SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ x ] Preliminary Information Statement [ ] Confidential, for use
[ ] Definitive Information Statement of the Commission only
(as permitted by Rule
14c-5(d)(2))
NAL FINANCIAL GROUP INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
/ x / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (set forth the amount on which the filing
fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPY
NAL FINANCIAL GROUP INC.
500 Cypress Creek Road West, Suite 590
Fort Lauderdale, Florida 33309
INFORMATION STATEMENT
This Information Statement is furnished to provide notice to
the holders of shares of common stock, par value $.15 (the "Common Stock"), of
NAL Financial Group Inc. (the "Company") that the record holder of approximately
73.6% of the outstanding shares of Common Stock has delivered to the Company a
written consent (the "Consent") approving the amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 50,000,000 to 100,000,000 (the "Amendment").
On August 21, 1997, the Board of Directors of the Company
approved the Amendment with a recommendation that the Company's stockholders
approve the Amendment.
On November 19, 1997 (the "Record Date"), there were
50,000,000 shares of Common Stock outstanding and entitled to vote upon the
Amendment. CIHC, Incorporated ("CIHC"), a wholly owned subsidiary of Conseco,
Inc. ("Conseco"), owns 36,814,305 shares of Common Stock, constituting 73.6% of
the Company's outstanding Common Stock. CIHC delivered the Consent to the
Company on the Record Date. As a result, all corporate approvals necessary for
the Amendment have been obtained and the Amendment will become effective on
December 19, 1997, 20 days after the date of this Information Statement.
This Information Statement describing the Amendment is first
being given to Stockholders on or about November 29, 1997.
The principal executive offices of the Company are located at
500 Cypress Creek Road West, Suite 590, Fort Lauderdale, Florida 33309.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
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AMENDMENT TO CERTIFICATE OF INCORPORATION
Background of the Amendment
The Amendment is one of several actions being taken to
consummate the transactions required by the Investment Agreement dated August
21, 1997 (the "Investment Agreement") by and between the Company and Conseco.
The Amendment is necessary to enable the Company to issue the full number of
shares of Common Stock issuable upon the conversion of the Company's outstanding
Subordinated Convertible Debentures and the exercise of certain warrants held by
Conseco and its subsidiaries on the date of this Information Statement.
The Investment Agreement was the result of the Company's
efforts to address its need for additional financing. During 1997, the Company
has experienced losses, decreased volume, and an increase in reserves for
credit. This situation and the tightening of credit generally available to the
nonprime automobile financing industry led to a substantial impairment of the
Company's liquidity.
The Company engaged a financial advisor to assist it in
obtaining a transaction providing for the sale or capital restructuring of the
Company. However, the measures taken by the Company did not result in the sale
or capital restructuring of the Company. Accordingly, in the Company's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1997, the Company reported
uncertainty with respect to its ability to continue operating as a going concern
and that, absent a sale or restructuring of the Company, it would be forced to
reorganize under the Federal bankruptcy laws.
Confronted with this situation, and the likely complete loss
of the shareholders' investment in the Company in the event of a reorganization
under the Federal bankruptcy laws, the Company entered into the Investment
Agreement with Conseco on August 21, 1997. By doing so, the Company obtained an
immediate infusion of additional working capital and obtained a commitment to
convert all of the Company's outstanding Subordinated Convertible Debentures
into Common Stock.
