<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
NATIONAL RECORD MART, INC.
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(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
NATIONAL RECORD MART, INC.
507 FOREST AVENUE
CARNEGIE, PENNSYLVANIA 15106
SEPTEMBER 14, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") of National Record Mart, Inc. (the
"Company").
Place: James H. Reed Building
435 Sixth Avenue, Ninth Floor
Pittsburgh, Pennsylvania 15219
Date: Thursday, November 4, 1999
Time: 9:30 a.m. local time
The Notice of the Annual Meeting and Proxy Statement accompany
this letter. The Proxy Statement describes the business to be transacted at the
Annual Meeting and provides other information concerning the Company. The
principal business to be transacted at the Annual Meeting will be (i) election
of four directors, (ii) ratification of the grant of stock options to William A.
Teitelbaum in June 1996 and July 1997, (iii) ratification of the appointment of
Ernst & Young LLP as independent auditors of the Company for the fiscal year
ending March 25, 2000 and (iv) such other business as may properly come before
the Annual Meeting and any adjournments thereof. The board of directors of the
Company (the "Board of Directors") recommends that stockholders vote for (i) the
election of the nominated directors, (ii) ratification of the grant of stock
options to William A. Teitelbaum in June 1996 and July 1997 and (iii) the
ratification of the appointment of Ernst & Young LLP.
We know many of our stockholders will be unable to attend the
Annual Meeting. Proxies are therefore solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting. Whether or not you plan to attend the Annual Meeting, we hope you will
have your stock represented by marking, signing, dating and returning your proxy
card in the enclosed envelope as soon as possible. Your stock will be voted in
accordance with the instructions you have given in your proxy card. You may, of
course, attend the Annual Meeting and vote in person even if you have previously
returned your proxy card.
You may have previously received materials relating to the
Annual Meeting of Stockholders originally scheduled for September 23, 1999. The
Company was recently advised by its printing and duplicating contractor that,
due to the contractor's error, the meeting and Proxy Statement for the
originally scheduled meeting omitted the pages containing the Company's audited
historical financial information.
In order to provide sufficient time to recirculate this
information and to allow stockholders a full opportunity to review the
information prior to returning proxies for the Annual Meeting, the Board of
Directors determined to reschedule the Annual Meeting to Thursday, November 4,
1999. The Board of Directors established a record date of September 8, 1999 for
such a meeting. Any proxy card which you completed and returned for the
September 23, 1999 meeting will not be effective
<PAGE> 3
to cast your vote at the rescheduled meeting. In order to vote at the Annual
Meeting, you must complete and return the proxy card included herein. We urge
you to do so.
Sincerely,
William A. Teitelbaum
President, Chief Executive Officer and
Chairman of the Board
- --------------------------------------------------------------------------------
IMPORTANT
A PROXY CARD IS ENCLOSED HEREWITH. ALL STOCKHOLDERS ARE URGED TO COMPLETE AND
MAIL THE PROXY CARD PROMPTLY. THE ENCLOSED ENVELOPE FOR RETURN OF THE PROXY CARD
REQUIRES NO POSTAGE. ANY STOCKHOLDER ATTENDING THE ANNUAL MEETING MAY PERSONALLY
VOTE ON ALL MATTERS THAT ARE CONSIDERED IN WHICH EVENT THE SIGNED PROXY WILL BE
REVOKED.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
- --------------------------------------------------------------------------------
<PAGE> 4
[NATIONAL RECORD MART LOGO]
NATIONAL RECORD MART, INC.
507 FOREST AVENUE
CARNEGIE, PENNSYLVANIA 15106
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS--NOVEMBER 4, 1999
Notice is hereby given of the Annual Meeting of Stockholders
of National Record Mart, Inc. (the "Company"), which will be held at the James
H. Reed Building, 435 Sixth Avenue, 9th Floor, Pittsburgh, Pennsylvania, at 9:30
a.m. (local time) on Thursday, November 4, 1999, for the following purposes:
(1) To elect four directors of the Company to serve until the next
annual meeting and until their successors are elected and
qualified;
(2) To ratify the grant of stock options to William A. Teitelbaum
in June 1996 and July 1997;
(3) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending March 25,
2000; and
(4) To transact such other business as may properly come before
the Annual Meeting and any adjournments thereof.
Only stockholders of record at the close of business on
September 8, 1999 are entitled to notice of and to vote at this Annual Meeting
and any adjournments thereof. A complete list of the stockholders entitled to
vote will be available during the period ten (10) days prior to the date of the
Annual Meeting for examination by any stockholder, for any purpose appropriate
to the Annual Meeting, during ordinary business hours at 507 Forest Avenue,
Carnegie, Pennsylvania.
Your vote is important. A proxy and return envelope are
enclosed for your convenience. Please complete and return your proxy card as
promptly as possible.
By Order of the Board of Directors,
JAMES HARDT
Pittsburgh, PA Secretary
September 14, 1999
IMPORTANT: YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
SIGN AND RETURN THE ENCLOSED PROXY. A RETURN ENVELOPE REQUIRING NO
POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR
CONVENIENCE. PROMPT RETURN OF THE PROXY WILL ASSURE A QUORUM AND SAVE
THE COMPANY UNNECESSARY EXPENSE. YOUR PROXY MAY BE WITHDRAWN BY YOU AT
ANY TIME BEFORE IT IS VOTED.
<PAGE> 5
September 14, 1999
NATIONAL RECORD MART, INC.
507 FOREST AVENUE
CARNEGIE, PENNSYLVANIA 15106
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 4, 1999
GENERAL INFORMATION
This Proxy Statement is furnished to the stockholders of
National Record Mart, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors for use at
the Annual Meeting of Stockholders of the Company to be held on Thursday,
November 4, 1999 at the James H. Reed Building, 435 Sixth Avenue, Pittsburgh,
Pennsylvania.
A copy of the Notice of Annual Meeting of Stockholders
accompanies this Proxy Statement. The 1999 Annual Report to the Stockholders
(which does not form a part of the proxy solicitation materials), including the
financial statements of the Company for the fiscal year ended March 27, 1999
("Fiscal Year 1999"), is enclosed herewith. It is anticipated that the mailing
of this Proxy Statement and the form of proxy will commence on September 14,
1999.
