jwallace@collectors.com
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant ¨
Check
the
appropriate box:
¨
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Preliminary
Proxy Statement
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¨
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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¨
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Soliciting
Material Pursuant to §240.14a-11(c) or
§240.14a-12
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COLLECTORS
UNIVERSE, INC.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee
required
¨ $125
per
Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
¨ $500
per
each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
¨ Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) |
Title
of each class of securities to which transaction
applies:
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(2) |
Aggregate
number of securities to which transaction
applies:
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(3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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(4) |
Proposed
maximum aggregate value of
transaction:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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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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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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COLLECTORS
UNIVERSE, INC.
1921
E. Alton Avenue
Santa
Ana, California 92705
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On Tuesday, December 5, 2006
TO
THE
STOCKHOLDERS OF COLLECTORS UNIVERSE, INC.:
The
2006
Annual Meeting of Stockholders of COLLECTORS UNIVERSE, INC. (the “Company”),
will be held at the Company’s offices at 1921 E. Alton Avenue, Santa Ana,
California 92705 on Tuesday, December 5, 2006, at 10:00 a.m., Pacific
Time, for the following purposes:
(1) Election
of Directors.
To
elect the following seven nominees to serve as directors until the next Annual
Meeting of Stockholders or until their successors are elected and have
qualified:
A.
Clinton Allen
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A.
J. “Bert” Moyer
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Deborah
A. Farrington
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Van
D. Simmons
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David
G. Hall
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Bruce
A. Stevens
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Michael
R. Haynes
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(2) Approval
of 2006 Equity Incentive Plan.
To
approve the 2006 Equity Incentive Plan for the purpose of replacing the
Company’s existing stock incentive plans with a single stock incentive plan that
will provide the Compensation Committee with the flexibility to grant not only
stock options and restricted shares, as permitted under those existing plans,
but also stock appreciation rights and restricted stock units, to officers,
directors, employees and consultants of the Company and its subsidiaries. If
the
2006 Equity Incentive Plan is approved by the stockholders, stock
grants that would otherwise be issuable under the existing stock plans will
become issuable, instead, under the 2006 Equity Incentive Plan and there will
be
no increase in the number of shares that will be available for the grant of
options or other stock incentive awards.
(3) Ratification
of Independent Registered Public Accounting Firm.
To
ratify the appointment of Grant Thornton LLP as the Company’s independent
registered public accounting firm for the fiscal year ending June 30,
2007.
(4) To
transact such other business as may properly come before the meeting or any
adjournment or postponement thereof.
Additional
information regarding these matters is contained in the accompanying Proxy
Statement, which stockholders are urged to review. Only stockholders of record
at the close of business on October 20, 2006 will be entitled to vote at
the meeting or any adjournment or postponement thereof.
By
Order
of the Board of Directors
A.
Clinton Allen
Chairman
of the Board
Santa
Ana, California
October
27, 2006
YOUR
VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD COMPLETE, DATE AND SIGN AND RETURN THE ENCLOSED
PROXY.
Any
stockholder present at the meeting may withdraw his or her proxy
and vote
personally on each matter brought before the meeting. Stockholders
attending the meeting whose shares are held in the name of a broker
or
other nominee who desire to vote their shares at the meeting should
bring
with them a proxy or letter from that firm confirming their ownership
of
shares.
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COLLECTORS
UNIVERSE, INC.
1921
E. Alton Avenue
Santa
Ana, California 92705
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
DECEMBER
5, 2006
INTRODUCTION
This
Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of Collectors Universe, Inc., a Delaware
corporation (the “Company”), for use at its 2006 Annual Meeting of Stockholders
to be held on Tuesday, December 5, 2006, at 10:00 A.M., Pacific Time, at the
executive offices of the Company, 1921 E. Alton Avenue, Santa Ana, California
92705. This Proxy Statement and the accompanying proxy card are first being
mailed to stockholders on or about October 30, 2006.
YOUR
VOTE IS IMPORTANT. PLEASE VOTE AS SOON AS POSSIBLE BY COMPLETING, SIGNING AND
DATING THE PROXY CARD ENCLOSED WITH THIS PROXY STATEMENT
AND
RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Some
stockholders may have their shares registered in different names or hold shares
in different capacities. For example, a stockholder may have some shares
registered in his or her name, individually, and others in his or her capacity
as a custodian for minor children or as a trustee of a trust. In that event,
you
will receive multiple copies of this Proxy Statement and multiple Proxies.
If
you want
all of
your votes to be counted, please be sure to sign, date and return all of those
Proxies.
Who
May Vote?
The
shares of the Company’s common stock, $.001 par value, constitute the only
outstanding class of voting securities of the Company. If
you
were a stockholder on the records of the Company at the close of business on
October 20, 2006 (which is the record date established for the Annual
Meeting), you may vote at the Annual Meeting, and at any adjournment or
postponement thereof, either in person or by proxy. On that day, there were
8,353,000 shares of our common stock outstanding and entitled to
vote.
How
Many Votes Do I Have?
Each
share is entitled to one vote in the election of directors and on any other
matter upon which a vote may properly be taken at the Annual Meeting. Also,
in
the election of directors, there is no cumulative voting. As a result each
stockholder will be entitled, for each share of common stock that such
stockholder owns, to cast one vote for a single nominee for each position on
the
Board of Directors.
In
order
to vote, you must either designate a proxy to vote on your behalf at the Annual
Meeting, or attend the Annual Meeting and vote your shares in person. The Board
of Directors requests your proxy so that your shares will count toward a quorum
and will be voted at the Annual Meeting.
How
Will The Board Vote My Proxy?
A
properly executed proxy received by us prior to the Meeting, and not revoked,
will be voted as directed by you on that proxy. If you provide no specific
direction, your shares will be voted “FOR”
the
election of the Directors nominated by the Board, “FOR”
approval of the Company’s 2006 Equity Incentive Plan (Proposal No. 2), and
“FOR”
the
ratification of the appointment Grant Thornton LLP as the Company’s independent
registered public accounting firm (Proposal No. 3).
If
any
other matter is presented at the Annual Meeting upon which a vote may properly
be taken, the shares represented by your proxy will be voted in accordance
with
the judgment of the holders of the proxy. However, if your shares are held
in a
brokerage account or by a nominee, please read the information below under
captions “How May I Vote” and “Voting Shares Held by Brokers, Banks and Other
Nominees” regarding how your shares may be voted.
How
May I Vote?
Stockholders
should complete, sign, date and return their proxy cards in the postage-prepaid
return envelope provided with this Proxy Statement. If you sign and return
your
proxy card without indicating how you want to vote, your proxy will be voted
as
recommended by the Board of Directors (except for shares held by brokers, banks
and other nominees, as described below). If you forget to sign your proxy card
your shares cannot be voted. However, if you sign your proxy card, but forget
to
date it, your shares will still be voted as you have directed. You should,
however, date your proxy card, as well as sign it.
In
the
alternative, you may attend the Annual Meeting and vote in person. However,
if
your shares are held in a brokerage account or by a nominee holder, you will
need to contact the broker or the nominee holder to obtain a proxy that will
enable you to vote your shares in person at the Annual Meeting.
Voting
Shares Held by Brokers, Banks and Other Nominees
If
you
hold your shares of Company common stock in a brokerage or nominee account,
you
are the “beneficial owner” of those shares, holding them in “street name.” In
order to vote your shares, you must give voting instructions to your broker
or
the nominee holder of your shares. We ask brokers and nominee holders to obtain
voting instructions from the beneficial owners of shares of our common stock.
Proxies that are sent to us by brokers or nominee holders on your behalf will
count toward a quorum and will be voted in accordance with the instructions
that
you have provided to the broker or nominee holder of your shares. If you fail
to
provide voting instructions, your broker or other nominee will have discretion
to vote your shares for the election of the Board’s nominees and the appointment
of the Company’s independent registered public accounting firm at the Annual
Meeting (unless there is a “counter-solicitation” or your broker has knowledge
of a “contest,” as those terms are used in the New York Stock Exchange Rules).
However, under the New York Stock Exchange Rules, which are applicable to
brokerage firms and are followed by most other nominee holders, without your
instructions your shares will not be voted by your broker or nominee holder
on
the proposal to approve the 2006 Equity Incentive Plan (Proposal No. 2
below).
Required
Vote
Quorum
Requirement.
Our
Bylaws require that a quorum — that is, the holders of a majority of all of the
shares of our common stock entitled to vote at the Annual Meeting — be present,
in person or by proxy, before any business may be transacted at the Meeting
(other than adjourning the Meeting to a later date to allow time to obtain
additional proxies to satisfy the quorum requirement).
Election
of Directors.
A
plurality of the votes cast is required for the election of Directors. The
seven
nominees for election to the Board who receive the highest number of votes
cast
will be elected and any shares voted to “Withhold Authority” will not have any
effect on the outcome of the election. Broker non-votes, which relate to shares
for which “street” or “nominee” holders do not obtain voting instructions from
the beneficial holders and cannot or do not choose to vote the shares on a
discretionary basis, are not counted as votes cast and, therefore, also will
have no effect on the outcome of the election. However, shares voted to Withhold
Authority and broker non-votes are considered present at the meeting for
purposes of determining whether a quorum is present.
Approval
of 2006 Equity Incentive Plan.
Approval of the 2006 Equity Incentive Plan will require the affirmative vote
of
a majority of the shares present, in person or by proxy, and voted on this
Proposal. Abstentions will have the same effect as a vote against this Proposal.
Broker non-votes, however, will be treated as if they had not been voted and,
therefore, will not be counted, except for quorum purposes.
Ratification
of Independent Registered Public Accounting Firm.
Ratification of the appointment of the Company’s independent registered public
accounting firm will require the affirmative vote of a majority of the shares
present, in person or by proxy, and voted on this Proposal. Abstentions will
have the same effect as a vote against this Proposal. Broker non-votes, however,
will be treated as if they had not been voted and, therefore, will not be
counted, except for quorum purposes.
How
Can I Revoke My Proxy?
If
you
are the record owner of your shares and, after you have returned your proxy,
you
decide to change your vote, you may do so by taking any one of the following
actions:
· |
Sending
a written notice that you are revoking your proxy addressed to the
Secretary of the Company, at P.O. Box 6280 Newport Beach, California
92658 and then voting again by one of the methods described immediately
below. To be effective, the notice of revocation must be received
by the
Company before the Annual Meeting
commences.
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· |
Returning
a new proxy with a later date than your earlier proxy. To be effective,
that later dated proxy must be received by the Company before the
Annual
Meeting commences.
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· |
Attending
the Meeting and voting in person or by proxy in a manner different
that
the instructions contained in your earlier
proxy.
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However,
if your shares are held by a broker or other nominee holder, and you want to
change the voting instructions you have previously given to the broker or
nominee holder, you will need to contact your broker or the nominee holder
to
ascertain the actions you will need to take to change your previous voting
instructions.
STOCK
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table presents certain information as of October 20, 2006,
regarding the shares of common stock of the Company beneficially owned by
(i) persons known by the Company to hold more than 5% of its shares,
(ii) the incumbent directors and the nominees for election to the Board of
Directors at the upcoming Annual Meeting, (iii) the executive officers of
the Company, and (iv) all of the directors and executive officers as a
group.
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Shares
Beneficially Owned(1)
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Name
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Number
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Percent
of Class
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Special
Situations Cayman Fund, L.P.,
Special
Situations Fund III QP, L.P.,
Special
Situations Fund III, L.P.
Austin
W. Marxe and David M. Greenhouse
527 Madison Avenue, 26th floor,
New
York, NY 10022
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774,527(2)
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8.8
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%
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|
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David
G. Hall
P.O. Box 6280 Newport Beach, CA 92658
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771,516(3)
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8.8
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%
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|
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Shamrock
Activist Fund GP, L.L.C.,
Shamrock
Partner Activist Fund L.L.C.,
Shamrock
Activist Value Fund, L.P.,
Shamrock
Activist Value Fund II, L.P.,
Shamrock
Activist Value Fund III, L.P.
4444
Lakeside Drive
Burbank,
CA 91505
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757,575(4)
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8.6
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%
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|
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|
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Royce
& Associates, LLC
1414 Avenue of the Americas
New
York, NY 10019
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550,599
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6.3
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%
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J.P.
Morgan Chase
270 Park Avenue
New
York, NY 10017
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463,910
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5.3
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%
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|
|
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|
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Van
D. Simmons
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232,358(5)
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2.6
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%
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|
|
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Michael
R. Haynes
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186,844(6)
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2.1
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%
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|
|
|
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|
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A.
Clinton Allen
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90,125(6)
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1.0
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%
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|
|
|
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|
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Ben
A. Frydman
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49,375(6)(7)
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*
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Deborah
A. Farrington
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42,500(6)
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|
|
*
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|
|
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A.
J. Bert Moyer
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42,500(6)
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*
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Michael
J. Lewis
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58,750(6)
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*
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Joseph
J. Wallace
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15,000(6)
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*
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Bruce
A. Stevens
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0
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*
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All
Directors and Executive Officers, as a group (10 persons)
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1,488,968(8)
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17.0
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%
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* Less
than
1%.
(1)
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Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission. Under those rules and for purposes of the table
above
(a) if a person has decision making power over either the voting
or the
disposition of any shares, that person is generally deemed to be
a
beneficial owner of those shares; (b) if two or more persons have
decision
making power over either the voting or the disposition of any shares,
they
will be deemed to share beneficial ownership of those shares, in
which
case the same shares will be included in share ownership totals for
each
of those persons; and (c) if a person held options or warrants to
purchase
shares that were exercisable on, or became exercisable within 60
days of,
October 20, 2005, that person will be deemed to be the beneficial
owner of
those shares and those shares (but not shares that are subject to
options
or warrants held by any other stockholder) will be deemed to be
outstanding for purposes of computing the percentage of the outstanding
shares that are beneficially owned by that
person.
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(2)
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According
to the most recent report on Schedule 13G filed with the SEC by Messrs.
Marxe and Greenhouse, 189,717 of these shares are owned by Special
Situations Cayman Fund, L.P. (“Cayman”), 537,680 shares are owned by
Special Situations Fund III QP, L.P. (“SSFQP”) and 47,130 shares are owned
by Special Situations Fund III, L.P. (“SSFIII”). That report states,
however, that Messrs. Marxe and Greenhouse share sole voting and
dispositive power over all 774,527 of the shares, because they are
the
controlling principals of AWM Investment Company, Inc., which is
the
general partner of and investment adviser to Cayman and the general
partner of MGP Advisers Limited Partnership (“MGP”), which is the general
partner of and investment adviser to SSFQP and
SSFIII.
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(3)
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Includes
46,424 shares held in grantor trusts established for Mr. Hall’s children.
Mr. Hall may, under limited circumstances, exercise dispositive power
(but
he does not have voting power) over those shares and, for that reason,
may
be deemed to share such dispositive power with the trustees of those
trusts.
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(4)
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According
to the most recent report on Schedule 13D filed with the SEC by Shamrock
Activist Value Fund, L.P., 382,705 of these shares are owned by Shamrock
Activist Value Fund, L.P. (“SAVF”), 319,017 of these shares are owned by
Shamrock Activist Value Fund II, L.P. (“SAVF II”) and 55,853 shares are
owned by Shamrock Activist Value Fund III, L.P. (“SAVF III”). That report
states, however, that Shamrock Partners Activist Fund, L.L.C. (“Shamrock
Partners”) has sole voting and dispositive power over all 757,575 of the
shares, because Shamrock Partners is the managing member of Shamrock
Activist Value Fund GP, L.L.C., which is the general partner of SAVF,
SAVF
II, and SAVF III.
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(5)
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Includes
15,474 of the shares held by the grantor trusts established by Mr.
Hall
for his children that are referred to in footnote (3) above, because
Mr.
Simmons is a trustee for certain of those trusts. As trustee, he
exercises
voting power, and shares dispositive power with Mr. Hall, over those
15,474 shares and, therefore, these 15,474 shares are included in
both of
their respective share ownership totals. Mr. Simmons does not have
any financial or pecuniary interest in any of the shares held in
these
trusts. Also includes 15,000 employee stock options that are exercisable
within 60 days of October 20, 2006.
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(6)
|
Includes
the following numbers of shares which may be purchased on exercise
of
employee and director stock options that were exercisable on, or
will
become exercisable within 60 days of, October 20, 2006: Mr. Haynes
-
145,000 shares; Mr. Allen - 81,250 shares; Mr. Frydman - 48,750 shares;
Ms. Farrington - 41,500 shares; Mr. Moyer - 37,500 shares; Mr. Lewis
-
41,250 shares; and Mr. Wallace - 15,000
shares.
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(7)
|
Does
not include, and Mr. Frydman disclaims beneficial ownership of, a
total of
4,375 shares owned by other members of the law firm of Stradling
Yocca
Carlson & Rauth, of which Mr. Frydman is a stockholder and
member.
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(8)
|
Includes
a total of 425,250 shares which our executive officers and directors
have
the right to acquire by exercise of stock options that were exercisable
on, or will become exercisable within 60 days of, October 20,
2006.
|
ELECTION
OF DIRECTORS
(Proposal
No. 1)
The
Company’s Bylaws currently provide for a Board of seven directors to serve for a
term of one (1) year and until their successors are elected and qualify to
serve. The Board of Directors has nominated the seven nominees named below
for
election as directors at the 2006 Annual Meeting. Unless
authority to vote has been withheld, the proxy holders named in the enclosed
proxies intend to vote the shares represented by those proxies at the Annual
Meeting for the election of all of the nominees named below.
Six
of
the seven nominees are presently directors of the Company and were elected
to
the Board of Directors by the Company’s stockholders at the 2005 Annual Meeting,
with the sole exception being Bruce A. Stevens, who has been selected by the
Board of Directors as the nominee to replace incumbent Ben A. Frydman, who
has
opted not to stand for re-election. All of the nominees have consented to serve,
if elected. If any nominee becomes unavailable for any reason before the
election, the enclosed proxy will be voted for the election of such substitute
nominee or nominees, if any, as shall be designated by the Board of Directors.
The Board of Directors has no reason to believe that any of the nominees will
be
unavailable to serve.
Vote
Required and Recommendation of the Board of Directors
Under
Delaware law, the seven nominees for election as Directors receiving the highest
number of votes at the Annual Meeting will be elected. As a result, proxies
voted to “Withhold Authority,” which will be counted, and broker non-votes,
which will not be counted, will have no practical effect on the outcome of
the
election.
The
names
and certain information, as of October 20, 2006, concerning the nominees for
election as Directors is set forth below.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES NAMED BELOW.
Nominees:
|
Age
|
|
Director
Since
|
|
Principal
Occupation
|
|
|
|
|
|
|
A.
Clinton Allen
|
62
|
|
2001
|
|
Chief
Executive Officer of A. C. Allen & Company
|
|
|
|
|
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Deborah
A. Farrington
|
56
|
|
2003
|
|
Co-Chairman
of StarVest Partners, L.P.
|
|
|
|
|
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David
G. Hall
|
59
|
|
1986*
|
|
President
of the Company
|
|
|
|
|
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Michael
R. Haynes
|
55
|
|
2003
|
|
Chief
Executive Officer of the Company
|
|
|
|
|
|
|
A.
J. “Bert” Moyer
|
62
|
|
2003
|
|
Business
Consultant and Private Investor
|
|
|
|
|
|
|
Van
D. Simmons
|
55
|
|
1986*
|
|
President
of DHRCC, Inc.
|
|
|
|
|
|
|
Bruce
A. Stevens
|
64
|
|
N/A
|
|
President
and Chief Executive Officer of Steinway &
Sons
|
|
*
|
Although
Collectors Universe was organized in February 1999, Messrs. Hall
and
Simmons were both founders and served as directors of its predecessor
company, Professional Coin Grading Service, Inc. beginning in
1986.
|
A.
Clinton Allenhas
served as a Director since June 2001 and as Chairman of the Board of Directors
since December 2002. Mr. Allen is the CEO of A. C. Allen & Company, a
private investment banking consulting firm. He is the Lead Director of Steinway
Musical Instruments, one of the world's largest manufacturers of musical
instruments. He is also a member of the board of directors of Brooks Automation,
Inc., which provides integrated tool and factory automation solutions for the
global semiconductor and related industries and the board of directors and
Executive Committee of LKQ Corporation, the largest nationwide provider of
recycled OEM automotive parts. He also serves on the board of Source Interlink
Companies, Inc., a premier direct-to-retail marketing merchandising and
fulfillment company for home entertainment content products. He served on the
board of directors of Blockbuster Entertainment Corporation from 1986 until
its
acquisition by Viacom/Paramount in September 1994. Mr. Allen graduated from
Harvard University and serves on the Executive Committee of the Friends of
Harvard Football, as well as the Harvard Visiting Committee on University
Resources and the Harvard Major Gifts Committee. He is a member of the Board
of
Directors and the President’s Council of the Massachusetts General
Hospital.