Investment Agreement
The Investment Agreement provides for a variety of
transactions affecting the Company's capital structure. The following
transactions required by the Investment Agreement have been consummated prior to
the date of this Information Statement:
1. Conseco Private Capital Group, Inc., a subsidiary of
Conseco, agreed to provide an additional $5,000,000 of short term debt financing
to the Company pursuant to its
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Credit Agreement with the Company (the "Credit Agreement"), all of which was
outstanding on November 19, 1997;
2. CIHC purchased 5,000,000 shares of the Company's
Series A Preferred Stock for an aggregate purchase price of $5,000,000. The
Series A Preferred Stock was authorized by the Company's Board of Directors on
September 29, 1997 pursuant to the Company's Certificate of Incorporation and
Section 151 of the General Corporation Law of Delaware;
3. Conseco, directly or through CIHC, purchased all
of the Company's Subordinated Convertible Debentures held by other parties (the
"Acquired Debentures"). The Acquired Debentures had an outstanding principal
amount of $11,013,694 at the time they were acquired by Conseco from Merrill
Lynch Convertible Fund, Inc., Merrill Lynch World Income Fund, Inc., Westminster
Capital, Inc., and Michael Karp. Conseco assigned its directly owned Acquired
Debentures to CIHC;
4. The conversion prices of all of the Company's
outstanding Subordinated Convertible Debentures were fixed. The conversion price
for Subordinated Convertible Debentures having an aggregate principal amount of
$10,000,000 was fixed at $.32 per share based upon the formulae set forth in the
debentures and the closing bid price of the Company's Common Stock on August 19,
1997. The conversion price for the Acquired Debentures acquired from Merrill
Lynch Convertible Fund, Inc. and Merrill Lynch World Income Fund, Inc. was fixed
at $.32 per share. The conversion price for the balance of the Acquired
Debentures was fixed at $.30 per share;
5. CIHC converted $10,000,000 principal amount of the
Company's Subordinated Convertible Debentures into 35,304,688 shares of Common
Stock;
6. CIHC converted Acquired Debentures in the principal
amount of $452,885 into 1,509,617 shares of Common Stock;
7. The maturity date of the indebtedness incurred by the
Company under the Credit Agreement was extended to April 1, 1998;
8. The Company's Board of Directors was increased from
four to seven, with the additional three members being designated by Conseco
(see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT - Change of
Control"); and
9. The exercise price of warrants held by Merrill Lynch
World Incorme Fund and Merrill Lynch Convertible Fund, Inc. to purchase 62,500
shares of Common Stock was reduced from $13.92 to $.72 per share.
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<PAGE>
Under the terms of the Investment Agreement, Conseco has
agreed to convert the remaining Acquired Debentures, having an outstanding
aggregate principal amount of $10,560,809, into Common Stock once the Company
has sufficient authorized shares of Common Stock available for issuance upon
such conversion.
Conseco has agreed in the Investment Agreement to certain
restrictions on transactions between the Company and Conseco or its affiliates
for limited time periods. Any cash out merger with Conseco or any of its
affiliates or any other transaction in which the minority stockholders of the
Company are forced to exchange their shares for cash or other consideration
prior to April 1, 1998 will require the approval of a majority of disinterested
members of the Company's Board of Directors. Prior to January 1, 1998, any such
transaction will also require the approval of a majority of the Company's
minority stockholders.
The descriptions of the provisions of the Investment Agreement
contained in this Information Statement are summaries, are not complete, and are
qualified in their entirety by reference to all of the provisions of the
Investment Agreement, a copy of which is attached to this Information Statement
as Exhibit A.
Warrants
The Amendment is also necessary to enable the Company to issue
shares of Common Stock upon the exercise of warrants to purchase 772,000 shares
of Common Stock held by Conseco and its subsidiaries.
The Company issued to Conseco a warrant to purchase 500,000
shares of Common Stock at an exercise price of $12.625 per share and a warrant
to purchase 15,000 shares of Common Stock at an exercise price of $14.25 per
share on April 23, 1996 in connection with the purchase by Conseco of the
Company's Subordinated Convertible Debentures (collectively, the "Conseco
Warrants").
In connection with the Credit Agreement, on June 23, 1997, the
Company issued to Conseco Private Capital Group, Inc. a warrant to purchase
257,000 shares of Common Stock at an exercise price of $.15 per share (the "CPCG
Warrant" and collectively with the Conseco Warrants, the " Warrants") and agreed
to reduce the exercise price of the Conseco Warrants to $.15 per share.
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Common Stock Issuable Upon Coversion of Debentures and Exercise of Warrants
Upon the conversion of the Acquired Debentures and the
exercise of the Warrants, Conseco and its subsidiaries will own approximately
[75,920,444] shares of Common Stock, representing approximately [85.20]% of the
then outstanding shares of Common Stock (1).
