U.S. PAWN, INC.
7215 Lowell Boulevard
Westminster, Colorado 80030
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1999
To the shareholders of U.S. Pawn, Inc.:
The annual meeting ("Annual Meeting") of the shareholders of U.S. Pawn,
Inc. (the "Company") will be held at the law offices of Brownstein, Hyatt,
Farber & Strickland, Suite 2200, 410 17th Street, Denver, Colorado 80202, at
9:30 A.M. on June 18, 1999, or at any adjournment or postponement thereof, for
the following purposes:
(1) To elect two (2) directors of the Company;
(2) To transact such other business as may properly come before the Annual
Meeting.
Details relating to the above matters are set forth in the attached Proxy
Statement. All shareholders of record of the Company as of the close of business
on April 30, 1999 will be entitled to notice of and to vote at the Annual
Meeting or at any adjournment or postponement thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IF YOU
DO NOT PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY. A REPLY CARD IS ENCLOSED FOR YOUR
CONVENIENCE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IF YOU ATTEND THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald A. Mitola
Secretary
May 3, 1999
<PAGE>
PROXY STATEMENT
U.S. Pawn, Inc.
7215 Lowell Boulevard
Westminster, Colorado 80030
Telephone: (303) 657-3550
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of U.S. Pawn, Inc. (the "Company"), a Colorado
corporation, of no par value common stock ("common stock" or "shares") to be
voted at the Annual Meeting of Shareholders of the Company ("Annual Meeting") to
be held at 9:30 A.M. on June 18, 1999, or at any adjournment or postponement
thereof. The Company anticipates that this Proxy Statement and the accompanying
form of proxy will be first mailed or given to all shareholders of the Company
on or about May 3, 1999. The shares represented by all proxies that are properly
executed and submitted will be voted at the meeting in accordance with the
instructions indicated thereon. Unless otherwise directed, votes will be cast
for the election of the two nominees for directors hereinafter named. The
holders of a majority of the shares represented at the Annual Meeting in person
or by proxy will be required to elect the nominees for directors hereinafter
named and to approve all other proposed matters.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person,
at the Annual Meeting, that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and the Company may reimburse such
persons for reasonable out of pocket expenses incurred by them in so doing.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The close of business on April 30, 1999, has been fixed by the Board of
Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At such
date, there were issued 3,685,410 shares of the Company's common stock, each
share entitling the holder to one vote on each matter which may come before the
Annual Meeting. Cumulative voting is not permitted. A majority of the issued and
outstanding shares of the Company's common stock entitled to vote, represented
at the Annual Meeting in person or by proxy, constitutes a quorum at any
shareholders' meeting.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the holdings of common stock, by each person
who, as of the date hereof, holds of record or is known by the Company to hold
beneficially or of record, more that 5% of the Company's common stock, by each
director, or director nominee and by all directors and officers as a group.
Shareholdings
Name and Address Number Percent
- ---------------- ------ -------
Charles C. Van Gundy(1) 146,750 3.7%
7215 Lowell Blvd.
Westminster, CO 80030
Gary A. Agron(2) 26,500 0.7%
5445 DTC Parkway, Suite 520
Englewood, CO 80111
Jack Skidell(3) 93,969 2.4%
500 N. Broadway #159
Jericho, NY 11753
Ross L. Murphy(4) 12,500 0.3%
3923 S. McClintock Drive #410
Tempe, AZ 85282
Ronald A. Mitola(5) 60,000 1.5%
7215 Lowell Blvd.
Westminster, CO 80030
Rodney W. Smith 356,225 8.9%
P.O. Box 7022
Tyler, TX 75711
All officers and directors
as a group(five in number)(1)(2)(3)(4)(5) 339,719 8.5%
(1) Includes currently exercisable stock options to purchase 1,250 shares at
$5.13 per share until January 20, 2002, 20,000 shares at $2.06 per share
until March 24, 2005, 8,000 shares at $1.70 per share until December 28,
2005, 12,500 shares at $4.38 per share until January 17, 2007, and 75,000
shares at $3.24 per share until October 29, 2007.
