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
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
THE NATIONAL REGISTRY INC.
-----------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE NATIONAL REGISTRY INC.
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) 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:
[ ] 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:
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THE NATIONAL REGISTRY INC.
2502 ROCKY POINT DRIVE
TAMPA, FLORIDA 33607
June 9, 1997
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 Friday, June
27, 1997, at the Rusty Pelican, 2425 Rocky Point Drive, Tampa, Florida 33607.
Business scheduled to be considered at the meeting includes the election of
seven directors, the consideration of a proposed amendment to the Company's 1992
Stock Incentive Plan to increase the number of shares of the Company's Common
Stock authorized for issuance thereunder and the ratification of the appointment
of Ernst & Young LLP as independent auditors for the Company for its fiscal year
ending December 31, 1997. Additional information concerning these matters is
included in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement.
The Board of Directors of the Company recommends that you vote "FOR" the
election of the seven nominees of the Board of Directors as directors, "FOR" the
amendment of the Company's 1992 Stock Incentive Plan to increase the number of
shares of the Company's Common Stock authorized for issuance thereunder and
"FOR" ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31, 1997. The
accompanying Proxy Statement provides further information concerning the matters
to be voted on at the Annual Meeting. Also enclosed is our 1996 Annual Report on
Form 10-K, as amended, which contains information concerning the 1996 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,
J. Anthony Forstmann
Chairman of the Board
<PAGE>
THE NATIONAL REGISTRY INC.
2502 ROCKY POINT DRIVE
TAMPA, FLORIDA 33607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 1997
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 Friday, June 27, 1997, at the Rusty
Pelican, 2425 Rocky Point Drive, Tampa, Florida 33607 for the following
purposes:
1. To elect seven 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 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, 1997; and
4. 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 June 9, 1997 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
David E. Brogan
Vice President-Finance, Treasurer and Secretary
Tampa, Florida
June 9, 1997
<PAGE>
THE NATIONAL REGISTRY INC.
2502 ROCKY POINT DRIVE
TAMPA, FLORIDA 33607
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, JUNE 27, 1997
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 Friday, June 27, 1997, at the Rusty Pelican,
2425 Rocky Point Drive, Tampa, Florida 33607 and at any adjournments thereof
(the "Annual Meeting"). Only holders of record of the Company's common stock,
$.01 par value per share (the "Common Stock"), at the close of business on June
9, 1997 (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, 34,774,366
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 1996 Annual Report on Form 10-K, as amended, for the fiscal
year ended December 31, 1996, 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 June 11, 1997.
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 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
(the "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.
<PAGE>
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 shares so
represented FOR the election of the seven nominees for director named in this
Proxy Statement, FOR the amendment of the Plan to increase by 1,000,000 the
number of shares of Common Stock authorized for issuance thereunder, shares and
FOR the ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997. 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 (the "Board")
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 the Record Date 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 executive officers and
directors of the Company as a group:
AMOUNTS AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------- ------------ ----------
J. Anthony Forstmann ........... 6,307,500(1) 18.0
7 Beverly Park
Beverly Hills, CA 90210
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Home Shopping Network, Inc. .... 6,336,154(2) 15.5
P.O. Box 9090
Clearwater, FL 34618
RMS Limited Partnership ........ 5,500,000(3) 15.3
201 West Liberty Street
P.O. Box 281
Reno, NV 89504
Frank M. Devine ................ 293,500(4) (6)
John L. Gustafson .............. 168,333(5) (6)
W. Lee Shevel .................. 120,000(5) (6)
Todd D. Lowe ................... 85,300(5) (6)
Clinton C. Fuller .............. 20,000(5) (6)
Robert C. Leamy ................ 17,000(5) (6)
Donald C. Klosterman ........... 0 0
Don M. Lyle .................... 0 0
Jed B. Trosper ................. 0 0
David E. Brogan ................ 0(5) 0
Executive officers and directors
as a group (11 persons) ........ 7,011,633(1)(4)(5) 19.5(1)(4)(5)
(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 demand note is
past due. Includes 557,500 shares of Common Stock subject to outstanding
options which are vested and exercisable. Includes 750,000 shares of Common
Stock directly held by Mr. Forstmann's spouse, Catherine S. Forstmann.
