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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NAL FINANCIAL GROUP INC.
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(Name of Registrant as Specified in its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
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Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
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<PAGE>
NAL
Financial
Group Inc.
May 1, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
'Meeting') of NAL Financial Group Inc. (the 'Company') which will be held at The
Westin Hotel, 400 Corporate Drive, Fort Lauderdale, Florida on Friday, May 31,
1996 at 10:00 AM. Your Board of Directors and management look forward to
personally greeting those stockholders able to attend.
At the Meeting, stockholders will be asked to approve amendments to the
Company's Certificate of Incorporation to (1) classify the Board of Directors
into three different classes and (2) to require a supermajority vote of
stockholders to approve amendments to the Company's Certificate of Incorporation
in certain circumstances. Stockholders will also be asked to elect five
directors, to approve an amendment to the Company's Amended and Restated 1994
Stock Option Plan (the '1994 Plan') to provide for an increase in the number of
shares of common stock the Company is authorized to issue under the 1994 Plan,
to ratify the appointment of Price Waterhouse LLP as the Company's independent
auditors and to consider such other matters as may properly come before the
Meeting or at any adjournment(s) thereof. These matters are discussed in greater
detail in the accompanying Proxy Statement.
Your Board of Directors recommends a vote FOR all of the amendments to the
Company's Certificate of Incorporation, FOR the election of directors, FOR the
amendment to the Company's 1994 Plan, and FOR the ratification of Price
Waterhouse LLP as the Company's independent auditors.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the Meeting. You
are requested to sign, date and mail the enclosed proxy promptly.
We wish to thank our stockholders for their participation and support.
Sincerely,
/s/ ROBERT R. BARTOLINI
Robert R. Bartolini
Chairman of the Board and
Chief Executive Officer
<PAGE>
NAL FINANCIAL GROUP INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 1996
May 1, 1996
To the Stockholders of NAL FINANCIAL GROUP INC.:
The Annual Meeting of Stockholders (the 'Meeting') of NAL Financial Group
Inc. (the 'Company') will be held at The Westin Hotel, 400 Corporate Drive, Fort
Lauderdale, Florida on Friday, May 31, 1996, at 10:00 A.M. for the following
purposes:
(1) to consider and approve an amendment to the Company's Certificate of
Incorporation to provide for the classification of the Board of
Directors into three different classes (a 'Classified Board'), to
establish procedures for filling vacancies on the Board, to provide
that directors shall only be removed for cause and by a supermajority
vote of stockholders, and requiring Board consent to amend these
provisions;
(2) to consider and approve an amendment to the Company's Certificate of
Incorporation to require a supermajority vote of stockholders to
approve amendments to the Company's Certificate of Incorporation in
certain circumstances, as described in the accompanying Proxy
Statement;
(3) to elect five directors;
(4) to consider and approve an amendment to the Company's Amended and
Restated 1994 Stock Option Plan (the '1994 Plan') to increase the
number of shares of common stock the Company is authorized to issue
under the 1994 Plan;
(5) to ratify the appointment of Price Waterhouse LLP as independent
auditors for the Company; and
(6) to transact such other business as may properly come before the Meeting
and at any adjournment(s) thereof.
A copy of the Annual Report for the fiscal year ended December 31, 1995 is
enclosed for your information.
Only stockholders of record as of the close of business on April 20, 1996
will be entitled to vote at the Meeting and any adjournment or adjournments
thereof.
Enclosed is a Proxy Statement, a form of proxy and an addressed return
envelope. All stockholders, whether or not they expect to be present at the
Meeting, are requested to date and sign the proxy and return it in the enclosed
envelope promptly. The return of the proxy will not affect your right to vote if
you attend the Meeting.
By Order of the Board of Directors,
/S/ JOANN WOODSIDE
JoAnn Woodside
Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
<PAGE>
NAL FINANCIAL GROUP INC.
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PROXY STATEMENT
------------------------------
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NAL Financial Group Inc. ('NAL' or the
'Company') to be voted at the Annual Meeting of Stockholders of the Company on
May 31, 1996 and at any adjournment or adjournments of the meeting (the
'Meeting') for the purposes described in the foregoing notice of Meeting.
Proxies which are validly executed by stockholders and which are received by the
Company no later than the business day preceding the Meeting will be voted in
accordance with the instructions contained thereon. If no instructions are
given, a proxy will be voted FOR the amendments to the Company's Certificate of
Incorporation to provide for a Classified Board and to provide for a
supermajority vote of stockholders to approve amendments to the Company's
Certificate of Incorporation in certain circumstances as described herein, FOR
the election of directors, FOR an amendment to the Company's Amended and
Restated 1994 Stock Option Plan (the '1994 Plan') providing for an increase in
the number of shares of common stock the Company is authorized to issue under
the 1994 Plan, FOR the ratification of Price Waterhouse LLP as the Company's
independent auditors and in the discretion of the persons named in the proxy, if
granted, on all other matters presented to the Meeting.
The securities entitled to vote at the Meeting consist of shares of Common
Stock of the Company. The number of outstanding shares of Common Stock at the
close of business on April 20, 1996 was 6,700,041. Each share of Common Stock is
entitled to one vote, and nominees receiving a plurality of the votes cast will
be elected as directors. Only holders of record at the close of business on
April 20, 1996 will be entitled to vote at the Meeting. The holders of a
majority of the outstanding shares of Common Stock must be present in person or
represented by proxy at the Meeting in order to constitute a quorum for the
transaction of business. Abstentions and broker non-votes will be counted for
the purpose of determining a quorum but neither will be counted in the election
of directors, in the voting on the amendments to the Certificate of
Incorporation, in the voting on the amendment to the 1994 Plan or in the voting
on the ratification of the Company's independent auditors, as described herein.
A copy of the Company's Annual Report for the fiscal year ended December
31, 1995 accompanies this Proxy Statement. No material contained in the Annual
Report is to be considered a part of the proxy solicitation material. The
mailing address of the Company's executive office is 500 Cypress Creek Road
West, Suite 590, Fort Lauderdale, Florida 33309. The approximate date on which
this Proxy Statement and the form of proxy was first mailed or given to
stockholders was May 1, 1996.
PROPOSAL 1 -- CLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors has approved a resolution amending the Company's
Certificate of Incorporation to provide for a classified Board of Directors, to
establish procedures for filling vacancies on the Board, to provide that
directors shall only be removed for cause and by a supermajority vote of the
stockholders and to require Board consent to amend these provisions. At the
Meeting, stockholders will consider and vote on this proposed amendment. The
text of the proposed amendment is attached to this Proxy Statement as Exhibit 1.
The statements made in this Proxy Statement with respect to this amendment to
the Certificate of Incorporation should be read in conjunction with and are
qualified in their entirety by reference to Exhibit 1. In the event that this
Proposal 1 is approved, the Board of Directors will consider conforming
amendments to the Company's By-Laws at the meeting of the Board of Directors
which is expected to follow shortly after the Meeting.
This Proposal 1 may have the effect of making it more difficult for
stockholders to remove the existing management of the Company and may,
therefore, discourage potentially unfriendly bids for shares of the Company. See
'Possible Anti-Takeover Effects of Proposal 1.'
1
<PAGE>
A. Description of Proposed Amendment
Section 10 of the Company's Certificate of Incorporation would be amended
to provide for a Classified Board of Directors. The existing Section 10 would be
included unaltered within subsection 10(a) as amended. Proposal 1 would operate
to divide the Board into three separate classes of directors, as nearly equal in
number as possible, to serve a three year term and until their successors are
duly elected and qualified with each class being elected at different annual
stockholder meetings. Following the effectiveness of Proposal 1, Class I will
consist of one director who will serve for an initial term of three years, Class
II will consist of two directors who will serve for an initial term of two years
and Class III will consist of two directors who will serve for an initial term
of one year. See 'Proposal 3 -- Election of Directors.' At each annual meeting
after 1996, directors will be elected to succeed those whose terms then expire
and each newly-elected director will serve for a three-year term. Proposal 1
would replace the prior system of electing all of the directors annually for
one-year terms.
If the number of directors constituting the Board is increased or
decreased, the resulting number of directors will be apportioned among the three
classes so as to make all classes as nearly equal in number as possible, except
that the term of any incumbent director may not be shortened. Under the Delaware
General Corporation Law ('Delaware GCL'), if a Board is classified by action of
the stockholders, unless the Certificate of Incorporation specifies otherwise,
members of the Board of each class may be removed by the stockholders before the
expiration of their respective terms only for cause. Accordingly, in the event
that the stockholders approve Proposal 1, none of the directors elected to the
Classified Board may be removed without cause prior to the expiration of their
respective terms.
The effect of a Classified Board of Directors may be circumvented by
increasing or decreasing the size of the Board. At present, vacancies in the
Board of Directors, including vacancies resulting from an increase in the number
of directors, are required to be filled by a majority of the remaining members
of the Board, although less than a quorum, and each person so elected serves as
a director until a successor is elected by the stockholders. Additionally, any
director or the entire Board may be removed with or without cause by majority
vote of the stockholders. Proposal 1 provides that the size of the Board may be
fixed solely by action of the Board itself, and that any vacancies in the Board
of Directors be filled by a majority vote of the remaining directors then in
office, even though less than a quorum, and each person so elected would serve
for the remainder of the full term of the class in which the new directorship
was created or the vacancy occurred. Proposal 1 would also provide that
directors may be removed only for cause and only by the affirmative vote of
two-thirds of the stockholders entitled to vote thereon. See 'Proposal 2 --
Supermajority Voting Provision.' The Delaware GCL provides that the Certificate
of Incorporation, including these provisions, may be amended by the stockholders
only with the consent of the Board.
B. Reasons for Proposal
Since directors will be serving for longer terms which expire at different
times, and may only be removed for cause by a supermajority vote of
stockholders, the Board of Directors believes that a Classified Board will
promote continuity of management and, thereby enhance the ability of the Company
to carry out long-range plans and goals for its benefit and the benefit of its
stockholders. Although the Company has not experienced difficulties in the past
in maintaining continuity of the Board and management, the Board of Directors
believes that a Classified Board will assist the Company in maintaining this
continuity of management into the future. Additionally, Proposal 1 has certain
anti-takeover effects that the Board believes will deter unsolicited takeover
attempts and protect the value of each stockholder's investment in the Company.
See 'Possible Anti-Takeover Effects of Proposal 1.'
A Classified Board would also extend the time it would take for a majority
stockholder to obtain control of the Company's Board of Directors, thereby
limiting such abusive takeover tactics as two tiered tender offers. Assuming
each class of directors is equal in size, a majority stockholder could not
obtain control of the Board until the second annual stockholder's meeting after
it acquired a majority of the voting stock. During this time, the Board of
Directors would have a better opportunity to negotiate
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with any such majority stockholder to obtain more favorable price and terms in
any merger or tender offer.
C. Possible Anti-Takeover Effects of Proposal 1
The Board of Directors believes that Proposal 1 may have anti-takeover
effects as described below. Also described below are the general anti-takeover
provisions of the Delaware GCL.
1. Anti-Takeover Provisions of the Delaware GCL
As set forth above, the Delaware GCL prohibits stockholders from removing
members of a Classified Board without cause before the expiration of their
respective terms unless the Certificate of Incorporation specifies otherwise.