Deborah
A. Farrington
is
founder and an officer of StarVest Management, Inc. and is, and since 1999
has
been, the Co-Chairman of StarVest Partners, L.P., a $150 million private equity
fund, which invests primarily in emerging software and business services
companies. From 1993 to 1997, Ms. Farrington was President and CEO of Victory
Ventures, LLC, a New York-based private equity investment firm. Also during
that
period, she was a founding investor and chairman of the board of Staffing
Resources, Inc., a diversified staffing company which grew from $17 million
to
$300 million in annual revenues while she served on its board. Ms. Farrington
serves on the Boards of ComparisonMarket, Inc., Fieldglass, Inc., NetSuite,
Inc.
and Perquest, Inc., all of which are private companies. She is a graduate of
Smith College and received an MBA from Harvard Business School.
David
G. Hall
has
served as President of Collectors Universe since October 2001 and a Director
since its founding in February 1999. From April 2000 to September 2001,
Mr. Hall served as the Chief Executive Officer of the Company and as its
Chairman from February 1999 to October 2001. Mr. Hall is a director of
Professional Coin Grading Service, Inc., the Company’s predecessor and now its
wholly-owned subsidiary, and was its Chief Executive Officer from 1986 to
February 1999, when it was acquired by the Company. Mr. Hall was honored in
1999 by COINage
Magazine
as
Numismatist of the Century, along with 14 other individuals. In 1990,
Mr. Hall was named Orange County Entrepreneur of the Year by INC.
Magazine. In
addition, he has written A
Mercenary’s Guide to the Rare Coin Market,
a book
dedicated to coin collecting.
Michael
R. Hayneshas
been
the Company’s Chief Executive Officer since January 2003. Prior to joining
Collectors Universe, he had served as president, chief operating officer or
chief financial officer of eight
different companies engaged in the collectibles, precious metals, specialty
retail, distribution, e-commerce and manufacturing businesses, including Greg
Manning Auctions, Inc., where he served as President and Chief Financial Officer
from 1994 to 1995 and Heritage Numismatic Auctions, where he served as President
from 1974 to 1990. Mr. Haynes also was one of the co-founding board members
of
the Industry Council for Tangible Assets, a Washington, D.C. trade association
for dealers and auctioneers of tangible and collectible assets, where he served
for nine years. Mr. Haynes holds a Master's Degree in Business and a Bachelor
of
Science Degree in Mechanical Engineering, both from Southern Methodist
University. Mr. Haynes also is a CPA.
A.
J. “Bert” Moyer,
who is now a business consultant and private investor, served from March 1998
until February 2000 as Executive Vice President and Chief Financial Officer
for
QAD, Inc., a leading provider of enterprise resource planning software
applications for global manufacturing companies. Between September 2000 and
February 2002, Mr. Moyer was engaged as a consultant to QAD, Inc., assisting
in
the Sales Operations of the Americas Region. He served as president of the
commercial division of the Profit Recovery Group International, Inc. from March
until July 2000. Prior to joining QAD, Inc. in 1998, Mr. Moyer was Chief
Financial Officer of Allergan, a specialty pharmaceutical company based in
Irvine, California. Mr. Moyer serves on the boards of directors of CalAmp Corp.,
Virco Manufacturing Corporation and LaserCard Corporation, all of which are
public companies. Mr. Moyer received his Bachelor of Science degree in Business
Administration from Duquesne University and graduated from the Advanced
Management Program at the University of Texas, Austin.
Van
D. Simmonsis
the
President of DHRCC, Inc., a direct seller of rare coins. He served as President
of the Company’s David Hall Rare Coins Division from October 2000 until March
2004, when we discontinued that business. From July to October 2000, he served
as Vice President of Sales of the Company’s Bowers and Merena Division. From
1981 to 1997 he served as the President of DHRCC, Inc. Mr. Simmons was a
founding director of the Company in February 1999 and was also a founder and
served as a director of its predecessor company, Professional Coin Grading
Service, Inc., from 1986 to February 1999. He served as Chairman of the Board
of
David Hall’s North American Trading, LLC, a retailer of rare coins, from
February 1997 to July 2000.
Bruce
A. Stevensis
the
President and Chief Executive Officer of Steinway & Sons, a wholly owned
subsidiary of Steinway Musical Instruments, Inc. Steinway & Sons is the
maker of fine pianos with manufacturing operations in the United States and
Germany and operational facilities in China, Japan and the UK. Mr. Stevens
has
served in this capacity from September 1985 to the present. He has been a member
of the board of directors of the parent company, Steinway Musical Instruments,
Inc., one of the world’s largest manufacturers of musical instruments, since
1995. Prior to that, he was employed by Polaroid Corporation for nearly 18
years
where he held various positions in both their domestic and international
divisions. Mr. Stevens has served on numerous industry and music education
organization boards such as Piano Manufacturers Association International,
American Music Conference, Music Teacher National Association, New England
Conservatory, Lincoln Park Performing Arts Center and Winchester Foundation
for
Educational Excellence. He is a graduate of the University of
Pennsylvania.
There
are
no family relationships among any of the Company’s officers or
directors.
THE
BOARD OF DIRECTORS
The
Role of the Board of Directors
In
accordance with Delaware law and our Bylaws, the Board of Directors oversees
the
management of the business and affairs of the Company. The members of the Board
keep informed about our business through discussions with senior management
and
other officers and managers of the Company and its subsidiaries, by reviewing
analyses and reports sent to them by management and outside consultants, and
by
participating in Board and in Board committee meetings.
Attendance
at Meetings
During
fiscal 2006, the Board of Directors of the Company held a total of 10 meetings
and all of the directors attended at least 75% of the total of those meetings
and the meetings of the Board committees on which they served during the
respective periods they served as directors of the Company during that
year.
Our
Board
members are encouraged to prepare for and attend all meetings of our
stockholders and all meetings of the Board and the Board committees of which
they are members. All of the directors attended the 2005 Annual Meeting of
Stockholders.
Number
of Directors
The
Board
currently consists of seven members. Our Bylaws provide that the Board of
Directors is authorized to change the authorized number of directors from time
to time, as it deems to be appropriate.
Term
of Office of Directors - Annual Election of Directors
The
Company’s Bylaws provide that directors are elected annually to serve for a term
of one year ending at the next Annual Meeting of Stockholders and until their
successors are elected. If a vacancy occurs in any Board position between Annual
Meetings, the Board may fill the vacancy by electing a new director to that
position. The Board of Directors may also create a new director position and
elect a new director to hold that position for a term ending at the next Annual
Meeting of Stockholders.
Director
Independence
The
Board
has determined, after careful review, that each member of the Board is
independent under the definition of independence set forth in the NASDAQ
Marketplace Rules that are applicable to companies with shares listed on the
NASDAQ Global Market (the “NASDAQ Listed Company Rules”), with the exception of
Messrs. Haynes and Hall, who are officers of the Company, and Mr. Simmons who
was employed by the Company until March 31, 2004. In reaching this conclusion,
the Board considered all relevant facts and circumstances with respect to any
direct or indirect relationships between the Company and each of the
non-management directors. The Board determined that any relationships that
now
exist, or may have existed in the past, between the Company and any of the
non-management directors have no material effect on their
independence.
In
accordance with the Board’s independence evaluation, 4 of the 7 incumbent
members of the Board are independent directors. In addition, all of the members
of the standing committees of the Board are independent directors.
Communications
with the Board
Stockholders
and other parties interested in communicating with the non-management directors
as a group may do so by writing to the Corporate Secretary, Collectors Universe,
Inc., P.O. Box 6280, Newport Beach, California 92658. The Corporate Secretary
will review and forward to the appropriate member or members of the Board copies
of all such correspondence that, in the opinion of the Corporate Secretary,
deal
with the functions of the Board or its committees or that the Corporate
Secretary otherwise determines requires their attention. Concerns relating
to
accounting, internal controls or auditing matters will be brought promptly
to
the attention of the Chairman of the Audit Committee and will be handled in
accordance with procedures established by the Board’s Audit
Committee.
Corporate
Governance Policies
Our
Board
of Directors believes that sound governance practices and policies provide
an
important framework to assist them in fulfilling their duty to the Company’s
stockholders. In September 2004, our Board of Directors adopted the following
governance policies, which include a number of policies and practices under
which our Board has operated for some time, together with concepts suggested
by
various authorities in corporate governance and the new requirements under
the
NASDAQ Listed Company Rules and the Sarbanes-Oxley Act of 2002. Some of the
principal subjects covered by those policies include:
•
Director
Qualifications,
which
include measuring each candidate’s independence, experience, knowledge, skills,
expertise, integrity, ability to make independent analytical inquiries; his
or
her understanding of our business and the business environment in which we
operate; and the candidate’s ability and willingness to devote adequate time and
effort to Board responsibilities, taking into account the candidate’s employment
and other board commitments.
• Responsibilities
of Directors,
which
include acting in the best interests of all stockholders; maintaining
independence; developing and maintaining a sound understanding of our business
and the industry in which we operate; preparing for and attending Board and
Board committee meetings; and providing active, objective and constructive
participation at those meetings.
• Director
access to management and, as necessary and appropriate, independent
advisors,
including encouraging presentations to the Board from the officers
responsible for
functional areas of our business.
•
Maintaining
adequate funding
to
retain independent advisors for the Board, as the Board deems to be necessary
or
appropriate, and also for its standing committees as the members of those
committees deem to be necessary or appropriate.
•
Director
orientation and continuing education,
including programs to familiarize new directors with our business, strategic
plans, significant financial, accounting and risk management issues, compliance
programs, conflicts policies, code of business conduct and corporate governance
guidelines. In addition, each director is expected to participate in continuing
education programs relating to developments in the Company’s business and in
corporate governance.
•
Annual
performance evaluation of the Board,
including an annual self-assessment of the Board’s performance as well as the
performance of each Board committee.
•
Regularly
scheduled executive sessions, without management,
are held
by the Board. In addition, the Audit Committee meets separately with the
Company’s outside auditors.
Code
of Business and Ethical Conduct
We
have
adopted a Code of Business and Ethical Conduct for our officers, employees
and
directors, as well as specific ethical conduct policies and principles that
apply to our Chief Executive Officer, Chief Financial Officer and other key
accounting and financial personnel. A copy of our Code of Business and Ethical
Conduct is available at the Investor Relations Section of our website
at www.collectors.com.
We
intend to disclose, at this location on our website, any amendments to that
Code
and any waivers of the requirements of that Code that may be granted to our
Chief Executive Officer or Chief Financial Officer.
Other
Governance Matters
In
addition to the governance policies discussed above, our Chief Executive Officer
and Chief Financial Officer have provided the certifications of our SEC filings
required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 each quarter
since the certification rules were adopted. We also have adopted charters for
our Board committees that comply with applicable NASDAQ Listed Company
Rules.
You
can
access our Board Committee charters, and other corporate governance materials,
news releases and SEC filings, by visiting the Investor Relations Section of
our
website at www.collectors.com.
Committees
of the Board of Directors
The
Board
has two standing committees: an Audit Committee and a Compensation Committee.
Information regarding the members of each of those Committees and their
responsibilities and the number of meetings held by those Committees in fiscal
2006 is set forth below. The Board of Directors, as a whole, functions as a
Board Nominating Committee.
Audit
Committee.
The
members of the Audit Committee are A. J. Bert Moyer, its Chairman, A. Clinton
Allen and Deborah A. Farrington. All of the members of the Audit Committee
are
independent within the meaning of the NASDAQ Listed Company Rules and the
enhanced independence requirements for audit committee members contained in
Rule
10A-3 under the Securities Exchange Act of 1934, as amended. Our Board of
Directors has determined that Mr. Moyer meets the definition of “audit committee
financial expert” adopted by the Securities and Exchange Commission (the “SEC”).
The Audit Committee has a written charter that specifies its responsibilities,
which include oversight of the financial reporting process and system of
internal accounting controls of the Company, and appointment and oversight
of
the independent public accountants engaged to audit the Company’s financial
statements. In accordance with the Charter and to ensure independence, the
Audit
Committee meets separately with our outside auditors and separately with members
of management. A copy of the Audit Committee Charter, which complies with
applicable NASDAQ Listed Company Rules, is accessible at the Investor Relations
Section of our website at www.collectors.com. The
Audit
Committee held 6 meetings during fiscal 2006.
Compensation
Committee.
The
members of the Compensation Committee are Deborah A. Farrington, its
Chairperson, A. Clinton Allen and A. J. Bert Moyer, each of whom is an
independent director within the meaning of the NASDAQ Listed Company Rules.
The
Compensation Committee reviews and approves the salaries and establishes
incentive compensation and other benefit plans for our executive officers.
Our
Board of Directors has adopted a charter setting forth the role and
responsibilities of the Compensation Committee. A copy of that charter, which
complies with applicable NASDAQ Listed Company Rules, is accessible at the
Investor Relations Section of our website at www.collectors.com.
The
Compensation Committee held 6 meetings during fiscal 2006.
Nominating
Committee.
The
Board of Directors has decided that the full Board of Directors should perform
the functions of a nominating committee for the Company. It made that decision
because the Board believes that selecting new Board nominees is one of the
most
important responsibilities the Board members have to our stockholders and,
for
that reason, all of the members of the Board should have the right and
responsibility to participate in the selection process. In its role as
nominating committee, the Board identifies and screens new candidates for Board
membership. Each of the Board members, other than Messrs. Haynes, Hall and
Simmons, is an “independent director” within the meaning of the NASDAQ Listed
Company Rules that are applicable to membership on a Board Nominating Committee
and the Board has decided that actions of the Board, in its role as nominating
committee, can be taken only with the affirmative vote of a majority of the
independent directors on the Board. Our Board of Directors has adopted a charter
setting forth the responsibilities of the Board when acting as a nominating
committee. A copy of that charter, which complies with applicable NASDAQ Listed
Company Rules, is accessible at the Investor Relations section of our website
at
www.collectors.com.
The
Director Nominating Process.
In
identifying new candidates for membership on the Board, the Directors will
seek
recommendations from existing Board members and executive officers. In addition,
the Board intends to consider any candidates that may be recommended by any
of
the Company’s stockholders who submit such recommendations to the Board in
accordance with the procedures described below. The Board also has the authority
to engage an executive search firm and other advisors as it deems appropriate
to
assist it identifying qualified Board candidates.
In
assessing and selecting new candidates for Board membership, the Board of
Directors will consider such factors, among others, as the candidate’s
independence, experience, knowledge, skills and expertise, as demonstrated
by
past employment and board experience and the candidate’s reputation for
integrity. When selecting a nominee from among candidates considered by the
Board, it will conduct background inquiries of and interviews with the
candidates the Board members believe are best qualified to serve as directors.
The Board members will consider a number of factors in making their selection
of
a nominee from among those candidates, including, among others, whether the
candidate has the ability, willingness and enthusiasm to devote the time and
effort required of members of the Board; the candidate’s independence, including
whether the candidate has any conflicts of interest or commitments that would
interfere with the candidate’s ability to fulfill the responsibilities of
directors of the Company, including membership on Board committees; whether
the
candidate’s skills and experience would add to the overall competencies of the
Board; and whether the candidate has any special background or experience
relevant to the Company’s business.
Stockholder
Recommendations of Board Candidates.
Any
stockholder desiring to submit a recommendation for consideration by the Board
of a candidate that the stockholder believes is qualified to be a Board nominee
at any upcoming stockholders meeting may do so by submitting that recommendation
in writing to the Board not later 120 days prior to the first anniversary of
the
date on which the proxy materials for the prior year’s annual meeting were first
sent to stockholders. However, if the date of the upcoming annual stockholders
meeting has been changed by more than 30 days from the anniversary date of
the
prior year’s annual meeting, the recommendation must be received within a
reasonable time before the Company begins to print and mail its proxy materials
for the upcoming annual meeting. In addition, the recommendation should be
accompanied by the following information: (i) the name and address of the
nominating stockholder and the person that the nominating stockholder is
recommending for consideration as a candidate or Board membership; (ii) the
number of shares of voting stock of the Company that are owned by the nominating
stockholder, his or her recommended candidate and any other stockholders known
by the nominating stockholder to be supporting the nomination of that candidate;
(iii) a description of any arrangements or understandings that relate to
the election of directors of the Company, between the nominating stockholder,
or
any person that (directly or indirectly through one or more intermediaries)
controls, or is controlled by, or is under common control with, such
stockholder, on the one hand, and any other person or persons (naming such
other
person or persons), on the other hand; (iv) such other information
regarding each recommended candidate as would be required to be included in
a
proxy statement filed pursuant to the proxy rules of the SEC; and (v) the
written consent of the stockholder’s recommended candidate to be named as a
nominee and, if nominated and elected, to serve as a director.
Stockholder
Nominations.
Our
Bylaws provide that any stockholder also may nominate, at any annual meeting
of
stockholders, one or more candidates for election to the Board of Directors,
by
giving the Company written notice (addressed to the Secretary of the Company
at
the Company’s principal offices) of such stockholder’s intention to do so not
later than 120 days prior to the first anniversary of the date on which the
proxy materials for the prior year’s annual meeting were first sent to
stockholders. Such notice must be accompanied by the same information, described
in the immediately preceding paragraph, regarding such candidate or candidates
to be nominated for election to the Board and the nominating stockholder. Any
stockholder nomination at any annual meeting that does not comply with these
Bylaw requirements shall be ineffective and disregarded. No such notice was
received from any stockholder with respect to the upcoming annual meeting and,
therefore, the election of directors at that meeting will be
uncontested.
Director
Compensation
In
fiscal
2006, each non-employee director received a fee of $37,500 per year for service
as a director and the three non-employee directors who also served as the
members of the Audit and Compensation Committees each received an additional
annual fee of $27,500 for service on those Committees. No per-meeting fees
were
paid to any of the directors. The Chairman of the Board of Directors and the
Chairpersons of the Audit Committee and Compensation Committee received
additional fees of $45,000, $10,000 and $5,000 per year, respectively, for
the
additional services they perform for the Board of Directors in those capacities.
The
following table sets forth the compensation paid to the Company’s non-management
directors for their services as directors of the Company in fiscal
2006:
:
|
|
Fees
Earned or Paid in Cash ($)
|
|
Option
Awards
(#)
|
|
A.
Clinton Allen
|
|
$
|
110,000(1)
|
|
|
--
|
|
|
|
|
|
|
|
|
|
A.J.
“Bert” Moyer
|
|
$
|
75,000(2)
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Deborah
A. Farrington
|
|
$
|
70,000(3)
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Van
D. Simmons
|
|
$
|
37,500
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Ben
A. Frydman
|
|
$
|
37,500
|
|
|
--
|
|
(1)
Includes, in addition to the directors's fee of $37,500, fees of $27,500 for
services on the audit and compensation committees,
and
an
additional fee of $45,000 as compensation for the additional services that
Mr.
Allen performed on behalf of the Board of Directors as its
Chairman.
(2)
Includes,
in addition to the director’s fee of $37,500, fees of $27,500 for service on the
Audit and Compensation Committees and an additional fee of $10,000 as
compensation for Mr. Moyer’s services as Chair of the Audit
Committee.
(3)
Includes,
in addition to the director’s fee of $37,500, fees of $27,500 for service on the
Audit and Compensation Committees and an additional fee of $5,000 as
compensation for Ms. Farrington’s services as Chair of the Compensation
Committee.
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
Based
upon information made available to us, the Company believes that all filing
requirements under Section 16(a) of the Securities Exchange Act of 1934
applicable to its directors and officers and any holders of more than 10% of
the
Company’s shares were satisfied with respect to the Company’s fiscal year ended
June 30, 2006.
COMPENSATION
OF EXECUTIVE OFFICERS
The
following table sets forth the annual and long-term compensation for the fiscal
years ended June 30, 2006, 2005 and 2004 paid by the Company to its Chief
Executive Officer and the other executive officers who earned total cash
compensation during fiscal 2006 of more than $100,000 (the “Named
Officers”).
Summary
Compensation Table
|
|
|
|
Cash
Compensation ($)
|
|
Option
Awards
|
|
($)
|
|
|
|
Fiscal
Year
|
|
Salary
|
|
Bonus
|
|
Number
of
Shares
|
|
Fair
Value
($)
|
|
Total
Compensation
|
|
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
R. Haynes
|
|
|
2006
|
|
$
|
312,000(1)
|
|
$
|
98,500(2)
|
|
|
--
|
|
$
|
--
|
|
$
|
410,500
|
|
Chief
Executive Officer
|
|
|
2005
|
|
|
303,129
|
|
|
300,000(2)
|
|
|
80,000
|
|
|
N/A
|
|
|
|
|
|
|
|
2004
|
|
|
273,509
|
|
|
225,051(2)
|
|
|
40,000
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
G. Hall
|
|
|
2006
|
|
$
|
300,000
|
|
$
|
150,000(2)
|
|
|
--
|
|
$
|
--
|
|
$
|
450,000
|
|
President
|
|
|
2005
|
|
|
300,000
|
|
|
300,000(2)
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
2004
|
|
|
300,000
|
|
|
300,051(2)
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J, Lewis(3)
|
|
|
2006
|
|
$
|
178,738
|
|
$
|
25,000(2)
|
|
|
--
|
|
$
|
--
|
|
$
|
203,738
|
|
Senior
Vice President
|
|
|
2005
|
|
|
221,971
|
|
|
200,000(2)
|
|
|
30,000
|
|
|
N/A
|
|
|
|
|
of
Finance
|
|
|
2004
|
|
|
223,824
|
|
|
125,051(2)
|
|
|
37,500
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace(3)
|
|
|
2006
|
|
$
|
190,000(1)
|
|
$
|
50,000
|
|
|
10,000
|
|
$
|
46,300(4)
|
|
$
|
286,300
|
|
Chief
Financial Officer
|
|
|
2005
|
|
|
135,000
|
|
|
35,054(5)
|
|
|
5,000
|
|
|
N/A
|
|
|
|
|
|
|
|
2004
|
|
|
5,625(5)
|
|
|
--
|
|
|
15,000
|
|
|
N/A
|
|
|
|
|
(1)
Mr.
