SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE NATIONAL REGISTRY INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11.
(4) Proposed maximum aggregate value of transaction:
[ ] 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>
[LOGO] NRid
THE NATIONAL REGISTRY INC.
May 24, 1996
Dear Stockholder:
You are cordially invited to attend The National Registry Inc.'s Annual
Meeting of Stockholders, to be held at 10:00 a.m., local time, on Tuesday, June
25, 1996, in the East and West 57th St. Room of the Drake Hotel at 440 Park
Avenue, New York, New York 10022.
Business scheduled to be considered at the meeting includes the election of
four directors, the consideration of a proposed amendment to the Company's 1992
Stock Incentive Plan to increase by 1,000,000 the number of shares of the
Company's Common Stock authorized for issuance thereunder, the consideration of
a proposed amendment to the Company's Certificate of Incorporation to increase
the number of authorized shares of the Company's Common Stock from 50,000,000 to
75,000,000 shares and the ratification of the appointment of Ernst & Young, LLP
as independent auditors for the Company for its fiscal year ending December 31,
1996. Additional information concerning these matters is included in the
accompanying Notice of Annual Meeting and Proxy Statement.
The board of directors of the Company recommends that you vote "FOR"
election of the four nominees of the board of directors as directors, "FOR" the
amendment of the Company's 1992 Stock Incentive Plan to increase by 1,000,000
the number of shares of the Company's Common Stock authorized for issuance
thereunder, "FOR" the amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company's Common Stock from
50,000,000 to 75,000,000 shares and "FOR" ratification of the appointment of
Ernst & Young, LLP as independent auditors of the Company for its fiscal year
ending December 31, 1996. The accompanying Proxy Statement provides detailed
information concerning the matters to be voted on at the Annual Meeting. Also
enclosed is our 1995 Annual Report on Form 10-K which contains information
concerning the 1995 fiscal year.
Please complete, sign and return the enclosed proxy card as soon as
possible. You may, of course, attend the Annual Meeting and vote in person.
Sincerely,
/s/ J. Anthony Forstmann
J. Anthony Forstmann
Co-Chairman of the Board
<PAGE>
THE NATIONAL REGISTRY INC.
2505 118th Avenue North
St. Petersburg, Florida 33716
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, JUNE 25, 1996
----------
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of The National Registry Inc., a Delaware corporation (the "Company"),
will be held at 10:00 a.m., local time, on June 25, 1996, in the East and West
57th St. Room of the Drake Hotel at 440 Park Avenue, New York, New York 10022
for the following purposes:
1. To elect four directors to serve for a term of one-year or until
their successors have been duly elected and qualified;
2. To approve the proposed amendment to the Company's 1992 Stock
Incentive Plan to increase by 1,000,000 the number of shares of the
Company's Common Stock authorized for issuance thereunder;
3. To approve the proposed amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
Common Stock from 50,000,000 shares to 75,000,000 shares;
4. To ratify the appointment by the Board of Directors of Ernst &
Young, LLP as the Company's independent auditors for the fiscal year ending
December 31, 1996; and
5. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on May 22, 1996 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. Only
holders of record of the Company's Common Stock at the close of business on that
date will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Stockholders are urged to attend the meeting in person. If you are not able
to do so, please sign, date and return the accompanying Proxy in the enclosed
envelope. No postage is required if mailed in the United States.
By Order of the Board of Directors
/s/ Steven T. Price
Steven T. Price
Treasurer and Assistant Secretary
St. Petersburg, Florida
May 24, 1996
<PAGE>
THE NATIONAL REGISTRY INC.
2505 118th Avenue North
St. Petersburg, Florida 33716
----------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, June 25, 1996
----------
SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The National Registry Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders to be
held at 10:00 a.m., local time, on Tuesday, June 25, 1996, in the East and West
57th St. Room of the Drake Hotel at 440 Park Avenue, New York, New York 10022
and at any adjournments thereof (the "Annual Meeting"). Only holders of record
of the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on May 22, 1996 (the "Record Date") are entitled to
receive notice of, and to vote at, the Annual Meeting. At the close of business
on the Record Date, [ ] shares of Common Stock were issued and
outstanding. The presence in person or by proxy of the holders of a majority of
the votes entitled to be cast by the outstanding shares of Common Stock shall
constitute a quorum for matters to be voted. Shares represented by proxies that
are marked "abstain" will be counted as shares present for purposes of
determining the presence of a quorum on all matters. Proxies relating to "street
name" shares that are voted by brokers on some but not all of the matters will
be treated as shares present for purposes of determining the presence of a
quorum on all matters, but will not be treated as shares entitled to vote at the
Annual Meeting on those matters as to which authority to vote is withheld by the
broker ("broker non-votes").
The Company's 1995 Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, including certified financial statements, has either
preceded, or is enclosed with, this Proxy Statement. This Proxy Statement and
the accompanying proxy card are being mailed to the Company's stockholders on or
about May 24, 1996.
The Common Stock was the only voting security of the Company outstanding
and entitled to vote at the Annual Meeting on the Record Date. Holders of Common
Stock are entitled to one vote per share on each matter to be voted upon at the
Annual Meeting. The Company's Bylaws provide that a plurality of the votes
present in person or represented by proxy at the Annual Meeting entitled to vote
on the election of directors shall be sufficient to elect directors.
Accordingly, abstentions and broker non-votes will not affect the outcome of the
election provided that a quorum is present. The vote of a majority of the shares
of Common Stock outstanding is necessary for the approval of the Amendment to
the Certificate of Incorporation. Accordingly, abstentions and broker non-votes
will effect the outcome of the vote thereon. The vote required for approval of
all other matters submitted to a vote of the stockholders of the Company,
including the vote on the amendment of the Company's 1992 Stock Incentive Plan,
shall be determined based on a majority of shares present in person or
represented by proxy at the Annual Meeting. On any such matter, an abstention
will have the same effect as a negative vote but, because shares held by brokers
will not be considered entitled to vote on matters as to which the brokers
withhold authority, a broker non-vote will have no effect on the vote. The vote
of shares of Common Stock will be counted by representatives of the Company's
stock transfer agent, U.S. Stock Transfer Corporation, or another inspector of
elections appointed by the Company.
Shares of Common Stock represented by properly executed proxy cards
received by the Company at or prior to the Annual Meeting will be voted
according to the instructions indicated on such proxy cards. Unless contrary
instructions are given, the persons named on the proxy card intend to vote the
<PAGE>
shares so represented FOR the election of the four nominees for director named
in this Proxy Statement, FOR the amendment of the Company's 1992 Stock Incentive
Plan (the "Plan") to increase by 1,000,000 the number of shares of Common Stock
authorized for issuance thereunder, FOR the proposed amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 50,000,000 shares to 75,000,000 shares and FOR ratification of
the appointment of Ernst & Young, LLP as the Company's independent auditors for
the fiscal year ending December 31, 1996. As to any other business which may
properly come before the Annual Meeting, the persons named on the proxy card
will vote according to their sole discretion.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted at the Annual Meeting by delivering a written notice of revocation
to the Secretary of the Company, by a duly executed proxy bearing a later date
or by voting by ballot at the Annual Meeting.