(2) Includes currently exercisable stock options to purchase 12,500 shares at
$2.00 per share until October 23, 2000 and 8,000 shares at $1.70 per share
until December 28, 2005.
(3) Includes currently exercisable stock options to purchase 4,500 shares at
$4.00 per share until December 31, 1999 and 12,500 shares at $3.24 per
share until October 29, 2007.
(4) Includes currently exercisable stock options to purchase 12,500 shares at
$2.39 per share until August 13, 2008.
(5) Includes currently exercisable stock options to purchase 20,000 shares at
$2.06 per share until March 24, 2005 and 40,000 shares at $3.50 per share
until March 4, 2008.
2
<PAGE>
ELECTION OF DIRECTORS
The bylaws of the Company provide that the number of directors will be
determined by the Board of Directors (the "Board"), but shall consist of at
least one director and no more than nine directors. The directors are elected by
the shareholders of the Company. At each annual meeting of the shareholders of
the Company successors of the class of directors whose term expires at the
annual meeting will be elected for a three-year term. Any director elected to
fill a vacancy or newly created directorship resulting from an increase in the
authorized number of directors shall hold office for a term that shall coincide
with the remaining term of that class. In no case will a decrease in the number
of directors shorten the term of any incumbent director. Any vacancy on the
Board howsoever resulting, may be filled by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining director. The Board
of the Company consists of four directors divided into three classes.
At the Annual Meeting, the shareholders will elect two (2) Class II
directors of the Company. Gary A. Agron has served the Company as a director
since 1989. On August 13, 1998, Ross L. Murphy was appointed to fill a Class II
vacancy. If elected, each will hold office until the annual meeting to be held
in the year 2002 and thereafter until his successor is elected and has
qualified. In the absence of instructions to the contrary, the person named in
the accompanying proxy will vote in favor of all persons named above as
directors of the Company. All nominees have consented to be named herein and to
serve if elected.
It is not anticipated that any nominee will become unable or unwilling to
accept nomination or election, but if such should occur, the person named in the
proxy intends to vote for the election in his stead of such person as the Board
of Directors of the Company may recommend.
The following table sets forth certain information as to each nominee's
age, positions with the Company, and the year when the nominee first became an
officer or director of the Company.
Officer or
Director
Name Age Office Since
- ---- --- ------ -----
Gary A. Agron(1) 54 Director 1989
Ross L. Murphy(1) 48 Director 1998
- ----------
(1) Class II director
Gary A. Agron earned his Bachelor of Arts degree from the University of
Colorado in 1966 and his Juris Doctorate degree from the University of Colorado
School of Law in 1969. Since 1969, he has been engaged in the private practice
of law in Denver, Colorado, and since 1974, has specialized exclusively in
securities law. Mr. Agron has acted as the Company's securities counsel since
1988. He is a director of Xedar Corporation, a publicly-held high technology
research and development firm and Meadow Valley Corporation, a publicly-held
heavy construction contractor. He devotes such time as is necessary to the
Company's affairs.
Ross L. Murphy has been the Chief Executive Officer and Chairman of the
Board of Directors of BancPro Inc., an OTC Bulletin Board specialty lender
company in Tempe, Arizona since 1994. Mr. Murphy earned his Bachelor of Business
Administration Degree from the University of Texas in 1973. He owned and led a
chain of retail furniture stores for 16 years. Mr. Murphy later acquired Haymco
Marketing, which he successfully ran for three years and sold. Mr. Murphy is
currently an investment banker with Eaton Mews in Tempe, Arizona and is
responsible for raising capital for BancPro, Inc. He devotes such time as is
necessary to the Company's affairs.
