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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:
[ ] 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 sec. 240.14a-11(c) or sec. 240.14a-12
CASH AMERICA INTERNATIONAL
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
To Our Shareholders:
The Annual Meeting of Shareholders of Cash America International, Inc. (the
"Company") will be held at the Fort Worth Club, 12th Floor, Fort Worth Club
Building, 306 West 7th Street, Fort Worth, Texas on Tuesday, April 22, 1997 at
10:00 a.m., Fort Worth Time, for the following purposes:
(1) Assuming the amendment described in item (3) below is adopted, to
elect ten (10) directors to terms of office expiring at the annual meeting
of shareholders in 1998 (four (4) directors), 1999 (three (3) directors)
and 2000 (three (3) directors); or if the foregoing amendment is not
adopted, to elect ten (10) directors to serve until the next annual meeting
of shareholders and until their successors are elected;
(2) To consider and act upon a proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as independent auditors of the Company for the
year 1997;
(3) To consider and act upon a proposal to amend the Articles of
Incorporation of the Company to provide for the classification of the Board
of Directors into three classes of directors with staggered terms of
office;
(4) To consider and act upon a proposal to amend the Articles of
Incorporation to provide for a requirement that shareholders notify the
Company of a nomination prior to any meeting;
(5) To consider and act upon a proposal to amend the Articles of
Incorporation to provide for a limitation upon who may call special
meetings of shareholders;
(6) To consider and act upon a proposal to amend the Articles of
Incorporation to provide for a minimum price and other matters, or a higher
voting requirement, in connection with certain business combinations;
(7) To consider and act upon a proposal to amend the Articles of
Incorporation to provide for preferred stock in the Company's authorized
capital stock; and
(8) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of the Common Stock of the Company at the close of
business on March 4, 1997 are entitled to notice of and to vote at the Annual
Meeting. The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding Common Stock entitled to vote at the meeting is
required for a quorum to transact business. The stock transfer books will not be
closed.
Management sincerely desires your presence at the meeting. However, so that
we may be sure that your shares are represented and voted in accordance with
your wishes, please sign and date the enclosed proxy and return it promptly in
the enclosed stamped envelope. If you attend the meeting, you may revoke your
proxy and vote in person.
By Order of the Board of Directors,
HUGH A. SIMPSON
Secretary
Fort Worth, Texas
March 14, 1997
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CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
SOLICITATION OF PROXIES
The proxy statement and accompanying proxy are furnished in connection with
the solicitation by the Board of Directors of Cash America International, Inc.,
a Texas corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Fort Worth Club
located on the 12th Floor of the Fort Worth Club Building, 306 West 7th Street,
Fort Worth, Texas on Tuesday, April 22, 1997 at 10:00 a.m., Fort Worth Time and
at any recess or adjournment thereof. The solicitation will be by mail, and this
Proxy Statement and the accompanying form of proxy will be mailed to
shareholders on or about March 14, 1997.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy by giving written notice of revocation
to the Secretary of the Company at its principal executive offices or by
executing and delivering a later-dated proxy or by attending the Annual Meeting
and voting in person. However, no such revocation shall be effective until such
notice has been received by the Company at or before the Annual Meeting. Such
revocation will not affect a vote on any matters taken prior to receipt of such
revocation. Mere attendance at the Annual Meeting will not of itself revoke the
proxy.
The expense of such solicitation will be borne by the Company and will
include reimbursement paid to brokerage firms and other custodians, nominees and
fiduciaries for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners. The Company has retained Kissel-Blake Inc. to
assist in the solicitation of proxies from shareholders, and will pay such firm
a fee for its services of approximately $5,000.00. Further solicitation of
proxies may be made by telephone, telegraph or oral communication following the
original solicitation by directors, officers and regular employees of the
Company or by its transfer agent who will not be additionally compensated
therefor, but will be reimbursed by the Company for out-of-pocket expenses.
A copy of the Annual Report to Shareholders of the Company for its fiscal
year ended December 31, 1996 is being mailed with this Proxy Statement to all
shareholders entitled to vote, but does not form any part of the information for
solicitation of proxies.
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close of business on March 4, 1997
(the "Record Date"). At the close of business on March 4, 1997, there were
24,229,969 shares of Common Stock, par value $.10 per share, issued and
outstanding, each of which is entitled to one vote on all matters properly
brought before the meeting. There are no cumulative voting rights. The presence
in person or by proxy of the holders of a majority of the issued and outstanding
shares of Common Stock on the Record Date is necessary to constitute a quorum at
the Annual Meeting. Assuming the presence of a quorum, the affirmative vote of a
majority of the shares of Common Stock present, or represented by proxy, and
entitled to vote at the Annual Meeting is necessary for the election of
directors and for ratification of the appointment of independent auditors.
Adoption of the proposal to amend the Company's Articles of Incorporation to
provide for the classification of the Board of
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Directors into three classes requires the affirmative vote of four-fifths of the
outstanding shares entitled to vote. Adoption of each of the other proposals to
amend the Company's Articles of Incorporation requires the affirmative vote of
two-thirds of the outstanding shares entitled to vote. Shares voted for a
proposal and shares represented by returned proxies that do not contain
instructions to vote against a proposal or to abstain from voting will be
counted as shares cast for the proposal. Shares will be counted as cast against
the proposal if the shares are voted either against the proposal or to abstain
from voting. Broker non-votes will not change the number of votes for or against
the proposal and will not be treated as shares entitled to vote, but such shares
will be counted for purposes of determining the presence of a quorum.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the shareholders of the Company will consider and
vote on the following matters:
(1) Assuming the amendment described in item (3) below is adopted, the
election of ten (10) directors to terms of office expiring at the annual
meeting of shareholders in 1998 (four (4) directors), 1999 (three (3)
directors) and 2000 (three (3) directors); or if the foregoing amendment is
not adopted, the election of ten (10) directors to serve until the next
annual meeting of shareholders and until their successors are elected;
(2) Ratification of the appointment of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the year 1997;
(3) A proposal to amend the Articles of Incorporation of the Company
to provide for the classification of the Board of Directors into three
classes of directors with staggered terms of office;
(4) A proposal to amend the Articles of Incorporation to provide for a
requirement that shareholders notify the Company of a nomination prior to
any meeting;
(5) A proposal to amend the Articles of Incorporation to provide for a
limitation upon who may call special meetings of shareholders;
(6) A proposal to amend the Articles of Incorporation to provide for a
minimum price and other matters, or a higher voting requirement, in
connection with certain business combinations;
(7) A proposal to amend the Articles of Incorporation to provide for
preferred stock in the Company's authorized capital stock; and
(8) Such other business as may properly come before the meeting or any
adjournments thereof.
ELECTION OF DIRECTORS
The Company's Board of Directors will consist of ten (10) members who are
to be elected for the respective terms specified below or until their successors
shall be elected and shall have qualified. If the proposed amendment to the
Company's Articles of Incorporation to provide for the classification of the
Board of Directors into three classes is adopted, the terms of the members of
the Board of Directors shall expire at the following times: Class I
Directors -- 1998 annual meeting of shareholders; Class II Directors -- 1999
annual meeting of shareholders; and Class III Directors -- 2000 annual meeting
of shareholders. If such proposed amendment is not adopted, the members will be
elected for a term expiring at the next annual meeting of shareholders. The
following slate of ten nominees has been chosen by the Board of Directors and
the Board recommends that each be elected. Unless otherwise indicated in the
enclosed form of Proxy, the
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persons named in such proxy intend to vote for the election of the following
nominees for the office of director. All of such nominees are presently serving
as directors.
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE DURING PAST FIVE YEARS SINCE
------------ ---------------------- --------
CLASS I DIRECTORS
Jack Daugherty Chairman of the Board and Chief Executive Officer of the 1983
(49) Company since its inception. Mr. Daugherty has owned and
operated pawnshops since 1971.
A. R. Dike Mr. Dike has owned and served as Chairman of the Board and 1988
(61) Chief Executive Officer of The Dike Co., Inc. (a private
insurance agency) for the past twenty years. He was Chairman
and Chief Executive Officer of The Insurance Alliance, Inc.
from January 1988 to September 1991 and has been Chairman and
President of Willis Corroon Life, Inc. (Fort Worth, Texas)
since September 1991.
Daniel R. Feehan President and Chief Operating Officer of the Company since 1984
(46) January 1990.
James H. Graves Managing Director of J. C. Bradford & Co., a Nashville based 1996
(48) securities firm, where he has worked for more than five years.
CLASS II DIRECTORS
B. D. Hunter Mr. Hunter is the founder of Huntco, Inc., an intermediate 1984
(67) steel processing company, and for more than five years has
served as its Chairman of the Board and Chief Executive
Officer.
Timothy J. McKibben Chairman of the Board of Ancor Holdings, a private investment 1996
(48) firm, since 1993, and prior to that, Chairman of the Board and
President of Anago Incorporated, a company he co-founded in
1978 that manufactures disposable medical products.
Alfred M. Micallef President since 1974, and currently Chief Executive Officer, 1996
(54) of JMK International, Inc., a holding company of rubber and
plastics manufacturing businesses.
CLASS III DIRECTORS
Carl P. Motheral Mr. Motheral has served over twenty-five years as President 1983
(70) and Chief Executive Officer and also Director of Motheral
Printing Company (a commercial printing company).
Samuel W. Rizzo Consultant and private investor since 1995, and prior to that 1994
(61) Executive Vice President of Service Corporation International
("SCI"), a publicly held company that owns and operates
funeral homes and related businesses, since February 1990.
Rosalin Rogers Private investor since 1986, and prior to that a principal 1996
(46) with the brokerage firm of Financial First, Inc. in New York,
New York.
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Each nominee for election as a director has consented to serve if elected.
The Board of Directors does not contemplate that any of the above-named nominees
for director will be unable to accept election as a director of the Company.
Should any of them become unavailable for election as a director of the Company
then the persons named in the enclosed form of proxy intend to vote such shares
represented in such proxy for the election of such other person or persons as
may be nominated or designated by the Board of Directors.
Certain nominees for director of the Company hold directorships in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934. Mr. Hunter is a director of Mark Twain
Bancshares, Inc., Celebrity, Inc., SCI, and Huntco Inc. Messrs. Daugherty, Dike,
Rizzo and Graves are directors of Hallmark Financial Services, Inc. Mr. Feehan
is a director of KBK Capital Corporation. Also, Mr. Rizzo is a director of
Tanknology Environmental, Inc. and Mr. Micallef is a director of Snyder Oil
Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the fiscal year ended
December 31, 1996. Standing committees of the Board include the Executive
Committee, Audit Committee, Executive Compensation Committee, and Stock Option
Committee. The Company does not have a Nominating Committee.
The Audit Committee's principal responsibilities consist of (a)
recommending the selection of independent accountants, (b) reviewing the scope
of the audit conducted by such auditors, as well as the audit itself, and (c)
reviewing the Company's internal audit activities and matters concerning
financial reporting, accounting and audit procedures, and policies generally.
Its members are Messrs. Rizzo and McKibben and Ms. Rogers. The Audit Committee
held three meetings during fiscal 1996.
The Executive Compensation Committee oversees and administers the Company's
executive compensation program and administers the Company's 1994 Long-Term
Incentive Plan. Its decisions relating to executive compensation are reviewed by
the full Board of Directors. Its members are Messrs. Hunter, Dike and Graves.
The Committee held three meetings during fiscal 1996.
The Stock Option Committee has the general duty to administer the Company's
1987 Stock Option Plan (with Stock Appreciation Rights) and the 1989 Key
Employee Plan. Its members are Messrs. Dike, Micallef and Motheral. The Stock
Option Committee held no meetings during fiscal year 1996.
All directors attended 75% or more of the total number of meetings of the
Board and of committees on which they serve.
DIRECTORS' COMPENSATION
Directors each receive a retainer of $2,500 per quarter. In addition, Board
members receive $2,500 per Board meeting attended, Executive Committee members
receive $1,500 for each Executive Committee meeting attended, and all other
committee members receive $1,000 for each committee meeting attended.
During 1989, the Company adopted the 1989 Non-Employee Director Stock
Option Plan (the "Non-Employee Director Plan"), which provided for the grant to
the Company's non-employee directors of options to purchase the Company's $.10
par value Common Stock. The Non-Employee Director Plan was approved by the
Company's shareholders at the 1990 Annual Meeting. Effective October 25, 1989,
options were granted under the Non-Employee Director Plan in the following
amounts (after adjustment for stock splits in 1990 and 1992): 225,000 shares to
each non-employee director serving on the Executive Committee of the Board of
Directors (i.e., Messrs. Rizzo and Motheral) 150,000 shares to each other
non-employee director with at least two years of service on the Board of
Directors as of the date of grant (i.e., Mr. Hunter) and 120,000 shares to each
other non-employee director (i.e., Mr. Dike). The exercise price for all shares
underlying such options was the last reported sale price of the Common Stock on
the American Stock Exchange on the day preceding the date of grant ($6.33 after
adjustment for stock splits in 1990 and 1992). The options expire 15 years from
the date of grant. The options may be exercised with respect to 40 per cent of
the number of shares subject to the options six months after the date of grant,
and an additional 10 per cent of the shares subject to the options shall be
exercisable as of the first, second, third, fourth, fifth and sixth
anniversaries of the date of grant, except
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that in the event of the death or termination of service as a director by reason
of disability, or in the event of a "change in control" of the Company (as that
term is defined in the Non-Employee Director Plan), the options shall be
immediately exercisable in full. An option holder may use already-owned Common
Stock as full or partial payment for the exercise of options granted under the
Non-Employee Director Plan. As a condition to participation in the Non-Employee
Director Plan, each director named above in this paragraph entered into a
Consultation Agreement with the Company dated as of April 25, 1990. Under these
Agreements, the non-employee directors have agreed to serve the Company in an
advisory and consultive capacity. They do not receive any additional
compensation under these Agreements, however.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.10 per share.