Haynes’ and Mr. Wallace’s salaries were increased effective July 1, 2006 to
$352,000 and $199,500, respectively. Mr. Haynes’ salary includes a car allowance
of $12,000 per annum.
(2) The
bonuses paid to Messrs. Haynes and Lewis, for each of the years presented,
were
awarded pursuant to annual incentive compensation plans for each of those years,
except that Mr. Haynes’ bonus compensation for fiscal 2004 also included a
$25,000 discretionary bonus awarded to him by the Compensation Committee. The
bonuses paid under the annual incentive compensation plans were determined
on
the basis of (i) the Company’s financial performance in each of those years
in relation to Company performance targets and (ii) the extent to which
those named officers achieved certain individualized performance goals in each
of those years. Mr. Hall’s bonuses, for each of the years presented, were paid
under incentive compensation plans that rewarded him for the performance of
the
Company’s collectibles authentication and grading division, which operates under
his direct management and supervision. Mr. Hall’s maximum annual bonus was
reduced from $300,000 to $150,000 in fiscal 2006.
(3)
Effective
September 15, 2005, Mr. Lewis was appointed Senior Vice President - Finance
and
Mr. Wallace was appointed as Chief Financial Officer, succeeding Mr. Lewis
in
that position. As a result of his appointment as Chief Financial Officer,
Mr. Wallace became an executive officer of the Company for the first time
effective September 15, 2005.
(4)
This
amount represents the fair value of the options granted in fiscal 2006, which
was determined in accordance with SFAS No. 123R and was estimated as of the
date
of grant using the Black-Scholes option valuation model, which is affected
by
our stock price and assumptions regarding a number of complex and subjective
variables. Those assumptions include, among others, risk-free market interest
rates, expected dividend yields of the underlying common stock, expected option
lives and expected volatility in the market value of the underlying common
stock,
as
follows:
|
Fiscal
2006
|
Risk-free
interest rate
|
4.7%
|
Expected
Dividend Yield
|
2.3%
|
Expected
option life
|
5.1
years
|
Expected
volatility
|
58%
|
(5)
Mr.
Wallace joined the Company on June 11, 2004 and, as a result, his 2004
compensation was paid for the period from that date to June 30, 2004. Mr.
Wallace’s fiscal 2005 bonus compensation consisted of a discretionary award to
him by the Compensation Committee based on the Company’s financial performance
and an evaluation of his individual contributions thereto in fiscal 2005. Mr.
Wallace’s fiscal 2006 bonus compensation was awarded pursuant to the same annual
incentive compensation plan pursuant to which the 2006 bonuses of Messrs. Haynes
and Lewis were paid.
Option
Grants in Fiscal 2006
Options
are granted by the Compensation Committee of the Board of Directors. It is
the
practice of the Committee to grant options (i) only on the dates of meetings
of
the Committee which are scheduled in advance and (ii) at the closing price
of
the Company’s common stock on the date of grant, thereby eliminating market
prices of the Company’s shares as a factor in the granting of stock
options.
The
following table sets forth information regarding the options to purchase shares
of Company common stock that were granted to the Named Officers during the
fiscal year ended June 30, 2006:
Named
Officers
|
|
Number
of
Securities
Underlying
Options
Granted (1)
|
|
Exercise
Price
($/Share)
(2)
|
|
Grant
Dates
|
|
Vesting
Dates
|
|
Expiration
Dates
|
|
Michael
R. Haynes
|
|
|
0
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lewis
|
|
|
0
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace
|
|
|
10,000
|
|
$
|
12.90
|
|
|
9/15/05
|
|
|
Structured(3)
|
|
|
9/15/2015
|
|
(1)
During
the fiscal year ended June 30, 2006, the Company granted options to purchase
an
aggregate of 42,000 shares of common stock, all to employees of the
Company (including Mr. Wallace), which represented 0.5% of the number of the
Company’s shares that were outstanding on June 30, 2006.
(2)
In
each
case, the options were granted at an exercise price that was equal to the
closing price per share of the common stock of the Company as reported by NASDAQ
on the date of the grant. The closing price per share of the Company’s
common stock on June 30, 2006, as reported by NASDAQ, was $13.89.
(3)
These
options becomes exercisable in four equal annual installments of 25% of the
total number of shares subject to the option, commencing one year after the
date
of the grant and will expire in 10 years following the grant date unless sooner
exercised or terminated.
Option
Exercises in Fiscal 2006 and Fiscal Year-End 2006 Stock Option
Data
Set
forth
below is information regarding the options exercised during fiscal 2006 by
each
of the Named Officers and the fiscal year-end values of the unexercised
“in-the-money” options that each of the Named Officers held at June 30,
2006:
|
|
Options
Exercised
During
Fiscal 2006
|
|
Number
of Shares
Underlying
Unexercised Options
At
June 30, 2006
|
|
Value
of Unexercised
In-the-Money
Options
At
June 30, 2006 (1)
|
|
Name
|
|
Number
of
Shares
|
|
Value
Realized(2)
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
Michael
R. Haynes
|
|
|
9,000
|
|
$
|
106,830
|
|
|
86,000
|
|
|
45,000
|
|
$
|
771,465
|
|
$
|
337,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Lewis
|
|
|
17,500
|
|
$
|
204,225
|
|
|
18,750
|
|
|
18,750
|
|
$
|
66,713
|
|
$
|
66,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
J. Wallace
|
|
|
0
|
|
$
|
--
|
|
|
7,500
|
|
|
17,500
|
|
$
|
1,200
|
|
$
|
11,100
|
|
|
(1)
|
Based
on the closing price of the Company’s common stock on the NASDAQ Global
Market on June 30, 2006, of
$13.89 per share.
|
|
(2)
|
Value
Realized represents the difference between the fair market value
of the
shares on the date of exercise and the exercise
price.
|
Employment
Agreement
Michael
Haynes is employed as the Company’s CEO under an employment agreement which was
entered into in January 2003 initially for a term of one year. The term of
that
employment agreement has since been extended and, unless further extended
or sooner terminated, will expire on December 31, 2007. The employment agreement
initially provided for the payment of a base annual salary to Mr. Haynes of
$250,000. Mr. Haynes’ base annual salary was increased to $275,000, effective
October 2003; to $300,000 effective July 2004; and to $340,000, effective July
2006. The employment agreement is terminable by the Company at any time, with
or
without cause, effective on 15 days’ prior notice to Mr. Haynes. If the
Company were to exercise its right to terminate that Agreement without cause,
it
would become obligated to continue Mr. Haynes’ salary and health insurance
benefits for a period of 12 months.
Certain
Transactions
During
2006, DHRCC, Inc., which is engaged in the direct sale of rare coins, primarily
at retail, and is owned by David G. Hall, who is our President and one of our
Directors, and Van D. Simmons, who also is one of our Directors, paid the
Company fees of $29,000 for advertising space on the Company’s website and in
the Company’s coin publications and approximately $3,000 for coin grading and
authentication services. Those advertising fees and authentication and grading
fees were comparable to the fees charged by the Company in the ordinary course
of its business to unaffiliated customers for similar services. During 2006,
the
Company also reimbursed DHRCC for warranty claims of approximately $53,000
in
accordance with the terms of its standard coin authentication and grading
warranty.
DHRCC
also has subleased from the Company, through November 6, 2009, approximately
2,200 square feet of office space, located at the Company’s offices in Santa
Ana, California, at a rent equal to between $1.50 and $1.75 per square foot
per
month. That rent was determined on the basis of and is equal to the rent that
was being paid to the Company by an unaffiliated subtenant for comparable space
in the same building under a sublease entered into by the Company in March
2004.
Rent received under the DHRCC sublease, which commenced on March 1, 2004,
totaled $41,000 in fiscal 2006.
Compensation
Committee Interlocks and Insider Participation
The
Members of the Compensation Committee of the Board of Directors are Deborah
Farrington, A. Clinton Allen, and A. J. Bert Moyer, who are non-employee
directors of the Company and have been determined by the Board of Directors
to
be independent directors within the meaning of the NASDAQ Listed Company Rules.
No executive officer of the Company served or serves on the board of directors
or compensation committee of any entity which has one or more executive officers
serving as members of the Company’s Board of Directors or Compensation
Committee.
REPORT
OF THE COMPENSATION COMMITTEE
Decisions
relating to the compensation of the Company’s executive officers are made by the
Compensation Committee of the Board of Directors. It is the responsibility
of
the Compensation Committee to assure that the executive compensation programs
are reasonable and appropriate, meet their stated purposes and effectively
promote the interests of the Company and its stockholders.
Compensation
Philosophy and Policies for Executive Officers
The
Company’s strategic goal is to become the leading provider of value-added
services to the high-value collectibles and diamond and colored gemstone markets
in which it operates and to expand its service offerings to other high value
asset markets, and thereby to maintain a high level of revenue growth and
achieve increasing profitability and, in that way, increase stockholder value.
In establishing compensation programs for the Company’s executive officers, the
Compensation Committee seeks to create incentives and provide rewards for
performance and accomplishments by its officers that will further these
goals.
The
Committee’s compensation policy emphasizes competitive base salaries, annual
incentive compensation or bonus plans for selected officers and management
employees and long term incentive compensation in the form of stock options
and
restricted stock grants. Stock options are granted at exercise prices equal
to
the market value of the Company’s shares on the date they are granted. Since the
financial reward provided by stock options is dependent on appreciation in
the
market value of the Company’s shares above those exercise prices, stock options
reward executives for performance that results in improved market performance
of
the Company’s stock, which benefits all stockholders. Restricted stock grants,
which to date have only been granted to Mr. Haynes, provide value to an
executive based upon the market value of the stock, when the restrictions
expire. With the exception of standard health insurance benefits that are
available to all of its employees, the Company provides essentially no
perquisites to the CEO or its other executive officers.
Base
Salaries.
All
executive officer salaries are reviewed and evaluated at least once per year.
In
determining appropriate salary levels and salary increases, the Compensation
Committee considers the extent to which the Company has achieved, and the extent
of the executive’s contribution to the achievement of, its strategic goals, the
level of responsibility of the executive, and his or her experience and other
qualifications. In addition, the Committee recognizes that to be able to retain
its existing executives and attract new executives, the Company must offer
executive salaries that are comparable to those paid by its competitors. As
a
result, in setting the salaries of the Company’s CEO and the other Named
Officers, the Compensation Committee also considers available data regarding
compensation paid by similar companies to individuals holding positions
comparable to those held by the Company’s executive officers.
Incentive
Compensation.
It is
the Committee’s policy to establish annual incentive compensation plans for the
Company’s CEO and the other Named Officers which will reward them for
(a) their contributions to the Company’s financial performance, measured in
relation to the Company’s annual operating plan for the year, which is initially
developed by management and then is submitted to the Board of Directors for
its
review, possible modification and approval; and (b) their achievement of
individualized objectives, generally within the executive’s area of
responsibility, that are established by the Committee. In accordance with that
policy, during fiscal 2006 the Compensation Committee established a Senior
Management Bonus Plan for Messrs. Haynes, Lewis, Hall and Wallace. Under that
Plan, the Committee established fiscal 2006 revenue and earnings goals
(“performance goals”) and individualized management objectives for Messrs.
Haynes, Lewis and Wallace and provided for the payment of bonuses to each of
them based on the extent to which (i) the Company achieved or exceeded
those performance goals and (ii) they achieved or exceeded their respective
individualized management objectives. In the case of Mr. Hall, his fiscal bonus
compensation under the 2006 Management Bonus Plan was tied to the contribution
of the Company’s authentication and grading divisions to the Company’s earnings,
because those divisions operate under Mr. Hall’s direct management
supervision.
Stock
Options and Equity-Based Programs.
The
grant of stock options and restricted stock represents the only form of long
term incentive compensation that is awarded by the Company to its executive
officers. As discussed above, the Committee believes that the grant of stock
options and restricted stock better aligns the interests of the Company’s
executive officers with those of the stockholders by rewarding the executive
officers for increases in the market value of the Company’s shares. In addition,
the Compensation Committee believes that stock option and restricted stock
grants provide the Company with a mechanism for recruiting individuals by
providing an opportunity for those officers to profit from improvements in
the
Company’s stock price performance that results from their contributions to the
Company.
The
options granted to executive officers entitle them to purchase shares of common
stock, at the fair market value on the date of grant. Each stock option may
become exercisable (“vests”) either immediately or over a period of time that
generally ranges from one to five years as determined by the Compensation
Committee at the time the option is granted; although, in most cases, vesting
occurs over a four to five year period. Once vested, options remain exercisable
for a stated term, generally 10 years.
However,
on termination of an optionee’s employment, options that have not yet become
vested terminate automatically and vested options terminate three months (or,
in
the event such termination is due to the disability or death of the optionee,
12
months) thereafter. Restricted stock awards permit executive officers to acquire
shares outright and to enjoy the benefits of a shareholder with respect to
the
shares subject to the award, but ordinarily provide that such shares may be
reacquired by the Company, either in whole or in part, if and to the extent
certain vesting requirements are not satisfied. Decisions with respect to the
number of shares covered by each option grant or restricted stock award and
the
frequency of option grants and restricted stock awards to executives reflect
the
Compensation Committee’s assessment of the executive’s level of responsibility,
his or her past and anticipated future contributions to the Company and the
impact the executive has on decisions that affect the overall success and stock
price performance of the Company.
Section
162(m) of the Internal Revenue Code of 1986, as amended (“Tax Code”) places a
limit of $1,000,000 on the amount of compensation that companies may deduct
in
any one year with respect to its CEO and each of the next four most highly
compensated executive officers. Certain performance-based compensation approved
by our stockholders, such as stock option grants under our existing stock
plans, is not subject to the deduction limit. However, to maintain flexibility
in compensating the Company’s executive officers in a manner designed to promote
varying corporate goals, it is not a policy of the Committee that all executive
compensation must be deductible.
CEO
Compensation.
Based
on a compensation study conducted for the Committee and recommendations made
to
the Committee by an outside compensation planning and advisory firm and
Mr. Haynes’ performance during fiscal 2006, the Compensation Committee
increased Mr. Haynes’ annual salary from $300,000 to $340,000, effective July 1,
2006. Mr. Haynes also earned a bonus under the fiscal 2006 Management Bonus
Plan of $98,500 based on the Company’s fiscal 2006 revenues and earnings and Mr.
Haynes’ performance of the individualized management objectives established for
him by the Committee for fiscal 2006. No options or other equity awards were
granted to Mr. Haynes during fiscal 2006.
On
September 19, 2006, based on the compensation study prepared by the Compensation
Committee’s outside compensation planning and advisory firm and the Compensation
Committee’s assessment of performance and contributions of Michael Haynes to the
growth and performance of the Company, Mr. Haynes was granted (i) an option
to purchase up to 28,000 shares at an exercise price of $13.75 per share, which
was equal to the closing price of the Company’s shares on the date of grant, as
reported by NASDAQ, and (ii) 26,200 shares of restricted stock, in each
case pursuant to stock incentive plans that have been approved by the
stockholders. The option will become exercisable, and the restricted shares
will
vest, in four equal annual installments, in each case beginning on September
19,
2007, subject to Mr. Haynes’ continued employment with the
Company.
Respectfully Submitted,
Deborah
A. Farrington (Chair)
A.
Clinton Allen
A.
J.
Bert Moyer
REPORT
OF THE AUDIT COMMITTEE
The
following is the report of the Audit Committee with respect to the Company’s
audited consolidated financial statements for the fiscal year ended June 30,
2006 (the “2006 Financial Statements”).
The
Audit
Committee of the Board of Directors is responsible for assisting the Board
in
fulfilling its oversight responsibility as it relates to the Company's financial
reporting, and its internal financial and accounting systems and accounting
practices and policies. The Board of Directors has adopted an Audit Committee
Charter that sets forth the authority and specific duties of the Audit
Committee. A copy of the Charter is accessible at the Investor Relations section
of our website at www.collectors.com.
In
discharging its responsibility, the Audit Committee met and held discussions
with management and Grant Thornton, LLP, the Company’s independent registered
public accounting firm for the fiscal year ended June 30, 2006. Management
represented to the Audit Committee that the Company’s financial statements were
prepared in accordance with generally accepted accounting principles, and the
Audit Committee has reviewed and discussed the financial statements with
management and the independent auditors. The Audit Committee also discussed
with
the independent auditors the matters required to be discussed by Statement
on
Auditing Standards No. 61 (Communications
with Audit Committees), as
amended.
The
Audit
Committee has received from Grant Thornton the written disclosures required
by
Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees)
and has
discussed with them their independence from the Company and its management
and
has considered whether the independent auditors’ provision of any non-audit
services was compatible with maintaining their independence.
Based
on
these discussions and reviews, the Audit Committee recommended that the Board
of
Directors approve the inclusion of the Company’s 2006 Financial Statements in
the Company’s Annual Report on Form 10-K for the year ended June 30, 2006 filed
with the Securities and Exchange Commission.
Management
is responsible for the Company’s financial reporting process, including its
system of internal controls, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting principles. The
Company’s independent auditors are responsible for auditing those financial
statements. The Audit Committee’s responsibility is to monitor and review these
processes. It is not the Committee’s duty or responsibility to conduct auditing
or accounting reviews or procedures. The members of the Audit Committee are
not
employees of the Company and no member of the Committee is, nor does any member
of the Committee represent himself or herself to be or to serve as, accountants
or auditors by profession or experts in the fields of accounting or auditing.
Therefore, we have necessarily relied, without independent verification, on
management’s representation that the financial statements have been prepared
with integrity and objectivity and in conformity with accounting principles
generally accepted in the United States of America and on the representations
of
the Company’s registered independent public accounting firm included in their
report on the Company’s 2006 Financial Statements.
Respectfully Submitted,
A.
J.
Bert Moyer (Chair)
A.
Clinton Allen
Deborah
A. Farrington
Notwithstanding
anything to the contrary set forth in the Company’s previous filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as
amended, that might incorporate future filings, including this Proxy Statement,
in whole or in part, the foregoing Compensation Committee and Audit Committee
Reports and the Performance Graph on the following page shall not be
incorporated by reference into any such filings.
STOCKHOLDER
RETURN COMPARISON
The
following graph compares, for each of the years in the five year period ended
June 30, 2006, the cumulative total returns for the Company and for (i) an
index comprised of five companies classified as “Auction House/Art Dealers that
were selected by the Company (the “Peer Group”), and (ii) the Russell Micro-Cap
Index. The companies comprising the Peer Group and their respective trading
symbols are: Richie Bros. Auctioneers (“RBA”), Sotheby's Holdings, Inc. (“BID”),
Ableauctions.Com (“AAC”), Escala Group, Inc. (“ESCL”), and Gallery of History,
Inc. (“HIST”). The data for this Peer Group Index was obtained from
NASDAQ.
|
|
June
30,
|
|
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
Collectors
Universe, Inc.
|
|
|
100
|
|
|
52
|
|
|
45
|
|
|
172
|
|
|
231
|
|
|
184
|
|
Peer
Group Index
|
|
|
100
|
|
|
105
|
|
|
105
|
|
|
129
|
|
|
134
|
|
|
171
|
|
Russell
Micro-Cap Index
|
|
|
100
|
|
|
95
|
|
|
99
|
|
|
136
|
|
|
140
|
|
|
159
|
|
This
Stock Performance Graph assumes that $100 was invested, on June 30, 2001, in
Company’s shares and
in
the shares of the companies in the Peer Group Index and in the Russell Micro-Cap
Index, respectively, and that any dividends issued for the indicated periods
were reinvested. Stockholder returns shown in the Stock Performance Graph are
not necessarily indicative of future stock performance.
APPROVAL
OF THE 2006 EQUITY INCENTIVE PLAN
(Proposal
No. 2)
Introduction
We
are
asking our stockholders to approve the Collectors Universe 2006 Equity Incentive
Plan, a copy of which is attached as Appendix
A
to this
Proxy Statement (the “2006 Plan”), to replace the Company’s existing stock
incentive plans that provide for the grant of options and restricted shares
to
officers, key employees, directors and outside consultants (the "Existing
Plans"). Those existing stock incentive plans provide for the grant only of
stock options and restricted shares. By contrast, the 2006 Plan provides for
the
grant, not only of stock options and restricted shares, but also of stock
appreciation rights ("SARs") and restricted stock units, Therefore,
adoption of the 2006 Plan will provide the Compensation Committee greater
flexibility primarily in terms of the types of equity incentives that the
Committee may grant for the purpose of enabling the Company to compete more
effectively for key management personnel and available collectibles experts,
as
well as to retain existing officers, key employees, directors and consultants.