3
<PAGE>
DIRECTORS NOT STANDING FOR ELECTION
The members of the Board of Directors who are not standing for election at
the Annual Meeting are set forth below:
Officer or
Director
Name Age Office Since
- ---- --- ------ -----
Charles C. Van Gundy(2) 46 President, Chief Executive 1994
Officer, Chief Financial Officer,
and Director
Jack Skidell(2) 56 Director 1997
- ------------
(2) Class III director
Charles C. Van Gundy has been employed by the Company since January 1992.
His positions within the Company have included Vice President of Accounting,
Vice President and Chief Financial Officer, and Secretary. Mr. Van Gundy
currently serves as the Company's President, Chief Executive Officer, and Chief
Financial Officer and is responsible for the overall operations of the Company.
Mr. Van Gundy earned his Bachelor of Science degree in accounting and finance
from Metropolitan State College of Denver in 1979, and subsequently studied law
at the University of San Diego School of Law until 1981. From 1982 to 1992 he
served as an accounting officer for various mutual fund, high technology and
economic redevelopment organizations. Since August of 1996, he has also been
director and officer of Medical Management Systems, Inc., a publicly-held
company currently seeking acquisition opportunities. From November 1995 until
May 1997, Mr. Van Gundy was a director and officer of Lahaina Acquisitions,
Inc., a publicly-held company seeking acquisition opportunities. He devotes
substantially all of his time to the Company's affairs.
Jack Skidell has been President and sole shareholder of Colin Winthrop &
Co., Inc., a New York based broker-dealer, registered under Section 15 of the
Securities Exchange Act of 1934 since 1990. In addition, Mr. Skidell was
President of Shelter Rock Securities Corporation, a broker-dealer registered
under Section 15 of the Securities Exchange Act of 1934 which voluntarily ceased
to do business as a broker-dealer in 1990. He devotes such time as is necessary
to the Company's affairs.
Directors' Fees and Compensation
Each non-employee director receives a fee of $1,000 for each meeting of the
Board attended and $500 for each meeting of a committee of the Board attended.
In addition, each director is granted an option to purchase 12,500 common shares
of the Company at the fair market value of the underlying securities on the date
of grant at the time each director initially joins the Board.
Board Committees
The Board has two standing committees. The Compensation Committee reviews
compensation paid to management and recommends to the Board appropriate
executive compensation. The Audit Committee reviews internal controls,
recommends to the Board the engagement of the Company's independent certified
public accountants, reviews with such accountants the plan for and results of
their examination of the consolidated financial statements of the Company, and
determines the independence of such accountants. Messrs. Agron, Murphy and
Skidell serve as members of the Compensation Committee. Messrs. Van Gundy, Agron
and Murphy serve as members of the Audit Committee.
4
<PAGE>
EXECUTIVE OFFICERS
The following table lists the executive officers of the Company as of the
date hereof and the capacities in which they serve.
Name Age Position
---- --- --------
Charles C. Van Gundy 46 President, Chief Executive Officer
Chief Financial Officer
Ronald A. Mitola 44 Vice President of Operations
Secretary
Biographical information with respect to Mr. Van Gundy was previously
provided under "Directors not Standing for Election".
Ronald A. Mitola has been employed by the Company since May of 1992 and has
over ten years experience in the pawn industry. In July of 1994, he became
General Manager responsible for the day to day operations of the Company's store
locations. In January of 1997, he was promoted to Vice President of Operations
and was elected to the office of Secretary in November of 1997. He devotes
substantially all of his time to the Company's affairs.
Compliance With Section 16(a) of the Securities Exchange Act of 1934
The Company's executive officers and directors are required to file under
the Securities Exchange Act of 1934 reports of ownership and changes of
ownership in securities of the Company with the Securities and Exchange
Commission. Based solely upon copies of such reports and information provided to
the Company by individual executive officers and directors, the Company believes
that during the year ended December 31, 1998 all executive officers and
directors complied with such reporting requirements, except for Mr. Murphy who
filed his Form 3 seven months late.
