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Exhibit A
 
EMPLOYMENT AND CONSULTING AGREEMENT
 
THIS AGREEMENT (the “Agreement”), made in New York, New York as of July 1, 2005,
between Greg Manning Auctions, Inc., a Delaware corporation (the “Company”), and
Greg Manning (“Executive”).
 
WHEREAS, the Company has employed Executive as its President and Chief Executive
Officer since July 1, 1992;
 
WHEREAS, the Company desires to continue to employ Executive in a modified
capacity as its Head of the U.S. and Asia Philatelic Auction Division, and
Executive desires to accept such continued employment on the terms and
conditions hereinafter set forth;
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as follows:
 
1. Term.
 
Unless earlier terminated in accordance with Section 4 hereof, the term of
Executive’s employment under this Agreement shall be the three-year period
commencing as of the date hereof and ending on June 30, 2008 (the “Term”).
 
2. Employment.
 
(a) Employment by the Company. Executive agrees to continue to be employed by
the Company during the Term upon the terms and subject to the conditions set
forth in this Agreement. Executive shall serve as the Head of the U.S. and Asia
Philatelic Auction Division of the Company and shall report to the President and
Chief Executive Officer of the Company. Executive agrees to serve as a member of
the Board of Directors of the Company, without additional remuneration, if
appointed or elected to such position.
 
(b) Performance of Duties. Throughout the Term, Executive shall faithfully and
diligently perform Executive’s duties in conformity with the directions of the
Company and serve the Company to the best of Executive’s ability. Executive
shall devote his full business time and best efforts to the business and affairs
of the Company. In his capacity as the Head of U.S. and Asia Philatelic Auction
Division of the Company, Executive shall have responsibility for philatelic
auctions conducted by the Company, Ivy & Manning Philatelic Auctions, Inc., H.R.
Harmer, Inc., Greg Manning Galleries, Inc., Nutmeg Stamp Sales, Inc. and John
Bull Stamp Auctions, Ltd. in North America and Asia and shall have such duties
and responsibilities as are customary for Executive’s position and any other
duties or responsibilities he may be assigned by the President and Chief
Executive Officer of the Company.
 
 
 

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(c) Place of Performance. Executive shall be initially based at the Company’s
offices in West Caldwell, New Jersey. Executive recognizes that his duties will
require, at the Company’s expense, travel to domestic and international
locations, including, without limitation, the Company’s New York offices.
 
3. Compensation and Benefits.
 
(a) Base Salary. The Company agrees to pay to Executive a base salary (“Base
Salary”) at the annual rate of (i) $500,000 during the first year of the Term,
(ii) $550,000 during the second year of the Term, and (iii) $600,000 during the
third year of the Term. Payments of the Base Salary shall be payable in equal
installments in accordance with the Company’s standard payroll practices.
 
(b) Standard Bonus. The Company shall pay Executive a $50,000 cash bonus (the
“Standard Bonus”) for each fiscal year during the Term. The Standard Bonus shall
be paid within thirty days following the issuance of financial statements for
the fiscal year in respect of which such bonus is payable, provided that in no
event shall the Standard Bonus be paid later than the March 14 next occurring
following the end of such fiscal year (the “Standard Bonus Payday”). Except as
provided in Section 5(a)(ii), Executive must be employed by the Company on the
Standard Bonus Payday to be eligible for the Standard Bonus.
 
(c) Retention Bonus. The Company shall pay Executive a cash retention bonus (the
“Retention Bonus”), provided that Executive remains employed through June 30,
2008. The Retention Bonus shall be equal to (i) $45,750, less (ii) (A) 50,000
multiplied by (B) the Share Price Differential. For purposes of this Section
3(c), the “Share Price Differential” means the amount, if any, by which the
closing price of the Company’s common stock on July 1, 2005, exceeds the average
of closing prices of the Company’s common stock as reported in the Wall Street
Journal for the period between June 1, 2008 and June 30, 2008. Payment of the
Retention Bonus, if any, shall be made on July 31, 2008; provided, however, that
if necessary to comply with Section 409A(a)(2)(B)(i) of the Internal Revenue
Code of 1986, as amended (the “Code”), and applicable administrative guidance
and regulations, such payment shall be made on December 31, 2008.
 
(d) Performance-Based Compensation. Executive will be eligible to receive
performance-based compensation pursuant to the Greg Manning Incentive
Compensation Program set forth on Annex A hereto.
 
(e) Benefits and Perquisites. During Executive’s employment hereunder, Executive
shall be entitled to participate in, to the extent Executive is otherwise
eligible under the terms thereof, the benefit plans and programs, and receive
the benefits and perquisites, generally provided by the Company to executives of
the Company, including without limitation disability insurance and family
medical insurance (subject to applicable employee contributions). Executive
shall be entitled to receive four weeks of annual paid vacation during his
employment hereunder.
 
(f) Business Expenses. The Company agrees to reimburse Executive for all
reasonable and necessary travel, business entertainment and other business
expenses incurred by Executive in connection with the performance of his duties
under this Agreement. Such reimbursements shall be made by the Company on a
timely basis upon submission by Executive of vouchers in accordance with the
Company’s standard procedures.
 
 
 

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(g) Car Lease. Executive may lease an automobile in his own name and at Company
expense. Executive shall cause the vehicle to be properly insured and
maintained. During Executive’s employment hereunder, the Company shall reimburse
Executive for all reasonable costs associated with such lease, including lease
costs, costs of insurance, routine maintenance, and service and repair of the
vehicle, provided that the Company’s obligation pursuant to this Section 3(g)
shall not exceed $1,000 per month.
 