The
2006
Plan will not
increase
the number of shares of the Company’s common stock (the “Shares”) available for
the grant of stock incentives by the Company because, if the 2006 Plan is
approved by stockholders, the authority to grant stock awards under the
Company’s Existing Plans will terminate, and the 2006 Plan will authorize
the issuance of up to, but not to exceed, a number of Shares equal to the sum
of
(i) the number of shares available for future grants of stock incentives
under the Existing Plans at the time the 2006 Plan is approved and (ii) the
number of shares that would otherwise become available for grant under the
Existing Plans due to the cancellation of any options or the reacquisition
of any unvested restricted shares that are currently outstanding under
those Plans. As of October 20, 2006, 444,000 shares were available
for new grants, and 911,000 shares were the subject of outstanding stock options
or unvested restricted shares, under the Existing Plans, the total of which
represented approximately 16.2% of the Company’s outstanding shares as of that
same date. Moreover, if any shares are issued as a result of the exercise of
any
currently outstanding stock options or any unvested restricted shares become
vested under any of the Existing Plans, then, the number of shares that
will be available for grants under the 2006 Plan will be correspondingly
reduced.
The
Board
of Directors unanimously adopted the 2006 Plan in October 2006, based on the
recommendation of the Compensation Committee. That recommendation was based,
in
turn, on information provided to the Compensation Committee by its outside
compensation planning and advisory firm which indicated that an increasing
number of companies were adopting “similar” equity incentive plans to
provide their boards and compensation committees with greater flexibility to
tailor equity awards (i) to provide more meaningful incentives to their
officers, key employees and directors and outside consultants and (ii) to
better align the interests of those persons with those of the
stockholders.
Reasons
for Adoption and Purposes of the 2006 Equity Incentive Plan.
The
Company’s primary business is the authentication and grading of high-value
collectibles and other high-value assets, such as diamonds and colored
gemstones. However, the number of individuals who have experience managing
such
a business and the number of persons who have the expertise to authenticate
and
grade high-value collectibles is limited, and competition for those
individuals is intense. Additionally, the Board of Directors believes that
an
important factor that will affect the Company’s ability to implement its growth
strategies and initiatives, including the expansion of our business into new
markets, will be our ability to attract additional key management personnel
with
relevant experience in those markets. As a result, the Board of Directors
believes that the Compensation Committee needs the added flexibility that the
2006 Plan will provide to be able to offer meaningful incentives that will
enable the Company to compete effectively for available experts and such other
key management personnel, as well as to retain existing officers and experts
and
other key employees, and directors and outside consultants. In the view of
both
the Compensation Committee and the Board of Directors, the Company’s existing
stock incentive
plans do not provide sufficient flexibility for these purposes and, therefore,
the Board of Directors is asking stockholders to approve the 2006 Equity
Incentive Plan.
Additionally,
the Board of Directors believes that the grant of stock incentives, such as
SARs
and restricted stock units, in addition to options and restricted shares,
will help the Compensation Committee to better align the interests of management
and key employees with those of the Company’s stockholders, because grants of
such stock incentives reward management and other key employees for performance
that results in increases in the price of the Company’s Shares, which benefits
our stockholders.
Moreover,
it is expected that the availability of the more varied types of stock
incentives under the 2006 Plan will enable the Compensation Committee to
reduce
the average number of shares that are the subject of stock incentive awards,
particularly as compared to the number of shares that, historically, have
been
the subject of stock option grants under the Existing Plans. Consequently,
the Board is not asking for stockholders to approve an increase in the number
of
shares available for stock incentive grants. Instead, if the 2006 Plan is
approved, no additional stock incentive grants will be made under the Existing
Plans, and the
aggregate number of shares which will be issuable under the 2006 Plan will
be
limited to the sum of (i) 444,000 Shares, which is the number of
Shares that are currently available for new grants under the Existing
Plans, plus (ii) any shares that are the subject of currently outstanding
options or restricted stock grants under those Plans that would again become
available for grant hereafter due to the cancellation of any of those options
or
the reacquisition of any of those unvested restricted
shares. The
Existing Plans consist of the PCGS Stock Incentive Plan, the Collectors Universe
1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the 2005 Stock
Incentive Plan.
For
these
reasons the Board of Directors is unanimous in its belief that adoption of
the
2006 Plan is in the best interests of the Company and its stockholders and
should be approved.
Vote
Required for Approval of the 2006 Plan.
Approval of the 2006 Plan requires the affirmative vote of the holders of a
majority of the shares of common stock that are present or represented and
voted
on this Proposal at the Annual Meeting. Proxies solicited by the Board of
Directors for which no specific instruction is given with respect to this
Proposal in any proxy will be voted FOR
approval
of the 2006 Plan. Abstentions will have the same effect as a vote against
adoption of the 2006 Plan, and broker non-votes will be treated as if they
had
not been voted and, therefore, will not be counted, except for quorum
purposes.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS
VOTE
“FOR”
APPROVAL OF THE 2006 PLAN.
Description
of the 2006 Plan
The
following is a summary of certain principal features of the 2006 Stock Plan.
This summary does not purport to be a complete description of the 2006 Plan,
and
is
qualified in its entirety by the full text of the 2006 Plan, which is included
as Appendix
A to
this proxy statement and incorporated herein by reference.
The
persons eligible to receive stock options, SARs, restricted stock and
restricted stock units (collectively, "Awards") under the 2006 Plan are the
officers, employees and directors of, and independent contractors that provide
advisory or consulting services to, the Company or any its subsidiaries or
affiliates who are designated by the Committee to receive such Awards. Persons
receiving Awards will enter into individual Award Agreements with the Company
that contain the terms and conditions of the Awards that are established
by the
Committee at the time of grant.
However,
the persons eligible to receive incentive stock options under the 2006 Plan
are
limited to the officers and other employees of the Company and any subsidiary
or
parent corporation of the Company. As of October 20, 2006, there were a total
of
4 executive officers and approximately 220 other employees of the Company
or its subsidiaries that would have been eligible to receive a grant of
incentive stock options under the 2006 Plan. An officer or employee who is
granted an incentive stock option may, if otherwise eligible, be granted
additional incentive stock options under the 2006 Plan, if the Committee so
determines. However, if the aggregate market value of the incentive options
of
an optionee that become exercisable for the first time in any year were to
exceed $100,000, only the first $100,000 of such options will be accorded
incentive stock option treatment under the Internal Revenue Code (the “Code”).
The remaining options, in that event, would be treated as nonqualified options
for income tax purposes. For purposes of determining whether or not this
limitation has been exceeded, such options would be valued at the fair market
value of the underlying Shares determined as of the date the options were
granted.
Administration
The
2006
Plan provides that it shall be administered by the Board of Directors or a
Committee of the Board designated by it. The Board of Directors has designated
its Compensation Committee to administer and to grant Awards under the 2006
Plan. References to the Committee shall refer to the Board if the Compensation
Committee ceases to exist and the Board does not appoint a successor Committee.
It is intended that each member of the Committee will qualify as a “non-employee
director” as defined under Rule 16b-3 under the Securities Exchange Act of
1934, as amended, an “outside director” for purposes of Section 162(m) of
the Code, an “independent director” for purposes of the Company’s Corporate
Governance Guidelines and the Compensation Committee Charter, and an
“independent director” under the NASDAQ Listed Company Rules. Subject to the
terms of the 2006 Plan, the Committee is authorized to select persons to
receive Awards and to determine the form, amount, timing and other terms of
the
Awards to be granted. The Committee may delegate to one or more separate
committees composed of one or more members of the Board or one or more officers
of the Company its authority regarding Awards to individuals not subject to
Section 16 of the Securities Exchange Act of 1934 or Section 162(m) of
the Internal Revenue Code. The Committee is authorized to interpret and construe
the 2006 Plan and the terms and conditions of any Award granted under the Plan,
to prescribe such rules and procedures as it may deem necessary or advisable
for
the administration of the 2006 Plan, to interpret and amend any of such rules
or
procedures and to make all other decisions and determinations required pursuant
to the Plan or any Award Agreement or as the Committee deems necessary or
advisable to administer the Plan. The Committee’s determinations under the 2006
Plan need not be uniform and may be made selectively among those individuals
to
whom Awards have been granted under the 2006 Plan and any authorized transferee
of such individuals (the “Participants”), whether or not such Participants are
similarly situated. No member of the Committee or any subcommittee shall be
liable for any action or determination made by the Committee or such
subcommittee in good faith with respect to the 2006 Plan or any Award granted
under the 2006 Plan.
Shares
Available Under the 2006 Stock Plan
Subject
to adjustment as described below under the heading “Changes
in Capital Structure and Changes of Control,”
the
maximum aggregate number of Shares that may be the subject of Awards under
the
2006 Plan will be equal to the sum of (i) the 444,000 Shares that are
currently available for new stock option or restricted stock grants under
the
Existing Plans, and (ii) that number of the 911,000 Shares that are the
subject of currently outstanding stock options or restricted stock awards
under
the Existing Plans that may become available for the grant of Awards in the
future due to the cancellation of any of those options or the reacquisition
by
the Company of any unvested restricted shares. Accordingly, if any Shares
are
issued as a result of the exercise of any stock options that are currently
outstanding, or if any unvested restricted shares become vested, under any
of
the Existing Plans, then, the number of Shares that will be available for
grants
of Awards under the 2006 Plan will be correspondingly reduced.
If
any
Award granted under the 2006 Plan should expire, terminate, or be forfeited
or
canceled, the Shares subject thereto shall be released and shall again be
available for the grant of new Awards under the 2006 Plan. Shares that are
withheld in order to satisfy federal, state, or local tax liabilities shall
again become eligible for grant or issuance under the 2006 Plan. Additionally,
only the number of Shares actually issued upon exercise of a SAR shall count
against the above limits.
Subject
to adjustment as described below under the heading “Changes in Capital
Structure and Changes of Control,” the number of Shares with respect to
which Awards may be made under the 2006 Plan during any fiscal year to any
participant may not exceed 200,000 Shares.
The
following table provides information relating to the number, and the average
exercise prices, of the shares of our common stock that, as of June 30, 2006,
were subject to (i) outstanding options under the Existing Plans, and
(ii) outstanding options or warrants to purchase shares of common stock
that have been granted to non-employee service providers (comprised principally
of collectibles experts). As of June 30, 2006, no restricted shares had
been granted by the Company.
|
|
As
of June 30, 2006
|
|
|
|
Column
A
|
|
Column
B
|
|
Column
C
|
|
|
|
Number
of Shares
Issuable
Upon Exercise
of
Outstanding Options
|
|
Weighted-Average
Exercise Prices of Outstanding Options
|
|
Number
of Shares Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding
Securities Reflected
in
Column A)
|
|
|
|
|
|
|
|
|
|
Existing
Plans(1)
|
|
|
876,000
|
|
$
|
12.69
|
|
|
437,000
|
|
Equity
Plans for Outside Service Providers(2)
|
|
|
295,000
|
|
|
11.18
|
|
|
--
|
|
Total
|
|
|
1,171,000
|
|
$
|
12.31
|
|
|
437,000
|
|
(1)
|
Each
of the Existing Plans was approved by the Company’s stockholders within
one year following its adoption by the Board of
Directors.
|
(2)
|
These
plans, which were adopted in 1997 and 1999 without stockholder approval,
authorized the grant of options solely to non-employee collectibles
experts.
|
Unless
sooner terminated by the Board, as described below under the heading “Amendment
and Termination,” the 2006 Plan will terminate 10 years after adoption by the
Board, and no further Awards may be granted under the 2006 Plan after that
date.
The termination (or early termination) of the 2006 Plan will not affect any
Awards granted prior to the termination (or early termination) of the 2006
Plan.
Repricing
Prohibition
Subject
to adjustment as described below under the heading “Changes in Capital Structure
and Changes of Control,” neither the Committee nor the Board shall cause or
permit the cancellation, substitution or amendment of any stock option or SAR
that would have the effect of reducing the exercise price of the subject option
or the base price of the subject SAR at which such option or SAR was granted
under the 2006 Plan, or otherwise approve any modification to such option or
SAR
that would be treated as “repricing” under the then applicable rules,
regulations or listing requirements adopted by the principal exchange on which
the Company’s Shares are listed for trading, unless and until the such action
has been previously approved by an affirmative vote of the holders of a majority
of the shares of the Company that are entitled to vote, and are so voted, on
the
proposal to approve such action.
Stock
Options
The
Committee is authorized to grant stock options, including both incentive stock
options under Section 422 of the Code (“ISOs”), which can result in
potentially favorable tax treatment to the Participant, and non-qualified stock
options. The exercise price per Share subject to an option is determined by
the
Committee, but must not be less than 100% of the fair market value of a Share
on
the date of grant; provided,
however,
that
with respect to a Participant who owns stock representing more than 10% of
the
voting power of all classes of stock of the Company, the exercise price per
share subject to an ISO shall not be less than 110% of the fair market value
of
a Share on the date of grant. For purposes of the 2006 Plan, the term “fair
market value” shall mean, except as otherwise specified in a particular Award
agreement, (i) while the Shares are traded on a stock exchange which
reports closing sale prices, the closing sale price of such Shares as reported
by the principal exchange on which such Shares are admitted or traded on the
date as of which such value is being determined or, if there is no closing
sale
price for such date, on the next preceding date for which a closing sale price
was reported, (ii) if the Shares are not listed or admitted to trading on a
stock exchange which reports closing sale prices, the average of the closing
bid
and ask prices for such a Share in the over-the-counter market. However, if
“fair market value” cannot be determined under clause (i) or
clause (ii) above, “fair market value” shall be the value determined by the
Committee, on a good faith basis, using any reasonable method of valuation.
The
maximum term of each option, the times at which each option will be exercisable,
and the provisions requiring cancellation of unexercised options at or following
termination of employment generally will be established by the Committee in
the
individual Award Agreements, except that no option may have a term exceeding
10 years and no ISO granted to a Participant who owns stock representing
more than 10% of the voting power of all classes of stock of the Company may
have a term exceeding 5 years. Options may be exercised by payment of the
exercise price in cash or in such other form of consideration as shall be
approved by the Committee, as expressly set forth in the individual Award
Agreement, which may include, without limitation, (i) by tendering
previously acquired Shares which have been held by the holder of the option
for
at least six months having an aggregate fair market value at the time of
exercise equal to the aggregate exercise price of the Shares with respect to
which the option is to be exercised, (ii) by withholding Shares otherwise
issuable under such option, (iii) by payment under a broker-assisted sale
and remittance program acceptable to the Committee, (iv) if permitted by
applicable law, by delivery of a full recourse promissory note in a principal
amount equal to the exercise price that is being paid for the Shares and
containing such terms and conditions as shall be approved by the Committee,
(v) by a combination of the methods set forth in (i) through (iv) above, or
(vi) by any other means that the Committee approves.
Options
are nontransferable, other than upon death, in which case they may be
transferred by will or the laws of descent and distribution, and generally
may
be exercised only by an employee while employed by the Company. If an optionee’s
employment or service with the Company or any subsidiary is terminated for
any
reason, those of his or her options that have not yet become exercisable will
terminate automatically. Any options that have previously become exercisable
will remain exercisable for such period of time, not exceeding three months,
after termination of employment, as shall be determined by the Committee at
the
time the options are granted. However, if the termination of employment or
service is due to the optionee’s disability or death, the options that had
become exercisable prior to such termination of employment or service will
remain exercisable for 12 months thereafter. Upon termination of any unexercised
option, the Shares subject to that option will again be available for the grant
of options under the 2006 Plan.
SARs
Restricted
Stock and Restricted Stock Units
The
Committee is authorized to grant restricted stock and restricted stock units
under the 2006 Plan. A grant of restricted stock is an Award of Shares, the
grant, issuance, retention and/or vesting of which is subject to certain
restrictions specified by the Committee in the individual Award Agreements.
A
grant of restricted stock units is an Award of a right to receive, in cash
or
Shares, as determined by the Committee, the market value of one Share, the
grant, issuance, retention and/or vesting of which is subject to certain
restrictions specified by the Committee in the individual Award Agreements.
At
the time of the Award, the Committee shall determine the purchase price or
other
consideration, if any, that will be payable for the restricted stock issuable
pursuant to the Award, which may be less than 100% of the fair market value
of
the Company’s shares on the date of the Award, and the vesting requirements
that, if not satisfied, will result in forfeiture of some or all of the Shares
of restricted stock. A Participant who has been granted restricted stock
will have the rights of a stockholder with respect to the Shares of restricted
stock only to the extent and subject to the restrictions provided in the Award
Agreement. A Participant who has been granted restricted stock units generally
will have no rights of a stockholder until Shares are issued under the Award.
During the restricted period, Participants holding Shares of restricted stock
will be entitled to receive all dividends and other distributions paid with
respect to such Shares, unless otherwise provided in the Award Agreement.
However, Shares of restricted stock ordinarily will not be transferable by
a
Participant unless and until such Shares become vested.
Qualified
Performance-Based Awards
The
Committee may make Awards that are subject to the achievement of performance
goals as may be determined by the Committee and specified in the relevant Award
Agreement to Participants (“Qualified Performance-Based Awards”). Award
Agreements for such Awards shall contain such terms, provisions, conditions
and
restrictions as may be necessary to qualify such Awards as “performance-based
compensation” not subject to the limitation on tax deductibility by the Company
under Section 162(m) of the Code.
The
performance criteria for any Qualified Performance-Based Award may include
any
one or more of the following: (i) net revenue or revenue growth,
(ii) numbers of collectibles or high value assets authenticated or graded,
(iii) operating margin or profit margin or costs of revenue,
(iv) operating income or net operating income, (v) earnings before
interest, taxes and amortization, (vi) income or net income,
(vii) cash flow, (viii) earnings per shares, (ix) return on
equity, (x) total stockholder return, (xi) share price performance,
(xii) return on capital, (xiii) return on assets or net assets,
(xiv) return on operating revenue, (xv) market segment share,
(xvi) cost containment or reduction, (xvii) comparisons of selected
Company performance metrics, such as total stockholder return, to the comparable
metrics of a selected peer group of companies or stock index,
(xviii) customer satisfaction, or (xix) individual business
objectives, either individually or in any combination. The Committee may
determine such performance criteria in respect of the performance of the
Company, as a whole, or of any of its subsidiaries or affiliates, or of any
business unit thereof, either individually, alternatively or in any combination.
Performance goals may be measured annually or cumulatively over a period of
years, and may be absolute or relative.
The
Plan
provides, however, that notwithstanding satisfaction of any such
performance criteria, to the extent specified at the time of grant of an Award,
the number of Shares, stock options, SARs, shares of restricted stock,
restricted stock units or other benefits granted, issued, retainable and/or
vested under an Award on account of satisfaction of such Performance Criteria
may be reduced by the Committee on the basis of such further considerations
as
the Committee in its sole discretion shall determine.
Section
162(m) of the Code generally disallows a public company’s tax deduction for
compensation in excess of $1.0 million paid in any taxable year to the Company’s
chief executive officer or any of its other four highest compensated officers
(a
“covered employee”). Compensation that qualifies as “performance-based
compensation,” however, is excluded from the $1.0 million deductibility cap.
Additionally, stockholder approval of the 2006 Plan is designed to constitute
approval of the Plan’s material features for purposes of Section 162(m) of the
Tax Code. However, Awards under the 2006 Plan need not include performance
criteria that satisfy Section 162(m). To the extent that Awards are intended
to
qualify as “performance-based compensation” under Section 162(m), the
performance criteria will be based on stock price appreciation (in the case
of
options or SARs) or on one or more of the other factors set forth in Section
9.2
of the 2006 Plan (which may be adjusted as provided in the Plan), applied either
individually, alternatively or in any combination, to either the Company as
a
whole or to any subsidiary or affiliate or any business unit thereof, either
individually, alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or relative to
a
pre-established target, to previous years’ results or to a designated comparison
group, in each case as specified by the Committee in the Award. To the extent
that an Award under the 2006 Plan is designated as a “Qualified Performance
Based-Award,” but is not intended to qualify as performance-based compensation
under Section 162(m), the performance criteria can include the achievement
of
other strategic objectives as determined by the Board.
The
Committee or the Board may condition any payment relating to an Award on the
withholding of taxes and may provide that a portion of any Shares to be
distributed will be withheld (or previously acquired Shares or other property
be
surrendered by the Participant) to satisfy withholding and other tax
obligations. Awards granted under the 2006 Plan generally may not be pledged
or
otherwise encumbered and are not transferable except by will or by the laws
of
descent and distribution or pursuant to a domestic relations order in settlement
of marital property rights. Awards granted under the 2006 Plan, if specified
in
a particular Award Agreement, may be transferred without consideration to such
Participant’s “family member” as that term is defined in Section 1(a)(5) of the
General Instructions to Form S-8 under the Securities Act, and in any transfer
described in clause (ii) of Section 1(a)(5) of the General Instructions to
Form
S-8 under the Securities Act. At the Committee’s discretion, a particular Award
Agreement may provide that the Participant shall have the right to designate
a
beneficiary who shall be entitled to any rights, payments or other benefits
specified under an Award following the Participant’s death. ISOs may be
transferred or assigned only to the extent consistent with Section 422 of the
Code.
