sec document
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2)
FILED BY THE REGISTRANT [ ]
FILED BY A PARTY OTHER THAN THE REGISTRANT [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
THE TOPPS COMPANY, INC.
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(Name of Registrant as Specified In Its Charter)
PEMBRIDGE VALUE OPPORTUNITY FUND LP
PEMBRIDGE CAPITAL MANAGEMENT LLC
CRESCENDO PARTNERS II L.P. SERIES Y
CRESCENDO INVESTMENTS II, LLC
CRESCENDO ADVISORS LLC
ERIC ROSENFELD
TIMOTHY E. BROG
ARNAUD AJDLER
JOHN J. JONES
TOPPS FULL VALUE COMMITTEE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JUNE __, 2006
TOPPS FULL VALUE COMMITTEE
June __, 2006
Fellow Stockholders:
The members of the Topps Full Value Committee (the "Committee") are
significant stockholders of The Topps Company, Inc., a Delaware corporation
("Topps" or the "Company"). The Committee does not believe that the current
Board of Directors of the Company is acting in your best interests. In
particular, the Board of Directors has overseen a deterioration of operating
results of the Company and a stagnant stock price over the past five years. The
Committee also believes that management compensation is excessive in light of
the Company's operating performance and that Topps lacks good corporate
governance practices. The Committee is therefore seeking your support at the
annual meeting.
The Committee believes that Topps has valuable assets and brands that
have not been optimized by the current Board of Directors. If elected, our
nominees will immediately focus management on improving the operating profit
margins of the Company. Simultaneously, our nominees will propose that the Board
form a special committee of independent directors to thoroughly review all
strategic alternatives.
Our nominees will represent a minority of the Board. Accordingly, the
Nominees will not be able to adopt any measures without the support of at least
some members of the current Board. Nevertheless, we believe that the election of
our nominees will provide a strong signal to the current Board of Directors that
the stockholders of Topps want a change in the direction of the Company and
support the formation of a special committee to review all strategic
alternatives and corporate governance reforms.
The Committee believes that for years Topps has maintained poor
corporate governance practices. The Committee included certain non-binding
stockholder proposals in its preliminary proxy materials for this year's annual
meeting aimed at reforming the Company's corporate governance. After initially
stating in its preliminary proxy materials that the Board expects to rule the
Committee's corporate governance proposals out of order at the annual meeting,
the Board has suddenly shifted its position and is now submitting for
stockholder vote modified versions of the Committee's proposals to declassify
the Topps Board of Directors and to allow stockholders to call a special
meeting. While this is a step in the right direction, the Committee believes
that its pressure on the Board is responsible for the Board's decision to
include these proposals and recognizes that there is much to be done to improve
the operational performance of the Company and to increase stockholder value.
The Committee believes that stockholders need a Board that is more accountable,
taking active steps to maximize stockholder value, not one that reacts when
stockholders contest an election of directors and propose changes in the
Company's corporate governance.
The Committee urges you to carefully consider the information contained
in the attached Proxy Statement and then support its efforts by signing, dating
and returning the enclosed GOLD proxy card today. The attached Proxy Statement
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and the enclosed GOLD proxy card are first being furnished to the stockholders
on or about June __, 2006.
If you have already voted for the Company's proposed directors using
the WHITE proxy card, you have every right to change your vote by signing,
dating and returning a later dated proxy.
If you have any questions or require any assistance with your vote,
please contact D.F. King & Co., Inc., which is assisting us, at its address and
toll-free numbers listed on the back cover of this Proxy Statement.
Thank you for your support,
TOPPS FULL VALUE COMMITTEE
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IF YOU HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING YOUR GOLD PROXY CARD,
OR NEED ADDITIONAL COPIES OF THE COMMITTEE'S PROXY MATERIALS, PLEASE CALL
D.F. KING & CO., INC. AT THE PHONE NUMBERS LISTED BELOW.
D.F. KING & CO., INC.
Call Toll-Free: L-800-628-8532
Banks and Brokerage Firms Call Toll-Free: 1-212-269-5550
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4
PRELIMINARY COPY
2006 ANNUAL MEETING OF THE STOCKHOLDERS
OF
THE TOPPS COMPANY, INC.
---------------------
PROXY STATEMENT
OF THE
TOPPS FULL VALUE COMMITTEE
---------------------
The members of the Topps Full Value Committee (the "Committee") are
significant stockholders of The Topps Company, Inc. ("Topps" or the "Company").
The Committee does not believe that the current Board of Directors of Topps (the
"Topps Board") is acting in the best interests of its stockholders. The
Committee is therefore seeking your support at the annual meeting of
stockholders scheduled to be held at [__________________, __________, _________
________, on _______________ __, 2006, at __:__ _.M. (local time), including any
adjournments or postponements thereof and any meeting which may be called in
lieu thereof (the "Annual Meeting") for the following:
1. To elect the Committee's slate of director nominees, Timothy E.
Brog, Arnaud Ajdler and John J. Jones (the "Nominees"), to serve
for a one-year term until the 2007 annual meeting of the Company's
stockholders. However, if Proposal 2 (described below) is not
approved by the requisite vote of stockholders, the terms of the
Nominees, if elected at the Annual Meeting, will expire at the
2009 annual meeting of the Company's stockholders;
2. To approve an amendment to the Restated Certificate of
Incorporation of the Company (the "COI") to eliminate the
classification of the Topps Board;
3. To approve an amendment to the COI to allow stockholders holding
in the aggregate at least 25% of the Company's common stock to
require the call of a special meeting of stockholders;
4. To approve an amendment to the Restated Bylaws of the Company (the
"Bylaws") to allow stockholders holding in the aggregate at least
25% of the Company's common stock to require the call of a special
meeting of stockholders; and
5. To adopt a resolution ratifying the Topps Board's appointment of
Deloitte & Touche LLP as the Company's independent auditors for
fiscal 2007.
As of June __, 2006, the approximate date on which this Proxy Statement
and the GOLD proxy card are being mailed to stockholders, the members of the
Committee were the beneficial owners of an aggregate of [2,784,763] shares of
common stock of the Company, par value $0.01 per share (the "Shares"), which
currently represent approximately [7.1]% of the issued and outstanding Shares.
The Committee is composed of Pembridge Value Opportunity Fund LP, a Delaware
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limited partnership ("Pembridge Value"), Pembridge Capital Management LLC, a
Delaware limited liability company ("Pembridge Capital"), Timothy E. Brog,
Crescendo Partners II, L.P., Series Y, a Delaware limited partnership
("Crescendo Partners II"), Crescendo Investments II, LLC, a Delaware limited
liability company ("Crescendo Investments II"), Crescendo Advisors LLC, a
Delaware limited liability company ("Crescendo Advisors"), Eric Rosenfeld,
Arnaud Ajdler and John J. Jones. Each of these individuals and entities are
deemed participants in this proxy solicitation. See "Other Participant
Information."
Topps has set the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting as [June 1], 2006 (the "Record
Date"). As of the Record Date, the members of the Committee were collectively
the beneficial owners of an aggregate of [2,576,341] Shares. The mailing address
of the principal executive offices of Topps is One Whitehall, New York, New York
10004. According to Topps, as of the Record Date, there were ____________ Shares
outstanding and entitled to vote at the Annual Meeting. The participants in this
solicitation intend to vote all of their Shares FOR the election of the Nominees
and the proposals included in the Company's proxy statement (the "Proposals")
described herein.
THE COMMITTEE'S NOMINEES ARE COMMITTED TO ACTING IN THE BEST INTEREST OF THE
COMPANY'S STOCKHOLDERS. WE BELIEVE THAT YOUR VOICE IN THE FUTURE OF TOPPS CAN
BEST BE EXPRESSED THROUGH THE ELECTION OF THE NOMINEES AND THE APPROVAL OF THE
PROPOSALS. ACCORDINGLY, WE URGE YOU TO VOTE YOUR GOLD PROXY CARD FOR TIMOTHY E.
BROG, ARNAUD AJDLER AND JOHN J. JONES AND THE APPROVAL OF THE PROPOSALS.
THIS SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF OF THE BOARD
OF DIRECTORS OR MANAGEMENT OF TOPPS. THE COMMITTEE IS NOT AWARE OF ANY OTHER
MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER MATTERS, WHICH THE
COMMITTEE IS NOT AWARE OF A REASONABLE TIME BEFORE THE SOLICITATION, BE BROUGHT
BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES IN THE ENCLOSED GOLD
PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
IF YOU HAVE ALREADY SENT A WHITE PROXY CARD FURNISHED BY TOPPS MANAGEMENT TO
TOPPS, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF TOPPS NOMINEES
BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE LATEST DATED
PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO
THE 2006 ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER
DATED PROXY FOR THE 2006 ANNUAL MEETING TO OUR PROXY SOLICITOR D.F. KING & CO.,
INC. ("D.F. KING") OR BY VOTING IN PERSON AT THE 2006 ANNUAL MEETING. SEE
"RECORD DATE AND VOTING" ON PAGE 20.
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IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW FEW SHARES YOU OWN. THE COMMITTEE
URGES YOU TO SIGN, DATE, AND RETURN THE ENCLOSED GOLD PROXY CARD TODAY TO VOTE
FOR the election of the Committee's Nominees and the Proposals.
o If your Shares are registered in your own name, please sign and date
the enclosed GOLD proxy card and return it to the Committee, c/o D.F.
King & Co., Inc., in the enclosed envelope today.
o If any of your Shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the Record Date, only it can vote
such Shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and
instruct that person to execute on your behalf the GOLD proxy card. The
Committee urges you to confirm your instructions in writing to the
person responsible for your account and to provide a copy of such
instructions to the Committee, c/o D.F. King & Co., Inc., which is
assisting in this solicitation, at the address and telephone numbers
set forth below, and on the back cover of this Proxy Statement, so that
we may be aware of all instructions and can attempt to ensure that such
instructions are followed.
