SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION Proxy Statement Pursuant to
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NAM CORPORATION
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NAM CORPORATION
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
(516) 829-4343
October 30, 1998
Dear Shareholders:
On behalf of the Board of Directors and management of NAM Corporation
(the "Company"), I cordially invite you to attend the Annual Meeting of
Shareholders to be held on Thursday, December 17, 1998, at 11:30 a.m., at the
Company's principal offices, located at 1010 Northern Boulevard, Suite 336,
Great Neck, New York 11021.
The matters to be acted upon at the meeting are fully described in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement. In
addition, certain directors and executive officers of the Company will be
present to respond to any questions that you may have. Accompanying the attached
Proxy Statement is a Proxy Card and the Company's Annual Report. This report
describes the financial and operational activities of the Company.
Whether or not you plan to attend the annual meeting, please complete,
sign, and date the enclosed proxy card and return it in the accompanying
envelope as promptly as possible. If you attend the Annual Meeting, and I hope
you will, you may vote your shares in person even if you have previously mailed
in a proxy card.
We look forward to greeting our shareholders at the meeting.
Sincerely,
Roy Israel
Chief Executive Officer, President,
and Chairman of the Board
NAM CORPORATION
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 17, 1998
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TO THE SHAREHOLDERS OF
NAM CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of NAM Corporation, a Delaware corporation (the "Company"),
will be held at the main conference room at the Company's principal offices,
located at 1010 Northern Boulevard, Suite 336, Great Neck, New York 11021, on
Thursday, December 17, 1998, at 11:30 a.m., for the following purposes:
1. To elect directors of the Company to hold office until the
next Annual Meeting or until their respective successors are duly elected and
qualified;
2. To ratify the appointment of Grant Thornton LLP as the
Company's independent accountants for the fiscal year ending June 30, 1999;
3. To consider and act upon a proposal to increase the number of
shares of Common Stock authorized for issuance under the Company's Amended and
Restated 1996 Incentive and Nonqualified Stock Option Plan (the "1996 Stock
Option Plan");
4. To consider and act upon a proposal to increase the number of
options granted automatically annually to non-employee directors of the Company
pursuant to the 1996 Stock Option Plan; and
5. To transact such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October
27, 1998 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting or any adjournments thereof.
Representation of at least a majority of all outstanding shares of Common Stock
is required to constitute a quorum. Accordingly, it is important that your stock
be represented at the meeting. The list of shareholders entitled to vote at the
Annual Meeting will be available for examination by any shareholder at the
Company's offices at 1010 Northern Boulevard, Suite 336, Great Neck, New York
11021 for ten (10) days prior to December 17, 1998.
Whether or not you plan to attend the Annual Meeting, please
complete, date, and sign the enclosed proxy card and mail it promptly in the
self-addressed envelope enclosed for your convenience. You may revoke your proxy
at anytime before it is voted.
By Order of the Board of Directors,
Roy Israel,
Chairman
Great Neck, New York
October 30, 1998
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YOUR VOTE IS IMPORTANT, ACCORDINGLY, WE URGE YOU TO DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
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NAM CORPORATION
TABLE OF CONTENTS
Page
PROXY STATEMENT 1
INFORMATION CONCERNING VOTE 1
General 1
Voting Rights and Outstanding Shares 1
Revocability of Proxies 1
Voting Procedures 2
ELECTION OF THE BOARD OF DIRECTORS 2
Director Nominees 2
Committees of the Board of Directors and Meeting Attendees 3
Executive Officers 3
EXECUTIVE COMPENSATION AND OTHER INFORMATION 4
Summary Compensation Table 4
Directors' Compensation 5
Employment Contracts and Termination of
Employment and Change In Control Arrangements 5
Board of Directors Report on Repricing of Stock Options 6
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION 8
APPOINTMENT OF INDEPENDENT ACCOUNTANTS 9
AMEND THE COMPANY'S AMENDED AND RESTATED 1996 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK AVAILABLE FOR GRANT 9
AMEND THE COMPANY'S AMENDED AND RESTATED 1996 INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN TO INCREASE THE NUMBER OF OPTIONS
GRANTED ANNUALLY TO NON-EMPLOYEE DIRECTORS OF THE COMPANY 9
OTHER MATTERS ARISING AT THE ANNUAL MEETING 10
PRINCIPAL SHAREHOLDERS 11
Security Ownership of Management 11
Summary of the 1996 Stock Option Plan 12
INTERESTED PARTY TRANSACTIONS 12
SHAREHOLDER PROPOSALS 12
COST OF SOLICITATION OF PROXIES 12
SECTION 16(a) REPORTING DELINQUENCIES 12
ANNUAL REPORT ON FORM 10-KSB 13
NAM CORPORATION
1010 Northern Boulevard, Suite 336
Great Neck, New York 11021
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PROXY STATEMENT
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For Annual Meeting of Shareholders
to be Held on December 17, 1998
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Approximate Mailing Date of Proxy Statement and Form of Proxy: October 30, 1998.
