<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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
CASH AMERICA INTERNATIONAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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> 2
Cash America International, Inc.
1600 West 7th Street
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 22, 1997
To Our Shareholders:
The Annual Meeting of Shareholders of Cash America International, Inc.
(the "Company") will be held at the Fort Worth Club, 12th Floor, Fort Worth
Club Building, 306 West 7th Street, Fort Worth, Texas on Tuesday, April 22,
1997 at 9:00 a.m., Fort Worth Time, for the following purposes:
(1) Assuming the amendment described in item (2) below is
adopted, to elect ten (10) directors to terms of office expiring at the annual
meeting of shareholders in 1998 (three (3) directors), 1999 (three (3)
directors) and 2000 (four (4) directors); or if the foregoing amendment is not
adopted, to elect ten (10) directors to serve until the next annual meeting of
shareholders and until their successors are elected;
(2) To consider and act upon a proposal to amend the
Articles of Incorporation of the Company to provide for the classification of
the Board of Directors into three classes of directors with staggered terms of
office;
(3) To consider and act upon a proposal to amend the
Articles of Incorporation to provide for (a) a limitation upon who may call
special meetings of shareholders, and (b) a requirement that shareholders
notify the Company of a nomination prior to any meeting;
(4) To consider and act upon a proposal to amend the
Articles of Incorporation to provide for a minimum price and other matters, or
a higher voting requirement, in connection with certain business combinations;
(5) To consider and act upon a proposal to amend the
Articles of Incorporation to provide for preferred stock in the Company's
authorized capital stock;
(6) To consider and act upon a proposal to ratify the
appointment of Coopers & Lybrand L.L.P. as independent auditors of the Company
for the year 1997; and
(7) To transact such other business as may properly come
before the meeting or any adjournments thereof.
<PAGE> 3
Only holders of record of the Common Stock of the Company at the close
of business on March 4, 1997 are entitled to notice of and to vote at the
Annual Meeting. The presence, in person or by proxy, of the holders of a
majority of the issued and outstanding Common Stock entitled to vote at the
meeting is required for a quorum to transact business. The stock transfer
books will not be closed.
Management sincerely desires your presence at the meeting. However,
so that we may be sure that your shares are represented and voted in accordance
with your wishes, please sign and date the enclosed proxy and return it
promptly in the enclosed stamped envelope. If you attend the meeting, you may
revoke your proxy and vote in person.
By Order of the Board of Directors,
Hugh A. Simpson
Secretary
Fort Worth, Texas
March 14, 1997
2
<PAGE> 4
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
SOLICITATION OF PROXIES
The proxy statement and accompanying proxy are furnished in connection
with the solicitation by the Board of Directors of Cash America International,
Inc., a Texas corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Fort Worth
Club located on the 12th Floor of the Fort Worth Club Building, 306 West 7th
Street, Fort Worth, Texas on Tuesday, April 22, 1997 at 9:00 a.m., Fort Worth
Time and at any recess or adjournment thereof. The solicitation will be by
mail, and this Proxy Statement and the accompanying form of proxy will be
mailed to shareholders on or about March 14, 1997.
The enclosed proxy, even though executed and returned, may be revoked
at any time prior to the voting of the proxy by giving written notice of
revocation to the Secretary of the Company at its principal executive offices
or by executing and delivering a later-dated proxy or by attending the Annual
Meeting and voting in person. However, no such revocation shall be effective
until such notice has been received by the Company at or before the Annual
Meeting. Such revocation will not affect a vote on any matters taken prior to
receipt of such revocation. Mere attendance at the Annual Meeting will not of
itself revoke the proxy.
The expense of such solicitation will be borne by the Company and will
include reimbursement paid to brokerage firms and other custodians, nominees
and fiduciaries for their expenses in forwarding solicitation material
regarding the meeting to beneficial owners. The Company has retained
Kissel-Blake Inc. to assist in the solicitation of proxies from shareholders,
and will pay such firm a fee for its services of approximately $5,000.00.
Further solicitation of proxies may be made by telephone, telegraph or oral
communication following the original solicitation by directors, officers and
regular employees of the Company or by its transfer agent who will not be
additionally compensated therefor, but will be reimbursed by the Company for
out-of-pocket expenses.
<PAGE> 5
A copy of the Annual Report to Shareholders of the Company for its
fiscal year ended December 31, 1996 is being mailed with this Proxy Statement
to all shareholders entitled to vote, but does not form any part of the
information for solicitation of proxies.
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting was the close of business on March
4, 1997 (the "Record Date"). At the close of business on March 4, 1997, there
were ________________shares of Common Stock, par value $.10 per share, issued
and outstanding, each of which is entitled to one vote on all matters properly
brought before the meeting. There are no cumulative voting rights. The
presence in person or by proxy of the holders of a majority of the issued and
outstanding shares of Common Stock on the Record Date is necessary to
constitute a quorum at the Annual Meeting. Assuming the presence of a quorum,
the affirmative vote of a majority of the shares of Common Stock present, or
represented by proxy, and entitled to vote at the Annual Meeting is necessary
for the election of directors and for ratification of the appointment of
independent auditors. Adoption of the proposal to amend the Company's Articles
of Incorporation to provide for the classification of the Board of Directors
into three classes requires the affirmative vote of four-fifths of the
outstanding shares entitled to vote. Adoption of each of the other proposals
to amend the Company's Articles of Incorporation requires the affirmative vote
of two-thirds of the outstanding shares entitled to vote. Shares voted for a
proposal and shares represented by returned proxies that do not contain
instructions to vote against a proposal or to abstain from voting will be
counted as shares cast for the proposal. Shares will be counted as cast
against the proposal if the shares are voted either against the proposal or to
abstain from voting. Broker non-votes will not change the number of votes for
or against the proposal and will not be treated as shares entitled to vote, but
such shares will be counted for purposes of determining the presence of a
quorum.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the shareholders of the Company will consider
and vote on the following matters:
(1) Assuming the amendment described in item (2) below is
adopted, the election of ten (10) directors to terms of office expiring at the
annual meeting of shareholders in 1998 (three (3) directors), 1999 (three (3)
directors) and 2000 (four (4) directors); or if the foregoing amendment is not
adopted, the election of ten (10) directors to serve until the next annual
meeting of shareholders and until their successors are elected;
(2) A proposal to amend the Articles of Incorporation of
the Company to provide for the classification of the Board of Directors into
three classes of directors with staggered terms of office;
2
<PAGE> 6
(3) A proposal to amend the Articles of Incorporation to
provide for (a) a limitation upon who may call special meetings of
shareholders, and (b) a requirement that shareholders notify the Company of a
nomination prior to any meeting;
(4) A proposal to amend the Articles of Incorporation to
provide for a minimum price and other matters, or a higher voting requirement,
in connection with certain business combinations;
(5) A proposal to amend the Articles of Incorporation to
provide for preferred stock in the Company's authorized capital stock;
(6) Ratification of the appointment of Coopers & Lybrand
L.L.P. as independent auditors of the Company for the year 1997; and
(7) Such other business as may properly come before the
meeting or any adjournments thereof.
ELECTION OF DIRECTORS
The Company's Board of Directors will consist of ten (10) members who
are to be elected for the respective terms specified below or until their
successors shall be elected and shall have qualified. If the proposed
amendment to the Company's Articles of Incorporation to provide for the
classification of the Board of Directors into three classes is adopted, the
terms of the members of the Board of Directors shall expire at the following
times: Class I Directors - 1998 annual meeting of shareholders; Class II
Directors - 1999 annual meeting of shareholders; and Class III Directors - 2000
annual meeting of shareholders. If such proposed amendment is not adopted, the
members will be elected for a term expiring at the next annual meeting of
shareholders. The following slate of ten nominees has been chosen by the Board
of Directors and the Board recommends that each be elected. Unless otherwise
indicated in the enclosed form of Proxy, the persons named in such proxy intend
to vote for the election of the following nominees for the office of director.
All of such nominees are presently serving as directors.
<TABLE>
<CAPTION>
Principal Occupation Director
Name and Age During past Five Years Since
------------ ---------------------- -----
<S> <C> <C>
CLASS I DIRECTORS
-----------------
Jack Daugherty Chairman of the Board and Chief Executive Officer of 1983
(49) the Company since its inception. Mr. Daugherty has
owned and operated pawnshops since 1971.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C> <C>
A. R. Dike Mr. Dike has owned and served as Chairman of the Board 1988
(61) and Chief Executive Officer of The Dike Co., Inc. (a
private insurance agency) for the past twenty years.
He was Chairman and Chief Executive Officer of The
Insurance Alliance, Inc. from January 1988 to September
1991 and has been Chairman of Willis Corroon
Corporation of Texas since September 1991.
Daniel R. Feehan President and Chief Operating Officer of the Company 1984
(46) since January 1990.
CLASS II DIRECTORS
------------------
James H. Graves Managing Director and Partner of J. C. Bradford & Co., 1996
(48) a Nashville based securities firm, where he has worked
for more than five years.
B. D. Hunter Mr. Hunter is founder and Chairman of the Board and
(67) Chief Executive Officer of Huntco, Inc., an 1984
intermediate steel processing company.
Timothy J. McKibben Chairman of the Board of Ancor Holdings, a private
(48) investment firm, since 1993, and prior to that, 1996
Chairman of the Board and President of Anago
Incorporated, a company he co-founded in 1978 that
manufactures disposable medical products.
CLASS III DIRECTORS
-------------------
Alfred M. Micallef President since 1974, and currently Chief Exe-cutive 1996
(54) Officer, of JMK International, Inc., a holding company
of rubber and plastics manufacturing businesses.
Carl P. Motheral Mr. Motheral has served over twenty-five years as
(70) President and Chief Executive Officer and also Director 1983
of Motheral Printing Company (a commercial printing
company).
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C> <C>
Samuel W. Rizzo Consultant and private investor since 1995, and prior 1984
(61) to that Executive Vice President of Service Corporation
International ("SCI"), a publicly held company that
owns and operates funeral homes and related businesses,
since February 1990.
Rosalin Rogers Private investor since 1986, and prior to that a 1996
(46) principal with the brokerage firm of Financial First,
Inc. in New York, New York.
</TABLE>
Each nominee for election as a director has consented to serve if
elected. The Board of Directors does not contemplate that any of the
above-named nominees for director will be unable to accept election as a
director of the Company. Should any of them become unavailable for election as
a director of the Company then the persons named in the enclosed form of proxy
intend to vote such shares represented in such proxy for the election of such
other person or persons as may be nominated or designated by the Board of
Directors.
Certain nominees for director of the Company hold directorships in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934. Mr. Hunter is a director of Mark Twain
Bancshares, Inc., Celebrity, Inc., SCI, and Huntco Inc. Messrs. Daugherty,
Rizzo and Graves are directors of Hallmark Financial Services, Inc. Messrs.
Daugherty and Feehan are also directors of KBK Capital Corporation. Mr. Rizzo
is also a director of Tanknology Environmental, Inc. Also, Mr. Daugherty is a
director of Dog World Inc., and Mr. Micallef is a director of Snyder Oil
Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the fiscal year ended
December 31, 1996. Standing committees of the Board include the Executive
Committee, Audit Committee, Executive Compensation Committee, and Stock Option
Committee. The Company does not have a Nominating Committee.
The Audit Committee's principal responsibilities consist of (a)
recommending the selection of independent accountants, (b) reviewing the scope
of the audit conducted by such auditors, as well as the audit itself, and (c)
reviewing the Company's internal audit activities and matters concerning
financial reporting, accounting and audit procedures, and policies generally.
Its members are Messrs. Rizzo and McKibben and Ms. Rogers. The Audit Committee
held three meetings during fiscal 1996.
The Executive Compensation Committee oversees and administers the
Company's executive compensation program and administers the Company's 1994
Long-Term Incentive Plan. Its decisions relating to executive compensation are
reviewed by the full Board of Directors. Its
5
<PAGE> 9
members are Messrs. Hunter, Dike and Graves. The Committee held three meetings
during fiscal 1996.
The Stock Option Committee has the general duty to administer the
Company's 1987 Stock Option Plan (with Stock Appreciation Rights) and the 1989
Key Employee Plan. Its members are Messrs. Dike, Micallef and Motheral. The
Stock Option Committee held no meetings during fiscal year 1996.
All directors attended 75% or more of the total number of meetings of
the Board and of committees on which they serve.
DIRECTORS' COMPENSATION
Directors each receive a retainer of $2,500 per quarter. In addition,
Board members receive $2,500 per Board meeting attended, Executive Committee
members receive $1,500 for each Executive Committee meeting attended, and all
other committee members receive $1,000 for each committee meeting attended.
During 1989, the Company adopted the 1989 Non-Employee Director Stock
Option Plan (the "Non-Employee Director Plan"), which provided for the grant
to the Company's non-employee directors of options to purchase the Company's
$.10 par value Common Stock. The Non-Employee Director Plan was approved by
the Company's shareholders at the 1990 Annual Meeting. Effective October 25,
1989, options were granted under the Non-Employee Director Plan in the
following amounts (after adjustment for stock splits in 1990 and 1992):
225,000 shares to each non-employee director serving on the Executive Committee
of the Board of Directors (i.e., Messrs. Rizzo and Motheral) 150,000 shares to
each other non- employee director with at least each two years of service on
the Board of Directors as of the date of grant (i.e., Mr. Hunter) and 120,000
shares to each other non-employee director (i.e., Mr. Dike). The exercise
price for all shares underlying such options was the last reported sale price
of the Common Stock on the American Stock Exchange on the day preceding the
date of grant ($6.33 after adjustment for stock splits in 1990 and 1992). The
options expire 15 years from the date of grant. The options may be exercised
with respect to 40 per cent of the number of shares subject to the options six
months after the date of grant, and an additional 10 per cent of the shares
subject to the options shall be exercisable as of the first, second, third,
fourth, fifth and sixth anniversaries of the date of grant, except that in the
event of the death or termination of service as a director by reason of
disability, or in the event of a "change in control" of the Company (as that
term is defined in the Non-Employee Director Plan), the options shall be
immediately exercisable in full. An option holder may use already-owned Common
Stock as full or partial payment for the exercise of options granted under the
Non-Employee Director Plan. As a condition to participation in the
Non-Employee Director Plan, each director named above in this paragraph entered
into a Consultation Agreement with the Company dated as of April 25, 1990.
