<PAGE> 1
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, AS AMENDED
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
PawnMart, Inc.
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on 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):
-------------------------------------------------------------------
<PAGE> 2
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------
<PAGE> 3
PAWNMART, INC.
301 COMMERCE STREET, SUITE 3600
FORT WORTH, TEXAS 76102
May 19, 1999
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of PawnMart, Inc. (the "Company") to be held on Tuesday, June
22, 1999, at 9:00 a.m., local time, at The Ridglea Bank Building, 6300 Ridglea
Place, Fort Worth, Texas.
The attached Notice of Annual Meeting and Proxy Statement fully describes
the formal business to be conducted at the Meeting.
Directors and officers of the Company, as well as a representative of the
Company's independent auditors, will be present at the Annual Meeting to
respond to any questions you may have.
It is important that your shares be represented and voted at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND the Annual Meeting, please COMPLETE, sign,
date and PROMPTLY return the ACCOMPANYING proxy in the ENCLOSED POSTAGE-PAID
envelope. Returning the proxy does NOT deprive you of your right to attend the
Annual Meeting. If you decide to attend the Annual Meeting and wish to change
your proxy vote, you may do so automatically by voting in person at the
meeting.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company. We look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/ CARSON R. THOMPSON
Carson R. Thompson
Chief Executive Officer
Chairman of the Board
<PAGE> 4
PAWNMART, INC.
301 COMMERCE STREET, SUITE 3600
FORT WORTH, TEXAS 76102
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 22, 1999
-------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of PawnMart, Inc., a Delaware corporation (the "Company"),
will be held on Tuesday, June 22, 1999, at 9:00 a.m., local time, at The
Ridglea Bank Building, 6300 Ridglea Place, Fort Worth, Texas for the following
purposes:
1. To elect two (2) Class II directors for terms expiring in 2002;
2. To ratify the selection of KPMG LLP as the Company's independent
auditors for fiscal year ending January 29, 2000; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The transfer books will not be closed, but only stockholders of record at
the close of business on May 7, 1999, will be entitled to notice of, and to
vote at, the Annual Meeting or any adjournments thereof. A complete list of the
stockholders entitled to vote at the Annual Meeting shall be open to the
examination of any stockholder, for any purpose germane to the meeting, at the
offices of the Company during the ten days preceding the meeting and will also
be available for inspection at the Annual Meeting.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying proxy statement for further information
with respect to the business to be transacted at the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU EXPECT TO ATTEND, THE COMPANY DESIRES TO HAVE MAXIMUM REPRESENTATION AT THE
MEETING AND RESPECTFULLY REQUESTS THAT YOU SIGN, DATE, AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE POSTAGE PAID ENVELOPE PROVIDED. NO ADDITIONAL POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. A PROXY MAY BE REVOKED BY A
STOCKHOLDER AT ANY TIME PRIOR TO ITS USE AS SPECIFIED IN THE ENCLOSED PROXY
STATEMENT.
By Order of the Board of Directors,
/s/ CARSON R. THOMPSON
Carson R. Thompson
Chief Executive Officer
Fort Worth, Texas Chairman of the Board
May 19, 1999
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
POSTAGE PAID ENVELOPE PROVIDED.
<PAGE> 5
PAWNMART, INC.
301 COMMERCE STREET, SUITE 3600
FORT WORTH, TEXAS 76102
-------------------
PROXY STATEMENT
MAY 19, 1999
-------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of PawnMart, Inc., a
Delaware corporation (hereinafter referred to as the "Company"), in connection
with the solicitation by the Company of proxies to be used in voting at the
Annual Meeting of Stockholders (together with any and all adjournments thereof,
the "Annual Meeting") to be held at 9:00 a.m., local time, on Tuesday, June 22,
1999, at The Ridglea Bank Building, 6300 Ridglea Place, Fort Worth, Texas, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. This Proxy Statement, the foregoing notice, the enclosed form of
proxy and a copy of the Company's Annual Report to Stockholders for the fiscal
year ended January 30, 1999, are first being mailed to the stockholders of the
Company on or about May 19, 1999. THE ENCLOSED PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY.
VOTING RIGHTS AND SOLICITATION OF PROXIES
A person giving the enclosed proxy has the power to revoke it by giving
notice to the Secretary of the Company in person, or by written notification
actually received by the Secretary (including by delivery of a later dated
proxy card), at any time prior to its being exercised. You may also revoke a
previously given proxy by appearing and voting at the Annual Meeting. Your
appearance at the Annual Meeting will not, in and of itself, constitute a
revocation of any proxy previously given. Unless previously revoked, the shares
represented by the enclosed proxy will be voted in accordance with the
stockholder's directions if the proxy is duly executed and returned prior to
the Annual Meeting. If no directions are specified, the shares will be voted
FOR the election of the Class II director nominees recommended by the Board of
Directors, FOR the ratification of the selection of KPMG LLP as the Company's
independent auditors for fiscal year ending January 29, 2000, and in accordance
with the discretion of the named attorneys-in-fact on other matters properly
brought before the Annual Meeting.