The following table sets forth certain information, as of the Record Date,
with respect to each person or entity who is known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock.
The information below was derived solely from filings made by such owners with
the Securities and Exchange Commission.
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ---------- --------
David L. Babson & Co., Inc.................................. 2,322,500(1) 9.57%
One Memorial Drive
Cambridge, Massachusetts 02142
Eagle Asset Management, Inc................................. 1,354,485(2) 5.58%
880 Carillon Parkway
St. Petersburg, Florida 33716
Shufro, Rose & Ehrman....................................... 1,249,936(3) 5.15%
745 Fifth Avenue
New York, New York 10151-2600
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(1) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that David L. Babson & Co., Inc. has sole voting power with
regard to 738,500 shares and the sole right to dispose of all 2,322,500
shares.
(2) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Eagle Asset Management, Inc. has sole voting power with
regard to all 1,354,485 shares and the sole right to dispose of all
1,354,485 shares.
(3) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Shufro, Rose & Ehrman has sole voting power with regard
to 128,230 shares and the sole right to dispose of all 1,249,936 shares.
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The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock, as of February 24, 1997, by its
directors, nominees for election as directors, named executive officers, and all
directors and executive officers as a group.
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1)(2) OF CLASS
---- -------------------------- --------
Jack Daugherty....................................... 997,635 3.97%
A. R. Dike........................................... 136,000 .56%
Daniel R. Feehan..................................... 482,111(3) 1.96%
James H. Graves...................................... 3,200 *
B. D. Hunter......................................... 165,000(4) .68%
Timothy J. McKibben.................................. 2,900 *
Alfred M. Micallef................................... 10,000 *
Carl P. Motheral..................................... 444,065 1.82%
Samuel W. Rizzo...................................... 306,710(5) 1.25%
Rosalin Rogers....................................... 10,000 *
Robert D. Brockman................................... 4,375 *
Don R. Blevins....................................... 15,620 *
Gregory W. Trees..................................... 42,992 .18%
All Directors and Executive Officers as
a group (17 persons)............................... 2,687,073(6) 10.21%
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* Indicates ownership of less than .1% of the Company's Common Stock.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. Unless otherwise indicated, each of the persons named has sole
voting and investment power with respect to the shares reported.
(2) Except for the percentages of certain parties that are based on options
exercisable within sixty days of February 24, 1997, as indicated below, the
percentages indicated are based on 24,229,969 shares of Common Stock issued
and outstanding on February 24, 1997. In the case of parties holding
options, the percentage ownership is calculated on the assumption that the
shares presently purchasable or purchasable within the next sixty days
underlying such options are outstanding. The shares subject to options that
are exercisable within sixty days of February 24, 1997 are as follows: Mr.
Daugherty -- 901,625 shares; Messrs. Motheral and Rizzo -- 225,000 shares
each; Mr. Dike -- 120,000 shares; Mr. Feehan -- 352,125 shares; Mr.
Hunter -- 150,000 shares; Mr. Brockman -- 4,375 shares; Mr.
Blevins -- 14,625 shares and Mr. Trees -- 37,125 shares.
(3) This amount includes 2,400 shares owned by Mr. Feehan's wife and 600 shares
in the name of Mr. Feehan's children.
(4) This amount includes 15,000 shares held by a corporation that Mr. Hunter
indirectly controls. Mr. Hunter disclaims beneficial ownership of such
shares.
(5) This amount includes 18,600 shares owned by trusts of which Mr. Rizzo is
trustee and 4,000 shares owned by Mr. Rizzo's wife.
(6) This amount includes 2,071,375 shares that directors and executive officers
have the right to acquire within the next sixty days through the exercise of
stock options.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers and directors are required to file under
Section 16(a) of the Securities Exchange Act of 1934 reports of ownership and
changes of ownership with the Securities and Exchange Commission. Based solely
upon its review of the copies of such reports received by it, and written
representations from individual directors and executive officers, the Company
believes that during the fiscal year ended December 31, 1996 all filing
requirements applicable to executive officers and directors have been complied
with.
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EXECUTIVE COMPENSATION
The following sets forth information for each of the Company's last three
fiscal years concerning the compensation of the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers
who were serving as executive officers at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION --
AWARDS
---------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
NAME AND -------------------- OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) ($)(1)
------------------ ---- --------- -------- --------------- ------------
Jack R. Daugherty, 1996 378,000 196,727 -- 40,628
Chairman and CEO 1995 378,000 -- -- 48,534
1994 360,000 36,000 175,000 42,202
Daniel R. Feehan, 1996 341,750 177,834 -- 30,953
President and Chief 1995 315,000 -- -- 30,464
Operating Officer 1994 300,000 28,500 145,000 29,242
Robert D. Brockman, 1996 169,200 70,447 -- 10,515
Executive Vice President -- 1995 87,500 21,045 7,500 33,534
Administration(2)
Don R. Blevins, Executive 1996 150,000 62,453 -- 10,385
Vice President -- European 1995 120,000 -- 7,500 2,674
Operations(3)
Gregory W. Trees, 1996 150,000 40,204 -- 4,922
Division Vice President 1995 150,000 -- 5,000 3,515
1994 137,500 12,500 7,000 2,576
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(1) The amounts disclosed in this column for 1996 include:
(a) Company contributions of the following amounts under the Company's
401(k) Savings Plan on behalf of Mr. Daugherty: $4,236; Mr. Feehan:
$4,442; Mr. Brockman: $2,320; Mr. Blevins: $2,072 and Mr. Trees:
$3,232.
(b) Payment by the Company of premiums for term life insurance on behalf of
Mr. Daugherty: $1,392; Mr. Feehan: $1,531; Mr. Brockman: $1,424; Mr.
Blevins: $3,767 and Mr. Trees: $1,690.
(c) Annual premium payments under split-dollar life insurance policies on
Mr. Feehan ($25,000) and on Mr. Daugherty's spouse ($35,000).
(d) Relocation expenses for Mr. Brockman: $6,771; and Mr. Blevins: $4,546.
(2) Mr. Brockman joined the Company on June 21, 1995.
(3) Mr. Blevins did not serve in an executive officer capacity prior to 1995.
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The following table provides information concerning option exercises in
fiscal 1996 and the value of unexercised options held by each of the named
executive officers at the end of the Company's last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FY-END(#)(1) AT FY-END($)(2)
--------------- -----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- --------------- -----------------
Jack R. Daugherty 901,625/68,875 1,719,375/46,875
Daniel R. Feehan 352,125/56,875 569,813/38,813
Robert D. Brockman 4,375/13,125 8,516/25,547
Don R. Blevins 14,625/9,875 11,766/18,047
Gregory W. Trees 37,125/8,875 11,406/12,969
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(1) These figures reflect the appropriate adjustments for the Company's
three-for-two stock split in May 1990 and the two-for-one stock split in
April 1992.
(2) Values stated are based upon the closing price of $8.50 per share of the
Company's Common Stock on the New York Stock Exchange on December 31, 1996,
the last trading day of the fiscal year.
COMPENSATION COMMITTEE REPORT
- -- OVERALL EXECUTIVE COMPENSATION POLICIES
The basic philosophy of the Company's executive compensation program is to
link the compensation of its executive officers to their contribution toward the
enhancement of shareholder value. Consistent with that philosophy, the program
is designed to meet the following policy objectives:
- Attracting and retaining qualified executives critical to the long-term
success of the Company.
- Tying executive compensation to the Company's general performance and
specific attainment of long-term strategic goals.
- Rewarding executives for contributions to strategic management designed
to enhance long-term shareholder value.
- Providing incentives that align the executive's interest with those of
the Company's shareholders.
- -- ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of the following
elements designed to meet the policy objectives set out above:
Base Salary
The Committee set the annual salary of the Company's Chief Executive
Officer and the President and reviewed the annual salaries of the Company's
other executive officers for fiscal 1996. In setting appropriate annual
salaries, the Committee takes into consideration the minimum salaries set forth
in certain executives' employment contracts (described elsewhere in this Proxy
Statement), the level and scope of responsibility, experience, and performance
of the executive, the internal fairness and equity of the Company's overall
compensation structure, and the relative compensation of executives in similar
positions in the marketplace. The Committee relies on information supplied by an
outside compensation consulting firm pertaining to competitive compensation. The
Company's executive compensation program is designed to position base salary at
the 50th percentile of the competitive market and total cash compensation,
including annual
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performance incentives, at the 75th percentile of the competitive market. The
Committee believes that very few of the companies in the peer groups described
below under "Performance Graph" are included in the surveys used for
compensation comparisons. Those surveys represent a much broader collection of
U.S. companies.
Annual Incentive Compensation
In 1996, the Committee modified the Company's executive compensation
program to formalize its short-term and long-term components.
a. Short-Term Component
Under this component, the Company's executive officers are eligible to
receive annual incentive cash bonuses equal to certain percentages of their
annual base salaries. The bonus percentage varies depending upon the officer's
position with the Company, and the percentages increase if the Company's
earnings performance exceeds the financial plan. A portion of the bonus amount
is based on the officer's accomplishment of certain individual performance
objectives established at the outset of the year.
b. Long-Term Component
Under this component, the Company's executive officers are eligible to
receive annual long-term incentive grants in the form of restricted stock and/or
stock options, with the aggregate grant date value of the stock and/or options
to equal certain percentages of the officers' annual base salaries. The
applicable percentage varies depending upon the officer's position with the
Company. The allocation between restricted stock and stock options is determined
by the Committee at its discretion. The Committee uses the Black-Scholes model
to determine the grant date value of options. The Company's 1994 Long-Term
Incentive Plan (the "1994 Plan"), approved by the shareholders of the Company at
the April 1994 Annual Meeting, allows for these forms of stock-based long-term
incentive compensation awards. This long-term incentive component rewards
effective management that results in long-term increases in the Company's stock
price. In this way, it is designed to further the objective of fostering and
promoting improvement in long-term financial results and increases in
shareholder value. Because the Committee believed the beginning of the Company's
fiscal year to be the appropriate time for the grant of these long-term
incentive awards, none were granted in 1996.
Deductibility Cap on Executive Compensation
A federal tax law enacted in 1994 disallows corporate deductibility for
certain compensation paid in excess of $1,000,000 to the Chief Executive Officer
and the four other most highly paid executive officers. "Performance-based
compensation," as defined in the tax law, is not subject to the deductibility
limitation, provided certain shareholder approval and other requirements are
met. Although the cash compensation paid to the Company's Chief Executive
Officer and the four other most highly paid executive officers is well below the
$1,000,000 level in each case, the Committee determined that the Company should
seek to ensure that future stock option and performance award compensation under
the 1994 Plan qualifies as "performance-based compensation." Accordingly, the
1994 Plan is intended to meet the requirements of this tax law and thereby
preserve full deductibility of both stock option and stock-based performance
award compensation expense.
- -- CEO'S COMPENSATION FOR FISCAL 1996
The fiscal 1996 salary of Mr. Jack R. Daugherty, Chief Executive Officer of
the Company, was based primarily on his rights under his ten-year employment
agreement with the Company dated April 25, 1990, which is described elsewhere in
this Proxy Statement. Under that agreement, Mr. Daugherty's minimum base salary
is $225,000. For fiscal 1996, the Committee set Mr. Daugherty's base salary at
$378,000. The Committee believes that the total cash compensation paid to Mr.
Daugherty was appropriate in light of the Company's accomplishments in 1996,
including (i) a 22% increase in net income, (ii) a 23% increase in total
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loan balances, (iii) a 14% decrease in year-end inventory, (iv) a 29% increase
in inventory turns, and (v) the successful implementation of the Company's field
incentive compensation program.
These 1996 accomplishments also support the Committee's belief that the
fiscal 1996 cash compensation of the Company's other executive officers was set
at appropriate levels.
EXECUTIVE COMPENSATION COMMITTEE
B. D. Hunter, Chairman
A. R. Dike
James H. Graves
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding report and the Performance Graph on Page 11
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Executive Compensation Committee of the
Company's Board of Directors is an officer, former officer, or employee of the
Company or any subsidiary of the Company.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As a condition to receiving grants of options under the 1989 Key Employee
Stock Option Plan for Cash America International, Inc., Messrs. Daugherty and
Feehan entered into employment agreements with the Company dated April 25, 1990.