The cost of preparing, assembling and mailing this proxy soliciting
material and Notice of Annual Meeting will be paid by the Company. Additional
solicitation by mail, telephone, telegraph or by personal solicitation may be
done by directors, officers and regular employees of the Company, for which they
will receive no additional compensation. Brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of the Company's stock as of
the Record Date will be requested to forward proxy soliciting material to the
beneficial owners of such shares, and will be reimbursed by the Company for
their reasonable expenses.
Dissenters' rights of appraisal will not be available under Delaware law
with respect to any proposal to be submitted by the Board of Directors at the
Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May [ ], 1996 by (i) each person
who is known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock; (ii) each of the Company's directors; (iii) each
person nominated to serve as a director of the Company; (iv) each of the Named
Executive Officers (as hereinafter defined); and (v) all officers and directors
of the Company as a group:
Amounts and
Nature of
Name and Address Beneficial Percent of
of Beneficial Owner Ownership Class
- ----------------- ----------- ----------
J. Anthony Forstmann ............ 12,814,154(1)(2) 41.7%(2)
7 Beverly Park
Beverly Hills, CA 90210
Home Shopping Network, Inc. ..... 6,336,154(2) 20.6%(2)
P.O. Box 9090
Clearwater, FL 34618
RMS Limited Partnership ......... 5,500,000(3) 21.3%(3)
201 West Liberty Street
P.O. Box 281
Reno, NV 89504
John L. Gustafson ............... 80,000(4) (5)
Kevin J. McKeon ................. -0- -0-
W. Lee Shevel ................... 60,000(4) (5)
Officers and directors
as a group (8 persons) ........ 12,954,154(1)(2)(4) 42.0%(1)(2)(4)
- ----------
(1) Of such amount, 3,500,000 shares of Common Stock are pledged in favor of
Theodore J. Forstmann, Mr. Forstmann's brother, to secure a demand note,
and 1,500,000 shares of Common Stock are pledged in favor of a financial
institution to secure a non-recourse credit facility which is past due.
Includes 1,000,000 shares of Common Stock directly held by Mr. Forstmann's
spouse, Catherine S. Forstmann.
2
<PAGE>
(2) Includes 6,336,154 shares of Common Stock issuable upon conversion of
100,000 currently convertible shares of Series A Preferred Stock held by
Home Shopping Network, for which Mr. Forstmann holds an irrevocable proxy.
Such irrevocable proxy shall terminate on the first to occur of the
following: (a) April 21, 2002, (b) the bankruptcy, insolvency or
dissolution of the Company or (c) the date that Mr. Forstmann and members
of his family in the aggregate cease to control, directly or indirectly,
more than 20% of the total voting power in an election of directors of the
Company.
(3) Includes 1,500,000 shares of Common Stock subject to outstanding options
which are vested and excercisable.
(4) Includes shares of Common Stock that can be acquired by exercise of vested
and exercisable stock options within 60 days of March 31, 1996 as follows:
Mr. Gustafson--80,000 shares; Mr. Shevel--60,000 shares; and all directors
and officers as a group--140,000 shares. Excludes 320,000 and 240,000
shares subject to options which have not vested in favor of Messrs.
Gustafson and Shevel, respectively.
(5) Less than 1%.
PROPOSAL 1. ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting to hold office for a
term of one year or until their successors have been duly elected and qualified.
Proxies will be voted for election of each of the four directors named below,
unless otherwise directed.
Election of Directors will require the affirmative vote of the holders of a
plurality of the votes of shares of Common Stock present in person or
represented by Proxy and entitled to vote on the election of directors at the
Annual Meeting. Although the Board of Directors anticipates that all of the
nominees will be available to serve as directors of the Company, should any one
or more of them not accept the nomination, or otherwise be unwilling or unable
to serve, it is intended that the proxies will be voted for the election of a
substitute nominee or nominees designated by the Board of Directors.
The Board of Directors has nominated the persons named below for election
as Directors at the Annual Meeting. All nominees, except for Kevin J. McKeon,
are currently Directors of the Company.
Nominees
Term Director
Name Age Position Expires Since
----- --- -------- ------- --------
J. Anthony Forstmann(1) ...... 58 Chairman 1997 1991
and Director
John L. Gustafson(1) ......... 52 President, 1997 1995
Chief Executive
Officer and Director
Kevin J. McKeon .............. 39 Director 1997 Not
Applicable
W. Lee Shevel(1) ............. 63 Vice-Chairman 1997 1995
and Director
- ----------
(1) Compensation Committee and Audit Committee member.
Information Regarding Nominees
J. Anthony Forstmann has been the Chairman of the Board of the Company from
June 1995, Co-Chairman from August 1993 to June 1995, Chairman from the
Company's inception in October 1991 to August 1993, a member of the Board's
Compensation Committee since February 1993 and a member of the Board's Audit
Committee since December 1995. Mr. Forstmann was President of the Company from
October 1991 to August 1993 and from September 1994 to March 1995 and Chief
Executive Officer of the Company from October 1991 to August 1993 and from
September 1994 to December 1995. Mr. Forstmann has been a Managing Director of
3
<PAGE>
J.A. Forstmann & Co., a merchant banking firm, since October 1987. He co-founded
Forstmann-Leff Associates, an institutional money management firm, in 1968 and
was a Managing Director thereof from its inception until October 1987. Mr.
Forstmann has been a Limited Partner of Forstmann Little & Co. since its
inception in 1978. Mr. Forstmann has been a director of Home Shopping Network,
Inc., since 1992, as well as of Cities in Schools, a non-profit corporation. Mr.
Forstmann received a BA in Economics from Yale University and an MBA from the
Graduate School of Business Administration, Columbia University.
John L. Gustafson has served as President, Chief Operating Officer and a
Director of the Company since March 1995, Chief Executive Officer since December
1995 and a member of each of the Board's Audit and Compensation Committees since
December 1995. From November 1993 to March 1995, Mr. Gustafson served as Vice
President for Business Development of Allied Technical Services, a wholly-owned
subsidiary of Allied Signal Inc. From 1968 to November 1993, Mr. Gustafson held
a variety of senior executive positions at Unisys Corp. and at Burroughs
Corporation, its predecessor company. Mr. Gustafson received his BS in Math from
St. Louis University and his MS in Computer Science from the University of
Missouri-Rolla.