INFORMATION CONCERNING VOTE
General
This Proxy Statement and the enclosed form of proxy is
furnished in connection with the solicitation of proxies by the Board of
Directors of NAM Corporation, a Delaware corporation (the "Company"), for use at
the annual meeting of shareholders to be held on Thursday, December 17, 1998 at
11:30 a.m., and at any and all adjournments thereof (the "Annual Meeting"), with
respect to the matters referred to in the accompanying notice. The Annual
Meeting will be held at the Company's principal offices, located at 1010
Northern Boulevard, Suite 336, Great Neck, New York 11021.
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on
October 27, 1998 are entitled to notice of and to vote at the Annual Meeting. As
of the close of business on October 27, 1998, 3,334,978 shares of common stock,
par value $.001 per share (the "Common Stock"), of the Company were issued and
outstanding. Each share of Common Stock entitles the record holder thereof to
one (1) vote on all matters properly brought before the Annual Meeting.
Revocability of Proxies
A shareholder who executes and mails a proxy in the enclosed
return envelope may revoke such proxy at any time prior to its use by notice in
writing to the Secretary of the Company, at the above address, or by revocation
in person at the Annual Meeting. Unless so revoked, the shares represented by
duly executed proxies received by the Company prior to the Annual Meeting will
be presented at the Annual Meeting and voted in accordance with the
shareholder's instructions marked thereon. If no instructions are marked
thereon, proxies will be voted FOR the election as directors of the nominees
named below under the caption "ELECTION OF DIRECTORS," FOR the ratification of
the independent accountants, and FOR each of the amendments to the Company's
Amended and Restated 1996 Incentive and Nonqualified Stock Option Plan. In their
discretion, the proxies are authorized to consider and vote upon such matters
incident to the conduct of the meeting and upon such other business matters or
proposals as may properly come before the meeting that the Board of Directors of
the Company does not know of in a reasonable time prior to this solicitation
will be presented at the meeting.
1
Voting Procedures
All votes shall be tabulated by the inspector of elections
appointed for the Annual Meeting, who shall separately tabulate affirmative and
negative votes, abstentions, and broker non-votes. The presence of a quorum for
the Annual Meeting, defined here as a majority of the votes entitled to be cast
at the Annual Meeting, is required. Votes withheld from director nominees and
abstentions will be counted in determining whether a quorum has been reached.
Broker-dealer non-votes are not counted for quorum purposes.
Assuming a quorum has been reached, a determination must be
made as to the results of the vote on each matter submitted for shareholder
approval. Director nominees must receive a plurality of the votes cast at the
meeting, which means that a vote withheld from a particular nominee or nominees
will not affect the outcome of the meeting.
PROPOSAL 1: ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors has nominated six (6) persons to be
elected as Directors at the Annual Meeting and to hold office until the next
annual meeting or until their successors have been duly elected and qualified.
It is intended that each proxy received by the Company will be voted FOR the
election, as directors of the Company, of the nominees listed below, unless
authority is withheld by the shareholder executing such proxy. Shares may not be
voted cumulatively. Each of such nominees has consented to being nominated and
to serve as a director of the Company if elected. If any nominee should become
unavailable for election or unable to serve, it is intended that the proxies
will be voted for a substitute nominee designated by the Board of Directors. At
the present time, the Board of Directors knows of no reason why any nominee
might be unavailable for election or unable to serve. The proxies cannot be
voted for a greater number of persons than the number of nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL THE
DIRECTOR NOMINEES.