Changes
in Capital Structure and Changes in Control
In
order
to preserve, but not increase, the benefits to Participants of outstanding
Awards under the 2006 Plan, in the event of any change with respect to the
outstanding Shares by reason of any recapitalization, reclassification, stock
dividend, extraordinary dividend, stock split, reverse stock split, or other
distribution, or any merger, reorganization, consolidation, combination,
spin-off or other similar corporate change that does not constitute a change
of
control (as defined in the 2006 Plan), the Committee shall adjust any or all
of
(i) the maximum number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted, (ii) the number and kind of Shares, units, other rights or
other securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards, (iii) the exercise or base price
with respect to any Award, and (iv) any other terms of an Award that are
affected by the event. Adjustments to ISOs, to the extent practicable, shall
be
made in a manner consistent with the requirements of Section 424(a) of the
Code
and any adjustment affecting an Award intended as performance-based compensation
shall be made consistent with the requirements of Section 162(m) of the
Code.
In
order
to preserve, but not increase, the benefits to Participants of outstanding
Awards under the 2006 Plan,
in the
event of a change of control (as defined in the 2006 Plan), the Committee may,
in its sole discretion, in individual Award Agreements, provide terms and
conditions it deems appropriate for the vesting of such Awards in the event
of a
change of control and with respect to the assumption of such Awards or the
exchange for an outstanding Award with comparable securities under another
incentive plan in the event of a change of control. In the event of a change
of
control, and whether or not the terms of an outstanding option agreement provide
for the acceleration of vesting in the event of a change of control, or to
the
extent the option is vested and not yet exercised, the Committee may provide
for
the purchase or exchange of each option for an amount of cash or property with
a
value equal to the spread between (i) the value of the cash or property
that the Participant would have received pursuant to the change of control
transaction in exchange for the Shares underlying the option had such option
been exercised immediately prior to the change of control, and (ii) the
exercise price of the option. In the event of a change of control, and whether
or not the terms of an outstanding SAR provide for the acceleration of vesting
in the event of a change of control, or to the extent the SAR is vested and
not
yet exercised, the Committee may provide for the purchase or exchange of each
SAR for an amount of cash or property with a value equal to the value of the
cash or property that the Participant would have received pursuant to the change
of control transaction in exchange for the Shares underlying the SAR had such
SAR been exercised immediately prior to the change of control. The Committee
shall be entitled to, in its sole discretion, to accelerate the vesting of
any
or all options and SARs, and/or the lapse of the restrictions on any or all
restricted stock or restricted stock units, even if the surviving entity in
any
change of control transaction has agreed to assume the options and SARs
outstanding, or issue substitute options or restricted stock or new equity
incentives in exchange for then outstanding Awards, under the 2006 Plan. In
any
event, upon consummation of a change of control of the Company, any options
or
SARs that are neither assumed by the surviving entity, with the consent of
the
Company, nor exercised will terminate. The Committee shall cause written notice
of the Company’s execution of a definitive agreement that provides for the
consummation of a change of control to be given to Participants not less than
15
days prior to the anticipated effective date of the proposed change of control
transaction.
Amendment
and Termination
The
Board
may amend, alter or discontinue the 2006 Plan and, to the extent permitted
by
the 2006 Plan, the Board or the Committee may amend any Award Agreement,
provided,
however,
that
the Company shall submit for stockholder approval any amendment requiring
stockholder approval by NASDAQ Listed Company Rules or that would
(i) increase the maximum number of Shares for which Awards may be granted
under the 2006 Plan, (ii) reduce the price at which stock options may be
granted below 100% of fair market value on the date of grant, (iii) reduce
the option price of outstanding stock options, (iv) extend the term of the
2006 Plan, (v) change the class of persons eligible to be Participants, or
(vi) increase the limits on ISOs that may be issued under the 2006 Plan
and/or the number of Shares that may be the subject of Awards granted under
the
2006 Plan to any one Participant during any fiscal year period. However, no
amendment or alteration shall be made to the 2006 Plan or any Award Agreement
that would impair the rights of any Participant, without such Participant’s
consent, under any outstanding Award granted under the 2006 Plan, provided,
however,
that no
such consent shall be required with respect to any amendment or alteration
if
the Committee determines, in its sole discretion, that such amendment or
alteration either (a) is required or advisable in order for the Company,
the Plan or the Award to satisfy or conform to any law or regulation or to
meet
the requirements of any accounting standard, or (b) is not reasonably
likely to significantly diminish the benefits provided under the Award, or
that
any such diminishment has been otherwise adequately compensated.
Accounting
Treatment
As
required by Statement of Financial Accounting Standards No. 123 (Revised 2004),
Share-Based
Payment
(“SFAS
No. 123R”), the Company has adopted the fair value based method of accounting
for stock-based employee compensation under SFAS No. 123R, effective as of
July
1, 2005. In accordance with SFAS No. 123R and Accounting Principles Board
(“APB”) Opinion No. 25, upon the grant of options, stock appreciation rights,
restricted shares or restricted stock units pursuant to the 2006 Plan, for
financial reporting purposes we will incur compensation expense that will be
recognized over the vesting period of the options, stock appreciation rights,
restricted shares or restricted stock units, in the case of stock options and
stock appreciation rights granted under the 2006 Plan, using a fair value based
method, and, in the case of restricted stock or restricted stock units granted
under the 2006 Plan, by calculating the difference between the market price
of
the shares at the grant date and the purchase price to the grantee, if any.
We
are not able at this time to predict whether such compensation expense will
be
material, on an on-going basis, as that will depend on, among other things,
the
number of shares for which options, stock appreciation rights, restricted stock
purchase rights or restricted stock units are granted and the prices of our
common stock in the future.
The
following is a brief description of the federal income tax consequences
generally arising with respect to Awards of options under the 2006 Plan.
The
grant
of an option gives rise to no tax consequences for the Participant or the
Company. The exercise of an option has different tax consequences depending
on
whether the option is an ISO or a nonqualified option. Upon exercising an ISO,
the Participant recognizes no income for regular income tax purposes, but the
option spread is taken into account in computing liability for the alternative
minimum tax imposed by Section 55 of the Code. On exercising a nonqualified
option, the Participant recognizes ordinary income equal to the excess, on
the
date of exercise, of the fair market value of the Shares acquired on exercise
of
the option over the exercise price.
The
disposition of Shares acquired on exercise of an option may have different
tax
consequences depending on whether the option is an ISO or a non-qualified option
and the timing of the disposition. On a disposition of Shares acquired on
exercise of an ISO before the Participant has held those Shares for at least
two
years from the date the option was granted and at least one year from the date
the option was exercised (the “ISO holding periods”), the Participant recognizes
ordinary income equal to the lesser of (i) the excess of the fair market
value of the Shares on the date of exercise of the ISO over the exercise price
and (ii) the excess of the amount realized on the disposition of those
Shares over the exercise price. On a disposition of Shares acquired on the
exercise of a nonqualified option or on exercise of an ISO when the ISO holding
periods have been met, the Participant will recognize capital gain or loss
equal
to the difference between the sales price and the Participant’s tax basis in the
Shares. That gain or loss will be long-term if the Shares have been held for
more than one year as of the date of disposition. The Participant’s tax basis in
the Shares generally will be equal to the exercise price of the option plus
the
amount of any ordinary income recognized in connection with the option.
Section
409A of the Code provides that participants in certain “deferred compensation”
arrangements will be subject to immediate taxation and, among other penalties,
will be required to pay an additional 20% tax on the value of vested deferred
compensation if the requirements of Section 409A are not satisfied. Options
may be considered “deferred compensation” for purposes of Section 409A
unless certain requirements are met. The Company expects that options granted
under the 2006 Plan will meet these requirements and will thus not be subject
to
Code Section 409A, but no assurances to this effect can be given.
The
Company generally will be entitled to a tax deduction equal to the amount that
the Participant recognizes as ordinary income in connection with an option.
The
Company is not entitled to a tax deduction relating to any amount that
constitutes a capital gain for a Participant. Accordingly, the Company will
not
be entitled to any tax deduction with respect to an ISO if the Participant
holds
the Shares for the ISO holding periods prior to disposing of the Shares.
Section 280G
of the Code provides special rules in the case of golden parachute payments.
Those rules could apply if, on a change in control of the Company, the
acceleration of options or other Awards held by a Participant who is an officer,
director or highly-compensated individual with respect to the Company, and
any
other compensation paid to the Participant that is contingent on a change in
control of the Company and have a present value of at least three times the
Participant’s average annual compensation from the Company over the prior five
years (the “average compensation”). In that event, the contingent compensation
that exceeds the Participant’s average compensation, adjusted to take account of
any portion thereof shown to be reasonable compensation, will not be deductible
by the Company and will be subject to a nondeductible 20% excise tax, in
addition to regular income tax, in the hands of the Participant.
The
foregoing discussion, which is general in nature and is not intended to be
a
complete description of the federal income tax consequences of the 2006 Plan,
is
intended for the information of stockholders considering how to vote at the
Annual Meeting and not as tax guidance to Participants in the 2006 Plan. This
discussion does not address the effects of other federal taxes or taxes imposed
under state, local or foreign tax laws. Participants in the 2006 Plan should
consult a tax adviser as to the tax consequences of participation.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
(Proposal
No. 3)
The
Audit
Committee has appointed the accounting firm of Grant Thornton LLP (“Grant
Thornton”) to serve as the Company’s independent registered public accountants
for the year ending June 30, 2007, including the audit of the Company’s
consolidated financial statements for the fiscal year ending, and the audit
of the effectiveness of our internal control over financial reporting as of,
June 30, 2007.
As
a
matter of good corporate governance, the Audit Committee has determined to
submit its selection of the independent audit firm to our stockholders for
ratification. In the event that this selection of Grant Thornton is not ratified
by the holders of a majority of the shares of common stock that are present
or
represented at the annual meeting and are voted on the matter, the Audit
Committee will review its future selection of an independent registered public
accounting firm.
Grant
Thornton performed the audit of the Company’s consolidated financial statements
and the audit of the effectiveness of our internal control over financial
reporting for the fiscal years ended June 30, 2006 and 2005. A representative
of
Grant Thornton is expected to attend the Annual Meeting, and will be afforded
an
opportunity to make a statement and to respond to appropriate questions from
stockholders.
Audit
Services Rendered in Fiscal Year 2004
The
audit
of the Company’s consolidated financial statements for the fiscal year ended
June 30, 2004 was performed by Deloitte & Touche (“Deloitte”), which served
as the Company’s independent registered public accountants for the fiscal year
ended June 30, 2004. As previously reported in a Current Report that we filed
with the Securities and Exchange Commission on Form 8-K dated January 26, 2005,
on that date we were informed by Deloitte that it had decided to resign as
the
Company’s independent registered public accounting firm upon the completion of
its review of the Company’s interim financial statements to be included in its
Quarterly Report on Form 10-Q for our second quarter that ended on December
31,
2004. The Company was informed by Deloitte that its decision to resign was
not
the result of any disagreements between the Company and Deloitte on matters
of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures.
During
the period from July 1, 2004 to January 26, 2005, there were no disagreements
between the Company and Deloitte on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures which,
if not resolved to Deloitte’s satisfaction, would have caused it to make
reference to the subject matter of the disagreement in connection with its
reports. During the period from July 1, 2004 to January 26, 2005 there were
no
reportable events as defined in Item 304(a)(1)(v) of Securities and Exchange
Commission Regulation S-K.
We
provided Deloitte with a copy of the disclosure we included in our Current
Report on Form 8-K reporting its resignation and, at our request Deloitte
furnished us with a letter addressed to the Securities and Exchange Commission
stating that Deloitte agreed with the statements that we made in that Current
Report.
As
also
previously reported, in a Current Report dated February 8, 2005, that we had
filed with the Securities and Exchange Commission, on February 8, 2005 the
Audit
Committee of the Company’s Board of Directors approved the appointment and
engagement of Grant Thornton as the Company’s independent registered public
accounting firm.
During
the period from July 1, 2004 to February 8, 2005 (the date Grant Thornton was
engaged), neither the Company, nor anyone acting on its behalf, consulted with
Grant Thornton regarding (i) the application of accounting principles to
any specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements, or
(ii) any of the matters or events set forth in Item 304(a)(2)(ii) of
Regulation S−K.
Audit
and Non-Audit Services Pre-Approval Policy
The
Audit
Committee Charter, a copy of which is accessible at the Investor Relations
Section of the Company’s website at www.collectors.com,
provides
that our Audit Committee will pre-approve all audit and non-audit engagements
of
any independent registered public accounting firms, including the nature of
the
services to be performed and the fees for such services, either through specific
approval of the Audit Committee or by its Chairman pursuant to authority
specifically delegated to him by the Committee. Any engagement approved by
the
Chairman pursuant to delegated authority is required to be reported to the
Audit
Committee at its next meeting. Since the adoption of the Charter, all audit
and
non-audit services provided by the Company’s independent registered accounting
firms have been pre-approved.
Audit
and Other Fees Paid in Fiscal Years 2006 and 2005
Services
Rendered by and Fees Paid to Grant Thornton in Fiscal 2006 and Fiscal
2005.
Audit
Services and Fees.
In
fiscal 2006, Grant Thornton rendered audit services to us that consisted of
(i)
the audit of our annual consolidated financial statements for the fiscal year
ended June 30, 2006 and reviews of our interim consolidated financial statements
included in our Quarterly Reports on Form 10-Q filed with the SEC for the first
three quarters of that year, (ii) an audit of management’s assessment of,
and an audit by Grant Thornton of, the effectiveness of our internal control
over financial reporting as of June 30, 2006, in accordance with Section 404
of
the Sarbanes-Oxley Act of 2002. Those audit services included the audit of
the
Company’s accounting treatment of certain business acquisitions consummated by
the Company during that year and management’s determinations of equity
compensation expense recorded in fiscal 2006 pursuant to SFAS No. 123R, which
became effective for the first time in fiscal 2006. Audit fees paid to Grant
Thornton for these services in fiscal 2006 totaled $740,000.
During
fiscal 2005, Grant Thornton rendered audit services to the Company, which
consisted of (i) the annual audit of our consolidated financial statements
for the fiscal year ended June 30, 2005 and a review of our interim consolidated
financial statements that were included in our Quarterly Report on Form 10-Q
filed with the SEC for the quarter ended March 31, 2005, and (ii) an audit
of management’s assessment of, and an audit by Grant Thornton of, the
effectiveness of our internal control over financial reporting as of June 30,
2005, in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Fees
paid for those services totaled $591,000.
Audit-Related
Fees.
In
fiscal 2006, Grant Thornton rendered audit related services in connection with
the Company’s filing with the SEC of a Registration Statement on Form S-8 under
the Securities Act of 1933, for which it was paid fees of $16,000. Grant
Thornton did not render nor did it receive any fees for audit related services
in fiscal 2005.
Tax
Fees.
Grant
Thornton rendered tax planning and advisory services to us in fiscal 2006,
for
which it was paid fees of $82,000. The Company paid no fees to Grant Thornton
for tax services in fiscal 2005.
All
Other Fees.
The
only other services rendered to us by Grant Thornton in fiscal 2006 and fiscal
2005 were accounting due diligence services in connection with our acquisition
of a business that we consummated in early September 2005. Fees paid to Grant
Thornton for those services in totaled $25,000 in fiscal 2006 and $47,000 in
fiscal 2005.
The
Audit
Committee determined that the provision by Grant Thornton of the tax services
and due diligence services, and the fees paid for those services, in fiscal
2006
and fiscal 2005 were compatible with maintaining Grant Thornton’s
independence.
Services
Rendered by and Fees Paid to Deloitte in Fiscal 2006 and Fiscal
2005.
Audit
Services.
In
fiscal 2006, Deloitte rendered no audit services to us. No audit fees were
paid
to Deloitte in fiscal 2006 services. During fiscal 2005, Deloitte rendered
audit
services to us consisting of reviews of our interim consolidated financial
statements included in our Quarterly Reports on Form 10-Q filed with the SEC
for
the quarters ended September 30 and December 31, 2004. Audit fees paid for
those
fiscal 2005 services totaled $30,000.
Audit-Related
Fees.
In
fiscal 2006, Deloitte rendered audit related services to us in connection with
the incorporation, in our Annual Report on Form 10-K, of Deloitte’s opinion on
our consolidated financial statements for the fiscal year ended June 30, 2004,
for which it received a fee of $1,000. In fiscal 2005, Deloitte rendered audit
related services to us in connection with the incorporation, by reference,
of
our audited financial statements for the fiscal years ended June 30, 2002,
2003
and 2004 and our unaudited interim consolidated financial statements for the
six
months ended December 31, 2004 and 2003, into our registration statement that
we
filed with the SEC to register, under the Securities Act of 1933, as amended,
a
total of 3,450,000 shares of our common stock for sale in a public offering
that
was completed in the third quarter of fiscal 2005. Deloitte’s fees for such
audit related services totaled $216,000.
Tax
Fees.
The
Company paid no fees to Deloitte for tax services in fiscal 2006. Deloitte
rendered tax planning and advisory services to us in fiscal 2005, for which
it
was paid fees of $1,000.
All
Other Fees.
Deloitte did not render any other services to us in either fiscal 2006 or fiscal
2005.
The
Audit
Committee determined that the provision by Deloitte of audit-related and tax
services, and the fees paid to Deloitte for those services, in fiscal 2006
and
fiscal 2005, respectively, were compatible with maintaining Deloitte’s
independence.
Vote
Required for Ratification of Appointment of Independent Registered Public
Accounting Firm.
Ratification
of the appointment of the Company’s independent registered public accounting
firm requires the favorable vote of the holders of a majority of the shares
of
common stock that are present or represented and voted on this Proposal at
the
Annual Meeting. Proxies solicited by the Board of Directors for which no
specific instruction is given with respect to this Proposal in any proxy will
be
voted FOR
ratification of the appointment of the independent registered public accounting
firm. Abstentions will have the same effect as a vote against ratification
of
the appointment of the independent registered public accounting firm, and broker
non-votes will be treated as if they had not been voted and, therefore, will
not
be counted, except for quorum purposes.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR”
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING JUNE 30,
2007.
SOLICITATION
We
will
pay the costs of soliciting proxies from our stockholders, and plan on
soliciting proxies by mail. In order to ensure adequate representation at the
Annual Meeting, Company directors, officers and employees (who will not receive
any additional compensation therefor) may communicate with stockholders,
brokerage houses and others by telephone, email, telegraph or in person, to
request that proxies be furnished. We will reimburse brokerage houses, banks,
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
proxy materials to the beneficial owners of the Company’s shares.
SHAREHOLDER
PROPOSALS
Under
Securities Exchange Act Rule 14a-8, any stockholder desiring to submit a
proposal for inclusion in our proxy materials for our 2007 Annual Meeting of
Stockholders must provide us with a written copy of that proposal by no later
than 120 days before the first anniversary of the release of our proxy materials
for the upcoming 2007 Annual Meeting. However, if the date of our Annual Meeting
in 2007 changes by more than 30 days from the date on which our 2006 Annual
Meeting is held, then the deadline will be a reasonable time before we begin
to
print and mail our proxy materials for our 2007 Annual Meeting. Matters
pertaining to such proposals, including the number and length of such proposals,
the eligibility of persons entitled to have such proposals included and other
aspects are governed by the Securities Exchange Act of 1934, as amended, and
the
rules of the SEC promulgated thereunder and other laws and regulations to which
interested stockholders should refer.
OTHER
MATTERS
We
are
not aware of any other matters to come before the 2006 Annual Meeting. If any
other matter not mentioned in this Proxy Statement is properly submitted to
a
vote of stockholders at the Meeting, the proxy holders named in the enclosed
proxies will have discretionary authority to vote all proxies they have received
with respect to such matter in accordance with their judgment.
ANNUAL
REPORT
The
2006
Annual Report to Stockholders of the Company is being sent with this Proxy
Statement to each stockholder of record as of October 20, 2006. The Annual
Report is not to be regarded as proxy solicitation material.
By
Order
of the Board of Directors
October
27,
2006
Michael
R. Haynes
Chief
Executive Officer
COPIES
OF THE COMPANY’S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM
10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED JUNE 30, 2006 WILL BE
PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY,
COLLECTORS UNIVERSE, INC., P.O. BOX 6280, NEWPORT BEACH, CA
92658.
APPENDIX
A
2006
EQUITY INCENTIVE PLAN
The
purposes of the Collectors Universe, Inc. 2006 Equity Incentive Plan (the
“Plan”) are:
|
(a)
|
to
further align the interests of Company employees, directors and service
providers with those of the Company’s stockholders by providing incentive
compensation opportunities tied to the performance of the Company’s common
stock and by promoting increased ownership of the Company’s common stock
by such individuals; and
|
|
(b)
|
to
enhance the Company’s ability to motivate, attract, and retain the
services of officers and other key employees, and directors and
consultants, upon whose judgment, interest, and special effort the
successful conduct of the Company’s business is largely dependent, by
enabling the Company to grant to such individuals Awards consisting
not
only of stock options and restricted stock, but also stock appreciation
rights and restricted stock units.
|
In
furtherance of these purposes, the Company’s Board of Directors (i) has
adopted this Plan to enable the
444,000 shares of Common Stock that are currently available, and any shares
that
may again become available, for the grant of Awards under the Company’s Existing
Stock Incentive Plans, to be available hereafter, instead, for the grant of
Awards under this Plan, and (ii) has determined not to increase the number
of shares that shall be available for grants of Awards by this Company.