Description of the Amendment
The Amendment increases the number of shares of Common Stock
the Company is authorized to issue from 50,000,000 to 100,000,000. It will
become effective on December 19, 1997, when a Certificate of Amendment setting
forth the Amendment filed with the Secretary of State of the State of Delaware
will become effective. A copy of the Amendment is attached hereto as Exhibit B.
The holders of the Company's existing outstanding shares of
Common Stock have no preemptive right to purchase the shares authorized by the
Amendment.
The purpose of the Amendment is to authorize sufficient shares
of Common Stock for issuance upon conversion of the Acquired Debentures and
exercise of the Warrants. The Amendment will also provide additional authorized
shares of Common Stock for issuance by the Company in the future to satisfy
obligations or to take advantage of opportunities that may become available. The
Company does not anticipate seeking authorization from the Company's
stockholders for the issuance of any of the shares of Common Stock authorized by
the Amendment.
The issuance of the Common Stock authorized by the Amendment
upon conversion of the Acquired Debentures will not provide any proceeds to the
Company. It will, however, improve the Company's financial condition by
converting the outstanding principal of, and accrued interest on, those
debentures into equity. In addition, the transactions provided by the Investment
Agreement, of which the Amendment is a part, have resulted in the infusion of an
additional $10,000,000 of capital into the Company by means of additional
advances under the Credit Agreement and the purchase of the Company's Series A
Preferred Stock. The $10,000,000 of proceeds have or will be used by the Company
to fund operating expenses.
- --------
1 All numbers and percentages of shares of common stock set forth within
brackets in this preliminary information statement have been calculated upon the
assumption that the definitive information statement will be distributed on
November 29, 1997 and that the amendment to the Company's Certificate of
Incorporation described in this preliminary information statement will become
effective 20 days thereafter. In the event of a later date of distribution, the
numbers and percentages of shares of common stock will be adjusted accordingly.
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The issuance of Common Stock authorized by the Amendment upon
exercise of the Warrants will provide $115,800 of proceeds to the Company, all
of which will be used by the Company to fund operating expenses.
Effect of Amendment On Existing Security Holders
As a result of the Amendment, [39,106,139] shares of Common
Stock will be issued upon conversion of the Acquired Debentures and exercise of
the Warrants, representing approximately [43.89]% of the shares of Common Stock
which will then be outstanding. Upon conversion of the Acquired Debentures and
exercise of the Warrants, Conseco and its subsidiaries will hold [75,920,444]
shares of Common Stock or [85.20]% of the shares of Common Stock which will then
be outstanding.
The Amendment will permit the Company to issue an additional
50,000,000 shares of Common Stock. The Company is obligated to issue
[75,148,444] shares of Common Stock upon conversion by Conseco of the Company's
Acquired Debentures pursuant to the Investment Agreement immediately after the
Amendment becomes effective on December 14, 1997. The Company is also obligated
to issue 772,000 shares of Common Stock upon exercise of the Warrants. The
issuance of those shares of Common Stock will substantially reduce the
proportionate interest that each presently outstanding share of Common Stock has
with respect to dividends, voting, and the distribution of assets upon
liquidation.
The issuance of the shares of Common Stock upon the effective
date of the Amendment will permit Conseco to substantially increase its
ownership of Common Stock. However, since Conseco presently has the power to
direct or cause the direction of the management and policies of the Company, the
Amendment will not result in a change of control of the Company (see "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Change of Control").
NASDAQ's Action to Delist Common Stock
The staff of The Nadaq Stock Market, Inc. ("Nasdaq") has
advised the Company that it is subject to delisting, asserting that the issuance
of Common Stock upon conversion of the Subordinated Convertible Debentures and
certain Company actions have violated Nasdaq policies.
On August 29, 1997, the Company filed an application with
Nasdaq to determine whether stockholder approval was necessary for the
transactions under the Investment
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Agreement. The Company's application also sought an exemption from the
requirement of shareholder approval in the event Nasdaq deemed such approval
necessary.
By letter dated September 19, 1997, Nasdaq's staff asserted
that, among other things, the Company's issuance of certain of the Convertible
Subordinated Debentures without stockholder approval "may have occured in
violation of Nasdaq Marketplace Rule 4460(i)(D)(ii)."
