
below industry norms in variable compensation (bonuses), and,
therefore, total compensation. The Compensation Committee
attempted to align executive compensation more directly with
company performance by increasing the potential for executives
to earn variable compensation, while placing less emphasis on
growth in base salaries.
Base Salary. We pay our executives a base
salary, which we review and determine annually. We believe that
a competitive base salary is a necessary element of any
compensation program. Base salaries are established, in part,
based on the individual position, responsibility, experience,
skills, historic salary levels and the executives
performance during the prior year. We are also seeking over a
period of years to align base compensation levels comparable to
our competitors and other companies similarly situated. We do
not view base salaries as primarily serving our objective of
paying for performance.
For fiscal 2008, we held the salary level of Gary Stern and
Arthur Stern constant, as we believed their overall compensation
should have a greater reliance on performance. Mitchell Cohen
was given a small raise in part for the same reason. Raises for
Mary Curtin and Cameron Williams were more substantial to
reflect their respective promotions and increased
responsibilities as executive officers of the Company. We
believe that our salary levels are generally sufficient to
retain our existing executive officers and to hire new executive
officers when and as required.
For fiscal 2009, we held the salary levels of the Named
Executive Officers constant as the performance of the Company
did not reach goals set for the year. This excludes
Mr. Arthur Stern, as he became an outside Director and
Chairman Emeritus effective January 2009. Mr. Williams is
contractually entitled to a salary increase of at least $50,000
on June 1, 2009. We believe that our salary levels are
generally sufficient to retain our existing executive officers
and to hire new executive officers when and as required.
Cash Incentive Bonuses. Consistent with our
emphasis on pay-for-performance incentive compensation programs,
our executives are eligible to receive annual cash incentive
bonuses primarily based upon their performance during the year.
As indicated above, based on the circuit breaker aspect of our
2008 plan, no cash bonuses were awarded for fiscal 2008. In the
past, bonus levels have been subjective, impacted in part by
comparisons to overall cash compensation paid by our competitors
as well as a broader range of comparable companies.
Under the terms of each of our executive employment agreements,
when we adopt more objective performance bonus standards,
subsequent restatement to the financial statements due to
malfeasance or negligence of the executive will subject the
executive to return of excess bonuses awarded if the executive
would have received a reduced bonus amount based on the restated
financial statements.
Equity Compensation. We believe that
restricted stock awards are an important long-term incentive for
our executive officers and employees and align officer interest
with that of our stockholders. We recognize that Gary Stern and
Arthur Stern already have a very significant equity stake in the
Company, so that for them equity grants do not serve to further
align their interests with that of our stockholders but do
assure that their overall compensation is fair from the point of
view of comparable overall compensation with our competitors. We
review our equity compensation plan annually. For fiscal 2008
performance, no awards were made.
We do not have any plan or obligation that requires us to grant
equity compensation to any executive officer on specified dates.
In recent years, we have developed the practice of approving
bonuses and equity grants at about the time our audit of the
prior fiscal year is completed to reward executives for work in
the completed year. The authority to make equity grants to our
executive officers rests with our Compensation Committee;
however, our practice has been to make those grants subject to
ratification and approval by the full Board of Directors. The
Committee does consider the input of our chief executive officer
in setting the compensation of our other executive officers,
including in the determination of appropriate levels of equity
grants.
Severance and
Change-in-Control
Benefits. Historically, we have provided our
executive officers with employment contracts. In January 2007,
we entered into three-year contracts with Gary Stern and
Mitchell Cohen, and a one-year contract with Arthur Stern. In
January 2008, we entered into a new one-year contract with
Arthur Stern, which has now expired, and a two-year employment
agreement with Cameron Williams. All contracts are similarly
structured. These contracts set minimum base salary levels, but
leave discretion as to bonuses and equity
10
grants, with the agreement for Mr. Williams setting an
expected level of the maximum cash bonus and stock grant. The
contracts also provide for certain severance benefits in the
event of termination, as well as a provision providing for a
higher payment in the event of termination or retirement
following a
change-in-control
as defined in the employment agreements. Those severance and
other benefits are described under Employment
Agreements below, and certain estimates of these severance
and change of control benefits are provided in a chart below.
When the existing employment agreements were negotiated, we did
not review wealth and retirement accumulation as a result of
employment with us in fixing severance benefits or any other
compensation issues, and we only focused on fair compensation
for the year in question. We provided this benefit to retain our
executives and believed these provisions were consistent with
the provisions of similar benefits by competitive companies.
Share
Retention
We do not have a share retention policy or guideline for
executive officers and directors encouraging or requiring them
to retain a certain amount of equity in the Company. However,
the most recent grant of restricted stock to directors in 2008
provided that, of the 5,000 restricted shares granted to each
director, 1,000 shares would not vest until death,
disability, retirement from the board or reaching the age of 80.
Regulatory
Considerations
We account for the equity compensation expense for our employees
under the rules of Statement of Financial Accounting Standards
No. 123R, Share-Based Payment
(SFAS 123R), which requires us to estimate and
record an expense for each award of equity compensation over the
service period of the award. Accounting rules also require us to
record cash compensation as an expense at the time the
obligation is accrued.
THE
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee has reviewed and discussed the
following Compensation Discussion and Analysis with management.
Based on this review and these discussions, the Compensation
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
Submitted by the Compensation Committee:
David Slackman, Chairman
Harvey Leibowitz
11
SUMMARY
OF COMPENSATION
The following table contains information about compensation
received by the named executive officers for the fiscal year
ended September 30, 2008.
Summary
Compensation Table
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
Fiscal
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(3)
|
|
|
($)(8)
|
|
|
($)
|
|
|
Arthur Stern
|
|
|
2008
|
|
|
|
360,385
|
|
|
|
0
|
|
|
|
167,055
|
|
|
|
466
|
|
|
|
527,906
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
370,962
|
|
|
|
0
|
(2)
|
|
|
220,340
|
|
|
|
455
|
|
|
|
591,757
|
|
Chairman of the Board(4)
|
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|
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|
|
|
|
|
|
|
|
|
|
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|
Gary Stern
|
|
|
2008
|
|
|
|
577,500
|
|
|
|
0
|
|
|
|
236,406
|
|
|
|
33,695
|
|
|
|
847,601
|
|
President & CEO
|
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|
2007
|
|
|
|
570,096
|
|
|
|
0
|
(2)
|
|
|
220,340
|
|
|
|
21,124
|
|
|
|
811,560
|
|
Mitchell Cohen
|
|
|
2008
|
|
|
|
277,308
|
|
|
|
0
|
|
|
|
143,956
|
|
|
|
28,662
|
|
|
|
449,926
|
|
Chief Financial Officer(5)
|
|
|
2007
|
|
|
|
260,577
|
|
|
|
75,000
|
|
|
|
220,340
|
|
|
|
19,570
|
|
|
|
575,487
|
|
Cameron Williams
|
|
|
2008
|
|
|
|
286,538
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,145
|
|
|
|
303,683
|
|
Chief Operating Officer(6)
|
|
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2007
|
|
|
|
16,346
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,200
|
|
|
|
17,546
|
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Mary Curtin
|
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2008
|
|
|
|
225,577
|
|
|
|
0
|
|
|
|
61,854
|
|
|
|
8,782
|
|
|
|
296,213
|
|
Senior Vice President(7)
|
|
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2007
|
|
|
|
190,577
|
|
|
|
70,000
|
|
|
|
73,456
|
|
|
|
8,400
|
|
|
|
342,433
|
|
|
|
|
(1) |
|
No bonuses were awarded to Named Executive Officers for fiscal
year 2008. Bonuses reflected in the table above were awarded in
January 2008 for fiscal year ended September 30, 2007. Also
included above is a $50,000 bonus paid to Mr. Cohen during
fiscal year 2007 for his work in connection with the
$300 million portfolio purchase in March 2007. Bonuses paid
in fiscal year 2007 for services provided in fiscal year 2006,
as reported in our 2007 proxy statement, were as follows: |
|
|
|
|
|
Arthur Stern
|
|
$
|
50,000
|
|
Gary Stern
|
|
$
|
100,000
|
|
Mitchell Cohen
|
|
$
|
50,000
|
|
|
|
|
(2) |
|
Bonuses awarded to Gary Stern and Arthur Stern of $250,000 and
$50,000, respectively, were not paid at the election of the two
Named Executive Officers. |
|
(3) |
|
The amounts shown in the Stock Awards column represent the
approximate amount we recognized for financial statement
reporting purposes in fiscal year 2008 for the fair value of
equity awards granted to the Named Executive Officers in fiscal
year 2008 and prior years, in accordance with
SFAS No. 123(R), excluding the impact of estimated
forfeitures related to service-based vesting conditions, as
required by SEC rules. As a result, these amounts do not reflect
the amount of compensation actually received by the Named
Executive Officer during the fiscal year. For a description of
the assumptions used in calculating the fair value of equity
awards under SFAS No. 123(R), see Note A [10] and
Note K of our financial statements in our
Form 10-K
for the year ended September 30, 2008. |
|
(4) |
|
Arthur Stern as of January 2009 has retired as an employee of
the Company, although he will continue to serve on the Board,
with the title Chairman Emeritus and to consult for a
combined annual directors and consulting fee of $300,000.
Mr. Stern founded the Company and has served as Executive
Vice President and Chairman of Board of the Company since 1995. |
|
(5) |
|
Mitchell Cohen has resigned from the Company.
Mr. Cohens resignation was effective
February 20, 2009. Mr. Cohen will continue to consult
with the Company to insure a smooth transition, and will receive
a consulting fee of $5,000 per month for six months. The Board
has also agreed to accelerate the vesting of 5,000 shares
of restricted stock of the Company which otherwise would have
vested on March 19, 2009. |
|
(6) |
|
Mr. Williams was appointed to the Chief Operating Officer
position on January 8, 2008. Salary for fiscal year 2007
represents the period August 27, 2007 (commencement of
employment with the Company) through September 30, 2007.