COMPENSATION
Executive Remuneration
The following tables set forth compensation with respect to the chief
executive officer of the Company for the fiscal years indicated in each table:
SUMMARY COMPENSATION TABLE
Long-Term
Fiscal Other Compensation
Name and Position Year Salary Compensation Stock Options(#)
- ----------------- ---- ------ ------------ ----------------
Charles C. Van Gundy (1) 1998 $150,000 -0- -0-
President, Chief Executive 1997 125,000 -0- 87,500
Officer, Chief Financial Oficer 1996 86,000 -0- -0-
and Secretary
Melvin Wedgle (2) 1997 $178,500 -0- -0-
President and 1996 157,000 -0- -0-
Chief Executive Officer
(1) Mr. Van Gundy was elected to the office of President and Chief Executive
Officer on October 29, 1997. Prior to October 29, 1997, Mr. Van Gundy
served as the Company's Chief Financial Officer and Secretary.
(2) Mr. Wedgle resigned from the office of President and Chief Executive
Officer on October 29, 1997.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
% of Value at Assumed Annual
Total Exercise Rates of Stock Price
Granted Price Appreciation for Option
Options in Fiscal per Share Expiration Term
Name Granted Year ($/Sh) Date 5%($) 10%($)
- ---- ------- ---- ------ ---- ----- ------
Charles C. -0- - - - - -
Van Gundy
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Value of Unexercised
Number of Unexercised Options In-the-Money Options at
Shares Acquired At Fiscal Year End Fiscal Year End(2)
Name on Exercise(#) Value Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles C.
Van Gundy -0- $ -0- 116,750 -0- $ -0- $ -0-
(1) Represents the difference, if any, between the market value of the
Company's common stock at exercise and the exercise price of the options.
(2) Represents the difference, if any, between the market value of the
Company's common stock on December 31, 1998 and the exercise price of the
options.
</TABLE>
Employment Agreements, Termination of Employment and Change-in-Control
Arrangements
On October 29, 1997, the Company accepted the resignations of Daniel B.
Rudden, Stanley M. Edelstein, Larry M. Snyder and Melvin Wedgle as members of
its Board of Directors (the "Resigning Directors") pursuant to an agreement
between the Resigning Directors and certain shareholders of the Company. The
Company also accepted the resignations of Melvin Wedgle as Chief Executive
Officer and President and Jack Simon as Secretary and Chief Financial Officer.
Gary A. Agron, a member of the Board since 1989 remained as a director. The
Company appointed Charles C. Van Gundy as a director, President, Chief Executive
Officer and Chief Financial Officer, and Mark Honigsfeld and Jack Skidell as
directors. Mr. Van Gundy, associated with the Company since 1992, served the
Company as its Chief Financial Officer, Secretary and director from October 1994
until his resignation in August of 1997. On August 6, 1998, Mr. Honigsfeld
resigned as a director. On August 13, 1998, Ross L. Murphy was appointed as a
director to fill the vacancy created by Mr. Honigsfeld's resignation.
On October 29, 1997, the Company agreed to extend until October 29, 1999
the exercisability of options to purchase a total of 69,500 common shares of the
Company granted under the Company's 1991 and 1995 Directors' Stock Option Plans
and vested in the Resigning Directors. The exercise prices of such options range
from $1.70 per share to $4.38 per share.
Also on October 29, 1997, the Company entered into an agreement with Melvin
Wedgle wherein he agreed to resign as President and Chief Executive Officer of
the Company (the "Resignation Agreement"). Under the terms of the Resignation
Agreement, the Company; (i) transferred ownership of a Company vehicle and
certain office furniture to Mr. Wedgle; (ii) agreed to purchase certain real
property which the Company had been leasing from Mr. Wedgle for a pawn shop
location valued at $332,000 in consideration of the Company assuming a $224,000
mortgage and forgiving all promissory notes and loans which Mr. Wedgle owed to
the Company in the amount of $108,000; and (iii) redeem for cash options to
purchase 223,250 common shares of the Company exercisable by Mr. Wedgle for
$265,360 which represented a $3.00 per share value less the exercise price of
such options. Mr. Wedgle agreed not to compete either directly or indirectly
with the Company in the pawn industry for a period of two years from October 29,
1997.