As of May 7, 1999, the Company had 7,209,445 shares of Common Stock, par
value $.01 per share ("Common Stock"), issued and outstanding. Each share of
Common Stock entitles the holder thereof to one vote. Only stockholders of
record at the close of business on May 7, 1999, will be entitled to notice of,
and to vote at, the Annual Meeting.
QUORUM REQUIRED
A quorum for the Meeting requires the presence in person or by proxy of
stockholders entitled to cast a majority of the votes entitled to be cast at
the Meeting. If a quorum is not present, the Meeting may be adjourned from time
to time without further notice, if the time and place of the adjourned meeting
are announced at the Meeting, until a quorum is obtained. Shares held by
stockholders present at the meeting in person who do not vote on a particular
matter, ballots marked "abstain" with respect to a matter and "broker nonvotes"
that cannot be voted on a matter will be counted as present at the Meeting for
quorum purposes, but will be deemed not to have been cast and will have no
legal effect on the vote with respect to any such matter.
<PAGE> 6
SOLICITATION OF PROXIES
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the
proxy, and any additional soliciting material furnished to stockholders. Copies
of solicitation material will be furnished to brokerage houses, fiduciaries,
and custodians holding shares in their names that are beneficially owned by
others so that they may forward this solicitation material to such beneficial
owners. In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals
for any such service. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of two Class
II directors each of whom will serve for a three-year term expiring in 2002.
The Company's nominating committee and the Board of Directors has nominated the
persons named below to stand for election as Class II directors at the Annual
Meeting. Each of the persons nominated presently serve as a Class II director
of the Company. Also listed below are each of the Class I and Class III
directors whose terms will continue after the meeting. It is intended that the
attorneys-in-fact named in the proxy card will vote FOR the election of the
Class II director nominees listed below, unless instructions to the contrary
are given therein. These nominees have indicated that they are able and willing
to serve as directors. However, if some unexpected occurrence should require
the substitution of some other person or persons for any one or more of the
nominees, it is intended that the attorneys-in-fact will vote FOR such
substitute nominees as the Board of Directors may designate. All directors
elected at the Annual Meeting will hold office for their respective terms and
until their respective successors are elected and qualified.
CLASS II DIRECTOR NOMINEES - TERMS EXPIRE 2002
Robert D. Bourland, Jr. (Age 57) has served as a Director since 1994. From
September 1998 to December 1998, he served the Company as President -
Franchising. From July 1994 to September 1998, he served the Company as
President and Chief Operating Officer. From 1985 until joining the Company, he
served as President of Cook's Nook, Inc., a specialty retailer of gourmet
cookware. From 1964 until that time, he served in various retail management
positions with the Radio Shack division of Tandy Corporation, including serving
as Senior Vice President - Managing Director, Tandy U.K. and as Tandy's
Divisional Vice President responsible for 1,200 Radio Shack stores. Radio Shack
is a specialty retailer of consumer electronic products.
James E. Berk (Age 53) has served as a Director since 1997. From January
1999 to the present, Mr. Berk has served as a consultant for Berk Development,
a consulting firm. From 1997 to 1998, Mr. Berk was Vice Chairman and Chief
Executive Officer of APC, Inc., a specialty retailer and wholesaler of auto
parts. Mr. Berk founded and, from 1993 to 1997, served as the President, Chief
Executive Officer and Chairman of the Board for Teach & Play Smart, Inc., a
privately-held specialty retail chain of children's educational products. Prior
to that time, he served as President and Chief Executive Officer of Bizmart,
Inc., a chain of office products superstores, and President and Chief Operating
Officer of The Wholesale Club, a chain of discount retail stores, and served in
various other companies in management capacities.
CLASS III DIRECTORS - TERMS EXPIRE 2000
Mark E. Kane (Age 44) has served as a Director since 1997. Presently, he
is President and Chief Executive Officer of Compact Discs International, LLC,
an international affiliate of CD Warehouse Inc. that owns the worldwide
development rights for the CD Warehouse Inc. franchise concept. Mr. Kane
founded and, from 1992 to 1997, served as President and Chief Executive Officer
of CD Warehouse Inc., a publicly traded national franchising firm specializing
in the sale of new and pre-owned compact discs.
2
<PAGE> 7
Monty R. Standifer (Age 59) has served as a Director since 1997. From July
1995 to the present, Mr. Standifer has served as Senior Vice President, Chief
Financial Officer, Treasurer and Secretary of Gadzooks, Inc., a specialty
retailer of apparel products. From June 1992 until July 1995, Mr. Standifer
served as Vice President - Treasurer and Chief Financial Officer of Gadzooks,
Inc. From July 1991 to June 1992, Mr. Standifer served as Senior Vice President
and Chief Financial Officer of AmeriServ Food Company, a food service systems
distributor. Prior to that time, Mr. Standifer was a co-founder of Bizmart,
Inc., a chain of office products superstores, serving as Vice President -
Finance, Treasurer and Secretary from its founding in October 1987 until July
1991, shortly after the company was sold. Mr. Standifer was previously employed
by Tandy Corporation for 14 years in various financial management positions.