Kevin J. McKeon, 39, has served as Executive Vice President, Chief
Financial Officer and Treasurer of Home Shopping Network, Inc. ("Home Shopping
Network") since February 1996. He served as Senior Vice President of Accounting
and Finance and Treasurer of Home Shopping Network from December 1993 to
February 1996. He served as Controller of the Company from July 1992 to December
1993. Prior to that appointment, he served as Executive Director of Finance of
Home Shopping Network from May 1991 to July 1992. From December 1986 to
September 1990, served in various financial capacities for Home Shopping
Network.
Lee Shevel has served as Vice Chairman of the Board and a Director of the
Company since March 1995, a member of each of the Board's Audit and Compensation
Committees since December 1995 and as a consultant to the Company since January
1995. Mr. Shevel also serves as a director of Insync Systems, Inc., a privately
held company in the business of providing gas distribution apparatus for
semiconductor processes. Since June 1994, Mr. Shevel has been Managing Director
of EIM, a consulting firm which he founded. From 1982 to June 1994, Mr. Shevel
held a variety of senior executive positions at Unisys Corp. and at Burroughs
Corporation, its predecessor company, including Vice President of Enterprise
Integration, President of Unisys' Shipboard and Ground Systems Group and of
Paramax Electronics, Unisys' Canadian subsidiary. Mr. Shevel received BS, MS and
Ph.D. degrees in Engineering from Carnegie Mellon University.
Mr. McKeon was nominated to serve on the Board of Directors by Home
Shopping Network in accordance with Home Shopping Network's right to nominate up
to three directors pursuant to the Stock Purchase Agreement, dated as of April
28, 1992, by and between the Company and Home Shopping Network, pursuant to
which the Home Shopping Network purchased 100,000 shares of the Series A
Preferred Stock of the Company.
Pursuant to a stockholders' voting agreement, dated as of March 14, 1995
(the "Stockholders' Voting Agreement"), J. Anthony Forstmann, RMS Limited
Partnership, a Nevada limited partnership ("RMS"), and Francis R. Santangelo
each agreed to vote certain shares of Common Stock beneficially owned by such
party, and each of their respective affiliates, for a director nominated by each
of Mr. Forstmann and RMS and not to vote certain shares of Common Stock
beneficially owned by such party, and each of their respective affiliates, in
favor of certain specified stockholder actions unless such actions are agreed
upon by Mr. Forstmann and RMS. To date, RMS has not exercised its right to
nominate a director pursuant to the Stockholders' Voting Agreement.
Compliance With Section 16(a) of The Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the Nasdaq Stock Market. Officers, directors and greater than
ten-percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
4
<PAGE>
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal 1995, J.
Anthony Forstmann, the Chairman of the Company, failed to file on a timely basis
five reports, covering 62 transactions in the aggregate, and William A. Wilson,
a director of the Company during 1995 who did not stand for re-election at the
Company's 1995 Annual Meeting of Stockholders, failed to file on a timely basis
one report, covering eight transactions. As of December 15, 1995, Mr. Forstmann
had filed all of his late reports, and as of February 28, 1995 Mr. Wilson had
filed his late report.
The Board of Directors and its Committees
The Board of Directors held nine meetings during fiscal year 1995.
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee. In addition, from time to time the Board establishes
committees of limited duration for special purposes. The Company does not have a
nominating committee for recommending to stockholders candidates for positions
on the Board of Directors.
The Audit Committee, which held one meeting during fiscal year 1995,
consisted of Gerald R. Johnson, Fredrick G. Ledlow and William A. Wilson, each a
director of the Company during 1995 who did not stand for re-election at the
Company's 1995 Annual Meeting of Stockholders, through June 1995; and Messrs.
Forstmann, Gustafson and Shevel and Peter M. Kern, a director of the Company who
resigned from the Board of Directors effective March 29, 1996, thereafter. The
Committee's responsibilities include reviewing (i) the scope and findings of the
annual audit, (ii) accounting policies and procedures and the Company's
financial reporting and (iii) the internal controls employed by the Company.
The Compensation Committee, which held two meetings during fiscal year
1995, consisted of Messrs. Forstmann, Johnson and Wilson through June 1995; and
Messrs. Forstmann, Gustafson and Shevel and Peter M. Kern, a director of the
Company who resigned from the Board of Directors effective March 29, 1996,
thereafter. The Committee's responsibilities include (i) making recommendations
to the Board of Directors on salaries, bonuses and other forms of compensation
for the Company's officers and other key management and executive employees,
(ii) administering the Company's 1992 Stock Incentive Plan and (iii) reviewing
management recommendations for grants of stock options and any proposed plans or
practices of the Company relating to compensation of its employees and
directors.
Each current director attended at least 75 percent of all meetings of the
Board of Directors and committees to which he was assigned that were held during
fiscal year 1995.
Compensation of Directors
No cash compensation has been paid to any of the directors of the Company
for being a director of the Company, except that such persons are reimbursed for
out-of-pocket expenses incurred in attending meetings of the Board of Directors
or committees of the Board of Directors of the Company.
On November 8, 1993, the Board of Directors granted options to purchase
45,000 shares of Common Stock, at an exercise price of $3.75 per share, to
Gerald F. Hogan, a director of the Company who resigned from the Board of
Directors effective September 28, 1995, and Peter M. Kern, a director of the
Company who resigned from the Board of Directors effective March 29, 1996, such
options vesting pro rata on each of the first three anniversaries of August 12,
1993, the date each of the foregoing individuals became directors of the
Company. Mr. Hogan's options expired unexercised on December 28, 1995; Mr.
Kern's options will expire on May 29, 1996.
5
<PAGE>
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company as of May 22,
1996 are set forth below.
Executive Officers
Officer
Name Age Position Since
----- --- ------- ------
John L. Gustafson ............ 52 President and 1995
Chief Executive
Officer
Clinton C. Fuller ............ 51 Vice President-- 1995
Product Marketing
and Financial
Services
Robert C. Leamy .............. 47 Vice President-- 1995
Product Operations
Todd D. Lowe ................. 43 Vice President-- 1995
Identification Systems
and Services
Steven T. Price .............. 45 Treasurer, 1992
Controller and
Assistant Secretary
The following sets forth the business experience, principal occupations and
employment of each of the current executive officers who do not serve on the
Board of Directors (See "Election of Directors--Information Regarding Nominees"
above for such information with respect to Mr. Gustafson):
Clinton C. Fuller has been Vice President--Product Marketing and Financial
Services of the Company since July 1995, overseeing the development and
marketing of the Company's products and services, including developing products
for the financial services industry. From September 1967 to June 1995, Mr.
Fuller held a variety of managerial positions at Unisys Corp., including
worldwide general manager of Unisys' financial retail delivery systems division.
Mr. Fuller received a BS in Computer Science from Lackawanna College.