The Delaware GCL contains a number of other provisions which are designed to
strengthen the position of incumbent management in connection with a takeover
attempt. For example, Delaware law provides that a company has the general
power, exercisable by its board of directors, to accept, reject, respond to or
take no action in respect of an actual or proposed acquisition, divestiture,
tender offer, takeover or other fundamental change. The case law of Delaware has
developed special standards for deciding whether to uphold or advocate the
actions of incumbent management in the context of takeover proposals.
The Company is also subject to Section 203 of the Delaware GCL, which
provides that a person who acquires fifteen percent (15%) or more of the
outstanding voting stock of a Delaware corporation becomes an 'interested
stockholder.' Section 203 prohibits a corporation from engaging in mergers or
certain other 'business combinations' with an interested stockholder for a
period of three years, unless (i) prior to the date the stockholder becomes an
interested stockholder, the board of directors approves either the business
combination or the transaction which results in the stockholder becoming an
interested stockholder, or (ii) the interested stockholder is able to acquire
ownership of at least eighty-five percent (85%) of the outstanding voting stock
of the corporation (excluding shares owned by directors of the corporation who
are also officers and shares owned by certain employee stock plans) in the same
transaction by which the stockholder became an interested stockholder, or (iii)
the interested stockholder obtains control of the board of directors, which then
approves a business combination which is authorized by a vote of the holders of
two-thirds of the outstanding voting stock not held by the interested
stockholder.
The definition of interested stockholder does not include persons whose
ownership of voting stock exceeds the fifteen percent (15%) threshold as a
result of action taken by the corporation unless that person thereafter acquires
additional shares.
A 'business combination' is defined broadly in the Delaware GCL to include
any merger or consolidation with the interested stockholder, any merger or
consolidation caused by the interested stockholder in which the surviving
corporation will not be subject to Delaware law, or the sale, lease, exchange,
mortgage, pledge, transfer or other disposition to the interested stockholder of
any assets of the corporation having a market value equal to or greater than ten
percent (10%) of the aggregate market value of the assets of the corporation.
'Business combination' is also defined to include transfers of stock of the
corporation or a subsidiary to the interested stockholder (except for transfers
in conversion, exchange or pro rata distribution which do not increase the
interested stockholder's proportionate ownership of a class or series), or any
receipt by the interested stockholder (except proportionately as a stockholder)
of any loans, advances, guaranties, pledges or the financial benefits.
2. Possible Consequences of the Anti-Takeover Effects of Proposal 1
The Board of Directors believes that this Proposal 1, to the extent that it
deters unsolicited takeover attempts, will promote conditions of stability in
the business, management and control of the Company, discourage in advance
certain takeover offers or other attempts to accumulate the Company's stock and
encourage anyone contemplating such actions to negotiate with the Company, and
will assist the Company in defending against any such action if the Board does
not believe it to be in the best interests of the Company and all of its
stockholders. Although the Board of Directors is not
3
<PAGE>
aware of any overt threat of such a takeover attempt at this time, the Board
believes that this Proposal 1 is in the best interest of the Company.
A takeover offer often places the target corporation in the position of
making a forced sale, sometimes when the market price of its stock may be
temporarily depressed. The Board believes that the consideration offered in such
a situation, even though it may be in excess of the then market price, is less
than the consideration which could be obtained in a freely negotiated
transaction. In a freely negotiated transaction, the Board of Directors would
have the opportunity to seek a suitable partner at a time of its choosing and to
negotiate the most favorable price and terms which reflect not only the current,
but also the future value of the Company. The Board may also believe that the
takeover offer is not in the best interests of the Company and its stockholders
for additional reasons, such as those exhibited in the large number of business
failures which result from overleveraged transactions. In the context of an
unsolicited offer, the Board may not have adequate time to consider fully the
takeover offer and to determine what actions are in the best interests of the
Company and its stockholders despite the provisions of applicable federal law
regarding the minimum duration of certain takeover offers. This Proposal 1
attempts to ameliorate the problems inherent in these situations.
Takeover offers or other non-market acquisitions of stock are usually made
at prices above the prevailing market price of the corporation's stock and often
have a corresponding effect on such market price. Accumulation of stock through
market purchases, whether or not for the purpose of acquiring control, may also
support the price of a corporation's stock at levels higher than otherwise would
be the case. This Proposal 1 may discourage such takeover offers and purchases,
even if holders of a majority of the Company's shares desire to sell such
shares.
This Proposal 1 may also make it more difficult to accomplish a transaction
requiring stockholder approval or to displace management quickly, even if a
majority of the stockholders of the Company desire to do so. Under certain
circumstances, this Proposal 1 may permit management of the Company to
perpetuate itself in control of the Company. In addition, Proposal 1 could
encourage a potential purchaser of the Company to negotiate with the Board of
Directors and offer terms acceptable to it. Such terms might include
continuation of the existing management of the Company or a commitment by the
purchaser to provide benefits (such as employment contracts) not available to
stockholders generally.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of at least the majority of the shares of
Common Stock which are entitled to vote at the Meeting is required in order to
approve this Proposal 1. Therefore, failure to vote has the same effect as a
negative vote. Accordingly, if stockholders are in favor of this Proposal 1 and
do not vote their shares for this Proposal 1 either in person or by proxy, such
stockholders will have effectively voted against Proposal 1. If approved, this
Proposal 1 will become effective upon the filing of a Certificate of Amendment
to the Certificate of Incorporation of the Company with the Secretary of State
of Delaware, which is expected to follow shortly after the approval, if at all,
of Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
CLASSIFICATION OF THE BOARD OF DIRECTORS
PROPOSAL 2 -- SUPERMAJORITY VOTING PROVISION
The Board of Directors has approved a resolution amending the Company's
Certificate of Incorporation to require the affirmative vote of two-thirds of
the outstanding voting stock to approve amendments to the Certificate of
Incorporation unless the proposed amendment has been approved by the affirmative
vote of at least eighty percent (80%) of the Board of Directors. At the Meeting,
stockholders will consider and vote on this proposed amendment as Proposal 2.
The text of the proposed amendment to the Certificate of Incorporation is
attached to this Proxy Statement as Exhibit 2. The statements made in this Proxy
Statement with respect to this amendment to the Certificate should be read in
conjunction with and are qualified in their entirety by reference to Exhibit 2.
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<PAGE>
This Proposal 2 may have the effect of making it more difficult for
stockholders to change the number of directors of the Company and to remove the
existing management of the Company. Consequently, it may discourage potentially
unfriendly bids for shares of the Company. This Proposal 2 will also make it
more difficult for a stockholder to defuse the Company's takeover defenses that
require amending the Certificate of Incorporation. For example, if this Proposal
2 is adopted, and Proposal 1 is also adopted, a stockholder seeking to eliminate
the Classified Board would have to obtain a supermajority vote of the
stockholders in order to amend the Company's Certificate of Incorporation. For
these reasons, the Board of Directors believes that Proposal 2 may have an anti-
takeover effect. In considering Proposal 2, stockholders should consider and
review the 'Possible Anti-Takeover Effects of Proposal 1.'
VOTE REQUIRED FOR APPROVAL
The affirmative vote of holders of at least the majority of the shares of
Common Stock which are entitled to vote at the Meeting is required in order to
approve this Proposal 2. Therefore, failure to vote has the same effect as a
negative vote. Accordingly, if stockholders are in favor of this Proposal 2 and
do not vote their shares in favor of this Proposal 2, either in person or by
proxy, such stockholders will have effectively voted against Proposal 2. If
approved, Proposal 2 will be effective upon the filing of a Certificate of
Amendment to the Certificate of Incorporation of the Company with the Secretary
of State of Delaware which is expected to follow shortly after approval, if at
all, of Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE SUPERMAJORITY VOTING PROVISION
PROPOSAL 3 -- ELECTION OF DIRECTORS
The five persons listed below have been nominated by the Board of Directors
to serve as directors of the Company.
If the amendment to the Certificate of Incorporation to provide for a
Classified Board of Directors (see 'Proposal 1') is adopted, the Board of
Directors will be divided into three classes. This Meeting will be the first
election of directors after the amendment which created the Classified Board.
Accordingly, at the Meeting, two directors will be elected for a term expiring
at the Company's 1997 Annual Meeting, two directors for terms expiring at the
1998 Annual Meeting, and one director for a term expiring at the 1999 Annual
Meeting and, in each case, until their successors are duly elected and
qualified. At each Annual Meeting after 1996, directors will be elected to
succeed those directors whose terms then expire, and each person so elected will
serve for a three-year term.
If Proposal 1 to the Certificate of Incorporation is not approved,
directors elected at the Meeting will serve one-year terms until the 1997 Annual
Meeting and until their successors are duly elected and qualified.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election as directors of the following nominees. In
the event that any nominee is unable to serve or will not serve as a director,
it is intended that the proxies solicited hereby will be voted for such other
person or persons as may be nominated by management. Vacancies in the Board of
Directors may be filled by the Board of Directors and, assuming stockholder
approval of Proposal 1, any director chosen to fill a vacancy would hold office
until the next election of the class for which such director had been chosen.
Assuming stockholders do not approve Proposal 1, any director chosen to fill a
vacancy would hold office until the next election of directors.
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<PAGE>
<TABLE>
<CAPTION>
YEAR IN WHICH
DIRECTORS WHOSE TERMS EXPIRE SERVICE AS A
AT THE 1997 ANNUAL MEETING PRINCIPAL OCCUPATION DIRECTOR BEGAN
---------------------------- -------------------- --------------
<S> <C> <C>
Ngaire E. Cuneo................. Executive Vice President, Corporate Development of Conseco, 1996
Inc.
James F. DeVoe.................. Chairman of the Board and CEO of J.D. Byrider Systems, Inc. 1996
</TABLE>
Ngaire E. Cuneo
Ms. Cuneo, 45, has been a director of the Company since April 1996. She has
been Executive Vice President, Corporate Development of Conseco, Inc., a
financial services holding company, since 1992. From 1986 to 1992, Ms. Cuneo was
Senior Vice President and Corporate Officer of General Electric Capital
Corporation. Ms. Cuneo is also a director of Conseco, Inc., Bankers Life Holding
Corporation, American Life Holding Company and Duke Realty Investments, Inc.
James F. DeVoe
Mr. DeVoe, 52, has been a director of the Company since March 1996. He is
the founder and has been since 1989 Chief Executive Officer and Chairman of the
Board of Directors of J.D. Byrider Systems, Inc., a used vehicle-operation
franchiser, with 75 open locations in 28 states. Mr. DeVoe has been President
and Chairman of the Board of DeVoe Chevrolet Cadillac, Inc., an auto dealership,
since 1975. Mr. DeVoe holds a bachelor of science degree and a masters degree in
business from Indiana University.
<TABLE>
<CAPTION>
YEAR IN WHICH
DIRECTORS WHOSE TERMS EXPIRE SERVICE AS A
AT THE 1998 ANNUAL MEETING PRINCIPAL OCCUPATION DIRECTOR BEGAN
---------------------------- -------------------- --------------
<S> <C> <C>
David R. Jones.................. President and CEO of DR Jones Financial, Inc. 1996
John T. Schaeffer............... President and Chief Operating Officer of NAC 1994
</TABLE>
David R. Jones
Mr. Jones, 47, has been a director of the Company since February 1996. He
has been President of DR Jones Financial, Inc., a privately held consulting
firm, since its formation in September 1995. Prior to forming DR Jones
Financial, Inc., Mr. Jones was Senior Vice President -- Asset Backed Finance of
Greenwich Capital Markets, Inc. from 1989 to 1995. Mr. Jones served as a
Managing Director of The First Boston Corporation, an investment banking firm,
from 1982 to 1989 and as Manager -- Product Development of General Electric
Credit Corp., an asset-based lender and financial services company, from 1981 to
1982. Mr. Jones is a graduate of Harvard College and has a masters degree in
business administration from The Amos Tuck School of Business Administration.
