<PAGE>
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>
(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>
PAWNMART, INC.
6300 RIDGLEA PLACE, SUITE 724
FORT WORTH, TEXAS 76116
April 19, 2000
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, May
23, 2000 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>
PAWNMART, INC.
6300 RIDGLEA PLACE, SUITE 724
FORT WORTH, TEXAS 76116
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2000
-------------------
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, May 23, 2000, 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 III directors for terms expiring in
2003;
2. To consider and act upon a proposal to amend the PawnMart,
Inc. 1997 Director Stock Option Plan to (i) increase by
200,000 (from 263,788 to 463,788) the number of shares of
common stock, par value $.01 per share ("Common Stock"), of
the Company authorized for issuance thereunder, (ii)
decrease the per director annual grant of options from the
lesser of 20,000 shares or $200,000 in market value of
Common Stock to the lesser of 15,000 shares or $200,000 in
market value of Common Stock, and (iii) reduce the initial
grant of options to newly appointed eligible directors from
25,000 options to purchase Common Stock to 15,000 options to
purchase Common Stock and to prorate the initial grant based
upon the portion of the year remaining until the next annual
meeting; 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 April 5, 2000, 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
April 19, 2000
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
POSTAGE PAID ENVELOPE PROVIDED.
<PAGE>
PAWNMART, INC.
6300 RIDGLEA PLACE, SUITE 724
FORT WORTH, TEXAS 76116
-------------------
PROXY STATEMENT
APRIL 19, 2000
-------------------
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, May 23, 2000, 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 29, 2000, are first being
mailed to the stockholders of the Company on or about April 19, 2000. 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 III director nominees recommended by the Board
of Directors, FOR approval of an amendment to the PawnMart, Inc. 1997
Director Stock Option Plan to (i) increase by 200,000 (from 263,788 to
463,788) the number of shares of Common Stock of the Company authorized for
issuance thereunder, (ii) decrease the per director annual grant of options
from the lesser of 20,000 shares or $200,000 in market value of Common Stock
to the lesser of 15,000 shares or $200,000 in market value of Common Stock,
and (iii) reduce the initial grant of options to newly appointed directors
from 25,000 options to purchase Common Stock to 15,000 options to purchase
Common Stock and to prorate the initial grant based upon the portion of the
year remaining until the next annual meeting, and in accordance with the
discretion of the named attorneys-in-fact on other matters properly brought
before the Annual Meeting.
As of April 5, 2000, the Company had 7,209,445 shares of Common Stock
issued and outstanding and 416,667 shares of 8% Convertible Preferred Stock,
par value $6.00 per share ("Preferred Stock") issued and outstanding. Each
share of Common Stock and Preferred Stock entitles the holder thereof to one
vote. Only stockholders of record at the close of business on April 5, 2000,
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>
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
III directors each of whom will serve for a three-year term expiring in 2003.
The Company's nominating committee and the Board of Directors has nominated
the persons named below to stand for election as Class III directors at the
Annual Meeting. Each of the persons nominated presently serve as a Class III
director of the Company. Also listed below are each of the Class I and Class
II 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 III 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 III DIRECTOR NOMINEES - TERMS EXPIRE 2003
Mark E. Kane (Age 45) has served as a Director since 1997. From April
1998 to the present, Mr. Kane has served as Chief Executive Officer of the
Movie Trading Company, Ltd, a specialty retailer of new and pre-owned movies.
From 1997 through July 1999, Mr. Kane was 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 Compact Disc
International, Ltd., a national franchising firm specializing in the sale of
new and pre-owned compact discs.
Monty R. Standifer (Age 60) has served as a Director since 1997. From
September 1999 to the present, Mr. Standifer has been an independent
financial consultant. From May 1999 to August 1999, Mr. Standifer served as
Vice President and Treasurer of Shabang!, Inc., an internet-based shopping
service. From June 1992 to May 1999, Mr. Standifer served as Chief Financial
Officer and Treasurer, and from July 1995 to May 1999, Mr. Standifer served
as Senior Vice President and Secretary of Gadzooks, Inc., a specialty
retailer of apparel products for teens. 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.