Director Nominees
The following table sets forth certain information with
respect to the nominees for directors:
Company Position Director of the
Name and Offices Held Company Since
- ---- ---------------- -------------
Roy Israel Chief Executive Officer, President February 1994
and Chairman of the Board of Directors
Cynthia Sanders Executive Vice President and Director February 1994
Daniel Jansen National Accounts Manager and Director February 1994
Ronald Katz Director February 1998
Anthony J. Mercorella Director February 1997
Michael I. Thaler Director April 1994
ROY ISRAEL, age 38, has been the Chairman of the Board of
Directors, Chief Executive Officer, and President of the Company since February
1994. Immediately prior to holding such positions, Mr. Israel was President,
Director, and founder of National Arbitration & Mediation, Inc. ("NA&M"), a
wholly-owned subsidiary of the Company, since February 1992.
CYNTHIA SANDERS, age 39, has been the Executive Vice President
since February 1994. Immediately prior to holding this position, Ms. Sanders was
the Executive Vice President of NA&M since May 1993.
2
DANIEL JANSEN, age 35, has been National Accounts Manager of
the Company since June 1997. Prior to such date, he had served as the Director
of Regional Offices of the Company since February 1994. Immediately prior to
holding such positions, he had been Senior Account Executive with NA&M since
September 1992.
RONALD KATZ, age 42, is a partner at Rubin & Katz LLP, a
certified public accounting firm and has been affiliated with such firm since
December 1986. Mr. Katz is a certified public accountant and a member of the
AICPA and the New York State Society of CPAs.
ANTHONY J. MERCORELLA, Esq., age 71, is a senior partner of
the law firm of Wilson, Elser, Moskowitz, Edelman & Dicker and has been a
partner with such firm since 1984, which he joined upon his retirement as a
Justice of the Supreme Court of the State of New York. Judge Mercorella also
serves as a hearing officer for the Company.
MICHAEL I. THALER, age 46, has been a principal/shareholder in
Bond Beebe, a professional corporation of certified public accountants since
October 1993.
Committees of the Board of Directors and Meeting Attendees
The Board of Directors held five meetings during fiscal year
1998.
The Compensation Committee is authorized to review and make
recommendations to the Board of Directors on all matters regarding the
remuneration of the Company's executive officers, including the administration
of the Company's compensation plans, other than the Company's Stock Option Plan.
The current members of this Committee are Messrs. Thaler and Mercorella. The
Compensation Committee held two meetings during fiscal year 1998 which had full
attendance of its members.
The Audit Committee is responsible for making recommendations
to the Board of Directors as to the selection of the Company's independent
auditor, maintaining communication between the Board and the independent
auditor, reviewing the annual audit report submitted by the independent auditor,
and determining the nature and extent of issues, if any, presented by such audit
warranting consideration by the Board. The current members of this Committee are
Mr. Thaler and Mr. Katz. The Audit Committee held one meeting during fiscal year
1998 which had full attendance of its members.
Executive Officers
In addition to Mr. Israel, Ms. Sanders, and Mr. Jansen, there
are three additional executive officers of the Company:
PATRICIA GIULIANI-RHEAUME, age 40, has been Vice President,
Chief Financial Officer, and Treasurer of the Company since February 1997.
Immediately prior to holding such positions, Ms. Giuliani-Rheaume was the Vice
President and Corporate Controller of The Robert Plan Corporation, an insurance
services company, since April 1991. Ms. Giuliani-Rheaume is a certified public
accountant and a member of the AICPA and the New York State Society of CPAs.
CARLA ISRAEL, age 36, has been Secretary of the Company and a
sales supervisor since November 1994. Immediately prior to holding such
positions, Mrs. Israel was a Secretary and a sales supervisor of NA&M.
3
RINA BLOCH, age 33, has been Vice President of Marketing of
the Company since July 1998. From October 1994 through July 1998, Ms. Bloch held
various positions with the Hair Club for Men: National Director of Sales and
Marketing from May 1997 until July 1998; Regional Director of Operations from
February 1996 through May 1997; Managing Director from March 1995 through
February 1996, and Sales Consultant from October 1994 through March 1995.
