NAL
[LOGO] Financial
Group Inc.
May 2, 1997
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, June 6,
1997 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 elect one director, 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 the election of the nominee
for director 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 JUNE 6, 1997
May 2, 1997
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, June 6, 1997, at 10:00 A.M. for the following
purposes:
(1) to elect one director;
(2) to ratify the appointment of Price Waterhouse LLP as independent
auditors for the Company; and
(3) 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, 1996 is
enclosed for your information.
Only stockholders of record as of the close of business on April 21, 1997
will be entitled to vote at the Meeting and at any adjournment(s) 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.
------------------------------
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
June 6, 1997 and at any adjournment(s) 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 election of the nominee for director, 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 return of the proxy will not affect your right to vote if you
attend 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 21, 1997 was 10,540,931. Each share of Common Stock
is entitled to one vote, and the nominee receiving a plurality of the votes cast
will be elected as director. Only holders of record at the close of business on
April 21, 1997 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 the director 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, 1996 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 2, 1997.
PROPOSAL 1
ELECTION OF DIRECTOR
DIRECTOR TO BE REELECTED AT MEETING
The Board of Directors currently has five members, of which two directors
have terms which expire at the 1997 Annual Meeting. The Company has been advised
that Mr. James F. DeVoe has declined to stand for reelection. Accordingly, the
Board of Directors has adopted a resolution reducing the Board of Directors to
four directors effective as of June 5, 1997. The person listed below has been
nominated by the Board of Directors to serve as a director of the Company until
the 2000 Annual Meeting of Stockholders.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election as director of the following nominee. In the
event that the 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 any director chosen to
fill a vacancy would hold office until the next election of the class for which
such director had been chosen.
1
<PAGE>
NOMINEE TO SERVE AS DIRECTOR PRINCIPAL OCCUPATION
---------------------------- --------------------
Ngaire E. Cuneo...................... Executive Vice President, Corporate
Development, of Conseco, Inc.
Ngaire E. Cuneo
Ms. Cuneo, 46, 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 Holdings, Inc., American Life Holding Company and
Duke Realty Investments, Inc.
REMAINING BOARD OF DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE
AT THE 1998 ANNUAL MEETING PRINCIPAL OCCUPATION
-------------------------- --------------------
David R. Jones........................ President and CEO of DR Jones
Financial, Inc.
John T. Schaeffer..................... Executive Vice President of NAL and
President and Chief Operating
Officer of NAL Acceptance Corporation
David R. Jones
Mr. Jones, 48, has been a director of the Company since February 1996 and
his term expires at the 1998 Annual Meeting. He has been President and Chief
Executive Officer 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, 50, has been President and Chief Operating Officer of NAL
Acceptance Corporation ("NAC"), a subsidiary of the Company, since its
inception. He became a director of the Company in conjunction with the merger of
the Company into an inactive public shell company in November 1994 (the
"Merger") and became Executive Vice President of the Company in May 1996. Mr.
Schaeffer's term as director will expire at the 1998 Annual Meeting. Prior to
joining NAC, Mr. Schaeffer was President and Chief Operating Officer of
FinancialFed Services, Inc., 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 1986, he was with First Pennsylvania Bank, N.A., where he served as Vice
President for 16 years.
2
<PAGE>
DIRECTOR WHOSE TERM EXPIRES
AT THE 1999 ANNUAL MEETING PRINCIPAL OCCUPATION
-------------------------- --------------------
Robert R. Bartolini...................... Chairman of the Board, President and
CEO of NAL; Chairman of the Board
and CEO of NAC
Robert R. Bartolini
Mr. Bartolini, 53, has been Chairman and Chief Executive Officer of the
Company since its inception in 1991 and became President in conjunction with the
Merger in November 1994. Mr. Bartolini's term as director will expire at the
1999 Annual Meeting. Prior to founding NAL, he was President and Chief Operating
Officer of FinFed, Miami, Florida, 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 1984, Mr. Bartolini was with First Pennsylvania Bank, NA (assets of $6
billion; 75 branches), where he served as Senior Vice President. Mr. Bartolini
serves as a member of the Board of Directors of J.D. Byrider Systems, Inc., from
which the Company operates the JDBR Franchise.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1996, there were five meetings of
the Board. All members of the Board attended these meetings. The Board of
Directors maintains two committees consisting of the Audit Committee and the
Compensation Committee. A brief description of the functions of each committee
are set forth below.