CLASS I DIRECTORS - TERMS EXPIRE 2001
Carson R. Thompson (Age 60) has served as a Director since 1996. In March
1997, he was named Chairman of the Board and Chief Executive Officer of the
Company. Prior to this, Mr. Thompson served as President, Chief Executive
Officer and Chairman of the Board of The Bombay Company, Inc., a specialty
retailer of home furnishing products. Mr. Thompson joined Tandy Corporation,
Fort Worth, Texas in 1957, and held various management positions before
becoming President in 1981 of Tandy Brands, Inc., a spin-off of Tandy
Corporation and a manufacturer and specialty retailer of various products. From
1982 to 1991, Mr. Thompson was Chairman and Chief Executive Officer, from 1991
to 1996, he was Chairman, and from 1996 to 1997, he was President and Chief
Executive Officer of The Bombay Company. Mr. Thompson serves as a director of
The Bombay Company, Inc. (NYSE:BBA), the University of North Texas Health
Science Center at Fort Worth, and the Osteopathic Health Foundation, Inc., and
is a member of the Board of Advisors of the College of Business Administration
at the University of Oklahoma.
Robert E. Camp (Age 55) has served as a Director since 1995. He founded
and, from 1993 until the present, served as President of Hero's Welcome, Inc.,
a privately held retail/mail order business. From 1982 until 1992, Mr. Camp was
the founder and Chief Executive Officer of Simpson & Fisher Companies, Inc., a
specialty retailer of apparel and home furnishing products. Mr. Camp is the
former Chief Executive Officer of Fort Worth based Pier 1 Imports, Inc., a
specialty retailer of home furnishing products, having been with that company
for 18 years. Mr. Camp currently serves as a director for Restoration Hardware,
Inc. (NASDAQ:RSTO), a publicly-held retailer of specialty home furnishings and
decorative hardware.
J. Roger Williams (Age 49) has served as a Director since April 1998. From
1974 to 1995, he served as President and Chief Executive Officer of Jack
Williams Automall, a multi-line automobile dealership. Since 1995, he has
served as Chairman of the Board and Chief Executive Officer of Roger Williams
Automall, a multi-line automobile dealership, in Weatherford, Texas, and
Chairman of the Board of Vestry Corporation of Fort Worth, Texas. He also owns
and operates Roger Williams Ranches in Weatherford, Texas.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established three committees: an Audit and
Finance Committee, a Compensation and Human Resources Committee and a
Nominating Committee. Each of these committees has one or more members who
serve at the discretion of the Board of Directors.
The Audit and Finance Committee, currently comprised of Messrs. Standifer
and Berk, is responsible for reviewing the Company's financial statements,
audit reports, internal financial controls and the services performed by the
Company's independent public accountants, and for making recommendations with
respect to those matters to the Board of Directors. The Audit and Finance
Committee held two meetings during the fiscal year ended January 30, 1999.
The Compensation and Human Resources Committee, currently comprised of
Messrs. Camp, Kane and Williams, is responsible for reviewing and making
recommendations to the Board of Directors with respect to compensation of
executive officers, other compensation matters and awards under the Company's
stock option plan. The Compensation and Human Resources Committee acted by
unanimous written consent four times during the fiscal year ended January 30,
1999.
3
<PAGE> 8
The Nominating Committee, currently comprised of Messrs. Thompson,
Bourland and Camp, is responsible for developing a strategy and criteria for
new board members and making recommendations to the Board of Directors that the
selection of future board members should be based thereon. The Nominating
Committee acted by unanimous written consent one time during the fiscal year
ended January 30, 1999.
The Board of Directors held four formal meetings and acted by unanimous
written consent seven times during the fiscal year ended January 30, 1999.
During the fiscal year ended January 30, 1999, no director of the Company
attended less than 75% of the total number of meetings of the Board of
Directors and all committees on which such director served.
COMPENSATION OF DIRECTORS
Cash Compensation. No cash compensation has been paid by the Company to
its directors prior to the date of this Proxy Statement. Directors are
reimbursed for their ordinary and necessary expenses incurred in attending
meetings of the Board of Directors or a committee thereof.
1997 Stock Option Plan for Directors. Effective as of October 16, 1997,
the 1997 PawnMart, Inc. Director Stock Option Plan (the "Directors' Option
Plan") was approved by the Company's Board of Directors and the holders of a
majority of the outstanding shares of the Company's Common Stock.
Stock options will be granted under the Directors' Option Plan to any
director who is not an employee of the Company and is not a holder of more than
5% of the outstanding shares of the Company's Common Stock or a person who is
in control of such holder ("Eligible Directors").
Newly appointed Eligible Directors will automatically receive an initial
grant of options to purchase 25,000 shares of Common Stock upon their
appointment to the Board of Directors. All Eligible Directors will receive
annual grants of options to purchase the lesser of 20,000 shares of Common
Stock or $200,000 in market value of underlying Common Stock as of the date
following each annual meeting of the Company's stockholders. The exercise price
of options granted under the Directors' Option Plan shall be one hundred
percent (100%) of the fair market value of the Common Stock on the date of
grant or such higher price as may be determined by the Compensation and Human
Resources Committee. Options granted pursuant to the Directors' Option Plan are
immediately exercisable. The expiration date can be no more than ten years from
the date of grant. Payment for shares purchased upon exercising an option is
made in cash or by certified check, bank draft or money order, or by delivery
of previously owned shares of Common Stock held for at least six months (at
their fair market value), or partly in cash and partly in such Common Stock.