John T. Schaeffer
Mr. Schaeffer, 49, has been President and Chief Operating Officer of NAL
Acceptance Corporation, a subsidiary of the Company ('NAC') since its inception
and has maintained those positions, with the addition of the office of director
of the Company in November 1994. See Footnote 1 below. Prior to joining the
Company, Mr. Schaeffer was President and Chief Operating Officer of FinancialFed
Services, Inc. ('FFS'), the automobile lease origination and servicing unit of
Financial Federal Savings & Loan Association ('FinFed'). From 1986 through 1989,
Mr. Schaeffer was Executive Vice President and Chief Operating Officer of
CenTrust Leasing Corporation, the leasing unit of CenTrust Savings Bank, where
he was responsible for the overall activities of the leasing subsidiary. Prior
to that, he served as Vice President with First Pennsylvania Bank, NA for
sixteen years.
6
<PAGE>
<TABLE>
<CAPTION>
YEAR IN WHICH
DIRECTOR WHOSE TERM EXPIRES SERVICE AS A
AT THE 1999 ANNUAL MEETING PRINCIPAL OCCUPATION DIRECTOR BEGAN
---------------------------- -------------------- ---------------
<S> <C> <C>
Robert R. Bartolini............. Chairman of the Board, President and CEO of NAL; Chairman of 1991(1)
the Board and CEO of NAC
</TABLE>
- - ------------------
(1) NAL commenced operations during June 1991. The Company became publicly held
by virtue of a merger (the 'Merger') with and into Corporate Financial
Ventures, Inc., an inactive public company ('COFVI'), effective November 30,
1994. Effective upon the Merger, COFVI assumed the historic operations of
NAL and changed its name to 'NAL Financial Group Inc.'
Robert R. Bartolini
Mr. Bartolini, 51, has been Chairman and Chief Executive Officer of NAL
since its inception in 1991 and has maintained those positions, with the
addition of the office of the President in November 1994. See Footnote 1 above.
Prior to founding NAL Financial Group Inc., he was President and Chief Operating
Officer of FinFed, a $1.8 billion mutual savings and loan. From 1984 to 1987,
Mr. Bartolini was Executive Vice President at CenTrust Savings Bank, an $11
billion institution based in Miami, Florida, with 60 branches. Prior to that,
Mr. Bartolini was with First Pennsylvania Bank, NA (assets of $6 billion; 75
branches), where he served as Senior Vice President.
BOARD MEETINGS AND COMMITTEES
There are currently five members of the Board of Directors. During the
fiscal year ended December 31, 1995, there were 2 meetings of the Board. All
then members of the Board attended both meetings. The only committee of the
Board of Directors is the Audit Committee. During the fiscal year ended December
31, 1995, there were no meetings of the Audit Committee.
The Audit Committee has primary responsibility to review accounting
procedures and methods employed in connection with audit programs and related
management policies. Its duties include (1) selecting the independent auditors
for the Company, (2) reviewing the scope of the audit to be conducted by them,
(3) meeting with the independent auditors concerning the results of their audit,
and (4) overseeing the scope and accuracy of the Company's system of internal
accounting controls. The Audit Committee is the principal liaison between the
Board of Directors and the independent auditors for the Company. The members of
the Audit Committee are Messrs. Bartolini, Jones and DeVoe, and Ms. Cuneo.
DIRECTORS' COMPENSATION
The employee-directors of the Company receive no fees or other compensation
in connection with their services as directors. Mr. Jones and Mr. DeVoe were
each granted Warrants to purchase 20,000 shares of the Company's Common Stock in
conjunction with joining the Board of Directors and receive $1,000 for each
meeting of the Board and any committee meeting attended in person and $500 for
each meeting attended telephonically.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses individual compensation information relating
to the Company's Chief Executive Officer and the other named executive officers
of the Company for the fiscal years ended December 31, 1993, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION (1) SECURITIES
-------------------------- UNDERLYING
NAME AND POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS (#)
- - ----------------------------------------------------- --------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
Robert R. Bartolini 1995 $ 300,000 $ 0 50,000(4)
Chairman of the Board, President and Chief 1994 $ 281,916 $ 298,985 75,000(2)
Executive Officer of NAL; Chairman and Chief 1993 $ 250,000 $ 1,248,100 0
Executive Officer of NAC
John T. Schaeffer 1995 $ 160,000 $ 0 25,000(4)
Director of NAL; President and Chief Operating 1994 $ 160,000 $ 0 40,000(3)
Officer of NAC 1993 $ 160,000 $ 161,302 0
Robert J. Carlson 1995 $ 80,000 $ 0 15,000(4)
Vice President -- Finance and Principal Accounting 1994 $ 74,231 $ 86,015 15,000(3)
Officer of NAL 1993 $ 72,500 $ 18,124 0
Dennis R. LaVigne 1995 $ 48,461 $ 0 25,000(5)
Vice President and Treasurer of NAL
</TABLE>
- - ------------------
(1) Based upon the fiscal years ended December 31, 1995, 1994, and 1993.
(2) Represents stock options granted as of December 15, 1994 pursuant to the
1994 Plan of which 66,666 options vest pro-rata over four years commencing
January 1, 1996 and 8,334 options vest pro-rata over three years commencing
January 1, 1996.
(3) Represents stock options granted as of December 15, 1994 pursuant to the
1994 Plan, which vest pro-rata over three years commencing January 1, 1996.
(4) Represents stock options granted as of December 6, 1995 pursuant to the 1994
Plan, which vest pro-rata over three years commencing January 1, 1997.
(5) Represents stock options granted as of December 6, 1995 pursuant to the 1994
Plan, which vest upon December 6, 1998.
8
<PAGE>
The following table discloses individual grants of stock options and
freestanding SARs made to the named executive officers for the fiscal year ended
December 31, 1995.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE
NAME GRANTED (#) FISCAL YEAR (1) ($/SHARE) EXPIRATION DATE
- - ----------------------------------------- ---------------- ----------------- ----------- -----------------------
<S> <C> <C> <C> <C>
Robert R. Bartolini...................... 50,000(2) 15.22% $ 16.50 December 6, 2005
Chairman of the Board, President and
Chief Executive Officer of NAL;
Chairman and Chief Executive Officer of
NAC
John T. Schaeffer........................ 25,000(2) 7.61% $ 15.00 December 6, 2005
Director of NAL; President and Chief
Operating Officer of NAC
Robert J. Carlson........................ 15,000(2) 4.57% $ 15.00 December 6, 2005
Vice President -- Finance and Principal
Accounting Officer of NAL
Dennis R. LaVigne........................ 25,000(3) 7.61% $ 13.25 December 6, 2005
Vice President and Treasurer of NAL
</TABLE>
- - ------------------
(1) Based upon the grant during the fiscal year ended December 31, 1995 of
options to purchase an aggregate of 328,500 shares of Common Stock pursuant
to the 1994 Plan.
(2) Represents stock options granted as of December 6, 1995 pursuant to the 1994
Plan, which vest pro-rata over three years commencing January 1, 1997.
(3) Represents stock options granted as of December 6, 1995 pursuant to the 1994
Plan, which vest upon December 6, 1998.
9
<PAGE>
The following table shows information regarding the exercise of stock
options during the fiscal year ended December 31, 1995 by the named executive
officer and the number and value of any unexercised stock options held by them
as of December 31, 1995:
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE
NUMBER OF SECURITIES OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)
ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME ON EXERCISE (#) REALIZED (1) (1)
- - ------------------------------- ------------------- ------------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
Robert R. Bartolini............ -0- -0- 19,445(E)/105,555(U) $138,365(E)/$ 393,885(U)
Chairman of the Board,
President and Chief Executive
Officer of NAL; Chairman and
Chief Executive Officer of
NAC
John T. Schaeffer.............. -0- -0- 13,333(E)/ 51,667(U) $101,731(E)/$ 203,469(U)
Director of NAL; President
and Chief Operating Officer
of NAC
Robert J. Carlson.............. -0- -0- 5,000(E)/ 25,000(U) $38,150(E)/$ 76,300(U)
Vice President-Finance and
Principal Accounting Officer
of NAL
Dennis R. LaVigne.............. -0- -0- 0(E)/ 25,000(U) $0(E)/$ 9,500(U)
Vice President and Treasurer of
NAL
</TABLE>
- - ------------------
(1) Based upon the closing price of the Company's Common Stock ($13.63 per
share) as of December 29, 1995 as traded on The NASDAQ National Market(SM).
EMPLOYMENT AGREEMENT
Effective November 30, 1994, the Company entered into an employment
agreement with Mr. Robert Bartolini. Such agreement, as subsequently amended,
provides for a base salary of $300,000 per year together with discretionary
bonuses, if any, to be declared by the Board of Directors. The agreement also
provides for certain benefits including vacation, life insurance, certain
expenses and stock option plan participation, as well as a restrictive covenant
in favor of the Company. The agreement is annually renewable for successive
three-year periods; however, Mr. Bartolini may terminate the agreement upon
written notice on the earlier of one year from the date of such notice or 90
days after his replacement is hired by the Company. Mr. Bartolini may not cause
the agreement to terminate prior to three years from the date of the agreement.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 20, 1996, information with
respect to the securities holdings of all persons which the Company, pursuant to
filings with the Securities and Exchange Commission, has reason to believe may
be deemed the beneficial owners of more than 5% of the Company's outstanding
Common Stock. Also set forth in the table is the beneficial ownership of all
shares of the Company's outstanding stock, as of such date, of all officers and
directors, individually and as a group.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY PERCENTAGE OF
AND OUTSTANDING SHARES
NAME AND ADDRESS OF RECORD (1) (1)
- - ----------------------------------------------------------------------- -------------- ---------------------
<S> <C> <C>
Robert R. Bartolini.................................................... 2,235,647(2) 33.18%
500 Cypress Creek Road West, Suite 590
Fort Lauderdale, FL 33309
John T. Schaeffer...................................................... 302,913(3) 4.50%
500 Cypress Creek Road West, Suite 590
Fort Lauderdale, FL 33309
Robert J. Carlson...................................................... 65,196(4) *
500 Cypress Creek Road West, Suite 590
Fort Lauderdale, FL 33309
Dennis R. LaVigne...................................................... --(5) *
500 Cypress Creek Road West, Suite 590
Fort Lauderdale, FL 33309
Ngaire E. Cuneo (6).................................................... 0 *
745 Fifth Avenue, Suite 2700
New York, NY 10151
James F. DeVoe......................................................... --(7) *
5780 West 71st Street
Indianapolis, IN 46278
David R. Jones......................................................... --(8) *
2 Ocean Avenue
Scituate, MA 02066-1624
Florence Karp (9)...................................................... 1,427,803(10) 17.57%
3418 Sansom Street
Philadelphia, PA 19104
Rozel International Holdings Limited................................... 362,318(11) 5.13%
P.O. Box 3151
Road Town
Tortola, B.V.I.
All Directors and Officers, as a group (7 persons)..................... 2,603,756 38.6%
</TABLE>
- - ------------------
* Represents less than 1%
(1) Except as otherwise indicated, includes total number of shares outstanding
and the number of shares which each person has the right to acquire, within
60 days through the exercise of options, warrants or debentures, pursuant
to Item 403 of Regulation S-B and Rule 13d-3(d)(1), promulgated under the
Securities Exchange Act of 1934, as amended. Also reflects 6,700,041 shares
of the Company's Common Stock outstanding as of April 20, 1996.