Under these Agreements, the non-employee directors have agreed to serve the
Company in an advisory and consultive capacity. They do not receive any
additional compensation under these Agreements, however.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one outstanding class of equity securities, its
Common Stock, par value $.10 per share.
The following table sets forth certain information, as of the Record
Date, with respect to each person or entity who is known to the Company to be
the beneficial owner of more than five percent (5%) of the Company's Common
Stock. The information below was derived solely from filings made by such
owners with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Amount of Percent
Name and Address of Beneficial of
Beneficial Owner Ownership Class
---------------- --------- -----
<S> <C> <C>
David L. Babson & Co., Inc. 2,322,500(1) 9.57%
One Memorial Drive
Cambridge, Massachusetts 02142
Eagle Asset Management, Inc. 1,354,485(2) 5.58%
880 Carillon Parkway
St. Petersburg, Florida 33716
Shufro, Rose & Ehrman 1,249,936(3) 5.15%
745 Fifth Avenue
New York, New York 10151-2600
</TABLE>
_________________________
(1) Based upon information contained in a Schedule 13G, filed with the
Company, which indicates that David L. Babson & Co., Inc. has the
voting power with regard to 738,500 shares and the right to dispose of
all 2,322.500 shares.
(2) Based upon information contained in a Schedule 13G, filed with the
Company, which indicates that Eagle Asset Management, Inc. has the
voting power with regard to 1,354,485 shares and the right to dispose
of all 1,354,485 shares.
(3) Based upon information contained in a Schedule 13G, filed with the
Company, which indicates that Shufro, Rose & Ehrman has the voting
power with regard to 128,230 shares and the right to dispose of all
1,249,936 shares.
7
<PAGE> 11
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock, as of February 24,
1997, by its directors, nominees for election as directors, named
executive officers, and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership (1) (2) of Class
---- ---------- --------- --- --- -- -----
<S> <C> <C> <C>
Jack Daugherty 997,635 3.97%
A. R. Dike 126,000 .52%
Daniel R. Feehan 482,111 (3) 1.96%
James H. Graves 3,200 *
B. D. Hunter 165,000 (4) .68%
Timothy J. McKibben 2,900 *
Alfred M. Micallef 10,000 *
Carl P. Motheral 444,065 1.81%
Samuel W. Rizzo 306,710 (5) 1.25%
Rosalin Rogers 10,000 *
Robert D. Brockman 4,375 *
Don R. Blevins 15,620 *
Gregory W. Trees 42,992 .18%
_________ (6) ____%
All Directors and Executive
Officers as a group
(17 persons)
</TABLE>
- --------------------------
* Indicates ownership of less than .1% of the Company's Common Stock.
(1) Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. Unless otherwise indicated, each of
the persons named has sole voting and investment power with respect to
the shares reported.
(2) Except for the percentages of certain parties that are based on
options exercisable within sixty days of February 24, 1997, as
indicated below, the percentages indicated are based on 24,238,476
shares of Common Stock issued and outstanding on February 24, 1997.
In the case of parties holding options, the percentage ownership is
calculated on the assumption that the shares presently purchasable or
purchasable within the next sixty days underlying such options are
outstanding. The shares subject to options that are exercisable within
sixty days of February 24, 1997 are as follows: Mr. Daugherty -
901,625 shares; Messrs. Motheral and Rizzo - 225,000 shares each; Mr.
Dike - 120,000 shares; Mr. Feehan - 352,125 shares; Mr. Hunter -
150,000 shares; Mr. Brockman - 4,375 shares; Mr. Blevins - 14,625
shares and Mr. Trees - 37,125 shares.
8
<PAGE> 12
(3) This amount includes 2,400 shares owned by Mr. Feehan's wife and 600
shares in the name of Mr. Feehan's children.
(4) This amount includes 15,000 shares held by a corporation that Mr.
Hunter indirectly controls. Mr. Hunter disclaims beneficial ownership
of such shares.
(5) This amount includes 18,600 shares owned by trusts of which Mr. Rizzo
is trustee and 4,000 shares owned by Mr. Rizzo's wife.
(6) This amount includes 2,278,500 shares that directors and executive
officers have the right to acquire within the next sixty days through
the exercise of stock options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers and directors are required to file
under Section 16(a) of the Securities Exchange Act of 1934 reports of ownership
and changes of ownership with the Securities and Exchange Commission. Based
solely upon its review of the copies of such reports received by it, and
written representations from individual directors and executive officers, the
Company believes that during the fiscal year ended December 31, 1996 all filing
requirements applicable to executive officers and directors have been complied
with.
EXECUTIVE COMPENSATION
The following sets forth information for each of the Company's last
three fiscal years concerning the compensation of the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers
who were servings as executive officers at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation -
Annual Compensation Awards
Name Securities All
and Underlying Other Compen-
Principal Options/ sation($)
Position Year Salary ($) Bonus ($) SARs (#) (1)
-------------------- ---- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Jack R. Daugherty, 1996 378,000 196,727 -- 40,628
Chairman and CEO 1995 378,000 -- -- 48,534
1994 360,000 36,000 175,000 42,202
Daniel R. Feehan, 1996 341,750 177,834 -- 30,953
President and Chief 1995 315,000 -- -- 30,464
Operating Officer 1994 300,000 28,500 145,000 29,242
Robert D. Brockman, Executive 1996 169,200 70,447 -- 10,515
Vice President - 1995 87,500 21,045 7,500 33,534
Administration(2)
Don R. Blevins, Executive 1996 150,000 62,453 -- 10,385
Vice President - European 1995 120,000 -- 7,500 2,674
Operations(3)
Gregory W. Trees, 1996 150,000 40,204 -- 4,922
Division Vice-President 1995 150,000 -- 5,000 3,515
1994 137,500 12,500 7,000 2,576
</TABLE>
(1) The amounts disclosed in this column for 1996 include:
(a) Company contributions of the following amounts under the
Company's 401(k) Savings Plan on behalf of Mr. Daugherty:
$4,236; Mr. Feehan:$4,442; Mr. Brockman: $2,320; Mr.
Blevins: $2,072 and Mr. Trees: $3,232.
(b) Payment by the Company of premiums for term life insurance on
behalf of Mr. Daugherty: $1,392; Mr. Feehan: $1,531; Mr.
Brockman: $1,424; Mr. Blevins: $3,767 and Mr. Trees: $1,690.
(c) Annual premium payments under split-dollar life insurance
policies on Mr. Feehan ($25,000) and on Mr. Daugherty's
spouse ($35,000).
(d) Relocation expenses for Mr. Brockman: $6,771; and Mr. Blevins:
$4,546.
(2) Mr. Brockman joined the Company on June 21, 1995.
(3) Mr. Blevins did not serve in an executive officer capacity prior to
1995.
The following table provides information concerning option exercises
in fiscal 1996 and the value of unexercised options held by each of the named
executive officers at the end of the Company's last fiscal year.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at FY-
Options/SARs at End ($)
FY-End(#) (1) (2)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
--------------------- ----------------- -------------------
<S> <C> <C>
Jack R. Daugherty 901,625/68,875 1,719,375/46,875
Daniel R. Feehan 352,125/56,875 569,813/38,813
Robert D. Brockman 4,375/13,125 8,516/25,547
Don R. Blevins 14,625/9,875 11,766/18,047
Gregory W. Trees 37,125/8,875 11,406/12,969
</TABLE>
- --------------------
(1) These figures reflect the appropriate adjustments for the Company's
three-for-two stock split in May 1990 and the two-for-one stock split
in April 1992.
(2) Values stated are based upon the closing price of $8.50 per share of
the Company's Common Stock on the New York Stock Exchange on December
31, 1996, the last trading day of the fiscal year.
COMPENSATION COMMITTEE REPORT
- - OVERALL EXECUTIVE COMPENSATION POLICIES
9
<PAGE> 13
The basic philosophy of the Company's executive compensation
program is to link the compensation of its executive officers to their
contribution toward the enhancement of shareholder value. Consistent
with that philosophy, the program is designed to meet the following
policy objectives:
o Attracting and retaining qualified executives critical to the
long-term success of the Company.
o Tying executive compensation to the Company's general performance
and specific attainment of long-term strategic goals.
o Rewarding executives for contributions to strategic management
designed to enhance long-term shareholder value.
o Providing incentives that align the executive's interest with those
of the Company's shareholders.
- - ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of the
following elements designed to meet the policy objectives set out above:
Base Salary
The Committee set the annual salary of the Company's Chief
Executive Officer and the President and reviewed the annual salaries of the
Company's other executive officers for fiscal 1996. In setting appropriate
annual salaries, the Committee takes into consideration the minimum salaries
set forth in certain executives' employment contracts (described elsewhere in
this Proxy Statement), the level and scope of responsibility, experience, and
performance of the executive, the internal fairness and equity of the Company's
overall compensation structure, and the relative compensation of executives in
similar positions in the marketplace. The Committee relies on information
supplied by an outside compensation consulting firm pertaining to competitive
compensation. The Company's executive compensation program is designed to
position base salary and annual incentive targets at the 50th percentile of the
competitive market. The Committee believes that very few of the companies in
the peer groups described below under "Performance Graph" are included in the
surveys used for compensation comparisons. Those surveys represent a much
broader collection of U.S. companies.
Annual Incentive Compensation
In 1996, the Committee modified the Company's executive compensation
program to formalize its short-term and long-term components.
10
<PAGE> 14
a. Short-Term Component
Under this component, the Company's executive officers are eligible to
receive annual incentive cash bonuses equal to certain percentages of their
annual base salaries. If the Company's earnings performance for the year
equals its financial plan approved by the Board of Directors for that year, the
officers are eligible for the following percentage bonus payments: Messrs.
Daugherty and Feehan: 50%; Executive Vice Presidents: 40%; all other
executive officers: 25%. The bonus percentages increase if the Company's
earnings performance exceeds the financial plan. One- half of the bonus amount
is earned strictly on the basis of the Company's financial performance, and the
other half is based on the officer's accomplishment of certain individual
performance objectives established at the outset of the year. (Because these
modifications to the executive compensation program were not implemented early
enough in 1996, short-term incentive bonuses earned for 1996 and paid in early
1997 were based entirely on the Company's earnings performance for 1996.)
b. Long-Term Component
Under this component, the Company's executive officers are eligible to
receive annual long-term incentive grants in the form of restricted stock
and/or stock options, with the aggregate grant date value of the stock and/or
options to equal the following percentages of the officers' annual base
salaries: Messrs. Daugherty and Feehan: 50%; Executive Vice Presidents: 40%;
all other executive officers: 25%. The allocation between restricted stock and
stock options is determined by the Committee at its discretion. The Committee
uses the Black-Scholes model to determine the grant date value of options. The
Company's 1994 Long-Term Incentive Plan (the "1994 Plan"), approved by the
shareholders of the Company at the April 1994 Annual Meeting, allows for these
forms of stock-based long-term incentive compensation awards. This long-term
incentive component rewards effective management that results in long-term
increases in the Company's stock price. In this way, it is designed to further
the objective of fostering and promoting improvement in long-term financial
results and increases in shareholder value. Because the Committee believed
the beginning of the Company's fiscal year to be the appropriate time for the
grant of these long-term incentive awards, none were granted in 1996.
Deductibility Cap on Executive Compensation
A federal tax law enacted in 1994 disallows corporate deductibility
for certain compensation paid in excess of $1,000,000 to the Chief Executive
Officer and the four other most highly paid executive officers.
"Performance-based compensation," as defined in the tax law, is not subject to
the deductibility limitation, provided certain shareholder approval and other
requirements are met. Although the cash compensation paid to the Company's
Chief Executive Officer and the four other most highly paid executive officers
is well below the $1,000,000 level in each case, the Committee determined that
the Company should seek to ensure that future stock option and performance
award compensation under the 1994 Plan qualifies as "performance-based
compensation." Accordingly, the 1994 Plan is intended to meet the requirements
of this tax law
11
<PAGE> 15
and thereby preserve full deductibility of both stock option and stock-based
performance award compensation expense.
- - CEO'S COMPENSATION FOR FISCAL 1996
The fiscal 1996 salary of Mr. Jack R. Daugherty, Chief Executive
Officer of the Company, was based primarily on his rights under his ten-year
employment agreement with the Company dated April 25, 1990, which is described
elsewhere in this Proxy Statement. Under that agreement, Mr. Daugherty's
minimum base salary is $225,000. The Committee has increased Mr. Daugherty's
base salary annually since that time (except in 1993) after taking into
consideration the factors described under "Base Salary" above. For fiscal
1996, the Committee set Mr. Daugherty's base salary at $378,000, which
represents a 5% increase. The Committee believes that the total cash
compensation paid to Mr. Daugherty was appropriate in light of the Company's
accomplishments in 1996, including (i) a 22% increase in earnings per share,
(ii) a 23% increase in total loan balances, (iii) a 14% decrease in year-end
inventory, (iv) a 29% increase in inventory turns, and (v) the successful
implementation of the Company's field incentive compensation program.
These 1996 accomplishments also support the Committee's belief that
the fiscal 1996 cash compensation of the Company's other executive officers was
set at appropriate levels.
EXECUTIVE COMPENSATION COMMITTEE
B. D. Hunter, Chairman
A. R. Dike
James H. Graves
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this
Proxy Statement, in whole or in part, the preceding report and the Performance
Graph on Page 13 shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Executive Compensation Committee of the
Company's Board of Directors is an officer, former officer, or employee of the
Company or any subsidiary of the Company.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
12
<PAGE> 16
As a condition to receiving grants of options under the 1989 Key
Employee Stock Option Plan for Cash America International, Inc., Messrs.
Daugherty and Feehan entered into employment agreements with the Company dated
April 25, 1990. Upon the expiration of the initial terms of the agreements
(ten years in the case of Mr. Daugherty and five years in the case of Mr.