Upon the expiration of the initial terms of the agreements (ten years in the
case of Mr. Daugherty and five years in the case of Mr. Feehan), they
automatically renew for additional one-year periods until one party notifies the
other to the contrary. Under these agreements, compensation is determined
annually by the Company's Board of Directors, subject to minimum annual
compensation for Messrs. Daugherty and Feehan of $225,000 and $190,000,
respectively. Included in each agreement is a covenant of the employee not to
compete with the Company during the term of his employment and for a period of
three years thereafter. The employment agreements also provide that if the
employee is terminated by the Company other than for cause, the Company will pay
to the employee the remainder of his current year's salary (undiscounted) plus
the discounted present value (employing an interest rate of 8%) of two
additional years' salary. In the event the employee resigns or is terminated
other than for cause within twelve months after a "change in control" of the
Company (as that term is defined in the employment agreement), the employee will
be entitled to earned and vested bonuses at the date of termination plus the
remainder of his current year's salary (undiscounted) plus the present value
(employing an interest rate of 8%) of two additional years' salary (for which
purpose "salary" includes the annual rate of compensation immediately prior to
the "change in control" plus the average annual cash bonus for the immediately
preceding three year period). The Company also entered into a similar employment
agreement effective March 30, 1992 with Mr. Trees. It provides for minimum
annual compensation of $125,000. The primary term of the agreement had an
expiration date of March 31, 1995 and is followed by two one-year renewal terms.
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PERFORMANCE GRAPH
The following Performance Graph shows the changes over the past five year
period in the value of $100 invested in: (1) the Company's Common Stock, (2) the
Standard & Poor's 500 Index, and (3) the common stock of two peer groups of
companies whose returns are weighted according to their respective market
capitalizations. The values of each investment as of the beginning of each year
are based on share price appreciation and the reinvestment of dividends. The
first peer group (the "New Peer Group") consists of the other companies in the
pawnbroking industry with publicly traded common stock. The second peer group
(the "Old Peer Group") consists of the following companies, whose businesses
comprise a combination of consumer lending and retail activities: Beneficial
Corp., Household International, Circuit City Stores, Jewelmaster, Inc., Peoples
Jewellers, MacFrugal's Bargains, Luria (L.) & Sons, Inc., Oshman's Sporting
Goods, Lowe's Corp., and Tandy Corp. The Company previously utilized the Old
Peer Group in the Performance Graph. However, factors such as the recent change
in the Company's revenue recognition method for pawn loans, the adoption of a
new incentive compensation program for field operations personnel, and increased
emphasis on cash returns on capital employed have heightened the focus on the
Company's core consumer finance business. On this basis, the Company concluded
that the continued use of the Old Peer Group would be inappropriate and that the
New Peer Group constitutes a more representative mix of comparable companies.
TOTAL SHAREHOLDER RETURNS -- DIVIDENDS REINVESTED
CASH
MEASUREMENT PERIOD AMERICA IN- NEW PEER OLD PEER
(FISCAL YEAR COVERED) TERNATIONAL S&P 500 GROUP GROUP
DEC 91 100 100 100 100
DEC 92 113.50 107.62 163.62 125.43
DEC 93 96.44 118.46 100.33 176.82
DEC 94 104.30 120.03 68.90 194.65
DEC 95 58.52 165.13 38.03 224.25
DEC 96 91.14 203.05 56.12 287.46
Data Source: Standard & Poor's Compustat
TRANSACTIONS WITH MANAGEMENT
The Board of Directors of the Company adopted an officer stock loan program
in 1994 and modified the program in 1996. The purpose of the program is (i) to
facilitate and encourage the ownership of Company common stock by the officers
of the Company and (ii) to establish the terms for stock loan transactions with
officers. Participants in the program can utilize loan proceeds to acquire and
hold common stock of the Company by means of option exercises or otherwise. The
stock to be held as a result of the loan must be pledged to the Company to
secure the obligation to repay the loan. Under the terms of the loan, interest
accrues at the "applicable Federal rate" for loans of this type, as published by
the Internal Revenue Service from time to time. Interest is payable annually and
may be paid with additional loan proceeds. Each loan has a one year maturity and
is renewable thereafter for successive one year terms, except that the Committee
could notify the borrower during any renewal term that the loan would not renew
again after the next succeeding renewal term. The aggregate principal balance of
all outstanding loans under the program may not exceed
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$5,000,000 at any time. As of December 31, 1996, Messrs. Daugherty and Feehan
had stock loans outstanding under this program in the aggregate principal
amounts of $698,539, and $1,005,729, respectively.
PROPOSALS TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION
INTRODUCTION
The Company's Board of Directors has determined that it is advisable to
adopt the Amendments to the Company's Articles of Incorporation ("Amendments").
It has voted to recommend them to the Company's shareholders for adoption. The
Amendments are discussed generally below under the caption "The Procedural
Amendments" and in detail below under the captions (i) "Proposal regarding the
Board of Directors," (ii) "Proposal regarding the Shareholders," (iii) "Proposal
regarding the Fair Price Amendment to the Articles of Incorporation," and (iv)
"Proposal regarding Authorization of Preferred Stock," which shareholders are
urged to read carefully. The Amendments are expected to have an antitakeover
effect.
Corporate takeover attempts have become increasingly common in recent
years. Takeover attempts that have not been negotiated with, and approved by,
the board of directors of a company can seriously disrupt a company's long-term
plans, distract management and cause great expense. These attempts may take
place at inopportune times and may involve terms that are less favorable to all
of the shareholders than would be available in a transaction negotiated and
approved by the board of directors. On the other hand, board-approved
transactions can be carefully planned and undertaken at an opportune time in
order to obtain maximum value for a company and its shareholders. In addition,
in the case of a proposal that is presented to the board of directors, there is
an opportunity for the board to thoroughly analyze the proposal and present its
analysis to the shareholders in an effective manner.
Hostile takeover attempts are frequently structured in ways that the Board
of Directors believes are not in the best interest of all shareholders. Although
a takeover attempt may be made at a price substantially above then current
market prices, these offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, shareholders may be
presented with the alternatives of partially liquidating their investment at a
time that may be disadvantageous or retaining their investment in an enterprise
with new management whose objectives may be different from those of the
remaining shareholders. There have also been "two-tiered" offers in which cash
is offered for a controlling interest in a company followed by a merger or other
transaction in which the remaining shares are acquired in exchange for cash or
securities reflecting a lesser value for the shares acquired in the second stage
transaction. The Board considers that tactics such as these can be highly
disruptive to a company and can result in dissimilar treatment of a company's
shareholders. The Amendments are being submitted for shareholder approval in
response to these kinds of tactics.
Some of the amendments (the "Procedural Amendments") to the Company's
Articles of Incorporation, consisting of Articles Seven and Twelve of the
proposed Amendments attached as Appendix A to this Proxy Statement, will, by
making it more time-consuming for a substantial shareholder to gain control of
the Board, strengthen the position of the Board in dealing with the substantial
shareholder, enable the Board to more effectively protect the interests of all
shareholders, enhance continuity in the management of the business and affairs
of the Company, and provide the Board with sufficient time to review any
proposal from the substantial shareholder and consider appropriate alternatives
to the proposal. However, the Procedural Amendments also may deter some mergers,
tender offers or other future takeover attempts which some or a majority of the
shareholders may deem to be in their best interest.
The business combination provisions (Article Thirteen of the proposed
Amendments) are designed to achieve some assurance that any multi-step attempt
to take over the Company is made on terms which offer similar treatment to all
shareholders.
The preferred stock provision (Article Four of the proposed Amendments) is
designed to permit the Company to issue both Common Stock and Preferred Stock.
The authorization of Preferred Stock also will
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enable the Board to issue new classes of preferred stock for a variety of
possible equity financing transactions, including acquisitions. Such preferred
stock could also be utilized to make more difficult or discourage an attempt to
obtain control of the Company by means of a merger, tender offer or otherwise
should the Board of Directors consider the actions of the person or entity
seeking control not to be in the best interests of the shareholders of the
Company.
The Amendments are being submitted separately. The adoption of any
Amendment is not contingent upon the adoption of any other Amendments.
The Amendments are not being recommended in response to any specific effort
of which the Company is aware to accumulate the Company's common stock or to
obtain control of the Company. They are being recommended to ensure fair
treatment of the Company's shareholders in takeover situations. They are being
submitted to the shareholders by the Board in response to the use of the tactics
outlined above. The Board has no present intention of soliciting a shareholder
vote on any other proposals relating to a possible takeover of the Company.
The Board of Directors believes that the Amendments are necessary to
safeguard the Company's stability, so that management can pursue its long-term
strategy for the Company. The Board also believes that the benefits provided by
the Amendments -- essentially the protection of the Company's ability to
negotiate with the proponent of an unsolicited takeover proposal and to consider
alternatives -- outweigh the disadvantages of discouraging such proposals.
ACCORDINGLY, THE BOARD BELIEVES THAT ADOPTION OF THE AMENDMENTS IS IN THE BEST
INTERESTS OF ALL SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENTS TO THE ARTICLES OF
INCORPORATION.
The Amendments would become effective upon the filing of Articles of
Amendment with the Secretary of State of Texas. This filing is expected to be
made shortly following the adoption of the Amendments at the Annual Meeting. If
the Amendments are approved, then the Company's Bylaws will be amended to carry
out the purposes of the Amendments. In the event of a conflict between the
Company's Articles of Incorporation, as amended by the Amendments, and the
amended Bylaws, the Articles of Incorporation will control.
THE PROCEDURAL AMENDMENTS
The Procedural Amendment contained in the Proposal regarding the Board of
Directors is to classify the Board of Directors into three classes of directors
as nearly equal in number as possible, each of which, after an interim
arrangement, will serve for three years, with one class of directors being
elected each year.
The Procedural Amendments contained in the Proposal regarding the
Shareholders:
(i) provide that special meetings of shareholders may be called only
by the Chairman of the Board, the President, the Board of Directors or
shareholders owning not less than a majority of the voting power of the
Voting Stock (as defined in the next paragraph) that would be entitled to
vote at such meeting; and
(ii) require shareholders desiring to propose to nominate a person to
the Board of Directors to give prior notice of intent to make nomination.
The term "Voting Stock" in this part of the Proxy Statement means all
issued and outstanding shares of the Company's capital stock entitled to vote
generally in the election of directors or that otherwise are entitled to vote
with the stock on the specific matter in question.
The Procedural Amendments may have significant effects on the ability of
shareholders of the Company to effect immediate changes in the composition of
the Board of Directors and otherwise to exercise their voting power to affect
the composition and certain other aspects of the Board of Directors.
Accordingly, before voting on the Amendments, shareholders are urged to read
carefully the following portions of this section of the Proxy Statement which
describe the Procedural Amendments and their purposes and effects, and the
relevant portions of Appendix A attached to the Proxy Statement. The Appendix
gives the full text of the Procedural Amendments. The description of the
Procedural Amendments is qualified in its entirety by reference to Appendix A.
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Purposes and Effects of the Procedural Amendments. The Board of Directors
is recommending that shareholders adopt the Procedural Amendments to discourage
certain types of transactions that involve an actual or threatened change of
control of the Company. The Procedural Amendments are designed to make it more
time-consuming to change majority control of the Board without its consent and
thus to reduce the vulnerability of the Company to an unsolicited takeover
proposal. The Board believes that the Procedural Amendments will encourage any
person intending to attempt such a takeover to negotiate with the Board, and
that the Board will therefore be better able to protect the interests of the
shareholders.
Persons routinely accumulate substantial stock positions in public
companies as a prelude to proposing a takeover or a restructuring or sale of all
or any part of the corporation or other similar extraordinary corporate action.
Such actions are often undertaken without advance notice to or consultation with
the corporation's board of directors or management. In many cases, the purchaser
seeks representation on the corporation's board in order to increase the
likelihood that any proposal will be implemented by the corporation. If a
corporation resists its efforts to obtain board representation, the purchaser
may commence a proxy contest to have itself or its nominees elected to the board
in place of certain directors or the entire board. In some cases, the purchaser
may not truly be interested in taking over the corporation, but uses the threat
of a proxy fight or a bid to take over the corporation as a means of forcing the
corporation to repurchase its equity position at a substantial premium over the
market price.
The Board of Directors believes that if such a purchaser acquired a
significant or controlling interest in the Voting Stock, the purchaser's ability
to remove the entire Board without its consent would severely curtail the
Company's ability to negotiate effectively with the purchaser. The threat of
removal would deprive the Board of the time, information and negotiating
leverage necessary to evaluate the takeover proposal, to study responses and
alternatives, to help ensure that the best price would be obtained in any
transaction involving the Company which might ultimately be undertaken, or
determine not to pursue such a transaction but instead to pursue the Company's
long-term strategy without disruption. If the real purpose of the purchases was
to enable the purchaser to make or threaten a takeover bid to force the Company
to repurchase the purchaser's accumulated stock interest at a premium price,
then the Company would face the risk that if it did not do so its business and
management would be disrupted, perhaps irreparably. Conversely, such a
repurchase would divert valuable corporate resources to the benefit of a single
shareholder.
Takeovers or changes in the board of directors of a company that are
proposed and effected without prior consultation and negotiation with a company
are not necessarily detrimental to that company and its shareholders. However,
the Board believes that the benefits of seeking to protect the Company's ability
to negotiate with the proponent of an unfriendly or unsolicited proposal to
effect a partial takeover of, or to restructure, the Company, through directors
who have been previously elected by the shareholders as a whole and are familiar
with the Company, outweigh the disadvantages of discouraging such proposals. The
Procedural Amendments could make more difficult or discourage a proxy contest or
the assumption of control by the holder of a substantial block of the Voting
Stock or the removal of the incumbent Board, and could thus increase the
likelihood that incumbent directors will retain their positions.