2
<PAGE>
CLASS II DIRECTORS - TERMS EXPIRE 2001
Carson R. Thompson (Age 61) 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 Osteopathic Health Foundation, Inc. and is a member of the
Board of Advisors of the College of Business Administration at the University
of Oklahoma.
J. Roger Williams (Age 50) has served as a Director since April 1998.
From 1995 to the present, Mr. Williams has served as Chairman of the Board
and Chief Executive Officer of Roger Williams Automall in Weatherford, Texas.
From 1974 to 1995, he served as President and Chief Executive Officer of Jack
Williams Automall, the multi-line dealership founded by his father, Jack
Williams, in 1958. Mr. Williams is Chairman of the Board of Vestry
Corporation of Fort Worth, Texas and owns and operates Roger Williams Ranches
in Weatherford, Texas.
CLASS II DIRECTORS - TERMS EXPIRE 2002
James E. Berk (Age 54) has served as a Director since 1997. From October
1999 to the present, Mr. Berk has served as Chief Executive Officer and from
March 2000 to the present, Mr. Berk has served as Chairman of the Board of
The Store of Knowledge, a retailer of educational products. From January 1999
to October 1999, 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
membership warehouse clubs, and served in various other companies in
management capacities.
Robert D. Bourland, Jr. (Age 58) has served as a Director since 1994.
From December 1998 to the present, Mr. Bourland has been self-employed as an
independent retail consultant. 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.
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
Corporate Governance 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 chaired by Mr. Standifer and
comprised of Messrs. Berk and Kane, 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 four meetings during the
fiscal year ended January 29, 2000. Attached as Exhibit B hereto is a copy of
the Audit and Finance Committee Charter.
3
<PAGE>
The Compensation and Human Resources Committee, currently chaired by Mr.
Berk and comprised of Messrs. 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 met one time and acted by unanimous written consent three times
during the fiscal year ended January 29, 2000.
The Corporate Governance Committee, currently chaired by Mr. Berk and
comprised of Messrs. Bourland and Thompson, is responsible for developing a
strategy and criteria for new board members and making recommendations to the
Board of Directors regarding the selection of future board members, board
compensation and corporate governance matters. The Corporate Governance
Committee met three times during the fiscal year ended January 29, 2000.
The Board of Directors held five formal meetings and acted by unanimous
written consent four times during the fiscal year ended January 29, 2000.
During the fiscal year ended January 29, 2000, 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.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF THE INDIVIDUALS NOMINATED
FOR ELECTION AS CLASS II DIRECTORS.
PROPOSAL NO. 2
ADOPT AMENDMENT NO. 1 TO
THE PAWNMART, INC. 1997 DIRECTOR STOCK OPTION PLAN
CURRENT DIRECTOR COMPENSATION
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 are 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 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 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 is 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 225,000 shares of Common Stock had been
granted and are outstanding under the Directors' Option Plan. All options
have exercise prices ranging from $3.25 to $4.44 per share of Common Stock.
4
<PAGE>
REASONS FOR PROPOSAL
The purpose of the Directors' Option Plan is to encourage ownership of
the common stock of the Company by Eligible Directors in order to provide
additional incentive for such persons to promote the success and the business
of the Company and to encourage them to become and remain an Eligible
Director of the Company by providing such persons an opportunity to benefit
from any appreciation of the common stock of the Company through the issuance
of stock options to such persons in accordance with the terms of the
Directors' Option Plan.
The Company is recommending the Plan Amendment in order to ensure that
sufficient shares are available under the Directors' Option Plan to reward
and motivate current Eligible Directors and to attract new Eligible Directors
in the future, particularly in light of the projected future growth of the
Company and the fact that no cash compensation has been or is planned to be
paid by the Company to Eligible Directors.