Feehan), they automatically renew for additional one-year periods until one
party notifies the other to the contrary. Under these agreements, compensation
is determined annually by the Company's Board of Directors, subject to minimum
annual compensation for Messrs. Daugherty and Feehan of $225,000 and $190,000,
respectively. Included in each agreement is a covenant of the employee not to
compete with the Company during the term of his employment and for a period of
three years thereafter. The employment agreements also provide that if the
employee is terminated by the Company other than for cause, the Company will
pay to the employee the remainder of his current year's salary (undiscounted)
plus the discounted present value (employing an interest rate of 8%) of two
additional years' salary. In the event the employee resigns or is terminated
other than for cause within twelve months after a "change in control" of the
Company (as that term is defined in the employment agreement), the employee
will be entitled to earned and vested bonuses at the date of termination plus
the remainder of his current year's salary (undiscounted) plus the present
value (employing an interest rate of 8%) of two additional years' salary (for
which purpose "salary" includes the annual rate of compensation immediately
prior to the "change in control" plus the average annual cash bonus for the
immediately preceding three year period). The Company also entered into a
similar employment agreement effective March 30, 1992 with Mr. Trees. It
provides for minimum annual compensation of $125,000. The primary term of the
agreement had an expiration date of March 31, 1995 and is followed by two
one-year renewal terms.
PERFORMANCE GRAPH
The following Performance Graph shows the changes over the past
five year period in the value of $100 invested in: (1) the Company's Common
Stock, (2) the Standard & Poor's 500 Index, and (3) the common stock of two
peer groups of companies whose returns are weighted according to their
respective market capitalizations. The values of each investment as of the
beginning of each year are based on share price appreciation and the
reinvestment of dividends. The first peer group (the "New Peer Group")
consists of the following companies, whose businesses taken as a whole, like
the Company's, represent consumer lending and other financial services to
persons who utilize nontraditional financing sources: ______________________.
The second peer group ("the "Old Peer Group") consists of the following
companies, whose businesses taken as a whole comprise a combination of consumer
lending and retail activities: Beneficial Corp., Household International,
Circuit City Stores, Jewelmaster, Inc., Peoples Jewellers, MacFrugal's
Bargains, Luria (L.) & Sons, Inc., Oshman's Sporting Goods, Lowe's Corp., and
Tandy Corp. The Company previously utilized the Old Peer Group in the
Performance Graph. However, factors such as the recent change in the Company's
revenue recognition method for pawn loans, the adoption of a new incentive
compensation program for field operations personnel, and increased emphasis on
cash returns on capital employed have heightened the focus on the Company's
core financial services business. On this basis, the Company concluded that
the continued use of the Old Peer Group
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<PAGE> 17
would be inappropriate and that the New Peer Group constitutes a more
representative mix of companies.
<TABLE>
<CAPTION>
INDEXED RETURNS
Years Ending
Base
Period
Company Name/ Index Dec 91 Dec 92 Dec 93 Dec 94 Dec 95 Dec 96
- ------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CASH AMERICA INTL INC 100 113.50 96.44 104.30 58.52 91.14
S & P 500 INDEX 100 107.62 118.46 120.03 165.13 203.05
NEW PEER GROUP 100 -- -- -- -- --
OLD PEER GROUP 100 125.43 176.82 194.65 224.25 287.46
</TABLE>
TRANSACTIONS WITH MANAGEMENT
The Board of Directors of the Company adopted an officer stock loan
program in 1994 and modified the program in 1996. The purpose of the program
is (i) to facilitate and encourage the ownership of Company common stock by the
officers of the Company and (ii) to establish the terms for stock loan
transactions with officers. Participants in the program can utilize loan
proceeds to acquire and hold common stock of the Company by means of option
exercises or otherwise. The stock to be held as a result of the loan must be
pledged to the Company to secure the obligation to repay the loan. Under the
terms of the loan, interest accrues at the "applicable Federal rate" for loans
of this type, as published by the Internal Revenue Service from time to time.
Interest is payable annually and may be paid with additional loan proceeds.
Each loan has a one year maturity and is renewable thereafter for successive
one year terms, except that the Committee could notify the borrower during any
renewal term that the loan would not renew again after the next succeeding
renewal term. The aggregate principal balance of all outstanding loans under
the program may not exceed $5,000,000 at any time. As of December 31, 1996,
Messrs. Daugherty and Feehan had stock loans outstanding under this program in
the aggregate principal amounts of $698,539, and $1,005,729, respectively.
PROPOSALS TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION
INTRODUCTION
The Company's Board of Directors has determined that it is advisable
to adopt the Amendments to the Company's Articles of Incorporation
("Amendments"). It has voted to recommend them to the Company's shareholders
for adoption. The Amendments are discussed generally below under the caption
"The Procedural Amendments" and in detail below under the captions (i)
"Proposal regarding the Board of Directors," (ii) "Proposal regarding the
Shareholders," (iii) "Proposal regarding the Fair Price Amendment to the
Articles of Incorporation," and (iv) "Proposal regarding Authorization of
Preferred Stock," which shareholders are urged to read carefully. The
Amendments are expected to have an antitakeover effect.
Corporate takeover attempts have become increasingly common in recent
years. Takeover attempts that have not been negotiated with, and approved by,
the board of directors of a company can seriously disrupt a company's long-term
plans, distract management and cause great expense. These attempts may take
place at inopportune times and may involve terms that are less favorable to all
of the shareholders than would be available in a transaction negotiated and
approved by the board of directors. On the other hand, board-approved
transactions can be carefully planned and
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<PAGE> 18
undertaken at an opportune time in order to obtain maximum value for a company
and its shareholders. In addition, in the case of a proposal that is presented
to the board of directors, there is an opportunity for the board to thoroughly
analyze the proposal and present its analysis to the shareholders in an
effective manner.
Hostile takeover attempts are frequently structured in ways that the
Board of Directors believes are not in the best interest of all shareholders.
Although a takeover attempt may be made at a price substantially above then
current market prices, these offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, shareholders may be
presented with the alternatives of partially liquidating their investment at a
time that may be disadvantageous or retaining their investment in an enterprise
with new management whose objectives may be different from those of the
remaining shareholders. There have also been "two-tiered" offers in which cash
is offered for a controlling interest in a company followed by a merger or
other transaction in which the remaining shares are acquired in exchange for
cash or securities reflecting a lesser value for the shares acquired in the
second stage transaction. The Board considers that tactics such as these can
be highly disruptive to a company and can result in dissimilar treatment of a
company's shareholders. The Amendments are being submitted for shareholder
approval in response to these kinds of tactics.
Some of the amendments (the "Procedural Amendments") to the Company's
Articles of Incorporation, consisting of Articles Seven and Twelve of the
proposed Amendments attached as Appendix A to this Proxy Statement, will, by
making it more time-consuming for a substantial shareholder to gain control of
the Board, strengthen the position of the Board in dealing with the substantial
shareholder, enable the Board to more effectively protect the interests of all
shareholders, enhance continuity in the management of the business and affairs
of the Company, and provide the Board with sufficient time to review any
proposal from the substantial shareholder and consider appropriate alternatives
to the proposal. However, the Procedural Amendments also may deter some
mergers, tender offers or other future takeover attempts which some or a
majority of the shareholders may deem to be in their best interest.
The business combination provisions are designed to achieve some
assurance that any multi-step attempt to take over the Company is made on terms
which offer similar treatment to all shareholders.
The preferred stock provision is designed to permit the Company to
issue both Common Stock and Preferred Stock. The authorization of Preferred
Stock also will enable the Board to issue new classes of preferred stock for a
variety of possible equity financing transactions, including acquisitions.
Such preferred stock could also be utilized to make more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer or otherwise should the Board of Directors consider the actions of
the person or entity seeking control not to be in the best interests of the
shareholders of the Company.
The Amendments are not being recommended in response to any specific
effort of which the Company is aware to accumulate the Company's common stock
or to obtain control of the Company.
15
<PAGE> 19
They are being recommended to ensure fair treatment of the Company's
shareholders in takeover situations. They are being submitted to the
shareholders by the Board in response to the use of the tactics outlined above.
The Board has no present intention of soliciting a shareholder vote on any
other proposals relating to a possible takeover of the Company.
The Board of Directors believes that the Amendments are necessary to
safeguard the Company's stability, so that management can pursue its long-term
strategy for the Company. The Board also believes that the benefits provided
by the Amendments -- essentially the protection of the Company's ability to
negotiate with the proponent of an unsolicited takeover proposal and to
consider alternatives -- outweigh the disadvantages of discouraging such
proposals. ACCORDINGLY, THE BOARD BELIEVES THAT ADOPTION OF THE AMENDMENTS IS
IN THE BEST INTERESTS OF ALL SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT
THE SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENTS TO THE ARTICLES OF
INCORPORATION.
THE PROCEDURAL AMENDMENTS
The Company's Board of Directors has determined that it is advisable
to adopt the Procedural Amendments. It has voted to recommend that the
shareholders adopt the Procedural Amendments.
The Procedural Amendment contained in the Proposal regarding the Board
of Directors is to classify the Board of Directors into three classes of
directors as nearly equal in number as possible, each of which, after an
interim arrangement, will serve for three years, with one class of directors
being elected each year.
The Procedural Amendments contained in the Proposal regarding the
Shareholders:
(i) provide that special meetings of shareholders may be called
only by the Chairman of the Board, the President, the Board of
Directors or shareholders owning not less than a majority of the
voting power of the Voting Stock (as defined in the next paragraph)
that would be entitled to vote at such meeting; and
(ii) require shareholders desiring to propose to nominate a person
to the Board of Directors to give prior notice of intent to make
nomination.
The term "Voting Stock" in this part of the Proxy Statement means all
issued and outstanding shares of the Company's capital stock entitled to vote
generally in the election of directors or that otherwise are entitled to vote
with the stock on the specific matter in question.
The Procedural Amendments would become effective upon the filing of
the Articles of Amendment with the Secretary of State of Texas. This filing is
expected to be made shortly following the adoption of the Amendments at the
meeting. If the Procedural Amendments are approved, then the Company's Bylaws
will be amended to carry out the purposes of the Procedural Amendments.
16
<PAGE> 20
In the event of a conflict between the Company's Articles of Incorporation, as
amended by the Amendments, and the amended Bylaws, the Articles of
Incorporation will control.
The Procedural Amendments may have significant effects on the ability
of shareholders of the Company to effect immediate changes in the composition
of the Board of Directors and otherwise to exercise their voting power to
affect the composition and certain other aspects of the Board of Directors.
Accordingly, before voting on the Amendments, shareholders are urged to read
carefully the following portions of this section of the Proxy Statement which
describe the Procedural Amendments and their purposes and effects, and the
relevant portions of Appendix A attached to the Proxy Statement. The Appendix
gives the full text of the Procedural Amendments.
Purposes and Effects of the Procedural Amendments. The Board of
Directors is recommending that shareholders adopt the Procedural Amendments to
discourage certain types of transactions that involve an actual or threatened
change of control of the Company. The Procedural Amendments are designed to
make it more time-consuming to change majority control of the Board without its
consent and thus to reduce the vulnerability of the Company to an unsolicited
takeover proposal. The Board believes that the Procedural Amendments will
encourage any person intending to attempt such a takeover to negotiate with the
Board, and that the Board will therefore be better able to protect the
interests of the shareholders.
Persons routinely accumulate substantial stock positions in public
companies as a prelude to proposing a takeover or a restructuring or sale of
all or any part of the corporation or other similar extraordinary corporate
action. Such actions are often undertaken without advance notice to or
consultation with the corporation's board of directors or management. In many
cases, the purchaser seeks representation on the corporation's board in order
to increase the likelihood that any proposal will be implemented by the
corporation. If a corporation resists its efforts to obtain board
representation, the purchaser may commence a proxy contest to have itself or
its nominees elected to the board in place of certain directors or the entire
board. In some cases, the purchaser may not truly be interested in taking over
the corporation, but uses the threat of a proxy fight or a bid to take over the
corporation as a means of forcing the corporation to repurchase its equity
position at a substantial premium over the market price.
The Board of Directors believes that if such a purchaser acquired a
significant or controlling interest in the Voting Stock, the purchaser's
ability to remove the entire Board without its consent would severely curtail
the Company's ability to negotiate effectively with the purchaser. The threat
of removal would deprive the Board of the time, information and negotiating
leverage necessary to evaluate the takeover proposal, to study responses and
alternatives, to help ensure that the best price would be obtained in any
transaction involving the Company which might ultimately be undertaken, or
determine not to pursue such a transaction but instead to pursue the Company's
long-term strategy without disruption. If the real purpose of the purchases
was to enable the purchaser to make or threaten a takeover bid to force the
Company to repurchase the purchaser's accumulated stock interest at a premium
price, then the Company would face the risk that if it did not do so its
business
17
<PAGE> 21
and management would be disrupted, perhaps irreparably. Conversely, such a
repurchase would divert valuable corporate resources to the benefit of a single
shareholder.
Takeovers or changes in the board of directors of a company that are
proposed and effected without prior consultation and negotiation with a company
are not necessarily detrimental to that company and its shareholders. However,
the Board believes that the benefits of seeking to protect the Company's
ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to effect a partial takeover of, or to restructure, the Company,
through directors who have been previously elected by the shareholders as a
whole and are familiar with the Company, outweigh the disadvantages of
discouraging such proposals. The Procedural Amendments could make more
difficult or discourage a proxy contest or the assumption of control by the
holder of a substantial block of the Voting Stock or the removal of the
incumbent Board, and could thus increase the likelihood that incumbent
directors will retain their positions.
The Procedural Amendments could have the effect of discouraging a
third party from making a partial tender offer (including an offer at a
substantial premium over the then-prevailing market value of the Voting Stock)
or otherwise attempting to obtain control of the Company, even though such an
attempt might be beneficial to the Company and its shareholders. In addition,
since the Procedural Amendments are designed to discourage accumulations of
large blocks of the Voting Stock by purchasers whose objective is to have such
Voting Stock repurchased by the Company at a premium, adoption of the
Procedural Amendments could tend to reduce the temporary fluctuations in the
market price of the Voting Stock that are caused by such accumulations.
Accordingly, shareholders could be deprived of some opportunities to sell their
stock at a temporarily higher market price. The Procedural Amendments also may
discourage or make more difficult or expensive a proxy contest or merger
involving the Company or a tender offer, open market purchase program or stock
purchase of Company Common Stock that a majority of shareholders may deem to be
in their best interests or that may give shareholders the opportunity to
realize a premium over the prevailing market price of their stock.