Immediately prior thereto, Ms. Bloch was the Director of Sales and Marketing for
Rimco Air Conditioning from March 1993 until August 1994.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following summarizes the aggregate compensation earned
during fiscal years 1998 and 1997 by the Company's Chief Executive Officer and
any officer who earned more than $100,000 in salary and bonus pursuant to their
contracts (the "Named Persons"):
Long Term
Annual Compensation Compensation
--------------------------------------- ------------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options/SARs Compensation
- ------------------ ---- ------ ----- ------------ ------------ ------------
Roy Israel, 1998 $225,865 $25,000 $14,924(1) 60,000(2) $ 14,110(3)
President, Chief
Executive Officer, 1997 94,202 -- -- -- 124,000(4)
and Chairman of
the Board
Patricia 1998 $118,965 -- -- 60,000(5) $ 2,400(3)
Giuliani-Rheaume,
Vice President, 1997 47,292 $ 5,000 -- 40,000(6) 1,000(3)
Chief Financial
Officer, and
Treasurer
- -------------
(1) Such amount represents tax gross ups for Mr. Israel for medical, life, and
disability insurance payments.
(2) Such figure is also reflected in the table for Options Granted in Last
Fiscal Year and the table contained in the Board of Directors Report on
Repricing of Stock Options.
(3) Such amount represents premium payments on life insurance policies for
the named executive officer.
(4) Such amount includes life insurance expenses and a one-time insurance
payout in the amount of $43,400 pursuant to Mr. Israel's former employment
contract which terminated on June 30, 1997.
(5) Such figure is also reflected in the table for Options Granted in Last
Fiscal Year and the table contained in the Board of Directors Report on
Repricing of Stock Options. Included in this figure is an option for
40,000 shares that was originally granted in Fiscal Year 1997 but was
repriced in Fiscal Year 1998.
(6) This option was originally granted in Fiscal Year 1997, but is also
included in the figure for Fiscal Year 1998 as it was repriced in Fiscal
Year 1998.
4
Options Granted In Last Fiscal Year
-----------------------------------
Number of Securities Percent of Total Options Exercise Market Price
Name and Underlying Granted to Employees or on Date of Expiration
Principal Position Options Granted in Fiscal Year Base Price Grant* Date
- ------------------ --------------- -------------- ---------- ------ ----
Roy Israel, 60,000 27.6% (1) $3.125 9/18/07
President, Chief
Executive Officer, and
Chairman of the Board
Patricia Giuliani-Rheaume, 20,000 9.2% (2) $3.125 9/18/07
Vice President, Chief
Financial Officer, and
Treasurer
- -------------
* The options were repriced on May 11, 1998. On such date, the market price
was $1.63 per share.
(1) The exercise price for the option is as follows: $1.79 for 24,000 shares,
$1.94 for 12,000 shares, $2.09 for 12,000 shares, and $2.25 for the
remaining 12,000 shares.
(2) The exercise price for the option is as follows: $1.63 for 4,000 shares,
$1.78 for 4,000 shares, $1.94 for 4,000 shares, $2.09 for 4,000 shares, and
$2.25 for the remaining 4,000 shares.
Directors' Compensation
Non-employee directors receive a fee of $250 for each meeting of the
Board attended, a fee of $150 for each meeting of any committee of the Board
attended and reimbursement of their actual expenses. In addition, pursuant to
the Company's Amended and Restated 1996 Stock Option Plan, each non-employee
director will be granted options to purchase 1,000 shares of Common Stock per
annum at an exercise price equal to the closing bid price of the underlying
Common Stock as reported by the Nasdaq SmallCap Market on the date of grant,
which shall be the last trading date in June of each year. Under Proposal No. 4
described below, if approved, the options granted annually to each non-employee
director will be increased from options to purchase 1,000 shares to options to
purchase 2,500 shares of Common Stock.
Employment Contracts and Termination of Employment and Change In
Control Arrangements
Roy Israel. Mr. Israel's employment agreement with the Company expires
June 30, 2002. Pursuant to this agreement, he is entitled to receive an annual
base salary of $225,000, an annual base salary increase equal to the greater of
6% or an amount which reflects the increase in the Urban Consumer Price Index,
and an annual bonus at the discretion of the Company's Board of Directors. In
addition, the agreement provides, among other things, that the Company shall pay
up to an aggregate of $15,000 per policy year for a key man life insurance
policy in favor of the Company for $1,000,000 and life insurance in favor of the
estate of Mr. Israel, as well as a disability policy for coverage of 60% of his
base salary and an allowance for leasing an automobile (up to a monthly lease
payment of $1,000.) If his duties are changed without his consent and such
change results in Mr. Israel no longer being the most senior executive officer
of the Company, then he is entitled to terminate the agreement and receive three
times of his then current base salary, payable over a one year period, and the
maintenance of his benefits for a one year period or until the end of the term
of the agreement, whichever is longer. In addition, if within two years of a
change in control of the Company, as such term is defined in the agreement, Mr.