The affirmative vote of the holders of a majority of the total votes
cast with respect to the Plan Amendment is required to approve the Plan
Amendment. In addition, approval of the proposal to increase the authorized
number of shares of Common Stock, which is described under Proposal 2 above,
is also required in order to allow the Company to achieve the benefits of the
Plan Amendment by granting additional options under the Directors' Option
Plan.
DESCRIPTION OF AMENDMENT NO. 1
The amendment to the Directors' Option Plan provides for an increase in
the aggregate number of shares of Common Stock as to which options may be
granted thereunder from 263,788 shares to 463,788 shares. Additionally, the
amendment would decrease the per director annual grant of options from the
lesser of 20,000 shares or $200,000 in market value of Common Stock to the
lesser of 15,000 shares or $200,000 in market value of Common Stock. The
amendment would also reduce the initial grant of options to newly appointed
Eligible Directors from 25,000 options to purchase Common Stock to 15,000
options to purchase Common Stock and to prorate the initial grant based upon
the portion of the year remaining until the next annual meeting.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
DIRECTORS' OPTION PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 2000, certain information
with respect to voting securities, the number of 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 voting shares, (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
---------------- ----------------
<S> <C> <C>
BENEFICIAL OWNER
- ----------------
Carson R. Thompson (3)(10)............................................. 503,258 6.0%
Michael D. Record (3)(11).............................................. 58,225 *
Thomas W. White (3)(12)................................................ 26,074 *
Randall L. Haden (3)(13)............................................... 67,904 *
Robert D. Bourland (4)(14)............................................. 120,094 1.4%
James E. Berk (5)(15).................................................. 53,243 *
Monty R. Standifer (6)(15)............................................. 78,243 *
Mark E. Kane (7)(15)................................................... 52,343 *
J. Roger Williams (8)(16).............................................. 73,500 *
All directors and executive officers as a group (9 persons)......... 1,032,884 12.3%
Jesse L. Upchurch, Trustee of Trust C of the Constance
J. Upchurch Family Trust Dated 10/14/94 (9)(17)..................... 729,167 8.7%
</TABLE>
5
<PAGE>
*Less than 1% of the outstanding voting shares.
(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 voting shares deemed outstanding was 8,429,335. This number includes
803,223 shares issuable pursuant to stock options and warrants that may
be exercised within sixty (60) days after April 1, 2000.
(3) His address is 6300 Ridglea Place, Suite 724, Fort Worth, Texas 76116.
(4) The address for Mr. Bourland is 1500 West 5th Street, Fort Worth, Texas
76102.
(5) The address for Mr. Berk is 1005 Edgewater Court, Colleyville, Texas
76034.
(6) The address for Mr. Standifer is 4032 Pirates Beach, Galveston, Texas
77554.
(7) The address for Mr. Kane is 1017 N. Central Expressway, Suite 100,
Plano, Texas 75075.
(8) The address for Mr. Williams is 1015 Fort Worth Street, Weatherford,
Texas 76086.
(9) The address for Mr. Upchurch is 500 Main Street, Suite 600, Fort Worth,
Texas 76102.
(10) Includes options exercisable into 137,052 shares of Common Stock.
(11) Includes options exercisable into 56,225 shares of Common Stock.
(12) Includes options exercisable into 16,831 shares of Common Stock.
(13) Includes options and warrants exercisable into 31,831 shares of Common
Stock.
(14) Includes options exercisable into 59,784 shares of Common Stock.
(15) Includes options exercisable into 40,000 shares of Common Stock.
(16) Includes options and warrants exercisable into 69,000 shares of Common
Stock.
(17) Includes warrants exercisable to purchase 312,500 shares of Common
Stock.
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 61) 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.
Michael D. Record (Age 46) joined the Company in September 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 30) was named Senior Vice President and Chief
Financial Officer of the Company in January 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 and
mergers and acquisitions manager serving numerous clients within the
financial services, manufacturing and retailing industries.