Salary earned for period was in the capacity of Vice
President Strategic Initiatives. |
12
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(7) |
|
Ms. Curtin was appointed to the Senior Vice President
position on January 8, 2008. Salary, Bonus and Stock Awards
were in a non-executive capacity for 2007. |
|
(8) |
|
These amounts consist of: |
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matching Company contributions under our 401(k) plan, and
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life premiums as follows:
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401(k)
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Life
|
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Health
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Company
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Insurance
|
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Automobile
|
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Insurance
|
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|
Match
|
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Premium
|
|
|
Allowance
|
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|
Premiums
|
|
|
Total
|
|
Name
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
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($)
|
|
|
($)
|
|
|
Arthur Stern
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
466
|
|
|
|
466
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
455
|
|
|
|
455
|
|
Gary Stern
|
|
|
2008
|
|
|
|
5,661
|
|
|
|
24,982
|
|
|
|
|
|
|
|
3,052
|
|
|
|
33,695
|
|
|
|
|
2007
|
|
|
|
10,000
|
|
|
|
8,224
|
|
|
|
|
|
|
|
2,900
|
|
|
|
21,124
|
|
Mitchell Cohen
|
|
|
2008
|
|
|
|
6,933
|
|
|
|
19,000
|
|
|
|
|
|
|
|
2,729
|
|
|
|
28,662
|
|
|
|
|
2007
|
|
|
|
7,500
|
|
|
|
9,475
|
|
|
|
|
|
|
|
2,595
|
|
|
|
19,570
|
|
Cameron Williams
|
|
|
2008
|
|
|
|
5,250
|
|
|
|
|
|
|
|
9,600
|
|
|
|
2,296
|
|
|
|
17,146
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
1,200
|
|
|
|
0
|
|
|
|
1,200
|
|
Mary Curtin
|
|
|
2008
|
|
|
|
7,750
|
|
|
|
|
|
|
|
|
|
|
|
1,032
|
|
|
|
8,782
|
|
|
|
|
2007
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
900
|
|
|
|
8,400
|
|
GRANTS OF
STOCK OPTION AND STOCK AWARDS
The following table provides certain information with respect to
restricted stock awards granted to our Named Executive Officers
during fiscal year 2008. None of the Named Executive Officers
received stock options during fiscal year 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Stock
|
|
|
|
|
|
|
|
|
|
Awards: Number of
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Grant Date Fair
|
|
|
|
|
|
|
Stocks or Units
|
|
|
Value of Stock and
|
|
Name
|
|
Grant Date
|
|
|
(#)(1)
|
|
|
Option Awards ($)
|
|
|
Arthur Stern
|
|
|
1/17/08
|
|
|
|
5,000
|
|
|
$
|
98,650
|
|
Gary Stern
|
|
|
1/17/08
|
|
|
|
20,000
|
|
|
$
|
394,600
|
|
Mitchell Cohen
|
|
|
|
|
|
|
|
|
|
|
|
|
Cameron Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Curtin
|
|
|
1/17/08
|
|
|
|
3,000
|
|
|
$
|
59,190
|
|
|
|
|
(1) |
|
These restricted stock awards vest in three equal annual
installments beginning 10/1/08. |
13
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information on exercisable and
unexercisable options and unvested stock awards held by the
Named Executive Officers on September 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Market Value of
|
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Number of Shares or
|
|
|
Shares or Units of
|
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
Units of Stock That
|
|
|
Stock That
|
|
|
|
(#)
|
|
|
Exercise Price
|
|
|
Option
|
|
|
Have Not Vested
|
|
|
Have Not Vested
|
|
Name
|
|
Exercisable
|
|
|
($)
|
|
|
Expiration Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
Arthur Stern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
35,050
|
|
|
|
|
6,000
|
|
|
|
5.96
|
|
|
|
11/14/11
|
|
|
|
3,334
|
|
|
|
23,371
|
|
|
|
|
30,000
|
|
|
|
4.725
|
|
|
|
11/1/12
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
14.87
|
|
|
|
11/3/13
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
18.22
|
|
|
|
10/28/14
|
|
|
|
|
|
|
|
|
|
Gary Stern
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
35,050
|
|
|
|
|
300,000
|
|
|
|
2.625
|
|
|
|
9/18/10
|
|
|
|
13,334
|
|
|
|
93,471
|
|
|
|
|
6,000
|
|
|
|
5.96
|
|
|
|
11/14/11
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
4.725
|
|
|
|
11/1/12
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
|
14.87
|
|
|
|
11/3/13
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
18.22
|
|
|
|
10/28/14
|
|
|
|
|
|
|
|
|
|
Mitchell Cohen
|
|
|
20,000
|
|
|
|
16.57
|
|
|
|
9/9/14
|
|
|
|
5,000
|
|
|
|
35,050
|
|
Cameron Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Curtin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,668
|
|
|
|
11,693
|
|
|
|
|
3,334
|
|
|
|
18.76
|
|
|
|
11/16/14
|
|
|
|
2,000
|
|
|
|
14,020
|
|
|
|
|
(1) |
|
Based on $7.01 per share, the closing price of the common stock
as reported by NASDAQ on September 30, 2008. |
OPTION
EXERCISES AND VESTING OF RESTRICTED STOCK AWARDS
The following table provides information on option exercises and
vesting of stock awards of Named Executive Officers during the
fiscal year ended September 30, 2008.
OPTION
EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Shares
|
|
|
Realized
|
|
|
Shares
|
|
|
Realized
|
|
|
|
Acquired
|
|
|
on
|
|
|
Acquired
|
|
|
on
|
|
|
|
on Exercise
|
|
|
Exercise
|
|
|
on
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Vesting (#)
|
|
|
($)(2)
|
|
|
Arthur Stern
|
|
|
100,000
|
|
|
|
1,237,500
|
|
|
|
6,666
|
|
|
|
79,479
|
|
Gary Stern
|
|
|
200,000
|
|
|
|
4,407,500
|
|
|
|
11,666
|
|
|
|
114,679
|
|
Mitchell Cohen
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
67,750
|
|
Cameron Williams
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mary Curtin
|
|
|
0
|
|
|
|
0
|
|
|
|
2,667
|
|
|
|
29,623
|
|
|
|
|
(1) |
|
Represents the difference between the market price of the
underlying securities at exercise and the exercise price of the
option. |
|
(2) |
|
Represents the number of shares vested multiplied by the market
value of the shares on the vesting date. |
14
Employment
Agreements
In January 2007, the Company entered into employment agreements
(each an Employment Agreement) with each of Gary
Stern, the Companys President and Chief Executive Officer,
Arthur Stern, the Companys Executive Vice President and
Mitchell Cohen, the Companys Chief Financial Officer
(each, an Executive). Each of Gary Sterns and
Mitchell Cohens Employment Agreements expire on
December 31, 2009, provided, however, that the parties are
required to provide ninety days prior written notice if
they do not intend to seek an extension or renewal of the
Employment Agreement. Arthur Sterns agreement had a one
year term. If each Employment Agreement is not renewed by the
expiration dates each executive will continue in their
respective roles as officers of the Company at the discretion of
the Board of Directors. In January 2008, the Company entered
into a similar employment agreement with Cameron Williams, and a
one -year agreement with Arthur Stern. Mr. Cohen has
resigned from the Company. Mr. Cohens resignation was
effective February 20, 2009. Mr. Cohen will continue
to consult with the Company to insure a smooth transition, and
will receive a consulting fee of $5,000 per month for six
months. The Board has also agreed to accelerate the vesting of
5,000 shares of restricted stock of the Company which
otherwise would have vested on March 19, 2009.
As of January 2009 Arthur Stern has retired as an employee of
the Company, although he will continue to serve on the Board,
with the title Chairman Emeritus and to consult for a
combined annual director and consulting fee of $300,000.
Mr. Stern founded the Company and has served as Executive
Vice President and Chairman of Board of the Company since 1995.
The following is a summary of the employment agreements in place
between the Company and its Named Executive Officers. The actual
agreements are on file with the Securities and Exchange
Commission.
The employment agreements each provide for a base salary, which
may be increased by the Board in its sole discretion. The base
contractual salary for each Executive Officer under their
employment agreements is as follows:
|
|
|
|
|
Gary Stern
|
|
$
|
577,500
|
|
Arthur Stern
|
|
$
|
355,000
|
|
Cameron Williams
|
|
$
|
300,000
|
|
Mitchell Cohen
|
|
$
|
280,000
|
|
The executive is eligible to receive bonuses and equity awards
in amounts to be determined by the Compensation Committee of the
Board of Directors. Each executive may also participate in all
of the Companys employee benefit plans and programs
generally available to other employees. Mr. Williams
contract provides that he will be entitled to a cash bonus of up
to $175,000 and a restricted stock grant of up to $175,000 if
all performance goals for 2008 are satisfied at the highest
level set by the Board. Such goals were not satisfied therefore
the bonus and the stock grant were not awarded.
If the executives employment is terminated Without
Cause (as such term is defined in the Employment
Agreement), subject to the execution of a general release
agreement by the executive in favor of the Company, the Company
must continue to pay the executive his base salary for
12 months following the effective date of termination and
maintain insurance benefits for that period. (Base salary and
insurance benefits for Mr. Williams must be maintained for
18 months.) Except as provided above, the executive will
not be eligible to participate in the Companys benefit
plans and programs as of the last day of his employment by the
Company; provided, however that he will not be precluded from
exercising his rights, if any, under COBRA or with respect to
grants made under the Companys 1995 Stock Option Plan, the
2002 Plan, or the Equity Compensation Plan, pursuant to the
terms of such plans and the applicable grant agreements
thereunder. The Company must provide the executive either ninety
days prior written notice of such termination or an amount
equal to ninety days of his base salary in lieu of such
notice of termination. Each party is required to provide ninety
days prior written notice if it does not intend to seek an
extension or renewal of the Employment Agreement. The term
Cause under the contract includes: (i) the
employees failure or refusal to perform his duties and
responsibilities under the contract or the Companys
policies and procedures (subject to certain cure rights);
(ii) the employees conviction of a felony or of any
crime involving moral turpitude; (iii) the commission by
the employee of a fraudulent, illegal or dishonest act in
connection with the performance of his duties; or (iv) the
commission by the employee of any willful misconduct or gross
negligence which reasonably could be expected to have the effect
of injuring the Company.
15
If the executives employment with the Company is
terminated for any reason within 180 days following a
change of control of the Company (as such term is
defined in the 2002 Plan), the Company is required to pay:
|
|
|
|
|
a lump sum amount in cash equal to two (2) times the sum of
the executives base salary in effect on the date of
termination and the highest annual bonus earned by the executive
during his employment with the Company, and
|
|
|
|
the executive will continue to receive the benefits and
perquisites as provided in the employment agreement for two
years from the date of termination.
|
The executive is also subject to standard non-compete and
confidentiality provisions contained in the employment agreement.
The following table describes the potential payments and
benefits upon employment termination for each of our Named
Executive Officers pursuant to applicable law an the terms of
their employment agreements with us, as if their employment had
terminated on September 30, 2008 (the last day of the
fiscal year) under the various scenarios described in the column
headings as explained in the footnotes below: No severance is
paid on a termination with Cause, if the executive terminates
employment, if employment terminates at the end of the
employment period, or if termination is because of death. Upon
disability the individual will be paid his base salary for the
remainder of the agreement from the date of disability.