6
<PAGE>
The Company and Mr. Van Gundy have entered into an employment agreement,
the term of which runs through December 31, 2000. Provisions of the agreement
include: (i) an annual base salary of $150,000; (ii) the right to receive
incentive compensation during each fiscal year covered by the agreement up to a
maximum of 50% of annual base salary and as determined by criteria set by the
Board; (iii) an option to purchase 75,000 common shares of the Company at an
exercise price of $3.24 per share, which in the event of a change in control of
the Company or constructive termination, Mr. Van Gundy could cause the Company
to repurchase at a price equal to the difference between the exercise price and
the closing price of the Company's common stock on the effective date of
termination or to extend the exercisability of the option under other
circumstances; (iv) the right to earn up to 100,000 and 75,000 options to
purchase common shares of the Company based on performance criteria set by the
Board for fiscal years 1999 and 2000, respectively, which, if vested, in the
event of a change in control of the Company or constructive termination, Mr. Van
Gundy could cause the Company to repurchase at a price equal to the difference
between the exercise price and the closing price of the Company's common stock
on the effective date of termination or to extend the exercisability of the
option under other circumstances; (v) continuation of salary payments for the
greater of the remainder of the term of the agreement or for one year and a lump
sum payment equal to 50% of annual base salary in the event of termination
without cause by the Company as defined in the agreement; (vi) continuation of
salary payments equal to one year's salary in the event of a change in control
of the Company; and (vii) continuation of salary payments during periods of
disability as defined in the agreement.
The Company and Mr. Mitola have entered into an employment agreement, the
term of which runs through December 31, 2000. Provisions of the agreement
include: (i) an annual base salary of $75,000; (ii) the right to receive
incentive compensation during each fiscal year covered by the agreement up to a
maximum of 50% of annual base salary and as determined by criteria set by the
Board; (iii) an option to purchase 40,000 common shares of the Company at an
exercise price of $3.50 per share, which in the event of a change in control of
the Company or constructive termination, Mr. Mitola could cause the Company to
repurchase at a price equal to the difference between the exercise price and the
closing price of the Company's common stock on the effective date of termination
or to extend the exercisability of the option under other circumstances; (iv)
the right to earn up to 30,000 options to purchase common shares of the Company
based on performance criteria set by the Board for fiscal years 1999 and 2000,
which, if vested, in the event of a change in control of the Company or
constructive termination, Mr. Mitola could cause the Company to repurchase at a
price equal to the difference between the exercise price and the closing price
of the Company's common stock on the effective date of termination or to extend
the exercisability of the option under other circumstances; (v) continuation of
salary payments not to exceed more than an aggregate amount equal to one year's
salary in the event of termination without cause by the Company as defined in
the agreement or in the event of a change in control of the Company; and (vi)
continuation of salary payments during periods of disability as defined in the
agreement.
Stock Options and Warrants
On December 14, 1988, the Company's shareholders approved an Incentive
Stock Option Plan (the "Plan") for the benefit of the Company's employees. The
Company believes that the Plan provides an appropriate incentive to certain
employees to maintain a continued interest in the operation and future of the
Company. The terms of the Plan provide that the Company is authorized to grant
options to purchase shares of common stock to selected employees including
officers and directors upon the unanimous consent of all of the Company's
directors. The Company will select the optionees and determine the terms and
conditions of the stock option grant. However, the purchase price to be paid by
optionees for the option shares will not be less than the fair market value of
the option shares on the date of grant. Employees owning more than 10% of the
outstanding shares of any class of securities of the Company must be granted
options at a purchase price of at least 110% of the fair market value of the
shares on the date of the grant. No option can be exercised for a period of
twelve months following the date of grant, and the employee must exercise
options during employment or within 30 days of termination of employment. The
Company has registered the shares underlying the options under the Securities
Act of 1933, as amended, so that the shares will be free trading when issued.