A maximum of 263,788 shares of Common Stock (subject to certain
anti-dilution adjustments) may be issued to Eligible Directors upon the
exercise of options granted under the Directors' Option Plan. As of the date of
this Proxy Statement, options for 125,000 shares of Common Stock had been
granted and are outstanding under the Directors' Option Plan. All options have
exercise prices ranging from $4.25 to $4.44 per share of Common Stock.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF THE INDIVIDUALS NOMINATED FOR
ELECTION AS CLASS II DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
KPMG LLP, independent certified public accountants, served as independent
auditors for the Company for the fiscal year ended January 30, 1999 and has
reported on the Company's consolidated financial statements. The Board, upon
the recommendation of the Audit and Finance Committee, has selected KPMG LLP as
the Company's independent auditors for fiscal year ending January 29, 2000 and
recommends that the stockholders ratify this selection. The Board has been
advised that KPMG LLP has no relationship with the Company or its subsidiaries.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if he desires to do so
and is expected to be available to respond to appropriate questions.
4
<PAGE> 9
Stockholder ratification is not required for the selection of KPMG LLP as
the Company's independent auditors for fiscal year January 29, 2000 because the
Board has responsibility for selection of the Company's independent auditors.
The selection is being submitted for ratification with a view toward soliciting
the opinion of stockholders, which opinion will be taken into consideration in
future deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF KPMG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 1, 1999, certain information
with respect to voting securities, the Common Stock shares, beneficially owned
by (i) each person who is known by the Company to beneficially own more than
five percent of the Company's outstanding shares of Common Stock, (ii) the
directors and certain executive officers of the Company, individually; and
(iii) the directors and all executive officers of the Company as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)(2)
----------------------------------
Number of Shares Percent of Total
BENEFICIAL OWNER ---------------- ----------------
- ----------------
<S> <C> <C>
Directors and Executive Officers:
Carson R. Thompson (3)(9) .......................................... 481,385 6.3%
Michael D. Record (3)(10) .......................................... 35,300 *
Thomas W. White (3)(11) ............................................ 23,425 *
Randall L. Haden (3)(12) ........................................... 66,255 *
Robert D. Bourland (3)(13) ......................................... 134,094 1.8%
Robert E. Camp (4)(14) ............................................. 46,487 *
James E. Berk (5)(14) .............................................. 28,243 *
Monty R. Standifer (6)(14) ......................................... 53,243 *
Mark E. Kane (7)(14) ............................................... 28,243 *
J. Roger Williams (8)(15) .......................................... 53,500 *
All directors and executive officers as a group (10 persons) .... 950,175 12.5%
</TABLE>
* Less than 1% of the outstanding shares of Common Stock.
(1) Unless otherwise noted, the Company believes that each person named in
the table has sole voting and investment power with respect to all shares
beneficially owned by such persons.
(2) In calculating the percentage of shares beneficially owned, the number of
shares of Common Stock deemed outstanding was 7,580,972. This number
includes 371,527 shares issuable pursuant to stock options and warrants
that may be exercised within sixty (60) days after May 1, 1999.
(3) His address is 301 Commerce Street, Suite 3600, Fort Worth, Texas 76102.
(4) The address for Mr. Camp is Rural Route 1, Box 202, North Hero, Vermont
05474.
(5) The address for Mr. Berk is 437 South Highway 101, Suite 677, Solana
Beach, California, 92075.
(6) The address for Mr. Standifer is 4121 International Parkway, Carrollton,
Texas 75007.
(7) The address for Mr. Kane is 1017 N. Central Expressway, Suite 200, Plano,
Texas 75075.
(8) The address for Mr. Williams is 1015 Fort Worth Street, Weatherford,
Texas 76086.
(9) Includes options exercisable into 104,079 shares of Common Stock.
(10) Includes options exercisable into 33,300 shares of Common Stock.
(11) Includes options exercisable into 15,182 shares of Common Stock.
(12) Includes options and warrants exercisable into 30,182 shares of Common
Stock.
(13) Includes options exercisable into 59,784 shares of Common Stock.
(14) Includes options exercisable into 20,000 shares of Common Stock.
(15) Includes options and warrants exercisable into 49,000 shares of Common
Stock.
5
<PAGE> 10
EXECUTIVE OFFICERS
Set forth below are each of the Company's executive officers and his name,
age, all positions and offices held by him with the Company and his principal
occupations and business experience for the past five years. All officers are
elected by the Board of Directors, each to hold office until his successor is
duly elected and qualified, or if earlier, until his resignation, removal from
office or death.