In response, the Company has requested an exception to
Nasdaq's decision to delist the Company. In its written submission to Nasdaq,
the Company has expressed its view that none of the Subordinated Convertible
Debentures were issued in violation of Nasdaq's rules and that the transactions
under the Investment Agreement did not require shareholder approval under
Nasdaq's rules. A hearing on this matter is scheduled to be held on November 20,
1997.
In the event that Nasdaq's determinations are ultimately
sustained, the Company's Common Stock would be delisted from Nasdaq. Such
delisting would render Nasdaq unavailable for transactions in the Common Stock.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
NAL Financial Group, Inc.
The following table sets forth, as of November 19, 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
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309 2,044,754(2) %
Robert J. Carlson
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309 75,196(3) *
Ngaire E. Cuneo
745 Fifth Avenue, Suite 2700
New York, NY 10151 0(4) *
David R. Jones
2 Ocean Avenue
Scituate, MA 02066-1624 23,000(5) *
Michael F. Bonnet
745 Fifth Avenue, Suite 2700
New York, NY 10151 0(6) *
Andrew W. Hubregsen
745 Fifth Avenue, Suite 2700
New York, NY 10151 0(6) *
Robert T. Wildman, Esquire
2600 One Indiana Square
Indianapolis, IN 46204-2071 0(6) *
Conseco, Inc.
11815 N. Pennsylvania Street
P. O. Box 1911
Carmel, IN 46032 [83,920,444](7) [86.42]%
All Directors and Executive Officers
As a group (7 persons) 2,142,950 [2.2]%
<FN>
*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. While 50,000,000 shares of Common Stock are outstanding as of
November 19, 1997, percentage of ownership is based on [97,106,139]shares
of Common Stock, the number of shares of Common Stock that will be
outstanding upon conversion of the Company's Subordinated Convertible
Debentures and exercise of the Warrants immediately after the Amendment
becomes effective and upon conversion of 5,000,000 shares of the Company's
Series A Preferred Stock.
(2) Includes 1,676,245 shares held by Robert R. Bartolini and Marcia G.
Bartolini, Co-Trustees of the Robert R. Bartolini Revocable Trust dated
July 27, 1992. 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.
(3) 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.
(4) Ms. Cuneo joined the Board of Directors effective April 23, 1996 in
conjunction with the sale by the Company of certain debentures to
affiliates of Conseco.
(5) 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.
(6) Michael F. Bonnet, Andrew W, Hubregsen, and Robert T. Wildman, Esquire,
joined the Board of
Directors on October 6, 1997 pursuant to the terms of the Investment
Agreement. See "AMENDMENT TO CERTIFICATE OF INCORPORATION - Investment
Agreement."
(7) Includes 36,814,305 shares of Common Stock held by CIHC. Also includes
[47,106,139] shares of Common Stock issuable upon conversion of the
Company's Subordinated Convertible Debentures and upon exercise of the
Warrants, assuming such conversion and exercise occur upon the effective
date of the Amendment, and upon conversion of the Company's Series A
Preferred Stock, assuming a conversion price of $.625 per share.
</FN>
</TABLE>
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Material Voting Arrangements
Messrs. Bartolini and Carlson are parties to a voting trust agreement dated as
of November 30, 1994 (the "Voting Trust Agreement") pursuant to which 400,000
shares of Common Stock were held 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 are to be released for each $150,000 of
cumulative net income after taxes of the Company up to $3,000,000 and 5,000
shares are to 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 are to be released pro
rata in accordance with the number of trust shares beneficially owned by each
stockholder. As of June 30, 1997, 48,931 shares remained in the trust for Mr.
Bartolini and 9,652 shares remained in the trust for Mr. Carlson. If these
remaining shares are not released pursuant to the earn-out formula within three
years, they will be canceled. The trustee under the Voting Trust Agreement is
English, McCaughan & O'Bryan, P.A., counsel to the Company.
Change of Control Transactions
As a result of the transactions which have been consummated under the Investment
Agreement prior to the date of this Information Statement, Conseco and its
subsidiaries presently have the power to direct or cause the direction of the
management and policies of the Company.