The Procedural Amendments could have the effect of discouraging a third
party from making a partial tender offer (including an offer at a substantial
premium over the then-prevailing market value of the Voting Stock) or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its shareholders. In addition, since the
Procedural Amendments are designed to discourage accumulations of large blocks
of the Voting Stock by purchasers whose objective is to have such Voting Stock
repurchased by the Company at a premium, adoption of the Procedural Amendments
could tend to reduce the temporary fluctuations in the market price of the
Voting Stock that are caused by such accumulations. Accordingly, shareholders
could be deprived of some opportunities to sell their stock at a temporarily
higher market price. The Procedural Amendments also may discourage or make more
difficult or expensive a proxy contest or merger involving the Company or a
tender offer, open market purchase program or stock purchase of Company Common
Stock that a majority of shareholders may deem to be in their best interests or
that may give shareholders the opportunity to realize a premium over the
prevailing market price of their stock.
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- -- PROPOSAL REGARDING THE BOARD OF DIRECTORS
The Procedural Amendments contained in this proposal relate to
classification of the Board of Directors. The Bylaws currently provide that all
directors are to be elected to the Company's Board of Directors annually for a
term of one year. The Procedural Amendments provide that the Board will be
divided into three classes of directors, each class to be as nearly equal in
number of directors as possible. If the Amendments are adopted by the
shareholders, the shareholders will be asked to elect the nominees described in
this Proxy Statement and classify them into three separate classes of directors.
Four directors will be elected for a term expiring at the Annual Meeting in
1998, three directors will be elected for a term expiring at the Annual Meeting
in 1999, and three directors will be elected for a term expiring at the Annual
Meeting in 2000. Any new director elected to fill a vacancy on the Board will
serve for the remainder of the full term of the class in which the vacancy
occurred, rather than until the next election of directors. For information
regarding the nominees and the class of directors in which they will serve,
please refer to the section of this Proxy Statement entitled "Election of
Directors."
The classification of directors will have the effect of making it more
difficult to effect an immediate change in, and otherwise to affect, through the
voting power of the Voting Stock, the composition of the Board of Directors. It
is common for various individuals and entities to acquire significant minority
positions in certain corporations with the intent of obtaining actual control of
the corporations by electing their own slate of directors, or to achieve some
other goal, such as the repurchase of their shares at a premium, by threatening
to obtain such control. These insurgents often can elect a majority or more of a
corporation's board of directors through a proxy contest or otherwise, even
though they do not own a majority of the corporation's outstanding shares
entitled to vote.
Under the Board classification provisions of the Procedural Amendments, at
least two annual shareholder meetings, instead of one, will be required to
effect a change in the majority control of the Board. Although the Company has
experienced no problems with respect to the continuity and stability of the
Board, the Board believes that the longer time required to elect a majority of a
classified board will help to ensure continuity and stability in the future,
because the majority of directors at any given time will have prior experience
as members of the Board. The longer time required to elect a majority of a
classified board also may deter certain mergers, tender offers or other future
takeover attempts which some or a majority of holders of the Voting Stock may
deem to be in their best interests. The proposed Board classification provisions
will apply to every election of directors, whether or not a change in the Board
would be beneficial to the Company and its shareholders and whether or not a
majority of the Company's shareholders believe that such a change would be
desirable. Finally, since neither Texas law nor the Company's Articles of
Incorporation or Bylaws allows cumulative voting, a purchaser of a block of
Company stock constituting less than a majority of the voting power of the
Voting Stock will have no assurance of proportional representation on the
Company's Board of Directors.
Vote Required. The Company's Bylaws requires the affirmative vote of
four-fifths ( 4/5) of the outstanding shares of Common Stock to adopt the
Amendment described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FOREGOING AMENDMENT.
- -- PROPOSALS REGARDING THE SHAREHOLDERS
The Procedural Amendments contained in these two proposals relate to
shareholder action by calling special meetings and proposing nominees at
shareholder meetings.
Limitations on Calling Special Meetings. The Company's Bylaws currently
provide that special meetings of the shareholders may be called by holders of at
least ten percent (10%) of the outstanding stock entitled to vote at such
meeting, by the Board of Directors, by the Chairman of the Board or the
President. The Procedural Amendments permit special meetings to be called only
by the Chairman of the Board, the President, the Board of Directors or
shareholders owning not less than a majority of the voting power of the Voting
Stock that would be entitled to vote at such meeting.
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The provisions of the Procedural Amendments that deny minority shareholders
the power to call special meetings are intended to prevent a minority
shareholder from calling a special meeting that is not deemed to be important by
a majority of the shareholders or the Board. Minority shareholders may, however,
submit proposals at duly convened shareholder meetings.
Proposing Shareholder Nominees. The Procedural Amendments provide that a
shareholder may nominate a person for election to the Board of Directors at a
meeting of the Company's shareholders only if written notice is delivered to the
Company by such shareholder at least 60 days in advance of the meeting, or
within ten days after the date of notice or public disclosure if such notice is
given less than 70 days before the meeting. This notice must contain certain
information, including the name and address of the nominating shareholder, the
nominee's name, address and principal occupation, and any other information
relating to the nominee that the Company reasonably requires or is required to
be disclosed in a proxy statement or Schedule 13D filing. No person will be
eligible for election as a director of the Company unless nominated in
accordance with the Procedural Amendments.
The purpose of this Procedural Amendment is to avoid the possibility of
surprise nominations from the floor that would preclude management from
investigating, and the shareholders from adequately assessing the competence,
experience, integrity and other relevant factors concerning the qualifications
of the proposed nominee. In the absence of such provisions, nominations could be
made from the floor without information concerning nominees being furnished in
advance to shareholders. The federal securities laws do not currently require
such advance information if proxies are not solicited or if proxies are being
solicited from fewer than ten persons. Management believes that the Company's
shareholders are entitled to know certain basic information about the merit of
matters presented to shareholders for a vote and the qualifications of persons
nominated for election as directors, and that these Procedural Amendments
substantially assist management in assuring that such information is made
available to the shareholders in a timely fashion.
Vote Required. The affirmative vote of two-thirds ( 2/3) of the outstanding
shares of Common Stock is required to adopt each of the foregoing Amendments.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FOREGOING AMENDMENTS.
PROPOSAL REGARDING THE FAIR PRICE AMENDMENT
TO THE ARTICLES OF INCORPORATION
In general, the Fair Price Amendment would require the approval of the
holders of at least eighty percent (80%) of the voting power of the Voting
Stock, voting together as a single class, as a condition for any "Business
Combination" (defined below) proposed by or on behalf of any "Interested
Shareholder" (defined below), unless (i) the transaction is approved by at least
the majority of the members of the Board who are unaffiliated with the
Interested Shareholder and certain of their successors ("Disinterested
Directors"); or (ii) the transaction satisfies certain minimum price, form of
consideration and other requirements.
The term "Business Combination" means (i) any merger or consolidation of
the Company involving the Interested Shareholder, (ii) certain transactions
involving assets, cash flow, earning power, securities or commitments of the
Company or the Interested Shareholder, which meet certain threshold amounts,
(iii) the adoption of any plan of liquidation or dissolution of the Company,
(iv) any issuance or reclassification of securities of the Company,
recapitalization, merger or other transaction having the effect of increasing
the proportionate share of ownership of the Interested Shareholder and (v) any
agreement, arrangement or other understanding providing for one or more of the
actions listed above. An "Interested Shareholder" is any person (other than the
Company, a Company subsidiary, or a Company benefit plan or its fiduciary and
certain of their successors) who is the beneficial owner of more than 15% of the
voting power of Voting Stock. A person is deemed to be the "beneficial owner" of
those shares of capital stock that the person and any of its affiliates or
associates directly or indirectly own or have the right to acquire or vote, or
have an agreement arrangement or understanding to acquire, hold, vote or dispose
of.
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Although, as discussed below, the Fair Price Amendment is designed to help
ensure fair treatment of each shareholder in comparison to every other
shareholder in the event of a takeover of the Company, it is not the purpose of
the Fair Price Amendment to ensure that shareholders will receive a premium
price for their shares in a takeover. Accordingly, the Board believes that the
adoption of the Fair Price Amendment would not preclude the Board's opposition
to any future takeover proposal that it believes not to be in the best interest
of the Company and its shareholders, whether or not such a proposal satisfies
the minimum price, form of consideration and other requirements of the Fair
Price Amendment.
The Fair Price Amendment is permitted under Texas corporation law and is
consistent with the rules of the New York Stock Exchange, upon which the
Company's Common Stock is listed and traded.
Adoption of the Fair Price Amendment may have a significant effect on the
ability of shareholders of the Company to benefit from certain transactions that
are opposed by the incumbent Board of Directors. Accordingly, shareholders are
urged to read carefully the following sections of this Proxy Statement and
Article Thirteen of Appendix A attached to this Proxy Statement, which presents
the full text of the Fair Price Amendment. The description of the Fair Price
Amendment is qualified in its entirety by reference to Appendix A.
Purposes and Effects of the Fair Price Amendment. It has become a
relatively common practice in corporate takeovers for a purchaser to pay or
threaten to pay cash to acquire a controlling equity interest in a company, by
tender offer or other transaction, and then to acquire the remaining equity
interest in the company by paying the remaining shareholders a price for their
shares that is lower than the price the purchaser paid to acquire its original
interest in the company or by paying a different and possibly less desirable
form of consideration (such as securities of the purchaser instead of cash).
Generally, in a two-step acquisition involving a tender offer followed by a
business combination that is effected for a lower price or different form of
consideration, arbitrageurs and other professional investors, because of their
sophistication and expertise in the takeover area, may be better able to take
advantage of the more lucrative first-step tender offer than other shareholders.
The Fair Price Amendment is designed to prevent a purchaser from utilizing
two-tier pricing and similar inequitable tactics in the event of an attempt to
take over the Company. This would be accomplished by requiring that to complete
a combination that involves two or more steps which is not approved by a
majority of Disinterested Directors, the purchaser must obtain the affirmative
vote of at least 80% of the voting power of the Voting Stock prior to the
business combination or be prepared to meet the minimum price, form of
consideration and other requirements of the Fair Price Amendment. The Fair Price
Amendment, however, is not designed to prevent or discourage tender offers for
the Company. It does not limit the ability of a third party that owns or can
obtain the affirmative vote of at least 80% of the voting power of the Voting
Stock to effect a business combination involving the Company in which the equity
interest of the minority shareholders is eliminated. It also does not impede an
offer for shares representing at least 80% of the voting power of the Voting
Stock of the Company or an offer which the Board of Directors has approved in
the manner described in this section of the Proxy Statement. Except for the
restrictions on business combinations, the Fair Price Amendment will not prevent
a holder of a controlling interest of the Company's Common Stock from exercising
control over or increasing its interest in the Company. The Fair Price Amendment
is designed to help ensure that if the Company is taken over, each shareholder
will be treated fairly in comparison to every other shareholder.
Federal securities laws and regulations applicable to business combinations
govern the disclosure required to be made to shareholders to consummate such a
transaction, but do not ensure that the terms of the business combination (that
is, the type and amount of consideration that shareholders will receive for
their shares) will be fair to shareholders or that shareholders can effectively
prevent its consummation.
Under Texas law, most mergers and consolidations, the sale of all or
substantially all of the Company's assets, the reclassification of securities or
a plan for the dissolution of the Company must be approved by the vote of the
holders of two-thirds ( 2/3) of the outstanding shares entitled to vote on the
matter. Moreover, the statutory right of the shareholders of a company who elect
not to tender their shares of stock or to dissent in connection with certain
business combinations and to receive the "fair value" of their shares in cash
may
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involve significant expense, delay and uncertainty to dissenting shareholders.
Dissenting shareholders have no assurance that such "fair value" would be as
high as the minimum price determined pursuant to the Fair Price Amendment. In
the case of many business combinations, including reclassification or
recapitalization of the outstanding shares of any class of a company's stock,
the statutory right of dissent may not be available at all.
Texas has no statutes or regulations imposing restrictions on business
combinations with an interested shareholder, as do some other states. The Fair
Price Amendment is intended partially to fill gaps in the federal and Texas law
and to prevent certain of the potential inequities of business combinations that
involve two or more steps.
The Fair Price Amendment is designed to eliminate the pressure on
shareholders faced with the decision whether to accept an offer for the purchase
of their shares of stock, or to risk being relegated to the status of minority
shareholders in a controlled corporation or being forced to accept a lower price
for all of their shares of stock, without having the opportunity to make a
considered investment choice between remaining a shareholder of the Company or
disposing of their stock. If the tender offer is over-subscribed for this
reason, even shareholders who wish to tender their shares may be compelled to
accept the less valuable consideration for some or all of their shares. The Fair
Price Amendment also is designed to protect those shareholders who have not
tendered or otherwise sold their shares to a purchaser who is attempting to
acquire control by ensuring that at least the same price and form of
consideration are paid to such shareholders in a business combination as were
paid to shareholders in the initial step of the acquisition. In the absence of
the Fair Price Amendment, a successful purchaser who acquired control of the
Company could subsequently, by virtue of such control, force minority
shareholders to sell or exchange their shares at a price that would not reflect
any premium the purchaser may have paid in order to acquire its controlling
interest, but at a price that would instead effectively be set by the purchaser.
The price established by the purchaser may be lower than the price paid by the
purchaser in acquiring control or may be in a less desirable form of
consideration.