Carson R. Thompson (Age 60) has served as a Director since 1996. In March
1997, he was named Chairman of the Board and Chief Executive Officer of the
Company. Prior to this, Mr. Thompson served as President, Chief Executive
Officer and Chairman of the Board of The Bombay Company, Inc., a specialty
retailer of home furnishing products. Mr. Thompson joined Tandy Corporation,
Fort Worth, Texas in 1957, and held various management positions before
becoming President in 1981 of Tandy Brands, Inc., a spin-off of Tandy
Corporation and a manufacturer and specialty retailer of various products. From
1982 to 1991, Mr. Thompson was Chairman and Chief Executive Officer, from 1991
to 1996, he was Chairman, and from 1996 to 1997, he was President and Chief
Executive Officer of The Bombay Company. Mr. Thompson serves as a director of
The Bombay Company, Inc. (NYSE:BBA), the University of North Texas Health
Science Center at Fort Worth, and the Osteopathic Health Foundation, Inc., and
is a member of the Board of Advisors of the College of Business Administration
at the University of Oklahoma.
Michael D. Record (Age 45) joined the Company on September 8, 1998 as
President. Mr. Record was previously employed for six years with Cash America
International, Inc., most recently as Vice President of Operations where he was
responsible for 118 stores. Mr. Record has been employed in the pawnshop
industry for over twenty years.
Thomas W. White (Age 29) was named Senior Vice President and Chief
Financial Officer of the Company on January 7, 1999. From October 1997 until
January 1999, he was employed as the Company's Vice President -- Finance and
Chief Accounting Officer. Mr. White was previously employed for six years with
the accounting firm of KPMG LLP, most recently as an assurance manager serving
numerous clients within the financial services, manufacturing and retailing
industries.
Randall L. Haden (Age 38) joined the Company in February 1994 as Vice
President - Information Services. From November 1991 until joining the Company,
he was employed by Search Capital Group, Inc., a publicly-held consumer finance
company, most recently as Vice President - Information Services.
6
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned by
the Chief Executive Officer of the Company and each executive officer of the
Company whose total annual salary and bonus exceeds $100,000 during the fiscal
years ended January 30, 1999 ("Fiscal 1998"), January 31, 1998 ("Fiscal 1997")
and January 26, 1997 ("Fiscal 1996") (collectively, the "Named Executive
Officers"). As of the date hereof, the Company has not granted any stock
appreciation rights.
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Securities
Name and Principal Fiscal ------------------------- Underlying All Other
Position During Fiscal 1998 Year Salary ($) Bonus ($) Options (#) Compensation ($)
- --------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Carson R. Thompson ..................... 1998 150,000 -- 175,000 --
Chairman of the Board and 1997 80,769 6,000 164,867 --
Chief Executive Officer (1)(2) 1996 -- -- -- --
Robert D. Bourland, Jr. ................ 1998 97,112 -- -- 27,000
President, Chief Operating 1997 90,000 5,400 98,920 --
Officer and Director (1)(3) 1996 90,000 17,500 -- --
</TABLE>
- --------------------
(1) Mr. Thompson and Mr. Bourland received personal benefits in addition to
salary and bonuses. The aggregate amount of such personal benefits,
however, did not exceed the lesser of $50,000 or 10% of the total of their
annual salary and bonus.
(2) Mr. Thompson joined the Company in March 1997 at an annual salary of
$100,000.
(3) From July 1994 to September 1998, Mr. Bourland served the Company as
President and Chief Operating Officer. From September 1998 to December
1998, he served the Company as President - Franchising. In December 1998,
Mr. Bourland resigned as President - Franchising and currently serves only
as a director. In connection with the resignation, Mr. Bourland received
$27,000 in severance pay.
The following table summarizes grants of options to purchase shares of
Common Stock under the PawnMart, Inc. 1997 Employee Stock Option Plan made
during Fiscal 1998 to Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted To Exercise or
Options Employees in Base Price Expiration Black-Scholes Grant
Name Granted (#)(1) Fiscal Year ($/Share) Date Date Present Value (3)
---- -------------- ----------- --------- ---- ----------------------
<S> <C> <C> <C> <C> <C>
Carson R. Thompson
Chairman of the Board and
Chief Executive Officer (1) 175,000 28.1% $ 4.25 6/12/08 $259,507
Robert D. Bourland, Jr.
President, Chief Operating
Officer and Director (2) -- -- -- -- --
</TABLE>
- -------------------------------
(1) The options to purchase shares of Common Stock were granted under the 1997
PawnMart, Inc. Employee Stock Option Plan and vest over a period of five
years.
(2) No options were granted to Mr. Bourland during Fiscal 1998.
(3) The grant date present value has been determined using the Black-Scholes
option pricing model with assumptions for the expected term of 3.93 years,
the risk-free interest rate of 5.04%, the expected volatility of 37.90%,
and no expected dividend yield.
7
<PAGE> 12
There were no exercises of stock options by any of the Named Executive
Officers during Fiscal 1998. The table below lists the number of shares of
Common Stock underlying each option held by the Named Executive Officers as of
January 30, 1999.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-The-Money
Unexercised Options at Fiscal Year End (#) Options At Fiscal Year End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C>
Carson R. Thompson 65,946/273,921 $0/$0 (1)
Robert D. Bourland, Jr. (2) 19,784/40,000 $0/$0 (1)
</TABLE>
- ------------------
(1) All exercisable and unexercisable options held by Named Executive Officers
have exercise prices ranging from $3.79 to $4.25 per share. At January 30,
1999, the closing market price of the Company's Common Stock as reported
by the NASDAQ SmallCap Market was $1.66 per share.