(h) Indemnification. The Company shall indemnify Executive, to the fullest
extent permitted by law, for any and all liabilities to which he may be subject
as a result of, in connection with or arising out of his employment by the
Company hereunder, as well as the costs and expenses (including reasonable
attorneys’ fees) of any legal action brought or threatened to be brought against
him or the Company as a result of, in connection with or arising out of such
employment. Executive shall be entitled to the full protection of any insurance
policies which the Company may elect to maintain generally for the benefit of
its directors and officers.
 
(i) No Other Compensation or Benefits; Payment. Except as otherwise provided in
Section 6, the compensation and benefits specified in this Section 3 and in
Section 5 of this Agreement shall be in lieu of any and all other compensation
and benefits. Payment of all compensation and benefits to Executive specified in
this Section 3 and in Section 5 of this Agreement (i) shall be made in
accordance with the relevant Company policies in effect from time to time to the
extent the same are consistently applied, including normal payroll practices,
and (ii) shall be subject to all legally required and customary withholdings.
 
(j) Cessation of Employment. In the event Executive shall cease to be employed
by the Company for any reason, then Executive’s compensation and benefits shall
cease on the date of such event, except as otherwise specifically provided
herein or in any applicable employee benefit plan or program or as required by
law.
 
4. Termination of Employment. Executive’s employment hereunder may be terminated
prior to the end of the Term under the following circumstances.
 
(a) Death. Executive’s employment hereunder shall terminate upon Executive’s
death.
 
(b) Executive Becoming Totally Disabled. The Company may terminate Executive’s
employment hereunder at any time after Executive becomes “Totally Disabled.” For
purposes of this Agreement, Executive shall be “Totally Disabled” in the event
Executive is unable to perform the duties and responsibilities contemplated
under this Agreement for a period of 120 consecutive days due to physical or
mental incapacity or impairment. During any period that Executive fails to
perform Executive’s duties hereunder as a result of incapacity due to physical
or mental illness (the “Disability Period”), Executive shall continue to receive
the compensation and benefits provided by Section 3 of this Agreement until
Executive’s employment hereunder is terminated; provided, however, that the
amount of base compensation and benefits received by Executive during the
Disability Period shall be reduced by the aggregate amounts, if any, payable to
Executive under any disability benefit plan or program provided to Executive by
the Company.
 
 

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(c) Termination by the Company for Cause. The Company may terminate Executive’s
employment hereunder for Cause at any time after providing written notice to
Executive. For purposes of this Agreement (other than Section 6 hereof), the
term “Cause” shall mean any of the following: (i) Executive’s neglect or failure
or refusal to perform his duties under this Agreement (other than as a result of
total or partial incapacity due to physical or mental illness); (ii) any act by
or omission of Executive constituting gross negligence or willful misconduct in
connection with the performance of his duties that could reasonably be expected
to materially injure the reputation, business or business relationships of the
Company or any of its affiliates; (iii) Executive’s conviction (including
conviction on a nolo contendre plea) of a felony or any crime involving, in the
good faith judgment of the Company, fraud, dishonesty or moral turpitude; (iv)
any material violation of the Company’s Code of Ethics, as may be amended from
time to time (the “Code of Ethics”); (v) the breach of an obligation set forth
in Section 7; or (vi) any other material breach of this Agreement; provided,
however, that a termination by the Company under Sections 4(c)(i) or 4(c)(vi)
for Cause shall be effective only if, within 14 days following delivery of a
written notice by the Company to Executive that the Company is terminating his
employment for Cause, Executive has failed to cure the circumstances giving rise
to Cause.
 
(d) Termination by the Company Without Cause. The Company may terminate
Executive’s employment hereunder at any time for any reason or no reason by
giving Executive thirty (30) days prior written notice of the termination.
Following any such notice, subject to the provisions of Section 6, the Company
may reduce or remove any and all of Executive’s duties, positions and titles
with the Company.
 
(e) Termination by Executive. Executive may terminate his employment hereunder
at any time for any reason or no reason by giving the Company thirty (30) days
prior written notice of the termination. Following any such notice, the Company
may reduce or remove any and all of Executive’s duties, positions and titles
with the Company.
 
5. Compensation Following Termination Prior to the End of the Term. In the event
that Executive’s employment hereunder is terminated prior to the end of the
Term, Executive shall be entitled only to the following compensation and
benefits upon such termination:
 
(a) General. On any termination of Executive’s employment, he shall be entitled
to:
 

 
(i)
any accrued but unpaid Base Salary for services rendered through the date of
termination; provided, however, that in the event Executive’s employment is
terminated pursuant to Section 4(b), the amount of Base Salary received by
Executive during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Executive under any disability benefit plan or
program provided to Executive by the Company; 

 
 
 

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(ii)
any Standard Bonus not yet paid for any fiscal year ending prior to the date of
termination (payable as and when such bonus would have been paid had Executive’s
employment continued), provided that Executive shall not receive such amount if
his employment is terminated by the Company for Cause;

 

 
(iii)
any vacation accrued to the date of termination;

 

 
(iv)
any accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with Sections 3(f) and 3(g) of this Agreement; and

 

 
(v)
receive any benefits to which he may be entitled upon termination pursuant to
the plans and programs referred to in Section 3(e) hereof in accordance with the
terms of such plans and programs or as may be required by applicable law.

 

 
(vi)
any amounts payable in accordance with, and subject to, the Greg Manning
Incentive Compensation Program.

 
(b) Termination by Reason of Death or Executive Becoming Totally Disabled;
Termination by the Company for Cause; Termination by Executive. In the event
that Executive’s employment is terminated prior to the expiration of the Term by
reason of Executive’s death pursuant to Section 4(a) or Employee becoming
Totally Disabled pursuant to Section 4(b), by the Company for Cause pursuant to
Section 4(c), or by Executive pursuant to Section 4(e), Executive (or, if
applicable, his estate) shall be entitled only to those items identified in
Section 5(a).
 
