SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
NATIONAL TRANSACTION NETWORK, INC.
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(Name of Registrant as Specified in Its Charter)
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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 Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing and registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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NATIONAL TRANSACTION NETWORK, INC.
117 FLANDERS ROAD
WESTBOROUGH, MASSACHUSETTS 01581
(508) 870-3200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE 10, 1997
To the Stockholders:
The Annual Meeting of Stockholders of National Transaction Network,
Inc. (the "Company") will be held at the offices of the Company, 117 Flanders
Road, Westborough, Massachusetts 01581 on Tuesday, June 10, 1997 at 11:00 a.m.,
local time, to consider and act upon the following matters:
1. To elect a Board of Directors to serve for the ensuing year.
2. To approve an amendment to the Company's Restated Certificate
of Incorporation increasing from 6,666,667 to 20,000,000 the
number of authorized shares of Common Stock, par value $.15
per share, of the Company.
3. To ratify the selection of the firm of Deloitte & Touche as
auditors of the Company for the fiscal year ending December
31, 1997.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on April 11, 1997 will
be entitled to vote at the meeting or any adjournment thereof. A list of the
stockholders of record entitled to vote shall be available for inspection at the
principal office of the Company for ten days prior to the Annual Meeting. The
stock transfer books of the Company will remain open.
By Order of the Board of Directors,
L. BARRY THOMSON
Chief Executive Officer
Westborough, Massachusetts
April 28, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. THE PROXY MAY BE REVOKED BY THE
PERSON EXECUTING THE PROXY BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY
ELECTING TO VOTE IN PERSON AT THE MEETING. NO POSTAGE NEED BE AFFIXED IF THE
PROXY IS MAILED IN THE UNITED STATES.
-----------------------------------
NATIONAL TRANSACTION NETWORK, INC.
117 FLANDERS ROAD
WESTBOROUGH, MASSACHUSETTS 01581
(508) 870-3200
-----------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1997
APRIL 28, 1997
-----------------------------------
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of National Transaction Network, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on Tuesday, June 10, 1997 at 11:00 a.m., at the offices of
the Company, 117 Flanders Road, Westborough, Massachusetts 01581. This proxy
statement and the form of proxy were first mailed to stockholders on or about
April 28, 1997.
Only stockholders of record as of April 11, 1997 will be entitled to
vote at the Meeting and any adjournment thereof. As of that date, 3,248,606
shares of Common Stock, par value $.15 per share, of the Company (the "Common
Stock") were issued, outstanding and entitled to vote at any meeting of
stockholders. The shares of Common Stock are the only outstanding voting
securities of the Company. Each share of Common Stock outstanding as of the
record date will be entitled to one vote, and stockholders may vote in person or
by proxy.
Each stockholder is requested to complete, sign, date and return the
enclosed proxy without delay to ensure that his shares are voted at the Meeting.
Execution of a proxy will not in any way affect a stockholder's right to attend
the Meeting and vote in person. Any stockholder giving a proxy has the right to
revoke it by written notice to the Secretary of the Company at any time before
it is exercised at the Meeting or by voting at the Meeting.
The persons named as attorneys in the proxies, L. Barry Thomson,
Kenneth M. Kubler and Milton A. Alpern are directors and/or officers of the
Company. All properly executed proxies returned in time to be cast at the
Meeting will be voted and, with respect to the election of the Board of
Directors, will be voted as stated below under "Election of Directors." Any
stockholder giving a proxy has the right to withhold authority to vote for any
individual nominee to the Board of Directors by writing that nominee's name on
the space provided on the proxy. In addition to the election of directors, the
stockholders will consider and vote upon proposals to (i) approve an amendment
to the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") increasing from 6,666,667 to 20,000,000 the number of authorized
shares of Common Stock of the Company, and (ii) ratify the selection of Deloitte
& Touche as auditors for the fiscal year ending December 31, 1997. Where a
choice has
-2-
been specified on the proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the specification and
will be voted "FOR" if no specification is indicated.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker non-votes (as defined below) are counted as
present or represented for purposes of determining the presence or absence of a
quorum. Directors are elected by a plurality of the votes cast by shareholders
entitled to vote at the Meeting. Shares represented by proxies which are marked
"withhold authority" will have no effect on the outcome of the vote for the
election of directors. Approval of the amendment to the Certificate of
Incorporation will require the affirmative vote of a majority of the outstanding
shares of Common Stock of the Company. The selection of auditors requires the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting. Only shares that are voted in favor of the proposals will
be counted toward achievement of majority. Abstentions and broker non-votes have
the same effect as votes against the proposals. A broker non-vote occurs when a
broker holding shares for a beneficial owner does not vote on a proposal because
the broker does not have discretionary voting power with respect to the proposal
and has not received instructions from the beneficial owner.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as attorneys in the proxies.