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change-in
|
|
|
|
Without Cause
|
|
|
Control Trigger
|
|
Name(1)
|
|
(2)
|
|
|
Event(3)
|
|
|
Arthur Stern(4)
|
|
$
|
355,000
|
|
|
$
|
810,000
|
|
Gary Stern
|
|
$
|
577,500
|
|
|
$
|
1,355,000
|
|
Mitchell Cohen(5)
|
|
$
|
280,000
|
|
|
$
|
710,000
|
|
Cameron Williams
|
|
$
|
450,000
|
|
|
$
|
600,000
|
|
|
|
|
(1) |
|
Ms. Curtin does not have an employment agreement. |
|
(2) |
|
Executive is paid for a period of twelve months following
termination date. Chart does not include the value of
12 months continued health, medical and other benefits nor
the effects of the requirement to give 90 days notice of
termination or pay for such 90 day period. |
|
(3) |
|
Executive is paid a lump sum amount in cash equal to two
(2) times the sum of the executives base salary in
effect on the date of termination and the highest annual bonus
earned by the executive during his employment with the Company.
Chart does not include the value of 24 months continued
health, medical and other benefits. |
|
(4) |
|
Arthur Sterns contract expired 12/31/08. Additionally,
Mr. Stern as of January 2009 has retired as an employee of
the Company, although he will continue to serve on the Board,
with the title Chairman Emeritus and to consult for a
combined annual director and consulting fee of $300,000. |
|
(5) |
|
Mitchell Cohen, resigned from the Company effective
February 20, 2009 to relocate and take another position.
Mr. Cohen will continue to consult with the Company to
insure a smooth transition, and will receive a consulting fee of
$5,000 per month for six months. The Board has also agreed to
accelerate the vesting of 5,000 shares of restricted stock
of the Company which otherwise would have vested on
March 19, 2009. |
DIRECTOR
COMPENSATION
Mr. Arthur Stern and Mr. Gary Stern received no
compensation for serving as directors, except that they, like
all directors, are eligible to be reimbursed for any expenses
incurred in attending Board and committee meetings. For fiscal
year 2008, the total annual fees that a director, other than
Mr. Arthur Stern and Mr. Gary Stern, could have
received for serving on our Board of Directors and committees of
the Board of Directors were set as follows:
|
|
|
|
|
An annual fee of $35,000 per year for each Independent Director,
|
|
|
|
An annual fee for the Lead Independent Director of $25,000 per
year,
|
|
|
|
An annual fee of $20,000 for Chairman of Audit Committee,
|
16
|
|
|
|
|
An annual fee of $10,000 for Audit Committee Member,
|
|
|
|
An annual fee of $15,000 for Chairman of the Compensation
Committee,
|
|
|
|
An annual fee of $7,500 for Compensation Committee Member,
|
|
|
|
An annual fee of $15,000 for Chairman of the Governance
Committee, and
|
|
|
|
An annual fee of $7,500 for Governance Committee Member.
|
The following table summarizes compensation paid to independent
directors in fiscal 2008:
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Herman Badillo
|
|
|
40,000
|
|
|
|
51,883
|
|
|
|
15,346
|
|
|
|
107,229(2
|
)
|
Edward Celano
|
|
|
48,750
|
|
|
|
51,883
|
|
|
|
15,346
|
|
|
|
115,979(3
|
)
|
Harvey Leibowitz
|
|
|
56,250
|
|
|
|
51,883
|
|
|
|
15,346
|
|
|
|
123,479(4
|
)
|
David Slackman
|
|
|
57,500
|
|
|
|
51,883
|
|
|
|
15,346
|
|
|
|
124,729(5
|
)
|
Alan Rivera
|
|
|
45,000
|
|
|
|
51,883
|
|
|
|
15,346
|
|
|
|
112,229(6
|
)
|
Louis Piccolo
|
|
|
39,375
|
|
|
|
51,502
|
|
|
|
15,346
|
|
|
|
106,604(7
|
)
|
|
|
|
(1) |
|
The amounts shown in the Stock Awards and Option Awards columns
represents the approximate amount we recognized for financial
statement reporting purposes in fiscal year 2008 for the fair
value of equity awards granted to the outside directors in
fiscal year 2008 and prior years, in accordance with
SFAS No. 123(R), excluding the impact of estimated
forfeitures related to service-based vesting conditions, as
required by SEC rules. As a result, these amounts do not reflect
the amount of compensation actually received by the director
during the fiscal year. For a description of the assumptions
used in calculating the fair value of equity awards under
SFAS No. 123(R), see Note A [10] and Note K
of our financial statements in our
Form 10-K
for the year ended September 30, 2008. |
|
(2) |
|
Includes $3,750 paid in cash for Chairmanship of the Governance
Committee and $2,500 for being a member of the Audit Committee.
Both positions have been held since June 3, 2008. |
|
(3) |
|
Includes $7,500 paid in cash for Chairmanship of the Nominating
Committee (predecessor committee to Governance Committee)
Mr. Celano was chairman until June 3, 2008. Also
includes $7,500 for being a member of the Audit Committee. |
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(4) |
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Includes $16,875 paid in cash for Chairmanship of the Audit
Committee and $5,625 for being a member of the Compensation
Committee. |
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(5) |
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Includes $12,500 paid in cash for Chairmanship of the
Compensation Committee, $5,000 in cash for being a member of the
Audit Committee (member through June 3, 2008) and
$6,250 for being Lead Independent Director, a position
Mr. Slackman has held since June 3, 2008. |
|
(6) |
|
Includes $11,250 paid in cash for being a member of the
Compensation Committee and the Governance Committee.
Mr. Rivera resigned his position on the Board of Directors
effective December 17, 2008. |
|
(7) |
|
Includes $5,625 paid in cash for being a member of the
Governance Committee. |
BOARD
ORGANIZATION AND MEETINGS
Composition of the Board of Directors. Since
the adoption of the Sarbanes-Oxley Act in July 2002, there has
been a growing public and regulatory focus on the independence
of directors. Additional requirements relating to independence
are imposed by the Sarbanes-Oxley Act with respect to members of
the Audit Committee. The Board has established procedures
consistent with the Sarbanes-Oxley Act of 2002, the Securities
and Exchange
17
Commission and The NASDAQ Stock Market. The Board of Directors
has also determined that the following members of the Board
satisfy the NASDAQ definition of independence: Edward Celano,
Harvey Leibowitz, David Slackman, Alan Rivera, Louis A. Piccolo
and Herman Badillo. Mr. Alan Rivera resigned from the Board
of Directors on December 17, 2008.
During the fiscal year ended September 30, 2008, the Board
of Directors held twenty three meetings and acted two times by
unanimous consent, the Audit Committee held four meetings, the
Compensation Committee held five meetings and the Governance
Committee held one meeting. During the 2008 fiscal year, all
members of the Board of Directors attended at least 75% of all
the meetings of the Board of Directors that such Director was
eligible to attend, and committees of the Board of Directors of
which such director was a member. There are three standing
committees of the Board of Directors, each of which is described
below.
Compensation
Committee Matters
Compensation Committee. During the fiscal year
ended September 30, 2008, the Compensation Committee
consisted of David Slackman (Chairman), Harvey Leibowitz and
Alan Rivera. The Compensation Committee is empowered by the
Board of Directors to review the executive compensation of the
Companys officers and directors and to recommend any
changes in compensation to the full Board of Directors.
Effective December 17, 2008, Mr. Rivera resigned from
the Board of Directors of the Company.
Compensation Committee Charter. The Board of
Directors has adopted a Compensation Committee charter to govern
its Compensation Committee. The Compensation Committee charter
is filed as Exhibit B to the Companys Proxy Statement.
Audit
Committee Matters
Audit Committee. At September 30, 2008,
the Audit Committee consisted of Harvey Leibowitz (Chairman),
Herman Badillo and Edward Celano. The Audit Committee is
empowered by the Board of Directors to, among other things:
serve as an independent and objective party to monitor the
Companys financial reporting process, internal control
system and disclosure control system; review and appraise the
audit efforts of the Companys independent accountants;
assume direct responsibility for the appointment, compensation,
retention and oversight of the work of the outside auditors and
for the resolution of disputes between the outside auditors and
the Companys management regarding financial reporting
issues; and provide an open avenue of communication among the
independent accountants, financial and senior management, and
the Board of Directors.
Grant Thornton LLP served as the Companys independent
registered public accounting firm during the fiscal year ended
September 30, 2008. A representative of Grant Thornton LLP
is expected to be present at the Annual Meeting to make such
statements as Grant Thornton LLP may desire and will be
available to answer appropriate questions from shareholders.
Grant Thornton LLP replaced Eisner LLP during fiscal year 2008.
Audit Committee Financial Expert. The Board of
Directors has determined that Harvey Leibowitz is an audit
committee financial expert as such term is defined by the
Securities and Exchange Commission (SEC). As noted
above, Mr. Leibowitz as well as the other
members of the Audit Committee has been determined
to be independent within the meaning of SEC and
NASDAQ regulations.
Audit Committee Charter. The Audit Committee
performed its duties during fiscal 2008 under a written charter
approved by the Board of Directors. The Audit Committee charter
is filed as Exhibit C to the Companys Proxy Statement.
Independence of Audit Committee Members. The
Companys Common Stock is listed on the NASDAQ Global
Select Market and the Company is governed by the listing
standards applicable thereto. All members of the Audit Committee
of the Board of Directors have been determined to be
independent directors pursuant to the definition
contained in Rule 4200(a)(15) of the National Association
of Securities Dealers Marketplace Rules and under the
SECs
Rule 10A-3.
18
Audit Committee Report. In connection with the
preparation and filing of the Companys Annual Report on
Form 10-K
for the fiscal year ended September 30, 2008:
(1) The Audit Committee reviewed and discussed the audited
financial statements with the Companys management.
(2) The Audit Committee discussed with the Companys
independent registered public accounting firm the matters
required to be discussed by SAS 61, Communication with Audit
Committees, as may be modified or supplemented.
(3) The Audit Committee received and reviewed the written
disclosures and the letter from the Companys independent
registered public accounting firm required by the Independence
Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as may be modified or
supplemented, and discussed with the Companys independent
registered public accounting firm 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 of Directors that the audited
financial statements be included in the 2008 Annual Report on
Form 10-K.