Randall L. Haden (Age 39) 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>
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 $100,000 during the
fiscal years ended January 29, 2000 ("Fiscal 1999"), January 30, 1999
("Fiscal 1998"), and January 31, 1998 ("Fiscal 1997") (collectively, the
"Named Executive Officers"). As of the date hereof, the Company has not
granted any stock appreciation rights.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION DURING FISCAL 1999 YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
- --------------------------- ---- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Carson R. Thompson...................... 1999 164,423 - - -
Chairman of the Board and 1998 150,000 - 175,000 -
Chief Executive Officer (1)(2) 1997 80,769 6,000 164,867 -
Michael D. Record....................... 1999 137,308 4,615 20,000 -
President (1)(3) 1998 48,461 25,385 125,000 -
1997 - - - -
</TABLE>
- -------------------
(1) Mr. Thompson and Mr. Record 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) Mr. Record joined the Company in September 1998 at an annual salary of
$120,000. In connection with his employment, Mr. Record received a
$30,000 signing bonus that was paid over a six month period.
The following table summarizes grants of options to purchase shares of
Common Stock under the PawnMart, Inc. 1997 Employee Stock Option Plan made
during Fiscal 1999 to Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION BLACK-SCHOLES GRANT
NAME GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE DATE PRESENT VALUE (3)
---- -------------- ----------- --------- ---- ----------------------
<S> <C> <C> <C> <C> <C>
Carson R. Thompson
Chairman of the Board and
Chief Executive Officer (1) - - - - -
Michael D. Record
President (2)(3) 20,000 19.8% $3.25 7/23/09 $19,997
</TABLE>
- -------------------------------
(1) No options were granted to Mr. Thompson during Fiscal 1999.
(2) The options to purchase shares of Common Stock were granted under the
1997 PawnMart, Inc. Employee Stock Option Plan and vest over a period of
three years.
(3) The grant date present value has been determined using the Black-Scholes
option pricing model with assumptions for the expected term of 2.77
years, the risk-free interest rate of 5.25%, the expected volatility of
38.60%, and no expected dividend yield.
7
<PAGE>
There were no exercises of stock options by any of the Named Executive
Officers during Fiscal 1999. The table below lists the number of shares of
Common Stock underlying each option held by the Named Executive Officers as
of January 29, 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT FISCAL YEAR END (#) OPTIONS AT FISCAL YEAR END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
Carson R. Thompson 137,052/202,815 $0/$0 (1)
Michael D. Record 56,225/88,775 $0/$0 (1)
</TABLE>
- ------------------
(1) All exercisable and unexercisable options held by Named Executive
Officers have exercise prices ranging from $3.00 to $4.25 per share. At
January 29, 2000, the closing market price of the Company's Common Stock
as reported by the NASDAQ SmallCap Market was $1.66 per share.
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 907,485 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>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was not a party to any transactions or series of
transactions with directors, nominees for directors, or executive officers in
amounts exceeding $60,000 during Fiscal 1999.
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.
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 $150,000 to $175,000
during Fiscal 1999. Mr. Thompson did not receive any stock option grants
during Fiscal 1999. 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 1999, including the
Company's continued store growth, significant improvements in the Company's
store profitability and improved consolidated operating results.
These accomplishments also support the Compensation and Human Resources
Committee's belief that the Fiscal 1999 cash compensation of the Company's
other executive officers was set at appropriate levels.
COMPENSATION AND HUMAN RESOURCES COMMITTEE
<TABLE>
<S> <C> <C>
James E. Berk, Chairman Mark E. Kane J. Roger Williams
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation and Human Resources Committee of
the Company's Board of Directors is an officer, former officer, or employee
of the Company or any subsidiary of the Company.
AUDIT AND FINANCE COMMITTEE REPORT FOR FISCAL 1999
The Audit and Finance Committee (the "Committee") oversees the Company's
financial reporting process on behalf of the Board of Directors. Management
has the primary responsibility for the consolidated financial statements and
the reporting process including the system of internal controls. In
fulfilling its oversight responsibilities, the Committee reviewed the audited
consolidated financial statements in the Annual Report with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the consolidated financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
consolidated financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the acceptability, of
the Company's accounting principles and such other matters as are required to
be discussed with the Committee under generally accepted auditing standards.