2.1 When
used
with reference to the Company, the term “Affiliate”
shall
mean:
(a) with
respect to Incentive Options, any “parent corporation” or “subsidiary
corporation” of the Company, whether now existing or hereafter created or
acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code,
respectively; and
(b) with
respect to Awards other than Incentive Options, in addition to any entity
described in paragraph (a) of this Section 2.1, any other corporation, limited
liability company partnership, joint venture or other entity, whether now
existing or hereafter created or acquired, in which the Company has a direct
or
indirect beneficial ownership interest representing at least one-third (1/3)
of
the aggregate voting power of the equity interests of such entity or one-third
(1/3) of the aggregate fair market value of the equity interests of such entity,
as determined by the Committee.
2.2 “Award”
means
a
Stock Option, Stock Appreciation Right (or SAR), Restricted Stock or Restricted
Stock Unit granted to a Participant pursuant to the Plan. The terms “Stock
Option”, “Stock Appreciation Right” (or “SAR”), “Restricted Stock” or
“Restricted Stock Unit” shall have the respective meanings given to such terms
in Section 5 of this Plan.
2.3 “Board”
means
the Board of Directors of the Company.
2.4 For
purposes of this Plan, a “Change
of Control”
shall
mean and shall be deemed to have occurred on the happening of any of the
following::
(a) the
acquisition, directly or indirectly, by any “person” or “group” (as those terms
are defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the
rules thereunder) of “beneficial ownership” (as determined pursuant to Rule
13d-3 under the Exchange Act) of securities entitled to vote generally in the
election of directors (“voting securities”) of the Company that represent 50% or
more of the combined voting power of the Company’s then outstanding voting
securities, other than:
(i) an
acquisition by a trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company or by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any person controlled
by the Company, or
(ii) an
acquisition of voting securities by the Company or a corporation owned, directly
or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the Shares of the Company.
(b) at
any
time during a period of two (2) consecutive years or less, individuals who
at
the beginning of such period constitute the Board (and any new directors whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was so approved) cease for any reason
(except for death, Disability or voluntary retirement) to constitute a majority
thereof; or
(c) the
consummation of a merger, consolidation, reorganization or similar corporate
transaction, whether or not the Company is the surviving entity in such
transaction, other than a merger, consolidation, or reorganization that would
result in the persons who are beneficial owners of the Company voting securities
outstanding immediately prior thereto continuing to beneficially own, directly
or indirectly, in substantially the same proportions, at least a simple majority
of the combined voting power of the Company’s voting securities (or the voting
securities of the surviving entity in such transaction) outstanding immediately
after such merger, consolidation or reorganization or other similar corporate
transaction; or
(d) the
sale
or other disposition of all or substantially all of the assets of the Company;
or
(e) the
approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company; or
(f) the
occurrence of any transaction or event, or series of transactions or events,
designated by the Board in a duly adopted resolution as representing a change
in
the effective control of the business and affairs of the Company, effective
as
of the date specified in any such resolution.
The
Committee shall have full and final authority, which shall be exercised in
its
discretion, to determine conclusively whether a Change of Control of the Company
has occurred pursuant to the above definition, and the date of the occurrence
of
such Change of Control and any incidental matters relating thereto.
2.5 “Code”
shall
mean the Internal Revenue Code of 1986, as such is amended from time to time,
and any reference to a section of the Code shall include any successor provision
of the Code.
2.6 “Committee”
shall
mean the committee appointed by the Board of Directors from among its members
to
administer the Plan pursuant to Section 3.
2.7 “Common
Stock”
means
the Company's common stock, par value $.001 per share.
2.8 “Company”
means
Collectors Universe, Inc.
2.9 “Consultant”
means
any natural person who, in a capacity other than as an employee or Outside
Director, renders bona fide advisory or consulting services to the Company
or
any Affiliate, pursuant to a contract entered into directly with the Company
or
any such Affiliate, provided,
however,
that
the services so rendered are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.
2.10 “Disability”
means
a
Participant being considered “disabled” within the meaning of Section
409A(a)(2)(C) of the Code, unless otherwise provided in an Award
Agreement.
2.11 “Exchange
Act”
means
the Securities Exchange Act of 1934, as amended from time to time, and any
reference to a section of the Exchange Act shall include any successor provision
of that Act.
2.12 “Existing
Plans”
means
the Company’s stock incentive plans that were in effect on the date on which
this Plan was adopted by the Company’s Board of Directors, which consist of the
Company’s PCGS Stock Incentive Plan, 1999 Stock Incentive Plan, 2003 Stock
Incentive Plan and 2005 Stock Incentive Plan.
2.13 “Market
Value”
on
any
given date means the value of one share of Common Stock, determined as
follows:
(a) If
the
Common Stock is then listed or admitted to trading on the Nasdaq Stock Market
or
a stock exchange which reports closing sale prices, the Market Value shall
be
the closing sale price per share of Common Stock on the date of valuation on
the
Nasdaq Stock Market or the principal stock exchange (as the case may be) on
which the Common Stock is then listed or admitted to trading, or, if no closing
sale price is quoted on such day, then the Market Value shall be the closing
sale price per share of the Common Stock on the Nasdaq Stock Market or such
principal stock exchange (as the case may be) on the next succeeding day for
which a closing sale price is reported.
(b) If
the
Common Stock is not then listed or admitted to trading on the Nasdaq Stock
Market or a stock exchange which reports closing sale prices, the Market Value
shall be the average of the closing bid and asked prices per share of the Common
Stock in the over-the-counter market on the date of valuation.
(c) If
neither paragraph (a) nor (b) is applicable as of the date of valuation, then
the Market Value shall be determined by the Committee in good faith using any
reasonable method of evaluation, which determination shall be conclusive and
binding on all interested and affected parties.
2.14 “Outside
Director”
shall
mean a member of the Board of Directors who is not otherwise an employee of
the
Company.
2.15 “Participants”
shall
mean those individuals to whom Awards have been granted from time to time and
any authorized transferee of such individuals.
2.16 “Plan”
means
this Collectors Universe, Inc. 2006 Equity Incentive Plan.
2.17 “Qualified
Performance-Based Award”
means
an Award the grant, issuance, retention, vesting and/or settlement of which
is
subject to satisfaction of one or more performance goals that are based on
or
determined with reference to the Performance Criteria specified in Section
9.2
hereof.
2.18 “Securities
Act”
means
the Securities Act of 1933, as amended from time to time, and any reference
to a
section of the Securities Act shall include any successor provision of that
Act.
2.19 “Share”
shall
mean a share of Common Stock or the number and kind of shares of stock or other
securities which shall be substituted or adjusted for such shares as provided
in
Section 11.
2.20 “Subsidiary”
means
any corporation or entity in which the Company owns or controls, directly or
indirectly, fifty percent (50%) or more of the voting power or economic
interests of such corporation or entity.
2.21 “10%
Stockholder”
means
a
person who, as of a relevant date, owns or is deemed to own (by reason of the
attribution rules applicable under Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of
the
Company or of any of its Affiliates.
3.
ADMINISTRATION
3.1 Composition
of Committee.
This
Plan shall be administered by the Committee. The Committee shall consist of
two
or more Outside Directors who shall be appointed by the Board of Directors
of
the Company (the “Board”).
The
Board shall fill vacancies on the Committee and may from time to time remove
or
add members of the Committee. The Board, in its sole discretion, may exercise
any authority of the Committee under this Plan in lieu of the Committee’s
exercise thereof, and in such instances references herein to the Committee
shall
refer to the Board of Directors. It is intended that each Committee member
shall
satisfy the requirements for (i) an “independent director” for purposes of
the Company's Corporate Governance Guidelines and the Compensation Committee
Charter, (ii) an “independent director” under rules adopted by the NASDAQ
Stock Market, (iii) a “nonemployee director” for purposes of such Rule
16b-3 under the Exchange Act and (iv) an “outside director” under Section
162(m) of the Code. No member of the Committee shall be liable for any action
or
determination made in good faith by the Committee with respect to the Plan
or
any Award thereunder.
3.2 Delegation
and Administration.
(a) The
Committee shall have the right, from time to time, to delegate to one or more
separate committees (any such committee a “Subcommittee”) composed of
(a) one or more directors of the Company (who may, but need not be, members
of the Committee) or (b) one or more officers of the Company, the authority
to grant Awards and take the other actions described in Section 3.3 below,
subject to (i) such limitations as the Committee shall determine,
(ii) the requirement, in the case of a delegation of authority to a
Subcommittee of one or more officers, that the resolution delegating such
authority shall specify the total number of Stock Options or rights such
Subcommittee may so award, and (iii) the limitation that in no event shall
any such delegation of authority be permitted with respect to Awards to any
members of the Board or to any officers or other individuals who are subject
to
Rule 16b-3 under the Exchange Act or Section 162(m) of the Code or who have
been
appointed to any such Subcommittee. Any action by any such Subcommittee in
accordance with and within the scope of such delegation shall be deemed for
all
purposes to have been taken by the Committee and, in such event, references
in
this Plan to the Committee shall include any such Subcommittee. Additionally
any
actions that may be taken by a Subcommittee composed of one or more officers
of
the Company shall be subject to review and approval, disapproval or modification
by the Committee.
(b) The
Committee may delegate the administration of the Plan to an officer or officers
of the Company, and such administrator(s) may have the authority to execute
and
distribute agreements or other documents evidencing or relating to Awards
granted by the Committee under this Plan, to maintain records relating to the
grant, vesting, exercise, forfeiture or expiration of Awards, to process or
oversee the issuance of shares of Common Stock upon the exercise, vesting and/or
settlement of an Award, to interpret the terms of Awards and to take such other
actions as the Committee may specify in the resolutions providing for such
delegation. Any action by any such administrator within the scope of its
delegation shall be deemed for all purposes to have been taken by the Committee
and references in this Plan to the Committee shall include any such
administrator, provided that the actions and interpretations of any such
administrator shall be subject to review and approval, disapproval or
modification by the Committee.
3.3 Powers
of the Committee.
Subject
to the express limitations of the Plan, the Committee shall have such powers
and
authority as may be necessary or appropriate for the Committee to carry out
its
functions as described in the Plan and to do all things necessary or desirable,
in its sole discretion, in connection with the administration of this Plan,
including, without limitation, the following:
(a) to
prescribe, amend and rescind rules and regulations relating to this Plan and
to
define terms not otherwise defined herein, and to interpret and construe this
Plan, any rules and regulations under this Plan and the terms and conditions
of
any Award granted hereunder, and to make exceptions to any such provisions
in
good faith and for the benefit of the Company;
(b) to
determine which persons are eligible to be Participants in this Plan and the
eligible Participants to whom Awards shall be granted hereunder and the time
or
times when any such Awards shall be granted to them;
(c) to
grant
Awards to Participants and determine the terms and conditions thereof, including
the number of Shares subject to Awards and the exercise or purchase price
thereof and the circumstances under which Awards become exercisable or vested
or
are forfeited or expire, which terms may but need not be conditioned upon the
passage of time, continued employment or service with the Company or an
Affiliate, the satisfaction of performance goals or criteria, the occurrence
of
certain events, or other factors as may be determined by the
Committee;
(d) to
amend
the terms of an Award in any manner that is not inconsistent with the Plan;
provided,
however,
that no
such action shall adversely affect the rights of a Participant with respect
to
an outstanding Award without the Participant's consent;
(e) to
establish or verify the extent of satisfaction of any performance goals or
other
conditions applicable to the grant, issuance, exercisability, vesting and/or
ability to retain any Qualified Performance-Based Award or other Award granted
under this Plan;
(f) to
prescribe and amend the terms of the agreements or other documents evidencing
Awards (“Award
Agreements”)
made
under this Plan (which need not be identical and the terms and conditions of
which may vary as determined by the Committee or any Subcommittee thereof);
(g) to
determine whether, and the extent to which, adjustments are required pursuant
to
Section 11 of this Plan; and
(h) to
make
all other determinations deemed necessary or advisable for the administration
of
this Plan.
3.4 Effect
of Change in Status.
The
Committee shall have the discretion to determine the effect upon an Award and
upon an individual’s status as a Participant under the Plan (including whether a
Participant shall be deemed to have experienced a termination of employment
or
other change in status) and upon the vesting, expiration or forfeiture of an
Award in the case of (i) any Participant who is employed by an entity that
ceases to be an Affiliate, (ii) any leave of absence approved by the
Company or any Affiliate, (iii) any change in the Participant’s status from
an employee to a member of the Board or to a Consultant, or vice versa, and
(iv) at the request of the Company or an Affiliate, any employee who
becomes employed by any partnership, joint venture, corporation or other entity
that does not meet the requirements to be an Affiliate for purposes of this
Plan.
3.5 Determinations
of the Committee.
All
decisions, determinations, interpretations and actions by the Committee
regarding this Plan shall be final, binding and conclusive on all Participants
and any other persons claiming rights under the Plan or any Award. The Committee
shall consider such factors as it deems relevant to making such decisions,
determinations and interpretations including, without limitation, the
recommendations or advice of any director, officer or employee of the Company
and such attorneys, consultants and accountants as it may select. The
Committee's determinations under the Plan need not be uniform and may be made
by
the Committee selectively among persons eligible to become Participants and
Participants, whether or not such persons or Participants are similarly
situated. A Participant or other holder of an Award may contest a decision
or
action by the Committee with respect to such person or Award only on the grounds
that such decision or action was arbitrary or capricious or was unlawful, and
any review of such decision or action shall be limited to determining whether
the Committee’s decision or action was arbitrary or capricious or was
unlawful.
3.6 Limitation
on Liability.
No
member of the Committee or any Subcommittee shall be liable for any action
or
determination made in good faith by the Committee or such Subcommittee with
respect to the Plan or any Award hereunder. No employee of the Company and
no
member of the Board or Committee or of any Subcommittee shall be subject to
any
liability with respect to duties under the Plan unless the person acts
fraudulently or in bad faith. To the extent permitted by law, the Company shall
indemnify each member of the Board, the Committee or any Subcommittee, and
any
employee of the Company, with duties under the Plan who was or is a party,
or is
threatened to be made a party, to any threatened, pending or completed
proceeding, whether civil, criminal, administrative or investigative, by reason
of such person’s conduct in the performance of duties under the
Plan.
4. SHARES
SUBJECT TO THE PLAN
4.1 Shares
Subject to the Plan.
(a) Subject
to adjustment as to the number and kind of shares pursuant to Section 11.1
hereof, the total number of shares of Common Stock may be issued under the
Plan
shall consist of a number of shares equal to the sum of (i) the 444,000
Shares that remain available for issuance and are not subject to awards granted
under the Company’s Existing Plans, plus (ii) any of the 911,000 Shares that, as
of the effective date of this Plan, are the subject of outstanding Awards under
any of the Existing Plans which again become available for grant under this
Plan
pursuant to the provisions of Section 4.1(b) below. If this Plan is approved
by
the affirmative vote of the holders of a majority of the shares of Common Stock
voting on the proposal to approve this Plan, the authority to grant awards
under
the Existing Plans shall terminate such that no additional awards or grants
may
be made under those Existing Plans.
(b) For
purposes of the foregoing limits on the maximum aggregate number of Shares
that
may be awarded or granted under this Plan, in the event that (i) all or any
portion of any Award granted or offered under any of the Existing Plans or
under
this Plan can no longer under any circumstances be exercised or purchased,
or
(ii) any Shares which had been the subject of an Award Agreement under any
of the Existing Plans or under this Plan are reacquired or purchased by the
Company, then, the Shares that were not exercised or purchased by a Participant
or that were reacquired or purchased by the Company (as the case may be) shall
again be available for grant or issuance under this Plan. Shares which are
withheld in order to satisfy federal, state or local tax liability (to the
extent permitted by the Committee) shall not count against the above limits
and
shall again become available for grant or issuance under the Plan. Additionally,
only the number of Shares actually issued upon exercise of a Stock Appreciation
Right shall count against the above limits, and any shares which were designated
to be used for such purposes and that are not in fact so used shall again become
available for grant or issuance under the Plan.
(c) Notwithstanding
anything to the contrary contained in this Section 4.1, subject to Section
4.2
hereof, the maximum aggregate number of Shares authorized for issuance under
this Plan that may be issued pursuant to Stock Options intended to be Incentive
Stock Options shall be 444,000 shares, plus any shares that were subject
to any
Awards under any of the Existing Plans that become available for grant under
this Plan pursuant to Section 4.1(b) above.
4.2 Individual
Participant Limitations.
The
maximum number of shares of Common Stock that may be the subject of Awards
granted under this Plan, in the aggregate, to any one Participant during any
fiscal year period shall be 200,000 shares. The foregoing limitations shall
be
applied on an aggregate basis taking into account Awards granted to a
Participant under this Plan as well as awards of the same type granted to a
Participant under any other equity-based compensation plan of the Company or
any
Affiliate now in existence or that may be adopted at any time hereafter.
5. PLAN
AWARDS
5.1 Award
Types.
The
Committee, on behalf of the Company, is authorized under this Plan to grant,
award and enter into the following arrangements or benefits under the Plan
provided that their terms and conditions are not inconsistent with the
provisions of the Plan: Stock Options, Stock Appreciation Rights (or “SARs”),
Restricted Stock And Restricted Stock Units. Such arrangements and benefits
are
sometimes referred to herein as “Awards.”
The
Committee, in its discretion, may determine that any Award granted hereunder
shall be a Qualified Performance-Based Award (as hereinabove defined). An Award
may consist of one of the following types of Awards or two or more different
types of Awards in tandem or in the alternative.
(a) Stock
Options.
A
“Stock
Option”
is
a
right to purchase a number of Shares at such exercise price, at such times,
and
on such other terms and conditions as are specified in or determined pursuant
to
Award Agreement evidencing the Award (the “Option
Agreement”).
The
Committee may grant Stock Options intended to be eligible to qualify as
incentive stock options pursuant to Section 422 of the Code (“Incentive
Stock Options”
or
“ISOs”) and Stock Options that are not intended to qualify as ISOs
(“Non-qualified
Stock Options”),
as
it, in its sole discretion, shall determine.
(b) Stock
Appreciation Rights.
A stock
appreciation right (“Stock
Appreciation Right”
or
“SAR”)
is a
right to receive value, with respect to a specified number of shares of Common
Stock, equal to or otherwise based on the excess of (i) the market value of
a share of Common Stock at the time of exercise over (ii) the exercise
price or “base price” of the right, subject to such terms and conditions as are
expressed in the Award Agreement evidencing the Award (the “SAR
Agreement”).
That
value may be paid to the Participant in cash or shares of Common Stock as
determined by the Committee and set forth in the SAR Agreement.
(c) Restricted
Stock Awards.
A
“Restricted
Stock”
Award
is an award of shares of Common Stock, the grant, issuance, retention and/or
vesting of which is subject to such conditions as are expressed in the Award
Agreement the Restricted Stock Award (the “Restricted
Stock Agreement”).
(d) Restricted
Stock Unit.
A
“Restricted
Stock Unit”
Award
is an award of a right to receive, in cash or Shares (as determined by the
Committee), the market value of one Share of Common Stock, the grant, issuance,
retention and/or vesting of which is subject to such conditions as are expressed
in the Award Agreement evidencing the Award (the “Restricted
Stock Unit Agreement”).
5.2 Evidence
of the Grant of an Award.
The
grant of an Award by the Committee under this Plan may be evidenced by a notice,
document or other communication, in written or electronic form, as shall be
approved by the Committee, subject to any requirements of law or of any rules
or
regulations (including accounting rules) applicable to the grant of Awards.
5.3 Suspension
or Termination of Awards.
(a) General.
The
Committee may specify in any Award Agreement at the time of the Award that
the
Participant's rights, payments and benefits with respect to an Award shall
be
subject to reduction, cancellation, forfeiture or recoupment, or that the
vesting of any Award shall be subject to suspension or termination, upon the
occurrence of any event or events that are specified in such Award Agreement,
in
addition to any otherwise applicable vesting or performance conditions of the
Award. Such events may include, but shall not be limited to, termination of
Service for cause or any act of misconduct (as such terms are defined in the
Participant’s Award Agreement), or other conduct by the Participant that is
detrimental to the business or reputation of the Company.
(b) Termination
for Cause.
Without
limiting the generality of Section 5.3(a) above, unless otherwise provided
by
the Committee and set forth in an Award Agreement, if a Participant's employment
or service relationship with the Company or any Affiliate shall be terminated
for cause, as the same may be defined in the Award Agreement of a Participant
(or by reference to a definition of cause that is included in any employment
or
independent contractor Agreement between the Company or any of its subsidiaries
and the Participant), the Company may, in its sole discretion, immediately
terminate such Participant's right to any further payments, vesting or
exercisability with respect to any Award in its entirety. The Company shall
have
the power to determine whether the Participant has been terminated for cause
and
the date upon which such termination for cause occurred. Any such determination
shall be final, conclusive and binding upon the Participant; provided,
however,
that
for any Participant who is an “executive officer” for purposes of Section 16 of
the Exchange Act, or an Outside Director, such determination shall be subject
to
the approval of the Board. In addition, if the Company shall reasonably
determine that a Participant has committed or may have committed any act which
could constitute the basis for a termination of such Participant's employment
or
service relationship for cause (as defined in the Participant’s employment or
service agreement with the Company or any Award Agreement of the Participant,
as
the case may be), the Company may suspend the Participant's rights to exercise
any Option or SAR, or receive any payment or vest in any right with respect
to
any Award pending a determination by the Company of whether an act has been
committed which could constitute the basis for a termination for “cause” as
provided in this Section 5.3.