In many situations, the minimum price, form of consideration and other
requirements of the Fair Price Amendment would require that a purchaser pay
shareholders a higher price for their shares or structure the transaction
differently. Accordingly, the Board believes that to the extent a business
combination were involved as part of a plan to acquire control of the Company,
adoption of the Fair Price Amendment will increase the likelihood that a
purchaser would negotiate directly with the Company. The Board believes that it
is in a better position than the individual shareholders of the Company to
negotiate effectively on behalf of any shareholders because the Board is likely
to be in a better position than any individual shareholder to assess the
business and prospects of the Company. Accordingly, the Board also believes that
negotiations between the Company and the purchaser will increase the likelihood
that shareholders would receive a higher price for their shares from anyone
desiring to obtain control of the Company through a business combination or
otherwise.
Although not all acquisitions of the Company's stock are made with the
objective of acquiring control of the Company through a subsequent business
combination, in most cases a purchaser desires to have the option to consummate
such a business combination. Assuming that to be the case, the Fair Price
Amendment would tend to discourage purchasers whose objective is to seek control
of the Company at a relatively low price, because acquiring the remaining equity
interest would not be assured unless the minimum price, form of consideration
and other requirements were satisfied or a majority of the Disinterested
Directors approved the transaction. The Fair Price Amendment may also discourage
the accumulation of large blocks of the Company's stock, which the Board
believes could precipitate a change of control of the Company on terms
unfavorable to the Company's other shareholders.
Tender offers or other non-open market acquisitions of stock are usually
made at prices above the prevailing market price of a company's stock. In
addition, acquisitions of stock by persons attempting to acquire control through
market purchases may cause the market price of the stock to reach levels that
are higher than would otherwise be the case. The Fair Price Amendment may
discourage such purchases, particularly those representing less than 80% of the
voting power of the Voting Stock, and may thereby deprive holders of the
Company's Stock of an opportunity to sell their stock at a temporarily higher
market price. Because of the higher percentage requirements for shareholder
approval of any subsequent business
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combination and the possibility of having to pay a higher price to other
shareholders in such a business combination, it may become more costly for a
purchaser to acquire control of the Company. The Fair Price Amendment may
therefore decrease the likelihood that a tender offer will be made for less than
80% of the voting power of the Voting Stock and, as a result, may adversely
affect those shareholders who would desire to participate in such a tender
offer. A potential purchaser of stock seeking to obtain control may also be
discouraged from purchasing stock because a 80% shareholder vote would be
required to change or eliminate these provisions. It should be noted that the
provisions of the Fair Price Amendment would not necessarily discourage persons
who might be willing to seek control of the Company by acquiring 80% of the
voting power of the outstanding Voting Stock even though they have no intention
of acquiring the remaining 20%. However, these kinds of transactions are rare.
The provisions of the Fair Price Amendment may produce a series of other
effects on potential purchasers of the Company's securities. In some cases, the
Fair Price Amendment's minimum price provisions, while providing objective
pricing criteria, could be arbitrary and not indicative of value. In addition,
an Interested Shareholder may be unable, as a practical matter, to comply with
all of the additional requirements of the Fair Price Amendment. Under these
circumstances, unless a potential purchaser were willing to purchase 80% of the
voting power of the Voting Stock as the first step in a business combination, it
would be forced either to negotiate with the Board and offer terms acceptable to
it or to abandon the proposed business combination.
Another effect of adoption of the Fair Price Amendment would be to give
veto power to the holders of an aggregate of 20.1% of the voting power of the
Voting Stock with respect to a business combination which is opposed by the
Board, but which a majority of shareholders may believe to be desirable and
beneficial. In addition, since only the Disinterested Directors will have the
authority to reduce to a simple majority or eliminate the 80% shareholder vote
required for business combinations, the Fair Price Amendment may tend to
insulate current management against the possibility of removal in the event of a
takeover bid.
Shareholder Vote Required for Certain Business Combinations. Under Texas
law, mergers, consolidations, sales of all or substantially all of the assets of
the Company, the adoption of a plan of dissolution of the Company, and
reclassification of securities and recapitalizations of the Company involving
amendments to the Articles of Incorporation must be approved by the vote of the
holders of two-thirds ( 2/3) of the stock entitled to vote. Certain other
transactions, such as sales of less than substantially all of the assets of the
Company, certain mergers involving a wholly owned subsidiary of the Company, and
recapitalizations not involving any amendments to the Articles of Incorporation
do not require shareholder approval.
The Fair Price Amendment would require the approval of the holders of 80%
of the voting power of the Voting Stock, voting together as a single class, as a
condition to business combinations, except in cases in which either (i) certain
price, form of consideration and other requirements are satisfied or (ii) there
is at least one Disinterested Director and the transaction or category of
transactions is recommended to the shareholders by a majority of the
Disinterested Directors. If either of such alternatives were applicable and were
satisfied with respect to a particular business combination, the normal
shareholder approval requirements of Texas law would apply and, accordingly, a
vote of the holders of two-thirds ( 2/3) of the stock entitled to vote would be
required or, for certain transactions, as noted above, no shareholder vote would
be necessary. Thus, depending upon the circumstances, the Fair Price Amendment
would require a 80% shareholder vote for a business combination in cases in
which either two-thirds ( 2/3) vote or no vote currently would be required under
Texas law and under the Articles of Incorporation.
If any shares of Preferred Stock were issued in the future (assuming the
shareholders approved the Preferred Stock Amendment discussed below), the terms
of such Preferred Stock might require the approval of a business combination by
its holders, voting as a separate class. That requirement would be in addition
to, and would not be affected by, the Fair Price Amendment.
Even if an Interested Shareholder could assure itself of an 80% affirmative
shareholder vote in favor of a business combination (so that neither the
approval of the business combination by a majority of the Disinterested
Directors nor the satisfaction of the minimum price, form of consideration and
other requirements would be necessary to effect the business combination), under
Texas law such business combination may nevertheless require approval by the
Board of Directors of the Company prior to its
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submission to a shareholder vote. This would be the case, for example, with
respect to a merger or consolidation involving the Company. In that case, the
Interested Shareholder could not effect the business combination, regardless of
its ability to assure a 80% shareholder vote, without Board action. As discussed
under "Proposal regarding the Board of Directors," if the Amendment to the
Articles of Incorporation described under that caption is adopted, the
Interested Shareholder could not be assured of gaining control of the Board
until at least two annual shareholder meetings had been held.
Exceptions to Higher Vote Requirement. In the case of a business
combination that involved the receipt of cash or other consideration by the
Company's shareholders, the 80% affirmative shareholder vote requirement would
not apply if either (1) the business combination were approved by a majority of
the Disinterested Directors, or (2) all of the requirements described in
paragraphs (a), (b) and (c) below were satisfied.
If the business combination did not involve the receipt of consideration by
the Company's shareholders (which would be the case if, for example, the
business combination took the form of a sale of assets or an original issuance
of the Company's securities to an Interested Shareholder), only approval by a
majority of any Disinterested Directors would avoid the requirement for such 80%
shareholder vote.
If there were no Disinterested Directors, the business combination would
require the 80% affirmative shareholder vote. On the other hand, approval of a
majority of the Disinterested Directors would, in every case, avoid both the
need for such 80% shareholder vote and the need to satisfy all of the minimum
price, form of consideration and other requirements described below.
(a) Minimum Price Requirements. The aggregate of (1) the cash and (2) the
Fair Market Value (as defined below), as of the date of consummation of the
business combination (the "Consummation Date"), of any consideration other than
cash to be received per share by a holder of Common Stock in the business
combination would have to be at least equal to the higher of (i) the highest per
share price paid by the Interested Shareholder in acquiring any share of Common
Stock during the two years immediately prior to the date of the first public
announcement of the proposed business combination (the "Announcement Date") or
in the transaction in which it became an Interested Shareholder, whichever is
higher, and (ii) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date (as defined below), whichever is
higher.
"Fair Market Value" is (1) in the case of cash, the amount of the cash, (2)
in the case of stock, the highest closing sale price with respect to such stock
during the 30 day period preceding the date in question, or fair market value,
and (3) in the case of property other that cash or stock, the fair market value
of such property on the date in question as determined by a majority of the
Disinterested Directors. The "Determination Date" is the date, with respect to
each Interested Shareholder, on which the Interested Shareholder became an
Interested Shareholder.
The higher of (i) or (ii) in the first paragraph of this sub-section (a)
above would have to be paid in respect of all outstanding shares of Common Stock
whether or not the Interested Shareholder had previously acquired any shares of
Common Stock. If the Interested Shareholder did not purchase any shares of
Common Stock during the two-year period prior to the Announcement Date or in the
transaction on the Determination Date in which it became an Interested
Shareholder (for instance, if it became an Interested Shareholder by purchasing
shares of any then-outstanding series of voting Preferred Stock), the minimum
price would be as determined under (ii) above.
Because the market price of the Company's Common Stock varies over time,
the provisions of the Fair Price Amendment and the determination of the minimum
price thereunder do not ensure any fixed minimum price. If the minimum price is
determined under clause (ii) of the first paragraph of sub-section (a) above,
for example, it would be equal to the highest price during such period and could
be substantially less than the historic highest price at which the Company's
Common Stock has been sold.
The following example illustrates the application of the minimum price
requirement to a business combination with an Interested Shareholder that (1)
acquired in the open market, during the two-year period prior to the
Announcement Date, 4.9% of the outstanding Common Stock of the Company (the only
presently
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outstanding class of capital stock), for which its highest per share price was
$10, (2) became an Interested Shareholder by purchasing 62% of the outstanding
Common Stock in a cash tender offer at $14 per share, which was equal to the
Fair Market Value on that date, and (3) then announced a proposed business
combination with the Company at a time when the Common Stock was trading at $16
per share.
(i) The highest price paid by the Interested Shareholder per share of
Common Stock during the two-year period prior to the Announcement Date ($10) or
in the transaction in which the Interested Shareholder became such ($14),
whichever is higher.
(ii) The higher of the Fair Market Value per share of Common Stock on the
Announcement Date ($16) and on the Determination Date ($14).
Accordingly, in the above example, to comply with the Fair Price Amendments
minimum price requirement the Interested Shareholder would be required to pay at
least $16 per share (the higher of the two alternatives above).
If the transaction does not involve the receipt of any cash or other
property by any of the Company's shareholders, such as a sale of assets or an
issuance of the Company's securities to an Interested Shareholder, then the
price criteria discussed above would not apply and the 80% shareholder vote
would be required, unless the transaction were approved by a majority of the
Disinterested Directors.
If any class or series of capital stock, other than Common Stock, is
outstanding on the Consummation Date, then the payments to holders of shares of
such class or series of capital stock would have to be at least equal to the
higher of (1) the highest price per share as determined with respect to such
class or series of capital stock in the same manner as described above with
respect to Common Stock, and (2) the highest preferential amount per share, if
any, to which the holders of such class or series of capital stock would be
entitled in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company. The minimum price requirement would have to be met
with respect to each class or series of outstanding capital stock whether or not
the Interested Shareholder owned shares of that class or series prior to the
business combination.
Under the minimum price requirements, the Fair Market Value of non-cash
consideration to be received by holders of shares of any class of capital stock
in a business combination is to be determined as of the Consummation Date. Where
the definitive terms of the non-cash consideration were established in advance
of the Consummation Date, intervening adverse developments, either in the
economy or the market generally or in the financial condition or business of the
Interested Shareholder, could result in a decline in the originally anticipated
Fair Market Value of such consideration, so that on the date scheduled for its
consummation the business combination (which had theretofore been considered as
not requiring the 80% shareholder vote or approval by a majority of any
Disinterested Directors) could not be consummated because it failed to meet the
minimum price criteria. An Interested Shareholder could avoid such a situation,
however, by establishing, in advance, terms for the business combination whereby
the non-cash consideration was to be determined by reference to its Fair Market
Value on the Consummation Date. Such an approach would ensure that the
Interested Shareholder, rather than the other shareholders of the Company, would
bear the risk of a decline in the market value of the offered consideration
prior to the consummation of the business combination.
(b) Form of Consideration Requirement. The consideration to be received by
holders of a particular class or series of capital stock in the business
combination is required to be either cash or the same type of consideration used
by the Interested Shareholder in acquiring the largest number of shares of such
class or series of capital stock.
(c) Other Requirements. In order to avoid the requirement of the 80%
affirmative shareholder vote or approval by a majority of the Disinterested
Directors, an Interested Shareholder would have to comply with all of the
following additional requirements.
The first additional requirement would be that the Company, after the
Determination Date and prior to the Consummation Date, had (1) not failed to
declare or pay full regular dividends on any outstanding capital stock, other
than Common Stock, (2) not reduced the amount or changed the frequency of
payment of any
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dividends regularly paid on Common Stock (except as necessary to reflect any
stock split, stock dividend, subdivision or reclassification of the Common
Stock), and (3) increased the amount of any dividends regularly paid on the
Common Stock as necessary to reflect any reverse stock split or reclassification
of the Common Stock or other transaction that has the effect of reducing the
number of outstanding shares of Common Stock, unless any failure or reduction
was approved by a majority of the Disinterested Directors. This provision is
designed to prevent an Interested Shareholder from attempting to depress the
market price of the capital stock prior to proposing a business combination by
reducing dividends on the capital stock, and thereby reducing the consideration
required to be paid pursuant to the minimum price requirements of the Fair Price
Amendment.
The second additional requirement would be that, after the Determination
Date and prior to the Consummation Date, the Interested Shareholder had not
acquired any additional shares of the capital stock, directly from the Company
or otherwise, in any transaction subsequent to the transaction pursuant to which
it became an Interested Shareholder (for the purpose of the Fair Price Amendment
all purchases made pursuant to a single tender or exchange offer would be
considered part of the same transaction). This provision is intended to prevent
an Interested Shareholder from purchasing additional shares of Voting Stock at
prices that are lower than those set by the minimum price requirements of the
Fair Price Amendment.