(2) Includes 1,647,004 shares held by Robert R. Bartolini and Marcia G.
Bartolini, Co-Trustees of the Robert R. Bartolini Revocable Trust dated
July 27, 1992, 210,000 shares of which are subject to options granted by
Mr. Bartolini during May 1995. Also includes 305,176 shares presently held
by English, McCaughan & O'Bryan, P.A. pursuant to the terms of the Voting
Trust Agreement. See 'Material Voting Arrangements.' Includes 264,022
shares held by Marcia G.
11
<PAGE>
Bartolini and Robert R. Bartolini, Co-Trustees of the Marcia G. Bartolini
Revocable Trust dated July 27, 1992. Does not include 50,000 shares owned
beneficially by Edward M. Bartolini, the adult brother of Robert R.
Bartolini. Also does not include 264,022 shares held by George Schnabel,
Trustee of the Robert R. Bartolini and Marcia G. Bartolini Irrevocable
Trust dated July 27, 1992. Includes vested Incentive Stock Options to
purchase 19,445 shares of Common Stock granted December 1994. Does not
include Incentive Stock Options to purchase 105,555 shares of Common Stock
granted December 1994 and December 1995, which have not vested. See
'Summary Compensation Table.'
(3) Includes 34,628 shares held by English, McCaughan & O'Bryan, P.A. for the
benefit of Mr. Schaeffer pursuant to the terms of the Voting Trust
Agreement. See 'Material Voting Arrangements.' Includes 13,333 vested
Incentive Stock Options granted to Mr. Schaeffer in December 1994. Does not
include 51,667 Incentive Stock Options granted to Mr. Schaeffer in December
1994 and December 1995 which remain subject to vesting. Includes 4,952
shares held by Mr. Schaeffer's spouse. See 'Summary Compensation Table.'
(4) Includes 60,196 shares held by English, McCaughan & O'Bryan, P.A. for the
benefit of Mr. Carlson pursuant to the terms of the Voting Trust Agreement.
See 'Material Voting Arrangements.' Includes 5,000 vested Incentive Stock
Options granted to Mr. Carlson in December 1994. Does not include 25,000
Incentive Stock Options granted to Mr. Carlson in December 1994 and
December 1995 which remain subject to vesting. See 'Summary Compensation
Table.'
(5) Does not include 25,000 Incentive Stock Options granted to Mr. LaVigne in
December 1995 which remain subject to vesting. See 'Summary Compensation
Table.'
(6) Ms. Cuneo joined the Board of Directors effective April 23, 1996 in
conjunction with the sale by the Company of certain 9% Subordinated
Convertible Debentures. See 'Recent Transactions.'
(7) Does not include Warrants to purchase 20,000 shares of Common Stock at an
exercise price of $11.50 per share granted to Mr. DeVoe in conjunction with
appointment as a director on March 11, 1996, which have not vested.
(8) Does not include Warrants to purchase 20,000 shares of Common Stock at an
exercise price of $14.38 per share granted to Mr. Jones in conjunction with
appointment as a director on February 5, 1996, which have not vested.
(9) As custodian for Ms. Karp's minor grandchildren.
(10) Includes 625,000 shares of Common Stock issuable upon the exercise, if at
all, of Warrants. Also includes 802,803 shares of Common Stock (643,939
shares representing principal and 158,864 shares representing interest at
maturity) issuable upon the conversion, if at all, of Debentures.
(11) Includes 128,818 shares issuable, if at all, upon conversion of outstanding
Debentures and 233,500 shares issuable, if at all, upon the exercise of
outstanding Warrants.
12
<PAGE>
Recent Transactions
Subsequent to April 20, 1996 (the record date for the Meeting), in
connection with a transaction effective April 23, 1996, the Company issued $5
million of 9% Subordinated Convertible Debentures to each of Beneficial Standard
Life Insurance Company ('BSLIC') and Great American Reserve Insurance Company
('GARCO', together with BSLIC, the 'Conseco Subsidiaries'). BSLIC and GARCO are
wholly owned subsidiaries of Conseco, Inc. ('Conseco'). Such convertible
debentures are convertible into approximately 833,000 shares of Common Stock.
Also, effective April 23, 1996, the Company issued warrants to purchase 515,000
shares of Common Stock at an average exercise price of $12.68 per share to
Conseco. As a result of these transactions, Conseco and the Conseco Subsidiaries
would own approximately 16.75% of the Company's Common Stock assuming conversion
of such debentures and the exercise of such warrants. The Company has also
granted to Conseco and the Conseco Subsidiaries certain registration rights
commencing January 1, 1997. The Conseco Subsidiaries are entitled to designate a
nominee to the Company's Board of Directors and the Audit Committee of the Board
of Directors pursuant to the terms of the agreements governing such debentures.
Ms. Ngaire E. Cuneo, an executive officer and director of Conseco and the
Conseco Subsidiaries, is the designated nominee. Pursuant to these arrangements,
Messrs. Bartolini and Schaeffer entered into a Stockholders' Agreement as of
April 23, 1996 with the Company pursuant to which they agreed to certain
limitations upon the resale of their shares of Common Stock until October 1997.
Material Voting Arrangements
Concurrent with the completion of the Merger, as of November 30, 1994,
Messrs. Bartolini, Schaeffer and Carlson entered into a Voting Trust Agreement
(the 'Voting Trust Agreement') pursuant to which 400,000 shares were placed in a
voting trust. The Voting Trust Agreement provides that, on any matter requiring
stockholder vote, the trustee will vote such shares in the same percentage as
the other then issued and outstanding shares of Common Stock are voted. Such
shares may be released from the Voting Trust Agreement pursuant to an earn-out
formula whereby for the years 1995, 1996 and 1997, 10,000 trust shares will be
released for each $150,000 of cumulative net income after taxes of the Company
up to $3,000,000 and 5,000 shares will be released for each $150,000 of
cumulative net income after taxes in excess of $3,000,000, less the number of
trust shares previously transferred to the stockholders under this formula. The
trust shares will be released pro-rata in accordance with the number of trust
shares beneficially owned by each stockholder. If the shares are not released
pursuant to the earn-out formula within three years, such shares will be
canceled. The trustee under the Voting Trust Agreement is English, McCaughan &
O'Bryan, P.A., counsel to the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loan to the Company
Mr. Robert R. Bartolini advanced $1,098,165 to the Company on June 30, 1995
in order to provide it with additional working capital. The Company's obligation
to repay this loan was evidenced by a promissory note dated August 31, 1995. In
December 1995, the principal balance of this loan was increased to $2,919,000 by
an additional advance from Mr. Bartolini of $1,820,835 under the same terms and
conditions. The indebtedness evidenced by the promissory note is subordinated to
the prior payment, when due, of the principal and interest on all senior
indebtedness of the Company. Under the terms of this promissory note, principal
and interest is due on October 31, 1997, with interest accruing at eleven
percent (11%).
13
<PAGE>
Sale of Portfolio to Executive Officer
As of November 30, 1994, the Company sold a portfolio of 14 unsecured
installment loans with a total principal balance of $1,055,000 to Mr. Robert R.
Bartolini, Chairman and Chief Executive Officer of the Company, in consideration
for $590,965. The portfolio of which this portfolio was a part was purchased by
the Company in March 1994 from the Federal Deposit Insurance Corporation at a
purchase price equal to 22.5% of principal balance. The purchase price paid by
Mr. Bartolini was equal to 56% of principal balance which, in management's
opinion, was the approximate fair market value of the loans determined from a
review of the expected collectibility of the loans. This price was considered by
the Company to be equal to their fair market value and was based on the
estimated cash flows anticipated for the portfolio. The method used for
estimating the cash flows was the same used by the Company in evaluating the
fair value of all of its portfolio acquisitions.
Transaction with Affiliate of Former Director
Andrew Panzo was a member of the Company's Board of Directors from August
1995 until his resignation in March 1996. Following the Merger, American Maple
Leaf Financial Corporation ('AMLF'), an affiliate of Mr. Panzo, rendered certain
investment banking advisory services to the Company for which AMLF received
33,000 common stock purchase warrants. The Warrants permit the purchase of
additional shares at an exercise price of $9.00 per share through May 1996.
During October 1994, the Company sold 333,333 shares of Common Stock to
AMLF in a private placement transaction for consideration of $19,999.
During April 1995, AMLF purchased $1,200,000 principal amount of 9%
Convertible Subordinated Debenture Units for an aggregate purchase price of
$1,200,000. These Debenture Units, as well as the accrued interest due thereon,
were converted into 142,925 shares of the Company's Common Stock in 1996.
Sale of Boat to Executive Officer
In October 1994, the Company sold a repossessed boat to John T. Schaeffer,
a director of the Company and President of NAC, in consideration for a note in
the amount of $89,000 which bears interest at 10% per annum for a period of one
year, and the offset by the Company of $21,000 payable to Mr. Schaeffer. The
note was repaid prior to June 30, 1995. In management's opinion the sale was at
the approximate fair market value of the boat.
Transactions with Former Principal Stockholder
In 1991, the Company entered into an agreement with FTM Holdings, Inc.
('FTM'), a former principal stockholder, to provide the Company with consulting
and other business related services. Under the agreement, the Company agreed to
pay FTM $50,000 per month through March 1995. The payments for consulting
services continued through May 1994, whereupon the Company made a lump sum
settlement with FTM through a final payment of $475,000 under this agreement.
This reflected a $75,000 discount from the cumulative payments required under
the agreement. Including the lump sum settlement, payments of $675,000 were made
to FTM in 1994. Payments of $600,000 were made to FTM in 1993.
During 1994, the Company paid FTM $428,000 as a commission on the sale of
certain loan portfolios.
On April 30, 1993, the Company redeemed 5,928 shares of Common Stock held
by FTM for $2,400,000. A portion of the proceeds was applied to the cancellation
of the receivable of $841,417 due from FTM to the Company.
In October 1993, Mr. Bartolini purchased the remaining shares of the
Company's stock held by FTM for a purchase price of $2,034,000. This purchase
was financed by the Company as described below. See 'Purchase of Shares of
Common Stock.' After the purchase, Mr. Bartolini's ownership
14
<PAGE>
percentage of outstanding stock was increased to 95%. The financial statements
at December 31, 1993 reflect the receivable from Mr. Bartolini as a reduction of
stockholders' equity.
The Company previously sub-leased a portion of the space occupied by its
headquarters at 500 Cypress Creek Road West, Fort Lauderdale, Florida from FTM.
However, in January 1995, the Company entered into a lease directly with the
landlord for such space. Thereafter, the Company entered into a sublease with
FTM by which FTM subleases from the Company certain space which it previously
leased directly from the landlord.
Purchase of Shares of Common Stock
In April 1993, the Company issued 214 shares to Mr. John T. Schaeffer, a
director of the Company and President of NAC, in exchange for his 10% ownership
of the common stock of NAC. After the issuance, the Company owned 100% of the
outstanding shares of NAC, and Mr. Schaeffer owned 5% of the Company's Common
Stock.