If you have any questions regarding your proxy,
or need assistance in voting your Shares, please call:
D.F. KING & CO., INC.
48 Wall Street
New York, NY 10005
Call Toll-Free: L-800-628-8532
Banks and Brokerage Firms Call Toll-Free: 1-212-269-5550
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REASONS FOR OUR SOLICITATION
We are significant stockholders of the Company. The Committee currently
owns in the aggregate a total of [2,784,763] Shares, representing approximately
[7.1]% of the issued and outstanding common stock of the Company, which Shares
were purchased for a total purchase price of approximately $[_________],
including brokerage commissions. As significant stockholders of Topps, we have
one simple goal -- To maximize the value of the Shares for all stockholders.
Our Nominees are committed to closely monitoring and promoting the
accountability of senior management, advocating corporate governance
improvements and encouraging and overseeing efforts to maximize stockholder
value. The Committee believes that the following examples demonstrate a need for
change on the Topps Board.
THE BOARD OF DIRECTORS HAS OVERSEEN A DETERIORATION
OF THE OPERATING RESULTS OF THE COMPANY
Over the last five years, Income from Operations fell significantly
from $36.6 million in fiscal year 2002 to a LOSS of $2.3 million in fiscal year
2006. This was due to a severe decline in gross margin, a substantial increase
in selling, general and administrative ("SG&A") expenses and a decline in sales.
Gross margin declined from 37.9% in 2002 to 32.6% in 2006 resulting in $18
million decline in gross profits over the period. SG&A expenses increased by
approximately $23 million from $77 million in 2002 to $100 million in 2006, a
30% increase. As a percentage of sales, SG&A expenses increased from 25.7% in
2002 to 34.1% in 2006. Finally, sales declined from $300 million in 2002 to $294
million in 2006, a decline of 2% (despite the 2004 acquisition of WizKids that
contributed $22 million in 2005, without which, sales would have been lower in
2006 resulting in an even steeper decline in sales). The Committee believes that
comparing certain of the Company's operating results over a five-year period
provides a customary and effective basis for comparison and that such operating
results over the past five years are typical of the Company's revenues and
operating performance.
How can the Topps Board justify a 30% increase in SG&A expenses over a
five-year period during which sales decline by 2%?
IN FACT, THE COMPANY HAS BEEN SO POORLY MANAGED THAT GROSS
MARGIN IS AT A TEN-YEAR LOW WHILE SG&A EXPENSES AS A
PERCENTAGE OF SALES ARE AT A TEN-YEAR HIGH.
Because of the Company's financial performance in 2006 and the trend in
declining operating margin, the Committee has concerns about Topps' ability to
implement a business plan that will create significant profitability for the
Company.
STOCK PERFORMANCE OF TOPPS' COMMON STOCK
HAS LAGGED INDICES AND PEERS
The stock price of a company is the ultimate report card for its
management and its board of directors. Topps' stock performance has fared just
as poorly, in our opinion, as has its operating performance during the past five
years. As indicated in the Company's own proxy statement, the performance of
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Topps' common stock has lagged the SP 500 and the SP 400 as well as its peer
group.
[INSERT IDENTICAL PERFORMANCE GRAPH FROM COMPANY PROXY STATEMENT]
Management and the Topps Board of Directors have jeopardized the
Company's significant intrinsic value by allowing the operating performance to
decline unchecked, in our opinion.
EXCESSIVE SALARY TO MANAGEMENT
The Committee believes that the salaries of management should be more
closely aligned with the Company's financial performance. The Committee believes
the salaries authorized by the Topps Board are inappropriate given the size and
the financial performance of the Company.
Over the last three years, the Company's Chairman and Chief Executive
Officer, Mr. Arthur T. Shorin, has received an average salary of approximately
$980,000. Mr. Shorin's salary is in line with the salary received by the chief
executive officers of multi-billion dollar companies such as Kraft Foods,
Hershey and Wrigley's. These companies posted average 2005 sales of $14.3
billion. By comparison, the Company's fiscal year 2006 sales level was slightly
above $290 million. We ask how the Topps Board can justify such a level of
salary given the Company's size and poor operating performance? The Committee
believes that salary is an appropriate benchmark for the comparisons above since
salary represents the baseline compensation paid to executives despite the
respective Company's actual financial performance, especially in light of the
large disparity in the financial performance of Kraft Foods, Hershey and
Wrigley's and the Company during the past three years. As such, the comparisons
do not reflect and are not indicative of total compensation.
Over the past five years, as revenues have declined and operating
profit has vanished, the Topps Board has continued to reward the executive
management team with generous bonuses. During a recent conference call with
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investors, Mr. Shorin was asked whether bonuses were paid to management given
the Company's poor fiscal year 2006 results. Mr. Shorin responded that no
bonuses were paid in 2006. After reviewing the Executive Compensation section of
the Company's Proxy Statement, the Committee was disappointed to see that in
fact Mr. Shorin received a $500,000 bonus for fiscal year 2006. Since Mr. Shorin
received compensation in excess of $1 million that is not performance-based, the
Company can not even fully deduct his compensation.
In addition we were surprised to see Mr. Shorin's son-in-law, Scott A.
Silverstein, receive another increase in salary in light of the Company's poor
operating performance. In fact since fiscal year 2004, his salary has increased
by 35%. In the same two-year period, the Company's Income from Operations
dropped by more than 100%.
WE LACK CONFIDENCE IN THE ABILITY AND COMMITMENT OF THE CURRENT
BOARD TO MAXIMIZE STOCKHOLDER VALUE
Based on the track record of the Topps Board, we lack confidence in the
ability of the current directors to take all actions necessary to maximize
stockholder value. We also question their commitment to take tangible steps
towards improving the performance of the Company. We believe that the actions
taken by the Topps Board over the past five years expose a board and management
team that is reactive to problems rather than proactive in creating and
unlocking stockholder value.
WE BELIEVE THE BOARD OF DIRECTORS HAS FAILED TO ALLOCATE THE
CAPITAL OF TOPPS IN AN EFFECTIVE MANNER
Over the past five years, the Company has kept an average of Cash &
Short Term Investments of $103 million, representing on average 35% of sales
during this period. We believe that Topps does not require this amount of cash
to conduct its operations. One of the main responsibilities of a board of
directors of any company is to allocate capital properly. Keeping such a large
balance of cash yielding an average of 2.8% during the past three years is an
example, in our opinion, of poor capital allocation.
THE TOPPS BOARD: LACK OF ACCOUNTABILITY AND
SUB-STANDARD CORPORATE GOVERNANCE PRACTICES
Throughout various missteps, the Topps Board, in our view, has
seemingly failed to hold management accountable. We believe this is partially
due to sub-standard corporate governance practices that inhibit Directors'
accountability to stockholders:
SEPARATION OF THE ROLE Consolidation of power in combining the
OF CHAIRMAN OF THE BOARD position of Chairman and Chief Executive
AND CHIEF EXECUTIVE OFFICER: Officer.
RELATED PARTY DEALINGS: Scott A. Silverstein, the President and
Chief Operating Officer of the Company
is the son-in-law of Arthur T. Shorin,
the Chairman and Chief Executive Officer
of the Company, a relationship that we
believe does not put Mr. Shorin in a
position to hold his President and Chief
Operating Officer accountable.
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STAGGERED BOARD: For years, Topps has maintained a
"staggered" or classified board -- a
policy which a 2002 study by Harvard
University professors, Lucian Bebchuk,
John Coates and Guhan Subramainian found
nearly doubles the likelihood of a
company remaining independent and
typically results in an 8% to 10% loss
of value in companies targeted for
acquisition by an uninvited suitor.
SUPERMAJORITY VOTING A supermajority vote is required for
PROVISIONS: stockholders to amend certain provisions
of the Company's COI and Bylaws,
including rescinding the classified
Board.
INABILITY TO CALL SPECIAL Stockholders are prohibited from calling
MEETINGS OF STOCKHOLDERS: special meetings of stockholders.
NO WRITTEN CONSENT: Stockholders are prohibited from taking
action by written consent.
Governance provisions such as these are contrary to the guidelines for
corporate governance best practices issued by leading advocates of stockholder
democracy, such as Institutional Shareholder Services (ISS) and Glass, Lewis &
Co. Commentators and corporate governance experts disagree on the propriety and
utility of such governance provisions. We believe that such provisions serve to
entrench the Topps Board and management team. Furthermore we believe the Topps
Board's consolidation of power in combining the Chairman and Chief Executive
Officer (and subsequent reliance on the mechanism of a rotating Lead Independent
Director) is not appropriate. Why do the Company's 2005 and 2006 proxy
statements not disclose who the current Lead Director is? We believe such a
consolidation of power protects a management team in spite of erratic results,
missed targets and failed strategic plans. Given the insulation provided to the
Topps Board by Topps' governance structures, one of the few avenues available to
stockholders dissatisfied with the status quo is the stockholder proposal
process.
The Committee believes that its efforts to hold the Topps Board
accountable to its stockholders is a primary factor for the Topps Board's
adoption of the Proposals. While the Proposals represent a step in the right
direction, the Committee questions the motivation of the Topps Board in its
decision at this juncture to include and recommend that the Proposals be
approved, and the Committee does not believe that the Proposals adequately
address all of the Committee's concerns with the Company's corporate governance
practices. Furthermore, the Committee is concerned because the Topps Board does
not state in its proxy statement that the individual members of the Topps Board
will vote their shares in favor of the Proposals, especially in light of the
supermajority vote requirement. The Committee intends to vote the Shares it owns
in the aggregate as of the record date in favor of the Proposals.