(c) Termination by the Company Without Cause. In the event that Executive’s
employment is terminated prior to the expiration of the Term by the Company
without Cause pursuant to Section 4(d), Executive shall be entitled only to the
following:
 

 
(i)
those items identified in Section 5(a).

 

 
(ii)
the continued payment of the Base Salary (as determined pursuant to Section
3(a)) for the remainder of the Term (such sums to be paid at the times and in
the amounts such Base Salary would have been paid had Executive’s employment not
been terminated); provided, however, that if necessary to comply with Section
409A(a)(2)(B)(i) of the Code, and applicable administrative guidance and
regulations, the payment of such sums shall be made as follows: (A) no payments
shall be made for a six-month period following the date of termination, (B) an
amount equal to six months of Base Salary (or, if applicable, such lesser amount
as would have accrued between the date of termination and the end of the Term)
shall be paid in a lump sum six months following the date of termination, and
(C) during the period beginning six months following the date of termination
through the remainder, if any, of the Term, payment of the Base Salary shall be
made at the times and in the amounts such Base Salary would have been paid had
Executive’s employment not been terminated

 
 

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(iii)
Payment of the Retention Bonus, provided that the Retention Bonus shall be equal
to (A) $45,750, less (B) (1) 50,000 multiplied by (2) the Early Termination
Share Price Differential. The “Early Termination Share Price Differential” means
the amount, if any, by which the closing price of the Company’s common stock on
July 1, 2005, exceeds the average common stock price of the Company for the
period between thirty days preceding the date of termination and the date of
termination. Payment of the Retention Bonus pursuant to this Section 5(c)(iii),
if any, shall be made thirty days following the date of termination. All stock
prices shall be as reported in the Wall Street Journal, calculated as of the
market close on the applicable dates.

 
(d) Effect of Material Breach of Section 7 on Compensation and Benefits
Following Termination of Employment Pursuant to Section 5. If, at the time of
termination of Executive’s employment for any reason prior to the expiration of
the Term or any time thereafter, Executive is in material breach of any covenant
contained in Section 7 hereof, Executive (or his estate, as applicable) shall
not be entitled to any payment (or if payments have commenced, any continued
payment) under Sections 5(c)(ii) or 5(c)(iii).
 
(e) No Further Liability; Release. Payment made and performance by the Company
in accordance with this Section 5 shall operate to fully discharge and release
the Company and its directors, officers, employees, subsidiaries, affiliates,
stockholders, successors, assigns, agents and representatives from any further
obligation or liability with respect to Executive’s employment and termination
of employment. Other than providing the compensation and benefits provided for
in accordance with this Section 5 and, if applicable, Section 6, the Company and
its directors, officers, employees, subsidiaries, affiliates, stockholders,
successors, assigns, agents and representatives shall have no further obligation
or liability to Executive or any other person under this Agreement. The payment
of any amounts pursuant to this Section 5 (other than payments required by law)
is expressly conditioned upon the delivery by Executive to the Company of a
release in form and substance satisfactory to the Company of any and all claims
Executive may have against the Company and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives arising out of or related to Executive’s employment by the
Company and the termination of such employment.
 
 

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6. Consultancy Following Termination of Employment.
 
(a) Consulting Period. Executive shall serve as a consultant to the Company
pursuant to the terms of this Section 6 if Executive’s employment hereunder is
terminated (i) upon expiration of the Term on June 30, 2008; (ii) by the Company
without Cause pursuant to Section 4(d); or (iii) by Executive pursuant to
Section 4(e). Executive shall serve in such capacity during the period (the
“Consulting Period”) commencing with such termination of employment and ending
upon the earlier of:
 
(i) Executive’s death;
 
(ii) Executive’s having become Totally Disabled (as defined in Section 4(b));
 
(iii) Executive’s termination of the consultancy on thirty days’ prior written
notice to the Company;
 
(iv) The Company’s notice to Executive of termination of the Consulting Period
for Cause. Solely for purposes of this Section 6, “Cause” shall mean any of the
following: (a) Executive’s substantial and continuing failure or refusal to
perform his duties under this Section 6; (b) any act by or omission of Executive
constituting willful misconduct in connection with the performance of his
consulting duties that could reasonably be expected to materially injure the
reputation, business or business relationships of the Company or any of its
affiliates; (c) Executive’s conviction (including conviction on a nolo contendre
plea) of a felony or any crime involving, in the good faith judgment of the
Company, fraud, dishonesty or moral turpitude; (d) any material violation of the
Company’s Code of Ethics; or (e) the breach of an obligation set forth in
Section 7; provided, however, that a termination by the Company under clause (a)
hereof for Cause shall be effective only if, within 14 days following delivery
of a written notice by the Company to Executive that the Company is terminating
his consultancy for Cause, Executive has failed to cure the circumstances giving
rise to Cause; or
 
(v) June 30, 2018, unless the Company, in its sole discretion, elects to extend
the Consulting Period pursuant to Section 6(b), in which case the Consulting
Period shall end (unless earlier terminated pursuant to clauses (i) - (iv) of
this Section 6(a)) on June 30, 2023.
 
(b) Extension of Consulting Period. If the Consulting Period is not terminated
before June 30, 2018, then on or before June 30, 2018, the Company may, in its
sole discretion, elect to extend the Consulting Period until June 30, 2023. If
the Company elects not to extend the Consulting Period pursuant to this Section
6(b), the Company shall continue to pay Executive the Consulting Fees (as
defined below) until June 30, 2021.
 