An Annual Report to Stockholders, containing financial statements for
the fiscal year ended December 31, 1996, is being mailed to stockholders along
with this proxy statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of management, certain
information regarding certain owners of Common Stock of the Company as of April
11, 1997 with respect to: (a) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the 3,248,606 shares of
Common Stock outstanding at such date; (b) each director of the Company; (c)
each nominee director of the Company; (d) each executive officer named in the
Summary Compensation Table set forth below under "Compensation of Executive
Officers"; and (e) all current executive officers and directors of the Company
as a group:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS(2)
------------------- ------------------------ --------------
International Verifact Inc. 2,726,440 83.9%
70 Torbarrie Road
Toronto, Ontario
Canada M3L 1G5
Paul A. Siegenthaler 23,333(3) *
L. Barry Thomson 5,000(4) *
Kenneth M. Kubler 5,000(5) *
George C. Whitton 8,333(6) *
Christopher F. Schellhorn 5,000(7) *
Milton A. Alpern 29,596(8) *
All directors and executive 52,929(9) 1.6%
officers as a group (5 persons)
- -----------------
* Less than 1%.
-3-
(1) Except as otherwise noted below, the Company believes each beneficial
owner has the sole voting and investment power with respect to the
number of shares of Common Stock (through the exercise of stock options
or warrants with respect to Common Stock) shown as beneficially owned
by such beneficial owner.
(2) All numbers and percentages, except as otherwise noted, assume the
exercise of outstanding options or warrants. Pursuant to the rules of
the Securities and Exchange Commission, shares of Common Stock which an
individual or group has a right to acquire within 60 days of April 11,
1997 pursuant to the exercise of presently exercisable or outstanding
options are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to
be outstanding for the purpose of computing the percentage ownership of
any other person shown in the table. Information with respect to
beneficial ownership is based upon information furnished by such
stockholder.
(3) Represents shares subject to options granted Mr. Siegenthaler
exercisable at April 11, 1997, or within 60 days thereafter.
(4) Represents shares subject to options granted Mr. Thomson exercisable at
April 11, 1997, or within 60 days thereafter.
(5) Represents shares subject to options granted Mr. Kubler exercisable at
April 11, 1997, or within 60 days thereafter.
(6) Represents shares subject to options granted Mr. Whitton exercisable at
April 11, 1997, or within 60 days thereafter.
(7) Represents shares subject to options granted Mr. Schellhorn exercisable
at April 11, 1997, or within 60 days thereafter.
(8) Represents shares subject to options granted Mr. Alpern exercisable at
April 11, 1997, or within 60 days thereafter.
(9) Represents 52,929 shares subject to options exercisable at April 11,
1997, or within 60 days thereafter.
The Company knows of no contract or other arrangement, including any
pledge by any person of securities of the Company, the operation of which may at
a subsequent date result in a change in control of the Company.
On September 13, 1996, International Verifact Inc. ("IVI") acquired
beneficial ownership of approximately 84% of the outstanding Common Stock of the
Company in a private transaction. IVI purchased all of the outstanding shares of
Common Stock held by BCE Investments (Canada) Inc. and Nelson Doubleday in
exchange for IVI common shares having an aggregated market value of
approximately $1,254,000.
-4-
DIRECTORS AND EXECUTIVE OFFICERS
The directors of the Company are elected annually and hold office until
the next annual meeting of stockholders and until their successors shall have
been elected and qualified. Shares represented by all proxies received by the
Board of Directors and not so marked as to withhold authority to vote for any
individual director or for all directors will be voted for the election of the
nominees named below (unless one or more nominees are unable or unwilling to
serve). The Board of Directors knows of no reason why any such nominee should be
unable or unwilling to serve, but if such should be the case, proxies will be
voted for the election of some other person.