While the Committee is pleased with the decision of Topps to include
the Proposals for stockholder vote, we do not believe that such amendments, if
approved, would go far enough to enact the sort of wide-sweeping corporate
governance reforms that the Committee is seeking. The Committee believes that
the requirement of stockholders holding an aggregate of at least 25% of the
common stock in order to call a special meeting is too high a threshold. The
Committee also believes that the proposed amendments relating to the call of
special meetings by stockholders should be effective immediately. In the
Committee's eyes, the greater accountability of the Topps Board to its
stockholders should commence in 2006, and not in 2007 as the Topps Board
proposes.
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In addition to the family relationship between the Company's Chairman
and Chief Executive Officer and the Company's President and Chief Operating
Officer, there are other related party transactions that raise concerns as to
the accountability of management and the independence of the Topps Board.
According to the Company's public filings:
o Director Jack H. Nusbaum is Chairman of the law firm of
Willkie Farr & Gallagher LLP, outside counsel to the Company.
o Director Richard Tarlow's former company, Carlson & Partners,
received $349,000 for advertising services during the fiscal
year ended March 1, 2003.
o Director David M. Mauer was retained as a special consultant
to the Company from April 2002 to December 2002 and received
$208,000 in compensation during the fiscal year ended March 1,
2003
We believe these relationships may impair the ability of the Topps
Board to exercise independent judgment.
We believe that certain of the factors described above, including poor
allocations of capital by management, a series of operational missteps and
excessive executive compensation, have, in turn, caused the Company and its
stockholders to suffer poor operating performance and an undervalued stock
price. In the event that the Topps Board attempts to adopt new bylaws or amend
existing bylaws that would in any way prevent the stockholders, including the
Committee, from accomplishing the objectives described in this Proxy Statement,
the Nominees, if elected, intend to attempt to repeal any new or amended bylaws
having such an effect.
TOPPS FULL VALUE COMMITTEE IS COMMITTED TO MAXIMIZING VALUE FOR ALL OF
ITS STOCKHOLDERS
Members of Topps Full Value Committee are each stockholders of the
Company, owning collectively [7.1%] of the outstanding Common Stock. Pembridge
Value and Crescendo Partners II are significant stockholders of the Company. As
such, the interests of Pembridge Value and Crescendo Partners II are aligned
with yours. We are interested solely in maximizing the value of Topps' Shares
for the benefit of ALL Stockholders.
Although our nominees do not have specific plans as of this date with
respect to enhancing the value of the Company, our nominees will, if elected,
commit themselves to exploring all strategic alternatives to maximize
stockholder value and ensuring that the Company undergoes a thorough and
comprehensive strategic review of opportunities. Our nominees will, if elected,
constitute a minority of the Board, at least until the next Annual Meeting or
some other change in composition of the Board. Accordingly, the Nominees will
not be able to adopt any measures without the support of at least some members
of the current Board. The Nominees therefore should be expected to articulate
and raise its concerns about Topps' business activities and strategy to maximize
stockholder value with the rest of the Topps Board members.
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Our Nominees are also committed to explore ALL strategic alternatives
to maximize stockholder value, which, among other things, include the following:
o Explore the sale of all or part of the Company in a tax efficient manner.
o Significantly reduce the Company's cost structure.
o Reduce executive compensation and bonus packages.
o Improve corporate governance practices.
o Significant repurchase of Topps' common stock either in the open market
or as part of a self-tender offer.
o A large special dividend.
o Allocate capital in a more efficient manner.
We fear that if stockholders do not act now to demand that the Topps
Board improve its corporate governance practices and explore other alternatives
to enhance stockholder value, we will be engaged in this debate again at this
time next year. In the meantime, our Company's significant intrinsic worth may
continue to erode. Remember that much of our Company's value is in its ongoing
operations and market positions, not in its hard assets. Ineffectual leadership
of those operations over a longer period of time can be expected to result in
weakened performance and earnings, decreased intrinsic value, and a lower stock
price.
RECENT EVENTS HAVE RAISED OUR CONCERN THAT THE CURRENT BOARD OF
DIRECTORS MAY BE TRYING TO FRUSTRATE OUR EFFORTS TO LET
STOCKHOLDERS HAVE A SAY IN THEIR COMPANY'S FUTURE
The following is a chronology of events leading up to this proxy
solicitation:
o On April 25, 2006, Pembridge Value delivered a letter to Topps
notifying Topps of its intention to nominate Timothy E. Brog, John
J. Jones and Eric S. Newman as Nominees for election to the Topps
Board at the Annual Meeting and proposing certain amendments to
Topps' Bylaws and COI (the "Nomination Letter").
o On May 1, 2006, the Committee delivered a supplement to its
Nomination Letter to Topps, substituting Arnaud Ajdler for Eric S.
Newman as a Nominee for election to the Topps Board at the Annual
Meeting (the "Supplement Letter").
o On May 3, 2006, Pembridge Value received a letter from director
Jack Nusbaum's law firm, Willkie, Farr & Gallagher LLP ("Willkie")
alleging that the Nomination Letter and Supplement Letter
delivered by Pembridge Value to Topps are each defective in
certain respects based on their belief that certain information
may be missing.
o On May 5, 2006, the Committee's law firm, Olshan Grundman Frome
Rosenzweig & Wolosky LLP, sent a letter to Willkie informing
Willkie of its belief that each of the Nomination Letter and
Supplement Letter comply fully in all respects with the
informational requirements of the Company's Bylaws and its belief
that the allegations of certain defects is an illusory assertion
that is part of a pattern to designed to hinder and delay
Pembridge Value's legitimate attempt to nominate an opposing slate
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of directors for election at the Company's 2006 annual meeting of
stockholders and to strip the right of the Company's stockholders
to participate in the voting process.
o On May 10, 2006, Pembridge Value delivered a letter to Topps
demanding, pursuant to Section 220 of the Delaware General
Corporation Law, a complete list of Topps' stockholders and other
corporate records of Topps (the "Demand Letter") to allow the
Committee to communicate with Topps' stockholders concerning
Pembridge Value's director nominations, stockholder proposals and
other matters relating to Topps' corporate governance and
operations.
o On May 11, 2006, the Committee delivered a letter to the Topps
Board expressing its belief that the Company's postponement of the
Record Date and Annual Meeting date is not in the best interests
of the Company's stockholders and that the Committee will use
everything within its power to bring these tactics to a halt.
o On May 11, 2006, the Company filed its preliminary proxy statement
with the SEC, in which it states that the nomination of John J.
Jones by Pembridge Value may not be proper in light of the
omission from the Nomination Letter of the fact that Mr. Jones was
Executive Vice President, General Counsel and Corporate Secretary
of RCN, a large telecommunication company and that it had filed a
Chapter 11 bankruptcy petition more than a year and a half after
of Mr. Jones' ceased to be an employee with RCN. Such information
is only required by the SEC's proxy rules to the extent that it is
material to an evaluation of the ability or integrity of the
individual as a nominee for election to the company's board of
directors. Pembridge Value does not feel that such information is
material to an evaluation of Mr. Jones' ability or integrity as a
nominee to serve as a director of Topps in light of the fact that
RCN filed a Chapter 11 bankruptcy petition a year and a half after
his departure and that it was an Internet-Telecommunication based
company that was part of a technology sector facing an adverse and
volatile business environment in wake of the technology downturn
and given the large number of bankruptcies and reorganizations
during such time period. Furthermore, Mr. Jones, as General
Counsel of the corporation, was not involved in the company's
day-to-day business operations. The Committee does not believe
that this fact affects Mr. Jones' nomination any more than the
fact that Mr. Jack H. Nusbaum, a director of Topps, was a director
of Fine Host Corporation, a public company, during a time in which
it filed a Chapter 11 bankruptcy petition and faced a formal SEC
investigation related to accounting practices and irregularities,
a fact which has never been disclosed in any Topps' proxy
statement.
14
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Topps Board is currently composed of nine directors divided into
three classes (each with three members) serving staggered three-year terms. One
class of directors is elected by the stockholders annually. At the Topps 2006
Annual Meeting three directors will be elected. The Committee is seeking your
support at the Annual Meeting to elect the Nominees in opposition to Topps'
director nominees to serve until the 2009 Annual Meeting of Stockholders and
until their successors are duly elected and qualified.
THE NOMINEES
The Committee has nominated a slate of highly qualified nominees who we
believe possess the expertise necessary to work to restore and enhance
stockholder value. The Nominees are independent of the Company in accordance
with SEC and Nasdaq Stock Market rules on board independence and are committed
to exploring all alternatives to increase stockholder value. If elected, the
Nominees are committed to acting in the best interest of Topps' stockholders and
will pursue their efforts diligently and promptly.
Set forth below are the name, age, business address, present principal
occupation, employment history and directorships of publicly-held companies of
each of the Nominees for at least the past five years. This information has been
furnished to the Committee by the respective Nominees. Each of the Nominees has
consented to serve as a director of the Company and be named in this Proxy
Statement as a nominee. Each of the Nominees is at least 18 years of age. None
of the entities referenced below is a parent or subsidiary of the Company. The
information below sets forth the names, ages (as of May 1, 2006), principal
occupation and directorships of each of our nominees:
Present Principal Occupation
Name Age and Five Year Employment History
---- --- --------------------------------
Timothy E. Brog 42 Mr. Brog has been the President of Pembridge
Capital Management LLC and the Portfolio Manager
of Pembridge Value Opportunity Fund since 2004.