As a result of its conversion of the Company's Subordinated Convertible
Debentures prior to the date of this Information Statement, CIHC owns shares of
Common Stock representing approximately 73.6 % of the outstanding Common Stock
of the Company on the Record Date.
The Company is subject to Section 203 of the Delaware General
Corporation Law (the "Delaware General Corporation Law'), which provides that a
person who acquires fifteen percent (15%) or more
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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 (85) percent 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.
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 transfer of stock of the
corporation or a subsidiary to the interested stockholder (except for a transfer
in conversion, exchange or pro rata distribution which does 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 financial benefits.
By virtue of the approval of the transactions contemplated by the Investment
Agreement by action of its Board of Director's dated August 21 and September 29,
1997, the Company has waived application of Section 203 to such transactions.
On October 1, 1997, the Board of Directors increased its size from four to
seven, and on October 6, 1997 elected three individuals designated by Conseco to
the three vacancies on the Board of Directors thus created. On October 3, 1997,
John T. Schaeffer resigned as a director of the Company. Prior to the election
of the Conseco nominees to the Company's Board of Directors pursuant to the
Investment Agreement, Conseco had exercised the right to designate one director
provided to it in connection with the purchase by subsidiaries of Conseco of the
Company's Subordinated Convertible Debentures in April 1996. As a result, four
of the Company's six directors are individuals which have been designated by
Conseco. Those individuals are:
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 since 1992. From
1986 to 1992, Ms. Cuneo was
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Senior Vice President and Corporate Officer of General Electric Capital
Corporation. Ms. Cuneo is also a director of Conseco and Duke Realty
Investments.
Andrew W. Hubregsen
Mr. Hubregsen, 35, became a director of the Company on October 6, 1997. He has
been employed by Conseco Private Capital Group, Inc. since 1992 and its
currently its Senior Vice President, with responsibilities for identifying,
structuring, and underwriting new investment opportunities. He was previously a
Senior Account Manager of General Electric Capital Corporation's Corporate
Finance Group, with responsibilities for underwriting, structuring, and
monitoring debt and equity investments.
Michael F. Bonnet
Mr. Bonnet, 35, became a director of the Company on October 6, 1997. He has been
employed by Conseco Private Capital Group, Inc. since 1995 and is currently its
Vice President, with responsibilities for identifying, structuring, and
underwriting new investment opportunities. From 1993 to 1995, Mr. Bonnet was a
Senior Associate in the Reorganization and Bankruptcy Group of Coopers &
Lybrand, with responsibilities for evaluating, developing and implementing
workout strategies for client companies. From 1986 to 1992, Mr. Bonnet was an
Account Manager in the Corporate Finance Group of General Electric Capital
Corporation, with responsibilities for restructuring non-performing assets and
for underwriting, structuring, and monitoring debt and equity investments in the
financial services industry.
Robert T. Wildman
Mr. Wildman, 50, became a director of the Company on October 6, 1997. He is a
partner with the law firm of Henderson, Daily, Withrow & DeVoe in Indianapolis.
His law firm represents Conseco, Inc. on various matters, including its
relationship with the Company.
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Conseco, Inc.
The following table sets forth, as of September 30, 1997, the
beneficial ownership of all shares of the outstanding common stock of Conseco,
as of such date, of all named executive officers and directors of the Company,
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
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309 0 0%
Robert J. Carlson
500 Cypress Creek Road West,
Suite 590
Fort Lauderdale, FL 33309 0 0
Ngaire E. Cuneo
745 Fifth Avenue, Suite 2700
New York, NY 10151 1,505,102(2) *
David R. Jones
2 Ocean Avenue
Scituate, MA 02066-1624 0 0
Michael F. Bonnet
745 Fifth Avenue, Suite 2700
New York, NY 10151 6,578(3) *
Andrew W. Hubregsen
745 Fifth Avenue, Suite 2700
New York, NY 10151 36,786(4) *
Robert T. Wildman, Esquire
2600 One Indiana Square
Indianapolis, IN 46204-2071 0(5) 0
All Directors and Executive Officers
As a group (7 persons) 1,548,466 *
<FN>
*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-K and Rule 13d-3(d)(1), promulgated under the
Exchange Act.