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 Ms. Ngaire E. Cuneo, Chairman, and Messrs. David R.
Jones and James F. DeVoe. During the fiscal year ended December 31, 1996, there
was one meeting of the Audit Committee.
The Compensation Committee is responsible for continually reviewing and
assessing the Company's compensation and benefit programs, reviewing and making
grants under the Company's Amended and Restated 1994 Stock Option Plan and
assessing the compensation payable to executive officers joining the Company.
The members of the Compensation Committee are Messrs. David R. Jones, Chairman,
and James F. DeVoe and Ms. Ngaire E. Cuneo. During the fiscal year ended
December 31, 1996, there was one meeting of the Compensation Committee.
DIRECTORS' COMPENSATION
The employee-directors of the Company receive no fees or other compensation
in connection with their services as directors. Each of Messrs. Jones and DeVoe
were granted options to purchase 20,000 shares of the Company's Common Stock in
connection with joining the Board of Directors. The non-employee directors each
receive $1,000 for each meeting of the Board and each committee meeting attended
in person and $500 for each meeting attended telephonically.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses individual compensation information relating
to the Company's Chief Executive Officer and the other named executive officers
of the Company for the years ended December 31, 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION (1) COMPENSATION
------------------------ --------------------------------
AWARDS PAYOUTS
---------------- -------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS (#) COMPENSATION
- ---------------------------------------------- ---- --------- -------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Robert R. Bartolini .......................... 1996 $300,000 $ 0 0 $30,900(5)
Chairman of the Board, President and 1995 $300,000 $ 0 50,000(4) $30,900(5)
Chief Executive Officer of NAL; 1994 $281,916 $298,985 75,000(2) $30,900(5)
Chairman and Chief Executive Officer
of NAC
John T. Schaeffer ............................ 1996 $160,000 $ 0 0 $10,300(5)
Director and Executive Vice President 1995 $160,000 $ 0 25,000(4) $10,300(5)
of NAL; President and Chief Operating 1994 $160,000 $ 0 40,000(3) $10,300(5)
Officer of NAC
Robert J. Carlson ............................ 1996 $ 80,000 $ 0 0 $ 0
Senior Vice President -- Finance 1995 $ 80,000 $ 0 15,000(4) $ 0
of NAL and NAC 1994 $ 74,231 $ 86,015 15,000(3) $ 0
</TABLE>
- ------------------
(1) Based upon the fiscal years ended December 31, 1996, 1995 and 1994.
(2) Represents stock options granted as of December 15, 1994 pursuant to the
Company's Amended and Restated 1994 Stock Option Plan (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 insurance premiums on whole life insurance policies paid by the
Company for the benefit of the named executive officer.
The Company did not grant any options to purchase Common Stock to the named
executive officers during the year ended December 31, 1996.
4
<PAGE>
The following table discloses information regarding the exercise of stock
options during the year ended December 31, 1996 by the named executive officers
and the number and value of any unexercised stock options held by them as of
December 31, 1996.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE
UNDERLYING OF UNEXERCISED
SHARES UNEXERCISED OPTIONS/SARS IN-THE-MONEY OTIONS/SARS
ACQUIRED AT FY-END (#) AT FY-END($)
NAME ON EXERCISE(#) VALUE REALIZED EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(1)
- -------------------------------- -------------- -------------- ------------------------ ----------------------------
<S> <C> <C> <C> <C>
Robert R. Bartolini,............ -0- -0- 19,445(E)/105,555(U) $60,584(E)/$171,667(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) $ 48,400(E)/$96,800(U)
Director and Executive Vice
President of NAL; President
and Chief Operating Officer of
NAC
Robert J. Carlson............... -0- -0- 5,000(E)/25,000(U) $ 18,150(E)/$36,300(U)
Senior Vice President --
Finance of NAL and NAC
</TABLE>
- ------------------
(1) Based upon the closing price of the Company's Common Stock ($9.63 per share)
as of December 31, 1996 on the Nasdaq National Market.