Mr. Brog has been a Managing Director of The
Edward Andrews Group Inc., a boutique investment
bank since 1996. From 1989 to 1995, Mr. Brog was
a corporate finance and mergers and acquisition
associate of the law firm Skadden, Arps, Slate,
Meagher & Flom LLP. Mr. Brog received a Juris
Doctorate from Fordham University School of Law
in 1989 and a BA from Tufts University in 1986.
Arnaud Ajdler 30 Mr. Ajdler has been a Managing Director of
Crescendo Partners, L.P., a Delaware limited
partnership, since December 2005, a Senior Vice
President from December 2004 to December 2005 and
an investment analyst from September 2003 to
December 2004. He has also served as the Chief
Financial Officer, a member of the Board of
Directors and the Secretary of Arpeggio
Acquisition Corporation, a publicly traded
company on the over the counter exchange, since
June 2004. Arpeggio announced a merger agreement
15
with Hill International in December 2005. Since
October 2005, Mr. Ajdler has also been assistant
to the Chairman of the Board and a Board observer
to Computer Horizons Corp., a NASDAQ listed
company. From January 2000 to July 2001, he
worked as a management consultant at Mercer
Management Consulting, a leading international
strategy consulting firm, before completing his
M.B.A. at Harvard Business School in June 2003.
He also worked as an investment analyst at Tilson
Capital, a New York-based hedge fund, as an
investment banker at Deutsche Bank, an
international financial service provider, and as
a management consultant at the Boston Consulting
Group. Mr. Ajdler received a B.S. in engineering
from the Free University of Brussels, Belgium, an
S.M. in Aeronautics from the Massachusetts
Institute of Technology and an M.B.A from the
Harvard Business School.
John J. Jones 39 Mr. Jones presently serves as a consultant to
Trump Entertainment Resorts, Inc. Mr. Jones was
Senior Vice President, General Counsel and
Corporate Secretary for Argosy Gaming Company
from January 2004 to the sale of Argosy in
October 2005. Between December 2002 and January
2004, Mr. Jones served as outside counsel to
various businesses, and was Managing Director of
The Edward Andrews Group Inc., a boutique
investment bank, and Vice Chairman and General
Counsel of Legal Advantage Services, Inc. From
July 1998 to December 2002, Mr. Jones was
Executive Vice President, General Counsel and
Corporate Secretary of RCN Corporation, a
telecommunications company, and held the same
positions from July 1998 until January 2001, with
Commonwealth Telephone Enterprises, Inc., a
telecommunications company. Approximately
eighteen months after Mr. Jones resigned from RCN
Corporation in December 2002, it filed for
bankruptcy in May 2004. From January 1996 to
December 1997, Mr. Jones was Vice President and
General Counsel of Designer Holdings Ltd.
Previously, he was an attorney with the law firm
Skadden, Arps, Meagher & Flom in New York City.
Members of the Topps Full Value Committee have agreed to share certain
expenses relating to the proxy contest at the 2006 Annual Meeting and have
further agreed not to sell any shares of Common Stock prior to the 2006 Annual
Meeting without the consent of the other party. Pembridge Value and Crescendo
Partners II have separate letter agreements with John J. Jones indemnifying him
against liabilities, costs and expenses related to the proxy contest.
Our nominees will, if elected, constitute a minority of the Topps
Board, at least until the next Annual Meeting or some other change in
composition of the Topps Board. Accordingly, the Nominees will not be able to
adopt any measures without the support of at least some members of the current
Topps Board. The Pembridge Nominees therefore should be expected to articulate
and raise its concerns about Topps' business activities and strategy to maximize
stockholder value with the rest of the Topps Board members.
The Nominees understand that, if elected as directors of Topps, each of
them will have an obligation under Delaware law to discharge his duties as a
director in good faith, consistent with his fiduciary duties to Topps and its
16
stockholders. Since the Committee is a significant stockholder of the Company,
its interests are aligned with all stockholders.
There can be no assurance that the actions the Nominees intend to take
as described above will be implemented if they are elected or that the election
of the Nominees will improve the Company's business or otherwise enhance
stockholder value. Your vote to elect the Nominees does not constitute a vote in
favor of the Committee's value enhancing plans for Topps. Your vote to elect the
Nominees will have the legal effect of replacing three incumbent directors of
Topps with the Nominees. There can be no assurance that stockholder value will
be maximized as a result of this solicitation or the election of the Nominees.
The Committee does not expect that the Nominees will be unable to stand
for election, but, in the event that such persons are unable to serve or for
good cause will not serve, the Shares represented by the enclosed GOLD proxy
card will be voted for substitute nominees. In addition, Pembridge Value
reserves the right to nominate substitute persons if Topps makes or announces
any changes to the Topps Bylaws or COI or takes or announces any other action
that has, or if consummated would have, the effect of disqualifying the
Nominees. In any such case, Shares represented by the enclosed GOLD proxy card
will be voted for such substitute nominees. Pembridge Value reserves the right
to nominate additional persons if Topps increases the size of the Topps Board
above its existing size or increases the number of directors whose terms expire
at the Annual Meeting. Additional nominations made pursuant to the preceding
sentence are without prejudice to the position of Pembridge Value that any
attempt to increase the size of the current Topps Board or to reconstitute or
reconfigure the classes on which the current directors serve constitutes an
unlawful manipulation of Topps' corporate machinery.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR NOMINEES
PROPOSAL NO. 2
PROPOSAL TO DECLASSIFY THE TOPPS BOARD
Article FIFTH of the COI stipulates that "The directors shall be
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constitution the entire Board of Directors...At each annual
meeting of stockholders beginning in 1992, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term." The Topps Board has adopted a proposal to amend Article FIFTH of the COI
to eliminate the classification of the Topps Board. Under the COI, this proposal
will require the affirmative vote of 66-2/3% of the outstanding shares of common
stock of the Company in order to be adopted.
Commentators and corporate governance experts disagree on the propriety
and utility of such governance provisions. We believe that a classified board
has served to entrench the Topps Board and management team and has reduced the
accountability of directors to stockholders because classified boards limit the
ability of stockholders to evaluate and elect all directors on an annual basis.
17
The Committee believes that the above amendment to declassify the Topps
Board will serve to increase the Topps Board's accountability to all
stockholders and minimize the impact of entrenched directors and management. The
Committee believes that directors who are up for re-election only every three
years are less likely to be attentive to stockholder concerns and are thus more
likely to "rubber stamp" management decisions. In addition, the current
classified board structure serves as an unwarranted de facto anti-takeover
defense. A classified board ensures that no stockholder or group of
stockholders, regardless of ownership interest, may compel the company to yield
to a takeover attempt through the removal of directors.
As discussed in further detail in the Company's proxy statement, the
Topps Board has unanimously adopted a resolution approving a declassification
amendment to the COI, which will provide for the annual election of all
directors, and is recommending that stockholders approve that amendment. The
text of the proposed amendment is substantially in the form set forth in Exhibit
B of the Company's proxy statement.
If the proposal is approved by stockholders, the amendment will become
effective as of the 2007 annual meeting of the Company's stockholders and the
terms for all directors would end at the 2007 annual meeting of the Company's
stockholders. Beginning with the 2007 annual meeting of the Company's
stockholders, all directors would be elected for one-year terms at each annual
meeting. If the stockholders do not approve the amendment to the COI, the Topps
Board will remain classified, the three directors elected at the Annual Meeting
will serve a three-year term expiring in 2009, and all other directors will
continue in office for the remainder of their three-year terms, subject to their
earlier death, resignation or removal.
YOU ARE URGED TO VOTE FOR THE PROPOSAL TO AMEND TOPPS' COI TO ELIMINATE
THE CLASSIFICATION OF THE TOPPS BOARD ON THE ENCLOSED GOLD PROXY CARD.
PROPOSAL NO. 3
PROPOSAL TO AMEND THE COI TO ALLOW STOCKHOLDERS
HOLDING IN THE AGGREGATE AT LEAST 25% OF THE OUTSTANDING CAPITAL STOCK
OF THE COMPANY TO REQUIRE THE CALL OF A SPECIAL MEETING OF STOCKHOLDERS
Article EIGHTH of the COI stipulates that no person or persons with the
exception of the Topps Board is entitled to call a special meeting of
stockholders. The Topps Board has adopted a proposal to amend Article EIGHTH of
the COI to permit stockholders holding in the aggregate at least 25% of the
outstanding common stock be entitled, upon proper notice thereof to the
Secretary of the Company, to require the Company to call a special meeting of
stockholders. Under the COI, this proposal will require the affirmative vote of
66-2/3% of the outstanding shares of Common Stock in order to be adopted.
As previously mentioned, although the Committee is recommending the
approval of this Proposal by stockholders, the Committee believes that the
proposed amendments relating to the call of special meetings by stockholders
should be made effective immediately. In the Committee's eyes, the greater
accountability of the Topps Board to its stockholders should commence in 2006
and the Topps Board and management should not be further insulated while
stockholder value continues to erode. The Committee further believes that the
requirement of stockholders holding an aggregate of at least 25% of the common
18
stock in order to call a special meeting is too high a threshold and disagrees
with the Company's beliefs that a 15% threshold is not sufficiently high to
deter the immediate call of a meeting of stockholders for matters that are not
sufficiently urgent or important and that could be brought up in the ordinary
course at the next annual meeting of stockholders.
The text of the proposed amendment is substantially in the form set
forth in Exhibit C of the Company's proxy statement.
As discussed in further detail in the Company's proxy statement, the
Topps Board has determined that this provision should be amended to permit
stockholders holding in the aggregate at least 25% of the outstanding Common
Stock be entitled, upon proper notice thereof to the Secretary of the Company,
to require the Company, any time following the Company's 2007 annual meeting of
stockholders, to call a special meeting of the stockholders. The Topps Board has
unanimously adopted a resolution approving such an amendment to the COI, and is
recommending that stockholders approve that amendment.