 
 

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(c) Consulting Fees. During the Consulting Period, Executive shall be paid
consulting fees (the “Consulting Fees”) at an annual rate equal to 65% of the
Base Salary on the date of termination of Executive’s employment, provided that
during any period Executive is receiving payments pursuant to Section 5(c)(ii),
such payments shall constitute full consideration for Executive’s consulting
work pursuant to this Section 6. The Consulting Fees shall be paid monthly in
arrears. The payment of Consulting Fees shall be subject to all legally required
and customary withholdings. Except as otherwise provided in the second sentence
of Section 6(b), the Consulting Fees shall end on the last date of the
Consulting Period, and the Company shall have no obligations to Executive
subsequent to the termination of the consultancy, except as required by law.
 
(d) Consulting Duties. As a consultant to the Company, Executive shall act as a
goodwill ambassador on behalf of the Company, maintaining and expanding client
relationships on behalf of the Company in consultation with the President and
Chief Executive Officer of the Company. Executive shall not be required to work
on a full-time basis during the Consulting Period.
 
(e) Relationship of the Parties.
 
(i) During the Consulting Period, Executive shall not be authorized to, and
shall not, act as an agent of the Company and shall not be entitled to enter
into any agreements, incur any obligations on behalf of the Company, or be
authorized to bind the Company in any manner whatsoever. No form of joint
venture, partnership or similar relationship between the parties is intended or
hereby created.
 
(ii) During the Consulting Period, all of Executive’s activities will be at
Executive’s own risk, and Executive shall have sole responsibility for
arrangements to guard against physical, financial, and other risks, as
appropriate.
 
7. Exclusive Employment; Noncompetition; Nonsolicitation; Nondisclosure of
Proprietary Information; Surrender of Records; Inventions and Patents; Code of
Ethics.
 
7.1 No Conflict; No Other Employment. During the period of Executive’s
employment with the Company, Executive shall not: (i) engage in any activity
which conflicts or interferes with or derogates from the performance of
Executive’s duties hereunder nor shall Executive engage in any other business
activity, whether or not such business activity is pursued for gain or profit
and including service as a director of any other company, except as approved in
advance in writing by the Company; provided, however, that Executive shall be
entitled to manage his personal investments and otherwise attend to personal
affairs, including charitable, social and political activities, in a manner that
does not unreasonably interfere with his responsibilities hereunder, or (ii)
accept or engage in any other employment, whether as an employee or consultant
or in any other capacity, and whether or not compensated therefor. During the
Consulting Period, Executive shall not engage in any activity which conflicts or
interferes with or derogates from the performance of Executive’s consulting
duties hereunder.
 

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7.2 Noncompetition; Nonsolicitation.
 
(a) Executive acknowledges and recognizes the highly competitive nature of the
Company’s business and that access to the Company’s confidential records and
proprietary information renders him special and unique within the Company’s
industry. In consideration of the payment by the Company to Executive of amounts
that may hereafter be paid to Executive pursuant to this Agreement (including,
without limitation, pursuant to Sections 3, 5, and 6 hereof) and other
obligations undertaken by the Company hereunder, Executive agrees that during
(i) his employment with the Company, (ii) the Consulting Period, and (iii) the
length of time that Executive is receiving payments from the Company following
the termination of his employment pursuant to Section 5 or the termination of
the consultancy pursuant to Section 6, but in no event less than one year
following the later of the date of termination of his employment for any reason
and the termination of the consultancy for any reason (together, the “Covered
Time”), Executive shall not, directly or indirectly, engage (as owner, investor,
partner, stockholder, employer, employee, consultant, advisor, director or
otherwise) in any Competing Business, provided that the provisions of this
Section 7.2(a) will not be deemed breached merely because Executive owns less
than 1% of the outstanding common stock of a publicly-traded company. For
purposes of this Agreement, “Competing Business” shall mean (i) any business in
which the Company is currently engaged anywhere in the world, including but not
limited to (A) the marketing, production and sale of collectibles, including
numismatic and philatelic material, by auction, as merchant-dealer or otherwise,
and (B) the marketing, production and sale of third-party and owned material by
auction; and (ii) any other business which the Company engages in anywhere in
the world during the Term or the Consulting Period.
 
(b) In further consideration of the payment by the Company to Executive of
amounts that may hereafter be paid to Executive pursuant to this Agreement
(including, without limitation, pursuant to Sections 3, 5, and 6 hereof) and
other obligations undertaken by the Company hereunder, Executive agrees that
during his employment, the Consulting Period, and the Covered Time, he shall
not, directly or indirectly, (i) solicit, encourage or attempt to solicit or
encourage any of the employees, agents, consultants or representatives of the
Company or any of its affiliates to terminate his, her, or its relationship with
the Company or such affiliate; (ii) solicit, encourage or attempt to solicit or
encourage any of the employees, agents, consultants or representatives of the
Company or any of its affiliates to become employees, agents, representatives or
consultants of any other person or entity; (iii) solicit or attempt to solicit
any customer, vendor or distributor of the Company or any of its affiliates with
respect to any product or service being furnished, made, sold or leased by the
Company or such affiliate; or (iv) persuade or seek to persuade any customer of
the Company or any affiliate to cease to do business or to reduce the amount of
business which any customer has customarily done or contemplates doing with the
Company or such affiliate, whether or not the relationship between the Company
or its affiliate and such customer was originally established in whole or in
part through Executive’s efforts. For purposes of this Section 7.2(b) only, the
terms “customer,” “vendor” and “distributor” shall mean a customer, vendor or
distributor who has done business with the Company or any of its affiliates
within twelve months preceding the later of the termination of Executive’s
employment and the termination of the Consulting Period.
 