Robert C. Leamy has been Vice President--Product Operations of the Company
since October 1995, managing the Company's product development. From August 1975
to October 1995, Mr. Leamy served as Engineering Director at Unisys Corp. where,
among other things, he helped develop computer products and systems used in law
enforcement. Mr. Leamy received his BS in Engineering from the University of
California, Los Angeles, a MS in Electrical Engineering and Computer Sciences
from the University of California, Berkeley and a MS in Administration from the
University of California, Irvine.
Todd D. Lowe has been Vice President--Identification Systems and Services
of the Company since September 1995, managing the implementation of the
Company's systems. From January 1982 to August 1995, Mr. Lowe was an employee of
Unisys Corp. where he was the business manager for its automated finger imaging
systems division (which was subsequently acquired by Loral Corporation),
managing the development of personal identification systems for government
social services agencies. Mr. Lowe received a BS in Chemistry from the United
States Naval Academy.
Steven T. Price has been Treasurer of the Company since September 1992 and
Controller since April 1992. From April 1991 to April 1992, Mr. Price was the
Vice President of Finance and Administration for Medic Alert Foundation
International. From September 1990 to April 1992, Mr. Price was Chief Financial
Officer for GOALS Athletic Wear, Inc. From May 1986 to September 1990, Mr. Price
held a variety of positions in various entities owned by Citicorp, N.A.,
including Corporate Controller for Quotron Systems, Inc. Prior to working for
Citicorp., Mr. Price spent an aggregate of four years working as an auditor for
Coopers & Lybrand. Mr. Price holds an MS Accounting degree from California State
University-Sacramento, an MBA degree from Southern Illinois
University-Edwardsville and a BS in Psychology from Swarthmore College. Mr.
Price is a certified public accountant.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation with respect to J. Anthony
Forstmann, Chairman of the Board of the Company from June 1995, Co-Chairman from
August 1993 to June 1995, Chairman from the Company's inception in October 1991
to August 1993, President of the Company from October 1991 to August 1993 and
from September 1994 to March 1995 and Chief Executive Officer from October 1991
to August 1993 and from September 1994 to December 1995, and John L. Gustafson,
President and Chief Operating Officer of the Company since March 1995 and Chief
Executive Officer since December 1995 (the "Named Executive Officers"). The
table omits other executive officers employed by the Company on December 31,
1995, because none of such officers' total annual salary and bonus for 1995
exceeded $100,000:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
-------------
Awards
Annual -------------
Compensation Securities
------------- Underlying
Name and Salary Options
Principal Position(1) Year ($) (#)
- ------------------- ----- ------------- -------------
J. Anthony Forstmann-- 1995 -0- -0-
Co-Chairman of the Board, 1994 -0- -0-
President and Chief Executive Officer(1) 1993 -0- 500,000(2)
John L.Gustafson -- 1995 $136,133 400,000
President and Chief Executive Officer 1994 NA NA
1993 NA NA
- ----------
(1) Mr. Forstmann does not receive cash compensation from the Company either as
an officer or a director of the Company.
(2) Options to purchase such 500,000 shares of Common Stock were canceled on
March 14, 1995.
The Company offers a plan pursuant to Section 401(k) of the Internal
Revenue Code (the "401(k) Plan") covering substantially all employees, including
the Named Executive Officers. Matching employer contributions are set at the
discretion of the Board of Directors. There were no employer contributions made
for either 1995, 1994 or 1993, the first year the 401(k) Plan was in effect.
Stock Incentive Plan
The 1992 Stock Incentive Plan, adopted by the Board of Directors and
approved by the stockholders of the Company in January 1992 (the "Plan"),
authorizes the granting of stock incentive awards ("Awards") to qualified
officers, employees, directors and third parties providing valuable services to
the Company (e.g., independent contractors, consultants and advisors to the
Company). At the Company's Annual Meeting of Stockholders held on August 12,
1993, the stockholders of the Company approved a proposal amending the Plan to
increase from 1,500,000 to 2,700,000 the number of shares of Common Stock
authorized for issuance upon exercise of options granted pursuant to the Plan.
The Board of Directors has proposed increasing such number of shares under the
Plan by an additional 1,000,000 shares. See "Proposal 2. Approval of Amendment
to the Stock Incentive Plan." The following table sets forth individual grants
of stock options made during fiscal year 1995 to each of the Named Executive
Officers (during fiscal year 1995 no stock appreciation rights ("SARs") were
awarded):
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------
Potential Realizable Value at
Percent of Assumed Annual Rates of Stock
Total Market Price Appreciation For Option
Options Price of Term
Granted to Common ----------------------------------------
Employees Exercise Stock on
Options in Fiscal Price Date of Expiration
Name (#) Year ($/Sh) Grant Date 0%($) 5% ($) 10%($)
----- ------- ---------- -------- ------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Anthony
Forstmann -0- -- -- -- -- -- -- --
John L.
Gustafson 400,000(1) 32.8% $1.50 $1.91(2) 3/14/2005 $164,000 $644,475 $1,381,619
</TABLE>
- ----------
(1) Stock Options were granted on March 14, 1995, of which options to purchase
80,000 shares of Common Stock vested on March 14, 1996 and options to
purchase 80,000 shares of Common Stock will vest on each of the next four
anniversaries of the grant date.
(2) The average of the bid and asked price on the Nasdaq Small-Cap Market on
March 14, 1996.
During fiscal year 1995, no stock options were exercised by any Director or
Named Executive Officer of the Company. The following table sets forth the
number and value of stock options outstanding as of December 31, 1995 for the
Named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Unexercised Value of Unexercised in-
Options at the-Money Options
Fiscal Year End (#) at Fiscal Year End ($)(1)
------------------------- --------------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
-------- ------------------------- --------------------------
J. Anthony Forstmann .... -0-/-0- -0-/-0-
John L. Gustafson ....... -0-/400,000 -0-/$512,500
- ----------
(1) Assumes a market price equal to the $2.78125 per share, the average of the
closing bid and asked price on the NASDAQ Small-Cap Market on December 29,
1995.
Compensation Committee Interlocks and Insider Participation
On January 4, 1995, Gerald R. Johnson and William A. Wilson resigned as
members of the Compensation Committee of the Board of Directors. The
Compensation Committee presently consists of Messrs. Forstmann, Gustafson and
Shevel. Mr. Forstmann was President of the Company until March 1995 and Mr.
Gustafson has been President of the Company since March 1995 and Chief Executive
Officer since December 1995.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Compensation
Committee") has furnished the following report on executive compensation:
Under the supervision of the Compensation Committee, the Company has
developed and implemented compensation policies which seek to enhance the
profitability of the Company, and thus stockholder value, by aligning the
financial interests of the Company's executive officers with those of its
stockholders. In furtherance of these goals, the Company relies to a large
degree on long-term incentive compensation provided through the Plan to attract
and retain corporate officers and other key employees of outstanding abilities
and to motivate them to perform to the full extent of their abilities.