YOU ARE URGED TO VOTE FOR THE PROPOSAL TO AMEND TOPPS' COI TO ALLOW STOCKHOLDERS
HOLDING AT LEAST TWENTY-FIVE PERCENT OF THE OUTSTANDING CAPITAL STOCK OF THE
COMPANY TO REQUIRE THE CALL OF A SPECIAL MEETING OF STOCKHOLDERS ON THE ENCLOSED
GOLD PROXY CARD.
PROPOSAL NO. 4
PROPOSAL TO AMEND THE RESTATED BYLAWS TO ALLOW STOCKHOLDERS
HOLDING AT LEAST 25% OF THE OUTSTANDING CAPITAL STOCK OF THE COMPANY
TO REQUIRE THE CALL OF A SPECIAL MEETING OF STOCKHOLDERS
Article II, Section 3 of the Company's Bylaws stipulates that no person
or persons with the exception of the Topps Board is entitled to call a special
meeting of stockholders. The Topps Board has adopted a proposal to amend Article
II, Section 3 of the Restated Bylaws to permit stockholders holding in the
aggregate at least 25% of the outstanding common stock be entitled, upon proper
notice thereof to the Secretary of the Company, to require the Company to call a
special meeting of stockholders. Under the Restated Bylaws, this proposal will
require the affirmative vote of 66-2/3% of the outstanding shares of common
stock in order to be adopted.
As discussed in further detail in the Company's proxy statement, the
Topps Board has adopted a resolution, subject to stockholder approval, amending
Article II, Section 3 of the Restated Bylaws to permit stockholders holding in
the aggregate at least 25% of the outstanding common stock be entitled, upon
proper notice thereof to the Secretary of the Company, to require the Company to
call a special meeting of stockholders. This amendment will conform the Restated
Bylaws to the provisions of the amended COI relating to the ability of
stockholders to require the call of a special meeting of stockholders.
Both Proposal No. 3 and Proposal No. 4 address the ability of
stockholders to require the call of a special meeting. However, because Proposal
No. 3 would amend the COI and Proposal No. 4 would amend the Restated Bylaws,
stockholders will have the ability to require the call of a special meeting only
if Proposal No. 3 is approved, whether or not Proposal No. 4 is approved.
19
The text of the proposed amendment is substantially in the form set
forth in Exhibit D of the Company's proxy statement.
YOU ARE URGED TO VOTE FOR THE PROPOSAL TO AMEND TOPPS' BYLAWS TO ALLOW
STOCKHOLDERS HOLDING AT LEAST TWENTY-FIVE PERCENT OF THE OUTSTANDING CAPITAL
STOCK OF THE COMPANY TO REQUIRE THE CALL OF A SPECIAL MEETING OF STOCKHOLDERS ON
THE ENCLOSED GOLD PROXY CARD.
OTHER PROPOSALS
RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
According to the Company's proxy statement, the Company is soliciting
proxies to ratify the Board's appointment of Deloitte & Touche LLP as
independent auditors to report on the consolidated financial statements of the
Company for the fiscal year ending March 3, 2007 and to perform such other
services as may be required of them. Please refer to the Company's proxy
statement for a detailed discussion of this proposal. The Committee does not
object to the ratification of the Topps Board's appointment of as Deloitte &
Touche LLP as the Company's independent auditors.
We are not aware of any other proposals to be brought before the Annual
Meeting. However, we intend to bring before the Annual Meeting such business as
may be appropriate, including without limitation nominating additional persons
for directorships, or making other proposals as may be appropriate to address
any action of the Topps Board not publicly disclosed prior to the date of this
proxy statement. Should other proposals be brought before the Annual Meeting,
the persons named as proxies in the enclosed GOLD proxy card will vote on such
matters in their discretion.
RECORD DATE AND VOTING
According to the Company's proxy statement, as of _____________, 2006,
the Company had outstanding _________ Shares entitled to be voted at the Annual
Meeting. Each share is entitled to one vote on each matter submitted to a vote
of stockholders. Only stockholders of record at the close of business on
_____________, 2006 will be entitled to vote at the Annual Meeting. If your
shares are registered directly in your name with the Company's transfer agent,
American Stock Transfer & Trust Company, you are considered with respect to
those shares the stockholder of record, and these proxy materials are being sent
directly to you. As the stockholder of record, you have the right to submit your
voting proxy directly to the Company using the enclosed proxy card or to vote in
person at the Annual Meeting.
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares held in "street
name." These proxy materials are being forwarded to you by your broker who is
considered, with respect to those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker to vote your shares,
and your broker or nominee has enclosed a voting instruction card for you to
use. If your shares are held by a broker or nominee, please return your voting
card as early as possible to ensure that your shares will be voted in accordance
with your instructions. You are also invited to attend the Annual Meeting;
however, since you are not the stockholder of record, you may not vote these
shares in person at the meeting.
Under Delaware law and the Bylaws, the presence of a quorum is required
to transact business at the Annual Meeting. A quorum is defined as the presence,
either in person or by proxy, of a majority of the shares entitled to vote.
Abstentions and broker non-votes are considered to be shares present for the
20
purpose of determining whether a quorum exists. A broker non-vote occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received voting instructions from the
beneficial owner. Brokers do not have discretionary voting power with respect to
this election of directors. Therefore, broker non-votes will not be counted in
this election of directors.
Under Delaware law, the COI and the Restated Bylaws, directors are
elected (Proposal No. 1 described above) by a plurality of the votes cast,
either in person or by proxy, at the Annual Meeting; Proposal Nos. 2, 3 and 4
(described above) must be approved by the affirmative vote of 66-2/3% of the
outstanding shares of the Company's common stock; and Proposal No. 5 must be
approved by the affirmative vote of a majority of the shares of the Company's
common stock present, either in person or by proxy, at the Annual Meeting,
provided that a quorum is present. Absentions and broker non-votes are not
counted as votes present for the purpose of electing directors. With respect to
the matters other than the election of directors, broker non-votes are not
considered to be shares present, but abstentions are considered to be shares
present and, therefore, abstentions will have the effect of votes against the
proposal. Stockholders of record may appoint proxies to vote their shares by
signing, dating and mailing the GOLD proxy card in the envelope provided.
If your shares are held in the name of a Custodian and you want to vote
in person at the 2006 Annual Meeting, you may specially request a document
called a "legal proxy" from the Custodian and bring it to the 2006 Annual
Meeting. If you need assistance, please contact our proxy solicitor toll-free at
1-800-628-8532.
Shares represented by properly executed, but unmarked, GOLD proxy cards
will be voted at the Annual Meeting as marked and will be voted FOR the election
of the Nominees to the Topps Board and FOR the Proposals described herein, and
in the discretion of the persons named as proxies on all other matters as may
properly come before the Annual Meeting.
You are being asked to elect the Nominees and to approve the Proposals
described herein. The enclosed GOLD proxy card may only be voted for the
Nominees and does not confer voting power with respect to the Company's
nominees. Accordingly, you will not have the opportunity to vote for any of
Topps' nominees. You can only vote for Topps' nominees by signing and returning
a proxy card provided by Topps. Stockholders should refer to the Company's proxy
statement for the names, backgrounds, qualifications and other information
concerning the Company's nominees. The participants in this solicitation intend
to vote all of their Shares in favor of the Nominees and the Proposals described
herein.
REVOCATION OF PROXIES
Stockholders of Topps may revoke their proxies at any time prior to
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Committee in care of D.F. King & Co., Inc. at the address set forth on the back
cover of this Proxy Statement or to Topps at One Whitehall Street, New York, New
York 10004 or any other address provided by Topps. Although a revocation is
effective if delivered to Topps, the Committee requests that either the original
or photostatic copies of all revocations be mailed to the Committee in care of
D.F. King & Co., Inc. at the address set forth on the back cover of this Proxy
21
Statement so that the committee will be aware of all revocations and can more
accurately determine if and when proxies have been received from the holders of
record on the Record Date of a majority of the outstanding Shares. Additionally,
D.F. King & Co., Inc. may use this information to contact stockholders who have
revoked their proxies in order to solicit later dated proxies for the election
of the Nominees and approval of the business proposals described herein.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE TOPPS BOARD OR FOR
THE PROPOSALS DESCRIBED IN THIS PROXY STATEMENT, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
METHOD OF COUNTING VOTES
The holders of not less than a majority of the number of shares of
Topps' common stock outstanding and entitled to vote at the Annual Meeting must
be represented in person or by proxy in order to constitute a quorum for the
transaction of business. Abstentions and broker non-votes will be included for
purposes of determining whether a quorum exists. Broker non-votes occur when
brokers do not receive voting instructions from their customers on non-routine
matters and consequently have no discretion to vote on those matters. If your
Topps's shares are held in the name of a brokerage firm, bank nominee or other
institution, you should contact the person responsible for your account and give
instructions for a proxy card to be issued so that your shares will be
represented at the 2006 Annual Meeting.
After a quorum is determined to exist at the 2006 Annual Meeting,
abstentions and broker non-votes will have no effect on the outcome of the
election of directors.
Rule 452 of the New York Stock Exchange permits a broker member to vote
on certain routine, uncontested matters without specific instructions from the
beneficial owners so long as the broker has transmitted proxy material to the
beneficial owner at least 15 days prior to the annual meeting of stockholders.
It is our view to the extent that we distribute material to the brokers for
forwarding on to beneficial owners, the election of directors becomes a
contested item and therefore the brokers will not issue a "routine" vote on
behalf of the beneficial owners that have not instructed the brokers as to how
they wish to vote on the election of directors. If a beneficial owner wishes to
vote, they must provide the broker with specific instruction to vote.