(2) Includes 6,336,154 shares of Common Stock issuable upon conversion of
100,000 currently convertible shares of Series A Preferred Stock.
(3) Includes 1,500,000 shares of Common Stock subject to outstanding options
which are vested and exercisable.
(4) Includes 200,000 shares of Common Stock subject to outstanding options
which are
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vested and exercisable.
(5) Includes shares of Common Stock that can be acquired by exercise of vested
and exercisable stock options within 60 days of June 9, 1997, as follows:
Mr. Gustafson - 168,333 shares; Mr. Shevel - 120,000 shares; Mr. Fuller -
20,000 shares; Mr. Leamy - 15,000 shares; and Mr. Lowe - 10,000 shares; and
all directors and officers as a group - 410,633 shares. Excludes 321,667,
196,667, 60,000, 50,000, 35,000 and 55,000 shares subject to options which
have not vested and which will not vest within 60 days of June 9, 1997 in
favor of Messrs. Gustafson, Shevel, Fuller, Leamy, Lowe and Brogan,
respectively.
(6) Less than 1%.
PROPOSAL 1. ELECTION OF DIRECTORS
Seven 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 seven 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 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.
The Board has nominated the persons named below for election as directors at
the Annual Meeting. All nominees, except for Frank M. Devine, Donald C.
Klosterman, Don M. Lyle and Jed B. Trosper are currently directors of the
Company.
TERM DIRECTOR
NAME AGE POSITION EXPIRES SINCE
- ---- --- -------- ------- -------
J. Anthony Forstmann (1)..... 59 Chairman 1997 1991
and Director
John L. Gustafson (1)........ 53 President, 1997 1995
Chief Executive
Officer and
Director
W. Lee Shevel(1) ............ 64 Vice-Chairman 1997 1995
and Director
Frank M. Devine ............. 54 Director ---- Nominee
Donald C. Klosterman......... 65 Director ---- Nominee
Don M. Lyle.................. 57 Director ---- Nominee
Jed. B. Trosper.............. 42 Director ---- Nominee
4
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- ------------------
(1) Compensation Committee and Audit Committee member.
INFORMATION REGARDING NOMINEES
J. ANTHONY FORSTMANN has been the Chairman of the Board 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
(the "Compensation Committee") since February 1993 and a member of the Board's
Audit Committee (the "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 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
Community Health Services, a private entity engaged in the operations of
hospitals, since 1996. 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 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. ("Unisys") 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.
W. 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 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 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.
FRANK M. DEVINE serves as a business consultant for various entities. He has
founded or co-founded Bachmann-Devine, Inc., a venture capital firm, and
Shapiro, Devine & Craparo, Inc., a hard goods manufacturers agency serving the
retail industry, where he has also served as President since 1978. Since
December 1994, Mr. Devine has served as a member of the Board of
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Directors of Salton Maxim Housewares Inc., a publicly owned company that markets
and sells electrical appliances and decorative accessories to the retail trade
under various brand names.
DONALD C. KLOSTERMAN serves as a business consultant for various entities.
From July 1994 to November 1995, Mr. Klosterman was co-founder and President of
Pacific Casino Management Inc., a casino operator. Mr. Klosterman was a
co-founder and the Chairman of the Board of Directors of NTN Communications,
Inc. ("NTN"), a satellite broadcasting company that provides interactive
entertainment programming, from April 1983 to September 1994, and a consultant
to NTN from 1991 to 1992. From 1989 to 1991, Mr. Klosterman was a consultant to
Comcheck, a credit verifying company. Mr. Klosterman is currently a director of
NTN, and has been a director of Aldila Shaft Manufacturer, Inc., a manufacturer
of graphite golf shafts, since March 1994. Mr. Klosterman served as Vice
President/General Manager of the Los Angeles Rams from 1971 until 1982, General
Manager of the Baltimore Colts from 1970 until 1971 and General Manger of the
Houston Oilers from 1966 until 1970. Mr. Klosterman played professional football
for Cleveland, Dallas, Los Angeles and Calgary.