In October 1993, Mr. Bartolini, Chairman, Chief Executive Officer and
principal stockholder of the Company, purchased 2,143 shares representing all
outstanding shares not previously owned by Mr. Bartolini or Mr. Schaeffer to
provide him with 95% ownership of the Company as of such date. Mr. Bartolini
financed the entire purchase price of such shares through a loan from the
Company represented by a note in the amount of $2,034,638 which bore interest at
5% per annum and was reflected as a 'Note Receivable from a Stockholder' as a
reduction of Stockholders' equity on the Company's consolidated balance sheet as
of December 31, 1993. In June 1994, the Company redeemed the 2,143 shares from
Mr. Bartolini in consideration for canceling the note.
Employment Arrangement
The Company has entered into an employment agreement with Mr. Robert R.
Bartolini, its Chairman, Chief Executive Officer and principal stockholder. See
'Employment Agreement.'
Grant of Options and Warrants
In December 1994 and December 1995, the Company granted certain options to
purchase shares of the Company's Common Stock to executive officers under the
Company's 1994 Plan. See 'Summary Compensation Table.' In conjunction with his
appointment to the Board of Directors on February 5, 1996, the Company granted
to Mr. Jones 20,000 common stock purchase warrants with an exercise price of
$14.38 per share. In conjunction with his appointment to the Board of Directors
on March 11, 1996, the Company granted to Mr. DeVoe 20,000 common stock purchase
warrants with an exercise price of $11.50 per share. See 'Directors'
Compensation.'
Travel Services
IYS Travel, Inc. ('IYS'), a travel agency of which Mr. Robert R. Bartolini
is a principal stockholder, provides business and personal travel services to
the Company and its employees at prevailing market prices. IYS receives
customary industry commission for services provided. During the years ended
December 31, 1995 and 1994, the Company paid IYS approximately $105,000 and
$84,000, respectively, for airline tickets booked by IYS for travel by the
Company's employees at the prevailing prices charged by the airlines.
During 1994, the Company advanced to IYS approximately $66,000 for payroll,
which IYS subsequently repaid.
Mr. Bartolini receives only indirect benefits as a principal stockholder of
IYS through profits of IYS, if any.
15
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
certain officers of the Company, as well as persons who own more than 10% of a
registered class of the Company's equity securities ('Reporting Persons'), to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. The Company believes that during the fiscal
year ended December 31, 1995 all Reporting Persons timely complied with all
filing requirements applicable to them, except Mr. Andrew Panzo, a former
director, failed to timely file in conjunction with joining the Board of
Directors in August 1995 and Mr. Abraham Bernstein, a former director, failed to
timely file in conjunction with joining the Board of Directors and the grant of
options to purchase common stock in August 1995.
PROPOSAL 4 -- INCREASE IN THE NUMBER OF COMMON SHARES THE COMPANY IS AUTHORIZED
TO ISSUE UNDER THE 1994 PLAN FROM 600,000 SHARES TO 1,000,000
SHARES
At the Meeting, stockholders will vote on a proposal to amend the Company's
Amended and Restated 1994 Stock Option Plan (the '1994 Plan'). The 1994 Plan
provides for the issuance of a maximum of 600,000 shares of Common Stock. The
Board of Directors has adopted, and recommends for approval by the Company's
stockholders, a resolution to provide for an increase in the number of shares of
Common Stock the Company is authorized to issue under the 1994 Plan from 600,000
shares to 1,000,000 shares. The 1994 Plan and the proposed amendment are
attached to this Proxy Statement as Exhibits 3 and 4, respectively. The
statements made in this Proxy Statement with respect to the 1994 Plan and the
proposed amendment should be read in conjunction with and are qualified in their
entirety by reference to Exhibits 3 and 4.
A. Description of the 1994 Stock Option Plan
Pursuant to stockholder approval, the 1994 Plan became effective in 1994.
The 1994 Plan is designed to provide an incentive to the Company's employees,
officers, directors and consultants to improve the performance of the Company,
and by doing so, serve the interests of the Company's stockholders. The 1994
Plan is intended to closely align the interests of management and other key
employees, consultants and directors of the Company with those of its
stockholders by creating, as an important part of the Company's compensation
program, options whose value rely upon the market price of the Company's common
stock.
The 1994 Plan currently authorizes the Board of Directors or a committee
thereof (the 'Committee') to grant stock options, until November 1, 2004, to
eligible employees, officers, directors and consultants of the Company to
purchase up to 600,000 shares of Common Stock, $.15 par value (the 'Common
Stock') of the Company which constitutes, in the aggregate, approximately 9% of
the presently outstanding shares of Common Stock. The Company's Common Stock is
included on The NASDAQ National MarketSM.
B. Participants in the 1994 Plan -- Eligible Employees
Under the 1994 Plan, stock options and/or stock appreciation rights may be
granted to eligible employees, officers, directors and consultants of the
Company. The stock options may take the form of either 'incentive' (as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the 'Code')) or
'non-qualified' stock options. A stock appreciation right ('SAR') entitles the
optionee to receive, upon surrender of the related stock option and exercise of
the SAR, Common Stock with a fair market value equal to the difference between
the exercise price per share of the Common Stock subject to the stock option and
the fair market value of a share of Common Stock. Under the 1994 Plan, a person
who owns, directly or indirectly, more than 10% of the total combined voting
power of all classes of stock of the Company immediately before the grant of an
incentive option, is eligible for the grant of an incentive stock option only if
the exercise price of such option is at least 110% of the fair market value of
the shares underlying the option on the day on which the option is granted. Non-
employee directors and consultants are not eligible for incentive stock option
grants.
16
<PAGE>
Option grants under the 1994 Plan are made at the discretion of the
Committee and the Board of Directors. Selection of optionees is within the
discretion of the Committee and may be by individual or by class. As of March
31, 1996, the Company had approximately 200 employees. The number of option
shares granted is based on the optionee's position, responsibility,
accomplishments and performance, and is determined in the sole discretion of the
Committee and the Board of Directors. See 'Administration of the 1994 Plan.'
C. Administration of the 1994 Plan
The Board of Directors, or the Committee which may be appointed by the
Board consisting of at least three directors, has the authority to grant stock
options under and administer the 1994 Plan. The Board of Directors has not as
yet formed such Committee. The 1994 Plan authorizes the Board of Directors or
the Committee to administer and interpret the 1994 Plan and gives the Board of
Directors or the Committee authority to determine to whom, in what amounts and
when stock options shall be granted.
D. Amendment, Modification and Termination of the 1994 Plan
The Board of Directors may amend, suspend or terminate the 1994 Plan at any
time, subject to the requirements of applicable securities and tax laws and to
the following restrictions. The Board of Directors may not, without stockholder
approval, amend the 1994 Plan so as to increase the number of shares subject to
the 1994 Plan, decrease the minimum option price provided in the 1994 Plan or
change the employees or class of employees eligible to receive options. The
Board of Directors may not take any action which would have a material adverse
effect on the terms and conditions of any options previously granted without the
consent of the optionee.
E. Awards Under the 1994 Plan
Participants in the 1994 Plan receive, shortly after the grant of an
option, a stock option agreement which states the number of shares covered, the
exercise price and the terms and conditions of grant, including the 'vesting
schedule' under which the options may be exercised. The Company also issues
periodic reports to optionees on the status of their outstanding options.
Options are exercisable at an exercise price per share equal to the fair
market value of a share of Common Stock on the date of grant, which value is
equal to the closing price of the Common Stock as reported by NASDAQ on the date
of grant. However, in the case of employees who are stockholders of more than
10% of the total combined voting power of all classes of stock of the Company
('Special Stockholders'), the exercise price must be 110% or more of the fair
market value of a share of Common Stock on the date of grant.
Options granted under the 1994 Plan typically may be exercised for ten
years after the date of grant, or five years in the case of employees who are
Special Stockholders, or such shorter period as the Committee or the Board of
Directors may determine. The aggregate fair market value of the shares of Common
Stock with respect to which incentive options are exercisable for the first time
by an optionee under the 1994 Plan during any calendar year shall not exceed
$100,000. No option may be transferred by the optionee other than by will or by
the laws of descent and distribution, and each option is exercisable during the
optionee's lifetime only by the optionee.
Subject to the terms and conditions imposed by the Board of Directors or
the Committee in the option grant or the stock option agreement, options under
the 1994 Plan may be exercised (1) while the holder is employed by the Company
or (2) within three months from the date employment is terminated, or (3) in the
event of death or incapacity of the optionee, within one year from the date of
death or incapacity. The exercise price of an option shall be satisfied by the
optionee delivering to the Company a check payable to the order of the Company.
17
<PAGE>
F. Federal Income Tax Aspects
The following summary of Federal income tax aspects of Options granted
under the 1994 Plan is based upon the Company counsel's interpretation of
present Federal income tax laws and regulations. This summary should not be
considered tax or legal advice. It may be inapplicable if such laws and
regulations are changed. State and local tax law considerations are not included
in the summary.
(a) Incentive Stock Options
Under the 1994 Plan, the Company may issue options which will be designated
as incentive stock options ('ISOs') which are intended to qualify under Code
Section 422. Pursuant to Code Section 422, the optionee will not be deemed to
have received any income at the time an ISO is granted or exercised. However,
the excess, if any, of the fair market value of the Common Stock on the date of
exercise over the exercise price will generally be treated as an adjustment in
computing alternative minimum taxable income for a non-corporate optionee and
may subject such optionee to the alternative minimum tax in the year of
exercise. Generally, the alternative minimum tax ('AMT') is computed by applying
either a 26% or 28% tax rate to a taxpayer's alternative minimum taxable income
(reduced by possible exemptions). To the extent this amount exceeds the
taxpayer's regular tax liability for the tax year, the excess will be the AMT
liability. As an AMT adjustment item, the 'spread' upon the exercise of an ISO
increases alternative minimum taxable income. Thus, the 'spread' may be subject
to tax twice: once, in the year of exercise as part of alternative minimum
taxable income; and again, in the year of sale, as short-term or long-term
capital gain.
If the optionee disposes of ISO shares later than two years after the date
of grant and one year after the exercise of the ISO, and certain other
requirements are met, the gain or loss, if any, (i.e., the difference between
the amount received for the shares and the exercise price), will be long-term
capital gain or loss. The basis in the shares will generally be equal to the
exercise price and the holding period for the shares will begin on the date of
exercise. However, for minimum tax purposes, the basis of the shares upon
disposition will be increased by the amount of 'spread' which constituted an AMT
adjustment item. Thus, the gain or loss on disposition of the shares acquired
pursuant to an ISO will differ for purposes of regular tax and minimum tax
computation.
If the foregoing holding periods are not satisfied or the ISO is exercised
more than three months after the optionee's employment with the Company is
terminated, the disposition will constitute a 'disqualifying disposition,' and
the optionee will realize income in the year of the disqualifying disposition
equal to the excess of the amount received for the Common Stock over the
exercise price. Of that income, the portion equal to the excess of the fair
market value of the Common Stock at the time the ISO was exercised over the
exercise price will be compensation income, and the balance, if any, will be
either short-term capital gain, if the Common Stock is disposed of within one
year after the ISO is exercised, or long-term capital gain, if the shares are
disposed of more than one year after the ISO is exercised.
If the optionee disposes of Common Stock in a disqualifying disposition at
a price that is below the fair market value of the Common Stock at the time the
ISO was exercised and such disposition is a sale or exchange to an unrelated
party, the amount includable as compensation income to the optionee will be
limited to the excess of the amount received on the sale or exchange over the
exercise price.