RECORD DATE AND OUTSTANDING SHARES
The Company has only one class of voting securities, its
common stock, par value $.01 per share (the "Common Stock"). On the record date,
September 8, 1999, 5,048,167 shares of Common Stock were outstanding. Each
stockholder of record at the close of business on September 8, 1999 will be
entitled to one vote for each share of Common Stock owned on that date as to
each matter presented at the meeting. Stockholders are not entitled to
cumulative voting rights in the election of directors.
QUORUM AND VOTING
The Bylaws of the Company provide that a majority of the
shares of Common Stock issued and outstanding and entitled to vote, present in
person or by proxy, will constitute a quorum at the Annual Meeting. Votes at the
Annual Meeting will be tabulated by the Secretary of the Company. Shares of the
Common Stock represented by a properly signed and returned proxy will be
considered as present at the Annual Meeting for purposes of determining a
quorum.
The shares represented by any proxy given pursuant to this
solicitation will be voted at the Annual Meeting and, if a choice is specified
on the proxy, will be voted in accordance with such specification. In the event
no choice is specified on the proxy, the shares represented by such proxy will
be voted FOR (i) election of the nominees for directors set forth herein, (ii)
ratification of the grant of stock options to William A. Teitelbaum in June 1996
and July 1997 and (iii) ratification of the appointment of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending March 25, 2000. A
nominee for election to the Board of Directors will be elected by a plurality of
the votes cast in person or by proxy at the Annual Meeting by holders of shares
of the outstanding Common Stock. The grant of stock options to William A.
Teitelbaum in June 1996 and July 1997 and the appointment of Ernst & Young LLP
each will be ratified if the proposal receives the affirmative vote of the
majority of the outstanding shares,
<PAGE> 6
'
present in person or by proxy, at the meeting. Proxies will be received and
tabulated by Chase Mellon Shareholder Services, the Company's transfer agent.
So far as is presently known, there is no business to be
transacted at the Annual Meeting other than that referred to in the Notice of
Annual Meeting of Stockholders and described herein and it is not anticipated
that other matters will be brought before the Annual Meeting. If any other
matters properly come before the Annual Meeting, or if any of the persons named
to serve as directors or as auditor should decline or be unable to serve, the
persons named in the proxy will vote on the same in accordance with their
discretion. Shares which are present, or represented by proxy, at the Annual
Meeting will be counted for quorum purposes regardless of whether the holder of
the shares or proxy fails to vote ("abstentions") or whether a broker with
discretionary authority fails to exercise its discretionary authority to vote
("broker non-votes"). However, abstentions and broker non-votes have no effect
on the determination of whether a plurality exists with respect to a given
nominee for director. Abstentions and broker non-votes have the effect of voting
against any other proposal.
REVOCABILITY OF PROXIES
A proxy may be revoked by the person giving it before it is
voted by (i) delivering to the Secretary of the Company, at the address listed
at the beginning of this Proxy Statement, a written notice of revocation which
must be signed in exactly the same manner as the proxy, (ii) filing with the
Secretary of the Company a duly executed proxy which bears a later date or (iii)
delivering a signed, written revocation to the Inspector of Elections at the
Annual Meeting. Revocations and subsequent proxies will be honored only if
received at the Company's offices on or before October 28, 1999 or delivered to
the Inspector of Elections at the Annual Meeting prior to the convening thereof.
Presence at the Annual Meeting alone will not revoke the proxy.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as to the
beneficial ownership of the Common Stock by (i) each current director or nominee
for director, (ii) each executive officer listed in the Summary Compensation
Table, (iii) each person known by the Company to be the beneficial owner of more
than 5% of the Common Stock and (iv) all directors, nominees for directors and
executive officers of the Company as a group. The information in the table and
the related footnotes pertaining to directors and executive officers is based
upon data furnished to the Company by or on behalf of such persons. The address
for each of the directors of the Company is c/o National Record Mart, Inc., 507
Forest Avenue, Carnegie, PA 15106. Unless otherwise indicated, each of the
following stockholders has sole voting and sole investment power with respect to
the shares beneficially owned by such stockholder.
<TABLE>
<CAPTION>
Shares Beneficially Owned
NAME AND ADDRESS NUMBER PERCENT
---------------- ------ -------
<S> <C> <C>
William A. Teitelbaum 1,283,328(1) 25.4%
Theresa Carlise 17,643(2) *
Irwin B. Goldstein 14,900(3) *
Samuel S. Zacharias 84,265(4) 1.7%
</TABLE>
2
<PAGE> 7
<TABLE>
<S> <C> <C>
Michele A. Teitelbaum 309,800(5) 6.1%
16 Carlisle Drive
Old Brookville, NY 11545
All executive officers and directors as 1,416,436(6) 28.1%
a group (8 persons)
</TABLE>
*Less than 1%
(1) Includes 170,000 shares subject to options and 129,950 shares held by
the National Record Mart, Inc. Profit Sharing Plan and Trust of which
Mr. Teitelbaum is trustee and as to which shares Mr. Teitelbaum has
voting and investment power. Also includes 31,500 shares held by
Remsen Funding Corp., an affiliate of Mr. Teitelbaum and 12,300 shares
held by Mr. Teitelbaum's children as to which shares Mr. Teitelbaum
disclaims beneficial ownership. Excludes 309,800 shares owned by Mr.
Teitelbaum's wife as to which shares Mr. Teitelbaum disclaims
beneficial ownership.
(2) Includes 10,200 shares subject to options.
(3) Includes 10,000 shares subject to options.
(4) Includes 10,000 shares subject to and 61,690 shares held by REALSEARCH
AG and 11,575 shares held by Three Rivers Energy Corporation, both
affiliates of Mr. Zacharias.
(5) Excludes 1,283,328 shares held by Mrs. Teitelbaum's husband, William
A. Teitelbaum, as to which shares Mrs. Teitelbaum disclaims beneficial
ownership.
(6) Includes 207,500 shares subject to options.
PROXY PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, four directors will be elected, each to
hold office (subject to the Company's Bylaws) until the next Annual Meeting of
Stockholders and until his or her respective successor has been elected and
qualified. Directors of the Company will be elected by a plurality of the votes
cast at the Annual Meeting.