The full text of the Procedural Amendments is attached to this Proxy
Statement as Article Seven and Article Twelve in Appendix A. The following
description of the Procedural Amendments is qualified in its entirety by
reference to Appendix A.
- - PROPOSAL REGARDING THE BOARD OF DIRECTORS
The Procedural Amendments contained in this proposal relate to
classification of the Board of Directors.
Classification of the Board of Directors. The Bylaws currently
provide that all directors are to be elected to the Company's Board of
Directors annually for a term of one year. The Procedural Amendments provide
that the Board will be divided into three classes of directors, each class to
be as nearly equal in number of directors as possible. If the Amendments are
adopted by the shareholders, the shareholders will be asked to elect the
nominees described in this Proxy Statement
18
<PAGE> 22
and classify them into three separate classes of directors. Three directors
will be elected for a term expiring at the Annual Meeting in 1998, three
directors will be elected for a term expiring at the Annual Meeting in 1999,
and three directors will be elected for a term expiring at the Annual Meeting
in 2000. Any new director elected to fill a vacancy on the Board will serve
for the remainder of the full term of the class in which the vacancy occurred,
rather than until the next election of directors. For information regarding
the nominees and the class of directors in which they will serve, please refer
to the section of this Proxy Statement entitled "Election of Directors."
The classification of directors will have the effect of making it more
difficult to effect an immediate change in, and otherwise to affect, through
the voting power of the Voting Stock, the composition of the Board of
Directors. It is common for various individuals and entities to acquire
significant minority positions in certain corporations with the intent of
obtaining actual control of the corporations by electing their own slate of
directors, or to achieve some other goal, such as the repurchase of their
shares at a premium, by threatening to obtain such control. These insurgents
often can elect a majority or more of a corporation's board of directors
through a proxy contest or otherwise, even though they do not own a majority of
the corporation's outstanding shares entitled to vote.
Under the Board classification provisions of the Procedural
Amendments, at least two annual shareholder meetings, instead of one, will be
required to effect a change in the majority control of the Board. Although the
Company has experienced no problems with respect to the continuity and
stability of the Board, the Board believes that the longer time required to
elect a majority of a classified board will help to ensure continuity and
stability in the future, because the majority of directors at any given time
will have prior experience as members of the Board. The longer time required
to elect a majority of a classified board also may deter certain mergers,
tender offers or other future takeover attempts which some or a majority of
holders of the Voting Stock may deem to be in their best interests. The
proposed Board classification provisions will apply to every election of
directors, whether or not a change in the Board would be beneficial to the
Company and its shareholders and whether or not a majority of the Company's
shareholders believe that such a change would be desirable. Finally, since
neither Texas law nor the Company's Articles of Incorporation or Bylaws allows
cumulative voting, a purchaser of a block of Company stock constituting less
than a majority of the voting power of the Voting Stock will have no assurance
of proportional representation on the Company's Board of Directors.
Vote Required. The Company's Bylaws requires the affirmative vote of
four-fifth (4/5) of the outstanding shares of Common Stock to adopt the
Amendment described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FOREGOING AMENDMENT.
- - PROPOSALS REGARDING THE SHAREHOLDERS
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<PAGE> 23
The Procedural Amendments contained in this proposal relate to
shareholder action by calling special meetings and proposing nominees at
shareholder meetings.
Limitations on Calling Special Meetings. The Company's Bylaws
currently provide that special meetings of the shareholders may be called by
holders of at least ten percent (10%) of the outstanding stock entitled to vote
at such meeting, by the Board of Directors, by the Chairman of the Board or the
President. The Procedural Amendments permit special meetings to be called only
by the Chairman of the Board, the President, the Board of Directors or
shareholders owning not less than a majority of the voting power of the Voting
Stock that would be entitled to vote at such meeting.
The provisions of the Procedural Amendments that deny minority
shareholders the power to call special meetings are intended to prevent a
minority shareholder from calling a special meeting that is not deemed to be
important by a majority of the shareholders or the Board. Minority
shareholders may, however, submit proposals at duly convened shareholder
meetings.
Proposing Shareholder Nominees. The Procedural Amendments provide
that a shareholder may nominate a person for election to the Board of Directors
at a meeting of the Company's shareholders only if written notice is delivered
to the Company by such shareholder at least 60 days in advance of the
meeting, or within ten days after the date of notice or public disclosure if
such notice is given less than 70 days before the meeting. This notice must
contain certain information, including the name and address of the nominating
shareholder, the nominee's name, address and principal occupation, and any
other information relating to the nominee that the Company reasonably requires
or is required to be disclosed in a proxy statement or Schedule 13D filing. No
person will be eligible for election as a director of the Company unless
nominated in accordance with the Procedural Amendments.
The purpose of this Procedural Amendment is to avoid the possibility
of surprise nominations from the floor that would preclude management from
investigating, and the shareholders from adequately assessing the competence,
experience, integrity and other relevant factors concerning the qualifications
of the proposed nominee. In the absence of such provisions, nominations could
be made from the floor without information concerning nominees being furnished
in advance to shareholders. The federal securities laws do not currently
require such advance information if proxies are not solicited or if proxies are
being solicited from fewer than ten persons. Management believes that the
Company's shareholders are entitled to know certain basic information about the
merit of matters presented to shareholders for a vote and the qualifications of
persons nominated for election as directors, and that these Procedural
Amendments substantially assist management in assuring that such information is
made available to the shareholders in a timely fashion.
Vote Required. The affirmative vote of two-thirds (2/3) of the
outstanding shares of Common Stock is required to adopt the foregoing
Amendments.
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<PAGE> 24
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FOREGOING AMENDMENTS.
PROPOSAL REGARDING THE FAIR PRICE AMENDMENT
TO THE ARTICLES OF INCORPORATION
The Company's Board of Directors has determined that the Fair Price
Amendment, which is contained in Article Thirteen of the proposed Amendments
attached to this Proxy Statement as Appendix A, is advisable. It has voted to
recommend that the Company's shareholders adopt the Fair Price Amendment.
In general, the Fair Price Amendment would require the approval of the
holders of at least eighty percent (80%) of the voting power of the Voting
Stock, voting together as a single class, as a condition for any "Business
Combination" (defined below) proposed by or on behalf of any "Interested
Shareholder" (defined below), unless (i) the transaction is approved by at
least the majority of the members of the Board continuing in office after the
filing of the Articles of Amendment and who are unaffiliated with the
Interested Shareholder and certain of their successors ("Disinterested
Directors"); or (ii) the transaction satisfies certain minimum price, form of
consideration and other requirements.
The term "Business Combination" means (i) any merger or consolidation
of the Company involving the Interested Shareholder, (ii) certain transactions
involving assets, cash flow, earning power, securities or commitments of the
Company or the Interested Shareholder, which meet certain threshold amounts,
(iii) the adoption of any plan of liquidation or dissolution of the Company,
(iv) any issuance or reclassification of securities of the Company,
recapitalization, merger or other transaction having the effect of increasing
the proportionate share of ownership of the Interested Shareholder and (v) any
agreement, arrangement or other understanding providing for one or more of the
actions listed above. An "Interested Shareholder" is any person (other than
the Company, a Company subsidiary, or a Company benefit plan or its fiduciary
and certain of their successors) who is the beneficial owner of more than 15%
of the voting power of Voting Stock. A person is deemed to be the "beneficial
owner" of those shares of capital stock that the person and any of its
affiliates or associates directly or indirectly own or have the right to
acquire or vote, or have an agreement arrangement or understanding to acquire,
hold, vote or dispose of.
It has become a relatively common practice in corporate takeovers for
a purchaser to pay or threaten to pay cash to acquire a controlling equity
interest in a company, by tender offer or other transaction, and then to
acquire the remaining equity interest in the company by paying the remaining
shareholders a price for their shares that is lower than the price the
purchaser paid to acquire its original interest in the company or by paying a
different and possibly less desirable form of consideration (such as securities
of the purchaser instead of cash). Generally, in a two-step acquisition
involving a tender offer followed by a business combination that is effected
for a lower price or different form of consideration, arbitrageurs and other
professional investors, because of
21
<PAGE> 25
their sophistication and expertise in the takeover area, may be better able to
take advantage of the more lucrative first-step tender offer than other
shareholders.
The Fair Price Amendment is designed to prevent a purchaser from
utilizing two-tier pricing and similar inequitable tactics in the event of an
attempt to take over the Company. The Fair Price Amendment is not designed to
prevent or discourage tender offers for the Company. It does not limit the
ability of a third party that owns or can obtain the affirmative vote of at
least 80% of the voting power of the Voting Stock to effect a business
combination involving the Company in which the equity interest of the minority
shareholders is eliminated. It also does not impede an offer for shares
representing at least 80% of the voting power of the Voting Stock of the
Company or an offer which the Board of Directors has approved in the manner
described in this section of the Proxy Statement. Except for the restrictions
on business combinations, the Fair Price Amendment will not prevent a holder of
a controlling interest of the Company's Common Stock from exercising control
over or increasing its interest in the Company. The Fair Price Amendment is
designed to help ensure that if the Company is taken over, each shareholder
will be treated fairly in comparison to every other shareholder.
Although the Fair Price Amendment is designed to help ensure fair
treatment of each shareholder in comparison to every other shareholder in the
event of a takeover of the Company, it is not the purpose of the Fair Price
Amendment to ensure that shareholders will receive a premium price for their
shares in a takeover. Accordingly, the Board believes that the adoption of the
Fair Price Amendment would not preclude the Board's opposition to any future
takeover proposal that it believes not to be in the best interest of the
Company and its shareholders, whether or not such a proposal satisfies the
minimum price, form of consideration and other requirements of the Fair Price
Amendment.
The Fair Price Amendment would become effective upon the filing of the
Articles of Amendment with the Secretary of State of Texas, which is expected
to be made shortly following the adoption of the Amendments at the Annual
Meeting.
Adoption of the Fair Price Amendment may have a significant effect on
the ability of shareholders of the Company to benefit from certain transactions
that are opposed by the incumbent Board of Directors. Accordingly,
shareholders are urged to read carefully the following sections of this Proxy
Statement and Article Thirteen of Appendix A attached to this Proxy Statement,
which presents the full text of the Fair Price Amendment.
Purposes and Effects of the Fair Price Amendment. As discussed above,
a number of companies have been the subject of tender offers for, or other
acquisitions of, more than 15% but less than all of their outstanding stock.
In many cases, these purchases have been followed by business combinations in
which the tender offeror or other purchaser has paid a lower price for the
remaining outstanding shares than the price it paid in acquiring its original
interest in the target company, or has paid a less desirable form of
consideration.
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Federal securities laws and regulations applicable to business
combinations govern the disclosure required to be made to shareholders to
consummate such a transaction, but do not ensure that the terms of the business
combination (that is, the type and amount of consideration that shareholders
will receive for their shares) will be fair to shareholders or that
shareholders can effectively prevent its consummation.
Under Texas law, most mergers and consolidations, the sale of all or
substantially all of the Company's assets, the reclassification of securities
or a plan for the dissolution of the Company must be approved by the vote of
the holders of two-thirds (2/3) of the outstanding shares entitled to vote on
the matter. Moreover, the statutory right of the shareholders of a company who
elect not to tender their shares of stock or to dissent in connection with
certain business combinations and to receive the "fair value" of their shares
in cash may involve significant expense, delay and uncertainty to dissenting
shareholders. Dissenting shareholders have no assurance that such "fair value"
would be as high as the minimum price determined pursuant to the Fair Price
Amendment. In the case of many business combinations, including
reclassification or recapitalization of the outstanding shares of any class of
a company's stock, the statutory right of dissent may not be available at all.
The Fair Price Amendment is intended partially to fill gaps in the
federal and Texas law (Texas has no business combination statute as do some
other states) and to prevent certain of the potential inequities of business
combinations that involve two or more steps by requiring that to complete a
business combination that is not approved by a majority of the Disinterested
Directors, the purchaser must either acquire or obtain the affirmative vote of
at least 80% of the voting power of the Voting Stock prior to the business
combination, or be prepared to meet the minimum price, form of consideration
and other requirements of the Fair Price Amendment.
The Fair Price Amendment is designed to eliminate the pressure on
shareholders faced with the decision whether to accept an offer for the
purchase of their shares of stock, or to risk being relegated to the status of
minority shareholders in a controlled corporation or being forced to accept a
lower price for all of their shares of stock, without having the opportunity to
make a considered investment choice between remaining a shareholder of the
Company or disposing of their stock. If the tender offer is over-subscribed
for this reason, even shareholders who wish to tender their shares may be
compelled to accept the less valuable consideration for some or all of their
shares. The Fair Price Amendment also is designed to protect those
shareholders who have not tendered or otherwise sold their shares to a
purchaser who is attempting to acquire control by ensuring that at least the
same price and form of consideration are paid to such shareholders in a
business combination as were paid to shareholders in the initial step of the
acquisition. In the absence of the Fair Price Amendment, a successful
purchaser who acquired control of the Company could subsequently, by virtue of
such control, force minority shareholders to sell or exchange their shares at a
price that would not reflect any premium the purchaser may have paid in order
to acquire its controlling interest, but at a price that would instead
effectively be set by the purchaser. The price established by the purchaser
may be lower than the price paid by the purchaser in acquiring control or may
be in a less desirable form of consideration.
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In many situations, the minimum price, form of consideration and other
requirements of the Fair Price Amendment would require that a purchaser pay
shareholders a higher price for their shares or structure the transaction
differently. Accordingly, the Board believes that to the extent a business
combination were involved as part of a plan to acquire control of the Company,
adoption of the Fair Price Amendment will increase the likelihood that a
purchaser would negotiate directly with the Company. The Board believes that
it is in a better position than the individual shareholders of the Company to
negotiate effectively on behalf of any shareholders because the Board is likely
to be in a better position than any individual shareholder to assess the
business and prospects of the Company. Accordingly, the Board also believes
that negotiations between the Company and the purchaser will increase the
likelihood that shareholders would receive a higher price for their shares from
anyone desiring to obtain control of the Company through a business combination
or otherwise.