(2) 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." Of these shares, 574,676 are subject
to options held by Ms. Cuneo which are exercisable within 60 days, 82,142
are owned by trusts of which her children are the beneficiaries, and 10,000
are subject to a currently exercisable warrant by her.
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<PAGE>
(3) Michael F. Bonnet joined the Board of Directors on October 6, 1997 pursuant
to the Investment Agreement. See "AMENDMENT TO CERTIFICATE OF INCORPORATION
- Investment Agreement." Of these shares, 5,760 are subject to options held
by Mr. Bonnet which are exercisable within 60 days and the remainder are
attributable to Mr. Bonnet's account under the ConsecoSave Plan, a 401(k)
savings plan.
(4) Andrew W. Hubregsen joined the Board of Directors on October 6, 1997
pursuant to the Investment Agreement. See "AMENDMENT TO CERTIFICATE OF
INCORPORATION - Investment Agreement." Of these shares, 34,000 are subject
to options held by Mr. Bonnet which are exercisable within 60 days and the
remainder are attributable to Mr. Hubregsen's account under the ConsecoSave
Plan, a 401(k) savings plan
5) Mr. Wildman joined the Board of Directors on October 6, 1997 pursuant
to the Investment Agreement. See "AMENDMENT TO CERTIFICATE OF INCORPORATION
- Investment Agreement."
</FN>
</TABLE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934
(the "Exchange Act") are incorporated by reference herein:
1. Financial Statements of the Company [included in Part II,
Item 7 of the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1996];
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Exchange Act after the date of this Information
Statement shall be deemed to be incorporated by reference into this Information
Statement and to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Information Statement to the extent that a statement contained herein or in
any other
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subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Information Statement.
By Order of the Board of Directors,
/s/ROBERT R. BARTOLINI
- -----------------------------
Robert R. Bartolini, Chairman and Chief Executive Officer
Dated: November 29, 1997
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EXHIBIT A
INVESTMENT AGREEMENT
This Agreement is by and between NAL Financial Group Inc., a Delaware
corporation ("Company") and Conseco, Inc., an Indiana corporation or its assigns
("Conseco") to be effective as of this 21st day of August, 1997.
RECITALS
A. Conseco Private Capital Group, Inc. ("Lender") and Company's
wholly owned subsidiary, NAL Acceptance Corporation, a Florida
corporation ("Borrower") have entered into a First Amendment to
Credit Agreement ("First Amendment") of even date herewith.
B. Subject to the terms and conditions hereof, Conseco or its
designee, has agreed to purchase certain preferred stock of the
Company.
C. As inducement for the Lender to advance funds under the First
Amendment and for Conseco to purchase the preferred stock, the
Company has agreed to amend the 9% Subordinated Convertible
Debenture dated April 23, 1996, issued to Beneficial Standard
Life Insurance Company in the amount of $5,000,000 and the 9%
Subordinated Convertible Debenture dated April 23, 1996, issued
to Great American Reserve Insurance Company in the amount of
$5,000,000 (collectively, the "Conseco Debentures") to provide
that the conversion price therein is fixed at thirty-two
(32(cent)) cents per share based upon eighty percent (80%) of the
closing bid price of the company's common stock on August 19,
1997, pursuant to the Second Amendment in the form attached
hereto as Exhibit "A" (the "Conseco Debenture Amendments").
D. As a condition of Lender's execution and delivery of the First
Amendment, the company shall amend certain other convertible
debentures now held by third parties, as listed on Exhibit "B"
attached hereto ("Other Debentures") to provide for a fixed
conversion price of (i) thirty (30) cents per share for all
Other Debentures other than those now held Merrill Lynch World
Income Fund, Inc. and Merrill Lynch Convertible Fund, Inc. (the
"Merrill Debentures") and (ii) thirty-two (32(cent)) per share
for the Merrill Debentures as to (i) and (ii) when and as Conseco
or any affiliate acquires such Other Debentures all as
hereinafter more specifically provided for herein.