Israel is terminated without cause or the agreement is terminated by Mr. Israel
due to a change of duties, Mr. Israel shall receive a lump sum payment equal to
three times his then current base salary, and the maintenance of his benefits
for one year. The agreement also contains a one-year non-competition clause if
the agreement is terminated for any reason or upon expiration.
Cynthia Sanders. Ms. Sanders's employment agreement with the Company
expires June 14, 2001 (with automatic one-year renewals unless terminated within
60 days of the end of an employment term by either party). Pursuant to this
agreement, she is entitled to receive an annual base salary of $125,000, an
annual base salary increase equal to 5%, and an annual bonus at the discretion
of the Company's Chief Executive Officer. In addition, the agreement provides,
among other things, that the Company shall pay for a life insurance policy of
$250,000, full family health insurance, and a $400 monthly allowance for leasing
an automobile. The agreement also contains a one-year non-competition clause if
the agreement is terminated for any reason or upon expiration.
5
Rina Bloch. Ms. Bloch's employment agreement with the Company expires
July 20, 2001 (with automatic one-year renewals unless terminated within 45 days
of the end of an employment term by either party). Pursuant to this agreement,
she is entitled to receive an annual base salary of $92,000, an annual base
salary increase equal to 5% (during the initial term only), an annual bonus at
the discretion of the Company's Chief Executive Officer, and options to purchase
20,000 shares of Common Stock of the Company. In addition, the agreement
provides, among other things, that the Company shall pay a $400 monthly
allowance for leasing an automobile. The agreement also contains a one-year
non-competition clause if the agreement is terminated for any reason or upon
expiration.
Patricia Giuliani-Rheaume. Ms. Giuliani-Rheaume's employment agreement
with the Company expires December 31, 1999 (with automatic one-year renewals
unless terminated within 45 days of the end of an employment term by either
party). Pursuant to this agreement, she is entitled to receive an annual base
salary of $116,000, an annual base salary increase equal to 5% (during the
initial term only), an annual bonus at the discretion of the Company's Chief
Executive Officer, and options to purchase 40,000 shares of Common Stock of the
Company. In addition, the agreement provides, among other things, that the
Company shall pay for a life insurance policy of $250,000, full family health
insurance, and a $400 monthly allowance for leasing an automobile. The agreement
also contains a one-year non-competition clause if the agreement is terminated
for any reason or upon expiration. If the agreement is terminated without cause,
Ms. Giuliani-Rheaume shall receive a payment of severance of an amount equal to
six months of the base salary in effect at such time.
Board of Directors Report on Repricing of Stock Options
On May 11, 1998, the Board of Directors of the Company approved the
repricing of outstanding stock options previously granted to employees. The
repricing provided for the exercise price of 230,500 options to be reduced from
a range of $3.00 to $4.38 per share to a range of $1.63 to $2.25 per share, to
reflect current fair value. The repricing did not effect the term or vesting
period of the options. The Board of Directors, in acting to reduce the exercise
price of the stock options, considered several factors. One such factor was the
decline in the price of the Common Stock over a period of approximately one year
prior to the date of the repricing, which resulted in many of the previously
granted stock options having exercise prices well in excess of the prevailing
market price for the Common Stock at the time of the repricing. As a
consequence, the impact of the stock options as a motivational tool and as a
reward to the employees was significantly eroded. In view of the Company's
reliance on stock options as a component of its compensation program, the Board
of Directors believed that the reduction in the exercise prices of the options
was critical to retaining and motivating the personnel who are in a position to
contribute substantially to the progress and success of the Company.