The Company's By-laws presently state that the number of directors
which shall constitute the whole Board of Directors shall be not less than one
and not more than nine. Within such limit, the number of directors shall be
determined by resolution of the Board of Directors or by the stockholders at the
annual meeting or at any special meeting of stockholders. The number of
directors currently fixed by the Board of Directors is four. There are presently
four individuals serving as directors of the Company. Jeffrey B. Finestone,
Robert D.D. Forbes, Christopher D. Illick, Brian Kouri, Paul A. Siegenthaler and
Charles R. Thompson were former directors and all of them resigned on September
13, 1996. Any vacancy in the Board of Directors may be filled by the directors
or stockholders pursuant to the Company's Certificate of Incorporation and
By-laws.
All four nominees are currently directors of the Company. Messrs.
Thomson, Kubler and Whitton were initially elected by a Written Consent of
Holder of Common Stock on September 13, 1996 and Mr. Schellhorn was initially
elected by the Board of Directors on March 4, 1997.
The following table sets forth the names of the nominees to be elected
at the Annual Meeting and the executive officers of the Company, their ages and
present positions with the Company.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
L. Barry Thomson* 55 Chief Executive Officer, President, Secretary and
Director
Kenneth M. Kubler* 50 Executive Vice President and General Manager and
Director
Milton A. Alpern 45 Chief Financial Officer, Vice President and
Treasurer
George C. Whitton* 61 Director
Christopher F. Schellhorn* 46 Director
</TABLE>
- --------------
* Director Nominee
The following describes the business experience during the past five
years of each director, director nominee, and executive officers named above.
L. Barry Thomson has served as a director of the Company since
September 13, 1996 and as President, Chief Executive Officer and Secretary of
the Company since October 9, 1996. Mr. Thomson has served as Chief Executive
Officer of International Verifact Inc. ("IVI") since May 1996 and as President
since April 1994. In addition, Mr. Thomson has served as a director of IVI since
May 1995. Prior to becoming the Chief Executive Officer of IVI from April 1994
until May 1996, Mr. Thomson served as Chief Operating Officer of IVI. Prior to
-5-
April 1994, Mr. Thomson served as President and Chief Executive Officer of Aluma
Systems Corporation, a construction technology company.
Kenneth M. Kubler has served as a director of the Company since
September 13, 1996 and as Executive Vice President and General Manager of the
Company since September 16, 1996. From July 1, 1995 until joining the Company,
Mr. Kubler served as President of the Marker Group, a retail automation company.
Mr. Kubler served as General Manager of the retail automation division of
Dataserv Inc. from January 1, 1993 until his employment at the Marker Group.
Dataserv is a software and services company. Prior to such time, Mr. Kubler
served as Vice President of Product Marketing of Viata Corporation, a retail
software applications and transaction processing company.
Milton A. Alpern has served as Chief Financial Officer, Vice President
of Finance, and Treasurer of the Company since November 1992. From 1987 through
1992, Mr. Alpern served as Vice President of Finance at Henco Software, Inc., a
developer of application development and information integration software.
George C. Whitton has served as a director of the Company since
September 13, 1996. Mr. Whitton has served as Chairman of International Verifact
Inc. ("IVI") since November 1986 and as Chief Executive Officer of IVI from
November 1986 until May 1996.
Christopher F. Schellhorn has been a director of the Company since
March 4, 1997. Since August 1996, Mr. Schellhorn has served as President and
Chief Operating Officer of Visa Interactive, a technology services company. Mr.
Schellhorn served as Vice President and General Manager of International
Verifact Inc. (U.S.) from August 1995 through August 1996. From January 1994
until August 1995, Mr. Schellhorn served as Executive Vice President of Market
Imaging Systems, Inc. Prior to such time, Mr. Schellhorn served as the Senior
Vice President of Wegmans Food Markets Inc.