E. As an inducement to the company to enter into this Agreement,
Conseco agrees to convert the Conseco Debentures and Other
Debentures it acquires at the Closing or as soon thereafter as
possible.
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and to
induce the Lender to enter into the First Amendment, the parties hereby agree as
follows:
1. For purposes of this Agreement, the term "Closing" shall mean one
business day following the later of (i) the expiration of the waiting period
under the Hart-Scott-Rodino Act with respect to a filing made by Conseco
thereunder with respect to its proposed acquisition of control of the company
("HSR Filing") or (ii) the resolution of any objections or antitrust issues
raised by the government as a result of such filing. Conseco and the Company
agree to make the necessary filings under the Hart-Scott-Rodino Act by August
27, 1997.
2. At the Closing, Conseco shall cause the Conseco Debentures and Other
Debentures owned by Conseco to be converted to common stock of the company in
accordance with their amended conversion prices as provided herein to the extent
that the Company has sufficient authorized common shares, and will complete all
such remaining conversions after sufficient authorized shares are available.
3. Conseco or its designees will use its best efforts to acquire the
Other Debentures at or prior to Closing on the terms reflected in term sheets
sent to the holders of the Other Debentures. At the Closing, the Company shall
execute and deliver the Conseco Debenture Amendments reflecting the fixed
conversion price of thirty-two (32(cent)) cents per share and at the Closing
upon receipt of written notification from Conseco that Conseco, or one of its
affiliates, has acquired all or any part of the Other Debentures, the Company
shall enter into an amendment with such acquiring party providing for the
amendment of the conversion price of the Other Debentures so acquired to a fixed
price of thirty (30(cent)) cents per share except for the Merrill Debentures
whose conversion price shall be amended to a fixed price of thirty-two
(32(cent)) cents per share; such amendments being substantially in the same form
as the Conseco Debenture Amendments.
4. At the Closing, Conseco shall cause the Lender to extend the
maturity date of all monies (i.e., the Original Loan and the Working Capital
Loan) advanced to Borrower by Lender under its Credit Agreement with Borrower to
April 1, 1998.
5. The Company shall immediately undertake to amend its Certificate
of Incorporation to increase its authorized shares of common stock in an amount
sufficient to issue common stock upon conversion of the Conseco Debentures and
Other Debentures (assuming the same are acquired and converted by Conseco or its
affiliates) at the amended conversion price. The Company certifies that its
Board of Directors has adopted a resolution proposing such an amendment to its
shareholders. Conseco shall cooperate with the Company in connection with such
amendment and vote in favor thereof. Prior to the Closing, the Company agrees
not to
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issue, offer or sell any shares of common stock or preferred stock or securities
convertible into common or preferred stock without consent of Conseco.
6. The Company certifies that its Board of Directors has adopted
resolutions increasing the members of its Board of Directors by three (3)
positions to create three (3) vacancies effective as of Closing, and have
authorized such vacant positions to be filled by Conseco appointees at the
Closing.
7. At the Closing, Conseco or its designee shall contribute additional
equity in an amount equal to the difference between Ten Million Dollars
($10,000,000), and the amount of loan advances made by the Lender to the Company
under the Working Capital Loan as defined in the First Amendment as of the
Closing in exchange for preferred stock of the Company have terms acceptable to
Lender and consistent with the provisions of Exhibit "C" attached hereto.
8. Conseco's obligations to close shall be subject to the following
conditions: (i) no government agency has raised any objections or antitrust
issues with respect to the acquisition of the Other Debentures by Conseco or its
affiliates, (ii) the Borrower is not in material default of its obligations to
Lender beyond applicable cure periods, (iii) the holders of the Other Debentures
shall have complied with their agreements to sell the Other Debentures to
Conseco or its affiliates (iv) the Company is not a party to any insolvency,
receivership or bankruptcy proceedings, (v) the Company has not breached its
obligations under this Agreement, or (vi) there has been no material adverse
change in the financial condition or business prospects of the Company and its
subsidiaries since the date hereof provided Lender provides the advances
required under the Credit Agreement with Borrower.