Audit Committee Members:
Harvey Leibowitz (Chairman)
Herman Badillo
Edward Celano
The foregoing report of the Audit Committee is not to be deemed
soliciting material or deemed to be filed with 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.
Audit Fees. The Company incurred $1,141,000
for the audit of the Companys annual financial statements
for the year ended September 30, 2008 and for the review of
the financial statements included in the Companys
Quarterly Reports on
Form 10-Q
filed during fiscal 2008. Such fees included the audit of
internal controls over financial reporting as required by the
Sarbanes- Oxley Act of 2002. The Company paid $727,000 for the
audit of the Companys annual financial statements for the
year ended September 30, 2007 and for the review of the
financial statements included in the Companys Quarterly
Reports on
Form 10-Q
filed during fiscal 2007.
Financial Information Systems Design Implementation
Fees. The Company was not billed for and did not
receive any professional services described in Paragraph
(c)(4)(ii) of
Rule 2-01
of the SECs
Regulation S-X
(in general, information technology services) from the
Companys independent registered public accounting firm
during the year ended September 30, 2008 or 2007.
Tax Fees and All Other Fees. The Company was
not billed for any tax compliance or any other services by Grant
Thornton LLP or Eisner LLP during fiscal year 2008. The Company
was not billed for any tax compliance or any other services by
Eisner LLP during fiscal year 2007.
The Audit Committee has approved the engagement of Grant
Thornton LLP as the Companys independent registered public
accounting firm. The Audit Committee requires the Companys
independent registered public accounting firm to advise the
Audit Committee in advance of the independent registered public
accounting firms intent to provide any professional
services to the Company other than services provided in
connection with an audit or a review of the Companys
financial statements. The Audit Committee shall approve, in
advance, any non-audit services to be provided to the Company by
the Companys independent registered public accounting firm.
Other Matters. No other matters were
considered by the Audit Committee of the Board of Directors.
Nominating
and Corporate Governance Committee Matters
Nominating and Corporate Governance
Committee. During the fiscal year ended
September 30, 2008 the Nominating and Corporate Governance
Committee consisted of Herman Badillo (Chairman), Louis Piccolo,
and Alan Rivera. The Nominating and Corporate Governance
Committee is empowered by the Board of Directors to, among other
19
things, recommend to the Board of Directors qualified
individuals to serve on the Companys Board of Directors
and to identify the manner in which the Governance Committee
evaluates nominees recommended for the Board.
Nominating and Corporate Governance Committee
Charter. In January 2008, the Board determined to
re-name the
Nominating Committee, the predecessor committee to the
Nominating and Corporate Governance Committee, and to expand its
functions. The Committee adopted the Nominating and Corporate
Governance Committee Charter and is attached hereto as
Exhibit D to the Companys Proxy Statement
Independence of Nominating and Corporate Governance Committee
Members. All members of the Nominating and
Corporate Governance Committee of the Board of Directors have
been determined to be independent directors pursuant
to the definition contained in Rule 4200(a)(15) of the
National Association of Securities Dealers Marketplace
rules.
Procedures for Considering Nominations Made by
Shareholders. The Nominating and Corporate
Governance Committees charter and guidelines developed by
the Nominating and Corporate Governance Committee describe
procedures for nominations to be submitted by shareholders and
other third-parties, other than candidates who have previously
served on the Board of Directors or who are recommended by the
Board of Directors. The guidelines state that a nomination must
be delivered to the Secretary of the Company at the principal
executive offices of the Company not later than the close of
business on the 90th day nor earlier than the close of
business on the 120th day prior to the first anniversary of
the preceding years annual meeting; provided, however
, that if the date of the annual meeting is more than
30 days before or more than 60 days after such
anniversary date, notice to be timely must be so delivered not
earlier than the close of business on the 120th day prior
to such annual meeting and not later than the close of business
on the later of the 90th day prior to such annual meeting
or the close of business on the 10th day following the day
on which public announcement of the date of such meeting is
first made by the Company. The public announcement of an
adjournment or postponement of an annual meeting will not
commence a new time period (or extend any time period) for the
giving of a notice as described above. The guidelines require a
nomination notice to set forth as to each person whom the
proponent proposes to nominate for election as a director:
(a) all information relating to such person that is
required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such
persons written consent to being named in the proxy
statement as a nominee and to serving as a director it elected)
and (b) information that will enable the Nominating and
Corporate Governance Committee to determine whether the
candidate or candidates satisfy the criteria established
pursuant to the charter and the guidelines for director
candidates.
Qualifications. The charter and guidelines
developed by the Nominating and Corporate Governance Committee
describe the minimum qualifications for nominees and the
qualities or skills that are necessary for directors to possess.
Each nominee:
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must satisfy any legal requirements applicable to members of the
Board of Directors;
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must have business or professional experience that will enable
such nominee to provide useful input to the Board of Directors
in its deliberations;
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must have a reputation, in one or more of the communities
serviced by the Company, for honesty and ethical conduct;
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must have a working knowledge of the types of responsibilities
expected of members of the board of directors of a public
company; and
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must have experience, either as a member of the board of
directors of another public or private company or in another
capacity, which demonstrates the nominees capacity to
serve in a fiduciary position.
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Identification and Evaluation of Candidates for the
Board. Candidates to serve on the Board of
Directors will be identified from all available sources,
including recommendations made by shareholders. The guidelines
developed by the Nominating and Corporate Governance Committee
provide that there will be no differences in the manner in which
the Nominating and Corporate Governance Committee evaluates
nominees recommended by shareholders and nominees recommended by
the Committee or management, except that no specific process
shall
20
be mandated with respect to the nomination of any individuals
who have previously served on the Board of Directors. The
evaluation process for individuals other than existing Board
members will include:
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a review of the information provided to the Nominating and
Corporate Governance Committee by the proponent;
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a review of reference letters from at least two sources
determined to be reputable by the Nominating and Corporate
Governance Committee; and
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a personal interview of the candidate,
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together with a review of such other information as the
Nominating and Corporate Governance Committee shall determine to
be relevant.
Third Party Recommendations. In connection
with the 2009 Annual Meeting, the Nominating and Corporate
Governance Committee did not receive any nominations from any
shareholder or group of shareholders which owned more than 5% of
the Companys Common Stock for at least one year.
STOCK
OPTION and STOCK AWARD PLANS
Equity
Compensation Plan
On December 1, 2005, the Board of Directors adopted the
Companys Equity Compensation Plan (the Equity
Compensation Plan), which was approved by the stockholders
of the Company on March 1, 2006. The Equity Compensation
Plan was adopted to supplement the Companys existing 2002
Stock Option Plan. In addition to permitting the grant of stock
options as are permitted under the 2002 Stock Option Plan, the
Equity Compensation Plan allows the Company flexibility with
respect to equity awards by also providing for grants of stock
awards (i.e. restricted or unrestricted), stock purchase rights
and stock appreciation rights. The Company has
1,000,000 shares of Common Stock authorized under the
Equity Compensation Plan, with 874,000 available for awards as
of December 31, 2008. The following description does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Equity Compensation Plan,
which is included as an exhibit to the Companys reports
filed with the SEC.
The general purpose of the Equity Compensation Plan is to
provide an incentive to our employees, directors and
consultants, including executive officers, employees and
consultants of any subsidiaries, by enabling them to share in
the future growth of our business. The Board of Directors
believes that the granting of stock options and other equity
awards promotes continuity of management and increases incentive
and personal interest in the welfare of the Company by those who
are primarily responsible for shaping and carrying out our long
range plans and securing our growth and financial success.
The Board believes that the Equity Compensation Plan will
advance the Companys interests by enhancing our ability to
(a) attract and retain employees, directors and consultants
who are in a position to make significant contributions to our
success; (b) reward employees, directors and consultants
for these contributions; and (c) encourage employees,
directors and consultants to take into account our long-term
interests through ownership of our shares.
2002
Stock Option Plan
On March 5, 2002, the Board of Directors adopted the Asta
Funding, Inc. 2002 Stock Option Plan (the 2002
Plan), which plan was approved by the Companys
stockholders on May 1, 2002. The 2002 Plan was adopted in
order to attract and retain qualified directors, officers and
employees of, and consultants to, the Company. The following
description does not purport to be complete and is qualified in
its entirety by reference to the full text of the 2002 Plan,
which is included as an exhibit to the Companys reports
filed with the SEC.
The 2002 Plan authorizes the granting of incentive stock options
(as defined in Section 422 of 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.
21
The Company has 1,000,000 shares of Common Stock authorized
for issuance under the 2002 Plan and 393,334 shares were
available as of September 30, 2008. Future grants under the
2002 Plan have not yet been determined.
1995
Stock Option Plan
The 1995 Stock Option Plan expired on September 14, 2005.
The plan was adopted in order to attract and retain qualified
directors, officers and employees of, and consultants, to the
Company. The following description does not purport to be
complete and is qualified in its entirety by reference to the
full text of the 1995 Stock Option Plan, which is included as an
exhibit to the Companys reports filed with the SEC.
The 1995 Stock Option Plan authorized 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 to the Company.
The Company authorized 1,840,000 shares of Common Stock
authorized for issuance under the 1995 Stock Option Plan. All
but 96,002 shares were utilized. As of September 14,
2005, no more options could be issued under this plan.
EQUITY
COMPENSATION PLAN INFORMATION
The following table gives information about the Companys
Common Stock that may be issued upon the exercise of options,
warrants and rights under the Companys Equity Compensation
Plan and 2002 Stock Option Plan, as of September 30, 2008.
These plans were the Companys only equity compensation
plans in existence as of September 30, 2008. The 1995 Stock
Option Plan expired September 14, 2005.
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(c)
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Number of Securities
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(a)
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Remaining Available for
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Number of Securities
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(b)
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Future Issuance Under
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to be Issued Upon
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Weighted-Average
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Equity Compensation
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Exercise of
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Exercise Price of
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Plans (Excluding
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Outstanding Options,
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Outstanding Options,
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Securities Reflected In
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Plan Category
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Warrants and Rights
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Warrants and Rights
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Column (a))
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Equity Compensation Plans Approved by Shareholders
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1,037,438
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$
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11.69
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1,267,334
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Equity Compensation Plans Not Approved by Shareholders
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Total
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1,037,438
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$
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11.69
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1,267,334
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SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors, executive officers and
persons holding more than 10% of a registered class of the
equity securities of the Company to file with the 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, 2008.
CERTAIN
RELATED PARTY TRANSACTIONS
The Company has entered into employment agreements with certain
of its executive officers. See Executive
Compensation Employment Agreements.
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
22
Directors, and will be made on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.