The third additional requirement would be that, after the Determination
Date and prior to the Consummation Date, the Interested Shareholder had not
received, whether in connection with the business combination or otherwise, the
benefit of any loans, other financial assistance or tax advantages provided by
the Company (other than proportionately as a shareholder). This provision is
intended to deter an Interested Shareholder from self-dealing or otherwise
taking advantage of its equity position in the Company by using the Company's
resources to finance the business combination or otherwise for its own purposes
in a manner not proportionately available to all shareholders.
The fourth additional requirement would be that, after the Determination
Date and prior to the Consummation Date, the Interested Shareholder shall not
have made any major change in the Company's business or capital structure
without the approval of a majority of the Disinterested Directors. This
provision is intended to deter an Interested Shareholder from making major
changes in the Company that may involve self-dealing by the Interested
Shareholder, or otherwise exerting influence that may not be to the benefit of
the other shareholders or consistent with the objectives of the Board.
The final additional requirement would be that a proxy or information
statement disclosing the terms and conditions of the business combination and
complying with the requirements of the proxy rules promulgated under the 1934
Act would have to be mailed to all shareholders of the Company at least 30 days
prior to the consummation of the business combination.
The Fair Price Amendment further provides that a majority of the
Disinterested Directors have the power and duty to determine all questions
arising under the Fair Price Amendment and that any such determination made in
good faith shall be binding and conclusive upon all parties. The Fair Price
Amendment also provides that nothing in it will be interpreted to relieve any
Interested Shareholder from any fiduciary obligation imposed by law, and the
fact that a business combination complies with certain provisions of the Fair
Price Amendment will not be interpreted to impose any fiduciary duty, obligation
or responsibility on the Board of Directors to approve the business combination
or recommend it to the shareholders. Further, this compliance does not limit in
any manner the Board of Directors with respect to evaluations of other actions
and responses taken with respect to such business combination.
Vote Required. The affirmative vote of two-thirds ( 2/3) of the outstanding
shares of Common Stock is required to adopt the Fair Price Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE FAIR PRICE AMENDMENT.
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PROPOSAL REGARDING AUTHORIZATION OF PREFERRED STOCK
The Board of Directors has adopted and submitted to the shareholders for
approval an amendment to the Company's Articles of Incorporation (the "Preferred
Stock Amendment") to authorize for issuance preferred stock ("Preferred Stock").
The Preferred Stock Amendment is contained in Article Four of the proposed
Amendments attached hereto as Appendix A.
The Articles of Incorporation currently authorizes the issuance of up to
80,000,000 shares of stock, without distinguishing between Common Stock and
Preferred Stock. The Company has issued 30,235,164 shares of Common Stock, of
which 24,229,969 were outstanding on February 24, 1997. If the Preferred Stock
Amendment is approved, the Articles of Incorporation will authorize an
additional 15,000,000 shares of Preferred Stock. The Preferred Stock Amendment
will not change the authorized number of shares of Common Stock which may be
issued, and this authorization will remain at 80,000,000. The existing Articles
of Incorporation provide that shareholders are not entitled to preemptive rights
and do not have any right to cumulate votes. The Articles of Incorporation
provides that holders of Common Stock do not have preemptive or cumulative
voting rights, but does not prohibit holders of Preferred Stock from having such
rights.
The Board of Directors believes that the Preferred Stock Amendment is in
the best interest of the Company and its shareholders. The Board believes that
it is advisable to have both Common Stock and Preferred Stock available in
connection with possible future transactions, such as financings, strategic
alliances, corporate mergers, acquisitions, possible funding of new product
programs or businesses and other uses not presently determinable, and as may be
deemed to be feasible and in the best interests of the Company. In addition, the
Board of Directors believes that it is desirable that the Company have the
flexibility to issue shares of both Common Stock and Preferred Stock without
further shareholder action, except as otherwise provided by law.
Whether or not the Preferred Stock Amendment is approved by the Company's
shareholders, unissued shares of Common Stock will continue to be available for
issuance, including by means of an unregistered private placement, without
further action of the shareholders, unless required by the Company's Articles of
Incorporation or Bylaws, applicable laws, or the policy of any stock exchange or
registered securities association on which the shares of stock of the Company
are listed, if any.
If the Preferred Stock Amendment is approved by the Company's shareholders,
then the Board of Directors of the Company will be entitled to approve the
creation and issuance of up to 15,000,000 shares of Preferred Stock in one or
more series, with such rights, designations, preferences, conversion rights,
exchange rights, cumulative, relative, participating, optional or other rights,
including voting rights, qualifications, limitations or restrictions thereof as
are determined by a corporation's board of directors with no further
authorization required of the shareholders. The issuance of shares of Preferred
Stock could decrease the amount of earnings and assets available for
distribution to holders of Common Stock and adversely affect the rights and
powers, including voting rights, of such holders.
The Board of Directors does not currently intend to seek shareholder
approval prior to any issuance of Common Stock or Preferred Stock, unless
otherwise required by law or the regulations of the stock market where the
capital stock is traded.
The Board of Directors is required to make any determination to issue
shares of the Common Stock and shares of Preferred Stock based on its judgment
as to the best interests of the shareholders and the Company. Although the Board
of Directors has no present intention of doing so, it could issue shares of the
Preferred Stock that could, depending on the terms of such series, make more
difficult or discourage an attempt to obtain control of the Company by means of
a merger, tender offer, proxy contest, or other means. For example, these shares
could be used to create voting or other impediments or to discourage persons
seeking to gain control of the Company. Such shares could be privately placed
with purchasers favorable to the Board of Directors in opposing the action. The
issuance of new shares also could be used to dilute the stock ownership of a
person or entity seeking to obtain control of the Company should the Board of
Directors consider the action of the entity or person not to be in the best
interests of the shareholders and the Company. In addition, the Board of
Directors could authorize holders of a series of Preferred Stock to vote either
separately as a class
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or with the holders of the Company's Common Stock, on any merger, sale, or
exchange of assets by the Company or any other extraordinary corporate
transaction.
The Company currently has no agreements or understandings with any third
party to effect any offering of Preferred Stock or to purchase any shares
offered in connection with an offer. No assurances are given that any offering
will in fact be effected. Therefore, the terms of any of the Preferred Stock
cannot be stated or estimated with respect to any or all of the securities
authorized.
Vote Required. The affirmative vote of two-thirds ( 2/3) of the outstanding
shares of Common Stock is required to adopt the Preferred Stock Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE PREFERRED STOCK AMENDMENT.
EXISTING DEFENSES
Articles of Incorporation and Bylaws. Neither the Company's Articles of
Incorporation nor its Bylaws presently contain any provisions that may have an
antitakeover effect.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. of Fort Worth, Texas served as independent public
accountants for the Company for fiscal 1996 and has reported on the Company's
financial statements. The Board of Directors of the Company has selected Coopers
& Lybrand L.L.P. to audit the accounts of the Company for the fiscal year ending
December 31, 1997 and recommends to the shareholders that they ratify this
selection for the ensuing fiscal year ending December 31, 1997. The Company has
been advised that Coopers & Lybrand L.L.P. has no relationship with the Company
or its subsidiaries other than that arising from the firm's employment as
auditors. The affirmative vote of a majority of the outstanding shares of Common
Stock present at the Annual Meeting in person or by proxy is necessary for the
ratification of the appointment of Coopers & Lybrand L.L.P. as independent
public accountants.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting and will be afforded an opportunity to make a statement and
will be available to respond to appropriate questions at such meeting.
While shareholder ratification is not required for the selection of Coopers
& Lybrand L.L.P. since the Board of Directors has the responsibility for the
selection of the Company's independent public accountants, the selection is
being submitted for ratification at the Annual Meeting with a view towards
soliciting the shareholders' opinion thereon, which opinion will be taken into
consideration in future deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF COOPERS & LYBRAND
L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE 1997 FISCAL
YEAR.
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OTHER BUSINESS
Any proposal to be presented by a shareholder at the Company's 1998 Annual
Meeting of Shareholders must be presented to the Company by no later than
November 14, 1997.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders are urged, regardless of the number of shares
of stock owned, to date, sign and return the enclosed proxy in the enclosed
reply envelope.
By Order of the Board of Directors
HUGH A. SIMPSON
Secretary
March 14, 1997
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APPENDIX A
TEXT OF PROPOSED AMENDMENTS TO
THE ARTICLES OF INCORPORATION
OF
CASH AMERICA INTERNATIONAL, INC.
The following Amendments to the Articles of Incorporation are proposed for
adoption by the shareholders of the Corporation on April 22, 1997:
I. The Amendments alter or change Article Four of the original Articles of
Incorporation, and Article Four is hereby amended so as to read as follows:
"ARTICLE FOUR
CAPITAL STOCK
The total number of authorized shares of capital stock of the
Corporation shall be 90,000,000 which shall consist of 15,000,000 shares of
Preferred Stock of the par value of $0.10 per share and 80,000,000 shares
of Common Stock of the par value of $0.10 per share.
The following is a statement fixing certain of the designations and
powers, voting powers, preferences, and relative, participating, optional
or other rights of the Preferred Stock and the Common Stock of the
Corporation, and the qualifications, limitations or restrictions thereof,
and the authority with respect thereto expressly granted to the Board of
Directors of the Corporation to fix any such provisions not fixed hereby:
A. Preferred Stock
The Board of Directors is hereby expressly vested with the authority
to adopt a resolution or resolutions providing for the issue of authorized
but unissued shares of Preferred Stock. These shares of Preferred Stock may
be issued from time to time in one or more series and in such amounts as
may be determined by the Board of Directors in such resolution or
resolutions. The powers, voting powers, designations, preferences, and
relative, participating, optional or other rights, if any, of each series
of Preferred Stock and the qualifications, limitations or restrictions, if
any, of such preferences and/or rights (collectively the "Series Terms"),
shall be such as are stated and expressed in a resolution or resolutions
providing for the creation or revision of such Series Terms (a "Preferred
Stock Series Resolution") adopted by the Board of Directors or a committee
of the Board of Directors to which such responsibility is specifically and
lawfully delegated. The powers of the Board with respect to the Series
Terms of a particular series (any of which powers, other than voting
powers, may by resolution of the Board of Directors be specifically
delegated to one or more of its committees, except as prohibited by law)
shall include, but not be limited to, determination of the following:
(1) The number of shares constituting that series and the
distinctive designation of that series, or any increase or decrease (but
not below the number of shares thereof then outstanding) in such number;
(2) The dividend rate on the shares of that series, whether such
dividends, if any, shall be cumulative, and, if so, the date or dates
from which dividends payable on such shares shall accumulate, and the
relative rights of priority, if any, of payment of dividends on shares
of that series;
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(3) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting
rights; provided, however, that if resolutions authorize the holders of
Preferred Stock to elect directors upon certain events, those directors
elected by the holders of Preferred Stock shall be in addition to those
directors authorized from time to time pursuant to Article Seven of
these Articles of Incorporation.
(4) Whether that series shall have conversion privileges with
respect to shares of any other class or classes of stock or of any other
series of any class of stock, and, if so, the terms and conditions of
such conversion, including provision for adjustment of the conversion
rate upon occurrence of such events as the Board of Directors shall
determine;
(5) Whether the shares of that series will be exchangeable, subject
to Article 2.38 of the Texas Business Corporation Act, as amended from
time to time, at the option of the Corporation, the shareholders or
another person or upon the occurrence of a designated event, for shares,
obligations, indebtedness, evidence of ownership, rights to purchase
securities or other securities of the Corporation or one or more other
domestic or foreign corporations or other entities or for other property
or any combination of the foregoing;
(6) Whether the shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including their
relative rights of priority, if any, of redemption, the date or dates
upon or after which they shall be redeemable, provisions regarding
redemption notices, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
(7) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(8) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution, or winding up of the
Corporation, and the relative rights of priority, if any, of payment of
shares of that series;
(9) The conditions or restrictions upon the creation of
indebtedness of the Corporation or upon the issuance of additional
Preferred Stock or other capital stock ranking on a parity therewith, or
prior thereto, with respect to dividends or distribution of assets upon
liquidation;
(10) The conditions or restrictions with respect to the issuance
of, payment of dividends upon, or the making of other distributions to,
or the acquisition or redemption of, shares ranking junior to the
Preferred Stock or to any series thereof with respect to dividends or
distribution of assets upon liquidation; and
(11) Any other designations, powers, preferences, and rights,
including, without limitation, any qualifications, limitations, or
restrictions thereof.
Any of the Series Terms, including voting rights, of any series may be
made dependent upon facts ascertainable outside the Articles of
Incorporation and the Preferred Stock Series Resolution, provided that the
manner in which such facts shall operate upon such Series Terms is clearly
and expressly set forth in the Articles of Incorporation or in the
Preferred Stock Series Resolution.
Subject to the provisions of this Article Four, shares of one or more
series of Preferred Stock may be authorized or issued from time to time as
shall be determined by and for such consideration as shall be fixed by the
Board of Directors or a designated committee thereof, in an aggregate
amount not exceeding the total number of shares of Preferred Stock
authorized by these Articles of Incorporation. Except in respect of series
particulars fixed by the Board of Directors or its committee as permitted
hereby, all shares of Preferred Stock shall be of equal rank and shall be
identical. All shares of any one series of Preferred Stock so designated by
the Board of Directors shall be alike in every particular, except that
shares of any one series issued at different times may differ as to the
dates from which dividends thereon shall be cumulative.