The Board of Directors met four (4) times during the fiscal year ended
December 31, 1996. During the fiscal year ended December 31, 1996, all of the
incumbent directors attended fewer than 75 percent of the aggregate of the total
number of meetings of the Board of Directors in the 1996 Fiscal Year because all
of the incumbent directors were elected to the Board of Directors on or after
September 13, 1996. The Board of Directors does not have standing audit,
nominating or compensation committees.
Election of the nominees for director listed above will require the
plurality vote of the holders of the outstanding shares of Common Stock of the
Company entitled to vote at the Meeting. The Board of Directors recommends a
vote "FOR" the election of the nominees listed.
-6-
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors of the Company do not receive compensation for their services
as directors, but non-employee directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors meetings.
Executive Officer Compensation
The following table sets forth information regarding compensation
received by the Chief Executive Officer and the most highly compensated
executive officers of the Company exceeding $100,000 for the last three
completed fiscal years. The Company did not make any restricted stock awards,
grant any stock appreciation rights, or make any long-term incentive plan
payments during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------- AWARDS
OTHER ANNUAL ------------ ALL OTHER
NAME/TITLE YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION ($)
- ---------- ---- ---------- --------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Siegenthaler 1996 87,943(1) -0- 11,192(2) 5,000 35,653(3)
Chief Executive Officer,
President and 1995 116,600 -0- 8,534 115,000 -0-
Director (1)
1994 110,000 -0- 7,786 3,333 -0-
L. Barry Thomson 1996 -0- -0- -0- 5,000 -0-
Chief Executive Officer,
President, Director
and Secretary (4)
</TABLE>
(1) Mr. Siegenthaler's employment with the Company terminated on September 13,
1996.
(2) Consists of $7,192 paid to Mr. Siegenthaler for accrued time off prior to
his termination of employment and $4,000 paid to Mr. Siegenthaler for a
car allowance.
(3) Reflects amounts paid to Mr. Siegenthaler following the termination of his
employment with the Company pursuant to a Severance Agreement executed
between the Company and Mr. Siegenthaler and dated January 30, 1993.
(4) Mr. Thomson was elected to the position of Chief Executive Officer,
President and Secretary of the Company on October 9, 1996.
-7-
Stock Plans
The Company currently has one employee stock ownership plan and options
outstanding under two director stock option plans: the 1988 Stock Plan, the 1993
Director Stock Option Plan and the 1995 Director Stock Option Plan,
respectively. The 1988 Stock Plan provides for the grant of incentive stock
options to officers and other employees of the Company and any present or future
subsidiaries of the Company (collectively, "Related Companies") and the grant of
(i) options which do not qualify as incentive stock options, (ii) awards of
stock in the Company and (iii) opportunities to make direct purchases of stock
in the Company (collectively, the "Stock Rights") to directors, officers,
employees and consultants of the Company and Related Companies. The 1988 Stock
Plan provides for the issuance of up to 800,000 shares of Common Stock pursuant
to the grant of Stock Rights. The terms of such Stock Rights, including number
of shares subject to each Stock Right, when the Stock Right become exercisable,
the exercise or purchase price of the Stock Right, the duration of the Stock
Right and the time, manner and form of payment upon exercise of a Stock Right,
are generally determined by the Board of Directors. As of the end of the last
fiscal year, incentive stock options to purchase 530,378 shares of Common Stock
at an average exercise price of approximately $.42 per share were outstanding,
held by thirty-one (31) employees, and non-statutory options to purchase 16,665
shares of Common Stock at an average exercise price of $3.00 per share were
outstanding, held by five (5) individuals pursuant to grants under the 1988
Stock Plan.
On April 6, 1993, the Board of Directors of the Company adopted the
1993 Director Stock Option Plan, which was approved by the Company's
stockholders on June 11, 1993. The 1993 Director Stock Option Plan authorizes
the grant of options for up to 20,000 shares of Common Stock. Each person who is
elected to the Board of Directors of the Company was automatically granted on
such date an option to purchase 3,333 shares of the Company's Common Stock;
provided, however, that the newly elected person did not serve as a director for
the term immediately preceding his or her election. The options expire ten years
from the date of grant, unless terminated earlier in accordance with the terms
of the 1993 Director Stock Option Plan.