On April 29, 2008, the Company obtained a subordinated loan
pursuant to a subordinated promissory note from Asta Group. The
loan is in the aggregate principal amount of approximately
$8.2 million, bears interest at a rate of 6.25% per annum,
is payable interest only each quarter until its maturity date of
January 9, 2010, subject to prior repayment in full of the
Companys senior loan facility with the Bank Group.
Since the adoption of the Sarbanes-Oxley Act in July 2002, there
has been a growing public and regulatory focus on the
independence of directors. Additional requirements relating to
independence are imposed by the Sarbanes-Oxley Act with respect
to members of the Audit Committee. The Board has established
procedures consistent with the
Sarbanes-Oxley
Act of 2002, the Securities and Exchange Commission and The
NASDAQ Stock Market. The Board of Directors has also determined
that the following members of the Board satisfy the NASDAQ
definition of independence: Edward Celano, Harvey Leibowitz,
David Slackman, Alan Rivera, Louis A. Piccolo and Herman
Badillo. Mr. Alan Rivera resigned from the Board of
Directors on December 17, 2008.
STOCKHOLDER
PROPOSALS
SEC regulations permit shareholders to submit proposals for
consideration at annual meetings of shareholders. Any such
proposals for the Companys Annual Meeting of Shareholders
to be held in 2010 must be submitted to the Company on or before
November 6, 2009, and must comply with applicable
regulations of the SEC in order to be included in proxy
materials relating to that meeting. If a shareholder notifies
the Company after January 20, 2010, of an intent to present
a proposal at the Companys Annual Meeting of Shareholders
to be held in 2010, the Company will have the right to exercise
its discretionary voting authority with respect to such
proposal, if presented at the meeting, without including
information regarding such proposal in its proxy materials.
The Board of Directors has established a procedure that enables
shareholders to communicate in writing with members of the Board
of Directors. Any such communication should be addressed to
Robert J. Michel, Chief Financial Officer and Secretary, Asta
Funding, Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey
07632. Any such communication must state, in a conspicuous
manner, that it is intended for distribution to the entire Board
of Directors. Under the procedures established by the Board of
Directors, upon the Secretarys receipt of such a
communication, the Companys Secretary will send a copy of
such communication to each member of the Board of Directors,
identifying it as a communication received from a shareholder.
Absent unusual circumstances, at the next regularly scheduled
meeting of the Board of Directors held more than two days after
such communication has been distributed, the Board of Directors
will consider the substance of any such communication.
Pursuant to a policy adopted by the Board, Board members are
required to attend the Companys annual meeting of
shareholders. Each of the members of the Board of Directors
attended the Companys 2008 annual meeting of shareholders.
OTHER
MATTERS
The Board of Directors does not know of any matters, other than
those referred to in the accompanying Notice of the Annual
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.
23
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-K,
for the fiscal year ended September 30, 2008 (as filed with
the SEC), including the financial statements thereto. All such
requests should be directed to the Secretary of Asta Funding,
Inc., 210 Sylvan Avenue, Englewood Cliffs, New Jersey 07632.
By Order of the Board of Directors
Robert J. Michel,
Chief Financial Officer and Secretary
A COPY OF THE COMPANYS ANNUAL REPORT ON
FORM 10-K,
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 ACCOMPANIES THIS
PROXY STATEMENT. THIS REPORT IS NOT TO BE REGARDED AS PROXY
SOLICITING MATERIAL OR AS A COMMUNICATION BY MEANS OF WHICH ANY
SOLICITATION IS TO BE MADE.
24
Exhibit A
CODE OF
ETHICS
FOR
SENIOR FINANCIAL OFFICERS
Section 1. Purpose.
The Board of Directors (the Board) of Asta Funding,
Inc. (the Company) has adopted the following Code of
Ethics (the Code) to apply to the Companys
Chief Executive Officer; Chief Financial Officer; Chief
Accounting Officer; Controller; and Treasurer (the Senior
Financial Officers). This Code is intended to focus Senior
Financial Officers on areas of ethical risk, provide guidance to
help them recognize and deal with ethical issues, provide
mechanisms to report unethical conduct, foster a culture of
honesty and accountability, deter wrongdoing and promote fair
and accurate disclosure and financial reporting.
No code or policy can anticipate every situation that may arise.
Accordingly, this Code is intended to serve as a source of
guiding principles. Senior Financial Officers are encouraged to
bring questions about particular circumstances that may involve
one or more of the provisions of this Code to the attention of
the Chair of the Audit Committee, who may consult with inside or
outside legal counsel as appropriate.
Section 2. Introduction
Each Senior Financial Officer is expected to adhere to a high
standard of ethical conduct. The good name of the Company
depends on the way Senior Financial Officers conduct business
and the way the public perceives that conduct. Unethical
actions, or the appearance of unethical actions, are not
acceptable. Senior Financial Officers are expected to be guided
by the following principles in carrying out their
responsibilities.
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Loyalty. Senior Financial Officers should not be, or appear to
be, subject to influences, interests or relationships that
conflict with the best interests of the Company.
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Compliance with Applicable Laws. Senior Financial Officers are
expected to comply with all laws, rules and regulations
applicable to the Companys activities.
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Observance of Ethical Standards. Senior Financial Officers must
adhere to high ethical standards in the conduct of their duties.
These include honesty and fairness.
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Section 3. Integrity
of Records and Financial Reporting.
Senior Financial Officers are responsible for the accurate and
reliable preparation and maintenance of the Companys
financial records. Accurate and reliable preparation of
financial records is of critical importance to proper management
decisions and the fulfillment of the Companys financial,
legal and reporting obligations. Diligence in accurately
preparing and maintaining the Companys records allows the
Company to fulfill its reporting obligations and to provide
stockholders, governmental authorities and the general public
with full, fair, accurate, timely and understandable disclosure.
Senior Financial Officers are responsible for establishing and
maintaining adequate disclosure controls and procedures, and
internal controls and procedures, including procedures that are
designed to enable the Company to: (a) accurately document
and account for transactions on the books and records of the
Company; and (b) maintain reports, vouchers, bills,
invoices, payroll and service records, business measurement and
performance records and other essential data with care and
honesty.
Senior Financial Officers shall immediately bring to the
attention of the Audit Committee any information they may have
concerning:
(a) Defects, deficiencies, or discrepancies related to the
design or operation of internal controls which may affect the
Companys ability to accurately record, process, summarize,
report and disclose its financial data or
A-1
(b) Any fraud, whether or not material, that involves
management or other employees who have roles in the
Companys financial reporting, disclosures or internal
controls.
Section 4. Conflict
of Interest.
Senior Financial Officers must avoid any conflicts of interest
between themselves and the Company. Any situation that involves,
or may involve, a conflict of interest with the Company, should
be disclosed promptly to the Chair of the Audit Committee, who
may consult with inside or outside legal counsel as appropriate.
A conflict of interest can occur when an
individuals personal interest is adverse to or
may appear to be adverse to the interests of the
Company as a whole. Conflicts of interest also arise when an
individual, or a member of his or her family, receives improper
personal benefits as a result of his or her position with the
Company.
This Code does not attempt to describe all possible conflicts of
interest which could develop. Some of the more common conflicts
from which Senior Financial Officers must refrain, however, are
set forth below:
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Improper conduct and activities. Senior Financial Officers may
not engage in any conduct or activities that are inconsistent
with the Companys best interests or that disrupt or impair
the Companys relationship with any person or entity with
which the Company has, or proposes to enter into, a business or
contractual relationship.
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Compensation from non-Company sources. Senior Financial Officers
may not accept compensation for services performed for the
Company from any source other than the Company. Senior Financial
Officers should obtain the approval of the Audit Committee prior
to accepting any paid employment or consulting position with
another entity.
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Gifts. Senior Financial Officers and members of their immediate
families may not accept gifts from persons or entities where any
such gift is being made in order to influence their actions in
their position with the Company, or where acceptance of the
gifts could create the appearance of a conflict of interest.
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Personal use of Company assets. Senior Financial Officers may
not use Company assets, labor or information for personal use,
other than incidental personal use, unless approved by the Chair
of the Audit Committee or as part of a compensation or expense
reimbursement program.
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Financial Interests in other Businesses. Senior Financial
Officers should avoid having an ownership interest in any other
enterprises, such as a customer, supplier or competitor if that
interest compromises the officers loyalty to the Company.
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Section 5. Corporate
Opportunities.
Senior Financial Officers are prohibited from: (a) taking
for themselves personally opportunities related to the
Companys business without first presenting those
opportunities to the Company and obtaining approval from the
Board; (b) using the Companys property, information,
or position for personal gain; or (c) competing with the
Company for business opportunities.
Section 6. Confidentiality.
Senior Financial Officers should maintain the confidentiality of
information entrusted to them by the Company and any other
confidential information about the Company, its business or
finances, customers or suppliers that comes to them, from
whatever source, except when disclosure is authorized or legally
mandated. For purposes of this Code, confidential
information includes all non-public information relating
to the Company, its business or finances, customers or suppliers.
Section 7. Compliance
with Laws, Rules and Regulations.
Senior Financial Officers shall comply with laws, rules and
regulations applicable to the Company, including insider trading
laws, and all other Company policies. Transactions in Company
securities are governed by the Companys Insider Trading
Policy.
A-2
Section 8. Encouraging
the Reporting of any Illegal or Unethical Behavior.
Senior Financial Officers must promote ethical behavior and
create a culture of ethical compliance. Senior Financial
Officers should foster an environment in which the Company:
(a) encourages employees to talk to supervisors, managers
and other appropriate personnel when in doubt about the best
course of action in a particular situation; (b) encourages
employees to report violations of laws, rules and regulations to
appropriate personnel; and (c) informs employees that the
Company will not allow retaliation for reports made in good
faith.
Section 9. Conclusion.
Senior Financial Officers should communicate any suspected
violations of this Code promptly to the Chair of the Audit
Committee. The Board or a person or persons designated by the
Board will investigate violations, and appropriate disciplinary
action will be taken by the Board in the event of any violation
of the Code, up to and including termination. Only the Audit
Committee may grant any waivers of this policy.
A-3
Exhibit B
ASTA
FUNDING, INC.
COMPENSATION COMMITTEE CHARTER
Purpose
The Compensation Committee of Asta Funding, Inc. (the
Corporation) is appointed by the Board
of Directors to assist the Board in carrying out the
Boards responsibilities relating to compensation of the
Corporations directors and officers. The Compensation
Committee has overall responsibility for evaluating and
approving the director and officer compensation plans, policies
and programs of the Corporation.