5.4 Withholding.
The
Committee may and/or a Participant shall make arrangements acceptable to the
Company for the satisfaction of any withholding tax obligations that arise
under
applicable federal, state, local or foreign law with respect to any Stock
Option, SAR, Restricted Stock or Restricted Stock Unit Award or any sale of
Shares acquired pursuant to any such Award. The Company shall not be required
to
issue any Shares or to recognize the disposition of any such Shares until such
obligations are satisfied. To the extent permitted or required by the Committee,
these obligations may or shall be satisfied by having the Company withhold
a
portion of the Shares that otherwise would be issued or a portion of the payment
that would otherwise be paid to a Participant under such Award or by the
Participant’s tender of Shares previously acquired by the
Participant.
5.5 Repricing
Prohibited.
Subject
to the anti-dilution adjustment provisions contained in Section 11.1 hereof,
evidenced by a majority of the votes cast, neither the Committee nor the Board
shall cause or permit the cancellation, substitution or amendment of any Stock
Option or SAR that would have the effect of reducing the exercise price of
such
Stock Option or base price of such SAR at which such Stock Option or SAR was
granted under the Plan, or otherwise approve any modification to such Stock
Option or SAR that would be treated as a “repricing” under the then applicable
rules, regulations or listing requirements adopted by NASDAQ Stock Market or
the
principal exchange on which the Company’s Shares are listed for trading (if
other than the NASDAQ Stock Market), unless and until such action is submitted
to the stockholders for their prior approval and is approved by the affirmative
vote of the holders of a majority of the shares of the Company that are entitled
to vote, and that are voted on, the proposal to approve such
action.
6. STOCK
OPTIONS
6.1 Grant,
Terms and Conditions of Stock Options.
The
Committee may grant Stock Options at any time and from time to time prior to
the
Termination Date of this Plan, as set forth in Section 13 below, to employees,
Outside Directors and Consultants of the Company or any Affiliate selected
by
the Committee. No Participant shall have any rights as a stockholder with
respect to any Shares subject to Stock Options awarded under this Plan until
those Shares have been issued by the Company. The terms and conditions governing
and the respective rights and obligations of the Participant and the Company
with respect to each Stock Option shall be evidenced only by a Stock Option
Agreement (in written or electronic form) as may be approved by the Committee
containing such terms and conditions, not in conflict with the express terms
of
this Plan, as are determined by the Committee. Subject to the provisions of
Section 6.6 hereof and Section 422 of the Code, each Stock Option shall be
designated, in the discretion of the Committee, as an Incentive Stock Option
or
as a Nonqualified Stock Option. Stock Options granted pursuant to this Plan
need
not be identical, but each must contain or be subject to the terms and
conditions set forth hereinafter in this Section 6.
6.2 Exercise
Price.
The
exercise price per share of a Stock Option shall not be less than
100 percent of the Market Value of a Share of Common Stock on the date of
grant, provided that the Committee may in its discretion specify for any
Stock
Option an exercise price per Share that is higher than such Market
Value.
6.3 Vesting
of Stock Options.
The
Committee shall, in its discretion, prescribe the time or times at which, and
the conditions upon which, a Stock Option, or portion thereof, shall become
vested and/or exercisable, and may accelerate the vesting or exercisability
of
any Stock Option at any time. The requirements for vesting and exercisability
of
a Stock Option may be based on the continued service of the Participant with
the
Company or any of its Affiliates for a specified time period or periods, or
on
the attainment of specified performance goals relating to Performance Criteria
or the satisfaction of any other conditions that may be established by the
Committee in its discretion.
6.4 Term
of Stock Options.
The
Committee shall, in its discretion, prescribe in each Stock Option Agreement
the
period during which a vested Stock Option may be exercised, provided that the
maximum term of a Stock Option shall not exceed ten (10) years from its date
of
grant. Except as otherwise provided in this Section 6 or as may be provided
otherwise by the Committee in the Stock Option Agreement, no Stock Option may
be
exercised at any time during the term thereof unless the Participant is then
an
employee, director or Consultant of the Company or one of its
Affiliates.
6.5 Stock
Option Exercise.
Subject
to such terms and conditions as shall be specified in any Stock Option
Agreement, a vested Stock Option may be exercised in whole or in part at any
time during the term thereof by delivery of a written or transmission of an
electronic notice in the form required by the Company, together with payment
of
the aggregate exercise price therefor and applicable withholding taxes. The
exercise price of a Stock Option shall be paid in cash or in such other form
of
consideration as shall be approved by the Committee, as expressly set forth
in
the Stock Option Agreement, and may include, without limitation, delivery of
already owned Shares that have been held by the Participant for at least six
months (or such period as the Committee may deem appropriate, for accounting
purposes or otherwise), valued at the Market Value of such Shares on the date
of
exercise; withholding (either actually or by attestation) of Shares otherwise
issuable under such Stock Option; by payment under a broker-assisted sale and
remittance program acceptable to the Committee; if permitted by the Committee
and applicable law, by delivery of a full recourse promissory note in a
principal amount equal to the exercise price that is being paid thereby and
containing such terms and conditions as shall be approved by the Committee;
by a
combination of the methods described above; or by such other method or means
as
may be approved by the Committee.
6.6 Additional
Rules for ISOs.
(a) Eligibility.
An ISO
may only be granted to a Participant who is considered an employee for purposes
of Treasury Regulation § 1.421-7(h) with respect to the Company or any Affiliate
that qualifies as a “Subsidiary” with respect to the Company for purposes of
Section 424(f) of the Code.
(b) Annual
Limits.
No ISO
shall be granted to a Participant as a result of which the aggregate Fair Market
Value (determined as of the Date of Grant) of the shares of Common Stock with
respect to which ISOs under Section 422 of the Code are exercisable for the
first time in any calendar year under the Plan and any other stock option or
stock incentive plans of the Company or any Affiliate, would exceed $100,000,
determined in accordance with Section 422(d) of the Code. This limitation shall
be applied by taking ISOs into account in the order in which they were
granted.
(c) Exercise
Price and Term.
If an
ISO is granted to any 10% Stockholder, the exercise price may not be less than
110% of the Market Value of a Share of Common Stock on the date of grant and
the
term of the ISO may not exceed 5 years.
(d) Termination
of Employment.
An
Award of an ISO may provide that such Stock Option may be exercised not later
than three (3) months following termination of employment of the Participant
with the Company and all Subsidiaries, or not later than one year following
a
permanent and total disability within the meaning of Section 22(e)(3) of the
Code, as and to the extent determined by the Committee to comply with the
requirements of Section 422 of the Code.
(e) Nontransferability.
An ISO
shall by its terms be nontransferable other than by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of a
Participant only by such Participant.
(f) Other
Terms and Conditions.
Any ISO
granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as are deemed necessary or desirable
by
the Committee, which terms, together with the terms of the Plan, shall be
intended and interpreted to cause such ISO to qualify as an “incentive stock
option” under Section 422 of the Code. A Stock Option Agreement for an ISO may
provide that it shall be treated as a Nonqualified Stock Option to the extent
that any of the requirements applicable to “incentive stock options” under the
Code shall not be satisfied.
(g) Disqualifying
Dispositions.
If
Shares acquired by exercise of an ISO are disposed of within two years following
the date of its grant or one year following the issuance of such shares to
the
Participant upon exercise, the Participant shall, promptly following such
disposition, notify the Company in writing of the date and terms of such
disposition and provide such other information regarding the disposition as
the
Company may reasonably require.
7. STOCK
APPRECIATION RIGHTS
7.1 Grant
of Stock Appreciation Rights.
A Stock
Appreciation Right (or SAR) may be granted to any employee, Outside Director
or
Consultant selected by the Committee. SARs (a) may be granted on a basis
that allows for the exercise of the right by the Participant or that provides
for the automatic payment of the right upon a specified date or event; and
(b) shall be exercisable or payable at such time or times and upon
conditions as may be approved by the Committee, provided that the Committee
may
accelerate the exercisability or payment of any SAR at any time.
7.2 Freestanding
Stock Appreciation Rights.
An SAR
may be granted without any related Stock Option and may be subject to such
vesting and exercisability requirements as specified by the Committee in the
SAR
Agreement. Such vesting and exercisability requirements may be based on the
continued service of the Participant with the Company or an Affiliate for a
specified time period (or periods) or on the attainment of specified performance
goals established by the Committee in its discretion. An SAR will be exercisable
or payable at such time or times as determined by the Committee, provided that
the term of an SAR shall not exceed ten (10) years from its date of grant.
The
exercise or “base” price of an SAR granted without any related Stock Option
shall be determined by the Committee in its sole discretion; provided,
however,
that
the base price per Share of any such freestanding SAR shall not be less than
100 percent of the Market Value of a Share of Common Stock on the date of
grant.
7.3 Tandem
Stock Option/Stock Appreciation Rights.
An SAR
may be granted in tandem with a Stock Option, either at the time of grant or
at
any time thereafter during the term of the Stock Option. A tandem Stock
Option/SAR will entitle the holder to elect, as to all or any portion of the
number of shares subject to such Stock Option/SAR, to exercise either the Stock
Option or SAR, resulting in the reduction of the corresponding number of shares
of Common Stock subject to the right so exercised as well as the tandem right
not so exercised. An SAR granted in tandem with a Stock Option hereunder
(a) shall have a base price per share equal to the per share exercise price
of the Stock Option, (b) will be vested and exercisable at the same time or
times that a related Stock Option is vested and exercisable, and (c) will
expire no later than the time at which the related Stock Option
expires.
7.4 Payment
of Stock Appreciation Rights.
An SAR
will entitle the holder, upon exercise by the holder or other payment thereof
by
the Company, as applicable, to receive an amount determined by multiplying:
(i) the excess of the Market Value of a Share of Common Stock on the date
of exercise or payment of the SAR over the base price of such SAR, by
(ii) the number of shares as to which such SAR is exercised by the holder
or is paid by the Company. Subject to any applicable requirements of Section
409A of the Code, payment of such amount may be made, as approved by the
Committee and set forth in the SAR Agreement, in Shares valued at their Market
Value on the date of exercise or payment, in cash, or in a combination of Shares
and cash, subject to applicable tax withholding requirements.
8.
|
RESTRICTED
STOCK AND RESTRICTED STOCK UNIT
AWARDS
|
8.1 Grant,
Terms and Conditions of Restricted Stock and Restricted Stock
Units.
The
Committee may grant Restricted Stock or Restricted Stock Units at any time
and
from time to time prior to the termination of the Plan to employees, Outside
Directors and Consultants selected by the Committee. A Participant shall have
rights as a stockholder with respect to any Shares subject to a Restricted
Stock
Award or an award of any Restricted Stock Units hereunder only to the extent
specified in this Plan or the Restricted Stock or Restricted Stock Unit
Agreement (as the case may be) evidencing such Award. The grant by the Committee
of Restricted Stock or Restricted Stock Units shall be evidenced by such written
or electronic notices or communications in such form as may be approved by
the
Committee. Awards of Restricted Stock or Restricted Stock Units granted pursuant
to the Plan need not be identical but each must contain or be subject to the
following terms and conditions:
(a) Terms
and Conditions.
Each
Restricted Stock Agreement and each Restricted Stock Unit Agreement shall
contain provisions regarding (i) the number of Shares subject to such Award
or a formula for determining such, (ii) the purchase price (if any) of
those Shares, and the methods by which payment of any purchase price may be
made, (iii) the satisfaction or achievement of conditions, including but
not limited to, but subject to Section 8.1(c) below, any period of service
or
achievement of performance goals that shall determine the number of Shares
that
are granted, issued, retainable and/or vested, (iv) such terms and
conditions on the grant, issuance, vesting and/or forfeiture of the Shares
subject to such Award as may be determined from time to time by the Committee,
(v) restrictions on the transferability of the Shares, and (vi) such
additional terms and conditions, all as may be determined by the Committee,
in
each case not inconsistent with this Plan.
(b) Purchase
Price.
Subject
to the requirements of applicable law, the Committee shall determine the price,
if any, at which Shares of Restricted Stock or Restricted Stock Units may be
purchased by or awarded to a Participant, which may vary from time to time
and
among Participants and which may be below the Market Value of such Shares at
the
date of grant or issuance.
(c) Vesting.
Except
as may otherwise be provided in Section 11.2 of the Plan:
(i) Vesting
Based on Continuous Service.
A
Restricted Stock or Restricted Stock Unit Award may provide that the Award
shall
vest (or that the restrictions to which the Award is subject may lapse) in
one
or more installments based on the period of time that the Participant remains
in
the Continuous Service of the Company or an Affiliate; provided,
however,
that no
such Restricted Stock or Restricted Stock Unit Award for which vesting is based
solely on the period of the Participant’s Continuous Service (a “Time-Based
Award”) shall become 100% vested sooner than (x) the completion of three
(3) years of continuous service, measured from its grant date, in the case
of such an Award to any officer or employee or (y) one (1) year of
continuous service, measured from its grant date, in the case of such an Award
to any Outside Director or Consultant.
(ii) Performance-Based
Vesting.
A
Restricted Stock or Restricted Stock Unit Award may provide that the Award
shall
vest (or that the restrictions to which the Award is subject may lapse) on
the
achievement, in whole or in part, of performance goals with respect to specified
Performance Criteria (a “Performance-Based
Award”),
in
which event the minimum vesting period of such an Award shall be no less than
one (1) year from its grant date.
(iii) Time
and Performance Based Awards.
If a
Performance-Based Award also provides that, notwithstanding a failure to achieve
in full any of the specified performance goals, the Award may still become
fully
vested on the basis of the duration of the Participant’s Continuous Service,
then, the Award may provide for a vesting period of not less than one (1) year
if and to the extent the specified performance goal or goals are achieved,
but
also shall provide that the applicable vesting period based on the duration
of
Continuous Service shall not be less than three (3) years in the case of an
Officer or Employee or one (1) year in the case of an Outside Director or
Consultant.
(iv) Effect
of Termination of Continuous Service or Failure to Achieve Performance
Goals.
A
Restricted Stock or Restricted Stock Unit Award shall provide, in the case
of a
Time-Based Award, that if the Participant’s Continuous Service terminates prior
to the time that the Restricted Stock or Restricted Stock Unit Award has become
fully vested, or, in the case of a performance-based Award, if any performance
goal required to be achieved as a condition of vesting is not fully achieved,
then, the shares of Common Stock subject to that Award that fail to vest as
a
result thereof may, at the Company’s election, be repurchased, in whole or in
part, by the Company at a repurchase price set forth in the applicable Award
Agreement, but not less than the purchase price paid by the Participant,
provided,
however,
that if
the Participant was not required to pay any purchase price for the Restricted
Stock or Restricted Stock Unit Award, then, the Award Agreement may provide
that, upon a failure of the vesting requirement or requirements to be satisfied,
the unvested shares of Restricted Stock shall be cancelled or transferred to
the
Company, without the payment by the Company of any purchase price
therefor.
(d) Restrictions
on Transferability.
Shares
granted under any Restricted Stock Award or Restricted Stock Unit Award shall
be
subject to transfer restrictions that prohibit the sale or other transfer,
the
assignment, pledge or encumbrance of any of the Shares until all applicable
restrictions are removed or have expired and any applicable conditions have
been
satisfied as provided in the Award Agreement, unless otherwise allowed by the
Committee. The Committee may provide, in any Award Agreement for the grant
of
any Restricted Stock Restricted Stock Units, that the certificates representing
the Shares awarded thereby (i) bear a legend making appropriate reference
to the transfer restrictions imposed on the Shares, and/or (ii) shall
remain in the physical custody of the Company or an escrow holder approved
by
the Committee until all restrictions are removed or have expired or the
Restricted Stock or Restricted Stock Units (as the case may be) have become
vested.
(e) Certain
Provisions Applicable to Restricted Stock Units.
Except
to the extent this Plan or the Committee specifies otherwise, Restricted
Stock
Units represent an unfunded and unsecured obligation of the Company and do
not
confer any of the rights of a stockholder until Shares are issued thereunder.
Settlement of Restricted Stock Units upon expiration of the deferral or vesting
period shall be made in shares of Common Stock or otherwise as determined
by the
Committee. Dividends or dividend equivalent rights shall be payable in cash
or
in additional shares with respect to Restricted Stock Units only to the extent
specifically provided for by the Committee. Until a Restricted Stock Unit
is
settled, the number of Shares represented by a Restricted Stock Unit shall
be
subject to adjustment pursuant to Section 11 hereof. Any Restricted Stock
Units
that are settled after the Participant’s death shall be distributed to the
Participant’s designated beneficiary(ies) or, if none was designated, the
Participant’s estate.
9.
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QUALIFIED
PERFORMANCE-BASED AWARDS
|
9.1 The
Committee may qualify Awards that are granted under this Plan as Qualified
Performance-Based Awards. If the Committee, in its discretion, decides to grant
a Qualified Performance-Based Award to a Participant, the provisions of this
Section 9 shall control over any contrary provision contained in this Plan
and
the Award Agreement shall contain such terms, provisions, conditions and
restrictions as may be necessary to comply with the Qualified Performance-Based
Compensation requirements of Section 162(m) of the Code; provided,
however,
nothing
herein shall preclude the Committee, in its discretion, from granting Awards
under this Plan that are based on Performance Criteria or performance goals
that
do not satisfy the requirements of this Section 9.
9.2 Performance
Criteria.
(a) For
purposes of this Plan, the term “Performance
Criteria”
shall
mean any one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to the Company or any Affiliate
as
a whole or to any business unit of the Company or any Affiliate, either
individually, alternatively or in any combination, and measured either annually
or cumulatively over a period of years, on an absolute basis or relative to
a
pre-established target, to previous years’ results or to a designated comparison
group, in each case as specified by the Committee in the Award: (i) net
revenue or revenue growth; (ii) numbers of collectibles or high value
assets authenticated or graded; (iii) operating margin or profit margin or
costs of revenue, (iv) operating income or net operating income,
(v) earnings before interest, taxes and amortization, (vi) income or
net income; (vii) cash flow, (viii) earnings per share,
(ix) return on equity, (x) total stockholder return, (xi) share
price performance, (xii) return on capital, (xiii) return on assets or
net assets, (xiv) return on operating revenue, (xv) market segment
share, (xvi) cost containment or reduction, (xvii) comparisons of
selected Company performance metrics, such as total stockholder return, to
the
comparable metrics of a selected peer group of companies or stock index,
(xviii) customer satisfaction; or (xix) individual business
objectives.
(b) The
Committee may appropriately adjust any evaluation of performance under any
Performance Criteria to exclude any of the following events that may occur
during a performance period: (i) asset write-downs, (ii) litigation or
claim judgments or settlements, (iii) the effect of changes in or
provisions under tax law, accounting principles or other such laws or provisions
affecting reported results, (iv) accruals for reorganization and
restructuring programs and (v) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 (as amended) and/or
in management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year. Notwithstanding satisfaction of any completion of any
Performance Criteria, to the extent specified at the time of grant of an Award,
the number of Shares, Stock Options, SARs, shares of Restricted Stock,
Restricted Stock Unit Awards or other benefits granted, issued, retainable
and/or vested under an Award on account of satisfaction of such Performance
Criteria may be reduced by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
10.
|
OTHER
PROVISIONS APPLICABLE TO
AWARDS
|
(a) No
Award
granted under this Plan, nor any interest in such Award, may be sold, assigned,
conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner,
other than by will or the laws of descent and distribution or pursuant to a
domestic relations order in settlement of marital property rights.
Notwithstanding the foregoing, the Committee may grant an Award or amend an
outstanding Award to provide that the Award is transferable or assignable in
the
case of a transfer without the payment of any consideration, to any “family
member” as such term is defined in Section 1(a)(5) of the General
Instructions to Form S-8 under the Securities Act, and in any transfer described
in clause (ii) of Section 1(a)(5) of the General Instructions to Form S-8 under
the Securities Act, provided
that
following any such transfer or assignment the Award will remain subject to
substantially the same terms applicable to the Award while held by the
Participant to whom it was granted, as modified as the Committee shall determine
appropriate, and as a condition to such transfer the transferee shall execute
an
agreement agreeing to be bound by such terms. Notwithstanding the foregoing,
however, an ISO may be transferred or assigned only to the extent consistent
with Section 422 of the Code and in no event shall any Permitted Transferee
of
any Participant be entitled to transfer the Award in whole or in part. Any
purported assignment, transfer or encumbrance that does not qualify under this
Section 10.1 shall be void and unenforceable against the Company.
(b) Notwithstanding
any provisions in this Plan to the contrary, the Committee may provide in the
terms of an Award Agreement that the Participant shall have the right to
designate a beneficiary or beneficiaries who shall be entitled to any rights,
payments or other benefits specified under an Award following the Participant's
death. During the lifetime of a Participant, an Award shall be exercised only
by
such Participant or such Participant's guardian or legal representative. In
the
event of a Participant's death, an Award may, to the extent permitted by the
Award Agreement, be exercised by the Participant's beneficiary as designated
by
the Participant in the manner prescribed by the Committee or, in the absence
of
an authorized beneficiary designation, by the legatee of such Award under the
Participant's will or by the Participant's estate in accordance with the
Participant's will or the laws of descent and distribution, in each case in
the
same manner and to the same extent that such Award was exercisable by the
Participant on the date of the Participant's death.