No income tax deduction will be allowed by the Company upon the grant or
exercise of an ISO. However, if there is a disqualifying disposition, the
Company may deduct an amount equal to the compensation income recognized by the
optionee upon the disqualifying disposition in the taxable year of the Company
in which the disqualifying disposition occurs. The Company's compensation
expense deduction will be subject to the reasonable compensation and other
requirements applicable to business expense deductions including the limits on
excess employee remuneration under Code Section 162(m).
(b) Non-Qualified Stock Options
Under the 1994 Plan , the Company may issue options which will be
designated as non-qualified stock options ('NQSOs') which are taxed pursuant to
Code Section 83. Under the provisions of that
18
<PAGE>
Section, if an option is granted to an employee in connection with the
performance of services and the option has a 'readily ascertainable fair market
value' at the time of the grant, the employee will be deemed to have received
compensation income in the year of grant in an amount equal to the excess of the
fair market value of the option at the time of grant over the amount, if any,
paid by the optionee for the option. However, a NQSO generally has 'readily
ascertainable fair market value' only when the option is actively traded on an
established market and when certain stringent Code requirements are met.
If the option does not have a readily ascertainable fair market value at
the time of the grant, the option is not included as compensation income at that
time. Rather, the optionee realizes compensation income only when the option is
exercised, and the optionee has become substantially vested in the shares
transferred. The shares are considered to be substantially vested when they are
either transferable or not subject to a substantial risk of forfeiture. It is
intended that an optionee will be substantially vested in the Common Stock at
the time of exercise of an option. Accordingly, the amount of income realized
will be equal to the excess of the fair market value of the shares at the time
the NQSO is exercised over the sum of the exercise price.
When the optionee disposes of the shares acquired pursuant to a NQSO, the
optionee will recognize capital gain or loss equal to the difference between the
amount received for the shares and the optionee's basis in the shares. The
optionee's basis in the shares will generally be equal to the exercise price of
the option plus the amount of compensation income realized by the optionee. The
capital gain or loss will be short-term if the shares are disposed of within one
year after the option is exercised, and long-term if the shares are disposed of
more than one year after the option is exercised.
The Company is generally entitled to a deductible compensation expense in
an amount equivalent to the amount included as compensation income to the
optionee. This deduction is allowed in the Company's taxable year in which the
income is included as compensation to the optionee. The Company is only entitled
to this deduction if the Company deducts and withholds upon the amount included
in an employee's compensation. The Company's compensation expense deduction will
be subject to the reasonable compensation and other requirements applicable to
business expense deductions including the limits on excess employee remuneration
under Code Section 162(m).
(c) Stock Appreciation Rights
In connection with an option granted to an employee under the 1994 Plan,
the Company may grant to such employee a related stock appreciation right
('SAR'). The grantee of a SAR shall have the right to surrender to the Company
for cancellation all or a portion of the related option granted under the 1994
Plan, but only to the extent that such option is then exercisable. Upon such
surrender, the employee shall be paid an amount equal to the excess (if any) of:
(i) the aggregate fair market value of the shares of Common Stock subject to the
option or portion thereof surrendered; over (ii) the aggregate exercise price of
the shares of Common Stock subject to the portion thereof surrendered. Payment
due upon exercise of SARs shall be made in cash, in Common Stock, or both, as
determined by the Board of Directors.
Generally, the granting of SARs is not the receipt of taxable property
under Code Section 83 and is not otherwise a taxable event to the employee or to
the Company.
If an employee exercises a SAR and receives the appreciation inherent in
the SAR in cash, the cash is compensation income taxable to the employee. If the
employee receives the appreciation in the form of Common Stock, the fair market
value of the Common Stock received is taxable to the employee as compensation
income under Code Section 83(a).
The Company is generally entitled to a deductible compensation expense in
an amount equivalent to the amount included as compensation income to the
optionee at the time of the exercise of a SAR. This deduction is generally
allowed in the Company's taxable year in which the income is included as
compensation to the optionee. The Company is only entitled to this deduction if
the Company deducts and withholds upon the amount included in an employee's
compensation. The Company's compensation expense deduction will be subject to
the reasonable compensation and other
19
<PAGE>
requirements applicable to business expense deductions including the limits on
excess employee remuneration under Code Section 162(m).
G. Amended Plan Benefits Table
The following table shows, as to the chief executive officer and the other
named executive officers, all current executive officers, as a group, all
directors who are not executive officers, as a group, and all employees,
including officers who are not executive officers, as a group, who are eligible
to receive stock options under the 1994 Plan, the following information with
respect to stock options: (i) the number of option shares granted and presently
outstanding; (ii) the exercise price per share of such stock options; and (iii)
the dollar value of vested stock options.
NAL FINANCIAL GROUP INC. 1994 PLAN
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE DOLLAR VALUE
NAME OPTION SHARES PER SHARE (1)
- - ---------------------------------------------------------- ------------- ----------------- ---------------
<S> <C> <C> <C>
Robert R. Bartolini 8,336 $ 6.00 $ 135,838(2)
Chairman of the Board, President and Chief Executive 66,664 $ 6.60
Officer of NAL; Chairman and Chief Executive Officer of 50,000 $16.50
NAC
John T. Schaeffer 40,000 $ 6.00 $ 100,005(3)
Director of NAL; President and Chief Operating Officer 25,000 $15.00
of NAC
Robert J. Carlson 15,000 $ 6.00 $ 37,500(4)
Vice President -- Finance and Principal Accounting 15,000 $15.00
Officer of NAL
Dennis R. LaVigne 25,000 $13.25 $ 0(5)
Vice President and Treasurer of NAL
All current executive officers, as a group 245,000 $ 6.00-$16.50 $ 273,343(6)
(4 persons)
All directors who are not executive officers, as a group 0 $ 0 $ 0
(3 persons)
All employees, including officers who are not executive 530,500 $ 6.00-$16.50 $ 273,343(7)
officers, as a group (181 persons)
</TABLE>
- - ------------------
(1) Dollar value calculated based on the closing sale price of the Company's
Common Stock on April 9, 1996 of $13.50 per share as reported on The NASDAQ
National Market(SM) as of such date, less the exercise price per share of
the vested options.
(2) Does not include 105,555 options which have not vested.
(3) Does not include 51,666 options which have not vested.
(4) Does not include 25,000 options which have not vested.
(5) Does not include 25,000 options which have not vested.
(6) Does not include 101,666 options which have not vested.
(7) Does not include 428,834 options which have not vested.
20
<PAGE>
The number and choice of recipients of stock options granted under the 1994
Plan is at the sole discretion of the Committee and the Board of Directors. It
is not possible to determine at this time the number of stock options which may
be granted in the future to the executive officers of the Company. See
'Participants in the 1994 Plan -- Eligible Employees.'
H. Reasons for Proposal
A total of 600,000 shares of Common Stock were initially reserved for
issuance upon the exercise of options under the 1994 Plan. Through December 31,
1995, options covering 530,500 shares are outstanding under the 1994 Plan. It is
the Company's intention to continue making appropriate option grants on an
annual basis which cannot be accomplished without an increase in the number of
shares authorized for issuance under the 1994 Plan. The Board of Directors
believes that increasing the authorized number of shares of Common Stock the
Company may issue under the 1994 Plan will provide the Company with the ability
to retain key personnel and to attract the level of employees necessary to meet
the Company's future demands.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present in person or by
proxy is required for approval of the amendment to the 1994 Plan to increase the
number of shares of Common Stock the Company is authorized to issue under the
1994 Plan from 600,000 shares to 1,000,000 shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN
THE NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE UNDER
THE 1994 PLAN FROM 600,000 SHARES TO 1,000,000 SHARES
PROPOSAL 5 -- RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS
Price Waterhouse LLP has audited the Company's financial statements since
the Company's inception in 1991. Price Waterhouse LLP has been selected by the
Board of Directors to serve as the independent auditors for the Company for the
fiscal year ending December 31, 1996. Representatives of Price Waterhouse LLP
are expected to be present at the Meeting to make a statement if they so desire
and will be available to respond to appropriate questions.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present in person or by
proxy is required for ratification of Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE 1996 FISCAL YEAR
OTHER MATTERS
The Board of Directors does not know of any other matter which is intended
to be brought before the Meeting, but if such matter is presented, the persons
named in the enclosed proxy intend to vote the same according to their best
judgment.
The enclosed proxy may be revoked by a later-dated proxy, by giving notice
to the Secretary of the Company in writing prior to the meeting or by personal
notification at the Meeting prior to the voting.
21
<PAGE>
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Company without additional compensation. The Company will
reimburse brokers and other persons holding stock in their names or in the names
of nominees for their expenses incurred in sending proxy material to principals
and obtaining their proxies.
1997 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1997 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's 1997 proxy statement,
they must be received by the Company at its principal office in Fort Lauderdale,
Florida, on or before January 1, 1997.
By Order of the Board of Directors,
/s/ ROBERT R. BARTOLINI
Robert R. Bartolini
Chairman of the Board and
Chief Executive Officer
Dated: May 1, 1996
22
<PAGE>
EXHIBIT 1
The Board of Directors has adopted a resolution to amend Section 10 of the
Company's Certificate of Incorporation, which provides in its entirety, as
follows:
10. BOARD OF DIRECTORS:
(a) NUMBERS, ELECTIONS AND TERMS. Except as otherwise fixed by or
pursuant to provisions hereof relating to the rights of the holders of any
class or series of stock having a preference over common stock as to
dividends or upon liquidation to elect additional Directors under specified
circumstances, the number of Directors of the Corporation shall be fixed
from time to time by affirmative vote of a majority of the Directors then
in office. The Directors, other than those who may be elected by the
holders of any classes or series of stock having a preference over the
common stock as to dividends or upon liquidation, shall be classified, with
respect to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be provided in the
manner specified in the By-Laws of the Corporation, one class to be
originally elected for a term expiring at the annual meeting of
stockholders to be held in 1997, another class to be originally elected for
a term expiring as the annual meeting of stockholders to be held in 1998,
and another class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1999, with each class to hold
office until its successor is elected and qualified. At each annual meeting
of the stockholders of the Corporation after fiscal year 1996, the
successors of the class of Directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of their
election. Election of directors need not be by written ballot unless so
provided in the By-Laws of the Corporation.
(b) NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise
fixed by or pursuant to provisions hereof relating to the rights of the
holders of any class or series of stock having a preference over common
stock as to dividends or upon liquidation to elect additional Directors
under specified circumstances, newly created directorships resulting from
any increase in the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or
other cause shall be filled by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the
Board of Directors. Any Director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class
of Directors in which the new directorship was created or the vacancy
occurred and until such Director's successor shall have been elected and
qualified. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(c) REMOVAL. Except as otherwise fixed by or pursuant to provisions
hereof relating to the rights of the holders of any class or series of
stock having a preference over common stock as to dividends or upon
liquidation to elect additional Directors under specified circumstances,
any Director may be removed from office only for cause and only by the
affirmative vote of the holders of two-thirds of the combined voting power
of the then outstanding shares of stock entitled to vote generally in the
election of Directors, voting together as a single class.
(d) AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the consent of the Board
of Directors shall be required to alter, amend or adopt any provisions
inconsistent with or to repeal this Section 10.