8
<PAGE>
Total compensation for executive officers of the Company presently consists
of both cash and equity based compensation. The Committee determines the salary
of executive officers based upon competitive norms. Under the Plan, the
Compensation Committee grants stock options, stock appreciation rights,
performance share awards and restricted share awards based upon competitive
industrial practice. To date, the Compensation Committee has only granted stock
options. The Compensation Committee has the authority to determine the
individuals to whom such options are awarded, the terms at which option grants
shall be made and the terms of the options and the number of shares subject to
each option. The size of option grants are based upon competitive practice and
position level. Through the award of stock option grants, the objective of
aligning executive officers' long-range interests with those of the stockholders
are met by providing executive officers with the opportunity to build a
meaningful stake in the Company. Salary levels and stock option awards may be
adjusted up or down for an executive's achievement of specified objectives and
individual job performance.
J. Anthony Forstmann, the Chairman of the Company, does not receive any
cash compensation from the Company either as an officer or director of the
Company.
On March 14, 1995, John L. Gustafson was named President and Chief
Operating Officer of the Company. The Board of Directors agreed to compensate
Mr. Gustafson, after extensive negotiations, at the rate of $170,000 per year
and has granted to him, on such date, stock options to purchase 400,000 shares
of Common Stock at an exercise price of $1.50 per share, of which options to
purchase 80,000 shares of Common Stock will vest on each anniversary of the date
of the grant through March 14, 2000. No specific formula was used in determining
or agreeing to Mr. Gustafson's compensation; however, the cash portion of his
compensation was determined based on the lowest amount Mr. Gustafson could be
paid within the Company's cash constraints to meet its ordinary course expenses,
while giving him significant upside potential in an option grant, the vesting of
which was tied to continuity of service. In December 1995, Mr. Gustafson became
Chief Executive Officer of the Company.
Compensation Committee
J. Anthony Forstmann
John L. Gustafson
W. Lee Shevel
9
<PAGE>
Performance Graph
Set forth below is a line graph comparing total stockholder return on the
Company's Common Stock against the cumulative total return of the Center for
Research in Securities Prices ("CRSP") Index for the Nasdaq Stock Market and the
CRSP Index for Nasdaq Computer and Data Processing Stocks for the period
commencing October 19, 1992 (the date the Company's Common Stock was registered
under Section 12 of the Securities Exchange Act of 1934, as amended) and ending
December 31, 1995.
COMPARISON OF THIRTY-EIGHT MONTH CUMULATIVE TOTAL RETURNS* AMONG THE
CRSP INDEX FOR NASDAQ STOCK MARKET, CRSP INDEX FOR NASDAQ COMPUTER
AND DATA PROCESSING STOCKS AND THE NATIONAL REGISTRY INC.
[The following table was represented by a line graph in the printed material]
CRSP Index for
CRSP Index for Nasdaq Computer
The National Nasdaq Stock and Data
Date Registry, Inc. Market Processing Stocks
- -------- -------------- -------------- -----------------
10/19/92 100 100 100
12/31/92 66.67 114.65 106.8
3/31/93 80 116.81 111.91
6/30/93 58.33 119.03 111.97
9/30/93 66.67 129.05 112.49
12/31/93 62.5 130.82 113.07
3/31/94 54.17 125.35 114.67
6/30/94 64.58 119.49 112.26
9/30/94 23.96 129.4 125.2
12/30/94 21.88 127.91 137.76
3/31/95 51.041 140.232 154.461
6/30/95 29.166 160.406 183.086
9/29/95 40.624 179.725 200.049
12/29/95 45.833 181.947 209.384
- ----------
* The Common Stock of The National Registry Inc. was registered under Section
12 of the Securities Exchange Act of 1934, as amended, on October 19, 1992.
Notes:
A. Assumes $100 invested on October 19, 1992 in the CRSP Index for Nasdaq
Stock Market, the CRSP Index for Nasdaq Computer and Data Processing Stock and
the Common Stock of The National Registry Inc.
B. The Common Stock of The National Registry Inc. began trading on the
Nasdaq Small-Cap Market on April 27, 1993. Prior to that date, the Common Stock
traded sporadically in the over-the-counter market since February 1992.B. The
Common Stock of The National Registry Inc. began trading on the Nasdaq Small-Cap
Market on April 27, 1993. Prior to that date the Common Stock traded
sporadically in the over-the-counter market since February 1992.
10
<PAGE>
Certain Relationships and Related Transactions
During fiscal 1995, the Company retained as a consultant W. Lee Shevel, a
director of the Company, and paid him an aggregate of $96,800 (including $34,800
in travel and other expenses). On March 14, 1995, the Company granted Mr. Shevel
options to purchase 300,000 shares of Common Stock at an exercise price of $1.50
per share, of which options to purchase 60,000 shares of Common Stock have
vested and options to purchase 60,000 shares of Common Stock will vest on the
next four anniversaries of the date of the grant. In addition, during fiscal
1995, the Company retained DMG & Associates ("DMG"), a healthcare marketing
consulting firm founded by Donna M. Gustafson, the wife of John L. Gustafson,
the Chief Executive Officer and President of the Company, and paid DMG an
aggregate of $82,534 (including $14,284 in travel and other expenses) for
certain consulting services. On October 13, 1995, the Company granted Ms.
Gustafson options to purchase 25,000 shares of Common Stock at an exercise price
of $2.25 per share, vesting pro rata on each of the next three anniversaries of
the date of grant. The Company may retain Mr. Shevel and DMG from time to time
in the future.
Gerald F. Hogan, a director of the Company who resigned from the Board of
Directors effective September 28, 1995, and Peter M. Kern, a director of the
Company who resigned from the Board of Directors effective March 29, 1996, were
nominated by and served as representatives of Home Shopping Network, Inc. in
accordance with Home Shopping Network's right to nominate up to three directors
pursuant to the Stock Purchase Agreement, dated as of April 28, 1992 (the "Stock
Purchase Agreement"), by and between the Company and Home Shopping Network,
pursuant to which Home Shopping Network purchased 100,000 shares of the Series A
Preferred Stock of the Company. Following Mr. Kern's resignation from the Board
of Directors, Home Shopping Network has nominated Kevin J. McKeon to serve as a
member of the Board of Directors pursuant to the Stock Purchase Agreement.
The Company engages in a variety of transactions with Home Shopping
Network, including the rental by the Company of office space from Home Shopping
Network for an annual rental of approximately $60,000.
The Company believes that each of the related party transactions described
herein were on terms as fair to the Company as could have been obtained from
unaffiliated third parties.