On October 25, 1995, the Board of Directors terminated the 1993
Director Stock Option Plan except as related to any options outstanding as of
October 25, 1995. As a consequence, the Company will not grant any further
options under the 1993 Director Stock Option Plan. As of the end of the last
fiscal year, options to purchase 3,333 shares of Common Stock at an exercise
price of $.69 per share were outstanding, held by one former director pursuant
to a grant under the 1993 Director Stock Option Plan. The outstanding options
under the 1993 Director Stock Option Plan will expire on June 10, 2004.
The 1995 Director Stock Option Plan authorizes the grant of
non-statutory options to directors of the Company. Each director who was a
member of the Board of Directors on October 26, 1995 was automatically granted
an option to purchase 15,000 shares of the Common Stock. Each director who is
first elected to the Board after October 26, 1995 will automatically be granted
on the date such person first becomes a member of the Board an option to
purchase 5,000 shares of Common Stock. In addition, each director who has served
continuously as a director for at least six months prior to January 15 of each
year shall be automatically granted on January 15 of each year an option to
purchase 5,000 shares of the Common Stock. The 1995 Director Stock Option Plan
provides for the issuance of up to 300,000 shares of Common Stock pursuant to
the grant of non-statutory stock options. Such options vest on the date of the
grant. Other terms of such options, including exercise or purchase price of the
options, the duration of the options and the time, manner and form of payment
upon exercise of such options, are generally determined by the Board of
Directors. As of the end of the last fiscal year, options to purchase 95,000
shares of Common Stock at an average exercise price of approximately $.37 per
share were outstanding, held by seven (7) current and former directors pursuant
to grants under the 1995 Director Stock Option Plan.
-8-
Option Grants in Last Fiscal Year
The following table sets forth information concerning options granted
during the fiscal year ended December 31, 1995 under the Company's 1988 Stock
Plan and 1995 Director Plan to the named executive officers. The Company did not
grant stock options to any named executive officer during the last fiscal year
ended December 31, 1996 under its 1993 Director Plan. The Company does not grant
stock appreciation rights ("SARs") of any kind.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR BASE EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR PRICE ($/SH) DATE
---- ----------- ----------------- ------------ ----
<S> <C> <C> <C> <C>
Paul A. Siegenthaler 5,000(1) ---- $.22 1/15/06
L. Barry Thomson 5,000(2) ---- $.44 9/13/06
</TABLE>
(1) Represents options granted pursuant to the Company's 1995 Director Plan that
vested on January 15, 1996.
(2) Represents options granted pursuant to the Company's 1995 Director Plan that
vested on September 13, 1996.
Aggregate Option Exercises And Fiscal Year End Option Values
The following table sets forth information concerning unexercised
options to purchase Common Stock held at the end of fiscal year 1996 by the
named executive officers and the value of such officers' unexercised options at
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END 1996 (#) AT FY-END 1996 ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ------------- ------------------
<S> <C> <C> <C> <C>
Paul A. Siegenthaler -0- -0- 23,333(1)/-0- 150/-0-
L. Barry Thomson -0- -0- 5,000(2)/-0- -0-/-0-(3)
</TABLE>
(1) Includes 20,000 vested options granted pursuant to the Company's 1995
Director Stock Option Plan and 3,333 vested options granted pursuant to
the Company's 1993 Director Stock Option Plan.
(2) Represents 5,000 vested options granted pursuant to the Company's 1995
Director Stock Option Plan.
(3) At fiscal year ended 1996, the fair market value of the Common Stock
underlying the options did not exceed the exercise price of the options.
Severance Agreements
On March 17, 1994, the Company entered into a Severance Agreement with
Mr. Alpern. Mr. Alpern's Severance Agreement provides that he is an "at-will"
employee. In addition, the Severance Agreement provides that if Mr. Alpern is
terminated for any reason other than "for cause," as that term is defined in the
Severance
-9-
Agreement, he is entitled to receive six months salary at his current base
salary rate, payable in the same manner as his salary was payable during the
term of his employment. If Mr. Alpern is terminated due to a change of control
of the Company, he is entitled to receive nine months salary payable according
to the terms described above.