Exh. 1-1
<PAGE>
EXHIBIT 2
The Board of Directors has adopted a resolution to amend the Company's
Certificate of Incorporation to include a Section 14, which provides in its
entirety, as follows:
14. AMENDMENTS TO CERTIFICATE OF INCORPORATION. Amendments to the
Certificate of Incorporation of the Corporation shall require the
affirmative vote of two-thirds of the holders of a majority of the combined
voting power of the then outstanding shares of stock entitled to vote on
any proposed amendment to the Certificate of Incorporation. Notwithstanding
the foregoing, in the event that a resolution to amend the Certificate of
Incorporation of the Corporation is adopted by the affirmative vote of at
least eighty percent (80%) of the Board of Directors, approval of the
amendment shall only require the affirmative vote of the holders of a
majority of the combined voting power of the then outstanding shares of
stock entitled to vote generally on such amendment, voting together as a
single class.
Exh. 2-1
<PAGE>
EXHIBIT 3
NAL FINANCIAL GROUP INC.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
This NAL Financial Group Inc. Amended and Restated 1994 Stock Option Plan
(the 'Plan') amends and restates the 1994 Stock Option Plan which became
effective October 31, 1994. The Plan provides for the grant to certain
employees, officers, directors and consultants of NAL Financial Group Inc.
('NAL' or the 'Company') or any subsidiary thereof of options to purchase
('Options') shares of common stock of NAL and related stock appreciation rights
and for the issuance, transfer or sale of such stock upon the exercise of such
Options. The term 'Company' as used in the Plan shall, unless the context
indicates otherwise, include NAL and any present or future subsidiary thereof.
1. Purpose. The purpose of the Plan is to provide additional incentive to
the directors, officers and other key employees and consultants of the Company,
who are responsible for the management and growth of the Company or otherwise
materially contribute to the conduct and direction of its business, operations
and affairs, in order to strengthen their desire to remain in the employ of the
Company, or in the case of consultants afforded Options, to strengthen their
bond to the Company, to stimulate their efforts on behalf of the Company and to
retain and attract persons of competence, and, by encouraging ownership of a
stock interest in NAL, to gain for the organization the advantages inherent in
directors, officers and employees having a sense of proprietorship.
2. The Stock. The aggregate number of shares of stock which may be issued,
transferred or sold upon the exercise of Options granted under the Plan shall
not, except as such number may be adjusted in accordance with Paragraph (f) of
Article 6 hereof, exceed 600,000 shares of Common Stock of NAL ('Common Stock'),
which may be either authorized and unissued shares or issued shares reacquired
by NAL. Notwithstanding the above limitation, if any Option granted under the
Plan shall expire, terminate or be canceled for any reason without having been
exercised in full, the corresponding number of unexercised shares shall again be
available for the purposes of the Plan.
3. Employees. The term 'employees' as used in the Plan shall mean
officers, other employees and consultants of the Company (including officers,
other employees and consultants who are also directors) within the classes
referred to in Article 1 hereof and shall, for the purposes of the Plan, also
include directors of the Company who are not employees. The term 'employment'
shall mean in reference to directors, the period in which a director serves on
the Board of Directors of the Company.
4. Eligibility. Options and related stock appreciation rights shall be
granted only to persons who, at the time of the grant of the Option, are
employees of the Company. A person to whom the Option is granted hereunder is
hereinafter sometimes referred to as an 'Optionee.' The Board of Directors of
NAL, or a committee appointed by its Board of Directors and constituted as
provided in Article 8 hereof (hereinafter called the 'Committee'), will
determine the employees who are to be granted Options under the Plan and the
number of shares subject to each Option. Notwithstanding anything herein to the
contrary, no person serving upon the Board of Directors (if administering the
Plan) or the Committee shall be prohibited from receiving Options during any
period, provided, however, such person must abstain from voting upon the grant
of such Options.
5. Grant of Stock Appreciation Rights.
(a) The Board of Directors or Committee (as applicable) may, in
connection with all or any part of an Option granted to an employee under
the Plan, grant to such employees (or to any person or persons having the
right to exercise such Option upon the death or incapacity of the employee
as provided in Paragraph (d) of Article 7 hereof) a related stock
appreciation right, either at the time the related Option is granted or at
any time thereafter prior to the exercise, termination or cancellation of
such Option, on such terms and conditions as the Board of Directors or
Committee (as applicable) shall from time to time determine. The grantee of
a related stock appreciation right shall have the right to surrender to the
Company for cancellation all or a portion of the related Option granted
under the Plan, but only to the extent that such Option is then
Exh. 3-1
<PAGE>
exercisable, and to be paid therefore an amount equal to the excess (if
any) of: (i) the aggregate fair market value of the shares of Common Stock
subject to the Option or portion thereof surrendered (determined as of the
date of exercise of such stock appreciation right); over (ii) the aggregate
exercise price of the shares of Common Stock subject to the portion thereof
surrendered.
(b) Payment due upon exercise of a stock appreciation right shall be
made (i) in cash; (ii) in Common Stock (valued at the fair market value
thereof as of the date of exercise); or (iii) partly in cash and partly in
Common Stock (valued at the fair market value thereof as of the date of
exercise), all as determined by the Board of Directors or Committee (as
applicable) in its sole discretion. If the Board of Directors or Committee
(as applicable) shall determine to make all of such payment in Common
Stock, no fractional shares of Common Stock shall be issued and no payments
shall be made in lieu of fractional shares.
(c) The grant of a stock appreciation right shall be subject to
execution, by the recipient thereof, of an instrument in writing in a form
approved by the Board of Directors or the Committee (as applicable), which
shall contain further terms and conditions, as deemed appropriate by the
Board of Directors or the Committee (as applicable), relative to, among
others, the grant, exercise or disposition of such stock appreciation
rights. The terms of such instrument need not be identical for all grantees
of such stock appreciation rights.
6. General Terms of Options.
(a) Consideration. Subject to the terms of Paragraph (a) of Article 7
hereof, the Board of Directors or the Committee shall determine the
consideration to NAL, if any, for the granting of Options under the Plan,
as well as the conditions, if any, which it may deem appropriate to ensure
that such consideration will be received by, or will accrue to, NAL, and in
the discretion of the Board of Directors or the Committee, such
consideration need not be the same, but may vary for Options granted under
the Plan at the same time or from time to time.
(b) Number of Options Which May Be Granted To, and Number of Shares
Which May Be Acquired By, Optionees. The Board of Directors or the
Committee may grant more than one Option to an individual during the life
of the Plan and, subject to the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the 'Code'), with respect to incentive
stock options (hereinafter referred to as 'Qualified Options'), such Option
may be in addition to, in tandem with, or in substitution for, Options
previously granted under the Plan or of another corporation and assumed by
NAL.
The Board of Directors or the Committee may permit the voluntary
surrender of all or a portion of any Option granted under the Plan to be
conditioned upon the granting to the employee of a new Option for the same
or a different number of shares as the Option surrendered, or may require
such voluntary surrender as a condition precedent to a grant of a new
Option to such employee. Such new Option shall be exercisable at the price,
during the period, and in accordance with any other terms or conditions
specified by the Board of Directors or the Committee at the time the new
Option is granted, all determined in accordance with the provisions of the
Plan without regard to the price, period of exercise, or any other terms or
conditions of the Option surrendered (except as otherwise provided in
Paragraph (f) of Article 7 hereof).
(c) Period of Grant of Options. Options under the Plan may be granted
at any time after the Plan has been approved by the Board of Directors of
NAL. However, no Options shall be granted under the Plan after November 1,
2004.
(d) Option Agreement. NAL shall effect the grant of Options under the
Plan, in accordance with determinations made by the Board of Directors or
the Committee, by execution of instruments in writing in a form approved by
the Board of Directors or the Committee. Each Option shall contain such
terms and conditions (which need not be the same for all Options, whether
granted at the same time or at different times) as the Board of Directors
or the Committee shall deem to be appropriate and not inconsistent with the
provisions of the Plan, and such terms
Exh. 3-2
<PAGE>
and conditions shall be agreed to in writing by the Optionee. The Board of
Directors or the Committee may, in its sole discretion, and subject to such
terms and conditions as it may adopt, accelerate the date or dates on which
some or all outstanding Options may be exercised. Options shall be
exercised by submitting to NAL a signed copy of a notice of exercise in a
form to be supplied by NAL. The exercise of an Option shall be effective on
the date on which NAL receives such notice at its principal corporate
offices.
(e) Non-Transferability of Option. No Option granted under the Plan
shall be transferable by the holder thereof otherwise than by will or by
the laws of descent and distribution, and such Option shall be exercisable,
during the holder's lifetime, only by such holder, or in case of the legal
incapacity of a holder, by such holder's legal representative.
(f) Effect of Change in Common Stock. In the event of a
reorganization, recapitalization, liquidation, stock split, stock dividend,
combination of shares, merger or consolidation, or the sale, conveyance,
lease or other transfer by NAL of all or substantially all of its property,
or any other change in the corporate structure or shares of NAL, pursuant
to any of which events the then outstanding shares of the Common Stock are
split up or combined, or are changed into, become exchangeable at the
holder's election for, or entitle the holder thereof to, other shares of
stock, or in the case of any other transaction described in Section 424(a)
of the Code, the Board of Directors or the Committee may change the number
and kinds of shares available under the Plan and any outstanding Option
(including substitution of shares of another corporation) and the price of
any Option and the fair market value determined under Article 6 hereof in
such manner as it shall deem equitable; provided, however, that in no event
may any change be made to a Qualified Option which would constitute a
'modification' within the meaning of Section 424(h)(3) of the Code. Options
granted under the Plan shall contain such provisions as are consistent with
the foregoing with respect to adjustments to be made in the number and kind
of shares covered thereby and in the option price per share in the event of
any such change.
(g) Optionees Not Stockholders. An optionee or a legal representative
thereof shall have none of the rights of a stockholder with respect to
shares subject to Options until such shares shall be issued, transferred or
sold upon exercise of the Option.
(h) Fair Market Value. As used in the Plan, the term 'fair market
value' shall: (i) if the Common Stock of NAL is traded in the
over-the-counter market, be the mean between the closing bid and asked
sales prices for Common Stock of NAL as reported by the National Quotations
Bureau, Inc. (or similar quotation agency) on the date the calculation
thereof shall be made; or the NASDAQ Small-Cap Index or National Market
System; or (ii) if the Common Stock of NAL is listed on a national
securities exchange, be the mean between the high and low sales prices for
Common Stock of NAL on such exchange on the date the calculation thereof
shall be made, in each case with such adjustments, if any, as shall be made
in accordance with Paragraph (f) of this Article 6. In the event the date
of calculation shall be a date on which there shall not have been reported
a closing bid and asked price for Common Stock of NAL, or a date which
shall not be a trading date on such national securities exchange, as the
case may be, determination of fair market value shall be made as of the
first date prior thereto on which there shall have been reported a closing
bid and asked price for Common Stock of NAL or the first date prior thereto
which shall have been a trading date on such national securities exchange,
as the case may be.
(i) Types of Options. Options granted under the Plan shall be in a
form of: (i) Qualified Options as defined as incentive stock options in
Section 422 of the Code; or (ii) options not qualifying under such Section,
or both, in the discretion of the Board of Directors or the Committee, as
well as related stock appreciation rights. The status of each Option shall
be identified in the Option Agreement executed by NAL and the Optionee
pursuant to Paragraph (d) of this Article 6.
Exh. 3-3
<PAGE>
7. Terms of Options.
(a) Option Price. The price or prices per share for shares of Common
Stock to be sold pursuant to an Option shall be fixed by the Board of
Directors or the Committee, but not less, in any case, than the fair market
value per share of such stock on the date of the granting of the Option,
subject to adjustment pursuant to Paragraph (f) of Article 6 hereof.
For the purposes of this Article 7, the date of the granting of an
Option under the Plan shall be the date fixed by the Board of Directors or
the Committee as the date for such Option.