(c) During Executive’s employment with the Company, the Consulting Period, and
the Covered Time, Executive agrees that upon the earlier of Executive’s (i)
negotiating with any Competitor (as defined below) concerning the possible
employment of Executive by the Competitor, (ii) receiving an offer of employment
from a Competitor, or (iii) becoming employed or otherwise engaged by a
Competitor, Executive will (A) immediately provide notice to the Company of such
circumstances and (B) provide copies of Section 7 of this Agreement to the
Competitor. Executive further agrees that the Company may provide notice to a
Competitor of Executive’s obligations under this Agreement, including without
limitation Executive’s obligations pursuant to Section 7 hereof. For purposes of
this Agreement, “Competitor” shall mean any entity (other than the Company or
any of its affiliates) that engages, directly or indirectly, in any Competing
Business.
 

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(d) Executive understands that the provisions of this Section 7.2 may limit his
ability to earn a livelihood in a business similar to the business of the
Company or its affiliates but nevertheless agrees and hereby acknowledges that
the consideration provided under this Agreement, including any amounts or
benefits provided under Sections 3, 5 and 6 hereof and other obligations
undertaken by the Company hereunder, is sufficient to justify the restrictions
contained in such provisions. In consideration thereof and in light of
Executive’s education, skills and abilities, Executive agrees that he will not
assert in any forum that such provisions prevent him from earning a living or
otherwise are void or unenforceable or should be held void or unenforceable.
 
7.3 Proprietary Information. Executive acknowledges that during the course of
his employment with the Company and any consultancy, he will necessarily have
access to and make use of proprietary information and confidential records of
the Company and its affiliates. Executive covenants that he shall not during the
Term, the Consulting Period, or at any time thereafter, directly or indirectly,
use for his own purpose or for the benefit of any person or entity other than
the Company, nor otherwise disclose, any proprietary information to any
individual or entity, unless such disclosure has been authorized in writing by
the Company or is otherwise required by law. Executive acknowledges and
understands that the term “proprietary information” includes, but is not limited
to: (a) the software products, programs, applications, and processes utilized by
the Company or any of its affiliates; (b) the name and/or address of any
customer or vendor of the Company or any of its affiliates or any information
concerning the transactions or relations of any customer or vendor of the
Company or any of its affiliates with the Company or such affiliate or any of
its or their partners, principals, directors, officers or agents; (c) any
information concerning any product, technology, or procedure employed by the
Company or any of its affiliates but not generally known to its or their
customers, vendors or competitors, or under development by or being tested by
the Company or any of its affiliates but not at the time offered generally to
customers or vendors; (d) any information relating to the computer software,
computer systems, pricing or marketing methods, sales margins, cost of goods,
cost of material, capital structure, operating results, borrowing arrangements
or business plans of the Company or any of its affiliates; (e) any information
which is generally regarded as confidential or proprietary in any line of
business engaged in by the Company or any of its affiliates; (f) any business
plans, budgets, advertising or marketing plans; (g) any information contained in
any of the written or oral policies and procedures or manuals of the Company or
any of its affiliates; (h) any information belonging to customers or vendors of
the Company or any of its affiliates or any other person or entity which the
Company or any of its affiliates has agreed to hold in confidence; (i) any
inventions, innovations or improvements covered by this Agreement; and (j) all
written, graphic and other material relating to any of the foregoing. Executive
acknowledges and understands that information that is not novel or copyrighted
or patented may nonetheless be proprietary information. The term “proprietary
information” shall not include information generally available to and known by
the public or information that is or becomes available to Executive on a
non-confidential basis from a source other than the Company, any of its
affiliates, or the directors, officers, employees, partners, principals or
agents of the Company or any of its affiliates (other than as a result of a
breach of any obligation of confidentiality).
 

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7.4 Confidentiality and Surrender of Records. Executive shall not during the
Term, the Consulting Period, or at any time thereafter (irrespective of the
circumstances under which Executive’s employment by the Company or the
consultancy terminates), except as required by law, directly or indirectly
publish, make known or in any fashion disclose any confidential records to, or
permit any inspection or copying of confidential records by, any individual or
entity other than in the course of such individual’s or entity’s employment or
retention by the Company. Upon termination of employment for any reason,
termination of the Consulting Period, or request by the Company, Executive shall
deliver promptly to the Company all property and records of the Company or any
of its affiliates, including, without limitation, all confidential records. For
purposes hereof, “confidential records” means all correspondence, reports,
memoranda, files, manuals, books, lists, financial, operating or marketing
records, magnetic tape, or electronic or other media or equipment of any kind
which may be in Executive’s possession or under his control or accessible to him
which contain any proprietary information. All property and records of the
Company and any of its affiliates (including, without limitation, all
confidential records) shall be and remain the sole property of the Company or
such affiliate during the Term, the Consulting Period, and thereafter.
 
7.5 Inventions and Patents. All inventions, innovations or improvements
(including policies, procedures, products, improvements, software, ideas and
discoveries, whether patent, copyright, trademark, service mark, or otherwise)
conceived or made by Executive, either alone or jointly with others, in the
course of his employment by or consulting for the Company, belong to the
Company. Executive will promptly disclose in writing such inventions,
innovations or improvements to the Company and perform all actions reasonably
requested by the Company to establish and confirm such ownership by the Company,
including, but not limited to, cooperating with and assisting the Company in
obtaining patents, copyrights, trademarks, or service marks for the Company in
the United States and in foreign countries.
 
7.6 Enforcement. Executive acknowledges and agrees that, by virtue of his
position, his services and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 7 would cause the Company and/or its affiliates
immediate, substantial and irreparable injury for which it or they have no
adequate remedy at law. Accordingly, Executive agrees and consents to the entry
of an injunction or other equitable relief by a court of competent jurisdiction
restraining any violation or threatened violation of any undertaking contained
in this Section 7. Executive waives posting by the Company or its affiliates of
any bond otherwise necessary to secure such injunction or other equitable
relief. Rights and remedies provided for in this Section 7 are cumulative and
shall be in addition to rights and remedies otherwise available to the parties
hereunder or under any other agreement or applicable law.
 