The Compensation Committee is also responsible for producing an
annual report on executive compensation for inclusion in the
Corporations proxy statement, in accordance with
applicable rules and regulations.
Composition
The Compensation Committee shall consist of no fewer than two
members. Each member of the Compensation Committee must
(i) be an independent director of the Corporation
satisfying the independence requirements of the NASDAQ and other
applicable regulatory requirements; (ii) qualify as an
outside director under Section 162(m) of the
Internal Revenue Code, as amended; and (iii) meet the
requirements of a non-employee director for purposes
of Section 16 of the Securities Exchange Act of 1934, as
amended.
The Board of Directors shall appoint the members of the
Compensation Committee. Subject to earlier removal by the Board
of Directors, each member shall serve until he or she is no
longer a director of the Corporation, and until his or her
successor shall have been duly elected and qualified. A
Compensation Committee member may be removed by the Board of
Directors at any time in its discretion, whereupon the resulting
vacancy shall be filled by the Board of Directors upon
recommendation of the Nominating Committee. The Compensation
Committee members shall elect a chairperson by a vote of a
majority of the full Compensation Committee, or, if the members
have failed to do so, then the Board of Directors shall
designate a chairperson.
The Compensation Committee may form and delegate authority to
subcommittees of the Compensation Committee when appropriate.
Structure
and Meetings
The Compensation Committee shall meet not less than one time per
year. The chairperson of the Compensation Committee shall
preside at each meeting of the Compensation Committee, except
that in the absence of the chairperson at any particular
meeting, then the Compensation Committee member designated by
the chairperson shall preside at such meeting. The chairperson
shall, after consultation with the other members of the
Compensation Committee, (i) determine the dates, times and
places for meetings of the Compensation Committee, and
(ii) set the agenda for each meeting. A majority of the
total number of Compensation Committee members then in office
shall constitute a quorum for the transaction of committee
business and all matters to be decided by the Compensation
Committee shall be decided by the affirmative vote of a majority
of the members present in person or by proxy at a duly called
meeting of the Compensation Committee.
Duties
and Responsibilities
The Compensation Committee shall have the following power,
authority and direct responsibilities:
1 Review and approve annually corporate goals and
objectives relevant to the compensation of the
Corporations Chief Executive Officer (CEO),
annually evaluate the CEOs performance in light of those
goals and objectives, and, consistent with the requirements of
any employment agreement, recommend the CEOs compensation
levels based on this evaluation. The CEO shall not be permitted
to be present during voting or deliberations relating to CEO
compensation.
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2 Make recommendations to the Board with respect to
director and non-CEO officer compensation, incentive
compensation plans and equity-based plans. The CEO may, at the
discretion of the Compensation Committee, be permitted to be
present during voting or deliberations relating to non-CEO
compensation.
3 Produce a Compensation Committee Report on executive
compensation and participate in the production of the
Compensation Discussion and Analysis as required by the SEC to
be included in the Corporations annual proxy statement or
annual report on
Form 10-K
filed with the SEC.
4 Annually review and recommend to the Board the following
items with respect to the CEO and the executive officers of the
Corporation (as defined by Section 16 and
Rule 16a-1(f)
of the Securities and Exchange Act of 1934): (a) the annual
base salary level, (b) the annual incentive opportunity
level, (c) the long-term incentive opportunity level,
(d) employment agreements, severance agreements, and change
in control agreements/provisions, in each case as, when and if
appropriate, and (e) any special or supplemental benefits,
in each case subject to the terms of any existing applicable
employment agreement terms.
5 Make regular reports to the Board.
6 Annually review and reassess the adequacy of this Charter
and recommend to the Board for approval any proposed changes to
this Charter.
7 Perform such other duties and responsibilities as may be
assigned to the Compensation Committee from time to time by the
Board of Directors, including without limitation:
8 Periodic analysis of, and recommendations to the Board of
Directors with respect to, the functions, duties and
responsibilities of each of the executive officers of the
Corporation;
9 Oversight and analysis of, and recommendations to the
Board of Directors with respect to, the Corporations
policies regarding the engagement, advancement, promotion,
reassignment and termination of its executive officers;
10 The implementation and administration of the
Corporations incentive and equity-based compensation plans
to the extent permitted by such plans;
11 Review and make recommendations to the Board of
Directors on (i) the competitiveness of the
Corporations compensation and benefit plans for directors
and key management employees and the employee relations policies
and procedures applicable to key management employees; and
(ii) such other matters relating to the organization of the
Corporation and the compensation of executive officers and key
management employees as the Compensation Committee may in its
own discretion deem desirable.
Operating
Policies
1 The Compensation Committee shall keep the minutes of all
Compensation Committee meetings (designating in its discretion
an individual to record the minutes) and approve the minutes by
subsequent action. The Compensation Committee shall circulate
the approved minutes of the Compensation Committee meetings to
the full Board of Directors for review.
2 The Compensation Committee shall determine its rules of
procedure in accordance with the Corporations principles
of corporate governance and its Bylaws.
3 At each regular meeting of the Board of Directors held
following a Compensation Committee meeting, the Compensation
Committee shall report to the Board of Directors regarding the
actions, activities and findings of the Compensation Committee
since the last Board of Directors meeting, as well as any
recommendations for action by the Board of Directors, when
appropriate.
4 In discharging its responsibilities, the Compensation
Committee shall have full access to any relevant records of the
Corporation and may also request that any officer or employee of
the Corporation or the Corporations outside counsel meet
with members of, or consultants to, the Compensation Committee.
5 The Compensation Committee shall have the authority to
engage such compensation consultants and counsel as it deems
necessary or desirable from time to time to discharge its
functions.
B-2
Exhibit C
ASTA
FUNDING, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee shall assist the Board of Directors (the
Board) of Asta Funding, Inc. (Asta) in
fulfilling its oversight responsibility by reviewing the
accounting and financial reporting processes of Asta and its
subsidiaries (collectively, the Company), the
Companys system of internal controls regarding finance,
accounting, legal compliance and ethics, and the audits of the
Companys financial statements. In so doing, it is the
responsibility of the Audit Committee to maintain free and open
means of communications among the Companys Board of
Directors, outside auditors and senior management. The Audit
Committees primary responsibilities and duties are:
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Serve as an independent and objective party to monitor the
Companys financial reporting process, internal control
system and disclosure control system.
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Review and appraise the audit efforts of the Companys
independent accountants.
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Assume direct responsibility for the appointment, compensation,
retention and oversight of the work of the outside auditors and
for the resolution of disputes between the outside auditors and
the Companys management regarding financial reporting
issues.
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Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board.
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The Audit Committee will primarily fulfill these
responsibilities by carrying out the activities identified in
Section IV of this Charter.
The Company shall be responsible for the providing the Audit
Committee with appropriate funding, as determined by the Audit
Committee, in order to compensate the outside auditors and
advisors engaged by or employed by the Audit Committee.
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II.
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COMPOSITION
OF THE AUDIT COMMITTEE
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The Audit Committee shall consist of at least three
independent Directors of Asta and shall serve at the
pleasure of the Board. An independent Director is
defined as an individual who (a) is not an officer or
salaried employee or an affiliate of the Company, (b) does
not have any relationship that, in the opinion of the Board,
would interfere with his or her exercise of independent judgment
as an Audit Committee member, (c) meets the independence
requirements of the Securities and Exchange Commission (the
SEC) and the NASDAQ Stock Market or such other
securities exchange or market on which Astas securities
are traded and (d) except as permitted by the SEC and the
NASDAQ Stock Market or such other securities exchange or market
on which Astas securities are traded, does not accept any
consulting, advisory or other compensatory fee from the Company.
At least one member of the Audit Committee shall be a
financial expert as defined by the SEC and the
NASDAQ Stock Market or such other securities exchange or market
on which Astas securities are traded. Each Audit Committee
member must be able to read and understand financial statements,
including a balance sheet, income statement, and cash flow
statement.
The members of the Audit Committee shall be designated by the
full Board from time to time. The Board shall designate one
member of the Audit Committee to serve as chairperson of the
committee.
III. MEETINGS
AND MINUTES
The Audit Committee shall meet at least quarterly, with
additional meetings if circumstances require, for the purpose of
satisfying its responsibilities. The Audit Committee shall
maintain minutes of each meeting of the Audit
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Committee and shall report the actions of the Audit Committee to
the Board with such recommendations as the Audit Committee deems
appropriate.
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IV.
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RESPONSIBILITIES
AND DUTIES OF THE AUDIT COMMITTEE
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The Audit Committee shall oversee and monitor the Companys
accounting and financial reporting process, internal control
system and disclosure control system, review the audits of the
Companys financial statements and review and evaluate the
performance of the Companys outside auditors. In
fulfilling these duties and responsibilities, the Audit
Committee shall take the following actions, in addition to
performing such functions as may be assigned by law, the
Companys certificate of incorporation, the Companys
bylaws or the Board.
1. The Audit Committee shall assume direct responsibility
for the appointment, retention and oversight of the work of the
outside auditors and, when appropriate, the replacement of the
outside auditors. As part of the audit process, the Audit
Committee shall meet with the outside auditors to discuss and
decide the audits scope. The Audit Committee shall
determine that the outside audit team engaged to perform the
external audit consists of competent, experienced, auditing
professionals. The Audit Committee shall also review and approve
the compensation to be paid to the outside auditors and shall be
authorized to compensate the outside auditors.
2. The Audit Committee shall take, or recommend that the
full Board take, appropriate action to ensure the independence
of the outside auditors. The Audit Committee shall require the
outside auditors to advise the Company of any fact or
circumstances that might adversely affect the outside
auditors independence or judgment with respect to the
Company under applicable auditing standards. The Audit Committee
shall require the outside auditors to submit, on an annual
basis, a formal written statement setting forth all
relationships between the outside auditors and the Company that
may affect the objectivity and independence of the outside
auditors. Such statement shall confirm that the outside auditors
are not aware of any conflict of interest prohibited by
Section 10A(l) of the Securities Exchange Act of 1934 (the
Exchange Act). The Audit Committee shall actively
engage in a dialogue with the outside auditors with respect to
any disclosed relationships or services that may impact the
objectivity and independence of the outside auditors.
3. The Audit Committee shall require the outside auditors
to advise the Audit Committee in advance in the event that the
outside auditors intend to provide any professional services to
the Company other than services provided in connection with an
audit or a review of the Companys financial statements
(non-audit services); provided that such non-audit
services are not listed in Section 10A(g) of the Exchange
Act (prohibited services). The Audit Committee shall
approve, in advance, any non-audit services to be provided to
the Company by the Companys outside auditing firm.