(b) Period of Option.
(i) Notwithstanding any other provisions contained in this Plan,
each Option granted under the Plan shall be exercisable at such time or
times, or upon the occurrence of such event or events, and in such
amounts, as the Board of Directors or the Committee shall specify in the
Option Agreement.
(ii) Options will be exercisable thereafter over the Option Period,
which shall be for that period fixed by the Board of Directors or the
Committee, and shall be exercisable at such times and in such amounts as
determined by the Board of Directors or the Committee at the time each
Option is granted. Notwithstanding any other provision contained in this
Plan, no Option shall be exercisable after the expiration of the Option
Period. Except as provided in Paragraphs (c) and (d) of this Article 7,
no Option may be exercised unless the Optionee is then in the employ of
the Company or a subsidiary thereof and shall have been continuously so
employed since the date of the grant of such Option. The Plan shall not
confer upon any Optionee any right with respect to continuation of
employment by the Company, nor shall it interfere in any way with the
employee's right or the Company's right to terminate employment at any
time.
(c) Termination of Employment. In the case of a Qualified Option, an
Optionee whose employment by the Company or a subsidiary terminates by
reason other than death, shall, but only within the three-month period
after the date of such termination of employment and in no event after the
expiration of the Option Period, be entitled to exercise such Option and
then only if and to the extent that the Optionee was entitled to exercise
the Option at the date of the termination of employment; provided, however,
that the exercise of an Option (whether Qualified or non-qualified) or a
related stock appreciation right granted pursuant to this Plan shall be
subject to the terms, conditions and limitations imposed by the Board of
Directors or the Committee in connection with such grant and/or in the
Option Agreement.
(d) Death or Incapacity of Optionee. If an Optionee should die while
in the employment of the Company, an Option theretofore granted shall be
exercisable by the estate of the Optionee, or by a person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, but then only if and to the extent that the Optionee
was entitled to exercise the Option at the date of death and only within
the twelve-month period next succeeding the death of the Optionee and in no
event after the expiration of the Option Period. Upon the legal incapacity
of an Optionee, any Option held by the Optionee shall be exercisable by the
Optionee's legal representative pursuant to the terms of this Paragraph (d)
of Article 7. Notwithstanding any other provision of this Plan, the
exercise of an Option or a related stock appreciation right following the
death or legal incapacity of an Optionee shall be subject to the terms,
conditions and limitation imposed by the Board of Directors or the
Committee in connection with the Option grant and/or in the Option
Agreement.
(e) Payment for Shares. Payment for shares of Common Stock purchased
(the 'Option Price') shall be made in full at the time of exercise of the
Option by check made payable to the Company.
Exh. 3-4
<PAGE>
(f) Incentive Stock Options. Options granted in the form of incentive
stock options ('Qualified Options') shall be subject, in addition to the
foregoing provisions of this Article 7 and Article 6 hereof, to the
following provisions:
(i) Sequential Exercise. Each Qualified Option shall by its terms
be exercisable even though there is outstanding any Qualified Option
which was granted, before the granting of such Option, to such Optionee
to purchase Common Stock or stock of any subsidiary (determined at the
time of granting such Option).
(ii) Ten Percent Shareholder. A Qualified Option may be granted to
any individual who, at the time of the proposed grant, owns Common Stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of NAL or any subsidiary if, in addition
to meeting the other requirements of the Plan: (A) the prices per share
for shares of Common Stock to be sold pursuant to such Qualified Option
shall not be less than 110% of the fair market value per share for such
stock on the date of the granting of the Qualified Option, subject to
adjustment pursuant to Paragraph (f) of Article 6 hereof; and (B) the
Option Period of such Qualified Option shall be for a period of not
longer than five (5) years from the date of the grant of such Qualified
Option.
(iii) First Time Limitation. Notwithstanding any other provision
contained in this Plan, the fair market value of Common Stock and stock
of any subsidiary of the Company for which a Qualified Option is also
granted (determined at the time such Qualified Option is granted) with
respect to which such options are exercisable by any one individual for
the first time during any calendar year (under this or any other plan)
shall not exceed the sum of $100,000.
(g) Non-Qualified Options. In granting any non-qualified option, the
Board of Directors or the Committee may specify that such non-statutory
option shall be subject to such additional or different termination or
cancellation provisions from those applicable to Qualified Options as the
Board of Directors or the Committee may specify, which provisions may vary
for Options granted under the Plan at the same time or from time to time.
8. Administration of the Plan. The Plan shall be administered under the
supervision of the Board of Directors of NAL or by a Committee, which the Board
of Directors may appoint at any time, consisting of at least three members of
the Board of Directors, who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors. A majority of the Committee shall
constitute a quorum and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee, shall be acts of the Committee.
In addition to the discretionary authority of the Board of Directors or of
the Committee set forth in other Articles hereof, the Board of Directors or the
Committee is authorized to establish such rules and regulations for the proper
administration of the Plan as it may deem advisable and not inconsistent with
provisions of the Plan. Unless otherwise determined by the Board of Directors,
all questions arising under the Plan or under any rule or regulation with
respect to the Plan adopted by the Board of Directors or the Committee, whether
such questions involve an interpretation of the Plan or otherwise, shall be
decided by the Board of Directors or the Committee, and its decisions shall be
conclusive and binding in all cases.
The Board of Directors or the Committee shall determine the employees to
whom Options under the Plan are to be granted and the number of shares to be
covered by each Option granted. In selecting the individuals to whom Options
shall be granted, as well as in determining the number of shares subject to each
Option, the Board of Directors or the Committee shall consider the positions and
responsibilities of the individuals being considered, the nature of the services
and accomplishments of each, the value to the Company of their services, their
present and potential contribution to the success of the Company, the
anticipated number of years of service remaining, and such other factors as the
Board of Directors or the Committee may deem relevant.
Exh. 3-5
<PAGE>
9. Amendment and Discontinuance of the Plan.
(a) The Board of Directors of NAL may at any time alter, suspend or
terminate the Plan, but, except in accordance with the provisions of
Paragraph (f) of Article 6 and Article 9 hereof, no change shall be made
which will have a material adverse effect upon any Option previously
granted unless the consent of the Optionee is obtained; provided, however,
that, except in the case of adjustment made pursuant to Paragraph (f) of
Article 6 hereof, the Board of Directors may not, without further approval
of stockholders: (i) increase the maximum number of shares for which
Options may be granted under the Plan or which may be purchased by an
individual employee; (ii) decrease the minimum Option Price provided in the
Plan; or (iii) change the class of employees eligible to receive Options.
(b) The Company intends that Options designated by the Board of
Directors or the Committee as Qualified Options shall constitute incentive
stock options under Section 422 of the Code. Additionally, the Company
intends that Options designated by the Board of Directors or the Committee
as Qualified Options shall comply with all of the provisions of Section
16(b)-3 of the Securities Exchange Act of 1934. Should any of the foregoing
provisions not be necessary in order to so comply or should any additional
provisions be required, the Board of Directors may in its complete and
total discretion amend the Plan in the manner it deems appropriate, without
the necessity of obtaining the approval of the stockholders of NAL.
(c) Notwithstanding the foregoing provisions of this Article 9, no
person may be divested of the ownership of Common Stock previously issued,
sold or transferred under the Plan.
10. Other Conditions. If at any time counsel of NAL shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to an
Option granted under the Plan is or may in the circumstances be unlawful under
the statutes, rules or regulations of the United States, or any applicable
jurisdiction, NAL shall have no obligation to make such sale or delivery, or to
make any application or to effect or to maintain any qualification or
registration under the Securities Act of 1933 or otherwise with respect to
shares of stock or Options under the Plan, until the right to exercise any such
Option shall be lawful.
Upon the termination or suspension of any period set forth herein, any
Option affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available upon exercise of the
Option before such suspension and to shares which would otherwise have become
available for purchase during the period of such suspension, but no such
suspension shall extend any Option Period.
At the time of any grant or exercise of any Option, NAL may, if it shall
deem it necessary or desirable for any reason connected with any law or
regulation of any governmental authority relative to the regulation of
securities, condition the grant and/or exercise of such Option by the Optionee
upon requiring the Optionee to make certain representations to NAL to the
satisfaction of NAL as to correctness of such representations.
11. Approval; Effective Date. The Plan initially became effective on
October 31, 1994. The amended and restated Plan was adopted by the Board of
Directors of NAL and became effective on April 22, 1996.
Exh. 3-6
<PAGE>
EXHIBIT 4
The Board of Directors has adopted a resolution to amend Article 2 of the
Company's Amended and Restated 1994 Stock Option Plan to read, in its entirety,
as follows:
2. The Stock. The aggregate number of shares of stock which may be
issued, transferred or sold upon the exercise of Options granted under the
Plan shall not, except as such number may be adjusted in accordance with
Paragraph (f) of Article 6 hereof, exceed 1,000,000 shares of Common Stock
of NAL ('Common Stock'), which may be either authorized and unissued shares
or issued shares reacquired by NAL. Notwithstanding the above limitation,
if any Option granted under the Plan shall expire, terminate or be canceled
for any reason without having been exercised in full, the corresponding
number of unexercised shares shall again be available for the purposes of
the Plan.
Exh. 4-1
<PAGE>
NAL FINANCIAL GROUP INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert R. Bartolini and John T. Schaeffer and
each of them Proxies with power to appoint a substitute and hereby authorizes
them to represent and to vote all shares of Common Stock of NAL Financial Group
Inc. held of record by the undersigned on April 20 , 1996 at the Annual Meeting
of Stockholders of NAL Financial Group Inc. to be held on May 31, 1996 and at
any adjournments thereof, and to vote as directed on the reverse side of this
form and, in their discretion, upon such other matters not specified as may come
before said meeting.
1. Proposal 1 -
Approval of an amendment to the Certificate of Incorporation to create a
Classified Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote FOR Proposal 1
2. Proposal 2 -
Approval of an amendment to the Certificate of Incorporation to require a
supermajority vote of stockholders to amend the Certificate of Incorporation.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote FOR Proposal 2
3. Proposal 3 -
Election of Directors
Nominees: Robert R. Bartolini, Ngaire E. Cuneo, James F. DeVoe, David R.
Jones and John T. Schaeffer
/ / FOR For, except vote withheld from the following nominee(s):
/ / WITHHELD
________
The Board of Directors recommends a vote FOR Proposal 3
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED, FOR APPROVAL OF
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO CREATE A CLASSIFIED BOARD OF
DIRECTORS AND TO REQUIRE A SUPERMAJORITY VOTE OF STOCKHOLDERS TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION, FOR THE ELECTION OF DIRECTORS, FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED 1994 STOCK
OPTION PLAN AND FOR APPROVAL OF THE RATIFICATION OF PRICE WATERHOUSE LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY.
See Reverse Side
<PAGE>
4. Proposal 4 -
Approval of amendment to the Company's Amended and Restated 1994 Stock Option
Plan to increase the number of shares that can be issued under the 1994 Plan
from 600,000 shares to 1,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote FOR Proposal 4
5. Proposal 5 -
Ratification of Price Waterhouse LLP as the Company's independent auditors
for the 1996 Fiscal Year.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote FOR Proposal 5
The undersigned hereby acknowledges receipt of the notice of Annual Meeting
and Proxy Statement.
PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.
NOTE: Please sign name(s) exactly
as printed hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such.
__________________________________
Signature
__________________________________
Date