Although not all acquisitions of the Company's stock are made with the
objective of acquiring control of the Company through a subsequent business
combination, in most cases a purchaser desires to have the option to consummate
such a business combination. Assuming that to be the case, the Fair Price
Amendment would tend to discourage purchasers whose objective is to seek
control of the Company at a relatively low price, because acquiring the
remaining equity interest would not be assured unless the minimum price, form
of consideration and other requirements were satisfied or a majority of the
Disinterested Directors approved the transaction. The Fair Price Amendment may
also discourage the accumulation of large blocks of the Company's stock, which
the Board believes could precipitate a change of control of the Company on
terms unfavorable to the Company's other shareholders.
The Fair Price Amendment is permitted under Texas corporation law and
is consistent with the rules of the New York Stock Exchange, upon which the
Company's Common Stock is listed and traded.
Tender offers or other non-open market acquisitions of stock are
usually made at prices above the prevailing market price of a company's stock.
In addition, acquisitions of stock by persons attempting to acquire control
through market purchases may cause the market price of the stock to reach
levels that are higher than would otherwise be the case. The Fair Price
Amendment may discourage such purchases, particularly those representing less
than 80% of the voting power of the Voting Stock, and may thereby deprive
holders of the Company's Stock of an opportunity to sell their stock at a
temporarily higher market price. Because of the higher percentage requirements
for shareholder approval of any subsequent business combination and the
possibility of having to pay a higher price to other shareholders in such a
business combination, it may become more costly for a purchaser to acquire
control of the Company. The Fair Price Amendment may therefore decrease the
likelihood that a tender offer will be made for less than 80% of the voting
power of the Voting Stock and, as a result, may adversely affect those
shareholders who would desire to participate in such a tender offer. A
potential purchaser of stock seeking to obtain control may also be discouraged
from purchasing stock because a 80% shareholder vote would be required to
change or eliminate these provisions. It should be noted that the provisions
of the Fair Price Amendment would not necessarily discourage persons who might
be willing to seek control of the Company by acquiring
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80% of the voting power of the outstanding Voting Stock even though they have
no intention of acquiring the remaining 20%. However, these kind of
transactions are rare.
The provisions of the Fair Price Amendment may produce a series of
other effects on potential purchasers of the Company's securities. In some
cases, the Fair Price Amendment's minimum price provisions, while providing
objective pricing criteria, could be arbitrary and not indicative of value. In
addition, an Interested Shareholder may be unable, as a practical matter, to
comply with all of the additional requirements of the Fair Price Amendment.
Under these circumstances, unless a potential purchaser were willing to
purchase 80% of the voting power of the Voting Stock as the first step in a
business combination, it would be forced either to negotiate with the Board and
offer terms acceptable to it or to abandon the proposed business combination.
Another effect of adoption of the Fair Price Amendment would be to
give veto power to the holders of an aggregate of 20.1% of the voting power of
the Voting Stock with respect to a business combination which is opposed by the
Board, but which a majority of shareholders may believe to be desirable and
beneficial. In addition, since only the Disinterested Directors will have the
authority to reduce to a simple majority or eliminate the 80% shareholder vote
required for business combinations, the Fair Price Amendment may tend to
insulate current management against the possibility of removal in the event of
a takeover bid. As of February 24, 1997, directors and officers of the Company
beneficially owned approximately ____% of the Company's Common Stock. [See
"Security Ownership of Certain Beneficial Owners and Management."]
Description of the Fair Price Amendment. The full text of the Fair
Price Amendment is attached to this Proxy Statement as Article Thirteen in
Appendix A. The following description of the Fair Price Amendment is qualified
in its entirety by reference to Article Thirteen in Appendix A.
Shareholder Vote Required for Certain business combinations. Under
Texas law, mergers, consolidations, sales of all or substantially all of the
assets of the Company, the adoption of a plan of dissolution of the Company,
and reclassification of securities and recapitalizations of the Company
involving amendments to the Articles of Incorporation must be approved by the
vote of the holders of two-thirds (2/3) of the stock entitled to vote. Certain
other transactions, such as sales of less than substantially all of the assets
of the Company, certain mergers involving a wholly owned subsidiary of the
Company, and recapitalizations not involving any amendments to the Articles of
Incorporation do not require shareholder approval.
The Fair Price Amendment would require the approval of the holders of
80% of the voting power of the Voting Stock, voting together as a single class,
as a condition to business combinations, except in cases in which either (i)
certain price, form of consideration and other requirements are satisfied or
(ii) there is at least one Disinterested Director and the transaction or
category of transactions is recommended to the shareholders by a majority of
the Disinterested Directors. If either of such alternatives were applicable
and were satisfied with respect to a particular business combination, the
normal shareholder approval requirements of Texas law would apply and,
accordingly, a vote of the holders of two-thirds (2/3) of the stock entitled to
vote would be required
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or, for certain transactions, as noted above, no shareholder vote would be
necessary. Thus, depending upon the circumstances, the Fair Price Amendment
would require a 80% shareholder vote for a business combination in cases in
which either two-thirds (2/3) vote or no vote currently would be required under
Texas law and under the Articles of Incorporation.
Although the Company's Articles of Incorporation will authorize
10,000,000 shares of Preferred Stock if the Company's shareholders approve the
Preferred Stock Amendment (discussed below), the Board has no present intention
of issuing any shares of Preferred Stock. If any shares of Preferred Stock
were issued in the future, the terms of such Preferred Stock might require the
approval of a business combination by its holders, voting as a separate class.
That requirement would be in addition to, and would not be affected by, the
Fair Price Amendment.
Even if an Interested Shareholder could assure itself of an 80%
affirmative shareholder vote in favor of a business combination (so that
neither the approval of such business combination by a majority of the
Disinterested Directors nor the satisfaction of the minimum price, form of
consideration and other requirements would be necessary to effect such business
combination), under Texas law such business combination may nevertheless
require approval by the Board of Directors of the Company prior to its
submission to a shareholder vote. This would be the case, for example, with
respect to a merger or consolidation involving the Company. In that case, the
Interested Shareholder could not effect the business combination, regardless of
its ability to assure a 80% shareholder vote, without Board action. As
discussed under "Proposal regarding the Board of Directors," if the Amendment
to the Articles of Incorporation described under that caption is adopted, the
Interested Shareholder could not be assured of gaining control of the Board
until at least two annual shareholder meetings had been held.
Exceptions to Higher Vote Requirement. In the case of a business
combination that involved the receipt of cash or other consideration by the
Company's shareholders, the 80% affirmative shareholder vote requirement would
not apply if either (1) the business combination were approved by a majority of
the Disinterested Directors, or (2) all of the requirements described in
paragraphs (a), (b) and (c) below were satisfied.
If the business combination did not involve the receipt of
consideration by the Company's shareholders (which would be the case if, for
example, the business combination took the form of a sale of assets or an
original issuance of the Company's securities to an Interested Shareholder),
only approval by a majority of any Disinterested Directors would avoid the
requirement for such 80% shareholder vote.
If there were no Disinterested Directors, the business combination
would require the 80% affirmative shareholder vote. On the other hand,
approval of a majority of the Disinterested Directors would, in every case,
avoid both the need for such 80% shareholder vote and the need to satisfy all
of the minimum price, form of consideration and other requirements described
below.
(a) Minimum Price Requirements. The aggregate of (1) the cash and
(2) the Fair Market Value (as defined below), as of the date of consummation of
the business combination (the
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"Consummation Date"), of any consideration other than cash to be received per
share by a holder of Common Stock in the business combination would have to be
at least equal to the higher of (i) the highest per share price paid by the
Interested Shareholder in acquiring any share of Common Stock during the two
years immediately prior to the date of the first public announcement of the
proposed business combination (the "Announcement Date") or in the transaction
in which it became an Interested Shareholder, whichever is higher, and (ii) the
Fair Market Value per share of Common Stock on the Announcement Date or on the
Determination Date (as defined below), whichever is higher.
"Fair Market Value" is (1) in the case of cash, the amount of the
cash, (2) in the case of stock, the highest closing sale price with respect to
such stock during the 30 day period preceding the date in question, or fair
market value, and (3) in the case of property other that cash or stock, the
fair market value of such property on the date in question as determined by a
majority of the Disinterested Directors. The "Determination Date" is the date,
with respect to each Interested Shareholder, on which the Interested
Shareholder became an Interested Shareholder.
The higher of (i) or (ii) in the first paragraph of this sub-section
(a) above would have to be paid in respect of all outstanding shares of Common
Stock whether or not the Interested Shareholder had previously acquired any
shares of Common Stock. If the Interested Shareholder did not purchase any
shares of Common Stock during the two-year period prior to the Announcement
Date or in the transaction on the Determination Date in which it became an
Interested Shareholder (for instance, if it became an Interested Shareholder by
purchasing shares of any then-outstanding series of voting Preferred Stock),
the minimum price would be as determined under (ii) above.
Because the market price of the Company's Common Stock varies over
time, the provisions of the Fair Price Amendment and the determination of the
minimum price thereunder do not ensure any fixed minimum price. If the minimum
price is determined under clause (ii) of the first paragraph of sub-section (a)
above, for example, it would be equal to the highest price during such period
and could be substantially less than the historic highest price at which the
Company's Common Stock has been sold.
The following example illustrates the application of the minimum price
requirement to a business combination with an Interested Shareholder that (1)
acquired in the open market, during the two-year period prior to the
Announcement Date, 4.9% of the outstanding Common Stock of the Company (the
only presently outstanding class of capital stock), for which its highest per
share price was $21, (2) became an Interested Shareholder by purchasing 45% of
the outstanding Common Stock in a cash tender offer at $25 per share, which was
equal to the Fair Market Value on that date, and (3) then announced a proposed
business combination with the Company at a time when the Common Stock was
trading at $27 per share.
(i) The highest price paid by the Interested Shareholder per share
of Common Stock during the two-year period prior to the Announcement Date ($21)
or in the transaction in which the Interested Shareholder became such ($25),
whichever is higher.
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(ii) The higher of the Fair Market Value per share of Common Stock
on the Announcement Date ($27) and on the Determination Date ($25).
Accordingly, in the above example, to comply with the Fair Price
Amendments minimum price requirement the Interested Shareholder would be
required to pay at least $27 per share (the higher of the two alternatives
above).
If the transaction does not involve the receipt of any cash or other
property by any of the Company's shareholders, such as a sale of assets or an
issuance of the Company's securities to an Interested Shareholder, then the
price criteria discussed above would not apply and the 80% shareholder vote
would be required, unless the transaction were approved by a majority of the
Disinterested Directors.
If any class or series of capital stock, other than Common Stock, is
outstanding on the Consummation Date, then the payments to holders of shares of
such class or series of capital stock would have to be at least equal to the
higher of (1) the highest price per share as determined with respect to such
class or series of capital stock in the same manner as described above with
respect to Common Stock, and (2) the highest preferential amount per share, if
any, to which the holders of such class or series of capital stock would be
entitled in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company. The minimum price requirement would have to be
met with respect to each class or series of outstanding capital stock whether
or not the Interested Shareholder owned shares of that class or series prior to
the business combination.
Under the minimum price requirements, the Fair Market Value of
non-cash consideration to be received by holders of shares of any class of
capital stock in a business combination is to be determined as of the
Consummation Date. Where the definitive terms of such non-cash consideration
were established in advance of the Consummation Date, intervening adverse
developments, either in the economy or the market generally or in the financial
condition or business of the Interested Shareholder, could result in a decline
in the originally anticipated Fair Market Value of such consideration, so that
on the date scheduled for its consummation the business combination (which had
theretofore been considered as not requiring the 80% shareholder vote or
approval by a majority of any Disinterested Directors) could not be consummated
because it failed to meet the minimum price criteria. An Interested
Shareholder could avoid such a situation, however, by establishing, in advance,
terms for the business combination whereby the non-cash consideration was to be
determined by reference to its Fair Market Value on the Consummation Date.
Such an approach would ensure that the Interested Shareholder, rather than the
other shareholders of the Company, would bear the risk of a decline in the
market value of the offered consideration prior to the consummation of the
business combination.
(b) Form of Consideration Requirement. The consideration to be
received by holders of a particular class or series of capital stock in the
business combination is required to be either cash or the same type of
consideration used by the Interested Shareholder in acquiring the largest
number of shares of such class or series of capital stock.
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(c) Other Requirements. In order to avoid the requirement of the
80% affirmative shareholder vote or approval by a majority of the Disinterested
Directors, an Interested Shareholder would have to comply with all of the
following additional requirements, as well as the minimum price and form of
consideration requirements.
The first additional requirement would be that the Company, after the
Determination Date and prior to the Consummation Date, has (1) not failed to
declare or pay full regular dividends on any outstanding capital stock, other
than Common Stock, (2) not reduced the amount or changed the frequency of
payment of any dividends regularly paid on Common Stock (except as necessary to
reflect any stock split, stock dividend, subdivision or reclassification of the
Common Stock), and (3) increased the amount of any dividends regularly paid on
the Common Stock as necessary to reflect any reverse stock split or
reclassification of the Common Stock or other transaction that has the effect
of reducing the number of outstanding shares of Common Stock, unless any
failure or reduction was approved by a majority of the Disinterested Directors.
This provision is designed to prevent an Interested Shareholder from attempting
to depress the market price of the capital stock prior to proposing a business
combination by reducing dividends thereon, and thereby reducing the
consideration required to be paid pursuant to the minimum price requirements of
the Fair Price Amendment.
The second additional requirement would be that, after the
Determination Date and prior to the Consummation Date, the Interested
Shareholder not have acquired any additional shares of the capital stock,
directly from the Company or otherwise, in any transaction subsequent to the
transaction pursuant to which it became an Interested Shareholder (for the
purpose of the Fair Price Amendment all purchases made pursuant to a single
tender or exchange offer would be considered part of the same transaction).
This provision is intended to prevent an Interested Shareholder from purchasing
additional shares of Voting Stock at prices that are lower than those set by
the minimum price requirements of the Fair Price Amendment.
The third additional requirement would be that after the Determination
Date and prior to the Consummation Date, the Interested Shareholder not have
received, whether in connection with the business combination or otherwise, the
benefit of any loans, other financial assistance or tax advantages provided by
the Company (other than proportionately as a shareholder). This provision is
intended to deter an Interested Shareholder from self-dealing or otherwise
taking advantage of its equity position in the Company by using the Company's
resources to finance the business combination or otherwise for its own purposes
in a manner not proportionately available to all shareholders.