6
The following table sets forth a summary of all repricing of options
previously granted to Mr. Israel and the Company's other executive officers,
which were effected as follows:
# of
Securities Market Exercise Expiration
Underlying Price at Price at Date of
Options Time of Time of Option
Name Repriced Repricing Repricing New Exercise Price (Unchanged)
- ---- -------- --------- --------- ------------------ -----------
Roy Israel 60,000 $1.63 $3.4375 $1.79 for 12,000 shares 9/18/07
$1.79 for 12,000 shares
$1.94 for 12,000 shares
$2.09 for 12,000 shares
$2.25 for 12,000 shares
Cynthia Sanders 35,000 $1.63 $3.125 $1.63 for 7,000 shares 9/18/07
$1.78 for 7,000 shares
$1.94 for 7,000 shares
$2.09 for 7,000 shares
$2.25 for 7,000 shares
Patricia Giuliani-Rheaume 20,000 $1.63 $3.125 $1.63 for 4,000 shares 9/18/07
$1.78 for 4,000 shares
$1.94 for 4,000 shares
$2.09 for 4,000 shares
$2.25 for 4,000 shares
Patricia Giuliani-Rheaume 40,000 $1.63 $3.00 $1.63 for 8,000 shares 4/18/03
$1.78 for 8,000 shares
$1.94 for 8,000 shares
$2.09 for 8,000 shares
$2.25 for 8,000 shares
7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to develop, administer and
review the Company's compensation plans, programs, and policies; to monitor the
performance and compensation of executive officers; and to make appropriate
recommendations and reports to the Board of Directors relating to executive
compensation.
The Company's compensation program is intended to motivate, retain and
attract management, thus linking incentives to financial performance and
creating enhanced shareholder value. The program's fundamental philosophy is to
tie the amount of compensation "at risk" for an executive to his or her
contribution to the Company's success in achieving superior performance
objectives.
It is currently anticipated that the compensation program will consist
of two components: (1) a base salary as set forth in each executive's employment
agreement, and (2) the potential for an annual cash and/or stock option bonus
equal to a percentage of the executive's base salary, depending upon the
satisfaction of certain general performance criteria established by the
Compensation Committee for each position and evaluated at the end of each fiscal
year. The criteria may relate to overall Company performance, the individual
executive's performance, or a combination of the two, depending upon the
particular position at issue. The second component constitutes the "at risk"
portion of the compensation program.
The Compensation Committee
Michael I. Thaler and Honorable Anthony J. Mercorella
August 19, 1998
8
PROPOSAL 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
It is proposed that the shareholders ratify the appointment of
Grant Thornton LLP ("Grant Thornton") as independent accountants for the Company
for fiscal year 1999. Grant Thornton has served as the Company's independent
accountants since March 4, 1997.
Representatives of Grant Thornton, which audited the Company's
fiscal year 1998 and 1997 financial statements, are expected to be present at
the Annual Meeting with the opportunity to make a statement, if they so desire,
and they are expected to be available to respond to appropriate questions.
Approval by the shareholders of the appointment of independent accountants is
not required, but the Board deems it desirable to submit the matter to the
shareholders for ratification. If the majority of shareholders voting at the
meeting should not approve the selection of Grant Thornton, the selection of
independent accountants will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
RATIFICATION OF THE INDEPENDENT ACCOUNTANTS.
On March 4, 1997, KPMG Peat Marwick LLP ("KPMG Peat Marwick")
was dismissed by the Company as the Company's auditors upon approval by the
Company's Board of Directors and Grant Thornton was engaged to audit the
Company's financial statements for the year ending June 30, 1997. KPMG Peat
Marwick's reports on the Company's financial statements for the two (2) years
ended June 30, 1995 and 1996 did not contain an adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the Company's two (2) fiscal years ended June 30,
1995 and 1996 and the subsequent interim period preceding the dismissal, there
were no disagreements with KPMG Peat Marwick on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of KPMG Peat
Marwick, would have caused it to make reference to the subject matter of the
disagreement in connection with this proxy statement.
PROPOSAL NO. 3: TO AMEND THE COMPANY'S AMENDED AND RESTATED 1996 INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK AVAILABLE FOR GRANT
The Board of Directors, on September 23, 1998, unanimously
approved, subject to shareholder approval, an amendment to the NAM Corporation
Amended and Restated 1996 Incentive and Nonqualified Stock Option Plan (the
"1996 Stock Option Plan") to increase the number of shares of Common Stock
authorized for issuance thereunder from 750,000 shares to 2,000,000 shares.
The purpose of the 1996 Stock Option Plan is to encourage and
enable key employees, including officers and directors of the Company or a
parent or subsidiary thereof, consultants and advisors to the Company, and other
persons or entities providing services to the Company to acquire a proprietary
interest in the Company through the ownership of common stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
AMENDING THE 1996 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE.