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7.7 Code of Ethics. Nothing in this Section 7 is intended to limit, modify or
reduce Executive’s obligations under the Code of Ethics. Executive’s obligations
under this Section 7 are in addition to, and not in lieu of, Executive’s
obligations under the Code of Ethics. To the extent there is any inconsistency
between this Section 7 and the Code of Ethics which would permit Executive to
take any action or engage in any activity pursuant to this Section 7 which he
would be barred from taking or engaging in under the Code of Ethics, the Code of
Ethics shall control.
 
8. Key Man Insurance. Executive recognizes and acknowledges that the Company or
its affiliates may seek and purchase one or more policies providing key man life
insurance with respect to Executive, the proceeds of which would be payable to
the Company or such affiliate. Executive hereby consents to the Company or its
affiliates seeking and purchasing such insurance and will provide such
information, undergo such medical examinations (at the Company’s expense),
execute such documents, and otherwise take any and all actions reasonably
necessary or desirable in order for the Company or its affiliates to seek,
purchase, and maintain in full force and effect such policy or policies.
 
9. Assignment and Transfer.
 
(a) Company. This Agreement shall inure to the benefit of and be enforceable by,
and may be assigned by the Company without Executive’s consent to, any purchaser
of all or substantially all of the Company’s business or assets or those of the
U.S. and Asia Philatelic Auction Division of the Company, or to any successor to
the Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise).
 
(b) Executive. The parties hereto agree that Executive is obligated under this
Agreement to render personal services during the Term and the Consulting Period
of a special, unique, unusual, extraordinary and intellectual character, thereby
giving this Agreement special value. Executive’s rights and obligations under
this Agreement shall not be transferable by Executive by assignment or
otherwise, and any purported assignment, transfer or delegation thereof shall be
void; provided, however, that if Executive shall die, all amounts then payable
to Executive hereunder shall be paid in accordance with the terms of this
Agreement to Executive’s estate.
 
10. Miscellaneous.
 
(a) Other Obligations. Executive represents and warrants that neither
Executive’s employment with the Company nor Executive’s performance of
Executive’s obligations hereunder will conflict with or violate or otherwise are
inconsistent with any other obligations, legal or otherwise, which Executive may
have. Executive covenants that he shall perform his duties hereunder in a
professional manner and not in conflict or violation, or otherwise inconsistent
with other obligations legal or otherwise, which Executive may have.
 
(b) Nondisclosure; Other Employers. Executive will not disclose to the Company,
use, or induce the Company to use, any proprietary information, trade secrets or
confidential business information of others. Executive represents and warrants
that Executive does not possess any property, proprietary information, trade
secrets and confidential business information belonging to any prior employers. 
 
 

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(c) Cooperation. In addition to performing consulting duties during the
Consulting Period, following termination of employment with the Company for any
reason, Executive shall cooperate with the Company, as requested by the Company,
to effect a transition of Executive’s responsibilities and to ensure that the
Company is aware of all matters being handled by Executive.
 
(d) Mitigation. Executive shall not be required to mitigate damages or the
amount of any payment provided to him under Section 5 of this Agreement by
seeking other employment or otherwise, nor shall the amount of any payments
provided to Executive under Section 5 be reduced by any compensation earned by
Executive as the result of employment by another employer after the termination
of Executive’s employment or otherwise.
 
(e) Protection of Reputation. During the Term, the Consulting Period, and
thereafter, Executive agrees that he will take no action which is intended, or
would reasonably be expected, to harm the Company or any of its affiliates or
its or their reputation or which would reasonably be expected to lead to
unwanted or unfavorable publicity to the Company or its affiliates.
 
(f) Governing Law. This Agreement shall be governed by and construed (both as to
validity and performance) and enforced in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed wholly
within such jurisdiction, without regard to the principles of conflicts of law
or where the parties are located at the time a dispute arises.
 
(g) Arbitration.
 

 
(i)
General. Executive and the Company specifically, knowingly, and voluntarily
agree that they shall use final and binding arbitration to resolve any dispute
(an “Arbitrable Dispute”) between Executive, on the one hand, and the Company
(or any affiliate of the Company), on the other hand. This arbitration agreement
applies to all matters relating to this Agreement and Executive’s employment
with, termination of employment from the Company, consulting for the Company,
and termination of the consultancy, including without limitation disputes about
the validity, interpretation, or effect of this Agreement, or alleged violations
of it, any payments due hereunder and all claims arising out of any alleged
discrimination, harassment or retaliation, including, but not limited to, those
covered by Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, as amended, and the Americans With
Disabilities Act or any other federal, state or local law relating to
discrimination in employment.

 
 
 

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(ii)
Injunctive Relief. Notwithstanding anything to the contrary contained herein,
the Company and any affiliate of the Company (if applicable) shall have the
right to seek injunctive or other equitable relief from a court of competent
jurisdiction to enforce Section 7 of this Agreement. For purposes of seeking
enforcement of Section 7, the Company and Executive hereby consent to the
jurisdiction of any state or federal court sitting in the City, County and State
of New York.

 

 
(iii)
The Arbitration. Any arbitration pursuant to this Section 10(g) will take place
in New York, New York, under the auspices of the American Arbitration
Association, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association then in effect, and
before a panel of three arbitrators selected in accordance with such rules.
Judgment upon the award rendered by the arbitrators may be entered in any state
or federal court sitting in the City, County and State of New York.