The fourth additional requirement would be that, after the
Determination Date and prior to the Consummation Date, the Interested
Shareholder shall not have made any major change in the Company's business or
capital structure without the approval of a majority of the Disinterested
Directors. This provision is intended to deter an Interested Shareholder from
making major changes in the Company that may involve self-dealing by the
Interested Shareholder, or otherwise existing influence that may not be to the
benefit of the other shareholders or consistent with the objectives of the
Board.
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The final additional requirement would be that a proxy or information
statement disclosing the terms and conditions of the business combination and
complying with the requirements of the proxy rules promulgated under the 1934
Act would have to be mailed to all shareholders of the Company at least 30 days
prior to the consummation of the business combination.
It should be noted that none of the minimum price, form of
consideration or other requirements described above would apply in the case of
a business combination approved by a majority of the Disinterested Directors,
and that, in the absence of such approval, all of such requirements would have
to be satisfied in order to avoid the 80% shareholder vote requirement.
The Fair Price Amendment further provides that a majority of the
Disinterested Directors have the power and duty to determine good faith all
questions arising under the Fair Price Amendment and that any such
determination made in good faith shall be binding and conclusive upon all
parties. The Fair Price Amendment also provides that nothing in it will be
interpreted to relieve any Interested Shareholder from any fiduciary obligation
imposed by law, and the fact that a business combination complies with certain
provisions of the Fair Price Amendment will not be interpreted to impose any
fiduciary duty, obligation or responsibility on the Board of Directors to
approve the business combination or recommend it to the shareholders. Further,
this compliance does not limit in any manner the Board of Directors with
respect to evaluations of other actions and responses taken with respect to
such business combination.
Vote Required. The affirmative vote of two-thirds (2/3) of the
outstanding shares of Common Stock is required to adopt the Fair Price
Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FAIR PRICE AMENDMENT.
PROPOSAL REGARDING AUTHORIZATION OF PREFERRED STOCK
The Board of Directors has adopted and submitted to the shareholders
for approval an amendment to the Company's Articles of Incorporation (the
"Preferred Stock Amendment") to authorize for issuance preferred stock
("Preferred Stock"). The Preferred Stock Amendment is contained in Article
Four of the proposed Amendments attached hereto as Appendix A.
The Articles of Incorporation currently authorizes the issuance of up
to 80,000,000 shares of stock, without distinguishing between Common Stock and
Preferred Stock. The Company has issued 30,235,164 shares of Common Stock, of
which 24,238,476 were outstanding on February 24, 1997. If the Preferred Stock
Amendment is approved, the Articles of Incorporation will authorize an
additional 10,000,000 shares of Preferred Stock. The Preferred Stock Amendment
will not change the authorized number of shares of Common Stock which may be
issued, and this authorization will remain at 80,000,000. The existing
Articles of Incorporation provide that shareholders are not entitled to
preemptive rights and do not have any right to cumulate votes. The Articles of
Amendment provides that holders of Common Stock shall
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<PAGE> 34
not have preemptive or cumulative voting rights, but does not prohibit holders
of Preferred Stock from having such rights.
The Board of Directors believes that the Preferred Stock Amendment,
which will expressly authorize the issuance of both Common Stock and Preferred
Stock, is in the best interest of the Company and its shareholders. The Board
believes that it is advisable to have both Common Stock and Preferred Stock
available in connection with possible future transactions, such as financings,
strategic alliances, corporate mergers, acquisitions, possible funding of new
product programs or businesses and other uses not presently determinable, and
as may be deemed to be feasible and in the best interests of the Company. In
addition, the Board of Directors believes that it is desirable that the Company
have the flexibility to issue shares of both Common Stock and Preferred Stock
without further shareholder action, except as otherwise provided by law.
Whether or not the Preferred Stock Amendment is approved by the
Company's shareholders, unissued shares of Common Stock will continue to be
available for issuance, including by means of an unregistered private
placement, without further action of the shareholders, unless required by the
Company's Articles of Incorporation or Bylaws, applicable laws, or the policy
of any stock exchange or registered securities association on which the shares
of stock of the Company are listed, if any.
If the Preferred Stock Amendment is approved by the Company's
shareholders, then the Board of Directors of the Company will be entitled to
approve the creation and issuance of up to 10,000,000 shares of Preferred Stock
in one or more series, with such rights, designations, preferences, conversion
rights, exchange rights, cumulative, relative, participating, optional or other
rights, including voting rights, qualifications, limitations or restrictions
thereof as are determined by a corporation's board of directors with no further
authorization required of the shareholders. The issuance of shares of
Preferred Stock could decrease the amount of earnings and assets available for
distribution to holders of Common Stock and adversely affect the rights and
powers, including voting rights, of such holders.
The Board of Directors does not currently intend to seek shareholder
approval prior to any issuance of Common Stock or Preferred Stock, unless
otherwise required by law or the regulations of the stock market where the
capital stock is traded.
The Board of Directors is required to make any determination to issue
shares of the Common Stock and shares of Preferred Stock based on its judgment
as to the best interests of the shareholders and the Company. Although the
Board of Directors has no present intention of doing so, it could issue shares
of the Preferred Stock that could, depending on the terms of such series, make
more difficult or discourage an attempt to obtain control of the Company by
means of a merger, tender offer, proxy contest, or other means. For example,
these shares could be used to create voting or other impediments or to
discourage persons seeking to gain control of the Company. Such shares could
be privately placed with purchasers favorable to the Board of Directors in
opposing the action. The issuance of new shares also could be used to dilute
the stock ownership of a person or entity seeking to obtain control of the
Company should the Board of Directors consider the action of the
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entity or person not to be in the best interests of the shareholders and the
Company. In addition, the Board of Directors could authorize holders of a
series of Preferred Stock to vote either separately as a class or with the
holders of the Company's Common Stock, on any merger, sale, or exchange of
assets by the Company or any other extraordinary corporate transaction.
The Company currently has no agreements or understandings with any
third party to effect any offering of Preferred Stock or to purchase any shares
offered in connection with an offer. No assurances are given that any offering
will in fact be effected. Therefore, the terms of any of the Preferred Stock
cannot be stated or estimated with respect to any or all of the securities
authorized.
Vote Required. The affirmative vote of two-thirds (2/3) of the
outstanding shares of Common Stock is required to adopt the Preferred Stock
Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE PREFERRED STOCK AMENDMENT.
EXISTING DEFENSES
Articles of Incorporation and Bylaws. Neither the Company's Articles
of Incorporation or Bylaws contain any provisions that may have an antitakeover
effect. The Board of Directors has recommended that the Company's shareholders
approve Amendments to the Articles of Incorporation. The Amendments may have
an antitakeover effect, as described under the captions "-- Procedural
Amendments," "Proposal regarding the Board of Directors," "Proposals regarding
the Shareholders," "-- Proposal regarding the Fair Price Amendment to the
Articles of Incorporation," and "-- Proposal regarding Authorization of
Preferred Stock." If the Amendments are approved, then the Board intends to
amend the Bylaws to make them consistent with the Amendments.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. of Fort Worth, Texas served as independent
public accountants for the Company for fiscal 1996 and has reported on the
Company's financial statements. The Board of Directors of the Company has
selected Coopers & Lybrand L.L.P. to audit the accounts of the Company for the
fiscal year ending December 31, 1997 and recommends to the shareholders that
they ratify this selection for the ensuing fiscal year ending December 31,
1997. The Company has been advised that Coopers & Lybrand L.L.P. has no
relationship with the Company or its subsidiaries other than that arising from
the firm's employment as auditors. The affirmative vote of a majority of the
outstanding shares of Common Stock present at the Annual Meeting in person or
by proxy is necessary for the ratification of the appointment of Coopers &
Lybrand L.L.P. as independent public accountants.
A representative of Coopers & Lybrand L.L.P. is expected to be present
at the Annual Meeting and will be afforded an opportunity to make a statement
and will be available to respond to appropriate questions at such meeting.
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<PAGE> 36
While shareholder ratification is not required for the selection of
Coopers & Lybrand L.L.P. since the Board of Directors has the responsibility
for the selection of the Company's independent public accountants, the
selection is being submitted for ratification at the Annual Meeting with a view
towards soliciting the shareholders' opinion thereon, which opinion will be
taken into consideration in future deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF COOPERS &
LYBRAND L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE 1997
FISCAL YEAR.
OTHER BUSINESS
Any proposal to be presented by a shareholder at the Company's 1998
Annual Meeting of Shareholders must be presented to the Company by no later
than November 20, 1997.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders are urged, regardless of the number of shares
of stock owned, to date, sign and return the enclosed proxy in the enclosed
reply envelope.
By Order of the Board of Directors
Hugh A. Simpson
Secretary
March 14, 1997
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<PAGE> 37
APPENDIX A
TEXT OF PROPOSED AMENDMENTS TO
THE ARTICLES OF INCORPORATION
OF
CASH AMERICA INTERNATIONAL, INC.
The following Amendments to the Articles of Incorporation are proposed
for adoption by the shareholders of the Corporation on April 22, 1997:
I. The Amendments alter or change Article Four of the original
Articles of Incorporation, and Article Four is hereby amended so as to read as
follows:
"ARTICLE FOUR
CAPITAL STOCK
The total number of authorized shares of capital stock of the
Corporation shall be 90,000,000 which shall consist of 10,000,000
shares of Preferred Stock of the par value of $0.10 per share and
80,000,000 shares of Common Stock of the par value of $0.10 per share.
The following is a statement fixing certain of the
designations and powers, voting powers, preferences, and relative,
participating, optional or other rights of the Preferred Stock and the
Common Stock of the Corporation, and the qualifications, limitations
or restrictions thereof, and the authority with respect thereto
expressly granted to the Board of Directors of the Corporation to fix
any such provisions not fixed hereby:
A. Preferred Stock
The Board of Directors is hereby expressly vested with the
authority to adopt a resolution or resolutions providing for the issue
of authorized but unissued shares of Preferred Stock. These shares of
Preferred Stock may be issued from time to time in one or more series
and in such amounts as may be determined by the Board of Directors in
such resolution or resolutions. The powers, voting powers,
designations, preferences, and relative, participating, optional or
other rights, if any, of each series
<PAGE> 38
of Preferred Stock and the qualifications, limitations or
restrictions, if any, of such preferences and/or rights (collectively
the "Series Terms"), shall be such as are stated and expressed in a
resolution or resolutions providing for the creation or revision of
such Series Terms (a "Preferred Stock Series Resolution") adopted by
the Board of Directors or a committee of the Board of Directors to
which such responsibility is specifically and lawfully delegated. The
powers of the Board with respect to the Series Terms of a particular
series (any of which powers, other than voting powers, may by
resolution of the Board of Directors be specifically delegated to one
or more of its committees, except as prohibited by law) shall include,
but not be limited to, determination of the following:
(1) The number of shares constituting that series
and the distinctive designation of that series, or any
increase or decrease (but not below the number of shares
thereof then outstanding) in such number;
(2) The dividend rate on the shares of that
series, whether such dividends, if any, shall be cumulative,
and, if so, the date or dates from which dividends payable on
such shares shall accumulate, and the relative rights of
priority, if any, of payment of dividends on shares of that
series;
(3) Whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if so,
the terms of such voting rights; provided, however, that if
resolutions authorize the holders of Preferred Stock to elect
directors upon certain events, those directors elected by the
holders of Preferred Stock shall be in addition to those
directors authorized from time to time pursuant to Article
Seven of these Articles of Incorporation.
(4) Whether that series shall have conversion
privileges with respect to shares of any other class or
classes of stock or of any other series of any class of stock,
and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate upon
occurrence of such events as the Board of Directors shall
determine;
(5) Whether the shares of that series will be
exchangeable, subject to Article 2.38 of the Texas Business
Corporation Act, as amended from time to time, at the option
of the Corporation, the shareholders or another person or upon
the occurrence of a designated event, for shares, obligations,
indebtedness, evidence of ownership, rights to purchase
securities or other securities of the Corporation or
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<PAGE> 39
one or more other domestic or foreign corporations or other
entities or for other property or any combination of the
foregoing;
(6) Whether the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including their relative rights of priority, if
any, of redemption, the date or dates upon or after which they
shall be redeemable, provisions regarding redemption notices,
and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different
redemption dates;
(7) Whether that series shall have a sinking fund
for the redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(8) The rights of the shares of that series in
the event of voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, and the
relative rights of priority, if any, of payment of shares of
that series;
(9) The conditions or restrictions upon the
creation of indebtedness of the Corporation or upon the
issuance of additional Preferred Stock or other capital stock
ranking on a parity therewith, or prior thereto, with respect
to dividends or distribution of assets upon liquidation;
(10) The conditions or restrictions with respect
to the issuance of, payment of dividends upon, or the making
of other distributions to, or the acquisition or redemption
of, shares ranking junior to the Preferred Stock or to any
series thereof with respect to dividends or distribution of
assets upon liquidation; and
(11) Any other designations, powers, preferences,
and rights, including, without limitation, any qualifications,
limitations, or restrictions thereof.
Any of the Series Terms, including voting rights, of any
series may be made dependent upon facts ascertainable outside the
Articles of Incorporation and the Preferred Stock Series Resolution,
provided that the manner in which such facts shall operate upon such
Series Terms is clearly and expressly set forth in the Articles of
Incorporation or in the Preferred Stock Series Resolution.
3
<PAGE> 40
Subject to the provisions of this Article Four, shares of one
or more series of Preferred Stock may be authorized or issued from
time to time as shall be determined by and for such consideration as
shall be fixed by the Board of Directors or a designated committee
thereof, in an aggregate amount not exceeding the total number of
shares of Preferred Stock authorized by these Articles of
Incorporation. Except in respect of series particulars fixed by the
Board of Directors or its committee as permitted hereby, all shares of
Preferred Stock shall be of equal rank and shall be identical. All
shares of any one series of Preferred Stock so designated by the Board
of Directors shall be alike in every particular, except that shares of
any one series issued at different times may differ as to the dates
from which dividends thereon shall be cumulative.
B. Common Stock
1. Distributions. Subject to the provisions of any
Preferred Stock Series Resolution, the Board of Directors may, in its
discretion, out of funds legally available for distribution and at
such times and in such manner as determined by the Board of Directors,
declare and pay a distribution on the Common Stock of the Corporation.