9. Conseco agrees that (i) from the date hereof, until Closing, neither
Conseco nor any of its Affiliates will initiate or cooperate in the initiation
of any reorganization or liquidation proceeding with respect to the Company
under the Bankruptcy Act, (ii) for a period of six (6) months following the
Closing, Conseco will not cause the Company to engage in a cash out merger with
Conseco or any Conseco affiliate or any other transaction in which minority
shareholders are forced to exchange their shares for cash or other consideration
unless the transaction is approved by a majority of the disinterested members of
the Board of the Company, (iii) for a period of there (3) months following the
Closing, Conseco will not cause the Company to engage in a cash out merger with
Conseco or any Conseco affiliate or other transaction in which minority
shareholders of the Company are forced to exchange their shares for cash or
other consideration unless the transaction is approved by a majority of such
minority shareholders. This paragraph does not prohibit purchase of Company
shares by Conseco or its affiliates on a voluntary basis.
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10. This Agreement is for the benefit of the Lender, Conseco, and its
affiliates, and shall have no effect on any Other Debentures not transferred to
Conseco or its affiliates, not shall it benefit current holders of the Other
Debentures.
11. The Company agrees that upon Conseco's purchase of the Merrill
Debentures, the Company shall amend all those certain warrants issued September
12, 1996, to the holders of Merrill Debentures of shares of common stock of the
Company so as to provide a strike price being adjusted to one hundred percent
(100%) of the closing bid price of the Company's common stock, as reported on
the principal exchange or automated quotation system upon which the Company's
common stock trades on the day of the expiration of the waiting period for the
HSR filing made by Conseco with respect to its proposed acquisition of control
of the Company (said warrants being retained by such Merrill Lynch affiliate).
12. The Company represents that it has been duly authorized to enter
into and perform this Agreement and that the execution and performance of this
Agreement by the Company will not violate or cause a default under any orders,
agreements, indentures or laws to which the Company is a party or by which it is
bound.
13. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties.
14. This Agreement may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
16. In the event any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
17. This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.
18. In any action or proceeding brought to enforce any provision of
this Agreement, or where any provision hereof is validly asserted as a defense,
the successful party shall be entitled to recover reasonably attorneys' fees in
addition to any other available remedy. In addition, the
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Company shall pay the reasonable attorney fees incurred by Conseco in connection
with the transactions contemplated by this Agreement and the preparation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the first above-mentioned date.
CONSECO, INC.
By: /s/ Ngaire E. Cuneo
-------------------------
Ngaire E. Cuneo
Executive Vice President
NAL FINANCIAL GROUP INC.
By: /s/ Robert R. Bartolini
------------------------
Robert R. Bartolini,
Chairman and Chief Executive Officer
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EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
NAL FINANCIAL GROUP INC.
The undersigned, desiring to amend the Certificate of
Incorporation of NAL Financial Group Inc., a Delaware corporation (the
"Corporation"), pursuant to Section 242 of the Delaware General Corporation law,
DOES HEREBY CERTIFY:
FIRST: The Board of Directors of the
Corporation has duly adopted the following resolution
proposing and declaring advisable the following
amendment to its Certificate of Incorporation:
RESOLVED, that Section 5(a) be amended to
read as follows:
"5. (a) The Corporation is authorized to issue
capital stock to the extent of: 100,000,000 shares
of Common Stock with a par value of $.15 per share
and 10,000,000 shares of Preferred Stock with a par
value of $.01 per share.
The Board of Directors shall have the
authority to fix by resolution such
designations, powers, preferences, rights,
qualifications, limitations, or restrictions
of the Preferred Stock that may be desired."
SECOND: That written consent by the
shareholders of the Corporation has been given to the
aforesaid amendment in accordance with Section 228 of
the Delaware General Corporation Law.
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THIRD: That the aforesaid amendment has
been duly adopted in accordance with Section 242 of
the Delaware General Corporation Law.
FOURTH: That this amendment shall become
effective on December 14, 1997.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be signed by its President and Secretary this 24th
day of November, 1997.
NAL FINANCIAL GROUP INC.
By: /s/ROBERT R. BARTOLINI
----------------------------------
Robert R. Bartolini, President
By: /s/JOANN WOODSIDE
----------------------------------
JoAnn Woodside, Secretary
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