EMPLOYMENT ARRANGEMENTS
Effective November 30, 1994, the Company entered into an employment
agreement with Mr. Robert R. 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 and disability
insurance, use of an automobile and certain related expenses, certain other
expenses and stock option plan participation, as well as a confidentiality
agreement and a two-year noncompetition agreement in favor of the Company. This
agreement provides for an initial term of three years and is annually renewable
for successive three-year periods unless either Mr. Bartolini or the Company
provides at least 60 days' notice of an intent not to renew. The agreement
provides that the Company may terminate Mr. Bartolini's employment at any time
with or without cause and that 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.
If Mr. Bartolini's employment were to be terminated by the Company without
cause, he generally would receive his base salary and benefits for the remainder
of the term of the agreement. If he were to be terminated because substantially
all of the assets of the Company are sold or a controlling interest in the
Company is sold, Mr. Bartolini would receive an additional payment of 299% of
his base salary unless the agreement is assumed by the buyer or Mr. Bartolini is
offered substantially identical duties and compensation with the buyer for at
least the remaining term of the agreement.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 21, 1997, 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 named
executive officers and directors, individually and as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AND OF RECORD(1)
-------------------------
NAME AND ADDRESS NUMBER PERCENT
---------------- ---------- -------
<S> <C> <C>
Robert R. Bartolini........................................ 2,254,754(2) 21.28%
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309
John T. Schaeffer.......................................... 331,581(3) 3.14%
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309
Robert J. Carlson.......................................... 75,196(4) *
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309
Ngaire E. Cuneo............................................ --(5) *
745 Fifth Avenue, Suite 2700
New York, NY 10151
James F. DeVoe............................................. 20,000(6) *
5780 West 71st Street
Indianapolis, IN 46278
David R. Jones............................................. 23,000(7) *
2 Ocean Avenue
Scituate, MA 02066-1624
Conseco, Inc............................................... 2,028,333(8)(12) 16.14%
11815 N. Pennsylvania Street
P. O. Box 1911
Carmel, IN 46032
Florence Karp(9)........................................... 1,440,303(10) 12.13%
3418 Sansom Street
Philadelphia, PA 19104
Merrill Lynch Asset Management............................. 780,165(11)(12) 6.89%
800 Scudders Mill Road
Plainsboro, NJ 08536
All Directors and Executive Officers
as a group (6 persons)................................... 2,704,531 25.31%
</TABLE>
- ------------------
* Represents less than 1%
(1) Except as otherwise indicated, includes total number of shares outstanding
and the number of shares that 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
Exchange Act. Percentage of ownership is based on 10,540,931 shares of
Common Stock outstanding as of April 21, 1997.
(2) Includes 1,886,245 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
6
<PAGE>
to options granted by Mr. Bartolini during May 1995. Also includes 48,931
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. 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 55,556 shares of Common
Stock granted in December 1994 and December 1995. Does not include
incentive stock options to purchase 69,444 shares of Common Stock granted
in December 1994 and December 1995, which have not vested. See "Summary
Compensation Table."
(3) Includes 5,552 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 35,001 vested
incentive stock options granted to Mr. Schaeffer in December 1994 and
December 1995. Does not include 29,999 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 9,652 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 15,000 vested incentive stock
options granted to Mr. Carlson in December 1994 and December 1995. Does not
include 15,000 incentive stock options granted to Mr. Carlson in December
1994 and December 1995, which remain subject to vesting. See "Summary
Compensation Table."
(5) Ms. Cuneo joined the Board of Directors effective April 23, 1996 in
conjunction with the sale by the Company of certain debentures. See
"Material Stockholder Arrangements."
(6) Includes options to purchase 20,000 shares of Common Stock granted to Mr.
DeVoe in connection with his appointment as a director on March 11, 1996.
(7) Includes options to purchase 20,000 shares of Common Stock granted to Mr.
Jones in connection with his appointment as a director on February 5, 1996.