PROPOSAL 2. APPROVAL OF AMENDMENT
TO THE STOCK INCENTIVE PLAN
Introduction
On May 8, 1996, the Board of Directors amended the Stock Incentive Plan,
subject to approval of the Company's stockholders, to increase from 2,700,000 to
3,700,000 the number of shares of Common Stock authorized for issuance
thereunder. Except as amended, the provisions of the Stock Incentive Plan will
remain unchanged. At the Company's Annual Meeting of Stockholders held on August
12, 1993, the stockholders of the Company approved a proposal amending the Plan
to increase from 1,500,000 to 2,700,000 the number of shares of Common Stock
authorized for issuance under the Plan.
Reasons for the Stock Incentive Plan and Amendment
The Board of Directors believes that the issuance of stock options
increases the incentive of, and attracts and encourages the continued employment
and service of qualified directors, officers and other key employees by
facilitating their purchase of a stock interest in the Company. In addition, the
granting of stock options helps align the financial interests of directors,
officers and the key employees receiving such options with the stockholders
because such directors', officers' and key employees' compensation increases as
the price of the Common Stock increases as the price of the Common Stock
increases. As of May 22, 1996, only 191,500 shares remain available for future
option grants under the Plan. The proposed amendment, if approved by the
Company's stockholders, will increase to 3,700,000 the number of shares of
Common Stock authorized for issuance under the Plan (equal to approximately
11.1% of the outstanding Common Stock), including 1,206,500 shares reserved for
future options. The Board of Directors believes that more shares than those
remaining available under the Plan are needed to help the Company meet its
goals using stock options.
11
<PAGE>
The Board of Directors has determined that it is advisable that the Company
and its stockholders continue to have the incentive of stock options available
as a means of attracting and retaining directors, officers and key employees. As
the Company progresses, the Company needs the ability to attract and retain such
directors, officers and key employees, including moving them into positions in
the Company where, in the judgment of the Board of Directors, such individuals
can continue to help the Company develop and market products and services. The
Board of Directors believes that an initial or increased stock option grant will
be a valuable tool in attracting and retaining such individuals and providing
added incentives for their continued contributions to the Company each which
will serve to the ultimate benefit of the stockholders.
The following summary of the Plan is qualified in its entirety by express
reference to the text of the Plan.
Description of the Stock Incentive Plan
The Plan, adopted by the Board of Directors and approved by the
stockholders of the Company in January 1992, as amended by the Board of
Directors and approved by the stockholders of the Company at the Company's
Annual Meeting of Stockholders held on August 12, 1993, authorizes the granting
of stock incentive awards ("Awards") of up to 2,700,000 shares of Common Stock
to qualified officers, employees, directors, and third parties providing
valuable services to the Company, e.g., independent contractors, consultants and
advisors to the Company. The Plan provides for the granting of options that are
intended to qualify as "incentive options" ("ISO") under Section 422 of the
Internal Revenue Code, as amended (the "Code"), as well as non-incentive
options. The Plan also provides that Awards can be Stock Options ("Options"),
Stock Appreciation Rights ("SARs"), Performance Share Awards ("PSAs") and
Restricted Share Awards ("RSAs"). The number and kind of shares available under
the Plan are subject to adjustment in certain events. Shares relating to Options
and SARs which are not exercised in full, shares relating to RSAs which do not
vest and shares relating to PSAs which are not issued will again be available
for issuance under the Plan. No SARs, RSAs or PSAs have been granted under the
Plan.
The Stock Incentive Plan may be administered by the Board of Directors or
by a committee appointed by the Board of Directors and consisting of two or more
members, each of whom must be disinterested. The Stock Incentive Plan is
currently administered by the Compensation Committee of the Board of Directors
(for purposes hereof, the administering body is referred to as the "Compensation
Committee") pursuant to an appointment by the Board of Directors. The
Compensation Committee currently consists of Messrs. Forstmann, Gustafson and
Shevel. The Compensation Committee determines the number of shares to be covered
by an Award, the term and exercise price, if any, of the Award and other terms
and provisions of Awards.
The exercise price for Options is to be determined by the Compensation
Committee, but in the case of an ISO is not to be less than fair market value on
the date the Option is granted (110% of fair market value in the case of an ISO
granted to any person who owns more than 10% of the Common Stock). The purchase
price is payable in any combination of cash, shares of Common Stock already
owned by the participant for at least six months or, if authorized by the
Compensation Committee, a promissory note secured by the Common Stock issuable
upon exercise of the Option. In addition, the Award agreement may provide for
"cashless" exercise and payment. Subject to certain early termination or
acceleration provisions, an Option is exercisable, in whole or in part, from the
date specified in the related Award agreement (which may be six months after the
date of grant) until the expiration date determined by the Compensation
Committee, but not to exceed ten years (five years for any person who owns more
than 10% of the Common Stock).
Persons to whom Options are granted prior to the expiration of a resale
restriction period must execute a letter agreement agreeing to certain
restrictions on the sale of the shares issuable upon exercise of such Options.
The Company intends to register under the Securities Act of 1933, as amended,
the shares issuable pursuant to the Stock Incentive Plan, which shares will be
freely tradable subject to certain limitations on shares held by affiliates.
As of May 22, 1996, the Compensation Committee had granted non-qualified
stock options with respect to 30,000 shares at an exercise price per share of
$3.75, with respect to 353,500 shares at an exercise price per share of $2.25,
with respect to 60,000 shares at an exercise price of $1.78 per share, with
respect to 1,175,000 at $1.50 per share and with respect to 75,000 shares at
$.01 per share. The vesting of Options varies with respect to each grant of
Options.
12
<PAGE>
A SAR is the right to receive payment based on the appreciation in the fair
market value of Common Stock from the date of grant to the date of exercise. In
its discretion, the Committee may grant an SAR concurrently with the grant of an
Option. A SAR is only exercisable at such time, and to the extent, that the
related Option is exercisable. Upon exercise of an SAR, the holder receives for
each share with respect to which the SAR is exercised an amount equal to the
difference between the exercise price under the related Option and the fair
market value of a share of Common Stock on the date of exercise of the SAR. The
Compensation Committee in its discretion may pay the amount in cash, shares of
Common Stock or a combination thereof.
A RSA is an Award of a fixed number of shares of Common stock subject to
restrictions. The Compensation Committee specifies the price, if any, the
recipient must pay for such shares. Shares included in a RSA may not be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered until they
have vested. These restrictions may not terminate earlier than six months after
the Award date. The recipient is entitled to dividend and voting rights
pertaining to such RSA shares even though they have not vested, so long as such
shares have not been forfeited.
A PSA is an Award of a fixed number of shares of Common Stock the issuance
of which is contingent upon the attainment of certain performance objectives,
and the payment of certain consideration, if any, as is specified by the
Compensation Committee. Issuance shall in any case not be earlier than six
months after the Award date.