 

 
(iv)
Fees and Expenses. In any arbitration pursuant to this Section 10(g), each party
shall be responsible for the fees and expenses of its own attorneys and
witnesses, and the fees and expenses of the arbitrators shall be divided equally
between the Company, on the one hand, and Executive, on the other hand.

 

 
(v)
Exclusive Forum. Except as permitted by Section 10(g)(ii) hereof, arbitration in
the manner described in this Section 10(g) shall be the exclusive forum for any
Arbitrable Dispute. Except as permitted by Section 10(g)(ii), should Executive
or the Company attempt to resolve an Arbitrable Dispute by any method other than
arbitration pursuant to this Section 10(g), the responding party shall be
entitled to recover from the initiating party all damages, expenses, and
attorneys’ fees incurred as a result of that breach.

 
(h) Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto in respect of Executive’s employment
and consultancy and supersedes, cancels and annuls any prior or contemporaneous
written or oral agreements, understandings, commitments and practices between
them respecting Executive’s employment or consultancy, including all prior
employment agreements between the Company and Executive (including, without
limitation, Executive’s employment agreement with the Company, dated as of May
14, 1993, as amended), which agreement(s) hereby are terminated and shall be of
no further force or effect.
 
 
 

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(i) Amendment. This Agreement may be amended only by a writing which makes
express reference to this Agreement as the subject of such amendment and which
is signed by Executive and, on behalf of the Company, by its duly authorized
officer.
 
(j) Severability. If any provision of this Agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction or arbitration panel to be invalid or unenforceable to
any extent, the remainder of this Agreement, or the application of such
provision to such person or circumstances other than those to which it is so
determined to be invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be enforced to the fullest extent permitted by law.
If any provision of this Agreement, or any part thereof, is held to be invalid
or unenforceable because of the scope or duration of or the area covered by such
provision, the parties hereto agree that the court or arbitration panel making
such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such invalid or
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced. The
parties hereto recognize that if, in any judicial or arbitral proceeding, a
court or arbitration panel shall refuse to enforce any of the separate covenants
contained in this Agreement, then that invalid or unenforceable covenant
contained in this Agreement shall be deemed eliminated from these provisions to
the extent necessary to permit the remaining separate covenants to be enforced.
In the event that any court or arbitration panel determines that the time period
or the area, or both, are unreasonable and that any of the covenants is to that
extent invalid or unenforceable, the parties hereto agree that such covenants
will remain in full force and effect, first, for the greatest time period, and
second, in the greatest geographical area that would not render them
unenforceable.
 
(k) Construction. The headings and captions of this Agreement are provided for
convenience only and are intended to have no effect in construing or
interpreting this Agreement. The language in all parts of this Agreement shall
be in all cases construed according to its fair meaning and not strictly for or
against the Company or Executive. As used herein, the words “day” or “days”
shall mean a calendar day or days.
 
(l) Nonwaiver. Neither any course of dealing nor any failure or neglect of
either party hereto in any instance to exercise any right, power or privilege
hereunder or under law shall constitute a waiver of any other right, power or
privilege or of the same right, power or privilege in any other instance. All
waivers by either party hereto must be contained in a written instrument signed
by the party to be charged and, in the case of the Company, by its duly
authorized officer.
 
(m) Notices. Any notice required or permitted hereunder shall be in writing and
shall be sufficiently given if personally delivered or if sent by registered or
certified mail, postage prepaid, with return receipt requested, addressed: (i)
in the case of the Company, to Greg Manning Auctions, Inc., 775 Passaic Avenue,
West Caldwell, New Jersey 07006, attn.: General Counsel, with a copy to Kramer
Levin Naftalis & Frankel LLP, 1177 Avenue of the
 
 
 

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(n) Americas, New York, New York 10036, attn.: Scott S. Rosenblum, Esq.; and
(ii) in the case of Executive, to Executive’s last known address as reflected in
the Company’s records, or to such other address as Executive shall designate by
written notice to the Company. Any notice given hereunder shall be deemed to
have been given at the time of receipt thereof by the person to whom such notice
is given if personally delivered or at the time of mailing if sent by registered
or certified mail.
 
(o) Assistance in Proceedings, Etc. Executive shall, without additional
compensation, during and after the Term and the Consulting Period, upon
reasonable notice, furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection with any legal or
quasi-legal proceeding, including any external or internal investigation,
involving the Company or any of its affiliates.
 
(p) Survival. Cessation or termination of Executive’s employment or consultancy
with the Company shall not result in termination of this Agreement. The
respective obligations of Executive and the Company as provided in Sections 5,
6, 7, 9 and 10 of this Agreement shall survive cessation or termination of
Executive’s employment and consultancy hereunder.
 
(q) Section 409A of the Code. Executive and the Company agree that in the event
the Company reasonably determines that the terms hereof would result in
Executive being subject to tax under Section 409A of the Code, Executive and the
Company shall negotiate in good faith to amend this Agreement to the extent
necessary to prevent the assessment of any such tax, including by delaying the
payment dates of any amounts hereunder.
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed on
its behalf by an officer thereunto duly authorized and Executive has duly
executed this Agreement, all as of the date and year first written above.
 
 

       GREG MANNING AUCTIONS, INC.  EXECUTIVE:  
   
   
 
By:                                                                                        
    
 
Name Greg Manning

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Greg Manning Title:  

 
 
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ANNEX A
 
Greg Manning Incentive Compensation Program
 
1. Introduction
 
This Greg Manning Incentive Compensation Program (the “Program”) is established
by Greg Manning Auctions, Inc. (the “Company”) to provide Greg Manning
(“Executive”) with “performance-based compensation” during his employment within
the meaning of Section 162(m)(4) of the Internal Revenue Code of 1986, as
amended (the “Code”). The Program has been approved by a committee of the
Company’s Board of Directors comprised solely of at least two independent
directors (the “Committee”) and is subject to approval by the shareholders of
the Company. Prior to any payment under the Program, the Committee shall certify
the amount of the Performance Bonus (as defined below) and/or the Long-Term
Incentive Award (as defined below) to which Executive is entitled.
 