DON M. LYLE has been an independent consultant to various computer and
venture capital companies in the United States, Europe and Japan since 1983. Mr.
Lyle has also been a principal of Technology Management Company, a management
firm specializing in high technology companies, since 1983. Mr. Lyle has served
as a director of Emulex Network Systems, Inc., a designer and manufacturer of
network access products, supplying high performance communications solutions for
managing the flow of time-critical data between computers and peripheral
equipment, since February 1994, DH Technology, Inc., a print head and specialty
printing company, since April 1992, Systech Corp., a data communications
company, since February 1990 and Insync Systems, Inc., a supplier of ultra-clean
gas delivery systems to semiconductor equipment manufacturers, since April 1995.
From 1984 to 1987, Mr. Lyle was President and Chief Executive Officer of Data
Electronics, Inc., a tape drive and cartridge media business.
JED B. TROSPER has served as Executive Vice President, Chief Financial
Officer and Treasurer of Home Shopping Network, Inc. ("Home Shopping Network")
since January 1997 and assumed the roles of Vice President, Chief Financial
Officer and Treasurer of HSN, Inc., Home Shopping Network's parent, on January
27, 1997. He previously served as President of Blessing/White, Inc., an
individual and organizational productivity improvement company, from September
1995 to December 1996 and Chief Financial Officer for several of the portfolio
companies of General Atlantic Partners including Blessing/White, Inc., Record
World, Inc., a retail record sales company, and Comprehensive Learning Concepts,
Inc., a computer learning center company, from 1990 to 1995.
Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement"),
dated as of April 28, 1992, by and between the Company and Home Shopping
Network, Home Shopping Network has the right to nominate up to three directors
for the Company's Board. Home Shopping Network had nominated as directors of the
Company Peter M. Kern and Kevin J. McKeon, who resigned effective March 29, 1996
and February 12, 1997, respectively. Jed B. Trosper has been nominated by Home
Shopping Network to serve on the Company's Board.
Pursuant to a stockholders' voting agreement, dated as of March 14, 1995, J.
Anthony
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Forstmann, RMS Limited Partnership, a Nevada limited partnership ("RMS"), and
Francis R. Santangelo (the "Stockholders' Voting Agreement"), each agreed to
vote certain shares of the Company's 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 SmallCap Market. Officers, directors and greater than
ten-percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
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 1996, David
E. Brogan, Vice President - Finance, Treasurer and Secretary of the Company,
failed to file on a timely basis one report, covering his election as an officer
and no transactions, Todd Lowe, a Vice President of the Company failed to file
on a timely basis one report, covering one transaction and Robert Leamy, a Vice
President of the Company, failed to file on a timely basis one report, covering
one transaction.
THE BOARD AND ITS COMMITTEES
The Board held five(5) meetings during fiscal year 1996. The Board 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.
The Audit Committee, which held one (1) meeting during fiscal year 1996,
consisted of J. Anthony Forstmann, John L. Gustafson, W. Lee Shevel and Peter M.
Kern, a director of the Company who resigned from the Board effective March 29,
1996, and Messrs. Forstmann, Gustafson and Shevel 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 one (1) meeting during fiscal year
1996, consisted of Messrs. Forstmann, Gustafson, Shevel and Kern, a director of
the Company who resigned from the Board effective March 29, 1996, and Messrs.
Forstmann, Gustafson and Shevel thereafter. The Committee's responsibilities
include (i) making recommendations to the Board on salaries, bonuses and other
forms of compensation for the Company's officers and other key
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management and executive employees, (ii) administering the 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 and committees to which he was assigned that were held during fiscal year
1996.
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 or committees
of the Board of the Company.