ADDITIONAL INFORMATION
The principal executive offices of The Topps Company, Inc. are located
at One Whitehall Street, New York, New York 10004. Except as otherwise noted
herein, the information concerning Topps has been taken from or is based upon
documents and records on file with the SEC and other publicly available
information.
The principal executive offices of Pembridge Value and Pembridge
Capital are at 708 Third Avenue, New York, New York 10017. Pembridge Value is a
Delaware Limited Liability Company. The principal offices of Crescendo Partners
II are at 10 East 53rd Street New York, New York 10022. Crescendo Partners II is
an investment firm.
22
PROXY SOLICITATION; EXPENSES
Executed proxies may be solicited in person, by mail, advertisement,
telephone, telecopier, telegraph or email. Solicitation may be made by the
Committee, including the Nominees, employees of Pembridge Value and Crescendo
Partners II and their affiliates, none of whom will receive additional
compensation for such solicitation. Proxies will be solicited from individuals,
brokers, banks, bank nominees and other institutional holders. We have requested
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all solicitation materials to the beneficial owners of the shares they
hold of record. We will reimburse these record holders for their reasonable
out-of-pocket expenses.
In addition, the Committee has retained D.F. King to solicit proxies on
our behalf in connection with the 2006 Annual Meeting. D.F. King will employ
approximately 12 people in its efforts. We have agreed to reimburse D.F. King
for its reasonable expenses and to pay to D.F. King a fee of up to $[ ].
The entire expense of our proxy solicitation is being borne by the
Committee. In the event that our nominees are elected to the Topps Board, we
will seek reimbursement of such expenses from Topps and will not submit such
reimbursement to a vote of stockholders. In addition to the engagement of D.F.
King described above, costs related to the solicitation of proxies include
expenditures for printing, postage, legal and related expenses are expected to
be approximately $[ ], of which no amounts have been paid to date.
23
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Each member of the Committee is a participant in this solicitation.
Eric Rosenfeld is the Managing Member of Crescendo Investments II, which in turn
is the general partner of Crescendo Partners II. The principal occupation of Mr.
Rosenfeld is serving as the managing member of Crescendo Investments II and the
managing member of the general partner of Crescendo Partners II. The principal
business of Crescendo Investments II is acting as the general partner of
Crescendo Partners II. The principal business of Crescendo Partners II is
investing in securities. The principal business of Crescendo Advisors is
investing in securities. The principal business address of Mr. Rosenfeld,
Crescendo Partners II, Crescendo Investments II and Crescendo Advisors is 10
East 53rd Street, 35th Floor, New York, New York 10022.
Timothy E. Brog is the Portfolio Manager of Pembridge Value and the
President of Pembridge Capital. The prinicipal business of Pembridge Capital is
serving as the management company of Pembridge Value. The principal business of
Pembridge Value is acquiring, holding and disposing of investments in various
companies. The principal business address of Mr. Brog, Pembridge Value and
Pembridge Capital is 708 Third Avenue, New York, New York 10017.
The principal business address of Arnaud Ajdler is c/o Crescendo
Partners, L.P., 10 East 53rd Street, 35th Floor, New York, New York 10022.
The principal business address of John J. Jones is 350 West 50th
Street, New York, New York 10019.
As of [June 16], 2006, Crescendo Partners II beneficially owned
2,397,700 shares of the Company. As the general partner of Crescendo Partners
II, Crescendo Investments II may be deemed to beneficially own the 2,397,700
shares of the Company beneficially owned by Crescendo Partners II. As of [June
16], 2006, Crescendo Advisors beneficially owned 100 shares of the Company. Eric
Rosenfeld may be deemed to beneficially own 2,397,900 shares of the Company,
consisting of 100 shares held by Eric Rosenfeld and Lisa Rosenfeld JTWROS,
2,397,700 shares Mr. Rosenfeld may be deemed to beneficially own by virtue of
his position as managing member of Crescendo Investments II and 100 shares Mr.
Rosenfeld may be deemed to beneficially own by virtue of his position as
managing member of Crescendo Advisors.
As of [June 16], 2006, Pembridge Value owned 356,622 shares of the
Company. As the investment manager of Pembridge Value, Pembridge Capital may be
deemed to beneficially own the 356,622 shares of the Company owned by Pembridge
Value. Timothy E. Brog may be deemed to beneficially own 386,863 shares of the
Company, consisting of 30,241 shares held directly by Mr. Brog as of [June 16],
2006, and 356,622 shares that Mr. Brog may be deemed to beneficially own by
virtue of his position as the sole manager of Pembridge Value. Mr. Brog
disclaims beneficial ownership of the shares beneficially owned by Pembridge
Value except to the extent of his pecuniary interest therein.
Neither Arnaud Ajdler nor John J. Jones beneficially own any shares of
the Company.
For information regarding purchases and sales of securities of Topps
during the past two years by the members of Topps Full Value Committee, see
Schedule I.
24
No Nominee is involved in any material pending legal proceedings with
respect to the Company. Pembridge Value has an agreement with John Jones that it
will indemnify him against liabilities, costs and expenses related to the proxy
contest. Except for what is set forth above, there is no other arrangement or
understanding between any Nominee and any other person pursuant to which he was
or is to be selected as a Nominee or director. None of the Nominees currently
holds any position or office with the Company or has ever served previously as a
director of the Company.
On June 9, 2005, Pembridge Value and the Company entered into a
Settlement Agreement (the "2005 Settlement Agreement"), pursuant to which
Pembridge Value agreed to terminate its proxy solicitation and to withdraw its
slate of nominees to the Topps Board with respect to the Company's 2005 Annual
Meeting of stockholders. Pembridge Value also agreed not to engage in certain
activities involving the Company until December 31, 2005, including a proxy
solicitation, other stockholder proposals or seeking board representation.
Pursuant to the 2005 Settlement Agreement, the Company agreed that the Topps
Board would refrain from adopting a "poison pill" without stockholder approval
until June 30, 2006. The Company also agreed to pay Pembridge Value $50,000.00
for expenses incurred or expected to be incurred by Pembridge Value in
connection with its proxy solicitation with respect to the Company's 2005 Annual
Meeting of stockholders.
Pembridge Value and Crescendo Partners II have agreed to share certain
expenses relating to the proxy contest at the 2006 Annual Meeting. The
percentage of the expenses to be paid by Pembridge Value is based upon the
number of Shares owned by Pembridge Value divided by the aggregate number of
Shares owned by Pembridge Value and Crescendo Partners II, plus fifteen percent.
The percentage of the expenses to be paid by Crescendo Partners II is based upon
the number of Shares owned by Crescendo Partners II divided by the aggregate
number of Shares owned by Pembridge Value and Crescendo Partners II, minus
fifteen percent. Legal fees and expenses related to the preparation of proxy
statement and solicitation of votes at the 2006 annual meeting of stockholders
shall be paid by Crescendo Partners II. Pembridge Value and Crescendo Partners
II have further agreed not to sell any shares of Common Stock of the Company
prior to the 2006 Annual Meeting without the consent of the other party.
On May 19, 2006, the members of the Committee entered into a Joint
Filing and Solicitation Agreement in which, among other things, the parties
agreed to the joint filing on behalf of each of them of statements on Schedule
13D with respect to the securities of the Company.
Topps Full Value Committee reserves the right to retain one or more
financial advisors and proxy solicitors, who may be considered participants in a
solicitation under Regulation 14A of the Exchange Act.
Except as set forth in this Proxy Statement (including Schedule I
hereto), (i) during the past 10 years, no participant in this solicitation has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) no participant in this solicitation directly or indirectly
beneficially owns any securities of Topps; (iii) no participant in this
solicitation owns any securities of Topps which are owned of record but not
beneficially; (iv) no participant in this solicitation has purchased or sold any
securities of Topps during the past two years; (v) no part of the purchase price
or market value of the securities of Topps owned by any participant in this
solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any securities of
Topps, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
25
division of losses or profits, or the giving or withholding of proxies; (vii) no
associate of any participant in this solicitation owns beneficially, directly or
indirectly, any securities of Topps; (viii) no participant in this solicitation
owns beneficially, directly or indirectly, any securities of any parent or
subsidiary of Topps; (ix) no participant in this solicitation or any of his/its
associates was a party to any transaction, or series of similar transactions,
since the beginning of Topps' last fiscal year, or is a party to any currently
proposed transaction, or series of similar transactions, to which Topps or any
of its subsidiaries was or is to be a party, in which the amount involved
exceeds $60,000; (x) no participant in this solicitation or any of his/its
associates has any arrangement or understanding with any person with respect to
any future employment by Topps or its affiliates, or with respect to any future
transactions to which Topps or any of its affiliates will or may be a party; and
(xi) no person, including the participants in this solicitation, who is a party
to an arrangement or understanding pursuant to which the Nominees are proposed
to be elected has a substantial interest, direct or indirect, by security
holdings or otherwise in any matter to be acted on at the Annual Meeting.
26
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth information available to the Company as to
shares of Common Stock owned as of , 2006 by (i) each person known to the
Company to be the beneficial owner of more than five percent of the outstanding
Common Stock, (ii) each director and nominee for election as a director, (iii)
each person designated in the section of this Proxy Statement captioned
"Executive Compensation" and (iv) all directors and executive officers as a
group. Except as otherwise indicated, each person named below has sole
investment and voting power with respect to the shares of Common Stock shown.