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B. Common Stock
1. Distributions. Subject to the provisions of any Preferred Stock
Series Resolution, the Board of Directors may, in its discretion, out of
funds legally available for distribution and at such times and in such
manner as determined by the Board of Directors, declare and pay a
distribution on the Common Stock of the Corporation.
No distribution (other than a dividend in capital stock ranking on a
parity with the Common Stock or cash in lieu of fractional shares with
respect to such stock dividend) shall be declared or paid on any share or
shares of any class of stock or series thereof ranking on a parity with the
Common Stock in respect of payment of a distribution for any distribution
period unless there shall have been declared, for the same distribution
period, a like proportionate distribution on all shares of Common Stock
then outstanding.
2. Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after
payment or provision for payment of the debts and other liabilities of the
Corporation and payment or setting aside for payment of any preferential
amount due to the holders of any other class or series of stock, the
holders of the Common Stock shall be entitled to receive ratably any or all
assets remaining to be paid or distributed.
3. Voting Rights. Subject to any special voting rights set forth in
any Preferred Stock Series Resolution, the holders of the Common Stock of
the Corporation shall be entitled at all meetings of the shareholders to
one vote for each share of such stock held by them.
C. Prior, Parity or Junior Stock
Whenever reference is made in this Article Four to shares "ranking
prior to" another class of stock or "on a parity with" another class of
stock, such reference shall mean and include all other shares of the
Corporation in respect of which the rights of the holders thereof as to the
payment of distributions or as to distributions in the event of a voluntary
or involuntary liquidation, dissolution, or winding up of the affairs of
the Corporation are given preference over, or rank on an equality with, as
the case may be, the rights of the holders of such other class of stock.
Whenever reference is made to shares "ranking junior to" another class of
stock, such reference shall mean and include all shares of the Corporation
in respect of which the rights of the holders thereof as to the payment of
distributions and as to distributions in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation are junior or subordinate to the rights of the holders of such
class of stock.
Except as otherwise provided herein or in any Preferred Stock Series
Resolution, each series of Preferred Stock ranks on a parity with each
other and each ranks prior to the Common Stock. Common Stock ranks junior
to the Preferred Stock.
D. Liquidation
For the purposes of sub-section 2 of Section B of this Article Four
and for the purpose of the comparable sections of any Preferred Stock
Series Resolution, the merger or consolidation of the Corporation into or
with any other Corporation, or the merger of any other Corporation into it,
or the sale, lease, or conveyance of all or substantially all the assets,
property or business of the Corporation, shall not be deemed to be a
liquidation, dissolution, or winding up of the Corporation.
E. Reservation and Retirement of Shares
The Corporation shall at all times reserve and keep available, out of
its authorized but unissued shares of Common Stock or out of shares of
Common Stock held in its treasury, the full number of shares of Common
Stock into which all shares of any series of Preferred Stock having
conversion privileges from time to time outstanding are convertible.
Unless otherwise provided in a Preferred Stock Series Resolution with
respect to a particular series of Preferred Stock, all shares of Preferred
Stock redeemed or acquired (as a result of conversion or otherwise) shall
be retired and restored to the status of authorized but unissued shares.
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No holder of shares of stock of the Corporation shall have any
preemptive or other right, except as such rights are expressly provided by
contract, to purchase or subscribe for or receive any shares of any class,
or series thereof, of stock of the Corporation, whether now or hereafter
authorized, or any warrants, options, bonds, debentures, or other
securities convertible into, exchangeable for or carrying any right to
purchase any shares of any class, or series thereof, of stock; but such
additional shares of stock and such warrants, options, bonds, debentures,
or other securities convertible into, exchangeable for or carrying any
right to purchase any shares of any class, or series thereof, of stock may
be issued or disposed of by the Board of Directors to such persons, and on
such terms and for such lawful considerations, as in its discretion it
shall deem advisable or as to which the Corporation shall have by binding
contract agreed.
Cumulative voting shall not be allowed in the election of directors or
for any other purpose."
II. The Amendments alter or change Article Seven of the original Articles
of Incorporation, and Article Seven is hereby amended so as to read as follows:
"ARTICLE SEVEN
BOARD OF DIRECTORS
A. Number. Except as otherwise fixed by the provisions of a resolution
adopted pursuant to Article Four A.(3) of these Articles of Incorporation
relating to the rights of the holders of the Preferred Stock to elect
additional directors under specified circumstances, the number of directors
which shall constitute the whole Board of Directors shall be as provided in
the Corporation's Bylaws.
B. Staggered Board. The directors of the Corporation shall be divided
into three classes, designated Class I, Class II and Class III (which at
all times shall be as nearly equal in number as possible), with the term of
office of Class I directors to expire at the 1998 Annual Meeting of
Shareholders, the term of office of Class II directors to expire at the
1999 Annual Meeting of Shareholders, and the term of office of Class III
directors to expire at the 2000 Annual Meeting of Shareholders, upon
election and qualification of their successors. At each annual meeting of
shareholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for
a term of office to expire at the third succeeding annual meeting of
shareholders after their election, upon election and qualification of their
successors.
C. Director Nominations. Nominations, other than those made by, or at
the direction of, a majority of the Board of Directors of the Corporation
or a committee thereof shall be made only if timely written notice of such
nomination or nominations has been given to the Secretary of the
Corporation. To be timely, such notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not less
than 60 days prior to the meeting, irrespective of any deferrals,
postponements or adjournments thereof to a later meeting date; provided,
however, that in the event that less than 70 days notice or prior public
disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than
the close of business on the tenth day following the day on which such
notice of the date of the meeting was mailed or such public disclosure of
the date of the meeting was made, whichever first occurs. Each such notice
to the Secretary shall set forth:
(i) the name, business address and residence address of the
shareholder who intends to make the nomination;
(ii) a representation that the shareholder is a holder of record of
shares of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice;
(iii) the name, age, business and residence addresses, and
principal occupation or employment of each nominee;
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(iv) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the shareholder;
(v) any other information relating to each nominee proposed by such
shareholder that is or would be required to be included in a proxy
statement filed with the Securities and Exchange Commission pursuant to
Regulation 14A promulgated under the Securities Exchange Act of 1934
(the "1934 Act");
(vi) any other information that is or would be required to be
disclosed in a Schedule 13D promulgated under the 1934 Act, regardless
of whether such person would otherwise be required to file a Schedule
13D; and
(vii) the consent of each nominee to serve as a director of the
Corporation if so elected.
In addition, a person providing notice under Section C of this Article
Seven shall promptly provide such other supplemental information as the
Corporation otherwise reasonably requests.
A majority of the Board of Directors may reject any nomination by a
shareholder that is not timely made or otherwise not made in accordance
with the terms of Section C of this Article Seven. If a majority of the
Board of Directors reasonably determines that the information provided in a
shareholder's notice does not satisfy the informational requirements of
Section C of this Article Seven in any material respect, the Secretary of
the Corporation shall promptly notify such shareholder of the deficiency in
writing. The shareholder shall have an opportunity to cure the deficiency
by providing additional information to the Secretary within such period of
time as a majority of the Board of Directors shall reasonably determine,
which period shall not exceed 10 days from the date such deficiency notice
is given to the shareholder. If the deficiency is not cured within such
period, or if a majority of the Board of Directors reasonably determines
that the additional information provided by the shareholder, together with
the information previously provided, does not satisfy the requirements of
this paragraph in any material respect, then a majority of the Board of
Directors may reject such shareholder's nomination. The Secretary of the
Corporation shall notify a shareholder in writing whether his or her
nomination has been made in accordance with the time and information
requirements of Section C of this Article Seven.
The chair of a meeting of shareholders may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedure prescribed by Section C of this Article
Seven, and if the chair should so determine, he or she shall so declare to
the meeting and such nomination shall be disregarded.
D. Ballots, Cumulative Voting. Election of directors need not be by
written ballot unless the Bylaws shall so provide. No holders of shares of
capital stock of the Corporation shall have any rights to cumulate votes in
the election of directors.
E. Preferred Stock, Directors. Notwithstanding the foregoing, whenever
the holders of Preferred Stock shall have the right to elect directors at
an annual or special meeting of Shareholders, the election, term of office,
filling of vacancies, and other features of such directorships shall be
governed by the terms of any resolution adopted pursuant to Article Four of
these Articles of Incorporation, and such Directors so elected shall not be
divided into classes pursuant to this Article Seven, unless expressly
provided by such terms."
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III. The Amendments add Article Twelve to the Articles of Incorporation,
and such new Article Twelve shall read as follows:
"ARTICLE TWELVE
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of shareholders of the Corporation may be called
only by the Chairman of the Board of Directors, if there is one, by the
President, by the Board of Directors or by holders of not less than a
majority of the voting power of the Voting Stock (as defined in Article
Thirteen of these Articles of Incorporation) that would be entitled to
vote at such meeting."
IV. The Amendments add Article Thirteen to the Articles of Incorporation,
and such new Article Thirteen shall read as follows:
"ARTICLE THIRTEEN
FAIR PRICE
A. Special Vote Required For Certain Business Combinations. In
addition to any affirmative vote required by law or these Articles of
Incorporation or the Bylaws of the Corporation and except as otherwise
expressly provided in Section B. of this Article Thirteen, a Business
Combination (as hereinafter defined) with, or proposed by or on behalf of
any Interested Shareholder (as hereinafter defined) or any Affiliate or
Associate (as hereinafter defined) of any Interested Shareholder or any
person who after such Business Combination would be an Affiliate or
Associate of such Interested Shareholder shall require the affirmative vote
of the holders of not less than 80% of the voting power of the Voting Stock
(as hereinafter defined), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage or separate class vote may be
specified, by law, by any other provision of these Articles of
Incorporation or the Bylaws of the Corporation, by any agreement with any
national securities exchange or otherwise.
B. When Special Vote Not Required. The provisions of Section A of this
Article Thirteen shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such
affirmative vote, if any, as is required by law, by any other provision of
these Articles of Incorporation or the Bylaws of the Corporation, by any
agreement with any national securities exchange or otherwise if, in the
case of a Business Combination involving the receipt of consideration by
the holders of the Corporation's outstanding Capital Stock (as hereinafter
defined), the condition specified in paragraph (i) below is met or all of
the conditions specified in paragraph (ii) below are met or if, in the case
of a Business Combination not involving the receipt of consideration by the
holders of the Corporation's outstanding Capital Stock, the condition
specified in paragraph (i) below is met:
(i) Approval by Disinterested Directors. The Business Combination
(either specifically or as a transaction which is within an approved
category of transactions) shall have been approved by a majority of the
Disinterested Directors (as hereinafter defined), it being understood
that this condition shall not be capable of satisfaction unless there is
at least one Disinterested Director.
(ii) Minimum Price, Form of Consideration and Other Requirements.
All of the following conditions shall have been met:
(A) Minimum Price Requirements. With respect to every class or
series of outstanding Capital Stock of the Corporation, whether or not
the Interested Shareholder has previously acquired beneficial ownership
of any shares of such class or series of Capital Stock:
(1) The aggregate amount of cash plus the Fair Market
Value (as hereinafter defined), as of the date of the consummation of
the Business Combination, of consideration other
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than cash to be received per share by holders of Common Stock in such
Business Combination shall be at least equal to the higher of the
amounts determined pursuant to clauses (aa) and (bb) below:
(aa) the highest per-share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for any share of Common
Stock in connection with the acquisition by the Interested Shareholder
of beneficial ownership of shares of Common Stock (x) within the
two-year period immediately prior to the Announcement Date (as
hereinafter defined) or (y) in the transaction or series of related
transactions in which it became an Interested Shareholder, whichever is
higher, in either case as adjusted for any subsequent stock split stock
dividend, subdivision or reclassification with respect to Common Stock;
and
(bb) the Fair Market Value per share of Common Stock
(x) on the Announcement Date or (y) on the Determination Date (as
hereinafter defined), whichever is higher, as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification
with respect to Common Stock.
(2) The aggregate amount of cash plus the Fair Market
Value, as of the date of the consummation of the Business Combination,
of consideration other than cash to be received per share by holders of
shares of any class or series of outstanding Capital Stock, other than
Common, shall be at least equal to the highest of the amounts determined
pursuant to clauses (aa), (bb) and (cc) below:
(aa) the highest per-share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Shareholder for any share of such
class or series of Capital Stock in connection with the acquisition by
the Interested Shareholder of beneficial ownership of shares of such
class or series of Capital Stock (x) within the two-year period
immediately prior to the Announcement Date or (y) in the transaction or
series of related transactions in which it became an Interested
Shareholder, whichever is bigger, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification
with respect to such class or series of Capital Stock;
(bb) the Fair Market Value per share of such class
or series of Capital Stock (x) on the Announcement Date or (y) on the
Determination Date, whichever is higher, as adjusted for any subsequent
stock split, stock dividend, subdivision or reclassification with
respect to such class or series of Capital Stock; and
(cc) the highest preferential amount per share, if
any, to which the holders of shares of such class or series of Capital
Stock would be entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation
regardless of whether the Business Combination to be consummated
constitutes such an event.
(B) Form of Consideration and Other Requirements.