PROPOSAL NO. 4: TO AMEND THE COMPANY'S AMENDED AND RESTATED 1996 INCENTIVE AND
NONQUALIFIED STOCK OPTION PLAN TO INCREASE THE NUMBER OF
OPTIONS GRANTED ANNUALLY TO NON-EMPLOYEE DIRECTORS OF THE
COMPANY
The Board of Directors, on September 23, 1998, unanimously
approved, subject to shareholder approval, an amendment to the 1996 Stock Option
Plan to increase the number of options granted annually to each non-employee
director from options to purchase 1,000 shares to options to purchase 2,500
shares.
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The purpose of this amendment is to continue to provide
non-employee directors the ability to acquire a proprietary interest in the
Company through the ownership of Common Stock of the Company, to increase the
Company's ability to retain and maintain qualified non-employee directors to
serve on the Board, and to limit the cash portion of compensation to the
non-employee directors to the repayment of attendance expenses.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
AMENDING THE 1996 STOCK OPTION PLAN TO INCREASE THE NUMBER OF OPTIONS GRANTED
ANNUALLY TO NON-EMPLOYEE DIRECTORS.
OTHER MATTERS ARISING AT THE ANNUAL MEETING
The matters referred to in the Notice of Annual Meeting and
described in this Proxy Statement are, to the knowledge of the Board of
Directors, the only matters that will be presented for consideration at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, the persons appointed by the accompanying proxy will vote on such
matters in accordance with their best judgment pursuant to the discretionary
authority granted to them in the proxy.
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PRINCIPAL SHAREHOLDERS
Security Ownership of Management
The following table sets forth, as of October 15, 1998,
certain information with respect to the beneficial ownership of each class of
the Company's equity securities by each director and director nominee,
beneficial owners of 5% or more of Common Stock of the Company, the Named
Persons and all directors and executive officers of the Company as a group:(1)
Amount and Nature of
Name of Beneficial Owner(2) Beneficial Ownership(3) Percent of Total
--------------------------- ----------------------- ----------------
Roy Israel(4) 1,227,139 36.5%
President, Chief Executive Officer and Chairman
of the Board
Cynthia Sanders(5) 130,555 3.9%
Executive Vice President and Director
Daniel Jansen -0- *
National Accounts Manager and Director
Ronald Katz(6) 6,000 *
Director
Michael I. Thaler(7) 2,000 *
Director
Anthony J. Mercorella(8) 8,000 *
Director
All officers and Directors as a Group 1,397,027 40.9%
(9 persons) (4)(5)(6)(7)(8)(9)
- -------------------
* Less than one percent (1%).
(1) Applicable percentage of ownership is based on 3,334,978 shares of Common
Stock, which were outstanding on October 15, 1998, plus, for each person
or group, any securities that person or group has the right to acquire
within sixty (60) days pursuant to options and warrants.
(2) The address for each individual is c/o NAM Corporation, 1010 Northern
Boulevard, Suite 336, Great Neck, New York 11021.
(3) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, and unless
otherwise indicated, represents shares for which the beneficial owner has
sole voting and investment power. The percentage of class is calculated in
accordance with Rule 13d-3.
(4) Includes 61,903 shares owned by Mr. Israel's wife, Carla Israel, the
Secretary of the Company, and 114,436 shares owned by the Roy Israel
Irrevocable Trust. Mr. Israel disclaims beneficial ownership as to such
shares. Also includes options to purchase 30,000 shares of the Company's
Common Stock, which are fully vested.
(5) Includes options to purchase 17,500 shares of the Company's Common Stock,
which are fully vested.
(6) Includes warrants to purchase 2,500 shares of the Company's Common Stock,
which are currently exercisable, and options to purchase 1,000 shares of
the Company's Common Stock, which are fully vested.
(7) Represents options to purchase 2,000 shares of the Company's Common Stock,
which are fully vested.
(8) Includes warrants to purchase 1,000 shares of the Company's Common Stock ,
which are currently exercisable and options to purchase 6,000 shares of
the Company's Common Stock, which are fully vested.
(9) Includes options to purchase 23,333 shares of Common Stock held by
Patricia Giuliani-Rheaume, the Chief Financial Officer and Treasurer of
the Company, which are fully vested and the 61,903 shares of the Company's
Common Stock owned by Carla Israel referred to in footnote 4 above.