If any nominee listed below should become unavailable as a
candidate for any reason, which management does not anticipate, the proxy will
be voted for any substitute nominee or nominees who may be selected by the Board
of Directors prior to or at the Annual Meeting or, if no substitute is selected
by the Board of Directors, for a motion to reduce the number of directors to the
number of nominees available. The information concerning the nominees has been
furnished by them to the Company. Each nominee has consented to being named a
nominee for director and has agreed to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE ELECTION OF THE FOUR PERSONS NOMINATED TO THE BOARD OF DIRECTORS.
3
<PAGE> 8
INFORMATION ABOUT DIRECTOR NOMINEES
The following table sets forth certain information concerning
the nominees, all of whom are presently directors of the Company.
<TABLE>
<CAPTION>
Director
Name Age Since Position
---- --- ----- --------
<S> <C> <C> <C>
William A. Teitelbaum 49 1986 Chairman, Chief Executive Officer, President
and Director
Theresa Carlise 40 1993 Senior Vice President, Chief
Financial Officer, Assistant Secretary and Director
Samuel S. Zacharias 56 1993 Director
Irwin B. Goldstein 70 1993 Director
</TABLE>
MR. TEITELBAUM has served as Chairman of the Company since 1986 and has served
as President and Chief Executive Officer since 1991. In January 1997 Mr.
Teitelbaum resigned as President, but retained his position as Chairman and
Chief Executive Officer. In January 1998, Mr. Teitelbaum resumed the position of
President. He also served as Vice President and Treasurer from 1986 to 1991.
From 1980 to 1985, he was a partner of Bear Stearns & Co. Since 1985 Mr.
Teitelbaum has been the sole shareholder and Chairman of Remsen Funding Corp., a
New York investment firm. In addition, since 1991, Mr. Teitelbaum has served as
a Director of Alarmax Distributors.
MS. CARLISE joined the Company in July 1986 as a financial systems consultant in
connection with the establishment of an automated accounting system and
subsequently became Controller of the Company in 1987. Ms. Carlise has served as
Treasurer of the Company since 1991. She served as Vice President of Finance of
the Company from April 1990 to April 1993, when she became Senior Vice
President, Chief Financial Officer and a Director. From February 1998 to June
1999 Ms. Carlise served as Secretary of the Company. In June 1999 she was
elected Assistant Secretary.
MR. ZACHARIAS has been President, Senior Partner and a Director of Gateway
Financial Group, Inc., an insurance consulting and merchant banking firm, since
1983. Mr. Zacharias also has served as President and a Director of Realsearch
International, Ltd., an investment banking firm, since 1979. He has served as a
Director of Three Rivers Energy Resources, Inc. since June 1976. Mr. Zacharias
has served as a Director of the Company since January 1993.
MR. GOLDSTEIN was Senior Vice President--Credit for Warner Elektra Atlantic
Corp. from 1985 until his retirement in 1992. From 1977 to 1985, Mr. Goldstein
served in various positions at Warner Elektra Atlantic Corp., including Vice
President and director of credit. Mr. Goldstein has served as a Director of the
Company since September 1993.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
In Fiscal Year 1999, the Board of Directors met three times
and also acted on five occasions by unanimous written consent. In Fiscal Year
1999, none of the directors attended fewer than 75% of aggregate of the total
number of meetings of the Board of Directors and the total number of meetings
held by all committees of the Board upon which such director served.
4
<PAGE> 9
The Board of Directors of the Company has established an Audit
Committee and a Compensation and Stock Option Committee. The Audit Committee,
comprised of Messrs. Goldstein and Zacharias, oversees actions taken by the
Company's independent auditors and reviews the Company's internal controls. The
Audit Committee met twice in Fiscal Year 1999. The Compensation and Stock Option
Committee, comprised of Mr. Zacharias, reviews the compensation of the Company's
officers and administers the Company's 1993 Stock Option Plan, 1993 Non-Employee
Director Stock Option Plan and 1997 Non-Employee Directors Stock Option Plan.
The Compensation Committee did not meet but acted on one occasion by unanimous
written consent in Fiscal Year 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As stated above, the Compensation and Stock Option Committee
consists of Mr. Zacharias. During Fiscal Year 1999, no executive officer served
on a compensation committee (or other board committee performing equivalent
functions) or board of directors of an entity related to any member of the Board
of Directors.
CASH COMPENSATION
Directors who are employees of the Company do not receive a
retainer or fees for attending meetings of the Board of Directors or meetings of
committees of the Board. Non-employee directors of the Company receive as
compensation for their services to the Company, in addition to reimbursement for
out-of-pocket expenses in connection with attending Board meetings, an annual
fee of $5,000, payable in quarterly installments and a meeting fee of $1,000 for
regularly scheduled meeting days and $500 for any committee meeting attended.
DIRECTOR STOCK OPTION PLAN
In May 1993, the Board of Directors adopted the National
Record Mart, Inc. 1993 Non-Employee Director Stock Option Plan (the "Directors
Plan"), which was approved by the stockholders of the Company on June 3, 1993.
The Directors Plan provides for the grant of options to purchase Common Stock to
those directors who are not employees of the Company.
Options to purchase up to 15,000 shares of Common Stock may be
granted under the Directors Plan. Shares issued upon exercise of options granted
under the Directors Plan may be authorized but unissued shares, shares
repurchased and held in treasury by the Company or a combination thereof. Each
option vests over a five-year period with one-fifth of the option shares vesting
on each of the first through fifth anniversaries of the date of the grant. The
exercise price of options granted under the Directors Plan is the fair market
value (as determined pursuant to the Directors Plan) of the Common Stock on the
date of grant of the option (except that, in the case of the initial grant of
options in fiscal 1994, the exercise price is $7.50 per share). Options granted
under the Directors Plan may be exercised by a participant by giving written
notice to the Company and by paying the exercise price in cash or by
surrendering other shares of Common Stock with a market value equal to the
exercise price.
The Directors Plan will terminate on the tenth anniversary of
its effective date, subject to earlier termination by the Board of Directors.