(2) In connection with Mr. Bourland's resignation in December 1998, 39,136
unexercisable options were cancelled. The remaining 40,000 unexercisable
options vested on April 30, 1999.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
On September 7, 1998, the Company entered into an employment agreement
with Mr. Record providing for a minimum beginning annual salary of $120,000 and
a $30,000 signing bonus. The employment agreement, which expires on December
31, 2000, provides Mr. Record with annual salary reviews at the beginning of
each fiscal year and provides for his participation in any Company bonus plans
upon the Company achieving an acceptable level of profitability. In connection
with the employment agreement, Mr. Record was granted 125,000 stock options at
an exercise price of $3.00. The options vest over a four-year period and expire
in September 2008. In the event Mr. Record is terminated "without cause" or as
a result of a "change of control" prior to expiration date of the agreement,
Mr. Record is entitled to one-half of his annual base salary. The employment
agreement also includes other provisions relating to benefits customary in
agreements of this nature.
EMPLOYEE STOCK OPTION PLAN
The Board of Directors and the stockholders of the Company have approved
the adoption of the 1997 PawnMart, Inc. Employee Stock Option Plan (the
"Plan"). Stock options granted pursuant to the Plan may be either incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), or non-qualified stock options.
The number of shares of Common Stock reserved for issuance pursuant to the Plan
is 1,000,000 shares. As of the date of this Proxy Statement, options for
878,923 shares of Common Stock had been granted and are outstanding under the
Plan. All options have exercise prices ranging from $3.00 to $4.25 per share of
Common Stock.
The Plan is administered by the Compensation and Human Resources Committee
(the "Committee") of the Board of Directors. Subject to the provisions of the
Plan, the Committee has the exclusive power to grant options, to interpret the
Plan, to grant waivers of restrictions thereunder and to adopt such rules and
regulations as it may deem necessary or appropriate in keeping with the
objectives of the Plan.
Options granted pursuant to the Plan become exercisable on such date or
dates as may be established by the Committee. The exercise price of options
granted under the Plan may not be an amount less than the market value of
Common Stock at the time of grant. The exercise price must be paid in full in
cash at the time an option is exercised or, if permitted by the Committee, by
means of tendering previously owned shares of Common Stock held for at least
six months (at their fair market value), or partly in cash and partly in Common
Stock.
In the event of a stock split, stock dividend, combination or
reclassification or certain other corporate transactions, the Committee is
authorized to make appropriate adjustments to the exercise price and number of
shares subject to options granted under the Plan. Subject to certain
limitations, the Board of Directors is authorized to amend, modify or terminate
the Plan to meet any changes in legal requirements or for any other purpose
permitted by law.
8
<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1997, Mr. Thompson acquired an aggregate of 375,000 shares of 12%
Series D Convertible Exchangeable Preferred Stock ("Series D Preferred Stock")
for $750,000 in connection with Mr. Thompson's becoming a Chief Executive
Officer of the Company. In connection with the completion of the Company's
initial public offering on March 20, 1998, the 375,000 shares of Series D
Preferred Stock were automatically converted into 187,500 shares of Common
Stock at a conversion price of $4.00. In March of 1996, Mr. Thompson purchased
a principal amount of $228,000 of 14% unsecured Convertible Subordinated
Debentures due June 30, 1999 which converted into 57,000 shares of Common Stock
in connection with the completion of the Company's initial public offering on
March 20, 1998. In October 1997, Mr. Standifer acquired an aggregate of 50,000
shares of Series D Preferred Stock for $100,000 in connection with Mr.
Standifer's becoming a Director of the Company. In connection with the
completion of the Company's initial public offering on March 20, 1998, the
50,000 shares of Series D Preferred Stock were automatically converted into
25,000 shares of Common Stock at a conversion price of $4.00.
During January and February 1998, the Company issued $225,000 in aggregate
principal amount of unsecured notes payable to Mr. Thompson in consideration
for Mr. Thompson advancing the Company $225,000 in cash. The notes, which
accrued interest at 12 percent, were paid in full by the Company on March 20,
1998. During September and October 1998, the Company issued $322,000 in
aggregate principal amount of unsecured notes payable to Mr. Thompson in
consideration for Mr. Thompson advancing the Company $322,000 in cash. The
notes, which accrued interest at 10 percent, were paid in full by the Company
on October 16, 1998. The Company believes that said arrangements were no less
favorable to the Company than would be available from unrelated third parties.
All future transactions between the Company and its officers, directors
and 5% stockholders will be on terms no less favorable than could be obtained
from independent, third parties and will be approved by a majority of the
independent, disinterested directors of the Company. Furthermore, any
forgiveness of loans must be approved by a majority of the Company's
independent directors who do not have an interest in the transactions and who
have access, at the Company's expense, to the Company's counsel or independent
counsel.