The Stock Incentive Plan also provides for certain stock depreciation
protection, tax-offset bonuses and tax withholding using shares of Common Stock
instead of cash.
Upon the date a participant is no longer employed by the Company for any
reason, shares subject to the participant's RSAs which have not become vested by
such date or shares subject to the participant's PSAs which have not been issued
by such date shall be forfeited in accordance with the terms of the related
Award agreements. Options which have become exercisable by the date of
termination of employment must be exercised within certain specified periods of
time from the date of such termination, the period of time depending on the
reason of termination. Options which have not yet become exercisable on the date
the participant terminates employment for a reason other than retirement, death
or total disability shall terminate on such date.
The Board of Directors may, at any time, terminate, amend or suspend the
Plan. However, the Board of Directors may not amend the Plan, except subject to
the approval of the Company's stockholders, if such amendment would (1)
materially increase the benefits accruing to eligible individuals under the
Plan, (2) increase the aggregate number of shares which may be issued under the
Plan, or (3) modify the requirements of eligibility for participation in the
Plan. Accordingly, and in order to seek to continue to take advantage of the
exemption from the short-swing profit rules under Section 16(b) (which may be
applicable to certain participants in the Plan) under the Securities Exchange
Act of 1934, as amended, pursuant to Rule 16b-3 promulgated thereunder,
stockholders approval is being sought for the amendment to the Plan. No
amendment, suspension or termination of the Plan may, without the consent of the
optionee to whom an Award has been granted, in any way modify, amend, alter or
impair any rights or obligations under any Award previously granted under the
Plan.
Market Value
On May __, 1996, the closing price for the Common Stock on the NASDAQ
SmallCap Market was $_____.
Recommendation and Vote
Approval of the proposed amendment to the Plan requires the affirmative
vote of the holders of a majority of the shares of Common Stock present in
person or by proxy at the meeting.
The Board of Directors recommends a vote FOR approval of the proposed
amendment.
13
<PAGE>
PROPOSAL 3. APPROVAL OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
General
The Board of Directors has authorized, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), to increase the number of authorized shares of
Common Stock from 50,000,000 shares to 75,000,000. The complete text of the
amendment to the Certificate of Incorporation (the "Amendment") is set forth in
Exhibit A to this Proxy Statement; however, such text is subject to change as
may be required by the Secretary of State of the State of Delaware. If the
Amendment is approved by the necessary vote of the Company's stockholders, upon
filing of the Amendment with the Secretary of State of the State of Delaware,
the number of authorized shares of Common Stock authorized by the Certificate of
Incorporation will be increased from 50,000,000 shares to 75,000,000 shares. The
Board of Directors may make any and all changes to the Certificate of
Incorporation that it deems necessary to file the Certificate of Incorporation
with the Secretary of State of the State of Delaware and to give effect to the
increase in the authorized Common Stock of the Company.
At the close of business on May [ ], 1996, 24,359,753 shares of the
Company's Common Stock were issued and outstanding; an aggregate of 1,591,500
shares were reserved for issuance upon the exercise of options granted or to be
granted under the Plan (before giving effect to the proposed amendment to the
Plan that would increase the number of shares reserved for issuance under the
Plan); an aggregate of 308,500 shares were reserved for issuance upon the
exercise of options granted to certain employees outside the Plan; 6,336,154
shares are reserved for issuance, subject to adjustment, upon conversion of the
Series A Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), into Common Stock; 359,925 shares are reserved for issuance upon the
exercise of outstanding warrants; 7,500,000 shares are reserved for issuance,
subject to adjustment, upon the conversion of the Series B Preferred Stock, par
value $.01 per share (the "Series B Preferred Stock"); 1,500,000 shares are
reserved for issuance upon the exercise of options granted to RMS Limited
Partnership, a Nevada limited partnership; and 1,000,000 shares are reserved for
issuance upon options granted to Francis R. Santangelo. Additionally, the
Company has committed to reserve or make available for issuance, subject to
stockholder approval of the amendment relating to the Plan, 1,000,000 shares of
Common Stock under the Plan.
Purposes and Reasons for the Amendment
The Company has proposed the Amendment to (i) seek to enable the Company to
avoid the Penalty (described below) for not reserving and keeping available out
of its authorized but unissued shares of Common Stock such number of shares of
Common Stock as shall from time to time be issuable upon the conversion of all
of the then outstanding shares of Series B Preferred Stock and (ii) have
additional shares of Common Stock available for other purposes deemed necessary
by the Board of Directors.
On January 29, 1996, the Company completed an equity financing pursuant to
which certain investors purchased from the Company 800 shares of Series B
Preferred Stock for an aggregate purchase price of $8.0 million before
commissions and expenses (estimated at approximately $770,000 in the aggregate).
Shares of Series B Preferred Stock are convertible at the option of the holder
thereof into shares of Common Stock based upon the result obtained by dividing
the $10,000 per share purchase price (increasing at the rate of eight percent
(8%) per annum (the "Premium")) (the "Stated Value") by a conversion price equal
to the lesser of (i) $2.53 per share or (ii) 85% of a floating price equal to
the average closing bid price of the Common Stock for the five trading days
immediately proceeding the date of conversion. All outstanding shares of Series
B Preferred Stock will automatically convert into Common Stock on January 19,
1999. The Company may redeem the Series B Preferred Stock, in cash, at a premium
commencing on July 30, 1996, or under certain other circumstances, at a price
based on the Stated Value in the event of a notice of conversion at less than
$2.53 per share of Common Stock. The shares of Series B Preferred Stock have no
voting rights except as required by law and have a liquidation preference equal
to their Stated Value.
14
<PAGE>
The Company has agreed, pursuant to the terms of the Certificate of
Designation of the Series B Preferred Stock, to reserve and keep available out
of its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Series B Preferred Stock, such number of shares
of Common Stock as shall from time to time be issuable upon the conversion of
all then outstanding shares of Series B Preferred Stock. In the event any holder
of Series B Preferred Stock has requested conversion and the Company does not
have sufficient authorized but unissued shares of Common Stock available to
effect the conversion of such shares of Series B Preferred Stock, then,
beginning on the 60th day after such holder has given notice to the Company, the
Premium shall be increased by a factor of two percent (2%) per 30-day period,
accrued daily (the "Penalty"). As of May 22, 1996, holders of [ ]
shares of Series B Preferred Stock have been converted such shares into
[ ] shares of Common Stock in the aggregate. An additional
[ ] shares of Common Stock in the aggregate would be issuable if the
holders of the remaining [ ] shares of Series B Preferred Stock
converted all such shares as of May 22, 1996.