On November 8, 1993, the Board granted options to purchase 45,000 shares of
Common Stock, at an exercise price of $3.75 per share, to Peter M. Kern, a
director of the Company who resigned from the Board effective March 29, 1996,
and such options vested pro rata on each of the first three anniversaries of
August 12, 1993, the date Mr. Kern became a director of the Company. Mr. Kern's
options expired unexercised on May 29, 1996. See "Certain Relationships and
Related Transactions."
EXECUTIVE OFFICERS
The names and ages of all executive officers of the Company (the "Named
Executive Officers") as of June 9, 1997 are set forth below.
EXECUTIVE OFFICERS
POSITION
NAME AGE OFFICER SINCE
- ---- --- ------- --------
John L. Gustafson 53 President and Chief 1995
Executive Officer
Clinton C. Fuller 52 Vice President - Product 1995
Marketing and
Financial Services
Robert C. Leamy 48 Vice President - 1995
Product Operations
Todd D. Lowe 44 Vice President - Identification 1995
Systems and Services
David E. Brogan 42 Vice President-Finance, 1996
Treasurer and Secretary
The following sets forth the business experience, principal occupations and
employment of each of the Named Executive Officers who do not serve on the Board
(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
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the Company since July 1995, overseeing the development of the Company's
products and services, including developing products for marketing to the
financial services industry. From September 1967 to June 1995, Mr. Fuller held a
variety of managerial positions at Unisys, including worldwide general manager
of Unisys' financial retail delivery system 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 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, an MS in Electrical Engineering and Computer Sciences
from the University of California, Berkeley and an 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
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.
DAVID E. BROGAN has been Vice President - Finance, Treasurer and Controller
of the Company since August 1996 and Secretary of the Company since December
1996. From March 1995 to March 1996, Mr. Brogan was a consultant for Tunstall
Consulting, a consulting firm specializing in business plan development and
assisting in raising capital. From December 1990 to March 1995, Mr. Brogan was a
Vice President of Finance for Mercury Medical, Inc., a medical distribution
company. From November 1988 to October 1990, Mr. Brogan was Chief Financial
Officer for Electronic Data Technologies, a publicly traded computer systems
manufacturer. Mr. Brogan received his MBA from the University of Colorado and a
BS in Accounting from Metropolitan State College in Denver, Colorado.
EXECUTIVE COMPENSATION
The following table sets forth all compensation with respect to certain of
the Named Executive Officers, including the Chief Executive Officer of the
Company. The table omits an executive officer employed by the Company on
December 31, 1996 because such officer's total annual salary and bonus for 1996
did not exceed $100,000:
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SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
-------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
------------ OPTIONS
NAME AND SALARY
PRINCIPAL POSITION(1) YEAR ($) (#)
- ------------------------- ------ ------------- -------------
John L. Gustafson - 1996 $248,922(1) 50,000
President and Chief 1995 136,133 400,000
Executive Officer 1994 N/A NA
Clinton C. Fuller 1996 $130,000 20,000
Vice President - 1995 78,210 60,000
Product Marketing
and Financial Services 1994 N/A N/A
Robert C. Leamy - 1996 $120,000 20,000
Vice President
Product Operations 1995 23,076 45,000
1994 N/A N/A
Todd D. Lowe - 1996 $115,000 15,000
Vice President
Identification 1995 31,016 30,000
Systems and Services
1996 N/A N/A
(1) Mr. Gustafson's salary in 1996 included $78,922 paid by the Company in
connection with Mr. Gustafson's relocation and a related "gross-up" for the
tax applicable to such reimbursement.
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. There were no employer contributions made for 1996,
1995 or 1994.