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT
OVERVIEW
The Compensation and Human Resources Committee of the Board of Directors
supervises the Company's executive compensation. The Company seeks to provide
executive compensation that will support the achievement of the Company's
financial goals while attracting and retaining talented executives and
rewarding superior performance. In performing this function, the Compensation
and Human Resources Committee reviews executive compensation surveys and other
available information and may consult with independent compensation
consultants.
The Company seeks to provide an overall level of compensation to the
Company's executives that are competitive within the pawnshop industry and
other companies of comparable size and complexity. Compensation in any
particular case may vary from any industry average on the basis of annual and
long-term Company performance as well as individual performance. The
Compensation and Human Resources Committee will exercise its discretion to set
compensation where in its judgment external, internal, or individual
circumstances warrant it.
In general, the Company compensates its executive officers through a
combination of base salary and long-term incentive compensation in the form of
stock options.
9
<PAGE> 14
BASE SALARY
Base salary levels for the Company's executive officers are set generally
to be competitive in relation to the salary levels of executives at other
companies in the pawnshop industry or other companies of comparable size,
taking into consideration the position's complexity, responsibility and need
for special expertise. In reviewing salaries, the Compensation and Human
Resources Committee takes into consideration the minimum salaries set forth in
certain employment contracts (described elsewhere in this Proxy Statement) and
also takes into account individual experience and performance.
LONG-TERM INCENTIVE COMPENSATION
The Company provides long-term incentive compensation through its employee
stock option plan, which is described elsewhere in this Proxy Statement. The
number of shares covered by any grant is generally determined by the then
current stock price, subject in certain circumstances, to vesting requirements.
In special cases, grants may be made to reflect increased responsibilities or
reward extraordinary performance.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Thompson was named Chief Executive Officer of the Company in March
1997. Mr. Thompson's base salary was increased from $100,000 to $150,000 during
Fiscal 1998. In addition, Mr. Thompson received stock option grants based upon
the overall achievements of the Company. The Compensation and Human Resources
Committee believes that the total cash compensation paid to Mr. Thompson was
appropriate in light of the Company's accomplishments during Fiscal 1998,
including completion of the Company's initial public offering, the Company's
store growth, and significant improvements in the Company's core lending
operations.
These accomplishments also support the Compensation and Human Resources
Committee's belief that the Fiscal 1998 cash compensation of the Company's
other executive officers was set at appropriate levels.
Compensation and Human Resources Committee
Robert E. Camp
Mark E. Kane
J. Roger Williams
10
<PAGE> 15
PERFORMANCE GRAPH
The following Performance Graph shows the changes since March 18, 1998
(the date the Company's Common Stock commenced public trading) in the value of
$100 invested in: (1) the Company's Common Stock, (2) the Nasdaq Stock Market -
U.S. Index, and (3) the common stock of a peer group of companies whose returns
are weighted according to their respective market capitalizations. The values
of each investment are based on share price changes and the reinvestment of
dividends, if any. The peer group selected by the Company includes the Company,
Cash America International, Inc., First Cash Financial Services, Inc., EZCORP,
Inc., and U.S. Pawn, Inc.
The comparisons shown in the following Performance Graph are based upon
historical data. The Company cautions that the stock price performance shown in
the Performance Graph below is not indicative of, nor intended to forecast, the
potential future performance of the Company's Common Stock. Information used in
the Performance Graph was obtained from SNL Securities, a source believed to be
reliable, but the Company is not responsible for any errors or omissions in
such information.
PERFORMANCE GRAPH OF CUMULATIVE TOTAL RETURN AMONG PAWNMART, INC.,
THE NASDAQ STOCK MARKET - U.S. INDEX AND PEER GROUP
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------
INDEX 3/18/98 4/30/98 7/31/98 10/31/98 1/30/99
---------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
PawnMart, Inc. $ 100.00 $ 95.64 $ 78.25 $ 42.02 $ 38.40
NASDAQ Stock Market - U.S. Index $ 100.00 $ 104.59 $ 104.70 $ 99.71 $ 142.10
Peer Group $ 100.00 $ 107.78 $ 99.70 $ 80.08 $ 95.57
</TABLE>
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any additional matters are properly brought before
the Annual Meeting, it is the intention of the attorneys-in-fact named in the
accompanying proxy to vote in accordance with their judgment on such matters.
VOTING REQUIREMENTS
With regard to the proposal for the Election of Directors, votes may be
cast for or votes may be withheld from each nominee. No stockholder may vote
for more than two nominees. Directors will be elected by plurality vote.
Therefore, votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may not be specified with respect to the
election of directors.
Under Delaware law, abstentions are counted as present for quorum purposes
and are included in the calculation of shares "entitled to vote". Abstentions
on a particular matter (other than the election of directors) will not be
counted as votes cast in the affirmative and will therefore have the same
effect as a vote against a particular matter (other than the election of
directors) because each proposal (other than the election of directors)
requires the affirmative vote of a specific number of shares.