4. The Audit Committee shall obtain confirmations from time
to time from the Companys outside auditing firm that such
firm is not providing to the Company (i) any prohibited
services, or (ii) any other non-audit service or any
auditing service that has not been approved in advance by the
Audit Committee. The Audit Committee shall have the authority to
approve the provision of non-audit services that have not been
pre-approved by the Audit Committee, but only to the extent that
such non-audit services qualify under the de minimus
exception set forth in Section 10A(i)(1)(B) of the Exchange
Act. The Audit Committee shall record in its minutes and report
to the Board all approvals of non-audit services granted by the
Audit Committee.
5. The Audit Committee shall meet with the outside
auditors, with no management in attendance, to openly discuss
the quality of the Companys accounting principles as
applied in its financial reporting, including issues such as
(a) the appropriateness, not just the acceptability, of the
accounting principles and financial disclosure practices used or
proposed to be used by the Company, (b) the clarity of the
Companys financial disclosures and (c) the degree of
aggressiveness or conservatism that exists in the Companys
accounting principles and underlying estimates and other
significant decisions made by the Companys management in
preparing the Companys financial disclosures. The Audit
Committee shall then meet, without operating management or the
outside auditors being present, to discuss the information
presented to it.
6. The Audit Committee shall meet with the outside auditors
and management to review the Companys quarterly reports on
Form 10-Q
and annual report on
Form 10-K
and discuss any significant adjustments, management judgments
and accounting estimates and any significant new accounting
policies before such forms
C-2
are filed with the SEC. The Audit Committee shall require the
outside auditors to report to the Audit Committee all critical
accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with the
Companys management, ramifications of the use of such
alternative disclosures and treatments, the treatments preferred
by the outside auditors and other material written
communications between the outside auditors and the
Companys management, including managements letters
and schedules of unadjusted differences.
7. Upon the completion of the annual audit, the Audit
Committee shale review the audit findings reported to it by the
outside auditors, including any comments or recommendations of
the outside auditors, with the entire Board.
8. The Audit Committee shall review all reports received
from the federal and state regulatory authorities and assure
that the Board is aware of the findings and results. In
addition, it will meet with the appropriate members of senior
management designated by the Audit Committee to review the
responses to the respective regulatory reports.
9. The Audit Committee shall consider and review with
management: (a) significant findings during the year and
managements responses thereto, including the status of
previous audit recommendations and (b) any difficulties
encountered in the course of their audits, including any
restrictions on the scope of activities or access to required
information.
10. The Audit Committee shall consider and approve, if
appropriate, changes to the Companys auditing and
accounting principles and practices, as suggested by the outside
auditors or management, and the Audit Committee shall review
with the outside auditors and management the extent to which
such changes have been implemented (to be done at an appropriate
amount of time prior to the implementation of such changes as
decided by the Audit Committee).
11. The Audit Committee shall prepare a letter for
inclusion in the Companys proxy statement describing the
discharge of the Audit Committees responsibilities.
12. The Audit Committee will review and update this Charter
periodically, at least annually, and as conditions may dictate.
The Audit Committee Charter shall be presented to the full Board
for its approval of any changes.
13. Commencing on such date as Section 102(a) of the
Sarbanes-Oxley Act of 2002 (the Act) becomes
effective, the Audit Committee shall obtain confirmation from
the outside auditors at the commencement of each audit that such
firm is a registered public accounting firm as such
term is defined under the Act.
14. The Audit Committee shall have the authority to engage
independent counsel and other advisers as it determines
necessary to perform its duties.
15. The Audit Committee shall establish procedures for
(i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal
accounting controls or auditing matters and (ii) the
confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing
matters.
16. The Audit Committee shall investigate or consider such
other matters within the scope of its responsibilities and
duties as the Audit Committee may, in its discretion, determine
to be advisable.
C-3
Exhibit D
ASTA
FUNDING, INC.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
The purpose of the Nominating and Corporate Governance Committee
(the Committee) of the Board of Directors (the
Board) of Asta Funding, Inc. (the
Company) is:
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identifying qualified individuals for membership on the Board;
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recommending to the board the director nominees for election at
the next annual meeting of stockholders;
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making recommendations to the Board regarding the size and
composition of the Board and its committees;
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monitoring the effectiveness of the Board; and
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developing and implementing our corporate governance policies,
including the implementation of the Companys principles of
corporate governance attached as Attachment A (the
Principles of Corporate Governance) and
administration of the Companys whistle-blower policy for
employees and
on-site
contractors attached as Attachment B (the
Whistle-Blower Policy).
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II.
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COMPOSITION
OF THE COMMITTEE
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The Committee:
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shall consist of not less than three members of the Board, the
exact number to be established by the Board from time to time;
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members shall consist solely of individuals who meet the
independence standards set forth in Securities and Exchange
Commission rules and in the listing standards applicable to the
Company, unless the Board determines that an exemption to such
qualification is available under applicable rules; and
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members shall be appointed and may be removed by the Board.
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III. RESPONSIBILITIES
AND DUTIES OF THE COMMITTEE
The Committee shall:
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establish general criteria for identifying and selecting
individuals who may be nominated for election to the Board,
which criteria shall
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reflect, at a minimum, all applicable laws, rules, regulations
and listing standards applicable to the Company, and
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include, without limitation, a potential candidates
experience, areas of expertise and other factors relative to the
overall composition of the Board;
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annually review the size, composition and needs of the board of
directors and make recommendations to the Board;
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recommend to the Board the director nominees for election at the
next annual meeting of stockholders;
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consider and recommend candidates for appointment to the Board
to the extent vacancies arise between annual meetings of
stockholders;
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consider director candidates submitted by stockholders, in
accordance with guidelines developed by the Committee;
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develop and implement an annual process for evaluating Director
performance;
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review and approve, where appropriate, related party
transactions;
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monitor the culture of ethical compliance;
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annually review the Committee charter and recommend to the board
any changes it deems necessary or desirable; and
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review and assess the adequacy of the Companys corporate
governance policies, including the implementation of the
Principles of Corporate Governance and the Whistle-Blower Policy.
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IV.
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MEETINGS
OF THE COMMITTEE
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The Committee shall meet as often as necessary to carry out its
responsibilities, but not less than twice each year. A majority
of the members of the Committee shall constitute a quorum.
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V.
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ADDITIONAL
AUTHORITY OF THE COMMITTEE
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The Committee shall have the authority to do the following, in
its discretion, to the extent it deems appropriate in carrying
out its duties under this Charter and the Principles of
Corporate Governance:
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delegate any of its responsibilities to a subcommittee or
subcommittees; and
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retain outside counsel and other advisors.
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Effective as of January 20, 2009
D-2
ATTACHMENT
A
Principles
of Corporate Governance
Adopted by the Board of Directors
13
Purpose and Nature of Principles
These principles have been adopted by Board resolution as a
definitive statement of the elements of governance by which the
Board will manage its affairs. These principles will be reviewed
and modified by the Board as needed on recommendation of the
Nominating and Corporate Governance Committee.
1. Responsibilities of the
Board. The Directors most
basic responsibility is to exercise their business judgment to
act in a manner that they reasonably believe is in the best
interest of the Company and its shareholders, and, in
discharging this obligation, may rely on members of the
Companys management and on the Companys outside
advisors and auditors. Directors must fulfill their
responsibilities consistent with their fiduciary duties to the
Companys shareholders and in compliance with all
applicable laws and regulations. Each Director must also comply
with all of the Companys policies, including its Code of
Ethics.
2. Functions of the Board. The
Board has four scheduled meetings a year at which it reviews and
discusses reports by management on the financial, as well as
operating, performance of the company, its plans and prospects,
as well as immediate issues facing the Company. In addition to
its general oversight of management, the Board also performs a
number of specific functions including:
a. selecting and evaluating the CEO and overseeing CEO
succession planning;
b. ensuring processes are in place for maintaining the
integrity of the company, the integrity of the financial
statements, the integrity of compliance with law and ethics, the
integrity of relationships with customers and suppliers, and the
integrity of relationships with other stakeholders.
3. Board Size. It is the policy
of the Company that the number of Directors not exceed or be
less than a number that can function efficiently as a body.
4. Director Independence. It is
the policy of the Company that the Board consists of a majority
of independent Directors. The Nominating and Corporate
Governance Committee of the Board shall determine director
independence utilizing the definition of director independence
established by NASDAQ.
5. Committees. It is the general
policy of the Company that the Board as a whole considers all
major decisions. As a consequence, the committee structure of
the Board is limited to those committees considered to be basic
to, or required for, the operation of a publicly owned company.
Currently these committees are the Audit Committee, the
Compensation Committee and the Nominating and Corporate
Governance Committee.
The Nominating and Corporate Governance Committee recommends the
members and chairs of these committees to the Board.
The Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee are made up of
only independent Directors as required by NASDAQ.
6. Board and Committee Self
Evaluation. Annually, the Board and the
committees of the Board shall discuss the performance of the
Board and the committees during the year, focusing on the
successes, as well as areas in which improvements would be
beneficial to the performance of the Board.
7. Director Education. Each
director is expected to participate in one or more director
education programs regarding directors legal duties and
responsibilities over each two-year period of service.
8. Presiding Director. On an annual
basis, the non-employee Directors will select a non-employee
member of the Board to serve as Presiding Director. The
Presiding Director will chair executive sessions of the Board
when the non-employee Directors meet without the Chairman and
Chief Executive Officer and other inside Directors present. The
Presiding Director will perform such other functions as the
Board may direct, including, acting as an
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intermediary between the non-employee Directors and management
when special circumstances exist or communication out of the
ordinary course is necessary, participating in the performance
evaluation of the Chief Executive Officer and reviewing the
schedule of Board and Committee meetings and the agendas for
Board meetings.]
9. Board Meetings. Directors are
expected to attend Board meetings and meetings of the Committees
on which they serve, to spend the time needed and to meet as
frequently as necessary to properly discharge their
responsibilities. Meetings should include presentations by
management and, when appropriate, outside advisors or
consultants, as well as sufficient time for full and open
discussion. In addition to regularly scheduled Board meetings,
the Audit Committee shall meet at least four times per year, the
Compensation Committee shall meet at least one time per year and
the Nominating and Corporate Governance Committee shall meet at
least two times per year.
10. Written Materials. Written
materials that are important to the Boards understanding
of the agenda items to be discussed at a Board or Committee
meeting should be distributed to the Directors sufficiently in
advance of the meeting to allow the Directors the opportunity to
prepare. Directors are expected to review these materials
thoroughly in advance of the meeting.