The options are granted for a term of six years, and during such term, may be
exercised 33.3% after one year and an additional 33.3% during each of the
succeeding two years. A total of 125,000 shares of the Company's authorized but
unissued common stock had been reserved for possible issuance pursuant to the
Plan. On March 25, 1995, the Company's Board of Directors increased the number
of shares of the Company's authorized but unissued common stock reserved for
possible issuance pursuant to the Plan to 275,000 shares. On July 25, 1995, the
Company registered the increase in shares reserved for possible issuance
pursuant to the Plan.
7
<PAGE>
To date, options totaling 358,040 shares have been issued under the Plan,
exercisable at $0.68 to $5.12 per share, options totaling 106,999 shares have
been exercised at $0.68 to $2.56 per share and options totaling 115,999 have
expired, leaving options totaling 135,042 shares outstanding.
On July 21, 1995, the Company established the 1995 Directors' Stock Option
Plan (the "Directors' Plan"). The Directors' Plan was approved by the
shareholders on June 22, 1996. The Company believes that the Directors' Plan
will enhance stockholder investment by attracting, retaining and motivating
directors of the Company and to encourage stock ownership by such directors by
providing a means to acquire a proprietary interest in the Company's success. On
July 21, 1995, each director then serving was granted options to purchase up to
15,000 shares of the Company's common stock in equal installments over a three
year period beginning September 30, 1995 at prices not less than the fair market
value of the option shares on the date of grant and exercisable for no more than
ten years from date of grant. Any director owning more than 10% of the total
combined voting power of all classes of stock of the Company must be granted
options at a purchase price of a least 110% of the fair value of the option
shares on the date of grant. Each installment granted to each director was
subject to further limitation based upon the Company achieving certain
percentages of after tax net income to total revenues for the three fiscal years
ending September 30, 1995 and December 31, 1996 and 1997. For the years ended
September 30, 1995 and December 31, 1996 and 1997, each director participating
in this arrangement as been issued options to purchase a total of 8,000 shares
of the Company's Common Stock at $1.70 per share exercisable any time until
December 28, 2005. On October 29, 1997, Messrs. Honigsfeld and Skidell were
granted an option to purchase 12,500 common shares of the Company exercisable at
$3.24 per share until October 29, 2007 in consideration of their appointment to
the Board. Effective August 13, 1998, Mr. Murphy was granted an option to
purchase 12,500 common shares of the Company exercisable at $2.39 per share
until August 13, 2008. To date, options totaling 127,500 shares have been issued
under the Directors' Plan, exercisable at $1.70 to $3.24 per share, options
totaling 24,000 have been exercised at $1.70 per share and options totaling
54,500 shares have expired, leaving options totaling 49,000 shares outstanding.
On January 27, 1996, the Company adopted the 1996 Consultant's Stock Option
Plan (the "Consultant Plan") under which 500,000 shares of the Company's common
stock have been reserved for issuance at prices not less than 75% of the fair
market value of the option stock on the date of grant. On February 7, 1996, the
Company registered all shares reserved under the Consultant Plan. The Company
believes that the Consultant Plan will enhance stockholder investment by
attracting, retaining and motivating consultants and employees of the Company
and encouraging stock ownership by such consultants and employees by providing a
means to acquire a proprietary interest in the Company's success. To date,
options totaling 375,000 shares have been issued under the Consultant's Plan,
exercisable at $1.50 to $3.50 per share, options totaling 300,000 shares have
been exercised at $1.50 to $3.50 per share, leaving options totaling 75,000
shares outstanding.