PROPOSAL TO
AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION
By Unanimous Written Consent of Directors in Lieu of a Meeting of the
Board of Directors of the Company dated March 11, 1997, the Board of Directors
recommended to the stockholders that the Company amend the Company's Certificate
of Incorporation to increase the number of authorized shares of Common Stock,
par value $.15 per share, from 6,666,667 to 20,000,000 shares. Shares of the
Company's Common Stock, including the additional shares proposed for
authorization, do not have preemptive or similar rights. The full text of the
proposed amendment to the Certificate of Incorporation is attached to this proxy
statement as Exhibit A.
As of April 11, 1997, there were 3,248,606 shares of Common Stock
issued and outstanding and approximately 642,380 shares of Common Stock reserved
for future issuance pursuant to outstanding options granted under the Company's
stock plans. If the amendment to the Certificate of Incorporation is approved,
the Board of Directors will have the authority to issue approximately 16,109,014
additional shares of Common Stock without further stockholder approval (the
"Additional Shares"). The Board of Directors believes the authorized number of
shares of Common Stock should be increased in order to pursue certain strategic
initiatives and to provide sufficient shares for such corporate purposes as may
be determined by the Board of Directors to be necessary or desirable. The
Company intends to pursue strategic initiatives which may include the
acquisition of other businesses and/or complementary product lines and may use
some or all of the Additional Shares to finance such an acquisition. In addition
to pursuing strategic initiatives, the Company may use the Additional Shares for
certain other corporate purposes, including without limitation: entering into
collaborative research and development arrangements with other companies in
which Common Stock or the right to acquire Common Stock are part of the
consideration; facilitating broader ownership of the Company's Common Stock by
effecting a stock split or issuing a stock dividend; raising capital through the
sale of Common Stock; and attracting and retaining valuable employees by the
issuance of additional stock options, including additional shares reserved for
future option grants under the Company's existing stock plan. The Company has no
present plan, arrangement or understanding with respect to the use of the
Additional Shares for any acquisition or other corporate purpose, including
those outlined above. The Board of Directors considers the authorization of
additional shares of Common Stock advisable to ensure prompt availability of
shares for issuance should the occasion arise.
The issuance of additional shares of Common Stock could have the effect
of diluting earnings per share and book value per share, which could adversely
affect the Company's existing stockholders. In addition, the Company's
authorized but unissued shares of Common Stock could be used to make a change in
control of the Company more difficult or costly. Issuing additional shares of
Common Stock could have the effect of diluting stock ownership of the persons
seeking to obtain control of the Company. The Company is not aware, however, of
any pending or threatened efforts to obtain control of the Company, and the
Board of Directors has no current intention to use the additional shares of
Common Stock in order to impede a takeover attempt.
Approval of the amendment to the Certificate of Incorporation will
require the affirmative vote of a majority of the outstanding shares of Common
Stock of the Company. The Board of Directors recommends that stockholders vote
"FOR" the approval of the amendment to the Certificate of Incorporation of the
Company increasing the number of authorized shares of Common Stock of the
Company from 6,666,667 to 20,000,000 shares.
PROPOSAL TO RATIFY SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1997. Deloitte & Touche has served as the Company's
auditors and outside accountants since 1988. It is expected that a member of the
firm will be present at the Annual Meeting of Stockholders with the opportunity
to make a statement if so desired and will be available to respond to
appropriate questions.
-10-
Ratification and approval of the selection of Deloitte & Touche as the
Company's independent public accountants for the fiscal year ending December 31,
1997 will require the affirmative vote of the holders of a majority of a quorum
of the outstanding shares of the Common Stock of the Company. The Board of
Directors recommends that stockholders vote "FOR" ratification and approval of
the selection of Deloitte & Touche as the Company's independent public
accountants for the fiscal year ending December 31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1996 to the present, there have been no transactions,
currently proposed transactions, or series of similar transactions, between the
Company and any executive officer, director, nominee for election as a director
or 5% beneficial owner of the Company's Common Stock, or any member of the
immediate family of the foregoing persons, in which one of the foregoing
individuals or entities had or will have an indirect or direct interest
exceeding $60,000.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement
to be mailed to all stockholders entitled to vote at the next annual meeting of
the Company must be received at the Company's principal executive offices not
later than December 26, 1997. In order to curtail controversy as to the date on
which a proposal was received by the Company, it is suggested that proponents
submit their proposals by Certified Mail--Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and
in addition to soliciting stockholders by mail through its regular employees,
the Company may request banks and brokers to solicit their customers who have
stock of the Company registered in the name of a nominee and, if so, will
reimburse such banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Company may also be made of some
stockholders in person or by mail, telephone or telegraph following the original
solicitation.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and holders of more than 10% of the Company's
Common Stock (collectively, the "Reporting Person") to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Such persons are required by
regulations of the Commission to furnish the Company with copies of all such
filing Based on its review of the copies of such filings received by it with
respect to the fiscal year ended December 31,1996, the Company believes that all
Reporting Persons complied with all Section 16(a) requirements in the fiscal
year ended December 31, 1996.