The Board of Directors has the authority to amend or terminate the Directors
Plan at any time without approval, except for certain amendments, which require
stockholder approval. Amendments requiring stockholder approval include
amendments which would materially increase the benefits accruing to
participants, materially increase the number of securities which
5
<PAGE> 10
may be issued under the Directors Plan or materially modify the requirements as
to eligibility for participation in the Directors Plan. In addition, no action
by the Board of Directors or the stockholders with respect to the Directors Plan
may alter or impair any option previously granted without the participant's
consent.
Vested options granted under the Directors Plan must be
exercised within ten years from the date of grant. In the event of a
participant's termination of membership on the Board of Directors, the
participant will have three months to exercise any vested options then
outstanding. In the case of termination of membership on the Board of Directors
for disability or death of the participant, the participant or his or her estate
or beneficiary (as applicable) will have twelve months to exercise any vested
options. In the event of a "change in control" (as defined in the Directors
Plan) involving the Company, all options then outstanding, including options
which have not yet vested, will be deemed to vest immediately upon occurrence of
the event constituting the change in control.
On June 30, 1997, the Company's Board of Directors approved
the 1997 Non-Employee Directors Stock Option Plan (the "1997 Directors Plan").
The 1997 Directors Plan provides for the grant of a maximum of 25,000 shares in
the aggregate to all independent members of the board who are not employees. The
options are vested as of the grant date and are exercisable over a ten year
period from the date of grant at an exercise price of not less than the fair
market value of the Common Stock on the date of grant.
As of March 27, 1999, each of the two non-employee directors
of the Company have received options to purchase 5,000 shares of Common Stock at
an exercise price of $7.50 under the Directors Plan and 5,000 shares of Common
Stock at an exercise price of $2.50 under the 1997 Directors Plan. Options at
the exercise price at $7.50 had no aggregate value as measured by the difference
between the closing price of the Common Stock on the NASDAQ National Market
System as of March 27, 1999 ($4.313 per share) and the exercise price of the
options ($7.50 per share). With respect to options granted at the exercise price
of $2.50, the potential realizable value of such unexercised options for each of
the non-employee directors was $9,065. Executive officers, directors who are
employed by the Company and other employees of the Company are not eligible to
receive any grant of options under the Directors Plan or 1997 Directors Plan.
EXECUTIVE OFFICERS AND COMPENSATION
The Company's executive officers, other than Mr. Teitelbaum
and Ms. Carlise, are identified below.
SCOTT BARGERSTOCK, age 49, is Vice President of Business Development and has
served the Company since 1970 in various positions including Store Manager,
District Manager and Regional Manager. Mr. Bargerstock was promoted in February
1998 to his current position.
JAMES BENEDETTI, age 36, is Vice President of Information Systems and has been
with the Company for eleven years as Manager and Director of Information
Systems. In February 1998, Mr. Benedetti was promoted to his current position.
JOHN GRANDONI, age 49, is Vice President of Purchasing and has twenty-eight
years of specialty music retail experience in various positions. Prior to
joining the Company in 1996, Mr. Grandoni was Vice
6
<PAGE> 11
President of Purchasing and Advertising for Cavages, a music specialty retailer
based in Buffalo, New York. In February 1998, Mr. Grandoni was promoted to his
current position.
CHARLES MICHAEL STEPHENSON, age 44, had a retail music background of twenty
years with Camelot Music in Canton, Ohio prior to joining NRM in April of 1996
as Director of Marketing. In February 1998, Mr. Stephenson became Vice President
of Marketing for the Company.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information regarding the
annual and long-term compensation paid by the Company during Fiscal Years 1999,
1998 and 1997 to the Chief Executive Officer and any other corporate officer who
received in excess of $100,000 in compensation in Fiscal Year 1999 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION ALL OTHER
COMPENSATION AWARDS COMPENSATION
------------ ------ ------------
NUMBER OF
FISCAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY UNDERLYING
- --------------------------- ---- ------ OPTIONS
-------
<S> <C> <C> <C> <C>
William A. Teitelbaum 1999 $225,000 - $3,616(1)
Chairman, CEO, President 1998 $225,000 200,000 $9,148(1)
and Director 1997 $225,000 200,000 $7,919(1)
Theresa Carlise 1999 $110,000 500 $1,122(2)
Senior Vice President, 1998 $100,962 3,000 $1,101(2)
Chief Financial Officer 1997 $100,000 5,000 $1,072(2)
and Director
</TABLE>
(1) Amounts represent the Company's contributions to its 401(k) retirement
savings plan on behalf of Mr. Teitelbaum and premiums paid for by the Company
for life insurance, some of which were made pursuant to the terms of Mr.
Teitelbaum's employment agreement, discussed below in "Certain Relationships and
Related Transactions." Except as otherwise noted, no other compensation was paid
during Fiscal Year 1999 (except for perquisites and other personal benefits, the
amount of which was less than 10% of the officer's total compensation).
(2) Amounts represent the Company's contributions to its 401(k) retirement
savings plan on behalf of Ms. Carlise and premiums paid for by the Company for
life insurance. Except as otherwise noted, no other compensation was paid during
Fiscal Year 1999 (except for perquisites and other personal benefits, the amount
of which was less than 10% of the officer's total compensation).
OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth certain information regarding
options granted to the Named Executive Officers during Fiscal 1999.
7
<PAGE> 12
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF STOCK
SHARES TOTAL OPTIONS MARKET PRICE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO ON DATE OF OPTION TERM
OPTION GRANTS EMPLOYEES EXERCISE PRICE GRANT EXPIRATION -----------
NAME (#) IN FISCAL YEAR ($/SHARE) ($/SHARE) DATE 5% 10%
---- --- -------------- --------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Theresa Carlise 500 1.5% $5.90 $5.90 11/16/08 $1,855 $4,702
</TABLE>
OPTION EXERCISES IN FISCAL YEAR 1999 AND 1999 FISCAL YEAR-END VALUES
The following table sets forth certain information regarding
options of the Named Executive Officers outstanding at the end of Fiscal Year
1999.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON REALIZED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
NAME EXERCISE VALUE YEAR END FISCAL YEAR-END (5)
---- -------- ----- -------- -------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. 0 0 110,000(4) 290,000(4) $223,430 $981,770
Teitelbaum (1)
(2) (3)
Theresa Carlise 0 0 8,600 9,900 $15,592 $17,949
(6)
</TABLE>
(1) On June 15, 1996, the Company's Board of Directors approved the issuance
to Mr. Teitelbaum of options to purchase 200,000 shares of the Company's
Common Stock at an option exercise price of $2.50 per share. These
options vest pro rata over 4 years, with an expiration date of June 15,
2007.