10.2 Dividends.
Unless
otherwise provided by the Committee, no adjustment shall be made in Shares
issuable under Awards on account of cash dividends that may be paid or other
rights that may be issued to the holders of Shares prior to their issuance
under
any Award. The Committee shall specify whether dividends or dividend equivalent
amounts shall be paid to any Participant with respect to the Shares subject
to
any Award that have not vested or been issued or that are subject to any
restrictions or conditions on the record date for dividends.
10.3 Documents
Evidencing Awards.
The
Committee shall, subject to applicable law, determine the date an Award is
deemed to be granted. The Committee or, except to the extent prohibited under
applicable law, its delegate(s), may establish the terms of agreements or other
documents evidencing Awards under this Plan and may, but need not, require
as a
condition to the effectiveness of any such agreement or document that it shall
be executed by the Participant, including by electronic signature or other
electronic indication of acceptance, and that such Participant agree to such
further terms and conditions as specified in such agreement or document. The
grant of an Award under this Plan shall not confer any rights upon the
Participant holding such Award other than such terms, and subject to such
conditions, as are specified in this Plan as being applicable to such type
of
Award (or to all Awards) or as are expressly set forth in the agreement or
other
document evidencing such Award.
10.4 Additional
Restrictions on Awards.
Either
at the time an Award is granted or by subsequent action, the Committee may,
but
need not, impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by a Participant or
other
subsequent transfers by a Participant of any shares of Common Stock issued
under
an Award, including without limitation (a) restrictions under an insider
trading policy, (b) restrictions designed to delay and/or coordinate the
timing and manner of sales by the Participant or Participants, and
(c) restrictions as to the use of a specified brokerage firm for receipt,
resales or other transfers of such Shares.
10.5 Affiliate
Awards.
In the
case of a grant of an Award to any Participant who is an employee or Consultant
of an Affiliate, such grant may, if the Committee so directs, be implemented
by
the Company’s issuance of any Shares subject to such Award to the Affiliate, for
such lawful consideration as the Committee may determine, upon the condition
or
understanding that the Affiliate will transfer those Shares to the Participant
in accordance with the terms of the Award specified by the Committee pursuant
to
the provisions of the Plan. Notwithstanding any other provision hereof, such
Award may be issued by and in the name of the Affiliate and shall be deemed
granted on such date as the Committee shall determine.
10.6 Awards
subject to Code Section 409A.
Any
Award that constitutes, or provides for, a deferral of compensation and that
is
subject to Section 409A of the Code shall satisfy the requirements of Section
409A of the Code, to the extent applicable as determined by the Committee.
The
Award Agreement with respect to any such Award shall incorporate the terms
and
conditions required by Section 409A of the Code. If any deferral of compensation
is to be permitted in connection with any Award, the Committee shall establish
rules and procedures relating to such deferral in a manner intended to comply
with the requirements of Section 409A of the Code, including, without
limitation, the time when an election to defer may be made, the time period
of
the deferral and the events that would result in payment of the deferred amount,
the interest or other earnings attributable to the deferral and the method
of
funding, if any, attributable to the deferred amount.
11.
CHANGES
IN CAPITAL STRUCTURE AND CHANGES OF CONTROL
11.1 Adjustments
For Changes in Capital Structure.
In
order to preserve, as nearly as practical, but not to increase, the benefits
to
Participants under this Plan, if there shall occur any change with respect
to
the outstanding shares of Common Stock by reason of any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse
stock split or other distribution with respect to the shares of Common Stock,
or
any merger, reorganization, consolidation, combination, spin-off or other
similar corporate change that does not constitute a Change of Control, or any
other change affecting the Common Stock, the Committee shall cause an adjustment
to be made in (i) the maximum number and kind of shares provided in Section
4.1 and Section 4.2 hereof, (ii) the number and kind of shares of Common
Stock, units, or other rights subject to then outstanding Awards, (iii) the
exercise or base price for each share or unit or other right subject to then
outstanding Awards, and (iv) any other terms of an Award that are affected
by the event. Notwithstanding the foregoing, in the case of Incentive Stock
Options, any such adjustments shall, to the extent practicable, be made in
a
manner consistent with the requirements of Section 424(a) of the Code and any
adjustment affecting an Award intended as Performance-Based Compensation shall
be made consistent with the requirements of Section 162(m) of the
Code.
11.2 Change
of Control Transactions.
In
order to preserve, as nearly as practical, but not to increase, the benefits
to
Participants under this Plan in the event of a Change of Control of the
Company:
(a) The
Committee shall have the discretion to provide, in each Award Agreement, such
terms and conditions as it deems appropriate with respect to (i) the
vesting of such Award in the event of a Change of Control, and (ii) the
assumption of such Award or the exchange therefor of comparable securities
under
another incentive program in the event of a Change of Control. In addition,
the
aforementioned terms and conditions may vary from Award Agreement to Award
Agreement as the Committee deems appropriate.
(b) Whether
or not the terms of an outstanding Option Agreement provide for acceleration
of
vesting in the event of a Change of Control, or to the extent that an Option
is
vested and not yet exercised, the Committee in its discretion may provide,
in
connection with the Change of Control transaction, for the purchase or exchange
of each Option for an amount of cash or other property having a value equal
to
the difference (or “spread”) between: (x) the value of the cash or other
property that the Participant would have received pursuant to the Change of
Control transaction in exchange for the shares issuable upon exercise of the
Option had the Option been exercised immediately prior to the Change of Control,
and (y) the Exercise Price of the Option.
(c) Whether
or not the terms of an outstanding SAR provide for acceleration of vesting
in
the event of a Change in Control, or to the extent that an SAR is vested and
not
yet exercised, the Committee in its discretion may provide, in connection with
the Change in Control transaction, for the purchase or exchange of any or each
SAR for an amount of cash or other property having a value equal to the value
of
the cash or other property that the Participant would have received pursuant
to
the Change in Control transaction in exchange for the shares issuable upon
exercise of the SAR had the SAR been exercised immediately prior to the Change
in Control.
(d) Notwithstanding
anything to the contrary that may be contained elsewhere in this
Section 11.2, the Committee shall have the power and authority, in its sole
discretion, to accelerate the vesting of any
or
all of the Options and SARs and/or the lapse of the restrictions on any or
all
of the Restricted Stock, even if the surviving entity in a Change of Control
transaction agrees to assume the Options and SARs outstanding under this Plan,
or issue Substitute Options or Restricted Stock or new equity incentives for
the
then outstanding Options, SARs or Restricted Stock. Additionally, the terms
and
conditions relating to the vesting of Options and SARs and the lapse of
restrictions on Restricted Stock in the event of the consummation of a Change
of
Control may vary from Award Agreement to Award Agreement, as the Committee,
in
its discretion, deems appropriate.
(e) Outstanding
Options and SARs shall terminate and cease to be exercisable upon consummation
of a Change of Control, except to the extent that, with the consent of the
Company, the Options or SARs are assumed by the successor entity (or parent
thereof) pursuant to the terms of the Change of Control
transaction.
(f) If
the
Company enters into a definitive agreement that provides for the consummation
of
a Change of Control, the Committee shall cause written notice of such proposed
Change of Control transaction to be given to Participants not less than fifteen
(15) days prior to the anticipated effective date of the proposed Change of
Control transaction; provided,
however,
that
any delay in giving or any failure to give such notice shall not affect the
validity of nor shall it entitle any Participant to obtain a delay or
postponement in the consummation of the Change of Control
transaction.
(g) Notwithstanding
anything to the contrary that may be contained elsewhere in this Section 11.2
or
elsewhere in this Plan, if pursuant to any of the above provisions of this
Section 11.2 above, an acceleration of the vesting of any Options or SARS or
the
lapse of restrictions on any Restricted Stock occurs or is deemed to have
occurred immediately prior to the consummation of a Change of Control, but
the
Change of Control transaction is terminated or abandoned, for any reason
whatsoever, before consummation thereof, then such acceleration of vesting
and
lapse of restrictions shall be deemed to have not occurred and the vesting
schedule for the Options and SARs and the schedule for lapse of restrictions
on
Restricted Stock, as in effect prior to such acceleration, shall be reinstated
to the same extent as if no definitive agreement providing for such Change
of
Control Transaction had ever been entered into by the Company.
11.3 Company
or Stockholder Actions Affecting the Capital Structure of the
Company.
Notwithstanding anything to the contrary that may be contained elsewhere in
this
Plan, the existence of outstanding Awards shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, exchanges, or other changes
in
the Company’s capital structure or its business, or any merger or consolidation
of the Company or any issuance of shares of Common Stock or other securities
or
subscription rights thereto, or any issuance of bonds, debentures, preferred
or
prior preference stock ahead of or affecting the Common Stock or other
securities of the Company or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise. Further, except as expressly provided herein
or
as may be provided by the Committee, (i) the issuance by the Company of
shares of stock, or any class of securities convertible into shares of stock,
of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, (ii) the payment of a dividend in cash or property other than
Shares, or (iii) the occurrence of any similar transaction, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Common Stock
that
are subject to Stock Options or other Awards theretofore granted under this
Plan
or the purchase price per share of such Common Stock, unless the Committee
shall
determine, in its sole discretion, that an adjustment is necessary or
appropriate.
12.
LISTING
OR QUALIFICATION OF COMMON STOCK
In
the
event that the Committee determines in its discretion that the listing or
qualification of the shares of Common Stock available for issuance under the
Plan on any securities exchange or quotation or trading system or under any
applicable law or governmental regulation is necessary as a condition to the
issuance of such shares, then, a Stock Option or SAR may not be exercised in
whole or in part and a Restricted Stock or Restricted Stock Unit Award or Stock
Unit Award shall not vest or be settled unless such listing, qualification,
consent or approval has been unconditionally obtained.
13. EFFECTIVE
DATE, AMENDMENT AND TERMINATION OF THE PLAN
13.1 Effective
Date.
This
Plan was approved by the Board of Directors in October 2006 and shall become
effective immediately following approval of the Plan by the affirmative vote
of
the holders of a majority of the shares of stock that are entitled to vote
and
are voted on the proposal to approve this Plan. Such approval by the
stockholders was obtained and, accordingly, the Plan became effective on _______
__, 2006.
13.2 Amendments.
The
Board may amend, alter or discontinue the Plan and, to the extent permitted
by
this Plan, the Board or the Committee may amend any Award Agreement or other
document evidencing an Award made under this Plan, provided,
however,
that
the Company shall submit for stockholder approval any amendment (other than
an
amendment pursuant to the adjustment provisions of Section 11) required to
be
submitted for stockholder approval by NASDAQ or that otherwise would:
(a) Increase
the maximum number of Shares for which Awards may be granted under this Plan;
(b) Reduce
the price at which Stock Options may be granted below the price provided for
in
Section 6.2;
(c) Reduce
the option price of outstanding Stock Options;
(d) Extend
the term of this Plan;
(e) Change
the class of persons eligible to be Participants; or
(f) Increase
the limits in Section 4.
In
addition, no such amendment or alteration shall be made which would impair
the
rights of any Participant, without such Participant’s consent, under any Award
theretofore granted, provided,
however,
that no
such consent shall be required with respect to any amendment or alteration
if
the Committee determines in its sole discretion that such amendment or
alteration either (i) is required or advisable in order for the Company,
the Plan or the Award to satisfy or conform to any law or regulation or to
meet
the requirements of any accounting standard, or (ii) is not reasonably
likely to significantly diminish the benefits provided under such Award, or
that
any such diminishment has been adequately compensated.
13.3 Termination
Date.
This
Plan shall remain available for the grant of Awards until _______ __, 2016,
which is ten (10) years following the date the Plan became effective, or such
earlier date as the Board of Directors may determine (the “Termination
Date”).
The
termination of the Committee’s authority to grant Awards under the Plan will not
affect the continued operation of the terms of the Plan or the Company’s or
Participants’ rights and obligations with respect to Awards granted on or prior
to such Termination Date, which Awards shall continue in effect beyond the
Termination Date in accordance with their terms and the terms and provisions
of
this Plan.
14.1 Employment
or Service.
This
Plan is strictly a voluntary undertaking on the part of the Company and shall
not be deemed to constitute a contract between the Company and any Participant
or to be consideration for, or an inducement to, or a condition of, the
employment or engagement of any Participant by the Company. Nothing in the
Plan,
in the grant of any Award or in any Award Agreement shall confer upon any
Participant any right to continue in the employment or service of the Company
or
any of its Affiliates, or interfere in any way with the right of the Company
or
any of its Affiliates at any time to terminate the Participant's employment
or
other service relationship with the Company or any Affiliate for any reason
or
no reason.
14.2 Securities
Laws.
No
shares of Common Stock will be issued or transferred pursuant to an Award unless
and until all then applicable requirements imposed by Federal and state
securities and other laws, rules and regulations and by any regulatory agencies
having jurisdiction, and by any exchanges upon which the shares of Common Stock
may be listed, have been fully met. As a condition precedent to the issuance
of
shares pursuant to the grant or exercise of an Award, the Company may require
the Participant to take any reasonable action to meet such requirements. The
Committee may impose such conditions on any shares of Common Stock issuable
under the Plan as it may deem advisable, including, without limitation,
restrictions under the Securities Act, under the requirements of any exchange
upon which such shares of the same class are then listed, and under any blue
sky
or other securities laws applicable to such shares. The Committee may also
require the Participant to represent and warrant at the time of issuance or
transfer that the shares of Common Stock are being acquired only for investment
purposes and without any current intention to sell or distribute such
shares.
14.3 Unfunded
Plan.
The
adoption of the Plan and any reservation of shares of Common Stock or cash
amounts by the Company to discharge its obligations hereunder shall not be
deemed to create a trust or other funded arrangement nor shall the Company
or
the Committee be deemed to be a trustee of stock or cash to be awarded under
the
Plan. Although bookkeeping accounts may be established with respect to
Participants who are granted Awards under this Plan, any such accounts will
be
used merely as a bookkeeping convenience. The Company shall not be required
to
segregate any assets which may at any time be represented by Awards, nor shall
this Plan be construed as providing for such segregation and, except upon the
issuance of Common Stock pursuant to an Award, any rights of a Participant
under
the Plan shall be those of a general unsecured creditor of the Company, and
neither a Participant nor the Participant's Permitted Transferees or estate
shall have any other interest in any assets of the Company by virtue of the
Plan. Notwithstanding the foregoing, in order to discharge its obligations
under
the Plan the Company shall have the right to implement or set aside funds in
a
grantor trust, subject to the claims of the Company's creditors or
otherwise.
14.4 Other
Compensation and Benefit Plans.
Except
as otherwise provided in Section 4.1 of this Plan, the adoption of the Plan
shall not affect any other share incentive or other compensation plans in effect
for the Company or any Affiliate, nor shall the Plan preclude the Company from
establishing any other forms of Share or equity incentive or other compensation
or benefit program for employees of the Company or any Affiliate. The amount
of
any compensation deemed to be received by a Participant pursuant to an Award
hereunder shall not constitute includable compensation for purposes of
determining the amount of benefits to which a Participant is entitled under
any
other compensation or benefit plan or program of the Company or an Affiliate,
including, without limitation, under any pension or severance benefits plan,
except to the extent specifically provided to the contrary elsewhere in this
Plan or by the terms of any other such plan.
14.5 Liability
of the Company.
The
Company shall not be liable to any Participant or any other persons as to:
(a) the non-issuance or sale of shares of Common Stock as to which the
Company has been unable to obtain from any regulatory body having jurisdiction
the authority deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder; and (b) any tax consequence
expected, but not realized, by any Participant or any other person due to the
receipt, exercise or settlement of any Stock Option or other Award granted
under
this Plan.
14.6 Plan
Binding on Transferees.
The
Plan shall be binding upon the Company, its transferees and assigns, and the
Participant, the Participant's executor, administrator and Permitted Transferees
and beneficiaries.
14.7 Foreign
Jurisdictions.
The
Committee may adopt, amend and terminate such arrangements and grant such
Awards, not inconsistent with the intent of the Plan, as it may deem necessary
or desirable to comply with any tax, securities, regulatory or other laws of
other jurisdictions with respect to Awards that may be subject to such laws.
The
terms and conditions of such Awards may vary from the terms and conditions
that
would otherwise be required by the Plan solely to the extent the Committee
deems
necessary for such purpose. Moreover, the Board may approve such supplements
to
or amendments, restatements or alternative versions of the Plan, not
inconsistent with the intent of the Plan, as it may consider necessary or
appropriate for such purposes, without thereby affecting the terms of the Plan
as in effect for any other purpose.
14.8 Substitute
Awards in Corporate Transactions.
Nothing
contained in the Plan shall be construed to limit the right of the Committee
to
grant Awards under the Plan in connection with the acquisition, whether by
purchase, merger, consolidation or other corporate transaction, of the business
or assets of any corporation or other entity. Without limiting the foregoing,
the Committee may grant Awards under the Plan to an employee or director of
another corporation who becomes an Eligible Person by reason of any such
corporate transaction in substitution for awards previously granted by such
corporation or entity to such person. The terms and conditions of the substitute
Awards may vary from the terms and conditions that would otherwise be required
by the Plan solely to the extent the Committee deems necessary for such
purpose.
14.9 Governing
Law.
This
Plan and any agreements or other documents hereunder shall be interpreted and
construed in accordance with the laws of the State of Delaware and applicable
federal law. The Committee may provide that any dispute as to any Award shall
be
presented and determined in such forum as the Committee may specify, including
through binding arbitration. Any reference in this Plan or in the agreement
or
other document evidencing any Award to a provision of law or to a rule or
regulation shall be deemed to include any successor law, rule or regulation
of
similar effect or applicability.
14.10 Severability.
If any
provision of the Plan or any Award Agreement shall be determined to be illegal
or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
14.11 Headings
and References to this Plan.
The
Section, subsection and paragraph headings in this Plan are for convenience
of
reference only and shall not affect the interpretation, construction or
application of the provisions of this Plan. Unless the context indicates
otherwise, the terms “herein”, “hereof”, “hereinafter”, “hereto” and “hereunder”
and similar terms shall refer to this Plan as a whole and not to the specific
Section, paragraph or clause where such term may appear.
COLLECTORS
UNIVERSE, INC.
P
R O X Y
Solicited
by the Board of Directors
Annual
Meeting of Stockholders—December 5, 2006
The
undersigned hereby revokes all previously granted proxies and appoints A.
Clinton Allen, Michael R. Haynes and David G. Hall, and each of them
individually, the attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all stock of Collectors Universe, Inc. which the
undersigned is entitled to represent and vote at the 2006 Annual Meeting of
Stockholders to be held at 1921 E. Alton Avenue, Santa Ana, California 92705,
at
10:00 A.M. Pacific Time on December 5, 2006, and at any and all adjournments
or
postponements thereof, as fully as if the undersigned were present and voting
at
the Annual Meeting, as directed on the reverse side of this Proxy.
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER
ON
THE REVERSE SIDE OF THIS PROXY. WHERE NO DIRECTION IS GIVEN, THOSE SHARES WILL
BE VOTED “FOR”
THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON THIS PROXY,
“FOR”
THE APPROVAL OF THE 2006 EQUITY INCENTIVE PLAN AND “FOR”
THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING JUNE 30,
2007. THIS PROXY CONFERS DISCRETIONARY AUTHORITY TO VOTE ON ALL OTHER MATTERS
WHICH MAY COME BEFORE THE MEETING.
IMPORTANT-PLEASE
SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
(continued
and to be signed on other side)
ê
DETACH PROXY CARD HERE ê
COLLECTORS
UNIVERSE, INC.
Please
mark your votes as in this example: x
|
|
THE
DIRECTORS RECOMMEND A VOTE “FOR”
PROPOSAL NO. 1, PROPOSAL NO. 2 AND PROPOSAL NO.
3
|
|
|
|
|
|
|
Proposal No. 1
|
ELECTION
OF DIRECTORS:
|
|
|
|
FOR:
¨
The
Nominees Named Below
|
|
WITHHOLD AUTHORITY:
¨
To Vote for
All of the Nominees Named Below
|
|
A.
Clinton Allen, Deborah A. Farrington, David G. Hall, Michael R. Haynes,
A.
J. “Bert” Moyer, Van D. Simmons and Bruce A. Stevens
|
|
|
(Instruction:
To withhold authority to vote for any Nominee, print the Nominee’s name in
the space below.)
|
|
|
Exceptions:
|
|
|
|
|
|
Proposal No. 2.
|
APPROVAL
OF THE 2006 EQUITY INCENTIVE PLAN
|
FOR
¨
|
AGAINST
¨
|
ABSTAIN
¨
|
|
|
|
|
|
Proposal No. 3.
|
RATIFICATION
OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM
|
FOR
¨
|
AGAINST
¨
|
ABSTAIN
¨
|
|
|
Proposal No. 4.
|
IN
THEIR DISCRETION, UPON OTHER BUSINESS WHICH PROPERLY COMES BEFORE
THE
MEETING OR ANY ADJOURNMENT THEREOF.
|
Dated:
,
2006
|
|
|
(Signature of stockholder)
|
|
|
(Signature
if held jointly)
|
Please
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