No distribution (other than a dividend in capital stock
ranking on a parity with the Common Stock or cash in lieu of
fractional shares with respect to such stock dividend) shall be
declared or paid on any share or shares of any class of stock or
series thereof ranking on a parity with the Common Stock in respect of
payment of a distribution for any distribution period unless there
shall have been declared, for the same distribution period, a like
proportionate distribution on all shares of Common Stock then
outstanding.
2. Liquidation. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment or provision for payment of the debts and
other liabilities of the Corporation and payment or setting aside for
payment of any preferential amount due to the holders of any other
class or series of stock, the holders of the Common Stock shall be
entitled to receive ratably any or all assets remaining to be paid or
distributed.
3. Voting Rights. Subject to any special voting rights
set forth in any Preferred Stock Series Resolution, the holders of the
Common Stock of the Corporation shall be entitled at all meetings of
the shareholders to one vote for each share of such stock held by
them.
C. Prior, Parity or Junior Stock
Whenever reference is made in this Article Four to shares
"ranking prior to" another class of stock or "on a parity with"
another class of stock, such reference shall
4
<PAGE> 41
mean and include all other shares of the Corporation in respect of
which the rights of the holders thereof as to the payment of
distribution or as to distributions in the event of a voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of
the Corporation are given preference over, or rank on an equality
with, as the case may be, the rights of the holders of such other
class of stock. Whenever reference is made to shares "ranking junior
to" another class of stock, such reference shall mean and include all
shares of the Corporation in respect of which the rights of the
holders thereof as to the payment of distribution and as to
distributions in the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation are junior
or subordinate to the rights of the holders of such class of stock.
Except as otherwise provided herein or in any Preferred Stock
Series Resolution, each series of Preferred Stock ranks on a parity
with each other and each ranks prior to the Common Stock. Common
Stock ranks junior to the Preferred Stock.
D. Liquidation
For the purposes of sub-section 2 of Section B of this Article
Four and for the purpose of the comparable sections of any Preferred
Stock Series Resolution, the merger or consolidation of the
Corporation into or with any other Corporation, or the merger of any
other Corporation into it, or the sale, lease, or conveyance of all or
substantially all the assets, property or business of the Corporation,
shall not be deemed to be a liquidation, dissolution, or winding up of
the Corporation.
E. Reservation and Retirement of Shares
The Corporation shall at all times reserve and keep available,
out of its authorized but unissued shares of Common Stock or out of
shares of Common Stock held in its treasury, the full number of shares
of Common Stock into which all shares of any series of Preferred Stock
having conversion privileges from time to time outstanding are
convertible.
Unless otherwise provided in a Preferred Stock Series
Resolution with respect to a particular series of Preferred Stock, all
shares of Preferred Stock redeemed or acquired (as a result of
conversion or otherwise) shall be retired and restored to the status
of authorized but unissued shares.
No holder of shares of stock of the Corporation shall have any
preemptive or other right, except as such rights are expressly
provided by contract, to purchase or subscribe for or receive any
shares of any class, or series thereof, of stock of the Corporation,
whether now or hereafter authorized, or any warrants, options, bonds,
5
<PAGE> 42
debentures, or other securities convertible into, exchangeable for or
carrying any right to purchase any shares of any class, or series
thereof, of stock; but such additional shares of stock and such
warrants, options, bonds, debentures, or other securities convertible
into, exchangeable for or carrying any right to purchase any shares of
any class, or series thereof, of stock may be issued or disposed of by
the Board of Directors to such persons, and on such terms and for such
lawful considerations, as in its discretion it shall deem advisable or
as to which the Corporation shall have by binding contract agreed.
Cumulative voting shall not be allowed in the election of
directors or for any other purpose."
II. The Amendments alter or change Article Seven of the
original Articles of Incorporation, and Article Seven is hereby amended
so as to read as follows:
"ARTICLE SEVEN
BOARD OF DIRECTORS
A. Number. Except as otherwise fixed by the provisions
of a resolution adopted pursuant to Article Four A.(3) of these
Articles of Incorporation relating to the rights of the holders of the
Preferred Stock to elect additional directors under specified
circumstances, the number of directors which shall constitute the
whole Board of Directors shall be as provided in the Corporation's
Bylaws.
B. Staggered Board. At the meeting of shareholders at
which these Articles of Amendment are adopted, the directors of the
Corporation shall be divided into three classes, designated Class I,
Class II and Class III (which at all times shall be as nearly equal in
number as possible), with the term of office of Class I directors to
expire at the 1998 Annual Meeting of Shareholders, the term of office
of Class II directors to expire at the 1999 Annual Meeting of
Shareholders, and the term of office of Class III directors to expire
at the 2000 Annual Meeting of Shareholders, upon election and
qualification of their successors. At each annual meeting of
shareholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding
annual meeting of shareholders after their election, upon election and
qualification of their successors.
C. Director Nominations. Nominations, other than those
made by, or at the direction of, a majority of the Board of Directors
of the Corporation or a committee thereof shall be made only if timely
written notice of such nomination or nominations has been given to the
Secretary of the Corporation. To be timely, such notice must be
delivered to or mailed and received at the principal executive offices
6
<PAGE> 43
of the Corporation not less than [60] days prior to the meeting,
irrespective of any deferrals, postponements or adjournments thereof
to a later meeting date; provided, however, that in the event that
less than 70 days notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to
be timely must be so received not later than the close of business on
the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure of the date of the
meeting was made, whichever first occurs. Each such notice to the
Secretary shall set forth:
(i) the name, business address and residence
address of the shareholder who intends to make the nomination;
(ii) a representation that the shareholder is a
holder of record of shares of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the
notice;
(iii) the name, age, business and residence
addresses, and principal occupation or employment of each
nominee;
(iv) a description of all arrangements or
understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made
by the shareholder;
(v) any other information relating to such
shareholder each nominee proposed by such shareholder that is
or would be required to be included in a proxy statement filed
with the Securities and Exchange Commission pursuant to
Regulation 14A promulgated under the Securities Exchange Act
of 1934 (the "1934 Act");
(vi) any other information that is or would be
required to be disclosed in a Schedule 13D promulgated under
the 1934 Act, regardless of whether such person would
otherwise be required to file a Schedule 13D; and
(vii) the consent of each nominee to serve as a
director of the Corporation if so elected.
In addition, a person providing notice under Section C of this
Article Seven shall promptly provide such other supplemental
information as the Corporation otherwise reasonably requests.
7
<PAGE> 44
A majority of the Board of Directors may reject any nomination
by a shareholder that is not timely made or otherwise not made in
accordance with the terms of Section C of this Article Seven. If a
majority of the Board of Directors reasonably determines that the
information provided in a shareholder's notice does not satisfy the
informational requirements of Section C of this Article Seven in any
material respect, the Secretary of the Corporation shall promptly
notify such shareholder of the deficiency in writing. The shareholder
shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of time as
a majority of the Board of Directors shall reasonably determine, which
period shall not exceed 10 days from the date such deficiency notice
is given to the shareholder. If the deficiency is not cured within
such period, or if a majority of the Board of Directors reasonably
determines that the additional information provided by the
shareholder, together with the information previously provided, does
not satisfy the requirements of this paragraph in any material
respect, then a majority of the Board of Directors may reject such
shareholder's nomination. The Secretary of the Corporation shall
notify a shareholder in writing whether his or her nomination has been
made in accordance with the time and information requirements of
Section C of this Article Seven.
The chair of a meeting of shareholders may, if the facts
warrant, determine and declare to the meeting that a nomination was
not made in accordance with the procedure prescribed by Section C of
this Article Seven, and if the chair should so determine, he or she
shall so declare to the meeting and such nomination shall be
disregarded.
D. Ballots, Cumulative Voting. Election of directors
need not be by written ballot unless the Bylaws shall so provide. No
holders of shares of capital stock of the Corporation shall have any
rights to cumulate votes in the election of directors.
E. Preferred Stock, Directors. Notwithstanding the
foregoing, whenever the holders of Preferred Stock shall have the
right to elect directors at an annual or special meeting of
Shareholders, the election, term of office, filling of vacancies, and
other features of such directorships shall be governed by the terms of
any resolution adopted pursuant to Article Four of these Articles of
Incorporation, and such Directors so elected shall not be divided into
classes pursuant to this Article Seven, unless expressly provided by
such terms."
8
<PAGE> 45
III. The Amendments add Article Twelve to the Articles of
Incorporation, and such new Article Twelve shall read as follows:
"ARTICLE TWELVE
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of shareholders of the Corporation
may be called only by the Chairman of the Board of Directors,
if there is one, by the President, by the Board of Directors
or by holders of not less than a majority of the voting power
of the Voting Stock (as defined in Article Thirteen of these
Articles of Incorporation) that would be entitled to vote at
such meeting."
IV. The Amendments add Article Thirteen to the Articles
of Incorporation, and such new Article Thirteen shall read as follows:
"ARTICLE THIRTEEN
FAIR PRICE
A. Special Vote Required For Certain Business
Combinations. In addition to any affirmative vote required by
law or these Articles of Incorporation or the Bylaws of the
Corporation and except as otherwise expressly provided in
Section B. of this Article Thirteen, a Business Combination
(as hereinafter defined) with, or proposed by or on behalf of
any Interested Shareholder (as hereinafter defined) or any
Affiliate or Associate (as hereinafter defined) of any
Interested Shareholder or any person who after such Business
Combination would be an Affiliate or Associate of such
Interested Shareholder shall require the affirmative vote of
the holders of not less than 80% of the voting power of the
Voting Stock (as hereinafter defined), voting together as a
single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that
a lesser percentage or separate class vote may be specified,
by law, by any other provision of these Articles of
Incorporation or the Bylaws of the Corporation, by any
agreement with any national securities exchange or otherwise.
B. When Special Vote Not Required. The
provisions of Section A of this Article Thirteen shall not be
applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote,
if any, as is required by law, by any other provision of these
Articles of Incorporation or the Bylaws of the Corporation, by
any agreement with any national securities exchange
9
<PAGE> 46
or otherwise if, in the case of a Business Combination
involving the receipt of consideration by the holders of the
Corporation's outstanding Capital Stock (as hereinafter
defined), the condition specified in paragraph (i) below is
met or all of the conditions specified in paragraph (ii) below
are met or if, in the case of a Business Combination not
involving the receipt of consideration by the holders of the
Corporation's outstanding Capital Stock, the condition
specified in paragraph (i) below is met:
(i) Approval by Disinterested Directors.
The Business Combination (either specifically or as a
transaction which is within an approved category of
transactions) shall have been approved by a majority
of the Disinterested Directors (as hereinafter
defined), it being understood that this condition
shall not be capable of satisfaction unless there is
at least one Disinterested Director.
(ii) Minimum Price, Form of Consideration
and Other Requirements. All of the following
conditions shall have been met:
(A) Minimum Price Requirements.
With respect to every class or series of outstanding
Capital Stock of the Corporation, whether or not the
Interested Shareholder has previously acquired
beneficial ownership of any shares of such class or
series of Capital Stock:
(1) The aggregate amount of cash
plus the Fair Market Value (as hereinafter defined),
as of the date of the consummation of the Business
Combination, of consideration other than cash to be
received per share by holders of Common Stock in such
Business Combination shall be at least equal to the
higher of the amounts determined pursuant to clauses
(aa) and (bb) below:
(aa) the highest per-share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by or on behalf of
the Interested Shareholder for any share of Common
Stock in connection with the acquisition by the
Interested Shareholder of beneficial ownership of
shares of Common Stock (x) within the two- year
period immediately prior to the Announcement Date (as
hereinafter defined) or (y) in the transaction or
series of related transactions in which it became an
Interested Shareholder, whichever is higher, in
either case as adjusted for any subsequent stock
split stock dividend, subdivision or reclassification
with respect to Common Stock; and
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<PAGE> 47
(bb) the Fair Market Value per share of
Common Stock (x) on the Announcement Date or (y) on
the Determination Date (as hereinafter defined),
whichever is higher, as adjusted for any subsequent
stock split, stock dividend, subdivision or
reclassification with respect to Common Stock.
(2) The aggregate amount of cash
plus the Fair Market Value, as of the date of the
consummation of the Business Combination, of
consideration other than cash to be received per
share by holders of shares of any class or series of
outstanding Capital Stock, other than Common, shall
be at least equal to the highest of the amounts
determined pursuant to clauses (aa), (bb) and (cc)
below:
(aa) the highest per-share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by or on behalf of
the Interested Shareholder for any share of such
class or series of Capital Stock in connection with
the acquisition by the Interested Shareholder of
beneficial ownership of shares of such class or
series of Capital Stock (x) within the two-year
period immediately prior to the Announcement Date or
(y) in the transaction or series of related
transactions in which it became an Interested
Shareholder, whichever is bigger, in either case as
adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with
respect to such class or series of Capital Stock;
(bb) the Fair Market Value per share of
such class or series of Capital Stock (x) on the
Announcement Date or (y) on the Determination Date,
whichever is higher, as adjusted for any subsequent
stock split, stock dividend, subdivision or
reclassification with respect to such class or series
of Capital Stock; and
(cc) the highest preferential amount
per share, if any, to which the holders of shares of
such class or series of Capital Stock would be
entitled to in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
the affairs of the Corporation regardless of whether
the Business Combination to be consummated
constitutes such an event.
(B) Form of Consideration and Other
Requirements.
(1) The consideration to be
received by holders of a particular class or series
of outstanding Capital Stock
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<PAGE> 48
shall be in cash or in the same form as previously
has been paid by or on behalf of the Interested
Shareholder in connection with its direct or indirect
acquisition of beneficial ownership of shares of such
class or series of Capital Stock. If the
consideration so paid for shares of any class or
series of Capital Stock varies as to form, the form
of consideration of such class or series of Capital
Stock shall be in cash or the form paid by or on
behalf of the Interested Shareholder in connection
with its direct or indirect acquisition of beneficial
ownership of the largest number of shares of such
class or series of Capital Stock.