11. Agenda for Board Meetings. The
Chairman of the Board will set the agenda for Board meetings
with the understanding that certain items necessary for
appropriate Board oversight will be brought to the Board
periodically for review, discussion and decision-making. The
Presiding Director will have the opportunity to review the
agenda for each Board meeting in advance of the meeting and may
request changes, as he or she deems appropriate in order to
ensure that the interests and requirements of the non-employee
Directors are appropriately addressed. Any Director may request
that an item be included on any meeting agenda.
12. Executive Sessions of Non-Employee
Directors. The non-employee Directors will
meet in regular executive sessions without any members of
management present at least two times each year. The Presiding
Director will chair these executive sessions.
13. Conflicts of Interest. Every
employee and Director has a duty to avoid business, financial or
other direct or indirect interests or relationships which
conflict with the interests of the Company or which may affect
his or her loyalty to the Company. Each Director must deal at
arms length with the Company and should disclose to the
Chairman or Presiding Director any conflict or any appearance of
a conflict of interest. Any activity which even appears to
present such a conflict must be avoided or terminated, unless
after appropriate disclosure and discussion, it is determined
that the activity is not harmful to the Company or otherwise
improper.
14. Other Company
Directorships. The Board recommends that,
except in unusual circumstances, if a Director is employed
full-time by a public company, such Director limit the number of
boards on which he or she sits to the boards of two other public
companies (in addition to the Companys Board and that of
his or her employer). If the Director is not employed full-time
by a public company, the Board recommends that, except in
unusual circumstances, he or she sit on the boards of no more
than four other public companies (in addition to the
Companys Board). The Nominating and Corporate Governance
Committee shall review on a
case-by-case
basis situations concerning significant involvement by a
Director in non-profit or charitable organizations.
15. Change in Director
Occupation. When a Directors principal
occupation or business association changes substantially during
his or her tenure as a Director, that Director shall tender his
or her resignation for consideration by the Nominating and
Corporate Governance Committee. The Nominating and Corporate
Governance Committee will recommend to the Board the action, if
any, to be taken with respect to the resignation.
16. Term Limits. The Board does
not endorse arbitrary term limits on Directors service,
nor does it believe in automatic annual renomination until they
reach the mandatory retirement age. The Board self-evaluation
process is an important determinant for continuing service.
17. Succession Planning/Management Development
Review. The Board shall oversee the senior
management development and succession planning process in order
to ensure that the process is rigorous and effective. In
furtherance of this objective, the Nominating and Corporate
Governance Committee will focus upon succession planning for the
Chairman/CEO and the Chairman/CEO will annually conduct a review
of the Senior Management
D-4
Team (the SMT) with the Nominating and Corporate
Governance Committee. This review will be shared with the full
Board in connection with its broader oversight responsibilities.
18. Communication with
Stakeholders. The Chairman and CEO are
responsible for establishing effective communications with the
Companys stakeholder groups, i.e., shareholders,
customers, company associates, communities, suppliers,
creditors, governments and corporate partners.
It is the policy of the Company that management speaks for the
Company. This policy does not preclude outside Directors from
meeting with shareholders, but it is suggested that in the
majority of circumstances, any such meetings be held with
management present.
D-5
ATTACHMENT
B
WHISTLE-BLOWER
POLICY FOR EMPLOYEES AND
ON-SITE
CONTRACTORS
OF
ASTA FUNDING, INC.
AS ADOPTED BY THE COMPANYS BOARD OF DIRECTORS
Asta Funding, Inc. and Subsidiary Companies (the
Company) has established a procedure by which
employees and
on-site
contractors can report to the Company allegations of known or
suspected alleged Improper Activities (as hereinafter defined).
Improper Activities include, but are not limited to,
(i) questionable accounting, internal accounting controls
or auditing matters; (ii) disclosures in documents filed by
the Company with the Securities and Exchange Commission (the
SEC) and other public disclosures made by the
Company that may not be complete or accurate;
(iii) violations of any written policies of the Company as
may be in effect from time to time; (iv) violations of
federal or state securities laws or other laws applicable to the
Company; (v) wire fraud, mail fraud, bank fraud, or any
fraud against the Companys stockholders or under statute;
(vi) forgery or alteration of documents;
(vii) misappropriation or misuse of Company resources, such
as funds or other assets; (viii) authorizing or receiving
compensation for goods not received or services not performed;
or (ix) any other activity by an employee or
on-site
contractor that is undertaken in the performance of the
employees or
on-site
contractors official duties, whether or not that action is
within the scope of his or her employment, and that is in
violation of any state or federal law or regulation, or
constitutes malfeasance, bribery, fraud, misuse of Company
property, or willful omission to perform his or her duties, or
involves gross misconduct.
Employees are encouraged to use the guidance provided by this
policy for reporting Improper Activities in accordance with the
following:
1. Reporting Requirement. All officers, directors and
employees or outside contractors are required to report
information concerning Improper Activities. Such reports are
encouraged to be made in writing so as to assure a clear
understanding of the issues, but may be oral. Such reports
should be factual rather than speculative or conclusory, and
should contain specific information to allow for proper
assessment of the nature, extent and urgency of the issues
raised in the report.
Reporting employees or
on-site
contractors should refrain from (i) obtaining evidence for
which they do not have a right of access and
(ii) conducting their own investigative activities.
It is the Companys policy that no employee or
on-site
contractor shall be subject to disciplinary or retaliatory
action by the Company or any of its employees or agents or
on-site
contractors as a result of the employees or
on-site
contractors submitting a report hereunder. However,
employees or
on-site
contractors who file reports of Improper Activities or provide
evidence which they know to be false or without a reasonable
belief in the truth and accuracy of such information will not be
protected by the above policy statement an may be subject to
disciplinary action and legal claims.
Reporting employees or
on-site
contractors that report Improper Activities on an anonymous
basis must provide sufficient corroborating evidence to justify
the commencement of an investigation. Unspecified wrongdoing or
broad allegations without verifiable evidentiary support may not
lead to an investigation. Because of the inability of
investigators to interview anonymous reporting employees or
on-site
contractors, it may be more difficult to evaluate the
credibility of an Improper Activity and therefore, it is less
likely that an investigation will be initiated.
2. Procedure for Reporting Improper Activities. To submit a
report involving any known or suspected Improper Activity, an
employee may call the Companys Nominating and Corporate
Governance Committee Chairperson at [(800)
652-9194] or
write to [Mr. Harvey Liebowitz, Nominating and Corporate
Governance Committee Chairperson, 159 West
53rd Street, Suite 22G, New York, NY 10019.] If the
employee or
on-site
contractor submitting the complaint is uncomfortable for any
reason addressing such concerns to the Companys Nominating
and Corporate Governance Committee Chairperson the employee or
on-site
contractor may write to the Chairman of the Companys Board
of Directors
c/o the
Company. Employees or
on-site
contractors are encouraged
D-6
to provide as much specific information as possible including
names, dates, places and events that took place, the
employees or
on-site
contractors perception of why the incident(s) constitute
an Improper Activity. Anonymous written or telephonic
communications will be accepted. Reports submitted through this
process that involve the Companys accounting, auditing,
and internal auditing controls and disclosure practices will be
presented by the Nominating and Corporate Governance Committee
Chairperson to the full Nominating and Corporate Governance
Committee of the Companys Board of Directors. An employee
or on-site
contractor may utilize this process either to raise new
complaints or if he or she feels that a complaint previously
raised has not been appropriately handled.
The Companys Nominating and Corporate Governance Committee
Chairperson will report directly to the Nominating and Corporate
Governance Committee of the Companys Board of Directors on
matters arising under this Policy. The Nominating and Corporate
Governance Committee Chairpersons responsibilities under
this policy include:
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Administering, implementing and overseeing ongoing compliance
under the Policy.
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Establishing, amending where necessary and administering
procedures to assure that such reports of Improper Activities
will be collected, reviewed promptly, treated or resolved in an
appropriate manner, and retained.
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Establishing, amending where necessary and administering
procedures that enable employees to submit reports of Improper
Activities and related concerns in a confidential and anonymous
manner.
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Ensuring that the individuals at the Company who are responsible
for preparing and reviewing the Companys public filings
with the SEC and other public disclosures are made aware of
reports of Improper Activities involving the Companys
accounting, auditing, and internal auditing controls or
disclosure practices.
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D-7
PROXY
ASTA FUNDING, INC.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 31,
2009
The undersigned hereby appoints Gary Stern and Robert J. Michel,
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. (the Company) Annual Meeting
of Stockholders to be held on March 31, 2009 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 BOARDS NOMINEES FOR DIRECTOR.
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF ASTA FUNDING, INC.
March 31, 2009
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF ASTA FUNDING,
INC.
Please date, sign and mail your proxy card in the envelope
provided as soon as possible.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders to Be Held on
March, 31 2009. This proxy statement, the accompanying form of
proxy card and our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2008, including
financial statements are available on the internet at
http://www.proxydocs.com/asfi.
Under new rules issued by the Securities and Exchange
Commission, we are providing access to our proxy materials both
by sending you this full set of proxy materials and by notifying
you of the availability of our proxy materials on the
internet.
Please detach along perforated line and mail in the envelope
provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS ONE AND TWO. PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN
HERE þ
1. Election of Directors:
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NOMINEES:
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FOR ALL NOMINEES
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o Gary
Stern
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o Arthur
Stern
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WITHHOLD AUTHORITY
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o Herman
Badillo
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FOR ALL NOMINEES
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o David
Slackman
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o Edward
Celano
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FOR ALL EXCEPT
(See instructions below)
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o Harvey
Leibowitz
o Louis
A. Piccolo
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INSTRUCTION: |
To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to
each nominee you wish to withhold, as shown
here: o
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Ratification of Grant Thornton LLP as Independent Registered
Public Accounting Firm
For o Against o Abstain o
2.
To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the
account may not be submitted via this
method. o
In their discretion, the above named proxies are authorized to
vote upon such other business as may properly come before the
meeting or any adjournment thereof and upon matters incident to
the conduct of the meeting.
THIS PROXY WILL BE VOTED AS
DIRECTED. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED IN NAMED ABOVE,
OR IF ANY ONE OR MORE OF THE NOMINEES BECOMES UNAVAILABLE, FOR
ANOTHER NOMINEE OR OTHER NOMINEES TO BE SELECTED BY THE BOARD OF
DIRECTORS.
Please 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.
Signature of
Stockholder
Date:
,
2009
Signature of
Stockholder
Date:
,
2009
NOTE: Please sign
exactly as your name or names appear on this Proxy. When shares
are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by authorized person.