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONAL TRANSACTION NETWORK, INC.
National Transaction Network, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation adopted
resolutions proposing and declaring advisable the following
amendments to the Restated Certificate of Incorporation of the
Corporation:
RESOLVED: That the first paragraph of Article FOURTH
of the Corporation's Restated Certificate of
Incorporation shall be amended to read in
its entirety as follows:
"FOURTH. The total number of shares of stock which
the Corporation shall have authority to issue is Twenty-Five
Million (25,000,000) shares, consisting of Twenty Million
(20,000,000) shares of Common Stock with a par value of
fifteen cents ($.15) per share (the "Common Stock") and Five
Million (5,000,000) shares of Preferred Stock with a par value
of ten cents ($.10) per share (the "Preferred Stock").
SECOND: The foregoing amendment to the Restated Certificate of
Incorporation of the Corporation was duly adopted by vote of
the stockholders of the Corporation in accordance with the
applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by L. Barry Thomson, its President and Secretary and
Milton A. Alpern, its Chief Financial Officer, this ______ day of May, 1997.
By: _________________________________________
L. Barry Thomson, President and Secretary
Attest:__________________________________________
Milton A. Alpern, Chief Financial Officer
NATIONAL TRANSACTION NETWORK, INC.
117 FLANDERS ROAD
WESTBOROUGH, MASSACHUSETTS 01581
(508) 870-3200
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
June 10, 1997
The undersigned hereby appoints L. Barry Thomson, Kenneth M. Kubler and
Milton A. Alpern, and each of them singly, proxies for the undersigned, with
full power of attorney and power of substitution, to vote all shares of capital
stock of any class which the undersigned is entitled to vote at the Annual
Meeting of Stockholders (the "Meeting") of National Transaction Network, Inc.
(the "Company") to be held on Tuesday, June 10, 1997, at 11:00 a.m. at the
offices of the Company, 117 Flanders Road, Westborough, Massachusetts 01581, and
at any adjournment thereof, upon the matters set forth in the Notice of Annual
Meeting of Stockholders and accompanying Proxy Statement, each dated April 28,
1997, receipt of which is hereby acknowledged:
1. To elect a Board of Directors for the ensuing year.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
L. Barry Thomson, Kenneth M. Kubler, George C. Whitton and Christopher F.
Schellhorn.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST ABOVE.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation increasing from 6,666,667 to 20,000,000 the number of
authorized shares of Common Stock, par value $.15 per share, of the
Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection of the firm of Deloitte & Touche as auditors of
the Company for the fiscal year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the meeting
and any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS SPECIFIED OR, WHERE NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEE DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2 AND 3. A VOTE
TO TRANSACT SUCH OTHER BUSINESS AS MAY BE PROPERLY TAKEN UNDER ITEM 4 WILL BE
VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS HEREINBEFORE NAMED AS
ATTORNEYS.
Dated: ____________, 1997 Print Name: _______________________
Signature(s):______________________
IMPORTANT: Please date this Proxy and sign exactly as your name(s) appear(s)
hereon. If stock is held jointly, each owner should sign. If signing as
attorney, executor, administrator, trustee, guardian or other fiduciary please
give your full title as such.
STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS MAY VOTE IN PERSON
EVEN THOUGH THEY HAVE PREVIOUSLY MAILED THIS PROXY. PLEASE DATE, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENCLOSED PRE-PAID, PRE-ADDRESSED ENVELOPE.