(2) On December 18, 1996, Mr. Teitelbaum canceled his option, granted in
1993, to purchase a total of 200,000 shares of the Company's Common Stock
exercisable at a price of $.10 per share.
(3) On July 1, 1997, the Company's Board of Directors approved the issuance
to Mr. Teitelbaum of options to purchase 200,000 shares of the Company's
Common Stock. The options vest pro rata over twenty years and are
exercisable at $0.10, with an expiration date of July 1, 2024. The
options vest automatically in full upon the termination or death of Mr.
Teitelbaum or the merger, acquisition or liquidation of the Company.
8
<PAGE> 13
(4) Of the 110,000 exercisable options, 100,000 were exercisable at an
exercise price of $2.50 per share and 10,000 were exercisable at an
exercise price of $.10 per share and of the 290,000 unexercisable
options, 100,000 will be exercisable at an exercise price of $2.50 per
share and 190,000 will be exercisable at an exercise price of $.10 per
share.
(5) The per share fair market value for the Company's Common Stock was $4.313
per share at March 27, 1999.
(6) On November 3, 1995, June 10, 1996, August 1, 1997 and November 17, 1998
the Company's Board of Directors approved the issuance to Ms. Carlise of
options to purchase a total of 18,000 shares at an exercise price of
$2.50 and 500 shares at an exercise price of $5.90. These options vest
over a period of five years from date of grant with an expiration date of
10 years from date of grant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires that the Company's officers, directors and persons who own
more than 10 percent of the Common Stock file with the Securities and Exchange
Commission (the "SEC") initial reports of beneficial ownership on Form 3 and
reports of changes in beneficial ownership of Common Stock and other equity
securities on Form 4. Officers, directors and greater than 10 percent
stockholders of the Company are required by the SEC regulations to furnish to
the Company copies of all Section 16(a) reports that they file. To the Company's
knowledge, based solely on reviews of such reports furnished to the Company and
written representations that no other reports are required, all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10
percent beneficial owners were complied with during Fiscal Year 1999.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement in whole or in part, the following
report and the Stock Performance Graph on page 14 shall not be incorporated by
reference into any such filings.
9
<PAGE> 14
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
To: The Board of Directors
The Compensation Committee of the Board of Directors of
National Record Mart, Inc. (the "Company") is responsible for establishing the
policies and programs which determine the compensation of the Company's Chief
Executive Officer and other executive officers. The Committee reviews with the
Board, in detail, all aspects of compensation for such officers. The Committee
is also responsible for administering and granting stock options pursuant to the
Company's 1993 Stock Option Plan. No member of the Committee is a former or
current officer or employee of the Company.
Base Salaries and Bonuses. Except as provided below, the base
salaries and bonuses of the executive officers for each fiscal year are
established by the Board of Directors upon recommendation of the Committee. Base
salary is determined at the beginning of each fiscal year and bonuses, if any,
are awarded after the financial results for the fiscal year have become
available.
Base salary depends primarily on the office and
responsibilities of the executive officer and is reviewed annually. Increases
are normally affected by the Company's financial performance. Two executive
officers, William A. Teitelbaum and Theresa Carlise, have employment agreements
with the Company. Mr. Teitelbaum's base salary for the 1999 fiscal year was
specified under his employment agreement with the Company, dated April 1, 1993,
described in the Company's proxy statement. Mr. Teitelbaum's employment
agreement establishes his base salary at $225,000 per year. Ms. Carlise's
employment agreement, dated as of January 1, 1996, which is also described in
the Company's proxy statement, establishes her base salary at $100,000 per year
with such increases as the Chief Executive Officer deems appropriate.
As to bonuses, it is a basic philosophy of the Committee that
executive officers should have a meaningful portion of their total compensation
tied to the profitability of the Company. Accordingly, financial results for the
fiscal year in question are the primary consideration in determining the bonuses
of executive officers, but other factors have significance as well, including
the individual performance of each officer. Under the terms of his employment
agreement, Mr. Teitelbaum is entitled to bonus compensation in an amount equal
to 4% of the increase (if any) in the Company's "pre-tax operating income" over
the prior year. No such bonus was paid in Fiscal Years 1999, 1998 or 1997.
Pursuant to her agreement, Ms. Carlise is entitled to such bonus compensation,
as the Committee deems appropriate. No such bonus was paid in Fiscal Years 1999,
1998 and 1997
Stock Options. Stock options are the principal form of
long-term compensation presently received by the Company's executive officers.
The Committee views stock options as particularly beneficial long-term
incentives because such options aid in tying the interests of the executives
with those of the stockholders. The decisions of the Committee with respect to
stock options are based upon each individual's job level and performance. A
total of 5,500 stock options were granted to executive officers in Fiscal Year
1999.
Compensation Committee
Samuel S. Zacharias
June 20, 1999
10
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Teitelbaum Loans. Mr. Teitelbaum, Chairman, Chief Executive
Officer and President of the Company, has incurred indebtedness to the Company
in a variety of transactions since 1993. The transactions represented cash
advances, expense payments and a tax withholding payment. A portion of the
indebtedness is evidenced by a note agreement in favor of the Company providing
for interest at prime plus 1-1/2%. The largest amount of indebtedness
outstanding during fiscal year 1999 was approximately $458,591. As of March 27,
1999, the amount of the indebtedness (as subsequently adjusted to correct
erroneous account entries) was $450,993. Subsequent to March 27, 1999, Mr.
Teitelbaum repaid $63,674.31 of such indebtedness. The indebtedness is secured
by a pledge of options granted to Mr. Teitelbaum in June 1996 to purchase
200,000 shares of common stock of the Company at $2.50 per share. See "Proxy
Proposal No. 2, Ratification of Stock Option Grants to William A.
Teitelbaum in June 1996 and July 1997."