This Program is an Annex to the employment and consulting agreement between
Executive and the Company, dated as of July 1, 2005 (the “Employment
Agreement”), and the provisions of the Employment Agreement, including without
limitation, with respect to arbitration of disputes, shall apply to this Program
to the extent not inconsistent with the terms of the Program.
 
2. Performance Bonus.
 
The Company shall pay Executive an annual performance cash bonus (the
“Performance Bonus”) for each fiscal year during the Term (as defined in the
Employment Agreement) equal to (A) an amount equal to the sum of (i) 10% of the
Divisional Pre-Tax Income (as defined below) and (ii) 1% of the Company Pre-Tax
Income (as defined below), divided by (B) 2; provided, however, that in no event
shall the total Performance Bonus exceed $250,000.
 
(a) The term “Divisional Pre-Tax Income” shall mean the net income of the
Company’s U.S. and Asia Philatelic Division before taxes and deductions for any
bonus paid under the Program, as determined by the Company in accordance with
its standard accounting practices. Allocations of expenses between divisions of
the Company shall be determined by the Company in accordance with its standard
practices.
 
(b) The term “Company Pre-Tax Income” shall mean the net income of the Company
before taxes and deductions for any bonus paid under the Program, less the
Divisional Pre-Tax Income, all as determined by the Company in accordance with
its standard accounting practices.
 
(c) The Performance Bonus shall be paid within thirty days following the
issuance of financial statements for the fiscal year in respect of which such
bonus is payable, provided that in no event shall the Performance Bonus be paid
later than the March 14 next occurring following the end of such fiscal year.
 
 
 

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(d) Except as provided below, Executive must be employed by the Company on the
last day of the fiscal year to be eligible for the Performance Bonus.
 
3. Long-Term Incentive Award.
 
(a) The Company will pay to Executive in shares of the Company’s common stock an
amount equal to 50% of the Appreciation in Stock Price (as defined below) for
100,000 shares of common stock of the Company. The “Appreciation in Stock Price”
shall mean the appreciation, if any, between (1) the closing price of the common
stock of the Company on July 1, 2005, and (2) the Average Closing Price (as
defined below) for the period between June 1, 2008 and June 30, 2008.
 
(b) Payment of the Long-Term Incentive Award, if any, shall be made on July 31,
2008; provided, however, that if necessary to comply with Section
409A(a)(2)(B)(i) of the Code, and applicable administrative guidance and
regulations, such payment shall be made on December 31, 2008. The number of
shares payable to Executive shall be based on the closing price of the Company’s
common stock on June 30, 2008.
 
(c) Except as provided below, Executive must be employed by the Company on June
30, 2008 to be eligible for the Long-Term Incentive Award.
 
4. Termination of Employment.
 
(a) Subject to Sections 4(c) and 4(d) below, if Executive’s employment
terminates by reason of Executive’s death or becoming Totally Disabled (as
defined in the Employment Agreement) or is terminated by the Company without
Cause (as defined in Section 4(c) of the Employment Agreement), Executive shall
be entitled to:
 
(i) any Performance Bonus not yet paid for any fiscal year ending prior to the
date of Executive’s termination of employment (payable as and when such bonus
would have been paid had Executive’s employment continued);
 
(ii) a prorated portion of the Performance Bonus for the fiscal year in which
Executive’s employment terminated, based on the number of days Executive was
employed by the Company in such fiscal year (the Performance Bonus to be
otherwise calculated and paid in accordance with, and subject to, the Program);
and
 
(iii) payment of the Long-Term Incentive Award in accordance with, and subject
to, Section 3 of the Program, provided that in such a case the Appreciation in
Stock Price shall be the appreciation, if any, between (1) the closing price of
the common stock of the Company on July 1, 2005, and (2) the Average Closing
Price for the 30-day period preceding the date of termination of employment.
Payment of the Long-Term Incentive Award, if any, shall be made thirty days
following the date of termination of employment; provided, however, if necessary
to comply with Section 409A(a)(2)(B)(i) of the Code, and applicable
administrative guidance and regulations, such payment shall be made six months
following the date of termination of employment.
 
 
 
 
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(b) If Executive’s employment is terminated by the Company for Cause (as defined
in Section 4(c) of the Employment Agreement) or is terminated by Executive,
Executive shall be entitled only to any Performance Bonus not yet paid for any
fiscal year ending prior to the date of Executive’s termination of employment
(payable as and when such bonus would have been paid had Executive’s employment
continued).
 
(c) The payment of any amounts pursuant to Sections 4(a)(ii) and (iii) hereof is
expressly conditioned upon the delivery by Executive to the Company of a release
in form and substance satisfactory to the Company of any and all claims
Executive may have against the Company and its directors, officers, employees,
subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives arising out of or related to Executive’s employment by the
Company and the termination of such employment.
 
(d) If, at the time of termination of Executive’s employment for any reason,
Executive is in material breach of any covenant contained in Section 7 of the
Employment Agreement, Executive (or his estate, as applicable) shall not be
entitled to any payment (or if payments have commenced, any continued payment)
under Sections 4(a)(ii) and (iii) hereof.
 
5. Average Closing Price.
 
For purposes of the Program, “Average Closing Price” with respect to a specified
period of time shall mean the average of closing prices of the Company’s common
stock as reported in the Wall Street Journal for those dates during the
specified period on which the national stock exchanges are open for business.
 
 
 
 
3