(8) Represents 515,000 shares issuable upon the exercise of warrants held by
Conseco, Inc. Also includes 756,667 shares of Common Stock (666,667 shares
representing principal and 90,000 shares representing interest at maturity)
issuable upon conversion, if at all, of $5 million principal amount of
debentures held by Great American Reserve Insurance Company ("GARCO") and
756,666 shares of Common Stock (666,666 shares representing principal and
90,000 shares representing interest at maturity) issuable upon the
conversion, if at all, of $5 million principal amount of debentures held by
Beneficial Standard Life Insurance Company ("BSLIC"). GARCO and BSLIC are
wholly-owned subsidiaries of Conseco, Inc. (the "Conseco Subsidiaries").
This table has been prepared assuming a fixed $7.50 conversion price for
the debentures. Additional shares may be issued to the holders of the
debentures upon conversion based on a conversion price equal to the lesser
of : (i) $7.50; and (ii) 80% of the closing bid price of the Company's
Common Stock on the date of conversion. If such debentures were converted
based upon the closing bid price of $2.44 as of April 21, 1997, 4,305,986
additional shares would be issued to the holders.
(9) As custodian for Ms. Karp's minor grandchildren.
(10) Includes 103,333 shares of Common Stock. Also includes 625,000 shares of
Common Stock issuable upon the exercise, if at all, of warrants. Includes
711,970 shares of Common Stock (560,606 shares representing principal and
151,364 shares representing interest at maturity) issuable upon the
conversion, if at all, of $5.5 million principal amount of debentures. This
table has been prepared assuming a fixed $9.00 conversion price for $3.0
million principal amount of the debentures. Additional shares may be issued
to the holder upon conversion based on a conversion price equal to the
lesser of: (i) $9.00 per share; and (ii) 75% of the closing bid price of
the Company's Common Stock on the date of conversion. If such debentures
were converted based on the closing bid price of $2.44 as of April 21,
1997, 1,592,042 additional shares would be issued to the holder.
7
<PAGE>
(11) Represents 366,667 shares of Common Stock issuable upon conversion, if at
all, of $2.75 million principal amount of debentures and 62,425 shares of
Common Stock issuable upon the exercise of warrants held by Convertible
Holdings, Inc. Also represents 300,000 shares of Common Stock issuable upon
conversion, if at all, of $2.25 million principal amount of debentures and
51,075 shares of Common Stock issuable upon the exercise of warrants held
by Merrill Lynch World Income Fund, Inc. Convertible Holdings, Inc. is
advised by Merrill Lynch Asset Management, an investment adviser registered
under the Investment Advisers Act of 1940 ("MLAM"). Merrill Lynch World
Income Fund, Inc. is advised by Fund Asset Management, Inc., an investment
adviser registered under the Investment Advisers Act of 1940 ("FAM"). FAM
and MLAM are affiliates and both disclaim beneficial ownership of the
Common Stock referred herein. This table has been prepared assuming a fixed
$7.50 conversion price for the debentures. Additional shares may be issued
to the holders upon conversion based on a conversion price equal to the
lesser of: (i) $7.50 per share; and (ii) 80% of the closing bid price of
the Company's Common Stock on the date of conversion. If such debentures
were converted based upon the closing bid price of $2.44 as of April 21,
1997, 1,896,910 additional shares would be issued to the holders.
(12) In connection with the issuance of these debentures and warrants, the
Company granted price protection to the holder(s) such that in the event
the Company issues securities during the term of the debentures and
warrants at an issuance price of less than $7.50 per share, the conversion
price of such debentures would be reduced to the lesser of: (i) the
issuance price of such securities; and (ii) 80% of the closing bid price of
the Company's Common Stock on the date of conversion. This provision may
result in the issuance of additional shares of Common Stock upon the
conversion of the debentures and a decrease in the proceeds to the Company
upon the exercise of the warrants. The exercise prices of the warrants are
also adjustable on an immediate or cumulative basis, as applicable, based
upon the issuance price of such additional securities.
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 ended 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. As of September 30, 1996, all of
the shares had been earned. 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.
MATERIAL STOCKHOLDER ARRANGEMENTS
In connection with the purchase of $10 million principal amount of
debentures in April 1996, 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.