(1) The consideration to be received by holders of a
particular class or series of outstanding Capital Stock shall be in cash
or in the same form as previously has been paid by or on behalf of the
Interested Shareholder in connection with its direct or indirect
acquisition of beneficial ownership of shares of such class or series of
Capital Stock. If the consideration so paid for shares of any class or
series of Capital Stock varies as to form, the form of consideration of
such class or series of Capital Stock shall be in cash or the form paid
by or on behalf of the Interested Shareholder in connection with its
direct or indirect acquisition of beneficial ownership of the largest
number of shares of such class or series of Capital Stock.
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(2) After the Determination Date and prior to the
consummation of such Business Combination:
(aa) there shall have been no failure to declare and
pay at the regular date therefor any full regular dividends (whether or
not cumulative) payable in accordance with the terms of any outstanding
Capital Stock, other than the Common Stock, except as approved by a
majority of the Disinterested Directors;
(bb) there shall have been no reduction in the
amount, or change in the frequency of payment of any dividends regularly
paid on the Common Stock (except as necessary to reflect any stock
split, stock dividend, subdivision or reclassification of the Common
Stock), except as approved by a majority of the Disinterested Directors;
and
(cc) there shall have been an increase in the amount
of all dividends regularly paid on the Common Stock as necessary to
reflect any reverse stock split or reclassification of the Common Stock,
or any split, recapitalization, reorganization or any similar
transaction that has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase the amount of
such dividends is approved by a majority of the Disinterested Directors.
(3) After the Determination Date and prior to the
consummation of such Business Combination, such Interested Shareholder
shall not have become the beneficial owner of any additional shares of
Capital Stock except as part of or otherwise in connection with the
transaction or series of related transactions that resulted in such
Interested Shareholder becoming an Interested Shareholder.
(4) After the Determination Date and prior to the
consummation of such Business Combination, such Interested Shareholder
shall not have received the benefit, directly or indirectly (except
proportionately as a Shareholder of the Corporation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination or
otherwise.
(5) After the Determination Date and prior to the
consummation of such Business Combination, such Interested Shareholder
shall not have made any major change in the Corporation's business or
capital structure without the approval of a majority of the
Disinterested Directors.
(6) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of the
Securities Act of 1934 Act (the "1934 Act") shall be mailed to all
shareholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to the 1934
Act). Such proxy or information statement shall contain, in a prominent
place, any statement as to the advisability (or inadvisability) of the
Business Combination that the Disinterested Directors, or any of them,
may choose to make and, if deemed advisable by a majority of the
Disinterested Directors, the opinion of an investment banking firm
selected by a majority of the Disinterested Directors as to the fairness
(or not) of the terms of the Business Combination from a financial point
of view to the holders of the outstanding shares of Capital Stock other
than the Interested Shareholder and its Affiliates or Associates, such
investment banking firm to be paid a reasonable fee for its services by
the Corporation.
C. Certain Definitions. The following definitions shall apply with
respect to this Article Thirteen:
(i) The term "Business Combination" shall mean:
(A) any merger or consolidation of the Corporation or any
subsidiary (as hereinafter defined) with (1) any Interested Shareholder
or (2) any other company (whether or not itself an Interested
Shareholder) that is or after such merger or consolidation would be an
Affiliate or Associate of an Interested Shareholder; or
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(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition, or any security arrangement investment, loan,
advance, guarantee, agreement to purchase, agreement to pay, extension
of credit, joint venture participation or other arrangement, in one
transaction of in a series of transactions, with or for the benefit of
any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder involving any assets, cash flow, earning power,
securities or commitments of the Corporation, any subsidiary, any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder that, together with all other such arrangements, has an
aggregate Fair Market Value or involves aggregate commitments equal to
10% or more of the assets, cash flow or earning power (in the case of
transactions involving assets or commitments other than capital stock)
or 10% of the shareholders' equity (in the case of transactions in
capital stock) of the entity in question (the "Substantial Part"), as
reflected in the most recent fiscal year-end consolidated balance sheet
of such entity existing at the time the shareholders of the Corporation
would be required to approve or authorize the Business Combination
involving the assets, cash flow, earning power, securities or
commitments constituting any Substantial Part; or
(C) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation; or
(D) any issuance or reclassification of securities (including
any stock dividend, split or reverse split or any other distribution of
securities in respect of stock), any recapitalization of the
Corporation, any merger or consolidation of the Corporation with any of
its subsidiaries or any other transaction (whether or not with or
otherwise involving an Interested Shareholder) that has the effect,
directly or indirectly, of increasing the proportional share of any
class or series of Capital Stock, or any securities convertible into or
rights, options or warrants to acquire Capital Stock, or equity
securities of any subsidiary, that is beneficially owned by any
Interested Shareholder or any Affiliate or Associate of any Interested
Shareholder; or
(E) any agreement, arrangement or other understanding
providing for any one or more of the actions specified in the foregoing
clauses (A) to (D).
(ii) The term "Capital Stock" shall mean the capital stock of the
Corporation authorized to be issued from time to time under Article Four
of these Articles of Incorporation; and the term "Voting Stock" shall
mean all issued and outstanding shares of Capital Stock entitled to vote
generally in the election of directors or that otherwise are entitled to
vote with such stock on the specific matter in question.
(iii) The term "person" shall mean any individual, firm, company or
other entity and shall include any group composed of any person and any
other person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing
of Capital Stock.
(iv) The term "Interested Shareholder" shall mean any person (other
than the Corporation or any subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit plan
of the Corporation or any subsidiary or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who or which:
(A) is the beneficial owner, directly or indirectly, of Voting
Stock representing 15% or more of the voting power of all Voting Stock;
or
(B) is an Affiliate or Associate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of Voting
Stock representing 15% or more of the voting power of all Voting Stock;
or
(C) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by an
Interested Shareholder if such assignment or succession shall have
occurred in the course of a
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transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
(v) A person shall be a "beneficial owner" of, shall "beneficially
own" and shall have "beneficial ownership" of any Capital Stock (1) that
such person or any of its Affiliates or Associates owns, directly or
indirectly; (2) that such person or any of its Affiliates or Associates
has, directly or indirectly, (x) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or options,
or otherwise, or (y) the right to vote pursuant to any agreement
arrangement or understanding; or (3) which is beneficially owned,
directly or indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any shares of Capital Stock. For the purposes of determining whether
a person is an Interested Shareholder pursuant to paragraph (iv) above,
the number of shares of Capital Stock deemed to be outstanding shall
include shares deemed beneficially owned by such person through
application of this paragraph (v), but shall not include any other
shares of Capital Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(vi) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
amended and in effect on the date that this Article Thirteen is approved
by the Board of Directors of the Corporation (the term "registrant" in
Rule 12b-2 meaning in this case the Corporation).
(vii) The term "subsidiary" means with reference to any person, any
corporation or other entity of which a majority of the voting power of
equity securities or majority of the equity interest is beneficially
owned, directly or indirectly, by such person, or otherwise controlled
by such person; provided, however, that for the purposes of the
definition of Interested Shareholder set forth in paragraph (iv) above,
the term "subsidiary" shall mean only a corporation or other entity of
which a majority of each class of equity securities is beneficially
owned by the Corporation.
(viii) "Common Stock" shall mean the common stock, par value $0.10
per share, of the Corporation, except that "Common Stock" when used with
reference to any person other than the Corporation shall mean the
capital stock of such person with the greatest voting power, or the
equity securities or other equity interest having power to control or
direct the management of such person.
(ix) The term "Disinterested Director," with respect to any
particular Business Combination with, or proposed by or on behalf of,
any Interested Stockholder or any Affiliate or Associate of any
Interested Shareholder or any person who thereafter would be an
Affiliate or Associate of any Interested Shareholder, means (1) any
member of the Board of Directors of the corporation, while such person
is a member of the Board, who is not such Interested Shareholder, or an
Affiliate or Associate of such Interested Shareholder, or a
representative of such Interested Shareholder or of any such Affiliate
or Associate, and was a member of the Board prior to the Determination
Date, or (2) any person who subsequently becomes a member of the Board,
while such person is a member of the Board, who is not such Interested
Shareholder, or an Affiliate or Associate of such Interested
Shareholder, or a representative of such Interested Shareholder or of
any such Affiliate or Associate, if such person's nomination for
election or election to the Board is recommended or approved by a
majority of the Disinterested Directors then in office.
(x) The term "Fair Market Value" means (1) in the case of cash, the
amount of such cash; (2) in the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York
Stock Exchange-listed stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such exchange, on the principal United States
A-10
38
securities exchange registered under the 1934 Act, on which such stock
is listed, or, if such stock is not listed on any such exchange, the
highest closing sale price with respect to a share of such stock during
the 30-day period immediately preceding the date in question as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System or any similar system then in use, or if no such sale
prices are available, the highest of the means between the last reported
bid and asked price with respect to a share of such stock on each day
during the 30-day period immediately preceding the date in question as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System, or if not so reported, as determined by a
member firm of the National Association of Securities Dealers, Inc.
selected by a majority of the Disinterested Directors, or if no such bid
and asked prices are available, the fair market value on the date in
question of a share of such stock as determined in good faith by a
majority of the Disinterested Directors; and (3) in the case of property
other than cash or stock, the fair market value of such property on the
date in question as determined in good faith by a majority of the
Disinterested Directors.
(xi) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in paragraphs (1) and (2) of Section B.(ii)(A) of this
Article Thirteen shall include the shares of Common Stock and/or the
shares of any other class or series of Capital Stock retained by the
holders of such shares.
(xii) The term "Announcement Date" means the date on which the
proposed Business Combination is first publicly announced, disclosed or
reported.
(xiii) The term "Determination Date" means with respect to any
Interested Shareholder, the date on which such Interested Shareholder
became an interested Shareholder.
(xiv) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Texas are
obligated by law or executive order to close.
D. Powers of Directors. For the purpose of this Article Thirteen, a
majority of the Disinterested Directors (whether or not any vacancies then
exist on the Board) shall exercise the powers of the Disinterested
Directors hereunder, and shall have the power and duty to determine in good
faith, on the basis of information known to them after reasonable inquiry,
any questions arising under this Article Thirteen, including, without
limitation, (1) whether a person is an Interested Shareholder, (2) the
number of shares of Capital Stock beneficially owned by any person, (3)
whether a person is an Affiliate or Associate of another, (4) whether a
Business Combination is with, or proposed by or on behalf of, an Interested
Shareholder or an Affiliate or Associate of an Interested Shareholder or a
person who thereafter would be an Interested Shareholder or an Affiliate or
Associate of an Interested Shareholder, and (5) whether any transaction
specified in paragraph (i)(B) of Section C. of this Article Thirteen meets
the Substantial Part test set forth therein. Any such determination made in
good faith shall be binding and conclusive on all parties.
E. No Effect On Fiduciary Obligations.
(i) Nothing contained in this Article Thirteen shall be construed
to relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
(ii) The fact that any Business Combination complies with the
provisions of Section B. of this Article Thirteen shall not be construed
to impose any fiduciary duty, obligation or responsibility on the Board
of Directors, or any member thereof, to approve such Business
Combination or recommend its adoption or approval to the shareholders of
the Corporation, nor shall such compliance limit, prohibit or otherwise
restrict in any manner the Board of Directors, or any member thereof,
with respect to evaluations of or actions and responses taken with
respect to such Business Combination."
A-11
39
[ ] Please mark your votes SHARES IN YOUR NAME
as in this example.
FOR WITHHELD
1. Election of Directors (see reverse) [ ] [ ]
2. Ratification of the appointment of Coopers FOR AGAINST ABSTAIN
& Lybrand L.L.P. as independent auditors for [ ] [ ] [ ]
the year 1997.
3. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for the [ ] [ ] [ ]
classification of the Board of Directors into
three classes of directors with staggered
terms.
4. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for a requirement [ ] [ ] [ ]
that shareholders notify the Company of a
nomination prior to any meeting.
5. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for a limitation [ ] [ ] [ ]
on who may call special meetings of
shareholders.
6. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for a minimum [ ] [ ] [ ]
price and other matters, or a higher voting
requirement, in connection with certain
business combinations.
7. Adoption of proposal to amend the Articles FOR AGAINST ABSTAIN
of Incorporation to provide for preferred [ ] [ ] [ ]
stock in the Company's authorized capital stock.
8. In their discretion the proxies are FOR AGAINST ABSTAIN
authourized to vote upon such other matters [ ] [ ] [ ]
as may come before the meeting or any
adjournment thereof.
For, except vote withheld from the
following nominee(s):
- ----------------------------
Change
of [ ]
Address
SIGNATURES(S) DATE
- ---------------------- ---------------------
SIGNATURES(S) DATE
- ---------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
40
CASH AMERICA INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING APRIL 22, 1997
The undersigned hereby constitutes and appoints Jack R. Daugherty, Daniel R.
Feehan, and Hugh A. Simpson, and each of them, my true and lawful attorneys and
proxies, with power of substitution, to represent the undersigned and vote at
the annual meeting of shareholders of Cash America International, Inc. (the
"Company") to be held in Fort Worth, Texas on April 22, 1997, and at any
adjournment thereof, all of the stock of the company standing in my name as of
the record date of March 4, 1997 on all matters coming before said meeting.
Election of Directors, Nominees: (change of address)
Jack R. Daugherty, A.R. Dike,
Daniel R. Feehan, James H. Graves, -----------------------
B.D. Hunter, Timothy J. McKibben,
Alfred M. Micallef, Carl P. Motheral, -----------------------
Samuel W. Rizzo, Rosalin Rogers
-----------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.