11
<PAGE> 16
If no directions are specified in any duly signed and dated proxy card
received by the Company, the shares represented by that proxy card will be
counted as present for quorum purposes and will be voted by the
attorneys-in-fact named in the proxy FOR the election of the Class II director
nominees recommended by the Board of Directors and FOR the ratification of the
selection of KPMG LLP as the Company's independent auditors for the fiscal year
ending January 29, 2000 and in accordance with the discretion of the named
attorneys-in-fact on other matters properly brought before the Annual Meeting.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than 10% of the Common Stock, to file with the Securities
and Exchange Commission (the "Commission") initial reports of beneficial
ownership and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company. Officers, directors and greater than
10% beneficial owners are required by the Commission to furnish the Company
with copies of all Section 16(a) reports they file.
On March 20, 1998, the Company completed its initial public offering and
became a reporting company. The Initial Statement of Beneficial Ownership of
Securities on Form 3 for all executive officers and directors were not filed on
a timely basis. Additionally, Mr. Record's Initial Statement of Beneficial
Ownership of Securities on Form 3 was not filed on a timely basis. Based solely
on its review of the copies of reports received by it, the Company believes
that all other filing requirements applicable to executive officers and
directors have been complied with during Fiscal 1998.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement
relating to the 2000 Annual Meeting of Stockholders of the Company must be
received no later than January 29, 2000 at the Company's principal executive
offices, 301 Commerce Street, Suite 3600, Fort Worth, Texas, 76102, Attention:
Corporate Secretary. Stockholders of the Company who intend to nominate
candidates for election as a director or to bring other business before the
meeting must also comply with the applicable procedures set forth in the
Company's Bylaws. See "Stockholder Nomination of Director Candidates." The
Company will furnish copies of such Bylaw provisions upon written request to
the Secretary of the Company at the aforementioned address. It is suggested
that proponents submit their proposals by certified mail, return receipt
requested.
STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any stockholder of record who is
entitled to vote for the election of directors at a meeting called for that
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
As described more fully in the Company's Bylaws, a stockholder desiring to
nominate a person for election to the Board of Directors must send a written
notice to the Secretary of the Company setting forth (i) as to each person who
the stockholder proposes to nominate, all information required to be disclosed
in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected) and (ii) as to the
stockholder giving the notice: (a) the name and address of such stockholder as
it appears on the Company's books and (b) the class and number of shares of the
Company that are owned of record by such stockholder. To be timely, notice of
persons to be nominated by a stockholder as a director at a meeting of
stockholders must be delivered to or mailed and received at the principal
executive offices of the Company not more than 90 nor less than 60 days before
the first anniversary of the preceding year's annual meeting.
12
<PAGE> 17
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Commission, will be furnished without charge to stockholders upon receipt by
the Company of a request addressed to:
Thomas W. White
Senior Vice President and Chief Financial Officer
PawnMart, Inc.
301 Commerce Street, Suite 3600
Fort Worth, Texas 76102
The enclosed form of proxy has been prepared at the direction of the
Company, of which you are a stockholder, and is sent to you at the request of
the Board of Directors. The proxies and attorneys-in-fact named herein have
been designated by your Board of Directors.
The Board of Directors of the Company urges you, even if you presently
plan to attend the Annual Meeting, to execute the enclosed proxy and mail it as
indicated immediately. You may revoke your proxy and vote in person if you are
in fact able to attend the Annual Meeting.
PAWNMART, INC.
By Order of the Board of Directors,
/s/ CARSON R. THOMPSON
Carson R. Thompson
Chief Executive Officer
Fort Worth, Texas Chairman of the Board
May 19, 1999
13
<PAGE> 18
PAWNMART, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PAWNMART, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 22, 1999
The undersigned, having received the notice and accompanying Proxy
Statement for said meeting, hereby appoints Carson R. Thompson and Thomas W.
White, and each of them, with full power of substitution, as the undersigned's
proxy and attorney-in-fact to vote at the Annual Meeting of Stockholders of
PawnMart, Inc. to be held on June 22, 1999, or at any adjournment thereof, all
shares of PawnMart, Inc. which the undersigned may be entitled to vote.
[X] Please mark your votes as in this example.
1. Election of Class II directors for terms expiring in 2002:
Robert D. Bourland, Jr.
James E. Berk
[ ] FOR ALL NOMINEES (except as indicated to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all the nominees above.
[ ] _______________________________ (To withhold authority to vote
for any individual nominee, print the nominee's name)
2. To ratify the appointment of KPMG LLP as the Company's independent
accountants for the fiscal year ending January 29, 2000.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
(Please complete, sign and date this card on the next page)
<PAGE> 19
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER
PROPOSAL 1 AND FOR PROPOSAL 2 AND ON ANY OTHER BUSINESS, IN THE DISCRETION OF
THE PROXIES.
IMPORTANT. Please date sign exactly as the name appears below.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
Dated , 1999
----------------------
-----------------------------------
Signature
-----------------------------------
Signature (if held jointly)
PLEASE MARK, SIGN, DATE AND MAIL
THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE
MEETING. IF YOU RECEIVE MORE THAN
ONE PROXY CARD, PLEASE SIGN AND
RETURN ALL CARDS IN THE ENCLOSED
ENVELOPE.
[ ] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