If the Amendment and the proposal relating to the Plan are approved by the
stockholders at the Annual Meeting, an additional 25,000,000 shares of
authorized Common Stock will be available and not otherwise reserved for
issuance under the Plan, upon the conversion of the Series A preferred Stock or
the Series B Preferred Stock or for other present obligations. These shares will
be available for issuance from time to time, for such purposes and
consideration, and on such terms, as the Board of Directors may approve, and no
further vote of the stockholders of the Company will be required, except as
required by Delaware law or the rules, if any, of the securities exchange(s)
upon which the Common Stock is listed.
The Board of Directors of the Company believes it is in the Company's best
interest to have such additional shares authorized, as such shares will provide
the Company added protection to avoid the Penalty and added flexibility in the
future to issue Common Stock to meet possible contingencies and take advantage
of opportunities in which the issuance of shares of Common Stock may be deemed
advisable, such as in equity financings or in acquisition transactions. By
adopting the Amendment at this time, issuance of shares of Common Stock upon
conversion of the Series A or the Series B Preferred Stock or for other purposes
approved by the Board of Directors, would be facilitated by eliminating the
delay and expense incident to the calling of a special meeting of the Company's
stockholders, in cases where such meeting would not otherwise be required, would
be avoided. The timing of the actual issuance of additional shares of Common
Stock will depend upon market conditions, the specific purpose for which the
stock is to be issued and other similar factors. Any additional issuance of
Common Stock, including upon the conversion of the Series A or Series B
Preferred Stock, would have a dilutive effect on the existing holders of Common
Stock. The Company currently has no agreements or commitments for the issuance
of Common Stock other than pursuant to the Plan, pursuant to current outstanding
options and warrants or upon the conversion of the Company's outstanding
convertible securities.
The terms of the additional shares of Common Stock for which authorization
is sought will be identical to the shares of Common Stock currently authorized
and outstanding, and the Amendment will not affect the terms, or the rights of
the holders, of issued and outstanding shares of Common Stock. The Common Stock
has no conversion, preemptive or subscription rights and is not redeemable.
Recommendation and Vote
Approval of the Amendment requires the affirmative vote of the holders of a
majority of the shares of Common Stock issued and outstanding.
The Board of Directors recommends a vote FOR approval of the Amendment.
15
<PAGE>
PROPOSAL 4. APPOINTMENT OF
INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board of Directors, on the
recommendation of the Audit Committee, has appointed Ernst & Young, LLP to
continue as its independent auditors for the fiscal year ending December 31,
1996.
Ernst & Young, LLP has been the Company's independent auditors since
October 1992. The Board recommends that the stockholders vote FOR such
ratification. If the stockholders do not ratify this appointment, other
independent auditors will be considered by the Board upon recommendation of the
Audit Committee. Representatives of Ernst & Young, LLP are expected to be
present at the Annual Meeting, and will have the opportunity to make a statement
if they so desire and are expected to be available to respond to appropriate
questions.
OTHER BUSINESS
It is not intended that any business other than that set forth in the
Notice of Annual Meeting and more specifically described in this Proxy Statement
will be brought before the Annual Meeting. However, if any other business should
properly come before the Annual Meeting, it is the intention of the persons
named on the enclosed proxy card to vote the signed proxies received by them in
accordance with their sole discretion on such business and any matters dealing
with the conduct of the meeting.
1997 STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's Proxy Statement for
the 1997 Annual Meeting of Stockholders, stockholder proposals must be received
by the Secretary of the Company at its executive offices by January 24, 1997.
By Order of the Board of Directors
/s/ Steven T. Price
Steven T. Price
Treasurer and Assistant
Secretary
Dated: May 24, 1996
16
<PAGE>
EXHIBIT A
Text of Proposed Amendment to the Company's Certificate of
Incorporation
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 76,000,000 shares,
consisting of (i) 1,000,000 shares of Preferred Stock, $.01 par value
per share (the "Preferred Stock"), and (ii) 75,000,000 shares of
Common Stock, $.01 par value per share (the "Common Stock")."
17
<PAGE>
Attachment A
PROXY THE NATIONAL REGISTRY INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 25, 1996
This Proxy is Solicited on Behalf of the Board of Directors of The National
Registry Inc.
The undersigned hereby appoints J. Anthony Forstmann and John L. Gustafson
and each of them, with full power of substitution, as proxies and with all
powers the undersigned would posses if personally present, to vote all of the
shares of Common Stock, par value $.01 per share (the "Common Stock"), of The
National Registry Inc. (the "Company") that the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Company to be held at 10:00 a.m.,
local time on Tuesday, June 25, 1996, and any adjournments or postponements
thereof, in the East and West 57th St. Room of the Drake Hotel at 440 Park
Avenue, New York, New York 10022, as directed herein upon the matters set forth
below and on the reverse side hereof and described in the accompanying Notice of
Annual Meeting of Stockholders and Proxy Statement and upon such other matters
as may properly be brought before such meeting according to their sole
discretion.
Receipt of the Notice of Annual Meeting, the Proxy Statement and the 1995
Annual Report of the Company on Form 10-K is hereby acknowledged.
THE BOARD OF DIRECTORS OF THE NATIONAL REGISTRY INC. RECOMMENDS A VOTE FOR
PROPOSALS 1, 2, 3 AND 4, EACH OF WHICH WERE PROPOSED BY THE BOARD OF DIRECTORS
OF THE NATIONAL REGISTRY INC.
(1) Election of Four Directors for a one-year term:
VOTE FOR WITHHOLD (TO WITHHOLD AUTHORITY TO
all listed AUTHORITY VOTE FOR ANY INDIVIDUAL NOMINEE,
Nominees except to vote for all WRITE THAT NOMINEE'S NAME ON
as indicated listed nominees THE LINE BELOW.)
[ ] [ ]
Nominees: J. Anthony Forstmann, John L. Gustafson, Kevin J. McKeon and
W. Lee Shevel
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(2) Amendment to the Company's 1992 Stock Incentive Plan to increase from
2,700,000 to 3,700,000 the number of shares of Common Stock authorized for
issuance thereunder.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE)
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(3) Amendment to the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 50,000,000 shares to
75,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) To ratify appointment of Ernst & Young, LLP as independent auditors for
fiscal year ending December 31, 1996.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREBY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL OF THE DIRECTORS LISTED IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4. AS TO ANY OTHER MATTER COMING BEFORE THE MEETING, EACH OF
THE PERSONS AUTHORIZED AS PROXIES HEREWITH IS AUTHORIZED TO VOTE IN HIS
DISCRETION ON SUCH MATTER.
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Signature
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Date
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Signature
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Date
Please date this card and sign your name
exactly as it appears on this Proxy. If
the Common Stock represented by this
Proxy is registered in the names of two
or more persons, each should sign this
proxy. Persons signing in a
representative or fiduciary capacity and
corporate officers should add their full
titles as such.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