THE 1992 STOCK INCENTIVE PLAN
The Plan, adopted by the Board and approved by the stockholders of the
Company in January 1992, 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
an amendment to the Plan increasing 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. At the Company's Annual Meeting of Stockholders held on
June 25, 1996, the stockholders of the Company approved a further amendment to
the Plan increasing from 2,700,000 to 3,700,000 the number of shares of Common
Stock authorized for issuance upon exercise of options granted pursuant to the
Plan. The Board has proposed increasing such number of shares under the Plan
10
<PAGE>
by an additional 1,000,000 shares. See "Proposal 2. Approval of Amendment to the
Plan." The following table sets forth individual grants of stock options made
during fiscal year 1996 to each of the Named Executive Officers (during fiscal
year 1996 no stock appreciation rights ("SARs") were awarded):
- --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
INDIVIDUAL GRANTS
-----------------
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE AT ASSUMED
TOTAL MARKET ANNUAL RATES OF STOCK PRICE
OPTIONS PRICE OF APPRECIATION FOR OPTION 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>
John L. Gustafson $50,000(1) 10.2% $1.125 $1.125(2) 11/18/2006 $0 $35,375 $86,648
Clinton C. Fuller 20,000(3) 4.1% $1.125 $1.125(2) 11/18/2006 0 $14,150 $35,859
Robert C. Leamy 20,000(3) 4.1% $1.125 $1.125(2) 11/18/2006 0 $14,150 $35,859
Todd D. Lowe 15,000(4) 3.1% $1.125 $1.125(2) 11/18/2006 0 $10,613 $26,894
David E. Brogan 50,000(5) 10.2% $ 0.84 $0.84 (6) 9/06/2006 0 $26,414 $66,937
David E. Brogan 5,000(7) 1.0% $1.125 $1.125(2) 11/18/2006 0 $ 3,538 $ 8,965
<FN>
- -------------------
(1) Stock Options were granted on November 18, 1996, of which options to
purchase 16,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 16,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(2) The average of the bid and asked price on the Nasdaq SmallCap Market on
November 18, 1996.
(3) Stock Options were granted on November 18, 1996, of which options to
purchase 6,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 6,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(4) Stock Options were granted on November 18, 1996, of which options to
purchase 5,000 shares of Common Stock will vest on November 18, 1997 and
options to purchase 5,000 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(5) Stock Options were granted on September 9, 1996, of which options to
purchase 16,666 shares of Common Stock will vest on September 9, 1997 and
options to purchase 16,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
(6) The average of the bid and asked price on the Nasdaq SmallCap Market on
September 9, 1996.
(7) Stock Options were granted on November 18, 1996, of which options to
purchase 1,666 shares of Common Stock will vest on November 18, 1997 and
options to purchase 1,667 shares of Common Stock will vest on each of the
next two anniversaries of the grant date.
</FN>
</TABLE>
11
<PAGE>
During fiscal year 1996, 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, 1996 for the
Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS
FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
John L. Gustafson 160,000/290,000 170,000/326,875
Clinton C. Fuller 20,000/60,000 15,650/60,050
Robert C. Leamy 15,000/50,000 4,688/38,125
Todd D. Lowe 10,000/35,000 3,125/27,813
David E. Brogan 0/55,000 0/93,313
- ---------------
(1) Assumes a market price equal to $2.5625 per share, the average of the
closing bid and asked price on the Nasdaq SmallCap Market on December 31,
1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee presently consists of Messrs. Forstmann, Gustafson
and Shevel. On March 29, 1996, Peter M. Kern resigned as a member of the
Compensation Committee. During the most recently completed fiscal year, the
Board did not have an option committee. Rather the full Board determined option
grants. The full Board voted by Unanimous Written Consent during the latest
fiscal year to reduce the exercise prices of outstanding options for a
consultant to the Company (not a Named Executive Officer) in connection with
valuable services provided by such consultant to the Company. 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 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
12
<PAGE>
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.
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, SARs, 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 agreed to compensate Mr. Gustafson, after
extensive negotiations, at the rate of $170,000 per year and 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. Based upon Mr. Gustafson's performance of his
duties in fiscal 1995, the Board determined to continue to compensate Mr.
Gustafson at the previously negotiated rate of $170,000 per year for fiscal
1996. In addition, the Board determined that the Company would be better served
by Mr. Gustafson relocating to Tampa, Florida. The Company agreed to reimburse
Mr. Gustafson for the costs associated with such relocation.