Employment Agreements. William A. Teitelbaum has an employment
agreement with the Company for an initial term of five years commencing on April
1, 1993. Such term was automatically renewed on April 1, 1996 for an additional
year and is automatically renewed on each anniversary of such date unless either
party elects to terminate such automatic renewal. The agreement provides for an
annual base salary of $225,000 commencing on June 27, 1993, with annual cost of
living increases or other merit increases approved by the Board of Directors,
plus a bonus equal to four percent of the increase in the Company's pre-tax
operating income from the prior fiscal year, subject to a maximum bonus equal to
his base salary. Pursuant to the agreement, the Company has purchased $5.0
million of life insurance for which Mr. Teitelbaum may designate the
beneficiary. The agreement prohibits Mr. Teitelbaum from competing with the
Company during his employment and for a period equal to the greater of (i) two
years after his termination for proper cause or (ii) the period of time during
which he is receiving payments from the Company pursuant to the agreement. The
agreement requires the Company to pay Mr. Teitelbaum an amount equal to 2.99
times his "base amount" (as defined by the Internal Revenue Code) if, following
a change in control of the Company, the agreement is terminated by the Company
or, if the Company achieves certain minimum shareholder investment returns.
Under his employment agreement, Mr. Teitelbaum is entitled to fringe benefits
including vacation and health insurance pursuant to the compensation policies
and practices of the Company, as well as an automobile and reimbursement for
expenses reasonably incurred by Mr. Teitelbaum in connection with the
performance of his services to the Company. Mr. Teitelbaum is also entitled to
such supplementary retirement benefits, if any, as may be provided by any plan
or plans hereafter established by the Company. The agreement provides that Mr.
Teitelbaum will devote a substantial majority of his working time as a full-time
officer of the Company, although it permits him to engage in non-competitive
business activities.
In addition, Theresa Carlise has an employment agreement with
the Company for an initial term of three years commencing on January 1, 1996.
Such term was automatically renewed on December 31, 1997 for three additional
years. The agreement provides for an annual base salary of $100,000, with annual
cost of living increases and such merit increases, as the Chief Executive
Officer may deem appropriate. Pursuant to the agreement, Ms. Carlise is also
eligible for such bonus compensation as the Board of Directors of the Company
determines to be appropriate and is entitled to vacation, retirement benefits
and other fringe benefits. The agreement prohibits Ms. Carlise from competing
with the Company during her employment and for a one-year period following
termination of her employment, unless she is terminated without proper cause or
because of disability.
11
<PAGE> 16
The Company believes that each of the transactions and
agreements above contains terms no less favorable to the Company than could be
obtained from unaffiliated third parties on an arms' length basis.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the quarterly percentage change
in cumulative total stockholder return on the Company's common stock during the
period from August 5, 1993 (the date on which the Company's stock first traded
on the NASDAQ National Market System) to March 27, 1999 with the quarterly
cumulative total stockholder return during such period on stocks included in (a)
the NASDAQ Composite Index and (b) an index of peer issuers in the Company's
industry (the "Peer Group Index") made up of the Company, Trans World
Entertainment Corp., and Musicland Stores Corp., weighted for market
capitalization as of the beginning of the period presented. The information
presented in the graph assumes that $100 was invested on August 5, 1993 in the
Company's stock, the NASDAQ Composite Index and the Peer Group Index and that
all dividends were reinvested.
QUARTERLY CUMULATIVE RETURN
<TABLE>
<CAPTION>
WEIGHTED
NASDAQ NRM NRM TRANSWORLD MUSICLAND INDUSTRY
QTR. ENDED VALUE VALUE VALUE VALUE VALUE VALUE
- ---------- ------ ----- ----- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Shs. O/S 4,993,816 9,731,208 34,246,856 48,971,880
Weight % 10.20% 19.87% 69.93% 100.00%
Aug. 5, 1999 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
Sept. 1993 $106.61 $76.67 $76.67 $100.00 $133.64 $121.15
Dec. 1993 $108.57 $96.67 $96.67 $103.64 $155.14 $138.94
Mar. 1994 $103.91 $73.33 $73.33 $96.36 $145.79 $128.58
Jun. 1994 $98.67 $53.33 $53.33 $81.82 $119.63 $105.35
Sept. 1994 $106.82 $66.67 $66.67 $80.00 $109.35 $99.16
Dec. 1994 $105.10 $46.67 $46.67 $56.36 $67.29 $63.01
Mar. 1995 $114.22 $35.00 $35.00 $36.36 $70.09 $59.81
Jun. 1995 $130.46 $31.67 $31.67 $25.45 $76.64 $61.88
Sept. 1995 $145.85 $36.67 $36.67 $29.09 $63.55 $53.96
Dec. 1995 $147.05 $12.71 $12.71 $14.55 $31.78 $26.41
Mar. 1996 $153.93 $15.00 $15.00 $23.64 $28.97 $26.49
Jun. 1996 $165.62 $31.67 $31.67 $49.55 $25.23 $30.72
Sept. 1996 $171.48 $20.00 $20.00 $44.55 $11.21 $18.73
Dec. 1996 $180.44 $16.67 $16.67 $51.93 $11.21 $19.86
Mar. 1997 $170.75 $23.33 $23.33 $81.82 $9.35 $25.17
Jun. 1997 $201.55 $17.50 $17.50 $125.45 $20.09 $40.76
Sept. 1997 $235.60 $60.00 $60.00 $198.18 $60.28 $87.65
Dec. 1997 $219.48 $48.33 $48.33 $281.82 $54.67 $99.16
Mar. 1998 $256.56 $78.33 $78.33 $403.64 $84.58 $147.34
Jun. 1998 $264.81 $130.83 $130.83 $627.27 $107.48 $213.14
Sept. 1998 $236.74 $85.00 $85.00 $398.18 $92.52 $152.49
Dec. 1998 $306.46 $121.67 $121.67 $415.91 $114.95 $175.43
Mar. 1999 $344.01 $59.17 $59.17 $240.00 $67.29 $100.78
</TABLE>
12
<PAGE> 17
PROXY PROPOSAL NO. 2
RATIFICATION OF STOCK OPTION GRANTS TO WILLIAM A. TEITELBAUM
IN JUNE 1996 AND JULY 1997
On May 10, 1993, prior to the Company's initial public
offering of its Common Stock, the Company granted to William A. Teitelbaum,
Chairman, President and Chief Executive Officer of the Company, an option to
purchase 200,000 shares of Common Stock at a price of $.10 per share. At the
time of the grant the Common Stock was not traded on the National Association of
Securities Dealers Automated Quotation System (NASDAQ); accordingly, NASDAQ
rules which require stockholder approval of option grants in certain
circumstances for companies whose shares are traded on NASDAQ were not
applicable. Effective December 18, 1996, Mr. Teitelbaum agreed to the
cancellation of this option. On July 1, 1997, the Company granted to Mr.