In addition, the Committee has discussed with the independent auditors the
auditors' independence from management and the Company including matters in
the written disclosures required by the Independence Standards Board.
The Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Committee held four meetings during the fiscal year ended January 29, 2000.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the consolidated audited financial statements be included in the Annual
Report on Form 10-K for the year ended January 29, 2000 for filing with the
Securities and Exchange Commission.
AUDIT AND FINANCE COMMITTEE
<TABLE>
<S> <C> <C>
Monty R. Standifer, Chairman Mark E. Kane James E. Berk
</TABLE>
In compliance with the listing standards of the NASDAQ SmallCap Market,
on which the Company's Common Stock trades, in the opinion of the Board, no
member of the Audit and Finance Committee has a relationship with the Company
that would interfere with the exercise of that member's independent judgment
in carrying out the responsibilities of a director.
PERFORMANCE GRAPH
The following Performance Graph shows the changes since March 17, 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.
10
<PAGE>
PERFORMANCE GRAPH OF CUMULATIVE TOTAL RETURN AMONG PAWNMART, INC.,
THE NASDAQ STOCK MARKET - U.S. INDEX AND PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
03/18/98 08/01/98 01/30/99 07/31/99 01/29/00
<S> <C> <C> <C> <C> <C>
PawnMart, Inc. $100 $ 77.14 $ 37.86 $ 71.43 $ 37.86
NASDAQ - Total US $100 $104.97 $142.54 $149.96 $214.98
SNL Pawn Shops Index $100 $111.64 $107.02 $ 69.42 $ 65.44
</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.
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 III
director nominees recommended by the Board of Directors, FOR approval of an
amendment to the PawnMart, Inc. 1997 Director Stock Option Plan to (i)
increase by 200,000 (from 263,788 to 463,788) the number of shares of Common
Stock of the Company authorized for issuance thereunder, (ii) decrease the
per director annual grant of options from the lesser of 20,000 shares or
$200,000 in market value of Common Stock to the lesser of 15,000 shares or
$200,000 in market value of Common Stock, and (iii) reduce the initial grant
of options to newly appointed directors from 25,000 options to purchase
Common Stock to 15,000 options to purchase Common Stock and to prorate the
initial grant based upon the portion of the year remaining until the next
annual meeting, and in accordance with the discretion of the named
attorneys-in-fact on other matters properly brought before the Annual Meeting.
11
<PAGE>
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.
Mr. Kane's Statement of Changes in Beneficial Ownership of Securities on
Form 4 for October 1999 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 1999.
STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement
relating to the 2001 Annual Meeting of Stockholders of the Company must be
received no later than January 27, 2001 at the Company's principal executive
offices, 6300 Ridglea Place, Suite 724, Fort Worth, Texas, 76116, 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>
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.
6300 Ridglea Place, Suite 724
Fort Worth, Texas 76116
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
April 19, 2000
13
<PAGE>
EXHIBIT A
AMENDMENT NO. 1 TO THE PAWNMART, INC.
1997 DIRECTOR STOCK OPTION PLAN
I. The first sentence of Section 2 of the Directors' Option Plan shall
be deleted and restated in its entirety as follows:
"Subject to adjustment as provided in Section 9 hereof, there will
be reserved for the use upon the exercise of Options to be granted
from time to time under the Plan, an aggregate of 463,788 shares of
the common stock, $0.01 par value, of the Company (the "Common
Stock"), which shares in whole or in part shall be authorized, but
unissued, shares of the Common Stock or issued shares of Common
Stock which shall have been determined from time to time by the
Board of Directors."