The following table is reprinted from Topps' proxy statement filed with the
Securities and Exchange Commission on May 11, 2006
Percentage
Amount and Nature of of Shares
Name of Beneficial Owner Beneficial Ownership (1) Outstanding
---------------------------------------------------------------------------------------------------
Arthur T. Shorin (2)(3) 2,900,489 7.26%
Ira Friedman (4) 63,399 *
Allan A. Feder (2)(5) 82,994 *
Warren Friss (6) 99,383 *
Catherine K. Jessup (7) 162,999 *
Stephen D. Greenberg (8) 135,449 *
Ann Kirschner (9) 74,449 *
David M. Mauer (10) 141,449 *
Edward D. Miller (11) 40,449 *
Jack H. Nusbaum (12) 156,449 *
Scott A. Silverstein (2)(13) 355,211 *
Richard Tarlow (14) 74,449 *
Leonard Stern 0 *
Private Capital Management, Inc. (15) 9,514,371 24.16%
8889 Pelican Bay Blvd.
Naples, Florida 34108
Merrill Lynch & Co., Inc. (16) 5,116,270 12.99%
Merrill Lynch Investment Managers (MLIM)
World Financial Center
250 Vesey Street
New York, New York 10381
Royce & Associates, LLC (17) 3,000,070 7.62%
1414 Avenue of the Americas
New York, New York 10019
Gamco Investors, Inc. (18) 2,374,861 6.03%
One Corporate Center
Rye, New York 10580
All directors and executive officers
as a group (18 persons) (2) 5,030,632 12.14%
* less than 1.0%.
27
(1) Pursuant to regulations of the Securities and Exchange Commission (the
"Commission"), shares are deemed to be "beneficially owned" by a person
if such person directly or indirectly has or shares the power to vote or
dispose of such shares, or has the right to acquire the power to vote or
dispose of such shares within 60 days, including any right to acquire
through the exercise of any option, warrant or right.
(2) Does not include 50,000, 1,378 and 20,702 shares of Common Stock owned by
immediate family members of each of Messrs. Shorin, Feder and
Silverstein, respectively. Messrs. Shorin, Feder and Silverstein disclaim
beneficial ownership of such shares.
(3) Includes 582,500 shares of Common Stock issuable upon exercise of
options.
(4) Includes 61,999 shares of Common Stock issuable upon exercise of options.
(5) Includes 68,000 shares of Common Stock issuable upon exercise of options.
(6) Includes 96,083 shares of Common Stock issuable upon exercise of options.
(7) Includes 162,999 shares of Common Stock issuable upon exercise of
options.
(8) Includes 85,000 shares of Common Stock issuable upon exercise of options.
(9) Includes 68,000 shares of Common Stock issuable upon exercise of options.
(10) Includes 115,000 shares of Common Stock issuable upon exercise of
options.
(11) Includes 34,000 shares of Common Stock issuable upon exercise of options.
(12) Includes 85,000 shares of Common Stock issuable upon exercise of options.
(13) Includes 330,665 shares of Common Stock issuable upon exercise of
options.
(14) Includes 68,000 shares of Common Stock issuable upon exercise of options.
(15) Based upon a Schedule 13G filed on February 14, 2006 with the Commission
by Private Capital Management, Inc.
(16) Based upon a Schedule 13G filed on February 8, 2006 with the Commission
by Merrill Lynch & Co., Inc.
(17) Based upon a Schedule 13G filed on January 31, 2006 with the Commission
by Royce & Associates, LLC.
(18) Based upon a Schedule 13D filed on January 20, 2006 with the Commission
by Gamco Investors, Inc.C
28
STOCKHOLDER PROPOSALS - 2007 ANNUAL MEETING
Any proposals of stockholders of the Company intended to be included in
the Company's proxy statement and form of proxy relating to the Company's next
annual meeting of stockholders must be in writing and received by the General
Counsel of the Company at the Company's office at One Whitehall Street, New
York, New York 10004-2109 no later than [ ], 2007. In the event that the next
annual meeting of stockholders is called for a date that is not within 30 days
before or after [ ], 2007, notice by the stockholder must be received no later
than a reasonable time before the Company begins to print and mail its proxy
materials.
For any other proposal that a stockholder wishes to have considered at
the 2007 Annual Meeting, and for any nomination of a person for election to the
Board at the 2007 Annual Meeting, the Company must have received written notice
of such proposal no more than 90 and no less than 60 days before the one-year
anniversary of the 2006 Annual Meeting
Any stockholder interested in making a proposal is referred to Article
II, Section 4 of the Company's Restated By-Laws.
THE COMMITTEE HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE
REQUIRED BY APPLICABLE LAW THAT IS ALREADY INCLUDED IN THE COMPANY'S PROXY
STATEMENT. THIS DISCLOSURE INCLUDES, AMONG OTHER THINGS, BIOGRAPHICAL
INFORMATION ON TOPPS' DIRECTORS AND EXECUTIVE OFFICERS, INFORMATION CONCERNING
EXECUTIVE COMPENSATION, AND AN ANALYSIS OF CUMULATIVE TOTAL RETURNS ON AN
INVESTMENT IN SHARES DURING THE PAST FIVE YEARS. STOCKHOLDERS SHOULD REFER TO
THE COMPANY'S PROXY STATEMENT IN ORDER TO REVIEW THIS DISCLOSURE.
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF
THE ELECTION OF OUR NOMINEES AND THE PROPOSALS DESCRIBED IN THIS PROXY
STATEMENT.
Dated: June [ ], 2006
Sincerely,
Your Fellow Stockholders:
TOPPS FULL VALUE COMMITTEE
29
SCHEDULE I
TRANSACTIONS IN SECURITIES OF TOPPS
DURING THE PAST TWO YEARS
EXCEPT AS OTHERWISE SPECIFIED, ALL PURCHASES AND SALES
WERE MADE IN THE OPEN MARKET.
Transactions in the Company's common stock by Timothy E. Brog:
--------------------------------------------------------------------------------
Date of Transaction Nature of Transaction Number of Shares
------------------- --------------------- ----------------
04/29/2005 Buy 8,000
05/06/2005 Buy 200
05/13/2005 Buy 6,800
12/16/2005 Buy 2,941
12/19/2005 Buy 2,000
04/11/2005 Buy 2,000
05/15/2006 Buy 500
05/17/2006 Buy 2,500
05/24/2006 Buy 1,300
06/14/2006 Buy 4,000
--------------------------------------------------------------------------------
Transactions in the Company's common stock by Pembridge Value:
Date of Nature of Number of
Transaction Transaction Shares
----------- ----------- ------
7/6/2004 BUY 2,165
7/8/2004 BUY 4,390
7/23/2004 BUY 3,693
7/26/2004 BUY 2,852
8/6/2004 BUY 4,000
8/9/2004 BUY 3,424
8/10/2004 BUY 868
8/11/2004 BUY 3,200
11/18/2004 BUY 322
11/19/2004 BUY 5,534
11/23/2004 BUY 16,500
12/1/2004 BUY 5,900
12/7/2004 BUY 1,000
12/8/2004 BUY 518
12/9/2004 BUY 2,843
1/13/2005 BUY 1,218
1/19/2005 BUY 1,423
1/20/2005 BUY 203
1/21/2005 BUY 1,523
1/24/2005 BUY 2,125
1/25/2005 BUY 1,063
2/9/2005 BUY 5,900
2/10/2005 BUY 3,712
30
2/11/2005 BUY 3,205
2/17/2005 BUY 1,332
2/18/2005 BUY 4,751
2/22/2005 BUY 8,100
2/24/2005 BUY 1,500
2/28/2005 BUY 5,800
3/8/2005 BUY 2,200
3/9/2005 BUY 2,000
3/10/2005 BUY 8,286
3/11/2005 BUY 4,100
3/15/2005 BUY 1,653
3/17/2005 BUY 3,000
3/18/2005 BUY 614
3/21/2005 BUY 940
3/23/2005 BUY 2,000
3/31/2005 BUY 4,192
4/8/2005 BUY 5,100
4/11/2005 BUY 5,327
4/12/2005 BUY 1,600
4/13/2005 BUY 5,412
4/14/2005 BUY 8,016
4/18/2005 BUY 1,607
4/22/2005 BUY 4,000
4/25/2005 BUY 100
4/27/2005 BUY 7,907
4/28/2005 BUY 3,001
4/29/2005 BUY 29,305
5/12/2005 BUY 7,000
5/13/2005 BUY 9,723
6/23/2005 BUY 14,400
6/29/2005 BUY 8,600
6/30/2005 BUY 2,000
7/6/2005 BUY 2,400
7/7/2005 BUY 11,600
7/8/2005 BUY 2,898
7/21/2005 BUY 1,200
7/26/2005 BUY 100
7/28/2005 BUY 2,299
8/4/2005 BUY 3,400
8/17/2005 BUY 100
8/26/2005 BUY 2,263
8/29/2005 BUY 5,144
9/2/2005 BUY 11,294
9/6/2005 BUY 300
9/7/2005 BUY 4,000
9/8/2005 BUY 13,700
9/20/2005 BUY 5,000
9/21/2005 BUY 4,989
31
9/28/2005 BUY 16,000
10/4/2005 BUY 3,602
10/10/2005 BUY 1,500
10/11/2005 BUY 2,092
10/12/2005 BUY 4,400
10/14/2005 BUY 2,100
10/17/2005 BUY 6,000
10/19/2005 BUY 200
10/20/2005 BUY 6,700
10/21/2005 BUY 2,800
10/25/2005 BUY 20,000
10/27/2005 BUY 7,200
10/28/2005 BUY 8,628
11/15/2005 BUY 9,000
11/16/2005 BUY 4,400
12/06/2005 BUY 5,024
12/07/2005 BUY 800
12/08/2005 BUY 9,578
12/12/2005 BUY 9,700
12/15/2005 BUY 1,547
12/16/2005 BUY 4,000
12/19/2005 BUY 5,200
12/20/2005 BUY 2,600
1/5/2006 BUY 4,300
1/9/2006 BUY 15,269
1/26/2006 BUY 2,300
1/30/2006 BUY 5,488
2/6/2006 BUY 5,100
2/22/2006 BUY 1,705
3/2/2006 BUY 1,740
3/6/2006 BUY 22,000
3/7/2006 BUY 6,800
3/8/2006 BUY 1,022
3/13/2006 BUY 5,943