Teitelbaum an option to purchase 200,000 shares of Common Stock at a price of
$.10 per share. The Board of Directors authorized this grant in order to
compensate Mr. Teitelbaum for the cancellation of the earlier option, and to
continue to incentivize his performance on behalf of the Company and to align
his financial interests with stockholders generally. Due to differences in the
market price for the Common Stock at the date of option grant, the annual
expense to the Company associated with the 1997 option was less than that
associated with the 1993 option. Under NASDAQ rules, stockholder approval may
have been required for this grant, but was inadvertently not solicited,
although, as noted below, this grant was disclosed in the Company's Form 10-K's
and other documents.
On June 10, 1996, the Company's Board of Directors approved
the grant to Mr. Teitelbaum of options to purchase 200,000 shares of Common
Stock at a price of $2.50 per share. The closing sale price of the Common Stock
on NASDAQ on the date of grant was $1.75 per share. The Board of Directors
authorized this grant in order to continue to incentivize Mr. Teitelbaum's
performance by further linking his financial interests to the price of the
Common Stock. At September 8, 1999, the closing price of the Common Stock on
NASDAQ was $3.625. Under NASDAQ rules, stockholder approval was required for
this grant, but was inadvertently not solicited, although, as noted below, this
grant was disclosed in the Company's Form 10-K's and other documents.
The June 1996 option grant was disclosed in the Company's
Annual Reports on Form 10-K for Fiscal Years 1999, 1998 and 1997 and in the
Company's Proxy Statement for its 1998 Annual Meeting of Stockholders. The July
1997 option grant was disclosed in the Company's Annual Reports on Form 10-K for
Fiscal Years 1999 and 1998 and in the Company's Proxy Statement for its 1998
Annual Meeting of Stockholders. Information concerning such options is set forth
above under "Aggregated Option Exercises in Fiscal Year 1999 and FY-End Option
Values."
The Company has recently been advised as to the application of
NASDAQ rules requiring stockholder approval of certain grants of options to
officers with particular reference to the circumstances described above. As a
result, the Company seeks stockholder ratification of such grants at this time.
The Company believes that stockholder ratification of the prior option grants is
desirable from the Company's standpoint in that ratification would not require
any cash outlay by the Company. If the grants are not ratified by stockholders,
to the extent that cancellation of the options is required by NASDAQ, the
Company intends to endeavor to negotiate with William A. Teitelbaum a settlement
in which Mr. Teitelbaum would be compensated for the cancellation of the
options.
13
<PAGE> 18
Terms of Option Granted in June 1996
On June 15, 1996, Mr. Teitelbaum was granted an option to
purchase 200,000 shares of Common Stock at $2.50 per share. The option vests at
the rate of 50,000 shares per year, over four years. At August 2, 1999 a total
of 150,000 shares were vested. The options will expire on June 15, 2007.
In the event the optionee's employment is terminated for
"proper cause" as such term is defined in the optionee's employment agreement
with the Company, or in the event the optionee resigns from employment with the
Company prior to June 15, 2001, all unvested option shares will terminate
automatically, and all vested option shares may be exercised by the optionee for
five years after such termination of employment.
All unvested options will vest and become immediately
exercisable and remain exercisable for a period of seven years in the event of
certain changes in control of the Company, or in the event of the optionee's
death or termination of his employment by the Company for any reason other than
"proper cause."
The number of shares covered by the option and the option
price per share will be adjusted for any change in the number of outstanding
shares of Common Stock resulting from the payment of a stock dividend, and in
certain other circumstances.
As of September 8, 1999, the fair market value of the shares
subject to the option was $725,000.
Terms of Option Granted in July 1997
On July 1, 1997, Mr. Teitelbaum was granted an option to
purchase 200,000 shares of Common Stock at a price of $.10 per share. The option
vests at the rate of 10,000 shares per year, over twenty years. At August 2,
1999 a total of 20,000 shares were vested. The options will expire on July 1,
2017.
In the event the optionee's employment is terminated for
"proper cause" as such term is defined in the optionee's employment agreement
with the Company, or in the event the optionee resigns from employment with the
Company prior to July 1, 2017, all unvested option shares will terminate
automatically, and all vested option shares may be exercised by the optionee for
five years after such termination of employment.
All unvested options will vest and become immediately
exercisable and remain exercisable for a period of seven years in the event of
certain changes in control of the Company, or in the event of the optionee's
death or termination of his employment by the Company for any reason other than
"proper cause."
The number of shares covered by the option and the option
price per share will be adjusted for any change in the number of outstanding
shares of Common Stock resulting from the payment of a stock dividend, and in
certain other circumstances.
As of September 8, 1999, the fair market value of the shares
subject to this option was $725,000.
14
<PAGE> 19
Tax Consequences
The optionee did not recognize any taxable income for Federal
income tax purposes upon receipt of the options. The grant of the options had no
tax effect upon the Company. Upon exercise of the option, the amount by which
the fair market value of the shares received exceeds the option price will be
treated and taxed as compensation received by the optionee in the year of the
exercise. The Company will be entitled to a compensation deduction equal to the
amount treated as compensation to the optionee. Upon sale of the shares received
upon exercise of the option, the difference between the amount realized on the
sale and the optionee's basis in the shares (the option exercise price plus the
amount treated as compensation upon exercise) will be taxed as a capital gain or
loss, which will be long-term or short-term depending on whether the shares were
held for more than one year after exercise.