II. Section 5 of the Directors' Option Plan shall be deleted and
restated in its entirety as follows:
"Eligible Directors will automatically receive an initial grant of
options to purchase 15,000 shares of Common Stock upon their
appointment to the Board of Directors, prorated based upon the
portion of the year remaining until the next annual meeting of the
Company's stockholders. Eligible Directors shall receive an annual
grant of options to purchase the lesser of 15,000 shares of Common
Stock or $200,000 in face value of underlying Common Stock as of the
date following each annual meeting of the Company's stockholders."
A-1
<PAGE>
EXHIBIT B
PAWNMART, INC.
AUDIT AND FINANCE COMMITTEE CHARTER
The Board of Directors of PawnMart, Inc. hereby constitutes and establishes
an Audit and Finance Committee with authority, responsibility, and specific
duties as described below.
MEMBERSHIP
The Committee shall consist of at least three independent directors of the
Company. The Board of Directors shall have the responsibility for determining
the independence and qualifications of board members for purposes of service
on the Audit and Finance Committee and ensuring that Committee members are
"independent" as defined by the Company's applicable listing standards.
Additionally, the Board of Directors shall appoint the chairman and other
members of the Committee for a term of one (1) year and such committee
members will continue to be eligible for reappointment at the will of the
Board.
AUTHORITY
The Audit and Finance Committee is granted the authority to investigate any
activity of the Company related to its specific duties, and all employees are
directed to cooperate as requested by members of the Committee.
RESPONSIBILITY
The members of the Committee shall make themselves familiar with the
financial condition, operating results, and the financial controls and
operations of the Company. The Committee shall make such recommendations to
the Board of Directors of the Company as the Committee deems appropriate for
the good of the Company, including seeking opportunities for the Company to
reduce costs, to enhance its competitive position and to improve tax
strategies. The Committee shall review the financial statements and related
financial disclosures of the Company with management including discussions of
the quality of the accounting principles as applied, and significant
judgments and underlying estimates affecting such financial statements. The
Committee shall have discussions with the outside auditor as to the outside
auditors' judgment of the quality of those accounting principles affecting
the Company's financial statements and judgments made by management in their
application. The Committee shall also take such further actions as the
Committee deems appropriate to carry out its functions, and shall exercise
such further authorities and responsibilities as the Board may from time to
time delegate to it.
SPECIFIC DUTIES
1. Recommend to the Board of Directors the outside auditor to be
selected to audit the books and records of the Company, and review
with management the responsiveness of the Company's outside auditor
to the Company's needs. Such recommendation shall consider the
effectiveness of the outside auditor and whether any significant
relationships between the outside auditor and the Company exist that
could impair the outside auditors' independence. Review and concur
with the engagement of the firm (including any related entities)
selected as the company's outside auditor for any services in
addition to financial statement audits (including audit and tax)
where such services are subject to a written engagement letter.
General consultations and requests for advise from the auditor in
regards to routine tax and accounting matters which occur in the
normal course of business shall be at the discretion of the
Executive management of the Company.
2. Review with the Company's management, its director of internal
auditing (if applicable), and the outside auditors, the Company's
general policies and procedures to reasonably assure the adequacy of
internal accounting and financial controls. Inquire as to
significant risks or exposures and assess the steps management has
taken to minimize such risks to the Company.
B-1
<PAGE>
3. Review the Company's quarterly financial statements and results of
operations with management prior to their public release, and
discuss significant matters affecting the quarterly results,
accounting principles applied and underlying estimates and judgments
made with regard to such financial statements.
4. Review, prior to the annual audit, the scope and general extent of
the outside auditors' audit examination, including their engagement
letter and proposed fees. The Committee's review should include an
understanding from the outside auditor of the factors considered by
them in determining the audit scope.
5. Review with management and the outside auditor, upon completion of
their audit, the Company's financial statements and operating
results for the year prior to their release to the public, together
with a review of the news release and related financial disclosures.