Compensation Committee
J. Anthony Forstmann
John L. Gustafson
W. Lee Shevel
13
<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 SmallCap 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, 1996
COMPARISON OF FIFTY MONTH CUMULATIVE TOTAL RETURNS* AMONG THE CRSP INDEX FOR
NASDAQ SMALLCAP 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 INDES 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
03/31/93 80 116.81 111.91
06/30/93 58.33 119.03 111.97
09/30/93 66.67 129.05 112.49
12/31/93 62.5 130.82 113.07
03/31/94 54.17 125.35 114.67
06/30/94 64.58 119.49 112.26
09/30/94 23.96 129.4 125.2
12/30/94 21.88 127.91 137.76
03/31/95 51.041 140.232 154.461
06/30/95 29.166 160.406 183.086
09/29/95 40.624 179.725 200.049
12/29/95 45.833 181.947 209.384
01/31/96 31.061 182.803 206.883
02/29/96 24.621 189.770 219.767
03/29/96 20.833 190.401 218.847
04/30/96 25.379 206.199 244.413
05/31/96 28.409 215.669 252.492
06/28/96 21.970 205.944 243.254
07/31/96 14.015 187.601 217.845
08/30/96 8.712 198.111 223.676
09/30/96 17.803 213.264 248.101
10/31/96 14.962 210.908 243.735
11/29/96 22.348 223.950 261.240
12/31/96 31.061 223.716 258.000
- ----------
* The Common Stock of the Company 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
SmallCap 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 Company began trading on the Nasdaq SmallCap Market
on April 27, 1993. Prior to that date, the Common Stock traded sporadically
in the over-the-counter market since February 1992.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1996, the Company retained as a consultant W. Lee Shevel, a
director of the Company, and paid him an aggregate of $66,607 (including $10,417
in travel and other
14
<PAGE>
expenses). On March 14, 1995, the Company granted him options to purchase
300,000 shares of Common Stock at an exercise price of $1.00 per share, of which
options to purchase 120,000 shares of Common Stock have vested and options to
purchase 60,000 shares of Common Stock will vest on each of the next three
anniversaries of the date of the grant. The Company may retain Mr. Shevel from
time to time in the future.
During fiscal 1996, the Company retained DMG & Associates ("DMG"), a health
care 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 $63,783 (including $13,178 in travel and other expenses) for
certain consulting services. On October 13, 1995, the Company, as part of such
consulting arrangement, 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. On June 3, 1996, the
Company hired Ms. Gustafson as Director of Marketing for health care services.
On November 18, 1996, the Company granted Ms. Gustafson options to purchase
15,000 shares of Common Stock at an exercise price of $1.125 per share.
Peter M. Kern, a director of the Company who resigned from the Board
effective March 29, 1996, was nominated by and served as a representative of
Home Shopping Network in accordance with Home Shopping Network's right to
nominate up to three directors pursuant to the Stock Purchase Agreement.
Following Mr. Kern's resignation from the Board, Home Shopping Network nominated
Kevin J. McKeon to serve as a member of the Board. Mr. McKeon resigned from the
Board effective February 12, 1997. Jed B. Trosper has been nominated by Home
Shopping Network to serve on the Company's Board.
The Company engages in a variety of transactions with Home Shopping Network,
including the rental by the Company of its previous office space from Home
Shopping Network for a 1996 rent of approximately $62,000.
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 1992 STOCK INCENTIVE PLAN
INTRODUCTION
On April 25, 1997, the Board amended the Plan, subject to approval of the
Company's stockholders, to increase from 3,700,000 to 4,700,000 the number of
shares of Common Stock authorized for issuance thereunder. Except as amended,
the provisions of the 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. At
the Company's Annual Meeting of Stockholders held on June 25, 1996, the
stockholders of the Company approved a proposal amending the Plan to increase
from 2,700,000 to 3,700,000 the
15
<PAGE>
number of shares of Common Stock authorized for issuance upon exercise of
options granted pursuant to the Plan.