The acceleration of the right to exercise the options or the
exercise of the options after certain change of control events may result in the
difference between the value of the stock at the time of exercise and the option
exercise price being treated as "parachute payments" for Federal income tax
purposes. This would result in a 20% excise tax to the employee and the loss of
a compensation deduction which would otherwise be allowable to the Company.
There is a limitation in the Federal tax law which prohibits
the Company from deducting compensation paid to the optionee that is in excess
of $1 million for any tax year. This limitation may apply to amounts treated as
compensation with respect to the options.
THE BOARD OF DIRECTORS BELIEVES THAT THE OPTIONS GRANTED TO
WILLIAM A. TEITELBAUM IN JUNE 1996 AND JULY 1997 HAVE BEEN AND CAN CONTINUE TO
BE A COST-EFFECTIVE MEANS TO INCENTIVIZE PERFORMANCE IN LINE WITH THE INTERESTS
OF STOCKHOLDERS GENERALLY. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE OPTION GRANTS TO WILLIAM A. TEITELBAUM IN JUNE 1996 AND JULY
1997.
PROXY PROPOSAL NO. 3
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors will request that stockholders ratify
the appointment of Ernst & Young LLP as the Company's independent auditors to
examine the financial statements of the Company for the year ending March 25,
2000. The firm of Ernst & Young LLP has served as the Company's public
accountants since 1991. A representative of Ernst & Young LLP will be present at
the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
OF THE COMPANY.
15
<PAGE> 20
EXPENSES OF SOLICITATION
The costs of this solicitation have been, or will be borne, by
the Company. In addition to the use of the mails, proxies may be solicited by
the Company's directors, officers and employees, without extra compensation, by
personal interview, telephone and telegram. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material and annual reports to the beneficial owners
of stock held of record by such persons, and the Company will reimburse them for
reasonable out-of-pocket and clerical expenses incurred by them in connection
therewith. The Company may retain the services of a professional proxy
solicitation firm and, if so, will pay such firm's customary fees and expenses.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST OF ANY STOCKHOLDER SOLICITED HEREBY, THE COMPANY WILL
PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED MARCH 27, 1999. REQUESTS SHOULD BE DIRECTED TO JAMES
HARDT, 507 FOREST AVENUE, CARNEGIE, PENNSYLVANIA 15106. ANY BENEFICIAL OWNER
SHOULD INCLUDE A GOOD FAITH REPRESENTATION THAT AS OF THE RECORD DATE HE OR SHE
IS A BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE.
DISCRETIONARY VOTING
The Board of Directors does not know of any other business that may be
presented for consideration at the Annual Meeting. If any other business should
properly come before the Annual Meeting, it is the intention of those named in
the Proxies solicited hereby to vote the shares represented by such Proxies in
accordance with their judgement on such matters.
STOCKHOLDER PROPOSALS FOR 2000
A proposal submitted by a stockholder for the regular annual
meeting of stockholders to be held in 2000 must be received by the Secretary,
National Record Mart, Inc., 507 Forest Avenue, Carnegie, Pennsylvania 15106 on
or prior to May 17, 2000 in order to be eligible for inclusion in the Company's
Proxy Statement for that annual meeting. In connection with the 2000 Annual
Meeting of Stockholders, if the Company does not receive notice of a matter of
proposal to be considered (whether or not the proponent thereof intends to
include such matter or proposal in the proxy statement of the Company) on or
before July 31, 2000 then the persons appointed by the Board of Directors to act
as the proxies for such annual meeting will be allowed to use their
discretionary voting authority with respect to any such matter or proposal at
such annual meeting, if such matter or proposal is raised at such annual
meeting.
By Order of the Board of Directors,
James Hardt
Secretary
16
<PAGE> 21
NATIONAL RECORD MART, INC.
PROXY FOR THE RESCHEDULED ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT
JAMES H. REED BUILDING, 435 SIXTH AVENUE, NINTH FLOOR, PITTSBURGH, PA 15219
THURSDAY, NOVEMBER 4, 1999 - 9:30 A.M. (LOCAL TIME)
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of NATIONAL RECORD MART, INC. (the "Company") does
hereby appoint William A. Teitelbaum and Theresa Carlise, or either of them
acting individually, with full power of substitution, as proxies of the
undersigned to vote at the Annual Meeting of Stockholders of the Company to be
held November 4, 1999 (the "Annual Meeting"), and at all adjournments thereof,
all the shares of Common Stock of the Company which the undersigned may be
entitled to vote, on the matters set forth on the reverse side of this card and
described in the Proxy Statement and, in their discretion, on any other
business which may properly come before the Annual Meeting.
The undersigned stockholder hereby also revokes all previous proxies for the
Annual Meeting, acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement both dated September 14, 1999, and of the
Annual Report to Stockholders for 1999.
YOU ARE URGED TO PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON SO THAT YOUR SHARES MAY
BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE MEETING.
The shares represented by this Proxy will be voted at directed by the
stockholder. If this proxy is executed but no direction is given, the shares
will be voted "FOR" Items 1, 2 and 3.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
<PAGE> 22
[X] Please mark your votes in the following manner
ITEM 1 -- Election of the following four directors: William A. Teitelbaum,
Theresa Carlise, Samuel S. Zacharias and Irwin B. Goldstein. A vote FOR
includes discretionary authority to vote for a substituted nominee if any
of the nominees listed becomes unable to serve or for a good cause will not
serve.
FOR all WITHHOLD
Nominees AUTHORITY
(except as shown to Vote for
to the right) All Nominees
[ ] [ ] (To withhold authority to vote for
one or more nominees, print such
nominee's or nominees' name(s) on
the line below
___________________________________
ITEM 2 - Ratification of the grant of stock options to William A.
Teitelbaum in June 1996 and July 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 3 - Ratification of the appointment of Ernst & Young as independent
auditors of the Company for the fiscal year ending March 25, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please date and sign exactly as your name
appears hereon and return in the enclosed
envelope. If acting as attorney, executor,
administrator, guardian or trustee, please
so indicate with your full title when
signing. If a corporation, please sign in
full corporate name, by duly authorized
officer. If shares are held jointly, each
stockholder named should sign.
SIGNATURE(S) ___________________________________________ DATE __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor administrator, trustee or guardian, please give
full title as such.