The Committee shall inquire about the outside auditors judgments
about the quality of the Company's accounting principles applied,
the clarity of the Company's financial disclosures and the degree of
aggressiveness or conservatism of the accounting principles and
underlying estimates and other significant decisions made by
management in preparing the financial statements and related
disclosures. Such review should encompass significant adjustments
proposed by the outside auditor, any changes in accounting
principles, significant nonrecurring transactions, tax policy
matters and other matters which may have significant impact on the
Company observed by the outside auditor during the conduct of the
audit.
6. Review with management and the Company's outside auditor the
adequacy and cost effectiveness of information services, internal
auditing, and accounting and financial controls of the corporation,
including those matters in the independent accountants' "management
letter" and communications with the audit committee required by
Statement of Auditing Standards No. 61.
7. Provide sufficient opportunity for the Company's outside auditor to
meet with the members of the Audit and Finance Committee without
members of management present. Among the items to be discussed in
these meetings are the outside auditor's evaluation of the Company's
accounting and auditing personnel, the cooperation which the outside
auditor received from management, including accounting and auditing
personnel, during the course of their audit, and the extent to which
undue pressure was brought to bear on the outside auditor by
management.
8. Review the internal audit and loss prevention functions of the
Company, including the proposed programs for the coming year and the
coordination of the internal audit function with the Company's
outside auditor. On a semi-annual basis, the Audit and Finance
Committee will receive a written report from the head of internal
audit covering business risks identified and other problems noted,
the proposed plan to address these matters, and progress since the
last written report. Interim reports to the Audit and Finance
Committee will be prepared as needed or in connection with quarterly
meetings. Review and concur in the appointment, replacement,
reassignment, or dismissal of the director of internal audit.
9. Review the Company's cash management program, including investment
guidelines and management strategy related to the investment of the
Company's surplus cash.
10. Review with management the Company's compliance with the Capital
Expenditure Plan previously approved by the Board of Directors, and
review and approve any planned expenditure exceeding policy
guidelines.
11. Review the terms and conditions of all bank lines of credit,
proposed loans, new equity offerings, stock distributions, etc.
prior to presentation to the full Board for approval.
12. Review and discuss with management the Company's risk management
policies including the adequacy of the Company's insurance and
limits of coverage for property and casualty, workers' compensation,
director and officer liability, and crime and burglary.
B-2
<PAGE>
MEETING TIMES AND MINUTES
Meetings of the Committee shall be called by the Chairman, or at his
direction, the Chief Executive Officer, as required to conduct the
Committee's business. Appropriate advance notice of meetings shall be given
to all Committee members. Minutes shall be kept of all meetings with copies
being submitted to all Committee members for approval, and to all Board
members for approval at a regular or special meeting of the Board.
B-3
<PAGE>
________________________________________________________________________________
PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PAWNMART, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
PAWNMART, INC.
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 May 23, 2000, or at any
adjournment thereof, all shares of PawnMart, Inc. which the undersigned may
be entitled to vote.
(PLEASE COMPLETE, SIGN AND DATE THIS CARD ON THE NEXT PAGE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
________________________________________________________________________________
(CONTINUED FROM OTHER SIDE) Please mark
your votes as in /X/
this example.
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.
FOR ALL WITHHOLD
NOMINEES AUTHORITY
THE BOARD OF DIRECTORS (except as to vote for all
RECOMMENDS A VOTE FOR indicated to the the nominees
PROPOSALS 1 AND 2. contrary below above
ITEM 1--Election of Class III / / / /
directors for terms expiring in 2003:
01 Mark E. Kane
02 Monty R. Standifer
(To withhold authority to vote for any individual nominee,
print the nominee's name).
__________________________________________________________
FOR AGAINST ABSTAIN
ITEM 2--Proposal to approve the / / / / / /
amendment to the PawnMart, Inc. 1997
Director Stock Option Plan.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
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.
Signature___________________ Signature____________________ Dated_________, 2000
IMPORTANT: PLEASE DATE AND SIGN EXACTLY AS THE NAME APPEARS HEREON. 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 COMPANY, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