(2) After the Determination Date
and prior to the consummation of such Business
Combination:
(aa) there shall have been no
failure to declare and pay at the regular date
therefore any full regular dividends (whether of not
cumulative) payable in accordance with the terms of
any outstanding Capital Stock, other than the Common
Stock, except as approved by a majority of the
Disinterested Directors;
(bb) there shall have been no
reduction in the amount, or change in the frequency
of payment of any dividends regularly paid on the
Common Stock (except as necessary to reflect any
stock split, stock dividend, subdivision or
reclassificati on of the Common Stock), except as
approved by a majority of the Disinterested Directors;
and
(cc) there shall have been
an increase in the amount of all dividends
regularly paid on the Common Stock as necessary to
reflect any reverse stock split or reclassification
of the Common Stock, or any split, recapitalization,
reorganization or any similar transaction that has
the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to
increase the amount of such dividends is approved by
a majority of the Disinterested Directors.
(3) After the Determination Date
and prior to the consummation of such Business
Combination, such Interested Shareholder shall not
have become the beneficial owner of any additional
shares of Capital Stock except as part of or
otherwise in connection with the transaction or
series of related transactions that
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<PAGE> 49
resulted in such Interested Shareholder becoming an
Interested Shareholder.
(4) After the Determination Date
and prior to the consummation of such Business
Combination, such Interested Shareholder shall not
have received the benefit, directly or indirectly
(except proportionately as a Shareholder of the
Corporation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantages provided by the
Corporation, whether in anticipation of or in
connection with such Business Combinations or
otherwise.
(5) After the Determination Date
and prior to the consummation of such Business
Combination, such Interested Shareholder shall not
have made any major change in the Corporation's
business or capital structure without the approval of
a majority of the Disinterested Directors.
(6) A proxy or information
statement describing the proposed Business
Combination and complying with the requirements of
the Securities Act of 1934 Act (the "1934 Act") shall
be mailed to all shareholders of the Corporation at
least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or
information statement is required to be mailed
pursuant to the 1934 Act). Such proxy or information
statement shall contain, in a prominent place, any
statement as to the advisability (or inadvisability)
of the Business Combination that the Disinterested
Directors, or any of them, may choose to make and, if
deemed advisable by a majority of the Disinterested
Directors, the opinion of an investment banking firm
selected by a majority of the Disinterested Directors
as to the fairness (or not) of the terms of the
Business Combination from a financial point of view
to the holders of the outstanding shares of Capital
Stock other than the Interested Shareholder and its
Affiliates or Associates, such investment banking
firm to be paid a reasonable fee for its services by
the Corporation.
C. Certain Definitions. The following
definitions shall apply with respect to this Article Thirteen:
(i) The term "Business Combination"
shall mean:
(A) any merger or consolidation of
the Corporation or any subsidiary (as hereinafter
defined) with (1) any
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<PAGE> 50
Interested Shareholder or (2) any other company
(whether or not itself an Interested Shareholder)
that is or after such merger or consolidation would
be an Affiliate or Associate of an Interested
Shareholder; or
(B) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, or
any security arrangement investment, loan, advance,
guarantee, agreement to purchase, agreement to pay,
extension of credit, joint venture participation or
other arrangement, in one transaction of in a series
of transactions, with or for the benefit of any
Interested Shareholder or any Affiliate or Associate
of any Interested Shareholder involving any assets,
cash flow, earning power, securities or commitments
of the Corporation, any subsidiary, any Interested
Shareholder or any Affiliate or Associate of any
Interested Shareholder that, together with all other
such arrangements, has an aggregate Fair Market Value
or involves aggregate commitments equal to 10% or
more of the assets, cash flow or earning power (in
the case of transactions involving assets or
commitments other than capital stock) or 10% of the
shareholders' equity (in the case of transactions in
capital stock) of the entity in question (the
"Substantial Part"), as reflected in the most recent
fiscal year-end consolidated balance sheet of such
entity existing at the time the shareholders of the
Corporation would be required to approve or authorize
the Business Combination involving the assets, cash
flow, earning power, securities or commitments
constituting any Substantial Part; or
(C) the adoption of any plan or
proposal for the liquidation or dissolution of the
Corporation; or
(D) any issuance or
reclassification of securities (including any stock
dividend, split or reverse split or any other
distribution of securities in respect of stock), any
recapitalization of the Corporation, any merger or
consolidation of the Corporation with any of its
subsidiaries or any other transaction (whether or not
with or otherwise involving an Interested
Shareholder) that has the effect, directly or
indirectly, of increasing the proportional share of
any class or series of Capital Stock, or any
securities convertible into or rights, options or
warrants to acquire Capital Stock, or equity
securities of any subsidiary, that is beneficially
owned by any Interested Shareholder or any Affiliate
or Associate of any Interested Shareholder; or
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<PAGE> 51
(E) any agreement, arrangement or
other understanding providing for any one or more of
the actions specified in the foregoing clauses (A) to
(D).
(ii) The term "Capital Stock" shall
mean the capital stock of the Corporation authorized
to be issued from time to time under Article Four of
these Articles of Incorporation; and the term "Voting
Stock" shall mean all issued and outstanding shares
of Capital Stock entitled to vote generally in the
election of directors or that otherwise are entitled
to vote with such stock on the specific matter in
question.
(iii) The term "person" shall mean
any individual, firm, company or other entity and
shall include any group composed of any person and
any other person with whom such person or any
Affiliate or Associate of such person has any
agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding,
voting or disposing of Capital Stock.
(iv) The term "Interested Shareh shall mean
any person (other than the Corporation or any
subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit
plan of the Corporation or any subsidiary or any
trustee of or fiduciary with respect to any such plan
when acting in such capacity) who or which:
(A) is the beneficial owner,
directly or indirectly, of Voting Stock representing
15% or more of the voting power of all Voting Stock;
or
(B) is an Affiliate or Associate
of the Corporation and at any time within the
two-year period immediately prior to the date in
question was the beneficial owner, directly or
indirectly, of Voting Stock representing 15% or more
of the voting power of all Voting Stock; or
(C) is an assignee of or has
otherwise succeeded to any shares of Voting Stock
which were at any time within the two-year period
immediately prior to the date in question
beneficially owned by an Interested Shareholder. if
such assignment or succession shall have occurred in
the course of a transaction or series of transactions
not involving a public offering within the meaning of
the Securities Act of 1933.
15
<PAGE> 52
(v) A person shall be a "beneficial
owner" of, shall "beneficially own" and shall have
"beneficial ownership" of any Capital Stock (1) that
such person or any of its Affiliates or Associates
owns, directly or indirectly; (2) that such person or
any of its Affiliates or Associates has, directly or
indirectly, (x) the right to acquire (whether such
right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (y) the right to vote
pursuant to any agreement arrangement or
understanding; or (3) which is beneficially owned,
directly or indirectly, by any other person with
which such person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, bolding,
voting or disposing of any shares of Capital Stock.
For the purposes of determining whether a person is
an Interested Shareholder pursuant to paragraph (iv)
above, the number of shares of Capital Stock deemed
to be outstanding shall include shares deemed
beneficially owned by such person through application
of this paragraph (v), but shall not include any
other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(vi) The terms "Affiliate" and
"Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date
that this Article Thirteen is approved by the Board
of Directors of the Corporation (the term
"registrant" in Rule 12b-2 meaning in this case the
Corporation).
(vii) The term "subsidiary" means
with reference to any person, any corporation or
other entity of which a majority of the voting power
of equity securities or majority of the equity
interest is beneficially owned, directly or
indirectly, by such person, or otherwise controlled
by such person; provided, however, that for the
purposes of the definition of Interested Shareholder
set forth in paragraph (iv) above, the term
"subsidiary" shall mean only a corporation or other
entity of which a majority of each class of equity
securities is beneficially owned by the Corporation.
(viii) "Common Stock" shall mean the
common stock, par value $0.10 per share, of the
Corporation, except that "Common Stock" when used
with reference to any person other than
16
<PAGE> 53
the Corporation shall mean the capital stock of such
person with the greatest voting power, or the equity
securities or other equity interest having power to
control or direct the management of such person.
(ix) The term "Disinterested
Director," with respect to any particular Business
Combination with, or proposed by or on behalf of, any
Interested Stockholder or any Affiliate or Associate
of any Interested Shareholder or any person who
thereafter would be an Affiliate or Associate of any
Interested Shareholder, means (1) any member of the
Board of Directors of the corporation, while such
person is a member of the Board, who is not such
Interested Shareholder, or an Affiliate or Associate
of such Interested Shareholder, or a representative
of such Interested Shareholder or of any such
Affiliate or Associate, and was a member of the Board
prior to the Effective Time, or (2) any person who
subsequently becomes a member of the Board, while
such person is a member of the Board, who is not such
Interested Shareholder, or an Affiliate or Associate
of such Interested Shareholder, or a representative
of such Interested Shareholder or of any such
Affiliate or Associate, if such person's nomination
for election or election to the Board is recommended
or approved by a majority of the Disinterested
Directors then in office.
(x) The term "Fair Market Value"
means (1) in the case of cash, the amount of such
cash; (2) in the case of stock, the highest closing
sale price during the 30-day period immediately
preceding the date in question of a share of such
stock on the Composite Tape for New York Stock
Exchange-listed stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such
exchange, on the principal United States securities
exchange registered under the 1934 Act, on which such
stock is listed, or, if such stock is not listed on
any such exchange, the highest closing sale price
with respect to a share of such stock during the
30-day period immediately preceding the date in
question as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
or any similar system then in use, or if no such sale
prices are available, the highest of the means
between the last reported bid and asked price with
respect to a share of such stock on each day during
the 30-day period immediately preceding the date in
question as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System,
or if not so reported, as determined by a member firm
of the National Association of Securities Dealers,
Inc. selected by a majority of the Disinterested
Directors, or if no such bid and asked prices are
17
<PAGE> 54
available, the fair market value on the date in
question of a share of such stock as determined in
good faith by a majority of the Disinterested
Directors; and (3) in the case of property other than
cash or stock, the fair market value of such property
on the date in question as determined in good faith
by a majority of the Disinterested Directors.
(xi) In the event of any Business
Combination in which the Corporation survives, the
phrase "consideration other than cash to be received"
as used in paragraphs (1) and (2) of Section
(b)(ii)(A) of this Article Thirteen shall include the
shares of Common Stock and/or the shares of any other
class cr series of Capital Stock retained by the
holders of such shares.
(xii) The term "Announcement Date"
means the date on which the proposed Business
Combination is first publicly announced, disclosed or
reported.
(xiii) The term "Determination Date"
means with respect to any Interested Shareholder, the
date on which such Interested Shareholder became an
interested Shareholder.
(xiv) "Business Day" shall mean any
day other than a Saturday, Sunday or a day on which
banking institutions in the State of Texas are
authorized obligated by law or executive order to
close.
D. Powers of Directors. For the
purpose of this Article Thirteen, a majority of the
Disinterested Directors (whether or not any vacancies
then exist on the Board) shall exercise the powers of
the Disinterested Directors hereunder, and shall have
the power and duty to determine in good faith, on the
basis of information known to them after reasonable
inquiry, any questions arising under this Article
Thirteen, including, without limitation, (1) whether
a person is an Interested Shareholder, (2) the number
of shares of Capital Stock beneficially owned by any
person, (3) whether a person is an Affiliate or
Associate of another, (4) whether a Business
Combination is with, or proposed by or on behalf of,
an Interested Shareholder or an Affiliate or
Associate of an Interested Shareholder or a person
who thereafter would be an Interested Shareholder or
an Affiliate or Associate of an Interested
Shareholder, and (5) whether any transaction
specified in paragraph (i)(B) of Section (c) of this
Article Thirteen meets the Substantial Part test set
forth therein. Any such
18
<PAGE> 55
determination made in good faith shall be binding and
conclusive on all parties.
E. No Effect On Fiduciary Obligations.
(i) Nothing contained in this
Article Thirteen shall be construed to relieve any
Interested Shareholder from any fiduciary obligation
imposed by law.
(ii) The fact that any Business
Combination complies with the provisions of Section
(b) of this Article Thirteen shall not be construed
to impose any fiduciary duty, obligation or
responsibility on the Board of Directors, or any
member thereof, to approve such Business Combination
or recommend its adoption or approval to the
shareholders of the Corporation, nor shall such
compliance limit, prohibit or otherwise restrict in
any manner the Board of Directors, or any member
thereof, with respect to evaluations of or actions
and responses taken with respect to such Business
Combination."
19
<PAGE> 56
[ ] Please mark your votes SHARES IN YOUR NAME
as in this example.
FOR WITHHELD
1. Election of Directors (see reverse) [ ] [ ]
2. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for the [ ] [ ] [ ]
classification of the Board of Directors
into three classes of directors
with staggered terms.
3. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for (a) a [ ] [ ] [ ]
limitation on who may call special meetings
of shareholders, and (b) a requirement that
shareholders notify the Company of a
nomination prior to any meeting.
4. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for a minimum [ ] [ ] [ ]
price and other matters, or a higher voting
requirement, in connection with certain
business combinations.
5. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for preferred [ ] [ ] [ ]
stock in the Company's authorized capital stock.
6. Ratification of the appointment of Coopers FOR AGAINST ABSTAIN
& Lybrand L.L.P. as independent auditors for [ ] [ ] [ ]
the year 1997.
7. In their discretion the proxies are FOR AGAINST ABSTAIN
authourized to vote upon such other matters [ ] [ ] [ ]
as may come before the meeting or any
adjournment thereof.
For, except vote withheld from the
following nominee(s):
- ----------------------------
Change
of [ ]
Address
SIGNATURES(S) DATE
- ---------------------- ---------------------
SIGNATURES(S) DATE
- ---------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE> 57
CASH AMERICA INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING APRIL 22, 1997
The undersigned hereby constitutes and appoints Jack R. Daugherty, Daniel R.
Feehan, and Hugh A. Simpson, and each of them, my true and lawful attorneys and
proxies, with power of substitution, to represent the undersigned and vote at
the annual meeting of shareholders of Cash America International, Inc. (the
"Company") to be held in Fort Worth, Texas on April 22, 1997, and at any
adjournment thereof, all of the stock of the company standing in my name as of
the record date of March 4, 1997 on all matters coming before said meeting.
Election of Directors, Nominees: (change of address)
Jack R. Daugherty, A.R. Dike,
Daniel R. Feehan, James H. Graves, -----------------------
B.D. Hunter, Timothy J. McKibben,
Alfred M. Micallef, Carl P. Motheral, -----------------------
Samuel W. Rizzo, Rosalin Rogers
-----------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