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Summary of the 1996 Stock Option Plan
The purpose of the 1996 Stock Option Plan is to enable the
Company to attract, retain, and motivate persons employed by the Company,
including officers, directors, advisors, and consultants, by providing such
persons with a proprietary interest in the Company and its performance. A total
of 750,000 shares of Common Stock are currently reserved for issuance under the
1996 Stock Option Plan. Proposal 3 hereto, if approved, will increase the number
of shares of Common Stock reserved for issuance under the 1996 Stock Option Plan
to 2,000,000. The 1996 Stock Option Plan provides for the award of options,
which may either be incentive stock options within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended (the "Code") or non-qualified
options which are not subject to special tax treatment under the Code. The 1996
Stock Option Plan is administered by the Board of Directors of the Company.
Officers, directors and employees of, and consultants to, the Company are
eligible to receive options under the 1996 Stock Option Plan. Subject to certain
restrictions, the Board of Directors of the Company is authorized to designate
the number of shares to be covered by each award, the terms of the award, the
dates on which and the rates at which options or other awards may be exercised,
the method of payment, and other terms.
INTERESTED PARTY TRANSACTIONS
Since the Company's inception there have not been any material
transactions between it and any of its officers and directors, except as set
forth herein and no additional transactions are currently contemplated.
On March 25, 1998, the Company announced its intention to
acquire, in open market transactions, up to 300,000 shares of its Common Stock.
Purchases, if any, are to be made from time to time at prevailing market prices
through March 25, 1999. Purchases may be discontinued at any time without
purchasing all of the 300,000 shares. As of October 30, 1998, the Company has
not acquired any such shares of its Common Stock.
SHAREHOLDER PROPOSALS
A shareholder of the Company who wishes to present a proposal
for action at the Company's 1999 Annual Meeting of Shareholders must submit such
proposal to the Company, and such proposal must be received by the Company, no
earlier than July 20, 1999 and no later than September 20, 1999.
COST OF SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement
is made by and on behalf of the Company's Board of Directors. The cost of such
solicitation will be paid by the Company. Such cost includes the preparation,
printing, and mailing of the Notice of Annual Meeting, Proxy Statement, Annual
Report, and form of proxy. The solicitation will be conducted principally by
mail, although directors, officers, and employees of the Company (at no
additional compensation) may solicit proxies personally or by telephone or
telegram. Arrangements will be made with brokerage houses and other custodians,
nominees, and fiduciaries for the forwarding of proxy material to the beneficial
owners of shares held of record by such fiduciaries, and the Company may
reimburse such persons for their reasonable expenses in so doing.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers and persons who beneficially own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the U.S. Securities and Exchange Commission (the "SEC")
and the Nasdaq SmallCap Market reports of ownership and changes in ownership of
Common Stock and other equity securities of the Company. Executive officers,
directors, and greater than ten percent (10%) beneficial owners are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
that they file. Based solely upon a review of the copies of such reports
furnished to the Company or written representations that no other reports were
required, the Company believes that, during fiscal year 1998, all filing
requirements applicable to its executive officers, directors, and greater than
ten percent (10%) beneficial owners were met. However, each of Roy Israel,
Cynthia Sanders, Patricia Giuliani-Rheaume, Stephen Acunto, Anthony J.
Mercorella, and Ronald Katz filed one late Form 5 with regard to one transaction
for each person.
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ANNUAL REPORT ON FORM 10-KSB
The Company is providing the Form 10-KSB as part of the
Company's Annual Report to each person whose proxy is solicited. The Company
does not undertake to furnish without charge copies of all exhibits to its Form
10-KSB, but will furnish any exhibit upon the payment of Twenty Cents ($0.20)
per page or a minimum charge of Five Dollars ($5.00). Such written requests
should be directed to Patricia Giuliani-Rheaume, Chief Financial Officer, NAM
Corporation, 1010 Northern Boulevard, Suite 336, Great Neck, New York 11021.
Each such request must set forth a good faith representation that, as of October
27, 1998, the person making the request was a beneficial owner of securities
entitled to vote at the Annual Meeting. The Company incorporates herein the
Annual Report by reference.
By Order of the Board of Directors,
Roy Israel
Chairman
Great Neck, New York
October 30, 1998
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