No retirement, pension, profit sharing or other similar program has been
adopted by the Company. Except as stated above, no warrants or options have been
granted to any officer, director or other employee of the Company. In the
future, the Company may offer stock bonus and profit sharing or pension plans to
the employees or executive officers of the Company in such amounts and upon such
conditions as the Board of Directors may determine in its sole discretion.
CERTAIN TRANSACTIONS
The Company leased one of its pawnshop locations from Melvin Wedgle, its
former President, at a monthly rental of $6,600 until November 1, 1997 at which
time the Company purchased the real property under the terms of a change in
control arrangement previously herein described . The Company believes the
rental rate was as fair to the Company as rates which could have been obtained
in arm's length transactions with unaffiliated third parties.
The Company was indebted at December 31, 1998 in the aggregate amount of
approximately $136,000 for loans advanced to the Company by shareholders and/or
employees. These loans are unsecured, bear interest between 10% and 15% per
annum, were used for working capital and are due on dates ranging from December
1999 to February 2000. The terms of the loans are believed to be as fair as
terms which could have been obtained in arm's length transactions with
unaffiliated third parties.
8
<PAGE>
Mr. Agron, a director of the Company, performs legal services on the
Company's behalf. Mr. Agron received legal fees from the Company totaling
approximately $4,000 during 1998.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ehrhardt, Keefe, Steiner & Hottman, P.C., Certified Public Accountants and
Consultants, conducted the audit of the Company's financial statements for the
years ended December 31, 1998 and 1997. The firm performed no accounting
services for the Company other than the audit of its financial statements. It is
the Company's understanding that Ehrhardt, Keefe, Steiner & Hottman, P.C. is
obligated to maintain audit independence as prescribed by the accounting
profession and certain requirements of the Securities and Exchange Commission.
As a result, the directors of the Company do not specifically approve, in
advance, non-audit services provided by a firm, nor do they consider the effect,
if any, of such services on audit independence.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT NEXT ANNUAL MEETING OF SHAREHOLDERS
Any shareholder of record of the Company who desires to submit a proper
proposal for inclusion in the proxy materials relating to the next annual
meeting of shareholders must do so in writing and it must be received at the
Company's principal executive offices prior to the Company's fiscal year end.
The proponent must be a record or beneficial shareholder entitled to vote at the
next annual meeting of shareholders on the proposal and must continue to own the
securities through the date on which the meeting is held.
OTHER BUSINESS
The management of the Company is not aware of any other matters which are
to be presented to the Annual Meeting, nor has it been advised that other
persons will present any such matters. However, if other matters properly come
before the meeting, the individual named in the accompanying proxy shall vote on
such matters in accordance with his best judgement.
The above notice and Proxy Statement are sent by order of the Board of
Directors.
Ronald A. Mitola
Secretary
May 3, 1999
9
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
U.S. PAWN, INC.
TO BE HELD JUNE 18, 1999
The undersigned hereby appoints Charles C. Van Gundy as the lawful agent
and Proxy of the undersigned (with all the powers the undersigned would possess
if personally present, including full power of substitution), and hereby
authorizes him to represent and to vote, as designated below, all the shares of
common stock of U.S. Pawn, Inc. held of record by the undersigned on April 30,
1999, at the Annual Meeting of Shareholders to held June 18, 1999, or any
adjournment or postponement thereof.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below ______
contrary below) ______
Gary A. Agron ______
Ross L. Murphy ______
INSTRUCTIONS: To withhold authority to vote for any one nominee, mark the
space after the nominee's name as listed above.
2. In his discretion, the Proxy is authorized to vote upon any matters which
may properly come before the Annual Meeting, or any adjournment or postponement
thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned stockholder. WHERE NO CHOICE IS
SPECIFIED BY THE STOCKHOLDER THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS PROPOSED IN ITEM (1) ABOVE.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that said Proxy may do by virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _______________ _________________________________
Signature
PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY
CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. _________________________________
Signature, if held jointly
PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OF
SHAREHOLDERS. _____