3/14/2006 BUY 7,000
3/15/2006 BUY 5,800
3/22/2006 BUY 7,800
3/30/2006 BUY 4,842
4/6/2006 BUY 3,000
4/7/2006 BUY 4,300
4/10/2006 BUY 45,000
4/11/2006 BUY 20,000
4/17/2006 BUY 10,700
5/24/2006 BUY 6,100
5/31/2006 BUY 11,400
6/5/2006 BUY 11,122
8/16/2004 SELL 2,692
8/18/2004 SELL 5,800
32
8/20/2004 SELL 6,192
8/23/2004 SELL 9,908
8/23/2004 SELL 1,000
8/25/2004 SELL 4,900
9/1/2004 SELL 32
9/2/2004 SELL 7,112
9/3/2004 SELL 208
9/8/2004 SELL 1,800
9/9/2004 SELL 3,026
9/13/2004 SELL 3,600
9/29/2004 SELL 806
9/30/2004 SELL 1,300
10/13/2004 SELL 3,900
10/27/2004 SELL 5,100
10/28/2004 SELL 1,755
10/29/2004 SELL 2,042
11/3/2004 SELL 3,875
11/4/2004 SELL 1,100
11/12/2004 SELL 1,500
11/15/2004 SELL 1,100
11/17/2004 SELL 2,100
11/22/2004 SELL 1,100
12/16/2004 SELL 800
12/30/2004 SELL 2,100
1/6/2005 SELL 2,331
1/10/2005 SELL 1,800
1/27/2005 SELL 700
1/31/2005 SELL 100
1/31/2005 SELL 3,585
2/4/2005 SELL 300
3/7/2005 SELL 758
3/14/2005 SELL 2,800
3/15/2005 SELL 3,000
3/22/2005 SELL 2,100
3/30/2005 SELL 6,216
3/31/2005 SELL 8
4/1/2005 SELL 103
4/5/2005 SELL 9,700
4/6/2005 SELL 1,000
4/7/2005 SELL 4,646
4/12/2005 SELL 1,550
4/19/2005 SELL 1,000
4/21/2005 SELL 3,831
6/16/2005 SELL 5,787
6/17/2005 SELL 3,600
6/20/2005 SELL 21,000
6/21/2005 SELL 1,000
6/24/2005 SELL 600
33
6/28/2005 SELL 10,100
7/5/2005 SELL 10,600
7/6/2005 SELL 1,500
7/11/2005 SELL 1,398
7/12/2005 SELL 10,013
9/6/2005 SELL 2,900
9/12/2005 SELL 3,886
9/16/2005 SELL 15,001
9/28/2005 SELL 1,000
9/29/2005 SELL 6,533
9/30/2005 SELL 340
10/26/2005 SELL 300
10/31/2005 SELL 6,598
11/3/2005 SELL 2,200
11/9/2005 SELL 700
11/10/2005 SELL 4,400
11/17/2005 SELL 10,684
11/22/2005 SELL 14,256
12/12/05 SELL 1,000
2/15/2006 SELL 13,606
3/15/2006 SELL 11,656
3/22/2006 SELL 5,800
3/29/2006 SELL 2,250
4/3/2006 SELL 17,946
Transactions in the Company's common stock by Crescendo Partners II:
Date of Nature of Number of
Transaction Transaction Shares
----------- ----------- ------
4/27/2006 BUY 645,000
4/28/2006 BUY 66,000
5/1/2006 BUY 156,800
5/2/2006 BUY 114,000
5/3/2006 BUY 98,600
5/4/2006 BUY 311,100
5/8/2006 BUY 33,000
5/9/2006 BUY 85,000
5/10/2006 BUY 105,700
5/11/2006 BUY 28,500
5/12/2006 BUY 65,100
5/15/2006 BUY 43,400
5/16/2006 BUY 103,200
5/17/2006 BUY 63,100
5/18/2006 BUY 30,000
5/24/2006 BUY 12,900
5/25/2006 BUY 59,500
5/26/2006 BUY 129,100
5/31/2006 BUY 49,100
6/06/2006 BUY 50,000
6/07/2006 BUY 6,300
6/08/2006 BUY 24,900
6/09/2006 BUY 35,100
6/12/2006 BUY 50,000
34
Transactions in the Company's common stock by Crescendo Advisors:
Date of Nature of Number of
Transaction Transaction Shares
----------- ----------- ------
4/25/2006 BUY 100
Transactions in the Company's common stock by Eric Rosenfeld and Lisa Rosenfeld
JTWROS:
Date of Nature of Number of
Transaction Transaction Shares
----------- ----------- ------
4/25/2006 BUY 100
35
--------------------------------------------------------------------------------
IMPORTANT
PLEASE REVIEW THIS DOCUMENT AND THE ENCLOSED MATERIALS CAREFULLY. YOUR VOTE
IS VERY IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
1: If your shares are registered in your own name, please sign, date and mail
the enclosed GOLD proxy card to D.F. King & Co., Inc. ("D.F. King"), in the
postage-paid envelope provided today.
2: If you have previously signed and returned a White proxy card to Topps, you
have every right to change your vote. Only your latest dated card will
count. You may revoke any White proxy card already sent to Topps by
signing, dating and mailing the enclosed GOLD proxy card in the
postage-paid envelope provided. Any proxy may be revoked at any time prior
to the 2006 Annual Meeting by delivering a written notice of revocation or
a later dated proxy for the 2006 Annual Meeting to D.F. King, or by voting
in person at the 2006 Annual Meeting.
3. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign a GOLD proxy card with respect to your
shares and only after receiving your specific instructions. Accordingly,
please sign, date and mail the enclosed GOLD proxy card in the postage-paid
envelope provided, and to ensure that your shares are voted, you should
also contact the person responsible for your account and give instructions
for a GOLD proxy card to be issued representing your shares.
4. After signing the enclosed GOLD proxy card, do not sign or return the White
proxy card, even as a sign of protest. Only your latest dated proxy card
will be counted.
If you have any questions or need assistance in voting your GOLD proxy,
please call our proxy solicitor:
D.F. KING & CO., INC.
48 Wall Street
New York, NY 10005
Call Toll-Free: 1-800-628-8532
Banks and Brokerage Firms Call Toll-Free: 1-212-269-5550
--------------------------------------------------------------------------------
PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JUNE __, 2006
THE TOPPS COMPANY, INC.
2006 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF PEMBRIDGE VALUE AND THE OTHER
MEMBERS OF TOPPS FULL VALUE COMMITTEE (COLLECTIVELY, THE "COMMITTEE")
P R O X Y
The undersigned appoints Timothy E. Brog and Arnaud Ajdler, and each of them,
attorneys and agents with full power of substitution to vote all shares of
common stock of The Topps Company, Inc. ("Topps" or the "Company") which the
undersigned would be entitled to vote if personally present at the 2006 Annual
Meeting of Stockholders of the Company scheduled to be held at
[__________________, __________, _________ ________, on _______________ __,
2006, at __:__ _.M. (local time), and including at any adjournments or
postponements thereof and at any meeting called in lieu thereof (the "Annual
Meeting").
The solicitation is being made on behalf of Pembridge Value Opportunity Fund LP,
Pembridge Capital Management LLC, Timothy E. Brog, Crescendo Partners II, L.P.,
Series Y, Crescendo Investments II, LLC, Eric Rosenfeld, Arnaud Ajdler and John
J. Jones.
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of common stock of the Company held by
the undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed on the
reverse and in the discretion of the herein named attorneys and proxies or their
substitutes with respect to any other matters as may properly come before the
Annual Meeting that are unknown to the Committee a reasonable time before this
solicitation.
IF NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
This Proxy will be valid until the sooner of one year from the date indicated on
the reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] PLEASE MARK VOTE AS IN THIS EXAMPLE
Proposal 1 - The Committee's Proposal to Elect Timothy E. Brog, Arnaud Ajdler
and John J. Jones to serve as directors of the Company until the 2009 annual
meeting of stockholders.
FOR ALL
WITHHOLD EXCEPT
AUTHORITY TO NOMINEE(S)
FOR ALL VOTE FOR ALL WRITTEN
NOMINEES NOMINEES BELOW
Nominees: Timothy E. Brog [ ] [ ] [ ]
Arnaud Ajdler
John J. Jones
Proposal 2 - Proposal to amend the Company's Restated Certificate of
Incorporation to eliminate the classification of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3 - Proposal to amend the Company's Restated Certificate of
Incorporation to permit stockholders holding in the aggregate at least 25% of
the outstanding common stock of the Company to require the call of a special
meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4 - Proposal to amend the Company's Restated By-Laws to permit
stockholders holding in the aggregate at least 25% of the outstanding common
stock of the Company to require the call of a special meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TOPPS FULL VALUE COMMITTEE STRONGLY RECOMMENDS THAT
STOCKHOLDERS VOTE IN FAVOR OF PROPOSALS 1, 2, 3 AND 4
Proposal 5 - To ratify the appointment of Deloitte & Touche LLP as independent
auditors to report on the consolidated financial statements of the Company for
the fiscal year ending March 3, 2007
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TOPPS FULL VALUE COMMITTEE MAKES NO RECOMMENDATION ON PROPOSAL 5
DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature, if held jointly)
____________________________________
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.