REASONS FOR THE PLAN AMENDMENT
The Board 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 other 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 of the Record Date, only 106,000 shares remain available
for future option grants under the Plan. The proposed amendment, if approved by
the Company's stockholders, will increase to 4,700,000 the number of shares of
Common Stock authorized for issuance under the Plan (equal to approximately
13.6% of the outstanding Common Stock), including 1,106,000 shares reserved
for future options. The Board believes that more shares than those remaining
available under the Plan are needed to help the Company meet its goals using
stock options.
The Board 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, such individuals can continue
to help the Company develop and market products and services. The Board 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 1992 STOCK INCENTIVE PLAN
The Plan, adopted by the Board and approved by the stockholders of the
Company in January 1992, as amended by the Board and approved by the
stockholders of the Company at the Company's Annual Meetings of Stockholders
held on August 12, 1993 and June 25, 1996, authorizes the granting of stock
incentive awards ("Awards") of up to 3,700,000 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" ("ISOs") 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"), 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
16
<PAGE>
issuance under the Plan. No SARs, RSAs or PSAs have been granted under the Plan.
The Plan may be administered by the Board or by a committee appointed by the
Board and consisting of two or more members, each of whom must be a director and
disinterested. The Plan is currently administered by the Compensation Committee
of the Board (for purposes hereof, the administering body is referred to as the
"Compensation Committee") pursuant to an appointment by the Board. 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 outstanding 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 Plan, which shares will be freely tradable
subject to certain limitations on shares held by affiliates.
As of the Record Date, the Compensation Committee had granted, and as of the
Record Date there is still outstanding, non-qualified stock options with respect
to 45,000 shares at an exercise price per share of $3.75, with respect to
346,000 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 1,000,000 at
$1.50 per share, with respect to 200,000 shares at an exercise price of $1.375
per share and with respect to 490,500 shares at $1.125 per share. The vesting of
Options varies with respect to each grant of Options.
An 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. An 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.
17
<PAGE>
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 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 may, at any time, terminate, amend or suspend the Plan. However,
the Board 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 June 9, 1997, the closing bid price for the Common Stock on the Nasdaq
SmallCap Market was $1.625.
18
<PAGE>
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 Annual Meeting.
The Board recommends a vote FOR approval of the proposed amendment.
PROPOSAL 3. APPOINTMENT OF
INDEPENDENT AUDITORS
Subject to stockholder ratification, the Board, 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, 1997.
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 Annual Meeting.
1998 STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's Proxy Statement for
the 1998 Annual Meeting of Stockholders, stockholder proposals must be received
by the Secretary of the Company at its executive offices by February 9, 1998.
By Order of the Board
David E. Brogan
Vice President-Finance, Treasurer
and Secretary
Dated: June 9, 1997
19
<PAGE>
PROXY Attachment A
THE NATIONAL REGISTRY INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 27, 1997
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 possess if personally present, to vote all of the
shares of Common Stock, $.01 par value 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 Friday, June 27, 1997, and any adjournments or postponements
thereof, at 2425 Rocky Point Drive, Tampa, Florida 33607, 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 1996
Annual Report of the Company on Form 10-K, as amended, is hereby acknowledged.
THE BOARD OF DIRECTORS OF THE NATIONAL REGISTRY INC. RECOMMENDS A VOTE FOR
PROPOSALS 1, 2 AND 3, EACH OF WHICH WERE PROPOSED BY THE BOARD OF DIRECTORS OF
THE NATIONAL REGISTRY INC.
(1) Election of Seven 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
as indicated listed nominees ON THE LINE BELOW.)
[ ] [ ]
Nominees: J. Anthony Forstmann, John L. Gustafson, W. Lee Shevel, Frank M.
Devine, Donald C. Klosterman, Don M. Lyle and Jed B. Trosper
- --------------------------------------------------------------------------------
(2) Amendment to the Company's 1992 Stock Incentive Plan to increase from
3,700,000 to 4,700,000 the number of shares of Common Stock authorized for
issuance thereunder.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
(PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE)
(3) To ratify appointment of Ernst & Young LLP as independent auditors for the
fiscal year ending December 31, 1997.
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 AND 3. 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.
-------------------------------
Signature
-------------------------------
Date
-------------------------------
Signature
-------------------------------
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.