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LOANS TO THE COMPANY
Mr. Robert R. Bartolini, Chairman and Chief Executive Officer of the
Company, has on occasion provided advances at market interest rates to the
Company.
In order to provide it with additional working capital, Mr. Bartolini
advanced approximately $1.0 million to the Company on June 30, 1995 and later
increased this amount to approximately $2.9 million during December 1995. The
advance was repaid in full as of June 30, 1996. During November 1996, Mr.
Bartolini provided advances totaling $2,413,869 to the Company, which were
repaid as of December 31, 1996 from the proceeds of the Company's underwritten
secondary offering of Common Stock. These advances bore interest at a fixed rate
of 11%.
TRANSACTION WITH AFFILIATE OF FORMER DIRECTOR
Mr. 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 the later
of May 1996 or the registration of the underlying shares of Common Stock.
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. $810,000 principal amount of these debenture units, as well as the
accrued interest due thereon, was converted into 95,692 shares of the Company's
Common Stock during January 1996. The remaining principal amount of these
debenture units ($390,000) was converted in April 1996.
SALE OF BOAT TO EXECUTIVE OFFICER
In October 1994, the Company sold a repossessed boat to Mr. John T.
Schaeffer, a director and Executive Vice President of NAL and President and
Chief Operating Officer of NAC, in consideration for a note in the amount of
$89,000, which bore 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.
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 "EXECUTIVE COMPENSATION." In conjunction with the
appointment of Mr. Jones to the Board of Directors on February 5, 1996, the
Company granted to him 20,000 options to purchase Common Stock with an exercise
price of $14.38 per share. In conjunction with the appointment of Mr. DeVoe to
the Board of Directors on March 11, 1996, the Company granted to him 20,000
options to purchase Common Stock with an exercise price of $11.50 per share. The
options held by Messrs. DeVoe and Jones are covered by the Company's Directors'
1996 Stock Option Plan.
RELATIONSHIP WITH J.D. BYRIDER SYSTEMS, INC.
Mr. Bartolini, Chairman and Chief Executive Officer of the Company, serves
as a member of the Board of Directors of J.D. Byrider, from which the Company
operates the JDBR Franchise. Mr. James F. DeVoe, a director of the Company, is
the Chairman and Chief Executive Officer of J.D. Byrider.
TRAVEL SERVICES
IYS Travel, Inc. ("IYS"), a travel agency of which the spouse of Mr. Robert
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 commissions from airlines, hotels, and cruise
agencies for services provided. During the years ended December 31, 1996 and
1995, the Company paid IYS approximately $217,000 and $105,000, respectively,
for airline tickets booked by IYS for travel by the Company's employees at the
prevailing prices charged by the airlines.
9
<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 year
ended December 31, 1996 all Reporting Persons timely complied with all filing
requirements applicable to them.
PROPOSAL 2
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, 1997. 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, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE 1997 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.
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.
1998 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1998 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's 1998 proxy statement,
they must be received by the Company at its principal office in Fort Lauderdale,
Florida, on or before January 3, 1998.
By Order of the Board of Directors,
/s/ Robert R. Bartolini
------------------------------------
Robert R. Bartolini
Chairman of the Board and
Chief Executive Officer
Dated: May 2, 1997
10
<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 21, 1997 at the Annual Meeting
of Stockholders of NAL Financial Group Inc. to be held on June 6, 1997 and at
any adjournment(s) thereof, and to vote as directed on this form and, in their
discretion, upon such other matters not specified as may come before said
meeting.
1. Proposal 1 -
Election of Director
Nominee: Ngaire E. Cuneo
/ / FOR / / WITHHELD
The Board of Directors recommends a vote FOR Proposal 1
2. Proposal 2 -
Ratification of Price Waterhouse LLP as the Company's independent auditors
for the 1997 Fiscal Year.
/ / FOR / / AGAINST / / ABSTAIN
The Board of Directors recommends a vote FOR Proposal 2
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 THE ELECTION OF
THE NOMINEE FOR DIRECTOR AND FOR APPROVAL OF THE RATIFICATION OF PRICE
WATERHOUSE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
See Reverse Side
<PAGE>
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(s)
__________________________________
Date
